( Rs. in million)
 1.  Contingent Liabilities not provided for, 
 in respect of:                                 As at         As at
                                              31/12/2010    31/12/2009
 
 (a) Counter Guarantees given to banks          103.12         84.76
 
 (b) Corporate Guarantees given to banks 
 on behalf of a Subsidiary Company [USD 
 10 million (As at 31/12/2009, USD 12.80 
 million)] [Amount outstanding USD 5 
 million, Rs. 223.55 million (As at 
 1/12/2009, USD 10.30 million, Rs. 479.36
 million)]                                      447.10        595.84
 
 (c) Income Tax, Fringe Benefit Tax, 
 Sales Tax, Central Excise and
 Service Tax demands:
 
 (i) in respect of matters which are 
 contested by the Company                        62.66         80.23 
 
 (ii) in respect of matters decided in 
 Companys favour where the department 
 is in further appeal                           342.60        347.75
 
 (d) Cases filed against the Company in 
 respect of Labour Laws                           2.43          1.60
 
 (e) Bills Discounted                           595.12        220.44
 
 2.  Security for Loans:
 
 (a) ECB Loan of Rs. 86.30 million (USD 2 million) [As at 31/12/2009,
 Rs. 172.63 million (USD 4 million)] from ICICI Bank Limited, Singapore,
 is secured by way of pari-passu first charge on movable properties
 (save and except stocks and book debts), both present and future, of
 the Company.
 
 (b) ECB Loan of Rs. 163.70 million (USD 3.33 million) [As at
 31/12/2009, Rs. 245.80 million (USD 5 million)] from The Hong Kong and
 Shanghai Banking Corporation Limited, Hong Kong, ECB Loan of Rs. 342.71
 million (USD 7.33 million) [As at 31/12/2009, Rs. 432.00 million (USD 9
 million)] from Standard Chartered Bank, United Kingdom, ECB Loan of Rs.
 268.26 million (USD 6 million) [(As at 31/12/2009, Rs. 279.30 million
 (USD 6 million)] from DBS Bank Limited, Singapore, and ECB Loan of Rs.
 894.20 million (USD 20 million) (As at 31/12/2009, Nil) from Australia
 and New Zealand Banking Group Limited, Singapore, are secured or to be
 secured by way of first pari-passu charge on immovable and movable
 properties (save and except stocks and book debts), both present and
 future, of the Company.
 
 (c) Working capital loans [including Foreign Currency Loan of Rs.
 201.20 million (USD 4.50 million) (As at 31/12/2009, Nil)] are secured
 by way of first pari-passu charge on all the stocks and book debts,
 both present and future, and are further secured by way of second
 charge on the immovable properties, both present and future, of the
 Company.
 
 3.  Fixed Assets where ownership is not with the Company:
 
 (a) Plant and Machinery includes HT line installation having net block
 of Rs. 23.60 million (As at 31/12/2009, Rs. 17.15 million), the
 ownership of which rests with the Electricity Company / Board.
 
 (b) Plant and Machinery includes contribution for Common Effluent
 Treatment Plant having net block of Rs. 1.29 million (As at 31/12/2009,
 Rs. 2.12 million), the ownership of which rests with a third party.
 
 4.  (a) Sundry Creditors include principal amount of Rs. 13.27 million
 (As at 31/12/2009, Rs. 15.52 million) and Nil interest due thereon to
 the suppliers covered under Micro, Small and Medium Enterprises
 Development Act, 2006.
 
 (b) No interest was paid during the current year as well as during the
 previous year by the Company to such suppliers.
 
 (c) No interest is due and payable for the period of delay in making
 payment, if any, at the end of the current year as well as previous
 year by the Company to such suppliers.
 
 (d) No interest was accrued and remains unpaid at the end of the
 current year as well as previous year by the Company to such suppliers.
 
 The above information has been determined to the extent such suppliers
 have been identified on the basis of information available with the
 Company.
 
 5.  (a) Sales (Export) is net of exchange rate fluctuation loss of Rs.
 57.37 million (Previous year, Rs. 117.88 million).
 
 (b) Materials Consumed includes exchange rate fluctuation gain on
 imported materials of Rs. 1.64 million (Previous year, loss of Rs.
 17.16 million).
 
 6.  In compliance with the Announcement dated March 29, 2008, by the
 Institute of Chartered Accountants of India, the Company has provided
 for, as at 31/12/2010, loss of Rs. 12.06 million (As at 31/12/2009, Rs.
 3.50 million) on all outstanding derivative contracts by marking them
 to market keeping in view the principle of prudence, other than for
 forward contracts to which Accounting Standard-11 The Effect of Change
 in Foreign Exchange Rates has been applied.
 
 7.  Employee Benefits:
 
 (a) Defined Benefit Plans - The Company makes annual contributions to
 the Micro Inks Limited Employees Gratuity Trust, who in-turn, has
 taken Group Gratuity Scheme of the Life Insurance Corporation of India,
 which is a funded defined benefit plan for qualifying employees. The
 scheme provides for lump-sum payment to vested employees at retirement,
 death while in employment or on termination of employment as per the
 Companys Gratuity Scheme. Vesting occurs upon completion of five years
 of service.
 
 8.  Provision for current tax of Rs. 600.00 million (Previous year,
 Rs. 381.60 million) includes provision for wealth tax of Rs. 0.54
 million (Previous year, Rs. 0.52 million) and tax provisions in respect
 of earlier years Rs. 77.00 million (Previous year, Nil).
 
