i) CONTINGENT LIABILITIES:
 
 A.  Show Cause Notices issued by various Government Authorities are not
 considered as Obligation.
 
 B.  When the demand notices are raised against such show cause notices
 and are disputed by the Company, these are classified as disputed
 obligations.
 
 C.  The treatment in respect of disputed obligations, in each case, are
 as under:
 
 a) a provision is recognised in respect of present obligations where
 the outflow of resources is probable;
 
 b) all other cases are disclosed as contingent liabilities unless the
 possibility of outflow of resources is remote.
 
 Notes annexed to and forming part of the accounts
 
 2. Sales-tax assessment both under UPVAT and CST have been completed
 upto the Financial year 2007-08. The Income-tax assessment has been
 completed upto assessment year 2009- 10 (financial year ended on March
 31, 2009). The company does not foresee any liability against pending
 assessment.
 
 3.  INVESTMENTS:
 
 (a) The Government of India approved participation in the equity share
 capital of M/s UP. Instruments Ltd. (A State Government Undertaking) to
 the extent of Rs15.68 lakhs, i.e., 49% of equity share capital and the
 Company/Nominees have so far invested Rs15.50 lakhs towards equity share
 capital (Previous year T15.50 lakhs). The Company has been intimated
 that all assets including land, building and plant & machinery of UPIL
 has been sold through Committee constituted by U.P. State Government.
 Accordingly, the possible loss for the entire investment of Rs 15.50
 lakhs has been provided for in the Accounts.
 
 (b) The Government of India approved participation in the equity shares
 of M/s UP Tyres & Tubes Ltd. (UPTT) (A State Government Undertaking) to
 the extent of Rs 52.28 lakhs, i.e., 49% of their equity share capital
 and the Company / Nominees have so far invested Rs52.28 lakhs towards
 equity share capital (Previous year ^ 52.28 lakhs). As the net worth of
 UPTT has become negative, the estimated realisable value of the shares
 is considered as Nil.  Accordingly, possible loss in the investment (Rs
 52.28 lakhs) has been provided for in the Accounts.
 
 (c). The company invested Rs 0.57 lakh in the shares of The
 Co-operative Electric Supply Society Limited in the year 1984. In
 absence of any information regarding the net worth of the company, a
 provision for the same has been made.
 
 4.  The balances in the debtors/creditors accounts, claims recoverable,
 loans and advances, assets/materials with third parties are subject to
 adjustments, if any, on reconciliation, as most of the above balances
 have not been confirmed or are showing balances different from SIL
 books. Details / confirmation of various deposits relating to
 Electricity, Customs-duty, Port Trust, Octroi, Sales-Tax, Landlord and
 certain parties are not available / obtained.
 
 5.  The Company is in physical possession of the land measuring 41
 bigha, 3 biswa and 18 biswansi acquired for Workmen''s Housing colony
 under Own Your House Scheme. The compensation determined by the Land
 Acquisition Officer of U.P. Government amounting to ^2.29 lakhs was
 paid by the Company. However, subsequently, some land owners entered
 into litigation for higher compensation before Nagar Mahapalika
 Tribunal against the State Government. The U.P. State Government has
 filed an appeal before the Hon''ble High Court Challenging the order of
 the Tribunal and final decision is still awaited. The Company has also
 been impleaded as a party to the said appeal. The additional liability
 on the part of the Company, if any, is not ascertainable.
 
 As regards ceiling land measuring 24 bigha, 13 biswa and 16 biswansi,
 which is in physical possession of the Company, the Govt, of U.P.
 issued an order dated 3rd August 2000 giving above land to the Company
 for the purpose of Workmen Housing colony under Own Your House Scheme
 on lease for 90 years in consideration @ Rs 4000 per bigha, amounting to
 ^4.55 lakhs including premium. Payment was made but returned
 subsequently by U.P.  Government. Thereafter, U.P. Government revised
 their earlier order vide their letter No. 919 (1) 1-12/2003-9151/87-92
 dated 8.5.2003 demanding market price of Rs 2412 lakhs, which was
 contested by the Company. A recovery notice for Rs 2412 lakhs in
 addition to collection charges was issued by Tehsildar, Lucknow.
 
