ACCOUNTING POLICIES AND NOTES ON ACCOUNTS STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES: Basis of Accounting:

These financial statements have been brpared to comply with the Generally Accepted Accounting Principles in India (Indian GAAP), including the Accounting Standards notified under the relevant provisions of the Companies Act, 2013.

The financial statements are brpared on accrual basis under the historical cost convention. The financial statements are brsented in Indian rupees rounded off to the nearest rupees in Lakhs.

Use of Estimates:

The brparation of financial statements in conformity with Indian GAAP requires judgments, estimates and assumptions to be made that affect the reported amount of assets and liabilities, disclosure of contingent liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known/ materialised.

Presentation and disclosure in financial statements:

For the year ended 31st March, 2015, the schedule III notified under the Companies Act, 2013, is applicable to the Company, for brsentation and disclosures in financial statements. The company has reclassified the brvious year's figures in accordance with the Schedule III as applicable in the current year.

Fixed Assets:

Tangible Fixed Assets:

Tangible Assets are stated at cost net of recoverable taxes, trade discounts and rebates and include amounts added on revaluation, less accumulated debrciation and impairment loss, if any. The cost of Tangible Assets comprises of its purchase price, borrowing cost and any cost directly attributable to bringing the asset to its working condition for its intended use, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the assets.

Subsequent expenditures related to an item of Tangible 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.

Projects under which assets are not ready for their intended use are disclosed under Capital Work-in-Progress.

Intangible Assets:

Intangible assets comprising of technical know-how, product designs, prototypes etc. either acquired or internally developed are stated at cost. In case of internally generated intangible assets, appropriate overheads including salaries and wages are allocated to the cost of the asset.

Leasehold land

Leasehold lands are shown at cost less accumulated amortization.

Lease:

Asset leased by the company in its capacity as lessee where substantially all the risk and rewards of ownership vest in the company are classified as finance lease and capitalized at the inception of the lease at cost. Lease payments under operating lease are recognized as an expense over the period of lease on straight line basis in statement of profit and loss account.

Debrciation and Amortisation :

Tangible Assets:

Debrciation on Fixed assets is provided to the extent of debrciable amount on Written Down Value method over the useful lives of assets specified in the Schedule II of the Companies Act, 2013.The Management

(Technical Expert) estimates the useful lives for some fixed assets based on internal assessment and/or independent technical evaluation carried out by external valuers. Debrciation for Assets Purchased/ sold, discarded, demolished or destroyed during the period is proportionately charged from the date of such addition or, as the case may be, up to the date, on which such asset has been sold, discarded, demolished or destroyed.

The cost and the accumulated debrciation for fixed assets sold, retired or otherwise disposed off are removed from the stated values and the resulting gains and losses are recognised in the profit and loss account.

Leasehold Assets are amortised over their period of lease.

Intangible Assets:

Intangible Assets are amortised over their estimated useful life. The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each financial year and the amortization method is reviewed to reflect the changed pattern.

Impairment of Assets :

The carrying amounts of assets are reviewed at each Balance Sheet date in accordance with Accounting Standards - 28 'Impairment of Assets' to determine whether there is any indication of impairment based on internal / external factors.

An impairment loss is recognized in the statement of Profit & Loss wherever the carrying amount of an asset exceeds its recoverable amount.

The impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined net of debrciation or amortization if no impairment loss had been recognized.

The recoverable amount is the greater of the assets net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their brsent value at the weighted average cost of capital.

Investments:

Non-current investments are carried at cost. Provision for diminution in the value of non-current investments is made only if such a decline is other than temporary in the opinion of the management.

Current investments are carried at lower of cost and fair value. The comparison of cost and fair value is done separately in respect of each category of investments.

On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of Profit and Loss. Profit or loss on sale of investments is determined on a first-in-first-out (FIFO) basis.

Investments in properties are carried individually at cost less debrciation and impairment if any. Investment in properties are capitalized and debrciated in accordance with the policy stated for fixed assets. Impairment in investment property is determined in accordance with the policy stated for impairment of assets.

Inventories:

Items of inventories are measured at lower of cost and net realisable value after providing for obsolescence, if any, except in case of by-products which are valued at net realisable value. Cost of inventories comprises of cost of purchase, cost of conversion and other costs including manufacturing overheads incurred in bringing them to their respective brsent location and condition.

Cost of raw materials, process chemicals, stores and spares, packing materials, trading and other products are determined on weighted average basis.

Cash and cash equivalents:

Cash comprises cash on hand and demand deposits with bank. Cash equivalents are short term balances, highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

Foreign currency transactions :

Initial recognition:

Transactions in foreign currencies entered into by the company are accounted at the exchange rates brvailing on the date of the transaction.

Measurement of foreign currency items at the Balance Sheet date:

Foreign currency monetary items of the company are restated at the closing exchange rates. Non-monetary items are recorded at the exchange rate brvailing on the date of the transaction. Exchange differences arising out of these translations are charged to the Statement of Profit & Loss.

Derivative Contracts:

Inrespect of Derivative contracts, brmium paid, gains / losses on settlement and losses on restatement are recognised in the Profit and Loss account except in case where they relate to the acquisition or construction of Fixed Assets, in which case, they are adjusted to the carrying cost of such assets.

Forward exchange contracts:

The brmium or discount arising at the inception of forward exchange contract is amortized and recognized as an expenses/income over the life of the contract. Exchange differences on such contracts are recognized in the Statement of Profit & Loss in the period in which the exchange rates change. Any Profit or Loss arising on cancellation or renewal of such forward exchange contract is also recognized as income or expense for the period.

