NOTES ON STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2016

1. Figures for the brvious year have been recasted/regrouped wherever necessary.

2. Contingent Liabilities not provided for include :

(i) LCs / Bank Guarantees issued for Rs. 350.33 lacs (Previous Year Rs. 294.64 lacs) in favour of West Bengal State Electricity Board & Himachal Pradesh State Electricity Board for power connection of Malda unit & Gurplah unit, Assistant Excise & Taxation Commissioner for VAT rebate, Commissioner of Customs / Jt. Director of Foreign Trade for the import of machinery under EPCG licence etc.

(ii) Central Excise Duty : Disputed Liabilities, not provided as expense in the accounts, comprise of Rs. 27.18 Crores. The amount mainly includes Rs. 24.94 Crores as disputed Central Excise Duty (excluding penalty and interest) demand raised by the Central Excise Department since 01/04/1997 alleging the sale of Maize Starch as that of Modified Starch. Since the matter is subjudice, the Department has continuously been issuing the show cause notice against the differential duty. However, pertinent to mention that the product has been repeatedly got tested by the Department from its Central Revenue Laboratory where it has been clearly held to be Maize Starch. So the demand is totally baseless and without any substance. The company has been manufacturing Maize Starch by following the standard Wet Milling Process for the last many decades and the product is sold and accepted by the market as Maize Starch, so the company does not foresee any liability to crystallize on this account. Other items include show cause notice concerning demand of Rs.1.19 crores on exempted goods and the case is pending before the Commissioner, Central Excise and Rs. 1.05 Crores wrongly levied for R&C measures by A.P. Northern Power Distribution Company Ltd., Nizamabad against exemption enjoyed by the unit, the matter is pending before the Hon'ble High Court of Andhra Pradesh.

(iii) Estimated value of contracts remaining to be executed on capital account and not provided for (net of advances) : Rs. 3.00 crores (Prev. year Rs. 6.70 crores)

(iv) Export obligation pending to be fulfiled is US$ 8.81 lacs (Prev. year US$ 8.61 lacs) in next 6 years under EPCG scheme of the Central Government against import of capital goods at concessional rates. The company has achieved an export turnover of US$ 13.00 lacs during the year under reference (Prev. Year US$ 7.21 lacs).

3. National Saving Certificates of Rs. 0.08 lacs (Prev. year Rs. 0.08 lacs) are pledged to the Govt. authorities as security.

4. Short term loans & advances include Rs. 283.34 lacs (Prev. year Rs. 293.83 lacs) due from the subsidiary companies.

M.G. SHARMA Sr. Vice President & CFO

AMAN SETIA Vice President (Finance) & Company Secretary

I.K. SARDANA Mg. Director

As per our separate report of even date

For Y.K. Sud & Co.

Chartered Accountants

Sd/-(Y.K. Sud)

B.Com., F.C.A.

Prop.

Memb. No. 16875

K.K. SARDANA DIRECTORS

V.K. SARDANA DIRECTORS

S.K. ANAND DIRECTORS

V.P. KAPAHI DIRECTORS

Place : Jalandhar

Dated : 25th May, 2016

STATEMENT ON SIGNIFICANT ACCOUNTING POLICIES

1. METHOD OF ACCOUNTING

The company maintains its financial statements on accrual basis and in accordance with the historical cost convention, generally accepted accounting principles and applicable Accounting Standards as well as the relevant provisions of The Companies Act, 2013. However, certain escalations/claims which are not ascertainable or unacknowledged are accounted for on their being acknowledged/ materialized.

2. FIXED ASSETS

The fixed assets are accounted for at their original cost of acquisition and subsequent improvements thereto including duties, taxes, freight and incident charges relating to their acquisition and installation, Interest on borrowings for fixed assets acquisition and revenue expenditure incurred for the period prior to commercial production are considered as a part of the cost of assets.

3. LEASES

The operating lease where the company is a lessee and substantially all the risks and rewards of ownership are retained by the lessor, rentals are charged to the Profit & loss on a accrual basis.

