Accounting Policies of Eco Hotels and Resorts Ltd. Company

Mar 31, 2024

2. Significant Accounting Policies

i) Statement of Compliance

These financial statements comply in all material aspects with Indian Accounting Standards

(Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies

(Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.

ii) Basis of Preparation and Presentation

a) The accounts of the company are prepared under the historical convention using accrual method of accounting. The company has incurred huge losses. The net worth of the company is completely eroded. After change in management, change in main activity of business and change in promoters, the company is hopeful for the revival in its business activities in future and hence these financial statements have been prepared on going concern basis, despite accumulated losses.

b) A number of Company''s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. The Company has established policies and procedures with respect to the measurement of fair values. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. The best estimate of the fair value of a financial instrument on initial recognition is normally the transaction price - i.e. the fair value of the consideration given or received. If the Company determines that the fair value on initial recognition differs from the transaction price and the fair value is evidenced neither by a quoted price in an active market for an identical asset or liability nor based on a valuation technique that uses only data from observable markets, then the financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value on initial recognition and the transaction price. Subsequently that difference is recognised in Statement of Profit and Loss on an appropriate basis over the life of the instrument but no later than when the valuation is wholly supported by observable market data or the transaction is closed out. In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based

on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

• Level 3 inputs are unobservable inputs for the asset or liability.

Assets and Liabilities are classified as Current or Non-Current as per the provisions of Schedule III to the Companies Act, 2013 and the Company''s Normal Operating Cycle. Based on the nature of business, the Company has ascertained its operating cycle as 12 months for the classification of assets and liabilities.

c) Use of estimates and judgements:

The preparation of the financial statements in conformity with Ind AS requires the management to make estimates, judgements, and assumptions. These estimates, judgements and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. The application of accounting policies that require critical accounting estimates involving complex and subjective judgements and the use of assumptions in these financial statements have been disclosed in Notes. Accounting Estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.

d) Critical estimates and judgements:

- Useful lives of property, plant and equipment and intangible assets:

Property, plant and equipment and intangible assets represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset''s expected useful life and the expected residual value at the end of its life. Useful lives of intangible assets are determined on the basis of estimated benefits to be derived from use of such intangible assets. The Company reviews the useful lives of property, plant and equipment and intangible assets at the end of each reporting period. Their reassessments may result in change in the depreciation / amortisation expense in future periods.

- Fair value measurements and valuation processes:

Some of the Company''s assets and liabilities are measured at fair value at each balance sheet date or at the time they are assessed for impairment. In estimating the fair value of an asset or a liability, the Company uses market observable data to the extent it is available. Where Level 1 inputs are not available, the Company engages third party valuers, where required, to perform the valuation. Information about the valuation techniques and inputs used in determining the fair value of

various assets and liabilities require estimates to be made by the management and are disclosed in the notes to the financial statements.

- Actuarial Valuation

The determination of Company''s liability towards defined benefit obligation to employees is made through independent actuarial valuation including determination of amounts to be recognised in the Statement of Profit and Loss and in Other Comprehensive Income. Such valuation depends upon assumptions determined after taking into account discount rate, salary growth rate, expected rate of return, mortality and attrition rate. Information about such valuation is provided in notes to the financial statements.

iii) Property, Plant and Equipment

All Property Plant & Equipments are stated at cost of acquisition, less accumulated depreciation and accumulated impairment losses, if any. Direct costs are capitalised until the assets are ready for use and includes freight, duties, taxes and expenses incidental to acquisition and installation. Subsequent expenditures related to an item of Property Plant & Equipment are added to its carrying value only when it is probable that the future economic benefits from the asset will flow to the Company & cost can be reliably measured. Losses arising from the retirement of, and gains or losses arising from disposal of Property, Plant and Equipment are recognised in the Statement of Profit and Loss.

