Accounting Policies of Reliance Chemotex Industries Ltd. Company

Mar 31, 2024

B. Material Accounting Policies Information

i. Material Accounting Policies Information

These financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act), read with the Companies (Indian Accounting Standards) Rules, 2015 and other relevant provisions of the Act.

Entity specific disclosure of material accounting policies where Ind AS permits options is disclosed hereunder.

The Company has assessed the materiality of the accounting policy information which involves exercising judgements and considering both qualitative and quantitative factors by taking into account not only the size and nature of the item or condition but also the characteristics of the transactions, events or conditions that could make the information more likely to impact the decisions of the users of the financial statements.

Entity''s conclusions that an accounting policy is immaterial does not affect the disclosures requirements set out in the financial statements.

ii. Basis of Preparation of Financial Statements:

a. The financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) as prescribed under Section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) (Amendment) Rules, 2016 and relevant provisions of the Companies Act, 2013. Date of Transition to Ind AS 2017 is 01.04.2016.

b. Historical cost convention

The financial statements have been prepared on a historical cost basis, except for the following:

1) certain financial assets and liabilities that are measured at fair value;

2) defined benefit plans - plan assets measured at fair value.

c. Use of estimates and judgments

The estimates and judgments used in the preparation of the financial statements are continuously evaluated by the Company and are based on historical experience and various other assumptions and factors (including expectations of future events) that the Company believes to be reasonable under the existing circumstances. Differences between actual results and estimates are recognised in the period in which the results are known/materialised.

The said estimates are based on the facts and events, that existed as at the reporting date, or that occurred after that date but provide additional evidence about conditions existing as at the reporting date."

d. Current non-current classification

All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle (twelve months) and other criteria set out in the Schedule III to the Companies Act., 2013.

e. The financial statements of the Company are presented in Indian Rupee (INR), which is also the functional currency of the Company.

iii. Property, Plant and Equipment

The company consider the previous GAAP carriying value of all its Propreties, Plants and Equipment except freehold and leasehold land as deemed cost at the transition date i.e. 1^st April 2016. The Company has adopted optional exemption under IND AS 101 to measure free hold land & lease hold land at fair value and consequently the fair fair value has been assumed to be deemed cost in case of free hold land & lease hold land on the date of transition.

Property, Plant and Equipment acquired after the transition dates are stated at cost less accumulated depreciation. Cost include expenses directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by management.

iv. Intangible Assets :

Intangible assets comprise of computer software. Expenditure incurred on intangible assets which are under development is included under intangible assets under development.

v. Depreciation/Amortisation

Deprreciation on Property , Plant & Equipment is calculated on straight line method using the rates arrived at based on the estimated useful life reviewed at the end of year which is same as given in schedule II of the Companies Act 2013 except as under : -

- Office Equipments are depreciated over 10 years.

- Intangible Assets (Computer Software) is amortised over 5 Years.

- Individual Assets costing below 5000/- are depreciated on prorata basis over one year from the date of acquisition. "

vi. Investment Property

Investment properties are measured at deemed cost less accumulated depreciation and impairment losses, if any.

The cost and related accumulated depreciation are eliminated from the financial statements, upon sale, disposition and withdrawal from permanent use of the assets and when no future economic benefits are expected from its disposal. The resultant gains or losses are recognised in statement of profit and loss.

vii. Valuation of Inventories:

Inventories of Raw Materials, Work-in-Progress, Stores and spares, Finished Goods are stated ‘at cost or net realisable value, whichever is lower’. Goods-in-Transit are stated ‘at cost’. Cost comprise all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost of stores and spares has been computed on weighted Average method and raw material has been computed on First-in-First-out Method, Scrap and waste has been valued on net realisable value. Due allowance is estimated and made for defective and obsolete items, wherever necessary. Scrap and waste has been valued at net reliasable value.

viii. Lease

The Company’s lease asset class primarily consists of lease for building and leasehold land. The Company, at the inception of a contract, assesses whether the contract is a lease or not a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a time in exchange for a consideration. This policy has been applied to contract existing and entered into on or after April 1, 2019. The Company has elected not to recognize Right-of-use Assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Company recognizes the lease payments associated with these leases as an expense over the lease term.The Company recognizes a Right-of-use Asset and a lease liability at the lease commencement date.The Right-of-use Asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial costs incurred. The Right-of-use Asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the Company’s incremental borrowing rate. Subsequently, lease liabilities are measured on amortized cost basis.In the comparative period, lease

payments under operating leases are recognized as an expense in the statement of profit and loss over the lease term.

ix. Revenue/Income Recognition:

(a) Revenue from contract with customers

Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customers at an amount that reflects the consideration to which the company expects to be entitled in exchange of promised performance obligations.

In case of sale of goods, transfer of control of the goods to the customer generally coincides with dispatch of goods to customer and is measured at a transaction value representing the related performance obligation. Transaction price is determined after considering the impact of variable considerations, returns, claims, rebates and other pricing allowances, trade & volume discounts (if any).

(b) Other Operating Revenue Export Incentives

Revenue in respect of the export incentives is recognized on post export basis. Duty Drawback benefits are accounted for on accrual basis.

(c) Interest-

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

(d) Insurance and Other Claim:-

Revenue in respect of insurance & other claims is recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.

x. Employee benefits Short-term obligations

Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the reporting period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.

Defined Contribution Plans:

Provident Fund

Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has no obligation, other than the contribution payable to the provident fund. The Company recognizes contribution payable to the provident fund scheme as an expense, when an employee renders the related service.

Defined Benefit Plans

Gratuity and Compensatory Absence

The Company provides for Gratuity and Compensatory Absence, a defined benefit retirement plan covering eligible employees of the Company. The present value of the obligations under such defined benefit plans is determined based on actuarial valuations using the Projected Unit Cost Method.

Actuarial gain/loss, if any, arising from or adjustments and change in actuarial assumptions are charged or credited to Other Comprehensive income in the period in which they arise.

xi. (a) Foreign Currency Transactions:

Transactions and balances

Transactions in foreign currencies are recognised at the prevailing exchange rates on the transaction dates. Realised gains and losses on settlement of foreign currency transactions are recognised in the Statement of Profit and Loss.

Monetary foreign currency assets and liabilities at the year-end are translated at the year-end exchange rates and the resultant exchange differences are recognised in the Statement of Profit and Loss.

(b) Exchange Forward Contracts:

The company uses Exchange Forward Contracts to hedge its risks associated with foreign currency related to firm commitments and highly probable forecasted transactions. The company does not enters into any forward contracts which are intended for trading or speculation purposes.

Profit/ Loss on cancellation of unutilsed portiion of forward Exchange contracts is accounted for as income/ Expense for the period in which cancellation of contract take place.

The company accounts for Mark to Market (MTM) gains/losses on unutlised foreign exchange forward contracts at the end of each reporting period.

(C) Borrowing Costs:

Interest and other costs connected with the borrowing for the acquisition / construction of qualifying fixed assets are capitalised up to the date such asset are put to use and other borrowing cost are charged to statement of profit & loss. Borrowing cost includes exchange rate difference to the extent regarded as an adjustment to the borrowing cost.

xii. Taxation:

Income tax expense represents the sum of current and deferred tax (including MAT)

(a) Current tax :-

Current income tax assets and liabilities are measured at the amount to be recovered from or paid to taxation authorities. The tax rates and tax laws used to compute the amount are according to the prevaling tax Law on the reporting date. Income tax expense is recognised in the Statement of Profit and Loss, except to the extent that it relates to items recognized directly in equity or other comprehensive income, in such cases the tax is recognised directly in equity or in other comprehensive income.

(b) Deferred tax:

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the Balance sheet and the tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally recognized for all deductible temporary differences, Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which those deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised. Deferred tax assets and deferred tax liabilities are off set, and presented as net.The carrying amount of deferred tax asset / liability is reviewed at each reporting date and necessasry adjustments are made in the books of accounts accordingly.

(c) MAT :

Credit of MAT 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, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the MAT credit becomes eligible to be recognised as an asset, the said asset is created by way of a credit to the profit and loss account and shown as MAT credit entitlement.

xiii. Government Grant/ Interest Subsidy:

Government Grants are recognised where there is reasonable assurance that the grant will be received and all attached condition will be complied with. Grants related to specific fixed assets are deducted from the gross value of the concerned assets in arriving at their book values. Investment subsidy/employment generation subsidy / Interest rate subsidy and other revenue grants are credited to Statement of Profit and Loss or deducted from the related expenses.

xiv. Impairment of Non Financial Assets:

The Management periodically assesses using external and internal sources whether there is any indication that an asset may be impaired. Impairment of an asset occurs where the carrying value exceeds the present value of the cash flow expected to arise from the continuing use of the asset and its eventual disposal. A provision for impairment loss is made when the recoverable amount of the asset is lower than the carrying amount.

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Mar 31, 2018

A. Significant Accounting Policies

(i) Property, Plant and Equipment

The company consider the previous GAAP carrying value of all its Properties, Plants and Equipment except freehold and leasehold land as deemed cost at the transition date i.e. 1^st April 2016. The Company has adopted optional exception under IND AS 101 to measure free hold land & lease hold land at fair value and consequently the fair value has been assumed to be deemed cost ( in case of free hold land & lease hold land) on the date of transition.

Property, Plant and Equipment acquired after the transition dates are stated at cost less accumulated depreciation. Cost include expenses directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by management.

(ii) Intangible Assets :

Intangible assets comprise of computer software. These assets are stated at cost.

(iii) Depreciation/Amortisation

Depreciation on Property , Plant & Equipment is calculated on straight line method using the rates arrived at based on the estimated useful life given in schedule II of the Company''s Act, 2013 except as under : -

- Lease hold Land is amortised over the period of lease.

- Office Equipment are depreciated over 10 years.

The remaining useful life of property , Plant & Equipment is reviewed at each financial year end and is in accordance with life as per schedule II of the Company''s Act, 2013.

Intangible Assets (Computer Software) is amortised over 5 Years.

Individual Assets costing below 5000/- are depreciated on prorata basis over one year from the date of acquisition. "

(iv) Non Current Investments :

Investment are valued at fair market value on the reporting date either through other comprehensive income, or through the Statement of Profit and Loss.

(v) Valuation of Inventories:

Inventories of Raw Materials, Work-in-Progress, Stores and spares, Finished Goods are stated ''at cost or net realisable value, whichever is lower''. Goods-in-Transit are stated ''at cost''. Cost comprise all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost of stores and spares has been computed on weighted Average method and raw material has been computed on First-in-First-out Method, Scrap and waste has been valued on net realisation value. Due allowance is estimated and made for defective and obsolete items, wherever necessary. Scrap and waste has been valued at net reliasable value.

(vi) Lease

Leases under which the Company assumes substantially all risks and rewards of ownership are classified as finance lease. When acquired such assets are capitalised at fair value or present value of minimum lease payments at the inception of the lease, whichever is lower.

Lease payments under operating lease are recognised as an expenses on a straight line basis in the Statement of Profit and Loss account over the lease term.

