1. Basis of accounting and brparation of financial statements

The financial statements of the Company have been brpared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 2013. The financial statements have been brpared on accrual basis under the historical cost convention. The accounting policies adopted in the brparation of the financial statements are consistent with those followed in the brvious years.

2. Significant accounting policies

2.1. Disclosure of Accounting Policies:

Financial statements have been brpared under the historical costs convention and in accordance with applicable accounting standards and provisions of the Companies Act, 2013. All income and expenditure having a material bearing in the financial statements are brpared on accrual basis.

2.2. Use of Estimates:

The brparation of financial statements in conformity with generally accepted accounting principles requires management to make certain 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.

2.3. Valuation of Inventories:

a) Raw Materials and Work in Progress are valued at cost.

b) Finished goods are valued at cost or net realisable value whichever is less.

c) CENVAT & VAT on purchase of rawmaterial/ components are deducted from cost of such materials.

2.4. Cash Flow Statements:

Cash flows are reported using the indirect method, whereby profit/(loss) before tax is adjusted for the effects of transactions of non  cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the companies are segregated based on the available information.

2.5. Accounting for Fixed Assets

Fixed assets are capitalized at acquisition cost and other directly attributable cost of bringing the assets to its working condition. Cenvat & VAT claimed on capital goods are credited to plant & machinery account. Development / broperative expenditure incurred , if any, in connection with new line of production will be capitalized to the respective project Assets.

2.6. Debrciation Accounting:

Debrciation on tangible assets is provided on the straight-line method over the useful lives of assets as per the schedule II of the Companies Act.2013. The useful life of the assets adopted by the company is as per schedule II of the Companies Act; 2013 as follows:

2.7. Research & Development (R & D):

Revenue expenditure (including debrciation) on R & D is charged to revenue in the year in which it is incurred. Capital expenditure, if any, on R & D is added to fixed assets.

2.8. Revenue Recognition

Sales & Services are inclusive of taxes and duties collected.

Revenue from fixed price contracts are recognized as per the terms of the contract.

Revenue from other income is based on accrual basis.

2.9. Accounting for effects in foreign exchange rates :

a) All monetary items denominated in foreign currency are reflected at the rates brvailing on the Balance sheet date.

b) Income and Expenditure items involving foreign exchange are translated at the exchange rate brvailing on the dates of transaction.

c) Exchange differences, if any, arising on account of fluctuations in foreign exchange have been duly reflected in the Profit & Loss Account except in respect of acquisition of fixed assets.

2.10. Accounting for Investments :

Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost.

2.11. Accounting for Retirement Benefits :

a) The Company has a provident fund scheme for their employees. Contributions to the scheme are charged to the profit and loss account.

b) Provision for gratuity has been made for all the employees in the rolls of the company at the closing of accounting year. The company is making actual gratuity payments as and when crystallized by debiting to the gratuity fund account.

c) The Company extends benefit of Encashment of Leave to its employees while in service as well as on retirement. Leave encashment liability in respect of leave accumulated is accounted for on the basis of last drawn salary.

2.12. Borrowing Cost :

Borrowing Costs that are attributable to the acquisition or construction of qualifying assets are capitalized till the date of the assets put to use. All other borrowing costs are charged to revenue.

2.13. Segment Reporting :

The company has no segmentals hence no segmental reporting is made.

2.14. Related party Disclosure :

The company has entered into transactions with related parties and the said information is shown separately as per AS - 18.

2.15. Operating Leases :

Assets acquired on leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases.

Where the Company is the lessee : Operating lease payments are recognised as an expense in the Statement of profit and loss on a straight-line basis over the lease term.

Where the Company is the lessor : Assets subject to operating leases are included in fixed assets. Lease income is recognised in the Statement of profit and loss. Costs, including debrciation are recognised as an expense in the Statement of profit and loss.

2.16. Earnings Per Share :

Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.

2.17. Consolidated Financial Statements :

The company has made consolidated financial statements as per AS - 21

2.18. Deferred Taxation :

Current Tax is determined as per the amount of tax payable in respect of taxable income for the period. Deferred tax is recognised, subject to the consideration of prudence in respect of deferred tax assets/liabilities, on timing differences, being difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

2.19. Accounting for investments in associates :

Investment in associates is valued at cost of investment.

2.20. Contingencies and events occurring after the balance sheet date :

Provisions involving substantial degree of estimation in measurement are recognized when there is a brsent obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements

NOTE – 1.

Figures have been rounded off to nearest rupee. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure. Also brvious year figures are not comparable since they rebrsent only 9 months where as current year rebrsent 12 months.

per our report of even date For PAVULURI & CO

Chartered Accountants Firm Reg. No: 012194S

For and on behalf of the Board of Directors

Sd/- Dr. M.V. Ramana Rao

Managing Director

Sd/- L.N. Malleswara Rao

Executive Director

Sd/-CA.N.Rajesh

Partner M.No:223169

Sd/- Malleswara Durga Prasad

CFO & Company Secretary

Place : Hyderabad.

Date : 16.05.2015