Notes to Accounts of MSL Industries Ltd.

Mar 31, 2013

Year Ended Year Ended 31-03-2013 31.03.2012 Rs./lacs Rs./Lacs

1 Contingent liabilities not provided for:

a) On account of claim from Electricity authority under dispute: i) At the units of Patna 330.63 lacs

ii) At the unit Hind Polymers. Rs. 4.91 lacs 335.54 335.54

b) On account of Sales Tax, Service Tax under dispute at Hind Polymers Unit: 29.78 29.78

c) On Account of Excise Duty under dispute :.

i) At Hind Polymers Unit Rs. 23.71 lacs

ii) At the units at Patna Rs. 3.82lacs 27.53 27.53

d) On Account of claim by the Provident Fund authority under dispute at the units at Patna (recovered by P.F. authority from the units Bank A/c for *27.57lacs (including interest and penalty for delayed payment for Rs. 23.14 lacs.) 49.07 49.07

e) Unprovided interest on Sales Tax L oan from PICUP on penal interest rate at Hind Polymers unit (estimated) 330.00 308.00

2 Current State of Affairs of the Company

i) Statement made by the Directors in their Report on the Annual Accounts of the Company and also the Statement made in Para 4 of Notes on Account in Schedule 17 as at 31st March 2012 are reiterated the abstract of which are as under:

a. The Company was declared SICK by BIFR under Sick Industrial Company /(Special Provision) Act 1985.

b. The Secured Creditors namely ICICI Bank Ltd. and State Bank of India have assigned their "Interest" on the Charged Assets of the Company in favour of Assets Reconstruction Company (India) Ltd (ARCIL) under SARFAESI Act and Industrial Development Bank of India (IDBI) also similarly assigned in favour of Stressed Assets Stabilization Fund (SASF).

c. The Financial Institutions namely IDBI, ICICI were having first charge on the Fixed Assets of the Company including Plant & Machinery on "Pari Passu" basis. State Bank of India was having First charge on the movable Assets of the Company.

d. ARCIL after serving demand notice to the Company took possession of all the Charged Assets of the Company both Moveable Assets and Immovable Assets under SARFAESI Act and sold those Assets. Operations of all Units of the Company were discontinued.

e. The said ARCIL has distributed the sale proceeds of those Assets to the Secured Creditors as under:

f. ARCIL submitted "No Due: Certificate" to the Company on behalf of ICICI Bank and State Bank India.

g. No Due Certificate from IDBI is yet to be received as on date, Inspite of distribution of sale proceeds of the Charged Assets of the Company by ARCIL of Rs. 477.56 Lacs to IDBI along with other Secured Creditors under Consortium under SARFAESI Act. As such, due to non receipt of "No Due Certificate" from IDBI their dues including interest was pending for adjustment in the Annual Accounts of the Company as on date.

h. Dues to other Secured Creditors namely Bihar State Credit & Investment Corporation Ltd. and Bihar State Finance Corporation at Patna were also to be adjusted after receipt of No Due Certificate, since they have also sold their charged Assets of the Company till date and recovered the sale proceeds of those assets. No further demands are received from them.

i. Sales Tax Loan received from Pradeshiya Industrial & Investment Corporation UP Ltd of Rs. 114.43 Lac plus interest there on, are also pending for settlement and adjustment in the Annual Accounts of the Company.

j. On the request of Secured Creditors Hon''ble Bench of BIFR, by its order dated 31st march 2010 has abated the said reference under third Provision of Section 15(A) of SICA1985.

3 Debtors & Advances

a. Debit Balances with Debtors & Advances aggregating to Rs. ''1621.20 Lacs includes dues from Companies having been referred to BIFR & also under liquidation proceedings amounting to Rs. "974.47 Lac and others Rs. ''646.73 Lac under disputes and shall be allowed to remain in the Accounts of the Units till receipt of Report from the In-Charge of the Unit about the action initiated by them for recovery of Debtors & advances and stating positions of the legal cases.

b It was earlier reported by the Directors in the Accounts of the Company that as per audited accounts of the Units at Patna a sum ofRs. 507.09 Lac was receivable from Pulak Enterprises since more than 13 years.

A Note as prepared by the In-charge of the Unit, explaining the details of the outstanding, was placed at the meeting of the Audit Committee held on 20th June 2013 along with the opinion obtained by the Unit from a renowned Advocate at Patna dated 18th June 2013 giving advice that the transaction between MSL Industries Ltd & Pulak Enterprises (a Partnership Firm) was as per permission of the Company Law Board and in the interest of MSL Industries Ltd. However MSL could not fulfill its assurance to PE to keep them fed with regular orders, because of change of technology i.e. from Jelly Filled Cables to Optic Fibre making the use of Galvanized Strips became obsolete/redundant. Also as per the legal advise huge court fees would have been involved - basically in the matter which the Company could ill afford.

It was also reported by the In-charge of the Unit Patna that out of the said dues of Rs. 507.90 Lac a sum of Rs. 349.44 Lac relates to interest (which was not accepted by PE) charged by the Unit on Pulak Enterprises for non-payment of the due. Balance amount ofRs. 158.46 Lac relates to Principal amount dues.

Considering the aforesaid facts, the Audit Committee at their meeting held on 20th June 2013, after thorough discussion decided that the above sum ofRs. 349.44 Lac representing interest, as stated, is to be debited to interest account in the Profit & Loss Account for the year ending 31st March 2013 and balance amount of Rs. 158.46 Lac was to be written off as bad debt. On the basis of such decision the Accounts for the year ending 31st March 2013 has been adjusted accordingly.

5c. As reported by the units at Patna legal Notices were issued to all Debtors for recovery of the outstanding dues from the respective Debtors, and no responses have been received by the Units. Further, as stated, the Units have not initiated any suit against any of the Debtors for realisation of the Units dues. Further, as stated by the Unit no confirmation from the Debtors for the accuracy of their balances were received.

3 d. Security Deposit of Rs." 19.25 Lac includes Deposit with Govt. Authorities etc. which are considered to be doubtful. Other receivable of Rs.''497.93 Lac includes balance amount of Rs.''467.92 Lac realised by ARCIL on sale of the Companies movable & immovable Assets on behalf of the Secured Creditors under SARFAESI Act 2002 and pending for adjustment with the dues of another Secured Creditors namely IDBi to whom they have paid Rs."477 Lac, due to non receipt of "No Due Certificate".

3 e. Further to the statement as reported in Note No. 7(b) in Schedule 17 Annexed with the Balance Sheet as at 31s march 2010 stating that other assets of Hind Polymers Units namely Furniture & Fixtures(Net value Rs.''10.15lacs) and Office Equipments (net value Rs.''9.38lacs) which had been dismantled and dumped at the factory premises of the said unit, the adjustments on account of loss, if any, of those assets along with other assets of the units which were not taken over and sold by ARCIL are pending for valuation and thereafter sale of those assets by the unit.

3 f. Interest free Loan from PICUP at the HP Unit for Rs. 114.44lacs was secured by way of second charge over all immovable & movable properties present and future of the said Unit. Which are sold by ARCIL as stated in note no. 4d above Provisions for Interest Liability was not made in the Accounts for the years upto ending 31 March 2013, the estimated amount of which would be around Rs. 330lacs (at penal rate of interest) since the matter is under settlement.

3 g. As stated in Para 5(B)(b) in Schedule 17 annexed to the Balance Sheet of the Company as 31 March 2012 in respect of Hind Polymers Units, debit balances under the Sundry Debtors for Rs."757.92 including dues from HTL, HCL and Optal Telecommunications aggregating Rs. 683.17lacs and debit balances under the head Store Advances aggregating Rs.''162.32lacs and Miscellaneous Advances aggregating Rs.''292.4 lacs, as also other debit balances due for more than three years will be considered to be written off or provided for in subsequent years after scrutiny by the units and after receipts of Report there on as to their recoverability or otherwise. Similarly credit balances standing in the books of the said units also to be considered to be written back after receipts of''Report from the unit head as to whether they are not payable.

3 h. The Units at Patna did not receive any balance confirmation from the Banks, Fixed Deposits Accounts, etc. aggregating to Rs.10.41 lac.

3 i. The unit is yet to obtain "No Dues Certificate from Sales Tax. The unit has paid Rs.10.35 Lac against unsold stock.

3 j. As reported earlier the production of the Hind Polymers Unit has been permanently discontinued w.e.f. 20 March 2009.

4. Investment

(a) Aggregate market value of Quoted investments is Rs. 23,46,6 92/- (previous year Rs. 25,92,985/-) & aggregate value of Un- Quoted investments is Rs.14,707/- (previous year Rs.14,707/-).

5 a. Unclaimed Dividend.