Depreciation is provided on a pro-rata basis on the straight-line method (''SLM'') over the estimated useful lives of the assets specified in Schedule II of the Companies Act, 2013.

iv) Impairment of Assets

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Statement of Profit and Loss. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

v) Retirement Benefits

Defined Contribution Plan:

Contribution payable to recognised provident fund, ESIC which are substantially defined contribution plan, is recognised as expense in the Statement of Profit and Loss, as they are incurred.

Defined Benefit Plan:

For defined plans in the form of gratuity, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected

immediately in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur.

All expenses represented by current service cost, past service cost, if any, and net interest on the defined benefit liability (asset) are recognised in the Statement of Profit and Loss. Remeasurements of the net defined benefit liability (asset) comprising actuarial gains and losses and the return on the plan assets (excluding amounts included in net interest on the net defined benefit liability/asset), are recognised in Other Comprehensive Income. Such remeasurements are not reclassified to the Statement of Profit and Loss in the subsequent periods. The retirement benefit obligation recognised in the Balance Sheet represents the actual deficit or surplus in the Company''s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.

vi) Inventories

Inventories are valued at the lower of cost and net realizable value. Cost includes purchase Stock of food and beverages and stores and operating supplies are carried at the lower of cost (computed on a Weighted Average basis) or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and selling expenses. Cost includes the fair value of consideration paid including duties and taxes (other than those refundable), inward freight, and other expenditure directly attributable to the purchase. Trade discounts and rebates are deducted in determining the cost of purchase. However, the Company does not have any inventory during the year.

vii) Foreign Currency Transactions

Initial Recognition: Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date

Conversion: At the year end, monetary items denominated in foreign currencies are converted into rupee equivalents at the year-end exchange rates.

Exchange Differences: All exchange differences arising on settlement and/or conversion on foreign currency transaction are included in the Profit & Loss Account.

viii) Taxation

Provision for Current Tax is made with reference to taxable income computed for the accounting period, for which the financial statements are prepared by the tax rates as applicable. However, the company has not provided for income tax as there is no income tax payable.

No Deferred Tax Assets are created in the books of the company as in the opinion of the management, they are not reasonably certain that there will be sufficient future income to recover such Deferred Tax Assets.

ix) Leases:

The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgement. The Company uses significant judgement in assessing the lease term (including anticipated renewals) and the

applicable discount rate. The Company determines the lease term as the non-cancellable period of a lease, together with both periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option; and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option. In assessing whether the Company is reasonably certain to exercise an option to extend a lease, or not to exercise an option to terminate a lease, it considers all relevant facts and circumstances that create an economic incentive for the Company to exercise the option to extend the lease, or not to exercise the option to terminate the lease. The Company revises the lease term if there is a change in the non-cancellable period of a lease. The discount rate is generally based on the incremental borrowing rate specific to the lease being evaluated or for a portfolio of leases with similar characteristics.

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Mar 31, 2023

2. Significant Accounting Policies

i) Statement of Compliance

These financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act except for Ind AS 19 - Retirement Benefits

ii) Basis of Preparation and Presentation

a) The accounts of the company are prepared under the historical convention using accrual method of accounting. The company has incurred huge losses. The net worth of the company is completely eroded. After change in management, change in main activity of business and change in promoters, the company is hopeful for the revival in its business activities in future and hence these financial statements have been prepared on going concern basis, despite accumulated losses.

b) A number of Company''s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. The Company has established policies and procedures with respect to the measurement of fair values. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. The best estimate of the fair value of a financial instrument on initial recognition is normally the transaction price - i.e. the fair value of the consideration given or received. If the Company determines that the fair value on initial recognition differs from the transaction price and the fair value is evidenced neither by a quoted price in an active market for an identical asset or liability nor based on a valuation technique that uses only data from observable markets, then the financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value on initial recognition and the transaction price. Subsequently that difference is recognised in Statement of Profit and Loss on an appropriate basis over the life of the instrument but no later than when the valuation is wholly supported by observable market data or the transaction is closed out. In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

• Level 3 inputs are unobservable inputs for the asset or liability.

