Notes to Accounts of Frontline Corporation Ltd.

Mar 31, 2014

1. General Information

Frontline Corporation Ltd. ("the Company") is engaged in the services of transportation, trading of Bricks and Automobile parts & Lubricants, Iron Ore, Renting of Property and production of wind energy. The company has its operations mainly in India.

2. Terms/Rights attached to Equity Shares

The Company has only one class of Equity Shares having Par Value of Rs 10/- per Share. Each holder of Equity Share is entitled to one vote per share.

3. Calls in Arrear are pending for Rs 5/- per share on 45,100 Equity Shares.

4. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders. The holders of Partly Paid Equity Shares will have to contribute unpaid amount on the the Equity Shares held by them.

5. Working Capital Facilities are secured by hypothecation of inventories, Book Debts and commercial vehicles of the company as well as by way of mortgage of some of the property of the company. The Bank is also holding personal guarantee of some of the Directors of the company as well as Corporate Guarantee of other group Companies.

6. Unsecured Loan taken from Related Parties at the rate of Interest of 9% per annum.

7. Working Capital Loans from bank includes Rs 1467.04 Lac against Cash Credit Limit and Rs. 2000.00 Lac against Export Packing Credit Limit from Punjab and Sind Bank has been slipped to Non Performing Assets with effect from 31-03-2012. The company has also defaulted in interest payable on said loan amounting to Rs 47359660/- for the period from 01/04/2013 to 31/03/2014.

8. Capital Work in Progress

The company has incurred expenditure for site development in respect of various plots acquired during the year 2013- 2014. Pending completion of work the amount is shown under Capital Work in Progress. Final allocation of the same to the respective plots will be done on completion of the work as tangible assets and amount Rs.19,92,421/- is still pend- ing as WIP.

9. The company has provided Unsecured Loan to Gateway Commodities(P) Ltd. during the year and yearend balance is Rs.6,44,54,127/- (Previous year Rs. 8,74,29,414/-). The said loan carry interest @ 14% p.a.

10. Short Term Loans & Advances includes Rs. 14,891,385 /-(P.Y. Rs. 1,00,10,392/-) being advance tax refundable under Income Tax Act,1961 in respect of various years withheld by authorities in respect of disputed tax demands for which appeals are pending before various authorities. The company is confident of favorable disposal of the same and hence no provision is considered necessary in respect thereof.

11. Contingent liabilities not provided for

Particulars 2013-14 2012-13

Corporate Bank Guarantee 318,00,00,000 318,00,00,000 Claims against the Company not acknowledged as

debts (including MACT claims aggregating to Rs.3,49,00,258/- for 4,01,51,518 4,01,51,518 which the Company holds adequate Insurance)

Disputed Direct and Indirect Taxes for which appealsare pending 58,65,398 1,00,89,146 at different forums

Suit filed by The New India Insurance Co Ltd to recover amount 2,12,87,770 2,12,87,770 under The Carries Act

Service tax on Rental Income (the matter is Sub- Judice in NIL 26,34,837 Hon''ble High Court, New Delhi)

TOTAL CONTINGENT LIABILITY 3,24,73,04,686 3,25,41,63,271

12. The company has provided Corporate Bank Guarantee to UCO Bank in respect of Credit Facilities enjoyed by Fairdeal Supplies Ltd. In respect of such guarantee, company has given some of its Fixed Assets as Collateral Securities. Details of such Fixed Assets have been given in Note No 10.2. UCO Bank has issued demand notice dated 05-08-2012 to the borrowers/guarantors/mortgagors to repay the amount mentioned in the notice being Rs 235,94,31,422.65, failing on which the bank has taken Symbolic Possession of the properties in exercise of powers conferred upon them under the SARFAESI Act, 2008.

13. In respect of the corporate guarantee given by the company in respect of Credit facilities of Fairdeal Supplies Ltd (a group company) by UCO Bank, Government approval has not been obtained in terms of Section 295 of The Companies Act, 1956.

