1.  The company has adopted the rates provided by FIMMDA for
 determining market value of securities in terms of Accounting Policy
 no. 5(ii) and net diminution in the value of securities as on March 31,
 2011 amounting to Rs. 1030.63 lacs has been provided for in the
 valuation of closing stock.
 
 2.  Securities against Repo transactions outstanding are as under:
 
 The above book value of securities under REPO is included under stock
 in trade in accordance with new REPO guidelines as mentioned in
 Accounting Policy no. 6. Due to change in Accounting Policy, the profit
 was over stated by Rs. 1.08 lacs.
 
 3.  Managerial Remuneration paid to the Managing Director during the
 year 2010-11:
 
 (Mr. S. Ranganathan was Managing Director till April 3, 2010 and
 thereafter, Mr. D.V.S.S.V. Prasad joined the organization with
 immediate effect and later on appointed by the Board as Managing
 Director w.e.f. May 3, 2010)
 
 Includes salary arrears of Rs.4.02 lacs paid by parent bank - Punjab
 National Bank)
 
 Computation of Net Profits under Section 349 of the Companies Act, 1956
 has not been made, as commission by way of percentage of profits is not
 payable to the Managing Director.
 
 4.  An amount of Rs.1000 lacs was lent in Call money to Madhavpura
 Mercantile Cooperative Bank Limited (MMCBL) in March 2001, which became
 overdue as on March 31, 2001. We have been informed by MMCBL that the
 Government of India (Ministry of Agriculture, Department of Agriculture
 & Cooperation, New Delhi) has formed a reconstruction scheme and the
 amount would be repaid accordingly. However, the repayment was not made
 by them as per the scheme and vide Government’s notifications
 instructed that all payments by the bank including installment of
 repayment due in August 2007, August 2008 and August 2009 (totalling to
 Rs. 761.88 lacs against which Rs. 380 lacs provision was outstanding)
 and payments of interest to banks on their deposits are deferred till
 August, 2010. However, during September, 2010, as per RBI’s prudential
 norms on “Income Recognition and Asset Classification and Provisioning”
 the Board of Directors decided to make 100% provision for the concerned
 asset, by making additional provision of Rs. 381.88 lacs. As on March
 31, 2011, the total principal outstanding was Rs. 761.88 lacs (previous
 year Rs.761.88 lacs) against which provision of Rs.761.88 lacs is
 outstanding. In view of the modification in the Reconstruction Scheme,
 and notification by the government, no further amount was due, till
 August 2011.
 
 5.  Appropriation of the Profits:
 
 . The Company has proposed a final dividend Rs. 1.20 per share, subject
 to approval of shareholders in Annual General Meeting amounting to Rs.
 1620.09 lacs. Accordingly, a provision of Dividend Distribution Tax of
 Rs. 269.08 lacs has been made @ 15 per cent plus surcharge @ 7.50 per
 cent plus Education Cess @ 2 per cent and Secondary Higher Education
 Cess @ 1 per cent.
 
 . A sum of Rs. 77 lacs has been transferred to General Reserve. Further,
 a sum of Rs. 612 lacs has been transferred to Statutory Reserve Fund.
 
 . The Board of Directors, in its meeting held on 09th January 2003, had
 decided to build up Market Fluctuation Reserve over a period of time
 with the cap equal to paid up capital of the company. At the time of
 adoption of annual accounts each year, Board may decide the quantum of
 amount to be transferred to this Reserve, if necessary. For the FY
 2010- 11, Board of Directors had decided not to appropriate any amount
 to this reserve and the balance outstanding in this reserve is Rs. 6300
 lacs.
 
 6.  Reportable segments in respect of business operations of the
 company have been identified on the basis of varied risk and return
 profile attached to each business segment which is the primary
 reporting format, and which are in terms of Accounting Standard - 17 on
 Segment Reporting. The company does not have any geographical segments,
 as such there is no secondary reporting format.
 
 The Segment information is as under:
 
 Note: Diminution of Rs. 1014.02 lacs on Government Securities, Rs.9.42
 lacs on Treasury Bills, Rs.7.19 lacs on Equity investments and Rs. NIL
 on Corporate Bonds (as there is net appreciation) as on March 31, 2011
 has been provided for (Prev. Year Rs.958.45 lacs on Government
 Securities, Rs. 11.05 lacs on Treasury Bills and Rs. NIL on Corporate
 Bonds and Debentures).
 
 Fixed deposits placed by the company are funded out of the net owned
 funds and thus have not been apportioned any costs. Consequently, the
 total allocable expenses have been allocated to all other segments.
 Figures for the previous year have been regrouped and rearranged
 accordingly.
 
 7.  Related Party Transactions
 
 As per Para 9 of the Accounting Standard 18 on Related Party
 Disclosures, the company being a state controlled enterprise is not
 required to make disclosures of related party relationships with other
 state controlled enterprises and transactions with such enterprises.
 Other information as per the Standard is as under:
 
 a.  The overall supervision and control of company vests with Board of
 Directors. The Managing Director of the company is on deputation from
 Punjab National Bank and is working full time with the company. Details
 of managerial remuneration are disclosed vide Note No. 3 above in the
 Notes to Accounts.
 
 b.  Out of a total of nine Directors on the Board of the company as at
 March 31, 2011, six are Independent directors. Only the Non-Executive
 Directors are being paid sitting fees for the Board / Committee
 meetings at the rate of Rs. 5000/- per meeting. During the year the
 company has paid a sum of Rs. 8.05 lacs (Prev. Year Rs.5.50 lacs)
 towards sitting fee.
 
