NOTES FORMING PART OF THE STANDALONE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31ST MARCH, 2016

1. SIGNIFICANT ACCOUNTING POLICIES

A. BASIS OF ACCOUNTING AND brPARATION OF FINANCIAL STATEMENTS:

The financial statements of the Company have been brpared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014. The financial statements have been brpared on accrual basis under the historical cost convention.

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 products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has determined its operating cycle as twelve months for the purpose of current and non-current classification of assets and liabilities.

B. USE OF ESTIMATES:

The brparation of financial statements in conformity with the generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities (including contingent liabilities) and the reported amounts of revenues and expenses during the reported period. The management believes that the estimates used in the brparation of financial statements are prudent and reasonable. Difference between the actual results and estimates are recognised in the period in which the results are known or materialise.

C. FIXED ASSETS AND DEbrCIATION/AMORTISATION:

a. Fixed Assets are stated at cost less accumulated debrciation/ amortization and impairment in value.

Costs comprise the purchase price (net of credits under CENVAT/VAT Scheme), including freight, installation and borrowing costs for bringing the asset to its working condition for its intended use.

Gains or losses arising from derecognition of Fixed Assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of Profit and Loss.

b. Debrciation:

(i) Till 30th September, 2014 debrciation was provided on the basis of Schedule XIV to the Companies Act, 1956, except in respect of vehicles, furniture fixture and office equipment where higher debrciation has been provided on straight line method at the rate of 20% based on management's estimate of the useful life of the assets.

Effective 1st October, 2014 (being the commencement of the Company's financial year), the Company has charged debrciation as per the requirements of Schedule II of the Companies Act, 2013. Debrciation on Building, Computers, Office equipment and Other Assets (viz. Electrical Fittings, Fire Fighting/Other equipment and Canteen Utensils etc.) has been provided on straight line method as per Schedule II of the Companies Act, 2013. Debrciation on Renewable Energy Saving Devices is provided on reducing balance method as specified in Schedule II to the Companies Act, 2013. In respect of Plant & Machinery, Moulds, Vehicles, Furniture and Fixtures and Computer Servers, where based on management's estimate of the useful life of the assets, debrciation has been provided on straight line method using the following estimated useful lives;

Description of the Asset Estimated Useful life

Plant & Machinery 10 Years

Moulds 6 Years

Vehicle, Furniture & Fixtures and Computer Servers 5 Years

Further the Company has identified and determined separate useful life for each major component of fixed assets, if they are materially different from that of the remaining assets, for providing debrciation in compliance with schedule II of the Companies Act, 201 3.

The estimate of the useful life of the assets has been assessed based on technical advice which considered the nature of the asset, the usage of the asset, expected physical wear and tear, the operating conditions of the asset, anticipated technological changes, manufacturers warranties and maintenance support, etc.

These changes in the basis of providing debrciation have no material impact on financial statements of the Company.

(ii) Debrciation on fixed assets added/disposed off during the period is provided on pro-rata basis with reference to the date of addition/disposal.

(iii) Assets acquired/purchased costing less than Rupees five thousand have been debrciated at the rate of 1 00%.

(iv) Leasehold Land is amortised over the period of the lease.

(v) Intangible Assets are carried at cost and amortised over 5 years on straight-line method over the estimated useful economic life of the assets.

D. IMPAIRMENT OF ASSETS:

The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Statement of Profit and Loss. If at the Balance Sheet date there is an indication that if a brviously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

E. INVESTMENTS:

Investments that are readily realisable and are intended to be held for not more than one year from the date, on which such investments are made, are classified as current investments. All other investments are classified as long term investments. Current investments are carried at lower of cost and fair value. Long-term investments are carried at cost. However, provision for diminution is made to recognise a decline, other than temporary, in the value of the investments, such reduction being determined and made for each investment individually.

Trade Investments comprise investments in subsidiary companies and in which the Company has strategic business interest.

On disposal of investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of Profit & Loss.

F. INVENTORIES:

Inventories consisting of stores & spares, raw materials, Work-in-progress, Stock-in-Trade and finished goods are valued at lower of cost and net realisable value. However, materials held for use in production of inventories are not written down below cost, if the finished products are expected to be sold at or above cost.

The cost is computed on FIFO basis except for stores and spares which are on daily moving Weighted Average Cost basis and is net of credits under CENVAT/VAT Schemes.

Work-in-progress and Finished Goods inventories include materials, duties and taxes (other than those subsequently recoverable from tax authorities) labour cost and other related overheads incurred in bringing the inventories to their brsent location and condition.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated cost of completion and estimated cost necessary to make the sale.

Obsolete and slow moving items are valued at lower of cost and estimated net realisable value.

G. REVENUE RECOGNITION:

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

Sale of goods and services are recognised when risks and rewards of ownership are passed on to the customer which generally coincides with delivery and when the services are rendered. Sales include Excise Duty but exclude VAT and warranty claims.

Interest is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

Dividend is recognized when the shareholders' right to receive payment is established by the Balance Sheet date.

