Notes to Accounts of Metropoli Overseas Ltd.

Mar 31, 2014

In the opinion of the Board, all current assets, loans and advances and other receivables are approximately of the value stated, if realised in the ordinary course of business

In the opinion of the Board, the net realisable value of Stores & Spares is more than the value at which they have been stated in the Balance Sheet, hence the same has been stated at cost.

1) The Board for Industrial and Financial Reconstruction (BIFR) declared the company as a sick Company vide its order dated 2nd September,2002 as Case No.233/2002 under the Sick Industrial Companies (Special Provision) Act, 1985 (SICA). BIFR passed order under Section 17(3) of SICA & sanctioned a rehabilitation scheme vide its order dated 23rd March 2009 with cut off date 31st March 2008. The company had partly implemented the scheme as reported last year. Further as per direction issued by Hon''ble BIFR the Company had filed a Draft Modified Rehabilitation Scheme (DMRS) with new Cut-off date. The DMRS has been approved by BIFR vide its hearing dated 09.01.2014 and the company will now implement the scheme in full

2) The Custom authorities revoked in earlier years Bank Guarantee of 108.44 lacs for non fulfillment of export obligation under EPCG Scheme. Custom Excise & Gold (Control) Appellate Tribunal before whom company has represented its case had in its verdict has confirmed further demand of Rs. 98.14 lacs along with interest @24% p.a. on differential duty to be paid. The company has not considered the interest amount. The new DMRS as approved, has allowed extension of time for the fulfillment of export obligation.

3) No provision has been made in respect of demand of Rs 129.07 lacs plus interest/penalty raised by sales tax department under KST/CST/KTEG for financial year 1998-99 to 2004-05 for non- submission of declaration forms /arbitrary disallowance of credit etc as the same has been/is being contested by the company with appropriate authorities. The company is confident to receive major relief as during the period 15.07.98 to 14.7.2003 the company was enjoying tax holiday and major demand relates to this period.

4) BIFR vide its order dated 09.01.2014 has approved the DRS, wherein liability to KSFC was settled at Rs.75 lacs against their claim of Rs.228 lacs. The company has already made payment of Rs.28.25 lacs against the said settlement. KSFC is not agreeable to this OTS sanctioned by BIFR and is contesting for the same. Liability in excess of 46.75 lacs has not been considered in the books. The company is in advanced stage of negotiation with KSFC to settle the dispute.

5) In the absence of comprehensive details of SSI undertaking and no intimations by the suppliers of being SSI undertaking, the amount due to SSI undertakings as on 31st March, 2014 could not be determined.

6) All assets except vehicles of the company are mortgaged to the body corporates, who have extended long term interest free loans to the company as per agreement dated 20.03.2012 Consequent to such agreement the necessary charges have been created with Registrar of companies in favor of such body Corporates. The Vehicle Loan from Vijaya Bank is secured against hypothecation of vehicle.

7) In view of the losses incurred for the current year no provision for Income Tax has been made.

8) Contingent Liabilities

Particulars Current Year Previous Year

Customs Pl refer note no. 2 above Pl refer note no. 2 above

VAT Pl refer note no. 3 above Pl refer note no. 3 above

KSFC Pl refer note no. 4 above Pl refer note no. 4 above

Bank Guarantee - -

9) The company has not recognized Deferred Tax assets (Net) as per Accounting Standards - 22 regarding ''Accounting of Taxation" in view of consistent losses and of uncertainty regarding estimation of future profit with reasonable certainty.

10) Balance confirmation from sundry debtors and sundry creditors are in process of getting confirmed.

11) Previous years figures have been regrouped / rearranged wherever found necessary.

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Mar 31, 2013

1) The Board for Industrial and Financial Reconstruction (BIFR) declared the company as a sick Company vide its order dated 2nd September,2002 as Case No.233/2002 under the Sick Industrial Companies (Special Provision) Act, 1985 (SICA). BIFR passed order under Section 17(3) of SICA ft sanctioned a rehabilitation scheme vide its order dated 23rd March 2009 with cut off date 31st March 2008. The company had partly implemented the scheme as reported last year. Further as per direction issued by Hon''ble BIFR the Company has filed a Draft Modified Rehabilitation Scheme (DMRS) with new Cut-off date as 01.04.2011 and will implement the remaining part of scheme in true spirit after DMRS is approved.

