1. Contingent Liabilities provided for :
 
 (i) acknowledged as debts, Rs. 686.99 lacs (Previous year Rs. Nil).
 
 (ii) Cumulative Preference Share Dividend on Series II Rs. 17.98 lacs.
 
 (iii) Estimated amount of contracts remaining to be executed on capital
 account and not provided for, Gross Rs. 235.69 Lacs (Previous year Rs.
 1447.34 Lacs), Advances paid Rs. 31.71 Lacs (Previous year Rs. 1282.28
 Lacs).
 
 (iv) Letters of credit availed and outstanding with bank at the year
 end Rs. 1786.00 Lacs (Previous year Rs. 504.21 Lacs).
 
 (v) Guarantees given by Bank Rs. 215.64 Lacs (Previous year Rs. 194.65
 Lacs) Corporate Guarantees given by Company on behalf of Associate
 Concerns Rs. 5611.00 Lacs (Previous year Rs. Nil).
 
 (vi) Sales Tax Liability for the year ended 31-3-1988 of Rs. 2.11 Lacs
 (Previous year Rs. 2.11 Lacs) for which appeal is filed where of Rs.
 0.66 Lacs since paid (Previous year Rs. 0.66 Lacs).
 
 (vii) Pending outcome of legal suits filed against the company and/or
 ongoing negotiation in respect of certain outstanding creditors
 balances, additional liability that may arise in this, respect on final
 settlement is currently not ascertainable and has not been provided
 for.
 
 2. Company has imported capital goods against letter of credits opened
 by ICICI on direct payment basis Out of these goods worth Rs.
 4122.48 lacs have not been cleared from Customs due to non payment of
 Custom duties alongwith interest,' ground rent and other incidental
 charges.  The total estimated liability on the above account, which has
 been duly provided for is Rs. 1263.03 lacs.  Company has received
 notices under section 48 of the Customs Act, 1962, for the disposal of
 the above said goods.  No provision for Loss, if any, arising in case
 of such disposal, has been made in accounts as the same is not
 ascertainable.
 
 3. In certain cases of Debtors, Creditors, stock lying with
 contractors/ third parties and other loans and advances balance
 confirmations are awaited.
 
 4 Secured Loans :
 
 (a) Series I debentures : Rs. 50.00 Lacs, including interest.  From
 Unit Trust of India (Rs. 20.00 Lacs repaid per 30-09-1997)
 
 (14% Non-Convertible Secured Debentures on Private Placement,
 Redeemable in five equal annual instalments commencing from 1503-1994
 at 5% premium in terms of Trust Deed dated 12-03-1990) (Secured by
 first peal passu (along with Loans from financial Institutions)
 Equitable Mortgage to ICICI as Trustees for UTI on the whole of the
 Immovable Properties of the Company (Present & Future) and
 hypothecation of movable Plant and Machinery, Tools, Accessories,
 present and future, subject to charges created/to be crested in favour
 of Company's bankers on specific assets for securing borrowings for
 working capital requirements.)
 
 (b) Series II debentures : Rs. 200.00 Lacs, including interest.
 
 i) From Unit Trust of India AND
 
 ii) From PNB Mutual Fund
 
 (14% Non-Convertible Debentures on Private Placement, Redeemable on
 01-11-1996 at 5% premium in terms of Trust Dead dated 23-10/1990)
 (Secured by first peal passu (along with Loans from Financial
 Institutions) Equitable Mortgage to ICICI as Trustees for the Debenture
 Holders on whole of the immovable properties of the Company (Present &
 Future and hypothecation of movables, present & future).
 
 (c) Series IV debentures : R & D 500.00 Lacs, including interest from
 UTI (17% Non-Convertible Debentures on Private placement, Redeemable in
 three equal instalment commencing from on 29-06-1998 and ending on
 29-06-2000 in terms of Trust Deed dated 29-03-1996) (Secured by
 Hypothecation of movables, present and future and first pari passu
 (along with Loans from financial institutions) Mortgage to ICICI as
 trustees on the whole of the immovable properties of the Company
 (Present & Future), subject to charges created/to be crested in favour
 of Company's bankers on specific assets for securing borrowings for
 working capital requirements.)
 
 (d) Cash-Credit and Working Capital Loans from Banks including interest
 are secured by hypothecation of stock of raw materials, finished goods,
 goods in process, stores and spares, bookdebts and personal guarantees
 of four Directors and also secured/to be secured by a second charge by
 way of equitable mortgage [subject to first charge in favour of
 debenture trustees and Financial Institutions] on the whole of the
 immovable properties of the Company, present and future and subject to
 charges created/to be crested in favour of Company's bankers on
 specific assets for securing borrowings for working capital
 requirements.)
 
 (e) [i] Equipment Finance Loan of Rs. 500.00 Lacs, including interest
 from IDBI
 
 [ii] Foreign Currency Loan of Rs. 1470.00 Lacs, including interest from
 ICICI and
 
 [iii] Rupee Term Loan of Rs. 1950.00 Lacs, including interest from IFCI
 for Wind Mill Project are secured by bypothecation of specific assets
 purchased out of those loans.
 
