Notes to Accounts of Sharp Industries Ltd.

Sep 30, 2011

1 The Company has not provided for gratuity and other retirement benefits as required by the Accounting Standard 15 issued by the Institute of the Chartered Accountants of India. However, they are accounted on crystalisation of the specific liability.

2 a) In the opinion of the Board, the Current Assets, Loans & Advances have been stated at the realisable value in the ordinary course of business.

b) As decided by the management Rs. 83.14 Lac (Previous Year Rs.3.64 Lac) has been debited under the head Prior Period Adjustments.

3 Balances due to and due from the parties are subject to confirmation.

c) Transactions with Associates

Not Applicable

4 The Company has not provided for Deferred Tax Liability in view of brought forward loss under the Income Tax Act, 1961.

5 The Company is mainly engaged in the manufacturing of Flexible Packaging Materials and all other activities revolve around it and hence there is no segment reporting in terms of the Accounting Standard - 17 "Segment Reporting" issued by the Institute of Chartered Accountants of India.

6 In the absence of adequate documents/ information, amount due to Small and Ancillary Undertakings included under Sundry Creditors and interest on delayed payment to Small Scale and Ancillary Undertaking Act, 1993 could not be identified and separately disclosed.

7 a) Material cost is reduced by Excise Duty, CENVAT and Sales Tax Set-off.

b) Amount of Sales Tax Deferred Credit of Rs. 160.58 Lac is subject to assessment by Sales Tax Authorities.

8 The Company is in process of filling up the vacancy of the Company Secretary.

9 Information pursuant to the provisions of Para 3,4C and 4D of part II of Schedule VI of the Companies Act, 1956 (to the extent applicable and as certified by the Management & relied upon by the Auditors).

---

Sep 30, 2010

1) Contingent Liabilities:

Contingent Liabilities are determined on the basis of available information and are disclosed by way of notes to accounts.

2. The Company has not provided for gratuity and other retirement benefits as required by the accounting standard 15 issued by the Institute of the Chartered Accountants of India. However, they are accounted on crystalisation of the specific liability.

3. The Company has written off Debtors and Loans & Advances which in the opinion of the management were doubtful of recovery.

4. No provision has been made in respect of interest, penal interest and other liquidated damages, if any, on disputed statutory dues, as the same has not been ascertained.

5. Confirmation for balances with various parties have not been received.

6. a) In the opinion of the Board, the Current Assets, Loans & Advances have value on realisation in the ordinary course of business at least or equal to the amount at which they are stated. The provisions for all known and determined liabilities are adequate and not in excess of the amount reasonably required.

b) As decided by the management Rs.3.64Lac (Previous Year Rs.5.96Lac) has been debited under the head Prior Period Adjustments.

c} The Company has made One Time Settlement (OTS) with Secured Creditors. As a Result, an amount of Rs.443.00Lac, i which was waived, has been added to the General Reserve.

7. Balances due to and due from the parties are subject to the confirmation.

8 Related parties disclosures:

a. Particulars of Associates:

Name of the Related Parties Nature of Relationship

Akar Laminators Ltd. Associate Company

Vishnu Vijay Packagers Ltd. Associate Company

Akar International Inc. Associate Company

b. Key Management Personal:

Name of the Related Parties Nature of Relationship

Mr. Vinod T. Sheth Chairman

Mr. Hasmukh T. Sheth Managing Director

9. The Company has not provided for Deferred Tax Liability in view of brought forward loss under the Income Tax Act, 1961. :

10. The Company is mainly engaged in the manufacturing of Flexible Packaging Material and all other acitivities revolve around it and hence there is no segment reporting in terms of the Accounting Standard - 17 "Segment Reporting" issued by the Institute of Chartered Accountants of India.

11. The Company has imported capital equipment of $ 13.50Lac & DM 10.96Lac (Rs.648.54Lac approx.) under EPCG Scheme and against which the Company has unexecuted export obligation of Rs.2594.18Lac aprox., as per Export Import Policy of Government of India. (As certified by the Management).

12. In the absence of adequate documents/ information, amount due to small and ancillary undertakings included under Sundry :

Creditors and interest on delayed payment to Small Scale and Ancillary Undertaking Act, 1993 could not be identified and separately disclosed.

