Notes to Accounts of Marvel Industries Ltd.

Mar 31, 2009

2008-2009 2007-2008 Rupees Rupees

1. Contingent Liabilities not provided for

a) Bank Guarantees 15,90,145 15,90,145

b) Dividend in arrears on Cumulative Preference Shares - 4,37,72,464 3,96,72,464

c) During the year, Company has re-negotiated its loan liability due to Asset Reconstruction Company India Limited (ARCIL) to Rs.325 Lacs. As per terms of settlement the entire paymeht is to be made on or before November 30, 2009. The effect of the settlement shall be given only on making of the entire payment as per the terms of the settlement. In case the payment is not made by November 30,2009, settlement willbe revoked and ARCIL would claim Rs.1394.73 Lacs towards principal and Rs.4040.59 Lacs towards interest plus interest for the further period. In the books the said liability is shown at Rs.600.69 Lacs as per the last settlement on which the company defaulted.

2. Term loan from financial institution and Assets Reconstruction Company India Ltd. shown under the head "secured loans" are secured by way of first mortgage of immovable properties both present and future and hypothecation of movable (save and except book debts), including machinery, spares, tools and accessories, subject to prior charge of bankers on stock of raw materials, Finished goods, stores etc. Pari-passu basis. These are further guaranteed jointly and severally by directors, shareholders and body corporate except Loans from SICOM includes, under ERS of finance Rs, 150 lacs and interest thereon is secured against specific assets financed & further guaranteed by directors and shareholders.

3. The loans under working capital limits from banks and Assets Reconstruction Company India Ltd shown under the head "secured loans" are secured by hypothecation of stock of raw material, work in process, finished goods, stores & spares and Book debts of the company and second charge on immovable/movable properties of the companyand personal guarantee of two directors and body corporate.

4. Company had obtained bank overdrafts from Corporation Bank and The South Indian Bank. These banks, letter assigned the loans to Kotak Mahindra Bank which has been challenged by the company in varous court, including honble Supreme Court of India.

5. a. The Preference shares under "Issued, Subscribed and Paid Up includes shares aggregating to Rs.340 lacs are over due and not redeemed due to absence of profit. b. No provision has been made for dividend and interest on overdue preference share capital. The amount in this respect has not been ascertained.

6. The Company has accounted for benefit of duty on material cleared under advance license on clearance of material in irrespective of the year of export As a result the accumulated losses are lower by Rs.9.25 Lacs.

7. a) The Company has not made provision for the interest payable on unsecured loan in the current year aggregating to Rs.4.92 lacs & in the earlier years aggregating to Rs. 4.92 lacs. As a result loss for the current period was lower by Rs.4.92 lacs & accumulated loss is lower by Rs.36.27 lacs.

b) Also the company has not made provision for the interest payable on loan outstanding with ARCIL in the current year for Rs.90.10 Lacs and in the earlier year Rs. 90.10 Lacs. As a result loss for the current period was lower by Rs.90.10 lacs and accumulated loss lower by Rs.257.59 Lacs.

8. The company is incurring losses since 1997-98 and has been referred to Honble BIFR as its net worth is negative. At the present level of its borrowings the operations of the Company are not viable. The scheme of revival has been rejected and order for change of management by Honble BIFR is passed on 20.08.07.However company is contesting the said order before the Honble AAIFR and proceedings are under progress.

9. Some of the balances of loans, sundry debtors, deposits, loans & advances and creditors are subject to confirmation and adjustments, if any, or reconciliation consequential impact thereof on the financial statements is not ascertainable.

10. In the opinion of the Board, the Current Assets, Loans and Advances have a value on realization in the ordinary course of business at least equal to the amount at which.they are stated in the Balance Sheet. The provision for other known liabilities is adequate except as stated elsewhere and not in excess of what is required.

11. Interest and other claims of Financial Institutions and Banks against the company been provided in the accounts as per the information available with the company without prejudice to the right of the company to claims appropriate relief/ waiver as per the applicable guidelines counterclaims of the company against the respective Institutions and Banks

12. a) "In the absence of taxable income and book profit during the year, non-provision for current income-tax has been made"

b) In accordance with the Accounting Standard 22 on Accounting for Taxes on Income issued by the institute of Chartered Accountants of India, which become mandatory from 01.04.2001 due to lack of virtual certainty of its realization the deferred tax asset arising on account of timing difference comprising of unabsorbed depreciation & unabsorbed business / capital losses has not been recognized hence company has not made any provision for deferred tax liabilities / assets in the current year.

13. The Company does not posses information as to, which of its suppliers is ancillary Industrial Undertaking/Small Scale Industrial undertaking holding permanent registration certificate issued by the Directorate of the Industries of a State or Union Territory Consequently, the liability, if any, of interest which would be payable under "The Interest on Delayed payment to small scale and ancillary Industries Undertaking Ordinance 1992", cannot be ascertained. However, the Company has not received any claims in respect of such interest.

14. Advances includes advances against expenses given to Executive Director of Rs.1,11,500/-

15. Related Parties disclosures, as required in terms of "Accounting Standard [AS] 18" are given below:

(1) Relationship:

(a) Associate Companies:

(i) Marvel Capital & Finance (India) Ltd.

(b) Key Management Personnel

(i) Vikram Saboo Managing Director (ii) Shailesh Saboo Executive Director

(c) Relatives of Key Management Personnel where transaction have taken place Mrs. Laxmi LSaboo

Note: - Related party relationships are as identified by the Company and relied upon by the Auditors.

16. Previous years figures have been re grouped recast and re classified wherever necessary to confirm to current years classification.

17. Segment reporting:

The companys business comprises of single segment manufacture of P.P Woven Fabrics & Sacks and purchase and sales of its raw material

18. The figures for the previouse year have been regrouped/ recast & reclassified wherever nacessary.