1. Due to the losses suffered by the Company in the earlier year which
 exceeded the Paid-up Capital and Reserves, the Company became a sick
 company within the meaning of Section 3(1)(o) of the Sick Industrial
 Companies (Special Provisions) Act of 1985-(SICA).  Thereafter the
 Board of Directors filed a 'Reference' under Section 15(1) of the said
 Act with the Board for Industrial and Financial Reconstruction (BIFR).
 The BIFR vide, its Order dated : 16-03-99 declared the company as a
 sick company as per the provisions of Section 16(1) of the said Act
 
 1.1 The BIFR, in its Order, as referred to earlier, have appointed
 Industrial Development Bank of India (IDBI) as the Operating Agency
 and have directed them to prepare and submit the Rehabilitation
 Proposal.  The IDBI is in the process of preparing the proposal.
 
 2. The Company carried on its manufacturing activities till 19th July
 1998 and thereafter declared Closure due to its inability to continue
 with the manufacturing activities on account of financial constraints
 and other related factors.
 
 2.1 Some of the Lenders and Creditors of the company have filed Winding
 up petitions and/or suits for recovery of their dues in various courts.
 The said winding-up petitions/suits are stayed/kept pending in view of
 the provisions of Section 22 of the Sick Industrial Companies (Special
 Provisions) Act of 1985.
 
 3. Despite the aforesaid circumstances these accounts for the year
 ended 31st March 1999 have been prepared on a Going Concern basis for
 the following reasons :
 
 (1) The management barring unforseen circumstances wishes to restart
 the manufacturing activities and implement the expansion project and is
 exploring the various possibilities in that direction,
 
 (2) IDBI as the Operating Agency is in the process of preparing the
 Rehabilitation Proposal.
 
 4. I The Company has contingent liabilities 
 not provided for in respect of :                          Previous Year
                                                               (Rs.)
 a. Sales Bills discounted and remaining unpaid
 ason the date of balancesheet                                  3,35,664
 Rs.Nil (Since realised Rs.Nil)
 
 b. Guarantees and Letter of Credits given by
 Bank on behalf of the Company Rs.2,46,214/-                         Nil
 
 c. Thedemand for WaterCharges of Rs.5,46,214/-
 in respect of Ankleshwar Unit which has been
 disputed and not admitted by the Company,against
 which an amount of Rs.3,00,000/- has been
 deposited with GIDC and Bank Guarantee has been
 furnished for Rs.2,46,214/- pursuant to the interim
 order of High Court of Gujarat.                                5,46,214
 
 II. Estimated amount of capital contracts
 (net of advances) not provided for Rs.NIL/-                    2,16,400
 
 III. Provision has not been made for :
 
 a. Excise Duty of Rs.9,07,153 for alleged wrong
 ful availment of Modvat on Import of Gum Rosin
 and other Capital Goods, which is disputed by the
 Company in appeal before Central Excise Tribunal.              9,07,153
 
 b. Land Revenue Cess of Rs.4,91,405/- as the same is
 disputed in Appeal before Revenue Authorities.                 4,91,405
 
 c. Customs duty of Rs.1,45,072/- in respect of
 imported waste paper as Company's appeal is pending
 before the Central Excise Tribunal against the order
 of Assistant Collector of Customs, Porbander.                  1,45,072
 
 d. Doubtful Debts of Rs.6,85,043/-                            21,07,173
 
 e. Income Tax liability in respect of assessment
 year 1996-97 as the liability in resect of the same
 is disputed in Appeal before the Appellate Authorities      1,15,51,793
 
 5. The Company has paid Rs.12,75,000/- out of outstanding
 Rs.22,60,252/- as upto 31st March 1999 to Oil & Natural Gas Corporation
 Ltd; as monthly installment of principal amount of arrears towards rate
 difference and royalty for the period prior to January 1987, pursuant
 to the final order passed by the Supreme Court of India.  However, as
 reported earlier, on the basis of legal advice, no provision has been
 made for interest of Rs.2,11,83,755 on the principal amount of the
 arrears as claim by the Oil & Natural Gas Corporation Ltd; vide their
 letter dated, 8th August, 1990 or the amount of interest as
 subsequently claimed by them before the Supreme Court for which the
 Company has not been provided with any details or basis as the
 liability in respect of interest remains unascertained due to direction
 as to its payment having not been given by the Supreme Court.
 
