Notes to Accounts of Alcobex Metals Ltd.

Mar 31, 2010

1 Contingent Liabilities not provided for:

a) Claims against the Company not acknowledged as debts.:-

i) Demand raised by a customer/creditors Rs 26.08 lacs (2009-Rs. 26.08 lacs).

ii) Demand raised by a creditor Rs. 106.63 lacs (2009-Rs. 106.63 lacs). The company has filed a demand of Rs. 31.31 lacs including interest against the creditor.

iii) Demand raised by excise authorities Rs.33.32 lacs (2009 - Rs.33.32 lacs) which includes Rs. 7.60 lacs deposited under protest. No provision has been made as the probability of Jhe claim succeeding is remote.

iv) Demand of sales tax on account of non-submission of declaration forms Rs. 9.48 Lacs (2009-Rs. 15.06 Lacs).

v) Demand raised by Electricity Department towards interest and late

payment charges Rs.Nil (2009-Rs. 28.00 Lacs).

vi) Other demand Amount unascertained (2009 Amount unascertained).

b) Other amounts for which the Company is contingently liable.

i) Letter of credits opened by the Company bankers Rs.Nil (2009-Rs. 331.65 lacs).

ii) Guarantees issued by Company bankers Rs. 10.92 lacs (2009-Rs. 155.49 lacs).

c) Certain employees have filed claims in various forums and sought relief. The ultimate liability, if any, with respect to their claims is not ascertainable and in the opinion of the management, would not have a material impact on the accounts.

2.1 The accumulated losses of the company have exceeded the net worth of the company. The company has been declared as sick unit by the Board of Industrial & Financial Reconstruction of The Sick Industrial Companies (Special provision) Act, 1985. The BIFR in its judgment dated 02.08.2010 have directed the company to deposit Rs. 5 Crores in the Interest Bearing "No Lien Account" with the IDBI within one month failing which the IDBI (OA) will file an Memorandum of Appeal (MA) for change of management. The company is in the process of filing for extension of time to comply of the order and is hopeful for a favorable decision.

2.2 The accumulated losses of the company exceeded the net worth of the company and the company incurred cash losses for the past few years. The production facility of the Company is suspended since 14,h December 2009 due to severe financial crunch. However, the accounts of the company have been prepared on a going concern assumption i.e the company will be able to realize all its assets at their carrying values as at 31.3.2010 and discharge all its liabilities as at 31.03.2010 in the normal course of business. As such, no adjustment relating to recoverability and classification of recorded assets amount or amounts and classification of liability that may be necessary if the Company is unable to continue as a going concern has been made in the financial statement. The Companys ability to continue as a going concern would be dependent on banks/financial institutions, better operational control, extensive debt restructuring, restructuring of product mix with better contribution, infusion of funds, one time. settlement with banks / Financial Institutions etc.

3 Transaction of sales, purchases & others covered under Section 297 of the Companies Act, 1956 have been entered into between the Company and parties in which some of the directors/ relative of director are interested without obtaining prior approval from the Central Government aggregating to Rs. 14.35 lacs. Also, during the year the Company has made advances (interest free) in the ordinary course of business for job work to a Private Limited Company in which directors are interested.

The Company has filed application for post facto approval from the Central Government and is hopeful of a favorable decision.

4 Value of building inter alia, includes cost of land. No separate cost of land has been depicted / accounted for in absence of details. The Company is in the process of getting the apportionment done between land and building through an approved valuer.

5.1 The revised securities as mentioned in Schedule 3 Secured Loans are based on the re- worked out package duly approved by the banks / financial institutions which has subsequently been revoked as due to severe financial crunch, certain conditions could not be fulfilled by the Company. However, the Company continues to classify the debts according to the re-worked out package approved earlier. As per the same package, first charge / satisfaction of charge in respect of all fixed assets of the Company in favour of the banks ranking parri passu with the other existing lenders and second charge on all movable assets including debtors in favour of Financial Institutions (FIs) are yet to be created pending approval of Board of Industrial Finance and Reconstruction ( BIFR).

5.2 The Company has in principle agreed to enter into One Time Settlement (OTS) of its dues to various Banks/Financial Institutions at terms and conditions mutually agreed amongst the parties on various dates subject to the approval of the Board of Industrial Finance and Reconstruction (BIFR) in earlier year. This has subsequently been withdrawn by the lenders due to non-compliance of various conditions and also delay/default in payment of capital/interest. However, the Company continues to provide interest as per the OTS agreed upon earlier. Also, no provision for further liability towards interest at prevalent cap rate (BPLR+3.5 p.a.) /penal interest (amount unascertained) due to delay/default in payment of capital/interest has been made as the Company is hopeful of relief / concession at the time of settlement.