Assets and Liabilities are classified as Current or Non-Current as per the provisions of Schedule III to the Companies Act, 2013 and the Company''s Normal Operating Cycle. Based on the nature of business, the Company has ascertained its operating cycle as 12 months for the classification of assets and liabilities.

c) Use of estimates and judgements:

The preparation of the financial statements in conformity with Ind AS requires the management to make estimates, judgements, and assumptions. These estimates, judgements and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. The application of accounting policies that require critical accounting estimates involving complex and subjective judgements and the use of assumptions in these financial statements have been disclosed in Notes. Accounting Estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.

d) Critical estimates and judgements:

- Useful lives of property, plant and equipment and intangible assets:

Property, plant and equipment and intangible assets represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset''s expected useful life and the expected residual value at the end of its life. Useful lives of intangible assets are determined on the basis of estimated benefits to be derived from use of such intangible assets. The Company reviews the useful lives of property, plant and equipment and intangible assets at the end of each reporting period. Their reassessments may result in change in the depreciation / amortisation expense in future periods.

- Fair value measurements and valuation processes:

Some of the Company''s assets and liabilities are measured at fair value at each balance sheet date or at the time they are assessed for impairment. In estimating the fair value of an asset or a liability, the Company uses market observable data to the extent it is available. Where Level 1 inputs are not available, the Company engages third party valuers, where required, to perform the valuation. Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities require estimates to be made by the management and are disclosed in the notes to the financial statements.

- Actuarial Valuation

The determination of Company''s liability towards defined benefit obligation to employees is made through independent actuarial valuation including determination of amounts to be recognised in the Statement of Profit and Loss and in Other Comprehensive Income. Such valuation depends upon assumptions determined after taking into account discount rate, salary growth rate, expected rate of return, mortality and attrition rate. Information about such valuation is provided in notes to the financial statements.

iii) Property, Plant and Equipment :

All Property Plant & Equipments are stated at cost of acquisition, less accumulated depreciation and accumulated impairment losses, if any. Direct costs are capitalised until the assets are ready for use and includes freight, duties, taxes and expenses incidental to acquisition and installation. Subsequent expenditures related to an item of Property Plant & Equipment are added to its carrying value only when it is probable that the future economic benefits from the asset will flow to the Company & cost can be reliably measured. Losses arising from the retirement of, and gains or losses arising from disposal of Property, Plant and Equipment are recognised in the Statement of Profit and Loss.

Depreciation is provided on a pro-rata basis on the straight-line method (''SLM'') over the estimated useful lives of the assets specified in Schedule II of the Companies Act, 2013.

iv) Impairment of Assets

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the

Statement of Profit and Loss. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

v) Retirement Benefits

- Defined Contribution Plan:

Contribution payable to recognised provident fund, ESIC which are substantially defined contribution plan, is recognised as expense in the Statement of Profit and Loss, as they are incurred.

- Defined Benefit Plan:

For defined plans in the form of gratuity, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur.

All expenses represented by current service cost, past service cost, if any, and net interest on the defined benefit liability (asset) are recognised in the Statement of Profit and Loss. Remeasurements of the net defined benefit liability (asset) comprising actuarial gains and losses and the return on the plan assets (excluding amounts included in net interest on the net defined benefit liability/asset), are recognised in Other Comprehensive Income. Such remeasurements are not reclassified to the Statement of Profit and Loss in the subsequent periods. The retirement benefit obligation recognised in the Balance Sheet represents the actual deficit or surplus in the Company''s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.

vi) Inventories

Inventories comprise of Raw Materials and Finished Goods (Manufactured and Traded). Inventories are valued at the lower of Cost and Net Realisable Value after providing for obsolescence and other losses, where considered necessary. Cost includes all charges in bringing the goods to their present location and condition, including GST and other levies, transit insurance. Finished Goods comprises of materials, direct labour, other direct costs and related production overheads. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

However, the Company does not have any inventory during the year.

vii) Foreign Currency Transactions

- Initial Recognition: Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date

- Conversion: At the year end, monetary items denominated in foreign currencies are converted into rupee equivalents at the year-end exchange rates.

