1.  Term loans from the financial institutions viz. International
 Finance Corporation, Deutsche Investitions-und Entwicklungsgesellschaft
 mbH, State Bank of India, Axis Bank Limited and ICICI Bank Limited are
 secured by a pari passu first charge on all movable and immovable
 properties of the Company situated at Rajahmundry, Serinarasannapalem
 and Kadiyam, in accordance with respective loan agreements and subject
 to charge under Note No. 2. Further, term loans from Axis Bank Limited
 have a second charge on current assets of the Company. As of December
 31, 2011, the Company is in the process of creating exclusive first
 charge on specific moveable fixed assets of the Company for the term
 loan of Rs 1,900 lakhs taken from BNP Paribas.
 
 2.  a.  Working capital facilities from State Bank of India and Canara
 Bank are secured by hypothecation of current assets along with a second
 charge on the fixed assets of the Company situated at Rajahmundry,
 Serinarasannapalem and Kadiyam.
 
 b.  Working capital facilities from BNP Paribas are secured by first
 pari passu charge on the inventory and receivables of the Company and
 Letter of Comfort from International Paper Company, USA.
 
 3.  1,499,330 equity shares of Rs 10 each of the Company held by M/s.
 Digvijay Investments Limited were pledged in favour of IDBI Trusteeship
 Services Limited for the benefit of International Finance Corporation
 and Deutsche Investitions-und Entwicklungsgesellschaft mbH as on March
 31, 2011. The pledge was released during the current year and no pledge
 was outstanding as on December 31, 2011.
 
 4.  Represents 14 years interest free sales tax deferment loan received
 from Government of Andhra Pradesh. Repayment commences from March 31,
 2013 based on the deferment availed in the respective year.
 
 5.  Terms of repayments are given below :
 
 a.  Loan taken from International Finance Corporation is repayable in
 half-yearly installments of Rs 1,239.23 lakhs each.
 
 b.  Loan taken from Deutsche Investitions-und Entwicklungsgesellschaft
 mbH is repayable in half-yearly installments of Rs 663.88 lakhs each.
 
 c.  Loan taken from State Bank of India is repayable in yearly
 installment of Rs 800 lakhs each.
 
 d.  Loan taken from Axis Bank is repayable in quarterly installments of
 Rs.866.67 lakhs each.
 
 e.  Loan taken from ICICI Bank are repayable in quarterly installments
 of Rs 411.35 lakhs and half yearly instalments of Rs 124.14 each.
 
 f.  Loan taken from BNP Paribas Bank is repayable in quarterly
 installments of Rs 118.75 lakhs each.
 
 6.  Public deposit aggregating to Rs.614.50 lakhs is repayable within 1
 year and Rs 221.50 lakhs is repayable within next 2 years. Unclaimed
 public deposit Rs 17.01 lakhs (March 31, 2011: Rs 23.60 lakhs) is included
 under the head ''Unpaid matured deposits and interest accrued thereon''.
 
 7.  Term loan from banks has a maturity tenor of 15 months, renewable
 automatically for successive periods of 15 months, subject to consent
 of both parties.
 
 Note:
 
 The Company has since the inception of Accounting Standard 22 on
 Accounting for Taxes on Income, recognized the deferred tax expense,
 which arises primarily from depreciation on tangible fixed assets on
 the basis of the currently applicable enacted Minimum Alternate Tax
 rate rather than the regular tax rates as specified by paragraph 21 of
 Accounting Standard 22. The Company has challenged the provisions of
 Accounting Standard 22, in so far as it relates to the above matter and
 has accordingly filed a writ petition in June 2003 before the Hon''ble
 High Court of Andhra Pradesh. The case has been subsequently
 transferred to the Hon''ble Calcutta High Court. The writ petition has
 been admitted and is currently pending resolution.
 
 The management is of the view that notwithstanding the writ petition
 and its ultimate outcome, the differential liability needs to be
 provided for in accordance with the provisions of AS 22 - Accounting
 for Taxes on Income and has accordingly quantified and recorded the
 deferred tax liability relating to earlier years up to March 31, 2011
 of Rs 8,046 lakhs. The cumulative amount of Rs 8,046 lakhs pertaining to
 the period up to March 31, 2011 has been debited to the profit and loss
 account for the period ended December 31, 2011 and has been disclosed
 separately.
 
