NOTES

1. The Board for Industrial & Financial Reconstruction (BIFR) had declared the Company, a sick industrial undertaking, within the meaning of section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) on 19th September, 2000. It sanctioned a scheme for rehabilitation ('the sanctioned scheme' (SS)) of the Company on 30th October, 2002, issued on 15th November, 2002, and appointed the Industrial Development Bank of India as the Monitoring Agency. The SS envisages corporate, business and financial restructuring of the Company's business. Pursuant to this SS, the Chemical Division of the Company was demerged to Navin Fluorine International Limited (NFIL) (formerly known as Polyolefins Rubber Chemicals Limited) and the Real Estate and Investment Business to Sulakshana Securities Limited (SSL) on their respective appointed dates of 1st March, 2002 and 1st April, 2002 and effect given to in the accounts of the earlier years. The Company had taken several steps for implementation of the scheme, but certain delays occurred in completion of reorganization of charges. Further, consultants were appointed to evaluate the business plan of the Company, whose reports have been received. The Company has initiated the process of modifying the SS in line with the directions of BIFR.
    
2. The qualifications of the auditors on the financial statements for the period ended 31st March, 2008, and the
   management’s comments thereon (in brackets) are as follows: 
   
   1. regarding, (i) certain reliefs and concessions recommended in the SS and considered in the accounts and
      (ii) carrying forward of capital work-in-progress. (These are dependent upon successful implementation
      of the SS, for which steps have already been initiated by the Company);
       
   2. regarding, non-provision for diminution in the value of unquoted investments. (These investments are
      strategic and long-term investments and diminution is of a temporary nature);
       
   3. regarding, non-provision for overdue debts, loans and advances, (Includes Companies where Company’s
      involvement is of a stratergic and long term nature.The Company has augmented efforts for collecting them
      and are expected to be recovered in due course. Irrecoverable amounts, if any, are presently not
      ascertainable);
       
   4. regarding, non-confirmation of balances of debtors, creditors, certain loans taken, bank accounts and
      loans/ advances given. (The Company is in the process of obtaining them);
       
   5. regarding, non-accounting of rent/ recovery of expenses from certain tenants/ ex-tenants, aggregating to
      date of Rs. 170.84 lacs. (This has been done on legal advice).
      
   6. regarding, non provision of interest of Rs.3,483.95 lacs on certain secured creditors (Will be appropriately dealt with upon disposal of scheme of compromise / arrangement filed in the High Court).
      
   7. regarding, non-accounting of debts assigned at the assignment consideration of Rs.2,230.85 lacs paid to
      banks (Will be appropriately dealt with upon approval of modified scheme proposed to be filed with
      BIFR)
      
      The impact of the quantifiable qualification, viz. 2.e, is that the profit before tax for the would have been Rs
      3,124.36 lacs for the year ended 31st March,2008.
      
      
3. Pursuant to the SS aforementioned, the Ahmedabad Unit of the Company has discontinued operations with effect from 1st March, 2003. On 21st May, 2003, the Company entered into an ‘Agreement to Sell’ with Annapurna Polymers Private Limited (APPL) for this Unit at an aggregate consideration of Rs. 677.70 lacs. The sale, after getting all approvals, was to be completed on or before 31st December, 2003. Pending this, a separate ‘Conducting Agreement’ has been entered with APPL, effective 1st June, 2003, under which APPL will operate the Unit on the Company’s behalf. On expiry of the aforementioned period, till 31st December, 2003, it has been mutually agreed to extend the period further, till 31st December, 2008.
    
4. There was one complaint pending at the beginning of the quarter. The Company has received four complaints during the quarter and has resolved all the five complaints.
    
5. The Company had, in an earlier year, entered into a ‘Development Agreement’ with Marathon Realty Limited (MRL), for a portion of its land at Lower Parel, Mumbai. On completion of the development project, it was entitled to a fixed percentage share in the sale proceeds from selling Units in the building/s constructed under this Agreement. During the period, the Company executed a deed of lease for assignment and transfer of the Company’s entitlement in the (future) gross sale proceeds from selling Units, as aforementioned, for a aggregate consideration of Rs. 15,847.55 lacs which has been included in ‘Turnover’. As required by the Development Control Rules, Government of Maharashtra, the utilization of sales proceed from sale of textile mill lands is being monitored by a Monitoring Committee appointed by the State Government.
    
6. The consolidated result include the financial result of five subsidiaries and seven associates.
   
   
7. Though the Company operates solely in the textile segment, on consolidation with its subsidiaries, there are two reportable primary (business) segments.


8. As reported earlier, Company has extended the current accounting period to 31st March, 2008 and consequently, this accounting period is for eighteen months. The figures given in column 2 are for twelve months ended 30th September, 2006 and hence are not comparable with the figures given in column 1 which represent year to date figures for the eighteen months period ended 31st March, 2008.


9. Previous year’s figures have been regrouped, wherever necessary, to correspond with those of the current period.


10. The above results have been taken on record by the Board of Directors at its meeting held on 17th June, 2008.

For MAFATLAL INDUSTRIES LIMITED

H.A. MAFATLAL
Vice Chairman
MUMBAI,
DATED: 17th Jun' 2008