Notes to Accounts of Polygenta Technologies Ltd.

Mar 31, 2016

1. Details of Security.

External Commercial Borrowings:

The secured loan mentioned above is secured by first pari passu charge by way of mortgage of land, buildings and tenements and immovable Plant & Machinery, both present and future at the Company''s works at Nashik, and first pari passu charge by way of hypothecation of the whole of the inventories and other movable assets of the Company including its movable Plant & Machinery, spares, tools and accessories both present and future.

OTHER NOTES

2) During the financial year 2015-16, the Company has implemented various measures to improve the operational and financial performance which have resulted in significant improvement in our product quality and reduced levels of variable as well fixed overheads. Despite overall economy slow down and weakness in the crude oil market, there has been a noticeable improvement in our sales in the branded segment. Our products are now well accepted by a wide range of international brands, which is evident from improved sales in branded segments, and regular additions of new customers/brands to our customer profile. During the second half of the financial year we shifted our focus towards making more of finer denier products which have the potential of realizing higher sales value and margins. With this we expect further improvement in our operations going forward.

The existing Promoters and Lenders of the Company have always been extremely supportive of the Company’s project and with this the Company is quite hopeful of achieving its strategic objective of becoming a leading supplier of 100% recycled content product and being recognized as a preferred supplier.

The parent company (viz. PerPETual Global Technologies Limited (‘PGTL’), in its efforts to support the company, have agreed during quarter ending 31st March, 2016, to not to charge any interest up to 30th June, 2016 on the External Commercial Borrowings that it has made available to the Company. Pursuant to this decision, the total interest of USD 1.26 Million (equivalent toRs, 836.58 Lacs) accrued up to 31st December, 2015, on this facility has been written back in the books of accounts. Out of this, interest amount to USD 0.57 Million (equivalent toRs, 356.22 Lacs) provided up to previous year ended 31st March 2015 has been considered as an exceptional item in the income statement. Balance interest amounting to USD 0.69 Million (equivalent toRs, 480.36 Lacs) provided for the nine months ended 31st December 2015 has been netted off against the interest expense during the year. In addition to this, the Company has also received letter of support from PGTL for financial, technical and administrative support for the forthcoming 12 months.

Based on the above the management has performed impairment test and is of the view that there is no impairment in the value of fixed assets.

Considering what is stated above, the accounts are prepared based on Principle of Going Concern.

3) Exceptional item during the year is reversal of Interest on ECB Loan received from PGTL for the amount ofRs, 83.7 million up to 31st December 2015 (During previous yearRs, 24.0 Million treated as exceptional item for the provision for loss in respect of assets held for disposal), as per amendment agreement signed between both the parties and Interest till the date of 30th June, 2016 waived off by the PGTL.

b) Commitments:

Estimated amounts of contracts remaining to be executed on capital account and not provided for (Net of Advances) is Rs, 38.5 million (previous yearRs,106.8 million).

c) The Company’s pending litigations comprise of claims against the Company and proceedings pending with Tax and other Authorities. The Company has reviewed all its pending litigations and proceedings and has

made adequate provisions, wherever required and disclosed the contingent liabilities, wherever applicable, in its financial statements. The Interest on contingent liabilities mentioned above is not disclosed as the Management is of the view that the likelihood of outflow of resources is remote. The Company does not reasonably expect the outcome of these proceedings to have a material impact on its financial statements

The above information has been compiled in respect of parties to the extent to which it could be identified as Micro, Small, and Medium Enterprises. The disclosure is based on the information made available to the Company regarding the status of suppliers in relation to the “Micro, Small, and Medium Enterprise Development Act, 2006”.

4) Related Party Transactions as per Accounting Standard -18:

Related parties where control exists.

- PerPETual Global Technologies Ltd. (Promoter, Holding Company)

Key Management Personnel

- Mr. Marc Lopresto - Director

- Mr. M. N. Sudhindra Rao - Chief Executive Officer (w.e.f. 17th July, 2014)

- Mr. Paresh Damania - Company Secretary

- Mr. Rakesh Tanna - Chief Financial Officer (w.e.f. 28th May, 2015)

- Mr. Amarjit Singh Bhatia - CFO (from 23rd April,2014 to 21st February,2015)

Notes:

5. Previous year’s figures are given in brackets.

6. During the year, the Company has written back interest aggregating to USD 1.3 million (equivalent toRs,83.7 million) on ECB loan from PGTL. Except for this, there are no other write offs/written backs or provisions for doubtful debts/ receivables during the year.

