NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2016

1. SIGNIFICANT ACCOUNTING POLICIES

a) Basis of Preparation

The financial statements of the Company have been brpared as a going concern on an accrual basis of accounting under the historical cost convention in accordance with generally accepted accounting principles in India. The financial statements comply in all material respects with the applicable accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) in accordance with section 133 of the Companies Act, 2013, read with Rule 7 of Companies (Accounts) Rules, 2014. All assets and liabilities have been classified as current or non-current as per the criteria set out in Schedule III of the Companies Act, 2013.

b) Use of Estimates

The brsentation of financial statements requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Differences between the actual results and estimates are recognised in the period in which the results are known/materialise.

c) Fixed Assets

Fixed assets are stated at cost of acquisition less accumulated debrciation. Cost includes taxes, duties (excluding Excise Duty and VAT for which CENVAT/VAT credit is available), freight and other incidental expenses relating to acquisition and installation of such fixed assets.

d) Recognition of Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criteria are applied for revenue recognition:

i) Revenue from sale of goods is recognised when all the significant risks and rewards of ownership of the goods have been passed to the buyer, usually on delivery of the goods. The Company collects sales taxes and/ or value added taxes (VAT) on behalf of the government and therefore, these are not economic benefits flowing to the Company and accordingly they are excluded from revenue. Excise duty deducted from revenue (gross) is the amount that is included in the revenue (gross).

ii) Revenue from service contracts is recognised as the service is performed. Performance of service is measured either under the completed service contract method or under the proportionate completion

method, whichever relates the revenue to the work accomplished or obligations fulfilled and when no significant uncertainty exist regarding the consideration receivable for the service performed. The Company collects service tax on behalf of the government and therefore, it is not an economic benefit flowing to the Company and accordingly it is excluded from revenue.

iii) Revenue from construction contracts is recognised on the percentage of completion method, measured by the proportion that contract costs incurred for work performed till the reporting date bear to the estimated total contract cost. Contract cost for this purpose includes:

a) Costs that relate directly to the specific contract;

b) Costs that are attributable to contract activity in general and can be allocated to the contract; and

c) Such other costs as are specifically chargeable to the customer under the terms of the contract.

Foreseeable losses, if any, are provided for immediately.

iv) Income and expenditure relating to the prior period and brpaid expenses which do not exceed Rs. 10,000/-in each case, are treated as income/expenditure of the current year.

e) Foreign Currency Transactions

i) Transactions denominated in foreign currencies are recorded at exchange rates brvailing on the dates of the transactions.

ii) Foreign currency monetary items (including forward contracts) are translated at rates brvailing at the reporting date. Exchange differences arising on settlement of transactions and translation of monetary items (including forward contracts) are recognised as income or expense in the year in which they arise.

iii) The brmium or discount on foreign currency forward contracts not relating to firm commitments or highly probable forecast transactions and not intended for trading or speculative purposes is amortised as expense or income over the life of each contract.

iv) In respect of derivative contracts relating to firm commitments or highly probable forecast transactions, provision is made for mark-to-market losses, if any, at the balance sheet date. Gains, if any, on such contracts are not recognised till settlement.

f) Investments

Investments, those are readily realisable and intended to be held for not more than one year from the date on which such investments are made, 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. However, provision for diminution is made to recognise a decline, other than temporary, in the value of long-term investments, such reduction being determined and made for each investment individually.

g) Inventories

i) Inventories of raw materials and components, stores and spares are valued at the lower of cost and net realisable value. Cost for the purpose of valuation of inventories is determined on weighted average basis.

ii) Finished goods and work-in-progress are valued at lower of cost and net realisable value. The cost of finished goods and work-in-progress includes raw material costs, direct cost of conversion and allocation of indirect costs incurred in bringing the inventories to their brsent location and condition. Excise duty is included in the value of finished goods.

iii) Patterns, loose tools, jigs and fixtures are amortised equally over three years.

h) Debrciation

i) Debrciation on fixed assets is provided on the straight line method in accordance with Schedule II of the Companies Act, 2013. Schedule II provides the useful lives of various categories of fixed assets and allows the Company to use higher / lower useful lives and residual values if such lives and residual values can be technically supported and the justification for any difference is disclosed in the financial statements.