 Aggrieved by the recovery notice, Company filed writ petition in
 Hon''ble High Court. The Court stayed recovery notice and ordered the
 Company to pay a sum of Rs 4.55 lakhs to District Magistrate, Lucknow.
 It has been complied with. Final decision of the Court is awaited.
 
 As regards another Forest land for Workmen Housing colony under Own
 Your House Scheme measuring 4 bighas and 13 biswa, which is in
 physical possession of the Company, for 90 years lease, the execution
 of conveyance deed with the State Government is pending due to delay in
 completion of procedural formalities by the Forest Department.
 
 The land held for Workmen Housing colony under ''Own Your House Scheme
 shall be transferred to workmen after complying with legal and other
 procedural formalities.  Accordingly, the same has not been included in
 our Fixed Assets Schedule.
 
 6.  The Company held no security in respect of material lying with
 third parties/contractors to the tune of Rs 70.32 lakhs (Previous year 
 Rs.113.94 lakhs); Fixed Asset with third party amounting to Rs 9.66 lakhs
 (Previous year Rs 9.66 lakhs) Provision available for material doubtful
 of recovery is Rs 17.84 lakhs (Previous year Rs 17.84 lakhs).
 
 7.  The Company is in physical possession of property at 64-65,
 Najafgarh Road, New Delhi where Regional Office, North Region is
 located, leased out to Scooters India Limited by M/s Ganesh Flour Mills
 Ltd. (since nationalised and vested in H.V.O.C. Ltd.). The lease
 agreement with M/s Ganesh Flour Mills Ltd. has expired in 1982-83. As
 there-is no contractual document between the two Companies and based on
 legal opinion, no liability towards lease rent/royalty has been
 provided. The Company on record offered for one time settlement of Rs
 53.80 lakhs for transfer of land which has not been provided in the
 accounts pending clarity / decision in the matter.
 
 8.  The consumption of material is derived as a balancing figure by
 adding opening inventory with purchases during the year and deducting
 closing inventory.
 
 9.  (a) As on 31.03.2011 there is an outstanding of Rs 95.59 lakhs
 (Previous year Rs. 98.58
 Lakhs) against M/s Amausi Motors Limited, Lucknow. Pursuant to the
 arrangement entered into by the company for liquidating the balance,
 the outstanding has come down during the year by Rs 2.99 Lakhs (Previous
 year Rs 5.06 lakhs). The outstanding is expected to be liquidated in the
 following years.
 
 (b) Legal proceedings that are in progress for recovery of outstanding
 in case of 31 dealers, the amount involved as on 31-3-2011 is Rs 338.80
 Lakhs. (Previous year 31 dealers amounting to Rs 338.93 lakhs) against
 which provision has been made.
 
 (c) As a measure of conservatism generally provision is being made for
 Debtors where there is no transaction for three years or where the
 company has initiated legal case against defaulting debtors.
 
 10.  Liability for Grauity & Leave Encashment has been determined by an
 actuary, apointed for the purpose, in conformity with the principles
 set out in Accounting Standard 15 the details of which are as
 hereunder.
 
 11.  The Company is principally engaged in the business of
 manufacturing and sale of motor vehicles and spare-parts (Automobile).
 Accordingly, there are no other reportable segments as per AS-17 on
 segment accounting.
 
 12.  As per guidelines issued under AS-28 Impairment of Assets, the
 company has assessed and found that no indication of impairment exists
 in relation to assets as on 31-03-2011.
 
