a) Guarantees issued by Bank and outstanding Rs.23.00 Lacs (P.Y Rs. 230.00 Lacs). Contingent Liabilities not provided for

a) On letter of credits. - Rs. 554 Lacs (P.Y Rs. 465.00 Lacs).

b) On bills discounted with banks - Rs. 95.30 Lacs (P.Y Rs. 460.68 Lacs).

c) On capital commitments not provided for - Rs. 39 Lacs (P.Y Rs. 39 Lacs).

d) Disputed excise duty Rs. 5,44,44,178.00 and disputed service tax Rs. 5,89,076.00 Demanded by the excise department as per show cause notice no. C. No. IV CE(9) CP/117/2008/11504 dt. 07.08.09 and show cause notice no. C.No. IV -CE(9) CP/62/2007/1506-1513 dt. 18.07.2008, respectively.

2. Managerial remuneration to the Managing Director has been paid as per previous rates Rs. 1463400/- (Previous year RS. 1463400/- the remuneration has been paid as per Central Government approval vide letter no. NIL dated 26.04.06.

3. In compliance with the requirement of Accounting Standard -2, valuation of inventories, which is mandatory from 1st April 1999, the company has changed the accounting, excise duty and provided excise duty liability on stock as on balance sheet date and included in valuation of such stocks. However on the closing stock of finished goods provision of excise duty of Rs. 2580 & provision for education cess, and higher secondary education cess of Rs. 77 has not affected the profit & loss account of the company.

4. CENVAT credit available on raw materials is accounted by booking raw material purchases of net of excise duty. Similarly CENVAT credit entitlement on capital goods is accounted on booking the capital goods net of excise duty. Both these credits are accumulated and shown as receivable in "Loans and Advances" for adjustment in due course against duty payable on dispatch of finished goods, subject to compliance of excise rules in this regard.

5. The balances of Secured Loans, Unsecured Loans, Debtors, Creditors and Loans & Advances etc are subject to confirmation and reconciliation.

6. Financial & Management information systems

To practice an integrated accounting system which unifies both financial books and costing records The books of accounts and other records have been designed to facilitate compliance of the relevant provisions of the Companies Act on the one hand, and meet the internal requirements of information and systems for planning, review and internal control on the other.

7. Unsecured loans include RS. 93,053/- received in earlier years from "Foreign Promoters" represents excess amount received towards allotment of Equity Shares. Reserve Bank of Indias approval to refund the amount is still awaited.

8. Additional information pursuant to the provisions of paragraphs 3, 4C & 4D of part II of schedule VI of the Companies Act, 1956 are given in the enclosed annexure.

9.. Previous year figures have been re-arranged/regrouped wherever necessary to confirm to the classification adopted in the current year,

10. The Company made a Rights issue of Equity Shares of RS. 10/- each at a premium of Rs.12/- per share to existing shareholders in the ratio of one-equity shares for every three equity shares held in the Financial Year 1995-96. Allotment was made on 15.07.95 and share application money and allotment money has been apportioned to Share Capital and Share Premium as per the terms of letter of offer. Application money called at the time of application was RS. 5.50 Per share out of which RS. 2.50 as share application money and balance RS. 3/- towards Share Premium. The Allotment Money was payable on 31.08.95. Calls in arrears in respect of equity shares has been accounted for and deducted from issued share capital account, the balance in arrears in respect of share premium will be accounted for as and when received.

11. The financial statements are prepared on accrual basis, in accordance with the generally accepted accounting principles and provisions of Companies Act, 1956 as adopted consistently by the Company, except gratuity, Leave encashment, LTA and premium on Right Issue being accounted for on Cash Basis. Claims etc which is unascertainable is accounted for as and when settled.

12. Inventory shows a sum of RS. 907.42 lacs towards cost of Dies manufactured in house for production of forging in Forge Shop. The consumption of Dies has not been charged as per utilization of the Dies, but is being charged to Profit & Loss account as & when the respective Die is discarded. During the current year as certified by management Rs. 13.63 Lacs have been spent on manufacturing of Dies for various new products and has been charged on account of discarding of dies Rs. 0 Lacs.

13 Based on the information available with the company, the company has identified 4 vendors as Micro and Small Enterprises as defined in the Micro, Small and Medium Enterprises Development Act 2006. The balance due to such vendors as at 31.03.2009 has been disclosed separately under current liabilities and provisions (refer schedule 9).

