NOTES TO THE FINANCIAL STATEMENTS

Nature of Operations:

National Oxygen Limited was incorporated on 23rd December 1974 and is engaged in manufacturing of Industrial Gases and Wind Energy generation .

Basis of Preparation :

The financial statements have been brpared to comply in all material respects with the accounting principles generally accepted in India, including mandatory Accounting Standards notified under Section 133 of the Companies Act, 2013 and the relevant provisions thereof under the historical cost convention and on an accrual basis. The accounting policies, in all material respects, have been consistently applied by the Company and are consistent with those used in the brvious year .

All Assets and Liabilities have been classified as current or non current as per the company's normal operating cycle and other criteria specified in Schedule III to the Companies Act, 2013. The company has brsently determined 12 months as the normal Operating cycle for the purpose of classification of current and non current Assets and Liabilities.

1. Significant Accounting Policies

A RECOGNITION OF INCOME & EXPENDITURE: The company follows the Mercantile system of accounting and recognizes Income and Expenditure on accrual basis, except those with significant uncertainties.

B FIXED ASSETS:

a) Fixed Assets are stated at cost net of Cenvat & Value added tax, debrciation and impairment. Cost of acquisition includes duties, taxes, incidental expenses, erection / commissioning expenses and interest etc.upto the date the asset is ready for its intended use.

b) The Carrying amount of assets are reviewed at each balance sheet date to determine if there is any indication of impairment based on external/internal factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount which rebrsents the greater of the net selling price and 'Value in use' of the assets. The estimated future cash flows considered for determining the value in use, are discounted to their brsent value at the weighted average cost of capital. Based on the review, the management concluded that there was no indication of any impairment as at the Balance Sheet date.

C DEbrCIATION:

a) With effect from 1st April 2014, the company has computed debrciation with reference to the useful life / revised remaining useful life of the assets as specified by and in the manner brscribed in Schedule II of the Companies Act 2013 under Straight Line Method. As permitted by the transitional provisions of Schedule II, the Company has decided to adjust the impact of change in useful life arising on its first application amounting to Rs.58,01,324 (Net of Deferred Tax Rs.27,86,868) against the opening Retained Earnings. On Additions / sales the debrciation is prorated to the month of Addition / Sale.

b) Lease hold Land is amortized over the lease period.

c) In case of Impairment, if any,debrciation is provided on the revised carrying amount of the assets over its remaining useful life.

D INVESTMENTS:

a) Quoted / Unquoted Long term Investments are stated at cost unless there is a decline, other than temporary, in the value thereof, which is duly provided for in the Accounts.

b) Current quoted investments are stated at lower of cost or market value on individual investment basis.

E INVENTORIES:

a) Finished Goods - At cost (Computed on Annual Weighted Average) or net realisable value which ever is lower

b) Raw Materials/Stores & Spare Parts - At Cost (Computed on FIFO basis) or net realisable value which ever is lower

F 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 reported at the year end closing rates. 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 restatement of monetary items are recognized in the Profit & Loss Account in the period in which they arise.

G EMPLOYEE BENEFITS:

Defined Benefits Plans: Gratuity liability is provided for based on actuarial valuation made at the end of each financial year using the projected unit credit method . Actuarial gain and losses are recognized immediately in the statement of Profit & Loss Account as income or expenses.

Defined Contribution plans : Company's contribution to Provident Fund is charged to the Profit & Loss Account of the year when the contribution to the said fund is due. The Company has no obligations other than the contributions payable to the said Fund.

H SALES : Sales is net of discounts and rebate allowed to the customers.

I BORROWING COSTS :Borrowing costs relating to acquisition/construction of qualifying assets are capitalised until the time all substantial activities necessary to brpare the qualifying assets for their intended use are complete. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

J TAXES ON INCOME :

a) Current Income Tax is provided as per the provisions of the Income tax Act 1961.

b) Deferred Tax arising on account of timing difference, being the difference between taxable income & accounting income that originate in one period and are capable of reversal in one or more subsequent periods, are recognised at the income tax rates enacted or substantively enacted as on the Balance Sheet date. Deferred Tax Asset is recognised and carried forward only to the extent that there is virtual certainty that the assets will be realised in subsequent periods.

K PROVISIONS:

A provision is recognized when an enterprise has 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.

L CONTINGENT LIABILITIES: Liabilities which are material and whose future outcome cannot be ascertained with reasonable certainty are treated as contingent and disclosed by way of "Notes" to the accounts.

1 The brvious figure has been reclassified/ rearranged / regrouped wherever necessary

As per our report annexed.,

For SINGHI & CO.,

Chartered Accountants

Firm Regn. No. 302049E

Sd/- (SUDESH CHORARIA)

Partner

Membership No. 204936

For and on behalf of the Board

Sd/- G.N. SARAF

Chairman & Managing Director

Sd/- RAJESH KUMAR SARAF

Joint Managing Director

Place : Chennai

Date : 29th May 2015