Accounting Policies of Aadi Industries Ltd. Company

Mar 31, 2024

2 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

This note provides a list of the Significant Accounting Policies adopted in the preparation of these Financial Statements. These policies have
been consistently applied to all the years presented, unless otherwise stated.

2.1 BASIS FOR PREPARATION OF ACCOUNTS

a) Statement of Compliance with Ind AS

These financial statements are the separate financial statements of the Company (also called standalone financial statements) prepared
in accordance with Indian Accounting Standards (''Ind AS'') notified under section 133 of the Companies Act 2013, read together with the
Companies (Indian Accounting Standards) Rules, 2015 (as amended).

b) Current versus Non-Current classification

All assets and liabilities have been classified as Current or Non Current as per the Company''s normal operation cycle i.e. twelve months
and other criteria set out in the Schedule III of the Act.

c) Historical Cost Convention

The financial statements are prepared on accrual basis of accounting under historical cost convention in accordance with Generally
Accepted Accounting Principles in India and the relevant provisions of the Companies Act, 2013 including Indian Accounting Standards
notified there under, except for the following:

- Certain financial assets and liabilities that are measured at fair valu(

2.2 USE OF ESTIMATES

In preparation of the financial statements, the Company makes judgements, estimates and assumptions about the carrying values of
assets and liabilities that are not readily apparent from other sources. The estimates and the associated assumptions are based on
historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to the accounting estimates are recognised in
the period in which the estimates are revised and in any future periods affected.

Significant judgements and estimates relating to the carrying values of assets and liabilities include useful lives of property, plant and
equipment and intangible assets, impairment of property, plant and equipment, intangible assets and investments, impairment of trade
receivables, provision for employee benefits and other provisions, recoverability of deferred tax assets, commitments and contingencies.

2.3 REVENUE RECOGNITION

a) Sale of Goods and Rendering of services

Revenue from sale of products or services is recognised upon transfer of control of promised products or services to customers in an
amount that reflects the consideration expected to be received in exchange for those products or services.

b) Dividend

Dividend income from investments is recognised when the shareholder''s rights to receive payment have been establishec

c) Interest Income

Interest income is accrued on a time proportion basis, by reference to the principal outstanding and the effective interest rate applicable.

2.4 FOREIGN CURRENCY TRANSACTIONS

a) Functional and Presentation Currency

The financial statements are presented in Indian Rupee (INR), which is company''s functional and presentation currency

b) Intial Recognisation

Transactions in foreign currencies are recorded at the exchange rate prevailing on the dates of the transactions. Exchange difference
arrising on foreign exchange transaction settled during the year are recognized in the Statement of profit and loss of the yeai

c) Measurment of foreign currency items at the Balance sheet date

Monetary assets and liabilities denominated in foreign currencies are re-translated into functional currency at the exchange rate
prevailing at the end of the reporting period. Non monetary assets and liabilities that are measured based on a historical cost in a
foreign currency are not re-translated. Exchange differences arrising out of these transaction are chanrged to the profit and loss

2.5 PROPERTY, PLANT AND EQUIPMENTS AND INTANGIBLE ASSETS

a) Property, plant and equipment (PPE)

i) Recognition and measurement

Freehold land is carried at cost. All other items of property, plant and equipment are measured at cost less acccumlated depreciation
and impairment losses, if any. Cost includes expenses directly attributable to the acquisition of the assets. The cost of an item of a PPE
comprises its purchase price including import duty, and other non-refundable taxes or levies and any directly attributable cost of
bringing the assets to its working condition of its intended use. Any trade discounts and rebates are deducted in arriving at the purchase
price.

ii) Subsequent expenditure

Expenditure incurred on substantial expansion upto the date of commencement of commercial production are capitalised. Subsequent
costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate only when it is probable that future
economic benefi ts associated with the item will fl ow to the Company and the cost of the item can be measured reliably. The carrying
amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are
charged to profit or loss during the reporting period in which they are incurred.

b) Capital Work-In-Progress And Pre-Operative Expenses During Construction Period

Capital work-in progress includes expenditure directly related to construction and incidental thereto. The same is transferred or
allocated to respective Property, Plant and Equipment on their completion / commencement of commercial production

c) Intangible assets

Intangible asstes are held on the balance sheet at cost less accumlated amortisation and imparment loss if any

2.6 IMPAIRMENT OF NON- FINANCIAL ASSETS

The Company''s non-fi nancial assets other than inventories and deferred tax assets, are reviewed at each reporting date to determine
whether there is an indication of impairment. If any such indication exists, then the asset''s recoverable amount is estimated.