Unclaimed dividend for Rs. 4,32,672/- and unclaimed interest ofRs. 7,61,414/- appearing in "Current Liabilities & Provisions" is subject to reconciliation as the necessary payment advices / evidences have not yet been forwarded by the bank to the Company. However, the Company has since deposited Rs. 220,789/- with the Registrar of Companies Patna (ROC, Patna) in compliance with the provision of section 205(c) of the Companies Act 1956. A sum of Rs. 6,32,670/- representing balance unclaimed dividend/interest, on Fully Convertible De enture due for more than seven years which amounts are lying with State Bank of India(SBI), Patna under unclaimed dividend/interest on FCD could not be deposited to the ROC, Patna for credit to the "Investors Education and Protection Fund" as the said SBI, Patna, in spite of several written request, did not release the fund under the plea that the matter is subjudice. However after repeated persuasion SBI has now issued draft for Rs. 3.07 lacs on the name of the company which will be disposed with Indian Overseas Bank. Draft for Rs. 7.22 lacs is yet to be received form SBI. After receipt of advice from the appropriate authority under the Companies Act 1956/2013 the amount will be paid/deposited accordingly to the Central Govt, as required U/S 205(c) of the Companies Act 1956

5b. Share Application Money Refundable f2,18,216/- (Previous Year Rs.2,18,216/-) included in Sundry Creditors is subject to reconciliation as the necessary information/account has still not been received from the bank.

6. Tax Matter.

(a) Income-tax of the Company up to Assessment year 2012-13 have already been completed by the Assessing Officer. No demand is outstanding against the Company.

(b) Income Tax Authorities have demanded for the assessment year 1997-98 Rs. 79,33,596/- by rectifying the assessment u/s 154 for which appeal is pending. Further a petition u/s 220(6) of IT Act is lying pending un-disposed off.

7. Positions of reference to the BIFR under SICA Act 1985.

It has already been reported that as per request of the secured creditors the Hon''ble Bench of BIFR has abated the said reference under 3 Provision of Sec. 15(A) of SICA Act 1985.

8. Previous year''s figures have been regrouped / rearranged wherever necessary.

9. Segment reporting

It was reported in earlier years that the operations of the Units at.Patna were closed from 1s April 2001 thereafter the operations of the Hind Polymers Unit were discontinued from 20 March 2009 as such there is no scope to have any segment wise reporting as required under the Act.

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Mar 31, 2012

Note :

IDBI along with itlCI & SBI were having first charge on all assets of the Company. After giving notice under SARFAESI Act 2002 all such assets of the Company were taken overjoy ARCIL who were assigned by ICICI & IDBI under the said Act. Said ARCIL sold all such assets of the units of the Company namely Hi-Tech Steels Unuit, Steels Unit at Patna and Hind Polymers Unit at Ghaziabad(excluding those assets specifically charged in favour of BSCICO & BSFC). Out of such sales proceeds, ARCIL paid to the Secured Creditors namely IDBI, ICICI & SBI as reported on the Financial Statements (Schedule-3) at 31st March 2010. After receiving "No Due Certificate" from the said ARCIL on behalf of ICICI Bank and SBI, the balance of Loans from them including interest accrued and due threon were adjusted to the credit of Profit & Loss Account for the year ending 31st March 2010.

However "No due certificate" on behalf of IDBI is yet to be received. Pending such receipt, although (as informed by ARCIL) payment of Rs. 477.561 Lac was made to IDBI, the loan from IDBI has been shown as Secured Loans (without having any security). "On filling the Satifcation of charge" from all Secured Creditor before the Registrar of Company, such Secured Loans will be shown as Unsecured Loan.

Similarly, other loans i.e. from BICICO, BSFC, who had sold the assets charged in their favour and realised the sales proceeds, as also loan from PICUP, having second charges on the specific assets of Hind Polymenrs Unit, will be shown as unsecured on receipt of No Due Certificate from them.

Year Ended Year Ended 31-03-2012 31.03.2011 Rs. Lacs Rs.Lacs

1. Contingent liabilities not provided for:

a) On account of claim from Electricity authority under dispute :

i) At the units of Patna 330.63 lack

ii) At the unit Hind Polymers. 4.91 lacs 335.54 335.54

b) On account of Sales, Service Tax under dispute at Hind Polymers Unit 29.78 29.78

c) On Account of Excise Duty under dispute :

i) At Hind Polymers Unit Rs. 23.71 lacs

ii) At the units at Patna Rs. 3.82 lacs 27.53 27.53

2. Current State of Affairs of the Company

Due to market situation arising out of the radical changes in Communication System, Liquidity Crunch etc. the operations of the two units at Patna were closed from 1st April 2001. Since the net worth of the Company reduced below the prescribed Limit under Sick Industrial Companies (Special Provision) Act 1985, on a reference made to BIFR, to comply with the Provision of the said Act, after consecutive hearing, the Hon''ble members of BIFR at their meeting held on 6th October 2005 declared the Company as Sick Industrial Company under the Provision of the said Act. Meanwhile the Secured Creditors of the Company nemely ICICI Bank Ltd. IDBI & SBI filed recovery suit against the Company. The said Secured Creditors assigned their rights on the Assets of the Company in favour of Assets Reconstructions Co (ARCIL) (for ICICI Bank Ltd & SBI) and in favour of Stressed Assets Stabilization Fund (for IDBI) under the Provision of the Securitization & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (SARFAESI). After issuing notice for recovery of Debts by said ARCIL on the Company under the said SARFAESI Act, not being paid, sold all charged Assets i.e. all Movable & Immovable Assets, firstly for the Units at Patna and thereafter for the Units HP at Ghaziabad which continued its operation till 19th March 2009. The said ARCIL after disposing of all Assets of the Company situated at its units at Patna and Ghaziabad distributed the amount of sale proveeds to the Secured Creditors to settle their dues on the Company. In view of such payments of Company''s dues to the above mentioned Secured Creditors, the said ARCIL vide its letter dated 14th July 2011 send "No Due Certificate" on behalf of ICICI Bank Ltd and State Bank of India. Although a sum of 477.56 Lac was paid by ARCIL to IDBI in settlement of their dues, till date " No Due Certificate" from IDBI is yet to be received through ARCIL. In view of receipts of "No Due Certificate" from ARCIL, as state above, on behalf of ICICI Bank Ltd and SBI, balance standing to their account along with interest due thereon, after adjustment of payments made by ARCIL to ICICI Bank & SBI, was written back in the Profit & Loss Account. All movable & immovable assets of the Oompany which were charged in favour of Secured Creditors and sold by ARCIL on their behalf have been written off in the Profit & Loss Account.

However, the Fixed Assets at the unit at Patna charged in favour of other creditors namely Bihar State Credit & Investment Corporation of India limited and Bihar State Finance Corporation having dues from Company for 32.50 Lac and 71.45 Lac respectively have also filed recovery suit against the Company which are contested. The said creditor sold the assets charged in their favour for an aggregate value of 30.01 Lac which are shown as deduction from total Secured Loan and pending for adjustment after arranging a settlement with the said Secured Creditors. Similarly Sales Tax Loan from Pradeshiya Industrial & Investment Corporation UP Ltd received at the unit Hind Polymers for 114.43 Lac are also pending for settlement. The said Creditors was having second charges on the Fixed Assets of the Hind Polymers unit.

In the meantime, the Hon''ble Bench of BIFR on the request of the Secured Creditors, by its order dated 31st March 2010 has abated the said reference under 3rd Provision of Section 15(A) of SICA1985.

In view of the aforesaid facts the recovery suit filed by the IDBI, SBI, ICICI Bank Ltd appears to have become infructious.

Notice 3. a) Debtors & Advances

Debit Balance with Debtors & Advances aggregating 2130.27 lac includes dues from Companies having been referred to BIFR & also under liquidation proceedings amounting 947.47 Lac and others 1182.80 lac under disputes and shall be allowed to remain in the Accounts of the Units till receipt of Roport from the In-Charge of the Unit about the action initiated by them for recovery of Debtors & advances and stating positions of the legal cases.

b) As reported earlier, Unit Patna filed a winding up petition against Modi Plastics Ltd for recovery of the outstanding dues of 242.49 Lac. On enquiry from dealing Advocate it was reported by him by its letter dated 21st June 2012 that the said winding up petition was dismissed by the Hon''ble Patna High Court. Further it was also reported by him that, as informed to him by the Unit, SBI, a Secured Creditors of Modi Plastics Ltd., took over its Assets and sold the same under SARFAESI Act. Under the circumstances, the Unit is of opinion, that since the Debts have become time barred it will not be economical for the Unit to spend good money by way of filing money suit against Modi Plastics Ltd. Considering above, as approval by the Board of Directors at their meeting held on 28th June 2012, the Debit Balance of 242.49 Lac recoverable from Modi Plastics Ltd has been written off and debited to Profit & Loss Account for the Financial Year ending 31st March, 2012.

c) As reported by the unit at Patna, legal notices were issue to all debtors (including M/s. Pulak Enterprises having due to the unit for rupees 507.90 lacs) for recovery of outstanding dues from the respective Debtors and no responses have been received by the units. Farther, as stated, the unit have not initiated suit against any of the debtors for realisation of the units'' dues. Further as state by units, no confermation from the Debtors for the accuracy of their balance were received. It is farther reported that H.K.Modi, the then Chairman Cum Managing Director, before his resignation was also a Partner of M/s. Pulak Enterprises.

d) Security Deposit of 19.25 lac includes Deposit with Govt. Authorities etc. which are considered to be doubtful. Other receivable of 497.93 Lac includes balance amount of 467.92 Lac relised by ARCIL on sale of the Companies movable & immovable Assets on behalf of the Creditors under SARFAESI Act 2002 and pending for adjustment with the dues of another Secured Creditors namely IDBI to whom they have paid 477 Lac, due to non receipt of "No Due Certificate".