7. Related party relationships are as identified by the management and relied upon by the auditors.

8) (a) In the opinion of the Board, all the assets other than fixed assets and non-current investments have a value on realization in the ordinary course of business, at least equal to the amount at which they are stated. The provision for depreciation and for all known liabilities is adequate and not in excess of the amount reasonably necessary.

(b) The accounts of certain Trade Payables, Trade Receivables and Advances are subject to formal confirmations / reconciliations and adjustments, if any. The management does not expect any material difference affecting the current year’s financial statements.

9) Employee Benefit Plans:

The disclosures in accordance with the requirements of the Accounting Standards are provided below:-

10. Defined Contribution Plan:

The Company has recognisedRs,5.1 million (Previous yearRs,5.6 million) as an expense towards its postemployment defined contribution plan comprising of a provident fund, deposited with government authorities.

11. Defined Benefit Plan:

In accordance with Payment of Gratuity Act, 1972, the Company is required to provide post-employment benefits to its employee in the form of gratuities. The Company is contributing to the trust, administered by the Trustees and managed by ICICI Prudential, an amount actuarially valued at the year-end. In accordance with Accounting Standards, the disclosure relating to the Company’s gratuity plan is given below.

Note:

The liability recognized with respect to compensated absences in the balance sheet as on 31st March 2016 is ''5.3 million (previous yearRs,3.9 million).

12) a) The previous year’s figures have been re-grouped and/or re-arranged wherever necessary to conform to the current year’s presentation.

b) Figures in 0.0 represents amount less thanRs,50,000

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Mar 31, 2015

1. During financial year 2014-15, modification was done in ReNew to operate plant at optimum level and improving the quality of the product. The Company is gradually shifting its focus to exports where the Company can realise premium pricing. The Company has started receiving orders from premium brands at premium pricing. Due to above the Company expects to achieve significant improvement in operating margins going forward.

The existing Promoters and the lenders of the Company have always been extremely supportive of the Project and with this the Company is quite hopeful of achieving its strategic objective of becoming a leading supplier of 100% recycled content product and being recognized as a preferred supplier. We have also received letter of support from the parent Company PGTL for an financial, technical and administrative support for the forthcoming 12 months.

Based on the above the management has performed impairment test and is of the view that there is no impairment in the value of fixed assets. Accordingly, the accounts are prepared based on Principle of Going Concern.

2. Exceptional expenses of Rs. 24.00 million for the year ended 31st March 2015 resulted from the revaluation of its Plant & Machinery which was held for disposal and its stated recoverable value.

b) Commitments:

Estimated amounts of contracts remaining to be executed on capital account and not provided for (Net of Advances) is Rs.118.6 million (previous year Rs.168.9 million)

c) The Company's pending litigations comprise of claims against the Company and proceedings pending with Tax and other Authorities. The Company has reviewed all its pending litigations and proceedings and has made adequate provisions, wherever required and disclosed the contingent liabilities, wherever applicable, in its financial statements. The Company does not reasonably expect the outcome of these proceedings to have a material impact on its financial statements

3)Related Party Transactions as per Accounting Standard –18: Related parties where control exists.

- PerPETual Technologies Ltd. (Promoter, Holding Company)

Parties with whom transactions have been entered into during the year: Associates & Fellow Subsidiaries

- Alpha Bottle Ltd. (Fellow Subsidiary)

Key Management Personnel

- Mr. Marc Lopresto – Chairman and Whole time Director

- Mr. Gerard De Nazelle - Chief Executive Officer (up to 21-February,2014)

- Mr. M. N. Sudhindra Rao - Chief Executive Officer (w.e.f. 17-7-2014)

- Mr. Amarjit Singh Bhatia – CFO, (from 23- April,2014 to 21-February,2015)

- Mr. Paresh Damania – Company Secretary

Notes:

1. Previous year's figures are given in brackets.

2. Neither amount in respect of related parties have been written off/written back during the year, nor has any provision been made for doubtful debts / receivables.

