Notes to Accounts of Rainbow Papers Ltd.

Mar 31, 2016

(b) Terms/rights, preferences and restrictions attached to securities:

Equity Shares:

The company has one class of equity shares having a par value of Rs.2 each. Each share holder is eligible for one vote per share held. The dividend proposed by the Board of Director, if any, is subject to the approval of share holders in the Annual General meeting, except in case of interim dividend. In the event of liquidation, the equity share holders are eligible to receive the remaining assets of the company after distribution of all preferential dues, in proportion to their shareholding.

Note No A

Deferral/capitalization of exchange differences:

The company had opted to follow the option granted by notification no 225(E) dated March 31, 2009 issued by the Ministry of Corporate Affairs relating to limited relaxation in the provision of "Accounting Standard-11" in respect of Foreign Exchange differences on foreign currency loans:

Exchange differences relating to long-term monetary items, arising during the year, in so far as they relate to the acquisition of a depreciable asset are added to / deducted from the cost of the asset and depreciated over the balance life of the asset.

In other cases such differences are accumulated in a "Foreign Currency Monetary Item Translation Difference Account" and amortized to the Profit and Loss account over the balance life of the long-term monetary item, however the period of amortization does not extend beyond; March 31, 2020 [extended by notification no GSR 913(E) dated 29th December 2011].

Accordingly, during the year Rs. 374.86 Lacs has been added (PY Rs. 239.55 was added) to the Foreign Currency Monetary Item Translation Difference Account.

Note No B

During the Year, Indian Overseas Bank has raised an objection for declaring the Dividend for the year ended on March 31, 2015 and pursuance to the same the company has reversed the proposed dividend declared and Dividend Distribution Tax thereon.

(a) Nature of security and terms of repayment for secured borrowings Term loan :

Term Loan in Rupee Currency are secured by way of First hypothecation charge on Pari passu basis over the fixed assets of the company, situated at Survey No 1423,1453, 1439/p/1, 1440/p/1 & 1441/p Village: Rajpur, Taluka: Kadi, Dist:Mehsana. Second charge on paripasu basis on entire current assets of the company. The loan is further secured by personal guarantee of Shri Ajay Goenka Chaiman and Managing Director of company, Smt Sangeeta Goenka and three promoter group companies. Term Loan is carrying Rate of Interest(at present) from 13% to 13.75% p.a. repayable over a period of 7 years.

Corporate Loan from Bank of India is secured by way of exclusive charge on Land at Survey no 1524,1457-58,148384,1447/4/p collectively admesuring 62524 sq. mts situated at Village: Rajpur, Taluka: Kadi, Dist:Mehsana together with building and fixed structures thereon . The loan is further secured by personal guarantee of Shri Ajay Goenka Chaiman and Managing Director of company, Smt Sangeeta Goenka and three promoter group companies. Term Loan has been converted into EPBG during the year under consideration and same set of security is exclusively charged with the said bank.

Corporate Loan from IFCI Ltd is secured by exclusive charge on power division assets of the Company bearing survey No. 1474/1, 1474/2, 1475, 1476, 1477, 1478, 1517 P1, 1517 P2 (now forming part of new survey No. 1442/1) and 1451, 1473, 1520, 1521 total admeasuring 81403 Sq. Mtrs. situated at village Rajpur, Ta. Kadi, Dist. Mehsana and Further secured by exclusive charge on survey no. 1444 & part of 1445 admeasuring 16633 Sq. Mtrs. situated at village Rajpur, Ta. Kadi, Dist. Mehsana, by way of pledge of 1,32,22,317 equity shares of Rainbow Papers Limited having Face Value of Rs.2/- , being held by promoters and promoter group companies .The loan is further secured by personal guarantee of Shri Ajay Goenka Chairman and Managing Director of company. Term Loan is carrying Rate of Interest (at present) 15.05% p.a. and is repayable in 5 years with balloning installments quarterly.

Vehicle Loan:

Vehicle loan from banks were secured by hypothecation of vehicles and are repayable over a period of 3 years carrying rate of interest 11.77% p.a..Further loan is guaranteed by Shri Ajay Goenka Chairman and Managing Director of company.

*Deferred Tax liability calculated as above is excluding the assets pertaining to power Generating units, the Income of which being deductible u/s 80IA of the Income tax Act 1961. As prescribed in ASI 3 & ASI 5 regarding application of AS 22 in situation of "Tax Holiday" period under section 80 IA, where timing difference arising in a year is reversed during Tax holiday period itself, no deferred Tax should be recognized.

*These amounts are subject to Income Tax Assessment of the company and on the assumption of certainty of its Payment in subsequent years.

Nature of security provided for cash credit facility:

Cash Credit Limit is secured by way of First hypothecation charge on Pari passu basis over the current assets of the company, situated at 1423 and 1453 of Village: Rajpur, Taluka: Kadi, Dist:Mehsana. Second charge on paripasu basis on all fixed assets, situated at survey no 1423 and 1453 of Village: Rajpur, Taluka: Kadi, Dist:Mehsana .The loan is further secured by personal guarantee of Shri Ajay Goenka Chairman and Managing Director of the company.

Whatever information the company could identify as above were possible at the year end only, and in view of this according to the company, it could not identify payments beyond due date during the year and to make interest provisions to that extent, due to numerous transactions concluded during the year as per the agreed terms with the suppliers. However the company has made due interest provisions over the requisite year end balances.

(i) Inclusion of Civil Works as Plant and Machinery or Building, being technical matter, is certified by the management

(ii) Treatment of Capitalization being technical matter, is as certified by the management

(iii) Pursuant to the enactment of Companies Act 2013, during the Financial Year ended on March 31,2015, the company has applied the estimated useful lives as specified in Schedule II. Accordingly the unamortized carrying value is being depreciated / amortized over the revised/remaining useful lives. The written down value of Fixed Assets whose lives have expired as at 1st April 2014 have been adjusted (net of tax), in the opening balance of General Reserve amounting to Rs. 26.98 Lacs.

(iv) *During the Financial Year ended as at 31st March 2014 revaluation of the land was carried out by the registered approved valuer, based on their report land is revalued at Rs. 21970.90 lacs, in pursuance to this upward revalued amount of Rs. 21019.02 lacs is shown as addition to Fixed Asset and accordingly Revelation reserve to that extent has been shown under head of Reserve and Surplus.

(i) Cost of Fixed Assets and pre-operative expenses, being technical matter, are capitalized or allocated to Capital work in progress on the basis of data certified by technical person & the management.

(ii) Borrowing cost includes interest and other bank charges including the exchange difference arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs which are directly related to the acquisition & construction of a qualifying asset.

(iii) Advances to Project suppliers are shown under Long term loans & advances included in Capital advances.

Commitment:

Estimated amount of contracts, remaining to be executed on capital accounts and not provided for Rs Nil net of advance (P.Y Nil ).

