1. The Company is entitled to claim benefit of Modvat for its purchase of excisable goods against goods
manufactured and dispatched under excise duty rules and regulation.  However no effect of credit balance
 under Modvat remaining unutilised has been taken in the books of accounts as the same is refundable under
excise laws since it can be
 utilised for dispatch of finished goods.  Consequently excise duty on
 finished goods not cleared is neither provided for nor the same is
 considered for valuation of closing stock.  This has no impact on the
 loss for the year.  The accounting policy so followed is not in accordance with the recommendation made by
the Institute of Chartered
 Accountants of India.
 
 2. The terms loan from ICICI Ltd. is securitised against first mortgage and charge on all the company's
immovable and movable assets. The terms loan from State Bank of India securities as primary charge on
hypothecation of stocks and receivables and second charge on the immovable and movable assets.
 
 3. The interest free sales tax deferred liability loan is secured by way of a charge and equitable mortgage
on the company's immovable and movable assets.
 
 4. Deposits include Rs. 19,08,812/- (P. Y. Rs. 64,08,812/-) given to
 firms in which the directors are interested as partners.  Maximum amount outstanding during the year Rs.
64,08,812/- (P.Y. Rs. 64,08,812/-)
 
 5. Sundry Debtors include Rs. 4,83,1871- (P.Y. 30,48,838/-) due from a firm in which the directors are
interested as partners.  Maximum amount outstanding during the year is Rs. 30,48,838/- P.Y. 64,08,812/-)
 
 6. Pursuant to an agreement of royalty payable dated 24th December 1994 approved by the Board of Directors,
a firm in which the directors are interested was entitled to claim royalty not exceeding 2 % of net
ex-factory sales carried out, excluding sales carried out to firms in
 which the directors are interested.  The company received a claim of
 royalty aggregating to Rs. 42,73,195/- during the year and a provision
 of royalty for the amount has been made during the year.  The royalty
 amount includes payment due for prior years Rs. 38,10,341/-.