- Exchange Differences: All exchange differences arising on settlement and/or conversion on foreign currency transaction are included in the Profit & Loss Account.

viii) Taxation

- Provision for Current Tax is made with reference to taxable income computed for the accounting period, for which the financial statements are prepared by the tax rates as applicable. However, the company has not provided for income tax as there is no income tax payable.

- No Deferred Tax Assets are created in the books of the company as in the opinion of the management, they are not reasonably certain that there will be sufficient future income to recover such Deferred Tax Assets.

ix) Leases:

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Assets held under finance leases are initially recognised as assets of the Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the consolidated balance sheet as a finance lease obligation. Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in profit or loss. Rentals payable under operating leases are charged to the Statement of Profit and Loss on a straight-line basis over the term of the relevant lease unless the payments to the lessor are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases.

With effect from April 1, 2019 Ind AS 116 requires lessees to determine the lease term as the noncancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Company makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably certain that any option to extend or terminate the contract will be exercised. In evaluating the lease term, the Company considers factors such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the importance of the underlying asset to the Company''s operations taking into account the location of the underlying asset and the availability of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances.

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Mar 31, 2014

A) SYSTEM OF ACCOUNTING:

The accounts of the company are prepared under the historical convention using accrual method of accounting. There has been no change in the method of accounting as compared to preceding previous year.

Since, it is not possible to ascertain with reasonable accuracy the quantum to be provided in respect of expenditure under any head of account when the amount in any voucher is less than RS. 300/- whether prepaid or outstanding the same is to be continued to be accounted on cash basis.

B) FIXED ASSETS & DEPRECIATION:

i) Fixed assets are stated at cost of acquisition. ii) Depreciation is provided.

a) On straight-line method at the rates prescribed in Schedule XIV vide GSR No.756 (E) dated 16.12.93 of the Companies Act, 1956.

b) In respect of additions to and deletions from the Fixed Assets on pro-data basis with reference to number of completed months.

C) INVENTORIES:

i) Closing Stock of Raw Materials is valued at cost.

ii) The closing stock of Finished Goods is valued at Estimated Cost i.e. selling price less 10%.

iii) The inventories have been physically verified, valued and certified by the management.

D) RETIREMENT BENEFITS :

i) Company''s contributions of provident fund paid / payable during the year are charged to the Profit and Loss Account.

ii) Compensation payable to employees retired is charged out in full in the year in which such expenditure is incurred.

iii) No provision has been made in the books of accounts of the Company on account of retirement benefits of the employees, in accordance with the AS-15 issued by the ICAI, as the same is made on cash basis and shall be provided in the books of the company as and when paid.

E) ACCOUNTING FOR FOREIGN CURRENCY:

i) Initial Recognition -

Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of transaction.

ii) Conversion -

At the year end, monetary items denominated in foreign currencies, other than those covered by forward contracts, are converted into rupee equivalents at the year end exchange rates.

All exchange differences arising on settlement and/or conversion on foreign currency transaction are included in the Profit and Loss Account. Exchange Differences in forward contract is recognized as required by AS-11.

F) REVENUE RECOGNITION:

Revenue from sale of goods is recognized when significant risks and rewards of ownership are transferred to the customers. Sales are net of trade discounts and sales tax.

G) TAXATION:

(i) Provision for current Tax is made with reference to taxable income computed for the accounting period, for which the financial statements are prepared by the tax rates as applicable.

(ii) No deferred Tax Assets are created in the books of the company as in the opinion of the management, they are not reasonably certain that there will be sufficient future income to recover such Deferred Tax Assets.

H) SEGMENT REPORTING:

As per the provisions of Accounting Standard 17 on "SEGMENT REPORTING" issued by the Institute of Chartered Accountants of India, the Standard is applicable to the company.

Further, a business segment or geographical segment is a reportable segment if (a) revenue from sales to external customers and from transactions with other segments exceed 10% of total revenues (external and internal) of all segments; or (b) segment result, whether profit or loss is 10% or more of (i) combined result of all segments in profit or (ii) combined result of all segments in loss whichever is greater in absolute amount; or (c) segment assets are 10% or more of all the assets of all the segments.