3. Related party relationships are as identified by the management and relied upon by the auditors.

4. (a) In the opinion of the Board, all the assets other than fixed assets and non-current investments have a value on realisation in the ordinary course of business, at least equal to the amount at which they are stated. The provision for depreciation and for all known liabilities is adequate and not in excess of the amount reasonably necessary.

(b) The accounts of certain Trade Payables, Trade Receivables and Advances are subject to formal confirmations/reconciliations and adjustments, if any. The management does not expect any m a t e r i a l difference affecting the current year's financial statements.

5. Employee Benefit Plans:

The disclosures in accordance with the requirements of the Accounting Standards are provided below:-

1. Defined Contribution Plan:

The Company has recognised Rs.7.3 million (Previous year Rs 5.5 million) as an expense towards its post- employment defined contribution plan comprising of a provident fund, deposited with government authorities.

6. a) The previous year's figures have been re-grouped and/or re-arranged wherever necessary to conform to the current year's presentation.

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Mar 31, 2014

Overview

Polygenta Technologies Limited is engaged in the business of manufacturing sustainable polyester filament yarn by recycling post consumer PET flakes using a break-through recycling technology (the ReNEW process). The polyester yarn products made by Polygenta using the the ReNEW process are sold for various applications in the fields of apparel, denim, home furnishings, floor coverings and industrial applications.

1) The Company had put significant efforts during FY12-13 (i.e. previous year) to technically modify temporarily the continuous polymerization unit to make 100% recycled content yarn. The benefits of these efforts were successfully reaped by the Company during 2013-14 which is witnessed by the fact that the plant was in continuous operations with virtually no interruptions from June 2013 and developing satisfied customer in recycle segment. In addition to the above, subsequent to the year ended 31st March 2014, the company has initiated innovative steps to further improve the operating efficiency/ Margins without significant capital expenditure to debottlenecking the process to increase capacity of the existing ReNEW plant. Due to the above, the company expects to achieve significant improvement in operating margins going forward.

The Company is now all set to further expand the existing ReNEW plant and has engaged in the process of raising additional capital for this purpose. The existing Promoters and the lenders of the Company have always been extremely supportive of the Project and with this the Company is quite hopeful of achieving its strategic objective of becoming a leading supplier of 100% recycled content product and being recognized as a preferred supplier.

Based on the above the management has performed impairment test and is of the view that there is no impairment in the value of fixed assets and the accounts are prepared based on Principle of Going Concern.

2) Exceptional expenses of Rs. 13.0 million for the year ended 31st March 2013 represents loss recognised on Plant & Machinery which is discarded / transferred to Assets held for disposal.

3) Contingent liabilities and commitments

a) Contingent Liabilities:

(Rs. in Millions)

As at Particulars 31-Mar-14 31-Mar-13

Estimated amount of claims against the company not acknowledged as debt in respect of: (Including interest up to date of demand, where applicable)

- Disputed Excise/Service Tax Demands 4.3 4.3

- Vendor Claims 0.9 0.9

- Disputed Income Tax Demands 102.6 102.6

b) Commitments:

Estimated amounts of contracts remaining to be executed on capital account and not provided for (Net of Advances) is Rs. 168.9 million (previous year Rs. 16.6 million)

The above information has been compiled in respect of parties to the extent to which it could be identified as Micro, Small and Medium Enterprises. The disclosure is based on the information made available to the Company regarding the status of suppliers in relation to the "Micro, Small and Medium Enterprise Development Act, 2006".