 (f) At other loans [including Rupee Term Loans, Project Loans,
 Corporate Loans.  Foreign Currency Loan of Rs. 560.00 Lacs from ICICI
 and External Commercial Borrowing of US Millions, including interest
 from foreign banks] are secured/to be secured by first pari passu
 equitable mortgage on the whole of use immovable properties of the
 Company, present and future and hypothecation of moveables, present and
 future subject to changes created to be created in favour of Company's
 hankers on specific assess for securing borrowing for working capital
 requirements, personal guarantees of four directors and Corporate
 Guarantee of a group company.
 
 (g) The loans from ICICI are further secured by mortgage of immovable
 properties and pledge of shares held by the Promoters/Associate
 Companies.
 
 (h) Amounts repayable against Secured Loans within one year Rs. 5633.75
 Lacs (which includes overdue amount of Rs. 2614.57 Lacs as on
 30-09-1997)
 
 5.  Preference Shares :
 
 Rs. 20000000 14% Non Cumulative Redeemable Preference Shares were
 repayable on 04-12-1997 and are overdue.  Since there are no profits
 and also no repayment is made, use management has not provided Capital
 Redemption Reserve in use accounts.
 
 6. Included in Other Expenses is Payment to Auditors as follows :
 
                                                           (Rs. in lacs)
                                         Current Period    Previous Year
 
 For Audit                                         0.75             0.50
 
 For Tax Audit                                     0.53             0.35
 
 For Taxation Matters                              0.37             0.25
 
 For Co. Law Matters                               0.37             0.25
 
 For Certification                                 0.50             0.27
 
 For Branch Audit                                  0.15             0.10
 
 Out of pocket Expenses                            0.15             0.46
 
                                                   2.82             2.18
 
 7. Additions to Fixed Assets/CWIP includes Rs. 240.24 lacs (Previous
 year Rs. NIL) on account of Exchange difference.  Sales include Rs.
 36.96 lacs (previous year Rs. 6.47 lacs) on account of Exchange rate
 fluctuations on realisation of Export proceeds.
 
 8. Statement showing maximum balance due from Directors and use
 Companies or Firms in which they are Directors for Partners.
 
                                                           (Rs. in lacs)
                                         Current period    Previous year
 
 A. Balance due to the company from Companies under the same management.
 
 (a) Included in Loans and Advances
 
 From Patheja Brothers Forgings and Stampings Ltd.           NIL    1949
 (Maximum Balance Due)                                     19.49   29.25
 
 (b)  Included in Sundry Debtors
 From Patheja Brothers Forgings and Stampings Ltd.        745.13     --
 
 (Maximum Balance Due)                                    745.13     --
 
 9. Since minimum remuneration has been paid to whole time directors,
 the recovery sad the computation of net profit under section 349 of
 the, Companies Act, 1956, is not required.
 
 10. Interest includes Rs. 4572.44 Lacs paid on Debentures and Term
 loans (Previous year Rs. 527.39 Lacs).  Other Expenses include Rs.
 41.62 Lacs (Previous year Rs. 22.96 Lacs) towards Directors' Travelling
 Expenses (Including Foreign) and Rs. 8.10 Lacs (Previous year Rs. 4.35
 Lacs) Rent paid to the Managing Director.
 
 11. Taxation of earlier years reflected in adjustment in respect of
 Previous Year represents account of Income tax payable on certain
 transactions pertaining to earlier years.
 
 12. Sundry Debtors include an overdue amount of Rs. 4955.50 lacs
 recoverable from overseas customers against exports.  The said
 customers have been refusing to make the payment under one pretext or
 other, since these goods were manufacture/supplied as per
 specifications prescribed by the customers and as they are tailor made
 to unit their designs, the goods, if and when returned also, will be
 worthless scrap.  The Company has made all the attempts to recover the
 said outstanding dues, even by filing suits against them but expects to
 realise just about Rs. 1589.93 lacs as such, in accordance with clause
 4.4 of Accounting Standard-4, the provision of balance account of Rs.
 3365.57 lacs as doubtful recovery has been made, which is necessary in
 the judgment and perception of the management of the Company to
 reflect the true and fair view of the state of affairs of the Company.
 
 13. Due to dishonour of certain cheques issued by the Company for want
 of funds as well as for nonpayment of its dues to creditors, company is
 facing proceedings under section 138 of the Negotiable Instruments Act,
 1881 and also under section 434 of the Companies Act, 1956.
 
 14. The Company's financial year for the compliance with the provisions
 of the Companies Act, 1956 ends on Sept. 30, as against the Previous
 Year for tax purposes which ends on March 31.  The Company has not
 provided for taxation for the assessment year 1997-98 as the income
 computed under the provisions of Income Tax Act, 1961 is NIL.  However,
 the carry forward of loss, if any, for the said assessment year 1997-98
 may not be allowed by the Income Tax department in view of the non
 -filing of the Income Tax Return for the said year.  The income if any,
 for the period April 1, 1997 to Sept.  30, 1997 forming part of the
 annexed accounts, will be assessed as apart of the composite income
 relevant to the assessment year 1998-99.  As a result, the tax
 liability, if any, in respect of the assessable income for the said
 period, cannot be quantified at present and hence, no provision for
 taxation is made.
 