For impairment testing, assets that do not generate independent cash infl ows are grouped together into cash-generating units (CGUs).
Each CGU represents the smallest group of assets that generates cash inflows that are largely independent of the cash inflows of other
assets or CGUs.

The recoverable amount of a CGU is the higher of its value in use and its fair value less costs to sell. Value in use is based on the
estimated future cash flows, discounted to their present value using a discount rate that reflects current market assessments of time
value of money and the risks specific to the CGU.

An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment
losses are recognised in the statement of profit and loss. Impairment losses recognised in respect of a CGU is allocated first to reduce
the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amount of the other assets of the CGU on a
pro rata basis.

An impairment loss in respect of assets for which impairment loss has been recognized in prior periods, the Company reviews at
reporting date whether there is any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has
been a change in the estimates used to determine the recoverable amount. Such a reversal is made only to the extent that the asset''s
carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no
impairment loss had been recognized.

The assets; residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

Depreciation and amortization on property, plant and equipment added/disposed off during the year has been provided on
pro-rata basis with reference to the date of addition/disposal.

Depreciation and amortization methods, useful lives and residual values are reviewed at the end of each reporting period
and adjusted if appropriate

2.8 FINANCIAL INSTRUMENTS

I. Financial Assets

a) Classification of financial assets

The Company classifies financial assets as subsequently measures at amortised cost, fair value through other comprehensive income or
fair value through profit & loss on the basis of its business model for managing the financial assets and the contractual cash flow
characteristics of the financial assets.

i) Debt instrument at amortised cost:

A ''debt Instrument'' is measured at the amortised cost if both the following conditions are met:

- The asset is held within a business model whose objectives is to hold assets for collecting contractual cash flow and

- Contractual terms of the asset give rise on specified dates to cash flow that are solely payments of principal and interest (SPPI) on the
principal amount outstanding.

After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR)
method. Amortised cost is calculated by taking into account any discount or premium and fees or cost that are an integral part of the
EIR. The EIR. Amortisation is included in finance income in the statement of profit and loss. The losses arising from impairment are
recognised in the statement of profit and loss. The category generally applies to trade and other receivable

ii) Debt instrument at fair value through other comprehensive income (FVOCI):

Assets that are held for collection of contractual cash flow and selling the financial assets, where the assets'' cash flow represents solely
payments of principal and interest are measuring at FVOCI, movements in the carrying amount are taken through OCI, except for the
recognition of impairment gains or losses, interest revenue orforeign exchange gains and losses which are recognised in profit and loss.
When the financial assets is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or
loss and recognised in other gains/ (losses). Interest income from these financial assets is included in other income suing the EIR
method. The company does not have any instruments classified as fair value through other comprehensive income (FVOCI).

iii) Debt instrument measured at fair through profit and loss (FVTPL).

Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt
instrument that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognised in
profit or loss and presented net in the statement of profit and loss within other gains/ (losses) in the period in which it arises. Interest
income from these financial assets is included in other income.

iv) Equity investments:

Investment in associates are accounted using equity method

All other equity investments which are in scope of Ind-AS 109 are measured at fair value. Equity instrument which are held for trading
are classified as at FVTPL. For all other equity investments, the Company decide to classify the same either as at fair value through other
comprehensive income (FVOCI) or FVTPL. The company makes such election on an instrument-by- instrument basis. The classification is
made on initial recognition and is irrevocable.

For equity investments classified as FVOCI, all fair value changes on the instruments, excluding dividend, are recognized in other
comprehensive income (OCI). There is no recycling of the amounts from OCI to statement of profit and loss, even on sale of such
investment

Equity investments included within the FVTPL category are measured at fair value with all changes recognized in the Statement of profit
and loss.

Costs of certain unquoted equity instruments has been considered as an appropriate estimate of fair value because of a wide range of
possible fair value measurements and cost represents the best estimate of fair value within that range.

b) Initial recognition and measurement

All financial assets are recognised initially at fair value and for those instruments that are not subsequently measured at FVTPL,
plus/minus transaction cost that are attributable to the acquisition of the financial assets.

Trade receivable are carried at original invoice price as the sales arrangements do not contain any significant financial component.
Purchase or sales of financial assets that required delivery of assets within a time frame established by regulation or convention in the
market place (regular way trades) are recognised on the trade date, i.e., the date that the company commits to purchase or sell the
assets.

c) Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a company of similar financial assets) primarily derecognised
(i.e. removed from the company''s balance sheet) when :

- The rights to receive cash flows from the asset have expired, or

- The Company has neither transferred nor retained substantially all the risks and rewards all the assets, but has transferred control of
the assets.