e) Further to the statement as reported in Note No. 7 (b) in Schedule 17 Annexed with the Balance Sheet as at 31st march 2010 stating that other assets of Hind Polymers Units namely Furniture & Fixtures (Net value 10.15 lacs) and Office Equipments (net value 9.38 lacs) which had been dismantled and dumped at the factory premises of the said unit, the adjustments on account of loss, if any, of those assets along with other assets of the units which were not taken over and sold by ARCIL are pending for valuation and thereafter sale of those assets by the unit.

f) Interest free Loan PICUP at the HP Unit for Rs.114.44 lacs is secured by way of second charge over all immovable & movable properties present and future of the said Unit. Provisions for Interest Liability was not made in the Accounts for the years upto ending 31st March 2011, the estimated amount of which would be around Rs. 308 lacs (at panal rate of interest) since the matter is under dispute.

g) As stated in Para 5(B)(b) in Schedule 17 annexed to the Balance Sheet of the Company as 31st March 2010 in respect of Hind Polymers Units, debit balances under the Sundry Debtors for Rs. 757.92 lac including dues from HTL, HCL and Optal Telecommunications aggregating Rs. 683.17 lacs and debit balances under the head Store Advances aggregating Rs. 162.32 lacs and Miscllaneous Advances aggregating Rs. 301.221 lacs, as also other debit balances due for more than three years will be considered to be written off or provided for in subsequent years after scrutiny by the units and after receipts of Report there on as to their recoverability or otherwise. Similarly credit balances standing in the books of the said units also to be considered to be written back after receipts of Report from the unit head as to whether they are not payable.

h) The Units at Patna did not receive any balance confirmation from the Banks, Fixed Deposit Accounts, Dividend Accounts etc. aggregating Rs. 14.48 Lac

i) The unit is yet to obtain "No Dues Certificate from Sales Tax authority. The unit has paid Rs. 10.35 Lac against unsold stock, j) As reported last year the production of the said Unit has been permanently discontinued discontinued w.e.f. 20th March 2009.

Investment

(a) Aggregate market value of Quoted investments is Rs. 2592985/- (previous year if 2835279/-) & aggregate value of Un-Quoted investments is 5*14707/- (previous year 2,10,710/-). k) Unclaimed Dividend.

Unclaimed dividend for Rs. 4,32,672/- and unclaimed interest of Rs. 7,61,414/- appering in "Current Liabilities & Provisions" is subject to reconciliation as the necessary payment advices / evidences have not yet been forwarded by the bank to the Company. However, the Company has since deposited Rs. 2,20,789/- with the Registrar of Companies Patna (ROC), Patna) in compliance with the provision of section 205(c) of the Companies Act 1956. A sum of f 6,32,670/- representing balance unclaimed dividend / interest on FCD due of more than seven years which amounts are lying with State Bank of India(SBI), Patna under unclaimed dividend/interest on FCD A/c could not be deposited to the ROC, Patna for credit to the "Investors Education and Protection Fund" as the said SBI, Patna, in spite of several written request, did not release the fund under the plea that the matter is subjudice.

I) Share Application Money Refundable Rs. 2,18,216/- (Previous Year if 2,18,216/-) included in Sundry Creditors is subject to reconciliation as the necessary information / account has still not been received from the bank, m) Tax Matter.

(a) Income-tax Assessments of the Company up to Assessment years 2011-12 have already been completed by the Assessing Officer. No demand is outstanding against the Company.

(b) Income Tax Authorities have demanded for the assessment year 1997-98 Rs.79,33,596/- by rectifying the assessment u/s 154 for which appeal is pending. Further a petition u/s 220(6) of IT Act is lying pending un-disposed off.

4. Positions of reference to the BIFR under SICA Act 1985.

It has already been reported last year that as per request of the secured creditors the Hon''ble Bench of BIFR has abated the said reference under 3rd Provision of Sec. 15(A) of SICA Act 1985.

5. Segment reporting

It was reported in earlier years that the opoerations of the Units at Patna were closed from 1st April 2001 thereafter the operations of the Hind Polymers Unit were discontinued from 20 the March 2009 as such there is no scope to have any segment wise reporting as required under the Act.

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Mar 31, 2011

1. Deferred tax assets for un-absorbed losses have not been recognized on the basis of prudence and in absence of strong projection of future taxable profits. Provision for taxation has not been considered necessary in view of the brought forward losses and losses for the year.

Year Ended Year Ended 31-03-2011 31.03.2010 Rs /Lacs Rs /Lacs

2. Contingent liabilities not provided for in respect of:

a) Claim for Electricity subsidy disputed by UPSEB 4.91 4.91

b) Electricity demand for 50% AMG disputed under clause 13(1) of High Tension agreement with Bihar State Electricity Board. 133.36 133.36

c) Electricity demand against fuel Surcharge disputed with Bihar State Electricity Board 12.61 12.61

d) Sales Tax demand for the financial year 1998-99 against which appeal

in Allahabad High Court preferred Against it a sum of 1,04,602/- has been deposited and is being shown as advances/deposits recoverable (previous year Rs. 1,04,602/-) 23.50 23.50

e) Sales Tax the demand of 1,42,345/- against which appeal is 1.42 1.42 preferred before Trade Tax Tribunal.

f) A sum of 2,42,423/- as demand of Service Tax along with penalty of 2,42,423/- has been imposed against which appeal was filed with the Commissioner (Appeals.) The Appeal was rejected. Subsequently Appeal was filed with Central Excise Tribunal and as per order of the _ Tribunal payment of 50,000/-was made on this account. The appeal is 4.86 4.86 pending before the said authority.

g) Demand notice issued by Superintending Engineer ELECL P.E.S.U " (West) Circle, Patna on a/c of electricity due for 76.03 lacs (net amount after adjustment on security deposit with interest thereon for 21.98 lacs) on Steel Division at Patna 63.70 lacs on Hi-tech Steels, Patna and 29.92 lacs on Hi-tech Steels unit II. Patna. 169.66 169.66

h) Demand raise by DRT, Patna on a/c of rent payable by Hi-Tech Unit to M/s Lakshman Ware Industries from 07-01-2000 15.00 15.00

i) Some of the suppliers have filed legal suites for recovery of their dues from the company for a total amount of 1115.72 lacs including interest of 236.30 lacs which have not been admitted by the company and are being contested legally. The Company's claims on suppliers for loss on account of short/delayed supply of materials by 482.88 482.88 the suppliers are also subjudice before the relevant court. Net liability/dues of the Company. If any, is subject to reconciliation.

k) Excise Demand disputed in appeal. However, the department of 3.82 3.82 Central Excise has realised their dues with interest by encashing TDRs 4.03 lakhs lying with SBI Patllputra Branch and IFB forming a part of the Company's cash and bank balance and was lying pledged with Central Excise Department.

As per the show cause notices the department is of the opinion that company has availed MODVAT on the endorsed gate passes after 31/03/94 - which is in correct. The company filed its replies with Assistant Commissioner to the show cause notice. The Assistant Commissioner has dropped the proceedings initiated vide above mentioned show cause notices. Subsequently department has filed appeal with commissioner (appeals) and Central Excise Tribunal, which again gave their judgement in favour of company. Then department has filed appeal with High Court Allahabad. However company was not aware that department has filed appeal with High Court. This fact was brought to the notice of company only during November 2006. The High Court in its judgment rejected the appeal of the department on the ground that it was time barred. Thereafter the department has filed writ with Supreme Court where the matter is pending at present

3. Notes On Accounts.

a) Recovery proceeding for P.F. dues of Rs. 2593506/- was initiated by the P F Authority against which writ petition was filed by the unit at Patna High Court. However, the said P F authority recovered the said amount of Rs. 25.93,506/- encroaching bank account of the. Company subsequently. In the process they have also recovered from another bank of the Company for Rs.1.64 lakhs in excess of the original demand. On direction of the Honourable Hich Court. Patna the Company's appeal before the provident Fund Tribunal was rejected. The PF authority also demanded interest/penalty for delayed payment. On the write petition filed by the Company before the Honourable High Court, Patna both were stayed.

b) The Following secured creditors have filed suites before the respective DRT, Kolkata and Patna and Hon'ble High Court, Patna claiming the amount as mentioned herein below, which are contested by the Company. The aggregate amount standing to the credit of the above accounts including the interest thereon in the books of the company as on 31-03-11 is sufficient to cover the amount of claims.

