Accounting Policies of Polar Industries Ltd. Company

Mar 31, 2010

I) Basis of Preparation of Financial Statements

a) The financial statments have been prepared under the historical cost convention and in accordance with the manadatory Accounting Standards notified by the Central Government under the Accounting Standard Rules(2006) and the provision of the Companies Act 1956. All Income ane Expenditure are accounted on the accrual basis.

Use of Estimates :

b) The preparation of the finaincial statements requires estimates and asumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statments and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and the estimates are recognised in the period in which results are known/materialise

ii) Fixed Assets :

Fixed Assets are stated at cost net of modvat/cenvat. less accmulated depreciation and impairment loss, if any, and also include amount added on revaluation of Land, Building, Plant & Machinery and Electrical Installation as on 31.03.1992. Cost includes expenditure incurred in the acquisition and construction / installation and other related expenses. The carrying amount of fixed assets are reviewed at each balance sheet date, if there is any indication of impairment based on internal / external factors, an impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset net selling price and valuein use. In assessing value in use, the estimate future cash flows are discounted to their present value at the weighted average cost of capital.

iii) Depreciation:

a) Depreciation is being calculated on straight line method as per the rates & manner specified in Schedule XIV (as amended) of the Companies Act, 1956 and on amount added on revaluation, depreciation is provided on residual life as estimated by the valuers. Depreciations on addition on rented premises has been provided over the lease period.

b) Leasehold Land/Building is amortised over the period of the lease. iv) Investments:

Investments are stated at cost. Provision for diminution in the value of long term investments is made only if there is a decline other than temporary in nature.

v) Inventories:

Inventories (other than scrap) are valued at lower of cost or net realisable value. Scrap is valued "at estimated realisable value". Cost is determined on FIFO basis. Cost of own manufactured Finished Goods and Work-in-Process includes cost of conversion and other related cost incurred in bringing the inventories to their present condition and location as certified by the Cost Accountant. The valuation is in accordance with the Accounting Standard (AS-2) (Revised) "Valuation Of Inventories."

vi) Provisions:

A provision is recognised when an enterprise has a present obligation as a result of past event; 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 except those disclosed elsewhere in the notes to the financial statements, are not discounted to its present value and are determined based on the best estimate required to settle the obligation at the balance sheetdate. These are reviewed at each balance sheet date and adujsted to reflect the current best estimate.

vii) Provisions for Warranty:

Product warranty costs are determined on the basis of past reasonable estiamtes made by the management and provided for in the year of Sale.

viii) Borrowing Costs :

Borrowing Costs incurred in relation to the acquisition, construction of qualifying assets upto the date such assets are ready for intended use are capitalised as part of the cost of such assets. Other borrowing costs are charged as an expense in the year in which they are incurred.

ix) Taxation:

Provision for tax for the year comprises current tax liability and deferred tax which recognises (subject to the consideration of prudence in case of deferred tax assets) timing differences between taxable income and accounting income that orginate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and the tax laws that have been enacted or have substantive effect of actual enactment at the balance sheet date.

x) Sales:

Sales are recognised on delivery or passage of title of the goods to the customer and are inclusive of excise duty and net of trade discounts and sales returns.

xi) Retirement Benefits:

Year end liability for accured leave is provided on actuarial valuation basis. Year end liability towards Gratuity in respect of eligible employees is provided/funded on actuarial valuation basis.

xii) Foreign Exchange Transaction :

Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transacton. Foreign currency monetary assets and liabilities outstanding at the year end are translated at the exchange rate prevailing as on Balance Sheet date. Exchange rate difference arising on account of conversion/transactions of such assets/liabilities are recognised in Profit & Loss account.

xiii) Research & Development Expenses :

The revenue expenditure on research and development is charged to profit & loss account for the year in which it is incurred. Expenditure which results in creation of capital assets is treated similar to other fixed assets.

xiv) Contingent Liabilities :

Contingent Liabilties are generally not provided for in the accounts and are separately shown in the schedule of Notes on Accounts, except certainties which are likely to effect the future outcome, are provided as specifially mentioned in the accounts.