Notes to Accounts of MTZ Polyfilms Ltd.

Mar 31, 2010

1. As the Companys business activity falls within a single segment viz. PET FILM, the disclosure requirements of Accounting Standard-17, Segment Reporting, issued by the Institute of Chartered Accountants of India, are not applicable.

2. The implementation of the Companys captive Polyester Chips manufacturing plant at Jhagadia Industrial Estate, Bharuch, Gujarat continues to be deferred for nearly fifteen years for want of required resources and other economic considerations. Due to the inordinate delay in completing and commissioning of the project, a difference has arisen between the amount already spent on the Polyester Chips project and the estimated realisable value of the same amounting to approximately Rs. 3130 lacs, resulting in a loss to the Company. As per the requirement of Para 4.4 of Accounting Standard-4, the estimate in regard to the contingent loss has to be provided for in the judgement and perception of the management of the Company. Given that no provision is made for such contingent loss in the Profit and Loss Account for the year ended 31st March, 2010, the losses have been understated to the extent of Rs. 3130 lacs.

3. Balances of Debtors, Creditors, Deposits and Loans and Advances are subject to confirmation.

4. (a) Sundry Debtors includes an amount of Rs. 350.53 lacs (Previous Year Rs. NIL) considered doubtful of recovery. No provision has been made in the books of accounts as the management is making efforts to recover the same.

(b) Advances recoverable in cash or in kind includes an amount of Rs. 383.55 lacs (Previous Year Rs. 112.32 lacs) considered doubtful of recovery. Against this, no provision has been made in the books of accounts since the Company is still pursuing the recovery of this amount.

(c) Provision has not been made for diminution in the value of the Companys Investment aggregating to Rs. 18.92 lacs in Equity Shares of Synthetics and Chemicals Limited. A final view with respect to providing for total diminution in the value of this Investment will be taken in due course.

5. Duty credits receivable under the Duty Entitlement Pass Book Scheme of the Government have been accounted for on accrual basis, amounting to Rs. 45.35 lacs (Previous Year Rs. 29.13 lacs) and included under export sales.

6. The Company did not owe any sum of money exceeding Rs. 1.00 lac for more than thirty days as at 31st March, 2010 due to a creditor registered as a Small Scale Industrial Undertaking.

7. Extraordinary/Prior Period Items comprise of:

(a) Credits:

(i) Time-barred Sundry Creditor Balances written back Rs. NIL (Previous Year Rs. 0.38 lac)

(b) Debits:

(i) Prior Period Expenses Rs. 0.81 lac (Previous Year Rs. NIL)

8. In the opinion of the Board, all Current Assets and Loans and Advances have a value on realization, in the ordinary course of business, at least equal to the amount at which they are stated, except as stated in Note No. B.8 on the Accounts.

9. As a matter of prudence, Deferred Tax Assets have not been considered in terms of Para-17 of Accounting Standard-22 relating to Accounting for Taxes on Income.

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

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Mar 31, 2009

1. Contingent Liabilities Previous Year Rs. in lacs Rs. in lacs

(a) Bilis Discounted with Banks and Others - 556.71 (d) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) 379.91 379.91

(c) Legal claims against the Company not acknowledged as debts 131.90 108.42 d> Counter Guarantee given by the Company on behalf of Bharuch

Eco-Aqua Infrastructure Limited 14.38 14.38

TOTAL 526.19 1,059.42

2. As the Companys business activity falls within a single segment viz. PET FILM, the disclosure requirements of Accounting Standard-17, Segment Reporting, issued by the Institute of Chartered Accountants of India, are not applicable.

3. The implementation of the Companys captive Polyester Chips manufacturing plant at Jhagadia Industrial Estate, Bharuch, Gujarat continues to be deferred for neariy fourteen years for want of required resources and other economic considerations. Due to the inordinate delay in completing and commissioning of the project, a difference has arisen between the amount already spent on the Polyester Chips project and the estimated realisable value of the same amounting to approximately Rs. 3130 lacs, resulting in a loss to the Company. As per the requirement of Para 4.4 of Accounting Standard-4, the estimate in regard to the contingent loss has to be provided for in the judgement and perception of the management of the Company. Given that no provision is made for such contingent loss in the Profit and Loss Account for the year ended 31st March, 2009, the losses have been understated to the extent of Rs. 3130 lacs.

4. Balances of Debtors, Creditors, Deposits and Loans and Advances are subject to confirmation.

5. (a) Advances recoverable in cash or in kind includes an amount of Rs.112.32 lacs considered doubtful of recovery.

Against this, no provision has been made in the books of accounts since the Company is still pursuing the recovery of this amount.

(b) Provision has not been made for diminution in the value of the Companys Investment aggregating to Rs. 18.92 lacs in Equity Shares of Synthetics and Chemicals Limited. A final view with respect to providing for total diminution in the value of this Investment will be taken in due course.

6. Duty credits receivable under the Duty Entitlement Pass Book Scheme of the Government have been accounted for on accrual basis, amounting to Rs. 29.13 lacs (Previous Year Rs. 69.77 lacs) and included under export sales.

7. The Company did not owe any sum of money exceeding Rs. 1.00 lac for more than thirty days as at 31st March, 2009 due to a creditor registered as a Small Scale Industrial Undertaking.

8. Extraordinary/Prior Period Items comprise of:

(a) Credits:

(i) Income Tax Refund Rs. NIL (Previous Year Rs. 72.27 lacs)

(ii) Time-barred Sundry Creditor Balances written back Rs. 0.38 lac (Previous Year Rs. 0.16 lac)

(b) Debits:

(i) Provision for Doubtful Debts Rs. NIL (Previous Year Rs. 68.00 lacs) (ii) Prior Period Expenses Rs. NIL (Previous Year Rs. 3.11 lacs)

9. In the opinion of the Board, all Current Assets and Loans and Advances have a value on realization, in the ordinary course of business, at least equal to the amount at which they are stated, except as stated in Note No. B.8 on the Accounts.

10. As a matter of prudence, Deferred Tax Assets have not been considered in terms of Para-17 of Accounting Standard-22 relating to Accounting for Taxes on Income.

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