When the company has transferred its rights to receive cash flow from an asset or has entered into a pass-through arrangement, it
evaluates whether it has transferred substantially all the risks and rewards of ownership. In such cases, the financial asset is
derecognised. When it has neither transferred nor retained substantially all of the risks and rewards of the assets, nor transferred
control of the assets, the Company continues to recognise the transferred asset to the extent of the company''s continuing involvement.
In the case, the company recognises and associated liability. The transferred asset and the associated liability are measured on a basis
that reflect the rights and obligations that the company has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying
amount of the asset and maximum amount of consideration that the company could be required to repay.

d) Impairment of financial assets

In accordance with Ind-AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment
loss on following financial assets and credit risk exposure:

- Financial assets that are debt instruments, and are measured at amortised cost e.g., loan, debt security, deposits, and bank balance.

- Trade Receivables

The company follows ''simplified approach'' for recognition of impairment loss allowance on trade receivables which do not contain a
significant financing component.

The application simplified approach does not require the company to track change in risk. Rather, it recognises impairment loss
allowance based on lifetime ECLs at each reporting date, right from its initial recognition. The company uses a provision matrix to
determine impairment loss allowance on the portfolio of trade receivable. The provision matrix based on its historically observed
default rates over the expected life of the trade receivable and is adjusted for forward looking estimates. At every reporting date,
historically observed default rate updated and change in the forward looking estimates are analysed.

II. Financial Liabilities and equity instruments

Debt and equity instruments issued by an entity are classified as either financial liability or as equity in accordance with substance of the
contractual arrangements and the definition of a financial liability and an equity instrument.

a) Equity instruments:

An equity instruments is any contact the evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity
instruments issued by an entity are recognised at the proceeds received, net of direct issue costs.

An equity instruments is any contact the evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity
instruments issued by an entity are recognised at the proceeds received, net of direct issue costs.

b) Financial liabilities Classification

Financial liabilities are classified as either''s at FVTPL'' or'' other financial liabilities consists of derivative financial instruments, wherein the
gain/losses arising from remeasurement of these Instruments of recognized in the statements of profit and loss. Other financial liability
(including borrowings and trade and other payables) are subsequently measured at amortised cost using the effective interest method.

c) Initial recognition and measurement:

All financial liability are recognised initially at fair value and for those instruments that are not

Subsequently measured at FVTPL, plus/minus transaction cost that are attributable to issue of these instruments.

d) Derecognition

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires .When an existing
financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of
the new liability. The difference in the respective carrying amounts is recognised in the statement of Profit and Loss.

III. Fair Value

The Company determines the fair value of its financial instruments on the basis of the following hierarch’

a) Level 1 : The fair value of financial instruments quoted in active markets is based on their quoted closing price at the balance sheet date.
Examples include exchange traded commodity derivatives and other financial instruments in equity and debt securities which are listed
in a recognised stock exchange

^b) Level 2 : The fair value of financial instruments that are not traded in active markets is determined by using valuation techniques using
observable market data. Such valuations techniques include discounted cash flows, standard valuation models based on market
parameters for interest rates, yield curves or foreign exchange rates, dealer quotes for similar instruments and use of comparable arm''s
length transactions. For example, the fair value of forward exchange contracts, currency swaps and interest rate swaps is determined by
discounting estimated future cash flows using a risk-free interest rate

b) Level 3 : The fair value of financial instruments that are measured on the basis of entity specific valuations using inputs that are not
based on observable market data (unobservable inputs)

IV. Accounting for day 1 differences

If the fair value of the financial asset or financial liability at initial recognition differs from the transaction price, this if it is not
consideration for goods or services or a deemed capital contribution or deemed distribution, is accounted as follows :

i) If the fair value is evidence by a quoted price in an active market for an identical asset or liability (ie Level 1 input) or based on a
valuation technique that uses data from observable market, the entire day 1 gain/loss is recorded immediately in the statement of
profit and loss; or

ii) in all other cases, the difference between the fair value at initial recognition and transaction price is deferred. After initial recognition,
the deferred difference is recorded as gain or loss in the statement profit and loss only to the extent that is arises from a change in a
factor (including time) that market praticipants would take into account when pricing the asset or liability.

