Accounting Policies of Tamil Nadu Steel Tubes Ltd. Company

Mar 31, 2015

A) Change in Presentation of Financial Statement:

During the year ended 31st March 2015, the Schedule III notified under the Companies Act 2013, has become applicable to the Company, for preparation and presentation of its Financial Statements. However, it has significant impact on presentation and disclosures made in the Financial Statements. The Company has also re-classified the previous year figures in accordance with the requirement applicable in the current year.

b) Basis of Preparation of Financial Statements:

The Financial Statements are prepared under historical cost convention in accordance with the generally accepted Accounting Principles in India and the provision of the Companies Act, 2013.

c) Use of Estimates :

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

d) Tangible Fixed Assets :

The fixed assets, acquired are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalized criteria are met and directly attributable cost or bringing the assets to its working conditions for the intended use. Any trade discounts and rebates are deducted in arriving atthe purchase price.

Subsequent expenditure related to the item of fixed assets is added to its book value only if it increases the future benefits from the existing assets beyond its previously assessed standard performance. All other expenses on existing fixed assets, including day to day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

e) Depreciation on Tangible Assets :

Depreciation on fixed assets is calculated on Straight Line Value method (SLV) on the fixed assets using the rates arrived at based on the useful lives estimated by the management or those prescribed under the Schedule II to the Companies Act, 2013.

Accordingly net amount of Rs.2605018/- is being charged to Retained Earnings during the F/Y ended on 31.03.2015. Depreciation for additions to / deletions from owned Assets is calculated on prorata basis from/to the day of addition / deletion.

f) Inventories :

Raw materials, components, store and spares are valued at lower of cost and net realizable value. However, materials and other items held for the use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw materials, components and stores and spares is determined on a weighted average basis.

Work in progress and finished goods are valued at lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity.

Scrap is valued at net realizable value. Net realizable value is estimated at selling price in the ordinary course of business.

g) Revenue Recognition:

Revenue from sale of products is recognized when practically all obligations connected with the transaction risks and rights to the buyer have been fulfilled and excluded sales tax and state value added taxes. This usually occurs upon dispatch and collection of the receivable is reasonably certain.

Interest income is recognized using time proportion method based on the rates implicit in the transaction.

h) Employees' Benefits:

a) Contribution to Provident Fund and other recognized fund is charged to Profit & Loss Account.

b) Liability for Leave Encashment is provided for as and when the entitlement is ascertained.

c) In respect of Gratuity, the Company offers a non contributory defined benefit plan to its Employees. The liability for the same as at the year end is provided for on the basis of Actuarial Valuation. But during the year under audit, no provision is made as there is an excess provision.

i) Excise Duty / Service Tax / Sales Tax and Value Added Tax: Excise Duty / Service Tax is accounted on the basis of both, payments made in respect of goods cleared/service provided as also provision made for goods lying in bonded warehouse if there is Sales Tax/Value added Tax is charged to Profit & Loss Account

j) Provision for Current Tax and Deferred Tax:

Provision for current tax is made after taking into consideration benefits admissible under the provisions of Income Tax Act, 1961.

Deferred Taxes:

Deferred tax resulting from"Timing Difference" between taxable and accounting income is accounted for using the tax rate and loss that are enacted or substantively enacted as on the balance sheet date. Deferred tax asset is recognized and carried forward only to the extent that there is a virtual certainty that the assets will be realized in future.

k) Segment Reporting:

The accounting policies adopted for the segment reporting are in line with the accounting polices stipulated. The Company primarily operates in single business segment which is Steel Tubes (Black & GI Pipes), and accordingly there is no primary segments to be reported as per Accounting Standard 17"Segment Reporting".

l) Earning per Share :

The basic earning per equity share is computed by dividing the net profit or loss for the attributable to the equity share holders by the weighted average number of equity shares outstanding during the reported period. The number of shares used in computed diluted earnings per share and also the weighted average number of shares considered for deriving basic earnings per share which may be issued on the conversion of all dilutive potential shares, unless the results would be antidilutive.

m) The Company has been declared by the Board for Industrial Financial Reconstruction Sick industrial company within the meaning of Sec-3(l)(o) of Sick Industrial Companies (Special Provisions) Act 198, but during the year the net worth is in positive. Hence the company ceased to be sick industrial Company.