However in view of the settlement of dues with State Bank of India (SBI) and Industrial Development Bank of India (DIBI) by Assets Reconstructions Corporation of (India) Ltd. (ARCIL) as stated in Note No. 5.(c) & (d) and in view of sale of those assets charged in its favour, by Bihar State Investment & Credit Corporation (SBICCO) as stated in Note No. 5(A) in Schedule 17 at 31.03.2010 the pending suits are likely to be infractions in course of time

4. Secured Loans (Cr.), Debtors & Loans & Advances

Further to the statement as reported in Note No. 5(A) & (B) and in Note No. 7a & b in Schedule-17 Annexed with the Balance Sheet as at 31st March 2010, and also as reported in Para4(b) herein above as also as reported in Para 3 in the Directors' Report on the Annual Accounts of the Company for the year ending 31st March 2010, it is reported that :-

a) The said Assets Reconstruction Corporation (India) Ltd. (ARCIL) vide their letter dated 17th August 2011reported that the assets charged in favour of Secured Creditors and taken over by them under SARFAESI Act 2002 of the units Hind Polymers, including Land, Building, Plant & Machinery and Stock-in- Trade were sold by them as also all other moveable assets Accordingly the net value of those assets of the said unit were written off and debited in the Profit & Loss Appreciation A/c for the year ending 31st March, 2011.

b) Further to the statement as reported in Note No. 7(b) in Schedule 17 Annexed with the Balance Sheet as at 31st march 2010 stating that other assets of Hind Polymers Units namely Furniture & Fixtures (Net value Rs. 10.15 lacs) and Office Equipments (net value Rs.9.38 lacs) which had been dismantle and dumped at the factory premises of the said unit, the adjustments on account of loss if any of those assets along with other assets of the units which were not taken over and sold by ARCIL are pending for valuation and thereafter sale of those assets by the unit.

c) As reported earlier balance of amount dues payable to ICICI Ban Ltd. (ICICI) and State Bank of India (SBI) under the head Secured Loans aggregating Rs. 5423.15 lacs after deduction of the amount paid by ARCIL to ICICI & SBI as stated below as also the amount of interest accrued and dues thereon as provided in the accounts of the company but not paid aggregating Rs. 1155.01 lacs as at 31.03.2010 was written back to Profit & Loss Appropriation A/c as at 31st March 2010 on the basis of Report from ARCIL vide their letter dated 14th July, 2011 read with letter dated 17th August 2011 and 8th September 2011 and on receipts of "No Due Certificates" from the said ARCIL on behalf of ICICI and SBI under SARFAESI Act 2002.

d) It was also reported by ARCIL vide their letter dated 8th September 2011 that the said ARCIL distributed the proceeds of the company, sold by them including sale proceeds of investment made by the company in shares transferred in favour of ARCIL to the secured creditors of the company as under.

Out of the aforesaid distribution by ARCIL to the above Secured Creditors payment to ICICI & SBI was shown as "Paid in full and final settlement" of their dues on receipts of "No due Certificate" from ARCIL on behalf of the said secured creditors under SARFAESI Act 2002 as the said dues along with the Financial Assets charged in their favour were assigned in favour of ARCIL under SARFAESI Act 2002 as reported earlier.

Although the amount paid by ARCIL for Rs. 4,77,55,818/- to IDBI as stated above, the adjustment of the said payment with dues of IDBI from the Company, and effect thereof in Profit & Loss Appropriation A/c including interest accrued & dues there on, are pending on receipt of "No due Certificate" from "Concerned Authority" on behalf of IDBI.

e) Interest free Loan from PICUP at the HP Unit for Rs. 114.44 lacs is secured by way of second charge over all immovable & movable properties present and future of the said Unit. Provisions for Interes Liability was not made in the Accounts for the years upto ending 31st March 2011, the estimated amount of which would be around Rs. 284lacs since the matter is under dispute.

f) As stated in Para 3(3) (a) of the Directors' report of the company, debit balances with Harayana Telecoms Ltd(HTL), Hindustan Cables Ltd. (HCL.), Modi Plastics Ltd. (MPL) & Pulak Enterprises(P.E.) as also credited Balances with Bhusan Industries Ltd., TISCO Ltd which are sub-judies or under dispute shall remain in Accounts of Units till their disposal.

g) As stated in Para 5(B) (b) in Schedule 17 annexed to the Balance Sheet of the Company as 31st March 2010 in respect of Hind Polymers Units, debit balances under the Sundry Debtors for Rs. 757.86 lacs including dues from HTL, HCL and Optal Telecommunications aggregating f 683.17 lacs and debit balances under the head Store Advances aggregating Rs. 162.32 lacs and Miscellaneous Advances aggregating Rs. 301.22 lacs, as also other debit balances due for more than three years will be considered to be written off or provided for in subsequent years after scrutiny by the units and after receipts of Report there on as to their recoverability or otherwise. Similarly credit balances standing in the books of the said units also to be considered to be written back after receipts of Report from the unit head as to whether they are not payable.

h. As per last Audited Accounts of the units at Patna >

a) winding up petition was filed by the said units for recovery of outstanding dues of Rs. 242.49 Lac from Modi Plastics Ltd. and the same was stated to let.

b) Legal notices were issued by the said units to various Debtors for recovery of the outstanding dues, no response has been received.

c) The unit has not initiated any suit against any of the Debtors for recovery of dues. Has not received any confirmation.

d) Did not receive any balance confirmation from the Banks, Fixed Deposits Accounts, Dividend Accounts etc. aggregating Rs. 14.48 Lac

e) The unit is yet to obtain "No Dues Certificate from Sales Tax. The unit has paid Rs. 10.35 Lac against unsold stock.

i) Balance in the following debtors a/cs of the Units at Patna namely Steel Units & Hitech Steel Units and Unit at Ghaziabad namely Hind polymers unit representing principal dues having been referred to BIFR or under litigation as stated by the Units are kept /or future action till their final outcome and till receipts of the Report from Units stating legal positions of recoverability and there after to be considered for written off or otherwise.

The aforesaid balances are due for more than 3 years. However provision if any will be made in subsequent years after taking appropriate action for recovery of those advances by the unit and after receipt of report from the unit about the outcome of the recovery proceedings.

5. As reported last year the production of the said Unit has been permanently discontinued w.e.f. 20th March 2009.

6. Fixed Assets

a) It was reported last year that the Fixed Assets of the units at Patna namely Hi-Tech Steels & Steels Unit excluding some Land as reported earlier were written off to the Profit & Loss Appropriation Account during the year ending 31st March 2009 after adjustment of provisions for impairment of Fixed Assets which included the assets sold by ARCIL under SARFAESI act and the Assets which were not sold as per advice.

b) Further to the report in para 7b of Schedule as on 31 st March 2010 ti is reported that Fixed Assets of the Unit Hind Polymers which was charged in favour of Secured Creditors and taken over by ARCIL under SARFAESI Act 2002, have since been sold by the said ARCIL. As such written value of Land, Buildings and Plant & Machinery including Electrical Installations as also Stock-in-Trade as on 31st March 2010 have since been written off and debited to the Profit & Loss Appropriation A/c.

As reported last year in para 7b in Schedule 17 that in view of the shifting of the office premises of Hind Polymers unit resulting dismantling of the Furniture & Fixtures (Net valueRs. 10.15 lacs) and Office Equipments (Net value Rs.9.58 lacs) were dumped in factory premises of the unit. As such the said other Assets are pending to be written off in subsequent year after valuation of the scrap and their sale by the unit.

7. Investment

(a) Aggregate market value of Quoted investment is Rs.2835279/- (previous year Rs.27,14,897/-) & aggregate value of Un-Quoted investments is if 210710/- (previous year Rs.210710/-).

8. Unclaimed Dividend.

(a) Unclaimed dividend for Rs.4,32,672/- and unclaimed interest of Rs. 7,61,414/- appearing in "Current Liabilities & Provisions" (Schedule 11) is subject to reconciliation as the necessary payment advices/evidences have not yet been forwarded by the bank to the Company. However, the Company has since deposited Rs. 2,20,789/- with the Registrar of Companies Patna (ROC, Parna) in compliance with the provision of section 205(c) of the Companies Act 1956. A sum of Rs. 6,32,670/- representing balance unclaimed dividend/interest, on FCD due for more than seven years which amounts are lying with State Bank of India(SBI), Patna under unclaimed dividend / interest on FCD A/c could not be deposited to the ROC, Patna for credit to the "Investors Education and Protection Fund" as the said SBI Patna, in spite of several written request, did not release the fund under the plea that the matter is subjudice.

(b) Share Application Money Refundable Rs. 2,18,216/- (Previous Year Rs. 2,18,216/-) included in Sundry Creditors is subjuct to reconciliation as necessary information/account has still not been received from the bank.

9. Tax Matter.

(a) Income-tax Assessments of the Company up to Assessment years 2006-07 have already been completed by the Assessing Officer. No demand is outstanding against the Company.

(b) Income Tax Authorities have demanded for the assessment year 1997-98 79,33,596/- by rectifying the assessment u/s 154 for which appeal is pending. Further a petition u/s 220(6) of IT Act is lying pending un-disposed off.

10. Positions of reference to the BIFR under SICA Act 1985.

It has already been reported last year that, as per request of the secured creditors, the Hon'ble Bench of BIFR has abated the said reference under 3rd Provision of Sec. 15(A) of SICA Act 1985.

11. Previous year's figures have been regrouped / rearranged werever necessary.

12. Segment reporting

It was reported in earlier years that the operations of the Units at Patna were closed from 1st April 2001 thereafter the operations of the Hind Polymers Unit were discontinued from 20th March 2009 as such there is no scope to have any segment wise reporting as required under the Act.

---

Mar 31, 2010

1. Deferred tax assets for un-absorbed losses have not been recognized oti the basis of prudence and in absence of strong projection of future taxable profits. Provision for taxation has not been considered necessary in view of the brought forward losses and losses for the year.

