1.  In the opinion of Board of Directors Current Assets, Loans and
 Advances have value on realization in ordinary course of business, at
 least, equal to the amount at which they have been stated in the
 Balance Sheet and no personal expenses have been debited to the Profit
 & Loss Account, except contractual obligations or in accordance with
 the generally accepted business practices.
 
 2.  The Company followed exclusive Cenvat and VAT method of accounting
 for purchases as in previous year and compliance under Section 145 A of
 Income Tax 1961 has been made, with adjustment of Cenvat, without VAT.
 
 i. The opening and closing inventories of raw materials, consumables,
 stores and spares have been shown at cost adjusted with Cenvat without
 VAT.
 
 ii. Purchases of raw materials, consumables. Stores & Spares and goods
 returned, packing and Paint & Polishing have been adjusted by Cenvat
 availed with an amount of 6376638/- and to this effect excise duty
 account is credited. There is no effect on the profitability of the
 company.
 
 iii. Sales have been stated inclusive of excise duty and not with VAT
 as per policy previously followed.
 
 iv. The closing inventories of finished goods have been valued at cost
 of production by applying CAS- 4 as certified by Cost accountants,
 further adjusted to the levy of excise duty by corresponding adjustment
 entries, debiting excise duty and crediting excise duty payable by
 amount of Rs.443770/- However, there is no consequential effect on
 profitability of the company.
 
 3.  Provision for gratuity has been made for Rs. 125727/- for employees
 and Rs. 17308/- for directors as per provisions of Gratuity Act. An
 amount of Rs.502338/- has been paid as gratuity or due to employees
 during the year, who left the services, which have been accounted for
 in gratuity payable account.
 
 4. Contingent liabilities are on account of old Bonds excecutited in
 favor of The President of India, amounting Rs. 4.86 Lakhs on account of
 raw materials import for scrap consumption, on account of pending cases
 of excise duty for Rs. 0.14 Lakhs and on account of inspection of
 Enforcement staff of PSEB for which adhoc amount of Rs. 412965/- has
 been deposited and proceeding are pending before Hable High Court of
 Punjab & Haryana. for which PSEB has raised demand for 838070.00 and
 against the same , no provision has been made in accounts, on account
 of interest on statutory personnel dues late deposited not yet
 ascertained, on a/c of advances for capital goods for which amount of
 contract not ascertained and on account of sales Tax matters the amount
 yet not stands ascertained, on account of demand of Rs
 10766182/-..raised by Custom and Excise Commissioner, Chandigarh,
 against which appeal is pending before Central Excise & Service Tax
 appellant Tribunal. New Delhi and demand has been stayed by the CESTAT,
 for which no payment has been made.
 
 5.  In response to the confirmation letters sent to parties under the
 head Sundry Debtors. Sundry Creditors and Advances, some of the
 parties did not sent their reply. So, balances appearing in these
 accounts are pending confirmation for auditors.
 
 6.  Mr. Ashok Sareen and Mr. Balraj Seth are not whole time directors
 and they have been paid Rs.  60000/- and 96000/- respectively for
 rendering consultancy services. This carries the approval of the Board.
 
 7.  250000 equity shares of Rs. 10/- amounting Rs. 25.00 lakhs had been
 issued to Industrial Finance Corporation of India, under their Direct
 Subscription Scheme, that originally financed the project, out of the
 total paid up capital.
 
 8.  Depreciation has been charged during the year on single shift
 basis, as per policy previously followed.
 
 9.  Under the Incentive Code, 1989 a Capital Subsidy Claim of R. 30.00
 Lakhs has been already received.
 
 10.  During the year, the company has raised loan against property from
 PNB. Civil Lines Jalandhar against title deed no.9223 dt.20.1.92, 9225
 dt.20.1.92 and 10415 dt.27.2.95 bearing khasra No.
 94/24/3,25//1,25//2. LAP is also secured against personal guarantee by
 directors namely S/sh. Rajinder Kapoor. Manoj Kapoor, Balram Kapoor,
 Jatinder Kapoor. Prem Chand Kapoor and Smt. Nirmla Kapoor. The relevant
 charge has been registered with Ministry of Companies Affairs vide
 Charge Identification No. 10030925 dt. 16.1.2007.
 
 11.  The provisions for doubtful debits have not been ascertained
 during the year as the management is hopeful for the recoveries, as
 such no provision made thereof.
 
 12.  Stock invests of Rs. 126500/- which were lost in past year by an
 authorized collection center, could not be recovered in this year.
 Against this, party paid up shares have been issued. No adjustment has
 been made in the year due to pending legal action of forfeiture of such
 unpaid shares.
 
 13.  The machinery sold during the financial year 2004-05 has already
 reduced the installed capacity of the company to one half and the
 figures of installed capacity have been amended during this year.
 
 14.  The old stock of steel castings and MP. Parts have been valued at
 old rates and no provision for obsolete stocks in this respect, have
 been made in accounts, as the management is expecting customer for
 same.
 
 15.  Previous year exp/income on account of rebate and discount
 recorded in the accounts during the year.  16.  Title deeds of land of
 the company are still in possession of IFCI and have not been released
 despite follow tips, though the company has paid the full loan
 liabilities pertaining to IFCI.  17.  Borrowing Cost: the company has
 incurred borrowing cost as bank interest for Rs. 140198/-. Interest
 expenses comprises of bank interest for Rs.  140198/- and Rs. 42341/-
 as interest on excise duty obligations.