Notes to Accounts of Sri Vasavi Industries Ltd.

Mar 31, 2011

1. Contingent Liabilities:

(Rs. In lacs)

"SL As at As at

No Contingent Liabilities not provided for: 31.3.2011 31.3.2010 Rs. Rs.

A Demands raised by Excise and Sales tax Authorities and contested by the Company 1948.78 544.22

B Disputed Income Tax Liability NIL NIL

2. Secured Loans :

The Loans from IDBI and EXIM Bank of India are secured by First mortgage and charge on all immovable and movable assets, present and future of the company and subject to prior charge on specified movables created / to be created in favor of bankers by way of security for borrowings for working capital and further secured by personal guarantee of promoters.

3. Employee Terminal Benefits:

Brief Description: A General description on the type of defined benefits Plans as follows."

a) Earned Leave Benefits (EL) Accrual -18 Days per year Accumulation can be done for one year only EL accumulated after one year will be encased while in service.

b) Sick Leave (SL) Accrual - 6 days per year, Accumulated can be done. SL accumulated can't be enchased.

c) Gratuity

15 days salary for every completed year of service, vesting period is 5 year and the payment is restricted to Rs.10,00,000/-

4. Segment Reporting:

The company operates solely in the steel segment as per ITC classification and hence Accounting Standard 17 is not applicable

5. Related party Disclosures:

The company has transactions with the following related parties / key management personnel and their relatives.

6. Sundry Debtors, Loans and Advances, Receivables and Payables.

Balances under Sundry Debtors, Loans and Advances and other receivables and payable for materials, Stores and Spares represent aggregate value of receivables and payables and subject to confirmation by respective parties.

7. In the opinion of the management Investment in Equity Shares (Unquoted) in associated / group companies are long term Investments, meant to be held permanently and any diminution in the latest available book value as compared to the cost of such sales is considered temporary by the management and hence not provided.

8. The company has not provided dividend on Preference Shares due to absence of profit during the year.

9. HYDEL POWER PROJECT:

WBSEB had accorded permission to the Co., for setting up a Captive Hydel Power Plant at Rammam Stage-Ill. In the year 2000 the Co., obtained DPR from WBSEB by paying Rs.47.88 lacs and in the year 2001 Central Electricity Authority granted consent in writing. But on August, 18, 2003 WBSEB sent a notice to the Company, withdrawing the permission of the project due to delay in implementation. However the Co., filed an appeal that in the absence of the Land Maps in respect of the project it was not possible for the Co., to proceed further. As such the Company also filed a writ petition with the Hon'ble Supreme Court, New Delhi against WBSEB and the same has been dismissed. Hence the Project Expenditure has been Written off in the books of accounts.

10. Previous year figures have been regrouped or rearranged wherever necessary to compare them with the current year figures.

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Mar 31, 2010

1. Contingent Liabilities:

(Rs. in lacs)

Sl. As at As at No Contingent Liabilities not provided for: 31.3.2010 31.3.2009 Rs. Rs.

A Demands raised by Excise and Sales tax Authorities and contested by the Company 544.22 1838.01

B Disputed Income Tax Liability nil 33.30

2. Secured Loans :

a) The Loans from IDBI and EXIM Bank of India are secured by First mortgage and charge on all immovable and movable assets, present and future of the company and subject to prior charge on specified movables-created/to be created in favor of bankers by way of security for borrowings for working capital and further secured by personal guarantee of promoters.

b) During the year , the company has fully settled the dues of IREDA and the waivers received by the company have been credited to Capital reserve.

3. Employee Terminal Benefits:

Brief Description: A General description on the type of defined benefits Plans as follows:

a) Earned Leave Benefits (EL) Accrual - 18 Days per year Accumulation can be done for one year only

EL accumulated after one year will be encased while in service.

b) Sick Leave (SL) Accrual - 6 days per year, Accumulated can be done. SL accumulated can't be enchased.

c) Gratuity

15 days salary for every completed year of service, zesting period is 5 year and the payment is restricted to Rs. 10,00,000/-

4. Segment Reporting:

The company operates solely in the steel segment as per ITC classification and hence Accounting Standard 17 is not applicable

5. Related party Disclosures:

The company has transactions with the following related parties/key management personnel and their relatives,

A) Key Management Personnel:

Name Designation

a) Smt G. Saraswathi Chairman

b) Sri G. Eswara rao vice chairman and Managing Director

c) Shri N.K. Das Executive Director

B) Relatives of Key Management Personnel:

C) Transactions during the period with Related Parties/Key Management Personnel are as under:

Sl.No. Name of the Party Relationship Nature of Transaction

1 Sarita steel and Related Party Sales Industries ltd Purchases

SI.No Amount Closing Balance (Rs. In lacs) (Rs. In lacs) 1 239.89 1286.71

NIL

D) Particulars of Related Parties:

Name of Related Party Nature of Relationship

A. Sri Vasavi Holdings & Investments Ltd Significant share holding

B. Sarita Synthetics & Industries Ltd Chairperson and Vice Chairman are also directors

C. Sarita Steel & Industries Ltd., Chairperson and Vice Chairman are also directors

6. In the opinion of the management Investment in Equity Shares (Unquoted) in associated/group companies are long term Investments, meant to be held permanently and any diminution in the latest available book value as compared to the cost of such sales is considered temporary by the management and hence not provided.

7. The company has not provided dividend on Preference Shares due to absence of profit during the year,

8. HYDEL POWER PROJECT:

WBSEB had accorded permission to the Co., for setting up a Captive Hydel Power Plant at Rammam Stage-III. In the year 2000 the Co., obtained DPR from WBSEB by paying Rs.47.88 lacs and in the year 2001 Central Electricity Authority granted consent in writing. But on August,18, 2003 WBSEB sent a notice to the Company withdrawing the permission of the project due to delay in implementation. However the Co., filed an appeal that in the absence of the Land Maps in respect of the project it was not possible for the Co., to proceed further. As such the Company also filed a writ petition with the Hon'ble High Court, Kolkata praying for direction to WBSEB to provide the Land Acquisition Map being an integral part of the DPR and also to renew the permission. The matter is now pending before Hon'ble Supreme Court,New Delhi.

9. Previous year figures have been regrouped or rearranged wherever necessary to compare them with the current year figures.