 Notes:
 
 1.  Both the gratuity and the compensated absences plans of the Company
 are funded. As of March 31, 2011, the Company had an overfunded
 position for both its gratuity and compensated absence benefit plans
 and accordingly, no provision existed as at March 31, 2011.
 
 2.  The Board of Directors have not recommended dividend for the period
 ended December 31, 2011. However, the Board of Directors had
 recommended Rs.1 per share for the year ended March 31, 2011.
 
 Notes:
 
 1.  Represents goodwill arising on acquisition of Coastal Papers
 Limited and its subsequent amalgamation with the Company.  The amount
 has been written off in earlier years.
 
 2.  During the current period, foreign exchange fluctuation loss
 amounting to Rs 1,683.21 lakhs has been capitalized to the block of fixed
 assets pursuant to notification no G.S.R. 225 (E) dated March 31, 2009.
 The notification was valid upto March 31, 2011 and was subsequently
 extended upto March 31, 2012 based on notification no. G.S.R 378(E).
 During the previous period, sales/adjustments made to the block of
 fixed assets aggregated to Rs.92.33 lakhs representing foreign exchange
 fluctuation gain decapitalized.
 
 3.  Depreciation for the period includes Rs 134.78 lakhs (March 31, 2011:
 Rs 33.89 lakhs) towards depreciation effect on foreign exchange
 fluctuations upto the end of the period ended December 31, 2011.
 
 4.  Sale/adjustment to the block of fixed assets includes Rs.9,270.39
 lakhs (March 31, 2011: Rs 258.18 lakhs) towards fixed assets discarded.
 Accumulated depreciation on such asset discarded amounted to Rs.6,034.02
 lakhs (March 31, 2011: Rs 180.44 lakhs) as at December 31, 2011 and
 balance Rs 124.35 lakhs (March 31, 2011: Nil) has been shown under
 ''short-term loans and advances'' as assets held for sale.
 
 5.  Depreciation for the period includes depreciation amounting to
 Rs 4.07 lakhs (March 31, 2011: Rs 5.03 lakhs) on assets used for research
 and development. During the period, the Company incurred X7 lakhs
 (March 31, 2011: Rs 7.81 lakhs) towards capital expenditure for research
 and development.
 
 1.  Balance with scheduled banks include Rs 253.20 lakhs (March 31, 2011:
 Rs 182.20 lakhs) representng margin money for letters of credit and bank
 guaranees issued.
 
 2.  Section 205 of the Companies Act, 1956 mandates that companies
 transfer dividend that has been unclaimed for a period of seven years
 from unpaid dividend account to the Investor Education and Protection
 Fund (IEPF). Accordingly, if dividend is unclaimed for a period of
 seven years, it will be transferred to IEPF.
 
 Note:
 
 Includes amount of Rs 8,046 lakhs pertaining to differential deferred tax
 expense on account of accounting for deferred taxes based on enacted
 tax rate as compared to Minimum Alternate Tax rate as followed in
 earlier years.
 
 8.1 Commitments and contingent liabilities
 
                                           As at              As at 
                               December 31, 2011     March 31, 2011
 
 i.  Commitments/contingent 
     liabilities
 
 a.  Guarantees issued by 
     banks                                687.39             684.36
 
 b.  Letters of credit 
     outstanding                        1,629.08           1,014.83
 
 c.  Corporate guarantee 
     given to the Forest
     Department of
     Government of Andhra
     Pradesh                            1,472.09           1,472.09
 
 ii. Claims against the Company 
     not acknowledged as debts 
     in respect of
 
 a.  Income tax matters, pending 
     decisions on various appeals
     made by the Company and by 
     the Department                        52.51             138.82
 
 b.  Excise matters, under dispute      1,510.99           1,647.02
 
 c.  Sales tax matters, under 
     dispute                              306.28             365.33
 
 d.  Other matters, under dispute         334.12             297.25
 
 e.  Vacant land tax                      357.39             228.31
 
 f.  Demand raised by Eastern 
     Power Distribution Corporation of
     Andhra Pradesh Limited for
     surplus power supplied by APGPCL
     disputed by the Company. An 
     amount of Rs76.98 lakhs paid
     under protest (March 31, 2011:
     Rs76.98 lakhs) has been grouped
     under loans and advances. 
     The appeal filed by APTRANSCO is
     pending before the Hon''ble 
     High Court of Andhra Pradesh in
     which other companies similarly 
     placed are made respondents.         87.66              87.66
 
 iii.Estimated amount of contracts 
     remaining to be executed on
     capital account and not
     provided for (net of advances)    1,043.89           2,136.94
 
 iv. Commitment under Export 
     Promotion Capital Goods
    (EPCG) Scheme                     51,360.62           57,613.38
 