6. Based on the valuation report of the companys manufacturing facilities at Jodhpur, carried out by professional valuer in the previous year, the Board of Director is of the opinion that the assets of the manufacturing facilities at Jodhpur are not impaired and consequently no provision has been made in the financial statement.

7. SemiFinishedGoodsattheyearendRs.6.61 lacs (2009 Rs. 75.45 lacs) inclusive of Rs. 1.86 lacs (2009 Rs. 36.8 lacs) lying with third party, is accounted for on the basis of a certificate from the management and is based on technical estimates since various technicalities are involved in assessing such stock as the maintenance of production records at various stages and process/batch wise costing record is not practicable.

8. Fixed/Margin Deposits with banks Rs. 202.70 lacs (2009 - Rs. 203.20 lacs) are lodged with the banks for obtaining guarantees/letters of credit.

9.1 Balances appearing under the head Sundry Debtors, Bank Balances, Loans & Advances, Liabilities Secured & Unsecured loans are subject to reconciliation/ confirmation.

9.2 In the opinion of the Board, the value on realization of Current Assets, Loans & Advances in the ordinary course of business will not be less than the amount at which they are stated in the Balance Sheet and provision for known liability have been made.

10. Loans and Advances inter alia include

a) Rs.l2.381acs (2009 Rs. 12.381acs) deposited with Industrial Development Bank of India (Escrow Account) for releasing guarantee of Jodhpur Wires Limited. This deposit is to be adjusted against repayment of loan to Bank/Financial Institutions.

b) Amount recoverable aggregating to Rs. 62.57 lacs (2009 Rs. 62.57 lacs) from various banks on account of the effect of the Reworked Out Package based on the approval given by the bank which was given effect to in earlier years. The Companys application for early release of these amounts are pending with the banks. The Company is hopeful of recovery and accordingly no provision for doubtful advances is considered necessary.

11 The Company has not received any information / memorandum (as required to be filed by Suppliers / Vendors with the notified authority under Micro, Small and Medium Enterprises Development Act, 2006), claiming their status as Micro, Small or Medium Enterprises. Consequently, the amount paid / payable together with interest paid/payable to these parties under this Act is Nil.

12. The Company has made application to Board of Industrial Finance and Reconstruction (BIFR) for permission to allot Equity/ Cumulative Redeemable Preference Shares against advance received/ credit balances arising out of the re-worked out package approved by Banks/ Financial Institutions which is pending with the BIFR.

13. No amount is paid / payable by the company under Section 441 of the Companies Act, 1956 (Cess on turnover) since rules specifying the manner in which the Cess shall be paid has not been notified yet by Central Government.

14.2 In view of inadequacy of profits as per Section 198 of the Companies Act, 1956, the remuneration to Directors have been paid as per part II of the Schedule XIII of the said act, and no commission is payable as per Section 350 of the said Act. Accordingly, computation under section 350 read with Section 309(5) is not given.

15. The amount of excise duty shown as deduction from turnover Rs. 86.29 lacs (2009 Rs. 400.71 lacs) is the total excise duty for the year excluding the excise duty relating to difference between the closing and opening stock.The difference in excise duty between closing and opening stock of finished goods amounting to Rs..9.27 lacs (2009 Rs. 30.41 lacs) is recognized separately in Profit & Loss Account.

16. Auditorsremuneration includes Statutory Audit Fee Rs. 1.46 lacs (2009 Rs. 1.46 lacs),Fees for other matters (limited review, corporate governance & certification fees etc.) Rs. 0.50 lacs (2009 Rs. 0.49 lacs) and Service tax of Rs. 0.20 lacs (2009- Rs. 0.21 lacs) have been debited to Service Tax Recoverable.

17. Employees Benefits

17.1 Defined Contribution Plans

The Company makes contribution towards Provident Fund and ESIC to a defined contribution retirement benefit plan for qualifying employees. The Provident Fund & ESIC plans are operated by Regional Provident Fund Commissioner and Director Employees State Insurance Corporation. The Company is required to contribute a specified percentage of payroll cost to the retirement benefit schemes to fund the benefits. The only obligation of the Company with respect to their retirement benefit plan is to make specified contribution at specified rates. The Company has recognized Rs. 3,344,030 (2009-Rs. 3,604,898) for Provident Fund and Rs. 10,19,845 (2009 Rs. 1,185,754) for ESIC

18.2 Defined Benefit Pan

18.2.1 Gratuity/Leave Encashment

The Company provides for retirement benefits in the form of gratuity & leave encashment which are determined using the projected unit credit method.