Year Ended Year Ended 31-03-2010 31.03.2009 Rs. Rs. 2. Contingent liabilities not provided for in respect of :

(a) Claim for Electricity subsidy

disputed by UPSEB 491 491

(b) Electricity demand for 50% AMG disputed under clause 13(1) of High Tension agreement with Bihar State

Electricity Board. 133.36 133.36

(c) Electricity demand against fuel Surcharge disputed with

Bihar State Electricity Board 12.61 12.61

(d) Sales Tax demand for the financial year 1998-99 against which appeal in Allahabad High Court preferred Against it a sum of Rs. 1,04,602/- has been deposited and is being shown as advances/deposits recoverable previous year Rs.1,04,602/-). 23.50 23.50

(e) Sales Tax demand of Rs. 1,42,345/- against which appeal is preferred before Trade Tax Tribunal. 1.42 1.42

(f) A sum of Rs. 2,42,423/- as demand of Service Tax along with penalty of Rs. 2,42,423/- has been imposed against

which appeal was filed with the commissioner (Appeals). The apple was rejected. Subsequently appeal was filed with Central Excise Tribunal and as per order of the Tribunal payment of Rs. 50,000/- was made on this account. The appeal is pending before the said authority. 4.86 4.86

(g) Demand notice issued by Superintending Engineer ELECL P.E.S.U (West) circle, Patna on a/c of electricity due for Rs. 76.03 lacs (net amount after adjustment of security deposit with interest thereon for Rs. 21.98 lacs) on Steel Division at Patna Rs. 63.70 lacs on Hi-tech Steels, Patna and Rs. 29.92 lacs on Hi-tech Steels unit II, Patna. 169.66 169.66

(h) Demand raise by DRT, Patna on a/c of rent payable by Hi-Tech Unit to M/s Lakshman Ware Industries from 07-01-2000. 15.00 15.00

(i) Some of the suppliers have filed legal suites for recovery of their dues from the company for a total amount of Rs. 1115.72 lacs including interest of Rs. 236.30 lacs which have not been admitted, by the company and are being contested legally. The company's claims on suppliers for loss on account of short / delayed supply of materials by the suppliers are also subjudice before the relevant court. Net liability / dues of the Company, if any, is subject to reconciliation. 482.88 482.88

(j) Excise Demand disputed in appeal, However, the department of Central Excise has realized their dues with interest by encasing TDR's Rs. 4.03 lakhs lying with SBI Patliputra Branch and IFB forming a part of the Company's cash and bank balance and was lying pledged with Central Excise Department. 3.82 3.82

(k) Central Excise Department has issued following show cause notices.

As per the show cause notices the department is of the opinion that company has availed MODVAT on the endorsed gate passes after 31/03/ 94 - which is in correct. The company filed its replies with Assistant Commissioner to the show cause notice. The Assistant Commissioner has dropped the proceedings initiated vide above mentioned show cause no- tices. Subsequently department has filed appeal with commissioner (ap- peals) and Central Excise Tribunal, which again gave their judgement in favour of company. Then department has filed appeal with High Court Allahabad. However company was not aware that department has filed appeal with High Court. This fact was brought to the notice of company only during November 2006. The High Court in its judgment rejected the appeal of the department on the ground that it was time barred. Thereafter the department has filed writ with Supreme Court where the matter is pending at present.

3. Notes On Accounts.

a) Recovery proceeding for P. F dues of Rs. 2593506/- was initiated by the P F Authority against which writ petition was filed by the unit at Patna High Court. However, the said P F authority recovered the said amount of Rs. 25,93,506/- encroaching bank account of the Company subsequently. In the process they have also recovered from another bank of the Company for Rs. 164 lakhs in excess of the original demand. The matter is contested by the unit.

(b) The following secured creditors have filed suites before the respec- tive DRT, Kolkata and Patna and Hon'ble High Court, Patna claim- ing the amount as mentioned herein below, which are contested by the Company. The aggregate amount standing to the credit of the above accounts including the interest thereon in the books of the company as on 31-03-09 is sufficient to cover the amount of claims.

4. Secured Loans/Debtors, Loans & Advances

(A) For Units at Patna

As reported in para 4(b) above the Secured Creditors of the Company filed recovery suits before the respective DRTS and Hon'ble High Court claiming the alleged amounts of dues with Interest from the Company. Out of the said Secured Creditors SBI, ICICI Bank Ltd., assigned their Rights on the Assets of the Company charged in their favour, in favour of Assets Reconstruction Co (I) Ltd (ARCIL). Similarly Industrial Development Bank of India (IDBI) assigned their Rights on the Assets of the Company charged with them in favour of Stressed Assets Stabilization Funds. It was also reported last year that all movable and immovable assets at Patna excluding some land were taken over and sold by ARCIL under SARFAESI Act 2002 on behalf of Secured Creditors. Other Secured Creditors of the Patna units namely BSFC and BICICO also sold the Assets of the Units which were charged in their favour. The Fixed Assets and Stock in Trade of both the Units at Patna were written off in the Accounts of the Company during the year ending 31st March 2009. Certain other movable Assets like book debts, advances, deposits etc were provided for or written off during the year ending 31st March 2009 as will be revealed in the Accounts ending 31st March 2009. However the Auditor of the Company was of the views that the Company could have written off all debtors and write back all creditors of the said units at Patna leaving those debtors and creditors which are sub-judice and qualified the same in their Audit Reports to the members of the Company dated 20th October 2010 on the Accounts of the Company for the year ending 31st March 2009.

In view of the aforesaid state of affairs and considering the present positions of the Units at Patna having practically no existence, having practically no staff/officers, having practically no records to find out the details, which were misplaced at the time of dismantling of the office building by the purchaser, as reported by Unit In-charge and further in compliance with the Auditors' Qualifications, Director thought it prudent to take judicious view on the adjustment of the old debtors and creditors brought forward for more than 10 years without any scope of or any possibility of recovery of outstanding debts. There were no claim from the creditors as reported by the In-charge of the Unit except those are sub-judice. It was also observed that the Units, in usual course of the business had charged interest at the rate as mentioned in their invoices, for non-payment/delayed payment by the Customers. As such a substantial amount (Rs. 187.85 Lac) was included in the Debtors and was credited in the Profit & Loss Account in earlier years. It was agreed that a preliminary discussion between the Managing Director & Chairman of the Audit Committee should be made. Accordingly an informal meeting was held on 12th April 2011 which was ratified subsequently by the Board of Directors at their meeting held on 25th April 2011. According to the said decision taken by the Board of Directors, in order to show a true & fair view of the state of affairs of the Company and in order to comply with the advice/report by the Statutory Auditors, following adjustments were made in the Accounts at Patna.

a. Interest charged as above and credited in the Profit & Loss Account in the earlier years aggregating Rs.187.85 Lac was debited in the Profit and Loss Account for the year ending 31st March 2010.

b. Debit Balance with the Debtors like Haryana Telecom Ltd.. Hindustan Cables Ltd., Modi Plastics Ltd., Pulak Enterprises and Credit Balance with Bhusan Industries Ltd., TISCO Ltd., which are sub-judice and under dispute be allowed to remain in the Accounts of the Units till their disposal.

c. Miscellaneous Debit Balance with Banks aggregating Rs. 12.36 Lac will be remaining to be carried forward to subsequent years for reasons reported earlier.

d. Balances appearing in different accounts other than above under the head Sundry Debtors. Advances to suppliers. Loans and Advances, Cash and Bank Balances aggregating Rs.391.16 Lac in both Units at Patna were written off in the Profit & Loss Account for the year ending 31st March 2010.

e. Credit Balance in Sundry Creditors, advances from customers and other liabilities aggregating Rs.-145.54 Lac in both Units at Patna were written back and credited in the Profit & Loss Account for the said year.

f. The provision made for doubtful debts and Loans & Advances at the said two Units at Patna aggregating Rs.257.63 Lac which were debited in Profit & Loss Account for the year ending 31st March 2009 as a provision, was decided to be written off in the Books of the Units without affecting further in the Profit & Loss Account of the Company for the year ending 31 -' March 2010 as it was thought prudent to do so considering total picture of the Units at Patna.

g. As per last Audited Accounts of the units at Patna :-

(a) Winding up Petition was filed for recovery of outstanding dues of Rs. 242.49 Lac and the same is pending.

(b) Legal notices were issued to all Debtors including Pulak Enterprises ( Rs. 507.90 Lac) for recovery of the outstanding dues, no response has been received.

(c) The Unit has initiated any suit against any of the Debtors for recovery of dues. Has not received any confirmation.

(d) Did not received any balance confirmation from the Banks, Fixed deposits Accounts, Dividend Accounts etc. aggregating Rs. 14.48 Lac

(e) To obtain "No Dues Certificate from Sales Tax & Excise Authorities the unit has paid Rs. 10.35 Lac against unsold stock.

5. (B) For Units of Hind Polymers

Similarly the Board of Directors, after going through the state of affairs of the Hind Polymers unit which was closed from 20th March 2009 and whose assets were taken over by ARCIL but not sold, decided the following adjustments in the Accounts of the said unit for the year ending 31st March 2010.

a) To reverse the amount of interest which was previously credited in Interest A/c of the Hind Polymers Unit by debiting the individual debtors for delayed payment aggregating Rs.557.44 Lac as per list submitted by the said Unit. As such interest accounts was debited and credit in Debtors a/c as it was done in 2001-02.

b) Balance in the following debtors ales of the Hind Polymers Unit representing principal dues having referred to BIFR or under litigation as stated by the Unit to be kept for future action.

c) Debtors having balance below Rs. 1.00 Lac was to be written off as per decision of the Board at their meeting held on 3rd March 2011 aggregating Rs.3.92 Lac. Provision for doubtful debts to be made in respect of Debtors having balance over Rs.1 Lac but within 5 Lac aggregating Rs.29.16 Lac.

d) Sundry Debtors for Rs.759.77 Lac includes Rs.757.25 Lac which are considered doubtful as per Audited Accounts of the Unit as on 31st March 2010. It has also been reported by the Unit that actions are initiated by the Unit tor recovery of the Doubtful Debts and Advances. Provision if any for such doubtful debts and Loans & Advances will be considered in subsequent year after scrutiny.