4) Related Party Transactions as per Accounting Standard –18

Related parties where control exists

- PerPETual Technologies Ltd. (Promoter, Holding Company)

Parties with whom transactions have been entered into during the year:

Associates & Fellow Subsidiaries

- Alpha Bottle Ltd. (Fellow Subsidiary)

Key Management Personnel

- Mr. Subodh Maskara –Chairman (up to 03rd August 2013)

- Mr. Marc Lopresto – CFO, Whole time Director (up to 03rd August 2013) and Executive Chairman (w.e.f 03rd August 2013)

- Mr. Gerard De Nazelle – Chief Executive Officer (up to 21st February 2014)

Enterprises where key managerial persons/directors, their relatives have significant influence

- Maskara Filaments Private Limited (up to 03rd August 2013)

5) (a) In the opinion of the Board, all the assets other than fixed assets and non-current investments have a value on realisation in the ordinary course of business, at least equal to the amount at which they are stated. The provision for depreciation and for all known liabilities is adequate and not in excess of the amount reasonably necessary.

(b) The accounts of certain Trade Payables, Trade Receivables and Advances are subject to formal confirmations/reconciliations and adjustments, if any. The management does not expect any material difference affecting the current year''s financial statements

6) Employee Benefit Plans

The disclosures in accordance with the requirements of the Accounting Standards are provided below:-

1. Defined Contribution Plan:

The Company has recognised Rs. 5.5 million (Previous year Rs. 4.9 million) as an expense towards its post- employment defined contribution plan comprising of a provident fund, deposited with government authorities.

2. Defined Benefit Plan:

In accordance with Payment of Gratuity Act, 1972, the Company is required to provide post-employment benefits to its employee in the form of gratuities. The Company is contributing to the trust, administered by the

7) a) The previous year''s figures have been re-grouped and/or re-arranged wherever necessary to conform to the current year''s presentation.

b) Figures in 0.0 represents amount less than Rs. 50,000.

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Mar 31, 2013

Overview

Incorporated in the state of Maharashtra in 1981, the Company was originally named Maskara Polytex Private Ltd. In 1994, it was converted into a public limited company. In July 1995, the name of the company was changed to Maskara Industries Ltd. Subsequently, on 25th June 2001 the name was again changed to Polygenta Technologies Limited.

The Company manufactures environmentally beneficial, sustainable Polyester Filament Yarn (PFY) using recycled PET bottle feedstock, manufacturing primarily Drawn Texturised Yarn.

1) a) Exceptional expenses of Rs. 13.0 million for the year ended 31st March 2013 resulted from the revaluation of one of its plant & building which is transferred to Assets held for disposal /lease and stated at recoverable value.

b) Previous Year - Exceptional income of Rs. 7.5 million resulted from the sale of its Murbad Unit which was under closure since January 2000.

2) Contingent liabilities and commitments

a) Contingent Liabilities: (Rs.in Millions) As at Particulars 31-Mar-13 31-Mar-12

Estimated amount of claims against the company not acknowledged as debt in respect of:

(Including interest up to date of demand, where applicable)

- Disputed Excise/Service Tax Demand 4.3 4.4

- Vendor Claims 0.9 0.9

- Disputed Income Tax Demand for earlier years 102.6

b) Commitments:

i. Estimated amounts of contracts remaining to be executed on capital account and not provided for (Net of

Advances) is Rs.16.6 million (previous year Rs. 11.1 million)

ii. The Company has an outstanding export obligation of Rs. Nil* (Previous Year Rs. 264 million) as at the close of period, against the import licenses taken for import of capital goods under Export Promotion Capital Goods (EPCG) Scheme. With respect to its EPCG export obligation, the Company had also provided bank guarantees to Custom Authorities Rs. 15.3 million (Previous year Rs.15.9 million) backed by a fixed deposits which are under process of release.

* Export Obligation fulfilled during the year includes fulfilment from exports of service of previous year earlier not considered.

3) Related Party Transactions as per Accounting Standard –18:

Related parties where control exists.

PerPETual Technologies Ltd. (Promoter, Holding Company)

Aloe Environment Fund II (Promoter)

Green Investment Asia Sustainability Fund I (Promoter)

Parties with whom transactions have been entered into during the year:

Associates & Fellow Subsidiaries

Alpha Bottle Ltd. (Fellow Subsidiary)

Key Management Personnel

Mr. Subodh Maskara –Chairman

Mr. Marc Lopresto – Wholetime director and CFO

Mr. Gerard De Nazelle – Chief Executive Officer

Enterprises where key managerial persons/directors, their relatives have significant influence

Maskara Filaments Private Limited S. K. Maskara & Sons (HUF)

4) The previous year''s figures have been re-grouped and/or re-arranged wherever necessary to conform to the current year''s presentation.

