Notes to Accounts of Vikas Proppant & Granite Ltd.

Mar 31, 2018

1. Background of the reporting entity

Vikas Proppant & Granite Limited (Formerly known as Vikas Granaries Limited) was incorporated in the year 1994. The shares of the Company were listed on Bombay Stock Exchange Limited (“the stock exchange”) and other stock exchanges in India in 1996. The Company is an agro based industry manufacturer and grading of Guar Gum Powder and grading of guar splits and its derivatives. Now the Company has diversified its business into the mining of Granite Blocks and manufacturing of Proppants.

I) General information and compliance with Ind AS

These financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the ‘Ind AS’) as notified by Ministry of Corporate Affairs (‘MCA’) under section 133 of the Companies Act, 2013 (‘Act’) read with the Companies (Indian Accounting Standards) Rules, 2015, as amended and other relevant provisions of the Act. The Company has uniformly applied the accounting policies for the periods presented.

The financial statements forthe year ended March 31,2018 are the first financial statements which the Company has prepared in accordance with Ind AS. For all periods up to and including the year ended March 31, 2017, the Company had prepared its financial statements in accordance with accounting standards notified under section 133 of the Act, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Previous GAAP), which have been adjusted forthe differences in the accounting principles adopted by the Company on transition to Ind AS. For the purpose of comparatives, financial statements for the year ended March 31, 2017 and opening balance sheet as at April 1, 2016 are also prepared and presented as per Ind AS. Note 29 describe the disclosures required under Ind AS 101.

The financial statements forthe year ended March 31, 2018 along with the comparative financial information were authorized and approved for issue by the Board of Directors on May 29, 2018.

II) Basis of preparation

The financial statements have been prepared on going concern basis in accordance with generally accepted accounting principles in India. Further, the financial statements have been prepared on a historical cost basis except for following items:

III) Recent accounting pronouncement

In March 2018, the Ministry of Corporate Affairs (‘MCA’) issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2018, notifying amendments to Ind AS 12, ‘Income taxes’, Ind AS 21, The effects of changes in foreign exchange rates andalso introduced new revenue recognition standard Ind AS 115 ‘Revenue from contracts with customers’. These amendments rules are applicable to the Company from April 1, 2018.

Ind AS 115 ‘Revenue from Contracts with Customers’ (Ind AS 115)

MCA has notified new standard for revenue recognition which overhauls the existing revenue recognition standards including Ind AS 18 - Revenue and Ind AS 11 - Construction contracts. The new standard provides a control-based revenue recognition model and provides a five step application principle to be followed for revenue recognition:

(a) Identification ofthe contracts with the customer

(b) Identification ofthe performance obligations in the contract

(c) Determination of the transaction price

(d) Allocation of transaction price to the performance obligations in the contract (as identified in step ii)

(e) Recognition of revenue when performance obligation is satisfied.

The management is yet to assess the impact of this new standard on the Company’s financial statements. Amendment to Ind AS 12

The amendment to Ind AS 12 requires the entities to consider restriction in tax laws in sources of taxable profit against which entity may make deductions on reversal of deductible temporary difference (may or may not have arisen from same source) and also consider probable future taxable profit. The Company is evaluating the requirements ofthe amendment and its impact on the financial statements.

Amendment to Ind AS 21

The amendment to Ind AS 21 requires the entities to consider exchange rate on the date of initial recognition of advance consideration (asset/liability), for recognising related expense/income on the settlement of said asset/liability. The Company is evaluating the requirements ofthe amendment and its impact on the financial statements.

(ii) 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 ensuring Annual General meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

(iii) The Company has passed a Special Resolution in its Extra Ordinary General Meeting held on March 24, 2018 for sub division of face value of equity share from Rs. 10/-each to Re. 1/-each. However, the Company has not given effect to the above resolution yet. An agenda for fixation of record date for sub division of equity share is also part of the board meeting held on May 29, 2018.

(iv) The members of the Company in their extra ordinary general meeting held on March 24, 2018 have approved the issue of 2,75,00,000 equity shares having face value of Rs. 10/- each to qualified investors (other than promoters) and 1,35,00,000 equity shares having face value of Rs. 10/- each to promoters, on a preferential basis at Rs. 10/- per share.

(vi) I he Company has not issued/allotted any class ot shares as fully paid up pursuant to contract(s) without payment being received in cash or by way of bonus shares during the period of five year immediately preceding the reporting date. Further, no shares of any class were bought back during the period of five year immediately preceding the reporting date.

(vii) Employee Stock Options

During the year under review, Company has passed a Special Resolution in its Extra Ordinary General Meeting held on March 24, 2018 for approval of issuance of 8,50,000 Equity Shares having face value of Rs. 10/- each to the Employees of the Company under “Vikas Gran Employees Stock Option Plan 2018 (ESOP 2018)”._

2(a) Deferred tax assets is recognized to the extent that it is probable that future taxable profits will be available against which carried forward tax losses can be utilised. The cumulative unabsorbed business losses amount to Rs.60882133 ( March 31, 2017 : Rs 10634872 ) and cumulative unabsorbed depreciation of Rs. 60882133 (March 31,2017 Rs. 106994964) on which no deferred tax asset has been recognised in accordance with accounting principles laid under Ind AS for recognition of deferred tax assets. Further, these losses are available to offset for maximum period of eiaht vears from the date of incurrence of loss. _

3. Segment information

The Company is engaged in the business of manufacturing of guar gum and its derivatives which as per Ind AS 108, Operating Segments is considered to be the only reportable business segment.

