Notes to Accounts of Soma Papers & Industries Ltd.

Mar 31, 2014

1. The net worth of the Company is fully eroded and the Company is a sick industrial company within the meaning of clause (o) of sub-section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), for which a reference has been made to the Board of Industrial and Financial Reconstruction (BIFR) under Section 15 of SICA.

2. As per scheme of arrangement sanctioned by the Bombay High Court under Section 391 and 394 of Companies Act, 1956 made between Shree Vindhya Paper Mills Ltd and the Company, the coating division of Shree Vindhya Paper Mills Ltd. with its assets, investments, liabilities and reserves as at 31st December, 1991 has been transferred to and vested with the Company with effect from 1st January, 1992. However, certain assets and liabilities of the said division before its transfer though reflected in the accounts are yet to be transferred in the name of the Company.

3. Contingent liability not provided for in respect of:

As at As at 31/03/2014 31/03/2013 Rs. Rs.

a) Claims against Company not acknowledged as debts 437,567 437,567

b) Guarantee given to financial institution for loans taken by its 48,454 48,454 employees

c) Bank guarantee to constituents and others. 1,360,000 1,360,000

d) Corporate Guarantee given to financial institutions and banks 25,000,000 25,000,000 on behalf of Vecron Industries Limited (a wholly owned subsidiary Company)

e) Liability as may arise for non-payment of wages, PF, Gratuity Amount Amount and other labour dues since the date of closure of factory, as unascertained unascertained the case filed by the worker''s union in Nashik Labour Court

f) Liability as may arise due to non compliance of certain fiscal Amount Amount statute unascertained unascertained

g) Income Tax Penalty Demand 19.38,082 19.38,082

h) Liability for Interest on deferred sales tax liability Amount Amount unascertained unascertained

i) Sales Tax Liability 1996-97 51,606 51,606

j) Bank Liability – Subsidiary Co. 4,91,14,993 4,91,14,993

4. The bank has auctioned the Land. Factory Premises, Plant and Machinery, Inventory and other assets lying at Nasik in Financial Year 2007-08 which was approved by the Debt Recovery Tribunal. On the basis of correspondence received from the bank, auction proceeds received by bank has been utilised directly by bank to repaid Bank Cash Credit Liabilities, Debentures with interest, Electricity Charges, deposit given to Labour Court for Labour Settlement and other related expenses. The documentary evidences for such payments made not available with the Company. The accounting of the above transaction has been done on the basis of correspondence taken place with bank. No confirmations from banks, debenture holders, electricity department or labour court have been received against the proceeds received.

5. The auction proceed which were not utilized by bank for payment of any liabilities of the company has been kept by bank. The bank is not providing interest on such amount held.

6. Sales Tax Incentive loan became payable w.e.f. 4th August, 2004 as per terms of its sanction due to closure of factory / business. The liability is shown under the head "Current Liability". The management is of the view that the liability will be settled with the Sales Tax Authority, hence no interest on the loan amount due has been provided in the books of accounts.

7. Security deposit received from the dealers shown under the head "Current Liability" The management is of the view that Interest on deposit will not be paid hence not provided.

8. There were no amounts due to Small Scale and / or Ancillary Industrial suppliers on account of principal and / or interest as at the end of year. This disclosure is based on the information available with the Company regarding the status of the suppliers as defined under the Interest on Delayed Payments of Small Scale and Ancillary Industrial undertaking Act, 1993.

9. The Company has closed the business; hence segment reporting is not applicable.

10. The secondary segment, i.e. ''geographical segment by location of customers'' is not applicable.

11. Related party disclosures:

Related party relationships:

A Subsidiary Company Vecron Industries Limited

enterprises where control exists)

B Key management personnel Mr. Vikram Somani

Mr. Bharat Somani

C Enterprise in which Key management SRS Trading & Agencies Private Limited personnel have significant influence

Notes:

1. The related party relationships have been determined on the basis of the requirements of the Accounting Standard (AS-18) ''Related Party Disclosures'' issued by the Institute of Chartered Accountants of India and the same have been relied upon by the auditors.

2. The relationships as mentioned above pertain to those related parties with whom transactions have taken place during the year (except where control exists, in which case the relationships are disclosed irrespective of exact transactions).

12. As per the Accounting standard AS-22 "Accounting for Taxes on Income" issued by the Institute of

Chartered Accountants of India, the deferred tax assets (net) arising during the previous year on account of timing difference. Having regard to the net worth of the Company being fully eroded and the Company is a Sick industrial company within the meaning of SICA and uncertainty as to whether the Company can continue as a going concern, the deferred tax assets / liabilities has not been recognised.

13. In the opinion of the management, current assets, loans and advances have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated and provision for all known and determined liabilities are adequate and not in the excess of the amount reasonably stated. The balances in case of sundry creditors, debtors and banks are subject to confirmation and reconciliations. The differences if any, as may arise will be accounted for on receipt of such information/reconciliation.

14. In view of the carried forward losses, provision for current year taxation and provision for deferred tax is not provided in the books of accounts.

15. Previous year figures have been regrouped and rearranged, wherever necessary.

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Mar 31, 2013

1. The net worth of the Company is fully eroded and the Company is a sick industrial company within the meaning of clause (o) of sub-section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), for which a reference has been made to the Board of Industrial and Financial Reconstruction (BIFR) under Section 15 of SICA.

2. As per scheme of arrangement sanctioned by the Bombay High Court under Section 391 and 394 of Companies Act, 1956 made between Shree Vindhya Paper Mills Ltd and the Company, the coating division of Shree Vindhya Paper Mills Ltd. with its assets, investments, liabilities and reserves as at 31st December, 1991 has been transferred to and vested with the Company with effect from 1st January, 1992. However, certain assets and liabilities of the said division before its transfer though reflected in the accounts are yet to be transferred in the name of the Company.

3. Contingent liability not provided for in respect of:

As at As at 31/03/2013 31/03/2012 Rs. Rs.

a) Claims against Company not acknowledged as debts 437,567 437,567

b) Guarantee given to financial institution for loans taken by its 48,454 48,454 employees

c) Bank guarantee to constituents and others. 1,360,000 1,360,000

d) Corporate Guarantee given to financial institutions and banks 25,000,000 25,000,000 on behalf of Vecron Industries Limited (a wholly owned subsidiary Company)

e) Liability as may arise for non-payment of wages, PF, Gratuity Amount Amount

and other labour dues since the date of closure of factory, as unascertained unascertained the case filed by the worker''s union in Nashik Labour Court

4. The bank has auctioned the Land. Factory Premises, Plant and Machinery, Inventory and other assets lying at Nasik in Financial Year 2007-08 which was approved by the Debt Recovery Tribunal. On the basis of correspondence received from the bank, auction proceeds received by bank has been utilised directly by bank to repaid Bank Cash Credit Liabilities, Debentures with interest, Electricity Charges, deposit given to Labour Court for Labour Settlement and other related expenses. The documentary evidences for such payments made not available with the Company. The accounting of the above transaction has been done on the basis of correspondence taken place with bank. No confirmations from banks, debenture holders, electricity department or labour court have been received against the proceeds received.

5. The auction proceed which were not utilized by bank for payment of any liabilities of the company has been kept by bank. The bank is not providing interest on such amount held.

6. Sales Tax Incentive loan became payable w.e.f. 4* August, 2004 as per terms of its sanction due to closure of factory / business. The liability is shown under the head "Current Liability". The management is of the view that the liability will be settled with the Sales Tax Authority, hence no interest on the loan amount due has been provided in the books of accounts.

7. Security deposit received from the dealers shown under the head "Current Liability" The management is of the view that Interest on deposit will not be paid hence not provided.

8. There were no amounts due to Small Scale and / or Ancillary Industrial suppliers on account of principal and / or interest as at the end of year. This disclosure is based on the information available with the Company regarding the status of the suppliers as defined under the Interest on Delayed Payments of Small Scale and Ancillary Industrial undertaking Act, 1993.

9. The Company has closed the business; hence segment reporting is not applicable.

10. The secondary segment, i.e. ''geographical segment by location of customers'' is not applicable.

11. Related party disclosures:

Related party relationships:

A Subsidiary Company Vecron Industries Limited

enterprises where control exists)

B Key management personnel Mr. Vikram Somani

Mr. BharatSomani

C Enterprise in which Key management SRS Trading & Agencies Private Limited

personnel have significant influence

12. As per the Accounting standard AS-22 "Accounting for Taxes on Income" issued by the Institute of

Chartered Accountants of India, the deferred tax assets (net) arising during the previous year on account of timing difference. Having regard to the net worth of the Company being fully eroded and the Company is a Sick industrial company within the meaning of SICA and uncertainty as to whether the Company can continue as a going concern, the deferred tax assets / liabilities has not been recognised.

13. In the opinion of the management, current assets, loans and advances have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated and provision for all known and determined liabilities are adequate and not in the excess of the amount reasonably stated. The balances in case of sundry creditors, debtors and banks are subject to confirmation and reconciliations. The differences if any, as may arise will be accounted for on receipt of such information/ reconciliation.

14. Payment to Auditor as:

(a) Statutory Audit Fees Rs.22,500

(b) Tax Audit Fees

(c) Certification and Consultation Fees Rs. 7,500

15. In view of the carried forward losses, provision for current year taxation and provision for deferred tax is not provided in the books of accounts.

16. Previous year figures have been regrouped and rearranged, wherever necessary.

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Mar 31, 2012

1. The net worth of the Company is fully eroded and the Company is a sick industrial company within the meaning of clause (o) of sub-section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), for which a reference has been made to the Board of Industrial and Financial Reconstruction (BIFR) under Section 15 of SICA.

2. As per scheme of arrangement sanctioned by the Bombay High Court under Section 391 and 394 of Companies Act, 1956 made between Shree Vindhya Paper Mills Ltd and the Company, the coating division of Shree Vindhya Paper Mills Ltd. with its assets, investments, liabilities and reserves as at 31st December, 1991 has been transferred to and vested with the Company with effect from 1st January, 1992. However, certain assets and liabilities of the said division before its transfer though reflected in the accounts are yet to be transferred in the name of the Company.

3. Contingent liability not provided for in respect of:

As at As at 31/03/2012 31/03/2011 Rs. Rs.

a) Claims against Company not acknowledged as debts 437,567 437,567

b) Guarantee given to financial institution for loans taken by its 48,454 48,454 employees

c) Bank guarantee to constituents and others. 1,360,000 1,360,000

d) Corporate Guarantee given to financial institutions and banks 25,000,000 25,000,000 on behalf of Vecron Industries Limited (a wholly owned

subsidiary Company)

e) Liability as may arise for non-payment of wages, PF, Gratuity Amount Amount

and other labour dues since the date of closure of factory, as unascertained unascertained

the case filed by the worker''s union in Nashik Labour Court

f) Liability as may arise due to non compliance of certain fiscal Amount Amount statute unascertained unascertained

g) Income Tax Penalty Demand 19.38,082 19.38,082

h) Liability for Interest on deferred sales tax liability Amount Amount

unascertained unascertained

4. The bank has auctioned the Land. Factory Premises, Plant and Machinery, Inventory and other assets lying at Nasik in Financial Year 2007-08 which was approved by the Debt Recovery Tribunal. On the basis of correspondence received from the bank, auction proceeds received bank has been utilised directly by bank to repaid Bank Cash Credit Liabilities, Debentures with interest, Electricity Charges, deposit given to Labour Court for Labour Settlement and other related expenses. The documentary evidences for such payments made not available with the Company. The accounting of the above transaction has been done on the basis of correspondence taken place with bank. No confirmations from banks, debenture holders, electricity department or labour court have been received against the proceeds received.

5. The auction proceed which were not utilized by bank for payment of any liabilities of the company has been kept by bank. The bank is not providing interest on such amount held.

6. Sales Tax Incentive loan became payable w.e.f. 4th August, 2004 as per terms of its sanction due to closure of factory / business. The liability is shown under the head "Current Liability". The management is of the view that the liability will be settled with the Sales Tax Authority, hence no interest on the loan amount due has been provided in the books of accounts.

7. Security deposit received from the dealers shown under the head "Current Liability" The management is of the view that Interest on deposit will not be paid hence not provided.

