1 SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Preparation:

i. In compliance with the accounting standards referred to in Section 133 and other relevant provisions of the Companies Act, 2013 to the extent applicable, the company follows the accrual system of accounting in general and the historical cost convention in accordance with the Generally Accepted Accounting Principles (GAAP).

ii. The brparation of accounting statements in conformity with GAAP requires the management to make assumption and estimates that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as at the date of the financial statement and the amounts of income and expenses during the period reported under the financial statements. Any revision to the accounting estimates are recognized prospectively when revised.

iii. All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria set out in the 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 equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current - non current classification of assets and liabilities.

(b) Fixed assets, intangible assets and capital work-in -progress:

i. Fixed assets are stated at cost or valuation less accumulated debrciation and impairment loss. The cost includes inward freight and other directly attributable expenses.

ii. In respect of qualifying assets, all direct expenses relating to the projects up to commencement of production, including interest on borrowed loan are capitalised. Financing Cost incurred on general borrowing used for projects is capitalised at weighted average cost. Amount of such borrowing is determined after setting off amount of internal accruals.

iii. Cost of any software purchased initially along with the computer hardware is being capitalised along with cost of hardware. Any subsequent acquisition/up-gradation of software is being capitalised as an asset.

(c) Debrciation and amortization:

i. Cost of capitalized software is amortised over a period of five years from date of its acquisition. Leasehold Improvements are amortised over period of lease or estimated useful life whichever is shorter.

ii. Debrciation on Fixed Assets is calculated on Straight line Method in accordance with the provisions of Schedule II of the Companies Act, 2013 keeping 5% of cost as residual value. The useful life of fixed assets as defined in Part C of schedule II of the companies Act, 2013 has been taken for all tangible assets other than Plant & Machineries, whose useful life is estimated 20 years based on internal assessment by the management and independent technical evaluation carried out by external valuer. Addition / deletion in the cost of the fixed assets due to exchange fluctuation in long term foreign currency monetary items arising due to difference in exchange rate vis a vis initial recording and reporting date are debrciated over the balance life of the assets.

iii. No write off is being made in respect of leasehold land, as the lease is a long lease.

iv. Fixed Assets costing upto «f 5000/- each are fully debrciated in the year of its acquisition.

(d) Investments:

Long term investments are stated at cost. Provision for diminution in the value of long term investments is made only if, such decline is other than temporary in the opinion of the management.

(e) Inventories:

i. Finished Goods, Project Materials are valued at lower of cost or net realisable value.

ii. Raw Materials are valued at cost or net realisable value whichever is lower.

iii. Stock in Process is valued at lower of cost or net realisable value.

iv. Stores, Spares and Consumables and Packing Materials are valued at cost.

v. Scrap is valued at estimated realisable value.

vi. Cost of Raw Materials is determined on First In First Out (FIFO) basis. Cost of Packing Materials, Stores & Spares are determined on weighted average basis. Work in Process includes raw material costs and allocated production overheads. Cost of finished goods is determined by taking derived material costs and other overheads.

(f) Revenue Recognition:

i. Sales are accounted for on dispatch of goods from factory to the customers. Sales are net of return and include excise duty wherever directly chargeable from customers, but exclude Sales tax/VAT.

ii. Turnkey Projects

- In the case of lump-sum Turnkey Contracts, as proportion of actual direct costs of the work to latest estimated total direct cost of the work. Project income is net of VAT/Service tax.

iii. No income has been taken into account on jobs for which:

- The terms have been agreed to at lump-sum turnkey contracts and physical progress is less than 25%.

-Where physical progress is less than 25%, the cost of such jobs is carried forward as work-in-progress at actual direct cost.

iv. Other claims including interest on outstanding are accounted for when there is virtual certainty of ultimate collection.

(g) Excise Duty:

Excise Duty has been accounted on the basis of both payments made in respect of goods cleared as also provision made for goods lying in factory brmises. CENVAT credit is accounted on accrual basis on purchases of materials.

Employee Benefits:

i. Liability in respect of Gratuity, a defined benefit plan, is being paid to fund maintained by LIC/Reliance Life Insurance Company Limited and administered through a separate irrevocable trust set up by the company. Difference between the fund balance and accrued liability at the end of the year based on actuarial valuation is charged to Profit & Loss Account.

ii. Liability in respect of leave encashment, a terminal employee benefit, being defined benefit plan, is recognized on the basis of actuarial valuation.

iii. Contributions with respect to Provident Fund, is recognized as an expense in the Profit and Loss Account of the year in which the related service is rendered.

iv. In respect of employees stock options, the excess of intrinsic value on the date of grant over the exercise price is recognized as deferred compensation cost amortized over vesting period.

Foreign Currency Transactions:

(i)

i. Transactions denominated in foreign currencies are normally recorded at the exchange rate brvailing on the date of transaction.

ii. Foreign currency transactions remaining unsettled at the year end are translated at year end rate. Premiumin respect of forward contracts is accounted over the period of contract. Exchange differences arising on foreign currency transactions are recognized as income or expense in the period in which they arise. iii. Exchange difference arising on reporting of long term foreign currency monetary items:­- in so far as they relate to the acquisition of a debrciable capital assets are adjusted in cost of assets. - other cases are accumulated in a 'Foreign Currency Monetary Item Translation Difference Account (FCMITDA) and are amortised over period of foreign currency monetary item or upto 31st March, 2020, whichever is earlier.

(j) Miscellaneous Expenditure:

Public issue expenditure/ 'FCCBs' issue expenditure is being written off against Securities / Share brmium, net of taxes, in the year of issue.

(k) Taxes on Income:

Current tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax is recognized, subject to the consideration of prudence in respect of deferred tax assets, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods

(l) Impairment of Fixed Assets:

Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the carrying amount of the Company's fixed assets. If any indication exists, an asset's recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their brsent value based on an appropriate discount factor.

Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised for the asset no longer exist or have decreased. However, the increase in carrying amount of an asset due to reversal of an impairment loss is recognised to the extent it does not exceed the carrying amount that would have been determined (net of debrciation) had no impairment loss been recognised for the assets in prior years.

(m) Contingent Liabilities:

Contingent liabilities are disclosed after a careful evaluation of the facts and legal aspects of the matter involved.

(n) Provision for Contractual Obligations:

The provision for estimated liabilities on account of guarantees & warranties etc. in respect of lump-sum turnkey contracts awarded to the company are being made on the basis of assessment of risk and consequential probable liabilities on each such job made by the management

Previous Year's figures have been regrouped / rearranged wherever necessary.

As per our Separate Report of even date attached

For JAGDISH CHAND & CO.

Firm Registration No. 000129N Chartered Accountants

(PRAVEEN KUMAR JAIN)

Partner

M.No. 085629

(ANIL GUPTA)  

Chairman-cum-Managing Director

(RAJEEV GUPTA)

Executive Director (Finance) & CFO

DIN: 00006422 DIN: 00128865

 (KISHORE KUNAL)

Company Secretary

M.No. A18495

(ADARSH JAIN)

General Manager (Finance)

M.No. 502048

Place of Signing: New Delhi

Date: 28th May, 2015