However, the company does not fall into any of the above stated criteria and hence the company does not qualify as reportable geographical segment and thus no segment reporting is provided.

I) TRADE PAYABLES

Unpaid amount due as on 31.03.2014, to Micro, Small and Medium enterprise suppliers on account of principal amount together with the interest thereon under the Micro, Small and Medium enterprise Development Act, 2006 could not be ascertained by the company in the absence of information relating to the status of the suppliers and has not disclosed in the Financial Statements.

J) EARNING PER SHARE:

Earning per share is calculated on Basis Earning per Share Method i.e. by dividing the net profit for the period attributed to equity shareholders by the weighted average number of equity share outstanding during the period.

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Mar 31, 2011

A) SYSTEM OF ACCOUNTING:

The accounts of the company are prepared under the historical convention using accrual method of accounting. There has been no change in the method of accounting as compared to preceding previous year.

However since it is not possible to ascertain with reasonable accuracy the quantum to be provided in respect of expenditure under any head of account when the amount in any voucher is less than RS. 300/- whether prepaid or outstanding the same is to be continued to be accounted on cash basis.

B) FIXED ASSETS & DEPRECIATION:

i) Fixed assets are stated at cost of acquisition. ii) Depreciation is provided.

a) On straight-line method at the rates prescribed in Schedule XIV vide GSR No.756 (E) dated 16.12.93 of the Companies Act, 1956.

b) In respect of additions to and deletions from the Fixed Assets on pro-data basis with reference to number of completed months.

C) INVENTORIES:

i) The closing stock of Finished Goods is valued at Cost.

ii) Packing Materials and Oil & Lubricants are consumed during the year against the job charges.

iii) The inventories have been physically verified, valued and certified by the management.

D) RETIREMENT BENEFITS :

i) Company's contributions of provident fund paid / payable during the year are charged to the Profit and Loss Account.

ii) Compensation payable to employees retired is charged out in full in the year in which such expenditure is incurred.

E) ACCOUNTING FOR FOREIGN CURRENCY:

i) Initial Recognition -

Transactions denominated in foreign currencies are recorded at the Exchange rates prevailing on the date of transaction.

ii) Conversion -

At the year end, monetary items denominated in foreign currencies, other than those covered by forward contracts, are converted into rupee equivalents at the year end exchange rates.

iii) Exchange Differences -

All exchange differences arising on settlement and/or conversion on foreign currency transaction are included in the Profit and Loss Account. Exchange Differences in forward contract is recognized as required by AS-11.

F) CONTINGENT LIABILITIES:

Contingent Liabilities are disclosed after a careful evaluation of the facts and legal accept of the matter involved.

i) Contingent liability in respect of penal dues/damages for delay in payments of statutory dues like PF, profession Tax, Excise Duty, etc and delayed payment charges on account of overdue payment to creditors, amount is not ascertainable.

ii) In respect of capital expenditure for construction of building premises and purchases of machineries.

iii) In respect of Appeal filed by Central Excise Department, Mumbai before the Supreme Court amounting to Rs. 17604797/-. The Central Excise department has filed further complaint in this regard before the court of Honorable Chief Judicial Magistrate, at Silvassa, case is being protested suitably.

iv) In respect of demand raised by Income Tax Officer for A.Y. 1997-98 Rs. 7223446/- the company has received order dated 30.01.2011 wherein the demand is reduced to Rs.2,26,940/- and the department has filed case before High Court against the order of ITAT.

v) In respect of demand raised by Income Tax officer for A.Y. 1998-99 Rs. 4530496/-. The company has preferred an appeal against the said order.

vi) a) Outstanding guarantees furnished by banks to Government authority of Rs. 10,00,000/-.

