Notes to Accounts of Murudeshwar Ceramics Ltd.

Mar 31, 2018

Note : 1 Corporate Information :

Murudeshwar Ceramics Limited (the Company) was established during the year 1983. The Company is manufacturing Ceramic and Vitrified Tiles. The Registered Office of the Company is at 604/B, Murudeshwar Bhavan, Gokul Road, Hubli - 580 030 and the Corporate Office is at Naveen Complex, 7th Floor, 14, M.G.Road, Bengaluru - 560 001. The Company is having 2 manufacturing plants at Sira, Dist. Tumkur and Karaikal, Pondicherry. The Company started trading activities for outsourcing of Vitrified Tiles and Ceramic Tiles. The Company''s products are branded as “Naveen Ceramic Tiles” and “Naveen Diamontile”. The Company is having well established marketing network all over the country.

Note : 2 Notes on IND AS Adjustments

a) Under Ind AS, all items of income and expense recognized in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognized in profit or loss but are shown in the statement of profit and loss as ‘other comprehensive income'' includes re-measurement of defined benefit plans the concept of other comprehensive income did not exist under previous GAAP.

b) The Company has valued financial assets/liabilities at fair value which hitherto were accounted for at cost. Impact of fair value changes as on the date of transition, is recognized in opening reserves and changes thereafter are recognized in Statement of Profit and Loss.

c) Under Ind AS, re-measurement of net defined benefit liabilities i.e., actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognized in other comprehensive income instead of statement of profit or loss. Under the previous gAaP, this re-measurement was forming part of the profit or loss for the year.

d) Ind AS 109 requires transaction costs incurred towards origination of borrowings to be deducted from the carrying amount of borrowings on initial recognition. These costs are recognized in the profit or loss over the tenure of the borrowing as part of the interest expense by applying the effective interest rate method. .

The following reconciliations provide quantifications of the effect of significant differences arising as a result of transition from Previous GAAP (IgGaP) to IND AS in accordance with IND AS 101.

(a) Balance Sheet as at 1st April, 2016 (Transition date);

(b) Other Equity as at 1st April, 2016 (Transition date);

(c) Balance Sheet as at 31st March, 2017;

(d) Other Equity as at 31st April, 2017; and

(e) Statement of Profit and Loss for the year ended 31st March, 2017; and

(f) Summary of reconciliation of movement in profit and loss on transition to IND AS for year ended March 31, 2017.

The Company has elected to use fair value of its total assets in its Opening Ind AS Balance Sheet (as at April 01 2016) as deemed cost. Accordingly, the Assets are carried at fair value of Rs.27,820.43 lakhs, Carrying amount reported under previous GAAP was Rs.27,753.99 lakhs. The difference between the fair value and carrying amount reported under previous GAAP of Rs.66.44 lakhs has been taken to Retained Earnings as at April 01, 2016 (Transition Date).

The fair value of the above mentioned assets as at April 01, 2016 has been arrived at, on the basis of a valuation carried out as at March 31, 2016 by Mr. Mohan R Chabbi, Chartered Engineer registered with the Institution of Engineers (India), having appropriate qualification and experience in the valuation of Property, Plant and Equipment after considering various factors like present market price, replacement cost, technical depreciation and obsolescence factors and residual life of assets.

For the land, the fair value was derived using the market approach considering the prevailing market rate in the vicinity of the subject land parcel and also considering available details of recent transactions of similar land parcels adjusted for factors such as negotiation margin, land use, road location etc.