EPBG is secured by way of First hypothecation charge on Pari passu basis over the fixed assets of the company, situated at Survey No 1423,1453, Village: Rajpur, Taluka: Kadi, Dist:Mehsana. Second charge on paripasu basis on entire current assets of the company. It is further secured by personal guarantee of Shri Ajay Goenka Chairman and Managing Director of company, Smt Sangeeta Goenka and three promoter group companies. EPBG will be reduced over a period of 10 years in balloning installments.

Defined Benefit Plan

The Company has adopted Accounting Standard 15 (AS-15) (Revised) "Employee Benefits" which is mandatory from accounting periods starting from Dec 7, 2006. Accordingly, the Company has provided for gratuity and leave encashment based on actuarial valuation done as per Projected Unit Credit Method.

VIII. Expected Employer''s contribution for the next financial year

On the basis of previous year''s trend, company is expecting to contribute the same amount as in 2016-17 to the defined contribution plan.

For the defined benefit plan company is not liable to contribute any amount for leave encashment as the plan is unfunded. However, for the gratuity which is funded, company is expecting to contribute such amount which can mitigate its future liability.

The estimate of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.

1) (a) Few accounts of Loan Liabilities & borrowings, Current liabilities, Trade receivables, Loans and advances given (Including Advance for Land), Balance with Revenue Authority and Statutory Dues are subject to confirmations and reconciliation and necessary adjustment, if any , will be made on receipt thereof. However, the management does not expect any material difference affecting the current years'' financial statements.

(b) During the year under consideration major addition in Fixed asset was made out of Capital Work in progress of Rs. 54736.18 Lacs as on 31^st March 2015. Till previous year the interest cost, Power & Fuel Stores and other pre-operative expenses pertaining to these fixed assets were capitalized in the cost of assets, however the fixed assets were put to use during the year and therefore the said expenses pertaining to the same has been charged to Statement of Profit & Loss.

(c) During the year under consideration physical verification of stock was carried out and various discrepancies in stock as per books and physical were found and the same have been accounted for in the books under respective heads of the material.

(d) During the year under consideration, the Company has written off its Minimum Alternate Tax credit of Rs. 24.63 Crore (Previous Year Rs. NIL) as the company is not anticipating normal income tax in the foreseeable specified period.

(e) During the year under consideration, on the basis of technical evaluation, the company has re-determined estimated useful life of some of the Plant & Machinery and accordingly the depreciation has been recomputed and its full effect has been given in the Statement of Profit & Loss for the year under consideration and accordingly Loss for the year is higher by Rs 5012.56 Lacs

(f) Certain Long outstanding advances for Capital Goods and Various other Advances are subject to confirmation from the respective parties. In the opinion of Management, these are good and recoverable.

(g) The Balance payable to Cargill International Trading PTE Limited, a party from whom advance against export order has been received is subject to confirmation from the said party and reconciliation, if any, will be made on receipt of its confirmation. Since the export obligation could not be fulfilled by the company, the said party has invoked the Bank Guarantee issued in its favour by few banks. The liability arisen out of this invocation of Bank Guarantee now stands payable in the books of the company in the name of the respective bankers.

(h) SEBI has vide its order WTM/RKA/MIRSD2/41/2016 dated 22^nd March, 2016 has banned operations of M/s. Sharepro Services (I) Private Limited under section 11, 11B and 11D of Securities Board of India Act, 1992 in respect of frauds committed by them in transfer of dividends and transfer/ transmission of shares of their clients company. M/s Sharepro Services (I) Private Limited is also Registrar and Share Transfer Agent of the Company. In absence of non availability of information the impact of the same on the Company cannot be ascertained.

(i) The Company is in process of filling the vacancy of Chief Finance Controller.

(j) Some of the Micro & Small Enterprises have filed case against the company and the matter is pending before Micro & Small Enterprises Facilitation Council. The company has not provided for interest payable on the Principal amount outstanding.

Notes:

2) Geographical Segments considered for disclosures are as follows:

- Operating revenue outside India includes Paper sales (incl. deemed Export) and Export incentive.

3) DERIVATIVE INSTRUMENTS (As certified by management):

a) The Company has not entered into any forward contract to offset its foreign currency risks arising from the amounts denominated in currencies other than the Indian Rupee.

b) Foreign currency exposure at the year end not hedged by derivative instruments.

(*) The Company has not remitted any amount in foreign currencies on account of dividends during the year and does not have information as to the extent to which remittances, if any, in foreign currencies on account of dividends have been made by/on behalf of non-resident shareholders.

4. Certain creditors, Bankers and Financial Institutions have served the notice for Winding-up of the Company under the provision of the Companies Act, 1956. Further IFCI limited have served the Notice under section 13(2) of Chapter III of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("SARFAESI Act, 2002") against the company. Further some of the banks have recalled their loan facilities granted. However, the company is of the opinion that going concern is not affected.

5) In view of the erosion of 100% net worth of the Company as on 31st March 2016, the Company has become Sick Industrial Company under Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA 1985). Accordingly, the Company has to file ''reference'' in prescribed ''Form A'' to the Hon''ble Board for Industrial & Financial Reconstruction (BIFR) to comply with the provisions of Section 15(1) of the SICA 1985 within 60 days from the date of forming such opinion by the Board of Directors.

6) During the year, the business of subsidiary company Rainbow Papers JLT has shifted its operation from Dubai Multi Commodity Centre to Umm Al Quwain Free Trade and became Rainbow Paper FZC and therefore the entire investment of the company in the shares of Rainbow Paper JLT has been transferred in the name of Rainbow Paper FZC. Further Rainbow Paper JLT has ceased to be subsidiary company from 22^nd March 2016 due to dilution of stake by the Parent Company.

7) (a) In the Opinion of the management the trade receivables, short term and long term loan and advances are realizable at the value stated if realized in the ordinary course of the business and the provision for all the known liabilities are adequate.

(b) The Classification/Grouping of the accounts are made by the management, on the basis of the available data with the company and which has been relied upon by the auditor.

(c) The amount of the inventories has been taken by the management, on the basis of the information available with the company.

(d) The accounts of Service Tax receivable/payable, CENVAT receivable/payable, VAT input credit receivable/payable are subject to reconciliation, submission of its returns for its claims and/or its assessment

8) During the year the company has written off Rs 1945.88 Lacs (Previous Year Rs. Nil) of the various Debts and Loan & advances as the management is of the opinion that the same are irrecoverable from the concerned parties.

9) As per section 135 of Companies Act 2013 and Rules made there under, the company is liable to incur Rs. 57.79 Lacs during the year under consideration on CSR activities. As against this during the year, company has spent Rs. NIL (Previous Year Rs. Nil) on CSR activities.

