Notes forming part of financial statements:

1 Corporate Information

Sree Rayalaseema Hi-Strength Hypo Limited is a public company domiciled in India and is Incorporated under the provisions of the companies Act, 1956. The company's principal business is manufacturing and sale of industrial chemicals and generation and distribution of power. The company caters to both domestic and Indian markets.

2 Basis of brparation

i) The accounts are maintained under Historical cost Convention and are brpared on accrual basis (except income and expenditure below Rs.5000/ per transaction and impairment or revaluation if any) as a 'going concern' by complying with generally accepted accounting principles and applicable Accounting Standards.

ii) The Accounting policies have been consistently followed and financial statements are brpared to comply in all material aspects in respect with Accounting Standards notified by the Companies Accounting Standards Rules, 2006 and relevant provisions of the Companies Act, 1956.

3 Use of estimates

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

4 Presentation and disclosure in Financial Statements:

For the year ended 31st Mar, 2015, the newly enacted Companies Act, 2013 is applicable w.e.f. 01st April, 2014 to the company for brsentation and disclosure in financial statements. The company's financial statements are in accordance with Schedule-III of the companies act 2013 and rules made there under and reclassifies the brvious years figure accordingly.

5) Significant Accounting Policies

a) Fixed Assets

• Tangible Fixed assets are stated at cost. Cost of asset includes acquisition and installation expenses which are directly attributable for bringing the asset into working condition. Spares which are used only in connection with a particular item of asset of the company and use is expected to be irregular are capitalized at cost (net of cenvat to be claimed). The fixed assets acquired as per scheme of arrangement are merged into company are accounted as per book values of the demerged / transferor company.

• Expenditure / Income during construction period including barrowing cost are included in cost work in progress and the same is allocated to respective fixed assets on the completion

b) Debrciation

Debrciation is a systematic allocation of debrciable amount of an asset over its useful life in straight line method.

Change in Accounting policy for debrciations with effect from 01st April, 2014 a change in accounting policy for debrciation is made effective by law and the useful lives of assets as brscribed in Schedule -II of the companies Act 2013 are adopted for determining debrciation account. Debrciable amount is historical cost minus 5% residual value over useful lives. The carrying amount for assets as on 01st April, 2014 and having residual lives are debrciated on straight line method over remaining residual lives after providing for 5% residual value. Deviation from schedule II as to useful life if any, will be disclosed in accounts suitably. Debrciation on additions is provided at prorat basis from the month of installation or date of commencement of commercial production.

c) Investments Classification:

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments and other investments are classified as non current Investments. Trade investments comprising investments in associate and entities in which the company has strategic business interest.

Carrying amounts in books:

i) Current Investments are carried at lower of cost and fair value determined on an individual investment basis.

ii) Non current investments including trade investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of investments.

d) Inventories

Inventories are valued as under:

i) Raw Materials, Fuels, Packing materials, Stores and Spares

Lower of the cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below the cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is determined on weighted average cost

ii) Stock-in-process and Finished goods

Finished Goods and stock-in-process are valued at lower of cost and net realizable value whichever is lower. Stock-in-process and finished goods are valued at cost of purchase, Cost of Conversion and other costs Incurred in bringing the inventories to their brsent location and condition. Cost of finished goods includes Excise duty.

Net realizable Value is the estimated selling price in the ordinary course of business minus estimated cost of completion and estimated cost that are necessary to make the sale.

e) Excise Duty

Liability for Excise Duty on Finished Goods lying in the factory by making provision in books of account as required by revised by Guidance Note on Modvat Accounting issued by the Institute of Chartered Accountants of India.