 13.  Related party disclosure as required by AS-18
 
 (a) List of related parties during the financial year 2010-11 Whole
 Time Directors
 
 Shri Ajai Kumar, Chairman-cum-Managing Director Shri P. Muthusamy,
 Director (Finance) Shri P.P. Sarkar, Director (Technical) Part-Time
 Director Shri Vikram Gulati Shri S.K. Tripathi (From 1st April 2010 to
 5,th July 2010)
 
 14.  The Government of India, Ministry of Industry & Public
 Enterprises, Deptt. of Heavy Industry released funds by way of non plan
 loan amounting to Rs 3731.86 lakhs (Previous year Rs 2843 lakhs) during
 the year towards salary support for the period October, 2009 to
 September, 2010. The dues of the officers are to be settled w.e.f.
 October 2010. The dues of staff is pending settlement for period
 October 2010 to December 2010. The balance dues are expected to be
 settled on receipt of necessary non plan support from Government of
 India.
 
 15.  (i) Due to non approval of proposal for the revision of wages of
 workmen which was to be implemented with the effect from 1.8.2004 the 
 amount paid to the workmen against the said revision amounting to Rs 192.90 lakhs (Previous yearRs 178.25
lakhs) is being shown as 
 recoverable advance in the books of accounts. However, the said 
 advance is being recovered from the separated workmen which had 
 been a matter of industrial dispute leading to the decision of the 
 Central Government Labour Court cum Appellate Tribunal to award the 
 refund of the said money. The company has
 preferred an appeal against the award of the Tribunal in the Hon''ble
 Lucknow Bench of the Allahabad High Court, Consequently, the company
 has not recognized the said award as a liability in the books of
 accounts. The amount recovered from the employees on this account as on
 31.03.2011 is Rs 33.58 lakhs (Previous Year Rs23.88 lakhs.)
 
 (ii) As the Company is not meeting the criteria of the guidelines for
 revision of salary and wages to be implemented w.e.f. 1.1.2007, no
 provision has been made in the Accounts.
 
 16.  (i) The Company increased the authorised capital from Rs 45 Crores
 to Rs 75 Crores, in its Annual General Meeting held on 25th September,
 2004. The Company had filed Form 5 and Form 23 along with requisite
 filing fee of Rs 15 lakhs with Registrar of Companies, Kanpur for its
 registration. The Registrar of Companies has returned the filing fee
 and advised the Company to approach the Central Government, for
 exempting filing fees in view of BIFR order under Section 632 in
 respect of previous increase from Rs 8 crores to Rs 45 crores. The
 Administrative Ministry i.e.  Ministry of Heavy Industries & Public
 Enterprise, Department of Heavy Industry, vide letter No.
 3(6)/2005-PE-VI dated 16th May, 2005 has recommended Ministry of Law
 Justice & Company Affairs for exemption for payment of filing fees in
 the first instance i.e.  from Rs 8 crores to Rs  45 crores. The Company
 has not made provision for filing fee of Rs 15 lakhs in the Books of
 Accounts, pending receipt of final approval/clarification.  However,
 subsequent to implementation of MCA 21 the company''s authorised capital
 has been shown as Rs 75 crore by Registrar of Companies.
 
 (ii) Pending allotment of share to Central Government, the money
 received towards equity from Government of India is classified as
 advance against share capital.
 
 17.  (i) Review petition in case of SIL VS OBC field by SIL was
 rejected by DRAT, Allahabad.
 
 For Filling writ petition before court, approval is being sought from
 committee of Disputes.
 
 (ii) In the matter of arbitration case between Ordinance Factory Board
 and the Company, the Company filed a Review Petition before the Law
 Secretary on the merits of the case as allowed by the Committee on
 Disputes. The Review Petition dismissed by Law Secretary has not
 considered the issue on the merit of the case as pointed out by the
 Committee on Disputes and, therefore, pending further action, the
 company has not recognized liability of Rs 192.98 lakhs (previous year Rs
 177.91 lakhs) in the books of accounts and it is shown as contingent
 liability.
 
 (iii) Employee State Insurance Corporation (ESIC) demanding ESI
 contribution of the employees from SIL in contravention of the
 judgement and order dated 22.06.2005 passed in SIL vs BIFR & Others,
 Appeal No. 304 of 2002 by tribunal AAIFR. The case is pending before
 High Court, Lucknow Bench.
 