(vii) Revenue/Income Recognition:

Revenue is recognised at the fair value of the consideration received or receivable. The amount disclosed as revenue is net of returns, trade discounts and taxes & duties.

The company recognizes revenue when the amount of revenue can be measured reliably and it is probable that the economic benefits associated with the transaction will flow to the entity.

(a) Sales of goods

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods are transferred to the buyer and the entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold.

(b) Other Operating Revenue Export Incentives

Revenue in respect of the export incentives is recognized on post export basis. Duty Drawback benefits are accounted for on accrual basis.

(c) Interest:-

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

(d) Insurance and Other Claim:-

Revenue in respect of claims is recognized when no significant uncertainity exists with regard to the amount to be realized and the ultimate collection thereof.

(viii) Employee benefits Short-term obligations

Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees'' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.

Defined Contribution Plans:

Provident Fund

Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has no obligation, other than the contribution payable to the provident fund. The Company recognizes contribution payable to the provident fund scheme as an expense, when an employee renders the related service.

Defined Benefit Plans Gratuity and Leave Encashment

The Company provides for Gratuity and Leave Encashment , a defined benefit retirement plan covering eligible employees of the Company. The present value of the obligations under such defined benefit plans is determined based on actuarial valuations using the Projected Unit Cost Method.

Actuarial gain /loss, if any, arising from or adjustments and change in actuarial assumptions are charged or credited to Other Comprehensive income in the period in which they arise. Net Interest Cost are charged as interest Cost in statement of profit and Loss account.

(ix) (a). Foreign Currency Transactions:

Transactions and balances

Transactions in foreign currencies are recognised at the prevailing exchange rates on the transaction dates. Realised gains and losses on settlement of foreign currency transactions are recognised in the Statement of Profit and Loss.

Monetary foreign currency assets and liabilities at the year-end are translated at the year-end exchange rates and the resultant exchange differences are recognised in the Statement of Profit and Loss.

(b) Exchange Forward Contracts:

The company uses Exchange Forward Contracts to hedge its risks associated with foreign currency related to firm commitments and highly probable forecasted transactions. The company does not enters into any forward contracts which are intended for trading or speculation purposes.

Profit/ Loss on cancellation of unutilised portion of Forward Exchange Contracts is accounted for as income/ Expense for the period in which cancellation of contract take place.

The company accounts for Mark to Market (MTM) gains/losses on unutilised foreign exchange forward contracts at the end of each reporting period.

(C) Borrowing Costs:

Interest and other costs connected with the borrowing for the acquisition / construction of qualifying fixed assets are capitalised up to the date such asset are put to use and other borrowing cost are charged to statement of profit & loss. Borrowing cost includes exchange rate difference to the extent regarded as an adjustment to the borrowing cost

(x) Research and Development:

Revenue expenditure on Research and Development is charged as expenses under the head "Research and Development" in the year in which it is incurred. Capital expenditure incurred on equipment and facilities that are acquired for research and development activities is capitalised and depreciated according to the policy followed by the Company.

(xi) Taxation:

Income tax expense represents the sum of current and deferred tax (including MAT)

(a) Current tax :-

Current income tax assets and liabilities are measured at the amount to be recovered from or paid to taxation authorities. The tax rates and tax laws used to compute the amount are according to the prevailing Law on the reporting date. Income tax expense is recognised in the Statement of Profit and Loss, except to the extent that it relates to items recognized directly in equity or other comprehensive income, in such cases the tax is recognised directly in equity or in other comprehensive income.

(b) Deferred tax:

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the Balance sheet and the tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally recognized for all deductible temporary differences, Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which those deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised. Deferred tax assets and deferred tax liabilities are off set, and presented as net. The carrying amount of deferred tax asset / liability is reviewed at each reporting date and necessary adjustments made in the books of accounts accordingly.

(c) MAT :

Minimum Alternative Tax (MAT) is applicable to the Company. Credit of MAT 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, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the MAT credit becomes eligible to be recognised as an asset, the said asset is created by way of a credit to the profit and loss account and shown as MAT credit entitlement.

(xii) Government Grant/ Interest Subsidy:

Government Grants are recognised where there is reasonable assurance that the grant will be received and all attached condition will be complied with. Grants related to specific fixed assets are deducted from the gross value of the concerned assets in arriving at their book values. Investment subsidy/employment generation subsidy / Interest rate subsidy and other revenue grants are credited to Statement of Profit and Loss or deducted from the related expenses.

(xiii) Impairment of Non Financial Assets:

The Management periodically assesses using external and internal sources whether there is any indication that an asset may be impaired. Impairment of an asset occurs where the carrying value exceeds the present value of the cash flow expected to arise from the continuing use of the asset and its eventual disposal. A provision for impairment loss is made when the recoverable amount of the asset is lower than the carrying amount.

(xiv) Provisions and Contingent liabilities and Contingent Assets

Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses. Provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense. Contingent Liabilities are disclosed in respect of possible obligations that arise from past events but their existence will be confirmed by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company or where any present obligation cannot be measured in terms of future outflow of resources or where a reliable estimate of the obligation cannot be made. Contingent assets are not recognised in the financial statements.

(xv) Cash and Cash Equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, bank overdraft, deposits held at call with financial institutions, other short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(xvi) Dividend:-

Final dividends on shares are recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the company''s Board of Directors.

(xvii) Earning Per Share -

Basic earnings per equity share is computed by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity shares outstanding during the period. Diluted earnings per equity share is computed by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares.

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Mar 31, 2014

1 SHARE CAPITAL

(I) (a) Includes 1,90,000 (P.Y. 1,80,000) Equity Shares allotted on 31.03.2014 (P.Y. 30.03.2013) ranking pari-passu with the existing Equity Shares of the Company. Such equity shares issued during the year are pending for listing on BSE Ltd., where the Company''s shares are listed.

(A) These shares are redeemable at par on expiry of 13 years from the respective dates of allotment.

(B) These shares are redeemable at par on expiry of 14 years from the respective dates of allotment.

(C) These shares are redeemable at par on expiry of 20 years from the respective dates of allotment.

(D) However, redemption of these shares can also be done before maturity by the Board of Directors.

(E) The consent letters of financial institutions for such issues were not available for auditor''s inspection.

(II) As stated under Note 1(c) in Note 3 of Long Term Borrowings Term Loans of Rs.1,919 Lacs sanctioned by IDBI (now IDBI Bank Ltd.), the Company had agreed that unsecured loans of Rs.4,00,00,000/- (included in Long Term Borrowings in Note 3) were to be converted into equity capital as per SEBI formula within 6 months from date of first disbursement. Accordingly the Company had converted till 31.03.2009 unsecured loans of Rs.44,44,200/- into Equity Capital.Further during the year the Company issued 1,90,000 Equity Shares of Rs. 10/- each at a premium of Rs. 23/- aggregating to Rs. 62,70,000/- (Previous Year 1,80,000 Equity Shares of Rs.10/- each at a premium of Rs. 31/- aggregating to Rs. 73,80,000/-) on Preferential Placement basis to Promoter Group Companies. IDBI Bank Ltd. vide their letter dated 09.04.2014 has agreed to allow the company to convert 50% of unsecured loan (i.e. 4,00,00,000/- out of Rs.8,00,00,000) into Equity Share capital by Financial year 2018, as per SEBI guidelines.

(III) Terms/ rights attached to Equity Shares

The Company has only one class of equity shares having a par value of Rs.10/- per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the Annual General Meeting. 1,90,000 (P.Y. 1,80,000) Equity Shares issued on 31.03.2014 (P.Y. 30.03.2013)(refer Note II above) have a lock-in period of 3 years from the respective dates of issue.

(IV) Terms/ rights attached to Preference Shares

(a) The shares shall carry a right to a cumulative preference dividend of 10% per annum in relation to the capital paid up on them.

(b) The holders of the said shares shall have a right to attend General Meetings of the Company and vote on resolutions directly affecting their interest or where the dividends in respect thereof are in arrear for not less than two years on the date of meeting, on all resolutions at every meeting of the Company.

(c) In case of winding up, the holders of the said shares shall be entitled to a preferential right of return of the amount paid up on the shares together with arrears of cumulative preferential dividend due on the date of winding up but shall not have any further right or claim overthe surplus assets of the Company.

REMARKS:

1 Term Loansfrom IDBI Bank Limited

a) Term Loan of Rs. 7,50,00,000/-,outstanding Rs. 54,50,000/- as on 31.03.14 (P.Y. 1,61,50,000/-) including Rs. 54,50,000/- (P.Y. Rs.

1.07.00. 000/-) shown under the head Other Current Liabilities for Current Maturities of Long Term Debts in Note 9, is secured by hypothecation by way of joint first charge ranking pari-passu of all immovable properties (by way of deposit of Title Deeds of Lease Hold Land), both present and future including movable (save and except book debts) machinery, spares, tools and accessories, present and future, subject to prior charges created in favour of Bankers for working capital facilities. As per Certificate of the Management, the above loan of Rs.7,50,00,000/- has also been guaranteed by the Managing Director and one other Director of the Company and are also secured by way of extension of pledge of 5,86,400 Equity Shares of the Company in the names of Directors and their relatives.

This loan is repayable in 28 quarterly Instalments commencing from 01.10.2007 and last instalment is payable by 01.07.2014 and carry floating interest rate at base rate 4.5%.

b) Term Loan of Rs. 19,19,00,000/-, outstanding Rs. 9,59,50,000/- as on 31.03.14 (P.Y. 11,99,38,000/-) including Rs. 2,39,87,000/- (P.Y. Rs. 2,39,87,000/-) shown under the head Other Current Liabilities for Current Maturities of Long Term Debts in Note 9, is secured by hypothecation by way of joint first charge ranking pari-passu of all immovable properties (by way of deposit of Title Deeds of Lease Hold Land), both present and future including movable (save and except book debts) machinery, spares, tools and accessories, present and future, subject to prior charges created in favour of Bankers for working capital facilities. As per Certificate of the Management, the above loan of Rs.19,19,00,000/- has also been guaranteed by the Managing Director and one other Director of the Company and are also secured byway of extension of pledge of 5,86,400 Equity Shares of the Company in the names of Directors and their relatives.

This loan is repayable in 96 monthly Instalments commencing from 01.04.2010 and last instalment is payable by 31.03.2017 and carry floating interest rate at base rate 4%.

c) In respect of Term Loan of Rs. 19,19,00,000/-as stated under para (b) above, the company has agreed that:

(i) The Company shall deploy 50% of total promoter''s contribution l.e. Rs.6,42,00,000/- in the Project upfront. The unsecured Loans brought in would be sub-ordinated to this loan and the Company would seek approval from the leading institution for payment of interest, if any, on the unsecured loans and

(ii) Rs. 4,00,00,000/-to be converted into equity capital as per SEBI formula within 6 months from date of first disbursement. Also refer Note (II) in Note 1.

