1.                                                         (Rs. '000)
                                              2010-2011        2009-2010

a) Claims against the Company not acknowledged as debts (to the extent ascertained)

(i) Sales Tax demands under appeal         1 29 00          1 29 00

(ii) Entry Tax demands under
appeal (Net of deposit)                    2 56 02          2 56 02

(iii) Others                               12 6211         12 62 11

b) Show cause notices issued 
By the Excise Deptt.                          9 56             9 56

b) Due to major fire at Malanpur Works production operations are under suspension since 15th October, 1998 and lay off has been declared by the management since 28th October, 1998, which is termed as illegal by the judgement of Gwalior Bench of Hon'ble Madhya Pradesh High Court. Pending resolution of the matter before Higher Division Bench of Hon'ble Madhya Pradesh High Court, compensation payable, if any, will be accounted for as and when decided.

c) The Unit has been closed w.e.f. 04.03.2000 by the closure order of Secretary, Labour Department,

Govt, of Madhya Pradesh. Pending final decision the accounts of the unit are prepared on a going concern concept basis.

3. Consequent to Suspension of Operations;

a) The accounts have been prepared in accordance with and on the basis of available MIS and records and information's.

b) Part of records of Plant at Malanpur relating to production and stores etc. for the period from April 97 to 31st October 98 are in possession of the Excise Department.

c) Usual and normal year-end exercises with respect to physical verification of fixed assets, CWIP and Inventories (including goods in transit, lying with third parties and at branches); determination of unserviceable or damaged Stores could not be carried out during the year. Provision against shortage between physical quantity as compared to book records will be accounted for as and when ascertained.

4. The factory premises of the Company is under seizure by the Collector of Gwalior w.e.f. 08.01.2000 for non-payment of minimum demands charges amounting to Rs. 56 75 96 raised by Madhya Pradesh State Electricity Board (MPEB), against which an amount of Rs. 2 81 92 deposited has been included as deposit under loans and advances. The company has contested the same by an Appeal before the Hon'ble Madhya Pradesh High Court, which has referred the matter to District Court, for appointment of Arbitrator. However, the MPEB has filed an appeal and the same is pending with the Higher Bench of Hon'ble Madhya Pradesh High Court.

5. Steel Plant was under suspension of work since 28.10.1998. In view of the prevailing circumstances and continuous losses, the management had decided to exit from Bar Mill. Net realisable value of assets as estimated by the Management of Bar Mill amounting to Rs.6 82 13 (2009-2010: Rs. 6 82 13) is shown separately as "Assets held for disposal". In view of the management, no further provision for diminution in the value of Bar Mill is required to be made.

6. Balances of investment, Debtors, fixed deposit pledged with Government authorities, loans and advances Creditors and other current liabilities are subject to confirmation and/or reconciliation. Adjustments, if any, will be accounted for in the year of reconciliation/settlement.

7. Sundry Debtors include Rs. 13 75 (2009-2010 : Rs. 13 75) are old and overdue against which legal and/or other steps for recovery have been initiated. In the opinion of the Management, considering the present status no provision is required. Provision/adjustment, if necessary, will be made as and when finally settled/recovered.

8. In the opinion of the management Current assets (other than inventory), loans and advances have a value on realisation in the ordinary course of business, at least equal to the amount at which they are stated.

9. In terms of the Scheme of Arrangement sanctioned by the Hon'ble High Court at Calcutta vide its order dated 25.04.2000, Rs. 1 98 73 29 being an amount equivalent to the difference between the aggregate of assets and liabilities including the reserves and equity share capital remaining after the transfer of relevant amounts to Hindusthan Engineering & Industries Ltd.(HEI) as on 01.04.1999 has been treated as a loan from HEI to the Company. Further, Rs. 1 51 75 33 (net) being the aggregate financing done by HEI to the Company for running of Company's operations, subsequent to 01.04.1999 [including Rs.27 42 23 (net) during the year] has been treated as loan from HEI in terms of the Scheme of Arrangement sanctioned by Hon'ble High Court at Calcutta. No interest is being provided on the above loan from HEI, as mutually agreed.

10. In view of accumulated losses, debenture redemption reserve as required by Sec. 117C of the Companies Act, 1956 has not been created.

11. In view of continued losses and financial constraints from 2000-01, interest payable on secured loans is recognised as and when paid, Accordingly, interest on secured loans upto 31st March, 2011 as estimated by the management, aggregating to Rs.4 22 43 32 (including Rs.Nil for the current year) has not been provided for in the books of account. Consequently, loss for the year is lower to that extent.

12. In accordance with Accounting Standard-22 "Accounting for taxes on Income" the Company has accounted for deferred tax during the year. The Company has significant amount of carried forward losses & unabsorbed depreciation under income Tax Act. Therefore, as a matter of prudence, deferred tax assets have been recognised only to the extent of deferred tax liability.

The break up of deferred tax assets to the extent recognised and liabilities and movement during the year is as follows:

13. The Company has been legally advised that the provision of section 274(1 )(g) dealing with the disqualification of directors in respect of unpaid redeemable debentures is applicable to the directorships of the Directors of the Company in companies other than this company.

14. Steel Plant of the Company's Unit Madhya Pradesh Iron & Steel Company (MISC) was under lay-off since 28.10.1998 and later on the Company decided to close down production facilities at MISC. Accordingly, certain expenditure though incurred and related to subsequent to commissioning of Plant & Machinery which have been carried over and treated as pre-operative expenditure in earlier years under Capital Work-in-progress (CWIP) amounting to Rs.2 45 80 64 was written off in Assessment Year 2001-02. The said amount of CWIP of Rs.2 45 80 64 was disallowed as Revenue Expenditure by the Assistant Commissioner of Income Tax in his Assessment Order dated 31.03.2004. This amount was also disallowed by the Commissioner of Income Tax (Appeal) vide his Order dated 05.10.2004. Moreover, The Income Tax Appellate Tribunal, Kolkata has also disallowed the same vide his order dated 24.05.2006.

In view of this M/s. Bharat D. Sarawgee & Co., Chartered Accountants, the Internal Auditors of the Company advised that the company should reverse the earlier debit entry made in the Profit & Loss Account in the Assessment Year 2001-02 by crediting Capital Work-in-progress Account in Profit and Loss Account to regularise the matter so the amount of Rs.2 45 80 64 which was debited as Capital Work-in-progress in the Profit and Loss Account and disallowed in the Assessment Year 2001-02 be and is hereby reversed by crediting back the same in the Profit and Loss Account for the current year ended 31.03.2011.

15. Figures for previous year have been regrouped/rearranged wherever considered necessary.

16. Additional information under Part II of Schedule VI of the Companies Act, 1956 is as per Schedule