8. There were no amounts due to Small Scale and / or Ancillary Industrial suppliers on account of principal and / or interest as at the end of year. This disclosure is based on the information available with the Company regarding the status of the suppliers as defined under the Interest on Delayed Payments of Small Scale and Ancillary Industrial undertaking Act, 1993.

9. The Company has closed the business, hence segment reporting is not applicable.

10. The secondary segment, i.e. ''geographical segments by location of customers'' is not applicable.

Notes:

1. The related party relationships have been determined on the basis of the requirements of the Accounting Standard (AS-18) ''Related Party Disclosures'' issued by the Institute of Chartered Accountants of India and the same have been relied upon by the auditors.

2. The relationships as mentioned above pertain to those related parties with whom transactions have taken place during the year (except where control exists, in which case the relationships are disclosed irrespective of exact transactions).

11. As per the Accounting standard AS-22 "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, the deferred tax assets (net) arising during the previous year on account of timing difference. Having regard to the net worth of the Company being fully eroded and the Company is a Sick industrial company within the meaning of SICA and uncertainty as to whether the Company can continue as a going concern, the deferred tax assets / liabilities has not been recognised.

12. In the opinion of the management, current assets, loans and advances have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated and provision for all known and determined liabilities are adequate and not in the excess of the amount reasonably stated. The balances in case of sundry creditors, debtors and banks are subject to confirmation and reconciliations. The differences if any, as may arise will be accounted for on receipt of such information / reconciliation.

13. In view of the carried forward losses, provision for current year taxation and provision for deferred tax is not provided in the books of accounts.

14. Previous year figures have been regrouped and rearranged, wherever necessary.

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Mar 31, 2011

1.The net worth of the Company is fully eroded and the Company is a sick industrial company within the meaning of clause (o) of sub-section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), for which a reference has been made to the Board of Industrial and Financial Reconstruction (BIFR) under Section 15 of SICA.

2. As per scheme of arrangement sanctioned by the Bombay High Court under Section 391 and 394 of Companies Act, 1956 made between Shree Vindhya Paper Mills Ltd and the Company, the coating division of Shree Vindhya Paper Mills Ltd. with its assets, investments, liabilities and reserves as at 31st December, 1991 has been transferred to and vested with the Company with effect from 1st January, 1992. However, certain assets and liabilities of the said division before its transfer though reflected in the accounts are yet to be transferred in the name of the Company.

3 a) The bank has auctioned the Land. Factory Premises, Plant and machinery, Inventory and other assets lying at Nasik in previous year, which was approved by the Debt Recovery Tribunal. On the basis of correspondence received from the bank, auction proceeds received bank has been utilised directly by bank to repaid Bank Cash Credit Liabilities, Debentures with interest, Electricity Charges, deposit given to Labor Court for Labor Settlement and other related expenses. The documentary evidences for such payments made not available with the Company. The accounting of the above transaction has been done on the basis of correspondence taken place with bank. No confirmations from banks, debenture holders, electricity department or labor court have been received against the proceeds received.

b) Interest income on Balance amount of auction money, lying with bank not provided since bank has not provided any interest on such amount.

4. Sales Tax Incentive loan became payable w.e.f. 4th August, 2004 as per terms of its sanction due to closure of factory / business. The liability is shown under the head "Unsecured Loan" instead of "Current Liability". Since, the management of the view of to settle the liability with Sales tax interest on the mount due has not been provided in the books of accounts.

5. Security deposit received from the dealers shown under the head "Unsecured Loan" though there is no business has been carried out during the year. The management is of the opinion that such liability is payable in due course. Interest on deposit is not payable hence not provided.

6. There were no amounts due to Small Scale and / or Ancillary Industrial suppliers on account of principal and / or interest as at the end of year. This disclosure is based on the information available with the Company regarding the status of the suppliers as defined under the Interest on Delayed Payments of Small Scale and Ancillary Industrial undertaking Act, 1993.

7. Payments to and provisions for employees includes remuneration paid To Since the factory as well as Plant and Machinery has been sold out Information required as per para 9 is Nil.

Earnings in foreign currency

FOB value of exports (Rupee payment) — —

8.The Company has closed the business, hence segment reporting is not applicable.

9.The secondary segment, i.e. ''geographical segments by location of customers'' is not applicable.

10. Related party disclosures:

Related party relationships:

a) Subsidiary Company

(Enterprises where control exists) : Vecron Industries Limited

b) Key management personnel : Mr. Vikram Somani

Mr. Bharat Somani c)Enterprise in which Key management personnel have significant influence. : SRS Trading & Agencies P. Ltd.

Notes:

1.The related party relationships have been determined on the basis of the requirements of the Accounting Standard (AS-18) ''Related Party Disclosures'' issued by the Institute of Chartered Accountants of India and the same have been relied upon by the auditors.

2.The relationships as mentioned above pertain to those related parties with whom transactions have taken place during the year (except where control exists, in which case the relationships are disclosed irrespective of exact transactions).

11. As per the Accounting standard AS-22 "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, the deferred tax assets (net) arising during the previous year on account of timing difference. Having regard to the net worth of the Company being fully eroded and the Company is a Sick industrial company within the meaning of SICA and uncertainty as to whether the Company can continue as a going concern as mentioned in note 1 above, the deferred tax assets has not been recognised during the year.

12. The Company has received a favorable award against GTC Industries Ltd. (GTC) given by the Arbitral Tribunal directing GTC to pay Rs. 32.51 lacs with interest @ 15% p.a. from 01.01.1997 till payment plus Rs. 2.00 lacs for cost of arbitration proceedings in the matter of merger of Raighadh Paper Mills Ltd. (RPL) with the Company and take over of Premier Paper Mills Ltd. (PPML) by the Company, as a composite deal on the terms and conditions mentioned in the agreement dated 13.12.1995 made by the Company with GTC. During the year Company has received the amount and considered as income.

13. In the opinion of the management, current assets, loans and advances have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated and provision for all known and determined liabilities are adequate and not in the excess of the amount reasonably stated. The balances in case of sundry creditors, debtors and banks are subject to confirmation and reconciliations. The differences if any, as may arise will be accounted for on receipt of such information / reconciliation.

14. The balance sheet abstract and Companies general business profile as per GSR No. 388(E) [ F. No. 3/ 24/93-CLV], Dated 15/05/1995, issued by the Department of Company Affairs, Ministry of Law, Justice and

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Mar 31, 2010

1. The net worth of the Company is fully eroded and the Company is a sick industrial company within the meaning of clause (o) of sub-section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), for which a reference has been made to the Board of Industrial and Financial Reconstruction (BIFR) under Section 15 of SICA.

2. As per scheme of arrangement sanctioned by the Bombay High Court under Section 391 and 394 of Companies Act, 1956 made between Shree Vindhya Paper Mills Ltd and the Company, the coating division of Shree Vindhya Paper Mills Ltd. with its assets, investments, liabilities and reserves as at 31st December, 1991 has been transferred to and vested with the Company with effect from 1st January, 1992. However, certain assets and liabilities of the said division before its transfer though reflected in the accounts are yet to be transferred in the name of the Company.

3. Contingent liability not provided for in respect of:

As at As at 31/03/2010 31/03/2009 Rs. Rs.

a) Claims against Company not acknowledged as debts 437,567 437,567

b) Guarantee given to financial institution for loans taken by its employees 48,454 48,454

c) Bank guarantee to constituents and others. 1,360,000 1,360,000

d) Corporate Guarantee given to financial 25,000,000 25,000,000 institutions and banks on behalf of Vecron Industries Limited (a wholly owned subsidiary Company)

e) Liability as may arise for non-payment of Amount Amount wages, PF, Gratuity and other labour unascert unascertaine dues since the date of closure of factory, ained d as the case filed by the worker''s union in Nashik Labour Court

F) Liability as may arise due to non Amount Amount compliance of certain fiscal statute unascert unascertaine ained d

g) Income Tax Penalty Demand 19.38,082 19.38,082

h) Liability for Interest on deferred sales tax Amount Amount liability unacert unacertained ained



4. a) The bank has auctioned the Land. Factory Premises, Plant and Machinery, Inventory and other assets lying at Nasik in previous year, which was approved by the Debt Recovery Tribunal. On the basis of correspondence received from the bank, auction proceeds received bank has been utilised directly by bank to repaid Bank Cash Credit Liabilities, Debentures with interest, Electricity Charges, deposit given to Labour Court for Labour Settlement and other related expenses. The documentary evidences for such payments made not available with the Company. The accounting of the above transaction has been done on the basis of correspondence taken place with bank. No confirmations from banks, debenture holders, electricity department or labour court have been received against the proceeds received.

b) Interest income on Balance amount of auction money, lying with bank not provided since bank has not provided any interest on such amount.

5. Sales Tax Incentive loan became payable w.e.f. 4th August, 2004 as per terms of its sanction due to closure of factory / business. The liability is shown under the head "Unsecured Loan" instead of "Current Liability". Since, the management of the view of to settle the liability with Sales tax interest on the mount due has not been provided in the books of accounts.

6. Security deposit received from the dealers shown under the head "Unsecured Loan" though there is no business has been carried out during the year. The management is of the opinion that such liability is payable in due course. Interest on deposit is not payable hence not provided.

7. There were no amounts due to Small Scale and / or Ancillary Industrial suppliers on account of principal and / or interest as at the end of year. This disclosure is based on the information available with the Company regarding the status of the suppliers as defined under the Interest on Delayed Payments of Small Scale and Ancillary Industrial undertaking Act, 1993.

8. The Company has closed the business, hence segment reporting is not applicable.

9. The secondary segment, i.e. "geographical segments by location of customers" is not applicable.

10. Related party disclosures:

Related party relationships:

a) Subsidiary Company : Vecron Industries Limited (Enterprises where control exists)

b) Key management : Mr. Vikram Somani personnel Mr. Bharat Somani

c) Enterprise in which Key SRS Trading & Agencies Private management personnel Limited have significant influence

Notes:

1. The related party relationships have been determined on the basis of the requirements of the Accounting Standard (AS-18) ''Related Party Disclosures'' issued by the Institute of Chartered Accountants of India and the same have been relied upon by the auditors.

2. The relationships as mentioned above pertain to those related parties with whom transactions have taken place during the year (except where control exists, in which case the relationships are disclosed irrespective of exact transactions).

11. As per the Accounting standard AS-22 "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, the deferred tax assets (net) arising during the previous year on account of timing difference. Having regard to the net worth of the Company being fully eroded and the Company is a Sick industrial company within the meaning of SICA and uncertainty as to whether the Company can continue as a going concern as mentioned in note 1 above, the deferred tax assets has not been recognised during the year.

12. The Company has received a favourable award against GTC Industries Ltd. (GTC) given by the Arbitral Tribunal directing GTC to pay Rs. 32.51 lacs with interest @ 15% p.a. from 01.01.1997 till payment plus Rs. 2.00 lacs for cost of arbitration proceedings in the matter of merger of Raighadh Paper Mills Ltd. (RPL) with the Company and take over of Premier Paper Mills Ltd. (PPML) by the Company, as a composite deal on the terms and conditions mentioned in the agreement dated 13.12.1995 made by the Company with GTC. The Company has not accounted for the said award pending disposal of appeal filed by GTC in Bombay High Court against the said award.

13. In the opinion of the management, current assets, loans and advances have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated and provision for all known and determined liabilities are adequate and not in the excess of the amount reasonably stated. The balances in case of sundry creditors, debtors and banks are subject to confirmation and reconciliations. The differences if any, as may arise will be accounted for on receipt of such information / reconciliation.

14. Previous year figures have been regrouped and rearranged, wherever necessary.

15. The balance sheet abstract and Company''s general business profile as per GSR No. 388(E) [F. No. 3/24/93-CLV], Dated 15/05/1995, issued by the Department of Company Affairs, Ministry of Law, Justice and Company Affairs is given in Annexure ''A''.

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Mar 31, 2008

1. The net worth of the Company is fully eroded and the Company is a sick industrial company within the meaning of clause (o) of sub-section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), for which a reference has been made to the Board of Industrial and Financial Reconstruction (BIFR) under Section 15 of SICA.