Accordingly, the management has estimated the useful lives and residual values of all its fixed assets and adopted useful lives as stated in Schedule II along with residual values of 5% except for the following:

• Based on the experience and assessment, mobile phones costing Rs. 5,000/- or more are debrciated over 2 years.

• Assets costing less than Rs. 5,000/- are fully debrciated in the year of purchase.

ii) Intangible assets are recognised as specified in the applicable accounting standard and are amortised as follows:

Particulars Period of amortization

Computer software -36 months

Website development cost- 36 months

Design and drawings -72 months

i) Employee Benefits

i) Short term Employee Benefits

All employee benefits payable wholly within 12 months after the end of the period in which the employees render related services are classified as short term employee benefits and are recognised as expenses in the period in which the employees render the related service. The Company recognises the undiscounted amount of short term employee benefits expected to be paid (including compensated absences) in exchange for services rendered, as a liability.

ii) Post-employment benefits

(a) Defined contribution plans:

Defined contribution plans are retirement benefit plans under which the Company pays fixed contributions to separate entities (funds) or financial institutions or state managed benefit schemes. The Company's contributions under the Employees' Provident Fund Scheme, Employees' State Insurance Scheme and Officers' Pension Scheme for certain employees are defined contributions plans. The Contributions paid/ payable under the schemes are recognised during the period in which the employees render the related service.

(b) Defined benefit plans:

Defined benefit plans are plans under which the Company pays certain defined benefits to employees following their retirement/resignation/ death based on rules framed for such schemes. The Employees' Gratuity Scheme is a defined benefit plan. The brsent value of the obligation under a defined benefit plan is determined based on the actuarial valuation using the Projected Unit Credit method, which recognises each period of service as giving rise to an additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

The obligation is measured at the brsent value of the estimated future cash flows. The discount rate used for determining the brsent value of the obligation under a defined benefit plan is based on the market yields on Government securities as at the balance sheet date, with maturity periods approximating the terms of the related obligation.

Actuarial gains and losses are recognised immediately in the statement of profit and loss.

Gains or losses on the curtailment or settlement of any defined benefits plan are recognised when the curtailment of settlement occurs. Past service cost is recognised as an expense on a straight-line basis over the average period until the benefits become vested.

iii) Other long-term employee benefits

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders related services are recognised as a liability at the brsent value of the defined benefit obligation at the balance sheet date on the basis of an actuarial valuation. The discount rates used for determining the brsent values of the obligation under defined benefit plans, are based on the appropriate market yields on Government securities as at the balance sheet date.

iv) Employee Stock Options :

Compensation cost in respect of stock options granted to eligible employees is recognised using the intrinsic value of the stock options and is amortised over the vesting period of such options granted.

j) Borrowing costs

Borrowing costs that are attributable to the acquisition of qualifying assets are capitalised upto the period such assets are ready for their intended use. All other borrowing costs are charged in the statement of profit and loss.

k) Taxes on Income

i) Current tax on income is determined on the basis of taxable income computed in accordance with the applicable provisions of the Income-tax Act, 1961.

ii) Deferred tax is recognised for all timing differences between the accounting income and the taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as on the balance sheet date.

iii) Deferred tax assets are recognised and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised, except in the case of unabsorbed debrciation or carried forward of losses under the Income-tax Act 1961, where deferred tax assets are recognised only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which deferred tax assets can be realised.

iv) Minimum alternate tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will be in a position to avail of such credit under the provisions of the Income-tax Act 1961.

l) Impairment of Assets

Impairment of individual assets/cash generating unit (a group of assets that generates identified independent cash flows) are identified using external and internal sources of information and impairment loss, if any, is determined and recognised in accordance with the applicable accounting standard.

m) Provisions, Contingent liabilities and Contingent assets

Provisions are recognised, if :

i) the Company has a brsent obligation as a result of a past event.;

ii) a probable outflow of resources is expected to settle the obligation; and

iii) the amount of obligation can be reliably estimated.