10) The figures of previous year in the financial statements have been adopted from the last year''s audited financial statements and therefore some Previous Year figures could not be regrouped to make them comparable with Current Year.

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Mar 31, 2015

1. Balances of Unsecured Loans, Creditors, Debtors, Loans & Advances and other parties are subject to their confirmations and reconciliation, due adjustment, if necessary, will be made on receipt thereof. However, the management does not expect any material difference affecting the current years' financial statements.

2. Based on the guiding principles given in Accounting Standard on "Segment Reporting" (AS-17) issued by the Institute of Chartered Accountants of India, the Company operates mainly in manufacturing and processing of Paper products and all other activities are incidental thereto, which have similar risk and return, accordingly, there are no separate reportable Segment as far as Primary Segment is concerned.

3. DERIVATIVE INSTRUMENTS :

a) The Company has not entered into any forward contract to offset its foreign currency risks arising from the amounts denominated in currencies other than the Indian Rupee.

b) Foreign currency exposure at the yearend not hedged by derivative instruments.

(*) The Company has not remitted any amount in foreign currencies on account of dividends during the year and does not have information as to the extent to which remittances, if any, in foreign currencies on account of dividends have been made by/on behalf of non-resident shareholders. The particulars of dividends payable to non-resident shareholders which were declared during the year, are given.

4. Section 135 of Companies Act 2013 and Rules made there under the company falls within the definition of companies which are required to spent on CSR activities, the financial details as sort by the Companies Act 2013 are as under :

5. Previous year's figures have been regrouped/ rearranged wherever necessary.

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Mar 31, 2014

CORPORATE INFORMATION :

The company is engaged in manufacturing and marketing of paper. It uses various qualities of waste papers as its raw material for manufacturing finished paper. The company offers wide range of paper including Writing & printing paper, Newsprint paper, Duplex Board,Coated Paper, Colour Paper and Board, Crepe paper, Poster paper, Cast coated paper & fluroscent paper. During the financial year 2011-12 the company has acquired 100% equity shares in two companies viz. Rainbow Papers JLT(Dubai) and Rainbow Infrabuild Pvt Ltd. M/s Rainbow Infrabuild Pvt Ltd has ceased to be a subsidiary of the company from 28.05.2013.

BASIS OF PREPARATION OF FINANCIAL STATEMENT:

These financial statements have been prepared to comply in all material aspects with the Accounting Standards notified by Companies (Accounting Standards) Rules, 2006 (as amended) and relevant provisions of the Companies Act 1956, read with General Circular No 15/2013 dated 13th September 2013, issued by the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act 2013 All Incomes and Expenditures having material bearing on the Financial Statements are recognized on accrual basis.

Terms/rights, preferences and restrictions attached to securities:

Equity Shares:

The company has one class of equity shares having a par value of ` 2 each. Each share holder is eligible for one vote per share held. The dividend proposed by the board of director is subject to the approval of share holders in the ensuing Annual General meeting, except in case of interim dividend. In the event of liquidation, the equity share holders are eligible to receive the remaining assets of the company after distribution of all preferential dues, in proportion to their shareholding.

Terms of securities convertible into equity shares:

Convertible Warrants:

On December 20,2012 the company has alloted 90,00,000 convertible warrants on prefrential allotment basis to promoter group company at a price of ` 81/- which shall be convertible into equity shares (at the sole option of warrant holder(s)) at any time within a period of 18 months from the date of allotment of warrants. The lock-in of shares acquired by excerise of the warrants shall be for the period of 3 years.

Nature of security and terms of repayment for secured borrowings

Term loan :

Term Loan in Rupee Currency are secured by way of First hypothecation charge on Pari passu basis over the fixed assets of the company, situated at 1423&1453 paiki of village: Rajpur, Taluka: Kadi, Dist:Mehsana. Second charge on paripasu basis on all current assets, situated at survey no 1423&1453 paiki of village: Rajpur, Taluka: Kadi, Dist:Mehsana .The loan is further secured by personal guarantee of Managing Director, Promoter and a body corporate. Term Loan is carring Rate of Interest(at present) from 13% to 14.50% p.a. repayable over a period of 5 to 7 years.

Term Loan in Foreign currency were secured by way of First hypothecation charge on Pari passu basis over the fixed assets of the company, situated at 1423 & 1453 paiki of village: Rajpur, Taluka: Kadi, Dist:Mehsana. Second charge on paripasu basis on all current assets, situated at survey no 1423 & 1453 paiki of village: Rajpur, Taluka: Kadi, Dist:Mehsana .The loan is further secured by personal guarantee of Managing Director, Promoter and a body corporate. Term Loan is carring Rate of Interest(at present) from LIBOR 7 to 8.5% repayable over a period of 5 years.

Corporate Loan from Allahabad Bank secured by way of exclusive charge on survey no 1439/p/1,1440/p/1 & 1441/p admeasuring 11288 sq. meter area together with building and fixed structure thereon situated at village: Rajpur, Taluka: Kadi, Dist:Mehsana. The loan is further secured by personal guarantee of Managing Director of the company.Term Loan is carring Rate of Interest (at present) 12.95% p.a. repayable in 16 equal monthly installments having moratarioum period of 6 months.

Corporate Loan from Bank of India is secured by way of exclusive charge on survey no 1524,1457-58,1483-84,1447/4/p together with building and fixed structure thereon situated at village: Rajpur, Taluka: Kadi, Dist:Mehsana. The loan is further secured by personal guarantee of Managing Director, promoter and promoter group companies. Term Loan is carring Rate of Interest (at present) 14.50% p.a. repayable in 27 balance equal monthly installments.

Corporate Loan from IFCI Ltd is secured by way of pledge of 1,33,44,270 equity shares having Face Value of ` 2/- each,. being held by promoters and promoter group companies .The loan is further secured by personal guarantee of Managing Director. Term Loan is carring Rate of Interest (at present) 14.75% p.a. and will repayable in 5 years with balloning installments quartlerly.

Vehicle Loan:

Secured vehicle loan from banks are secured by hypothecation of vehicles and are repayable over a period of 3 years carring rate of interest 10.32 to 11.25% p.a..Further loan is guaranted by Managing Director of the company. Secured vehicle loan from financial institutions are secured by hypothecation of vehicles and are repayable over a period of 3 years carring rate of interest 11.25 p.a.%.Further loan is guaranted by Managing Director of the company.

Terms of repayment for unsecured borrowings

Loan from financial institution:

The company shall repay the loan in two installments with the first installment of ` 10 crore payable on 31.03.2015 and second installment of Rs. 20 crore payable on 31.03.2016 which carries Rate of Interest(at present) 15% p.a.

The Company has pledged 11940000 Equity Shares of Face Value of Rs. 2/- each, being held by one of its Promoter Group for availing Corporate Term Loan of ` 30 Crores.

