Note 1: SIGNIFICANT ACCOUNTING POLICIES

a) Basis of 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), including the Accounting Standards notified under the relevant provisions of The Companies Act, 2013.

The Financial Statements have been brpared as a going concern on accrual basis under the •historical cost convention.

The Accounting Policies adopted in the brparation of the Financial Statements are consistent with those followed in the brvious year

b) Use of estimates:

The brparation of the Financial Statements in conformity with Indian GAAP requires the management to make estimates and assumptions considered in the reported amounts of Assets and Liabilities (including contingent liabilities) and the reported Income and Expenses during the year. Management believes that the estimates used in brparation of the Financial Statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and estimates are recognised in the periods in which the results are known.

c) Fixed Assets (Tangible and Intangible):

Fixed Assets are recorded at cost of acquisition or construction including any directly attributable expenditure on making the asset ready for its intended use, net of CENVAT and/or Value Added Tax less Accumulated Debrciation, Amortization and Impairment loss, if any.

d) Capital Work-in-Progress:

Projects under which tangible Fixed Assets are not yet ready for their intended use are carried at cost, including direct cost and related expenses.

e) Impairment of Fixed Assets:

The carrying amounts of assets are reviewed at the Balance Sheet date, if there is any indication of impairment based on external / internal factors.

An asset is treated as impaired when the carrying cost of the asset 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 recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

f) Debrciation:

Debrciation on Fixed Assets has been provided as per the useful life brscribed in Schedule II to the Companies Act, 2013 as follows:

i) Leasehold land is being amortized over the lease period.

ii) Debrciation in respect of Buildings and Plant and Machinery has been provided on Straight Line Method from the date of acquisition / installation.

iii) Debrciation on all other assets other than Building and Plant & Machinery has been provided on Written Down Value method

iv) In case of impairment, if any, debrciation is provided on the revised carrying amount of the assets over its remaining useful life subject to following deviation.

i) Useful life of IBAP plant has been considered as technically assessed which is less than the period brscribed under Schedule II to the Companies Act 2013.

g) Investments

Current Investments are carried at lower of cost and quoted / fair value. Investment that are intended to be held for more than a year, from the date of acquisition, are classified as Noncurrent investments and are carried at cost. However, provision for diminution in value of investments is made to recognise a decline, other than temporary, in the value of investments..

h) Inventories:

Inventories are valued on the following basis:

i) Finished Goods - At cost (calculated on weighted average Method) or net realisable value whichever is lower.

ii) Material in Process - At cost.

iii) Waste - At actual realisable value.

iv) Raw Materials / Stores & Spare Parts - At cost or Net Realisable Value whichever is lower.

i) Cash Flow Statement:

Cash flows are reported using the indirect method, whereby profit or loss before extraordinary items and tax is adjusted for the effects of transactions on noncash nature and any deferrals or accruals of past of future cash receipts of payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information, j) Foreign Currency Transactions:

Foreign currency transactions are recorded on the basis of exchange rate brvailing at the date of the transaction.

Foreign currency monetary items are restated at the yearend closing rate. Non monetary items which are carried at historical cost are reported using the exchange rate brvailing at the date of the transaction.

The exchange differences arising on settlement / year end reinstatement of monetary items are recognised in the Profit & Loss Account in the period in which they arise.

Forward contracts, other than those entered into hedge the foreign currency risk of unexecuted firm commitments or of highly probable forecast transactions, are treated as foreign currency transactions and accounted accordingly. Exchange differences arising on such contracts are recognized in the period in which they arise and the brmium or discount is accounted as expenses / income over the life of the contract. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or as expenses for the year.

k) Borrowing Costs:

Borrowing costs that are attributable to acquisition or construction of qualifying assets are capitalized as part of the cost of such asset till such time as the asset is ready for their intended use. All other borrowing costs are recognised as an expense in the period in which they are incurred.

I) Employee Benefits:

1) Defined Contribution Plan:

Employee benefits in the form of contribution to superannuation fund, provident fund managed by Government authorities, Employee State Insurance Corporation and Labour Welfare Fund are considered as defined contribution plan and the same is charged to Statement of Profit or Loss for the year when the contributions to the respective funds are due.

2) Defined Benefit Plan:

Retirement benefits in the form of gratuity are considered as defined benefit obligations and are provided for on the basis of Actuarial Valuation, using the projected unit credit method, as at the date of balance sheet. Actuarial gains and losses are immediately recognised in the statement of profit or loss.

3) Other long term benefits:

The Company has a scheme for leave encashment for employee, the liability for which is determined on the basis of an actuarial valuation carried out at the end of the year using Projected Unit Credit method. .

m) Revenue recognition:

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

Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. Sales are disclosed net of Sales tax/Value added Tax, discounts and Sales return.

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

Export Incentives are accounted for to the extent considered recoverable by the Management.

n) Research and Development Expenses:

Research and Development expenditure of revenue nature are charged to Profit & Loss Account, while Capital Expenditure are added to the cost of Fixed Assets in the year in which these are incurred.

o) Taxes on Income:

Tax expense comprises of current tax and deferred tax. Current Tax is provided as per the provisions of the Income Tax Act 1961 and other applicable laws. Deferred Tax is recognised on account of timing differences, being the differences between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods, are recognised at the rate of income tax brvailing or substantively enacted tax rate at the reporting date.

Deferred Tax Assets are recognised for timing difference of items to the extent that reasonable certainty exists that sufficient future taxable income will be available against which such deferred tax asset can be realised.

Deferred Tax Liabilities are recognised for all timing differences. Deferred Tax Assets and Liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the company has a legally enforceable right for such set off. Deferred Tax Assets are reviewed at each Balance Sheet date for their readability.

Deferred Tax relating to items directly recognised in Reserves are recognised in Reserves and not in the Statement of Profit and Loss.

p) Provisions, Contingent Liabilities and Contingent Assets:

A provision is recognised when there is a brsent obligation as a result of past event and 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 Liabilities are not recognised but are disclosed in the Notes to the accounts. Contingent Assets are neither recognised nor disclosed in the financial statements.

7.1 Secured Loan - Working Capital Loans from Bank Nature of Security

Paripassu first charge in favour of consortium banks on entire Immovable and Movable goods and other assets brsent and future and further secured by deposit of Title Deed of the existing Immovable properties of the company excluding Land and Building of Residential Staff Quarters and 2.3 MW Captive Power Plant located in the existing Factory Building.

7.2 Short Term Borrowings - Unsecured Loan

Unsecured working capital loan including Import Finance Loan taken in Foreign Currency (US $) for payment of imported Raw Materials. The currency risk is partly hedged. Interest is charged at LIBOR Plus sbrad. Applicable interest amount is payable along with principal amount. Due date for repayment of these loans are between 80 to 90 days from the date of availment. Details of loan are given below:

The company operates in single segment i.e, Fluro-Chemicals in India and all other activities evolve around the same. Hence, there is no reportable primary/secondary segment.

Despite losses and reducing net worth, the financial statements of the Company have been brpared on 'going concern' basis having regard to business plans of the Company and continued financial support from a promoter.

The figures of brvious year have been reclassified and / or regrouped wherever necessary to confirm to current year classification or grouping.

For and on behalf of the Board of Directors

K. Sendhil Naathan Unit Head

Lalit Naik

Manager and Director

R. Karthikeyan Director

N.R. Ravichandran

CFO - Vice President (F&C)

V.T. Moorthy Director

M.R. Sivaraman Director

Punita Aggarwal

Company Secretary

Dated May 15, 2015

Place : Chennai