Notes to Accounts of Chokhani International Ltd.

Mar 31, 2012

Notes :- 1. Amount due and payable to Financial Institutions i. e. ICICI, IDBI and IFCI in terms of loan agreements executed by the Company with them were secured by way of first mortgage by deposit of title deeds with the lead institution of all immovable properties, both present and future, and first charge by way of hypothecation of two Floating Dry Docks of 14000 M.T. and 2400 M.T. lifting capacity and all the other movable assets (save and except book debts) including movable machinery, machinery spares, tools and accessories present and future, which have since been disposed off by DRT Receiver during the preceding years.

2. The above term loans stand recalled by all the financial institutions i.e. ICICI, IDBI and IFCI (Refer foot note no.6)

3. (I) Rupee Term Loan includes amount due to erstwhile SCICI Ltd amount Rs. 35,951,120/- (Previous Year Rs. 35,951,120/-)

(II) Foreign Currency Loan includes amount due to erstwhile SCICI Ltd amount Rs. 69,603,824/-(Previous Year Rs. 69,603,824/-)"

4. The Financial Institution (ICICI, IDBI & IFCI) had an option to convert at par Rs. 518.35 lakhs out of the total sanctioned rupee term loan of Rs. 2990 lakhs into fully paid equity shares of the company during the period from July 01, 1992 to June 30, 1995. In exercise of this option the institutions have converted rupee term loans to extent of Rs. 253.42 lakhs during the year 1992-93.

5. Cost of Fixed Assets (Less Depreciation Provided till the date of disposal) and value of inventories disposed off by DRT Receiver (also refer foot note No.6(iii)

6.(i) Notices of recall of loans have been received from All Indian Financial Institutions viz. IDBI, IFCI, ICICI (including SCICI). IDBI & IFCI have filed a suit before the Debt Recovery Tribunal (DRT), Madras and ICICI have filed a suit before the Debt Recovery Tribunal, Mumbai for recovery of their dues.

(ii) ICICI has also sued the Company before the Mumbai High Court & an Official Receiver has been appointed who has taken possession of the suit securities on 14.08.1998. Mumbai High Court transferred this case to DRT Mumbai. On request of ICICI, DRT Mumbai has appointed a Private Receiver in place of Court Receiver. As per direction of DRT Mumbai, ICICI / Receiver inserted an advertisement in the newspaper on 27.11.2002 for sale / disposal of Assets of the company viz Floating Dry Docks, machineries, furniture and fixtures, vehicle and stores and spares etc. on as is where is basis and as is what is basis. These assets as intimated by DRT Receiver have since been disposed off.

(iii) Pending decision in the matter of company's claim on ICICI (Lead Bank) amounting to Rs. 210 crores, on account of their loss and negligence which resulted in a total loss of company's most valuable assets which had a value more than sufficient to meet the claims of all secured and/or unsecured creditors. By failing to carry out timely maintenance despite reminders from the Court Receiver, High Court, Mumbai and others the financial institutions allowed dissipation and ultimate destruction of the two dry docks and other imported & indigenous machineries. Therefore the cost of fixed assets (net of relevant revaluation reserve) less depreciation provided till the date of disposal and value of inventories aggregating to Rs. 48.81 crores as intimated by DRT Receiver has been deducted from secured loans. In view of above, the management is of the considered opinion that no amount whatsoever is due and payable to the Financial Institutions.

(iv) Owing to the recall of loans by the Financial Institutions, the liability in respect of foreign currency loans has been accounted in terms of Indian rupees. Hence the adjustment with respect to variation in the foreign exchange rates from 1st April 1997 has neither been considered necessary, nor provided.

Note 1:

Disclosure pursuant to Note no. 6(T) of Part I of Schedule VI to the Companies Act, 1956

Contingent liabilities and As at 31.03.2012 As at 31.03.2011 commitments (to the extent not provided for)

(i) Contingent Liabilities

(a) Claims against the company not acknowledged as debt - -

(b) Guarantees - -

(c) Other money for which the company is contingently liable 49,120,000 49,120,000

49,120,000 49,120,000

2. Income Tax Assessments of the Company have been completed upto Assessment Year 2009-10 u/ s 143(1) (a). For the current year, the company has been advised that no provision for Income Tax is necessary in the absence of taxable income.

3. Remuneration paid to Managing Director NIL (Previous Year NIL)

*In view of the prevailing circumstances, Managing Director has consented to waive-off his remuneration and other benefits.

4. (i) Balances under the head Term Loans, Loans & Advances, Deposits, Sundry Debtors, Sundry Creditors for materials and Sub-contractors, remained unconfirmed till the Balance Sheet date.

(ii) In the opinion of the Management, the aggregate values of Current Assets, loans and advances on realisation in ordinary course of business will not be less than the amount at which these are stated in the Balance Sheet. Certain advances & Debtors which are under dispute/litigation, pending decision, have not been provided.

5) SEGMENT REPORTING

The company operated in only one operating segment i.e. ship repairs. However the operation remained suspended since June, 1998.

6) RELATED PARTY TRANSACTIONS

Related party transactions during the year ended March 31, 2012 are detailed below: i) Key Management Personnel and their relatives

Mr. Jagdish Chokhani

Mr. B. P. Hazarika

Mr. Satender Singh

Mr. Naresh Tulshan

Mr. Madhusudan Chokhani

Mrs. Anita Chokhani

7) Deferred Taxation

The management does not foresee any immediate revival of operations / earrings in near future where the deferred tax assets can be realised against future taxable income. Therefore the accounting of deferred tax liabilities/assets has not been done.

(vii) There was no employee who was employed throughout the Financial year and was in receipt of an aggregate remuneration of more than Rs. 48,00,000/- p.a. or Rs. 4,00,000/- per month if employed for part of the year.

NOTE :-

I. Till the year ended 31 March 2011, the company was using pre-revised Schedule VI to the Companies Act 1956, for preparation and presentation of its financial statements. During the year ended 31 March 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the company. The company has reclassified previous year figures to conform to this year's classification.

II. Figures in brackets represent previous year's figures.

III. Figures have been rounded off to nearest Rupee.

Note 1 to 30 form an integral part of accounts.