Loans and advances from related parties:

The company has taken interest free advance from related parties which is repayable after a period of one year. Other loan & advances includes trade deposits accepted for a period morethan one year.

DEFERRED TAX LIABILITIES (NET):

Deferred Tax Liability calculated as above is excluding the assets pertaining to Power Generating Units, the income of which being deductible u/s 80 IA of The Income Tax Act 1961. As prescribed in ASI 3 & ASI 5 regarding application of AS 22 in situation of “Tax Holiday” period under Section 80 IA , where the timing difference arising in a year is reversed during Tax Holiday period itself, no Deferred Tax should be recognized.

Nature of security provided for cash credit facility:

Cash Credit Limit is secured by way of First hypothecation charge on Pari passu basis over the current assets of the company, situated at 1423 paiki of village: Rajpur, Taluka: Kadi, Dist:Mehsana. Second charge on paripasu basis on all fixed assets, situated at survey no 1423 paiki of village: Rajpur, Taluka: Kadi, Dist:Mehsana .The loan is further secured by personal guarantee of Managing Director, Promoter and a body corporate.

CAPITAL WORK IN PROGRESS COMPRISES

- Cost of Fixed Assets and pre-operative expenses, being technical matter, are capitalized or allocated to Capital work in progress on the basis of data certified by technical person & the management.

- Borrowing cost includes interest and other bank charges including the exchange difference arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs which are directly related to the acquisition & construction of a qualifying asset.

- Advances to Project suppliers are shown under Long term loans & advances included in Capital advances.

Contingent liabilities and commitments (to the extent not provided for):

(Rs. in Lacs) Contingent liabilities As at As at March 31,2014 March 31,2013 Guarantees:

- Bank Guarantee 681.35 803.68

Other money for which company is contingently liable:

- Export obligation in respect of custom duty on machinery imported on EPCG scheme (EODC is pending) - 2875.94

Commitment:

Estimated amount of contracts, remaining to be executed on capital accounts and not provided for Rs. 563.93 Lacs net of advance (PY Rs. 1419.75 Lacs).

Defined Benefit Plan

The Company has adopted Accounting Standard 15 (AS-15) (Revised) “Employee Benefits” which is mandatory from accounting periods starting from Dec 7, 2006. Accordingly, the Company has provided for gratuity and leave encashment based on actuarial valuation done as per Projected Unit Credit Method.

Expected Employer''s contribution for the next financial year

On the basis of previous year''s trend, company is expecting to contribute the same amount as in 2014-15 to the defined contribution plan.

For the defined benefit plan company is not liable to contribute any amount for leave encashment as the plan is unfunded. However, for the gratuity which is funded, company is expecting to contribute such amount which can mitigate its future liability.

The estimate of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.

Balance of Un secured Loans, Creditors, Debtors, Loans & Advances and other parties are subject to their confirmations and reconciliation, due adjustment, if necessary, will be made on receipt thereof. However, the management does not expect any material difference affecting the current years'' financial statements.

Based on the guiding principles given in Accounting Standard on “Segment Reporting” (AS-17) issued by the Institute of Chartered Accountants of India, the Company operates mainly in manufacturing and processing of Paper products and all other activities are incidental thereto, which have similar risk and return, accordingly, there are no separate reportable Segment as far as Primary Segment is concerned.

Notes:

1) Geographical Segments considered for disclosures are as follows :

* Operating revenue outside India includes Paper sales (incl. deemed Export) and Export incentive.

* Previous year''s figures have been regrouped or rearrange wherever necessary.

Derivative Instruments :

a) The Company has not entered into any forward contract to offset its foreign currency risks arising from the amounts denominated in currencies other than the Indian Rupee.

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Mar 31, 2013

1 1. CORPORATE INFORMATION:

The company is engaged in manufacturing and marketing of paper. It uses various qualities of waste papers as its raw material for manufacturing finished paper. The company offers wide range of paper including Writing & printing paper, Newsprint paper, Duplex Board,Coated Paper, Colour Paper and Board, Crepe paper, Poster paper, Cast coated paper &fluroscent paper.

During the financial year 2011 -12 the company has acquired 100%equity shares in two companies viz. Rainbow Papers JLT(Dubai) and RainbowlnfrabuildPvt Ltd.

1.2 BASIS OF PREPARATION OF FINANCIAL STATEMENT:

The Financial Statements are prepared as per historical cost convention and in accordance with the Generally Accepted Accounting Principles (GAAP) in India, the provisions of the Companies Act 1956, and the applicable Accounting Standards notified under the Companies(Accounting Standards) Rules,2006. All Incomes and Expenditures having material bearing on the Financial Statements are recognized on accrual basis.

2) BalancesofUnsecuredLoans,Creditors, Debtors, Loans & Advances and other parties are subject to their confirmations and reconciliation, due adjustment, if necessary, will be made on receipt thereof. However, the management does not expect any material difference affecting the currentyears''financial statements.

3) Based on the guiding principles given in Accounting Standard on "Segment Reporting"(AS-17) issued by the Institute of Chartered Accountants of India, the Company operates mainly in manufacturing and processing of Paper products and all other activities are incidental thereto, which have similar risk and return, accordingly, there are no separate reportable Segment as far as Primary Segment is concerned.

4) Derivative Instruments:

a) The Company has not entered into any forward contract to offset its foreign currency risks arising from the amounts denominated in currencies other than the Indian Rupee.

5. Previous year''s figures have been regrouped or rearranged wherever necessary.

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Mar 31, 2012

1 1.1. CORPORATE INFORMATION:

The company is engaged in manufacturing and marketing of paper. It uses various qualities of waste papers as its raw material for manufacturing finished paper. The company offers wide range of paper including Writing & printing paper, Newsprint paper, Duplex Board, Coated Paper, Colour Paper and Board, Crepe paper, Poster paper, Cast coated paper & fluorescent paper.

During the year ended 31 March 2012 the company has acquired 100% equity shares in two companies viz. Rainbow Papers JLT(Dubai) and Rainbow Infrabuild Pvt Ltd.

1.2 BASIS OF PREPARATION OF FINANCIAL STATEMENT:

The Financial Statements are prepared as per historical cost convention and in accordance with the Generally Accepted Accounting Principles (GAAP) in India, the provisions of the Companies Act 1956, and the applicable Accounting Standards notified under the Companies (Accounting Standards) Rules,2006. All Incomes and Expenditures having material bearing on the Financial Statements are recognized on accrual basis.

(a) Terms/rights preferences and restrictions attached to securities:

Equity Shares:

The company has one class of equity shares having a par value of Rs. 2 each. Each share holder is eligible for one vote per share held. The dividend proposed by the board of director is subject to the approval of share holders in the ensuing Annual General meeting, except in case of interim dividend. In the event of liquidation, the equity share holders are eligible to receive the remaining assets of the company after distribution of all preferential dues, in proportion to their share holding.