 5.1 The Company has not provided for interest in respect of arrears of
 rate difference, royalty and transportation charges aggregating to
 Rs.45,60,004/- for the period from 30/01/87 to 22/11/89 as the same is
 disputed.
 
 6. Hon'ble Gujarat High Court has set aside the order passed by the
 State Government rejecting the Company's application for exemption to
 hold vacant land pursuant to the provision of Section 20 of Urban Land
 (Ceiling & Regulation) Act,1976 and has remanded the matter to the
 State Government with the direction of consider the application for
 exemption to hold vacant land afresh and to take final decision thereon
 in accordance with law.
 
 7. Capital work in progress under Expansion Project includes directly
 attributable expenditure incured for the assets at site, other direct
 costs in respect thereof and interest and other finance charges
 incurred for borrowing to acquire those assets.
 
 7.1. The Company has continued its past accounting policy to capitalise
 interest and other finance charges incurred for borrowings to acquire
 the said assets and accordingly Rs.1,30,36,869/- have been charged to
 capital work in progress.
 
 7.2 The company has during the year transferred certain advances
 aggregating to Rs.513607/- representing the amounts paid in the past in
 connection with the project work remaining unadjusted and certain other
 expenses incurred during the year in relation to the project work
 aggregating to Rs.2,38,750/- to Capital Work-in-progress.
 
 7.3 Pre-operative Expenses includes Right Issue expenses of
 Rs.20,75,696/- Previous Year Rs. 20,75,696/-
 
 7.4 Pre-operative Expenses shall be capitalised upon completion of
 the Expansion Project.
 
 8. 14%, 56,278 Non Convertible Debentures of Rs.100/- each are secured
 by second legal mortgage in English form inter-alia on all the
 Company's Plant and Machinery situated at Utran, Dist. Surat save and
 except machinery acquired under Equipment Refinance Scheme.
 
 8.1 The Debentures are redeemable at par in three instalments at the
 end of 6th, 7th and 8th year from the date of allotment i.e. 31st
 March, 1991.
 
 8.2 The Company has not made payment of the instalments of
 Rs.56,27,160/- falling due upto 31st March 1999 in respect of
 redemption of 14% Secured Non-Convertible Debentures.
 
 8.3 In view of the losses during the year, no amount has been
 transferred to Debenture Redemption Reserve Account.
 
 9. Certain payments to the Sundry Creditors aggregating to
 Rs.62,86,250/- during the year and the balances of Sundry Debtors,
 Sundry Creditors, Depositors and parties to whom loans and advances
 have been given and from whom received are subject to confirmations and
 in certain cases are subject to reconcilation and adjustments, if any.
 
 9.1 Confirmations of Balances in respect of Current/Temporary overdraft
 Accounts with some Banks, Fixed Deposits with Banks and Secured and
 Unsecured Loans, are not available for verifications by the Auditors
 
 9.2 No provision has been made for the interest, overdue interest &
 penal interest and Hire charges claimed by the Banks, Financial
 institutions and others, the amount which is estimated at Rs.
 29,39,322- as the company has not accepted its liability in that
 respect.
 
 9.3 Interest in respect of Working Capital Term Loans from UCO Bank has
 been provided upto 30th Setember 1998, as per intimations received from
 them.
 
 9.4 Balances in Accounts of the companies under the same management and
 also companies in which the Director's are interested are subject to
 reconciliations, if any.
 
 10. The company has still to comply :
 
 a) with the provisions of section 370 of the Companies Act of 1956, as
 regards the loan to a company under the same management Jayant
 Industrial Packaging Limited, given in the earlier year.
 
 b) with the provisions of section 372 of the Companies Act of 1956, as
 regards to the investment in the earlier year, in the shares of Jayant
 Industrial Packaging Limited.
 
 11. Loans and Advances Recoverable in cash and kind include loan of
 Rs.16,97,501/- (Previous Year Rs.16,77,501/-) given to Jayant Fibre
 Container Pvt. Ltd. a private company under the same management as that
 of the company in contravention of the provision of Section 295 of the
 Companies Act, 1956.
 
 12. The Company has not complied with the provisions of Section 58A of
 the Companies Act, 1956 with regard to Public Deposit accepted by it.
 