6. As reported last year since the production of the said Unit has been permanently discontinued w.e.f. 20th March 2009 the usable value of the producing Fixed Assets and other allied assets of the Unit are in process of revaluation under AS28 under the Companies Act 1956 and the difference if any will be adjusted in subsequent year.

7. Fixed Assets

a) It was reported last year that the Fixed Assets of the units at Patna namely Hi-Tech Steels & Steels Unit excluding some Land as reported earlier were written off to the Profit & Loss Account during the year ending 31st March 2009 after adjustment of provisions for impairment of Fixed Assets which included the assets sold by ARCIL under SARFAESI Act and the Assets which were not sold as per advice.

b) It was also reported that all Fixed Assets of the Hind Polymers Unit which were charged in favour of Secured Creditors were taken over by ARCIL under the said Act, although not sold. The said Fixed Assets of the Units at Hind Polymers includes net value of Furniture & Fixtures Rs. 10.15 Lac and Office Equipment Rs.9.38 Lac which has been reported by the Unit that while shifting of the office premises a part of the aforesaid Assets were dismantled and part was dumped at the Factory premises of the Unit. The adjustment of Loss of the value of those assets will be made either after sale of those assets or after valuations by outsider in subsequent years. As the operations of the Factory of the Unit was discontinued i.e. 20th March 2009 loss of impairment of the Assets of the Unit, if any, will be adjusted in subsequent year on sale of the said assets by ARCIL.

8. Investment

(a) Aggregate market value of Quoted investments is Rs. 27.14,897/- (previous year Rs. 7,14,12,103/-) & aggregate value of Un-Quoted investments is Rs. 2,10,707/- (previous year Rs. 2.10,707/-).

9. Inventory

It was reported last year on the accounts of the Company for the year ending 31st March 2009 that the Stock-in-Trade at the Units at Patna namely Hi-Tech & Steels Unit which were taken over and sold by ARCIL under SARFAESI Act 2002 were written off to Profit & Loss Account during the said year after adjustment of Provision made in earlier year on account of diminution in value of the stocks.

However stock at the Hind Polymers Unit as on 31st March 2010 of Rs.16.30 Lac which were taken over by ARCIL but not sold as yet under SARFAESI Act included Finished goods valuing Rs.11.08 Lac which has been reported by the Unit as not saleable at cost/market price due to closure of the Unit and becoming obsolete. Provision for loss if any, will be made in subsequent year after sale of the Assets by ARCIL.

10. Interest on Secured Loans

The Secured Creditors of the Company namely SBI, ICICI Bank Ltd and IDBI, filed recovery suits against the Company. They assigned their Rights on all assets of the Company charged in their favour with Assets Reconstruction Co (I) Ltd (ARCIL) under SARFAESI Act 2002. The said ARCIL took possessions of the said assets and sold all movable & immovable Assets at the Units at Patna namely Hi-Tech Steels & Steels Unit. Since the filing of the Recovery Suits against the Company, the said secured creditors did not claim any interest. Under the aforesaid circumstances the Company has not provided any interest on the loans from the Secured Creditors including BSFC, BICICO and PICUP for 2009-10. The Aggregate amount of unprovided interest upto 31st March 2009 on estimation basis as reported earlier year was Rs. 14.019 Lac. The company could not make any estimation of such unprovided interest on the secured loans of the Company as on 31st March 2010.

11. Unclaimed Dividend.

(a) Unclaimed dividend for Rs. 4.32,672/- and unclaimed interest of Rs. 7,61,414/- appearing in "Current Liabilities & Provisions" (Schedule 11) is subject to reconciliation as the necessary payment advised / evidences have not yet been forwarded by the bank to the Company. However, the Company has since deposited Rs. 2.20.789/- with the Register of Companies Patna (ROC, Patna) in compliance with the provision of section 205(C) of the Companies Act 1956. A sum of Rs. 6,32,670 representing balance unclaimed dividend/interest FCD due for more than seven years which amounts are lying with State Bank of India (SBI), Patna under unclaimed dividend / interest on FCD A/c could not be deposited to the ROC. Patna for credit to the "Investors Education and Protection Fund" as the said SBI, Patna, in spite of several written request, did not release the fund under the plea that the matter is subjudice.

(b) Share Application Money Refundable Rs.2,18,216/- (Previous Year Rs.2,18,216/-) included in Sundry Creditors is subject to reconciliation as the necessary information/account has still not been received from the bank.

12. Tax Matter.

(a) Income-tax Assessments of the Company up to Assessment years 2006-07 have already been completed by the Assessing Officer. No demand is outstanding against the Company.

(b) Income Tax Authorities have demanded for the assessment year 1997-98 Rs.79,33,596/- by rectifying the assessment u/s 154 for which appeal is pending. Further a petition u/s 220(6) of IT Act is lying pending indisposed off.

13. Positions of reference to the BIFR under SICA Act 1985.

It has already been reported last year that as per request of the secured creditors the Hon'ble Bench of BIFR has abated the said reference under 3rd Provision of Sec. 15(A) of SICA Act 1985.

14. Segmental Reporting :

It was reported in earlier years that the operations of the Units at Patna were closed from 1st April 2001 thereafter the operations of the Hind Polymers Unit were discontinued from 20th March 2009 as such there is no scope to have any segment wise reporting as required under the Act.

15. Capacity, Production, Stocks & Sales

It was reported in earlier years that the operations of the Units at Patna were closed from 1st April 2001 thereafter the operations of the Hind Polymers Unit were discontinued from 20th March 2009 As such Capacity Utilizations. Productions. Sales etc are not applicable and thus not reported separately. Similarly statement on Raw Material consumptions, value of Import and Export of Raw Material. Stores & Spare Parts, Finished Goods etc., are not reported due to aforesaid situation.

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Mar 31, 2009

1. Deferred tax assets for un-absorbed losses have not been recognized on the basis of prudence and in absence of strong projection of future taxable profits. Provision for taxation has not been consid- ered necessary in view of the brought forward losses and losses for the year.

Year Ended Year Ended

31-03-2009 3103 2008

Rs. Rs.

2. Contingent liabilities not provided for in respect of :

(a) Claim for Electricity subsidy disputed by UPSEB 491,049 491,049

(b) Electricity demand for 50% AMG disputed under clause 13(1) of High Tension agreement with Bihar State

Electricity Board. 1,333,031 1,333,031

(c) Electricity demand against fuel Surcharge disputed with

Bihar State Electricity Board 1,260,569 1,260,569

(d) Sales tax demand of Rs. 5,47,718/- (Previous Year Rs. 5,47,718/-) for the year 1997-98 against which appeal in Allahabad High Court is pending. However the amount has already been deposited with sales tax authority and shown under the head Advance

Recoverable in cash or kind. Nil Nil

(e) Sales Tax demand for the financial year 1998-99 against whichappeal in Allahabad High Court preferred Against it a sum of Rs. 1,04,602/- has been deposited and is being shown as advances/deposits recoverable(previous year Rs. 1.04,602/-). 2,350,000 2,350,000

(f) Sale Tax demand of Rs. 1,42,345/- against which appeal is preferred before Trade Tax Tribunal. 142,345 142,345

(g) A sum of Rs. 2,42,423/- as demand of ServiceTax along with penalty of Rs. 2,42,423/- has been imposed against which appleal was filed with the commissioner (Appeals). The apple was rejected. Subseq- uently appeal was filed with Centra Excise Tribunal and as per order of the Tribunal payment of Rs. 50,000/- was made on this account. The appeal is pending before the said authorty. 484,846 484,846

(h) Demand notice issued by Superintending Engineer ELECL P.E.S.U (West) circle, Patna on a/c of electricity due for Rs. 76.03 lacs (net amount after adjustment of security deposit with interest thereon for Rs. 21.98 lacs) on Steel Division at Patna Rs. 63.70 lacs on Hi-tech Steels, Patna and Rs. 29.92 lacs on Hi-tech Steels unit II, Patna. 16,965,964 16,965,964

(i) Demand raise by DRT, Patna on ale of rent payable by Hi-Tech Unit to M/s Lakshman Ware Industries from 07-01-2000. 1,500,000 1,500,000

(j) Some of the suppliers have filed legal suites for recovery of their dues from the company for a total amount of Rs. 1115.72 lacs including interest of Rs. 236.30 lacs which have not been admitted by the company and are being contested beore the relevant courts. The total provisions in these accounts as on 31.03.2009 are Rs. 632.84 lacs and furtherinterest if any. 48,288,000 48,288,000

(k) Debit raised by SBI, New Delhi for Rs. 37.93 lacs and ICICI Bank Ltd. for Rs. 42.07 lacs against the guarantee given by them to Jersey India Ltd. have been shown under Loans and Advance. Provi- sion. if any, has not been made pending finalisation of the results of the Liquidation proceedings of Jersey India Ltd. and other legal cases. 8,000,000 8,000,000

(I) Excise Demand disputed in appeal, However, the department of Central Excise has realised their dues with interest by encashing TDRs Rs, 4.03 lakhs lying with SBI Patiputra Branch and IFB forming a part of the Companys cash and bank balance and was lying pledged with Centra Excise Department. 382,040 382.040

(m) Central Excise Department has issued following show cause notices.