The Term Loans from Banks are repayable in quarterly instalments. Interest is payable on monthly basis. The Term Loans from Banks, namely Canara Bank and Indian Bank are secured by first charge created/to be created on the immovable / Fixed Assets of the Company, and by charges on the other movables including machinery, Spares, Tools, accessories and movable plant and machinery both present and future, save and except book debts and other Deferred Payment Guarantee equipments, assets hypothecated to concerned institutions / Bankers against specific finance for the same. The said charge on the movable properties of the Company in favour of these Bankers is subject to prior charges created in favour of Company''s Bankers for working capital requirements. Loans from ICICI Bank Ltd., Kotak Mahindra Ltd., Oriental Bank of Commerce, The Daimler Financial Services and Sundaram Finance Limited for specific assets are secure against hypothecation of specific items of assets financed for. Loan from LIC of India is against pledge of Key-Man Policy. All the secured and unsecured loans other than public deposits have been further secured by way of Personal Guarantees by Promoter Directors of the Company to the extent applicable. The Term Loan from Indiabulls is secured by way of Mortgage of Title Deeds of specific assets.

The Cash Credit and other working capital facilities from the consortium of Bankers namely, Canara Bank, State Bank of India, Bank of Baroda, The Lakshmi Vilas Bank Ltd., Oriental Bank of Commerce and Axis Bank are secured by way of hypothecation of Raw materials, Stock in Process, Finished Goods, Book Debts and Goods meant for export on pari-passu basis and further secured by way of second & subsequent charge on the whole of the immovable / Fixed Assets of the Company. These borrowings are further secured by way of Personal Guarantees by Promoter Directors of the Company to the extent applicable.

Note : 3 Disclosures under Accounting Standards

3.1 Employee benefit plans

3.1.a DEFINED CONTRIBUTION PLANS

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits.The Company recognised Rs.40.58 lakhs (Year ended 31st March, 2017 Rs.38.58 lakhs) for Provident Fund contributions and Rs.13.35 lakhs (Year ended 31st March, 2017 Rs.8.64 lakhs) for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of schemes.

3.1.b DEFINED BENEFIT PLANS

The Company offers the following employee benefit schemes to its employees :

i. Gratuity : The following tables sets out the funded status of the defined benefit schemes and the amount recognised in the financial statements :

4.1 Segment information

The Company has identified business segments as its primary segment and geographic segments as its secondary segment. Business segments are primarily Ceramic Tiles and Vitrified Tiles. Revenues and expenses directly attributable to segments are reported under each reportable segment. Expenses which are not directly identifiable to each reportable segment have been allocated on the basis of associated revenues of the segment and manpower efforts. All other expenses which are not attributable or allocable to segments have been disclosed as unallocable expenses. Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as unallocable. Fixed assets that are used interchangeably amongst segments are not allocated to primary and secondary segments. Geographical revenues are allocated based on the location of the customer. Geographic segments of the Company are Americas (including Canada) and South American countries, Europe, India and others.

Net deferred tax (liability) / asset

The Company has recognised deferred tax asset on unabsorbed depreciation to the extent of the corresponding deferred tax liability on the difference between the book balance and the written down value of fixed assets under Income Tax.

Effect of IND AS adoption on Standalone Statement of Profit and Loss for year ending 31.03.2017.

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Mar 31, 2016

1 Employee benefit plans

a DEFINED CONTRIBUTION PLANS

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized Rs.39.92 lacs (Year ended 31st March, 2015 Rs.31.71 lacs) for Provident Fund contributions and ''8.64 lacs (Year ended 31st March, 2015 Rs.7.54 lacs) for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of schemes.

b DEFINED BENEFIT PLANS

The Company offers the following employee benefit schemes to its employees :

i. Gratuity : The following tables sets out the funded status of the defined benefit schemes and the amount recognized in the financial statements :

2. Segment information

The Company has identified business segments as its primary segment and geographic segments as its secondary segment. Business segments are primarily Ceramic Tiles and Vitrified Tiles. Revenues and expenses directly attributable to segments are reported under each reportable segment. Expenses which are not directly identifiable to each reportable segment have been allocated on the basis of associated revenues of the segment and manpower efforts. All other expenses which are not attributable or allocable to segments have been disclosed as unallocable expenses. Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as unallocable. Fixed assets that are used interchangeably amongst segments are not allocated to primary and secondary segments. Geographical revenues are allocated based on the location of the customer. Geographic segments of the Company are Americas (including Canada) and South American countries, Europe, India and others.