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Mar 31, 2012

Overview

Incorporated in the state of Maharashtra in 1981, the Company was originally named Maskara Polytex Private Ltd. In 1994, it was converted into a public limited company. In July 1995, the name of the company was changed to Maskara Industries Ltd. Subsequently, on 25th June 2001 the name was again changed to Polygenta Technologies Limited.

The Company is in the business of environmentally beneficial, sustainable Polyester Filament Yarn (PFY), manufacturing primarily Drawn Texturised Yarn.

1. Details of Security.

The said loan is secured by first charge by way of mortgage of land, buildings and tenements and immovable Plant & Machinery, both present and future at the Compares works at Nashik as also by way of hypothecation of the whole of the inventories and other movable assets of the Company including its movable Plant & Machinery, spares, tools and accessories both present and future._

Additional information to Secured Short Term Borrowings:

I. Project loan, Working Capital loan and Buyers Credit from Standard Chartered Bank

The said loan is secured by second charge by way of mortgage of land, buildings and tenements and immovable Plant & Machinery, both present and future at the Company's works at Nashik as also by way of hypothecation of the whole of the inventories and other movable assets of the Company including its movable Plant & Machinery, spares, tools and accessories both present and future.

II. Working Capital Loan from Ratnakar Bank Ltd

The said loan is secured by first charge by way of mortgage of land, buildings and tenements and immovable Plant & Machinery, both present and future at the Company's works at Nashik as also by way of hypothecation of the whole of the inventories and other movable assets of the Company including its movable Plant & Machinery, spares, tools and accessories both present and future.

OTHER NOTES

2) a) Exceptional income of Rs. 7.5 million for the year ended 31st March 2012 resulted from the sale of its

MurbadUnitwhich was under closure since January 2000.

b) Exceptional income of Rs. 12.2 million for the year ended 31st March 2011 resulted from the write- back of an inter-corporate deposit that had been outstanding for an extended duration.

3) Contingent liabilities and commitments

a) Contingent Liabilities: (Rs. in Millions)

Particulars As at 31-Mar-12 31-Mar-11

Estimated amount of claims against the company not acknowledged as debt in respect of:

- Disputed Excise/Service Tax Demand 4.4 34.7

- Vendor Claims 0.9 0.9

b) Commitments:

i. Estimated amounts of contracts remaining to be executed on capital account and not provided for (Net of Advances)isRs.11.1 million (previous year Rs.28.7 million)

ii. The Company has an outstanding export obligation of Rs. 264 million (Previous Year Rs.886.1 million) as at the close of period, against the import licenses taken for import of capital goods under Export Promotion Capital Goods [EPCG] Scheme. The expiry date for Export Obligation period is December 2016. With respect to its EPCG export obligation, the Company has also provided a bank guarantee to Custom Authorities backed by a Rs. 15.9 million (Previous year Rs.15.9 million) fixed deposit.

4) Related Party Transactions as perAccounting Standard-18:

Related parties where control exists.

Aloe Environment Fund II (Promoter)

PerPETualTechnologies Ltd. (Promoter, Holding Company)

Green InvestmentAsia Sustainability Fund I (Promoter)

Parties with whom transactions have been entered into during the year:

Associates & Fellow Subsidiaries

Polygenta Stock Option Trust (Associate) AlphaBottle Ltd. (Fellow Subsidiary)

Key Management Personnel

Mr. Subodh Maskara - Managing Director upto 20-09-2010 Mr. Marc Lopresto - Wholetime director and CFO Mr. Gerard De Nazelle - Chief Executive Officer

Enterprises where key managerial persons/directors, their relatives have significant influence

Maskara Filaments Private Limited S.K. Maskara & Sons (HUF)

5) Deferred Tax Assets/ Liabilities:

Deferred tax asset was recognised in Dec 2008 in accordance with Accounting Standard 22- 'Accounting for Taxes on Income" issued by the Companies (Accounting Standards) Rules, 2006 as the management is confident that in view of the successful implementation of the PFY project, there will be sufficient future income against which the deferred tax assets will be fully realised. Further, as a matter of prudence, no further deferred tax asset is being recognised.