14. Related Party disclosures under Accounting Standard 18

1 Party where control exists Nil

2 Other related parties with whom transactions have taken place during the year

Joint Venture Company Nil Associates Fair deal Supplies Limited Falgun Export Pvt. Limited Centre for Advanced studies in Engineering Fair Chemical & Marketing Prima Financial Services Ltd. Fair deal (partnership firm) Frontline Industries Limited Jhunjhunwala Charitable Trust Scientific Weigh Bridge & Auto parts(partnership firm)

3 Key Management Personnel & their relatives:

Pawankumar Agrawal Narayanprasad Agrawal Saurabh Jhunjhunwala Ramprasad Agrawal Baijnath Agrawal & Sons H.U.F. Bhagwani Devi Agrawal Gaurav Jhunjhunwala Hansa Agrawal Shraddha Jhunjhunwala Raja Jhunjhunwala Mukund Jhunjhunwala Narayanprasad Agrawal & sons H.U.F. Ramprasad Agrawal &sons H.U.F. Renudevi Jhunjhunwala Rewadevi Jhunjhunwala Shilpi Jhunjhunwala Kritin Jhunjhunwala Venya Jhunjhunwala

15. The Figures in Italics indicate Previous Years Figure.

16. The company has disclosed business segments as the primary segments which have been identified taking into account the nature of the activities ( i.e. Wind Energy, Trading & Transportation, Renting of Immovable property) the differing risk & returns the organization structure and internal reporting System. The Company''s operation predominantly relate to Bulk Transportation of Goods & Trading in Automotive Parts.

17. The Company''s business relates to the domestic market.

18. Segment revenue, segment results, segment assets, and segment liabilities include the respective amount identifiable to each of the segment.

19. The company has disclosed business segments as the primary segments which have been identified taking into account the nature of the activities ( i.e. Wind Energy, Trading & Transportation, Renting of Immovable property) the differing risk & returns the organization structure and internal reporting System. The Company''s operation predominantly relate to Bulk Transportation of Goods & Trading in Automotive Parts.

20. The Company''s business relates to the domestic market.

21. Segment revenue, segment results, segment assets, and segment liabilities include the respective amount identifiable to each of the segment.

---

Mar 31, 2013

1.1 Accounting for employee benefits:

A. Post Retirement Benefits:

(a) Defined Contribution Plan

As per applicable laws the eligible employees of the company are entitled to receive benefits under the provident fund, a defined contribution plan, in which both employees and company make monthly contribution at specified percentage of the covered employee salary. The contributions as specified under the law are paid to the respective provident fund authorities as specified by law as per the scheme framed under the governing laws.

(b) Defined Benefit Plan

The company has not formulated any specific terms of employment providing for specific requirement benefits. However as per applicable laws, the company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees at retirement, death/disablement while in employment or termination of employment, of an amount equivalent to 15 days salary with reference to the number of completed year of service and last drawn salary. The Company has taken a Group Gratuity Scheme with Life Insurance Corporation of India covering all eligible employees. The liability in respect of Gratuity is recognised in accordance with Project Unit Credit Method.

B. Other Employee Benefits: Short Term Benefits

Short term employee benefits are recognized as an expense at the undiscounted amount in profit & Loss Account of the year in which related service is rendered.

1.2 Taxes on Income:

(a) Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the income tax act, 1961.

Deferred tax is recognized, subject to consideration of prudence, on timing differences, being the difference between taxable incomes and accounting incomes that originate in one period and is capable of reversal in one or more subsequent periods.

(b) Deferred tax is measured based on the tax rate and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets are recognized only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against such deferred tax assets can be realised.

1.3 Cash & Cash Equivalents:

Cash and cash equivalents for the purpose of cash flow statement comprise of cash at bank and in hand and short term investments/bank deposits with an original maturity of three months or less.

1.4 Provision:

A provision is recognised when the Company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their present value and are determined based on the best estimates required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

1.5 Contingent Liabilities:

Contingent liabilities exist and are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of company, unless the possibility of an outflow is remote. A present obliga- tion that arises from past events where it is either not probable that an outflow of resources will be required or a reliable estimate of the amount cannot be made is termed as contingent liability.

1.6 Inter-divisional Transfers:

Inter-divisional transfers of goods for internal use as captive consumption are shown as contra items in the Profit & Loss Account to reflect the true economic value of the production inter-se the divisions. This accounting treatment has no impact on the profit of the Company.

1.7 Terms/Rights attached to Equity Shares

The Company has only one class of Equity Shares having Par Value of Rs 10/- per Share. Each holder of Equity Share is entitled to one vote per share.

1.8 Calls in Arrear are pending for Rs 51- per share on 45,100 Equity Shares.

1.9 In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders. The holders of Partly Paid Equity Shares will have to contribute unpaid amount on the the Equity Shares held by them.

