NOTE No. 1 SIGNIFICANT ACCOUNTING POLICIES FOR THE YEAR ENDED 31ST MARCH, 2016

1.1 Basis of Accounting

a) The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles in India, including the accounting standards specified under section 133 of the Companies Act 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014.

b) The Company generally follows accrual system of accounting and recognizes significant items of income and expenditure on accrual basis.

c) All Assets and Liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria set out in the Schedule III to the Companies' Act, 2013. Based on the nature of operations and time between the procurement of raw materials and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities.

1.2 Fixed Assets

a) Fixed Assets are stated at their original cost (net of accumulated depreciation and amortization) of acquisition including all related expenses of acquisition and installation.

b) Depreciation on tangible fixed assets is provided on straight line basis so as to charge the cost of the assets or the amount substituted for costs in case of revalued assets less its residual value over the useful life of the respective asset as prescribed under Part C of Schedule II to the Companies Act, 2013. Residual value has been considered as 5% of the cost of the respective assets.

c) Leasehold land is amortized, over the period of lease. Computer Software acquired is amortized over a period of five years on Straight Line Basis.

1.3 Inventories

a) Inventories (other than scrap) are valued at lower of cost or net realizable value.

The cost of inventories is computed on weighted average basis except trading goods the cost of which is calculated on first in first out basis. Cost of inventory comprises of purchase price, cost of conversion and other directly attributable cost that have been incurred in bringing the inventories to their respective present location and condition.

b) Scrap is valued at net realizable value.

1.4 Investments

Investments are either classified as current or long-term based on Management's intention at the time of purchase. Long term Investments are carried at cost. Provision for diminution is made to recognize a decline, other than temporary, in the value of noncurrent investments, script wise. Current Investments are valued at lower of cost or fair value, category wise. Cost of investments include acquisition cost such as brokerage, stamp duty etc.

1.5 Sales

a) Sale of goods is recognized at the time of transfer of substantial risk and rewards of ownership to the buyer for a consideration.

b) Sales is inclusive of Excise Duty and net of Sales Tax and Trade Discount.

1.6 Employee benefits

a) Short-term employee benefits are recognized as an expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the related service is rendered.

b) Post employment and other long term employee benefits are recognized as an expense in the Statement of Profit and Loss for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined as per actuarial valuations. Actuarial gains and losses in respect of long term employee benefits are recognized in the Statement of Profit and Loss.

1.7 Research & Development

Revenue expenditure pertaining to research and development is charged to revenue in the year in which it is incurred. Capital expenditure on research and development is shown as addition to Fixed Assets.

1.8 Foreign Currency Transactions

a) Transactions in Foreign Currency are initially recorded at the Exchange Rate at which the transactions are carried out.

b) Monetary items are translated at Exchange Rate prevailing at the year-end.

Any income or expense on account of exchange difference either on settlement or on translation at the year-end is recognized in the Statement of Profit and Loss.

c) Forward exchange contracts entered into for hedging purposes are accounted for separately from the underlying transactions. The premium or discount on forward exchange contract is amortized over the period of the respective contract.

1.9 Insurance Claims

Insurance claims are recognized when the amount thereof can be reasonably ascertained and the claim is likely to be received.

1.10 Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognized in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered probable as a result of a past event, and the Company has a present legal obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are measured by the best estimate of the outflow of economic benefits required to settle the obligation at the balance sheet date.

Contingent liabilities are shown by way of Notes on Account in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered not probable.

Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.

Re-imbursement expected in respect of expenditure to settle a provision is recognized only when it is virtually certain that the reimbursement will be received.

Contingent assets are neither recognized nor disclosed in the Accounts.

1.11 Taxes On Income

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognized, subject to consideration of prudence in respect of deferred tax assets, on timing difference, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are reviewed as at each Balance Sheet date and written down or written up to reflect the amount that is reasonably/virtually certain to be realized.

The deferred tax for timing differences between the book and tax profit for the period is accounted for using the tax rates and laws that have been enacted or substantively enacted as of the balance sheet date.

1.12 Impairment Of Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

1.13 Cash flow statement

Cash flows are reported using the indirect method, whereby profit/loss before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing flows. The cash flows from operating, investing and financing activities of the Company are segregated.

d. The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The holders of Equity Shares are entitled to receive dividend as declared from time to time. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

e. 500,000 9% non convertible, non cumulative redeemable Preference Shares of Rs.100/- each have been issued at par during the year in lieu of extinguishment of amount due on account of principal debt of Rs. 50,000,000/-. The Preference shares shall be redeemable at par in one or more tranches as may be decided by the board of directors within 20 years from the date of allotment. The Preference shares shall not carry any voting right except in accordance with the provisions of Section 47(2) of the Companies Act, 2013.

f. Reconciliation of number and amount of equity & preference shares outstanding:

A) Nature of securities:

1) Term Loan

a) Loan from Allahabad Bank is secured by an equitable mortgage of Immovable property owned by a third party subservient charge on the current assets and fixed assets of the Company and personal guarantee of Chairman & Managing Director of the Company.

b) Vehicle loan from IDBI Bank and Axis Bank are/were secured by hypothecation of Vehicles.