" During the year ended 31 March 2012, the amount of per share dividend recognized for distribution to equity shareholders was Rs. 0.40(RY.31 March 2011 Rs. 0.40)"

(b) Terms of securities convertible into equity shares:

Convertible Warrants:

On August 30,2011 the company has allotted 60,00,000 convertible warrants on preferential allotment basis to promoter group company at a price of Rs. 61/- which shall be convertible into equity shares (at the sole option of warrant holder(s)) at any time within a period of 18 months from the date of allotment of warrants. The lock-in of shares acquired by exercise of the warrants shall befor the period of 3 years.

(e) On 28th January 2010 the Company had issued and allotted Global Depository Receipts (GDRs). The said GDRs are listed on at Euro MTF Market of Luxemburg Stock Exchange and the funds raised have been and are being utilized to finance the Expansion Plan and balance funds pending utilization have been placed as deposit with the Foreign Bank. The details of funds activity during the year are as follow:

(a) Nature of security and terms of repayment for secured borrowings Term loan:

Term Loan in Rupee Currency are secured by way of First hypothecation charge on Pari passu basis over the current assets of the company, situated at 1423 paiki of village: Rajpur, Taluka: Kadi, Dist:Mehsana. Second charge on paripasu basis on all fixed assets, situated at survey no 1423 paiki of village: Rajpur, Taluka: Kadi, Dist:Mehsana .The loan is further secured by personal guarantee of Managing Director, Promoter and a body corporate. Term Loan is carrying rate of Interest (at present) from 13% to 14.50% p.a. repayable over a period of 5 years.

Term Loan in Foreign currency are secured by way of First hypothecation charge on Pari passu basis over the current assets of the company, situated at 1423 paiki of village: Rajpur, Taluka: Kadi, Dist:Mehsana. Second charge on paripasu basis on all fixed assets, situated at survey no 1423 paiki of village: Rajpur, Taluka: Kadi, Dist:Mehsana .The loan is further secured by personal guarantee of Managing Director, Promoter and a body corporate. Term Loan is carrying rate of interest(at present) from LIBOR 7 to 8.5% repayable over a period of 5 years.

Vehicle Loan:

Secured vehicle loan from banks are secured by hypothecation of vehicles and are repayable over a period of 3 years carrying rate of interest 6 to 8% p.a. Further loan is guaranteed by Managing Director of the company. Secured vehicle loan from financial institutions are secured by hypothecation of vehicles and are repayable over a period of 3 years carrying rate of interest 9 to 11 p.a.%. Further loan is guaranteed by Managing Director of the company.

(b) Terms of repayment for unsecured borrowings Loan from financial institution:

The company shall repay the loan in two installments with the first installment of Rs. 10 crore payable on 31.03.2015 and second installment of Rs. 20 crore payable on 31.03.2016 which carries Rate of interest(at present) 15% p.a.

The Company has pledged 11940000 Equity Shares of Face Value of Rs. 2/- each, being held by one of its Promoter Group for availing Corporate Term Loan of Rs. 30 Crores.

Inter Corporate Deposits:

The company has taken interest free interoperate deposit which is repayable after a period of one year.

Loans and advances from related parties:

The company has taken interest free advance from related parties which is repayable after a period of one year.

Deferred Tax Liability calculated as above is excluding the assets pertaining to Power Generating Units, the income of which being deductible u/s 80 IA of The Income Tax Act 1961. As prescribed in ASI 3 & ASI 5 regarding application of AS 22 in situation of "Tax Holiday" period under Section 80 IA and 80 IB, where the timing difference arising in a year is reversed during Tax Holiday period itself, no Deferred Tax should be recognized.

Nature of security provided for cash credit facility:

Cash Credit Limit is secured by way of First hypothecation charge on Pari passu basis over the current assets of the company, situated at 1423 paiki of village: Rajpur, Taluka: Kadi, DistMehsana. Second charge on paripasu basis on all fixed assets, situated at survey no 1423 paiki of village: Rajpur, Taluka: Kadi, DistMehsana .The loan is further secured by personal guarantee of Managing Director, Promoteranda body corporate.

Nature of security provided for packing credit facility:

Packing Credit Limit is secured by way of First hypothecation charge on Pari passu basis over the current assets of the company, situated at 1423 paiki of village: Rajpur, Taluka: Kadi, DistMehsana. Second charge on paripasu basis on all fixed assets, situated at survey no 1423 paiki of village: Rajpur, Taluka: Kadi, DistMehsana .The loan is further secured by personal guarantee of Managing Director, Promoter and a body corporate.

* Based on the information/documents/ parties identified by the company and to the extent information available/gathered, information as required to be disclosed as per Micro, Small & Medium Enterprise Development Act, 2006 have been determined as follows:

Whatever information the company could identify as above were possible at the year end only, and in view of this according to the company, it could not identify payments beyond due date during the year and to make interest provisions to that extent, due to numerous transactions concluded during the year as per the agreed terms with the suppliers. However the company has made due interest provisions over the requisite year end balances.

* Liability towards Investor Education and Protection Fund under Section 205C of The Companies Act, 1956 ( NotDueason31.03.2012/31.03.2011)

Deferral/capitalization of exchange differences:

The company has opted to follow the option granted by notification no 225(E) dated March 31, 2009 issued by the Ministry of Corporate Affairs relating to limited relaxation in the provision of "Accounting Standard-11" in respect of Foreign Exchange differences on foreign currency loans:

(i) Exchange differences relating to long-term monetary items, arising during the year, in so far as they relate to the acquisition of a depreciable asset are added to / deducted from the cost of the asset and depreciated over the balance life of the asset.

(ii)In other cases such differences are accumulated in a "Foreign Currency Monetary Item Translation Difference Account" and amortized to the Profit and Loss account over the balance life of the long-term monetary item, however the period of amortization does not extend beyond; March 31,2020 [extended by notification no GSR 913(E) dated 29th December 2011].

- Cost of Fixed Assets and pre-operative expenses, being technical matter, are capitalized or allocated to Capital work in progress on the basis of data certified by technical person & the management.

- Borrowing cost includes interest and other bank charges including the exchange difference arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs which are directly related to the acquisition& construction of a qualifying asset. During the year borrowing cost amounting to Rs.4769.04 Lacs has been capitalised.

- Advances to Project suppliers are shown under Long-term loans & advances included in Capital advances.

*The balance lying with foreign bank of GDR issue account has been taken on the basis of E- statement of account received through mail.