Term Loan (Secured) from Bank of Baroda secured against Hypothecation of 2 Wind Mill of the Company and further secured by way of equitable mortgage of some of property of the company and personal guarantee of some of directors of the company. The term loan carries interest rate @ 16.50% p.a. and The Loan is repayable in 36 Monthly Installment of Rs. 5,10,773/- each excluding interest.

Term Loan from Punjab and Sind Bank is secured by way assignment of lease rentals and equitable mortgage of some of property of company. The Term Loan carries interest rate @ 13.75% p.a. and The loan is repayable in 84 Equal monthly installment of Rs. 1061712/-. (Current Year - Balance Outstanding - NIL)

Term Loans -others @ 12% p.a. rate of interest and secured by the Hypothecation of Specified vehicles Financed by the lenders to the company and also by personal guarantee of some of the Directors of the Company. The Loan is repayable in 35 Equal monthly installment of Rs.2,25,003 /-.

Unsecured Loans varying @ 0 to 9% p.a. rate of interest. The terms of repayment not specified for Unsecured Loan from Body Corporate, Related Parties, Others and Directors. However the same are not repayable in within one year.

1.10 Working Capital Facilities are secured by hypothecation of inventories, Book Debts and commercial vehicles of the company as well as by way of mortgage of some of the property of the company. The Bank is also holding personal guarantee of some of the Directors of the company as well as Corporate Guarantee of other group Companies.

1.11 Working Capital Loans from Banks includes Rs 1467.04 Lac against Cash Credit Limit and Rs 2000.00 Lac against Export Packing Credit Limit from Punjab and Sind Bank has been slipped to Non Performing Assets with effect from 31- 03-2012. The company has also defaulted in Interest Payable on said loan amounting to Rs 5,38,03,295/- for the period from 01/04/2012 to 31/03/2013.

1.12 Capital Work in Progress

The company has incurred expenditure for site development in respect of various plots acquired during the year 2012- 2013. Pending completion of work the amount is shown under Capital Work in Progress. Final allocation of the same to the respective plots will be done on completion of the work as tangible assets and amount Rs. 19,59,820/- is still pending as WIP.

1.13 Following properties has been given as Collateral Securities to UCO Bank in respect of various credit facilities enjoyed by Fairdeal Supplies Ltd a group company and these properties have been symbolically possessed by the UCO Bank. Please refer the details in Note No. 32 in Notes on Accounts:-

1.14 Investment in Immovable Properties includes property situated at 8, OCH Street, Kolkata of Rs 671.11 Lacs is given to Punjab and Sind Bank as collateral security to secure various credit facilities enjoyed by the company. Physical Possession of said property is taken by bank. The bank is under process of auction of said properties. However the company has protested the contention in case filed by the Bank in Debt Recovery Tribunal Kolkata.

Provisions for claims are made based on deductions made for thefts and shortages by various clients. The Final Amounts of deductions will be settled only after completion of counter claims and other legal proceedings. However, based on the information available with company and past empirical experience, necessary provision has been made as per the best judgment.

1.15 The management is rigorously pursuing the recovery against doubtful debts and advances and is hopeful of recovery. Provision is made to the extent considered necessary in accordance with the principal of prudence and conservatism.

1.15 The company has provided Unsecured Loan to Gateway Commodities(P) Ltd. during the year and yearend balance is Rs.8,74,29,414/- (Previous year Rs. 9,02,37,555/-). The said loan carry interest @ 14% p.a.

1.16 Short Term Loans & Advances includes Rs.1,00,10,392/-(P.Y. Rs. 56,43,438/-) being advance tax refundable under Income Tax Act,1961 in respect of various years withheld by authorities in respect of disputed tax demands for which appeals are pending before various authorities. The company is confident of favorable disposal of the same and hence no provision is considered necessary in respect thereof.

1.17 The company has provided Corporate Bank Guarantee to UCO Bank in respect of Credit Facilities enjoyed by Fairdeal Supplies Ltd. In respect of such guarantee, company has given some of its Fixed Assets as Collateral Securities. Details of such Fixed Assets have been given in Note No 10.2. UCO Bank has issued demand notice dated 05-08-2012 to the borrowers/guarantors/mortgagors to repay the amount mentioned in the notice being Rs 235,94,31,422.65, failing on which the bank has taken Symbolic Possession of the properties in exercise of powers conferred upon them under the SARFAESI Act, 2008.

