ADDITIONAL DISCLOSURES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31st MARCH 2014

1 Accounting Policies

I. Fixed Assets are stated at their original cost including taxes, duties, freight and other incidental expenses related to acquisition, as reduced by Cenvat Credit.

II. Debrciation has been provided on Plant and Machinery on a straight line method on historical book cost and in respect of other fixed assets on Written Down Value method, as per schedule XIV of the Companies Act 1956

III. Valuation of Inventories as per AS-2 of ICAL-

Raw Materials, Stores & spares are valued at cost, finished goods at cost or net realizable value whichever is less including excise duty payable and work —in-process at cost.

IV. Investments are valued at cost except those where permanent diminution has arisen for which due provision has been made. Dividends are accounted as and when declared and received.

V. Leave payments to employees are accounted as and when claimed and paid.

VI. The company had been following the system where Retirement Benefits were provided in the books of accounts and payments were made to Life Insurance Corporation of India on the basis of actuarial principles. However no provision has been made during the current year

VII. Excise Duty on the closing stock of finished goods at the factory is included in the valuation of stock-in-trade. This will have no effect on the working results of the company.

VIII. Foreign Exchange transactions (monetary items) remaining unsettled at the end of the period are converted at the rates brvailing on the last day of the period.

IX. The Subsidies of capital nature received or receivable are accounted as capital reserves.

The subsidies of revenue nature, if any, are taken as income.

2. The difference aroused between the taxable income and accounting income is in permanent nature and will result in deferred tax asset, but there is no virtual certainty of taxable income in the near future of the Company. So the Company has not provided in the books of account the effect of deferred tax as per the norms and provisions of Accounting Standard — 22 " Taxes on Income" issued by the Institute of Chartered Accountants of India.

3. Regarding the Assessment Year 2004-05 the appeal filed by the Company before the Income Tax Appellate Tribunal has been partly allowed, but the order giving effect to this order has not yet been passed by the department. The Company intends to take up the matter before the Honorable High Court of Kerala.

4. Out of the total extent of land measuring 99.92 acres purchased at Ulundurpet, 54 acres of land come under Urban Land Ceiling Act. The application for exemption from Land ceiling is pending before the Government the clearance for the land admeasuring 99.92 Acres has not been granted by Pollution Control Board because of the stretch of land falling within one kilometer from the banks of the river. In the light of the land ceiling act, the possibilities for disposal of lands possess difficult. In absence of reasonable marketable value, the increase or decrease in the value of the land is not ascertainable.

5. The company reference application to BIFR as a sick industrial Company stands registered on case No.101/2005 dt.28.03.2005.BIFR has appointed Bank of Baroda, as the Operating Agency. The Company has submitted a revival proposal to the Bank Baroda.

6. The Maintenance expenditures of the closed units are charged to revenue.

7. Balances of debtors, creditors, loans and advances and banks/ financial institutions are subject to confirmation / reconciliation by the parties.

8. Company does not possess full information as to, which of its suppliers are small scales industrial undertakings holding permanent registration certificate issued by the relevant authorities.

9. The operations of the company relate only to one segment viz., manufacture and sale of chemicals

10. In the absent of realizable value of assets of the company, the decrease or increase in value of assets has not been quantified. Hence the impairment of assets has not been quantified. Hence the impairment of assets could not be ascertained

11. The balance under deposits made by the company with different authorities and various other parties were not confirmed as on 31st March 2014. The following are the details.

Joseph Varghese Managing Director

T.S.Rajagopalan Director

George Varghese Director

As per our report of even date attached

for and on behalf of

VBSK & Company

Chartered Accountants

(FRN 010779S)

Suresh G

Partner

(M.No.210211)

Ernakulam

30-05-2014