2 Term Loan from State Bank of India

a) Term Loan of Rs. 19,64,00,000/-, outstanding Rs. 9,06,50,000/- as on 31.03.14 (P.Y. 11,88,50,000/-) including Rs. 2,82,00,000/- (P.Y. Rs. 2.82.00. 000/-) shown under the head Other Current Liabilities for Current Maturities of Long Term Debts in Note 9, is secured by hypothecation by way of joint first charge ranking pari-passu of all immovable properties (by way of deposit of Title Deeds of Lease Hold Land), both present and future including movable (save and except book debts) machinery, spares, tools and accessories, present and future, subject to prior charges created in favour of Bankers for working capital facilities. As per Certificate of the Management, the above loans of Rs.19,64,00,000/- have also been guaranteed by the Managing Director and one other Director of the Company and are also secured by way of extension of pledge of Preference Shares of the face value of Rs. 1,75,00,000/- of the Company belonging to Directors and pledge of Preference Shares of the face value of Rs. 1,50,00,000/- belonging to a Promoter Company. This loan is repayable in 84 monthly Instalments commencing from July 2010 and the last instalment is payable by 30th June 2017 and carry floating interest rate at base rate 4.25%till 07.01.2014 and base rate 3.70% thereafter.

b) Term Loan of Rs.13,00,00,000/-, Outstanding Rs. 11,91,56,000/- (P.Y. 12,99,86,000/- including Rs. 2,16,60,000/- (P.Y. 1,08,30,000/-) shown under the head Other Current Liabilities for Current Maturities of Long Term Debts in Note 9, is secured by hypothecation by way of joint first charge ranking pari-passu of all immovable properties (by way of deposit of Title Deeds of Lease Hold Land), both present and future including movable (save and except book debts) machinery, spares, tools and accessories, present and future, subject to prior charges created in favour of Bankers for working capital facilities. As per Certificate of the Management, the above loans of Rs.13,00,00,000/- have also been guaranteed by the Managing Director and one other Director of the Company and are also secured by way of extension of pledge of Preference Shares of the face value of Rs. 1,75,00,000/- of the Company belonging to Directors and pledge of Preference Shares of the face value of Rs. 1,50,00,000/- belonging to a Promoter Company. This loan is repayable in 72 instalments from oct.2013 and last instalment is payable by September 2019 and carry floating interest rate at base rate 4.25% till 07.01.2014 and base rate 3.70% thereafter.

3 Term Loan fro mother parties(RIICO)

a) Term Loan of Rs.10,00,00,000/-, Outstanding Rs. 8,33,34,000/- (P.Y. 5,89,68,000/-) including Rs. 1,66,66,000/- (P.Y. 1,66,66,000/-) shown under the head Other Current Liabilities for Current Maturities of Long Term Debts in Note 9, is secured by hypothecation by way of joint first charge ranking pari-passu of all immovable properties (by way of deposit of Title Deeds of Lease Hold Land), both present and future including movable (save and except book debts) machinery, spares, tools and accessories, present and future, Finished and semi finished products, other goods and uncalled capital, subject to prior charges created in favour of Bankers for working capital facilities. As per Certificate of the Management, the above loans of Rs.10,00,00,000/- have also been guaranteed by

Managing Director and one other Director of the Company. This loan is repayable in 24 quarterly equal installments from May 2013 and last installment is payable by 15th February 2019. The above term loan carry interest @13% p.a. with 2% LD in case of default.

4 Term Loans (Vehicle Loans) from ICICI Bank Limited

(A) Vehicle Loan from ICICI Bank Ltd. of Rs. 53,00,000/- outstanding Rs. 43,68,593/- as on 31.03.2014 (P.Y. Nil) including 17,00,573/- (P.Y. Rs. Nil) shown under the head Other Current Liability for Current maturity of Long Term debts is secured byway of Hypothecation of respective car acquired out of the said loan. This Loan is repayable in 36 monthly instalment commencing from 01.09.2013 along with interest @ 8.65% per annum and the last instalment is payable by 01.08.2016 . Evidences in respect of filing of charge documents were not availablefor Auditors'' inspection.

(B) Vehicle Loan from ICICI Bank Ltd. of Rs. 46,98,000/- outstanding Rs. 33,79,926/- as on 31.03.2014 (P.Y. Nil) including 15,51,348/- (P.Y. Rs. Nil) shown under the head Other Current Liability for Current maturity of Long Term debts is secured byway of Hypothecation of respective car acquired out of the said loan. This Loan is repayable in 36 monthly instalment commencing from 15.05.2013 along with interest @ 9% per annum and the last instalment is payable by 15.04.2016. Evidences in respect of filing of charge documents were not availablefor Auditors'' inspection.

5 Term Loans (Vehicle Loans)from HDFC Bank Limited

(a) Vehicle Loan from HDFC Bank Ltd. of Rs. 10,80,000/- outstanding Rs. 6,39,552/- as on 31.03.2014 (P.Y. 9,75,310/- ) including 3,70,927/- (P.Y. Rs. 3,35,758/-) shown under the head Other Current Liability for Current maturity of Long Term debts is secured by way of Hypothecation of respective car acquired out of the said loan. This Loan is repayable in 36 monthly instalment commencing from 05.12.2012 along with flat interest @ 5.39% per annum and the last instalment is payable by 05.11.2015. Evidences in respect of filing of charge documents were not available for Auditors'' inspection.

(b) Vehicle Loan from HDFC Bank Ltd. of Rs. 12,00,000/- outstanding Rs. 8,70,571/- as on 31.03.2014 (P.Y. 12,00,000/- ) including 3,95,386/- (P.Y. Rs. 3,29,429/-) shown under the head Other Current Liability for Current maturity of Long Term debts is secured by way of Hypothecation of respective car acquired out of the said loan. This Loan is repayable in 36 monthly instalment commencing from 05.05.2013 along with interest @ 10% per annum and the last instalments is payable by 05.04.2016. Evidences in respect of filing of charge documents were not availablefor Auditors'' inspection.

(C) Vehicle Loan from HDFC Bank Ltd. of Rs. 9,25,000/- outstanding Rs. 9,03,284/- as on 31.03.2014 (P.Y. Nil) including Rs. 2,77,052/- (P.Y. Rs. Nil) shown under the head Other Current Liability for Current maturity of Long Term debts is secured by way of Hypothecation of respective car acquired out of the said loan. This Loan is repayable in 36 monthly instalment commencing from 05.03.2014 along with interest @ 11.40% per annum and the last instalment is payable by 05.02.2017. Evidences in respect of filing of charge documents were notavailablefor Auditors'' inspection.

(D) Vehicle Loan from HDFC Bank Ltd. of Rs. 6,50,000/- outstanding Rs. 6,50,000/- as on 31.03.2014 (P.Y. Nil) including Rs. 1,92,889/- (P.Y. Rs. Nil) shown under the head Other Current Liability for Current maturity of Long Term debts is secured by way of Hypothecation of respective car acquired out of the said loan. This Loan is repayable in 36 monthly instalment commencing from 05.04.2014 along with interest @ 11.40% per annum and the last instalment is payable by 05.03.2017. Evidences in respect of filing of charge documents were notavailablefor Auditors'' inspection.

7 SHORTTERM BORROWINGS

(a) Borrowings of Rs. 11,30,87,378/-(P.Y.13,07,68,017/-) from SBI and IDBI Bank Ltd. for working capital aresecured by hypothecation by way of joint first charge on entire inventories, trade receivables and other current assets present and future charges on pari-passu basis and are reported to have also been guaranteed to the extent of Rs. 21,00,00,000/- (P.Y. Rs. 21,00,00,000/-) by the Managing Director and one other Director of the Company. Such borowings are also secured by second pari-passu charge on fixed assets of the Company, b) The nature of securities, guarantees and other information as stated, above and status of compliance of terms and conditions, are subject to confirmations of respective lenders/others.

15 INVENTORIES

(a) Details ofWork in Process : Fibre in Process Rs. 3,44,18,712/- (P.Y. 3,23,09,610/-) and Yarn in Process Rs. 2,99,14,502/- (P.Y. Rs.1,56,84,963/-)

(b) Includes stock ofvalue of RS. 10,56,702/- (P.Y. Rs.29,40,864/-) lying with outside Parties. (Un confirmed)

(c) Includes Stock items ofthe value of Raw Materials Rs. 38,96,262/-, Finished Goods RS.1,09,54,559/- Stores and spares Rs.8,23,530/- in transit

(Previous year Raw Materials Rs.NIL, Finished Goods Rs. 1,39,54,799/-, Stores and Spares Rs.9,59,596/-)

(d) Refer Note 1 (vii) In Note 27 for Mode of Valuation.

27 Significant Accounting Policies and Notes on Financial Statements:

1. Significant Accounting Policies:

(i) Basis of Preparation of Financial Statements:

The Financial Statements are prepared on going concern assumption and under the historical cost convention, in accordance with generally accepted Accounting principles in India and the provisions of the Companies Act 1956.

All assets and liabilities have been classified as current and non - current as per normal operating cycle of the Company and other criteria set out in the revised Schedule VI to the Companies Act, 1956. Based on nature of products/ services, the Company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities.

(ii) Use of Estimates:

The preparation of financial statements requires estimates and assumption to be made that effect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which results are known/ materialized.

(iii) Fixed Assets

(a) Fixed Assets are stated at cost less accumulated depreciation. Cost (net of Cenvat credit) is inclusive of freight, duties, levies and any directly attributable cost of bringing the assets to their working condition for intended use. Interest and other borrowing costs on borrowed funds used to finance the acquisition of fixed assets, upto the date the assets are ready for use, are estimated and capitalised and included in the cost of the asset.

(b) Fixed assets retired/discarded and held for disposal are shown at realizable value.

(iv) Depreciation:

(A) On Tangible Assets:

(a) (i) Depreciation on tangible assets is provided pro-rata to the period of use on straight line method in the manner and at the rates specified in schedule XIV to the Companies Act, 1956 (ii)The Company is providing, (since 1st April,1993) depreciation on Plant and Machinery (including machineries related to utilities), considering the same as continuous process plant, which is required and designed to operate 24 hours a day, on the basis of technical opinion obtained by the Company in an earlier year, in this regard. This being a technical matter, has been relied upon by the auditors.

(b) Value of lease hold land is amortized over the period of lease

(c) Assets of value not exceeding Rs.5,000/- are fully depreciated in the year of purchase (Subject to Note 8 (ix) below)

(B) On Intangible Assets:

(a) Computer Software is amortized over a period of five years.

(b) Corporate Club Memberships are amortized over a period often years from respective dates.

(v) Lease Rentals:

As no assets were taken on lease after 1st April, 2001, the Accounting Standard (AS-19) ''Accounting for Leases'' issued by The Institute of Chartered Accountants of India, is not applicable.

(vi) Non-Current Investments:

(a) Non-current investments are stated at cost.

(b) Dividend income is recognized when right to receive is established.