Service income is recognized as per the terms of the contracts / arrangements when related services are performed.

H. CASH AND CASH EQUIVALENTS:

Cash and Cash Equivalents for the purpose of Cash Flow Statement comprise cash and cheques in hand, bank balances and demand deposits with banks where the original maturity is three months or less.

I. EXCISE DUTY:

Excise Duty has been accounted on the basis of both payments made in respect of goods despatched and also provision made for goods lying in bonded warehouses.

J. RESEARCH AND DEVELOPMENT:

Revenue expenditure on Research and Development is charged to the Statement of Profit and Loss of the Period i n which it is incurred. Capital expenditure on Research and Development is included as additions to Fixed Assets.

K. TAXATION:

Provision for Current Tax is made on the basis of estimated taxable income for the current accounting period comprising of 1 st October, 2014 to 31st March, 2015 and 1st April, 201 5 to 31st March, 201 6 and in accordance with the provisions of the Income Tax Act, 1 961.

Deferred tax for timing differences between the book and tax profits for the Period is accounted for, using the tax rates and laws that have been enacted or substantially enacted on the Balance Sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. If the company has carry forward unabsorbed debrciation and tax losses, deferred tax assets are recognised only to the extent there is a virtual certainty supported by convincing evidence that sufficient taxable income will be available against which such deferred tax assets can be realised.

L. LEASES:

Lease payments under operating leases are recognised as expenses on straight line basis over the lease term in accordance with the period specified in respective agreements.

M. EMPLOYEE BENEFITS:

The Company contributes to Regional Provident Fund Commissioner on behalf of its employees and such contributions are charged to the Statement of Profit and Loss. In respect of some of its employees the Company contributes the Provident Fund to a Trust established for this purpose based on fixed percentage of the eligible employees' salary and is charged to the Statement of Profit and Loss. The Company is liable for annual contributions and any shortfall in the fund assets and interest based on the Government specified minimum rate of return and recognises such contributions and shortfall, if any, as an expense in the period incurred.

The Company also contributes to a government administered Pension Fund on behalf of its employees, which are charged to the Statement of Profit and Loss.

Superannuation benefits to employees, as per Company's Scheme, have been funded with Life Insurance Corporation of India (LIC) and the contribution is charged to the Statement of Profit and Loss.

Liabilities with regard to Gratuity are determined under Group Gratuity Scheme with LIC and the provision required is determined as per Actuarial Valuation as at the Balance Sheet date, using the Projected Unit Credit Method.

Short-term employee benefits are recognised as an expense as per the Company's Scheme based on expected obligation on undiscounted basis. Other long term employee benefits are provided based on the Actuarial Valuation done at the period end, using the Projected Unit Credit Method.

Actuarial gain/loss are charged to the Statement of Profit and Loss and not deferred.

N. FOREIGN CURRENCY TRANSACTIONS:

Transactions denominated in foreign currencies are recorded at the exchange rate brvailing at the date of the transaction or that approximates the actual rate as at the date of transaction.

Monetary items denominated in foreign currencies at the period end are restated at period end rates. In case of monetary items which are covered by forward exchange contracts, the difference between the period end rate and the contracted rate is recognised as exchange difference. Premium paid on forward contracts is recognised over the life of the contract. Non-monetary items are carried in terms of historical cost denominated in foreign currency and is recorded using the exchange rate brvailing at the date of the transaction or that approximates the actual rate as at the date of transaction. Any profit or loss arising on cancellation or renewal of forward exchange contract is also recognized as income or expense for the period.

O. DERIVATIVE TRANSACTIONS:

The Company uses derivative financial instruments, such as Forward Exchange Contracts, Currency Swaps and Interest Rate Swaps, to hedge its risks associated with foreign currency fluctuations and interest rates. Currency and interest rate swaps are accounted in accordance with their contract. At every period end all outstanding derivative contracts are fair valued on a marked-to-market basis and any loss on valuation is recognised in the Statement of Profit and Loss, on each contract basis. Any gain on marked-to-market valuation on respective contracts is not recognised by the Company, keeping in view the principle of prudence as enunciated in AS-1 "Disclosure on Accounting Policies".

P. BORROWING COSTS:

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

Q. WARRANTY:

Provision for product warranties is recognised based on management estimate regarding possible future outflows on servicing the customers during the warranty period. These estimates are computed on scientific basis as per past trends of such claims.

R. PROVISIONS AND CONTINGENT LIABILITIES:

A provision is recognised when there is a brsent obligation as a result of a past event where it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Contingent liability is disclosed for (i) Possible obligations which will be confirmed only by future events not wholly within the control of the Company or (ii) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. Contingent Assets are not recognised in the financial statements sinee this may result in the recognition of income that may never be realized.

S. EARNINGS PER SHARE:

The Basic & Diluted Earnings per share is computed by dividing the Profit after tax for the Period/Year by weighted average number of equity shares outstanding during the period/year.