 15. The Company had written off as an expenditure the Lease Rental paid
 with respect to the assets which were put in use in the previous year.
 However, in the current period, to reflect more properly and as per
 clause 29 of Accounting Standard-5, irrespective of the usage of assets
 entire lease rental have been debited to profit and loss account,
 Consequent to this change, Lease Rental expenses for the period are
 higher by Rs. 2941.77 lacs.
 
 16. The Company has changed the closing of financial year from 31st
 March to 30th September.  Hence the Company's accounts for the current
 period ended 30th September 1997, reflect the operational results for a
 period of 18 months and to that extent previous year figures are not
 comparable.
 
 17. To reflect the true and fair view of the state of affairs of the
 Company and as per Accounting Standard - 2, the company's policy of
 valuing its stocks of Work In Progress and Finished Goods at net
 realisable value or cost whichever is lower, such items amounting to
 Rs. 4582.47 lacs have been valued at net realisable value which is
 substantially lower than the actual cost.
 
 18. No provision has been made for interest accrued and or due on
 unpaid lease rental and unsecured loans.  Had such provision been made
 losses and current liabilities for the period would issue been higher
 by Rs. 1138.78 lacs (Previous year Rs. NIL).
 
 19. The Company's Current period's Loss amounts to Rs. 15351.54 Lacs
 resulting in erosion in the total net worth of Rs. 11158.38 Lacs
 comprising of paid-up capital of Rs. 2900.00 Lacs and free reserves of
 Rs. 8258.38 Lacs.  Hence the Company has become a sick industrial
 company within the meaning of section 3(1)(0) of Sick Industrial
 Companies (Special Previsions) Act, 1985.
 
 20. Extra Ordinary Items and Prior Period Expenditure :
 
 [a] Commissioner (Adj.) Central Excise, Mumbai has raised demand for
 the aggregate sum of Rs. 836.53 lacs including penalty vide order No.
 14 of 1998 dated 30-03-1998 for the financial year 1994-95 and 1995-96.
 Company has preferred appeal in CEGAT against the above order.
 However, as a matter of abundant precaution Company has made a
 provision for the above liability in books of accounts.  This provision
 does not infer in any way as acceptance of the above liability by the
 management of the Company.
           
 [b] Senior Asst. Commissioner (Sales Tax), Aurangabad baa raised demand
 for the aggregate sum of Rs. 230.07 lacs including penalty vide order
 Nos.21 and 23 dated 10-10-1996 and 29-08-1997 respectively for the
 financial year 1992-93.  Company has preferred appeal against the shove
 order.  However, as a matter of abundant precaution Company has made a
 provision for the above liability in books of accounts.  This provision
 does not infer in any way as acceptance of the above liability by the
 management of the Company.
 
 21. As per the terms of issue of Debentures, the Company is required to
 create Debenture Redemption Reserve.  However no reserve has been
 created during the period in absence of profits.
 
 22. These accounts are prepared on a Going Concern Basis, inspite of
 substantial losses incurred by the company leading to erosion in its
 net worth, as the management is confident of running the plant in a
 commercially viable manner, with certain modifications/ alternatives to
 revive the company.
 
 In the absence of adequate necessary data for compilation on
 alternative basis, no adjustments are being made in the accounts
 relating to recoverability of recorded assets and in respect of
 Liabilities as might be necessary.
 
 23. Unpaid Dividend for the year 1905-96 amounting to Rs. 436.46 Lacs
 has not been transferred into a separate bank account as required under
 Section 205A of the Companies Act, 1956.
 
 24. Future obligations on Lease Agreements as on 30-09-1007 amounts to
 Rs. 3645.46 Lacs.
 
 25. In view of insufficient information received by the company from
 Suppliers as defined under Interest on delayed payments to Small Scale
 & Ancillary Industrial Undertaking Act, 1993 concerning their status,
 disclosure of particulars regarding unpaid amounts together with
 Interest on delayed payments to such Suppliers, could not be made as on
 30-09-1907 in the accounts.
 
 26. As the management is confident of recovering the overdues in Loans
 and advances amounting to Rs. 561.35 Lacs, no provision has been made
 in the accounts.
 
 27. Previous Year's figures have been regrouped or rearranged wherever
 considered necessary'.
 
 28. Income Tax assessments of the Company have been completed up to
 assessment year 1903-94 (i.e. year ended 31-03-1993) for which the
 required provision have been made.  For the assessment year 1994-95 the
 assessment has been re-opened by the assessing officer and for the
 assessment year 1905-96 the assessment pasted by the assessing officer
 has been set aside by the Commissioner (Appeals) and remanded back to
 the assessing officer for re-assessment.