2. As per scheme of arrangement sanctioned by the Bombay High Court under Section 391 and 394 of Companies Act, 1956 made between Shree Vindhya Paper Mills Ltd and the Company, the coating division of Shree Vindhya Paper Mills Ltd. with its assets, investments, liabilities and reserves as at 31st December, 1991 has been transferred to and vested with the Company with effect from 1st January, 1992. However, certain assets and liabilities of the said division before its transfer though reflected in the accounts are yet to be transferred in the name of the Company.

3. Contingent liability not provided for in respect of:

As at As at 31/03/2008 31/03/2007 Rs. Rs.

a) Claims against Company not acknowledged as debts 437,567 437,567 b) Guarantee given to financial institution for loans taken by its employees 48,454 48,454 c) Bank guarantee to constituents and others. 1,360,000 1,360,000 d) Corporate Guarantee given to financial 25,000,000 25,000,000 institutions and banks on behalf of Vecron Industries Limited (a wholly owned subsidiary Company)

4. a) 14% convertible debentures privately placed with LIC Mutual Fund is secured by way of first mortgage of all immovable properties, both present and future and also by the hypothecation of the movable properties of the Company (save and except book-debts and subject to prior charges on inventories in favour of Companys bankers) ranking pari passu interse.

b) Cash credit advances are secured by hypothecation of all present and future goods, book debts, and other current assets of the Company by way of prior/first charge ranking pari passu interse and further by second charge on companys all immovable properties both present and future and guaranteed by director and executive director of the Company. Interest on cash credit facility has not been provided.

5. In view of closure of the factory, sales tax incentive loan became payable w.e.f. 4th August, 2004 as per terms of its sanction. However, the same has not been paid during the year. The interest for the year has not been provided.

6. The last instalments of Rs. 3,333,333 of 100,000 14% Non-Convertible Debentures of Rs. 100 each which was due for redemption on 25th September, 1998 at par has been redeemed to the extent of Rs. 1,933,333 only.

7. There were no amounts due to Small Scale and / or Ancillary Industrial suppliers on account of principal and / or interest as at the end of year. This disclosure is based on the information available with the Company regarding the status of the suppliers as defined under the Interest on Delayed Payments of Small Scale and Ancillary Industrial undertaking Act, 1993.

8. Payments to and provisions for employees includes remuneration paid to executive directors.

9. The Company has closed the business, hence segment reporting is not applicable.

10. The Company has received a favourable award against GTC Industries Ltd. (GTC) given by the Arbitral Tribunal directing GTC to pay Rs.32.51 lacs with interest @ 15% p.a. from 01.01.1997 till payment plus Rs. 2.00 lacs for cost of arbitration proceedings in the matter of merger of Raighadh Paper Mills Ltd. (RPL) with the Company and take over of Premier Paper Mills Ltd. (PPML) by the Company, as a composite deal on the terms and conditions mentioned in the agreement dated 13.12.1995 made by the Company with GTC. The Company has not accounted for the said award pending disposal of appeal filed by GTC in Bombay High Court against the said award.

11. In the opinion of the management, current assets, loans and advances have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated and provision for all known and determined liabilities are adequate and not in the excess of the amount reasonably stated. The balances in certain sundry creditors, debtors and banks are subject to confirmation and reconciliations, if any. The differences if any, as may arise will be accounted for on receipt of such information / reconciliation. The management does not anticipate any material adjustment in respect of the same affecting revenue or otherwise.

12. Research and Development expenses debited in other heads of accounts:

13. Previous year figures have been regrouped and rearranged, wherever necessary.

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Mar 31, 2007

1. The net worth of the Company is fully eroded and the Company is a sick industrial company within the meaning of clause (o) of sub-section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), for which a reference has been made to the Board of Industrial and Financial Reconstruction (BIFR) under Section 15 of SICA.

2. As per scheme of arrangement sanctioned by the Bombay High Court under Section 391 and 394 of Companies Act. 1956 made between Shree Vindhya Paper Mills Ltd and the Company, the coating division of Shree Vindhya Paper Mills Ltd. with its assets, investments, liabilities and reserves as at 31st December, 1991 has been transferred to and vested with the Company with effect from 1st January, 1992. However, certain assets and liabilities of the said division before its transfer though reflected in the accounts are yet to be transferred in the name of the Company.

3. Contingent liability not provided for in respect of:

As at As at 31/03/2007 31/03/2006 Rs Rs

a)Claims against Company not acknowledged as debts 37,567 437,567 b) Guarantee given to financial institution for loans taken by its employees 8,454 48,454 c) Bank guarantee to constituents and others. 136000 1,360,000 d) Corporate Guarantee given to financial institutions and banks on behalf of Vecron Industries Limited (a wholly owned subsidiary Company) 5,000,000 25,000,000

e) Liability as may arise for non-payment of wages since the date of closure of factory, as the case filed by the workers union in

Nashik Labour Court Amount unascertained - F) Liability as may arise due to non compliance of certain fiscal statute Amount unascertained -

g) Income Tax Penalty Demand 19.38,082 - h) Liability for Interest on deferred sales tax liability 1,12,48,818 -

4. a} 14% non-convertible debentures privately placed with LIC Mutual Fund is secured by way of first mortgage of all immovable properties, both present and future and also by the hypothecation of the movable properties of the Company (save and except book-debts and subject to prior charges on inventories in favour of Companys bankers) ranking pari passu interse.

b) Cash credit advances are secured by hypothecation of all present and future goods, book debts, and other current assets of the Company by way of prior/first charge ranking pari passu interse and further by second charge on companys all immovable properties both present and future and guaranteed by director and executive director of the Company. Interest on cash credit facility has not been provided

5. In view of closure of the factory, sales tax incentive loan became payable w.e.f. 4th August, 2004 as per terms of its sanction. However, the same has not been paid during the year. The interest for the year has not been provided.

6. The last instalments of Rs. 3,333,333 of 100,000 14% Non-Convertible Debentures of Rs. 100 each which was due for redemption on 25" September, 1998 at par has been redeemed to the extent of Rs. 1,933,333 only.

7. There were no amounts due to Small Scale and / or Ancillary Industrial suppliers on account of principal and /or interest as at the end of year. This disclosure is based on the information available with the Company regarding the status of the suppliers as defined under the Interest on Delayed Payments of Small Scale and Ancillary Industrial undertaking Act, 1993.

As per the Accounting standard AS-22 "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, the deferred tax assets (net) arising during the previous year on account of liming difference. Having regard to the net worth of the Company being fully eroded and the Company is a Sick industrial company within the meaning of SICA and uncertainty as to whether the Company can continue as a going concern as mentioned in note 1 above, the deferred tax assets has not been recognised during the year.

8. The Company has received a favourable award against GTC Industries Ltd. (GTC) given by the Arbitral Tribunal directing GTC to pay Rs. 32.51 lacs with interest @ 15% p.a. Irom 01.01.1997 till payment plus Rs. 2.00 lacs lor cost of arbitration proceedings in the matter of merger of Raighadh Paper Mills Ltd. (RPL) with the Company and take over of Premier Paper Mills Ltd. (PPML) by the Company, as a composite deal on the terms and conditions mentioned in the agreement dated 13.12.1995 made by the Company with GTC. The Company has not accounted tor the said award pending disposal of appeal tiled by GTC in Bombay High Court against the said award.

9. In the opinion of the management, current assets, loans and advances have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated and provision for all known and determined liabilities are adequate and not in the excess of the amount reasonably stated. The balances in certain sundry creditors and debtors are subject to confirmation and reconciliations, if any. The differences if any, as may arise will be accounted for on receipt of such information / reconciliation. The management does not anticipate any material adjustment in respect of the same affecting revenue or otherwise.

10. Previous year figures have been regrouped and rearranged, wherever necessary.

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Mar 31, 2006

ANNUAL REPORT 2005-2006

NOTES ON ACCOUNTS

SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS

A SIGNIFICANT ACCOUNTING POLICIES

1. System of accounting The accounts are prepared on the basis of historical cost convention, in accordance with the applicable accounting standards and on the accounting principles of a going concern though the business was not carried on during the year.

2. Fixed assets

Fixed assets are stated at cost less accumulated depreciation.

3. Depreciation

a) Depreciation on fixed assets is provided on straight-line method at the rates and in the manner specified in- Schedule XIV to the Companies Act 1956.

b) Depreciation on assets added/disposed off during the year has been provided for on pro-rata basis with reference to the month of addition/disposal.

c) Continuous process plants as defined in Schedule XIV to, the Companies Act, 1956 have been considered.

4. Investments

Investments of the long-term nature are stated at cost less 'diminution in value wherever the decline is other than a temporary decline.

5. Inventories

Inventories if any are valued at lower of the cost and:estimated net realizable value. Cost of inventories is computed on weighted average basis. Finished goods and work-in-progress if any; include costs of conversion and other cost incurred in bringing the inventories to their present location and condition.

6. Revenue recognition

Income and expenditure are recognised and accounted on accrual basis, except in case of significant uncertainties.

7. Retirement benefits

The company is contributing towards gratuity liability of employees and superannuation liability of certain employees under the scheme of Life Insurance Corporation of India (LIC). During the continuation of service of the employees, the gratuity liability as per actuarial valuation is provided for if it is in excess of the fund available with LIC and provision for, leave encashment is made on the basis of actuarial valuation. In other cases, liability is provided for on accrual basis.

8. Foreign currency transactions

Transaction denominated in foreign currency if any, are recorded using the exchange rate prevailing at the date of transaction. Assets and liabilities denominated in foreign currency as at balance sheet date are converted at the exchange rates prevailing at that date. Exchange differences other than those relating to acquisition of fixed assets are recognised in the profit and loss account. Exchange differences relating to purchase of fixed assets are adjusted to carrying cost of fixed assets

9. Expenditure during construction period

Expenditure during construction period are included under capital work in progress and the same is allocated to the respective fixed assets on the completion of construction.

10. Research and development

Revenue expenses in respect of research and development are charged to profit. and loss account and capital expenditure of such nature-are added to the cost of fixed assets n the year in which they are incurred.

11. Taxation

Provision for current tax is made on the basis of the estimated taxable income for the current accounting year in accordance with the Income Tax Act, 1961. The management is of the view that company is not suppose to be liable-for fringe benefit tax hence not provided.

The deferred tax for timing differences between the book profits and tax profits for the year is accounted for using the tax rates and laws that have been enacted or substantially enacted as of the balance sheet date. Deferred tax assets arising from timing differences are recognized to the extent there is virtual certainty that these would be realized in future and are reviewed for the appropriateness of their respective carrying values at each balance sheet date. In view of the losses provision for deferred tax has not been provided.

12. Provision and contingent liabilities

The Company creates a provision when,there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, requires art outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made

13. Impairment of assets

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired, if any such indication exists, the management estimates the recoverable amount of the asset. If such recoverable amount of the asset is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as on impairment loss and Is recognized in the profit and loss account. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost.

B. NOTES TO ACCOUNTS

1. The net worth of the Company is fully eroded-and the Company is a sick industrial company within;the meaning of clause (o) of sub-section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), for which a reference has been made to the Board of industrial and Financial Reconstruction (BIFR) under Section 15 of SICA. The management is exploring the various options and firmly believes that it would be able to restart ifs operations in the foreseeable future and as such these financial statements have been prepared ongoing concern basis.

2. As per scheme of arrangement sanctioned by the Bombay High Court under Section 391 and 394 of Companies Act, 1956 made between Shree Vindhya Paper Mills Ltd and the Company the coating division of Shree Vindhya Paper Mills Ltd, with its assets, investments, liabilities and reserves as at 31st December, 1991 has been transferred to and vested with the Company with effect from list January, 1992. However, certain assets and liabilities of the said division before its transfer though reflected in the accounts are yet to be transferred in the name of the Company.

