NOTE -1 - NOTES ON ACCOUNTS:

A. Significant Accounting Policies and Practices:

1. Accounting Convention and Concepts :

a. The Financial Statements of the Company have been brpared in accordance with generally accepted accounting principles in India (Indian GAAP).The Company has brpared these financial statements to comply in all material respects 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 an accrual basis and under the historical cost convention. The accounting policies adopted in the brparation of financial statements are consistent with those of brvious year, except for the change in accounting policy for debrciation on Fixed Assets. Refer note 3C.

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

2. Use Of Estimates:

The brparation of financial statements are in conformity with generally accepted accounting principles require estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statement and the reported amount of revenues and expenses during the year. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates.

3. Tangible Fixed Assets and capital work in progress:

Fixed assets are stated at cost, less accumulated debrciation and impairment losses if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Capital work in progress comprises cost of tangible fixed assets not ready for intended use at the balance sheet date.

Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its brviously assessed standard of performance. All other expenses on existing fixed assets, including day to day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

Gains or losses arising from de-recognition 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 when the asset is derecognized.

4. Debrciation on tangible fixed assets:

Debrciation on fixed assets is provided using straight line method based on rates specified in Schedule II of the Companies Act, 2013.

Till the year ended March 31, 2014, Schedule XIV of the Companies Act, 1956, brscribed requirements concerning debrciation on fixed assets. From the Current year, Schedule XIV has been replaced by Schedule II of the Companies Act, 2013. The applicability of Schedule II has resulted in the following changes related to debrciation of fixed assets. Unless stated otherwise, the impact mentioned for the current year is likely to hold good for future years also.

a. Useful Lives / Debrciation Rates:

Till the year ended March 31, 2014, debrciation rates brscribed under Schedule XIV were treated as minimum rates and the company was not allowed to charge debrciation at lower rates even if such lower rates were justified by the estimated useful life of the asset. Schedule II to the Companies Act 2013, brscribes useful lives for fixed assets which, in many cases, are different from lives brscribed under the erstwhile Schedule XIV. However, Schedule II allows companies to use higher / lower useful lives and residual values if such useful lives and residual values can be technically supported and justification for difference is disclosed in the financial statements.

The management believes that the useful lives / debrciation rates specified under Schedule II of the Companies Act,2013 would fairly reflect the estimate of the useful lives of the existing fixed assets and hence would comply with the provisions of Schedule II commencing from April 1, 2014. Had the Company continued to use the earlier accounting policy i.e as per Schedule XIV of the Companies Act,1956, the impact on debrciation of fixed assets would have been lesser by Rs.13.52 lakhs.

b. Debrciation on assets costing less than Rs.5000/-:

Till the year ended March 31,2014, to comply with the requirements of Schedule XIV to the Companies Act,1956, the company was charging 100% debrciation on assets costing less than Rs.5000/- in the year of purchase. However, Schedule II to the companies Act, 2013, applicable from the current year, does not recognize such practice. Hence, to comply with the requirement of Schedule II to the Companies Act, 2013, the company has changed the accounting policy for debrciation of assets costing less than Rs.5000/- . The management has decided to apply the revised accounting policy prospectively from the accounting period commencing from April 1, 2014. The change in the accounting for debrciation of assets costing less than Rs.5000/- did not have any material impact on the financial statements of the company for the current year.

5. Inventories:

Finished products are valued at lower of cost or net realizable value, stock in process, raw material, stores and spares at cost and these are in conformity with Accounting Standards.

6. Sales / Revenue:

Sale of goods is recognized at the point of dispatch to customers. The Excise Duty collected on sales is added in Sales.

7. Excise Duty:

Excise Duty on manufactured goods is accounted for at the time of their clearance from the factory. The above policy however, has no impact on the operating results of the Company.

8. Retirement Benefits :

Company's contribution to Provident Fund are charged to Profit & Loss Account. Gratuity and Leave encashment benefits at the time of retirement are charged to Profit & Loss Account on the basis of actual payment.

9. Contingent Liabilities:

Contingent liabilities are determined on the basis of available information and are disclosed by way of other notes given herein below.

B. Other Notes:

1. For details related to Contingent liabilities refer Note no.10.

2. No provision for gratuity and leave encashment towards brsent liability for future payment under the Payment of Gratuity Act, 1972 and terms of employment has been made as the amount is not ascertained.

3. a. The Excise Duty payable on finished goods not cleared from Factory as on the date of Balance Sheet is estimated at Rs.44.30 lakhs ( Previous Year -Rs.50.64 lakhs) on brvailing rates. The non-provision of this duty will not affect the profitability or otherwise of the year, being revenue neutral.

b. As per amended provisions, (1) Dues of excise duty on clearance of finished goods wherever applicable is payable in monthly installments w. e. from 01.02.2004 and (2) Statutory records under Excise Rules are dispensed with effect from 01.07.2000. The Company has acted on these amendments.

4. The Income Tax assessments of the Company have been made upto assessment year 2009-10 relevant to the brvious year ended on 31.03.2009. Assessments relating to assessment year 2010-11 and subsequent years are yet to be completed.

5. a.During the year under audit, the Company has paid a sum of Rs.13,41,216/- comprising of Central Excise Duty arrears of Rs.532,800/- for the year 2007-08 along with Penalty Rs.532,800/- and penal interest Rs.275,616/- as per the Final Order No.A/1381/2012-EX(DB) dated 18/12/2012 issued by the Customs, Excise & Service Tax Appellate Tribunal, New Delhi and the above sum has been included under " Exceptional and Extra-ordinary items " in Note no.20.

b. Prior period expenses amounting to Rs.1,23,858/- includes salary arrears Rs.120,358/- for the brvious year and Wealth Tax Rs.3,500/-for the year 2008-09 and the same have been shown under "Exceptional and Extra-ordinary items " in Note no.20.

6. As informed to us by the Management, the yield of finished products is slightly lower due to inferior quality of raw materials consumed for the production purpose and also due to relatively old machinery being used in production.

7. Deferred Tax Assets and Liabilities:

Income Tax comprises the current tax provision and the net change in the deferred tax asset or liability in the year.

Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying values of assets and liabilities and their respective tax bases and operating loss carry forwards. Deferred tax assets are recognized subject to management's judgment that realization is more likely than not. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be received or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the income statement in the period of enactment of the change. Provision relating to deferred tax liability / asset is not made.

8. Earnings in Foreign Exchange: Nil (Previous Year - Nil)

9. Sundry Debtors and Sundry Creditors are subject to balance confirmation.

10. In view of insufficient information from suppliers regarding their status as Micro, Small and Medium Scale Unit as per the Micro, Small and Medium Enterprises Development Act, 2006, the amount overdue, if any, to them cannot be ascertained.

11. Previous Year's figures have been rearranged and / or regrouped wherever necessary.