Notes on Secured Loans:
 
 1. SECURED LOANS :
 
 The loan term loan from Andhra Pradesh Industrial Development
 Corporation Ltd., (APIDC) and Andhra Pradesh State Financial
 Corporation (APSFC) are secured by joint equitable mortgage of title
 deeds relating to the Company's immovable properties and further
 secured by deed of hypothecation in respect of movable properties
 present and future, other than those movable properties on which second
 charge has been created in favour of State Bank of India, Secunderabad
 for availing working capital facilities.
 
 The Terms Loans from APIDC and APSFC are further secured by the
 personal guarantees of two Directors of the Company.
 
 2. UNSECURED LOANS :
 
 Loans taken from Haritha Finance Limited guaranteed by the Directors of
 the Company.  No security or charge has been created against these
 loans.
 
 General Notes:
 
 3. R & D Expenditure :
 
 The expenditure incurred by way of consumption of materials and time
 spent by the personnel for developing the products like 4,7
 Dichloroquinoline and Chloroquine Phosphate in 1995-96 amounting to
 Rs.40.46 lacs is being set apart as R&D expenditure is being written
 off over a period of 10 years beginning from 1995-96.
 
 4. SALES TAX :
 
 Sales Tax is accounted as per the bills raised on the customers.
 Further liability, if any, arising on assessment is accounted as and
 when the demand is raised by the Department consequent to the
 assessments.
 
 5. INCOME TAX :
 
 No provision is made for Income Tax by the Company as there is no
 taxable income.
 
 6. The Company has filed a Compliant in respect of Working Capital
 limits with Banking Ombudsman on 19th November'97 against State Bank of
 India, R.P. Road Branch, Secunderabad claiming damages of Rs. 450 lacs,
 for the losses incurred by the Company due to the negligence and
 deficiency of services of State Bank of India.  The said Complaint was
 disposed off by the Banking Ombudsman in favour of the Company on 9th
 January'98 by directing State Bank of India to pay Rs. 10 lacs as
 Compensation to the Company, since the Banking Ombudsman Scheme 1995
 can grant relief only up to Rs. 10,00,000/-.  The amount of
 compensation has not been received by the Company as on date and also
 no provision is being made for receipt of the same in the Accounts as
 on 31-03-1999.
 
 7. The Company has not provided any interest on the amount outstanding
 under cash credit with State Bank of India as at the end of the year.
 As the Banking Ombudsman has passed the order in favour of the Company,
 the Company decided not to make any provision and is also contemplating
 to take necessary legal action for adequate compensation.
 
 8. The Company has filed Suit (No. S.R. No. 19798/98) in the First
 Senior Civil Judge, City Civil Court, Hyderabad claiming a compensation
 of Rs. 450 Lacs from State Bank of India for the deficiency in services
 of the Bank.
 
 9. The State Bank of India has filed an application for recovery of an
 amount of Rs. 1,69,12,478.77 from the Company before the Debt Recovery
 Tribunal.
 
 10. No interest is provided on the Unsecured Loans taken from Directors
 and others.  The total of these Unsecured Loans amount Rs.
 1,54,47,974.00 as on 31-03-2000.
 
 11. Balances appearing under Inventories, Sundry Debtors, Loans and
 Advances Secured and Unsecured Loans, Sundry Creditors and other
 creditors are subject to confirmation and for reconciliation, if any.
 The difference if any will be charged to revenue when ascertained.
 
 12. Figures have been rounded off to the nearest rupee.
 
 13. Previous year's figures have been regrouped/reclassified wherever
 necessary so as to confirm to current year presentation.