In case difference represents :

i) deemed capital contribution - it is recorded as investment in subsidiary

ii) deemed distribution - It is recorded in equity

iii) deemed consideration for goods and services - it is recorded as an asset or liability. This amount is amortised / accredited to the
statement of profit and loss as per the substance of the arrangement (generally straight line basis over the duration of the arrangement)

2.9 INVENTORIES

Inventories are stated at the lower of cost and net realizable value
Cost of Raw Material is determined on a First In First Out (FIFO) basis
Packing materials are valued at cost.

Finished goods are valued at cost or net realizable value whichever is lower. Cost comprises direct materials and where applicable, direct
labour costs, those overheads but excluding borrowing cost that have been incurred in bringing the inventories to their present location
and condition. Cost is arrived on weighted average cost basis.

Work in Progress is valued at cost or net realizable value whichever is less. Cost comprises direct materials and appropriate portion of
direct labour costs, manufacturing overheads but excluding borrowing cost that have been incurred in bringing the inventories to their
present location and condition.

2.10 BORROWING COSTS

Borrowing Costs that are interest and other costs that the company incurs in connection with the borrowings of funds and is measured
with reference to the effective interest rate applicable to the respective borrowing. Borrowing costs include interest cost measured at
EIR and exchange difference arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest
cost.

Borrowing Costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such
assets, wherever applicable, till the assets are ready for their intended use. Such capitalisation is done only when it is probable that the
asset will result in future economic benefits and the costs can be measured reliably. Capitalisation of borrowing cost is suspended and

Capitalisation of borrowing costs commences when all the following conditions are satisfied

i. Expenditure for the acquisition, construction or production of a qualifying asset is being incurred

ii. Borrowing costs are being incurred; anc

iii. Activities that are necessary to prepare the asset for its intended use are in progress

A qualifying asset is one which necessarily takes substantial period to get ready for intended use. All other borrowing costs are charged
to revenue account.

2.11 ACCOUNTING FOR TAXES ON INCOME
a) Income Taxes

The income tax expense or credit for the period is the tax payable on the current period''s taxable income based on the applicable
income tax rate for each jurisdiction adjusted by changes in Deferred Tax Assets and Liabilities attributable to temporary differences and
to unused tax losses.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting
period i.e. as per the provisions of the Income Tax Act, 1961, as amended from time to time. Management periodically evaluates
positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes
provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities,
based on the rates and tax laws enacted or substantively enacted, at the reporting date in the country where the Company operates and
generates taxable income. Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.

Current tax assets and liabilities are offset only if, the Company :

i) has legally enofrceable right to set off the reocgnised amounts; and

ii) Intends either to settle on a net basis, or to realise the asset and settle the liability simultaenously.

b) Deffered Taxes

Deferred tax is recognised in respect of temporary differences between the carrying amounts of the assets and liabilities for financial
reporting purposes and the corresponding amounts used for taxation purpose

Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences only if it is probable
that future taxable profits will be available against which they can be used. Deferred tax assets are reviewed at each reporting date and
are reduced to the extent that it is no longer probable that the related tax benefits will be realised; such reductions are reversed when
the probability of future taxable profits improves

Unrecognised deferred tax assets are reassessed at each reporting date and recgonised to the extent that it has become probable that
future taxable profits will be available against which they can be used.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates
enacted or substantially enacted at the reporting date.

Deferred Tax Assets and Liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when
the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the Company has a
legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Current and Deferred Tax is recognised in the Statement of Profit and Loss, except to the extent that it relates to items recognised in
other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in
equity, respectively.

Any tax credit including MAT credit available is recognised as Deferred Tax to the extent that it is probable that future taxable profit will
be available against which the unused tax credits can be utilised. The said asset is created by way of credit to the Statement of Profit and
Loss and shown under the head deferred tax asset

The carrying amount of Deferred Tax Assets is reviewed at each reporting date and reduced to the extent that it is no longer probable
that sufficient taxable profit will be available to allow all or part of the Deferred Tax Asset to be utilised. Unrecognised Deferred Tax
Assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits
will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are offset only if, the Company :

i) has legally enofrceable right to set off the reocgnised amounts; and

ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on the same
taxable entity.

