Notes to Accounts of K J International Ltd.

Mar 31, 2010

CONTINGENT LIABILITIES

a) There are various suits filed against the company by various parties. We are unable to quantity the amount of liabilities arising in various suits.

b) Contigent liabilities not provided for as the information provided by the management, present status of the cases are not known as the management has not provided any detail of the cases.

Particulars Amount(ln Rs.)

Sales Tax for Karnal Unit 80 lacs

Sales Tax for Bundi Unit 37 lacs

1) SECURED LOANS

During the last year, the deed of Assignment was executed on 10th June 2008 between the Consortium Bankers , Kotak Mahindra Bank and the Company regarding the buyout of Consurtium debt owned by K J International Ltd. Similarly the deed of assignment was also executed on 13th June 2008 between the Stressed Assets Stabilization fund (IDBI), Kotak Mahindra bank ltd and the company regarding the acquiring the debts of IDBI owned by the copmany. As per the draft term sheet , the company has not provided Interest on above loans.

During the year the company has made a payment of Rs. 3,.98 crores to Kotak Mahindra Bank against ARD loan , however in the absence of Agreement with the bank, we are unable to comment on the terms & conditions for repayment of Bank Loans.

The company has also provided interest on the above loan . However no confirmation is available in respect of loan and interest their on.

(2) TAXES ON INCOME

Current tax is determined as the amount of tax payable in respect of estimated taxable income for the year and in accordence with the provision as per Income Tax Act 1961. Deffered tax is recognised using the enacted tax rates and laws as on the Balance Sheet date. Subject to the consideration of prudence in respect of deffered tax assets, on all timing, differences, between taxable of deffered tax assets, on that originate in one period and are capable of reversal in one or more subsequent period.

(3) Auditors Remuneration - Rs 15000 /-, (Previous Year - Rs 16854 /-)

(4) Provisions of lndustries( Development & Regulation) Act. 1951 relating to licenced capacity :- in the absense of any engineer certificate we are unable to comment on the insatalled, licensed ¦ actual capacity of various industries

(5) Production, Stock and Sales of Rices:

The Company is not carrying a any manufacturing and business activity during the year and carry no inventory

6 ) CAPITAL WAIVER ACCOUNT (Shown under Reserve & surplus) As informed in para 8 above, the debts of the company was taken over by Kotak Mahindra bank, after settle the above dues, the balances left in loan accounrs were transfered to Capital Waiver account.

7) Earning From Foreign Currency NIL NIL

Expenditure in Foregin Currency NIL NIL

8) During the year company has taken over the M/s K.J. International dt. 29 September, 2009 a firm in which directors are interested.

9) Deffered tax assets/ liabilities has not been recognized and carried forward as there is no certainly of any future taxable income

10) Closing Balances of debtors, Secured Loans, Unsecured loans and subject to confirmation by them. because the management has not provided any confirmation of abobe balances

11) During the year the company has not writeoff/ writeback old debtors.

12) Previous years figures have been regrouped and rearranged wherever necessary to make it comparable with the Current years figures. All figures have been rounded off to nearest rupee.

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Mar 31, 2009

CONTINGENT LIABILITIES

a) There are various suits filed against the company by various parties. We are unable to quantify the amount of liabilities arising in various suits.

b) There are disputed liability for Electricity Bills of Bundi unit to the tune of Rs. 8.26 Lacs as on 31.03.2005 which have not been accounted for by the company.

c) Contigent liabilities not provided for

Particulars Amount(ln Rs.)

Sales Tax for Karnal Unit 80 lacs

Sales Tax for Bundi Unit 37 lacs

SECURED LOANS

During the year, the deed of Assignment was executed on 10th June 2008 between the Consortium Bankers , Kotak Mahindra Bank and the Company regarding the buyout of Consurtium debt owned by K J International Ltd. Similarly the deed of assignment was also executed on 13th June 2008 between the Stressed Assets Stabilization fund (IDBI), Kotak Mahindra bank ltd and the company regarding the acquiring the debts of IDBI owned by the copmany.

As per the draft term sheet , the company has provided Interest on above loans @ 25% pa.

(1) TAXES ON INCOME

Current tax is determined as the amount of tax payable in respect of estimated taxable income for the year and in accordence with the provision as per Income Tax Act 1961. Deffered tax is recognised using the enacted tax rates and laws as on the Balance Sheet date, Subject to the consideration of prudence in respect of deffered tax assets, on all timing, differences, between taxable of deffered tax assets, on that originate in one period and are capable of reversal in one or more subsequent period.

(2) Auditors Remuneration - Rs 168541-, ( Previous Year - Rs 16854 /-)

3 ) CAPITAL WAIVER ACCOUNT ( Shown under Reserve & surplus) As informed in para 8 above, the debts of the company was taken over by Kotak Mahindra bank, after settle the above dues the balances left in loan accounrs were transfered to Capital Waiver account.

Further during the year, the company has paid Rs 25 lacs to Standard Chartered Bank in respect of case filed before DRT on account of Foreign exchange contract.which is also tranfered to this account since no liability was booked in earlier years. The Standard chartered Car loan was also credited to this account, as informed to us the car has been taken over by bank. Tha balance of UBI ( Bombay ) was transferred to this account as no records was available wrt this account. Hence the standard chartered car loan & UBI (baombay ) bank balances are subject to confirmation.

4) Deffered tax assets/ liabilities has not been recognized and carried forward as there is no certainty of any future taxable income.

5) Balances of debtors, creditors, unsecured loans and loan & advances are subject to confirmation by them

6 ) During the year the company has writeoff/ writeback old debtors & creditors and net balance has been credited to profit & loss a/c. The company has also booked loss on investment of the shares of Yogi Pharmacy due to delisting of shares of the that company.

7.) Previous years figures have been regrouped and rearranged whereever necessary to make it comparable with the Current years figures. All figures have been rounded off to nearest rupee.