1.1 Non-Convertible Debentures from KSFC referred above is secured by
 way of hypothecation of Stock of Current Assets, Semi-Finished,
 Finished Goods and Book Debts, Machinery & Equipment, both present and
 future and also guaranteed by the Directors personally.
 
 1.2 Loan from Central Bank of India consists of the following long
 pending liabilities:
 
 - Foreign Bills Purchased 43,34,400
 
 - Packing Credit 16,00,000
 
 (The above loans are secured by way of hypothecation of multimedia
 titles and movable property, stock-in-trade and foreign bill to the
 extent of Rs. 45 Lakhs and secured by the Directors personally).
 
 1.3 The Long term borrowing balances are subject to confirmation.
 
 1.4 No provision has been made till date in respect of interest on the
 loan balance claimed by Central Bank of India as the same has been
 contested by the Company, which is pending for settlement.
 
 1.5 The Company has made provision for interest in respect of
 non-convertible debentures issued in favour of Karnataka State
 Financial Corporation as per the sanction terms. The Corporation has
 filed a suit against the Company for recovery of the debenture
 redemption amount along with interest, which the Company has contested.
 
 2 Contingent Liability on account of Current Year Previous Year
  
                                 (Rs. in Lakhs)     (Rs. in Lakhs)
 
 Interest claimed by 
 Central Bank of India              28.27               28.27
 
 not acknowledged as debt 
 by the Company
 
 Amount claimed by Tata
 Finance Limited                     7.10               7.10
 
 not acknowledged as 
 debt by the Company
 
 Amount claimed by Income 
 Tax Department                      3.93               3.93
 
 towards Income Tax and 
 Interest U/s 201(1A)
 and 220(2)
 
 3.  Balances under unsecured loans, other liabilities, in deposit
 account with banks, margin money held on FBP with Central Bank of India
 and other loans and advances are subject to confirmation wherever
 applicable.
 
 4.  No provision has been made till date in respect of the claim made
 by Tata Finance Limited as the arbitration award has been challenged by
 the Company before the City Civil Judge, Bangalore.
 
 5.  No provision has been made in respect of claim made by the Income
 Tax Department towards Income Tax and Interest U/s 201(1A) and 220(2).
 
 6.  There are no Micro and Small enterprises, to whom the Company owes
 dues, which are outstanding for more than 45 days as at 31st March
 2012. This information is required to be disclosed under the Micro,
 Small and Medium Enterprises Development Act, 2006. Has been determined
 to the extent such parties have been identified on the basis of
 information available with the Company.
 
 7.  Managerial Remuneration: Paid/or payable during the year in
 respect of Directors of the Company is Rs. NIL (Previous Year: Rs. NIL)
 
 8.  Earnings / Expenditure In Foreign Currency during the year is Rs.
 NIL (Previous Year: Rs. NIL).
 
 10.  Related Party Transactions: Name of the related party - Kirloskar
 Multimedia, Inc., - No transactions during the year.
 
 11.  No provision has been made for taxes on income as the Company has
 incured losses during the year and Deferred Tax Asset is not created in
 the absence of certainty of sufficient future income against which
 Deffered Tax Asset can be realized.
 
 12.  The Petition for reduction of share capital is pending before the
 Honorable High Court of Karnataka.