Note No. 1

NATURE OF OPERATION:

Tulsyan NEC Limited is engaged in the Manufacturing TMT bars, Coal Based Power Plant and Synthetics Woven Fabrics and Sacks. It has manufacturing plant at Gummudipoondi, Tamilnadu and Bangalore (Doddaballapura).

1. Significant Accounting Policies:

1.1 Basis of brparation of Financial Statements

a. The financial statements are brpared under the historical cost convention on accrual basis of accounting to comply in all material respects with mandatory accounting standard as notified by the Companies(Accounting Standards) Rules, 2006 as amended ('the Rules') and the relevant provisions of the Companies Act, 1956 ('the Act').

b. Accounting policies have been consistently applied by the company and the accounting policies not referred to otherwise, are in conformity with Generally Accepted Accounting Principles (GAAP).

1.2 Fixed Assets and Debrciation

a. Fixed Assets & Capital work in Progress:

Fixed assets are stated at cost, less accumulated debrciation and impairment losses, if any. Cost includes all expenditure necessary to bring the asset to its working condition for its intended use. Own manufactured assets are capitalized inclusive of all direct costs and attributable overhead.

Capital work-in-progress comprises of amount paid to acquire fixed assets and the cost of fixed assets that are not yet ready for their intended use as at the balance sheet date.

Assets held for disposal are stated at the lower of net book value and the estimated net realizable value.

b. Financial costs incurred up to the date of commissioning of assets are capitalised.

c. Debrciation has been provided as follows:

i). Under WDV method on assets acquired up to 31.12.1985 at the then brvailing rates.

ii) Under SLM method on assets acquired after 31.12.1985 and up to 15.12.1993 at the rates as originally brscribed in Schedule XIV to the Companies Act,1956, and on assets acquired thereafter at the revised rates as per Notification GSR 756(E) dated 16.12.1993.

iii) Debrciation on revaluation is adjusted against Revaluation Reserve.

iv) Cost of Leasehold land is amortised over the lease period.

v) Plant and Machinery and Furniture and Fittings which cost are less than Rs 5000/- each are debrciable at the rate of 100% in the year of purchase.

1.3 Debrciation

Retirement and other employee benefits: Defined contribution to provident fund and employee stateinsurance are charged to the profit and loss account of the year when the contributions to the respective funds are due. There are no other obligations other than contribution payable to the respective statutory authorities. Retirement benefits in the form of gratuity are considered as defined benefit obligation, and are provided in the year of separation.(AS 15).

1.4 Inventories

Raw materials, Components, Stores and Spares and Work-in-Progress are valued at cost. Finished goods are valued at cost or realizable value whichever is less. The basis of determining cost for various categories of inventories are as follows:

Raw Material, components, stores and spares

At cost (Weighted Average)

Work-in-Progress

At Material cost plus Conversion cost on the basis of absorption costing

Finished Goods

At material cost plus conversion cost on the basis of absorption costing (including of excise Duty payable)

REVENUE RECOGNITION:

1.5 Sales

Sales comprises of sale of goods produced & purchased by the Company as also sales effected as agents and sale of raw materials, and are gross of duties. Consignment sales are accounted on receipt of consignment sale note from the consignee.

1.6 Revenue Recognition

All income and expenditure are recognised on accrual basis except rates & taxes, bonus on cash basis. Export benefits rebrsenting duty free imports of earlier years are accounted in proportion to materials consumed. The value of Advance Licence on hand at the end of the year as certified by the management is incorporated in the books of accounts.

1.7 Investments:

Long Term Investments are carried at cost less provision for diminution in value other than temporary, if any. Current investments are valued at lower of cost and fair value.

1.8 Contingent Liabilities

All liabilities have been provided for in the accounts except liabilities of a contingent nature, which have been disclosed at their estimated value in the Notes to the Financial Statements wherever practicable.

waivers by reducing the rate of interest from applicable rates of each bank to 11% per annum. Interest on the restructured loans have been provided for in the books at lowered rates of interest. The Master restructuring Agreement entered into between the company and the banks' provides a "Right of Recompense" on the reliefs / sacrifices as per the CDR guidelines. The total value of such sacrifices / reliefs/ waivers as on 31st March 2015 is Rs.6.46 Crores.

