NOTES TO FINANCIAL STATEMENT

NOTE '1' — SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of accounting

The financial statements have been brpared in accordance with the generally accepted accounting principles in India "Indian GAAP" to comply in all material aspects with the Accounting Standards specified under section 133 of the Companies Act 2013 read together with paragraph 7 of the Companies (Accounting Standards) Rules,2014. The financial statements have been brpared under the historical cost convention on accrual basis of accounting.

(b) Use of estimates

The brparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon management's best knowledge of current events and actions, actual result could differ from these estimates.

(c) Fixed Assets and debrciation:

(i) Debrciation is provided on fixed assets, other than Spa/Fitness Equipment and Leasehold Improvement under the straight-line method in the manner brscribed under schedule II of the Companies Act, 2013, which also rebrsents the useful life of fixed assets.

(ii) Spa/Equipment and Leasehold Improvement are debrciated on a straight-line basis over a period of 5 years which is managements estimate of the useful life of these assets.

(d) Intangible assets

Costs relating to the following assets are capitalized as 'Intangible asset' and amortized on a straight-line basis over a period which is the management's estimate of the useful life of such assets:

Sublicense - over a period of 10 years

Software - over a period of 10 years

(e) Investments

Investments are classified into "Non-current Investments" and are valued at cost

(f) Inventories

Stock-in-trade and spares are valued at lower of cost and net realizable value, cost being the actual purchase price and other costs that are necessary to bring the inventories to the brsent location and condition.

(g) Foreign currency transactions

(i) Initial Recognition - Transactions denominated in foreign currencies are recorded at the rates of exchange brvailing on the date of transaction.

(ii) Conversion - Monetary assets and liabilities denominated in foreign currency are converted at the rate of exchange brvailing on the date of the Balance Sheet.

(iii) Exchange differences - All exchange differences arising on settlement/conversion of foreign currency transactions are included in the Statement of Profit and Loss in the year in which they arise.

(iv) Forward Contract - The Company uses foreign exchange forward contracts to hedge its exposure of foreign currency fluctuations. Any profit or loss arising on cancellation or renewal of foreign exchange forward contracts is recognition as income or expenses for the year.

(h) Employee Benefits:

(i) The Company's contribution to Provident Fund is remitted to Employss's Provident Fund Organization based on a fixed percentage of the eligible employee's salary and charged to Statement of Profit and Loss . (The Company has categorized its Provident Fund as a defined contribution plan since it has no further obligations beyond these contributions).

(ii) The Company's contribution under a defined Superannuation Plan to the trust established for this purpose bases on a specific percentage of salary of eligible employees is charged to Statement of Profit and Loss. (The Company has categorized superannuation plan as a defined contribution plan since it has no further obligations beyond these contributions).

(iii) The Company's liability towards gratuity is accounted for on the basis of an actuarial valuation done by Life Insurance Corporation of India (LIC) at the year end and actuarial gains/losses are charged to the Statement of Profit and Loss. Gratuity liability is funded by payments to LIC under the Group Gratuity Scheme of the Company's employees.

(iv) Leave encashment which is expected to be utilized within a year, is treated as short-term employment benefit.

(i) Taxes on Income

Deferred tax is recognized on timing differences between the accounting and taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted at the Balance Sheet date and is capable of reversal in one or more subsequent periods.

Tax credit is recognized in respect of Minimum Alternative Tax ("MAT") as per the provisions of section 115 JAA of the Income Tax Act,1961 based on convincing evidence that the Company will pay normal income tax within statutory time frame and is reviewed at each Balance Sheet date.

(j) Leases:

(i) Assets acquired under finance leases are capitalized at the lower of the fair value of the leased assets at the inception of the lease term and the brsent value of minimum lease payments.

(ii) Lease payments under operating lease are recognized as an expense in the Statement of Profit and Loss on straight line basis over the lease term.

2.1 — CONTINGENT LIABILITIES (TO THE EXTENT NOT PROVIDED FOR)

Claims against the Company not acknowledged as debt:

Labour claim of an earlier year disputed by the Company against which Rs.1,75,000 has been deposited with The High Court, Mumbai.

(i) Guarantees and Letters of Credit:

(a) Outstanding against Indemnity of default loss given to the Axis Bank ltd to the extent of Rs.10 crores on account of factoring of trade receivable from reputed indentified customers of the Company is Rs.3,88,13,852 as on 31 March, 2016 (Previous year Rs.8,96,00,012).

(b) Bank guarantees given to the extent of Rs.1,50,93,190 (Previous year Rs.1,30,70,052)

(c) Letters of Credit outstanding to the extent of Rs.18,88,99,993 (Previous year Rs.11,15,93,267)

(ii) Other money for which the Company is contingently liable:

(a) Demands for Wealth Tax for the assessment years 1997-98 & 1998-99 amounting to Rs.51,25,378 was raised by the Tax authorities in earlier years which had been disputed by the Company and appeals filed with the Hon. High Court, Mumbai. The Company however deposited the demanded amounts in full with the tax authorities.

(b) For the assessment years 2000-2001, 2002-2003 and 2003-2004 the Income-tax Appellate Tribunal had given relief of Rs.8,74,254 which had been accounted for in an earlier year. The tax authorities had subsequently filed an appeal with the Hon. High Court, Mumbai against the relief of Rs.8,74,254. The matter was set aside by Hon. High Court, in an earlier year and the matter was restored to the Tribunal court for disposal. The matter is still pending with the tax authorities.

(c) The tax authorities have raised a demand for the assessment year 2013-14 u/s 143 (3) for Rs.16,43,120. The company has disputed this demand and has filed an appeal with the Commissioner (Appeals) of Income- tax Mumbai against this demand.

(d) Demand of Rs.13,50,000 raised in an earlier year by the customs authorities for goods imported had been disputed by the Company against which the full amount had been deposited under protest. The matter is still pending with the Customs authorities.

(e) Bond for Rs.1.20 crore executed with the Customs authorities for demand raised by the authorities in an earlier year which had been disputed and challenged by the Company. This Bond is to remain in force till finalisation of the value by the Customs authorities of the goods imported by the Company.

(f) Demand of Rs.38,31,386 (Previous year Rs. 38,31,386) raised by the New Maker Chambers IV Premises Co-operative Society Ltd, Mumbai for the difference in BMC tax from 01.04.2000 to 31.03.2015, and the same has been paid to Society under protest. However net liability of the Company against this demand is Rs.15,66,683.

2.2 OTHER COMMITMENTS

(i) An amount of Rs.1,55,00,000 was due from a third party in terms of Contract of Engagement with this party as a Consultant against which provision for doubtful debt of Rs.77,50,000 was made and subsequently written off in an earlier year. Though the Contract had been terminated with effect from 1 April 2007, inspite of all assurances given to the Company by this party for clearing this debt, the party has not paid any amount so far against these dues. The Company had initiated an Arbitration proceeding invoking Arbitration in the brvious year as per the Contract of Engagement referred to above. The Arbitration proceeding is still in process.

(ii) Buyer's Credit outstanding to the extent of Rs.7,97,58,205 for goods purchased against the Letter of Undertaking of Banks (Previous year Rs.Nil).

2.3 TRADE RECEIVABLES

Trade receivables are net of customer's accepted liability for Rs.2,94,19,719 which are discounted under letter of credit issued by the customer's bank.

2.4 — Previous years figures have been regrouped / reclassified wherever necessary to conform to the current year brsentation.