b) An appeal filed by the Company before the Commissioner of Central Excise (Appeal) the order on the same has been passed by in favour of the Company against demand of Rs.3,61,537/- (already paid) plus Rs.16,32,382/- (already paid) and imposed penalty of Rs.3,61,537/- and ; Rs. 1,00,000/- and interest thereon. However the Excise Department has filed appeal before the CEGAT (case No 103/adj/2001 ADC dated 31.10.2001). The case is being defended by the company.

c) The Appeal being case No OIO No. 71/JC/Vapi/Dem/2004 filed by the company before the Commissioner of Central Excise (Appeals), Vapi filed against the order of Jt. Commissioner Central Excise and the Commissioner (Appeals) has passed order reducing the penalty to Rs. 10,000/- and demand of Rs.93,163/- subject to verification of certain documents. The case is under settlement.

d) The Appeal being case No OIO No. 82/JC/Vapi/Dem/2004 filed by the Company before the Commissioner of Central Excise (Appeals), Vapi filed against the order of Jt. Commissioner Central Excise (Appeals) , Vapi and the Commissioner (Appeals) has passed the order reducing the demand to Rs.22,944 Rs.14,405 Rs.5,519/- and penalty Rs.42,868/- The case is under settlement.

e) Recrona Synthetics Limited has filed case against the Company before the High Court, Mumbai for a claim of Rs.4,49,38,266/- and interest thereon Rs.2,99,41,821/- and other claims of Rs.32,,87,546/-. However the same is being suitably defended by the company.

In all above cases the company has not accepted liability and also contested by the company. Directors have decided not make provision for the same. Cenvat benefits is accounted on accrual basis on purchase of material and appropriated against payment of Excise Duty on clearance of finished goods.

g) TAXES ON INCOME

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred Tax is recognized, on timing differences, being the difference between taxable incomes and accounting income that originate in one year and are capable of reversal in one or more subsequent year.

h) SEGMENT REPORTING

Segment has been identified in line with the AS - 17, taking into account the organization structure as well as the differing risks and returns. The business segment is disclosed as primary segment.

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Mar 31, 2008

A) SYSTEM OF ACCOUNTING:

The accounts of the company are prepared under the historical convention using accrual method of accounting. There has been no change in the method of accounting as compared to preceding previous year.

However since it is not possible to ascertain with reasonable accuracy the quantum to be provided in respect of expenditure under any head of account when the amount in any voucher is less than RS. 300/- whether prepaid or outstanding the same is to be continued to be accounted on cash basis.

B) FIXED ASSETS & DEPRECIATION:

i) Fixed assets are stated at cost of acquisition.

ii) Depreciation is provided.

a) On straight-line method at the rates prescribed in Schedule XIV vide GSR No.756 (E) dated 16.12.93 of the Companies Act, 1956.

b) In respect of additions to and deletions from the Fixed Assets on pro-data basis with reference to number of completed months.

C) INVENTORIES:

i) There are no closing stock of Raw Materials , Traded Goods and Spares.

However the closing stock of Raw Materials and Trading Goods were valued at Cost.

ii) Packing Materials and Oil & Lubricants are consumed during the year against the job charges.

iii) The inventories have been physically verified, valued and certified by the management.

D) RETIREMENT BENEFITS :

i) Company's contributions of provident fund paid / payable during the year are charged to the Profit and Loss Account.

ii) Compensation payable to employees retired is charged out in full in the year in which such expenditure is incurred.

E) SALES:

There are no Sales during the year.

6) CONTINGENT LIABILITIES:

Contingent Liabilities are disclosed after a careful evaluation of the facts and legal accept of the matter involved.

Contingent Liabilities not provided for :-

i) Contingent liability in respect of penal dues/damages for delay in payments of statutory dues like PF, profession Tax, Excise Duty, etc and delayed payment charges on account of overdue payment to creditors, amount is not ascertainable.

ii) In respect of capital expenditure for construction of building premises and purchases of machineries.

iii) In respect of Appeal filed by Central Excise Department, Mumbai before the Supreme Court amounting to Rs.17604797/-. The Central Excise department have filed further complaint in this regard before the court of Honorable Chief Judicial Magistrate, at Silvassa, case is being protested suitably.

