UNSECURED LOANS
 
 Additions to Land and Buldings represents revalution done during the
 Year.
 
 OTHER NOTES
 
 1.  Information regarding licensed capacity-installed capacity and
 actual production is not applicable as the company is engaged in
 Leasing and Hire Purchase Finance and Investment.
 
 2.  Remuneration Paid to Managing Director
 
                                         Period Ended     Period Ended
                                 30th September, 2001  30th June, 2000
 
 Salaries                                     1,87,500        1,87,500
 
 Contribution to P.F.                           22,500          22,500
 
 Other Perquisites                              93,750          93,750
 
 Commission to
 Managing Director *                              N.A.            N.A.
 
 Total                                        3,03,750        3,03,750
 
 * No Commission is payable in view of inadequate profits.
 
 3.  Secured Loans :
 
 a) Cash Credit and Working Capital Demand Loan from Banks are Secured
 by hypothecation of assets given under hire purchase and assets given
 on lease and are further secured by personal guarantees of two
 Directors.
 
 b) Bills rediscounting from Andhra Pradesh Industrial Development
 Corporation Limited is secured by deposit of title deeds of the
 Companys premises situated at Model House, Punjagutta, Hyderabad and
 is further secured by personal guarantees of two Directors.
 
 c) Company had issued Secured, Redeemable and Non-convertible Bonds of
 Rs.1000/- each, aggregating to Rs. 30 crores. These Bonds have a tenure
 of 12 months and 1 day/18 months and carry coupon rate of 14% and 15%
 on fixed bonds and cumulative bonds respectively.
 
 4.  On 29th September 2001 the Company entered into an agreement with
 M/s.Model Chit.Corp Limited assigning hire purchase debtors, lease
 debtors, bills receivables and advances receivable in consideration of
 M/s.Model Chit.Corp Limited settling the outstanding bondholders
 liability.
 
 Both the companies have filed an application before the High Court of
 Andhra Pradesh on 15.03.2002 u/s 391 and 394 of the Companies Act, 1956
 read with Rule 69 of the Companies (Court) Rules 1959 with a prayer to
 the High Court to issue a direction for publication of the notice
 convening a meeting of the Shareholders and Bondholders of the Company
 for the approval of scheme of arrangement for assignment of bonds and
 shares in the books of the company in consideration for the transfer of
 assigned book debts.
 
 5.  Investments include Rs.100 lakhs (previous year Rs.100 lakhs)
 invested in the share capital of the Subsidiary-Model Projects
 Limited.
 
 6.  Future installments of lease rents receivable in respect of
 executed lease contracts is Rs. Nil (Previous year Rs.191.65 lakhs.)
 
 7.  Land and Buildings have been revalued as on 30th September, 2001 at
 their market value on the basis of technical valuation obtained by the
 company.  Accordingly, they are stated at market value,
 
 8.  As lease period of certain assets has expired and no secondary
 lease agreements were entered into, the company decided to write off
 the entire book value of leased assets.
 
 9.  Contingent liabilities not provided for :
 
 Corporate Guarantee given on behalf of M/s. Model Projects Ltd.,
 subsidiary of the company, Rs. 47,32,642/-
 
 10.  Dues to Small Scale Industries-NiL.
 
 11.  Investments include amounts invested in Government
 Securities/Government approved securities to comply with the
 requirements of the directives by the Reserve Bank of India for
 maintenance of liquid assets.
 
 12.  A vehicle included in Fixed Assets is yet to be transferred in the
 name of the Company.
 
 13.  The accounting year comprises fifteen months ending 30th
 September, 2001.
 
 14.  Previous year figures have been regrouped wherever necessary to
 facilitate comparison.
 
 15.  Paise have been rounded off to the nearest rupee.
 
 16.  Additional information as required under Part IV of Schedule VI of
 the Companies Act, 1956.
 
 17.  The reporting period of the holding company M/s.  Model Financial
 Corporation Limited is from 1st July, 2000 to 30th September, 2001 and
 the accounting period of the subsidiary company viz. Model Projects
 Limited is from 1st April, 2000 to 31st March, 2001. There are no
 significant events/ transactions occuring between the different dates
 of closing of accounts of the above entities.
 