3. Contingent liability not provided for in respect of:

As at As at 31.03.2006 31.03.2005 Rs. Rs.

a) Claims against Company not acknowledged as debts 437,567 437,567

b) Guarantee given to financial institution for loans taken by its employees 48,454 48,454

c) Bank guarantee to constituents and others 1,360,000 1,360,000

d) Corporate Guarantee given to financial institutions and banks on behalf of Vecron Industries Limited (a wholly owned subsidiary Company) 25,000,000 25,000,000

e) Liability as may arise for non-payment of wages since the date of closure of factory, as the case filed by the worker's union in Amount Nashik Labour Court unascertained -

F) Liability as may arise due to non compliance of Amount certain fiscal statute unascertained -

4. a) 14% non-convertible debentures privately placed with LIC Mutual Fund is secured by way of first mortgage of all immovable properties, both present and future and also by the hypothecation of the movable properties of the Company (save and except book-debts and subject to,prior charges on inventories in favour of Company's bankers) ranking pan passu interse.

b) Cash credit advances are secured by hypothecation of all present and future goods, book debts, and other current assets of the Company by way of prior / first charge ranking part passu interse and further by second charge on company's all immovable properties, both present and future and guaranteed by director and executive director of the Company. Interest on cash credit facility has not been provided.

5. In view of closure of the factory, sales tax incentive loan became payable w.e.f 4th August, 2004 as per terms of its sanction. However, the same has not been paid during the year. The interest for the year has not been provided.

6. The last instalments of Rs. 3,333,333 of 100,000 14% Non-Convertible Debentures of Rs. 100 each which was due for redemption on 25th September, 1998 at par has been redeemed to the extent of Rs. 1,933,333 only.

7. There were no amounts due to Small Scale and / or Ancillary Industrial suppliers on account of principal and / or interest as at the end of year. This disclosure is based on the information available with the Company regarding the status of the suppliers as defined under the Interest on Delayed Payments of Small Scale and Ancillary Industrial undertaking Act, 1993.

8. Payments to and provisions for employees includes remuneration paid to executive directors:

Current Previous Year Year Rs. Rs.

Salary and allowances - 134,400 Medical reimbursement - - Contribution to provident and other funds - 21,000 - 1,55,400

9. Additional information required pursuant to provisions of pare 3, 4C, 4D of of II of Schedule VI of the Companies Act, 1956.

Current Previous Year Year

A Licenced and installed capacities:

i. Licenced capacity, 17,000 17,000

ii. Annual installed capacity on triple shift basis as determined by the management

- Coated and speciality paper and board 10,000 10,000

B. Opening stock, production, purchases, turnover and closing stock :

Particulars Unit Opening Stock Production Turnover (gross)

Qty. Amount Qty. Qty. Amount Rs. Rs.

a) Coated and MT - - - - - Speciality (MT) (111) (4,871,828) (623) (734) (24,3W,604) paper and board

b) Job work - - - - - (8) (127,040) (63) (81) (2,171,775)

Particulars Unit Closing Stock

Qty. Amount Rs.

a) Coated and MT - - Speciality (MT) - - paper and board

b) Job work - - - -

C. Raw materials consumed

Unit Qty. Current Qty. Previous

Year Year Rs. Rs.

1. Base paper Mr - - 411 14,480,817 2. Chemicals - - 3,012,037 - 17,492,854

Note: Sale of chemicals Rs. Nil (previous year Rs. 109,895) excluded from raw materials consumed.

Current Previous Year Year

Rs. Rs.

D. C.I.F. value of imports

Raw materials -- --

E. Values of imported and indigenous raw materials, spare parts and components consumed and percentage of each to the total consumption:

Current Previous

% Year % Year Rs. Rs.

1. Raw materials - Imported - - - - - Indigenous - - 100.00 17,492,854 - - 100.00 17,492,854

F. Earnings in foreign currency FOB value of exports (Rupee payment) -- --

10. The Company has close the business; hence segment reporting is not applicable.

11. The secondary segment, i.e. 'geographical segments by location of customers' given below:

(Amount in Rs.)

Sr. Particulars Geographical segments No. Within India Outside Total India 1. Segment revenue Sales and income from -- -- -- operations (27,371,851) -- (27,371,851)

2. Carrying amount of assets, by geographical location of assets Segment assets -- -- -- (33,347,885) -- (33,347,885)

3. Additions to fixed assets -- -- -- and intangible assets (92,530) -- (92,530)

Notes: i. Secondary segments identified are as per the requirements of Accounting Standard AS-17 'Segment Reporting' issued by The Institute of Chartered- Accountants of India, taking into account the organisation structure as well as the differing risks and returns.

ii. The segment revenue and total assets include the revenue and assets respectively Which are identifiable with each segment and amounts allocated to the segments on a reasonable basis.

iii. Figures in bracket pertain to the previous year

12. Related party disclosures: A. Related party relationships:

a) Subsidiary Company : Vecron industries Limited (Enterprises where control exists)

b) Key management personnel : Mr. Vikram Somani Mr. Bharat Somani c) Enterprise in which Key : SRS Trading & Agencies Pvt. Limited management personnel have Shaktiman Mercantile Go. Ltd. significant influence

Notes:

1. The related party relationships have been determined on the basis of, the requirements of the Accounting Standard (AS-18) 'Related Party' Disclosures' issued by the Institute of Chartered Accountants of India and the same have been relied upon by the auditors.

2. The relationships as mentioned above pertain to those related parties with whom transactions have taken place during the year (except where control exists, in which case the relationship are disclosed irrespective' of exact transactions).

B. Transactions with related parties:

(Amount in Rs.)

Particulars Related parties Total Subsidiary Enterprise in Key which Key management management personnel personnel have significant influence

Managerial - - - - Remuneration (--) (--) (155,400) -

Loan taken - 746,495 - 746,495 (--) (355,000) (--) (355,000)

Loan given - - - - (-) (-) (-) (-)

Loan repaid - - - - (74,357) (1,700,000) (-) (1,774,357)

Balances receivable 43,188,386 -- -- 43,188,386 as at year end. (43,188,386) (--) (--) (43,188,386)

Balance payable as -- 1,101,495 -- 1,101,495 at year end (--) (355,000) (-) (355,000)

Provision for 43,188,386 - - 43,188,386 doubtful loan (43,188,386) (-) (-) (43,188,386)

Note : Figures in brackets pertain to the previous year;

13. Earnings per share:

a) Earnings / (loss) before exceptional item

Current Year Previous Year Rs. Rs. (i) Net profit / (loss) after tax available for equity shareholders (4,151,659) (27,836,319)

(ii) Weighted average number of equity shares outstanding during the year 1,402,150 1,402,150

(iii) Basic, and diluted earnings / (loss) per share (2.96) (19.85)

(iv) Nominal value of share 10.00 10.00

b) Earnings / (loss) per share after exceptional, item

(i) Net profit / (loss) after tax available for equity shareholders (4,207,161) (40,804,374)

(ii) Weighted average number of equity shares outstanding during the year 1,402,150 1,402,150

(iii) Basic and diluted earnings / (loss) per share (3.00) (29.10)

(iv) Nominal value of share 10.00 10.00

As per the Accounting standard AS-22 'Accounting for Taxes on Income' issued by the Institute of Chartered Accountants of India, the deferred tax assets (net) arising during the previous year on account of timing difference. Having regard to the net worth of the Company being fully ended and the Company's a Sick industrial company within the meaning of SICA and uncertainty as to, whether the Company cars continue as a going concern as mentioned in note 1 above, the deferred tax assets has not been recognised during the year.

As at As at 31/03/2006 31/03/2005 Rs. Rs. Deferred tax assets on account of: Expenses allowable on payment basis under Amounts not Income tax ascertained Capital loss as not Business loss recognised

Unabsorbed depreciation Amounts not Provision for diminution in value ascertained of investments Provision for doubtful debts as not Total (A) recognised Deferred tax. liability on account of: Depreciation Total (B) Deferred Tax Asset (Net): [Total A - B)

14. The Company has received a favourable award against GTC Industries Ltd. (GTC) given by the Arbitral Tribunal directing GTC to pay Rs. 32.51 lacs with interest 15% p.a. from 01.01.1997 till payment plus Rs. 2.00 lacs for Cost of arbitration proceedings in the matter of merger of Raighadh Paper Mills Ltd. (RPL) with the Company and take over of Premier. Paper Mills Ltd. (PPML) by the Company, as a composite deal on the terms' and conditions mentioned in the agreement dated 13.12.1995 made by the Company with GTC. The Company has not accounted for the said award pending disposal of appeal filed by GTC in Bombay High Court against the said award.

15. In the opinion of the management, current assets, loans and advances have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated and provision for all known and determined liabilities are adequate and not in the excess of the amount reasonably stated. The balances in certain sundry creditors and debtors are subject to confirmation and reconciliations, if any. The differences if any, as may arise will be accounted for on receipt of such information / reconciliation. The management does not anticipate any material - adjustment in respect of the same affecting revenue or otherwise.

16. Research and Development expenses debited in other heads of accounts:

Current Previous Year Year Rs. Rs.

Depreciation 36,247 36,247

17. Previous year figures have been regrouped and rearranged, wherever necessary.

FOR JAIN MAHESHWARI & CO. On behalf of the Board of directors Chartered Accountants G. S. Mansawala - Director K. G. Gupta - Director

(Dharmesh Shah) Vikram Somani - Director PARTNER Bharat Somani - Executive Director K. K. Somani - Chairman

Mumbai, Dated : August 30, 2006

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Mar 31, 2005

1. The net worth of the Company is fully eroded and the Company is a sick industrial company within the meaning of clause (o) of sub-section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), for which a reference has been made to the Board of Industrial and Financial Reconstruction (BIFR) under Section 15 of SICA. The management is exploring the various options and firmly believes that it would be able to restart its operations in the foreseeable future and as such these financial statements have been prepared on going concern basis.

2. As per scheme of arrangement sanctioned by the Bombay High Court under Section 391 and 394 of Companies Act, 1956 made between Shree Vindhya Paper Mills Ltd and the Company, the coating division of Shree Vindhya Paper Mills Ltd. with its assets, investments, liabilities and reserves as at 31st December, 1991 has been transferred to and vested with the Company with effect from 1st January, 1992. However, certain assets and liabilities of the said division before its transfer though reflected in the accounts are yet to be transferred in the name of the Company.

3. Contingent liability not provided for in respect of:

As at As at 31/03/2005 31/03/2004 Rs. Rs.

a) Claims against Company not acknowledged as debts 437,567 437,567

b) Guarantee given to financial Institution for loans taken byte employees 48,454 48,454

c) Bank guarantee to constituents and otheis 1,360,000 1,360,000

d) Corporate Guarantee given to financial institutions and banks on behalf of vecron Industries Limited (a wholly owned subsidiary Company) 25,000,000 25.000,000

e) Liability as may arise for non-payment of wages since the date of closure of factory, as the case filed by the workers union in Nashik Labour Court Amount unascertained

F) Liability as may arise due to non compliance of certain fiscal statute Amount unascertained

4. a) 14% non-convertible debentures privately placed with LIC Mutual Fund is secured by way of first mortgage of all immovable properties, both present and. future and also by the hypothecation of the movable properties of the Company (save and except book-debts and subject to prior charges on inventories in favour of Companys bankers) ranking pan passu interse.

b) Cash credit advances are secured by hypothecation of all present and future goods, book debts, and other current assets of the Company by way of prior/first charge ranking pan passu interse and further by second charge on companys all immovable properties both present and future and guaranteed by director and executive director of the Company.

5. In view of closure of the factory, sales tax incentive loan became payable w.e.f. 4th August, 2004 as per terms of its sanction. However, the same has not been paid during the year.

6. The last instalments of Rs. 3,333,333 of 100,000 14% Non-Convertible Debentures of Rs. 100 each which was due for redemption on 25th September, 1998 at par has been redeemed to the extent of Rs. 1,933,333 only.

7. There were no amounts due to Small Scale and/or Ancillary Industrial suppliers on account of principal and/or interest as at the end of year. This disclosure Is based on the information available with the Company regarding the status of the suppliers as defined under the Interest on Delayed Payments of Small Scale and Ancillary Industrial undertaking Act, 1993.

8. Payments to and provisions for employees includes remuneration paid to executive directors: -

Current Previous Year Year Rs. Rs.

Salary and allowances 134,400 368,640

Medical reimbursement - 2,389

Contribution to provident and other funds 21,000 57,600

155,400 428,629

9. Additional information required pursuant to provisions of para 3,4C, 4D of part 11 of Schedule VI of the Companies Act, 1956.

Current Previous Year Year (MT) (MT) A. Licenced and installed capacities:

i. Licenced capacity 17,000 17,000

ii. Annual installed capacity on triple shift basis as determined by the management

Coated and speciality paper and board 10,000 10,000

Notes:

1. The related party relationships have been determined on the basis of fifty requirements of the Accounting Standard (AS-18) Related Party Disclosures issued by the Institute of Chartered Accountants of India and the same have been relied upon by She auditors.