---

Mar 31, 2014

I) BASIS OF PREPARATION OF FINANCIAL STATEMENTS:

The financial statements are prepared in accordance with the generally accepted accounting principles in India (Indian GAAP) under the historical cost convention on an accrual basis and are in compliance with all material aspect the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act") read with the General Circular No. 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013. The accounting policies have been consistently applied by the company and are consistent with those used in the previous year

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 the Revised Schedule VI to the Companies Act, 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as up to twelve months for the purpose of current and non-current classification of assets and liabilities.

ii) USE OF ESTIMATES:

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

iii) TANGIBLE FIXED ASSETS AND DEPRECIATION:

TANGIBLE FIXED ASSETS:

Tangible fixed assets are stated at cost, less accumulated depreciation and impairment loss if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.

CAPITAL WORK IN PROGRESS:

Expenses incurred towards acquisition of fixed assets which have not been installed or not put to use before the year end are disclosed under capital work in progress and no depreciation has been provided on that.

DEPRECIATION:

Depreciation on fixed assets is charged on straight-line method basis in the manner and as per the rates and method provided in schedule XIV of the Companies Act, 1956.

Depreciation on Assets added / disposed off during the year have been provided on pro-rata basis with reference to the day of additions / deletions from the respective day of purchase/sale.

iv) INTANGIBLE FIXED ASSETS AND AMORTISATION:

* Intangible assets are recognized where it is probable that the future economic benefit attributable to the assets will flow to the Company and its cost can be reliably measured.

* Intangible Assets are stated at acquisition cost, net of accumulated amortisation and accumulated impairment losses, if any. Intangible assets are amortised on a straight-line basis over their estimated useful lives.

* Expenditure incurred on acquisition/development of intangible assets which are not put/ready to use at the reporting date is disclosed under intangible assets under development.

However there are no Intangible Assets for the year under consideration.

v) IMPAIRMENT OF ASSETS:

The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An asset is treated as impaired when the carrying value of the asset exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and loss in the year in which as asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

However, there is no such Impairment on Asset, for the year under consideration.

vi) INVENTORY:

The Inventory is valued as under and as certified by the Management

* Raw Material and Consumables are valued at cost.

* Finished Goods are valued at Cost or Market Value whichever is lower. Cost includes the cost of conversion and other costs incurred to bring the inventories to their present location and condition.

* Obsolete stock if any is valued at net realisable value. However there is no obsolete stock in the year under consideration.

* Work in progress is valued at cost which includes the cost of conversion and other costs incurred to bring the inventories to their present location and condition.

vii INVESTMENTS:

Investments, which 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.

Investments are recorded at cost on the date of purchase, which includes acquisition charges such as brokerage, stamp duty, taxes, etc. Current Investments are stated at lower of cost and quoted/fair value. Provision for diminution in the value of Long Term Investments is made, only if, in the opinion of the management, such a decline is regarded as being other than temporary.

However there are no investments of the company in the year under consideration.

viii) GOVERNMENT GRANTS

Government Grants are recognized when there is reasonable assurance that the same will be received and all attaching conditions will be complied with. Revenue grants are recognized in the Statement of Profit & Loss account. Capital grants relating to specific Tangible/Intangible assets are reduced from the gross value of the respective Tangible/Intangible assets. Other capital grants in nature of promoter''s contribution are credited to capital reserve.

However no government grants are received by the company in the year under consideration.

ix) REVENUE RECOGNITION:

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and can be reliably measured.

* Sale of Goods

Domestic Sales is recognized on dispatch to customers and is net of returns and rate difference if any. Sales turnover includes basic sales value and excise duty, but excludes other recoveries such as insurance, sales tax etc. However there are no sales during the year under consideration.

* Other Income

Interest is recognized on Time Proportion Basis with reference to principal outstanding and rate of Interest applicable.

x) EMPLOYEE BENEFITS:

No provision is made for retirement benefits, the company will account for the same as and when paid.

xi) FOREIGN CURRENCY TRANSACTIONS:

Transactions in foreign currencies are recorded at actual rates rates. The exchange difference resulting from settled transactions is recognized in the statement of profit and loss.

Year end balances of monetary items are restated at the year end exchange rates and the resultant net gain or loss is recognized in the statement of profit and loss.

Premium or discount on forward contracts where there are underlying assets/liabilities are amortised over the life of the contract. Such foreign exchange forward contracts are revalued at the Balance Sheet date and the exchange difference between the spot rate at the date of contract and spot rate on the Balance Sheet date is recognized as gain/loss in the Statement of Profit and loss.