(c) Provision for Diminution in the value of Long Term (Non-Current) Investments is made only if such a decline is in the opinion of the management other than temporary. However the break up value of Equity Shares of M/s V.S.Lignite Pvt.Ltd. in which the Company has made such investments is Rs. Nil as per the said Company''s Balance Sheet as at 31.03.2013 against cost of Rs.1,67,47,190/- for which no provision has been made in Accounts, as the investment is made for purchase of power at cheaper rate on Long Term basis and plant for power generation is fully operational, and that power plants take longer time to be profitable.

(vii) Valuation of Inventories:

Inventories are valued at lower of cost (net of Cenvat / VAT credits) and net estimated realizable value, as certified by the management. Cost has been arrived at asfollows:

(a) (i) Cost of Stores and Spares has been computed on the basis of weighted average method (Subject to Note (e) below)

(ii) There are no significant machinery spares lying in stock which can be directly used in connection with Plant & Machinery and whose life is expected to be irregular.

(b) Cost of Raw Materials has been computed on the basis of first in first out method.

(c) Cost of Work in process and Finished goods (also refer note (viii) below) has been computed on the basis of estimated cost of materials, cost of labor, cost of conversion and other costs incurred for bringing the inventories to their present location and condition

(d) Waste and scrap and residual materials are computed on the basis of estimated market value.

(e) Provision of Rs. 13,96,887/- (P.Y. Rs.12,99,916/- has been made in respect slow moving items of stores and raw materials. The management has confirmed that there are no other obsolete/ slow moving stocks for which further provision need to be made in Accounts.

(viii) Excise Duty and Cenvat/VAT/ Service Tax Credits:

(a) The value of closing stock of finished goods lying in factory premises (except goods meant for export) are inclusive of excise duty (also refer note l(x) (b) below)

(b) Benefits of Cenvat/VAT/Service Tax Credits to the extent claimed/ availed are accounted for by adjusting to the cost of relative materials/fixed assets/expenses.

(ix) Revenue/lncome Recognition:

(a) Income and Expenses considered receivable and payable respectively, are accounted for on accrual and prudent basis (Subject to Notes below).

(b) (i) Interest receivable on refunds of Sales Tax/VAT, Income Tax and Excise duty are intended to be accounted as and when the amounts are finally determined or settled.

(ii) The sale value, the amount whereof is not presently ascertainable and hence not stated, in respect of fixed Assets of Rs. 3,81,796/- (P.Y. Rs.2,76,401/-) (WDV) written off during the year is intended to be accounted for only as and when such fixed assets are disposed off.

(c) Claims of Rs.23,07,672/- raised by the Company on a party in an earlier year had been settled by the Bombay High Court and the company had been granted a decree for recovery of such amount along with interest etc. As the whereabouts of the party are not known, the sum of Rs.13,67,265/- payable to the said party as per accounts had been written back to the Profit and Loss Account during the year ended 31.03.2011. The balance amount, recoverable Rs.9,40,407/- from the party along with accrued interest, the amount whereof is not presently ascertainable and hence not stated, is intended to be accounted for in Statement of Profit and Loss, when the same are actually recovered.

(d) Remissions, if any, receivable against Rs.1,61,58,983/- (P.Y. Rs.1,49,05,875/-) charged in accounts under respective heads of expenditure, for Entry Tax for the period after July, 2006 till the year ended 31.03.2014, the deposits of which have been

stayed by the Rajasthan High Court, are intended to be accounted for as and when the respective matters are settled by the Court. The concerned authority have passed assessment orders for the years 2007-2008 to 2010-2011 raising demands of Rs.86,61,030/- (P.Y. Rs. 85,88,676/-) in respect of tax, interest and penalty and such amount is included in above amount.

(e) Service Tax payments relating to expenses for Exports were debited by the company to relative expenses heads of account up to 31st March 2010. In view of certain notifications issued by concerned Authority, the Company filed claims for refunds of Rs. 31,06,451/- (P.Y. Rs. 31,06,451/-) but such refund claims were rejected by the authorities. Company had filed appeals before CEGAT against such rejections in earlier years. Such claims are intended to be accounted for as and when settled and or received.

(f) Also refer Notes l(vi) above, l(xii), 6 and 8(i) (b) below.

(x) Turnover/Sales:

(a) Local sales are recognized on dispatch of goods and are inclusive of Excise Duty collected but excluding sales tax/VAT

(b) Export sales are recognized on basis of dates of Bills of lading and are exclusive of Excise Duty except to the extent clearance made on payment/adjustment of excise duty.

(xi) Retirement benefits/gratuity and leave encashment benefits:

(a) The liability for gratuity is covered under the Group Gratuity Scheme with Life Insurance Corporation of India. Annual Contributi''on/Premium made to the Scheme including Rs. 3,51,807/- (P.Y. Rs. 3,62,787/-) for OYGTA Risk Premium is charged to Statement of Profit and Loss.

(b) Liability for Leave encashment benefits is accounted for on basis of actuarial valuation.

(c) The disclosures required under AS-15 (Revised) are set out in Note 14 below.

(xii) A. Foreign CurrencyTransactions:

(a) Transactions arising in foreign currency for exports/ imports of goods are accounted for at rates of exchange prevailing on the dates of transactions

(b) Foreign currency monetary items at the Balance Sheet date are translated at the exchange rates prevailing on the date of the Balance Sheet

(c) Exchange rate differences resulting from foreign exchange transactions on revenue account, settled during the year, including on year end translation of monetary items, are recognized in Statement of Profit & Loss.

(d) There were no Exchange rate differences resulting on Capital account

B. Exchange Forward Contracts:

(a) The company uses Exchange Forward Contracts to hedge its risks associated with foreign currency related to firm commitments and highly probable forecasted transactions. The management has certified that the company has not entered into any forward contracts which are intended for trading or speculation purposes.

(b) Profit/ Loss on cancellation or renewal of forward Exchange contracts accounted for as income/ Expense for the period.

(c) Premium/discount i.e. the difference between the forward exchange contract rates and the rates on the dates of transactions being not gain were not recognized during the year ended 31.03.2013, in respect of outstanding portfolio of exchange forward contracts as on 31.03.2013. However, the Company has this year accounted for Mark to Market (MTM) gain (net) of Rs. 97,32,676/- as per Bank Statement dt. 31.03.2014. MTM net gain includes also component of premium/discount in respect of the aforesaid outstanding forward exchange contracts. Due to aforesaid change in the method of accounting the profit for this year is increased by Rs. 97,32,676/- with resultant effect on Reserves and Surplus and Liabilities and Assets of the Company.

(xiii) Export Benefits:

(a) Duty Drawback benefits are accounted for on accrual basis.

(b) Premium for transfer of Duty credit scripts under Focus Product/ Market Schemes and Premium in respect of such entitlements of Rs.1,47,27,004/- (P.Y. Nil) in hand as on the close of the year and or entitlements to be received are accounted for on accrual basis, which is being valued at net estimated realizable value.

(xiv) Borrowing Costs:

Interest and other costs on borrowing funds used to finance the acquisition of fixed assets, up to the dates the assets are ready for use, are estimated and capitalized under respective fixed assets. Other interest and costs incurred by the Company in connection with the borrowing of funds are recognized as expenses in the period in which they are incurred.

(xv) Research and Development:

Routine research and development expenditure considered as of revenue nature are recognized as an expense in the period in which it is incurred. Such expenditure are included under various accounts in Notes 24 to 26, the amount whereof cannot be separately ascertained and stated. The expenditure of capital nature, if any, is capitalized as fixed assets

(xvi) Provision for taxation:

(A) Current Tax:

(a) Provision for current tax of Rs. 1,90,00,000/-(MAT) (P.Y. Rs. 1,54,00,000/-) is made after taking into consideration benefits admissible under the provisions of the Income Tax Act., 1961,and is as estimated and certified by the management.

(b) The Company is entitled to credit of Rs.76,28,713/- as on 31.03.2014, in respect of Minimum Alternate Tax (MAT) under the provisions of Income Tax Act, 1961, which will be accounted for as and when credit is adjusted.

(c) Also refer Note 3(v) (a) below.

(B) Deferred Tax:

The deferred tax liabilities and assets are recognized using current tax rates, to the extent the management feels that there is virtual certainty that sufficient future taxable income will be available, against which such deferred tax assets/ liabilities can be realized / adjusted. Such assets / liabilities are reviewed as at each Balance Sheet date, to re-assess realizations /liabilities.

(xvii) Government Grant/ Interest Subsidy:

Interest subsidy received under Technology Upgradation Fund Scheme and under Rajasthan Investment Promotion Scheme, 2003 are being adjusted with interest paid on Term Loans to Banks in Note 25 of Finance Costs.

(xviii) Impairment of Assets:

As required by AS-28 "Impairment of Assets" issued by the Institute of Chartered Accountants of India, no provision for impairment loss of assets is required to be made as in view of the management the estimated realizable value of such assets will be more or equal to the carrying amount stated in the Balance Sheet. The Auditors have relied on the Certificate of the Management in this regard.(Subjectto Note (ix) above and sub-notes referred therein)

(xix) Provisions, Contingent Liabilities and Contingent Assets:

(a) Provisions are recognized in respect of obligations where, based on the evidences available, and their existence at the Balance Sheet date, are considered probable.

(b) Contingent Liabilities are shown by way of Notes on accounts (refer note 3 below) in respect of obligations where, based on the evidences available, their existence at the Balance Sheet are considered not probable.

(c) Contingent Assets are neither recognized nor disclosed in accounts.

---

Mar 31, 2013

I) Basis of Preparation of Financial Statements

ii) Use of Estimates

The preparation of financial statements requires estimates and assumption to bew made that effecct the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which results are known/materialized.All assets and liabilities have been classified as current and non-current as per normal operating cycle of the Company and other criteria set out in the revised Schedule VI to the Companies Act, 1956. Based on nature of products/services the company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities .

iii) Fixed Assets

a) Fixed Assets are stated at cost less accumulated depreciation. Cost (net of Cenvat credit) is inclusive of freight, duties, levies and any directly attributable cost of bringing the assets to their working condition for intended use. Interest and other borrowing costs on borrowed funds used to finance the acquisition of fixed assets, upto the date the assets are ready for use, are estimated and capitalised and included in the cost of the asset.

b) Fixed assets retired and held for disposal is shown at realizable value

iv) Depreciation

a) (i) Depreciation on fixed assets is provided pro-rata to the period of use on straight line method in the manner and at the rates specified in schedle XIV to the Companies Act, 1956.

