Notes to Accounts of Crystal Software Solutions Ltd.

Mar 31, 2012

I. Corporate Information

The engaged in business of providing Back office Services & Software Services.

II. General Notes

1 The balances of Debtors, Creditors and Advances are subject to confirmation from the parties.

1 No contract on Capital account remains to be executed.

2 There is no other contingent liability on account of the company, as per the knowledge of the management.

Sundry Debtors of Rs. 3,37,49,380/- appearing in the balance sheet are outstanding since 1999 in respect of which no confirmation is available from the Debtor, M/s. MIRC Electronics Ltd., however,

3 the management has filed a suit for recovery of dues amounting to Rs. 6,90,50,524.98 inclusive of principle amount & interest thereon till the date of filling of suit, in the High Court at Mumbai, which is pending disposal. However, it is classified as doubtful of recovery in accounts.

Earlier the Company was having a manufacturing unit at Vasai in the backward area of Maharashtra for which it was granted Entitlement Certificate as an eligible unit under Package Scheme of Incentives, 1983/1988 for the period from 01-02-1994 to 31-01-2001. Under the said scheme the

4 company was allowed to differ its sales tax liability and the same was payable in accordance with the terms of assessment orders passed by the assessing officer, An Amount of Rs. 15, 77,737/- has been deferred by the company towards its sales tax liability under the said scheme in respect of which no assessment order has been passed by the sales tax authorities.

The Balance Shown in unpaid dividend account is subject to reconciliation and shall be reconciled in duourse and unclaimed dividends as required to be deposited with government treasury has not been done.

An Amount of Rs. 2511736/- appearing as loans and advances recoverable from the Ex-Chairman & 6 Ex-Managing Director Mr. Niranjan B Shah is the balance of the amount paid towards his medical

During the year under review the Company has entered in to an out of court settlement with Abhyudaya Co Op Bank Ltd. and paid a sum of Rs. 4,05,00,000/- in full settlement of all pending cases filed by the Bank. The Consent Terms has been filed in the Court and the bank has withdrawn all the cases against the company including winding up petition. The company has made appropriate book entries and excess payment made to the bank has been appropriated towards building & Factory premises which were jeopardised pending bank suit

Factory Building at Plot 80 vasai sold to one M/s. Simto Property Developers Ltd. has been re- 8 acquired by the Company at original Sale Value as the agreement to sale has been reversed by the buyer.

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Mar 31, 2010

1. Figures have been rounded off to the nearest rupee.

2. The figures of the previous year have been regrouped / rearranged and recasted wherever necessary, in order to make them comparable with the figures of the current year.

3. Auditors Remuneration

As Auditors Rs. Rs. 33,708/-(Pr. Yr. 33708)

Taxation & other Matters : Rs.84.764/-(Pr.Yr 12665)

4. Valueoflmports CIF(GoodsTraded in) Rs.NIL (Rs.NIL)

5. Expenditure in foreign Currency : Rs.NIL/- (Pr.Yr.NIL)

6. Earnings in foreign Currency Rs. 7.50,000/-(Pr. Yr. Rs. 702000) (Back Office Charges Received)

(ExportSales) Rs,NIL (Pr.Yr.Nil)

7. MANAGERIAL REMUNERATION:

2009-2010 2008-2009

Salary 96,000 2,25,000



(To Managing Director)

8. Sundry Debtors of Rs. 3,37,49,380/- appearing in the balance sheet are outstanding since 1999 in respect of which no confirmation is available from the Debtor, M/s. MIRC Electronics Ltd., however, the management has filed a suit for recovery of dues amounting to Rs. 6,90,50,524.98 inclusive of principle amount & interest thereon till the date of filling of suit, in the High Court at Mumbai, which is pending disposal. However, it is classified as doubtful of recovery in accounts.

9. The Bank balance of Rs. 1,05,72,604 appearing in the balance sheet is not confirmed by the companys banker viz., Abhyudaya Co-op. Bank Ltd. on account of dispute as the bank has filed a dispute for recovery of Rs. 3,88,02,735.85 before Co Operative Court, and the company has filed a counter claim of Rs. 59,31,21,475.36 against the bank, which is pending disposal. The Management is in the process of negotiating out of court settlement

10, In view of pending litigation no provision for interest has been made during the year, in respect of cash credit limits availed from the

Abhy udaya Co-op.Bank Ltd.the amount where of is un as certained.

11,. The Amount of Rs. 17,32,877/- shown as Fixed Deposit with Abhyudaya Co-op. Bank Ltd is not confirmed by the bank and the same is adjusted against credit facilities availed by the company. Therefore no provision for interest on FDR is made. However, due to pending litigation with the bank the company has not written off the FDR.

12. Earlier the Company was having a manufacturing unit at Vasai in the backward area of Maharashtra for which it was granted Entitlement Certificate as an eligible unit under Package Scheme of Incentives, 1983/1988 for the period from 01 -02-1994 to 31-01-2001. Under the said scheme the company was allowed to differ its sales tax liability and the same was payable in accordance with the terms of assessment orders passed by the assessing officer, An Amount of Rs. 15,77,737/- has been deferred by the company towards its sales tax liability under the said scheme in respect of which no assessment order has been passed by the sales tax authorities.

13. Contingent Liabilities not provided for:

a) No Provision has been made in respect of suits pending/lost by the company for an amount aggregating to Rs. 108.10 Lacs (Approx.).

However the company has already made a deposit of Rs. 20 Lacs with Bombay High Court against aforesaid suits.

b) A criminal case for Rs. 3.80 Lakhs instituted against the company u/s. 138 of Negotiable Instrument Act 1938 is pending at New Delhi.

However in view of management the company is not liable for the payment of cheque amount as the goods were supplied by the complainant onaccount of and under instructions of MIRC Electronics Ltd.

c) The Company has made a payment of Rs. 10 Lakhs towards a Corporate guarantee given to the Indusind Bank in respect of credit facilities amounting to Rs. 50 Lakhs availed by its erstwhile subsidiary viz. Crystal Exim Ltd. for discharging the said guarantee. The Guarantee has been extinguished & satisfaction of charge has been filed with ROC. The Said amount has been debited to Profit & Loss A/c under the head of Legal Expenses, during the year under review.

14. The Balance Shown in unpaid dividend account is subject to reconciliation and shall be reconciled in due course and unclaimed dividends as required to be deposited with government treasury has not been done.

15. A Winding Up Petition filed by the Abhyudaya Co Op Bank Ltd. against the Company has been admitted by Bombay High Court, however the company is contesting the same and is confident of getting the petition dismissed.

16. Related Party Disclosure

A. Name of the Related Party & Nature of Relationship

a. Company in whichDirectors are interested:

Crystal Equities Ltd.

Sparkling Carpets Ltd.

Manesh Power Equipment Pvt. Ltd.

Sparkling Carpets USA

b. Key Managerial Personnel & their Relatives:

Mr. Niranjan B Shah - Managing Director

Mrs. Geeta N Shah - Wife of Managing Director

Mr. Kaushal Shah - Son of Managing Director