2. The relationships as mentioned above pertain to those related parties with whom transactions have taken place during the year (except where control exists, in which case the relationship are disclosed irrespective of exact transactions).

Current Previous Year Year Rs. Rs.

D C.I.F. value of imports Raw materials - 636,688

E. Value of imported and indigenous raw materials, spare parts and components consumed and percentage of each to the total consumption.

Current Previous % Year % Year Rs Rs

1 Raw materials

- Imported - - 2.11 1,593,378

- indigenous 100.00 17,492,854 97.89 73,978,947

100.00 17,492,854 100.00 75,572,325

F. Earnings in foreign currency

FOB value of exports (Rupee payment) 961,598

Notes:

i. Secondary segments identified are as per the requirements of Accounting Standard AS-17 Segment Reporting issued by The Institute of Chartered Accountants of India, taking into account the organisation structure as well as the differing risks and returns.

ii. The segment revenue and total assets include the revenue and assets respectively which are identifiable with each segment and amounts allocated to the segments on a reasonable basis.

iii. Figures in bracket pertain to the previous year

11 Related party disclosures:

A, Related party relationships:

a) Subsidiary Company Vecron Industries Limited (Enterprises where control exists)

b) Key management personnel - Mr. Vikram Somani Mr. Bharat Somani

c) Enterprise in which Key management personnel have significant influence SRS Trading & Agencies Private Limited Shaktiman Mercantile-Go. Ltd.

12. Earnings per share:

a) Earnings/(loss) before exceptsonat item

Current Previous Year Year Rs. Rs. (i) Net profit/(loss) after tax available for equity shareholders (27,836,319) (8,.612,109)

(ii) Weighted average number of equity shares outstanding during the year 1,402,150 1,402,150

(iii) Basic and diluted earnings/(loss) per share (1985) (6.14)

(iv) Nominal value of share 10.00 10.00

b) Earnings/(loss) per share after exceptional item

(i) Net profit/(loss) after tax available for equity shareholders (40,804,374) (8,612,109)

(ii) Weighted average number of equity shares outstanding during the year 1,402,150 1,402,150

(iii) Basic and diluted earnings/(loss) per share (29.10) (6.14)

(iv) Nominal value of share 10.00 10.00

13. As per the Accounting standard AS-22 "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, the deferred tax assets (net) arising during the previous year on account of timing difference was Rs 5,139,702 As the management expected to earn sufficient taxable profit in future to offset the deferred tax asset (net), recognised during the previous year in the profit and loss account. Major components of deferred tax assets and liabilities; as at year-end was as below:

As at As at 31/03/2005 31/03/2004 Rs. Rs.

Deferred tax assets on account of: Expenses allowable on payment basis under Income tax 848,197

Capital loss 329,959

Business loss 11,920,496

Unabsorbed depreciation Amounts not 2,827,356

Provision for diminution in value of investments ascertained 3,121,448 Provision for doubtful debts as not 392,646

Total (A) recognised 19,440,102

Deferred tax liability on account of:

Depredation 6,472,047

Total (A) 6,472,047

Deferred Tax Asset (Net): [Total A - B] 12,968,055

Having regard to the net worth of the Company being fully eroded and the Company is a Sick industrial company within the meaning of SICA and uncertainty as to whether the Company can continue as a going concern as mentioned in note 1 above, the deferred tax assets has not been recognised during the year and deferred tax assets recognised upto 31/03/2004 has been reversed in the current year as an exceptional item.

14. The Company has received a favourable award against GTC Industries Ltd. (GTC) given by the Arbitral Tribunal directing GTC to pay Rs. 32.51 lacs with interest @ 15% p.a. from 01.01.1997 till payment plus Rs. 2.00 lacs for cost of arbitration proceedings in the matter of merger of Raighadh Paper Mills Ltd. (RPL) with the Company and take over of Premier Paper Mills Ltd. (PPML) by the Company, as a composite deal on the terms and conditions mentioned in the agreement dated 13.12.1995 made by the Company with GTC. The Company has not accounted for the said award pending disposal of appeal filed by GTC in Bombay High Court against the said award.

15. In the opinion of the management, current assets, loans and advances have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated and provision for all known and determined liabilities are adequate and not in the excess of the amount reasonably stated. The balances in certain sundry creditors and debtors are subject to confirmation and reconciliations, if any. The differences if any, as may arise will be accounted for on receipt of such information/reconciliation. The management does not anticipate any material adjustment in respect of the same affecting revenue or otherwise.

16. Research and Development expenses debited in other heads of accounts:

Current Previous Year Year Rs. Rs.

Depreciation 36,247 36,247

17. Previous year figures have been regrouped and rearranged, wherever necessary.

18. The balance sheet abstract and Companys general business profile as per GSR No. 388(E) (F. No. 3/24/93-CLV], Dated 15/05/1995, issued by the Department of Company Affairs, Ministry of Law, Justice and Company Affairs is given in Annexure A.

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Mar 31, 2003

1. The Company faced with financial crisis was not able to operate Its sole factory located at Nashik since April 2002 till January 2003. However, the Company signed a memorandum of settlement with the union of Its workmen on 03-01-2003 for restarting the factory. The factory has restarted from 03-02-2003. The Company has Incurred substantial losses during the year and the loss for the year alongwith accumulated losses has substantially eroded its net worth as at 31-03-2003. However, since the management believes that it would be able to continue Its operations In the near future, the accounts have been prepared on going concern basis.

2. As per scheme of arrangement sanctioned by the Bombay High Court under section 391 and 394 of Companies Act, 1956 made between Shree VIndhya Paper Mills Ltd and the company, the coating division of Shree VIndhya Paper Mills Ltd. with its assets. Investments, liabilities and reserves as on 31st December 1991 has been transferred to and vested with the company with effect from 1st January 1992. However certain assets and liabilities of the said division before Its transfer though reflected In the accounts are yet to be transferred In the name of the company.

As at As at 31-03-2003 31-03-2002 Rs. Rs.

3. Contingent liability not provided for :

a) Claims not acknowledged as debts 1,980,879 1.720,295

b) Guarantee to Housing Development Finance Corporation Ltd. 81,848 106.459

c) Bank guarantee to constituents and others. 1,380,000 1.885,200

4. a) Rupee term loan from ICICI Ltd. and 14% non-convertible debentures privately placed with LIC Mutual Fund are secured by way of first mortgage of all Immovable properties, both present and future and also by the hypothecation of the movable properties of the company (save and except book-debts and subject to prior charges on Inventories In favour of Companys bankers) ranking pan passu interse.

b) Cash credit advances are secured by hypothecation of all present and future goods, book debts, and other current assets of the company by way of prior/first charge ranking pari passu Interse and further by second charge on companys all immovable properties both present and future and guaranteed by director and executive director of the Company.

c) As per the terms of sanction of sales tax incentive loan, in the event of production below normal capacity or closure, the amount of loan becomes immediately payable. The Company is operating below normal capacity in view of financial and other constraints.

5. Inventories include stock in transit.

6. Certain debit and credit balances are subject to confirmation and reconciliation.

7. The last Installment of Rs. 3,333,333/- of 100,000 14% Non-Convertible Debentures of Rs. 100/- each which was due for redemption on 25.09.1998 at par has been redeemed to the extent of Rs 1,933,333/- only.

8. There were no amounts due to Small Scale and/or Ancillary industrial suppliers on account of principal and/or interest as at the close of year. This disclosure is based on the information available with the Company regarding the status of the suppliers as defined under the Interest on Delayed Payments of Small Scale and Ancillary Industrial undertaking Act, 1993.

9. Research and Development expenses debited In other heads of accounts:

As at As at 31.03-2003 31-03-2002 Rs. Rs.

Depreciation 38,248 38,246

10. Payments to and provisions for employees Includes remuneration paid to executive directors:

As at As at 31-03-2003 31-03-2002 Rs. Rs.

Salary allowances 414,720 514,080

Contribution to provident and sup. Fund 84,800 80,325

Other perquisites 9,978 7.835

489,498 602,240

11. The Company has made an investment of Rs. 27,000,000/- (previous year Rs. 27,000,000/-) in the share capital of. advanced interest free loans of Rs. 43,260,243/- (previous year Rs. 43,260,243/-) to and given corporate guarantee to financial Institutions and banks on behalf of Vecron Industries Ltd. (VIL) a wholly owned subsidiary of the Company. VIL has been recommended for winding up by the Board for Industrial and Financial Reconstruction (BIFR) under the Sick Industrial Companies (Special Provision) Act, 1985. As such, the Company had made provision for the above Investment and loans In the previous year. However, with respect to the loan granted to VIL. the management now perceives that 20% of such loan is recoverable and accordingly, the proportionate provision of Rs. 8,652,049 has been written-back during the current year. The Company does not expect any liability to accrue on account of the corporate guarantee given to financial Institutions and banks on behalf of VIL as In Its opinion the guarantee Is not enforceable against the Company In view of order of Debt Recovery Tribunal dated 19/06/2002 and Law of Limitation. Hence, no provision has been made for the same.

12. Vehicles shown under fixed assets Include four vehicles costing Rs. 2,170,928/- which are registered In the name of directors.

13. Additional Information required pursuant to provisions of para 3, 4C, 4D of part II of Schedule VI of the Companies Act, 1958

14. The Company has only one business segment of manufacturing of coated and speciality paper and board. The Company does not have any reportable geographical segment.

15. Related party disclosures:

A. Related party relationships:

a) Subsidiary Company (Enterprises Vecron Industries Limited where control exists)

b) Key management personnels : Mr. Vikram Somani Mr. Bharat Somani

c) Enterprise In which Key management SRS Trading & Agencies Private Limited personnels have significant Influence

Notes:

1. The related party relationships have been determined on the basis of the requirements of the Accounting Standard AS-18 `Related Party Disclosures Issued by the Institute of Chartered Accountants of India and the same have been relied upon by the auditors.

2. The relationships as mentioned above pertain to those related parties with whom transactions have taken place during the year (except where control exists, In which case the relationship are disclosed Irrespective of exact transactions).

2003 2002 16. Earning per share Rs. Rs.

(I) Net profit/(loss) after tax available for (861,217) (78,133,861) equity shareholders (Rs.)

(II) Weighted average number of equity shares 1,402,160 1,402,150 outstanding during the year

(III) Bade and diluted earning/(loss) per share (Rs.) (0.61) (55.72)

(iv) Nominal value of share (Rs.) 10.00 10.00

17. As per the Accounting standard AS-22 "Accounting for Taxes on Income" Issued by the Institute of Chartered Accountants of India, the deferred tax assets, (net of reversals) arising during the year and the deferred tax liabilities reversing during the year aggregate to Rs 3,896,114. As mentioned In Note 1, the Company has restarted operations at Its unit at Nashik from February 2003 and the management expects to earn sufficient taxable profits In future to offset the deferred tax assets (net) as at 31st March 2003 of Rs 7,828,353. In view of the same the entire deferred tax assets of Rs. 3,596,114 (Including deferred tax liability reversing during the year) arising during the year have been recognised In the profit and loss account. Major components of deferred tax assets and liabilities, arising on account of timing differences, as at year-end are as below:

Accumulated (Charge)/ As at As at Credit 31.03.2003 31.03.2002 during the (Rs.) (Rs.) year (Rs.)

Deferred tax liability on account of:

Depreciation 7,386,745 574,156 6,812,689

Total (A) 7,386,745 574,156 6,812,689

Deferred tax assets on account of:

Statutory payments under section 43B of the Income Tax Act, 1961. 417,141 241.101 658,242

Capital loss 143,352 (3,413) 139,939

Business loss 5,262,705 2,618,029 7,880,734

Unabsorbed depreciation 1,870,851 527,799 2,398,680

Provision for diminution in value of Investments 3,279,748 (78,089) 3,201,669

Provision for doubtful debts 252,298 109,420 361,718

Tax credit for Minimum Alternate Tax 392,689 (392,889) -

Total (B) 11,616,984 3,021,968 14,640,942

Deferred Tax Liability/(Asset) [Net]: [Total A-B] (4,232,239) 3,596,114 (7,828,363)

18. The Company has received a favourable award against GTC Industrias Ltd. (GTC) given by the Arbitral Tribunal directing GTC to pay Rs. 32.51 lacs with Interest @ 15% p.a. from 01.01.1997 till payment plus Rs. 2.00 lacs for cost of arbitration proceedings In the matter of merger of Raighadh Paper Mills Ltd. (RPL) with the Company and take over of Premier Paper Mills Ltd. (PPML) by the Company, as a composite deal on the terms and conditions mentioned in the agreement dated 13.12.1995 made by the company with GTC. The Company has not accounted for the said award pending disposal of appeal filed by GTC In Bombay High Court against the said award.

