Bombay Burmah Trading Corporation

Bombay Burmah Trading Corporation Ltd has informed that in the limited review report of the Company for the quarter ended June 30, 2007, the Auditors of the Company have made the following observations:

"1. The Company has restated foreign currency loans as on June 30, 2007, as against Balance Sheet Date in line with the Accounting Standard 11 'The Effects of changes in Foreign Exchange Rates' issued by the Institute of Chartered Accountants of India and the impact on net profit is favorable by Rs 389.26 lacs.

2. The Company has treated exchange gain on restatement of foreign currency loan and expenditure incurred on voluntary retirement scheme (VRS) as extraordinary items. In Auditors opinion these ought to have been considered for arriving at Profit from Ordinary Activities.

3. The Company has charged off Rs 417 lacs being 1/3rd of the total amount paid as VRS. The total VRS will be charged over 3 years in equal annual installments. Had the same been charged on pro rata basis, charge for the quarter would have been Rs 104.25 lacs.

4. Provision for leave encashment is made on estimated basis considering the actuarial valuation carried out as at the end of the previous financial year. Provision for short term compensated absences in terms of Accounting Standard -15 (Revised) would be made at the year-end. The impact of this adjustment has not been ascertained."