 CASH FLOW STATEMENT FOR THE PERIOD ENDED 30-09-2001
 
                                                     As at       As at
                                                30.09.2001  30.06.2000
                                                 Rs in000   Rs in000
 
 (A) NET CASH FLOW FROM OPERATING ACTIVITIES
 
 Net Profit Before Tax and Extraordinary items     (58053)        1162
 
 Adjustments for :
 
 Depreciation                                         6955        9052
 
 Misc Exps Written off                               18723         474
 
 Provision for Sub Standard Assets                       -        2929
 
 Provision for Doubtful Assets                           -       (347)
 
 Excess Provision Written Back                     (19891)           -
 
 Provn. for Diminution in Value of Long Term
 Investments                                            41       (114)
 
 Loss on Value of Current Investments                  803       (714)
 
 Loss on Sale of Assets                                 29          49
 
 Profit on sale of Assets                                -      (2155)
 
 Profit on Sale of Investments                        (16)           -
 
 Lease Equalisation Charge                           28622       13945
 
 Rebate on Lease Rentals                              1222           -
 
 Lease Income Written of                                74           -
 
 Interest Expenses                                   71162       64345
 
 Investments Income - Interest/Dividend             (3347)      (5584)
 
 Dividend on Corporate chit                          (703)      (5600)
 
 Operating Profit before Working Capital Changes     45621       77442
 
 (Increase)/Decrease in Debtors                   (226062)
 
 (Increase)/Decrease in stock on Hire                139143     (9150)
 
 (Increase)/Decrease in Lease Rental Debtors          43174    (17081)
 
 (Increase)/Decrease in Bills Receivable              19457     (1723)
 
 (Increase)/Decrease in Loans & Advances              60217    (22561)
 
 Increase/(Decrease) in Current Liabilities            3578    (18374)
 
 Increase/(Decrease) in Provisions                     1306          -
 
 Capital Work-in-Progress                              2652          -
 
 Cash Generated from operations                       89086       8553
 
 Direct Taxes Paid                                   (5745)         96
 
 Interest Paid                                      (71162)    (64345)
 
 Net Cash flow from operating activities (A)          12179    (55696)
 
                                                     As at       As at
                                                30.09.2001  30.06.2000
                                                 Rs in000   Rs in000
 
 (B) NET CASH FLOW FROM INVESTING ACTIVITIES
 
 Purchase of Fixed Assets                           (1867)      (2270)
 
 Proceeds from sale of Fixed Assets                     21           2
 
 Proseeds from Sale of Investments                     400        6826
 
 Purchase of Investments                             (295)       (567)
 
 Income From Investments                              3347        5584
 
 Dividend on Corporate chits                           703        5600
 
 Net Cash Flow from Investing Activities (B)          2309       15175
 
 (C) NET CASH FLOW FROM FINANCING ACTIVITIES
 
 Proceeds from issuance of Share Capital
 (Including Premium)                                    -            -
 
 Redemption of Preference Share Capital                 -            -
 
 Increase in Reserves                                   -            -
 
 Increase/(Decrease) in Cash Credits                (146)         7380
 
 Increase/(Decrease) in Term Loans                  (420)       (5400)
 
 Increase/(Decrease) in Other Secured Loans          1410        77076
 
 Increase/(Decrease) in Unsecured Loans                 -      (37271)
 
 Increase/(Decrease) in Fixed Deposits            (10245)            -
 
 Dividend Paid                                          -            -
 
 Deferred Expenditure Incurred                     (6303)       (6065)
 
 Net Cash Flow from Financing Activities (C)      (15704)        35720
 
 Net Increase in Cash and Cash Equivalents (A+B+C) (1216)       (4801)
 
 Cash and Cash Equivalents as on 01.07.2000          7311        12112
 
 Cash and Cash Equivalents as on 30.09.2001          6095         7311
 
                                                 BY ORDER OF THE BOARD
 
 Place : Hyderabad                                  V S R P ADUSUMILLI
 Date : 20.05.2002                                   Managing Director