18.2.3 The Actuarial calculations used to estimate commitments and expenses are based on the following assumption which if changed, would affect the commitments size, funding requirement and expenses.

18.3 The estimates of future salary increase in actuarial valuations take account of inflations, seniority, promotion and other relevant factors such as supply and demand factors in employment market.

18.4 Gratuity expenses and Leave Encashment have been recognized under the head Employees Remuneration & Welfare Expenses.

19 ICAI has issued a limited revision to AS 15 (revised) which allows an entity to make disclosures required by paragraph 120 (n) of AS 15 (revised) prospectively from the transition date. The limited revision has not yet been incorporated in AS 15 notified under Companies (Accounting Standard) Rules, 2006. Company expects that limited revision will be incorporated in notified standards shortly". In preview of the above the Company has not disclosed the information required to be disclosed under para 120 (n) of AS 15 (revised).

20. The Company could not make timely deduction/deposit of income tax at source in all cases due to severe financial crisis and as such further liability of penal interest etc., if any, will be accounted for as and when demanded..

21. Segment Reporting :

At present the Company has only one business segment-copper & copper based alloys Copper and copper based alloys include a small proportion of fabrication income. The companys export form a significant proportion of copper & copper based alloys. As such geographical segment becomes a reportable segment in which risks and return are different. The company has no system to identify revenue and expenses to reportable business and geographical segments and as such the particulars of segment information are not reported. Similarly assets and liabilities contracted have not been identified to any reportable segment as it is currently not practicable to provide segment disclosures relating to assets, liabilities & capital employed.

22. Related party Disclosures:

The details of transactions entered into with related parties during the year are as under:

a) Related Party and their relationship

i) Subsidiary Companies NIL

ii) a) Key Management Personnel

Sh.G.C.Kanunga Sh.B.L.Kanunga Sh.S.R.Kanunga Sh. Manoj Kanunga

b) Relative of Directors

Mr. Bharat Kanunga Mr. Arvind Kanunga Mrs. Kanta Kanunga Mr. Sandeep Kanunga Mr. Rahul Kanunga Mr. Ritesh Kanunga Mrs. Sucheta Kanunga

iii) Enterprises in which key management personal have significant influence. Alcobex Investment (P) Ltd. Maharastra Metal House AbexTubes(P)Ltd. Century Metals Varron Impex Sai Sum Hydro Power Pvt. Ltd.

23. Disclosures in respect of Companys operating lease arrangements, entered on or after 15th April, 2001 under Accounting Standard (AS-19) "Leases" issued by the Institute of Chartered Accountants of India.

a) The company has entered into operating lease arrangements primarily for godown /office premises and residential premises for employees/directors. Some of the significant terms and conditions of the arrangements are: agreements may generally be terminated by either party by servicing a notice period.

The lease arrangements are generally renewable on expiry of lease period subject to mutual agreement.

The company shall not sublet, assign or part with the possession of the premises without prior written consent of lessor.

b) Rent in respect of above, charged to Profit & Loss Account Rs. 13.92 lacs (2008-Rs. 16.181acs).

c) The total amount of future lease payments under non-cancellable operating leases are as under:

(i) not later than one year:Rs.7.70 lacs (2009 Rs. 10.76 lacs)

(ii) Later than one year but not later than five years: Rs. Nil (iii) Later than five years :Rs. Nil

24. An illegal strike at the factory premises continues since 3 April 2007 onwards. Accordingly no provision for Salary, Wages & allied benefits for workers on strike is due for the period.

26. Taxes on Income

The deferred tax liability in accordance with Accounting Standard (AS-22) "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India comprises of the followings:

In terms of the provisions of Accounting Standard (AS- 22) Taxes on Income issued by the Institute of Chartered Accountants of India, the Company would have had deferred tax assets in respect assets in respect of expenses allowable on payment basis, carry forward business loss, unabsorbed depreciation etc. However, the Company is not virtually/ reasonably certain about their realization in future and has accordingly b ot considered the same.

27. In the opinion of the Board, the fall in the market value of investment is temporary in nature and accordingly no provision for diminution in value of investment has been considered necessary.

28. As there is no company secretary, the accounts of the Company could not be authenticated u/s 215 read with Sec. 383 of the Companies Act, 1956.

29. The figures for the previous year have been regrouped/ recast as far as practicable to make them comparable with those of current year.

30. Additional information pursuant to Part II of Schedule VI of The Companies Act, 1956.