Sl.No. SCN No. & Date Amount Period

1. V(30)Demand/177/94/7977 dt.04/10/94 Rs. 1273717.03 April1994

2. V(30)Demand/1778/94/7977 dt.04/10/94 Rs. 1085007.60 May1994

3. V(30)Demand/314/94/9552 dt.05/12/94 Rs. 12246.00 June1994



As per the show cause notices the department is of the opinion that company has availed MODVAT on the endorsed gate passes after 31/03/ 94 - which is in correct. The company filed its replies with Assistant Commissioner to the show cause notice. The Assistant Commissioner has dropped the proceedings initiated vide above mentioned show cause no- ¦tices. Subsequently department has filed appeal with commissioner (ap- peals) and Central Excise Tribunal, which again gave their judgement in favour of company Then department has filed appeal with High Court Allahabad. However company was not aware that department has filed appeal with High Court. This fact was brought to the notice of company only during November 2006 The High Court in its judgment rejected the appeal of the department on the ground that it was time barred. Thereafter the department has filed writ with Superme Court where the matter is pending at present,

3. Notes On Accounts.

a) Recovery proceeding for P. F dues of Rs. 2593506/- was initiated by the P F Authority against which writ petition was filed by the unit at Patna High Court. However, the said P F authority recovered the said amount of Rs 2593506/- encroaching bank account of the Company subsequently. In the process they have also recovered from another bank of the Company for Rs. 1.64 lakhs in excess of the original demand The matter is contested by the unit

(b) The following secured creditors have filed suites before the respec- tive DRT, Kolkata and Patna and Honble High Court, Patna claim- ing the amount as mentioned herein below, which are contested by the Company. The aggregate amount standing to the credit of the above accounts including the interest thereon in the books of the company as on 31-03-09 is sufficient to cover the amount of

(e) Depreciation on Fixed Assets of Steel unit and Hi-tech Steel Unit at Patna, other than Leasehold Land and Shed & Building have not provided by the unit of the year ending 31st March 2009 as the residual value of those assets are less than 5% of the cost and as the assets has been sold by ARCIL us 13 of the SARFAEST Act 2002.

3 Sundry Debtors and Loans Advances & Other Current Assets.

Sundry Debtors of Rs. 2776.69 lacs (Previous year 2793.00 lacs). Loans & Advances Rs. 1157.81 lacs (Previous year 1271.00 lacs)

(A) As per last Audited acounts of units at Patna; the said units

i) Filed winding up petition with the Honble Patna High Court for recovery of its dues from Modi Plastics Ltd for an amount of Rs. 242.49 lacs (shown under loans and advances)

ii) Issued Legal notices to all Debtors including Pulak Enterprises (Rs. 507.90 lacs) for recovery of its outstanding dues from the respective Debtors, and no responses have been received by the units.

iii) Has not initiated any suit against any of the Debtors for realization of units dues.

iv) Has not received any confirmation from the Debtors for the accuracy of their Balance.

v) Further Loans and Advance includes Rs. 98.15 lacs (previous year 98.15 lacs) as Income Tax deducted at soure by the outside parties, is also considered to be doubtful as Income Tax deduction certificates from these parties have not been received and there- fore could not be filed before the Assessing Officer.

VI) Balance confirmation certificate from various banks maintained by the said unit in Current Account Fixed Deposit Account and Dividend Account etc. aggregating Rs. 14.48 lacs in respect of Steel unit and Rs. 2.52 lacs in respect of Hi-tech Steel unit at Patna have not been received by the unit.

vii) Fixed Deposit Receipt with the Banks lying with Excise Author- ity in compliance with the provision of the relevant Act amounting to Rs. 4.03 lacs have been adjusted by the said Excise Authority by recovering the proceds of the FDR and have since been ad- justed with their dues. The amount of Rs. 4.03 lacs have been debited to Profit & Loss Account under the head Excise duty during the year ending 31.03 2007.

viii) The unit have surrendered Sale Tax Registration and Cen- tral Excise Registration to the respective Authorities. Accord- ingly a sum of Rs. 10.35 lacs were paid by the said units on account of unsold stock and obtained "No Due Certificate" from the Central Excise Patliputra range, Patna. In view of above, total sum of Rs. 16.64 lacs lying in debit under the head "Pre-paid Excise Duty" in Steel division and Rs. 5.46 lacs in Hi- tech Steel division has been considered to be doubtful.

(B) For Unit Hind Polymer at Ghaziabad.

i) Sundry Debtors includes Rs. 1347.35 lacs which are dues for more than 3 years and is considered doubtful. Recovery pro- ceedings are being initiated against Debtors. As such provision for doubtful debts will be made in subsequent yeas after con- clusion of such recovery proceeding. As reported by the Branch Auditor confirmation of loans (including interest free loan) from debtors and creditors have not been obtained by the units and have been taken to be carried forward from last account.

ii) Rs. 13,44,881/- towards exports benefit taken credit in ex- pectation of realization against import licence in early years have been considered doubtful and adjusted to the Profit & Loss A/c during this year.

iii) Electric subsidy paid by the unit for Rs. 4.91 lacs (previous year Rs. 4.91 lacs) is under dispute and is doubtful of recov- ery.

iv) Sales Tax demand of Rs. 2.80 lacs paid by the unit is under dispute and is considered to be doubtful.

v) Raw materials having value of Rs. 0.41 lacs are in stock, which lost their self life, and finished Goods stock at unit Hind Polymers as at 31 st March 2009 for Rs. 17.08 lacs may not be saleable at cost/market price as the unit is closed. However provision for deterioration and decline in value of raw materials and Finished goods will be made in subsequent years.

(D) Dividend income on investment in shares and other such secu- rities are accounted in head office account. Certain investment has been transferred in favour of the lender but no effect of the same has been given, pending receipts of advice from the transferee. Profit / Loss on such investments will be accounted for on final settlement of the dues to the Secured Creditors.

(F) Production of the unit Hind Polymers has since been discontin- ued with effect from 20th March, 2009.

4 a. Secured Loans.

It has already been reported that the Financial Institutions namely iDBI & ICICI and the Gos Banker namely SBI have all as- signed their rights and interest on all secured assets of the company in favour of ARCIL which were previously charged in their favour and that those charges where modified in favour of ARCIL and that the said ARCIL took possessions of the assets of the units of the company u/s 13 of SARFAESI Act 2002. The movable assets of the units at Patna were sold by ARCIL under the said Act (excluding Assets which were mortgaged in favour of BICICO & BSFC), save & accept, book debts, advances, cash & bank balances and other Current Assets. The said ARCIL have since sold part of the immovable assets of the units at Patna. Total value of the sales proceeds realised by ARCIL on behalf of ICICI, IDBI & SBI on account of sale of immovable and moveable assets of the units of Patna as per copy of the agreements (received from ARCIL) between the Purchasers & ARCIL is Rs. 1039.89 lacs i e. Rs. 515.00 lacs for sale of Stock and other moveable assets and Rs. 524.89 lacs for sale of immovable assets. The Company is yet to receive intimation from the ARCIL on distribution of the said sale proceeds, realized by them from the Purchase of all movable & immovable assets of the Units at Patna namely Hi-Tech Steels Unit & Steel Unit, amongst the secured creditors i.e. IDBI, ICICI & SBI on whose behalf the ARCIL has sold afore- said Assets and received the sale proceeds and also adjustment thereof with the dues of the secured creditors in full & final settlement. We presume ARCIL have taken due care to complete all required formalities.

However as decided by the Board of Directors NET value of all Fixed Assets excluding land at Chandigarh and Silvassa and including other assets namely Electric Equipments, Office Equip- ments, Furniture & Fittings, Computers, Trajptor, Vehicles, and discarded Plant & Machinery of the unit at Patna were written off and debited in Profit & Loss Account during the year ending 31 "March 2009.

Further the fixed assets charged in favour of BSFC & BICICO ware sold and recovered by them at Rs. 20.00 lac & Rs 10.01 lac respectively as intimated by them and pending for adjust- ment with their dues in full & final settlement. The amount recovered by ARCIL on behalf of secured creditors Iclcl Ltd., IDBI & SBI also above recovered by BSFC and BICICO as above were deducted from the total amount of secured Loans as at 31.03.2009 pending final adjustment.

Since the process of actions initiated by ARCIL for recovery of the outstanding dues have not yet been completed, man- agement is of the view that adjustments under this a/c will be done at latter date pending more details.

In view of the above fact it was slated earlier that the Provision for Doubtful Debts and Advances, if any, will be made in subsequent years with consent of the Secured Creditors in compliance with the provision of Sub-section 13 of section 13 of the said Act.

As decided by the Board of Directors, the amount of Book Debts recoverable from certain Debtors at the Units at Patna aggregating Rs.89.89 Lac, Loans & Advances including In- come Tax Deducted at Source recoverable by the Units at Patna aggregating Rs. 167.73 Lac have been provided for and debited in Profit & Loss Account during the year ending 31st March, 2009.

