Notes on Financial Statements for the year ended 31st March, 2014

Significant Accounting Policies :

1.01. System of Accounting :

Financial Statements have been brpared in accordance with the historical cost convention following accrual system of Accounting, Accepted Accounting Principles, Accounting Standards issued by I.C.A.I and relevant provisions of the Companies Act, 1956.

1.02. Revenue Recognition :

Sales : Sales are recognised in the accounts on passing the title of the goods.

Rental Income : Rental Income have been shown in the accounts as per the terms of Agreements with the tenants.

Other Income / Expenses : Other Income including sale of services and expenses are accounted for on accrual basis.

1.03. Investment :

Investments are stated at cost including the share stamp charges.

1.04. Fixed Assets :

Fixed Assets are stated at cost including direct expenses related thereto net of debrciation.

1.05. Debrciation :

The Company is providing debrciation on assets including assets acquired in amalgamation on written down value method on pro-rata basis as per the rates brscribed under Schedule XIV to the Companies Act, 1956. No debrciation has been provided on Silver Idol as rate of debrciation has not been brscribed in Schedule XIV to the Companies Act, 1956. Debrciation on Building on Leasehold Land (Shown under the head Non-Current Investments) has been charged on proportionate basis over the period of Lease.

1.06. Inventories :

Real Estate - Valued at lower of cost including other attributable expenses or market realisable value.

Shares - Valued at lower of cost or market value in case of quoted shares and at lower of cost or book value in case of unquoted shares.

Finished Goods - Finished goods has been valued at lower of cost or market realisable value.

Work-in-Progress - Work-in-progress has been valued at cost incurred up to the stage of completion.

The deferred revenue expenses are being amortised by 5 equal installments.

1.08. Employee Benefits :

I. Short Term Employee Benefits - All employee benefits payable within twelve months of rendering the service are recognised in the period in which the employee renders the related service.

II. Post Employment Benefits -Defined Contribution Plans :

a) Gratuity Plans :

Gratuity is payable to all eligible employees of the Company on death, permanent disablement and resignation in terms of the provisions of the Payment of Gratuity Act, 1972 or as per the Company's Scheme, whichever is more beneficial. Benefit would be paid at the time of separation based on the last drawn basic salary.

b) Leave Encashment :

Eligible employees can carry forward and encash leave up to death, permanent disablement and resignation subject to maximum accumulation allowed up to 88 days or as per terms of employment with the individual employee.

In case of employees of Kolkata and Ranchi Division, the leave over and above accumulation allowed is liable to be lapsed. Benefits would be paid only at the time of separation based on the last drawn gross salary.

In case of employees of Howrah Division, accumulated leave in excess of 42 days or as per terms of employment with the individual employee are encashed in the next year based on gross salary drawn in the last year.

III. Termination Benefits :

Termination Benefits are charged to the statement of Profit and Loss in the year in which they are incurred.

2.28 Estimated amount of contracts remaining to be executed on capital account is Rs.11,22,76,870/-(Previous Year Rs. 26,52,688/-) against which Rs. 49,72,360/-(Previous Year Rs. 4,63,149/-) has been paid as advance.

2.29 Contingent Liabilities not provided for:

(a) Additional Excise Duty amounting to Rs. 26,98,597/- (Previous Year Rs. 26,98,597/-) demanded by the Excise Authorities has not been provided in the Books of Account although an amount of Rs. 20,46,303/- (Previous Year Rs. 20,46,303/-) has been deposited with the Central Excise Authorities as per High Court Order. The matter is subjudiced pending decision by the Central Excise Tribunal, neither adjustment for the amount deposited nor provision for additional Excise Duty has been made.

(b) Interest and penalty of Rs. 82,23,782/- (Previous Year Rs. 58,53,873/-) of Kolkata Municipal Corporation taxes of brmises no. 50, Chowringhee Road, Kolkata, the valuation of which has been disputed by the Company and the matter is pending before Hon'ble High Court at Calcutta.