However there are no foreign currency transactions during the year under consideration.

xii) BORROWING COST:

Borrowing Costs attributable to acquisition and construction of qualifying assets are capitalized as a part of the cost of such asset up to the date when such assets are ready for its intended use. Other borrowing costs are charged to the Statement of Profit and Loss Account in the period in which they are incurred.

xiii) LEASES:

* As a Lessee

Leases, where significant portion of risk and reward of ownership are retained by the Lessor, are classified as Operating Leases and lease rentals thereon are charged to the Statement of Profit and Loss on a straight-line basis over the lease term.

However there are no such leased assets in the year under consideration.

* As a Lessor

The Company has leased certain tangible assets, and such leases, where the Company has substantially retained all the risks and rewards of ownership, are classified as operating leases.

Lease income is recognised in the Statement of Profit and Loss on a straight-line basis over lease term.

However there are no such leased assets in the year under consideration.

xiv) TAXES ON INCOME:

Tax expense comprises of current and deferred tax.

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

Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle the asset and the liability on a net basis.

The deferred tax for timing differences between the book and tax profits 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.

In case of unabsorbed losses and unabsorbed depreciation, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profit.

However, the Company is of the opinion that there exists no reasonable or virtual certainty that these would be realized in future, and hence, no such Deferred Tax has been recognized for the year under consideration.

Minimum Alternative Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in Guidance Note issued by the ICAI, the said asset is created by way of a credit to the Statement of Profit and Loss and shown as MAT Credit Entitlement. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal Income Tax during the specified period.

The Company has the policy of reviewing and passing proper adjustment entries for Income Tax paid, Provision for Income Tax made and excess/short tax provision for the year after receiving orders from the Appellate authorities. The Company also makes a fair estimate of the Income Tax liability for the said year and gives effects to it in the Books of Accounts.

xv) CASH AND CASH EQUIVALENT :

Cash and Cash Equivalents for the purpose of cash flow statement comprise cash on hand and cash at bank including fixed deposit with original maturity period of less than three months and short term highly liquid investments with an original maturity of three months or less.

xvi) CASH FLOW STATEMENT:

Cash flows are reported using the Indirect Method, whereby profit/ (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

xvii) RESEARCH & DEVELOPMENT:

Revenue expenditure on Research and Development is charged to the Statement of Profit and Loss in the year in which it is incurred. Capital Expenditure on Research and Development is shown as an addition to Fixed Assets or Work-in-Progress, as the case may be.

However no such expenditure is incurred in the year under consideration.

xviii) EARNINGS PER SHARE:

Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

xix) PROVISION & CONTINGENCIES:

The company estimates the probability of any loss that might be incurred on outcome of contingencies on the basis of information available.

A provision is recognized when the company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are determined based on management''s estimate required to settle the obligation at the balance sheet date, supplemented by experience of similar transactions. These are reviewed at each balance sheet date and adjusted to reflect the management''s current estimates.

In cases where the available information indicates that the loss on the contingency is reasonably possible but the amount of loss cannot be reasonably estimated, a disclosure is made in the financial statements.

In case of remote possibility neither provision nor disclosure is made in the financials.

A Contingent Asset is neither recognised nor disclosed in the Financial Statements.

---

Mar 31, 2013

I) BASIS OF PREPARATION OF FINANCIAL STATEMENTS:

The financial statements are prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual concept and are in line with the Accounting Standards, relevant laws as well as the guide lines prescribed by the Institute of Chartered Accountants of India.

These financial statements have been prepared to comply in all material aspects with the accounting standards notified under Section 211(3C) [Companies (Accounting Standards) Rules, 2006, as amended and the other relevant provisions of the Companies Act, 1956.

ii) USE OF ESTIMATES:

The preparation and presentation of financial statements requires estimates and assumptions and/or revised estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosures of Contingent Liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reported period.

The estimates and assumptions used in the accompanying financial statements are based upon Management''s evaluation of the relevant facts and circumstances as on the date of financial '' statements. Differences between the actual results and estimates are recognised in the period in which the results are known / materialise.

Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities.

iii) TANGIBLE FIXED ASSETS AND DEPRECIATION:

- TANGIBLE FIXED ASSETS:

Fixed Assets have been stated at cost. Cost comprises of the purchase price and all other attributable cost of bringing the assets to its working condition for intended use.

- CAPITAL WORK IN PROGRESS:

Expenses incurred towards acquisition of fixed assets which have not been installed or not put to use before the yearend are disclosed under capital work in progress and no depreciation has been provided on that.

- DEPRECIATION:

Depreciation on fixed assets is charged on straight-line method basis in the manner and as per - the rates and method provided in schedule XIV of the Companies Act, 1956.