2) The Custom authorities revoked in earlier years Bank Guarantee of 108.44 lacs for non fulfillment of export obligation under EPCC Scheme. Custom Excise ft Gold (Control) Appellate Tribunal before whom company has represented its case had in its verdict has confirmed further demand of Rs. 98.14 lacs along with interest ©247. p.a. on differential duty to be paid. The company has not considered the interest amount. The company has prayed for extension of time for fulfillment of export obligation under DMRS.

3) No provision has been made in respect of demand of Rs 129.07 lacs plus interest/penalty raised by sales tax department under KST/CST/KTEG for financial year 1998-99 to 2004-05 for non-submission of declaration forms /arbitrary disallowance of credit etc as the same has been/is being contested by the company with appropriate authorities. The company is confident to receive major relief as during the period 15.07.98 to 14.7.2003 the company was enjoying tax holiday and major demand relates to this period.

4) BIFR vide its order dated 23-03-2009 has approved the DRS, wherein liability to KSFC was settled at Rs.75 lacs against their claim of Rs.228 lacs. The company has already made payment of Rs.28.25 lacs against the said settlement. KSFC is not agreeable to this OTS sanctioned by BIFR and is contesting for the same. Liability in excess of 46.75 lacs has not been considered in the books. The company is in advanced stage of negotiation with KSFC to settle the dispute.

5) In the absence of comprehensive details of SSI undertaking and no intimations by the suppliers of being SSI undertaking, the amount due to SSI undertakings as on 31st March, 2013 could not be determined.

6) All assets except vehicles of the company are mortgaged to the body corporates, who have extended long term interest free loans to the company as per agreement dated 20/03/2012 Consequent to such agreement the necessary charges have been created with Registrar of companies in favor of such body Corporates. The Vehicle Loan from Vijaya Bank is secured against hypothecation of vehicle.

7) In view of the losses incurred for the current year no provision for Income Tax has been made.

8) Contingent Liabilities

Customs PI refer note no. 2 above PI refer note no. 2 above

VAT PI refer note no. 3 above PI refer note no. 3 above

KSFC PI refer note no. 4 above PI refer note no. 4 above *

Bank Guarantee - 9-8o Lacs

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Mar 31, 2012

1. No provision has been made in respect of demand of Rs 129.07 lacs plus interest/penalty raised by sales tax department under KST/CST/KTEG for financial year 1998-99 to 2004-05 for non submission of declaration forms /arbitrary disallowance of credit etc as the same has been/is being contested by the company with appropriate authorities. The company is confident to receive major relief as during the period 15.07.98 to 14.7.2003 the company was enjoying tax holiday and major demand relates to this period.

2. BIFR vide its order dated 23-03-2009 has approved the DRS, wherein liability to KSFC was settled at Rs.75 lacs against their claim of Rs.228 lacs. The company has already made payment of Rs.28.25 lacs against the said settlement. KSFC is not agreeable to this OTS sanctioned by BIFR and is contesting for the same. Liability in excess of 46.75 lacs has not been considered in the books. The company is in advanced stage of negotiation with KSFC to settle the dispute.

3. In the absence of comprehensive details of SSI undertaking and no intimations by the suppliers of being SSI undertaking, the amount due to SSI undertakings as on 31st March, 2012 could not be determined.

4. All assets except vehicles of the company are mortgaged to the body corporates, who have extended long term interest free loans to the company as per agreement dated 20/03/2012 Consequent to such agreement the necessary charges have been created with Registrar of companies in favor of such body Corporates. The Vehicle Loan from Vijaya Bank is secured against hypothecation of vehicle.

5. In view of the losses incurred for the current year no provision for Income Tax has been made.

6. Contingent Liabilities

Customs PI refer note no. 2 above PI refer note no. 2 above

VAT PI refer note no. 3 above PI refer note no. 3 above

KSFC PI refer note no. 4 above PI refer note no. 4 above

Bank Guarantee 9.8 lacs

7. The company has not recognized Deferred Tax assets (Net) as per Accounting Standards - 22 regarding "Accounting of Taxation" in view of consistent losses and of uncertainty regarding estimation of future profit with reasonable certainty.

