1.  SCHEME OF AMALGAMATION:
 
 The Scheme sanctioned by Hon''ble High Court of Andhra Pradesh is for
 the Amalgamation of M/s. Vineet Laboratories Private Limited (VLPL
 -Transferor Company) with M/s. Ortin Laboratories Limited (OLL -
 Transferee Company)
 
 Both VLPL and OLL are engaged in similar line of activity, that of
 manufacture of pharmaceuticals and chemicals. There is synergy of
 operations between the two companies. The scheme of amalgamation will
 give more thrust and integrate their business facilities and
 infrastructure under one single unit. The scheme will be beneficial and
 advantageous in the long term interest of both the transferor company
 and the transferee company and its shareholders.
 
 Salient features of the Scheme are:
 
 1.  The Scheme would be operative from the Appointed Date, i.e.
 01.10.2010 and would be effective from the date on which copies of the
 order of Hon''ble High Court of Andhra Pradesh sanctioning the Scheme
 has been filed with the Registrar of Companies, Andhra Pradesh.
 
 2.  Authorised Share Capital of OLL is Rs. 8,50,00,000 (Rupees Eight
 Crores and Fifty Lacs only) divided into 85,00,000 equity shares of Rs.
 10/- each and The Authorised capital of VLPL is 7,25,00,000 (Rupees
 Seven Crores and Twenty Five Lacs only) divided into 72,50,000 equity
 shares of Rs. 10/- each. After Amalgamation, the combined Authorised
 capital is Rs 15,75,00,000/- (Rupees Fifteen Crores Seventy Five Lacs
 only) divided into 1,57,50,000 equity shares of Rs. 10/- each.  As per
 Court order the company has to raise its Authorised Share Capital to
 Rs.  17,00,00,000 (Rupees Seventeen Crores only) divided into
 1,70,00,000 equity shares of Rs. 10/- each. However the company
 proposed to increase its Authorised Capital to Rs. 20,00,00,000/-
 (Rupees Twenty Crores only) divided into 2,00,00,000 equity shares of
 Rs. 10/- each.
 
 3.  Equity Shareholders of VLPL would get 17 Equity Shares of OLL for
 every 10 Equity Share held in VLPL. Accordingly 1,22,40,000 fully
 paid-up equity shares of Rs. 10/- each of OLL shall be issued and
 allotted to the equity shareholders of VLPL in the same proportion as
 to their shareholding in VLPL.
 
 4.  The difference if any, being the excess or shortfall between the
 assets, liabilities and reserves of the Transferor Company as
 transferred to the Transferee Company and the consideration discharged
 shall be adjusted against / transferred to Share Premium Account of the
 Transferee Company.
 
 5.  Accordingly, Equity Share Capital of the Transferee Company would
 become Rs. 16,94,04,000/- comprising of 1,69,40,400 Equity Shares of
 Rs. 10/- each.
 
 6.  The incidence of adopting uniform Accounting Policies, if any,
 would be quantified and adjusted in the Share Premium Account of the
 Transferee Company.
 
 7.  All Assets, Liabilities, Rights and Obligations of VLPL would vest
 with OLL at Book Value as on the Appointed Date, i.e. 1.10.2010.
 
 The Scheme of amalgamation has been sanctioned by Hon''ble High Court of
 Andhra Pradesh vide its Order dated 29th June, 2011. The scheme became
 effective from 1st October, 2010, the Appointed Date of the Scheme.
 
 According to the scheme, the amalgamation is to be accounted under the
 purchase method. However, according to the subsequent paragraphs of the
 scheme, it is understood that the amalgamation is in the nature of
 merger and as such, it has been accounted under the pooling of
 interests method as per the specific provisions of the Scheme.
 Accordingly, the Scheme has been given effect to in these accounts and
 all assets and liabilities of the Transferor Company stands transferred
 to and vested in the Transferee Company with effect from the Appointed
 Date.
 
 The Share Capital of the erstwhile VLPL (Transferor Company) before
 amalgamation was Rs. 720.00 lacs. According to the scheme of
 amalgamation, the Equity Share Capital to be allotted to the
 Shareholders of VLPL is Rs. 1,224.00 lacs. The difference of Rs. 504.00
 lacs between the Equity Share Capital allotted to the Shareholders of
 VLPL the Transferor Company and its Equity Share Capital prior to
 Amalgamation has been adjusted in the following manner:
 
 The consideration for the merger of VLPL with OLL is to be discharged
 by the allotment of 1,22,40,000 fully paid-up equity shares of Rs. 10/-
 each to the shareholders of erstwhile VLPL and the allotment is under
 process. Since the shares have not been allotted to the shareholders of
 the transferor company VLPL as on the reporting date of 31st March,
 2011, the share capital of Rs. 1,224.00 lacs to be issued by the
 company to the shareholders of the transferor company is accounted
 under ''Shareholders funds'' as Share Capital Suspense account.
 