Note 3 Previous Year''s Figures

Previous year’s figures have been regrouped / reclassified wherever necessary to correspond with the current year’s classification / disclosure.

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Mar 31, 2015

Note : 1 Corporate Information :

Murudeshwar Ceramics Limited (the Company) was established during the year 1983. The Company is manufacturing Ceramic and Vitrified Tiles. The registered office of the Company is at 604/B, Murudeshwar Bhavan, Gokul Road, Hubli - 580 030 and the Corporate Office is at Naveen Complex, 7th Floor, 14, M.G.Road, Bengaluru - 560 001. The Company is having 2 manufacturing plants at Krishnapur Village, Hubli and Karaikal, Pondicherry. The Company started Trading activities for outsourcing of Vitrified Tiles and Ceramic Tiles. The Company''s products are branded as "Naveen Ceramic Tiles" and "Naveen Diamontile". The Company is having well established marketing network all over the country.

2.1 Contingent liabilities and commitments As at 31st As at 31st (to the extent not pr0vided f0r) March 2015 March 2014

(i) Contingent liabilities

(a) Guarantees 436.01 476.01

(b) Letters of Credit established with Banks 2,549.17 1,126.18

(ii) Commitments

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for Tangible assets - 98.46

Note 3 Disclosures under Accounting Standards 28.1 Employee benefit plans

3.1. a DEFINED CONTRIBUTION PLANS

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits.The Company recognised Rs.31.71 lacs (Year ended 31st March, 2014 Rs.27.44 lacs) for Provident Fund contributions and Rs.7.54 lacs (Year ended 31st March, 2014 Rs.8.97 lacs) for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of schemes.

4.1. b DEFINED BENEFIT PLANS

The Company offers the following employee benefit schemes to its employees :

i. Gratuity : The following tables sets out the funded status of the defined benefit schemes and the amount recognised in the financial statements :

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Mar 31, 2014

Particulars As at As at

1.1 Contingent liabilities and commitments (to the extent 31st March 31st March not provided for) 2014 2013

(i) Contingent liabilities Rsin Lacs Rsin Lacs

(a) Guarantees 476.01 232.41

(b) Letters of Credit established with Banks 1,126.18 1,540.77 (ii) Commitments

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for Tangible assets 98.46 2.56

1.2 Details of unutilised amounts out of issue of securities made for specific purpose The Company had issued securities (Equity Share and Share Warrants) amounting to Rs. Nil for purposes of clearing high cost debt and working capital needs of the Company.

1.3 Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006

Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management. This has been relied upon by the auditors.

1.4 Disclosure as per Clause 32 of the Listing Agreements with the Stock Exchanges

Loans and advances in the nature of loans given to subsidiaries, associates and others and investment in shares of the Company by such parties:

Note : Figures / percentages in brackets relates to the previous year.

Note 2 Disclosures under Accounting Standards

2.1 Employee benefit plans

2.1.a DEFINED CONTRIBUTION PLANS

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits.The Company recognised Rs.27.44 lacs(Year ended 31st March, 2013 Rs.30.45 lacs) for Provident Fund contributions and Rs.8.97 lacs (Year ended 31st March, 2013 Rs.8.36 lacs) for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of schemes.

2.1.b DEFINED BENEFIT PLANS

The Company offers the following employee benefit schemes to its employees :

i. Gratuity : The following tables sets out the funded status of the defined benefit schemes and the amount recognised in the financial statements :

Note Particulars

2.2 Related party transactions Details of related parties:

Description of relationship

Associates RNS Infrastructure Ltd

Murdeshwar Power Corporation Ltd. Naveen Hotels Ltd RNS Motors Ltd R N Shetty Trust R N S Trust

Key Management Personnel (KMP) Dr. R N Shetty Shri Satish R Shetty Shri Sunil R Shetty Shri Naveen R Shetty

Key Management Personnel / Shri Satish R Shetty, Shri Sunil Relatives of Key R Shetty and Management Personnel Shri Naveen R Shetty are sons of Dr. R N Shetty Company in which KMP / Above mentioned Associate Relatives of KMP can Companies exercise significant influence

Note : Related parties have been identified by the Management.