n) Provision for rates and taxes (under current liability) includes a sum of Rs.3,08,44,000/- being Stamp Duty payable on acquisition of Factory Land situated at Maraimalai Nagar Industrial Estate Chengleput Taluk, Kancheepuram Dist, which was recognised as Revenue Expenses in the Financial Year 2009-10 is reversed in financial year 2014-15 as the provision no longer required.

o) Impairment of Assets (AS-28):

In the opinion of the company, the recoverable amount of fixed assets of the company will not be lower than the book value of the fixed assets. Hence no provision has been made for impairment.

p) i) Service Tax due for the period November 1997 to June 1998 is Rs.1.60 Lakhs.

ii) Other Current liabilities includes a sum of Rs.49.41 lakhs towards Interest payable on Customs Duty as per JDGFT Letter F.No.04/88/40/00090 AM00, dated 08.03.2011 which was debited to General Expenses in the Financial Year Ended 31.03.2011.

iii) The Company has addressed letters to the suppliers and service provider seeking information from them as to whether they fall under the categories of"Micro Small and Medium Enterprises". The Company is yet to receive replies from them.

q) CONTINGENT LIABILITIES :

Company has received a show cause notice from Commercial Taxes Department for payment of tax Rs.2,44,16,070/- on account of input Credit Reversed Credit on Consignment and CST Sales. The issue is not yet finalized and it is under dispute.

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Mar 31, 2014

1) CORPORATE INFORMATION

TAMILNADU STEEL TUBES LTD. (the Company) is a Public Limited Company domiciled in India and incorporated under the provisions of the Companies Act 1956 under RC NO.U27110TN1979PLC007887. Its share is listed on Stock Exchanges in India. The Company is engaged in the manufacturing and selling a reputed Brand of Black Pipe (ERW Pipe) & G.l. Pipe. The Company caters only domestic market.

2) SIGNIFICANT ACCOUNTING POLICIES

a) Change in Presentation of Financial Statement:

During the year ended 31st March 2012, the Revised Schedule VI Notified under the Companies Act 1956, has become applicable to the Company, for preparation and presentation of its Financial Statements. However, it has significant impact on presentation and disclosures made in the Financial Statements. The Company has also re-classified the previous year figures in accordance with the requirement applicable in the current year.

b) Basis of Preparation of Financial Statements:

The Financial Statements are prepared under historical cost convention in accordance with the generally accepted Accounting Principles in India and the provision of the Companies Act, 1956.

c) Use of Estimates:

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

d) Tangible Fixed Assets:

The fixed assets, acquired are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalized criteria are met and directly attributable cost or bringing the assets to its working conditions for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

Subsequent expenditure related to the item of fixed assets is added to its book value only if it increases the future benefits from the existing assets beyond its previously assessed standard performance. All other expenses on existing fixed assets, including day to day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

e) Depreciation on Tangible Assets:

Depreciation on fixed assets is calculated on Straight Line Value method (SLV) on the fixed assets using the rates arrived at based on the useful lives estimated by the management or those prescribed under the Schedule XIV to the Companies Act, 1956. Depreciation for additions to/deletions from owned Assets is calculated on prorata basis from/to the day of addition/deletion.

f) Inventories:

Raw materials, components, store and spares are valued at lower of cost and net realizable value. However, materials and other items held for the use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw materials, components and stores and spares is determined on a weighted average basis.

Work in progress and finished goods are valued at lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity.

Scrap is valued at net realizable value. Net realizable value is estimated at selling price in the ordinary course of business.

g) Revenue Recognition:

Revenue from sale of products is recognized when practically all obligations connected with the transaction risks and rights to the buyer have been fulfilled and excluded sales tax and state value added taxes. This usually occurs upon dispatch and collection of the receivable is reasonably certain.

Interest income is recognized using time proportion method based on the rates implicit in the transaction.

h) Employees'' Benefits:

a) Contribution to Provident Fund and other recognized fund is charged to Profit & Loss Account.

b) Liability for Leave Encashment is provided for as and when the entitlement is ascertained.

c) In respect of Gratuity, the Company offers a non contributory defined benefit plan to its Employees. The liability for the same as at the year end is provided for on the basis of Actuarial Valuation. But during the year under audit, no provision is made as there is an excess provision.

i) Excise Duty/Service Tax/Sales Tax and Value Added Tax:

Excise Duty/Service Tax is accounted on the basis of both, payments made in respect of goods cleared/service provided as also provision made for goods lying in bonded warehouse if there is Sales Tax/Value added Tax is charged to Profit & Loss Account.

j) Provision for Current Tax and Deferred Tax:

Provision for current tax is made after taking into consideration benefits admissible under the provisions of Income Tax Act, 1961.