Reimbursements expected in respect of expenditure required to settle a provision are recognised only when it is virtually certain that the reimbursement will be received.

A contingent liability is disclosed in the case of

i) a brsent obligation arising from a past event, when it is not probable that an outflow of resources will be required to settle the obligation; or

ii) a possible obligation, unless the probability of outflow of resources is remote.

Contingent assets are not recognised .

n) Research and Development

Revenue expenditure on research and development is charged under the respective heads of account. Capital expenditure on research and development is included as part of fixed assets and debrciated on the same basis as other fixed assets.

o) Government Grants

Recognition

Government grants are recognised where:

i) There is reasonable assurance of complying with the conditions attached to the grant.

ii) Such grant/benefit has been earned and it is reasonably certain that the ultimate collection will be made.

Presentation in Financial Statements:

i) Government grants relating to specific fixed assets are adjusted with the value of such fixed assets.

ii) Government grants in the nature of promoters' contribution, i.e. which have reference to the total investment in an undertaking or by way of contribution towards total capital outlay, are credited to capital reserve.

iii) Government grants related to revenue items are either adjusted with the related expenditure or shown separately as income in the statement of profit and loss.

p) Expenditure on Corporate Social Responsibility (CSR)

Amount incurred on CSR projects undertaken by the Company are charged in statement of profit and loss under "Other Expenses". No provision is made in the accounts in respect of any shortfall in CSR spends, if any, as determined in accordance with section 135 of the Companies Act 2013, unless a contractual liability has been incurred under a CSR activity already undertaken by the Company.

2. Estimated amount of contracts remaining to be executed on capital account and not provided for are Rs. 457.79 Million (brvious year Rs. 45.28 Million) against which advances paid aggregate Rs. 54.61 Million (brvious year Rs. 1.78 Million).

3. In respect of working capital facilities sanctioned by a bank to the subsidiary company, M/s GE Triveni Ltd (GETL), the Company has given an undertaking not to dispose of its investments in the equity shares of GETL aggregating to Rs. 80.00 Million (Previous year Rs. 80.00 Million) during the tenure of the facilities.

4. The Company primarily operates in one business segment - Power Generating Equipment and Solutions. There are no reportable geographical segments.

5. The amount spent by the Company on CSR activities, in terms of section 135 of the Companies Act 2013, has been charged in the statement of profit and loss under "Other expenses" in accordance with accounting treatment suggested in Guidance Note issued by the Institute of Chartered Accountants of India on the subject. However, during the brvious year, based upon the guidance then available, the Company had considered the amount of Rs. 26.43 Million, being the amount incurred by it on CSR activities during that year, as an appropriation of profits.

6. The land at Sompura, acquired by the Company during financial year 2014-15 from Karnataka Industrial Areas Development Board, was on a lease-cum-sale basis. The Company is required to pay Rs. 0.14 Million per year towards lease and maintenance charges towards this land for an initial period of ten years. Thereafter the ownership of the land will be transferred in favour of the Company. Accordingly the cost of the said land amounting to Rs. 388.65 Million has been disclosed as freehold land in these financial statements under "Tangible Assets" in Note no. 10 and no amortisation is required to be provided.

7. The Company has changed method of estimating and recognising export incentives receivable under the Merchandise Export Incentive Scheme, Focused Market Scheme and Served From India Scheme formulated by the Government, based on reasonable certainty of collection flowing under such incentives upon complying with the conditions attached to such Schemes (reasonable certainty of collections arrived at based on best judgment and past experience of the Company). Consequently, during the year, the Company has accounted for additional export incentives aggregating Rs. 20.37 Million arising from the exports made by it.

8. The brvious year's figures have been regrouped/rearranged wherever necessary, to make them comparable to those of the current year.

As per our report of even date.

For and on behalf of

J.C.Bhalla & Company

Chartered Accountants

FRN : 001111N

Sudhir Mallick

Partner

Membership No. 80051

Deepak Kumar Sen Vice President & CFO

Rajiv Sawhney Company Secretary

Dhruv M. Sawhney Chairman & Managing Director

Amal Ganguli Director & Chairman Audit Committee

Place : Noida (U.P.)

Date : May 10, 2016