Revenue Recognition:

Revenue from sale are recognized on transfer of significant risk & rewards of ownership to the buyer that usually takes place on dispatch of goods in accordance with the terms of sale and is inclusive of excise duty but excluding sales returns, trade discount, CST and VAT.

In case of export sales, revenue is recognized as on the date of bill of lading, being the effective date of transfer of significant risks and rewards to the customer. Export benefits are accounted for on accrual basis.

Revenue arising due to price escalation claim is recognized in the period when such claim is made in accordance with terms of sale.

Inter-division transfers of materials and services for captive consumption are eliminated from Sales and other operative income of the respective division.

Revenue from services is recognized in accordance with the specific terms of contract on performance.

Dividend Income on investment is accounted for, as and when the right to receive the payment is established.

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

Government grants and subsidies are accounted for on receipt basis.

Employee benefit:

All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries, wages and bonus, etc, are recognized in the statement of profit and loss in the period in which the employee renders the related service.

Defined contribution plans:

The employee's provident fund scheme, employees' state insurance fund and contribution to superannuation fund are defined contribution plans. The company's contribution paid/payable under these schemes is recognized as an expense in the statement of profit & loss during the period in which the employee renders the related service.

Defined benefit plans:

The company's gratuity plan is a defined benefit plan. The brsent value of gratuity obligation under such defined benefit plan is determined based on an actuarial valuation carried out by an independent actuary using the Projected Unit Credit Method, which recognizes each period of current and past service as giving rise to 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 defined benefit plans, is based on the market yields on Government securities as at the valuation date having maturity periods approximating to the terms of related obligations. Actuarial gains and losses are recognized immediately in the statement of profit and loss.

Gains or losses on the curtailment or settlement of any defined benefit plan are recognized when the curtailment or settlement occurs.

Provisions, Contingent Liabilities and Contingent assets:

A provision is created when there is a brsent obligation as a result of a past event that probably requires an outflow or 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 a brsent obligation that may, but probably will not, require an outflow or resources. When there is a possible obligation or a brsent obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

The company does not recognize assets which are of contingent nature until there is virtual certainty of realisability of such assets. However, if it has become virtually certain than an inflow of economic benefits will arise, asset and related income is recognized in the financial statements of the period in which the change occurs.

Provision for Taxation:

Tax expense comprises of current tax (i.e. amount of tax for the period determined in accordance with the Income Tax Act, 1961) and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the period).

The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the Balance Sheet date.

Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realized in future; however, where there is unabsorbed debrciation or carry forward loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realization of such assets. Deferred tax assets are reviewed as at each Balance Sheet Date to reassess realization.

Minimum Alternate Tax (MAT) paid in excess of normal income tax is recognised as asset (MAT Credit entitlement) only to the extent, there is reasonable certainty that company shall be liable to pay tax as per the normal provisions of the Income Tax Act, 1961 in future.

Borrowing Cost:

Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are capitalized as a part of the cost of such asset. The qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing cost is recognized as expense in the period in which they are incurred.

DEMERGER NOTE:

1. The Hon'ble High Court of Madras vide its Order dated December 4, 2014 sanctioned the Scheme of Arrangement (Demerger) in Company Petition No. 339 of 2014 for the Demerger of four undertakings of M/s. Pondy Oxides and Chemicals Limited (Demerged Company) namely Metallic Oxides Division, Plastic Additives Division, Zinc Refining Division and Lead Alloying & Refining Division along with their related assets and liabilities into POCL Enterprises Limited (Resulting Company), effective from April 1, 2013, as the appointed date.

2. The Net Profit/Loss for the period from Appointed Date i.e.,1st April 2013 to 31st March 2014 is adjusted in Surplus/(Deficit) in Statement of Profit and Loss.

3. The Financial Statements of the Company for the year ended March 31, 2015 includes Assets, Liabilities and Results of Operations of four demerged undertakings and therefore the current year financials are strictly not comparable with the brvious year financials.

4. As per the Scheme of Arrangement (Demerger) as referred above, each member of M/s. Pondy Oxides and Chemicals Limited, whose name stood recorded in the Register of Members as on January 9, 2015 (Record Date) have been allotted 1 (One) Equity Share of Rs. 10/- each in the Company for every 2 (Two) Equity Shares of Rs. 10/- each held by the shareholder in M/s. Pondy Oxides and Chemicals Limited. Consequently, the same has been credited to Share Capital Account.

5. The 7,81,465 equity shares of Rs. 10/- each held by M/s. Pondy Oxides and Chemicals Limited in the Company had been cancelled pursuant to the Scheme of Demerger. Consequently the Company ceases to be subsidiary of Pondy Oxides and Chemcials Limited.

6. The Effective Date for the Scheme of Demerger is December 22, 2014, being the date on which the Certified True Copy of the High Court Order was filed with Registrar of Companies, Tamilnadu.

7. The Company is in the process of changing the names of certain properties/assets covered by the Scheme.

8 REMITTANCE IN FOREIGN CURRENCY ON ACCOUNT OF DIVIDEND

No dividend has been declared by the Company in the brvious financial years and hence question on remittance of dividend in foreign currency does not arise.

9 Previous year figures have been regroped/rearranged wherever necessary

As per our Report of even date

For Jeeravla & Co.,

Chartered Accountants

FRN No : 001323S

Sohan C.J.

Parmar

Proprietor

M.No. 022321

For and on behalf of the Board

Devakar Bansal Managing Director

N Ravichandran Chief Financial Officer

Sunil Kumar Bansal Joint Managing Director

Aashish Jain Company Secretary

Place : Chennai

Date : 29/05/2015