13. a) Material cost is reduced by Excise Duty, CENVATand Sales Tax Set-off.

b) Amount of Sales Tax Deferred Credit of Rs.160.58Lac is subject to assessment by Sales Tax Authorities.

14. The Company is in process of filling up the vacancy of the Company Secretary.

---

Sep 30, 2009

1) Borrowing Cost

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying assets is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing cost are charged to revenue.

i) Contingent Liabilities:

Contingent Liabilities are determined on the basis of available information and are disclosed by way of notes to accounts.

2 The Company has not provided for gratuity and other retirement benefits as required by the accounting standard 15 issued by the Institute of the Chartered Accountants of India. The extent of non-compliance in value terms is not ascertainable.

3 The Company has not made the provision of debtors and loans & advances which are doubtful of recovery, as the amount of the same is not ascertainable in view of not having the balance confirmation from respective parties.

4 No Provision have been made for interest, penal interest and other liquidated damages on unpaid amount of Statutory Dues, as it is not ascertainable due to non-availability of necessary details.

5 The Company has not provided for the diminution in the value of investments, as the same will be made at the time of sale/disposal.

6 a) In the opinion of the Board, the Current Assets, Loans & Advances have value on realisation in the ordinary course of business at least or equal to the amount at which they are stated. The provision for all known & determined liabilities are adequate and not in excess of the amount reasonably required. The balances of Secured Loans are subject to confirmation and reconciliation thereof.

b) As decided by the management Rs.5.96Lacs (Previous Year Rs.22.24Lacs) has been debited under the head Prior Period Adjustments.

7 Balances due to and due from the parties are subject to the confirmation.

8 The company is contingently liable (As determined by the management) for and not provided in the accounts :-

a) Disputed Income Tax Demand Rs. 12.78 lacs (P.Y. Rs. 16.00 lacs) as the matters are under appeal.

b) Disputed Excise demand Rs. 48.39 (P.Y. Rs. 48.39 lacs).

c) The Company is contingently liable for Rs.28.69 Crores to ARCIL towards Non Convetibe Debenture (NCD), which would arise if Company and/or Lalit Polyster Private Limited fails to meet its commitment as per the One Time Settlement Scheme.

10 Related Parties disclosures:

a) Particulars of Associates:

Name of the Related Parties Nature of Relationship

M/s. Akar Laminators Ltd Associate Company

M/s. Vishnu Vijay Packagers Ltd Associate Company

M/s. Akar International Inc. Associate Company

b) Key Management Personal:

Name of the Related Parties Nature of Relationship

Mr. Vinod T. Sheth Chairman

Mr. Hasmukh T. Sheth Managing Director

Mr. Hitesh R. Shah Director

12 In view of accumulated business losses carried forward and unabsorbed depreciation under the income Tax Act, the Accounting Standard 22 relating to "Accounting for Taxes on Income" cannot be implemented on Balance Sheet date as sufficient future taxable income is not assured with proper evidence.

13 The Company is mainly engaged in the manufacturing of Flexible Packaging Material and all other acitivities revolves around it and hence there is no reporting in terms of the Accounting Standard - 17 "segment reporting" issued by the Institute of Chartered Accountants of India.

14 The Company has imported capital equipment of $ 13.50 lacs & DM 10.96 lacs (Rs. 648.54 lacs approx.) under EPCG Scheme and against which the company has unexecuted export obligation of Rs. 2594.18 lacs aprox., to be executed as per export import policy of Government of India. (As certified by the Management)

15 In the absence of adequate documents/ information, amount due to small and ancillary undertakings included under Sundry Creditors and interest on delayed payment to small scale and ancillary undertaking Act, 1993 could not be identified and separately disclosed in the accounts

16 a) Material cost is reduced by excise duty CENVAT and Sales Tax Set-off.

b) Amount of Sales-tax deferred credit loan of Rs. 160.58 lacs is subject to assessment by Sales-tax Authorities.

17 The company is in process of filling up the vacancy of the Company Secretary.

18 Figures have been regrouped, recasted, rearranged and re-classified wherever necessary. Figures shown in brackets are for previous year.