Notel 1  SIGNIFICANT ACCOUNTING POLICIES

1.1 Basis of Preparation of Financial Statements:

The financial statements have been brpared to comply in all material aspects with the Accounting Standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Companies Act, 2013.

Financial statements are brpared in accordance with the generally accepted accounting principles, as adopted consistently, and are based on historical cost and items of income and expenditure are recognized on accrual basis.

All the assets and liabilities have been classified as current or non current as per the Company's normal operating cycle and other criterion set out in Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalent, the Company has ascertained its operating cycle to be 12 months for the purpose of current and non-current classification of assets and liabilities.

1.2 Use of Estimates:

The brparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions, based upon the best knowledge of current events and actions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as at the date of financial statements and the reported amounts of incomes and expenses during the reporting period. Actual results may differ from those estimates. Any difference between the actual results and estimates are recognized in the period in which the results are known/ materialize.

1.3 Revenue Recognition:

Revenue is recognized to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

Sale of goods is recognized on transfer of significant risks and rewards of ownership to the customer which is generally on the dispatch of goods. Revenue from operations is disclosed inclusive of excise duty and net of sales tax / value added tax, discounts and returns.

Benefits on account of entitlement to import goods free of duty, Duty Draw back Scheme, Focus Product Scheme, etc. are accounted for in the year of exports made and are included in revenue from operations.

1.4 Fixed Assets: Tangible Assets

Tangible fixed assets are stated at cost, net of Cenvat and VAT input credit availed, less accumulated debrciation, amortization and impairment losses, if any, except freehold land which is carried at cost. Cost includes all expenditure necessary to bring the asset to its working condition for its intended use.

Foreign currency exchange variations to the extent covered under AS-11 are capitalized as per the policy stated in note 1.7.

Assets which are not ready for their intended use are disclosed under Capital work-in-progress. Expenditure during construction period (including borrowing cost relating to borrowed funds for construction or acquisition of fixed assets) incurred on projects/ assets, including trial run expenses (net of revenue) are treated as Pre-operative expenses, pending allocation to the assets, and are included under "Capital work-in-progress." These expenses are apportioned to related fixed assets on commencement of commercial production. Capital work-in-progress is stated at the amount expended up to the date of Balance Sheet.

The carrying amounts of fixed assets are reviewed at each balance sheet date to assess if they are recorded in excess of their recoverable amounts and where carrying values exceed their estimated recoverable amount, assets are written down to their recoverable amount.

Intangible Assets

Intangible assets are stated at cost less accumulated amortization. Cost includes all expenditure necessary to bring the asset to its working condition for its intended use.

1.5 Debrciation/Amortization:

i) Debrciation on fixed assets is provided on "Written Down Value Method (WDV)" except in respect of Building and Plant & Machinery of Kanpur Unit and Temra (Bilaspur) Unit where debrciation is provided on "Straight Line Method (SLM)".

ii) Effective 1st April, 2014, Debrciation is provided based on useful life of the assets as provided in Schedule II to the Companies Act, 2013 except in respect of the following assets, where useful life is different than those brscribed in Schedule II are used:

a) The useful life of certain plant and machinery being continuous process plants, which is required and designed to operate for 24 hours a day, has been estimated, based on independent technical evaluation, as 18 years;

b) In respect of power line payments made to Electricity Authorities, useful life is estimated at five years and expenditure is amortized accordingly on Straight Line Method.

c) Cost of Technical Know-how and Software capitalized is amortised over a period of five years on Straight Line Method.

d) Individual assets, whose actual cost does not exceed Rs.10,000 are debrciated fully within the year of acquisition.

iv) Premium paid on Leasehold land is amortized over the period of the Lease.

v) In respect of additions or extensions forming part of existing assets, including incremental cost arising on translation of foreign currency liabilities for acquisition of Fixed Assets, debrciation is provided over the residual life of the respective assets.

1.6 Borrowing Costs:

Borrowing costs include exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Interest and other borrowing costs that are attributable to acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. 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 the Statement of Profit & Loss in the period in which they are incurred.

1.7 Foreign Currency Transactions:

Transactions denominated in foreign currency are recorded at the exchange rate brvailing on the date of transaction or that approximates the actual rate at the date of the transaction.

Monetary items denominated in foreign currencies, which are outstanding as at the year-end and not covered by forward contracts, are restated at year end rates. Resultant gain or loss, other than in relation to acquisition of fixed assets, is charged to revenue during the year. In case of items covered by forward exchange contracts, the difference between the forward rate and the exchange rate at the inception of the forward exchange contracts is recognized as income/expense over the life of the contract. The exchange differences arising on such forward exchange contracts are recognized as income or expense along with the exchange differences on the underlying assets/liabilities. Profit or loss on cancellations/renewals of forward contracts is recognized during the year. Non-monetary foreign currency items are carried at cost.