(ii) The Comapny is providing, (since 1st April, 1993) depreciation on Plant and Machinery (including machineries related to utilities), considering the same as continuous process plant, which is required and designed to operate 24 hours a day, on the basis of technical opinion obtained by the Company in an earlier year, in this regard. This being a technical matter has been relied upon by the auditors.

b) Value of lease hold land is amortised over the period of lease.

c) Assets of value not exceeding Rs. 5000/- are fully depreciated in the year of purchase ( Subject to Note 7 (XI) below).

v) Lease Rentals

As no assets were taken on lease after 1st April, 2001, the Accountinng Standard (AS-19) Accounting for Leases'' issued by The Institute of Chartered Accountants of India, is not applicable.

vi) Investments

a) Investments are stated at cost.

b) Dividend income is recognized when right to receive is established.

c) Provision for Diminution in the value of Long Term Investments is made only if such a decline is other than temporary. Company has made investment in Shares of M/s V.S.Lignite Pvt. Ltd. The said Company''s performance has shown improvement

(if) There are no significant machinery spares lying in stock which can be directly used jn connection with Plant & Machinery and whose life is expected to be irregular. ""

b) Cost of Raw Materials has been computed on the basis of first in first out method.

c) Cost of Work in process and Finished goods (also refer note (viii) below) has been computed on the basis of estimated cost of materials, labour, cost of conversion and other costs incurred for bringing the inventories to their present location and condition.

d) Waste and scrap and residual materials are computed on the basis of estimated market price.

e) Provision of Rs. 12,99,916/- (P.Y. Rs. 3,43,848/-) has been made in respect of stores, spares and raw material of slow moving items. The management has considered that there are no other obsolete/ slow moving stocks for which further provision need to be made in Accounts.

viii) Excise Duty and Cenvat / VAT / Service Tax Credits

a) The value of closing stock of finished goods lying in factory premises (except goods meant for export) are inclusive of excise duty (also refer note 1 (x) (b)).

b) Benefits of Cenvat/VAT/Service Tax Credits etc to the extent claimed/ availed are accounted for by adjusting to the cost of relative materials/fixed assets/ expenses. Such Credits of Rs. 3,49,23,193/- (P.Y. Rs.99,52,961/-) are outstanding as on 31.03.2013 and are included under "Other Advances" in Note "17'' of "Short term Loans and Advances".

The management is confident to get an adjustments for such credits in future. Adjustments for non availability and or short recoveries, the amount whereof is not presently ascertainable, are intended to be made as and when such credits are finally determined/received. ix) Revenue Recognition

a) Income and Expenses considered receivable and payable respectively, are accounted for on accrual and prudent basis.

b) (i) Interest receivable on refunds of Sales Tax / VAT, Income Tax and Excise duty are intended to be accounted as and when the amounts are finally determined or settled. (ii) The sale value, the amount whereof is not presently ascertainable and hence not stated, in respect of fixed Assets of Rs.2,76,401/- (P.Y. Rs. 7,35,698/-) (WDV) written off during the year is intended to be accounted for only as and when such discarded fixed assets are disposed off.

c) Claims of Rs.23,07,672/- raised by the Company on a party in an earlier year had been settled by the Bombay High Court and the Company had been granted a decree for recovery of such amount alongwith interest etc. As the whereabouts of the party are not known, the sum of Rs.13,67,265/- payable to the said party as per accounts has been written back to the Profit and Loss Account for the period ended 31.03.2011. The balance amount, recoverable Rs.9,40,407/- from the party alongwith interest is intended to be accounted for in Statement of Profit and Loss, when the position in his regard is finally clear.

d) Remissions, if any, receivable against Rs. 1,49,05,875/- (P.Y. Rs. 1,35,14,755/-) charged in accounts under respective heads of expenditure, for Entry Tax for the period after July, 2006 till the year 2012-13, the deposits of which have been stayed by the Rajasthan High Court, are intended to be accounted for as and when the respective matters are settled. The concerned authority have passed assessment orders for the year 2007-2008 to 2010-2011 raising demands of Rs. 85,88,676/- (P.Y. Rs. 71,42,068/-) in respect of tax, interest & penalty and such amount is included in above for tax & interest. The management has certified that deposits of such demands still remain stayed by such High Court and in absence of evidences auditors have relied on the certificate of management.

e) Service Tax payments relating to expenses for Exports were debited by the Company to relative expenses heads of account upto 31s! March 2010. In view of certain notifications issued by concerned Authority, the Company filed claims for refunds of Rs. 31,06,451/- (P.Y. Rs 31,06,451/-) but such refund claims were rejected by the authorities. The Company has filed appeals in CEGAT against such rejections. Such claims will be accounted for as and when settled.

x) Turnover/Sales

a) Local sales are recognized on despatch of goods and are inclusive of Excise Duty collected but excluding sales tax / VAT.

b) Export sales are recognized on basis of dates of Bills of lading and are exclusive of Excise Duty.

xi) Retirement Benefits /Gratuity and Leave Encashment Benefits

a) (i) The liability for gratuity is covered under the Group Gratuity Scheme with Life Insurance Corpration of India. Annual Contribution made to the Scheme is charged to Statement of Profit and Loss.

(ii) The Company, having taken out, the group gratuity policy with Life Insurance Corporation of India (LIC) or future payments of gratuity liability to its employees as stated under (i) above is paying for annual premium as determined by LIC (including Rs. 3,62,787/- (P.Y. Rs. 5,90,912/-) for OYGTA Risk Premium and the same is charged Statement of Profit and Loss.

b) Liablity for Leave encashment benefits is accounted for on basis of actuarial valuation.

c) The disclosures required under AS-15 (Revised) are set out in Note 15 below.

xii) A. Foreign Currency Transactions

a) Transactions arising in foreign currency for exports/imports of goods are accounted for at rates of exchange prevailing on the dates of trasactions.

b) Foreign currency monetary items at the Balance Sheet date are translated at the exchange rates prevailing on the date of the Balance Sheet.

c) Exchange rate differences resulting from foreign exchange transactions on revenue account settled during the year, including on year end translation of monetary items, are recognized in Statement of Profit & Loss.

d) There were no Exchange rate differences resulting on Capital account.

B. Exchange Forward Contract

a) The Company uses Exchange Forward Contacts hedge to its risks associated with foreign currrency related to firm commitments and highly forecasted transactions. The management has certified that the Company has not entered into any forwards contract which is intended for trading or apeculatiion purposes. The auditors have relied on the certificate of management in this regard.

b) Profit/Loss on cancellation or renewal of forward Exchange contracts are accounted for as income/ Expenses for the period.

c) Any premium/discount i.e. the difference between the forward exchange rates and the date of transactions is not reognized in respect of outstanding portfolio of exchange forward contracts as on Balance Sheet date. Its impact on the financial results of the Company has been ascertained and states.

d) Net mark to market losses, if any, on the outstanding portfolio of forwards contracts are recognized in the statement of Profit and Loss and net gains, if any, are ignored.

xiii) Export Benefits

Consideration/Benefits for transfer of DEPB Licences and benefits (including for entitlements of Rs. Nil (P.Y.Rs. 1,12,51,827/-) in hand as on the close of the year and to be received) are accounted for on accrual basis and are being valued at estimated and or at net estimated realisable value. Adjustments for Short/ excess realisations, if any, are made on actual dates of realisations.

xiv) Borrowing Costs

Interest and other costs on borrowing funds used to finace tghe acquisition of fixed assets, upto date the assets are ready for use, are estimated and capitalised under respective fixed assets. Other interest and costs incurred by the Company in connection with the borrowing of funds are recognised as expenses in the period in which they are incurred.

xv) Research and Development

Routine research and development expenditure considered as of revenue nature are recognised as an expense in the period in which it is incurred. Such expenditure is included in Note 25, the amount whereof cannot be separately ascertained and stated. The expenditure of capital nature, if any, is capitalised as fixed assets

xvi) Intangible Assets

a) Computer Software is amortized over a period of five years.

b) Corporate Club Membership is amortized over a period of ten years.

xvii) Provision for taxation

A) Current Tax :

a) Provision for current tax is made after taking into consideration benefits admissible under the provision of the Income Tax Act., 1961,and is as estimated and certified by the management.

b) The Company is entitled to credit of Rs. 79.11 Lacs in respect of Minimum Alternate Tax (MAT) under the provisions of Income Tax Act, 1961 which has been considered for calculation of Current Tax.

c) Demand of Rs. 7,20,58,480/- raised by JCIT, Circle-10, Kolkata for Asst. year 2008-2009 was deleted as the Company''s appeal against relative order to the Commissioner of Appeals was decided in favour of the Company. However the department has filed appeal against such order before ITAT, Kolkata in respect of additions of Rs. 8,36,89,307/- (out of total additions of Rs. 16,11,23,096/-) deleted by the 1st Appellate Authority. The liability if any arising on disposal of such departmental appeal, is intended to be provided, as and when such appeal is decided.

B) Deferred Tax :

The deferred tax liabilities and assets are recognised using current tax rates, to the extent the management feels that there is virtual certainty that sufficient future taxable income will be available, against which'' such deferred tax assets/ Liabilities can be realized/ adjusted. Such assets/ liabilities are reviewed as at each Balance Sheet date, to reassess realisations/ Liabilities. xviii)lmpairment of Assets

As required by AS-28 "Impairment of Assets" issued by the Institute of Chartered Accountants of India no provision for impairment loss of assets is required to be made as in view of the management the estimated realisable value of such assets will be more or equal to the carrying amount stated in the Balance Sheet. The Auditors have relied on the Certificate of the Management in this regard.

xix) Provisions, Contingent Liabilities and Contingent Assets

a) Provisions are recognized in respect of obligations where, based on the evidences available, and their existence at the Balance Sheet date, are considered probable.

b) Contingent Liabilities are shown by way of Notes on accounts (refer note 3) in respect of obligations where, based on the evidences available, their existence at the Balance Sheet are considered not probable.

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Mar 31, 2012

I) Basis of Preparation of Financial Statements

the Financial Statements are prepared on going concern assumption and under the historical cost convention, in accordance with generally accepted Accounting principles in India and the provisions of the Companies Act 1956. .

ii) Use of Estimates

The preparation of financial statements requires estimates and assumption to be made that effect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which results are known/materialized,

iii) Fixed Assets

Fixed1 Assets are stated at cost less accumulated depreciation Cost (net of Cenvat credit) is inclusive of freight, duties, levies and any directly attributable cost of bringing the assets to their working condition for intended use. interest and other borrowing costs on borrowed funds used to finance the acquisition of fixed assets, upto; the date the assets are ready for use, are estimated and capitalised and included in the cost of the asset.

iv) Depreciation

a) (i) Depreciation on fixed assets is provided pro-rata to the period of use on straight line method in the manner and at the rates specified in schedule XIV to the Companies Act, 1956.

(ii) The Company is providing, since 1st April,1993, depreciation on Plant and Machinery {including machineries

b) Value of leasehold land is amortised oyer the period of lease.

c) Assets of value not exceeding Rs.6,000/- are fully depreciated in the year of purchase (Subject to Note 7 (xii) below).

v) Lease Rentals

As no assets were taken on lease after 1st April, 2001, the Accounting Standard (AS-19) "Accounting for Leases" issued by The Institute of Chartered Accountants of India, is not applicable". vi) Investments

a) Investments are stated at cost.

b) Dividend is accounted for on accrual basis.

c) Provision for Temporary diminution (amount not ascertained and stated) in the value of Long Term Investments is made only if such a decline is other than temporary, in the opinion of the Management.

d) Also refer note 9 below.

vii) Valuation of Inventories

Inventories are valuedat lower of cost (net of Cenvat / VAT credits) and net estimated realisable value, as certified by the Management.

a) (i) Stores, Spares, Packing Materials etc. and Dyes and Chemicals has been computed on the basis of weighted average method.