Similarly as decided by the Board of Directors the amount payable to some of the Creditors and for other liabilities of the Units at Patna lying unclaimed for more than 8 years were considered not payable and as such written back aggregating Rs.81.73 Lac and credited in Profit & Loss Account the year 31"March2009.

B The interest free Loan from PICUP is secured by second charge over all the immovable and movable properties, present and future of the Polymer unit of the Company.

C The term loan from Bihar State Credit & Investment Corporation is against equipment finance and secured accordingly

D Cash Credit, Packing Credit & Bills Account are secured against hypothecation of stocks and Book Debts and also guar- anteed byShri H K Modi, the then Managing Director, Shri S K Modi, Managing Director and Shri N K Modi former Di- rector of the Company. Both Shri H. K. Modi and Shri N. K. Modi have resigned.

E As the Financial Institutions i.e. IDBI, SBI and ICICI Ltd have filed recovery suite against the Company and not intimated any debit advice for interest As such interest provision on loans from IDBI, SBI and ICICI Ltd has not been made during the year, altnough provision on account of interest up to 31st March 2005 on the agreed rate of interest payable to ICICI was made in the Accounts. Had the past practice continued, the estimated amount of interest would have been provided for Rs. 2579 lacs for the year 2008-09 and accordingly loss of the company the year would have been higher to that extent. The accumulated loss up to 31st March 2009 would have increased by Rs. 14019 lacs.

F As reported by the Hind Polymers unit, interest liability has not been provided by the unit on Sale Tax loan from PICCUP for the year 31st March 2009 as the same is under disputes The amount of un-provided interest for the year ending 31st March 2009 and accumulated un-provided interest up to 31st March 2009 included under above unprovided interest are Rs. 24.47 lacs and Rs. 234.95 lacs respectively. Although the said loan was interest free but as the instalments were not paid on due date, interest became payable as per terms of the Agreement. The loss of the unit for the year and accumu- lated loss up to the year ending 31st March 2009 has been shown lower by the said amount.

G As reported in the last year sale proceeds of the shares pledged with SBI and sold by the said bank amounting Rs. 40.48 lacs has been debited in SBI Account and will be adjusted on final settlement with ARCIL on behalf of SBI.

H Total of the Term Loans and working capital loan from Financial Institutions and Bank are over due for re-payment as on date.

a. Plant & Machinery.

As reported in earlier years all Plant & Machinery installed at High Tech division at Patna which were dismantled were lying in the Steel division factory at Patna. The expenses incurred on foundation, electric wiring and Sundry expenses have not yet been written off pending ascertainment. Condition of the dismantled parts of the Machine were subject to detonation. How- ever all such dismantled Plant & Machinery have been sold by ARCIL as stated above and included in net value of Fixed Asset was written off during this year and debited in Profit & Loss Account for this year.

b. Fixed Assets.

As reported by the Branch Auditors in last account the units at Patna namely Hi-tech and Steel unit have a Fixed Assets Register but the situation of the Fixed Assets are not re- corded. Further no evidence of physical verification of Fixed Assets was made by the unit management and as such. The same was not provided to the Branch Auditor.

However, verification/valuation of Fixed Assets have been carried out by an outside expert and losses as assessed by the said valuer on account of Impairment of Fixed Assets as re- quired under the AS-28 has been adjusted in the units accounts during the year ending 31st March 2005.

Fixed assets of the unit Hind Polymers includes inter-alia Fur- niture & Fixture & Office Equipment having net value as on 31st March 2009 as under

a) Furniture & Fixture Rs.13,23,547

b) Office Equipment Rs. 10,83,732

Rs. 24,07,279

It is reported that rented office of the Hind Polymers Unit of the Company have been shifted to other place. As such the Fixtures Furniture, Office Equipment installed/used in the said office mostly has become out of use while dismantling/remov- ing. The said assets also include expenditure incurred for reno- vation of the rented office at Kolkata/Delhi. The estimated realizable value of the said assets would be ascertained, preferably by the outside valuer, as may be decided and to be adjusted in subsequent year. Further, since the production of the unit Hind Polymers has been permanently discontinued w.e.f. 20th March 2009, the usable value of other assets of the said unit are required to be revalued under AS-28 as required under the Companies Act 1956.

5. Investment

(a) Aggregate market value of Quoted investments is Rs. 3,92,06,178/- (previous year Rs.7,14,12,103/-) & aggregate value of Un-Quoted investments is Rs. 2,10,707/- (previous year Rs. 2.10,707/-).

(b) Companys investment in shares as in Schedule 6 annexed with the Balance Sheet as 31st March 2009 aggregating Rs. 127.20 lacs having market value as at 31-03-2006 of Rs. 215.16 lacs for quoted shares and at cost of Rs. 5.55 lacs for unquoted shares have since been transferred by the company in favour of Assets Reconstruction Company (India) Ltd (ARCIL) as part payment of their demand raised under section 13 of the SRFAESI Act. 2002.

(c) As advised/decided by the Board of Directors, certain Shares (having Book value of Rs. 2,52,823/- have been written off and debited to Profit & Loss Account during the year ending 31st March, 2009.

6. Inventory

As reported Closing Stock of Inventory of Rs. 950.23 lacs of the Company are the balances of different stock as per Books of Accounts i.e. Raw Materials, Finished Goods, Prqcessed Stocks, Stores & Spares and Scraps as at 31 st March 2009 and includes the said stock at the Companys Hi-Tech and Steels Units at Patna for Rs. 516.34 lac and Rs. 416.31 lac respec- tively. On physical verification and valuation done by an out- side Agency during the year 2003-04 at the said Units a sum of Rs. 320.98 lac and Rs. 245.86 lac respectively of the said Units aggregating rs. 566.84 lac was provided in the Profit & Loss account of the Company during the year ending 31st March 2004 as diminution in value of those stocks, as ascer- tained by the said valuer, on the basis of their visual inspection of the materials lying scattered in various plages at the said Units as also at outside places. As reported above in Note No. 6(A) the said stocks of Inventory was sold by ARCIL under the provisions of Sec. 13(4) of the SARFAESI Act 2002.

However as advised and decided by the Board of Directors the Book Value of Inventory (movable assets) at -the Units at Patna taken over and sold by ARCIL on behalf of Secured Creditors under SARFAESI Act 2002 have been written off and debited in Profit & Loss Account during the year ending 31" March 2009.1 the provisions made in the Account on account of diminution in the value of Closing Stock of the said unit has also been written back and credited in Profit S Loss Account for the said year.

7. Unclaimed Dividend.

(a) Unclaimed dividend for Rs. 432672/- and unclaimed Interest of Rs. 761414/- appearing in "Current Liabilities & Provisions" (Schedule 11) is subject to reconciliation as the necessary pay- ment advices /evidences have not yet been forwarded by the bank to the Company. However, the Company has since deposited Rs. 2,20,789/- with the Registrar of Companies Patna (ROC, Patna) in compliance with the provision of section 20.5( c) of the Companies Act 1956. A sum of Rs. 6,32,670 representing balance unclaimed dividend/interest FCD due for more than seven years which amounts are lying with State Bank of India (SBI), Patna under unclaimed dividend/ interest on FCD A/c could not be deposited to the ROC, Patna for credit to the "Investors Education and Protection Fund" as the said SBI, Patna, in spite of several written request, did not release the fund under the plea that the matter is subjudice.

(b) Share Application Money Refundable Rs.2,18,216/- (Previous Year Rs.2,18,216/-) included in Sundry Creditors is subject to reconciliation as the necessary information / account has still not been received from the bank.

8. Tax Matter.

(a) Income Tax Assessments of the Company up to Assessment years 2006-07 have already been completed by the Assessing Officer. No demand is outstanding against the Company.

(b) Income Tax Deducted at Source of Rs. 91,22,700/- for which

certificates for Tax Deducted at Source from certain parties have not been received and therefore could not be filed before the Assessing Officer. Hence recovery of this amount is con- sidered doubtful and not provided Income Tax Authorities have demanded for the assessment year 1997-98 Rs. 79,33,596/- for which appeal is pending by rectifying the assessment u/s 154 for which appeal field by the company before CIT (A) is lying pending unheard. Further a petition u/s 264 against rejec- tion of petition filed u/s 220 (6) of IT Act is also filed but lying pending unheard.

9. Company declared as a Sick Unit.

The Company has been declared as a Sick Unit by the Honble BIFR and hearing of the case has since been completed. The Honble Bench of BIFR as per request of the Secured creditors.has abated the Reference under the thirdprovision of section 15(A)of SICA Act 1985.

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

11. Segmental Reporting :

Segment information has been prepared in conformity with the accounting policies adopted for preparing and presenting the financial statement of the Company.

The following tables present the revenue, loss, and Assets & Liabilities information relating to the Business/ geographical segment for the year ended March 2009.

Previous year figures are in brackets.

Capacity based on Chartered Engineers Certificate.

** The Company was manufacturing a variety of Coated Strips e.g. Galvanised Steel Strips, Painted High Tensile Strapping & Galvanised High Tensile Strap- pings. All these products have been clubbed together under the nomenclature of Coated Strips.

*** Installed capacity is not ascertainable as various complex and Hi-tech products which have widely different rates of production, are produced by the same multipurpose machine.