(c) Interest and penalty of Rs. 4,83,525/- (Previous Year Rs. 3,07,698/-) of Kolkata Municipal Corporation taxes of brmises no. 225C, A. J. C. Bose Road, Kolkata, which has been disputed with Kolkata Municipal Corporation as the Company has paid certain amount in waiver scheme and decision of the same is pending.

2.30 (a) One of the tenants of the Company namely M/s Income Tax Appellate Tribunal is not paying Service Tax on Rent since the same has came in to effect. The Company is liable to collect a sum of Rs. 46,84,664/- (Previous Year Rs. 39,43,202/-) from said M/s Income Tax Appellate Tribunal towards Service Tax on Rent for the period 01.06.2007 to 31.03.2014 and remit the same to the Government account. The Company has duly provided the said Service Tax liability in its books of account. The Company has filed a writ petition before the Hon'ble High Court at Calcutta for recovery of Service Tax on Rent from M/s Income Tax Appellate Tribunal. The matter is subjudiced pending decision by the Hon'ble High Court at Calcutta.

(b) Annual Value of one property of the Company situated at 50, Chowringhee Road, Kolkata was revised by the Kolkata Municipal Corporation with retrospective effect from 1st July, 2006 on 15.06.2010. The Company has disputed the said valuation by filing a writ petition before the Hon'ble High Court at Calcutta praying for a fresh valuation. The Company is not paying municipal tax and liability on this account of Rs. 1,25,42,889/- (Previous Year Rs. 1,06,00,390/-) up to 31.03.2014 has been duly provided in the books of account. The matter is subjudiced, pending decision by the Hon'ble High Court at Calcutta.

2.31 As per the Scheme of amalgamation M/s. Jaypee Estates Pvt. Ltd. and M/s. Avni Estates Pvt. Ltd. have been merged with the Company w.e.f. 01.04.2003 with all Assets and Liabilities including charges, liens, mortgages, interest, appeals etc. vide Order (s) dated 26.08.2002 and 14.10.2004 passed by the Hon'ble High Court at Calcutta. The Company is to issue 1133 Equity Shares of Rs. 10/- each fully paid up to the erstwhile shareholders of amalgamating Companies as purchase consideration.

Pending completion of certain legal formalities with the appropriate authorities, some of the assets and liabilities taken in the books are still in the name of amalgamating companies.

2.32 Capital Reserve amounting to Rs. 4,00,00,000/- (Rupees Four Crores only) carried forward since financial year 1998-99 has been transferred to General Reserve during the year as the required period of restriction of non competing the business has completed long back and specific purpose of creation of Capital Reserve has since fulfilled.

2.33 Purchases of Packaged Drinking Water have been shown net of input credit taken against Excise Duty & VAT. Similarly Sales have been shown net of output tax adjusted against VAT.

2.34 In the opinion of the management there is no requirement making any provision on account of impairment of Fixed Assets held by the Company, accordingly no provision has been made as required by AS - 28.

2.35 Since the demand of Central Excise and Interest/ Penalty on municipal taxes is contingent in nature and has been disputed by the Company before the Appropriate Authorities, the provision required as per AS - 29 has not been considered necessary.

2.36 Some Tenants have deposited rent in Rent Control Account and the Company is withdrawing the amount there from time to time.

2.37 Land of the Company at Kankulia measuring 5 (five) Bighas and 1 (one) Cottah was acquired by the West Bengal Government under the provisions of West Bengal Land (Requisition and Acquisition) Act, 1948. Compensation so far received, net of cost, has already been taken as Income. In case the Company gets any further compensation the same shall be adjusted in the year of receipt.

2.39 Rates and Taxes have been charged to the accounts as net after adjusting Rs. 17,05,182/-(Previous year Rs. 17,05,182/-) recoverable from tenants on this account. Since the final assessment of certain taxes such as Excise Duty, VAT, CST, Profession Tax etc. was made during the year, a sum of Rs. 2,30,161/- (brvious year Rs. 2,96,648/-), paid on account of demands relating to earlier years, has been charged to the current year.