 3.  SECURED LOANS:
 
 a) Term Loans from Karnataka Bank Limited is secured by hypothecation
 of Plant & Machinery and other Fixed Assets and second charge on
 current assets of the Company and further secured by Personal Guarantee
 of Promoter Directors.
 
 b) Cash Credits include cash credit of Ortin Laboratories from
 Karnataka Bank Limited and cash credit of erstwhile Vineet Laboratories
 Pvt. Ltd. from Karnataka Bank Limited, secured by present and future
 raw materials, semi finished goods, finished goods, stores and secured
 second charge on Fixed Assets of the Company and further secured by
 personal guarantee of promoter Directors.
 
 c) Vehicle Loans are secured by hypothecation of specified vehicles
 acquired.
 
 4.  During the year Sales Tax assessments for the financial year
 2005-06 and 2006-07 were completed and an amount of Rs. 1,75,067/- and
 Rs. 1,08,466/- was paid against the demand of the department.
 
 5.  RESEARCH & DEVELOPMENT EXPENSES:
 
 During the year the company has incurred revenue expenditure pertaining
 to Research and Development of Rs. 87,157/-. Revenue expenditure is
 shown under respective heads of expenditure. There is no capital
 expenditure on Research and Development.
 
 6.  EMPLOYEE STOCK OPTION SCHEME:
 
 During the year the company has not issued any employee stock option
 scheme.
 
 7.  SALES TAX DEFERMENT:
 
 The sales tax deferment liability amounting to Rs. 11,15,966/- shown
 under Unsecured Loans due for repayment from the financial year 2019
 onwards. The Government of Andhra Pradesh has granted Sales Tax
 Deferment for a period of 14 years.
 
 11.  CONTINGENT LIABILITIES:
 
 a) The contingent liabilities as on 31st March, 2011 are as follows:
 
 b) Estimated amount of contracts remaining to be executed on Capital
 Accounts and not provided for – NIL.
 
 14.  RELATED PARTY TRANSACTIONS:
 
 Disclosure as required by Accounting Standard AS 18: Related party
 disclosures issued by the Institute of Chartered Accountant of India
 (ICAI) is follows: (A) (i) Names of the transacting related parties.
 
 SRI SAI KRISHNA MARKETING ASSOCIATES (ii) Description of the
 relationship between the parties.
 
 Associate Firm.  (iii) Description of the nature of transaction.
 
 Sales and purchases to/from associates firm in which directors are
 interested.
 
 (iv) Volume of transaction:
 
 Sales: Rs. 77,17,436/-
 
 Purchases: Rs. 12,10,716/- The above transactions are not related to
 the products, which are manufactured at the company''s production
 facilities and it is only a trading transaction.  (v) Other elements of
 the related party transactions necessary for an understanding of the
 financial statements: NIL.  (vi) The amounts or appropriate proportions
 of outstanding items pertaining to related parties at the balance sheet
 date and provisions for doubtful debts due from such parties at that
 date: Dr. 26,86,734/-.  (vii) Amounts written off or written back in
 the period in respect of debts due from or to related parties: NIL (B)
 
 (i) Names of the transacting related parties.  ORTIN BIOTECH PRIVATE
 LIMITED
 
 (ii) Description of the relationship between the parties.  Associate
 Company.
 
 (iii) Description of the nature of transaction.  Inter corporate Loan
 to associate Company in which directors are interested.
 
 (iv) Volume of transaction:
 
 Loan outstanding: Rs. 1,11,000/-
 
 (v) Other elements of the related party transactions necessary for an
 understanding of the financial statements: NIL.  (vi) The amounts or
 appropriate proportions of outstanding items pertaining to related
 parties at the balance sheet date and provisions for doubtful debts due
 from such parties at that date: 1,11,000.  (vii) Amounts written off or
 written back in the period in respect of debts due from or to related
 parties: NIL (C)(i) Names of the transacting related parties.
 
 WOHLER LABORATORIES PRIVATE LIMITED
 
 (ii) Description of the relationship between the parties.
 
 Enterprise over which key managerial personnel/ their relatives are
 able to exercise significant influence (iii) Description of the nature
 of transaction.
 