(ii) There are no significant machinery spares lying in stock which, can be directly used in connection with Plant & Machinery and whose life is expected to be irregular.

b) Raw Materials has been computed on the basis of first in first out method.

c) Work in process and Finished goods (also refer note (viii) below) has been computed on the basis of estimated cost of materials, labour, cost of conversion and other costs incurred for bringing the inventories to their present location and condition.

d) Waste and scrap and residual materials are computed on the basis of estimated market price.

e) There are no other obsolete/slow moving stocks for which further provisions need to be made in Accounts. viii) Excise Duty and Cenvat / VAT / Service Tax Credits

a) The value of closing stock of finished goods lying in factory premises (except goods meant for export) are inclusive of excise duty (also refer note 1(x) (b)).

b). Benefits of Cenvat/VAT/Service Tax Credits etc to the extent claimed/ availed are accounted for by adjusting to the cost of relative materials/fixed assets/ expenses. Such Credits of Rs. 99,52,961/- (P.Y. Rs.1,96,66,464/-) are outstanding as on 31.03.2012 and are included under "Other Advances" in Notes ,"16" of "Short term Loans and Advances".

The Management is confident to get adjustments; for such credits; in future. Adjustments for non availability and or short recoveries, the amount whereof is not presently ascertainable, are intended to be made as and when such credits are finally determined/received. ix) Revenue Recognition

a) Income and Expenses considered receivable and payable respectively, are accounted for on accrual and prudent basis.

b) (i) Interest receivable on refunds of Safes Tax / VAT, income Tax and Excise duty are intended to be accounted as and when the amounts are finally determined or settled.

(ii) The sale value, the amount whereof is not presently ascertainable and hence not stated, in respect of fixed Assets of Rs.7,35,694/- (P.Y. Rs.46,78,665/- (WDV) written off during the year are intended to be accounted for only as and when such fixed assets are disposed off,

c) Claims of Rs.23,07,672/- raised by the Company on a party in an earlier year had been settled by the Bombay High Court and the Company had been granted a decree for recovery of such amount alongwith interest etc: As the whereabouts of the party are not known, the sum of Rs.13,67,265/- payable to the said party as per accounts has been written back to the profit and Loss Account for the period ended 31.03.2011. The balance amount, recoverable Rs.9,40,407/- from the party alongwith interest is intended to be accounted for in Profit and Loss Account, when the position in his regard is finally clear. ¦¦ *..

d) Remissions, if any, receivable against Rs. 1,35,14,755/- (P.Y. Rs.1,19,83,911/-) charged in accounts under respective heads of expenditure, for Entry Tax charged for the period after July, 2006, the deposits of which have been stayed by the Rajasthan High Court, are intended to,be accounted for as and when the respective matters are settled. The concern authority have passed assessment order for the year 2007- 2008 and 2008-2009 raising demand of Rs. 71,42,068/- in respect of tax, interest & penalty and such amount is included in above for tax & interest. The Management has certified that deposits of such demands.still remains stayed by such High Court.

e) Service Tax payments relating to expenses for Exports were debited by the Company to relative expenses heads of account upto 31st March, 2010. In view of certain notifications issued by concerned Authority, the Company filed claims for refunds of Rs. 31,06,451/- (P.Y. Rs. 32,13,237/-) for such service tax payment for the period from' (1st April, 2008 to 31st March, 2009) and such refund claims were rejected by the authorities but the Company has filed the appeals in CEGAT against such rejections. Such claims will be accounted for as and when settled.

f) (i) Remissions, as may be, received against Rs.1 ,26,83,136/- (P.Y. Rs.51,74,991/-) in respect of amounts deducted by the Company from the bills raised by M/s. VS Lignite Power Pvt. Ltd. for supply of Power, but charged in accounts under the heads of Power in Note "24" of "Other Cost" from July 10, are intended to be accounted, as and when the matter is settled.

(ii) Claims of Rs.12,84,933/- raised / to be raised by the Company on M/s. V.S. Lignite Private Limited for lower supply of power to the Company during the year ended 31.03.2011 is intended to be accounted for as and when the matter is settled or payments are received.

g) Also refer Notes 1 (vi) to 1 (viii), 1 (x) to 1 (xiv), 1 (xviii), 1 (xix), 6(v), 6(ix) to 6(xv) and 14.

(i) Due to the basis of accounting of matters as stated under paras (a) to (h) above the, results for the year , and the Assets and Liabilities are affected to the extent stated, above. The amounts thereof have not been ascertained and hence not stated.

x) Turnover/Sales

a) Local sales are recognized on despatch of goods and are inclusive of Excise Duty collected but excluding sales tax / VAT. b) Export sales are recognized on basis of dates of Bills of lading and are exclusive of Excise Duty. xi) Retirement Benefits/ Gratuity and Leave Encashment Benefits .

a) (i) The liability for gratuity is covered under the Group Gratuity Scheme with Life Insurance Corporation of India. Contribution made to the Scheme is charged to Profit and Loss account:

(ii) The Company, having taken out, the group gratuity policy with Life Insurance Corporation of India (LIC) for future payments of gratuity liability to its employees as stated under (i) above, is paying for annual premium as determined by LIC (including Rs, 5,90,912/- (P.Y. Rs. 2,84,906/-) for OYGTA Risk Premium and the same is charged to Profit & Loss A/c.

b) Liability for Leave encashment benefits is accounted for on basis of actuarial valuation.

c) The disclosures required under AS-15 (Revised) are set out in Note 14 below.

xii) Foreign Currency Transactions

a) Transactions arising in foreign currency for exports/ imports of goods are accounted for at rates of exchange prevailing on the dates of transactions.

b) Foreign currency monetary items at the Balance Sheet date are translated at the exchange rates prevailing on the date of the Balance Sheet.

c) Exchange rate differences resulting from foreign exchange transactions on revenue account, settled during the year, including on year end translation of monetary items, are recognized in Profit & Loss Account, except those covered by forward contracted rates, where the premium-or discount arising at the inception of such forward exchange contract, is amortised as expenses or income over the life of the contract. d) Also subject to Note 6(xiii) below.

e) There were no Exchange rate differences resulting on Capital account.

f) The Management has certified that the Company has not entered into any forward exchange contract which is intended for trading or speculation purposes. The Auditors have relied on the Certificate of the . Managernent in this regard.

xiii) Export Benefits

Consideration/Benefits for transfer of DEPB Licences and benefits (including for entitlements of Rs.1,12,51,827/- (P.Y. 1,79,60,952/-) in hand as on the close of the year and to be received) are accounted for on accrual basis and are being valued at estimated and or at net estimated realisable value. Adjustments for short / excess realisations, if any, are made on actual, dates of realisations.

xiv) Borrowing Costs

Interest and other costs on borrowing funds, used to finance the acquisition of fixed assets, upto date the assets are ready for use are estimated and capitalised under respective fixed assets. Other interest and costs incurred by the Company in connection with the borrowing of funds are recognised as expenses in the period in which they are incurred.

xv) Research and Development

Routine research and development expenditure considered as of revenue nature are recognised as an expense in the period in which it is incurred. Such expenditure is included in Schedules 18 and 19, the amount whereof cannot be separately ascertained and stated: The expenditure of capital nature, if any, is capitalised as fixed assets.

xvi) Intangible Assets

Intangible assets are recognised at cost and amortised over a period of five years. xvii) Unsecured Loans

The Company had taken unsecured loans from certain bodies corporate and a Director of the Company during the year and also in earlier year. These loans were partly repaid also during the year and the outstanding amount thereof as on 31.03.2012 was Rs.. 12,88,50,000/-. However the Company has obtained letters of undertaking from these parties, that they will not seek repayment of their such outstanding loans before 30.04-2013. Accordingly these unsecured loans have been considered as long term borrowings within the provisions of revised schedule VI of the. Companies Act, 1956. xviii) Provision for taxation

A) Current Tax: a) Provision for Income Tax Rs. 59 Lacs (P.Y. Rs.102 Lacs) made in Accounts is as estimated and certified by the Management.

b) A demand of Rs.7,20,58,480/- was raised by JCIT, Cicle -10, Kolkata,for A.Y. 2008- 2009. Company's appeal against the said demand has been decided; by CIT appeals XII in favour of the Company and demand deleted. The department has filed appeal against such order before ITAT, Kolkata and the appeal is pending.

c) Also refer Note 1(ix),6(xii) and 14.

d). The Company is entitled to credit in respect of Minimum Alternate Tax (MAT) under the provisions Income Tax Act, 1961. However, read with (B) below and keeping in view the consideration of prudence and the probability of availability / availing the MAT Credit (which is based on convincing evidence,of realization as envisaged by the Guidance Note issued by ICAI), MAT'Credits for the year/ earlier years, the amount, whereof is not presently ascertainable, has not been considered by the Company.

B) Deferred Tax : The deferred tax liabilities and assets are recognised using current tax-rates, to the extent the Management feels that there is virtual certainty that sufficient future taxable income will be available! against which such deferred tax assets/Liabilities can be realised. Such assets/liabilities are reviewed as at each Balance Sheet date, to reassess realisations/ Liabilities.

xix) Impairment, of Assets

As required by AS-28 impairment of Assets" issued by the Institute of Chartered Accountants of India, provision for impairment loss of assets is not required to be made as in view of the Management the estimated realisable value of such assets will be more or equal to the carrying amount stated in the Balance Sheet.: The Auditors have relied on the Certificate of the Management in this regard.

xx) Provisions, Contingent Liabilities and Contingent Assets

a) Provisions are recognized in respect of obligations where, based on the evidences available, and their existence at the Balance Sheet date are considered probable:

b) Contingent Liabilities are shown by way of Notes on accounts (refer note 3) in respect of obligations where, based on the evidences available, their existence at the Balance Sheet are considered not probable.

c) Contingent Assets are. neither recognized nor disclosed in Accounts.

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Mar 31, 2011

(i) Basis Of Preparation of Financial Statements:

The Financial Statements are prepared on going concern assumption and under the historical cost convention, in accordance with generally accepted Accounting principles in India and the provisions of the Companies Act 1956.

(ii) Use of Estimates:

The preparation of financial statements requires estimates and assumption to be made that effect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which results are known/ materialized.

(Hi) FIXED ASSETS

Fixed Assets are stated at cost less accumulated depreciation. Cost (net of Cenvat credit) is inclusive of freight, duties, levies and any directly attributable cost of bringing the assets to their working condition for intended use. Interest and other borrowing costs on borrowed funds used to finance the acquisition of fixed assets, upto date the assets are ready for use, are estimated and capitalised and included in the cost of the asset.

(iv) Depreciation:

(a) (i) Depreciation on fixed assets is provided pro-rata to the period of use on straight line method in the manner and at the rates specified in schedule XIV to the Companies Act, 1956

(ii) The Company is providing, since 1st April, 1993, depreciation on Plant and Machinery (including machineries related to utilities), considering the same as continuous process plant, which is required and designed to operate 24 hours a day, on the basis of technical opinion obtained by the Company in an earlier year, in this regard. This being a technical matter has been relied upon by the auditors.