14. Deferred Tax Assets (Net) - The accounting standard 22, viz accounting for taxes on income issued by the Institute of Chartered Accountants of India, has become applicable to the company. The Company has unabsorbed depreciation and unabsorbed loss which is to be carried forward as per the provisions of Income Tax Act, 1961. In the opinion of management there is no certainty that sufficient future taxable income will be available against which deferred tax asset can be realised, accordingly no deferred tax asset has been recognized.

15. Related Party Disclosures

(a) Key Management Personnel and relatives Mr. Deshbir Singh - Managing Director

16. Segment reporting

(a) Since the Companys business activity falls within a single business and geographical segment, there are no additional disclosures to be provided under accounting standard 17 "Segment Reporting" other than those provided in financial Statements.

(b) The Major products dealt in by the company are Forgings & Crankshafts.

17. Current tax provision on account of substantial carry forward of losses and unabsorbed Depreciation, the management is of the opinion that there will not be any tax liabilities on current profits which are adjustable with unabsorbed depreciation and carry forwarded of losses as such no provision for current tax has been made. However, Provision for Taxation on current year profit has been made based on relevant provisions of Income Tax Act 1961.

18. The company issued 90,00,000 convertible warrants during the year 2004-05 in which, the warrant holders have an option to convert these warrants into equity shares determined at an initial conversion price of Rs. 14.25 per share within a period of 18 months from the date of allotment i.e. 6th October 2004 to 5th April 2006. During current year 2005-06 Out of 9000000 warrant holders 4000000 haveexercised their option and paid the conversion price at Rs. 14.25 per share during the year and the total proceeds (Net of Advance) Rs.512 lacs have been used for OTS due of financial institutions working capital requirement and other corporate purposes. During the year 2006-07 out of 50,00,000 warrant holders 1500000 have exercised their option and paid the conversion price at Rs. 14.25 per share and total proceeds (Net of Advance) Rs. 192 Lacs have been used for acquiring assets. The company has refunded Rs. 50.75 Lacs to a warrant holder with the prior approval of Board of Directors, who has not exercised his option for conversion of w.arrants in to shares.

19. On 22.12.06 the company issued 2 Crore equity shares of Rs.1/- to M/s Duke Special Situation Fund at Rs. 3.10 per share on preferential allotment basis. The total proceeds of Rs. 6.20 crore have been utilized for import of machinery.

The company also issued 6 crore convertible warrant at an initial conversion price of Rs.3.10 per Share and paid 10% as application/allotment money. The warrant holder have an option to convert these warrants into equity share within a period of 18 month from the date of allotment i.e. 22nd December 2006 to 21st June 2008, The total proceeds received from warrant holder Rs. 186 lacs have been used for import of Machinery.

During the year under review, the warrant holder(s) have not exercised their option as such, the subscription received from them amounting Rs. 186 lacs has been forfeited with the permission of Board.

20. In the opinion of management, there is no impairment of any of the fixed Assets of the company in terms of AS-28 Issued by The ICAI.

21. The Sundry Debtors and Loans & Advances which are outstanding for more than two years according to the aging but no provision for bad debts and doubtful debts have been provided for because management is of the view that these amounts are recoverable even if they are outstanding for more than two years under the aging system.

22. The consumption of consumable stores includes stores used for repairing of Plant & Machinery etc. items, since the segregation of such items are not possible.

23. General:

A) Expenses in excess of 1% of total revenue is freight & cartage included in charges general Rs. 15.87 Lac (Previous Year Rs. 39.36 Lac)

B) Earning on exchange Rate Fluctuation on Cancellation of Forward Contract has been included in charges General Credit Rs. 1706 (Previous Year Credit Rs. 1657881/-)

24. Previous year Income and previous year expenses, unrecovered/unclaimed amounts written of and written back have been charged to Profit and Loss Account after netting.

25. During the year under review the workers adopted the go slow tactics and with the result the production suffered and most of the expenses related to manufacturing exceeded abnormally and could not meet with the actual norms of consumption being achieved in the past.

26. During the year under review in view of levy of service tax on Job work undertaken by the company but the department disputed that the liabilities on work is for excise duty and not service tax, with the result they raided the factory and impounded the record, which are still with department.