The Company has executed (During the year 2009-10 and 2011-12) Corporate Guarantee in favour of the Shamrao Vithal Co-operative Bank Limited, Mumbai for the loan taken by M/s. Chitrakoot Steel and Power Pvt. Ltd., wholly owned subsidiary of the Company, for Rs. 25.00 Crores.

The Company received notices from Commercial Tax Department for reversing the ineligible Input tax credit taken for Rs. 64,43,869/-, Rs. 15,78,849/- and Rs. 50,19,598/- for the financial year 2011-12, 2012-13 and 2013-14 respectively. During the financial year 2014-15, the Company has reclassified the ineligible ITC and grouped in current asset, in the ledger under the account head VAT under protest and this has been quantified in Form WW. However the management is of opinion that the reversal of input tax credit need not be made in the Accounts for the aforesaid years.

1.9 Cash and Cash Equivalents:

Cash and cash equivalents in the cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.

1.10 Foreign Exchange Transactions:

All foreign currency transactions are recorded at the average exchange rate brvailing during the transaction occurs. Outstanding balances of foreign currency monetary items are reported using the period end rates. Pursuant to the notification of the companies ( Accounting Standard) amendment Rules 2009 issued by the Ministry of Corporate Affairs on March 31st, 2009 amending Accounting Standard-11 (AS-11), the effect of changes in Foreign Exchange Rates (Revised 2003), exchange difference relating to long term monetary items are dealt with in the following manner.

Exchange difference relating to long term monetary items, arising during the year, in so far as they relate to the acquisition of debrciable capital asset are added to/deducted from the cost of the assets and debrciated over the balance life of the asset.

In other cases, such difference are accumulated in the "Foreign Currency Translation Difference Account" and amortised to the profit and loss account over the balance life of the long term monetary item but not beyond 31st March, 2015.

All other exchange difference are recognized as income or expenses in the profit and loss account (discloses separately under the head Exceptional items in the Schedule-VI, Part-II of the Companies Act, 1956). Foreign exchange transactions are as follows:

2. LEASE PAYMENTS AND RECEIPTS

Lease payments have been made towards land at Chennai and amortised on a straight line basis during the period of lease.

Lease payments have been made towards Hire Purchase of Vehicles. Lease charges have been debited to the Statement of Profit and Loss based on the certificate issued by the Lessor. The Principal amount of lease due has been disclosed in the Balance Sheet under Secured Loans.

3. The information required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company. There are no overdues to parties on account of principal amount and/or interest and accordingly no additional disclosures have been made.

4. Impairment of Fixed Assets

There being no indication of impairment of Asset determined by the Company, no loss has been recognized on impairment loss.

5. Borrowing Cost

In respect of new units/major expansions, the interest paid/payable on borrowing funds, attributable to construction of building and acquisition/erection of Plant and machinery is capitalized up to the date of construction/acquisition/erection of aforesaid assets all other borrowing costs are charged to the statement of profit and loss. During the year under audit the below mentioned amount has been capitalized as per AS-16 issued by the Institute of Chartered Accountants of India - Nil.

6. Expenditure incurred Rs. 50,80,003/- towards Right Issue of Shares and the same has been disclosed in the Balance Sheet under the head Miscellaneous Expenditure and would be written off over a period of five years after the completion of Rights Issues.

7. Previous year figures are regrouped and reclassified whenever necessary to conform to the current year classification as per Schedule III of the Companies Act, 2013.

As per our Report of even date

For C.A. Patel & Patel

Chartered Accountants

FR No. 005026 S

Bhavesh N Patel

Partner

M. No. 26669

On behalf of the Board

Sanjay Tulsyan Managing Director

C. Ramachandran Director

C S Giridhar Company Secretary

Lalit Kumar Tulsyan Executive Chairman

Shantha Kumar RP Chief Financial Officer

Place: Chennai

Date : 3rd July, 2015