Significant Accounting Policies forming part of Financial Statements for the year ended 31st March, 2015

1. SIGNIFICANT ACCOUNTING POLICIES

1.1 BASIS OF brPARATION OF FINANCIAL STATEMENTS :

The financial statements are brpared in accordance with Generally Accepted Accounting Principles ("GAAP") in India under the historical cost convention, on accrual basis. GAAP comprises mandatory Accounting Standards issued by the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 2013. The accounting policies have been consistently applied by the Company and are consistent with those used in the brvious year.

1.2 USE OF ESTIMATES :

The Preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates. Any revision to the accounting estimates is recognized prospectively.

1.3 TANGIBLE ASSETS AND CAPITAL WORK IN PROGRESS :

Tangible assets are stated at cost, less accumulated debrciation and impairment losses if any. Cost comprises the purchase price and any attributable/allocable cost of bringing the asset to its working condition for its intended use. The cost also includes direct cost and other related incidental expenses. Revenues earned, if any during trial run of assets is adjusted against cost of the assets.

1.4 DEbrCIATION AND AMORTIZATION :

Debrciation on all assets of the Company has been provided on Straight Line Method at the rates and in the manner specified in schedule II of the Companies Act, 2013. The details of estimated life for each category of asset are as under:

Type of Asset Life

Office Premises 60 Years

Plant & Machinery 15 Years

Office Equipments 5 Years

Computers 3 Years

Furniture & Fixtures 10 Years

Motor Car 8 Years

Motor Bike 10 ears

1.5 IMPAIRMENT OF ASSETS :

Fixed assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Whenever the carrying amount of an asset exceed its recoverable amount, an impairment loss is recognized in the income statement for the items of fixed assets carried at cost. However in the opinion of the management, no provision is required for impairment of asset in the current year.

1.6 INVESTMENTS:

Investments that are readily realizable and intended to be held for not more than one year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost or fair value determined on individual investment basis. Long term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary decline in the value of the investments.

1.7 INVENTORIES:

a) Construction work in progress

The construction work in progress is valued at lower of cost and net realizable value. Cost includes cost of land, development rights, rates and taxes, construction costs, borrowing costs, other direct expenditure, allocated overheads and other incidental expenses.

b) Finished stock of completed projects (ready units)

Finished stock of completed projects and stock in trade of units is valued at lower of cost and net realizable value.

c) Inventory includes certain land purchased in the name of directors who holds the same . in trust for the Company

1.8 REVENUE RECOGNITION:

i) Revenue for real estate development/sale

The Company being a Development and Construction Company engaged in the construction of the Industrial Plots Sheds and the Residential Bungalows. During the year under review, the Company has followed the method of accounting for the recognizing of sales on the basis completion of sales method brscribed in AS-9 Revenue Recognition. Hence sales are recognized when possession is handed over to the parties. All expenses and incomes not directly related to particular projects are charged to Profit and loss account of the financial year during which the same are incurred.

Further based on the Guidance Note on Accounting for Real Estate Transaction (Revised 2012) issued by the ICAI, company has followed percentage completion method for projects where construction activity has been commenced from 1st April,2012.

The estimates relating to percentage of completion, costs of completion, area available for sale etc. being of a technical nature are reviewed and revised periodically by the

Management and are considered as change in estimates and accordingly, the effect of such changes in estimates is recognized prospectively in the period in which such changes are determined.

Revenue of open plots / land is recognized on the execution of agreement.

ii) Rent

Rental Income is recognized on a time proportion basis as per the contractual obligations agreed with the respective tenant.

iii) Interest

Interest Income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

1.9 FOREIGN CURRENCY TRANSACTION:

All the Foreign Currency Transactions are accounted for at the exchange rate brvailing on the date of such transaction.

1.10 SHARE ISSUE EXPENSES :

Share issue expenses are amortized over a period not exceeding 5 years.

1.11 TAXES ON INCOME :

(a) Provision for Income Tax is made on the basis of income for the current accounting period in accordance with the Income tax Act, 1961.

(b) Deferred tax resulting from timing difference between book and tax profit is accounted for under the liability method, at the current rate of tax, to the extent that the timing differences are expected to crystallize.