1.18 In respect of the corporate guarantee given by the company in respect of Credit facilities of Fairdeal Supplies Ltd (a group company) by UCO Bank, Government approval has not been obtained in terms of Section 295 of The Companies Act, 1956.

---

Mar 31, 2011

1. Previous year's figures have been re-grouped and rearranged wherever necessary.

2. In the opinion of the Board of Directors, the current assets, loans and advances are approximately of the value stated, if realized in the ordinary course of business except doubtful debts & advances. All known and ascertainable liabilities have been accounted for in full, in the books of accounts except those stated otherwise. All material accounts in respect of debtors, creditors, loans and advances etc. have been confirmed directly or indirectly. However, in some cases confirmations are pending but the amounts thereof are not material and consequent adjustments, if any required, will be carried out as and when such confirmations are received.

3. The Company has requested its suppliers for furnishing information about their SSI status. Prima-facie, there is no outstanding dues to any SSI Unit. However, authentic information about such dues can be furnished only upon receipt of information from respective SSI Units, if any.

4. Capital Work in Progress

The company has incurred expenditure for site development in respect of various plots acquired during the year 2010-11. Pending completion of work the amount is shown under Capital Work in progress. Final allocation of the same to the respective plots will be done on completion of work as capitalised and amount Rs.15,98,860/ still pending as WIP.

5. The company has provided Unsecured Loan to Gateway Commodities(P) Ltd. during the year and year end balance is Rs.8,07,57,806/- 7. The management is rigorously pursuing the recovery against doubtful debts and advances and is hopeful of

recovery. Provision is made to the extent considered necessary in accordance with the principal of prudence and conservatism.

6. Fixed Deposits of Rs. 82,18,227/- are pledged with bank for various facilities.

7. Advances Recoverable in cash or in kind under the head Current Assets includes Rs.51,15,594/- (P.Y. Rs. 87,47,890) being advance tax refundable under Income Tax Act,1961 in respect of various years with held by authorities in respect of disputed tax demands for which appeals are pending before various authorities. The company is confident of favourable disposal of the same and hence no provision is considered necessary in respect thereof.

C. ADDITIONAL INFORMATION PURSUANT TO THE PROVISIONS OF PARAGRAPH 3 AND 4 OF PART-II OF SCHEDULE VI TO THE COMPANIES ACT 1956 (AS AMENDED) (TO THE EXTENT APPLICABLE)

1 None of the Employees of the Company was in receipt of Salary exceeding Rs.200,000/- per month (Previous Year Rs. 2,00,000/-) for either part or full year.

2 Quantitative information of Licensed and Installed capacity, production, purchases, Raw Material Consumed and sales and stock of each class of goods manufactured / traded:

D. Additional Disclosures as required under applicable Accounting Standards (to the extent applicable) 1 Contingent liabilities not provided for:

Particulars 2010-11 2009-10

Bank Guarantees Issued 10,30,00,000 60,50,000

Claims against the Company not acknowledged as debts (including MACT claims aggregating to Rs.3,49,00,258/- for which the Company holds adequate Insurance) 4,01,51,518 4,01,51,518

Disputed Direct and Indirect Taxes for which appeals are pending at different forums 51,15,594 87,47,890

Sult filed by The New India Insurance Co. Ltd. to recover amount under The Carriers Act 2,12,87,770 2,12,87,770

LC discounted with bank (Sino Steel Holding Pvt. Ltd.) - 12,51,93,576

Advance on purchase of Land 22,00,000 10,38,000

Service tax on Rental Income 26,34,837 22,04,241

TOTAL CONTINGENT LIABILITY 17,48,89,719 20,46,72,995

Note : Provisions for claims are made based on deductions made for thefts and shortages by various clients. The Final Amounts of deductions will be settled only after completion of counter claims and other legal proceedings. However, based on the information available with company and past empirical experience, necessary provision has been made as per the best judgement.

---

Mar 31, 2010

1. Previous years figures have been re-grouped and rearranged wherever necessary.

2. In the opinion of the Board of Directors, the current assets, loans and advances are approximately of the value stated, if realized in the ordinary course of business except doubtful debts & advances. All known and ascertainable liabilities have been accounted for in full, in the books of accounts except those stated otherwise. All material accounts in respect of debtors, creditors, loans and advances etc. have been confirmed directly or indirectly. However, in some cases confirmations are pending but the amounts thereof are not material and consequent adjustments, if any required, will be carried out as and when such confirmations are received.