Depreciation on Assets added / disposed off during the year have been provided on pro-rata basis with reference to the month of additions / deletions from the respective month of purchase/sale.

iv) INTANGIBLE FIXED ASSETS AND AMORTISATION:

- Intangible assets are recognized where it is probable that the future economic benefit attributable to the assets will flow to the Company and its cost can be reliably measured.

- Expenditure incurred on acquisition/development of intangible assets which are not put/ready to use at the reporting date is disclosed under intangible assets under development.

- Intangible Assets are stated at acquisition cost, net of accumulated amortisation and accumulated impairment losses, if any. Intangible assets are amortised on a straight- line basis over their estimated useful lives. However there are no Intangible Assets for the year under consideration.

v) IMPAIRMENT OF ASSETS

An asset is treated as impaired when the carrying value of the asset exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and loss in the year in which as asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount. However for the year under consideration there is no such Impairment on Asset.

vi) INVENTORY

The Inventory is valued as under and as certified by the Management

- Raw Material and Consumables are valued at cost.

- Finished Goods are valued at Cost or Market Value whichever is lower. Cost includes the cost of conversion and other costs incurred to bring the inventories to their present location and condition.

- Obsolete stock if any is valued at net realisable value. However there is no obsolete stock in the year under consideration.

- Work in progress is valued at cost which includes the cost of conversion and other costs incurred to bring the inventories to their present location and condition.

vii) INVESTMENTS:

Investments, which 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. AH other investments are classified as long-term investments.

The Current investments are valued at cost. Long Term investments are stated at cost. Provision for diminution in the value of Long Term Investments is made, only if, in the opinion of the management such a decline is regarded as being other than temporary.

However there are no investments in the year under consideration.

viii) REVENUE RECOGNITION:

- SALE OF GOODS

Domestic Sales is recognized on dispatch to customers and is net of returns and rate difference if any. Sales turnover includes basic sales value and excise duty, but excludes other recoveries such as insurance, sales tax etc.

However there are no sales during the year under consideration.

- OTHER INCOME

Interest is recognized on Time Proportion Basis with reference to principal outstanding and rate of Interest applicable.

ix) EMPLOYEE BENEFITS:

No provision is made for retirement benefits, the company will account for the same as and when paid.

x) Foreign Currency Transactions:

Transactions in foreign currencies are recorded at actual rates rates. The exchange difference resulting from settled transactions is recognized in the statement of profit and loss.

Year end balances of monetary items are restated at the year end exchange rates and the resultant net gain or loss is recognized in the statement of profit and loss.

Premium or discount on forward contracts where there are underlying assets/liabilities are amortized over the life of the contract. Such foreign exchange forward contracts are revalued at the Balance Sheet date and the exchange difference between the spot rate at the date of contract and spot rate on the Balance Sheet date is recognized as gain/loss in the Statement of Profit and loss.

However there are no foreign currency transactions during the year under consideration.

xi) Borrowing Costs:

Interest and other related cost on acquiring qualifying assets are capitalised as per accounting standard AS-16. All other borrowing costs are recognized as expense in the period in which they are incurred. However no such expense is incurred in the year under consideration.

xii) LEASES:

(a) As a Lessee:

Leases, where significant portion of risk and reward of ownership are retained by the Lessor, are classified as Operating Leases and lease rentals thereon are charged to the Statement of Profit and Loss on a straight-line basis over the lease term. However there are no such leased asset in the year under consideration.

(b) As a Lessor:

The Company has leased certain tangible assets, and such leases, where the Company has substantially retained all the risks and rewards of ownership, are classified as operating leases.

Lease income is recognised in the Statement of Profit and Loss on a straight-line basis over lease term. However there are no such leased assets in the year under consideration.

xiii) Taxes on Income:

Tax expense comprises of current and deferred tax.

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

The deferred tax for timing differences between the book and tax profits 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 realised in future.

Minimum Alternative Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognised as an asset in . accordance with the recommendations contained in Guidance Note issued by the ICAI, the said asset is created by way of a credit to the Statement of Profit and Loss and shown as MAT Credit Entitlement. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal Income Tax during the specified period.

