Notes to Financial Statements for the year ended 31st March, 2016

1. Summary of Significant Accounting Policies

1.1 Basis for brparation of Financial Statements

The Company follows accrual method of Accounting. The financial statements have been brpared under the Historical Cost Convention and on the basis of going concern and in accordance with the Accounting Standards notified under the Companies Act, 1956 ("The Act") read with the general circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act 2013.

1.2 Inventories

Inventories have been valued at lower of cost and net realizable value. The cost of inventories has been assigned using the weighted average cost formula.

a) Purchased items - at FIFO - Net of CENVATand VAT

b) Work-in-Progress - Purchase cost net of CENVAT and VAT plus proportionate Overheads

c) Manufactured items - at cost excluding selling at Factory overheads and VAT.

d) Traded Items - at cost and net of VAT.

e) Inventory at Branches / - at cost including applicable Foreign Branches taxes and duties.

1.3 Debrciation

Debrciation is charged on Straight line basis for Plant & Machinery, Vehicles and Computers and on Written Down Value basis for other assets. Rates brscribed under Schedule II of the Companies Act, 2013 are adopted.

1.4 Revenue Recognition

Sales : Sales, which includes excise duty, but excludes VAT, is recognised at the time of shipment of goods from plant or from stock points.

Royalty: Royalty is recognised on accrual basis in accordance with the terms of the relevant Agreement.

Rent: Rental income is recognised on accrual basis in accordance with terms of respective rent agreements.

Interest: Interest is recognised on accrual basis taking into account the amount outstanding and the rate applicable.

Dividend : Dividend is recognised and accounted when the right to dividend is established.

1.5 Fixed Assets

a) Fixed assets are recorded at historical cost of acquisition, which includes all taxes, duties and other direct expenses incurred up to the stage of commissioning of the asset, net of CENVAT and VAT, wherever applicable.

b) Capital work-in-progress:

Capital work-in-progress consisting of assets under construction, erection and commissioning are valued at cost incurred up to the date of Balance Sheet.

c) An asset is considered as impaired in accordance with Accounting Standard 28 on "Impairment of Asset", when at Balance Sheet date there are indications of impairment and the carrying amount of the Asset, or where applicable the cash generating unit to which the asset belongs, exceeds its recoverable amount ( i.e. the higher of the asset's net selling price and value in use). The carrying amount is reduced to the recoverable amount and the reduction is recognized as an impairment loss in the Statement of Profit and Loss.

1.6 Foreign Currency Transactions

Transactions in foreign currency are recorded at exchange rate brvailing on the date of the transaction. For transactions settled within the year, exchange variance is charged to Statement of Profit and Loss. Outstanding liabilities and assets are restated at exchange rate brvailing at the end of the period. The resultant exchange variances are recognized in the Statement of profit and loss brpared for the period on a net off basis.

1.7 Investments

Long term investments are valued at cost. When there is a decline, other than temporary, the carrying amount is reduced to recognise the decline. Short term investments are valued at cost or fair value whichever is lower.

1.8 Employee Benefits

a) Provident Fund: Provident Fund contribution is as per the rates brscribed by the Employees Provident Fund Act 1952 and the same is charged to revenue account.

b) Superannuation: Company has an arrangement with Life Insurance Corporation of India for providing Superannuation benefits to employees eligible as per Company's Rules. Company's contribution to the Superannuation Fund is calculated as per agreed terms and provided in the accounts.

c) Leave Salary : Liability in respect of encashment of accumulated leave is provided based on actuarial valuation.

d) Gratuity: The Company operates a defined benefit plan for the payment of post employment benefits for its employees in the form of Gratuity fund scheme managed by Life Insurance Corporation of India. The expenditure are recognized based on the brsent value of obligation as determined in accordance with AS -15 on "Employee Benefits".

e) Other short term employee benefits: All the other short term employee benefits such as profit share, performance pay, etc are measured and provided on accrual basis.

1.9 Borrowing Cost

Borrowing cost includes:

a) Interest and Commitment charges on bank borrowings and other short term and long term borrowings.

b) Amortization of ancillary costs incurred in connection with the arrangement of borrowings.

c) Finance charges in respect of assets acquired under finance leases or under other similar arrangements.

d) Exchange difference arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.

1.10 Deferred Tax

Deferred Tax liabilities/assets are accounted for in respect of all timing differences, as per (AS)22.

1.11 Research & Development Expenses:

Revenue expenditure on Research and Development are charged off in the year in which they are incurred. Fixed Assets purchased for the purpose of research and development are debrciated as per the Company's policy stated above.

1.12 Intangible Assets

Intangible Assets are recorded at the cost of acquisition and are amortised over a period of five years or its legal/ useful life whichever is less.

1.13 Provisions, Contingent Liabilities & Contingent Assets:

Provisions are recognized at the best estimate of the expenditure required to settle the brsent obligation at the balance sheet date.

Contingent liabilities do not warrant provisions, but are disclosed unless the possibility of outflow of resources is remote. Contingent assets are neither recognized nor disclosed in the financial statements

2 Investment in SAS Belair

The Company in its letter to Bombay Stock Exchange Limited ("BSE') and National Stock Exchange Limited ('NSE') has intimated that business operations of SAS Belair, France are not smooth and the cost structures are challenging. The subsidiary has filed for protective action with the Commercial Court in Anncy, France. Pursuant to this the court has appointed an Administrator on April 26, 2016. Hence, the subsidiary is no longer under the control of the company and the company is under Legal redress as per the French Laws.

The Management is of the view that there will be no further liabilities on account of such restructuring. No provision has been considered for the carrying value of the investments, advances and receivables aggregating to Rs. 526.51 Million, as the same would be evaluated and provided depending upon the progress of the above said legal proceedings in France.

3 Balances in the accounts of Sundry Debtors, Sundry Creditors, Security and other Deposits have been reconciled wherever letters of confirmation have been received and necessary effect has been given in the accounts.

4 Previous year figures have been regrouped and re-classified wherever necessary to make them comparable.