Deferred Taxes:

Deferred tax resulting from "Timing Difference" between taxable and accounting income is accounted for using the tax rate and loss that are enacted or substantively enacted as on the balance sheet date. Deferred tax asset is recognized and carried forward only to the extent that there is a virtual certainty that the assets will be realized in future.

k) Segment Reporting:

The accounting policies adopted for the segment reporting are in line with the accounting polices stipulated. The Company primarily operates in single business segment which is Steel Tubes (Black & Gl Pipes), and accordingly there is no primary segments to be reported as per Accounting Standard 17 "Segment Reporting".

l) Earning per Share:

The basic earning per equity share is computed by dividing the net profit or loss for the attributable to the equity share holders by the weighted average number of equity shares outstanding during the reported period. The number of shares used in computed diluted earnings per share and also the weighted average number of shares considered for deriving basic earnings per share which may be issued on the conversion of all dilutive potential shares, unless the results would be anti-dilutive.

m) The Company has been declared by the Board for Industrial Financial Reconstruction as a Sick industrial company within the meaning of Sec-3(1)(o) of Sick Industrial Companies (Special Provisions) Act 1985.

n) Provision for rates and taxes (under current liability) includes a sum of Rs. 3,08,44,000/- being Stamp Duty payable on acquisition of Factory Land situated at Maraimalai Nagar Industrial Estate Chengleput Taluk, Kancheepuram Dist, which was recognised as Revenue Expenses in the Financial Year 2009-10.

o) Impairment of Assets (AS-28):

In the opinion of the company, the recoverable amount of fixed assets of the company will not be lower than the book value of the fixed assets. Hence no provision has been made for impairment.

p) The Company has paid in full the agreed liability of Rs. 10 Crores as per the One Time Settlement (OTS) entered into with Jammu & Kashmir Bank Ltd, together with interest and the Company is in the process of obtaining closure letter/NOC from the Bank.

The balance of Rs. 1.44 Crores in Capital Loan Account and Rs. 0.35 Crore in Packing Credit Account due to Jammu & Kashmir Bank are not yet confirmed.

q) The Company is in the process of appointing a full time Company Secretary

r) CONTINGENT LIABILITIES:

r.1 Service Tax due for the period November 1997 to June 1998 is Rs. 1.60 Lakhs.

s) The Company has addressed letters to the suppliers and service provider seeking information from them as to whether they fall under the categories of "Micro Small and Medium Enterprises". The Company is yet to receive replies from them.

t) Other Current liabilities includes a sum of Rs. 49.41 Lakhs towards Interest payable on Customs Duty as per JDGFT Letter F.NO.04/88/40/00090/AM00 dt.08.03.2011 which was debited to General Expenses in the Financial Year Ended 31.03.2011.

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Mar 31, 2013

1) CORPORATE INFORMATION

TAMILNADU STEEL TUBES LTD. (the Company) is a Public Limited Company domiciled in India and incorporated under the provisions of the Companies Act 1956. under RC No.L27110TN1979PLC007887. Its shares are listed on Stock Exchanges in India. The Company is engaged in manufacturing and selling a reputed Brand of Black Pipe (ERW Pipe) & G.l. Pipe. The Company caters only domestic market.

2) SIGNIFICANT ACCOUNTING POLICIES

a) Change in Presentation of Financial Statement:

During the year ended 31st March 2013, the Revised Schedule VI Notified under the Companies Act 1956, has become applicable to the Company, for preparation and presentation of its Financial Statements. However, it has significant impact on presentation and disclosures made in the Financial Statements. The Company has also re-classified the previous year figures in accordance with the requirement applicable in the current year.

b) Basis of Preparation of Financial Statements :

The Financial Statements are prepared under historical cost convention in accordance with the generally accepted Accounting Principles in India and the '' provision of the Companies Act, 1956.

c) Use of Estimates :

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

d) Tangible Fixed Assets :

The fixed assets, acquired are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalized criteria are met and directly attributable cost or bringing the assets to its working conditions for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

