(Amount in Rs.)

Particulars                               2009-2010       2008-2009

a) Disputed Sales Tax demand                    Nil       49,98,258

b) Disputed Income Tax demand             27,91,895       56,37,705

c) Claims against the Company not 
acknowledged as debts                   2,71,82,189             Nil

d) Guarantees given by the Banks on 
behalf of the Company                      3,90,000     2,28,15,000

The Company is of the opinion that based on the decisions of the Appellate authorities and the interpretations of the other relevant provisions, and as per the legal opinion obtained by it, the above Sales Tax and Income Tax, demands are likely to be either dropped or substantially reduced and hence the provision created in past would be adequate enough to meet any liabilities, in respect of disputed matters which are pending in appeals.

2.0. In terms of the Accounting Standard 17 (AS-17) "Segment Reporting" issued by the Institute of Chartered Accountants of India the Company has only one Segment i.e. "Production and distribution of Wines". There is only one geographical segment. Accordingly no separate disclosure is made.

2.1. SECURED LOANS:

(A) LOANS FROM BANKS, FINANCIAL INSTITUTIONS AND OTHERS:

The loans from Banks, Financial Institutions and Others stand secured as under: Out of Term Loans of Rs. 119.89.45.090 :

a) Loans amounting to Rs. 6,31,87,455 are secured by hypothecation of all current assets both present and future as well as first charge to lead bankers and second charge to pther consortium bankers on the fixed assets of the Company.

b) Loan of Rs. 34,92,70,485 is secured by first pari passu charge over all immovable assets of the Company.

c) Loan of Rs. 48,66,31,078 is secured by subservient charge over Companys current assets and key identified brands of the Company.

d) Loan of Rs. 7,61,76,523 is Secured by subservient charge on Winery Land & Building of Unit 1,2 & 3 situated at Narayangaon.

e) Security for the Term Loan Rs. 22,36,79,549/- is being created. (Refer Note No. 2.17)

(B) Cash Credit of Rs. 146.41.27.574:

Cash credit and other working capital facilities amounting to Rs. 146,41,27,574 are secured by hypothecation of all the Companys current assets both present and future as well as first charge to lead bankers and second charge to other consortium bankers on the fixed assets of the Company.

2.2. Disclosure requirements as per Accounting Standard 18 (AS-18) "Related Party Disclosure" issued by the Institute of Chartered Accountants of India.

- Subsidiary Company

Seabuckthorn Indage Ltd.

Indage Holdings Ltd.

Thachi Wines Pty Ltd.

Indage UK Ltd.

- Associate Concerns with which transactions have taken place during the year

Indage Restaurants & Leisures Ltd.

Indage Development Construction Pvt. Ltd.

Marlborough Finance Pvt. Ltd.

Indage Wines - (Partnership Firm)

Industrial Agencies Corporation - (Partnership Firm)

Indage Engineering Pvt. Ltd

Indage Investments Pvt. Ltd

Vintner Wine Connection Pvt. Ltd.

Indage Richter Nurseries Pvt.Ltd.

Indage Vineyards Pvt. Ltd.

Indrinks Retail Pvt. Ltd.

Indian Institute of Vine & Wine.

- Key Management Personnel

Mr. S. G. Chougule - Chairman

Mr. A. B. Shah - Vice Chairman

Mr. R. S. Chougule - Managing Director

- Related parties of Key Management personnel where transactions have taken place during the year

Arsh Advisors & Owners Ltd.

Asian Electronics Limited.

Pranamghar (India) Pvt. Ltd.

- Related parties of Key Management personnel where no transactions have taken place-during the year

Mrs. P. S. Chougule

Mrs. A. S. Chougule

Mrs. Rina R. Chougule

Mrs. Ramila A. Shah

Note: Related Party relationship is as identified by the Company and relied upon by the Auditors.

2.3. Deferred Tax:

In terms of the Provisions of the Accounting Standard-22 "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India , there is a net deferred tax asset on account of accumulated business losses and unabsorbed depreciation.

In Compliance with Provisions of Accounting Standard and based on General Prudence, the Company has not recognised the Deferred Tax Asset.

