1. SIGNIFICANT ACCOUNTING POLICIES , CONTINGENT LIABILITIES AND NOTES

A. STATEMENT OF SIGNIFICANT ACCOUNTING POLICY

1. METHOD OF ACCOUNTING:

The Financial Statements have been brpared on historical cost convention. The Company follows the accrual basis of accounting. The Financial Statements are brpared in accordance with the accounting standards specified in the Companies (Accounting Standards) Rules, 2006 notified by the Central Government in terms of Section 211(3C) of the Companies Act, 1956.

2. Revenue Recognition:

Sales includes inter-divisional transfers, sale of scrap, Sales Outsource Products, Sales related to Engineering Procurement and Contract Services, Excise duty Paid, Value Added tax and Invoices for price escalation as per Contracts with the relevant customers on accrual basis.

3. Fixed Assets:

Fixed Assets are stated at cost less accumulated debrciation up to the year. Expenditure incurred on improvement or replacement, which in the opinion of the management is likely to substantially increase the life of the assets and future benefits from it, is capitalized. Capital expenditure includes advances for assets under erection/installation are being grouped under capital work in progress.

4. Debrciation:

Debrciation was charged on Straight Line basis at rates specified in Schedule XIV the Companies Act.1956. from the year 2014-15 after the amendment of the company’s Act 2013 the Debrciation on the assets are being calculated based on the useful life of the asset. The impact of Such change is to the tune of Rs.17.93 Crs. Additional debrciation debited to P&L account as per the new companies Act 2013. In the Block of asset of the company, the original asset Block was Put to use in the year 1993, as per the Amended company’s act the useful life of the P&M are over as to the affliction of time, however, regarding the useful ness of the P&M into the production and the brsent performance of the P&M are yet to be decided by the project Director of the company.

5. Expenditure during construction period:

All br-operative project expenditure (net of income accrued), including interest on borrowings incurred up to the date of installation is capitalized are added pro-rata to the cost of fixed assets. Foundation costs are allocated as certified by management.

6. Investment:

Long-term investments are valued at cost. however the investments in the Non

- Quoted Shares of the other companies are considered at their original cost, further being the Non

- Quoted investments the Market prices are not readily available and due to non-intention of sales of the shares, and based on the tests and assumptions of the management as to the No diminution

In the current value of the same, they are shown in the accounts at their original cost

7. Inventories:

a) Inventories of finished goods are valued at lower of costs or net realizable value inclusive of excise duty. Work in process (including finished stock pending QC inspection) is valued at cost rebrsenting material, labour and apportioned overheads as certified by the management. Other inventories are valued at cost. Materials related to Projects under implementation are valued at standard cost.

b) Cost of work-in-progress and finished goods includes material cost, labour cost, and manufacturing overheads absorbed on the basis of normal capacity of production.

8. Provident Fund and Retirement Benefits:

Contribution to Provident Fund is accounted on actual liability basis. Provision for Gratuity and Leave Encashment is made based on actuarial valuation.

9. Excise Duty:

Excise Duty payable on finished goods held as stock in the works is included in the expenditure and in such stocks as per the provisions of Section 145 of the Income tax Act, 1961.

There was an inquiry under section 14 of the Central Excise Act, 1944 in the brmises of the Company on 15-09-2014. Pursuant to such inquiry the Central Excise Department has alleged that the Company has wrongly availed the CENVAT credit to the extent of Rs.40.00 crores approximately during the period 2012-13, 2013-14 and 2014-15 (till July, 2014). No show-cause notice under the provisions of section 11(a) of the Central Excise Act, 1944 has been served upon the Company till date which is sine qua non for the recovery of demand of any short payment or non-payment or wrong availment of CENVAT credit. Since the company holds all the material and evidences to justify its claim of CENVAT credit it is of view that the allegations made by the Excise Department are not tenable in law.

Thus, in absence of such show cause notice as well as non-quantification of the Demand by the Central Excise Department, the company has not acknowledged the said approximate demand and accordingly no provision has been made in the books of account for the same.

10. Amortisation:

Expenditure on Fire Resistant Low Smoke Project (FRLS) & High Sensitivity & High Conductivity Conductors (HSHC) have been amortized over a period of five years. One- fifth portion of the expenses deferred on Aerial Bunch Cable Project (ABC Project) have been charged to the revenue for the financial period.

11. Foreign Currency Transactions:

The Company has no Branch offices outside India. The Foreign currency transaction are recorded on initial recognition in the reporting currency by applying the exchange rate brvailing at the date of transaction .Any Income or Expense on account of exchange rate difference is recognized in the Income and Expenditure Account. The company has an ECB Exposure of USD 17.62 MN the interest on which has been hedged till March 2015; subsequently the Axis Bank has transferred the exposure of USD 8 MN to Bank of India. Further foreign exchange Gain/Loss on the re-statement of the current Assets and Liabilities are calculated based on the RBI exchange rate as of 31/3/2015.

