a) Consequent to total erosion of net-worth.thecompany was referred to
the Board for Industrial and Financial Reconstruction (BIFR), but the
application was rejected.Subsequently, the Directors approached the
Banks/Financial Institutions for One Time Settlement (OTS). The
Directors had already negotiated and settled the dues to State Bank of
India and the State Bank of Hyderabad under one time settlement Scheme
and released the properties of the Company attached by these Banks. As
the Company stopped the business operations only temporarily due to the
above financial problems the accounts have been prepared on the basis
of principles applicable to a going concern.
b) Cost Conventions:
The Accounts have been prepared under Historical Cost Convention.
c) Revenue Recognition:
All Income and expenditure are accounted on accrual basis except in
respect of interest on loans originally obtained from ICICI Bank Ltd
which had assigned the said loan in favour of Standard Chartered Bank,
which in turn has again assigned the loan in favour of Sri Venkatasesha
Reddy. K. In respect of the interest on the said loan, no provision has
been made in the accounts for and from the Financial Year 2002-03 since
Company became sick. Regarding Non Provision of interest and effect of
the same on the Profit / Loss of the Company, refer in Note No: 11
d) Fixed Assets:
Fixed Assets a re stated at cost less depreciation.
Depreciation on Fixed Assets of the company has been provided on
written down value method as per the rates prescribed under schedule
XIV to the Companies Act, 1956 in order to cover natural wear a nd tea
r to the assets of the Company due to sea water.