1. NOTES ON ACCOUNTS

1. Statement of Significant Accounting Policies:-

Basis of brparation of Financial Statements:

AS - 1 Disclosure of accounting policies

The financial statements have been brpared on the basis of going concern, under the historic cost convention, to comply in all the material aspects with applicable accounting principles in India, the accounting standards notified under the Companies Act, 1956 / Companies Act, 2013 as applicable.

AS-2 Valuation of inventories

a. Raw materials, components, stores and spares are valued at cost determined on weighted average basis. Work in process includes material cost and applicable direct overheads.

Finished goods are valued at the aggregate of material cost and applicable direct and indirect overheads or market value whichever is lower.

b. The Excise Duty is exempt on finished grey goods.

c. There is no goods lying in customs bonded warehouses and hence the provision of duty does not arise.

AS -3 Cash flow statements

Cash flow statement has been brpared under "Indirect Method".

AS - 4 Contingencies and Events occurring after the Balance Sheet Date

There are no contingencies and events after the Balance Sheet date that affect the financial position of the company. Contested liabilities are disclosed by way of a note.

AS - 5 Net profit or loss for the Year, prior period items and changes in accounting policies:

This is not applicable as there is no change in accounting policies.

AS - 6 Debrciation accounting

1, Upto March 31,2014, debrciation has been provided in the accounts on the following basis, at the rates brscribed in Schedule XIV to the Companies Act, 1956,

(a) Plant and machinery other than Windmill:

I) On additions till 31st  December 1977.

Under the written down value method,

ii) On additions from 1st  January 1978.

Under straight line method at the rates specified in Clause (ll)(i)(a).

(b) On all other Assets:

Under the written down value method.

(c) Windmill:

Under straight line method at the rates specified in Clause (II) (i) (b),

(d) In respect of additions during the year, full debrciation has been provided irrespective of the period of use. Similarly no debrciation to be provided on assets disposed off during the year.

2. Pursuant to the enactment of the Companies Act, 2013 (the 'Act'), the Company has,effective Is April 2014, reviewed and revised the estimated useful lives of its fixed assets, in accordance with the provisions of Schedule II of the Act and debrciation is now provided based on the remaining useful life of the asset.

AS - 7 Accounting for Construction contracts

The company is not engaged in any Construction business covered by this Standard.

AS - 8 Accounting for Research and Development

This standard stands withdrawn from the date of Accounting Standard 26 - Intangible Assets becoming mandatory.

AS- 9 Revenue recognition

a) Income and expenditure are accounted on a going concern basis.

b) Sales are recognized at the time of despatches of the goods to the customers and recorded net of sales returns and includes export benefits.

c) Interest income is recognized on a time proportion basis taking into account the amount of outstanding and rate applicable.

d) Dividend income: The company has derived income during the current year out of its investment and is recognized when the Company's right to receive dividend is established.

e) Lease rentals in respect of assets given on "lease" are taken to Profit & Loss Account under the head of Non-operative income on the basis of the terms and conditions specified in the lease agreement.

f) Income of Profit on sale of investments have been accounted on the basis of realisation.

AS 10 Accounting for fixed assets

Fixed assets are stated at cost of acquisition which includes expenditure incurred upto the date the asset is put to use, less accumulated debrciation. Land is stated at cost or revaluation. Building is stated at cost or revaluation less debrciation. Plant and Machinery etc., are stated at cost less debrciation.

AS-11 Accounting for effects in foreign exchange rates

a. Purchase of imported components and spare parts arc accounted based on retirement memos from banks,

b. In respect of exports of cloth made on or before 31.03.2016, the amount due have been accounted at the rate, at which the export bills were tendered to the Bank for Collection / Discounting,

c. There is no year end foreign currency denominated liabilities and receivables.

d. Derivative Transactions:

The Company uses forward exchange contracts to hedge its exposure in foreign currency. As on March 31,2016 there is no Foreign Exchange Contracts outstanding exposure.

No Mark to Market component arises as the Company do not have any outstanding contract as at the end of the year.

AS - 12 Accounting for Government Grants

The company is availing Duty Drawback subsidy and the same is treated as revenue receipt.

A S - 13 Accounting for Investments

Investments are stated at cost. Provision for diminution in the carrying cost of investments is made if such diminution is other than temporary in nature.

AS-14 Accounting for amalgamation

This standard is not applicable to the company for the year under review.

AS-15 Accounting for retirement benefits

Gratuity with respect to defined benefit schemes are accrued based on actuarial valuations, carried out by an independent actuary as at the balance sheet date and being paid to Gratuity Fund.

The estimate of future salary increases considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors.

Provident Fund, Employees' State Insurance Scheme and defined contribution plans are charged to the Profit and Loss Account when incurred.-6-

AS - 16 Borrowing cost

All borrowing costs are charged to revenue except to the extent they are attributable to qualifying assets which are capitalized.

AS - 17 Segment reporting

The Company operates in only one business segment viz. Textiles.

AS - 1 8 Related party disclosure

Disclosure is made as per the requirements of the standard and as per the clarifications issued by the Institute of Chartered Accountants of India.

AS-19 Leases

This standard is not applicable as the company does not have any finance lease agreement in force.

AS - 20 Earnings per share

The Disclosure is made in the Profit and Loss account as per requirement.

AS - 21 Consolidated financial statements

There is no subsidiary company and M/s. Colour Yams Limited, ceased to be an Associate company on and from 28.03.2016 and as such these standards are not applicable to the company.

AS - 22 Accounting for taxes on income

Provision is made for income tax liability estimated to arise on the results for the year at the current rate of tax in accordance with the Income Tax Act, 1961.

Deferred tax assets arising on account of brought forward losses and unabsorbed debrciation are recognized only when there is virtual certainty supported by convincing evidence that such assets will be realized. Deferred tax assets arising on other temporary timing differences are recognized only if there is a reasonable certainty of realization.

AS - 23 Accounting for Investments in Associates in Consolidated Financial Statements

This standard is not applicable to the company for the year under review.

AS - 24 Discontinuing Operations:

This is not applicable to the Company,

AS - 25 Interim Financial Reporting:

Quarterly financial results are published in accordance with the requirement of listing agreement with Stock Exchanges. The recognition and measurement principle as laid down in the standard have been followed in the brparation of these results.

AS - 26 Intangible Assets

The company has no intangible assets. Hence this is not applicable.

AS - 27 Financial Reporting of Interest in Joint Ventures

This standard is not applicable to the Company as the company does not have any joint venture.

AS - 28 Impairment of Assets

As on the Balance Sheet date the carrying amounts of the assets net of accumulated debrciation is not less than the recoverable amount of such assets. Hence there is no impairment loss on the assets of the company.

AS-29 Provisions, Contingent Liabilities and Contingent Assets

Contingent Liabilities are disclosed in Note No.2,

AS-30 Financial Instruments: Recognition and Measurement

This standard is not applicable to the company for the year under review.

AS-31 Financial Instruments: Presentation

This standard is not applicable to the company for the year under review.-8-

AS • 32 Financial Instruments: Disclosures

This standard is not applicable to the company for the year under review.

6. Previous year's figures have been regrouped wherever necessary

For and on behalf of the Board

In Accordance with our Report attached

For PERI THIAGRAJ & Co,

Chartered Accountants

Firm Registration No.002636S

T.KANNAN  Chairman & Managing Director

RM.SOMASUNBAKAM Director

T.KALAIRAJ Partner Membership No. 023840

S.PARAMASHIVAN Company Secretary

V.SUMDARAMOORTHY Chief Financial Officer

Kappalur,

Madurai.

May,9,2016