2. NOTES TO THE FINANCIAL STATEMENTS AS AT 31ST MARCH, 2016

a. The amount due and paid during the period to “Investor Education and Protection Fund” is Rs. 0.30 Crore. (Previous Year - Rs. 0.14 Crore)

b. The Company’s leasing arrangements are in respect of operating leases for brmises (residential, office and godowns). The leasing arrangements, which are not non-cancellable, range between eleven months and three years generally, and are usually renewable by mutual consent on agreed terms. The aggregate lease rentals payable are charged as rent. h. Provision for Taxation has been made in respect of the income brsently determined for the period 1st April, 2015 to 31st March, 2016. Further, provision for the assessment year 2015-16 has been determined and adjusted considering the provision already made in the accounts for the year ended 30th September, 2014.

c. The Company is engaged interalia in the manufacture of Rubber Products such as Tyres, Tubes, Flaps, Tread Rubber and Conveyor Belt. These in the context of Accounting Standard 17 on Segment Reporting are considered to constitute one single primary segment. The Company’s operations outside India do not exceed the quantitative threshold for disclosure envisaged in the Accounting Standard. Non-reportable segments has not been disclosed as unallocated reconciling item in view of its materiality. In view of the above, primary and secondary reporting disclosures for business/geographical segment are not applicable to the Company.

d. The total borrowing cost capitalised during the period is Rs. 45.18 Crore. (Previous year Rs. 18.18 Crore)

e. Commitment

(i) Estimated amount of contracts remaining to be executed on Capital Account, net of advances and not provided for - Rs. 650.59 Crore. (Previous year - Rs. 1,460.46 Crore)

(ii) Customs Duty on import of equipments and spare parts under EPCG Scheme - Rs. 162.76 Crore. (Previous Year - Rs. 161.36 Crore)

f. Contingent Liabilities not provided for:

(i) Guarantees given by the Banks - Rs. 47.33 Crore. (Previous Year - Rs. 35.18 Crore)

(ii) Corporate Guarantees given to Banks for and on behalf of wholly owned Subsidiaries - Rs. NIL. (Previous Year - Rs. 310.85 Crore)

(iii) Letters of Credit issued by the Banks - Rs. 85.90 Crore. (Previous Year - Rs. 466.05 Crore)

(iv) Claims not acknowledged as debts:

(a) Disputed Sales Tax demands pending before the Appellate Authorities - Rs. 23.05 Crore. (Previous Year - Rs. 18.18 Crore)

(b) Disputed Excise/Customs Duty demands pending before the Appellate Authorities/High Court - Rs. 76.07 Crore. (Previous Year - Rs. 80.31 Crore)

(c) Disputed Income Tax Demands - Rs. 30.74 Crore. (Previous Year - Rs. 21.34 Crore). Against the said demand, the company has deposited an amount of Rs. 14.93 Crore.

(d) Contested EPF Demands pending before Appellate Tribunal - Rs. 1.10 Crore. (Previous year - Rs. 1.10 Crore)

(v) Bills discounted with a bank - Rs. NIL. (Previous Year - Rs. 22.14 Crore)

g. Disclosures required under Section 186(4) of Companies Act, 2013:

(i) The Company has given Corporate guarantees to bankers on behalf of Subsidiary Companies for general business purposes amounting to Rs. 854.85 Crore. The said guarantees have been cancelled during the period.

(ii) Refer Note 12 and 15 for investments.

h. In terms of the proviso to clause 3(i) of Part A of Schedule II to the Companies Act,2013, the Company has, after technical assessment, decided to retain the useful life hitherto adopted for certain categories of fixed assets, which are in certain cases, different from those brscribed in Schedule II to the Act. The Company believes that based on the policy followed by it of continuous and periodic assessment, the estimated useful life adopted so far is appropriate.

The above change has resulted in lower debrciation for the period from 1.10.2014 to 31.3.2016 by Rs. 29.13 Crore. Further, consequent to Notification GSR 627(E) dated August 29,2014 amending Para 7(b) under Schedule II, Company has charged off transitional debrciation amounting to Rs. 11.61 Crore to Statement of Profit and Loss.

i. The Company has changed its accounting year from year ended September 30th to year ended March 31st. Accordingly, the financial statements for the current accounting period are brpared for a period of 18 months from 1st October, 2014 to 31st March, 2016. Hence the figures and Earnings per Share for the current period are not comparable with those of the brvious accounting year.

j. Previous year’s Figures have been regrouped/ rearranged, wherever necessary.

Vide our Report of even date.

For Sastri & Shah

Chartered Accountants

Firm Regn. No. 003643S

(C R Kumar)

Partner

Mem. No. 26143

For M. M. Nissim & Co.

Chartered Accountants

Firm Regn. No. 107122W

(Dhiren Mehta)

Partner

Mem. No. 109883

MADHU P NAINAN Vice President Finance

RAVI MANNATH Company Secretary

V SRIDHAR Directors

JACOB KURIAN Directors

K M MAMMEN Chairman & Managing Director

Chennai, Dated 3rd May, 2016