 Sales and purchases to/from a company in which directors are
 interested.  (iv) Volume of transaction:
 
 Sales: Rs. 9,31,267/-
 
 Purchases: Rs. 1,59,522/-
 
 Job work payments Rs. 1,20,000/- (v) Other elements of the related
 party transactions necessary for an understanding of the financial
 statements: NIL.  (vi) The amounts or appropriate proportions of
 outstanding items pertaining to related parties at the balance sheet
 date and provisions for doubtful debts due from such parties at that
 date: Rs. 45,37,544/- (vii) Amounts written off or written back in the
 period in respect of debts due from or to related parties: NIL.
 
 15.  SEGMENT REPORTING:
 
 The Company is engaged in the manufacture of Drug Intermediates and
 Pharmaceuticals.  Accounting Standard 17 Segment Reporting issued by
 the Institute of Chartered Accountants of India is not applicable.
 
 16.  SHARE CAPITAL:
 
 The authorized capital of the company is Rs. 15,75,00,000/- divided
 into 1,57,50,000 shares of Rs. 10/- each. According to the scheme of
 amalgamation approved by the High Court, the authorized capital of the
 company is to be increased to Rs.17,00,00,000/-, upon the scheme being
 finally effective. However the company is proposing to increase the
 authorized capital to Rs. 20,00,00,000/-. Since the formalities with
 the Registrar of Companies is pending, the authorized capital of the
 company is shown as the sum total of the authorized share capital of
 the company before the amalgamation and the authorized share capital of
 erstwhile VLPL.
 
 Shareholders'' funds of Rs. 16,94,04,000/- consists of the paid up
 capital of the company Rs. 4,70,04,000/- divided into 47,00,400 equity
 share of Rs. 10/- each and Share Capital Suspense account of Rs.
 12,24,00,000/-, which represents the amount of share capital to be
 issued to the shareholders of erstwhile VLPL pursuant to the scheme of
 amalgamation.
 
 17 In the opinion of the Board the Current assets, Loans and advances
 are approximately of the value stated if realized in the ordinary
 course of the business. The provision for depreciation and all known
 liabilities are adequate and not in excess of the amount considered
 reasonably necessary.
 
 18.  The balances shown against Sundry Debtors, Sundry Creditors and
 Advances are subject to confirmation from the respective parties.
 
 19.  DISCLOSURE UNDER MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT
 ACT, 2006: As regards to the compliance of provisions relating to the
 dues to Micro, Small and Medium Enterprises in terms of Section 22 of
 the Micro, Small and Medium Enterprises Development Act, 2006, the
 Company has sent letters to the Creditors to confirm whether they are
 Micro, Small and Medium Enterprises. The Company is yet to receive the
 confirmations from them. Hence, the Company could not quantify the
 dues, if any to the Micro, Small and Medium Enterprises.
 
 20.  ADDITIONAL INFORMATION PURSUANT TO PARAGRAPHS 3 & 4 OF PART II OF
 
 SCHEDULE VI TO THE COMPANIES ACT 1956, (AS CERTIFIED BY A DIRECTOR:
 
 A.  PARTICULARS IN RESPECT OF GOODS MANUFACTURED:
 
 Since the products involved are voluminous, according to the management
 it is not possible to give product wise details.
 
 B.  STOCKS, PURCHASES & SALES OF FINISHED GOODS:
 
 Since the products involved are voluminous, according to the management
 it is not possible to give product wise details.
 
 21.  During the year the company has recognized the export incentive on
 excise duty of Rs. 2,49,289/- as income in the profit and loss account.
 
 22.  During the year it was proposed to declare dividend of 5% on paid
 up Share Capital.
 
 23.  During the year the company has amortized 20% of preliminary
 expenses i.e.  Rs. 11,64,675/-.
 
 26.  Disclosure under clause 32 of the Listing Agreement:
 
 (a) Loans and Advances in the nature of Loans to Subsidiary Company NIL
 
 (b) Loans and Advances in the nature of Loans to Associate Company NIL
 
 (c) Loans and Advances in the nature of Loans where there is:
 
 (1) No repayment schedule or repayment beyond 7 years NIL
 
 (2) No interest or interest below section 372 A of Companies Act NIL
 
 (d) Loans and Advances in the nature of Loans to firms/companies
 
 In which directors are interested Rs. 1,11,000
 
 (e) Investment by the Loan in the shares of the parent company And
 subsidiary company, when the company has made a loan
 
 Or advance in the nature of loan NIL
 
 27.  Previous year figures have been regrouped and rearranged wherever
 necessary.
 
 28.  All the amounts are rounded of to the nearest rupee.