19. Previous year figures have been regrouped and rearranged wherever necessary.

20. The balance sheet abstract and companys general business profile as per GSR No. 388(E) (F.No. 3/24/93-CLV), Dated 15/05/1995, Issued by the Department of Company Affairs. Ministry of Law, Justice and Company Affairs Is given in Annexure `A.

Signature to schedules `1` to `21`

FOR SURESH SURANA & ASSOCIATES Chartered Accountants On behalf of the Board of directors (Suresh Surana) G. S. Mansawala - Director PARTNER K.G. Gupta-Director Vikram Somani-Executive Director Bharat Somani-Executive Director K.K. Somani-Chairman Mumbai, Dated: 19th, July 2003 Mumbai, Dated : 19th. July 2003

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Mar 31, 2002

1. The Company has incurred substantial loss during the year and as a result, its net worth has substantially eroded. The Company has not been able to operate its sole factory located at Nashik since April 1, 2002. The Company has entered into memorandum of understanding with the union of the workers on May 07, 2002. providing for restructuring of its labour force including resignation of its entire labour force and re-appointment as per requirement of the Company. However, the MOU has not been acted upon till date by the union and the same has been challenged by it in the Industrial Court. However, the accounts have been prepared on going concern basis.

2. As per scheme of arrangement sanctioned by the Bomoay High Court under section 391 and 394 of Companies Act, 1956 made between Shree Vindhya Paper Mills Ltd and the company, the coating division of Shree Vindhya Paper Mills Ltd. with its assets, investments, liabilities and reserves as on 31st December 1991 has been transferred to and vested with the company with effect from 1st January 1992. However certain assets and liabilities of the said division before its transfer though reflected in the accounts are yet to be transferred in the name of the company.

As at As at 3. Contingent liability not provided for: 31.03.2002 31.03.2001 Rs. Rs.

a) Claims not acknowledged as debts 428,209 423,782

b) Guarantee to Housing Development Finance Corporation Ltd. 105,459 119,524

c) Corporate Guarantee to Financial Institution and bank in respect of term loan and working capital facilities to subsidiary company. - 87,056,024

The management is of the opinion that the Corporate guarantee as aforesaid is not enforceable against the Company in view of order of Debt Recovery Tribunal dated 19/06/2002 and law of limitation.

d) Bank guarantee to constituents and others 1,885,200 2,785,200

4. a) Rupee term loan from ICICI Ltd. and 14% non-convertible debentures privately placed with LIC Mutual Fund are secured by way of first mortgage of all immovable properties, both present and future and also by the hypothecation of the movable properties of the company (save and except book-debts and subject to prior charges on inventories in favour of Companys bankers) ranking pari passu intense.

b) Cash credit advances are secured by hypothecation of all present and future goods, book debts, and other current assets of the company by way of prior/first charge ranking pari passu interse and further by second charge on companys all immovable properties both present and future and guaranteed by director and executive director of the Company.

c) As per the terms of sanction of sales tax incentive loan, in the event of production below normal capacity or closure, the amount of loan becomes immediately payable. In view of the above and note `1 of Schedule 20, the above sales tax incentive loan has since become payable.

5. Inventories include stock in transit.

6. Certain sundry debit and credit balances are subject to confirmation and reconciliation.

7. The last installment of Rs. 3,333,333/- of 100,000 - 14% Non-Convertible Debentures of Rs. 100/- each which was due for redemption on 25.09.1998 at par has been redeemed to the extent of Rs 1,933,333/- only.

6. There were no amounts due to Small Scale and/or Ancillary industrial suppliers on account of principal and/or interest as at the close of year. This disclosure is based on the information available with the Company regarding the status of the suppliers as defined under the Interest on Delayed Payments of Small Scale and Ancillary Industrial undertaking Act, 1993.

9. Research and Development expenses debited in other heads of accounts:

31.03.2002 31.03.2001 Rs. Rs.

Depreciation 36,246 32,939

10. Payments to and provisions for employees includes remuneration paid to executive directors:

31.03.2002 31.03.2001 Rs. Rs.

Salary and allowances 521,915 545,152

Contribution to provident and superannuation fund 30,325 81,000

602,240 626,152

11. The Company has made an investment of Rs. 27,000,000/- (previous year Rs. 27,000,000/-) in the share capital of, advanced interest free loans of Rs. 43,260,243/- (previous year Rs. 43,250,410/-) to and given corporate guarantee to financial Institutions/banks on behalf of Vecron Industries Ltd. (VIL) a wholly owned subsidiary of the Company. The losses of VIL exceeded its paid up capital and reserves. On reference being made under Sick Industrial Companies (Special Provisions) Act, 1985, VIL has been recommended for winding up by the Board tor Industrial and Financial Reconstruction (BIFR) and the winding up has been affirmed by the Appellate Authority for Industrial and Financial Reconstruction (AAIFR). As such during the year the Company has made provision for the above investments and loans. Since the Company does not expect any liability to accrue on account of the corporate guarantee given to financial institutions and banks on behalf of VIL [Refer note 3(c)], no provision has been made for the same.

12. a) Vehicle loan was secured against the assets purchased there against.

b) Vehicles shown under fixed assets includes four vehicles costing Rs. 21,70,926/- which are registered in the name of directors.

13. The Company has only one business segment of manufacturing of coated and speciality paper and board. The Company does not have any reportage geographical segment.

14. Related party disclosures:

A. Related party relationships:

a) Subsidiary Company (Enterprises where: Vecron Industries Limited control exists)

b) Key management personnels: Mr. Vikram Somani Mr. Bharat Somani

Notes:

1. The related party relationships have been determined on the basis of the requirements of the Accounting Standard AS-18 `Related Party Disclosures issued by the Institute of Chartered Accountants of India and the same have been relied upon by the auditors.

2. The relationships as mentioned above pertain to those related parties with whom transactions have taken place during the year (except where control exists, in which case the relationship are disclosed irrespective of exact transactions).

2002 2001

15. Earning per share Rs. Rs.

(i) Net profit/floss) after tax available for equity shareholders (Rs.) (78,133,861) (1,438,064)

(ii) Weighted average number of equity shares outstanding during the year 1,402,150 1,402,150

(iii) Basic and diluted earning/(loss) per share (Rs.) (55.72) (1.03)

(iv) Nominal value of share (Rs.) 10.00 10.00

16. In accordance with the Accounting standard AS-22 "Accounting for Taxes on Income issued by the Institute of Chartered Accountants of India, the deferred tax liability (net) Rs. 5,178,044 pertaining to timing differences arising for the period upto 31/03/2001 has been deducted from `general reserve. The deferred tax assets (including deferred tax liability pertaining to period up to March 31, 2001, reversing during thy year) arising during the year amount to Rs. 9,410,283. The Company has taken steps to restructure its operations and as such the management is hopeful of restaning its unit at Nashik and earn sufficient taxable profits in future to offset the deferred tax assets arising during the year. In view of the same the entire deferred tax assets (net) of Rs. 94,10,263 arising during the year have been recognized in the profit and loss account. Major components of deferred tax assets and liabilities arising on account of timing differences as on March 31, 2002 are as below

Accumulated (Charge)/ As at As at Credit 31.02.2002 31.03.2001 during the (Rs.) (Rs.) year (Rs.)

Deferred tax liability on account of:

Depreciation 7,471,533 (84,786) 7,368,745

Total (A) 7,471,533 (84,768) 7,386,745

Deferred tax assets on account of: Statutory payments under section 43B of the Income Tax Act, 1961 223,979 193,162 417,141

Capital loss 125,787 17,565 143,352

Business loss 394,104 4,868,601 5,262,705

Unabsorbed depreciation 1,106,507 764,344 1,870,851

Provision for diminution in value of

investments 443,112 2,836,636 3,279,748

Provision for doubtful debts - 252,298 252,298

Tax credit for Minimum Alternate Tax - 392,669 392,889

Total (B) 2,293,489 9,325,495 11,618,984

Deferred Tax Liability/(Asset) [Net]: [Total A+B] 5,178,044 (9,410,283) (4,232,239)

17. The Company has received a favourable award against GTC Industries Ltd. (GTC) given by the Arbitral Tribunal directing GTC to pay Rs. 32.51 lacs with Interest @ 15% p. a. from 01.01.1997 till payment plus Rs. 2.00 lacs for cost of arbitration proceedings in the matter of merger of Raighadn Paper Mills Ltd. (RPL) with the Company and take over of Premier Paper Mills Ltd. (PPML) by the Company, as a composite deal on the terms and conditions mentioned in the agreement dated 13.12.1995 made by the company with GTC, The Company has not accounted tor the said award pending disposal of appeal tiled by GTC in Bombay High Court against the said award.

18. Previous year figures have been regrouped and rearranged wherever necessary.

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Mar 31, 2001

B. NOTES TO ACCOUNTS

1. As per scheme of arrangement sanctioned by the Bombay High Court under section 391 and 394 of Companies Act 956 made between Shree Vindhya Paper Mills Ltd. and the company, the coating division of Shree Vindhya Paper Mills Ltd. with its assets, investments, liabilities and reserves as on 31st December 1991 has been transferred to and vested with the company with effect from 1st January 1992. However, certain assets and liabilities of the said division before its transfer though reflected in the accounts are yet to be transferred in the name of the company.

2. a) Rupee term loan from ICICI Ltd. and 14% non-convertible debentures privately placed with LIC Mutual Fund are secured by way of first mortgage of all immovable properties, both present and future and also by the hypothecation of the movable properties of the company (save and except book-debts and subject to prior charges on inventories in favour of company's bankers) ranking pari passu interse.

b) Cash credit advances are secured by hypothecation of all present and future goods, book debts, and other current assets of the company by way of prior/ first charge ranking pari passu interse and further by second charge on company's all in-immovable properties both present and future and guaranteed by director & executive director of the company.

3. Inventories include stock in transit.

4. Certain sundry debit and credit balances are subject to confirmation and reconciliation.

5. The last installment of Rs. 33,33,333/- of 1,00,000 14% non-convertible debentures of Rs. 100/- each which was due for redemption on 25.09.1998 at par has been redeemed to the extent of Rs 19,33,333/- only (Previous year Rs. 13,33,333/-)

6. a) There were no amounts overdue and remaining unpaid to small scale and/or ancillary industrial suppliers on account of principal and/or interest as at close of the year.

b) As required by Notification No. GSR 129(E) dated 22.02.1999 issued by the Department of Company Affairs, Ministry of Law, Justice and Company Affairs, the total amount outstanding to Small Scale Industries where the unit owe a sum exceeding Rs. 1,00,000/- and the same is outstanding for more than 30 days to an SS1 Unit - Rs. Nil.

7. The Company has made an investment of Rs. 2,70,00,000/- (previous year Rs. 2,70,00,000/-) in the share capital of and advanced interest free loans of Rs. 4,32,50,410/- (previous year Rs. 4,31,56,876/-) to and given corporate guarantee to financial institution and banks amounting to Rs. 8,70,56,024/- (previous year Rs. 8,76,15,219/-) as on 31st March 2001 on behalf of Vecron Industries Limited (VIL) a wholly owned subsidiary of the company. The losses of VIL exceeds its paid up capital & reserves as on 31st March 2001. In view of the long term beneficial interest of the company in VIL, no provision has been made for any probable loss that may arise.

8. The company has received a favourable award against GTC Industries Ltd. (GTC) given by the Arbitral Tribunal directing GTC to pay Rs. 32.51 lacs with interest @ 15% p.a. from 01.01.1997 till payment plus Rs. 2.00 lacs for cost of arbitration proceedings in the matter of merger of Raighadh Paper Mills Ltd. (RPL) with the company and take over of Premier Paper Mills Ltd. (PPML) by the company, as a composite deal on the terms and conditions mentioned in the agreement dated 13. 12.1995 made by the company with GTC. The company has not accounted for the said award pending receipt of decree from appropriate court.