 (iv) Punjab National Bank filed a case against SIL for the recovery
 against indemnity provided by SIL for loan availed by UP Tyres and
 Tubes. The case is pending before DRT Lucknow.
 
 18.  The amount involved in 11 cases (previous year 14 cases) of
 Consumer forum is estimated at Rs 12 lakhs (previous year Rs 15 lakhs).
 In remaining 76 cases (previous year 72 cases) the amount is
 indeterminate.
 
 19.  UPSICL and Scooters India Limited jointly sponsored a scheme for
 the development of Ancillary Estate in the Amausi Industrial Area,
 Lucknow. SIL had claimed an amount of Rs 43.05 lakhs spent on behalf of
 UPSICL towards such Ancillary Estate, whereas UPSICL has made a counter
 claim of Rs 9.27 lakhs plus interest. Pending resolution of the issue
 the matter went into arbitration in the year 1985, the outcome of which
 is still awaited and pending clarity on the matter, the company has not
 recognized counter claim as liability.
 
 20.  Earnings per share (EPS) :
 
 21.  In absence of information from vendors with regard to their
 registration (filing of memorandum) under The Micro, Small Medium
 Enterprises Development Act, 2006, the information is NIL.
 
 22.  Revenue recognition in respect of royalty income from M/s Fine
 White Line Limited (FWL), Lambretta Trademark Licencee, has been done
 on the basis of minimum royalty due (Rs30.37 lakhs) during the year, in
 view of non availability of turnover figure, discontinuance of royalty
 payment since June, 2010 onwards and uncertainty in relationship with
 FWL.for which SIL is also initiating legal proceedings.
 
 In consideration of prudence, the above deferred tax assets aggregating
 to Rs 4029.33 lakhs (Previous Year Rs 3717.35 lakhs) has not been
 recognised by the Company in the financial statements in the current
 year, since it is not virtually certain whether the Company will have
 sufficient taxable income in near future against which such deferred
 tax assets can be realised.  The same would be considered at
 appropriate time keeping in view the availability of sufficient future
 taxable income against which Deferred Tax Assets can be realized.
 
 23.  The company has been declared sick under section 3(1 )(o) of the
 SICA by BIFR in its meeting held on 18th February, 2010 consequent to
 the reference made by the company due to erosion of its net worth as on
 31st March, 2009
 
 24.  Previous year''s figures have been regrouped, rearranged and
 recast, wherever necessary, to make them comparable with those of the
 current year.
 
 25.  Figures have been rounded off to the nearest rupee.
 
 Pursuant to Clause 49 of the Listing Agreement with the Stock
 Exchanges, following information is furnished about the Directors
 
 Shri Ajai Kumar - M.Tech.(Mechanical), IIT-Kanpur, started his career
 with Oil & Natural Gas Corporation Limited and served in various
 positions and places. Before joining SIL as CMD on 23rd April 2008 he
 was with the assignment of Head Central Workshop, ONGC, Sivasagar
 (Assam).
 
 Shri Vikram Gulati - holds PGDM/MBA (Gold Medalist) from MDI, Gurgaon
 and M.Sc. from Delhi University. Before being nominated to the Board of
 SIL, he has also worked as Government nominated Director in BSCL, BBJ,
 BCL, HMT (Watches), Pragya Tools, Chinar Watches etc. At present he is
 holding directorship in Tyre corporation of India and member Governing
 Council of fluid Control Research Institute, Palghat, Kerala. He has
 joined the Company as a Government of India Nominee Director w.e.f.
 16.11.2007.
 
 Shri P.P. Sarkar - holds a B.Tech (Mech.) degree from Indian Institute
 of Technology, Kanpur and PGDBM degree from Indian Institute of
 Management, Kolkata. Prior to joining the organisation he has worked as
 Superintending Engineer in ONGC. He has joined the company as Director
 (Tech.) w.e.f. 16th May 2007.