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
 below.
 
 d) Fixed Assets:
 
 Fixed Assets a re stated at cost less depreciation.
 
 e) 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.