(A) Excise Duty demand regarding valuation of goods under section 4 of Central Excise Act 1944 is Rs. Nil Lacs (Previous Year 112.34 Lacs). Demand raised by the department had been withdrawn.

(B) Excise duty demand against Cenvat on capital goods Rs.10.56 lacs disallowed (Previous year Nil)

(C) Service Tax on Business auxiliary services Rs. 36.56 lacs (Previous year Nil)

(D) Department filed appeal against core pipe with finish goods sale matter Rs. 0.84 lacs (Previous year Nil)

(E) Estimated amount of contracts remaining to be executed on capital A/c and not provided for Rs. Nil lacs (Previous year Rs.300.21 lacs)

(F) Demand of UPSEB amounting to Rs. 13.31 lacs (Previous year 13.31 lacs) and late payment surcharge of Rs. 19.26 lacs (Previous year 19.26 lacs) for use of electricity during peak hours of period from April92 to July93, not accepted by the company. Matter under consideration with Udhyog Bandhu, Lucknow and stay is granted by Hble High Court, Lucknow Bench against writ filed.

(G) Bank interest under dispute with Punjab and Sind bank of Rs 5.51 Lacs. (Previous year 5.51 lacs).

(H) Guarantees aggregating to Rs. 4460.00 lacs (Previous year Rs 4460.00 lacs) to banks and financial institutions on behalf of others.

(I) Legal suit by Hindustan Door Oliver Ltd. for compensation claim of Rs. 100.00 Lacs (Previous year 100.00 lacs). Matter is in progress for settlement out of court.

(J) Custom Duty on Imported Waste Paper brunt due to fire amounting to Rs. 101.22 lacs. (Previous Year: Nil)

(K) Sales tax demand Rs. Nil (Previous Year 176.95 Lacs).

3. The company has undertaken trading of sugar during this financial year. The consequent change in the Memorandum of Association has been made & filed with the Registrar of Companies.

4. Against the insurance claim receivable of Rs. 274.00 lacs, appearing in last year balance sheet, for fire broke out on 22nd March 2004, the company has received the claim to the extent of Rs. 181.74 lacs and further a sum of Rs. 42.27 lacs is adjusted by way of reversal of differential custom duty. Balance sum of Rs. 49.99 lacs remains as unadjusted receivable claim for the preceding year.

Further another fire occurred on 15th April 2004 against which the company lodged the claim of Rs. 471.02 lacs and the claim was received of RS. 268.66 lacs. Balance amount of Rs. 202.36 lacs continue as claim receivable against insurance company.

Against the aggregate receivable claim of Rs. 252.35 lacs ( Rs. 44.99 lacs for preceding year and Rs. 202.36 lacs for current year fire ) the company has moved to the arbitration claiming Rs. 292 lacs ( Comprising short amount received against claim and consequential losses ) plus interest @ 18% . No provision for possible loss if any, has been made as the same is un ascertainable at this stage. The above said receivable amount is appearing under the head Loans & Advances.

5. The ground rent paid to Container Corporation, of India amounting to Rs. 44.21 lacs has been debited to ground rent refundable account as the claim is pending with appropriate authority on the facts that the ground has arise due to congestion at the port for which company is not liable. The said amount is appearing under the head Loans & Advances. Provision of Rs. 10.00 lacs has been made for possible loss on this account.

6. Loans and advance includes interest refundable from bank Rs 22.63 lacs for differential interest @ 1.5% excess charged by bank. The company has taken up the issue with the bank at appropriate level and the same is pending. No provision has been made for loss if any on this account as the amount is not ascertainable. The above said receivable amount is appearing under the head Loans & Advances.

7. Balances of Sundry Debtors., Loans & Advances, Sundry Creditors and Security Deposits are subject to confirmation .

8. No Provision has been made for Directors Sitting Fee. Estimated Liability Rs.21,250 (Previous year Rs.20,250)

9. Auditors Remuneration

Audit Fee                        Rs. 110,200 (Prev. Year Rs. 83.000)

10. There has been no employee having received the remuneration aggregating-Rs. 4,800,OOO/- or more if employed for the full year or Rs. 400,000/- per month or more, if employed for the part of year.

11. The company is availing the sales tax exemption for nine years maximum to the extent of tax aggregating to Rs. 1,841.38 lacs initially allowed under U.P. Trade tax and Central Sales Tax act, which is reduced every year to the extent used as per section 4A of UPTT Act.

12. The company has an equity investment of Rs.175.00 lacs in M/s Chadha Boards Ltd. Further Rs 343.91 Lacs is taken as interest free advance from M/s Chadha Boards Ltd.

13. In the opinion of the directors and to the best of their knowledge & belief, the value on realization of current assets, loans & advances in the ordinary course of business would not be less than the amount at which they are stated in the Balance Sheet.

14. Sundry debtors includes a sum of Rs.1,012,710 (Previous year Rs.1,056,464) due from M/s United Papers Crafts, Derrabassi (Punjab) against whom legal suit is pending in court. However mutual settlement is reached with party and the payment is being received gradually. Hence no provision for bad and doubtful debts is made or provided for.

15 The expenses for commission & consultancy incomes are debited to respective heads of accounts of profit & loss account.

16 M/s Hindustan Door Oliver Ltd. has filed legal suit against the company in Delhi High Court for compensation Claim of Rs.100.00 lacs plus awarding cost ,on account of non fulfillment of contract obligations. The company has not accepted their claim & has decided to defend the suit. No provision has been made against the said claim.

17 Provision for minimum Alternate tax has not been made in the accounts as company has not earned book profit.

18. This year the company has charged depreciation on its Writing & Printing Plant & Machinery on the rates applicable to Continuous process plant. In the last year the same was provided on Shift working basis. The change is done consequent to the opinion obtained from independent paper industry technocrat. The change has resulted in the additional depreciation of Rs. 41,796 being charged in the current financial year pertaining to last year. Had the same method being used depreciation would have been higher by Rs. 19,247,878 and consequently profit would have been lower by the same amount.

19. The Company hold the lease hold right of using an accommodation for a week per year (on cumulating basis) of sterling Holidays Resorts where ever constructed. The original payment made by the company is Rs.67800.00 the right of use is treated as fixed assets and depreciation is being charged considering the period of lease.

Pursuant to accounting standard (AS) 22, Accounting for taxes on Income, the company has recorded a net cumulated deferred tax liability of Rs.55,326,621 up to 31.03.2004. During the year the company has revised its deferred tax liability of Rs.55,326,261 to represent current tax rate applicable. This has resulted in reduction of liability to the extent of Rs.7,482,378. The amount has been credited to Profit & Loss Account. Further, Rs.3,447,321 has been recognized as deferred tax assets for the year and accordingly credited to profit & loss Account.

20. Previous year figures have been regrouped and rearranged wherever necessary to make them comparable with those of previous year.

21 Additional Information Pursuant to the Provision of Paragraph 3, 4C & 4D of part II of schedule VI of the companies Act1956. The company manufactures M.G.Kraft Paper and News Print/Writing Printing Paper and the relevant particulars thereof are as under:

Installed capacity is as certified by the Management but not verified by the Auditors being a technical matter.

Note Opening stock, Production & Closing stock of Kraft Paper includes the qty. 4.837 Mt, (-) 1.077 Mt. & 3.772 Mt. respectively of core Pipe which is of captive consumption nature.