 13. The Company revalued its Buildings, Plant and Machinery excluding
 Plant and Machinery acquired during the year ended 31-3-1996 financial
 year, Electrical installation and laboratory equipments as on 31.03.97
 based on Revaluation Report from an approved valuer at its
 Depreciated Present Fair Market.Value as stated here under :
 
                                              Rupees
 
 (a) Building                            9,22,90,563
 
 (b) Plant & Machinery                   8,15,83,142
 
 (c) Electrical Installation               79,51,385
 
 (d) Laboratory Equipment                   1,93,028
 
                                        18,20,18,118
 
 The corresponding aggregate amount of Rs. 18,20,18,118/- had been
 transferred to Revaluation reserve as on that date.
 
 14. The amount representing the difference between the depreciation of
 the Depreciated Fair Market Value and the original cost of
 Rs.64,60,498/- (Previous Year Rs. 73,51,722) has been transferred from
 Revaluation Reserve Account to the Profit and Loss Account (Refer to
 Note No.9.3 Under 'A').
 
 15. Plant and Machinery includes Rs.25,03,950/- being the cost of the
 items purchased on the Hire-Purchase basis, the legal ownership of
 which shall be transfered in the name of the company upon the payment
 of the final instalment in terms of the Hire-Purchase Agreement.
 
 15.1 Adjustments as shown in the Schedule No.5 of the Fixed Assets
 represent interse rectifications.
 
 15.2 Depreciation has been provided for the Whole year ended 31-03-1999
 in respect of Assets used for production activities though however,
 production has been discontinued effective from 19-07-1998 to provide
 for wear and tear and depletion in value due to efflux of time.
 
 16. The proposal of the Board of Directors of not calling the uncalled
 amount of Rs.20/- per Share out of the total amount of Rs.40/- per
 share payable in respect of the Rights Equity Shares issued earlier, as
 approved by the Shareholders at the General Meeting held on 15th
 November 1997 is subject to approval of the Hon'ble High Court of
 Gujarat.
 
 When finally sanctioned by the Hon'ble High Court of Gujarat, the
 necessary adjustment shall be made by transferring the requisite amount
 of Share Premium received to Share Capital so as to make partly Paid up
 Shares as fully paid-up.
 
 17. The proposal of the Board of Directors to waive interest chargeable
 on the late payment of allotment money in respect of Right Shares
 issued during the earlier year is subject to the approval of Securities
 and Exchange Board of India (SEBI).
 
 18. The investment in the Equity Shares of unquoted companies may not
 have the same value at which they are stated, if realised in the
 ordinary course of business.  However, no provision is made for the
 dimunition in value as the amount thereof is not ascertained.
 
 19. The management has not been able to physically verify the Stores &
 Spares and Stock-in-Trade as on 31- 03-1999 in view of the closure of
 the factory after the discontinuation of manufacturing operations and
 labour unrest which followed thereafter.
 
 19.1 The inventories of Stores & Spares and Stock-in-Trade excluding
 Finished Goods as shown in Current Assets and Loans & Advances are on
 the basis of a Certificate issued by the Management.  The Quantity of
 inventories as stated in Certificate and the value thereof have been
 arrived after taking into consideration the book balances as on
 30-06-1998 and the receipts and issue thereafter till 19th July 1998,
 being the date on which the manufacturing operations were discontinued.
 The values of inventories as stated are their estimated values' as
 certified by the Management on the basis of available information with
 them.
 
 19.2 In case of Finished Goods, the Quantitative thereof have been
 taken on the basis of Central Excise records as available with the
 company as on 31-07-1998 and have been valued at their estimated net
 realisable value'.
 
 20. The Company has provided for the Salaries, Wages and other Benefit
 aggregating to Rs.1,02,89,950/- for the period from August 1998 to
 March 1999 on the basis of the available records in respect of the
 period prior to the closure of the factory though its liability in
 respect thereof is 'indeterminate'.
 
 21. Power and Fuel includes provision for Rs.20,89,200/- charged by
 Gujarat Electricity Board as Minimum Demand Charges and Rs.35,90,838/-
 charges by Gas Authorities of India Ltd. as transportation charges
 though the liability in respect of the same is not accepted by the
 company.
 
 22. Prior Years adjustments represents items of expenses being
 short/excess provided in the earlier years.