 8.  Earnings per share (EPS)/Diluted Earnings per share (DEPS)
 
 There has been no change in the share capital during the year. There
 are no potential equity shares outstanding. Hence there is no dilution
 of the Basic EPS.
 
 9.  Deferred Tax
 
 An adjustment for the current year amounting to Rs 20.20 lacs {Prev.
 Year Rs. (126.16) lacs} has been made out of the profits for the
 current year.
 
 10.  Disclosure on Interest Rate Swaps
 
 Market risk : In the event of 100 basis points adverse movement in
               interest rates there will be a negative impact of 
               Rs. 0.06246 lacs (Prev. Year Rs 38.04 lacs) on
               Trading Swaps in the swap book.
 
               The losses, which would be incurred if, counter 
               parties failed to fulfill their obligations works 
               out to Rs.10.72 lacs (Prev. Year Rs. 789.97 lacs)
 
               Company’s exposure with regard to outstanding swap 
               transactions is limited to Banks and Primary Dealers.
 
 Collateral  : No Collateral is insisted upon from counterparty
 
 Credit Risk 
 Concentr
 ation       : State Bank of India. - Rs.5.36 lacs.
               (Previous year Rs. 251.62 lacs)
 
 11.  As on March 31, 2011, Secured loans (including market repo) of Rs.
 64354.97 lacs comprise of Rs. 24500.00 lacs under RBI’s refinance
 facility, Rs. 16500.00 lacs under RBIs LAF repo facility, Rs. 1733.10
 lacs under CBLO and Rs. 21621.87 lacs under REPO facility. Unsecured
 loans of Rs. 21110.00 lacs comprise of Call Money Borrowings of Rs.
 21110.00 lacs. During the year 2010-11, average and peak net borrowings
 in Call Money amounted to Rs. 41262.83 lacs and Rs.103590.00 lacs
 respectively. For the year, the average and peak leverage ratio stands
 at 1.59 and 3.06 times respectively.
 
 12.  (a) As on March 31, 2011, the total stock of Rs. 118131.15 lacs
 comprise of Government securities (including Treasury Bills) of Rs.
 100194.19 lacs, Rs.55.57 lacs of Equity instruments, Rs.3403.12 lacs of
 Money Market Instruments and Rs. 14478.27 lacs of Corporate Bonds &
 Debentures. The portfolio of Corporate Bonds & Debentures comprises
 Rs.13649.07 lacs of AAA rated and Rs.829.20lacs of AA+ rated bonds.
 
 (b) As per the RBI circular dated 31st August 2009, the company had
 categorized an amount of Rs. 13269.55 lacs of Government Securities in
 Held To Maturity (HTM) category. During the current year, an amount of
 Rs. 358.52 lacs was transferred from HTM to trading category by booking
 depreciation of Rs.0.64 lacs. Further, an amount of Rs. 12.15 lacs was
 amortized by Straight-line basis on the securities. The outstanding
 under HTM category as on March 31, 2011 stood at Rs. 12898.88 lacs, the
 details of which is given in the Annexure to Schedule 8 (b.1).
 
 13. Capital Adequacy Ratios as on June 30, 2010, September 30, 2010,
 December 31, 2010 and March 31, 2011 were 57.60 per cent, 70.67 per
 cent, 56.18 per cent and 94.42 per cent respectively as against RBI
 stipulation of 15 per cent. Net Owned Funds of the company stands at
 Rs. 56891.59 lacs as against the minimum stipulated capital of Rs.
 25000.00 lacs. Return on net worth for the year 2010-11 stands at 5.43
 per cent.
 
 14.  Tax deducted at source on interest, miscellaneous income and
 commission and fees during the FY 2010-11 amounted to Rs 98.07 lacs
 (Prev. Year : Rs 312.18 lacs).
 
 15.  Provision for leave encashment has been done in accordance with
 the requirement of AS - 15 (revised) as per actuarial valuation for the
 year 2010-11 on April 1, 2011 and as per Projected Unit Credit Method,
 details for which are given hereunder:
 
 16.  During the year 2010-11, the carrying amount of assets were
 reviewed and none of the assets of the company were found to be
 impaired, for which the procedure prescribed as per Accounting Standard
 28 needs to be applied.
 
 17.  The Mutual Fund Commission accrued (Rs. 82.04 lacs) as on March
 31, 2011, has been taken to income on an estimated basis and to the
 extent that the commission on reinvestment of dividend, in case of
 reinvestment plan, cannot be calculated accurately.
 
 18.  During the year, refund from the Income Tax Department, related to
 eight years from FY 2001-02 to 2008-09, amounting to Rs.1818.16 lacs
 have been received. Interest to the tune of Rs. 183.88 lacs received on
 the refund is included in the miscellaneous income.
 
 19.  During the year, an amount of Rs.1.13 lacs on account of non-
 receipt of TDS certificate and Rs. 0.04 lacs on account of excess
 accrual in Mutual Fund income receivable have been written off.
 
 20.  Figures for the previous year have been regrouped and rearranged
 wherever considered necessary, in order to make them comparable with
 those of the current period.