NOTES TO FINANCIAL STATEMENTS:

1. General Information:

The Company was incorporated during the year 1993 and is engaged in the business of manufacture and sale of Indian Made Foreign Liquor (IMFL). The Company has its manufacturing unit at Pondicherry.

2. Significant Accounting Policies:

2.1 Basis of brparation of Financial Statements:

The Financial Statements have been brpared in accordance with the generally accepted accounting principles ('GAAP') applicable in India under the historical cost convention on accrual basis. These financial statements have been brpared to comply in all material aspects with the accounting standards notified under Section 133 read with Rule 7 of the Companies (Accounts) Rules, 2014, as amended from time to time and the other relevant provisions of the Companies Act, 2013.

All Assets and Liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria set out in Schedule III of the Companies Act, 2013.

2.2 Use of Estimates:

The brparation of Financial Statements in conformity with GAAP requires that the management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of the date of the financial statements. Actual results could differ from these estimates. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized. Management believes that the estimates used in brparation of financial statements are prudent and reasonable.

2.3 Tangible Assets:

Tangible Assets are stated at cost (or revalued amount as the case may be) less accumulated debrciation and accumulated impairment losses if any. Cost Comprises purchase price and any other attributable cost of bringing the asset to its working condition for its intended use. Subsequent expenditure related to an item of fixed asset are added to its book value only if they increase the future benefits from the existing asset beyond its brviously assessed standard of performance.

Gain or loss arising from de-recognition of assets are measured as the difference between the net disposal proceeds and the carrying amount of the assets and are recognized in the statement of profit and loss when the asset is derecognized.

Consequent to the enactment of the Companies Act, 2013 (the Act) and its applicability for accounting periods commencing after April 1, 2014, the company has reworked debrciation with reference to the estimated economic lives of fixed assets brscribed by Schedule II to the Act or actual useful life of assets, whichever is lower. In case of assets whose life has completed as above, the carrying value, net of residual value as at April 1, 2014 has been adjusted to the reserves and in other cases the carrying value has been debrciated over the remaining of the revised life of the asset and recognized in the statement of Profit and Loss.

2.4 Borrowing Costs:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that takes necessarily substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

2.5 Impairment of assets:

As on Balance Sheet date, the Company reviews the carrying amount of Fixed Assets to determine whether there are any indications that those assets have suffered "Impairment Loss". Impairment loss, if any, is provided to the extent, the carrying amount of assets exceeds their recoverable amount. Recoverable amount is higher of an asset's net selling price and its value in use. Value in use is the brsent value of estimated future cash flows expected to arise from continuing use of an asset and from its disposal at the end of its useful life.

2.6 Investments:

Investments that are readily realizable 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 or Market / Fair Value determined on a individual investment basis.

Long Term investments are valued at cost. Provision for diminution in the value of long term investment is made only if such decline is other than temporary in nature.

2.7 Grants and Subsidies:

Grants and Subsidies are recognized when there is reasonable assurance that the Grant / Subsidy will be received and all attaching conditions will be complied with. When the grant or subsidy relates to a revenue item it is recognized as income over the period necessary to match them on a systematic basis to the costs, which it is intended to compensate.

Where the Grant on subsidy relates to an asset its value is deducted in arriving at the carrying amount of the related asset.

2.8 Revenue Recognition:

The company is in the business of manufacture and sale of IMFL products. Sale of goods are recognized when the goods are dispatched / on passing title of the Goods to the customers. The sales are accounted by including the scheme / discounts / Excise Duty and Sales Tax. The Scheme discounts / Sales Tax are charged off separately to the Profit and Loss Account. Profit on sale of investments is recorded on transfer of title from the company and is determined as the difference between the sale price and the carrying value of the investment. Interest is recognized based on time-proportion method based on rates implicit in the transaction.

2.9 Inventories:

Inventories are valued at lower of cost and estimated net realizable value after providing for cost of obsolescence and other anticipated losses, wherever considered necessary. Cost includes taxes, duties and all incidental expenses directly attributable to the purchases.

Method of assignment of cost is as under:

Raw Material, Stores & Spares: Weighted average cost basis

Work - in - progress : Direct expenses plus appropriate Factory overheads on the basis of completed production

Finished Goods : Cost of goods, direct expenses plus appropriate Factory overheads and Excise Duty

Traded Goods : Actual cost Basis

2.10 Employee Benefits:

The Provident fund scheme and Employee State Insurance Scheme are defined contribution plans. The company contributes a fixed sum to the Provident Fund / Employees State Insurance Scheme maintained by the Central Government. The contribution paid / payable under the schemes is recognised during the period in which the employee renders the related service.

The liability for Gratuity to employees as at the Balance Sheet date is as per the obligation to gratuity fund administered by the trustees and managed by Life Insurance Corporation of India. The contribution thereof paid / payable for the relevant period is charged off to Profit and Loss Account.

2.11 Foreign Exchange Transactions:

Foreign currency transactions are recorded at the rate of exchange brvailing on the date of the respective transactions.

Foreign Exchange monetary items in the Balance Sheet are translated at the year-end rates. Exchange differences on settlement / conversion are adjusted to Profit and Loss Account.