6) (a) In the opinion of the Board, all the assets otherthan fixed assets and non current investments have a value on realisation in the ordinary course of business, at least equal to the amount at which they are stated. The provision for depreciation and for all known liabilities is adequate and not in excess of the amount reasonably necessary.

(b) The accounts of certain Trade Payables, Trade Receivables and Advances are subject to formal confirmations / reconciliations and adjustments, if any. The management does not expect any material difference affecting the current year's financial statements.

7) Employee Benefit Plans:

The disclosures in accordance with the requirements of the Accounting Standards are provided below:-

1. Defined Contribution Plan:

The Company has recognised Rs.5.1 million (Previous year Rs 2.6 million) as an expense towards its post employment defined contribution plan comprising of a provident fund, deposited with government authorities.

8) Amount of exchange Difference (net) debited to statement of Profit & Loss for the year ended 31.03.2012 Rs.29.2 millions (Previous yearRs.30.0 millions).

9)(i) The financial statement have been prepared in accordance with revised schedule VI. The previous year's figures have been re-grouped and/or re-arranged wherever necessary to conform to the current year's presentation.

(ii) In view of commencement of commercial production on 01.03.2011,current year figures are not comparable with those of previous year.

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Mar 31, 2010

Overview

Incorporated in the state of Maharashtra in 1981, the Company was originally named Maskara Polytex Private Ltd. In 1994, it was converted into a public limited company. In July 1995, the name of the company was changed to Maskara Industries Ltd. Subsequently, on 25th June 2001 the name was again changed to Polygenta Technologies Ltd. The Company is at the advanced stage of implementing DTY Project at Nasik (Detailed in Notes to Accounts). In 2008 , the Company has identified investors, who have mobilized significant financial resources for comprehensive re-engeering of the Nasik POY/DTY Project.

1. Contingent liabilities not provided for:

a) Claims made by Vendors against the Company not acknowledged as debts, Rs. 1,006,277 (as on 31st December 2008 Rs.1,996,639). In the opinion of management, appropriate provision has been made in the books of account in respect of these claims that may be payable considering the present status of the matter. The Company expects to succeed in all the pending disputes, as per the expert opinion obtained by the management.

b) Demand by Excise Authorities Rs.587,200 excluding interest thereon(as on 31st December 2008 Rs Nil), if any and inadmissible CENVAT Credit of Rs 3,247,147(as on 31st December 2008 Rs Nil). Company has filed an appeal and stay application before the Customs, Excise and Service Tax Appellate Tribunal and it is reasonably confident that the decision will be in its favour.

c) Interest/compound interest/penalty on delayed/non payment of statutory dues/lenders of unsecured loans(Amount unascertained).

d) Liabilities as may arise as a result of closing the Murbad Unit in respect of State Government capital subsidy and withdrawal of benefits as granted/allowed.

2. OPERATIONS AND PROJECTS

a) (i) Capital Reduction & Preferential Allotment

Polygenta shareholders voted overwhelmingly to accept a capital reduction. This write-down, which was part of the agreed settlement with secured creditors, was effectively a 90% write-off of shareholders historical investment in the Company. The March 2009 EGM and August 2009 EGM approved a preferential allotment in favour of new investors providing fresh capital.

(ii) De-registration from the BIFR

The Company had initially sought a rehabilitation plan from the BIFR. However, as a result of its one- time settlement and other restructurings, the Companys positive net worth status was restored in its balance sheet ending 31 st December 2008.The Company elected to petition for de-registration from the BIFR (on the basis of the BIFR no longer having jurisdiction over companies with a positive net worth). Eventually, the Companys petition was accepted and it was released from the BIFRs jurisdiction in July 2009(videAAFIRorderdated 29/07/09).

(iii) Current Project

First fully Integrated Polyester, Eco-friendly sustainable Polyester Filament Yarn Plant

In 2008, the Company has identified investors who have mobilized significant financial resources for comprehensive reengineering of the Nashik Plant. From the said financial resources,the Company has settled all of its liabilities to secured lenders and started incurring capital expenditure in respect of its comprehensive re-engineering of Nashik Plant.