3. The Company has requested its suppliers for furnishing information about their SSI status. Prima-facie, there is no outstanding dues to any SSI Unit. However, authentic information about such dues can be furnished only upon receipt of information from respective SSI Units, if any.

4. The management is rigorously pursuing the recovery against doubtful debts and advances and is hopeful of recovery. Provision is made to the extent considered necessary in accordance with the principal of prudence and conservatism.

5. Fixed Deposits of Rs. 10,38,208/- are pledged with bank for various facilities.

6. Advances Recoverable in cash or in kind under the head Current Assets includes Rs.87,47,890/- (P.Y.Rs. 92,50,310) being advance tax refundable under Income Tax Act,1961 in respect of various years withheld by authorities in respect of disputed tax demands for which appeals are pending before various authorities. The company is confident of favourable disposal of the same and hence no provision is considered necessary in respect thereof.

7. The company had received Rs.23,68,278/- towards arrear rent for the period from October 2003 to March 2009 from the property letout to Punjab & Sindh Bank through mutual settlement. Out of total arrear rent, rent received Rs.5,94,633/- belongs to the period prior to acquisition of the property, therefore the said amount has been reduced to the cost of property and remaining balance Rs. 17,73,645/- has been treated as Rental Income from the Let out Property during the financial year 2009-10.

C. ADDITIONAL INFORMATION PURSUANT TO THE PROVISIONS OF PARAGRAPH 3 AND 4 OF PART-H OF

SCHEDULE VI TO THE COMPANIES ACT 1956 (AS AMENDED) (TO THE EXTENT APPLICABLE)

1 None of the Employees of the Company was in receipt of Salary exceeding Rs.200,000/- per month (Previous Year Rs. 200,000/-) for either part or full year.

D. Additional Disclosures as required under applicable Accounting Standards (to the extent applicable) 1 Contingent liabilities not provided for:

Particulars 2009-10 2008-09

Bank Guarantees Issued 60,50,000 84.13.30.000

Claims against the Company not acknowledged as debts (including MACT claims aggregating to Rs.3,49,00,258/- for which the Company holds adequate Insurance) 4,01,51,518 4,01,51,518

Disputed Direct and Indirect Taxes for which appeals are pending at different forums 87,47,890 93,10.310

Suit filed by The New India Insurance Co. Ltd. to recover amount under The Carriers Act 2,12,87,770 NIL

LC discounted with bank (Sino Steel Holding Pte. Ltd.) 12,51,93,576 NIL

Advance on purchase of Land 10,38,000 6,09.180

TOTAL CONTINGENT LIABILITY 20,24,68,754 89,14,01,008

5 Related Party disclosures under Accounting Standard 18

1 Party where control exists Nil

2 Other related parties with whom transactions have taken place during the year

Joint Venture Company Nil

Associates Fairdeal Supplies Limited

Falgun Export Pvt. Limited Centre for Advanced studies in Engineering Nova Impex Private Limited Fair Chemical & Marketing Prima Financial Services Ltd. Fair deal (partnership firm) Deepak Road Carriers (Proprietorship Concern) Kajal Trading Company Neha Trades & Finance Pvt. Ltd. Falgun Financial Services Limited Frontline Industries Limited Jhunjhunwala Charitable Trust

Scientific Weigh Bridge & Auto Parts (Partnership Firm) Shiv Shakti Steel Pvt. Ltd.

3 Key Management Personnel & their relatives:

Pawankumar Agrawal

Narayanprasad Agrawal

Saurabh Jhunjhunwala

Ramprasad Agrawal

Baijnath Agrawal & Sons H.U.F.

Bhagwani Devi Agrawal

Gaurav Jhunjhunwala

Hansa Agrawal

Shraddha Jhunjhunwala

Raja Jhunjhunwala

Mukund Jhunjhunwala

Narayanprasad Agrawal & Sons H.U.F.

Ramprasad Agrawal & Sons H.U.F.

Renudevi Jhunjhunwala

Rewadevi Jhunjhunwala

Shilpi Jhunjhunwala

Kritin Jhunjhunwala

Venya Jhunjhunwala