In accordance with Accounting Standard (AS) 11, "Accounting for the effects of changes in foreign exchange rates", exchange difference arising in respect of long term foreign exchange liabilities, where they relate to acquisition of debrciable fixed assets, are adjusted to the carrying cost of such assets and are debrciated over the balance useful life of the asset.

1.8 Valuation of Inventories:

Items of Inventories are valued at lower of cost and net realizable value after providing for obsolescence, if any. Cost of inventories is ascertained on the 'weighted average' basis. Inventory of Finished goods* and Work in progress is valued on full absorption cost incurred in bringing the inventories to their brsent location and condition. Waste & Scrap are valued at net realizable value.

(*Excise duty, wherever applicable, is included in finished goods inventory valuation.)

1.9 Lease Rentals:

Rental charges in respect of assets acquired under finance leases prior to 1'st April 2001 are amortized over the useful economic life of the asset and excess of lease rentals paid over the amount accrued are treated as brpaid lease rentals. No leased assets, except leasehold land, were acquired on or after 1'st April 2001.

1.10 Employee Benefits:

Defined contribution plans such as contributions to Provident Fund, Family Pension Fund and Employee's State Insurance are made to the funds administered by the Govt. of India, and are recognized as an expense when employees have rendered service entitling them to the contributions. Defined benefit plans such as leave encashment and gratuity are determined using the Projected Unit Credit Method, on the basis of actuarial valuation carried out by independent actuaries at each balance sheet date. Actuarial gains and losses are recognized in the Statement of Profit and Loss in the year in which they arise.

1.11 Taxation:

Tax expense comprises Current and Deferred Tax.

Current Income Tax is measured at the amount expected to be paid to the tax authorities, using the applicable tax rates in accordance with the provisions of the Income Tax Act, 1961.

Deferred income tax reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred charge or credit resulting from timing difference is measured based on the current tax rates and tax laws that have been enacted or substantively enacted as on the Balance Sheet date. Deferred tax assets are recognized and carried forward to the extent there is a reasonable certainty that these assets can be realized in future against future taxable income. Deferred tax assets/liabilities are reviewed at each Balance Sheet date.

Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing reasons that the company will pay normal income tax during the specified period. MAT credit entitlement is reviewed at each balance sheet date.

1.12 Provisions, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognized when there is a brsent obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligations. Provisions are measured at the best estimate of the expenditure required to settle the brsent obligation at the balance sheet date.

Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

1.13 Earnings per Share:

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

1.14 Government Grants:

Grants and subsidies from the Government are recognized when there is reasonable certainty that the grant/ subsidy will be received and all attaching conditions will be complied with.

Grants received against specific fixed assets are adjusted to cost of assets and those in the nature of promoter's contribution are credited to Capital Reserve. Revenue Grants are recognized in the Statement of Profit and Loss on a systematic basis to match them with related costs.

1.15 Application of Securities Premium Account:

Share issue expenses and Premium payable on redemption of Preference Shares are charged, first against available balance in Securities Premium Account.

Note 2 FINANCIAL & DERIVATIVES INSTRUMENTS

Nominal value of Forward Contracts entered into by the Company for hedging foreign currency risks and outstanding as on 31st March, 2015 amounting to Rs.2,36,57,797 (Previous Year Rs.3,92,07,720) Un-hedged Foreign Currency exposure that are not hedged by derivative instruments or forward contracts as at 31st March, 2015 amounting to Rs.42,17,83,596 (Previous Year Rs.46,61,58,454).

Note 3 DUES TO MICRO, SMALL AND MEDIUM ENTERPRISES

There are no dues to Micro, Small and Medium Enterprises as at 31st March, 2015 (Previous year Nil). The information as 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 based on the information available with the Company.

Note 4 Previous year figures have been reclassified to conform to this year's classification.

In terms of our annexed report of even date

FOR MEHROTRA RAKESH KUMAR & CO.

Chartered Accountants

(Registration No. 002978C)

Deepak Seth

Partner

Membership No. 073081

For and on behalf of the Board

Sharad Sharma Joint Managing Director

Shyam Sunder Sharmma Chairman and Managing Director

Bharat Kumar Sajnani Company Secretary

Gopal Agarwal Chief Financial Officer

Place: Kanpur

Dated: 30th May, 2015