 9.  Revenue expenditure on Research and Development amounting to Rs.
 40.08 million (Previous year, Rs. 44.15 million) has been charged to
 Profit and Loss Account and capital expenditure relating to Research
 and Development amounting to Rs. 1.10 million (Previous year, Rs. 0.05
 million) has been included in Fixed Assets (Schedule-5).
 
 10.  The Companys significant leasing arrangements in respect of
 Operating Lease are:
 
 (a) The Company has entered into a Lease Agreement for Power Generating
 Equipment and Waste Heat Recovery Equipment. The lease agreement is
 cancellable by giving notice for the specified period. The Agreement is
 renewable on mutually agreed terms after completion of the initial
 lease period. During the year, the Company has paid Rs. 49.84 million
 (Previous year, Rs. 46.83 million) as Standby Charges (Minimum Charges)
 and Rs. 12.12 million (Previous year, Rs. 7.93 million) as Variable
 Charges (Contingent Charges) for the electricity generated and these
 amounts are included in Miscellaneous Expenses under Manufacturing
 and Other Expenses (Schedule-14).
 
 (b) Lease arrangements for Premises in respect of Marketing Offices,
 Matching Centers and Depots are usually renewable on mutually agreed
 terms but are cancellable. Lease payments in respect of these premises
 are disclosed as Office and Godown Rent under Manufacturing and Other
 Expenses (Schedule-14).
 
 (c) Lease arrangements for Premises for residential use of employees
 are usually renewable on mutually agreed terms but are cancellable.
 Lease payments in respect of these premises aggregating Rs. 0.57
 million (Previous year, Rs. 0.75 million) are included in Salaries,
 Wages and Bonus under Manufacturing and Other Expenses (Schedule-14).
 
 11. Micro Inks Limited had reviewed the useful lives of certain
 categories of fixed assets in the previous year. Consequently,
 depreciation rates on these categories of assets had been revised,
 resulting in an additional charge for depreciation by Rs. 151.51
 million in the previous year and a corresponding reduction in profit
 before tax for that year by a like amount.
 
 12. (a) The Company has investments in Hostmann-Steinberg Inc., USA, a
 wholly-owned subsidiary at a carrying value of Rs. 965.81 million (As
 at December 31, 2009, Rs. 965.81 million). The carrying values of these
 investments are after writing-off of Rs. 1,587.86 million, in an
 earlier year, by utilising the credit balances in Securities Premium
 Account / Capital Redemption Reserve, in accordance with the requisite
 approvals. The accumulated losses as at December 31, 2010, of
 Hostmann-Steinberg Inc., USA, are Rs. 3,629.97 million (including a
 profit of Rs. 29.41 million earned during the year). As a result, the
 net worth in Hostmann-Steinberg Inc., USA, as at December 31, 2010, is
 Rs. 848.98 million (As at December 31, 2009, Rs. 853.82 million).
 
 (b) The Company also has an outstanding of Rs. 346.88 million (net)
 [(As at December 31, 2009, Rs. 564.07 million (net)] on account of
 debtors from Hostmann-Steinberg Inc., USA, and has given corporate
 guarantee of Rs. 447.10 million (As at December 31, 2009, Rs. 595.84
 million), on their behalf, for loans given by banks.
 
 (c) The management, including that of Hostmann-Steinberg Inc., USA, has
 been implementing series of initiatives to improve the operating
 performance. The new pricing initiative is assisting in generation of
 higher cash flows. There has also been implementation of cost
 containment strategy, by reducing the head count significantly and
 other costs in order to align towards the future profitable business
 model. Micro Inks Limited continues to provide financial support to
 Hostmann-Steinberg Inc., USA, and is committed to assist the latter in
 making the operations profitable. As a result of the foregoing
 improvement measures and restructuring, Hostmann-Steinberg Inc., USA,
 for the year 2010, has made profits of Rs. 29.41 million against losses
 of Rs. 155.30 million in 2009.  On the basis of the foregoing and the
 Balance Sheet of the Company having been trimmed in view of the earlier
 investments being written-off as explained in paragraph 27(a) above, in
 the opinion of the Management, no further losses are presently expected
 to occur on the additional investment of Rs. 965.81 million,
 outstanding of Rs. 346.88 million (net) on account of debtors and on
 corporate guarantee of Rs. 447.10 million given to banks. Accordingly,
 no provision presently is required to be made in the accounts,
 particularly since the investment is strategic in nature and held for
 long-term.
 
 13.  Segment Information
 
 In addition to the significant accounting policies applicable to the
 business segment as set out in Schedule-16, the accounting policies in
 relation to the segment accounting are as under:
 
 The Company has considered Business Segment as primary format for
 segment reporting, namely:
 
 (a) Inks and Intermediates
 
 (b) Other Products and Services (Lamination Adhesives, Wire Enamels,
 Ketonic Resins and Polyamide Resins).
 
 These Business Segments have been identified and reported taking into
 account the product, nature of manufacturing process, industry profile,
 differences in the risks and returns, the organisational structure and
 the internal management reporting system.
 
 Inks and Intermediates and Other Products and Services have different
 manufacturing process, risks and returns and internal reporting system.
 The geographical segment is considered as secondary format for
 reporting and identified by taking into account the location of
 customers, size and risks prevailing in the market, internal
 organisational structure and the internal management reporting system.