9. a) Vehicle loan is secured against the asset purchased there against.

b) Vehicles shown under fixed assets includes four vehicles costing Rs. 21,70,926/- which are standing in the name of directors.

10. Miscellaneous receipts includes unspent liabilities, excess provisions and unclaimed balances in respect of earlier years written back Rs. 1,97,942/- (previous year Rs. 23,33,882/-)

11. Previous year figures have been regrouped and rearranged wherever necessary.

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Mar 31, 2000

1. As per scheme of arrangement sanctioned by the Bombay High Court under sections 391 and 394 of the Companies Act, 1956 made between Shree Vindhya Paper Mills Ltd. and the company, the coating divisional Shree Vindhya Paper Mills Ltd. with its assets, investigations, liabilities and reserves as on 31st December, 1991 has been transferred to and vested with the company with effect from 1st January, 1992. However, certain assets and liabilities of the said division before its transfer though reflected in the accounts are yet to be transferred in the name of the company.

AS AT AS AT 31.3.2000 31.03.99 Rupees Rupees

2. Estimated amount of contract remaining to be executed on the capital account and not provided for (Net of advances) Nil Nil

3. Contingent liability not provided for

a) Claims not acknowledged as debts 1,587,006 1,587,006

b) Guarantee to Housing Development Finance Corporation Ltd. 144,112 256,208

c) Guarantee to financial institution and bank in respect of term loan and working capital facilities to subsidiary company 87,615,219 87,706,100

d) Bank guarantee to constituents and others 2,503,000 2,445,000

e) Bills discounted with banks 232,100 Nil

4. a) Rupee term loan from ICICI Limited and 14% non-convertible debentures privately placed with LIC Mutual Fund are secured by way of first mortgage of all immovable properties, both present and future and also by the hypothecation of the movable properties of the company (save and except book-debts and subject to prior charges on inventories in favour of company's bankers) ranking pari passu interse.

b) Cash credit advances are secured by hypothecation of all present and future goods, book debts and other current assets of the company by way of prior/first charge ranking pari passu interse and further by second charge on company's all immovable properties both present and future and guaranteed executive director and a director of the company.

In compliance with the requirements of Accounting standard 2, `Valuation of Inventories' which is mandatory from 1st April, 1999, the company has provided Excise duty/Custom duty liability on stocks lying in bonded warehouse as on the balance sheet date and included the same in the value of such stocks. This has no impact on the results for the year.

Inventories include stock in transit.

Certain sundry debit and credit balance are subject to confirmation and reconciliation.

The last installment of Rs.33,33,333/- of 1,00,000 14% Non-Convertible Debentures of Rs.100/- each which was due for redemption on 25.09.1998 at par has been redeemed to the extent of Rs.13,33,333/- only (Previous year Rs.8,33,333/-)

5. a) There is no amounts overdue and remaining unpaid to small scale and/or ancillary industrial suppliers on account of principal and/or interest as at close of the year.

b) As required by Notification No.GSR 129(E) dated 22.02.1999 issued by the Department of Company Affairs, Ministry of Law, Justice and Company Affairs, the total amount outstanding to Small Scale Industries where the unit owe a sum exceeding Rs. 1,00,000/- and the same is outstanding for more than 30 days to an SSI Unit - Rs. Nil.

6. Research and Development expenses debited in other heads of accounts.

1999-2000 1998-99

Rupees Rupees

Depreciation 32,277 32,032

7. The Company has made an investment of Rs.2,70,00,000/- (Previous year Rs.2,70,00,000/-) in the share capital and advanced interest free loans of Rs.4,31,56,87/- (Previous year Rs,4,31,38,147/-) to and given corporate guarantee to financial Institution/Banks amounting to Rs.8,76,15,219/- (Previous year Rs.8,77,06,100/-) as on 31st March 2000 on behalf of Vecron Industries Limited (VIL) a wholly owned subsidiary of the company. The losses of VIL exceeds its paid up capital & reserves as on 31st March 2000. In view of the long term beneficial interest of the company in VIL, no provision has been made for any probable loss that may arise.

8. a) Vehicle loan is secured against assets purchased there against.

b) Vehicles shown under fixed assets includes two vehicles costing Rs.10,11,323/- which are standing in the names of directors.

9. Miscellaneous receipts includes unspent liabilities, excess provisions and unclaimed balances in respect of earlier years written back Rs.23,33,882/- (Previous year Rs. 10,16,854/-)

10. Previous year figures have been regrouped and rearranged wherever necessary.

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Mar 31, 1999

1. As per scheme of arrangement sanctioned by the Bombay High Court under sections 391 and 394 of the Companies Act, 1956 made between Shree Vindhya Paper Mills Ltd. and the company, the coating division of Shree Vindhya Paper Mills Ltd. with its assets, investments, liabilities and reserves as on 31st December, 1991 has been transferred to and vested with the company with effect from 1st January, 1992. However, certain assets and liabilities of the said division before its transfer though reflected in the accounts are yet to be transferred in the name of the company.

AS AT AS AT 31.03.99 31.03.98 Rupees Rupees

2. Estimated amount of contract remaining to be executed on the capital account and not provided for (Net of advances) Nil 188,693

3. Contingent liability not provided for

a) Claims not acknowledged as debts 1,587,006 1,779,159

b) Guarantee to Housing Development Finance Corporation Ltd. 256,208 415,834

c) Guarantee to financial institution and bank in respect of term loan and working capital facilities to subsidiary company 87,706,100 88,867,231

d) Bank guarantee to constituents and others. 2,445,000 3,925,000

4. a) Rupee term loan from ICICI Ltd. and 14% non-convertible debentures privately placed with LIC Mutual Fund are secured by way of first mortgage of all immovable properties, both present and future and also by the hypothecation of the movable properties of the company (save and except book-debts and subject to prior charges on inventories in favour of company's bankers) ranking pari passu interse.

b) Cash credit advances are secured by hypothecation of all present and future goods, book debts and other current assets of the company by way of prior/first charge ranking pari passu interse and further by second charge on company's all immovable properties both present and future and guaranteed by managing director & executive director of the company.

5. Excise duty in respect of goods manufactured being generally payable at the time of removal from factory is paid and accounted for by the company at the time of such removal. Such excise duty liability on goods manufactured but not removed as at 31st March, 1999 is estimated at Rs. 6,97,241 (previous year Rs.16,44,659). However, the said liability, if accounted, would have no impact on the profit for the year.

6. Inventories include stock in transit.

7. Capital work in progress includes capital advances Rs.Nil (previous year Rs.2,05,425/-)

8. Profit and/or loss on sale of raw materials and stores are not ascertained/shown separately. The sale proceeds have been credited to the respective accounts.

9. The last installment of Rs.33,33,333/- of 1,00,000 14% Non-Convertible Debentures of Rs.100/- each which was due for redemption on 25.09.98 at par has been redeemed to the extent of Rs.8,33,333/- only.

10. Certain sundry debit and credit balances are subject to confirmation and reconciliation.

11. Investments include National Savings Certificates lying with government department as security deposit.

12. a) There were no amount overdue and remaining unpaid to small scale/ or ancillary industrial suppliers on principal and/or interest as at the close of the year.

b) Sundry creditors and other liabilities in schedule No.11 includes :

i) Total outstanding dues of Small Scale Industrial Undertaking - Rs.Nil.

ii) Total outstanding dues of creditors other than Small Scale Industrial Undertaking - Rs.1,92,09,108/-.

c) As required by Notification No.GSR 129(E) doted 22.02.99 issued by the Department of Company Affairs, Ministry of Law, Justice of Company Affairs, the total amount outstanding to Small Scale Industries where the unit owe a sum exceeding Rs.1,00,000/- and the same is outstanding for more than 30 days to an SSI Unit - Rs.Nil.

d) The aforesaid disclosure is based on the information available with the company regarding the status of the suppliers as defined under the Interest on Delayed Payment of Small Scale and Ancillary Industrial Undertaking Act, 1993 and sec. 3(j) of the Industrial (Development and Regulations) Act, 1951.

13. Excise duty on, branch stock is shown separately as advances and hence not included in the valuation of closing stock.

14. Research and Development expenses debited in other heads of accounts :

1998-99 1997-98 Rupees Rupees

Depreciation 32,032 31,689

15. The Company has made an investment of Rs.270 lacs (Previous Year Rs.270 lacs) in the share capital of, advanced interest free loans of Rs.431 lacs (Previous Year Rs.435 lacs) to and given corporate guarantee to financial Institution/banks amounting to Rs.877 lacs (Previous Year Rs.889 lacs) as on 31st March 1999 an behalf of Vecron Industries Limited (VIL) a wholly owned subsidiary of the company. The losses of VIL exceeds its paid up capital & reserves as on 31st March 1999. In view of the long term beneficial interest of the company in VIL, no provision has been made for any probable loss that may arise.

16. Supplier's credit of Rs.142 lacs payable to Subhash Projects & Marketing Limited (SPML) shown under unsecured loans in the previous year for supply of 550 KW Wind Electric Generator (WEG) was disputed by the company and the matter was referred to arbitration. As per the agreement dated 9.3.99 between the company and SPML, it was decided to sell the Land & Wind Mill at a lump sum consideration of Rs.110 lacs. SPML agreed to waive the balance payable Rs.32 lacs which is taken to Reserves & Surplus as "Capital Reserve" instead of considering it as other Income.

17. a) Vehicle loan is secured against the asset purchased there against.

b) Vehicles shown under fixed assets includes a vehicle of Rs.5,15,451/- which is standing in the name of a director.

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Mar 31, 1998

1. As per scheme of arrangement sanctioned by the Bombay High Court under sections 391 and 394 of the Companies Act, 1956 made between Shree Vindhya Paper Mills Ltd. and the company, the coating division of Shree Vindhya Paper Mills Ltd. with its assets, investments, liabilities and reserves as an 31st December, 1991 has been transferred to and vested with the company with effect from 1st January, 1992. However, certain assets and liabilities of the said division before its transfer though reflected in the accounts ore yet to be transferred in the name of the company.

2. a. Rupee term loan from Industrial Credit & Investment Corporation of India Ltd. and 14% non-convertible debentures privately placed with LIC Mutual Fund are secured by way of first mortgage of all immovable properties, both present and future and also by the hypothecation of the movable properties of the company (save and except book-debts and subject to prior charges on inventories in favour of company's bankers) ranking pari passu interse.

b. Cash credit advances are secured by hypothecation of all present and future goods, book debts and other current assets of the company by way of prior/first charge ranking pari passu interse and further by second charge on companys all immovable properties both present and future and guaranteed by managing director & executive director of the company.

3. Excise duty in respect of goods manufactured being generally payable at the time of removal from factory is paid and accounted far by the company at the time of such removal. Such excise duty liability an goads manufactured but not removed as at 31st March, 1998 is estimated at Rs. 1,644,659 (previous year Rs. 1,399,405). However, the said liability, if accounted, would have no impact on the profit for the year.

4. Inventories include stock in transit.

5. Capital work in progress includes capital advances Rs. 205,425/- previous year Rs. 38,700).

6. Profit and/or lass on sale of raw materials and stores are not ascertained/shown separately. The sale proceeds have been credited to the respective accounts.

7. The last installment of Rs. 3,333,333/- against 100,000 - 14% Non-convertible debentures of Rs. 100/- each is redeemable on 25.09.1998 at par.

8. Certain sundry debit and credit balances are subject to confirmation and reconciliation.

9. Investments include National Savings Certificates lying with government department as security deposit.

10. There are no amounts overdue and remaining unpaid to small scale and/or ancillary industrial suppliers an account of principal and/or interest as at close of the year. This disclosure is based on the information available with the company regarding status of suppliers as defined under the "Interest on delayed payments to small scale and Ancillary Industrial Undertakings Act, 1993."

11. Excise duty on branch stock is shown separately as advances and hence not included in the valuation of closing stock.