 
 8.2 Related party disclosures
 
 a.  Related parties where control exists or where significant influence
 exists and with whom transactions taken place during the year:
 
 Ultimate holding company
 
 International Paper Company, USA
 
 Holding company
 
 IP Holding Asia Singapore PTE. Limited, Singapore
 
 Enterprises where principal shareholders have control
 
 Samay Books Limited (Up to October 14, 2011) Enterprises where
 principal shareholders have significant influence (Up to October 14,
 2011) i.  Digvijay Investments Limited ii.  Amalgamated Development
 Limited iii.  Apurva Export Private Limited iv.  MB Commercial Company
 Limited v.  Maharaja Shree Umaid Mills Limited
 
 vi.  Mugneeram Ramcoowar Bangur Charitable & Religious Company vii.
 Placid Limited viii. Shree Krishna Agency Limited ix.  The General
 Investment Company Limited x.  The Kishore Trading Company Limited xi.
 The Peria Karamalai Tea & Produce Company Limited xii.  The Swadeshi
 Commercial Company Limited
 
 Key Management Personnel represented on the Board
 
 Mr. Paul Brown (from October 15, 2011) Chairman and CEO
 
 Mr. L.N. Bangur (upto October 14, 2011) Executive Chairman
 
 Mr. M.K. Tara (upto October 14, 2011) Managing Director & CEO
 
 Ms. Sheetal Bangur (upto October 14, 2011) Director (Commercial)
 
 Mr. Shreeyash Bangur (upto October 14, 2011) Director (Corporate)
 
 Mr. P.K. Suri Director (Operations)
 
 Non-Executive/Independent Directors on the Board
 
 Mrs. Alka Bangur (upto May 17, 2011)
 
 Mr. N. Srinivasan (upto December 6, 2011)
 
 Mr. R.C. Sarin (upto August 8, 2011)
 
 Mr. P.J.V. Sarma (upto December 6, 2011)
 
 Mr. P.K. Paul (upto December 6, 2011)
 
 Mr. Rajiv Kapasi (upto December 6, 2011)
 
 Mr. P.R. Ramakrishnan (upto December 6, 2011)
 
 Mr. Thomas G. Kadien (from October 14, 2011)
 
 Mr. Brett A. Mosley (from October 14, 2011)
 
 Mr. Shreeyash Bangur (from October 14, 2011)
 
 Mr. M. S. Ramachandran (from December 6, 2011)
 
 Mrs. Ranjana Kumar (from December 6, 2011)
 
 Mr. M.K. Sharma (from December 6, 2011)
 
 Mr. M. Adhiraj Sarin (from December 6, 2011)
 
 Mr. Milind Sarwate (from December 6, 2011)
 
 8.3 Superannuation
 
 The Company contributed Rs 54.35 lakhs (March 31, 2011: Rs 94.79 lakhs) to
 the superannuation fund maintained with Life Insurance Corporation of
 India during the period ended December 31, 2011.
 
 8.4 Provident fund
 
 The Company contributed Rs 277.81 lakhs (March 31, 2011: Rs 310.16 lakhs)
 to the Provident Fund trust maintained by the Company and  Rs 92.09 lakhs
 (March 31, 2011: Rs 104.76 lakhs) to Regional Provident Fund Commissioner
 during the period ended December 31, 2011.
 
 The Guidance on Implementing AS 15, Employee Benefits (revised 2005)
 issued by Accounting Standards Board (ASB) states that benefits
 involving employer established provident funds, which require interest
 shortfalls to be recompensed by the Company. Accordingly, the Company
 has provided Rs 28.40 lakhs (March 31, 2011: Rs.Nil) as shortfall to the
 provident fund trust.
 
 8.5 Employee benefit plans
 
 The following table sets out the status of the gratuity plan as
 required under AS-15 (Revised):
 
 Discount rate: The discount rate is based on the prevailing market
 yields of Indian government securities as at the balance sheet date for
 the estimated term of the obligations.
 