The difference in excise duty liability on opening and closing stocks of finished goods is not deducted from gross revenue but shown separately as other miscellaneous expenditure in statement of Profit and Loss.

f) Cenvat

Cenvat benefit is accounted for on exclusion method by reducing the excise duty from purchase cost of the material and shown as cenvat receivable and adjusted against the excise duty amount payable by the Company on sale dispatches.

g) Employee Benefits

i) Short Term Benefits

All employees' benefits due wholly within a year of rendering services are classified as short term benefits. These benefits like salaries, wages, short term compensation absences, expected cost of bonus, ex-gratia are recognized as expenses on accrual basis of undiscounted amounts in the Profit and Loss Account.

ii) Retirement Benefits - Defined Contribution Plan:

Employee's contribution to Provident fund and Employee State Insurance are recognized as expenditure in statement of Profit and Loss, as they are incurred. There are no other obligations other than the contribution payable to aforesaid respective Trusts / Govt. Authorities.

iii) Defined Benefit Plan :

The company provides for gratuity as defined benefit plan. There are no other post retirement benefits. The defined benefit gratuity obligation on annual basis is determined by actuarial valuation using the projected unit credit method on renewal date.

The annual contribution paid during the year towards gratuity liability is recognized as funded expenses and unfunded part of the gratuity liability determined on actuarial basis is provided as unfunded gratuity liability.

Disclosures for defined contribution plan and defined benefit plan as required under AS 15(Revised), Employee Benefits, are submitted in Notes to accounts.

h) Sales

Gross Sales include excise duty amount and net of sales returns. The gross sales and net sales (deducting excise duty)are disclosed on the face of statement of Profit & Loss.

i) Foreign exchange transactions

(i) Initial recognisition

Transactions in foreign currencies are recorded at the exchange rate brvailing on the date of transaction.

(ii) Conversion

The outstanding transactions other than those covered by forward contracts at the end of the year are accounted at the rates brvailing as on Balance sheet date.

(iii) Forward Exchange Contracts

In respect of transactions covered by foreign exchange contracts, the difference between forward trade and exchange rate and the exchange rate on the date of transaction is recognized over the period of contract.

(iv)Exchange differences

All exchange differences arising on settlement/conversion/payment of foreign currency transactions are recognized as Income or Expenses in Profit and Loss Account.

j) Revenue Recognition:

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured.

Revenue is recognized when significant risks and rewards of ownership of goods have passed to the buyer. Accordingly domestic sales are accounted as sale on dispatch of product to the customer as per terms and export sales are accounted on the basis of documents like Bill of Lading etc evidencing passing of risk and rewards depending up on terms of export sales.

i) Sales

Revenue is recognized from sales when the property in the goods is transferred and significant risks and rewards associated with the ownership of the goods are passed to the buyer.

ii) Insurance Claims

Insurance claims are accounted on the basis of claims lodged.

iii) Dividends

Dividends on investments are recognized when the right to receive it is established.

iv) Other Incomes':

Export incentives such as Focus Market Scheme. Licenses are calculated based on exports made during the year. Interest income is recognized on time proportion basis taking in to account the amount outstanding and rate of interest.

k) Impairment

The carrying amounts of assets are reviewed at each Balance Sheet date whether there are any indications of impairment of asset based on internal/ external factors. If any such indication exist, an impairment loss will be recognized whether the carrying amount exceeds it's estimated recoverable amount (greater of the assets net selling price and value in use) the carrying amounts is reduced to recoverable amount. Such reduction is treated as impairment loss and recognized in the Profit and Loss Account.

Previously recognized impairment loss is further increased or partly /fully reversed depending on changes in circumstances.

l) Borrowing costs

Borrowing costs relating to acquisition of fixed assets which takes substantial period of time to get ready for its intended use are included to the extent they relate to the period till such assets are ready to be put to use. All other borrowing cost are charged to revenue.

Borrowing cost include interest, amortization of ancillary costs incurred in connection with borrowings and includes exchange fluctuations arrising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.

m) Taxes on income:

• • Tax expenses comprise of current tax and deferred tax. Provision for current tax is made on the basis of estimated taxable income for the current year in accordance with Income Tax Act, Deferred Tax for the timing difference between book profit & tax profits is accounted for by

using tax rates and laws on the balance sheet date. Deferred Tax Asset arising from the timing difference are recognized to the extend there is reasonable certainty that they would be realized in future.

