Notes to Accounts of Rushabh Precision Bearings Ltd.

Mar 31, 1998

1. Deferred payment guarantees from Union Bank of India is secured by hypothecation of machinery purchased under DPGL.

2. Cash Credit loan from Union Bank of India is secured by hypothecation of Stock in trade and personal guarantee of Chairman & Managing Director

3. Working Capital Loan from Industrial Development of India (IDBI) is secured by Mortgage by deposit of title deeds on its properties situated at Wadhwan City, Dist. Surendranagar, Gujarat State and Personal Guarantee of the Chairman and Managing Director.

4. Motorcar loans from Citi Bank are secured by hypothecation of Two Motorcars.

5. The Company has on 24th December, 1996 privately placed a Secured Redeemable Non-Convertible Debentures issue of Rs.4.00 Crores (each Rs.1000/-) secured by charge on assets which are acquired out of the proceeds of the Debenture issue and such other assets as may be decided by the Board of Directors in consultation with Trustees

6. H.P. Finance from GSFC is secured by personal guarantee of Directors.

7. Outstanding balances of Suppliers, Debtors, Creditors and others are subject to Confirmation.

8. The Inter Corporate Deposits received by the Company during the financial year are subject to confirmation from the respective parties and in case of some there are legal disputes pending in the Court.

9. In the opinion of the Board & to the best of their knowledge belief, current assets, loans and advances are stated in the Balance Sheet at the realisable value in ordinary course of business.

10. The company has not paid managerial remuneration to Shri. Rajesh D. Vora, Shri. Dhirajlal H. Vora, Smt. Sunayana R. Vora & Shri. Rasik V. Tolia during the year although the same were approved in the Annual General Meeting held on 18th September 1996 as the aforesaid Directors have waived the same vide their waiver letter dated 31st March 1998.

11. The company has disputed the Income Tax liability of Rs. 11059095/- for the A.Y. 1996-97 and on the contrary claimed a Refund of Rs. 1628012/- in the Revised Return of Income Tax filed by the Company for the relevant Financial Year on 1st December 1997. As the said Revised Return has been rejected by the Assessing Officer of Income Tax. Therefore Company has not Given any effect of the said Revised Financial Account as on 31.03.1996, in the current Year.

12. No provision has been made in the Accounts for Income Tax as the Unit is located in Government notified backward area which is eligible for benefits u/s 80IA.

13. Additional information pursuant to the provision of paragraph 3, 4C & 4D of part 2 of Schedule VI of the Companies Act, 1956.

14. The expenditure incurred on private placement of debentures is being treated as deferred Revenue expenditure to be amortised over of 10 years and thus accordingly Rs. 19322 is charged to Revenue account during the year.

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Mar 31, 1996

NOTES TO SHARE CAPITAL:

a) I. 27,50,000 Equity Shares of Rs.10/- each fully paid-up have been allotted in terms of public issue of Equity Shares during the year.

II. 12,50,000 Equity shares of Rs.10/- each fully paid-up has been allotted to the Promoters, Directors their friends relatives & associates on firm basis (for five year Lock in period) during the year.

b) In the year 1994-95 4,00,000 equity shares of Rs.10/- each were allotted as fully paid up by way of Bonus share, after capitalising the free reserve.

NOTES TO SECURED LOANS:

1. Term loans from Union Bank of India are secured by Equitable mortgage of Factory Land and Building and hypothication of entire plant & machinery.

2. Deferred payment guarantees from Union Bank of India is secured by hypothication of machinery purchased under DPGL.

3. Usance bill Discounting Loan from Union Bank of India is secured against usance bill not exceeding 90 days covering sale of Bearings.

4. Cash Credit loan from Union Bank of India is secured by hypothication of Stock in trade.

5. Motorcar loans from Citi Bank are secured by hypothication of Two Motorcars.

NOTES TO ACCOUNTS:

1. The Contingent liability of Rs. 1,12,500 in respect of guarantee given by the company to the Bombay Stock Exchange is not provided in the books.

2. The Estimated amount of contracts remaining to be executed on Capital account is Rs.82,01,304/-.

3. As per the report of the Chartered Engineer and as Certified by the Management, the following assets had been valued at their replacement values during the year 1992-93. Due to the revaluation of the assets the Profit & Loss account had been debited by an additional Depreciation of Rs.27,87,818.

4. Outstanding balances of Contractors, Suppliers, Debtors, Creditors & other are subject to Confirmation reconciliation.

In the opinion of the Board & to the best of their knowledge & belief, the Current Assets, loans & Advances are considered realisable in the ordinary course of business at which they are stated in the Balance Sheet.

5. Share Application Refund Money of Rs. 12,76,000 is lying with the banks pending realisation of Refund orders.

6. The expenditure incurred on Public Issue of Shares is being treated as deferred Revenue expenditure to be amortised over of 10 years. Accordingly Rs. 2,10,803 is charged to Revenue account during the year.