Debrciation on additions to Plant & Machinery has been provided on a straight line method and on other fixed assets on written down value, on the basis of estimated useful lives as specified in Schedule II to the Companies Act, 2013. Accordingly the unamortized carrying value is being debrciated / amortised over the revised/ remaining useful lives. Debrciation on assets added during the year has been provided on pro-rata basis with reference to the month of addition/installation.

Impairment loss, if any, is provided to the extent carrying cost of an asset exceeds its realizable value.

6. INVESTMENTS

Investments are valued at cost. Profit and loss are recognized as income or expenditure on their transfer. Long Term Investments are stated at cost less other than temporary diminution, if any, in value.

7. INVENTORIES

Raw Material, stores & spares, packing material, components, stock in process, finished goods and goods held for resale are valued at lower of cost and net realizable value. Bye products are valued at their net realisable value. The costs are, in general, determined on a weighted average basis. Due allowance is made for obsolete items, if any.

8. EMPLOYEE BENEFITS

(i) Short term employee benefits are charged to the profit & loss account of the year in which the employee renders services. These benefits include Annual leave encashment, Ex-gratia etc.

(ii) A defined contribution plan comprises contribution to Employees Provident fund, Employee Pension Scheme and Employee State Insurance which are deposited with the Government. These contributions are recognized as expense during the periods employees perform services.

(iii) Defined benefit plans include gratuity which is determined on the basis of actuarial valuation at the end of the year and contributions are deposited with SBI Life Insurance Company Ltd. Under a separate trust, and charged to the Profit and loss account of the relevant year. Contributions to superannuation plan for certain category of employees (to provide an agreed benefit) are deposited with the life insurance corporation of India and charged to the profit and loss account on the same basis.

9. REVENUE RECOGNITION

(i) The revenue is recognized when it can be reliably measured and reasonably expected to realize. Sales are inclusive of Excise duty wherever applicable.

(ii) Dividend income is accounted for when the right to receive the payment is established.

(iii) Interest income is recognized on time proportion basis taking into consideration the outstanding amount and the applicable rate of interest.

10. FOREIGN CURRENCY TRANSACTIONS

Foreign currency transactions relating to sale of goods are translated at the rates brvailing at the time of settlement of transactions. The transactions remain unsettled as on the balance sheet date are translated at the contracted rates (where applicable) or at the exchange rates brvailing at the end of the accounting year.

Any income or expenditure on account of exchange difference (on transaction) is recognized in the profit and loss account except Long term liabilities relating to the acquisition of fixed assets where they are adjusted to the cost of asset and debrciated over the balance life of the asset.

11. RESEARCH AND DEVELOPMENT EXPENDITURE

Revenue expenditure on research & development are charged off as and when incurred. However, the capital expenditure is considered as part of the fixed assets and debrciated on the same basis as other fixed assets.

12. TAXATION

(i) Provision for current tax is made in the accounts on the basis of estimated tax liability as per the applicable provisions of Income Tax Act, 1961.

(ii) Deferred tax for timing differences between tax profits and book profits is accounted for using the tax rates and laws that have been enacted or substantially enacted as of the Balance Sheet date. Deferred tax assets are recognized to the extent there is reasonable certainty that these assets can be realized in future.

13. GOVERNMENT GRANTS/SUBSIDIES

Grants in the nature of contribution towards capital cost of setting up projects are treated as capital reserve. However, grants or subsidies relating to an expense item is recognized as income over the periods necessary to match them to the costs, which it is intended to compensate.

14. BORROWING COSTS

Borrowing costs directly attributable to the acquisition of qualifying assets are capitalized as a part of the cost of assets till the date of commencement of commercial use of the asset. All other borrowing costs are charged to the Profit & Loss Account of the period in which they are incurred.

15. PROVISIONS/CONTINGENCIES

Provision is recognized when there is a brsent obligation as a result of a past event and it is probable that the outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Contingent liabilities are not recognized and are disclosed by way of Notes on financial statements.