** Margin Money deposits with a carrying amount of Rs. 874.13 Lacs (31 March 2011: Rs. 800.70 Lacs are given as margin against Letter of Credit open with bank)

(Rs. in Lacs)

1 CONTINGENT LIABILITIES AND COMMITMENTS As at As at (to the extent not provided for): March 31,2012 March 31,2011

A. Contingent liabilities Guarantees:

- Bank Guarantee 526.65 93.16

Other money for which company is contingently liable:

- Additional Premium on Land * 18.78 18.78

- Liability in respect of additional Stamp Duty on purchase of Land Not Ascertainable Not Ascertainable

* The Tribunal has cancelled the order regarding additional premium on Land and the matter is again referred to The Collectors, Mehsana for re-valuation of premium amount.

Defined Benefit Plan

The Company has adopted Accounting Standard 15 (AS-15) (Revised) "Employee Benefits" which is mandatory from accounting periods starting from Dec 7, 2006. Accordingly, the Company has provided for gratuity and leave encashment based on actuarial valuation done as per Projected Unit Credit Method.

I. Expected Employer's contribution for the next financial year

On the basis of previous year's trend, company is expecting to contribute the same amount as in 2011-12 to the defined contribution plan.

For the defined benefit plan company is not liable to contribute any amount for leave encashment as the plan is unfunded. However, for the gratuity which is funded, company is expecting to contribute such amount which can mitigate its future liability.

The estimate of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.

Interest expenses have been shown as net off interest received from trade parties, margin money and fixed deposits.

**Surplus of Rs. 171.09 Lacs being the impact of foreign exchange fluctuation on account of import, export, and foreign currency working capital have been recognized in other operating revenue however deficit of Rs. 287.68 Lacs being the impact of foreign exchange fluctuation on account of term loan facilities have been recognized in the finance cost.

2) Balances of Unsecured Loans, Creditors, Debtors, Loans & Advances and other parties are subject to their confirmations and reconciliation, due adjustment, if necessary, will be made on receipt thereof. However, the management does not expect any material difference affecting the current years' financial statements.

3) Based on the guiding principles given in Accounting Standard on "Segment Reporting" (AS-17) issued by the Institute of Chartered Accountants of India, the Company operates mainly in manufacturing and processing of Paper products and all other activities are incidental thereto, which have similar risk and return, accordingly, there are no separate reportable Segment as far as Primary Segment is concerned.

4) DERIVATIVE INSTRUMENTS:

a) The Company has entered into forward contracts to offset foreign currency risks arising from the amounts denominated in currencies other than the Indian Rupee. The counter parties to such forward contracts are banks.

Consequent to the announcement issued by the Institute of Chartered Accountants of India on Accounting of Derivatives, details of derivatives contracts outstanding as on 31-3-2012 are as under:

5) Till the year ended 31 March 2011, the Company was using pre-revised Schedule VI to the Companies Act 1956, for preparation and presentation of its financial statements. During the year ended 31 March 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the Company. The Company has re-classified previous year figures to conform to this year's classification. Previous year figures have been re-arranged and re-grouped, wherever necessary to make them comparable with those of current year as per revised Schedule-VI.

(*) The Company has not remitted any amount in foreign currencies on account of dividends during the year and does not have information as to the extent to which remittances, if any, in foreign currencies on account of dividends have been made by/on behalf of non-resident shareholders. The particulars of dividends payable to non-resident shareholders which were declared during the year, are given.

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Mar 31, 2011

1) Contingent liabilities not provided for:

(Rs in Lacs)

Particulars 31.03.2011 31.03.2010

Bank Guarantee 93.16 194.46

Additional Premium on Land * 18.78 18.78

Liability in respect of additional Stamp Duty on purchase of Land Not Ascertainable Not Ascertainable

Export Obligation in respect of Custom Duty on machinery imported under EPCG Scheme - 2930.22

* The Tribunal has cancelled the order regarding additional premium on Land and the matter is again referred to The Collectors, Mehsana for re-valuation of premium amount.

Further, the Company has received demands from Sales Tax Department for Rs. 1.47 Lacs, which are not acknowledged as debts and company has preferred an appeal to the appropriate authority. The Company has paid the same under protest and shown under the head "Loans & Advances". Due adjustment will be made on finalisation of the appeal.

2) Estimated amount of contracts, remaining to be executed on capital accounts and not provided for Rs 4422.86 Lacs net of advance (PY Rs. 1536.71 Lacs).

3) Surplus of Rs. 82.56 Lacs being the impact of foreign exchange fluctuation on account of export / import and Deficit of Rs. 178.91 Lacs being the impact of foreign exchange fluctuation on account of borrowing for working capital and term loan facilities have been recognized in the Profit & Loss Account.

4) The company has opted to follow the option granted by notification no 225(E) dated March 31, 2009 issued by the Ministry of Corporate Affairs relating to limited relaxation in the provision of "Accounting Standard-11" in respect of Foreign Exchange differences on foreign currency loans:

(i) Exchange differences relating to long-term monetary items, arising during the year, in so far as they relate to the acquisition of a depreciable asset are added to / deducted from the cost of the asset and depreciated over the balance life of the asset.

(ii) In other cases such differences are accumulated in a "Foreign Currency Monetary Item Translation Difference Account" and amortized to the Profit and Loss account over the balance life of the long-term monetary item, however the period of amortization does not extend beyond March 31, 2011.

Accordingly, Rs. Nil has been deducted (PY Rs 190.48 Lacs was deducted) from / to the cost of the fixed assets.

5) Interest expenses have been shown as net off interest received from trade parties, margin money and fixed deposits.

6) (i) Balances of Unsecured Loans, Creditors, Debtors, Loans & Advances and other parties are subject to their confirmations and reconciliation, due adjustment, if necessary, will be made on receipt thereof. However, the management does not expect any material difference affecting the current years' financial statements.

(ii) The balance lying with Euram Bank, Austria of GDR issue account has taken on the basis of E- statement of account received through mail.

7) The Company has taken approval of the Members at an Extra Ordinary General Meeting held on 20th April, 2011 for issue and allottment of 40,00,000 Equity Shares of Rs 2 each at a premium of Rs 58 per share on preferential basis. The Company has received Share Application Money amounting to Rs 3015 Lacs during the year. The allotment of the said Equity Shares is pending as the approval from the Regulatory Authorities is awaited.

8) On 28th January 2010 the Company had issued and allotted 10235455 Global Depository Receipts (GDRs) each representing one Equity Share of nominal value of Rs 10 each at the offer price US $ 2.64 aggregating to US $ 27.02 millions equivalent to Rs 12384.90 Lacs. As on 31st March 2011, it represents 5,11,77,275 Equity Shares having face value of Rs 2 each due to subdivision of share. The said GDRs are listed on at Euro MTF Market of Luxemburg Stock Exchange and the funds raised have been and are being utilized to finance the Expansion Plan and balance funds pending utilization have been placed as deposit with the Euram Bank.

9) Based on the guiding principles given in Accounting Standard on "Segment Reporting" (AS-17) issued by the Institute of Chartered Accountants of India, the Company operates mainly in manufacturing and processing of Paper products and all other activities are incidental thereto, which have similar risk and return, accordingly, there are no separate reportable Segment as far as Primary Segment is concerned.