Presently, the Nashik plant is the first fully-integrated, eco-friendly sustainable PFY plant in India. The Company has made trial runs during the year to de-risk equipment reliability and to prepare itself to run the plant on a fully integrated basis by Q3,2010-11.

b) The estimated amount of Contract remaining to be executed on Capital account and not provided for (Net of advances Rs. 33,915,840) Rs.55,833,291; Previous year (Net of advances of Rs. 251,878,442) Rs. 545,388,735.

c) No provision of interest aggregating to Rs. 26,479,239(Previous year Rs. 25,450,000) payable to unsecured lender has been made as the management is hopeful of setting the amount without interest.

d) The Companys present activity is implementing Nasik project, therefore, Segment reporting i.e. Accounting Standard -17 are not applicable. All expenses are in respect of implementing Nasik project.

3. In respect of Murbad Unit under closure since January, 2000, management is looking at the possibility of selling the same. Accordingly, the assets at Murbad Unit are grouped under Assets held for disposal at their net book value or realizable value, whichever is lower.

4. (a) During the Year, the Company has allotted Compulsory Convertible Preference Shares (CCPS) pursuant to the resolutions passed at EGM held on 28th March 2009 and 31st August 2009.These CCPS are convertible on demand into Equity Shares within 18 Months from the date of issue. The said CCPS are subject to lock-in for a period of one yearfrom the date of allotment.

(b) 27.50 lakhs CCPS out of the above CCPS were allotted to Financial Institutions as per One Time settlement (OTS).

(c) The company has issued 9% Optionally Fully Convertible Debentures (OFCD) worth Rs.300 lacs to a Financial Institutions as per One Time settlement (OTS). The OFCD will be either converted into equity on demand (at Rs.30 per share) or redeemed on 20th March 2012. The said OFCD are subject to lock-in upto20thSeptember2010.

(d) The aforesaid OFCD are secured by mortgage of immovable properties and hypothecation of movable properties other than book debts and current assets to be hypothecated to banks.

5. Exchange difference (net) credited to the Profit and Loss Account includes Rs.114,700,000 (previous year Rs Nil) being foreign exchange Gain on realignment of Long Term Foreign Currency Borrowings at the Balance Sheet date.

6. During the year, Company sold assets worth Rs. 118,775,000 (WDV) with the intention of "Sale and Lease Back" However, due to project necessities, Company had to buy similar assets with the additional cost of Rs.671,576.

7. Deferred Tax Assets / Liabilities:-

i) Deferred tax asset is recognised in accordance with Accounting Standard 22- "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India as the management is confident that in viewof advance stage of implementation of the Nasik factory project there will be sufficient future income against which the deferred tax assets will be fully realized.

8. (a) In the opinion of the Board, CurrentAssets, Loans and advances have a realization in the ordinary course of business, at least equal to the amount at which they are stated. (b) The accounts of certain Sundry Debtors, Sundry Creditors, Banks, Advances and Lenders are subject to confirmation/reconciliations and adjustments, if any. The management does not expect any material difference affecting the current years financial statements.

9. Pursuant to, Bombay High Courts order dated 18th September 2009, Share Capital stands reduced w.e.f. 12th October 2009 from Rs. 194,291,880 to Rs. 19,429,180 divided into 1,942,918 Equity Shares of the face value of Rs.10 each by offering one (1) equity share of Rs.10 in cancellation of ten equity shares of Rs.10 each to the equity shareholders and corresponding amount of the Share Capital so reduced and cancelled

i.e.Rs. 174,862,700/- has been appropriated and adjusted towards the balance appearing under the head "Profit and Loss Account" (Debit) balance in the Balance Sheet of the Company.

10. Employee Benefits

The disclosures in accordance with the requirements of the Standard are provided below:- a) Defined Contribution Plan:

The Company has recognized Rs.4,781,091 towards post employment defined contribution plan comprising of providentfund.

11. The Board of Directors in their meeting held on October 30, 2009 approved the change in financial year from the period ending in December to period ending in March. Hence figures for the current year comprising of 15 months is not comparable to that of previous year comprising of 9 months.