8. Previous years figures have been regrouped / rearranged wherever found necessary.

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Mar 31, 2011

1. Fixed assets does not include plant & machinery worth Rs. 185.09 lacs taken on lease.

2. Contingent Liabilities Current Year Previous Year NIL NIL

3.1 The Board for Industrial and Financial Reconstruction (BIFR) declared the company as a sick Company vide its order dated2nd September,2002 as Case No.233/2002 under the Sick Industrial Companies (Special Provision) Act, 1985 (SICA). BIFR passed order under Section 17(3) of SICA & sanctioned a Rehabilitation Scheme vide its order dated 23rd March 2009 with cut off date 31st March 2008. The scheme came into effect from the date of issue of the sanctioned scheme. Relevant extracts from the sanctioned scheme are given below:-

3.2 The impact of effects as given in F/Y 2008-09 of the scheme approved by the Hon'ble BIFR on the accounts of the company are as follows:-

a. Unsecured Loan from promoters have been written off by Rs. 97.23 lacs

b. Past interest/Lease Rental to Banks/Institutions has been written off as provided in book i.e. Rs. 1352.15 lacs.

c. As per OTS settlement Principal amount of Term Loan / Cash Credit to the extent of Rs. 2056.81 lacs written off.

d. Capital work in progress of Rs. 207.19 lacs has been reversed by writing back liability as provided in the book.

3.3 The Rehabilitation Scheme as sanction by 11001316 BIFR could not be implemented to the fullest as earlier promoter could not bring in the desired funds. However, since joining of S. K. Plodder Group (as Co- promoter) company has been able to fully settle the OTS dues of secured creditors namely SASF/IDBI and Bank of Baroda from the funds infused by them. Both these Banks has already issued NO DUES CERTIFICATE. As per direction issued by Hon'ble BIFR the Company is in the process of filing a Draft Modified Rehabilitation Scheme with new Cutt-off date as 01.04.2011 and will implement the remaining part of scheme in true spirit after DMRS is approved.

4. The Custom authorities evoked in earlier years Bank Guarantee of 108.44 lacs for non full filament of export obligation under EPCG Scheme. Custom Excise & Gold (Control) Appellate Tribunal before whom company has represented its case had in its verdict has confirmed further demand of Rs. 9813730 along with interest @24% p. a. on differential duty to be paid. The amount of duty of Rs. 207.17 lacs which was debited to capital work in progress in the books of account by creating liability for customs have been reversed in the year 2008-09 pending necessary confirmation order from the customs department in implementation of the orders of Hon'ble BIFR. The company has prayed for extension of time for fulfillment of export obligation under Rehabilitation Scheme

5. No provision has been made in respect of demand of Rs 129.07 lacs plus interest/penalty raised by sales tax department under KST/CST/KTEG for FA" 1998-99 to 2004-05 for non-submission of declaration forms /arbitrary disallowance of credit etc. as the same has been/is being contested by management with appropriate authorities. The company is confident to receive major relief as during the period 15.07.98 to 14.07.2003 was enjoying tax holiday and major demand relates to this period.

6. In the opinion of Directors Current Assets, Loan and Advances have the value at which they are stated in the Balance Sheet if realized in ordinary course of business

7. Balances with Bank, Financial Institutions & other parties are subject to confirmation

8. In the absence of comprehensive details of SSI under taking and known intimations by the suppliers of being SSI undertaking , the amount due to SSI undertakings as on 31st March,2011 could not be determined.

9. The amount of OTS to Banks/ Institutions till finally settled will continue to be secured as :-

a) Debenture and Term Loans from IDBI and Bank of Baroda are secured by way of joint mortgage of the immovable properties of the Company's HRLT Unit .both present and future and by way of Hypothecation of whole of the moveable properties of the HRLT Unit (save and except book debts) including plant & machinery, spares, tools and other moveable both present and future subject to the first charge on special moveable assets created in favor of Bank of Baroda for Working Capital finance, to rank on pari passé basis.

b) Working Capital loan from Bank of Baroda are secured by way of hypothecation of book debts, stocks including in transit and second charge on all immoveable properties of HRLT Unit of the company.

c) The facilities from IDBI and Bank of Baroda are further secured by personal guarantee of three directors.

d) Facilities from Bank of Baroda are collaterally secured by mortgage of prawn far munity of the company.

10. The company has imported some of machineries for its HRTL plant at Bangalore Rural and was allowed exemption from payment of entry tax. However, in financial year 2002-03 the department raised a demand of Rs. 3503462/- including penalty and interest and the same was capitalized under head Capital Work In Progress as the same was on capital goods. Now the company has been advised that this provision was enacted after the import was made and as such the demand raised was erroneous. Company has taken steps to get the same rectified and hence the same is reversed during the year.

11. Personnel: No remuneration has been paid to any of the directors.

12. The provision for Income Tax has not been made as there is no taxable income.

13. The company has not recognized Deferred Tax assets (Net) as per According Standards - 22 regarding Accounting of Taxation" in view of consistent losses and of uncertainty regarding estimation of future profit with reasonable certainty.

14. Previous years figures have been regrouped/rearranged wherever necessary.