Note 3 Previous Year''s Figures

3.1 The revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.

NOTES TO THE CASH FLOW STATEMENT CASH AND CASH EQUIVALENT :

Cash and cash equivalents consists of cash on hand and balances with Banks and Investments in money market instruments. Cash and cash equivalents in the cash flow statement comprise the following Balance Sheet amounts.

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Mar 31, 2013

Note : 1 Corporate Information :

Murudeshwar Ceramics Limited (the Company) was established during the year 1983. The Company is manufacturing Ceramic and Vitrified Tiles. The registered office of the Company is at 604/B, Murudeshwar Bhavan, Gokul Road, Hubli - 580 030 and the Corporate Office is at Naveen Complex, 7th Floor, 14, M.G. Road, Bangalore - 560 001. The Company is having 2 manufacturing plants at Krishnapur Village, Hubli and Karaikal, Pondicherry. The Company started Trading activities for outsourcing of Vitrified Tiles and Ceramic Tiles. The Company''s products are branded as ''Naveen Ceramic Tiles'' and ''Naveen Diamontile''. The Company is having well established marketing network all over the country.

2.1 Monies received against share warrants

As approved by the shareholder at the Extra Ordinary General Meeting held on March 14, 2012, the Board of Directors at their meeting held on March 21, 2012 alloted 39,70,000 Convertible Share Warrants at a price of Rs.17/- per Convertible Share Warrants in accordance with SEBI Guidelines at Murdeshwar Power Corporation Ltd. 25% price of convertible Share Warrants which amounts to Rs.1,68,72,500/- was received by them. On 19.03.2013, Murdeshwar Power Corporation Limited converted its first trenche of 19,35,000 Convertible Share Warrants into 19,35,000 Equity shares by paying the balance 75% amount to Rs..2,46,71,250/-. The remaining Convertible Share warrants may be converted into equivalent number of shares on payment of the balance amount at any time on or before eighteen months from the date of issue of warrant. In the remaining Convertible Share warrants are not converted into shares within the said period, the Company is eligible to forfeit the amount received towards the warrants.

2.2 Details of unutilised amounts out of issue of securities made for specific purpose

The Company had issued securities (Equity Share and Share Warrants) amounting to Rs. Nil for purposes of clearing high cost debt and working capital needs of the Company.

3.1 Employee benefit plans

3.1.a DEFINED CONTRIBUTION PLANS

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits.The Company recognised Rs.30.45 lacs(Year ended 31st March, 2012 Rs.39.41 lacs) for Provident Fund contributions and Rs.8.36 lacs (Year ended 31st March, 2012 Rs.8.72 lacs) for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of schemes.

3.1.b DEFINED BENEFIT PLANS

The Company offers the following employee benefit schemes to its employees :

i. Gratuity : The following tables sets out the funded status of the defined benefit schemes and the amount recognised in the financial statements :

4 The revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.

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Mar 31, 2012

Note : 1 Corporate Information :

Murudeshwar Ceramics Limited (the Company) was established during the year 1983. The Company is manufacturing Ceramic and Vitrified Tiles. The registered office of the Company is at 604/B, Murudeshwar Bhavan, Gokul Road, Hubli - 580 030 and the Corporate Office is at Naveen Complex, 7th Floor, 14, M.G. Road, Bangalore - 560 001. The Company is having 2 manufacturing plants at Krishnapur Village, Hubli and Karaikal, Pondicherry. The Company started Trading activities for outsourcing of Vitrified Tiles and Ceramic Tiles.The Company's products are branded as 'Naveen Ceramic Tiles' and 'Naveen Diamontile'. The Company is having well established marketing network all over the country.