2.4. The Company has carried all its Fixed Assets at its carrying amount. As per its economic performance and internal projections, the management contends that there is no potential impairment loss on the existing fixed assets of the Company. No impairment loss is provided as stated under AS-28 "Impairment of Assets" issued by the Institute of Chartered Accountants of India.

2.5 In the previous year, the Company has written off share issue expenses, which are in the nature of stamp duty for fresh issue of shares against Securities Premium account amounting to Rs. 8,59,275.

2.6 Since F. Y. 2005-06, the Company had undertaken various initiatives / activities for creation of a retail network for selling wines and other alcoholic beverages. Various expenses were incurred and certain inventories of the Company were earmarked specifically for the said retail network that had been created by the Company. The expenses incurred in connection thereto and the inventories earmarked therefore were shown separately in the books of the Company as Non - Current Assets under the head "Retail Initiative." However, due to the various financial and operational problems faced by the Company, a decision was taken during the year to discontinue the said "Retail Initiative." Pursuant to this decision the expenses to the tune of Rs. 44,96,35,369/- that were incurred by the Company for the said "Retail Initiative" have been transferred to Profit & Loss account for the year under the head "Exceptional Items." As per the accounting practice followed by the Company, the inventories earmarked for the "Retail Initiative" were earlier carried at Net Realisable Value. However, on account of discontinuation of "Retail Initiative", the earmarked inventories have been transferred to Inventories of the Company under Current Assets. However, as per the accounting practice followed by the Company the inventories (Current Assets) (Ref. Note No. 1.8) of the Company are valued at cost or net realizable value whichever is lower and accordingly the difference of Rs. 92,02,97,518 has been transferred to Profit & Loss account for the year under the head "Exceptional Items."

2.7 Some of the balances in Sundry Creditors, Sundry Debtors and Other Liabilities are subject to reconciliation, confirmation and consequential adjustments/provisions, the amounts whereof have not been determined.

2.8 Inventories :

During the year, the operations of the Company were sub-optimal, hence, the financial cost attributable to process time, as defined in Significant Accounting Policy (Note No. 1.8) has not been considered for the purpose of valuation of Inventories.

2.9 Corporate Debt Restructuring - Empowered Group ( CDR - EG) approved the Scheme for restructuring Companys Debt on 30th March 2010. As the Scheme is effective from October 1, 2009 the Company has given effect to the same during the year. The outstanding liabilities of the Company are being restructured under the aegis of CDR Scheme. As required under the Scheme the Master Restructuring Agreement (MRA) has been executed and effective. Other necessary documents including security documents are in the process of being executed.

2.10 Preference Share Capital - Suspense Account

Pursuant to the Scheme approved by Corporate Debt Restructuring - Empowered Group (CDR-EG), certain portion of Interest Payable from cut off date (30th September 2009) is to be paid by way of Preference Shares redeemable in F.Y. 2018-19 & 2019-20. However as on the Balance Sheet date the Company does not have Preference Shares as class of Shares. Hence, the amount for which Preference Shares have to be issued has been shown under Preference Share Capital - Suspense Account.

2.11 Increase/Decrease in Stock :

During the year the Company decided to discontinue the Retail Initiative (Ref. Note No. 2.14) Due to this the stock earmarked for Retail Initiative has been added to opening stock for the purpose of calculation of Increase/Decrease in Stock of Finished goods and Wine in Process. As a result of this the amount of opening stock of Finished goods & Wine- in-Process for the current year (Rs. 235,28,45,906) is not comparable with the closing stock of Finished goods & Wine in Process for the year ended 31st March 2009 (Rs. 123,45,43,464).

2.12 Pursuant to winding up petitions filed by certain creditors of the Company, the Honble High Court of Bombay has passed the winding up order against the Company on March 19, 2010. However, the Honble High Court was kind enough to stay the said order. Being aggrieved by the said order, the Company has filed an appeal against the said order before the Divisional Bench of the Honble High Court of Bombay.

The Company has also filed a Composite Scheme of Arrangement and Compromise under Sections 391-394 of the Companies Act, 1956 providing for settlement of all the creditors of the Company.

2.13 Previous Year figures have been regrouped and recast wherever necessary.