(b) Value of lease hold land is amortised over the period of lease.

(c) Assets of value not exceeding Rs. 5,000/- are fully depreciated in the year of purchase (Subject to Note 7 (xii) below)

(v) Lease Rentals

As no assets were taken on lease after 1st April, 2001, the Accounting Standard (AS-19) 'Leases' issued by The Institute of Chartered Accountants of India, is not applicable.

(vi) investments :

(a) Investments are stated at cost

(b) Dividend is accounted for on accrual basis

(c) Provision for Temporary diminution (amount not ascertained and stated) in the value of Long Term Investments is made only if such a decline is other than temporary, in the opinion of the management.

(d) Also refer note 9 below.

(vii) Valuation of Inventories:

Inventories are valued at lower of cost (net of Cenvat / VAT credits) and net estimated realisable value, as certified by the management. Cost for the purpose of valuation of:

(a) (i) Stores, Spares, Packing Materials etc. and Dyes and Chemicals has been computed on the basis of weighted average method.

(ii) There are no significant machinery spares lying in stock which can be directly used in connection with Plant & Machinery and whose life is expected to be irregular.

(b) Raw Materials has been computed on the basis of first in first out method.

(c) Work in process and Finished goods (also refer note (viii) below) has been computed on the basis of estimated cost of materials, labour, cost of conversion and other costs incurred for bringing the inventories to their present location and condition.

(d) Waste and scrap and residual materials are computed on the basis of estimated market price.

(e) There are no other obsolete / slow moving stocks for which further provisions need:to be made in Accounts.

(viii)Excise Duty and Cenvat / VAT / Service Tax Credits

(a) The value of closing stock of finished goods lying in factory premises (except goods meant for export) %re inclusive of excise duty (also refer note 1 (x) (b)).

(b) Benefits of Cenvat/VAT/Service Tax Credits etc to the Extehtplaimed /.,availed are, accounted foit by adjusting to the cost of relative, materials/fixed assets/ expenses. Such Credits of. Rs4;j96,66,464/- are outstanding as on 31.03.2011 and are included under "Advances" in Schedule "11" of "Loans and Advances".

The Management is confident to get adjustments for such credits in’ future. Adjustments for non availability and or short recoveries, the amount whereof is not presently ascertainable, are intended to be made as and when such credits are finally determined/received.

(c) In previous year, Benefits of Cenvat A/AT/ Service Tax credits amounting to Rs. 7,63,475/- had also been claimed/availed, on certain additional items, of expenses (which had hitherto not been claimed/availed). The company intends to claim such Benefits/ Credits, for earlier years also on such other items, of expenses and adjustments in respect of the same shall be made as and when such refunds /credits are determined /availed. Such benefits for the year under review are also pending it a be claimed. The amounts of such claimable/ available Credits for the years earlier to previous year and for this year are still to be ascertained and accounted for. This will affect the results and assets of the Company accordingly.

The Company is also examining the possibility of claiming such Cenvat credits also on some further items of expenses and will accordingly file claims for the same. The same are also intended to be adjusted as and when such credits/refunds are claimed/availed for this year as well as earlier years. The amount claimable/ available of such credits is still to be ascertained and hence not stated. Pending adjustments, the results of the Company are affected and or will get affected, consequently.

(ix) Revenue Recognition

(a) Expenses and Income considered payable and receivable respectively, are accounted for on accrual and prudent basis.

(b) (i) Interest receivable on refunds of Sales Tax /VAT, Income Tax and Excise duty are intended to be accounted as and when the amounts are finally determined or settled.

(ii) The sale value, the amount whereof is not presently ascertainable and hence not stated, in respect of fixed Assets of Rs.46,78,665/- (WDV) written off during the year are intended to be accounted for only as and when such fixed assets are disposed off.

(c) Claims of Rs.23,07,672/- raised by the Company on a party in an earlier year had been settled by the Bombay High Court and the Company had been granted a decree for recovery of such amount alongwith interest etc. As the whereabouts of the party are not known, the sum of Rs. 13,67,265/- payable to the said party as per accounts has been written back to the Profit and Loss Account during the year: The balance amount, recoverable Rs.9,40,407/- from the party alongwith interest is intended to be accounted for in Profit and Loss Account, when the position in his regard is finally clear.

(d) Remissions, if any, receivable against Rs.86,61,030/- (P.Y. Rs.80,60,827/-) charged in accounts under respective heads of expenditure, for Entry Tax charged for the period after July, 2006, the deposits of which have been stayed by the Rajasthan High Court, are intended to be accounted for as and when the respective matters are settled. The Management has certified that deposits of such demands still remains stayed by such High Court.

(e) Liabilities, as may arise, due to non receipt of Sales Tax Declaration forms are intended to be accounted for, on completion of relative assessments and or as and when such liabilities are finally determined. Amount not ascertained and hence not stated. :(

(f) Service Tax payments relating to expenses for Exports were debited by the Company to relative expenses heads of account during the year as well as in previous year. In View of certain notifications issued by concerned Authority, the Company filed claims for refunds of Rs. 35,46,085/- (P.Y. Rs 32,13,237) for such service tax payment for the period from 1st July, 2009 to 31st March, 2010 (P.Y. for the year ended 31s1 March, 2009 and for the period from 1st April, 2009 to 30th June, 2009) claims of Rs 6,27,156 (P.Y. Rs 6,27,156/-) against which appeals had been filed were rejected by authorities but the Company has again filed appeals against such rejection / appeals orders and or is in process of filing the appeals / further appeals. Claims for refund of Service Tax payments (amount to be ascertained and hence not stated) relating to the export expenses for the year ended 31.03.2011 are still to be filed. The Company intends to account for such claims, refunds and or refunds on receipt of such refunds and for which claims are still to be filed as aforesaid on disposal of relative appeals and or on settlement of such claims.

(g) (i) Remissions, as may be, received against Rs,51,74,991/- in respect of amounts deducted by the Company from the bills, raised by M/s. VS Lignite Power Private Limited for supply of Power but charged in accounts under the heads of Power in Schedule "19" of Manufacturing Cost, for the period from July 2010 to March 2011, are intended to be accounted, as and when the matter is settled.

(ii) Claims of Rs. 12,84,933/- raised / to be raised by the Company on M/s. VS Lignite Power Private Limited for lower supply of power to the Company during the year ended 31.03.2011 is intended to be accounted for as and when the matter is settled or payments are received. (h) Also refer Notes 1(vi) to 1(viii), 1(x) to 1(xiv), 1(xviii), 1(xix), 7(v), 7(ix) to 7(xv)Wid 13.

(i) Due to the basis of accounting of matters as stated under paras (a) to (h) above the results for the year and the Assets and Liabilities are affected to the extent stated above. The amounts thereof have not been ascertained and hence not stated.

(x) Turnover/Sales

(a) Local sales are recognized on despatch of goods and are inclusive of Excise Duty collected but excluding sales tax / VAT.

(b) Export sales are recognized on basis of dates of Bills of lading and are (except to the extent clearance made on payment of excise duty and or by way of adjustment with cenvat credit as such Excise duty paid and or adjusted is refunded by Excise Department by way of claims of rebate of Central Excise Duty),exclusive of Excise Duty.

Such refunds of Rs. 3,11,06,647/- (including Rs.21,58,505/- due since 31.03.05) included under advances in schedule "11" are pending realisations. Adjustments, for non-recovery and for short realizations, the amount whereof are not presently ascertainable, are intended to be made as and when such refunds are received. (xi) Retirement Benefits/Gratuity and Leave Encashment Benefits

a) (i) The liability for gratuity is covered under the Group Gratuity Scheme with Life Insurance Corporation of India. Contribution made to the Scheme is charged to Profit and Loss account.

(ii) The Company, having taken out, the group gratuity policy with Life Insurance Corporation of India (LIC) for future payments of gratuity liability to its employees as stated under (i) above, is 'paying for annual premium as determined by LIC (including Rs.2,84,906/- (P.Y. Rs.2,64,240/-) for OYGTA Risk Premium and the same is charged to Profit and Loss account.

b) Liability for Leave encashment benefits is accounted for on basis of actuarial valuation.

c) The disclosures required under AS-15 (Revised) are set out in Note 13 below.

(xii) Miscellaneous Expenditure

As per the selected accounting policy and consistent application thereof and on basis of judgments and estimates that are reasonable and prudent, payments made upto 31.03.2007 to workers for compensation, were considered by the Company as deferred revenue expenditure and the same are being amortised over a period of five years from the respective years in which such payments were made. Such expenditure is required to be considered as expenditure for the respective years, as per Accounting Standard 26 issued by ICAI. Such unamortised expenditure is Rs.Nil (P.Y. Rs.9,39,587/-) as on 31.03.2011. The results of the Company as well as the Liabilities and Assets have accordingly been affected to the extent as stated above.

(xiii) Foreign Currency Transactions

(a) Transactions arising in foreign currency for exports/ imports of goods are accounted for at rates of exchange prevailing on the dates of transactions

(b) Foreign currency monetary items at the Balance Sheet date are translated at the exchange rates prevailing on the date of the Balance Sheet

(c) Exchange rate differences resulting from foreign exchange transactions on revenue account, settled during the year, including on year end translation of monetary items, are recognized in Profit & Loss Account, except those covered by forward contracted rates, where the premium or discount arising at the inception of such forward exchange contract, is amortised as expenses or income over the life of the contract.

(d) Also subject to Note 7(xiv) below.

(e) There were no Exchange rate differences resulting on Capital account

(f) The Management has certified that the Company has not entered into any forward exchange contract which is intended for trading or speculation purposes. The Auditors have relied on the Certificate of the Management in this regard.

(xiv) Export benefits

(a) Consideration/Benefits for transfer of DEPB Licences and benefits (including for entitlements of Rs.1,79,60,952 (P.Y. Rs 2,12,77,026) in hand as on the close of the year and to be received) are accounted for on accrual basis and are being valued at estimated and or at net estimated realisable value. Adjustments for short/ excess realisations, if any, are made on actual dates of realisations.

(b) On announcement of relative notifications during a previous year, under Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 by the Govt, of India, the Exporters have option to claim benefits on export at their own under either of the Schemes as per convenience exporter. Since issue of such notifications the Company is claiming export benefits either under DEPB Scheme or under Drawback Rules, as found advantageous and: convenient.

(xv) Borrowing Costs

Interest and other costs on borrowing funds used to finance the acquisition of fixed assets, upto date the assets are ready for use are estimated and capitalised under respective fixed assets. Other interest and costs incurred by the Company in connection with the borrowing of funds are recognised as expenses in the period in which they are incurred.

(xvi) Research and Development

Routine research and development expenditure considered as of revenue nature are recognised as an expense in the period in which it is incurred. Such expenditure is included in Schedules 18 and 19, the amount whereof cannot be separately ascertained and stated. The expenditure of capital nature, if any, is capitalised as fixed assets.