(c) The Company has made current tax provision for Minimum Alternate Tax (MAT) under section 115JB of the Income tax Act, 1961. As per the provisions of section 115JAA. MAT Credit receivable has to be recognized as an asset in accordance with the recommendations contained in Guidance note issued by the ICAI. However same is not accounted as receivable in the books of accounts since the management is doubtful of availing the credit against Income tax payable due to uncertainty of taxable profits in the upcoming years

1.12 EARNING PER SHARE:

Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting brference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events of bonus issue, bonus element in a rights issue to existing shareholders, share split and reverse share split (consolidation of shares). For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

1.13 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

A provision is recognized when an enterprise has a brsent obligation as a result of past event it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its brsent value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Possible future obligations or brsent obligations that may but will probably not require outflow of resources or where the same cannot be reliably estimated, is disclosed as contingent liabilities in the notes to accounts of financial statements. Contingent Assets are neither recognized nor disclosed in the financial statements.

1.14 BORROWING COSTS

Borrowing costs relating to acquisition and/or construction of qualifying assets are capitalized to the extent that the funds are borrowed and used for purpose of constructing a qualifying asset until the time all substantial activities necessary to brpare the - qualifying assets for their intended use are complete. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs which are not related to acquisition and/or construction activities nor are incidental thereto are charged to the Statement of profit and loss.

NOTES TO FINANCIAL STATEMENTS

2 Borrowings

a SICOM Limited - Rs. 5 Cores

Secured by way of first charge on piece or parcel of land admeasuring 25340 square metres located at Village Honad, Taluka Raigad and 1,43,930 square metres located at Village Isambe, Taluka Khalapur. The rate of interest is Medium Term Reference Rate + 2% p.a.

b SICOM Limited - Rs. 9.995 Crores

Secured by way of hypothecation of receivables from the project - Magic Hills covering the entire loan amount The rate of interest is Medium Term Reference Rate + 2% p.a.

c United Bank of India - Rs. 4.5 Crores

Secured by way of registered mortgage of 11 residential bunglows located at Magic Hills bearing plot no. 13,14,15,16 & 17 (part), Ambivali, Khalapur. The rate of interest is Base Rate +1.50% p.a.

d Union Bank of India - Rs. 1445 Crores

Secured by way of first charge on piece or parcel of land admeasuring 1,206,856 square feet located at Village Honad, Taluka Khalapur and hypothecation and escrow of the lease rent receivable. The rate of interest isBase Rate + 3.25% p.a.

e India Infoline Finance Limited - Rs. 1.52 Qores

Secured against brmises situated at Laxmi Industrial Estate. The floating rate of interest is 16.50% p.a.

f Religare Finvest Limited - Rs. 13 Crores

Secured against registered mortgage of entire project of Garnet Paladium, Malad & Gross Proeject Receivables. The rate of interest is 18.00% p.a.

g Religare Finvest Limited - Rs. 6 Qores

Secured against registered mortgage of project Magic Enclave, Taluka Khalapur k Gross Proeject Receivables. The rate of interest is 18.00% p.a.

h Kotak Mahindra Bank Ltd. - 0.75 Qores

Secured by way of first charge on automobiles. The rate of interest is 18.00% p.a.

3 The Company's normal operating cycle in respect of operations relating to under construction real estate projects may vary from project to project depending upon the size of the project, type of development, project complexities and related approvals. Operating cycle for all completed projects and other business is based on 12 months period. Assets and Liabilities have been classified into current and non-current based on the operating cycle of respective businesses.

4 The Company operates in Single Segment i.e. Real Estate \ Real Estate Development and therefore Segment Reporting as per AS-17' Segment Reporting 1 is not applicable.

5 No provisions are made for liability of gratuity and leave encashment which are treated on cash basis in the accounts and amount for which is unascertained.

6 a. In the opinion of the management, any of the assets other than fixed assets and non- current investments have a value on realisation in the ordinary course of business atleast equal to the amount at which these are stated.

b. The accounts of certain Trade Receivables, Trade Payables, Loans and Advances and banks are, however, subject to confirmations or b. reconciliations and consequent adjustments, if any. The management does not expect any material difference affecting the current year's financial statements on such reconciliation/ adjustments.

7 Previous year's figures have been regrouped / rearranged wherever necessary to conform to current year's classification. Signature to Notes No 1 to 36

For SHANKARLAL JAIN & ASSOCIATES

CHARTERED ACCOUNTANTS

Firm Reg. No.l09901W

Kishan Kumar Kedia Chairman & Managing Director

Mukesh Sonavane

PARTNER

Membership No.143622

For and on behalf of the Board of Directors of Garnet Construction Limited

Arun Kedia

Marketing Director

Sanjay Kumar Kedia Director

HetalTalreja

Chief Financial Officer

Place: Mumbai

Date: 30th May, 2015