2.1 Monies received against share warrants

As approved by the shareholder at the Extra Ordinary General Meeting held on March 14, 2012, the Board of Directors at their meeting held on March 21, 2012 alloted 18,40,000 Equity Shares & 39,70,000 Convertible Share Warrants at a price of Rs.17/- per Equity Share & per Convertible Share Warrants in accordance with SEBI Guidelines to Murdeshwar Power Corporation Ltd. 25% Price of convertible Share Warrants which amounts to Rs. 1,68,72,500/- was received by them. The warrants may be converted into equivalent number of shares on payment of the balance amount at any time on or before eighteen months from the date of issue of warrant. In the event the warrants are not converted into shares within the said period, the Company is eligible to forfeit the amounts received towards the warrants.

As at As at

31st March 31st March

2012 2011 (Rs. in Lacs) (Rs. in Lacs)

2.2 Contingent liabilities and commitments (to the extentnot provided for)

(i) Contingent liabilities

(a) Claims against the Company not acknowledged

as debt (give details) - -

(b) Guarantees 255.90 239.88

(c) Letters of Credit established with Banks 1,272.07 1,794.43

(ii) Commitments

(a) Estimated amount of contracts remaining to be executedon capital account and not provided for Tangible assets 25.22 33.60

2.3 Details of unutilized amounts out of issue of securities made for specific purpose

The Company had issued securities (Equity Share and Share Warrants) amounting to Rs. 4,81,52,500 for purposes clearing high cost debt and working capital needs of the Company.

3.1 Employee benefit plans

3.1.a DEFINED CONTRIBUTION PLANS

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs. 39.41 lacs (Year ended 31 March, 2011 Rs. 38.19 lacs) for Provident Fund contributions and Rs. 8.72 lacs (Year ended 31 March, 2011 Rs. 8.13 lacs) for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

3.1.b DEFINED BENEFIT PLANS

The Company offers the following employee benefit schemes to its employees :

i. Gratuity : The following table sets out the funded status of the defined benefit schemes and the amount recognised in the financial statements :

3.2 Segment information

The Company has identified business segments as its primary segment and geographic segments as its secondary segment. Business segments are primarily Ceramic Tiles and Vitrified Tiles. Revenues and expenses directly attributable to segments are reported under each reportable segment. Expenses which are not directly identifiable to each reportable segment have been allocated on the basis of associated revenues of the segment and manpower efforts. All other expenses which are not attributable or allocable to segments have been disclosed as unallocable expenses. Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as unallocable. Fixed assets that are used interchangeably amongst segments are not allocated to primary and secondary segments. Geographical revenues are allocated based on the location of the customer. Geographic segments of the Company are Americas (including Canada and South American countries), Europe, India and others.

4 The revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.

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Mar 31, 2010

1. The Term Loans from Banks namely Canara Bank, Bank of Baroda, State Bank of India, The Lakshmi Vilas Bank Ltd., Axis Bank and Indian Bank are secured by first charge created / to be created on the immovable / Fixed Assets of the Company, and by charge on other movables including machinery spares, tools, accessories and movable plant and machinery both present and future, save and except book debts and other Deferred Payment Guarantee equipments, assets hypothecated to concerned institutions / Bankers against specific finance for the same. The said charge on the movable properties of the Company in favour of these Bankers is subject to prior charges created in favour of Companys Bankers for working capital requirements.

2. (a) The Cash Credit and other working capital facilities (including adhoc limits) from the consortium of Bankers namely, Canara Bank, Bank of Baroda, State Bank of India, The Lakshmi Vilas Bank Ltd., and Axis Bank are also secured by way of hypothecation of raw materials, stock in process, finished goods, book debts and goods meant for export on pari-passu basis and further secured by way of second & subsequent charge on the whole of the immovable / Fixed Assets of the Company.