12. Suppliers' credit of Rs. 142 lacs (Previous Year Rs. 142 lacs) payable to Subhash Projects & Marketing Limited (SPML), far supply of 550 KW Wind Electric Generator (WEG) has been disputed by the company as the performance of the WEG is not as per the stipulations, as also certain other terms and conditions as mentioned in the company's purchase order dated 12.10.1995 have not been complied with by SPML and the matter has been referred for arbitration. Hence, no provision for interest payable, if any, has been made. The same has been disclosed under unsecured loans.

13. The company has made an investment of Rs. 270 lacs (Previous Year Rs. 270 lacs) in the Share Capital of, advanced interest free loans of Rs. 435 lacs) Previous Year Rs. 394 lacs) to and given corporate guarantee to Financial Institution/Banks amounting to Rs. 889 lacs (Previous Year Rs. 646 lacs) as an 31st March, 1998 an behalf of Vecron Industries Limited (VIL) a wholly owned subsidiary of the company. The losses of VIL exceeds its paid-up capital and reserves as on 31st March, 1998. In view of the long term beneficial interest of the company in VIL, no provision has been made for any probable loss that may arise.

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Mar 31, 1997

1.As per scheme of arrangement sanctioned by the Bombay High Court under sections 391 and 394 at the Companies Act, 956 made between Shree Vindhya Paper Mills Ltd and the company, the coating division at Shree Vindhya Paper Mills Ltd with its assets, investments, liabilities and reserves as an 31st December, 1991 has been transferred to and vested with the company with effect from 1st January 1992. However, certain assets and liabilities though reflected in the accounts ate yet to be transferred in the name of the company.

2. A) Rupee term loan from Industrial Credit & Investment Corporation of India Ltd. and 14% non-convertible debentures privately placed with LIC Mutual Fund are secured byway at first mortgage of all immovable properties, both present and future and also by the hypothecatian of the movable properties of the company (save and except beak-debts and subject to prior charges an inventories in favour of company's bankers) ranking pari passu interse.

b) Cash credit advances are secured by hypothecatian of all present and future goods, book debts and other current assets of the company by way at prior/first charge ranking pari passu interse and guaranteed by managing director & executive director of the company.

3. Excise duty in respect of goods manufactured being generally payable at the time at removal from factory is paid and accounted for by the company at the time at such removal. Such excise duty liability on goods manufactured but not removed as at 31st March, 1997 is estimated at Rs.13,99,405 (previous year Rs.23,17,428). However, the said liability, if accounted, would have no impact on the profit for the year.

4. Inventories include stock in transit.

5. Capital work in progress includes capital advances Rs.38,700 (previous year Rs. 476,663).

6. Profit and/or loss an sale of raw materials and stores are not ascertained/ shown separately. The sale proceeds have been credited to the respective accounts.

7. 1,00,000- 14% Non-convertible debentures at Rs. 100/- each are redeemable in three equal yearly instalments beginning from 25.9.1996 together with a premium of 5% at the face value at the debentures payable on 25.9.1997 of which first instalment has been redeemed in the current year.

8. Certain sundry debit and credit balances are subject to confirmation and reconciliation.

9. Investments include National Saving Certificates lying with government department as security deposit.

10. There are no amounts overdue and remaining unpaid to small scale and/or ancillary industrial suppliers on account of principal and/or interest as at close of the year. This disclosure is based an the information available with the company regarding status of suppliers as defined under the "Interest on delayed payments to small scale and Ancillary Industrial Undertaking Act, 1993."

11. Excise duty on branch stock is shown separately as advances and hence not included in the valuation of closing stock.

12. Plant and Machinery includes assets given an lease in previous year amounting to Rs.60,01,000 an which depreciation has been provided @ 100% in previous year.

13. An amount of Rs. 142 lacs payable to Subhash Projects & Marketing Limited (SPML), for supply at 550 Kw Wind Electric Generator (WEG) has been disputed by the company as the performance at the WEG is not as per the stipulations, as also certain other terms and conditions as mentioned in the company's purchase order dated 12.10.1995 have not been complied with by SPML and the matter has been referred for arbitration. Hence, no provision for interest payable, if any, has been made.

14. The company has made an investment of Rs.270 lacs in the Share Capital at, advanced interest free loans at Rs.394 lacs to and given corporate guarantee to Financial Institution/Bank amounting to Rs. 646 lacs as on March 31, 1997 an behalf of Vecron Industries Limited (VIL) a wholly owned subsidiary of the company. The losses at VIL exceeds its Paid-up Capital and Reserves as on March 31, 1997. In view at the long term beneficial interest of the company in VIL no provision has been made far any probable loss that may arise.

15. Unsecured loans include supplier's credit for Rs. 142 lacs (previous year Rs.142 lacs) against installation of wind mill project, pending finalisation of its payment terms.

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Mar 31, 1996

As per scheme of arrangement sanctioned by the Bombay High Court under Section 391 and 394 of Companies Act, 1956 made between Shree Vindhya Paper Mills Ltd. and the company, the coating division of Shree Vindhya Paper Mills Ltd. with its assets, investments, liabilities and reserves as on 31st December, 1991 has been transferred to and vested with the company with effect from 1st January, 1992, However, certain assets and liabilities though reflected in the accounts are yet to be transferred in the name of the company.

(a) Rupee term loan from financial institution and 14% non-convertible debentures privately placed with LIC Mutual Fund are secured by way of first mortgage of all immovable properties, both present and future and also by the hypothecation of the movable properties of the company (save and except book-debts and subject to prior charges on inventories and other current assets in favour of company's bankers) ranking pari passu interse.

(b) Cash credit advances are secured by hypothecation of all present and future goods, book debts and other current assets of the company by way of prior/first charge ranking pari passu interse and guaranteed by managing director & executive director of the company.

Excise duty in respect of goods manufactured being generally payable at the time of removal from factory is paid and accounted for by the company at the time of such removal. Such excise duty liability on goods manufactured but not removed as at 31st March, 1996 is estimated at Rs. 23,17,428 (previous year Rs. 1,28,279). However, the said liability, if accounted, would have no impact on the profit for the year,

Inventories include stock in transit.

Capital work in progress includes capital advances Rs. 4,76,663 (Previous year Rs. 30,000)

Profit and/or loss on sale of raw materials and stores are not ascertained/shown separately. The sale proceeds have been credited to the respective accounts.

1,00,000 - 14% Non-convertible debentures of Rs. 100/- each are redeemable either on 25-9-1997 or in three equal yearly instalments beginning from 25-9-1996 together with a premium of 5% of the face value of the debentures payable on 25-9-1997.

Certain sundry debit and credit balances are subject to confirmation and reconciliation.

Investments include National Saving Certificates lying with government department as security deposit.

Provision for retirement benefits relating to leave encashment has been made in accordance with accounting standard prescribed by Institute of Chartered Accountants of India. Consequently profits of the company are lower and current liabilities are higher by Rs. 4,49,424/-.

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Mar 31, 1995

1.As per the scheme of arrangement sanctioned by the Bombay High Court under sections 391 & 394 of Companies Act, 1956 mad between Shree Vindhya Paper Mills Limited, and the company, the coating division of Shree Vindhya Paper Mills Ltd with its assets, investments, liabilities and reserves as on 31st December 1991 has been transferred to and vested in the company with effect from 1st January 1992. However, certain assets and liabilities though reflected in the accounts are yet to be transferred in the name of the company.

4. a) Rupee term loan from financial institution and 14% non-convertible debentures privately placed with LIC mutual fund are secured by way of first mortgage of all immovable properties both present and future and also by the hypothecation of the movable properties of the company (save and except book-debts and subject to prior charges on inventories in favour of company's bankers) ranking pari passu interse.

b) Cash credit advances are secured by hypothecation of all present and future goods and book debts of the company by way of prior/first charge ranking pari passu interse and guaranteed by managing director and executive director of the company.

5. Excise duty in respect of goods manufactured being generally payable at the time of removal from factory is paid and accounted for by the company at the time of such removal. Such excise duty liability on goods manufactured but not removed as at 31st March 1995 is estimated at Rs. 1,28,279 (previous year Rs. 21,95,808). However. the said liability, if accounted, would have no impact on the profit for the year.

6. Inventories include stock-in-transit.

7. Capital work in progress includes capital advances Rs. 30,000 (Previous year Rs. 8,31,700).

8. Profit and/or loss on sale of raw materials and stores are not ascertained/ shown separately. The sale proceeds have been credited to the respective accounts.

9. 1,00,000 - 14% Non-Convertible Debentures of Rs. 100/- each are redeemable either on 25.9.1997 or in three equal yearly installments beginning from 25.9.1996 together with a premium of 5% of the face value of the debentures payable on 25.9.1997.

12. Investments in 100 shares each in Raymond Synthetics Limited and Siyaram Silk Mills Limited, were not physically available as the same are reported to have not been received from these companies duly transferred.

13. The company is in the process of identifying suppliers who are covered under the Interest on delayed payments to Small Scale and Ancillary Industrial Undertaking Act, 1993. Consequently, the liability under the said Act, if any on account of interest has not been ascertained.

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Mar 31, 1994

As per the scheme of arrangement under sections 391 & 394 of companies act, 1956 sanctioned by Bombay High court made between Shree Vindhya Paper Mills Limited, coating division with its assets, investments, liabilities and reserves as on 31st December 1991 has been transferred to and vested in the company with effect from 1st January 1992. However, certain assets and liabilities are yet to be transferred in the name of the company.

Rupee term loan from financial institution and non convertible debentures privately placed with LIC mutual fund are secured by immovable properties and hypthecation of movable properties of the company (save and except book debts and subject to prior charges on inventories in favour of company's bankers) ranking pari passu interse.

Cash credit advances are secured by hypothecation of all present and future goods and book debts of the company by way of prior/first charge ranking pari passu interse and guaranteed by managing director and executive director.

Excise duty in respect of goods manufactured by the company according to the method of accounting consistently followed by the company and also considering the accepted practice of the excise authority that excise duty is generally payable on clearance of goods, is accounted at the time of clearance of goods from the factory for sale. Sale excise duty liability on goods manufactured but not cleared as at 31st March, 1994 is estimated at Rs. 21,95,808 (previous year Rs. 1,61,871). However, said liability, if accounted, would have no impact on the profit for the year.

Depreciation has been provided at revised rates, pursuant to amendments in schedule XIV to the companies act, 1956, vide notification GSR No. 756 (E), dated 16.12.1993. Continuous process plant, as defined in the said schedule has been considered on technical assessment and depreciation provided accordingly. As a result of the above, depreciation for the year is lower by Rs. 13,16,492.

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Mar 31, 1993

As per the scheme of arrangement under sections 391 & 394 of the companies act, 1956 sanctioned by Bombay High Court (hereinbefore and after called "the scheme") made between Shree Vindhya Paper Mills Ltd (hereinbefore and after called "SVPM Ltd") and the company, coating division of SVPM Ltd with its assets, investments, liabilities and reserves as on 31st December 1991 has been transferred to and vested in the company with effect from 1st January 1992. However, certain assets and liabilities are yet to be transferred in the name of the company.

As per the scheme, properties of coating division of SVPM Ltd. have been tranferred to the company subject to the charges existing 1.1.1992 in SVPM Ltd.

The major part of operations reflected in the profit and loss account have been carried out in the name of SVPM Ltd in trust for the company as per the scheme and subsequently upto 28.2.93 pending completion of formalities.

Non convertible debentures privately placed with LIC Mutual fund are secured by way of an equitable mortgage of immovable properties and hypothecation of movable properties of the company (except book debts and subject to prior charges on inventories in favour of bankers) ranking pari passu interse. Further, rupee term loans are guaranteed by the erstwhile managing director of SVPM Ltd.

Cash credit advances against hypothecation are secured by hypothecation of all present and future goods and book debts of the company by way of prior/first charge ranking pari passu interse and guaranteed by erstwhile managing director and a director of SVPM Ltd.

Excise duty in respect of goods manufactured by the company according to the method of accounting consistently followed by the company and also considering the accepted practice of the excise authority that excise duty is generally payable on clearance of goods, is accounted at the time of clearance of goods from the factory for sale. Such excise duty liability on goods manufactured but not cleared as at 31st March 1993 is estimated at Rs. 161871 (previous year Rs. 54987/-). However, said liability, if accounted, would have no impact on the profit for the year.