2.40 (a) Sri N. K. Poddar was re-appointed as Chairman (being Whole Time Director) of the Company for a period of 5 (five) years w.e.f. 1st October, 2010. The Central Government approved the appointment and remuneration of Sri N. K. Poddar with effect from 01.10.2010 till next AGM i.e. 26.09.2011 and asked the Company to submit the shareholders resolution to consider the approval for the remaining period. The Company has submitted to the Central Government the Shareholders resolution approving the appointement and remuneration of Sri N. K. Poddar on 21.11.2011. The further approval is still awaited. The Company has paid a sum of Rs. 14,07,600/- (Previous Year Rs. 14,07,600/-) including value of non monetary benefits of Rs. 39,600/- to Sri N. K. Poddar as remuneration for the year ended 31st March, 2014.

(b) The Central Government had approved appointment of Sri Akshat Poddar as Managing Director of the Company for a period of 5 (five) years w.e.f. 1st September, 2010 but approved payment of remuneration for a period of 3 (three) years only w.e.f. said date. The Company has made an application to the Central Government on 28.11.2013 for approval of remuneration for his residual term i.e. from 1st September, 2013 to 31st August, 2015 on the terms approved by the shareholders. The further approval is still awaited. The Company has paid a sum of Rs. 3,39,150/- including value of non monetary benefits of Rs. 59,850/- to Sri Akshat Poddar as remuneration for the period from 1st September, 2013 to 31st March, 2014.

(c) Sri B. D. Mundhra was appointed as an Executive Director (being Whole Time Director) of the Company for a period of 5 (five) years w.e.f. 1st June, 2012.The shareholders have duly approved the appointment and remuneration of Sri B. D. Mundhra at the Annual General Meeting held on 27th September, 2012. Application for the approval of appointment and remuneration of Sri B. D. Mundhra has been rejected by the Central Government vide letter dated 28.01.2013 in the absence of certain clarification/ information asked by them from the Company. The letters asking the said clarification/ information were never received by the Company, so the Company has prayed the Central Government on 01.03.2013 to grant an opportunity of being heard. The said application is still pending with the Central Government. The Company has paid/ provided a sum of Rs. 4,78,801/- (Previous Year Rs. 3,41,334/-) as remuneration to Sri B. D. Mundhra for the year ended 31st March, 2014.

2.41 The Company has been advised that the Service Tax has become applicable w. e. f. 1st July, 2012 on Electricity Charges billed by it on its tenants on the basis of sub meters. However many tenants are disputing the said levy in the absence of specific notification from the concerned authority on this issue. The Company is charging Service Tax at the applicable rate on bills raised by it against Electricity Charges on its tenants with effect from 1st July, 2012 but the Company is remitting to the credit of Government Account only amount of Service Tax actually collected by it from the tenants. The Company is pursuing other tenants to make payment of Service Tax. The Company is to collect from its tenants and remit to the credit of Government Account a sum of Rs. 37,65,620/- (Previous Year Rs. 24,15,671/-) up to 31st March, 2014 on this account.

2.42 Previous year's figures have been rearranged / regrouped, wherever found necessary.

2.43 Income on account of Electricity Charges have been taken in the accounts as net after Adjusting Rs. 3,97,92,980/- (Previous year Rs. 4,07,99,139/-) paid on this account.

2.44 Amount due to Small Scale Industrial undertakings Rs. Nil (Previous Year Rs. Nil)

2.45 Amount due and outstanding to be credited to the Investor Education and Protection Fund Rs. Nil (Previous Year Rs. Nil).

Previous year's figures have been given in the brackets.

As per our Report of even date annexed

For TIWARI & COMPANY

Chartered Accountants

Firm Regn. No. 309112E

P. TIWARI

Partner

Membership No. 16590

N. K. Poddar - Chairman

Akshat Poddar - Managing Director

G. L. Agarwalla - Director

B. D. Mundhra - Executive Director

Gora Ghose - Director

A. K. Poddar - Director

A. K. Singhania - Chief Financial Officer

Jiyut Prasad - Company Secretary

 Kolkata, 29th day of May, 2014