 Expected rate of return on plan assets: This is based on the
 expectation of the average long term rate of return expected on
 investments of the fund during the estimated term of the obligations.
 
 Salary escalation rate: The estimates of future salary increases
 considered takes into account the inflation, seniority, promotion and
 other relevant factors.
 
 8.6 Segment information
 
 The Company is in the business of manufacture and sale of pulp, paper
 and paper board. Considering the core activities of the Company,
 management is of the view that manufacture and sale of pulp, paper and
 paper boards is a single reportable business segment and hence
 information relating to primary segment is not required to be
 disclosed.
 
 8.7 Clean Development Mechanism (CDM) Emission Reductions
 
 On account of energy efficiency measures undertaken by the Company
 during the period from June 2000 to December 2006, UNFCCC (in
 accordance with the regulations of United Nations body on environment)
 has approved the project and accorded Certified Emission Reduction
 (CERs) points to the Company, which have been sold during the previous
 period. Income from such sales has been credited to the profit and loss
 account and has been disclosed under other income.
 
 8.8 Leases
 
 The Company is obligated under non-cancellable operating lease
 agreements. Total rental expense under non-cancellable operating leases
 for the current period is Rs 23.50 lakhs (March 31, 2011: Rs 31.33 lakhs).
 The total rental expense under cancellable operating leases for the
 current period amounts to Rs 146.83 lakhs (March 31, 2011: Rs.161.31
 lakhs). The future minimum lease payments under non-cancellable
 operating leases are as follows:
 
 8.9 The Promoters of the Company, LN Bangur Group informed the Company
 on March 29, 2011 that they had entered into an agreement to sell their
 entire shareholding of 21,260,008 equity shares of Rs.10 each held by
 them in the Company to IP Holding Asia Singapore PTE. Limited
 (Acquirer), a subsidiary of International Paper Company, USA. The
 Acquirer is an unlisted company incorporated under the Laws of
 Singapore. International Paper Company, USA is a global paper and
 packaging company and is listed on the New York Stock Exchange.
 
 Lazard India Private Limited, Manager to the Open Offer appointed by
 the Acquirer had given a certificate dated October 11, 2011 to the
 Company confirming that the Acquirer along with International Paper
 Company complied with all applicable provisions of Securities and
 Exchange Board of India (Substantial Acquisition of Shares and
 Takeovers) Regulations and completed their obligations in relation to
 the Open Offer made in accordance with the Interim Order dated August
 11, 2011 to Securities Appellate Tribunal. They have also confirmed
 that despatch of payment consideration to the shareholders whose equity
 shares have been accepted in the Open Offer was completed by October 8,
 2011. The Board approved transfer of 35,762 equity shares of Rs.10 each
 in physical form to the Acquirer and noted the acquisition of 8,531,759
 equity shares in electronic form from public shareholders by the
 Acquirer.
 
 Pursuant to such Open Offer and above mentioned share sale agreement,
 29,827,529 shares of the Company were acquired by the Acquirer on
 October 14, 2011 being the effective date of the change in the
 ownership. Pursuant to such acquisition, the Acquirer became the
 holding company of the Company, with International Paper Company being
 the ultimate holding company.
 
 8.10 During the period, the Company carried out an internal technical
 assessment based on its global standards and methodologies whereby
 assets with a net book value of Rs 3,112.02 lakhs have been identified as
 unsuitable for future use and accordingly was debited to the profit and
 loss account.
 
 8.11 Addition to fixed assets include an amount of Rs 227.91 lakhs (March
 31, 2011: Rs 222.69 lakhs) on account of capitalisation of interest cost
 as stipulated under Accounting Standard -16 (Borrowing cost).
 
 8.12 During the period ended December 31, 2011, the Company has accrued
 for managerial remuneration in excess of the maximum limits specified
 in Schedule XIII to the Companies Act, 1956 to the extent of Rs.194.64
 lakhs. The Company proposes to apply to the Central Government for
 necessary approval.
 
 8.13 The Company in its Board meeting held on December 6, 2011 approved
 the change of financial year from March 31 to December 31, every year.
 Pursuant to such change, the Company has closed its accounts for the
 nine months period ended December 31, 2011.
 
 8.14 Comparative figures
 
 The current period figures are for nine months period and hence not
 comparable to the previous period figures for the year ended March 31,
 2011.