Subsequent expenditure related to the item of fixed assets is added to its book value only if it increases the future benefits from the existing assets beyond its previously assessed standard performance. All other expenses on existing fixed assets, including day to day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

e) Depreciation on Tangible Assets :

Depreciation on fixed assets is calculated on Straight Line Value method (SLV) on the fixed assets using the rates arrived at based on the useful lives estimated by the management or those prescribed under the Schedule XIV to the '' Companies Act, 1956. Depreciation for additions to / deletions from owned Assets is calculated on prorata basis from/to the day of addition / deletion.

f) Inventories:

Raw materials, components, store and spares are valued at lower of cost and net realizable value. However, materials and other items held for the use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw materials, components and stores and spares is determined on a weighted average basis.

Work in progress and finished goods are valued at lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity.

Scrap is valued at net realizable value. Net realizable value is estimated at selling price in the ordinary course of business.

g) Revenue Recognition :

Revenue from sale of products is recognized when practically all obligations connected with the transaction risks and rights to the buyer have been fulfilled and excluded sales tax and state value added taxes. This usually occurs upon despatch and collection of the receivable is reasonably certain.

Interest income is recognized using time proportion method based on the rates implicit in the transaction.

h) Employees'' Benefits:

a) Contribution to Provident Fund and other recognized fund is charged to Profit & Loss Account.

b) Liability for Leave Encashment is provided for as and when the entitlement is ascertained. '' .

c) In respect of Gratuity, the Company offers a non. contributory defined benefit plan to its Employees. The liability for the same as at the year end is provided for on the basis of Actuarial Valuation. But during the year under audit, no provision is made as there is an excess provision.

i) Excise Duty / Service Tax / Sales Tax and Value Added Tax :

Excise Duty / Service Tax is accounted on the basis of both, payments made in respect of goods cleared/service provided as also provision made for goods lying in bonded warehouse if there is Sales Tax/Value added Tax is charged to Profit & Loss Account. .

j) Provision for Current Tax and Deferred Tax :

Provision for current tax is made after taking into consideration benefits admissible under the provisions of Income Tax Act, 1961.

Deferred Taxes:

Deferred tax resulting from "Timing Difference" between taxable and accounting income is accounted for using the tax rate and loss that are enacted or substantively enacted as on the balance sheet date. Deferred tax asset is recognized and carried forward only to the extent that there is a virtual certainty that the assets will be realized in future.

k) Segment Reporting :

The accounting policies adopted for the segment reporting are in line with the accounting polices stipulated. The Company primarily operates in single business segment which is Steel Tubes (Black & Gl Pipes), and accordingly there is no primary segments to be reported as per Accounting Standard 17 "Segment Reporting". .

I) Earnings per Share :

The basic earning per equity share is computed by dividing the net profit or loss for the attributable to the equity share holders by the weighted average % number of equity shares outstanding during the reported period. The number of shares used in computed diluted earnings per share and also the weighted average number of shares considered for deriving basic earnings per-share which may be issued on the conversion of all dilutive potential shares, unless the results would be anti-dilutive, m) The Company has been declared by the Board for Industrial Financial Reconstruction as a Sick industrial company within the meaning of Sec-3(1)(o) of Sick Industrial Companies (Special Provisions) Act 1985. n) Provision for rates and taxes (under current liability) includes a sum of Rs.3,08,44,000/- being Stamp Duty payable on acquisition of Factory Land . situated at Maraimalai Nagar Industrial Estate, Chengleput Tk., Kancheepuram Dist, which was recognized as Revenue Expenses in the Financial Year 2009-10. ,

o) Impairment of Assets (AS-28):

In the opinion of the company, the recoverable amount of fixed assets of the company will not be lower than the book value of the fixed assets. Hence no provision has been made for impairment.

p) The Company has paid in full the agreed liability of Rs.10 Crores as per the One Time Settlement (OTS) entered into with Jammu & Kashmir Bank Ltd, together with interest and the Company is in the process of obtaining closure letter / NOC from the Bank

The balance of Rs.1.44 Crores in Capital Loan Account and Rs.0.35 Crore in Packing Credit Account due to Jammu & Kashmir Bank are not yet confirmed, q) The Company is in the process of appointing a full time Company Secretary r) CONTIGENT LIABILITIES :

