2. ESI Authorities levied damages for Rs.2,58,356/- for delayed payment of ESI dues. The Company has obtained stay order from ESI Court Coimbatore on payment of 50 % of damages. Pending orders, no provision has been made for the said liability.

3. Demand of Rs.1,75,000/- imposed by SEBI is being contested by the company and hence no provision is made in the accounts.

4. The demand by the Income tax department in respect of interest under Section 234 (B) amounting to Rs. 17,33,644/- and interest under Section 220 (2) amounting to Rs. 10,20,899/- was adjusted by the department against the refunds to be issued to the Company. The Companys petition before the Chief Commissioner of Income Tax, Coimbatore for the waiver of above interest u/s 234 (B) is still pending.

5. Income Tax assessment upto the year ended 31.03.2006 has been completed.

The above information and that given in Schedule Current Liabilities regarding Micro, Small and Medium enterprises has been determined on the basis of information available with the Company. This has been relied upon by the auditors.

6 The Company settled the dues of secured lenders during the year ended 31.03.2008 under One time Settlement Scheme. Consequent to settlement, the secured lenders waived an aggregate amount Rs.153.27 Crores (Principal Rs.10.28 Crores and interest Rs.142.99 Crores), which was written back and grouped under other income as "Extraordinary Income". This waiver resulted in turning Companys Net Worth positive and BIFR in their hearing dated 30.10.2007, declared that the company as out of the purview of BIFR.

7. The Company has disposed of the Machineries in Coimbatore Unit as proposed in the rehabilitation scheme. Hence, the accounts have been prepared on a going concern basis.

8 Confirmation of balances have been sent to all parties of which only some have been received and reconciled. The others are subject to confirmation and reconciliation.

9. Previous year figures have been regrouped and reclassified wherever necessary.