(b) The Working Capital facilities (including Cash Credit) availed from HDFC Bank Limited are secured by way of hypothecation of Raw Material, Stock in Process, Finished goods, Book-debts & goods meant for exports. A further security is subject to ceding of second charge on the whole of immovable / Fixed Assets of the company by the consortium of Bankers as mentioned in 2(a) above.

3. Loans from ICICI Bank Ltd., Tata Finance Ltd., Sundaram Finance Ltd., Sheba Properties Ltd., and HDFC Bank Ltd., for specific assets are secured against hypothecation of specific items of assets financed for. Loan from Life Insurance Corporation of India is against pledge of Key-Man Policy.

4. The term loans availed from State Bank of India and Canara Bank, for specific assets financed for are • secured by way of first charge on such specific assets and a charge on all movable assets subject to charges created / to be created in favour of other Banks / Financial Institutions for Working Capital / Term Loan requirements in the ordinary course of business.

5. All the secured and unsecured loans other than Public Deposits have been further secured by way of Personal Guarantees by Promoter Directors of the Company to the extent applicable.

NOTES ON ACCOUNTS ANNEXED TO AND FORMING PART OF BALANCE SHEET AS ON 31.03.2010 AND THE PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31.03.2010.

1. Figures in parenthesis relate to the previous year.

2. Contingent Liabilities not provided for in respect of:

a) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.43.40 lakhs (Rs.88.08 lakhs)

b) Guarantees given by Banks on behalf of the Company Rs.81.22 lakhs (Rs. 125.96 lakhs)

c) Letters of Credit established with Banks Rs.1,039.72 lakhs (Rs.64.26 lakhs)

6. The Company has provided Depreciation on its Fixed Assets at the Rates prescribed in Schedule XIV of The Companies Act, 1956 as amended on 16.12.1993.

7. No Provision for Tax has been made in view of the losses for the year as per The Income Tax Act, 1961. MAT credit U/s.115 JAA shall be carried forward and set off in the year in which the Company pays tax at normal rates.

8. a) Sundry Creditors include Rs.90.49 lakhs (Rs.45.78 lakhs) due to Small Scale and Ancillary Undertakings.

b) List of Small Scale Industrial Undertakings to whom the Company owes a sum exceeding Rs.1 lakh, which is outstanding for more than 30 days :

01. Ashapura China Clay Company, Bhuj 02. Bharat Minerals, Cuddapah 03. Hari Belts & Conveyors Pvt. Ltd., Bangalore 04. Hi-Tech Ceramics, Jaipur 05. M.S. Traders, Namakkal 06. N R Industries, Belgaum 07. SB International, Coimbatore 08. Shri Abirami Enterprises, Namakkal 09. Yesha Industries, Hubli.

9. Balances of sundry debtors, loans and advances and sundry creditors to the extent unconfirmed as on 31.3.2010 are subject to reconciliation and settlement wherever necessary. Sundry Debtors includes a sum of Rs. 83.40 lacs from Group Companies.

a) M/s. Naveen Hotels Ltd., : Rs. 44.77 lacs b) M/s. R.N.S. Motors : Rs. 8.71 lacs,

c) M/s. R.N. Shetty Trust : Rs. 29.92 lacs

10. Deferred tax liability has been shown net of deferred tax asset. The Company has recognized Deferred tax asset of Bs.29.50 lakhs (Rs.27.48 lakhs) in respect of timing differences as per Accounting Standard - 22 issued by Institute of Chartered Accountants of India.

The Company has recognised Deferred tax asset on the unabsorbed depreciation losses carried forward as per the provisions of the Income Tax Act, 1961. The Management is confident that there will be sufficient profits in future to write off the Deferred tax assets. The future business projections made by the Management and its commitment to the same is the basis to support the recognition of Deferred tax assets.

11. Previous years figures have been regrouped / rearranged wherever necessary to conform to current years classification.