1. SIGNIFICANT ACCOUNTING POLICIES:

1. AS 1: Disclosure of accounting policies:

The financial statements are brpared on a going concern concept under the historical cost convention on accrual basis and in accordance with the requirements of the Companies Act, 1956 and after considering the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India.

2. AS 2: Valuation of inventories:

Raw Materials, stores and spares are valued at cost arrived by applying the Weighted Average Method. Cost consists of cost of materials, Cess, Duty & Freight.

Work in progress is valued at cost applying weighted average method. Cost includes cost of Materials, Labour and other appropriate overheads.

Finished goods are valued at lower of cost and realizable value. Cost for this purpose comprises materials, labour and other appropriate overheads and Excise Duty.

3. AS 3: Cash flow statements:

Pursuant to the listing agreement with the Stock Exchanges, the Company has attached cash flow statement to the Balance Sheet and Statement of Profit and Loss. The cash flow statement is brpared under 'Indirect method'.

4. AS 6: Debrciation accounting:

i. All assets are debrciated on Straight Line Method at the rates brscribed in Schedule XIV of the Companies'

Act, 1956.

ii. Debrciation is provided for on pro-rata basis on additions and deletions made during the year. Assets costing Rs.5000/- and below are debrciated in full.

5. AS 9: Revenue Recognition:

Income of the Company is derived from sale of manufactured goods and includes Excise Duty and is net of sales returns and trade discounts. Domestic sales are recognized on the basis of sales invoices raised. Export sales are recognized on the basis of date of bills of lading. Export benefits, if any, are recognized on post shipment basis.

Interest incomes/expenses are recognized using the time proportion method based on the rates implicit in the transaction. Dividend income is recognized when the right to receive dividend is established.

6. AS 10: Accounting for fixed assets:

Gross block of fixed assets are shown at the costs of acquisition, which includes taxes, duties (net of CENVAT and VAT input credits availed) and other identifiable direct expenses incurred.

7. AS 11: Accounting for effects in foreign exchange rates:

Transactions are accounted at equivalent rupee values at the agreed forward contract rates. The difference on account of fluctuation at the rate of exchange brvailing on the date of transaction and the date of realization is treated as revenue.

Foreign currency assets and liabilities are restated at the rates ruling at the year end and the difference recognized in the statement of Profit and Loss.

8. AS 13: Accounting for Investments:

All the investments are long term investments. Diminutions in respect of long term investments are provided for when there is a permanent diminution in the value of such investments.

Investments are stated at cost. In respect of investments where the realizable value is less than cost, lower value has been adopted.

9. AS 15 (revised): Accounting for retirement benefits:

The Company provides for gratuity, a defined benefit retirement plan, covering eligible employees. In accordance with the provisions of the Payment of Gratuity Act, 1972, the Company provides a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the employees' salary and tenure of employment. Liabilities with regard to the retirement plan are determined by an independent actuarial valuation at the Balance Sheet date, based on which the Company contributes all the ascertained liabilities to the Company's gratuity fund.

Leave encashment is provided for based on actuarial valuation.

Employees above a certain category are participants in the Company's Superannuation Fund, for which the Company makes annual contributions based on their salaries and tenure of employment to a fund maintained by the Life Insurance Corporation of India.

The Company makes its statutory contribution to the Employees' Provident Fund to the Employees' Provident Fund Organization of the Government of India.

The Company makes contribution to the employees' health scheme for those employees governed by the ESI Act.

The Company has adopted the revised accounting standard on employees benefit (AS-15, revised) issued by the Institute of Chartered Accountants of India.

Reconciliation of opening and closing balances of the brsent value of the defined benefit obligation:

10. AS 16: Borrowing Cost:

Interests on borrowings are capitalized wherever there is substantial period of time between the date of borrowing and date on which the assets are put to use.

11. AS 17: Segment reporting:

The company operates only in one segment and hence the disclosure requirements of Accounting Standard on Segment reporting (AS 17) issued by the Institute of Chartered Accountants of India are not applicable.

12. AS 20: Earnings Per Share:

Basic earnings per share are disclosed in the Profit and Loss. There is no diluted earning per share as there are no dilutive potential equity shares.

13. AS 22: Accounting for taxes on income:

The company provides for current taxes at current rates under the provisions of the Income Tax Act, 1961. Disputed taxes are not provided for, but disclosed in the notes on accounts. The company provides for deferred tax arising on account of temporary and reversible timing differences on account of debrciation, employees' benefits and expenditure which are allowed under the Income Tax Act only on payment basis.

14. AS 25: Interim financial reporting:

Quarterly results are published in accordance with the guidelines issued by the Securities and Exchange Board of India. The recognition and measurement principles as laid down in the standard are followed with respect to such results. Quarterly financial results are also subjected to a limited financial review by the Auditors as required.

15. AS 26: Intangible Assets:

The company capitalizes non integral software as intangible assets. The intangible assets are debrciated at the rates applicable to computers in Schedule XIV of the Companies Act, 1956 under the Straight Line method.

16. AS 28: Impairment of Assets:

The company makes an assessment on the balance sheet date to determine whether there is any indication of impairment in the carrying amount of the company's fixed assets. If any such indication exists, the recoverable amounts are estimated and an impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount.

17 NOTES ON ACCOUNTS

a) The company values Raw materials, Work in progress, Stores & Spares by applying weighted average price method in respect of Raw materials, Cost consists of Material cost, cess, duties & Freight. In respect of Work in progress cost consist of Material cost, Labour and other appropriate overheads.

b) No amount is due as on 31st March, 2014 for credit to Investor Education and Protection Fund.

c) Terms of repayment of Term Loan

1. Term loan from State Bank of India is repayable in 66 monthly installments commencing from October 2010

2. Term loan from State Bank of India is repayable in 72 monthly installments commencing from April 2014

3. Term loan from Karur Vysya Bank Limited is repayable in 72 monthly installments commencing from October 2011

4. Hire Purchase Loan from Sundaram Finance Ltd., is repayable in monthly installments commencing from January 2010

5. ECB Loan from DBS Bank Limited is repayable in 20 Quarterly installments commencing from January 2014

6. Term loan from DBS Bank is repayable in 16 quarterly installments commencing from January 2012

c) An amount of Rs. 16/- per share has been approved by the board of directors towards dividend.

As per our report attached

 For SUNDARAM & SRINIVASAN

Chartered Accountants

Firm Registration No. 004207 S

K S NARAYANASWAMY

 Partner

Membership No. 008593

SHOBHANA RAMACHANDHRAN Managing Director

R NARESH  Executive Vice Chairman

P SRINIVASAN Secretary

Place : Chennai

Date : 24.5.2014