12. Borrowing Costs:

Borrowing costs that are attributable to the acquisition, construction or Production of qualifying assets is capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

13. Income Tax:

Provision for Current Income Tax is made after considering Company’s claims under the Income Tax Act, 1961 .This Liability is calculated at the applicable tax rate or Minimum Alternate Rate under Section 115JB of the Income Tax Act 1961 as the case may be.

14. Deferred Tax :

Deferred Tax is Calculated at the tax rates and Laws that have been enacted or substantially enacted as of Balance Sheet date and is recognized on timing differences that originated in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence are recognized and carried forward only to the extent that they can be released.

15. Impairment of Assets:

The Company has examined carrying cost of its identified Cash Generating Units (CGU) by comparing brsent value of estimated future cash flows from such CGUs, in terms of Accounting Standard-28 on impairment of Assets, and in absence of any indication of being potential impairment of Assets, no provision for impairment is required as assets of none of CGUs are impaired during the financial year under consideration.

16 Uses of Estimates:

The brparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of financial statements and the reported amount of revenue and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which results are known/materialized.

17. Derivative Contracts:

Company as such in the current financial year has not entered into any such Derivative Contracts except the interest on the ECB Loan exposure has been covered by the Interest Rate SWAP contract

18. Operating Cycle:

Assets and liabilities other than those relating to long-term contracts (i.e. supply or turnkey contracts) are classified as current if it is expected to realise or settle within 12 Months after the balance sheet date. In case of long-term contracts, the time between acquisition of assets for processing and realisation of the entire proceeds under the contracts in cash or cash equivalent exceeds one year. Accordingly for classification of assets and liabilities related to such contracts as current, duration of each contract is considered as its operating cycle

19 Financial Restructuring and Rephasement of Debt:

The Company has re-negotiated its entire Debt @ 11 % instead of the existing average cost of borrowings at 13.50%, the lenders have funded all interests cost up to June 2016.The Terms loans & NCD Payments have also been rephrased for payment from June 2016, lenders have provided adequate working capital limits for the current years and have fully funded the expansion project of the company,

20. Legal cases:

The Company has outstanding legal cases wherein there are claim of Rs 1.77 crores against the company, however on same parties the company has claims of Rs 3 crores, in our opinion the companies matters are on strong ground & no financial repercussions on the company.

21. Corporate Guarantee:

The Company has extended a Corporate Guarantees aggregating Rs 1200 Million to the lenders of companies wholly owned subsidiary Diamond Power Transformers Ltd. Part B Notes to Accounts

1. Contingent Liabilities

(a) Letter of Credit opened as on March 31 2015 is Rs 864.29 Million (Previous Year Rs. 1933.09 Million); materials under all letters of credit have been received and accounted for as Creditors. Buyer’s credit opened Rs. Nil Million (Previous Year Rs. 74.76 Million) materials under all Buyers’ credit have been received and accounted for as Creditors.

b) Outstanding Inland Bank Guarantees as of March 31, 2015 is Rs. 1397.98 Million (Previous Year Rs.1403.11 Million) and outstanding Foreign Bank Guarantees as of March 31,2015 is $ 3.48 Million ( Previous Year $5.51.Million)

(c) Pending Liabilities of the company which are not acknowledge as Debt:

Income tax demands: Rs. NIL (brvious year Rs Nil): the company was in settlement commission till the A.Y. 2012-13 for which demand has been quantified and paid, for the A.Y. 2013-14 the regular assessment is to start.

Sales Tax/CST Demands: 2007-08 Rs. 4.36 MN (Appeal Pending in tribunal), 2009-10 Rs. 10.83 MN (Appeals pending at Commissioner level). Excise and Service Tax Demands: 5.44 MN show Cause Notice for service tax, pending at Commissioner level

(d) There are no outstanding Claims against the Company except of Rs. 1.77 MN of Sardar Sarovar Narmada Nigam Ltd., in our opinion the companies matters are on strong ground & no financial repercussions on the company

25. Annual Provision and provisions of expenses related to the commencement of the production from the new facilities resulted in increase in the cost of Q-4 2014-2015, the benefits of which are expected over the next year.

Previous year figures are regrouped /reclassified where ever necessary to make them comparable with the current year.

SIGNATURES TO THE Notes from 1 TO 25 FORMING PART OF THE ACCOUNTS

For Vijay. N. Tewar & Co.

(Chartered Accountants)

For & on behalf of the Board of Directors

Vijay N. Tewar Amit Bhatnagar Sumit Bhatnagar Nishant Javlekar

Proprietor Managing Director Joint Managing Director Company Secretary

FRN:111422W

Membership No. 040676

Date : 30th May, 2015

Place : Vadodara