• Deferred Tax Asset and Deferred Tax Liability are offset if a legally enforceable right exist to set off. If there is unabsorbed debrciation or carry forward tax losses, The Deferred Tax Asset are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against adequate future taxable profits.

• The Carrying amounts of Deferred Tax Asset are reviewed at each balance date. The company write down the carrying amount of Deferred Tax Asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable profits will be available against which Deferred Tax Asset can be realized.

• Minimum Alternate Tax (MAT) is recognized as an asset only when and to the extend there is convincing evidence that the company will be required to pay regular income tax during specific period resulting is utilization of MAT. In accordance with Guidance Note of ICAI, the MAT credit is recognized as asset is created as MAT entitlement by way of credit to statement of profit and loss of the subsequent review of balance sheet dates if there is no longer carrying evidence, MAT entitled will be written down to that extent.

n ) Provisions and Contingent Liabilities

The Company recognizes a provisions when there is a brsent obligation as a result of a post event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or brsent obligations that may, but probably will not, require an outflow of resources or there is brsent obligation, reliable estimate of the amount of which cannot be made. Where there is a possible obligations or a brsent obligation and the likelihood of outflow of resources is remote, no provision or disclosure for contingent liability is made.

o) Prior period and extraordinary items and changes in accounting policies having material impact on the financial affairs of the Company are disclosed.

p) Material events occurring after the Balance Sheet date are taken into recognizance.

q) Leases:

Leases rentals payments under operating leases are recognized as expense and Lease rentals received under operating leases are recognized as income in Profit and Loss Account on a straight line basis over the lease term.

1Micro, Small and Medium Enterprises

The Company identified Micro, Small and Medium Enterprises on the basis of information made available to the company by the suppliers. The Company is regular in making payments to Micro, Small and Medium Enterprises. The principal amounts outstanding as on 31-03-2015 and remaining unpaid to any Micro, Small and Medium Enterprises is Rs. 2,50,10,056/- and the said amounts are due for less than 45 days as on 31-03-2015. Hence, excepting above, there is no reportable information under Sec 22 (i) to (v) of Micro, Small and Medium Enterprises Act, 2006 read with part I of Schedule VI to the Companies Act, 1956.

2 Disclosure pursuant to clause 32 of the listing agreement (As applicable to the company)

1) Cash flow statement according to AS3, Cash flow and related party disclosure as per AS18 are furnished as part of these financial statements.

2) Loans and Advances

Loans and Advances to associates are Rs.0/- outstanding as on 31.03.2015.

B. Defined benefit plan:

The company has employees group gratuity fund through a policy with LIC and contributes to the fund through annual renewal brmium determined based on actuarial valuation using projected unit credit method as at 31-03-2015.The company has funded current service cost obligations and contributions made are recognized as expenses. The unfunded past service cost is provided as per actuarial valuation as on 31-03-2015.The disclosures in respected of funded and unfunded defined benefit obligations as required by AS 15 are as below.

3 Confirmation of balances.

Confirmation of balances from certain parties for amounts due to them or due from them is yet to be received.

Confirmation letters were received from some of the parties. No material discrepancies are observed.

4 Regrouped/ Rearranged/ Reclassified.

Previous year figures have been regrouped/rearranged wherever necessary to make them comparable with current year's disclosures and figures.

5. Rounding off.

Figures shown in the Financial Statements have been rounded off to the nearest rupee.

As per our report of even date attached.

For and on behalf of the Board

For S.T.Mohite & Co.,

Chartered Accountants

(Regn.No.011410S)

D. Sai Leela

Director

Sd/- V.Surekha

Company Secretary

Sd/- M.T.Sreenivasa Rao

Proprietor/Membership No.15635

T.G.Bharath

Chairman & Managing Director

Place: Kurnool

Date : 29th May, 2015