1) Appeals for sales tax dues (including interest and penalty) that are pending before Appellate Assistant Commissioner of Commercial Taxes, Chennai as follows:-

Assessment Years Amount (in Lakhs) *

i. A/Y. 2004-05 6.44

ii. A/Y. 2005-06 5.84

iii. A/Y. 2006-07 4.04 -

2) Service Tax due for the period November 1997 to June 1998 is Rs.1.60 Lakhs. .

s) The Company has addressed letters to the suppliers and service provider seeking information from them as to whether they, fall under the categories of "Micro Small and Medium Enterprises". The Company is yet to receive replies from them.

t) Other Current liabilities includes a sum of Rs.49.41 Lakhs towards Interest payable on Customs Duty as per JDGFT Letter F.No.04/88/40/00090/AM00 dt.08.03.2011 which was debited to General Expenses in the Financial Year Ended 31.03.2011. ''

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Mar 31, 2012

A) Change in Presentation of Financial Statements :

During the year ended 31st March 2012, the Revised Schedule VI Notified under the Companies Act 1956, has become applicable to the Company, for preparation and presentation of its Financial Statements. However it has significant impact on presentation and disclosures made in Financial Statement, the Company has also reclassified the previous year figures in accordance with the requirement in the current year.

b) BASIS OF PREPARATION OF FINANCIAL STATEMENT.

The Financial Statements are prepared under historical cost convention in accordance with the generally accepted Accounting Principles in India and the provision of the Companies Act 1956.

c) USE OF ESTIMATES.

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

d) TANGIBLE FIXED ASSETS.

The fixed assets, acquired are stated at cost, net of accumulated depreciation and accumulated impairment losses if any. The cost comprises purchase prize, borrowing costs if capitalized criteria are met and directly attributable cost or bringing the assets to the working conditions for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

Subsequent expenditure related to the item of fixed assets is added to its book value only if it increases the future benefits from the exiting assets beyond its previously assessed-standard performance. All other expenses on exiting fixed assets, including day to day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

e) DEPRECIATION ON TANGIBLE ASSETS

Depreciation on fixed assets is calculated on straight line value method (SLV) on the fixed assets using the rates arrived at based on the useful lives estimated by the management or those or those prescribed under the schedule XIV to the Companies Act 1956. Depreciation for Additions to/Deletions from owned Assets is calculated on prorate basis from/to the day of addition/deletion.

f) INVENTORIES

Raw materials, components, store and spares are valued at lower of cost and net realizable value. However materials and other items held for the use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw materials, components and stores and spares is determined on a weighted average basis.

g) REVENUE RECOGNITION

Revenue from sale of products is recognized when practically all obligations connected with the transaction risks and rights to the buyer have been fulfilled and excluded sales tax and state value added taxes. This usually occurs upon dispatch and collection of the receivable is reasonably certain.

Interest income is recognized using time proportion method based on the rates implicit in the transaction.

h) EMPLOYEE BENEFITS

- Contribution to provident fund and other recognized fund is charged to Profit & Loss Account.

- Liability for Leave Encashment is provided for as and when the entitlement is ascertained.

- In respect of Gratuity, the Company offers a non contributory defined benefit Plan to its Employees. The liability for the same as at the year end is provided for on the basis of Actuarial Valuation. But during the year under audit no provision is made as there is an excess provision.

i) EXCISE DUTY/SERVICE TAX/SALES TAX AND VALUE ADDED TAX.

Excise Duty/Service Tax is accounted on the basis of both, payments in respect of goods cleared/service provided as also provision made for goods lying in bonded warehouse if there is Sales Tax/Value added Tax is charged to Profit & Loss A/c.

j) PROVISION FOR CURRENT TAX AND DEFERRED TAX

Provision for current tax is made after taking into consideration benefits admissible under the provisions of income tax act 1961.