2.12 Tax Expenses:

Tax expenses for the year comprise of current tax and deferred tax. Current tax is measured after taking into consideration the deductions and exemptions admissible under the provision of Income Tax Act, 1961 and in accordance with Accounting Standard 22 on "Accounting for Taxes on Income".

Deferred Tax rebrsents the tax effect of timing differences between taxable income and accounting income for the reporting period and is capable of reversal in one or more subsequent periods. Deferred tax are quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet Date.

Deferred Tax Assets are recognized and carried forward only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax asset on unabsorbed debrciation and carry forward of losses are not recognized unless there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

2.13 Contingent Liabilities and Provisions:

Provisions are recognized only when there is a brsent obligation as a result of past events and when a reliable estimate of the amount of obligation can be made.

Contingent Liability is disclosed for

a. Possible obligation which will be confirmed only by future events not wholly with in the control of the company or

b. Present obligations arising from the past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation can not be made.

c. Contingent Assets are not recognized in the financial statements since this may result in the recognition of income that may never be realized.

2.14 Earnings Per Share:

In determining the Earnings Per share, the company considers the net profit after tax including any post tax effect of any extraordinary / exceptional item. The number of shares used in computing basic earnings per share is the Weighted average number of shares outstanding during the period. The number of shares used in computing Diluted earnings per share comprises the Weighted average number of shares considered for computing Basic Earning per share and also the weighted number of equity shares that would have been issued on conversion of all potentially dilutive shares.

In the event of issue of bonus shares, or share split the number of equity shares outstanding is increased without an increase in the resources. The number of Equity shares outstanding before the event is adjusted for the proportionate change in the number of equity shares outstanding as if the event had occurred at the beginning of the earliest period reported.

2.15 Leases: Finance Lease

Leases which effectively transfer to the company all the risks and benefits incidental to ownership of the leased item, are classified as Finance Lease. Lease rentals are capitalized at the lower of the fair value and brsent value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return.

Operating Lease

Lease where the lessor effectively retains substantially all risks and benefits of the asset are classified as Operating lease. Operating lease payments are recognized as an expense in the Profit & Loss account on a Straight Line Basis over the Lease term.

2.16 Segment Reporting:

The generally accepted accounting principles used in the brparation of the financial statements are applied to record revenue and expenditure in individual segments.

Segment revenue and segment results include transfers between business segments. Such transfers are accounted for at the agreed transaction value and such transfers are eliminated in the consolidation of the segments.

Expenses that are directly identifiable to segments are considered for determining the segment result. Expenses, which relate to the company as a whole and are not allocable to segments are included under unallocated corporate expenses

Segment assets and liabilities include those directly identifiable with the respective segments. Unallocated corporate assets and liabilities rebrsent the assets and liabilities that relate to the company as a whole and not allocable to any segment.

3. Impairment of Assets:

Assets of the Company are being tested for impairment. Considering the internal and external sources of information, there was no indication of potential impairment loss, and hence estimation of recoverable amount does not arise.

4. Segment Reporting:

The company operates only in one reportable business segment namely manufacture and sale of Indian Manufactured Foreign Liquor. The liquor business incorporates the product groups (viz) IMFL and others, which have similar risks and returns. Hence segment reporting is not applicable.

5. Exceptional Items:

"During the Financial Year 2014-2015, the High Court of Madras has dismissed the pending petitions of the Company regarding "Turnover Tax" payable to Financial Year 1999-2000, to Financial Year 2006-2007. The High Court has directed the Company to pay total demand of Rs. 119.72 to Department of Sales Tax. Accordingly, the Company has made provision in the accounts during the year for Turnover Tax payable and disclosed the same under the head "Exceptional Items".

6. Taxation Matters:

The Company has received a Demand Notice from Income Tax Department regarding Appeals filed by with the Commissioner of Income Tax (Appeals) against the orders of the Assessing Officer; in respect of the Assessment Year 2010-2011; on account of disallowance of expenditure under section 40 a (ia) of the Income Tax Act, 1961. The Department has raised a demand of Rs.138.94 Lacs for the said assessment year. The Company has decided to file an appeal with the Income Appellate Tribunal against the Appeal Orders issued by the Commissioner of Income Tax (Appeals). Further, the Company has received a Demand Notice from Income Tax Department regarding Assessment Proceedings for the Assessment Year 2012-2013. The Department has raised a demand of Rs. 1,209.99 Lacs for the said assessment year. The Company has filed an appeal with the Commissioner of Income Tax (Appeals) against the Appeal Orders issued by the Assessing Officer. The Company is confident of succeeding in the said petition and the Company has also taken favorable opinion from legal experts. Hence no provision has been made in the books of accounts and the demand raised by the Department has been shown under "Contingent Liabilities".

In respect of other disputed liabilities pertaining to earlier years such as Turnover Tax, Bank Guarantee amount, the amounts have been shown under "Contingent Liabilities" in the respective years.

7. Previous Year Figures:

The financial statements for the year ended March 31,2015 have been brpared as per Schedule III of the Companies Act, 2013. The figures for the brvious year have been regrouped, reclassified or rearranged to meet the recognition and measurement principles followed for brparation of financial statements.

For and on behalf of the Board of Directors

For RAVI KUMAR DISTILLERIES LIMITED

Mr. R.V. Ravikumar

Managing Director

Mr. Badrinath S. Gandhi

Executive Director

Date : 12.08.2015

Place : Chennai