(ii) The Remuneration to Managing Directors of the Company has been paid as agreed to, which is lower than the permissible minimum remuneration as provided in Schedule XIII of the Companies Act, 1956. As such, computation of net profits under Section 349 of the Companies Act, 1956 has not been given.

(iii) The above excludes provision for gratuity and leave encashment, since these are based on actuarial valuation done on an overall company basis.

Deferred Tax Liability calculated as above is excluding the assets pertaining to Power Generating Units, the income of which being deductible u/s 80 IA of The Income Tax Act 1961. As prescribed in ASI 3 & ASI 5 regarding application of AS 22 in situation of "Tax Holiday" period under Section 80 IA and 80 IB, where the timing difference arising in a year is reversed during Tax Holiday period itself, no Deferred Tax should be recognized.

In the current year, the Company has adopted Accounting Standard 15 (AS-15) (Revised) "Employee Benefits" which is mandatory from accounting periods starting from Dec 7, 2006. Accordingly, the Company has provided for gratuity and leave encashment based on actuarial valuation done as per Projected Unit Credit Method.

The estimate of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.

10) Related Party Disclosure:

(a) List of Related Parties and Relationships:

i. Concern where significant interest exists.

Name of the Concern Nature of Relationship

Orient Newsprint Ltd Control exists

Drupa Suppliers Pvt. Ltd Control exists

Rainbow Industrial Park Pvt. Ltd Control exists

Rainbow Infrabuild Pvt. Ltd Control exists

Nigo Best Packs Pvt. Ltd Control exists

Windsor Paper Pvt. Ltd Control exists

ii. Key Management Personnel and Relatives.

Lt Shri. Radheshyam N. Goenka - Executive Director till 28.05.2010

Shri. Ajay R. Goenka - Chairman & Managing Director

Shri.Manish Bagadia - Executive Director

Smt. Sangeeta A. Goenka - Sr Vice President (Executive Director till 28.05.2010)

Smt. Niyati Agrawal - Sr Vice President

11) Derivative Instruments :

a) The Company has entered into forward contracts to offset foreign currency risks arising from the amounts denominated in currencies other than the Indian Rupee. The counter parties to such forward contracts are banks.

12) Previous year figures have been re-arranged and re-grouped, wherever necessary to make them comparable those of current year.

---

Mar 31, 2010

1) Contingent liabilities not provided for:

(Rs in Lacs) 31.03.2010 31.03.2009

(a) Bank Guarantee 194.46 92.24

(b) Letter of Credit - 571.39

(c) Income Tax Demand - 0.56

(d) Additional Premium on Land ** 18.78 18.78

(e) Liability in respect of additional Stamp Duty Not Ascertainable Not Ascertainable on purchase of Land

(f) Export Obligation in respect of Custom Duty on 2930.22 6092.15 machinery imported under EPCG Scheme

** The Tribunal has cancelled the order regarding additional premium on Land and the matter is again referred to The Collectors, Mehsana for re-valuation of premium amount.

2) Estimated amount of contracts, remaining to be executed on capital accounts and not provided for Rs 1536.71 Lacs net of advance (Previous Year Rs. 1439.05 Lacs).

3) The Company has received demands from Sales Tax Department for Rs. 1.47 Lacs, which are not acknowledged as debts and company has preferred an appeal to the appropriate authority. The Company has paid the same under protest and shown under the head "Loans & Advances". Due adjustment will be made on finalisation of the appeal.

4) Deficit of Rs. 32.22 Lacs (Previous Year Surplus of Rs. 220 Lacs) being the impact of foreign exchange fluctuation on account of export sales and Surplus of Rs.359.04 Lacs (Previous Year Deficit of Rs. 108.91 Lacs) being the impact of foreign exchange fluctuation on account of borrowing for working capital and term loan facilities have been recognized in the Profit & Loss Account.

5) The company has opted to follow the option granted by notification no 225(E) dated March 31, 2009 issued by the Ministry of Corporate Affairs relating to limited relaxation in the provision of "Accounting Standard-11" in respect of Foreign Exchange differences on foreign currency loans:

(i) Exchange differences relating to long-term monetary items, arising during the year, in so far as they relate to the acquisition of a depreciable asset are added to / deducted from the cost of the asset and depreciated over the balance life of the asset. -

(ii) In other cases such differences are accumulated in a "Foreign Currency Monetary Item Translation Difference Account" and amortized to the Profit and Loss account over the balance life of the long-term monetary item, however the period of amortization does not extend beyond; March 31, 2011.

Accordingly, Rs.190.48 Lacs has been deducted (P.Y.Rs 500.71 Lacs was added) from / to the cost of the fixed assets.

6) There was no impairment loss on Fixed Assets on the basis of review carried out by the management in accordance with Accounting Standard 28 issued by Institute of Chartered Accountants of India.

7) Interest expenses have been shown as net off interest received from trade parties.

8) In term of section 78(2) of the Companies Act 1956, the company has adjusted the GDR issue expenses of Rs 457.97 Lacs against the securities premium.

9) Unsecured Loans include a Short Term Corporate Loan of Rs 5000 Lacs sanctioned by Punjab National Bank - Large Corporate Branch, Ahmedabad, (with in proposed Term Loan of Rs 8500 Lacs ) for a period of Six months against personal guarantee of Three Directors namely, Shri Radheshyam Goenka, Shri Ajay Goenka and Smt Sangeeta Goenka, and same shall be adjusted / absorbed from disbursement of Term Loan.

10) (i) Balances of Unsecured Loans, Creditors, Debtors, Loans & Advances and other parties are subject to their confirmations and reconciliation, due adjustment, if necessary, will be made on receipt thereof. However, the management does not expect any material difference affecting the current years financial statements.

(ii) The balance lying with Euram Bank, Austria of GDR issue account has taken on the basis of E- statement of account received through mail which is subject to Bank confirmation.

(iii) In the opinion of the Board, the current assets, loans and advances are approximately of the value stated in the Balance Sheet, except provision made, if realized in the ordinary course of the business. Provision for depreciation and for all known liabilities has been made in books of accounts.

11) Legal Expenses include Rs 15.85 Lacs incurred for stamp duty and fees paid for increased in Authorized Share Capital.

12) On 28th January 2010 the Company has issued and allotted 10235455 Global Depository Receipts (GDRs) each representing one Equity Share of nominal value of Rs 10 each at the offer price US $ 2.64 aggregating to US $ 27.02 millions equivalent to Rs 12384.90 Lacs. The said GDRs are listed on at Euro MTF Market of Luxemburg Stock Exchange and the funds raised have been and are being utilized to finance the Expansion Plan and balance funds pending utilization have been placed as deposit with the Bank.

