Notes to Accounts of Indo Bonito Multinational Ltd.

Mar 31, 2012

(1) Previous year's figures are regrouped, recast and rearranged wherever necessary to make them comparable with those of the current year.

(2) Balances of Sundry Debtors, Sundry Creditors are subject to confirmation, reconciliation and consequent adjustments if any.

(3) In the opinion of the Board, unless otherwise stated in the Balance Sheet and schedules attached thereto, the current assets and loans and advances as stated in the Balance Sheet are approxImately of the value realizable in the ordinary course of business and provision for all known liabilities for the year has been made in the books of account of the Company.

(4) Additional information as required under Para-IH of Part II of Schedule VI to the Companies Act, 1956 (as certified by the directors and relied by the Auditors).

a) Particulars of Capacity:

1) Licensed Capacity: 285000MT - Dry Mix Plaster - Leased Unit

2) Installed Capacity : 285000MT - Dry Mix Plaster - Leased Unit

3) Licensed Capacity : Not Applicable

4) Installed Capacity : 40000 Blocks Or 80000 Pavers per day based on three shifts working - Bangalore - Leased Unit

However the lease in respect of Dry Mix Plaster unit was cancelled in Dec 2010 and Blocks and Pavers unit w.e.f June 2011.

b) Quantitative details for the year are as under:

During the current year company has dealt in wide range of products i.e. ceramic tiles, building materials, blocks and pavers, and water management business. Hence quantitative information is not provided in the current year.

c) Value of import calculated on CIF basis by the Company during the year in respect of raw materials, trading goods, components, spare parts and capital goods Rs.Nil (PreviouS year 2, 64,751).

d) Value of all imported/indigenous raw materials, traded goods, stores and spare parts and components consumed (including through canalized agencies):

i) Raw Materials Rs. Nil (Previous year Rs. 11,21,94,431)

ii) Stores & Components - Nil (Previous year Rs. Nil)

iii) Traded Goods Rs. 4,68,07,028 (Previous year 111,84,99,079/-)

e) Purchase of traded goods during the year Rs 4,67,22,903 (Previous year Rs. 106,75,44,390)

f) Expenditure/Advances in foreign currency Rs. Nil (Previous year Rs 13,98,081)

g) FOB value of deemed Export Rs Nil (Previous year Rs. 12,01,28,660)

(5) Contingent liabilities indude -

a) Contractual obligations of the company as per the agreements with its sundry debtors Rs Nil (Previous Year Rs Nil)

b) Disputed Income Tax Demand Rs.34.17 crores (Previous Year Rs5.75 crores).

c) Claims not acknowledged as debts Rs 53 crores (Previous Year Rs 53 crores)

(5) There are no dues outstanding for more than 30 days in respect of transactions with small scale industrial undertakings.

(6) Deferred Taxation:

The company has provided for deferred tax Liability of Rs.NIL (Previous Year Rs NIL) .As there are losses incurred during the current year; no deferred tax asset is recognized on a conservative basis.

(7) Interest and financial charges include bank charges, service charges, and bill discounting charges payable and interest on unsecured loans, car loans and interest on packing credit.

(8) Disclosure as required by the AS-18 on Related Party disclosure:

Related Party Disclosures, as required by Accounting Standard 18, "Related Party Disclosures", issued by the Institute of Chartered Accountants of India are given below:

Subsidiary Companies where Nil control exists

Group Companies where Scarlet International Pvt Ltd

common control exists Nestler Commodities Ltd.

(9) Unclaimed dividends as on 31/03/2012 for FY 2007-08 is Rs.l06112(l,06,373) and for FY 2008-09 Rs.52650(55,216) and FY 2009-10 Rs 488935.

(10) IDBI Bank had cancelled a term loan of Rs 17 crores and cash credit of Rs 3 crores, causing the project of hollow core blocks of Rs 47 crores to be aborted. .Project expense of Rsl912 lacs has not been written off and its relocation possibilities are still being explored.However certain amounts may still have to be written off after incurring relocation costs. Further estimated losses are expected to be Rs 8 to 9 crores on this account.

(11)Secured loan of Rs 24.06 cr from Bank of India was raised for export packing credit and foreign bills purchase facility. However the bank has issued a legal notice and recalled for loan of Rs 26.27 cr including interest upto Sep 2011.

(12)Cancellation of term loan and recall of working capital by IDBI in respect of our investee company M/S Kare Labs P Ltd compelled the company to resort to disinvestment causing a loss of Rs 2.53 crores.

---

Mar 31, 2011

1. Loans from banks include Bill Discounting and Packing Credit limit availed from Bank of India which are secured by first charge on mortgaged fixed assets moviable and discounted bills

2.Secured Loans from others include:-

a. Loans secured by first charge on vehicles or other assets acquired against them.

b. Loans secured by investments and financial assets under acquisition from an Asset Reconstruction Company on assignment basis.The security of these loans would be the physical assets underlying financial assets upon acquisition.

c.Advances received in cash/kind from its vendors secured against financial assets due from a related company.

