SIGNIFICANT ACCOUNTING POLICIES

A] Basis of Accounting:

The financial statements of Gorani Industries Limited have been brpared to comply with the generally accepted accounting principles in India (Indian GAAP), including the Accounting Standards notified under the relevant provisions of the Companies Act, 2013. The financial statements have been brpared under historical cost convention on accrual basis. The accounting policies have been consistently applied by the company unless otherwise stated.

B] Sales:

The sales of goods are recognized at the point of dispatch of the finished to the customers.

C] Income:

The Income is accounted for on accrual basis.

D] Fixed Assets:

Fixed Assets are stated at cost. The cost of an asset comprises its purchase price/cost of construction and any directly attributable expenses for bringing the assets to their working condition for its intended use. Expenditure for additions, modifications, improvements and renewals are capitalized and expenditure for maintenance and repairs are charged to the Profit & Loss Account.

E] Debrciation:

Debrciation on Fixed Assets has been provided on useful life of the assets as brscribed in the Schedule II to the Companies Act, 2013 on straight line method (SLM). Assets which are purchased, sold or scrapped during the year, debrciation has been provided on pro-rata basis.

F] Borrowing Cost:

Borrowing cost that is attributable to the acquisition or construction of qualifying assets is capitalized as part of the cost of such assets. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing cost is recognized as an expense in the period in which they are incurred.

G] Foreign Currency Transaction:

The transactions in foreign currencies are recorded at the rate brvailing on the date of the transaction. Monetary items denominated in foreign currency are restated at the rate brvailing on the balance sheet date. Exchange gains/ losses on settlement and on conversion of monetary items denominated in foreign currency are dealt with in the profit and loss account.

H] Inventories:

Inventories are stated at the lower of cost or net realizable value. Cost is determined on the basis of FIFO method. The cost of work in progress and finished goods comprise direct material, direct labour, and other direct cost and related production overheads.

I] Contingent Liabilities:

Contingent liabilities as defined in Accounting Standard 29 on "Provisions, contingent liabilities and contingent assets" are disclosed by way of notes to the accounts. Disclosure is not made if the possibility of an outflow of future economic benefits is remote. Provision is made if it is probable that an outflow of future economic benefits will be required to settle the obligation.

J] Retirement Benefits:

i] The Company accounts for group gratuity for the eligible employees on the basis of payments to Life Insurance Corporation of India as actuarially determined with reference to agreement between them.

ii] Leave encashment liability is accounted on actual payment basis as per the rules applicable to the company.

iii] Company's contribution to Provident Fund and ESIC are charged to Profit and Loss Account.

K] Research & Development:

Capital expenditure on research and development is treated in the same way as expenditure on Fixed Assets. The revenue expenditure on Research & Development is written off in the year in which it is incurred.

L] Accounting on Taxes:

Tax Expenses comprises current tax and deferred tax.

Deferred tax is recognized on timing difference being the difference between taxable income and accounting income originate in one period and are capable of reversal in one or more subsequent periods.

Deferred tax assets in respect of unabsorbed debrciation and carry forward losses are recognized if there is virtual certainty that there will be sufficient future taxable income available to realize such losses.

As explained by the management, the brought forward business loss and unabsorbed debrciation are more than timing difference between tax debrciation and book debrciation; therefore the provision as stipulated by AS- 22 is not required. Company shall recognize deferred tax assets in succeeding years only when there is certainty that sufficient taxable income will be available.

M] Impairment of Fixed Assets:

The Company on an annual basis makes on assessment of any indicator that may lead to impairment of assets. If any such indication exists, the company estimates the recoverable amount of the assets. If such recoverable amount is less than the carrying amount, then the carrying amount is reduced to its recoverable amount by treating the difference between them, as impairment loss and the same is charged to profit & loss account. Based on the aforesaid review, the Company is of opinion that there is no impairment of any of its fixed assets as at 31st March 2015.

Note: 1

The brvious year figures have been regrouped / reclassified, wherever necessary to confirm to the current year figures.

For and on behalf of the Board As per our report of even date

For B. D. Sharda & Company

Chartered Accountants

Firm Reg. No. 00161C

(Sanjay Gorani) Managing Director

(Anil Gorani) Whole Time Director

(C.S. Sharma) C.F.O.

 (Arpita Jain) Company Secretary

(B. D. Sharda)

DIN :-00055531 DIN :00055540 M.No.070209

Place : Indore

Date : 30.05.2015