13) Previous years figures have been re-arranged and re-grouped, wherever necessary to make them comparable with those of current year.

14) Related Party Disclosure:

(a) List of Related Parties.and Relationships:

i. Concern where significant interest exists.

Name of the Concern Nature of Relationship

Orient News Print Ltd Control exists

Drupa Suppliers Pvt. Ltd Control exists

Rainbow Industrial Park Pvt. Ltd Control exists (Formerly known as Karnavati Papers Pvt. Ltd)

ii. Key Management Personnel and Relatives.

Shri Ajay R. Goenka - Chairman & Managing Director

Shri Radheshyam N. Goenka - Executive Director

Smt. Sangeeta A. Goenka . - Executive Director

Shri G.P. Kothari - Whole Time Director

Shri A. H. Goswami - Whole Time Director

Smt. Draupadidevi Goenka - Relative

Smt. Niyati Agarwal - Relative

Miss Nikita Goenka - Relative

15) Sapient Reporting:

As the Company is engaged in only one ifepwHalbte segment, wWdhi iis imnatiuiaEliiJiiriiing ami poeessitmg rf Papers, there are no fepoirtablle segments as per /tamwufing SiaradMJ - 17..

16) Information pursuant of provisions of Part IV of Schedule VI to the Companies Act, 1956:

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Mar 31, 2009

1) Contingent liabilities not provided for: (Rs. in Lacs) 31.03.2009 31.03.2008

a) Bank Guarantee 92.24 1,18.11

(b) Letter of Credit 571.39 NIL

(c)Income Tax Demand 0.56 NIL

(d)Additional Premium on Land 18.78 18.78

(e) Liability in respect of additional Stamp Duty on purchase of Land Not Ascertainable Not Ascertainable

(f) Export Obligation in respect of Custom Duty on machinery imported under JEPCG Scheme] 6092.15 3961.36

2) Estimated amount of contracts, remaining to be executed on capital accounts and not provided for Rs. 1439.05 Lacs net of advance (Previous Year Rs.7510.53 Lacs).

3) The Company has received demands from Sales Tax Department for Rs. 1.47 Lacs which are not acknowledged as debts and company has preferred an appeal to the appropriate authority. The Company has paid the same under protest and shown under the head "Loans and Advances". Due adjustment will be made on finalization of the appeal.

4) Surplus of Rs. 220 Lacs (Previous Year Deficit of Rs. 58.04 Lacs) being the impact of foreign exchange fluctuation on account of export sales and deficit of Rs. 108.91 Lacs (Previous Year Deficit of Rs. 79.87 Lacs) being the impact of foreign exchange fluctuation on account of borrowing for working capital and term loan facilities have been recognized in the Profit & Loss Account.

5) The company has opted to follow the option granted by notification no 225(E) dated March 31, 2009 issued by the Ministry of Corporate Affairs relating to limited relaxation in the provision of/Accounting Standard-11" in respect of foreign Exchange differences on Foreign currency loans:

(I) Exchange differences relating to long-term monetary items, arising during the year, in so far as they relate to the acquisition of a depreciable asset are added to / deducted from the cost of the asset and depreciated over the balance life of the asset.

(ii) In Other cases such differences are accumulated in a "Foreign Currency Monetary Item Translation Difference Account" and amortized to the Profit and Loss account over the balance life of the long-term monetary item, however that the period of amortization does not extend beyond; March 31, 2011.

Exchange differences relating to long-term monetary items have been recognized in the Profit and Loss account in the previous year. These have now been reversed from the General Reserve and accounted for in accordance with (i) and (ii) above.

Accordingly, Rs 500.71 Lacs has been added to the cost of the fixed assets/ shown as part of pre operative expenses and Rs 114.89 Lacs transferred to Foreign Currency Monetary Item Translation Difference AccounKunamortized balance at year end Rs 54.56 Lacs) and consequently, the profit for the year is higher by Rs 561.04 Lacs and the General Reserve is higher by Rs. 37.24 Lacs.

6) Change of Method of Accounting for depreciation -

Depreciation up to the financial year ended on 31.03.2008 on all fixed assets (except plant & machinery purchased on or after 1.4.1999) was hitherto provided on "Straight Line Method". During the year ended 31.03.2009, the company, for more appropriate presentation / preparation of financial statements, has changed the method of providing depreciation on all its assets to "Written Down Value Method" and accordingly as required by Accounting Standard -6 "Accounting for Depreciation", depreciation is recalculated retrospectively from the date of installation. The resultant deficit is adjusted in current years account. Due to this change, depreciation for the year is higher by Rs 421.36 Lacs and Consequently to the extent profit for the year is lower.

7) There was no impairment loss on Fixed Assets on the basis of review carried out by the management in accordance with Accounting Standard 28 issued by Institute of Chartered Accountants of India.

8) Interest expenses have been shown as net off interest received from trade parties.

9) Packing Materials Consumed has been shown as net of claim for non receipt of materials.

10) Sundry Creditors includes Rs. 8.01 Lacs (Previous Year 16,11 Lacs) due to the Small Scale Industrial undertakings as identified by the management from the available documents / information, which are outstanding for more than 30 days as on Balance Sheet Date.

11) (I) Balances of Unsecured Loans, Creditors, Debtors, Loans & Advances and other parties are subject to their confirmations and reconciliation, due adjustment, if necessary, will be made on receipt thereof. However, the management does not expect any material difference affecting the current yearsfinancial statements.

(ii) In the opinion of the Board, the current assets, loans and advances are approximately of the value stated in the Balance Sheet, except provision made, if realised in the ordinary course of the business. Provision for depreciation and for all known liabilities has been made in accounts.

12) Previous years figures have been re-arranged and re-grouped, wherever necessary to make them comparable with those of current year.

13) Related Party Disclosure:

(a) List of Related Parties and Relationships

i. Concern where significant interest exists.

Name of the Concern Nature of Relationship

Orient News Print Ltd Control exists

Drupa Suppliers Pvt. Ltd Control exists

Karnavati Papers Pvt, Ltd, Control exists

Zenith Distributors Partnership firm being relative of Managing Director

ii, Key Management Personnel and Relatives,

Shri Ajay R, Goenka - Chairman & Managing Director

Shri Radheshyam N, Goenka - Executive Director

Smt. Sangeeta A, Goenka - Executive Director

Shri 0, P. Goyal - Whole Time Director

Shri A. H, Goswami - Whole Time Director

Smt, Draupadidevi Goenka - Relative

Miss Niyati Goenka - Relative

Miss Nikita Goenka; Relative

14) Segment Reporting:

As the Company is engaged in only one segment, which is manufacturing and processing of Papers, there are no reportable segments as per Accounting Standard - 17.

15) Information pursuant to provisions of paragraph 3 & 4 of part II, Schedule VI of the Companies Act, 1956.