iv) In respect of demand raised by Income Tax Officer for A.Y. 1997-98 Rs.7223446/- the company has received order dated 30.01.2008 wherein the demand is reduced to Rs.2,26,940/- and the department has filed case before High Court against the order of ITAT.

v) In respect of demand raised by Income Tax officer for A.Y. 1998-99 Rs.4530496/-. The company has preferred an appeal against the said order.

vi) Outstanding guarantees furnished by banks to Government authority of Rs.10,00,000/-.

vii) A ) M/s. Loknath Packaging Pvt. Ltd. has filed claim for amount of Rs.3,35,100/- with interest @ 29% before silvassa court. The case is being protested suitably.

b) M/s. Silvassa Cement Products Pvt. Ltd. has filed claim for amount of Rs. 98,170/- with interest @ 24% before silvassa court.

c) Mr. Gopal Ram Hanuman Prasad has filed claim for amount of Rs. 4,86,182/- with interest 24% before Silvassa court.

d) An appeal filed by the Company before the Commissioner of Central Excise (Appeal) the order on the same has been passed by in favor of the Company against demand of Rs.3,61,537/- (already paid) plus Rs. 16,32,382/- (already paid) and imposed penalty of Rs.3,61,537/- and Rs. 1,00,000/- and interest thereon. However the Excise Department has filed appeal before the CEGAT ( case No 103/adj/2001 ADC dated 31.10.2001). The case is being defended by the company.

e) The Appeal being case No OIO No. 71/JC/Vapi/Dem/2004 filed by the company before the Commissioner of Central Excise (Appeals), Vapi filed against the order of Jt.Commissioner Central Excise and the Commissioner (Appeals) has passed order reducing the penalty to Rs. 10,000/- and demand of Rs.93,163/- subject to verification of certain documents. The case is under settlement.

f) The Appeal being case No OIO No. 82/JC/Vapi/Dem/2004 filed by the Company before the Commissioner of Central Excise (Appeals), Vapi filed against the order of Jt. Commissioner Central Excise (Appeals) , Vapi and the Commissioner (Appeals) has passed the order reducing the demand to Rs.22,944 Rs.14,405 Rs.5,519/- and penalty Rs.42,868/- The case is under settlement.

g) The GIICL has filed a civil suit against the Company for recovery of Loan of Rs.1,47,39,160/- with interest granted to one of its group concerns viz. Dalmia Dye-Chem Industries Ltd. in whose favor the company has given corporate guarantee. The case is being suitably defended

h) M/s. Modipon Ltd has filed a case before the Silvassa Court against the company for recovery of Rs.5,53,825/- with interest @ 18% p.a. However the same is being suitably defended by the company.

i) Mr. Sureshchandra Ram Sakha has filed a case against the Company in the Labour Court at Silvassa for a claim of Rs.3,80,706/-. However the same is being suitably defended by the company.

j) Recron Synthetics Limited has filed case against the Company before the High Court, Mumbai for a claim of Rs.4,49,38,266/- and interest thereon Rs.2,99,41,821/- and other claims of Rs.32,,87,546/-. However the same is being suitably defended by the company.

In all above cases the company has not accepted liability and also contested by the company. Directors have decided not make provision for the same.

F)CENVAT

Cenvet benefits is accounted on accrual basis on purchase of material and appropriated against payment of Excise Duty on clearance of finished goods.

G) TAXES ON INCOME

Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred Tax is recognized, on timing differences, being the difference between taxable incomes and accounting income that originate I one year and are capable of reversal in one or more subsequent year.

H) SEGMENT REPORTING -

Segment has been identified in line with the AS - 17, taking into account the organization structure as well as the differing risks and returns. The business segment is disclosed as primary segment.

I) IMPAIRMENT LOSS

Impairment loss is provided to the extent the earring amounts of assets exceed their recoverable amounts. Recoverable amount is higher of an assets net selling price and its value in use. Value in use is the present value of estimated future cash flow expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from the sale of the asset in an arm length transaction between knowledgeable, willing parties, less the cost of disposal.