1. Basis of Accounts
 
 The accounts of the company are under the historical cost convention
 and in accordance with fundamental accounting assumptions as suggested
 by Accounting Standard Board, issued by The Institute of Chartered
 Accountants of India and the same has been accepted and incorporated
 while preparing financial statements.
 
 2. Fixed Assets
 
 Fixed Assets are stated at original cost of acquisition including
 freight and custom duty on imported machinery. Since the company has
 not started its commercial production, depreciation has not been
 provided in books of accounts.
 
 3. Expenditure during construction period
 
 Expenditure incurred during construction period are appearing under the
 head Pre-Operative Expenses and will be capitalised on commencement of
 commercial production.
 
 4. Retirement Benefits
 
 No provision is made for estimated liability for the year ended 31st
 March, 2002 as Payment of Gratuity Act, 1972 is not applicable. The
 same would be accounted in the year when the said Act would be
 applicable.
 
 5. Preliminary and Public Issue Expenses
 
 Preliminary and Public issue expenses would be amortised when company
 starts commercial production.
 
 6. Borrowing Cost
 
 Borrowing costs directly attributable to the acquisition or
 construction of Fixed Assets are capitalised as part of the cost of the
 assets, upto the date the asset is put to use. Other borrowing costs
 are charged to the Profit & Loss Account in the year in which they are
 incurred.
 
 7. Deferred Taxation
 
 Deferred Tax resulting from timing differences between book and tax
 profits is accounted for under the liability method, at the current
 rate of tax, to the extent that the timing differences are expected to
 crystalise.
 
 B. Notes on Accounts
 
 1. Contingent Liabilities not provided for in respect of:
 
 Interest Accrued on term loan from financial institutions and banks.
 The exact quantum of the same is not ascertainable as no statement of
 Accounts or Balance confirmation at the year end from financial
 institutions and banks were produced before us.
 
 2. Term Loans and accrued Interest thereon:
 
 a) Term loan from Financial Institutions like IDBI, IRBI and The
 Federal Bank Ltd. are secured by movable and Immovable properties of
 the company. However confirmations in respect of closing balances were
 not made available to us.
 
 b) IDBI has filed suit against company before Bombay High Court for
 term loan and interest dues. Interest on term loan from IDBI is
 provided upto 15th March, 1998, since the company is unable to obtain
 details of accrued interest thereafter.
 
 c) IRBI has also filed suit against company before High Court for term
 loan and interest dues. Interest on term loan from IRBI is provided
 upto 15th May, 1998, since the company is unable to obtain details of
 accrued interest thereafter
 
 d) Interest on term loan from The Federal Bank Ltd. is provided upto
 31st March, 1999, since the company is unable to obtain details of
 accrued interest thereafter.
 
 3. The company has taken unsecured loan from Directors, their
 relatives and parties in which directors and their relatives are
 interested of Rs. 670,79,0791- (Previous Year Rs.667,75,088/-) as per
 stipulation of Financial Institutions. However the confirmation in
 respect of closing balance were not made available to us.
 
 4. The company has taken unsecured loans of Rs. 30,64,109/- (Previous
 Year Rs. 30,64,109/-) which is subject to confirmation.
 
 5. The Bank statements from Central Bank of India (Worli Branch), Indo
 Suez Bank and State Bank of India (Main Branch) were not made available
 to us and the year end balances are same as last year audited accounts.
 
 6. In the Opinion of Board:
 
 a) Current Assets and Loans and Advances are stated at value which will
 be realised in ordinary course of business.
 
 b) The Provision for all known liabilities are adequate and not in
 excess of amount reasonably necessary.