2) Working Capital Term Loan and Funded Interest Term Loan from Banks are secured as follows :-

a) First charge on entire current assets of the Company both present and future on pari passu basis amongst working capital consortium Bankers.

b) Collateral security- Pari passu first charge on the entire fixed assets of the Company, both present and future, excluding -1) The property at Noida, 2) Land & Building at the lease hold land at Kolkata, 3) Lease hold land with building at Balanagar, Hyderabad, 4) Land at Kala AMB and 5) Land at Dehradun.

c) Personal Guarantee of Chairman & Managing Director of the Company.

B) Cash Credit facilities and Term Loans ( Other than Vehicle Loans) have been restructured by the leading Banks during the Current Year.

Nature of securities:

Cash Credit from Banks are secured as follows:-

a) First charge on entire current assets of the Company, both present and future, on pari passu basis amongst working capital consortium Bankers.

b) Collateral security- Pari passu first charge on the entire fixed assets of the Company, both present and future, excluding -1) The property at Noida, 2) Land & Building at the lease hold land at Kolkata, 3) Lease hold land with building at Balanagar, Hyderabad, 4) Land at Kala AMB and 5) Land at Dehradun.

c) Personal Guarantee of Chairman & Managing Director of the Company.

* Partly Secured against Land Situated at Dehradun having book value Rs. 18,267,250/-

b) The Company has entered into a sub-lease Agreement on 19/10/1985 for Kolkata Factory premises with M/s P. C. Shyam & Co., the lessee, with the consent of Kolkata Port Trust (KPT), the lessor. The lease which expired in April, 1987 is yet to be renewed by the lessor. The amount of liability not provided in this respect, if any, is presently not ascertainable.

The amounts shown in (a) above represent the best possible estimates arrived at on the basis of available information. The uncertainties and timing of the cash flows are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be estimated accurately. The Company does not expect any reimbursement in respect of above contingent liabilities.

In the opinion of the management, no provision is considered necessary for the disputes mentioned above on the grounds that there are fair chances of successful outcome of appeals.

2.29 Commitments: Capital contracts’ remaining to be executed and not provided is NIL (Previous year Rs. NIL) against which an advance of NIL (Previous year Rs. NIL) is paid.

2.30 Balances outstanding with certain Debtors and Creditors are subject to confirmation.

2.31 Provisions, Contingent Liabilities and Contingent Assets as per AS-29:

(iv) Notes:

a) Figures in the brackets pertain to previous year.

b) The Company has neither written off nor written back any amount recoverable/payable from / to any related party during the year.

c) The amount due from related parties are good and hence no provision for doubtful debts in respect of dues from such related parties is required.

d) The transactions with related parties have been entered at an amount which are not materially different from those on normal commercial terms.

2.34 Disclosure under clause 32 of the listing agreement:

There are no transactions (except related party transactions) which are required to be disclosed under clause 32 of the listing agreement with the stock exchanges where the equity shares of the Company are listed.

Defined Benefit Plan:

Post employment and other long-term employee benefits in the form of gratuity and leave encashment are considered as defined benefit obligation. The present value of obligation is determined based on actuarial valuation using projected unit credit method as at the Balance Sheet date. The amount of defined benefits recognized in the balance sheet represents the present value of the obligation as adjusted for unrecognized past service cost, and as reduced by the fair value of plan assets.

Any asset resulting from this calculation is limited to the discounted value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan. The amount recognized in the Statement of Profit and Loss for the year ended 31st March, 2016 in respect of Employees Benefit Schemes based on actuarial reports as on 31st March,

2016 is as follows:

2.37 The Company has not received any memorandum (as required to be filed by the suppliers with the notified authority under the Micro, Small & Medium Enterprises Development Act, 2006) claiming their status as on 31.03.2016 as micro and small enterprises. Consequently, the amount paid/payable to these parties as on 31.03.2016 is NIL (Previous Year Rs. NIL).

2.38 The Company's net worth has eroded. However, the Management believes that the Company will be able to generate sufficient resources to be able to continue as a going concern. Accordingly, these financial statements have been prepared under the going concern assumption and that no adjustments are required to the carrying value of assets and liabilities.

2.39 The Company has charged depreciation in previous year based on the revised remaining life of the assets as per the requirement of Schedule II to the Companies Act, 2013 effective 1st April, 2014.

2.40 Details of Loans given, investments made and guarantee given covered under section 186 (4) of the Companies Act, 2013:

The above loans are to be utilized for general corporate purpose by the recipients.

b. Details of Investment made

The relevant details are given in Note no. 2.9.

c. Details of Guarantee Given

The Company has not given any Guarantee.