NOTE 1 - SIGNIFICANCE ACCOUNTING POLICIES

1. COMPANY OVERVIEW

Loyal Equipments Limited ('the Company') was incorporated on April 20, 2007 and is engaged in the business of manufacturing of Equipments.

2. SIGNIFICANT ACCOUNTING POLICIES

A. BASIS OF ACCOUNTING:

1. These financial statements have been brpared on accrual basis under the historical cost convention in accordance with the generally accepted accounting principles in India and comply with the Accounting Standards notified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014, till the standards of accounting or any addendum thereto are brscribed by Central Government in consultation and recommendation of the National Financial Reporting Authority, the existing standards notified under the Companies Act, 1956 shall continue to apply. Consequently, these financial statements have been brpared to comply in all material aspects with the accounting standards notified under Section 211 (3C) of Companies Act, 1956 (Companies (Accounting standards) Rules 2006, as amended)and other relevant provisions of the Companies Act, 2013.

2. All the assets and liabilities have been classified as current and non-current as per the Company's normal operating cycle and other criteria set out in Schedule III of the Act. The Company has ascertained its operating cycle to be 12 months for the purpose of current and non-current classification of assets and liabilities.

B. USE OF ESTIMATES:

The brparation of the financial statements in conformity with generally accepted accounting principles, Accounting Standards notified under Section 133 of the Companies Act, 2013 and the relevant provisions thereof, requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of liabilities as at the date of financial statements and reported amounts of income and expenditure during the period. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.

C. DEbrCIATION:

1. The Company has changed the method of charging debrciation in current year, earlier the debrciation was charged as per WDV according to rates specified in Income Tax but during the year the company has charged debrciation as per W.D.V. method of Companies Act, 2013. Also the Company has recalculated the debrciation in accordance with the new method from the date of the asset coming into use. The deficiency or surplus arising from retrospective recomputation of debrciation in accordance with the new method is adjusted in the accounts in current year Therefore change the method of debrciation accordingly Rs. 9,15,456/- have been charged arrear Debrciation from date of assets put to use to F.Y. 2013-14 as prior period Expenses and charge to P&L Account due to revise calculation under new method.

2. The balances as on 31/03/2014 of fixed assets shown in Note - H are differed with balance sheet due to re-calculation of debrciation.

D. INVESTMENTS:

Current investments are stated at lower of cost and fair value. Long-term investments are stated at cost after deducting provisions made, if any, for diminution in the value which is other than temporary.

E. BORROWING COST AND FINANCE CHARGES:

Interest and other borrowing costs attributable to qualifying assets has not capitalized. Other interest and borrowing costs are charged to the revenue.

Other Finance cost incurred for raising long term borrowing is amortized over the tenure of the borrowing.

F. INVENTORIES:

Inventories are valued at Cost or Market Value whichever is less as certified by the management. Cost of inventories is computed on a First-in-First-Out basis.

G. REVENUE RECOGNITION:

Revenue from sales is recognised when significant risks and rewards of ownership have been transferred to the buyer which is normally on delivery of goods and is net of sales tax/ value added tax.

Interest is recognised on time proportion basis.

H. TAXATION:

Tax expense comprises of current tax and deferred tax of Rs. 14,42,930/- and same have been identified as Deferred Tax Liability.

Provision for current tax is made on the basis of estimated taxable income for the current accounting year in accordance with the Income tax Act, 1961.

The deferred tax for timing differences between the book income and tax income for the year is accounted for, using the tax rates and laws that have been substantively enacted as of the Balance Sheet date. Deferred tax assets arising from timing differences are recognised to the extent there is reasonable certainty that these would be realized in future.

Deferred tax assets where there are unabsorbed losses and unabsorbed debrciation, are recognised only if there is virtual certainty that such deferred tax assets will be realized against future taxable income.

Deferred tax assets and liabilities are measured using the tax rates and tax law that have been enacted or substantively enacted by the Balance Sheet date.

I. PROVISIONS, CONTINGENT LIABILITIES AND ASSETS:

Provisions are recognised when the Company has a brsent obligation as a result of past events and it is more likely that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Provisions are not discounted to brsent value and are determined based on best estimate of the expenditure required to settle the obligation at the balance sheet date.

These are reviewed at each balance sheet date and adjusted to reflect the current best estimate.

Contingent Liabilities are disclosed by way of notes to the financial statements. Contingent assets are neither recognised nor disclosed in the financial statements.

J.IMPAIRMENT OF ASSETS:

The carrying amounts of the assets are reviewed at each balance sheet date if there is any indication of impairment based on the internal/external factors. An asset is impaired when the carrying amount of the asset exceeds the recoverable amount. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. An impairment loss recognised in the prior accounting periods is reversed if there has been change in the estimate of the recoverable amount.

20. Non Current Investments:

Investment in Equity Shares:

(a) Company has Investment in Equity Share of Noroda Nagrik Co-operative Bank amounting Rs. 400,000/- as on 3151 March 2015

23. Contingent Liabilities not provided for:

In respect of Bank Guarantees 5.87 Lacs (Previous year: 20.31 Lacs).

24. Segment Reporting:

The Company is primarily engaged in the equipments Manufacturing, which in the context of

Accounting Standard 17 on "Segment Reporting" constitutes a single reporting segment. Further, there are no geographical segments.

26. In the opinion of the Board of Directors, the current assets, loans and advances would realize not less than the value stated if realized in the ordinary course of business. The provision for all known liabilities is adequate and reasonably estimated.

27. The Company has not received any memorandum (as required to be filled by the suppliers with the notified authority under Micro. Small and Medium Enterprise Development Act, 2006) claiming their status during the year as micro, small or medium enterprises. Consequently there are no amounts paid/ payable to such parties during the year.

28. Previous year figures have been regrouped /rearranged wherever necessary to correspond with the current year's classifications/disclosure.

As per our Report of even dale.

For, J. M. PATEL & BROS.

Chartered Accountants

F.R.No. 107707W

(J. M. Patel)

Proprietor

Place: Ahmedabad

Date: 25/05/2015