The Company has the policy of reviewing and passing proper adjustment entries for Income Tax oaid, Provision for Income Tax made and excess/short tax provision for the year after receiving orders from the Appellate authorities. The Company also makes a fair estimate of the Income Tax liability for the said year and gives effects to it in the Books of Accounts.

xiv) CASH AND CASH EQUIVALENT

Cash and Cash Equivalents for the purpose of cash flow statement comprise cash on hand and cash at bank including fixed deposit with original maturity period of less than three months and short term highly liquid investments with an original maturity of three months or less.

xv) CASH FLOW STATEMENT

Cash flows are reported using the Indirect Method, whereby profit/ (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

xvi) RESEARCH & DEVELOPMENT

Revenue expenditure on Research and Development is charged to the Statement of Profit and Loss in the year in which it is incurred. Capital Expenditure on Research and Development is shown as an addition to Fixed Assets or Work-in-Progress, as the case may be. However no such expenditure is incurred in the year under consideration.

xvii) EARNINGS PER SHARE

Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

xviii) Provisions and Contingencies:

The company estimates the probability of any loss that might be incurred on outcome of contingencies on the basis of information available up to the date on which the financial statements are prepared.

A provision is recognized when the company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are determined based on management''s estimate required to settle the obligation at the balance sheet date, supplemented by experience of similar transactions. These are reviewed at each balance sheet date and adjusted to reflect the management''s current estimates.

In cases where the available information indicates that the loss on the contingency is reasonably possible but the amount of loss cannot be reasonable estimated, a disclosure is made in the financial statements.

---

Mar 31, 2010

1. Accounting Convention:

The financial statement are prepared under the historical cost convention in accordance with the accounting principles accepted in India and are in line with the relevant laws as well as the guidelines prescribed by the Department of Company Affairs and the Institute of Chartered Accountants of India.

2. Method of Accounting:

Method of accounting employed by the Company is generally mercantile both as to income and expenditure except in the case of refunds from government bodies viz. sales tax, excise, income tax etc, subsidy, insurance claims and dividend receipts which are being accounted on cash basis.

3. a. Fixed Assets:

Fixed Assets have been stated at cost. Cost comprises of the purchase price and all other attributable cost of bringing the assets to its working condition for intended use.

b. Capital work in Progress:

Expenses incurred towards acquisition of fixed assets which have not been installed or put to use before the year end are disclosed under capital work in progress and no depreciation has been provided on that.

c. Impairment of Assets:

In compliance with Accounting Standards (AS) 28 "Impairment of Assets" issued by the Institute of Chartered Accountants of India (ICAI), the carrying amount of Cash Generating Units/Assets are reviewed at Balance Sheet date to determine whether there is any indication of impairment if any such indication exists, the recoverable amount is estimated at the higher of net selling price and value in use. Impairment loss is recognized wherever carrying amount exceeds the recoverable amount.

d. Depreciation:

Depreciation on fixed assets is charged on straight line method basis in the manner and as per the rates and method provided in schedule XIV of The Companies Act, 1956.

Depreciation on Assets added / disposed off during the year has been provided on prorata basis with reference to the month of additions / deletions.

The Company has changed the method of depreciation from written down value basis to straight line method from retrospective effect and excess depreciation difference of Rs. 1,28,597 is credited to Profit & Loss A/c.

The Depreciation on Factory Building is @ 3.34% on straight line basis considering the terms and conditions stated in the lease of Land agreement and its residual scrap value thereafter.

4. Inventory:

Raw Materials, Stores and Spare parts are valued at cost (excluding excise and sales tax), finished goods are valued at realizable value and work-in-process are valued at cost of production. The manufacturing process being continuous, work-in- progress is separately accounted.

5. Excise Duty:

The liability for cess duty on finished goods is accounted as and when they are cleared from the factory premises.

6. Revenue Recognition:

Gross Receipts include commission and other income. Sales of goods are recognized on dispatch to customer and are net of returns. Sales turnover includes basic sales value, and includes other recoveries such as excise, sales tax etc.

7. Retirement Benefits:

Retirement benefits in the form of Provident Fund, Family Pension Fund and Super Annuation Schemes, which are defined

Contribution Schemes are charged to the Profit & Loss Account of the year when the contribution to the respective funds accrue. There are no other obligations other than the contribution payable to the respective trusts.

8. Foreign Currency Transactions:

The transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Outstanding bills at the end of year are however booked at the exchange rate prevalent as on 31 st March.

9. Borrowing Costs:

Interest and other related cost on acquiring qualifying assets are capitalized as per accounting standard AS-16.

10. Taxes on Income:

Deferred Tax Provision

As per the accounting standard AS-22 issued by ICAI, the net deferred tax liability amounting to Rs. 16.61 lacs on account of timing differences as shown below for the year under consideration, is accounted for using the tax rate and laws that have been enacted or substantially enacted as on the Balance Sheet date, has been debited to the Profit and Loss account.