DEFERRED TAXES

Deffered tax resulting from "Timing Difference" between taxable and accounting income is accounted for the using the tax rate and loss that are enacted or substantively enacted as on balance sheet date. Deferred tax is recognized and carried forward only to the extent that there is a virtual certainty that the assets will be realized in future

k) SEGMENT REPORTING

The accounting polices adopted for the segment reporting are in line with the accounting polices stipulated. The company primarily operates in single business segments which is steel tubes (black & Gi pipes), and accordingly there is no primary segments to be reported as per accounting standard 17 "SEGMENT REPORTING"

l) EARNING PER SHARE

The basic earning per equity share is computed by dividing the net profit or loss of the attributable to the equity share holders by the weighted average number of equity share holders outstanding during the reported period. The number of shares used in diluted earnings per share and also the weighted average number of shares considered for deriving basic earning per share which may be issued on the conversion of all dilutive potential shares, unless the results would be anti-dilutive.

m) The company has been declared by the board for industrial financial reconstruction as a sick industrial company within the meaning of sec 3(1) (o) of sick industrial companies (special provisions) Act 1985,

n) Provision for rates and taxes (under current liability) includes a sum of Rs. 3,08,44,000/- being Stamp Duty payable on acquisition of Factory Land situated at Marimalai Nagar, Industrial Estate Chengleput Taluk, Kancheepuram Dist., which was recognized as Revenue Expenses in the Financial Year 2009-10.

o) IMPAIRMENT OF ASSETS (AS-28)

In the opinion of the company, the recoverable amount of fixed assets of the company will not be lower than the book value of the fixed assets. Hence no provision has been made for impairment

p) The Company has paid in full the agreed liability of Rs. 10 Crores as per the One Time Settlement (OTS) entered into with Jammu & Kashmir Bank Ltd, together with interest and the Company is in the process of obtaining Closure letter/NOC from the Bank

The balance of Rs. 1.44 Crores in Capital Loan Account and Rs. 0.35 Crore in Packing

Credit account due to Jammu & Kashmir Bank are not yet confirmed.

q) The company is in the process of appointing a full time company secretary.

r) CONTINGENT LIABILITIES

Appeals for sales tax dues (including interest and penalty) that are pending before appellate assistant Commissioner of commercial taxes, Chennai as follows

Assessment Years Amount (in Lakhs)

i. AY. 2004-05 6.44

ii. A.Y. 2005-06 5.84

iii. A.Y. 2006-07 4.04

s) Service Tax due for the period November 1997 to June 1998 is Rs. 1.60 Lakhs.

t) The Company has addressed letters to the suppliers and service provider seeking information from them as to whether they fall under the categories of "Micro Small and Medium Enterprises". The Company is yet to receive replies from them.

u) Other Current liabilities includes a sum of Rs. 49.41 Lakhs towards interest payable on Customs Duty as per JDGFT Letter F.No. 04/88/40/00090/AM00, dt. 08.03,11 which was debited to General Expenses in the Financial Year Ended 31.03.2011.

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Mar 31, 2010

ACCOUNTING CONVENTION:

The financial statements have been prepared to comply in all material respects with the Notified accounting standard by Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

FIXED ASSETS:

Fixed assets are stated at cost of acquisition (or revalued amounts, as the case may be) less accumulated depreciation and impairment losses if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.

BORROWING COSTS:

The Company does not have any Borrowing Costs attributable to the acquisition or construction of qualifying assets. AN the other borrowing costs are charged to revenue. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale.

DEPRECIATION:

i) Depreciation on Fixed Assets is provided on Straight Line Method at the rates based on the

estimated useful life of the assets, estimated by the management which is in accordance with the rates specified in Schedule XIV of the Companies Act, 1956.

ii) Fixed Assets costing below Rs. 5,000/- are fully depreciated in the year of acquisition.

iii) Depreciation on fixed assets / disposed off during the year is provided on pro-rata basis with respect to date of acquisition / disposal.

INVENTORIES:

Inventories (Raw Material, Stores & Spares, Finished Goods and Scrap) are valued at lower of cost and estimated net realizable value.

REVENUE RECOGNITION:

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

b) The company generally follows the mercantile system of accounting and recognises income and expenditure on an accrual basis except those with significant uncertainties.

c) Sale of goods is recognised when the risk and rewards of ownership are passed on to the customers, which is generally on dispatch of goods.

TAXES ON INCOME:

Tax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income tax act 1961, and based on the expected outcome of assessments/appeals.

Deferred tax is recognised on timing differences between the accounting income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

Deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

RETIREMENT BENEFITS:

a) Contribution to Provident Fund and other recognised funds is charged to Profit and Loss Account.

b) Liability for Leave Encashment is provided for as and when the entitlement is ascertained.

c) In respect of gratuity, the Company offers a defined benefit plan to its employees. Liability for Gratuity is provided as prescribed by the Payment of Gratuity Act.