(1) Previous year's figures are regrouped, recast and rearranged wherever necessary to make them comparable with those of the current year.

(2) In view of the emergent special circumstances the accounts for the year ended 31st March 2009 and 31st March 2010 have been revised as it was statutorily not possible to revise the accounts for the year ending 31.03.2008. These special circumstances were as a result of having to net write off of certain debtor accounts related to association under agreements with public-sector trading houses. The loss on account of non recovery from the Company's PSU debtor on account of alleged non-performance by the Company relating to the debtor's dues from its overseas buyers had to be booked by this Company in the prior years which however had to be restricted to the extent(Rs.7.42 crores) of available profits considering the dividend distribution in these years. A further balance loss on this account of Rs 65.20 lacs has been booked in this financial year as an exceptional item. The abovesaid losses on account of non-recoverable debtors are in addition to other non -recoverable debtors that have been assigned to erstwhile promoters of Bonito Impex Pvt Ltd and earlier suppliers of goods to Bonito Impex Pvt Ltd in pursuance of indemnification agreements with them at the time of their amalgamation into this Company . Such assignment is quantified to the tune of Rs 25.48 crores and has been assigned at par to various parties.

The Company started large scale business operations was after merger of Bonito Impex Pvt Ltd into this Company. The former Bonito Impex Pvt Ltd was functioning as an Associate/ Shipper to the exports being done by some Public Sector Trading Houses and accordingly this sales turnover was reflected as deemed exports in our books and Annual Reports. Consequent to the said merger all the assets and liabilities - including the abovesaid debtors accounts that resulted from the sales turnover (with these PSU Trading Houses) between the appointed and effective date and, also from the sales turnover of former Bonito Impex Pvt. Ltd. with the said PSUs in the period prior to the appointed date; had been taken over on the books of this Company . This takeover of the said debtors accounts and the current liabilities was obviously subjected to appropriate indemnification executed by the management of the former Bonito Impex Pvt.Ltd.

This Company , subsequent to the merger, has got involved into legal proceedings including one before an Arbitral Tribunal in relation to the abovesaid transactions with the public sector undertakings. In September 2010, during these legal proceedings it has become apparent that the accounts of the company will have to be revised to bring out the true and fair picture of the Company's finances..This became particularly necessary after the company had to face investigations by the concerned agencies causing the attendant bad publicity and the resultant badly disrupted operations to deeply dent the Company's performance in the second half of the financial year 2010-11. The Company had to even put on back burner after the banks/ lenders suspended financial assistance to it. The loss on account of shelving the project is still to be ascertained and not yet booked to the Profit & Loss account.

(3) Balances of Sundry Debtors, Sundry Creditors are subject to confirmation, reconciliation and consequent adjustments if any.

(4) In the opinion of the Board, unless otherwise stated in the Balance Sheet and schedules attached thereto, the current assets and loans and advances as stated in the Balance Sheet are approximately of the value realizable in the ordinary course of business and provision for all known liabilities for the year has been made in the books of account of the Company.

(5) Additional information as required under Para-III of Part II of Schedule VI to the Companies Act, 1956 (as certified by the directors and relied by the Auditors).

a) Particulars of Capacity :

1) Licensed Capacity : 285000MT - Dry Mix Plaster - Leased Unit

2) Installed Capacity : 285000MT - Dry Mix Plaster - Leased Unit

3) Licensed Capacity : Not Applicable

4) Installed Capacity : 40000 Blocks Or 80000 Pavers per day based on three ship workings - Banglore - Leased Unit

b) Quantitative details for the year are as under :

During the current year company has dealt in wide range of products i.e. ceramic tiles, building materials, and gold, diamond, jewellery, wooden floorings, blocks and pavers, dry-mix plasters. Hence quantitative information is not provided in the current year. However, in respect of gold jewellery the quantitative information is given in quantitative schedule.

c) Value of import calculated on CIF basis by the Company during the year in respect of raw materials, trading goods, components, spare parts and capital goods Rs.2,64,751 (Previous year 4412920).

d) Value of all imported/indigenous raw materials, traded goods, stores and spare parts and components consumed (including through canalized agencies) :

i) Raw Materials Rs. 11,21,94,431-(Previous year Rs. 17,29,65,123/ )

ii) Stores & Components - Nil (Previous year Rs. Nil)

iii) Traded Goods Rs. 111,84,99,079/- (Previous year 211,44,36,159 )

e) Purchase of traded goods during the year Rs.106,75,44,390/-(Previous year Rs. 202,10,05,322 )

f) Expenditure/Advances in foreign currency Rs.13,98,081 /- (Previous year Rs 19,79,850 )

g) FOB value of deemed Export Rs 12,01,28,660 /- (Previous year Rs. 142,92,13,373 /-)

(6) Contingent liabilities include

a) Contractual obligations of the company as per the agreements with its sundry debtors Rs Nil (Previous Year Rs 62.23 crores)

b) Disputed Income Tax Demand Rs.5.75 crores (Previous Year Rs4.09 crores).

c) Rs 53 crores in respect of claims not acknowledged as debts.

