1. Contingent Liabilities not provided for :
 
 - Income Tax matters under dispute Rs. 2,33,45,525/-
 
 (Previous year Rs. 1,87,94,274/-)
 
 2. i) The company has been issued Certificate of Registration on
 16.04.99 as per Section 45 IA of the Reserve Bank of India Act, 1934.
 The Reserve Bank of India by the letter dated 14.12.1999 has
 reclassified the Company as a Loan Company and the Company is not
 eligible to raise public deposit for the present.
 
 ii) The Credit rating given to the Company by ICRA is MB on
 05.07.2000 which is an inadequate safety grading for accepting deposits
 as specified by Reserve Bank of India in its Notification No.
 DFC118/DG(SPT)-98 dated January 31, 1998.  In pursuance of the above
 said directions the company is required to return the excess deposits
 aggregating to Rs. 832.58 lakhs held in excess of the limits prescribed
 by the Reserve Bank of India before 31st December, 2000.
 
 3. Secured Loans :
 
 a) The Rupee Term Loans from Financial Institutions together with
 interest etc. thereon are secured by the first charge on the assets
 procured out of the said term loans and further secured by the personal
 guarantee of Dr.N.P.V.Raju, Chairman and Managing Director.
 
 b) Cash Credit from Banks are secured by hypothecation of stock-in-hire
 and equipment on lease and are further secured by the personal
 guarantees of Dr N.P.V.S.Raju, Chairman & Managing Director and
 Mr.N.Ravindra Varma, Director of the Company.
 
 4. The outstanding balances relating to Hire Purchase Debtors, Lease
 Debtors and other receivables are subject to confirmation and
 reconciliation.
 
 5. The company's investment in unencumbered approved securities as on
 30.6.2000 as a percentage of public deposits held on 31.12 1999 is not
 within the limits prescribed by the Non-Banking Financial Companies
 (Reserve Bank) Directions, 1998.
 
 6. a) The Company has made provision for substandard, doubtful and loss
 assets in accordance with prudential norms prescribed by Reserve Bank
 of India and provisioning and derecognition of income has been made
 accordingly.
 
 b) The company has in addition to making provision for substandard,
 doubtful and loss assets has made a review of all receivables and based
 on Management assessment made an additional provision for a possible
 short recovery.  The company is of the view that any further provision
 required will be considered at the appropriate time.
 
 7. Pursuant to a special resolution passed in the Annual General
 Meeting held on 39.12.1999 amending the objects clause of the
 Memorandum of Association enabling the company to carry on the business
 of software development services and other connected activities the
 company has setup a software division during the year.
 
 8. The company does not have any dues towards Small Scale Industrial
 Units as required to be disclosed in Schedule VI vide amendment to
 Companies Act, 1956.
 
 9. Leased Assets include Rs. 57,43,844/- which have been assigned at
 book valued on which income has been recognised during the previous
 year by discounting future receivables on the said assets.
 
 As per the terms of the agreement of assignment, in case of foreclosure
 of the lease by the lessee, the company is liable to pay to the
 assignee the difference between the rate of discounting and the
 pre-closure rate.  The contingent liability arising therefrom is not
 ascertainable.
 
 10. The Income Tax Department has raised certain tax demands which are
 disputed by the Company.  The appeals filed by the Company/Department
 are at various stages of disposal.  The Company has meanwhile, paid a
 sum (including amounts paid under protest) aggregating to Rs.
 2,34,68,831/- (previous year Rs. 2,34,68,831/-) towards advance tax, in
 addition to Rs. 2,27,33,733/- (Previous year Rs. 2,51,72,869/-) tax
 deducted at source.  Pending final outcome of the disputed issues
 before the Appellate Authorities, no provision for taxation has been
 made.
 
 11. Based on valuations made by approved valuers, certain Fixed Assets
 Viz., Land and Buildings, have been revalued as at 31.03.98.  The
 resultant increase in the value aggregating to Rs. 1,94,60,438/- has
 been added to gross block of Fixed Assets and credited to Revaluation
 Reserve.  The additional depreciation of Rs. 88,913/- during the year
 (Previous year Rs. 1,33,655/-) on the value written up on revaluation
 has been debited to Revaluation Reserve.
 
 12. Earnings & outgo in foreign currency :
 
 Earnings : Rs. NIL
 
 Outgo : Rs. 1,55,445/-
 
 13. The statement on Significant Accounting Policies forms integral
 part of Financial Statements.
 
 14. Paise have been rounded off to the nearest rupee.
 
 15. Previous year's figures have been regrouped/recast/rearranged
 wherever necessary, to conform to current year's classification.