(xvii) Intangible Assets

Intangible assets are recognised at cost and amortised over a period of five years.

(xviii) Provision for taxation

(A) Current tax

(a) Provision for Income Tax Rs. 102 Lacs (P.Y. Rs.49.30 Lacs) made in Accounts is as estimated and certified by the Management, (subject to note (b) below).

(b) Income tax Assessments have been completed upto Assessment year 2008-09.In view of certain additions and disallowances a demand of Rs.7,20,58,480/- (including interest) for Assessment year 2008-09 has been raised against the Company for which provision has not been made in Accounts as the said order has been appealed against.

(c) Also refer Note 1(ix), 7(xi), 7(xii) and 13.

(d) Short Provision for Fringe Benefit Tax of Rs.1,10,830/- on the basis of assessment for an earlier year is intended to be provided in accounts as and when the rectification petition filed by the Company is disposed off by the concerned Authorities

(e) The Company is entitled to credit in respect of Minimum Alternate Tax (MAT) under the provisions of Income Tax Act, 1961. However, read with (b) below and keeping in view the consideration of prudence and the probability of availability / availing the MAT Credit (which is based on convincing evidence of realization as envisaged by Jie Quidance Note issued by ICAI), MAT Credits for the year / earlier years, the amount, whereof not presently ascertainable, has not been considered by the Company.

(B) Deferred tax

The deferred tax liabilities and assets are recognised using current tax rates, to the extent the Management feels that there is virtual certainty that sufficient future taxable income will be available, against which such deferred tax Assets/ Liabilities can be realised. Such Assets/ Liabilities are reviewed as at each Balance Sheet date, to reassess realisations/ Liabilities.

(xix) Impairment of Assets

As required by AS-28 "Impairment of Assets" issued by the Institute of Chartered Accountants of India, provision for impairment loss of assets is not required to be made as in view of the Management the estimated realisable value of such assets will be more or equal to the carrying amount stated in the Balance Sheet. The Auditors have relied on the Certificate of the Management in this regard. (xx) Provisions, Contingent Liabilities and Contingent Assets

(a) Provisions are recognized in respect of obligations where, based on the evidences available, and their existence at the Balance Sheet date are considered probable.

(b) Contingent Liabilities are shown by way of Notes on accounts (refer note 3) in respect obligations where, based on the evidences available their existence at the Balance Sheet are considered not probable.

(c) Contingent Assets are neither recognized nor disclosed in Accounts.

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Mar 31, 2010

I) Basis of Preparation of Financial Statements

The Financial Statements are prepared on going concern assumption and under the historice cost conversion. in accordance with generally accepted Accountinng principles in lndia and the provisons of the Companies Act 1956.

II) Use of Estimates

The preparation offinancialsi statements requires estithetes and assumption to be made that affact the toportded amount of assets and liabilities on the date of the financial and the reported amount or and expenses during the reporting period. Difference between the actual l results and estithetes are recognized In the period in which results are known materalized

iii) Fixed Assets

Fixed Assets are stated at cost less acomulated depreciation Cost (net of Modvat/credit) is inclucive of doigng duties, levies and any (Latter not visible )

(v) Depreciation

a) (i)l Deprociation on fixed assets is provided pro-rata to the period use on straight line method in the manner and at the rates-spocifed in schodule XIV to the Companies Act 1956

(ii) The Company Rs providing sinco (charectro not visible) reiafod fo trinities). considering the same as continuous process plant, which is required and designed to operate 24 hours a day. on the basis of technical opinion obtained by the Company in an year, in(Latter not visible)

iii This year. Benefits of Cenvat /VAT/ Service Tax crucfeis amounting to Rs7,63,475/- have also been c(charector not visibal) expenses (whichhad hitherto not been claimed availed). The Company intends to claim Benefits/ Credit-. for cartler years also on such other items, of expenses and respect of the some shall be thede as and when such refunds are determined availed- The amount of (Latter not visible) to be and hence Rs not stated. The Company to also examining me possibility of (charector notvRsible some and when ouch |x) Revenue Recognition

a) (Letter not visible)

ix) Revenue Recognition

a) Expenses and income considered payable and receivable respectively. are accounted for on accounts prudent basis.

b) (1) Interest receivable on refunds of Sales Tax, Income Tax and Excise duty are atended to be accounted as end when the amounts are finally determined or seticed

(ii) The sale proceeds, the amount where of is not presently and not staled, in respect of fixed Assets ofl Rs.16.52.699 (WDV) written all during the year are intended to De accounted for only 35 and when such fixed are disposed on

C) Claims of Rs.23.07.672/- raised by the Company on a party in an earlier year, alongwth interest and cesits (Latter not visible) to be accounted for as And (Latter not visible)e) Liabilities, as they anse, due 10 non availability of Safes Tax Declaration forms are intended to be accounted for, on comotetion of relative assessments and or as and when such Cos are finally determined. Amount not ascertained

f) Service Tax payments (Latter not visible) heeds of account during the year as well as in previous year view notificationon issued by concerned Aulhority. the Company: for rolunds of Rs. 32.13.237/- for such serivice tax payment for the year ended 31st therch. 2009 and for the ported from 1st Aprilt. 2009 to 30th Juno, 2009 of Rs. 6.27 56- out of aforesaid damts were rejected by 1 but the Company has filed appeals Against such orders and or in process of fling The appeals. (charector not visible) peyment (amount to be ascertained 31st march , 2010 are will to be (Latter not visible)

x) Turnover/Sales

a) Local sales are recognized on despetch of goods and are inclusive of ExcRse Duty collected but excluding sales tax/ VAT.

b) Export safes are recognised on bassis of dates of Bisis and or adjusted is refunded by Excise Department by way exclusive ol Excise Duty. Such refunds of Rs. 4,82.21,855/- (including RS 21,58,505 due since 31.03.05 mctuded under advanced in schedule "11" pending realisations. Adjustments, for non-recovery and (or short realizations. amount where are not presentty ascertainable, are intended to be made as and when such rotunds are receded

xi) Retirement Benefits/Gratuity and Leave Encashment Benefits

a) (1) The liability for gratuity Rs covered under the Group Gratuity Scheme with Ufa Insurance Gorporation of India.. A contribution made to the Scheme is charged to Profit and Loss account

(ii) The Company, having taken out, the group gravity potey with Life insurance Corporation of India (LIC) for future payments of gratuity liability to its employees as slated under 0} above, is paying for

b) Liability tor Leave encashment benefits Rs accounted for on basis of actuaria) valuation.

c) The disclosures required under AS- 15 (Revised) are set out in Note 13 below.

xii) Miscellaneous Expenditure

As per the selected accounting policy and consistion application thereof and on basis of judgements and estithetes that are reasonable, and prudent, payments made upto 31.03 2007 to workers for compensation. were considered by the Company as deterred revenue expenditure and the same are being amortised over a period (Latter not visible) inquired to be considered as expenditure for the respective years, as per Accounting Standard 26 issued by ICAL . Such unainortfeod expenditure Rs Rs9.39.567/- P.Y. RS 29, 73, 18/- as on 31.03.2010. The results of the Company as well as the Liabilities and Assets have accordingly affected to the extent as stated above

xiii) Foregin Currency Transactions

a) Transactions arising in foreign currency for exports/ imports of goods are accounted for at rates of exchange prevailing on the dates of transactions.

b) Foreign currency monetary items at the Balance Shoot date are translated at the exchange rates prevalling date of the Balance Sheet.

c) Exchange rate differences resulting from foreign exchange transactions on revenue account, settled during the year, inducing on year and translation of monetary items, are recognized in Prcfid & Lost Account except those covered by forward contracted rates, where the premium or ascount arising at the inception of such forward exchange contract, isamoritised as expense or income over the life of the contract.

d) Also subject to Note 7 below

e) There were no Exchange rate on Capital account.

f) The management has certified that the Company has not entered into any forward exchange contract which is intended for trading or speculation purposes The Auditors nave refced on the certificate of the management in thRs regard

xiv) Export Benefits

a) Considersation Benfits for transfer Of DEPB Licences and Benefits (including for entilfemenls R&.2,12,77,028 in hand as on the close of the year and to be received) are accounted for on accrual basis and are being valued at estitheted and at net estitheted realised value, Adjustments for short excess any. ate are be made on actual daries of realisations.

b) On announcement of relative notifications during a previous year, under Cusstoms Central Excise and Service Tax Drawback Rutes, 1995 by the Govt, of India, the Exporters have option to claim benifits on export at their own under of the Schemes as per convenience of the exporter. Since issue of such notification the Company it claiming export benefits eklner under DEPB Scheme or under Drawback Rules, as found advantagcous and convenient

xv) Borrowing Costs

Interest and other costs on borrowing funds used to finance the acquisition of fixed upto date the assets ore reedy tor use are estitheted and capitalRsed under respective fixed assets Other interest and costs incurred by me Company in connecton wm the borrowing of funds are recognised as an expenses in the period in which they are Incurred

xvi) Research and Development

Rouene research and development exoenduro considered as of revenue nature are recognRsed as an expense In the periodtn which it is Incurred. Such expendiaure is included in Schedules 18 and 19. the amount cannot be separately ascertained and stated. The expenditure of capita nature, if any. is capitalised as fixed assets.

xvi) Intangible Assets

intangible assets are recognised at cost and amortised over a period of five years.

xvii) Provision for taxation

A) Current Tex : a) Provision tor Income Tex Rs 49.30 Lacs (P.Y Rs 32,50 Lacs) and Fringe Benefit Tax Rs, Nil (P.Y RsS 50 Lacs) made in Accounts are as estimated and certified by the management. (subject to note (b) below)

b) Also refer Note 7[xi, 7[xii] and 13,

c) Short Provision for Fringe Benefit Tax of Rs.M0.83(y- on the basis of assessment for an year is intended to bo provided In accounts as and when the rectification filled by the Company is disposed off by the concerned Authonboe.

B) Deferred Tax :

The deferred a and assets are recognised using current tax rates. to the extent the management feels thet there is virtual certainty that sufficient future taxable income willl be arable, against which such deterred tax assets/ tax can be realised- Such assets/ Liabllits are reviewed as at each Satance Sheet dale, to reassess lliabilities

b) Impairment of Assets

As required by As-28 "impairment of Assets" issued by the Institute of Chartered Accountants of India. provision for impairment foss of assets Rs not required be made as in view of management the estimated realisable value of such assets will be more or equal to the carrying amount stated in the Balance Sheet The Auditors have rated on the cenrtcate of the management in this regard,

xx) Provisions, Contingent Liabilities and Contingent Assets

a) Protons are recognized in respect of obligations where. based on the evidences available and their existence at the Balance Sheet date are considered probable.

b) Contingent Liabilites are shown by way of Notes on accounts (refer note 3) in obligations where, based on the evidences available their existence at the Balance Sheet are considered not probable.

c) Contingent Assets are nether recognized nor disclosed in the Accounts.