(7) There are no dues outstanding for more than 30 days in respect of transactions with small scale industrial undertakings.

(8) Deferred Taxation :

The company has provided for deferred tax Liability of Rs.NIL (Previous Year Rs NIL) .As there are losses incurred during the current year ,no deferred tax asset is recognized on a conservative basis.

(9) Interest and financial charges include bank charges ,service charges ,and bill discounting charges payable to banks and interest on unsecured loans, car loans and interest on packing credit.

(10) Segment Information for the year ended 31st March. 2011

The Company has dealt mainly and substantially in the segment of Gold Jewellery Business, which is its primary segment. Hence, information required by AS-17 is not applicable in the opinion of the Board, however for better disclosure the company has analyzed its activities in two segments viz. gold jewellery business and other business.

(11) Unclaimed dividends as on 31/03/2011 for FY 2007-08 is Rs 106113 (1,06,373) for FY 2008-09 Rs 52650 (Rs.55,216) and for FY 2009-10 Rs 478934 (nil) .

(12) A substantial part & loan & advance comprise of financial assets. The security of these loans would be the physical assets underlying them upon acquisition.

---

Mar 31, 2010

(1) Previous years figures are regrouped, recast and rearranged wherever necessary to make them comparable with those of the current year.

(2) Balances of Sundry Debtors, Sundry Creditors are subject to confirmation, reconciliation and consequent adjustments if any.

(3) In the opinion of the Board, unless otherwise stated in the Balance Sheet and schedules attached thereto, the current assets and loans and advances as stated in the Balance Sheet are approximately of the value realizable in the ordinary course of business and provision for all known liabilities for the year has been made in the books of account of the Company.

(4) Additional information as required under Para-III of Part II of Schedule VI to the Companies Act, 1956 (as certified by the directors and relied by the Auditors).

a) Particulars of Capacity :

1) Licensed Capacity : 285000MT - Dry Mix Plaster - Leased Unit

2) Installed Capacity : 285000MT - Dry Mix Plaster - Leased Unit

3) Licensed Capacity : Not Applicable

4) Installed Capacity : 40000 Blocks Or 80000 Pavers per day based on three ship workings -

Banglore - Leased Unit

b) Quantitative details for the year are as under :During the current year company has dealt in wide range of products i.e. ceramic tiles, building materials, and gold, Jewellery, wooden floorings, blocks and pavers, dry-mix plasters and mobile. Hence quantitative information is not provided in the current year. However, in respect of gold jewellery the quantitative information is given in quantitative schedule.

c) Value of import calculated on CIF basis by the Company during the year in respect of raw materials, trading goods, components, spare parts and capital goods Rs.44,12,920/- (Previous year 91,47,791/-)

d) Value of all imported/indigenous raw materials, traded goods, stores and spare parts and components consumed (including through canalized agencies) :

(5) Contingent liabilities of Rs 62.23 crores includes contractual obligations of the company as per the agreements with its sundry debtors.(Previous Year Rs 90 crores) and disputed Income Tax Demand Rs.4.09 crores (Previous Year Rs. Nil).

(6) There are no dues outstanding for more than 30 days in respect of transactions with small scale industrial undertakings.

(7) Deferred Taxation : The company has provided for deferred tax Liability of Rs. 27,05,600/- (Previous Year Rs.30,25,000/-).

(8) Interest and financial charges include bank charges ,service charges ,and bill discounting charges payable to banks and interest on unsecured loans, car loans and interest on packing credit.

(9) Disclosure as required by the AS-18 on Related Party disclosure:

(10) SEGMENT INFORMATION FOR THE YEAR ENDED 31ST MARCH, 2010

(11) Additional information pursuant to part II of schedule VI to the Companies Act, 1956:-

(12) Earning Per Share (in Rs.)

(13) Unclaimed dividends as on 31/03/2010 for FY 2007-08 is Rs.1,06,373/- and for FY 2008-09 Rs.55,216/- (Previous Year for FY 2007-08 Rs.1,23,949/-).

(14) Sundry debtors includes bills discounted with banks.

NOTES :

1. Other Products includes building materials, dry-mix plaster, mobiles, agro products, blocks and pavers, wooden floorings.

2. Other materials includes cement, sand and allied chemicals.

3. Production of dry-mix plaster and chiknaputty was 20865MT during the year

4. Production of blocks and pavers was 8100 MT during the year.