4. Detail of dues to micro and small enterprises defined under the MSMED Act 2006

Disclosure of payable to vendors as defined under the “Micro, Small and Medium Enterprise Development Act, 2006” is based on the information available with the Company regarding the status of registration of such vendors under the said Act, as per the intimation received from them on requests made by the Company. There are no overdue Principal amounts/interest payable amounts for delayed payments to such vendors at the Balance Sheet date. There are no delays in payment made to such suppliers during the year or for any earlier years and accordingly, there is no interest paid or outstanding interest in this regard in respect of payments made during the year or brought forward from previous years.

5. Capital commitments and contingent liabilities

a) Estimated amount of contracts remaining to be executed on capital account is Rs. Nil (previous year Rs. 98.56 lacs)

b) There are no contingent liabilities.

6. Corporate social responsibility

During the year the company has organised seed distribution programme, in which gaur seed for Rs Nil (Previous year Rs. Nil) was distributed free of cost to farmers for promotion of guar cultivation as Corporate Social responsibility prescribed under section 135 of the Companies Act, 2013.

7. Related party disclosure

a. Transactions with related parties are summarised below :

Related party and nature of related party with whom transactions have taken place during the year

1) Key management personnel and their relatives (KMP)

Mrs. Bimla Devi Jindal - Managing Director

Ms. Kamini Jindal - Director Mr. B D Agarwal - Director

2) Entities controlled by KMPs Vikas WSP Limited

Vikas Dali and General Mills (Partnership firm)

Vikas Chemi Gums India Limited$

Vegan Colloids Limited $

Shree GRG Home Developers Private Limited #

Kuber Warehousing Private Limited &

$ Entities became related party with effect from 31 July 2015, hence the disclosure have been made for the current year.

# Entities ceases to be related party with effect from 3 February 2016.

& Entities ceases to be related party with effect from 3rd December 2015.

For instruments measured at amortised costs, carrying value represents best estimate ofthe fair value.

Derivative instruments and unhedged foreign currency exposure

The Company has no outstanding derivative instrument at the year end. The amount of foreign currency exposure that are not hedged by derivative instruments or otherwise are as under-

Financial risk management objectives and policies

The Company’s principal financial liabilities other than derivatives, comprises trade and other payables, security deposits, employee liabilities. The Company’s principal financial assets include trade and other receivables, inventories and cash and short-term deposits/ loan that derive directly from its operations.

The Company is exposed to market risk, credit risk and liquidity risk. The Company’s management oversees the management of these risks. The Company’s senior management is supported by a Risk Management Compliance Board that advises on financial risks and the appropriate financial risk governance framework for the Company. The financial risk committee provides assurance to the Company’s management that the Company’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives. The management reviews and agrees policies for managing each of these risks, which are summarised below.

I. Market risk Foreign currency sensitivity

Foreign currency risk is the risk that the fair value of future cash flows of an exposure will fluctuate because of changes in exchange rates. Foreign currency risk sensitivity is the impact on the Company’s profit before tax is due to changes in the fair value of monetary assets and liabilities. The following tables demonstrate the sensitivity to a reasonably possible change in USD with all other variables held constant.

II. Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities primarily trade receivables.

The maximum credit risk exposure relating to financial assets is represented by the carrying value as at the Balance Sheet date.

A. Trade receivables

An impairment analysis is performed at each reporting date on an individual basis for major clients. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in the financial statements. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets. Owing to the payment records of customers the Company does not foresee any credit risk.

B. Financial instruments and cash deposits

Credit risk from balances with banks and financial institutions is managed by the Company’s treasury department in accordance with the Company’s policy.

III. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due. All current the financial liabilities ofthe Company are current in nature as disclosed in the financial statements.

8. First time adoption of Ind AS:

(i) “Ind AS 101 (First-time Adoption of Indian Accounting Standards) provides a suitable starting point for accounting in accordance with Ind AS and is required to be mandatorily followed by first-time adopters. The Company has prepared the opening Balance Sheet as per Ind AS as of April 1, 2016 (the transition date) by:

a. recognising all assets and liabilities whose recognition is required by Ind AS,

b. not recognising items of assets or liabilities which are not permitted by Ind AS,

c. reclassifying items from previous Generally Accepted Accounting Principles (GAAP) to Ind AS as required under Ind AS, and

d. applying Ind AS in measurement of recognised assets and liabilities.”

(iv) (A) Ind AS 101 mandates certain exceptions and allows first-time adopters exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions in the financial statements:

(a) Property, plant and equipment and intangible assets were carried in the Balance Sheet prepared in accordance with previous GAAP on March 31, 2016. Under Ind AS, the Company has elected to regard such carrying values as deemed cost at the date of transition.

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Mar 31, 2015

1. Segment information

The Company is engaged in the business of manufacturing of guar gum and its derivatives which as per Accounting Standard 17 on Segment Reporting" is considered to be the only reportable business segment.

2. Detail of dues to micro and small enterprises denned under the MSMED Act 2006

The Company has requested its vendors to confirm their status under Micro, Small and Medium Enterprises Development Act, 2006. Based on the confirmations received, there are no amounts due to any micro or small enterprise under the MSMED Act, 2006.

3. Commitments and contingent liabilities

a) Firm capital commitments

Estimated amount of contracts remaining to be executed on capital account is Rs.98.56 lacs (previous year Rs. 105.82 lacs)

4. During the year the company has organised seed distribution programme, in which gaur seed for Rs 10.27 lacs was distributed free of cost to farmers for promotion of guar cultivation as Corporate Social responsibility prescribed under section 135 of the Companies Act, 2013.

5. Previous year's figures have been re-grouped or re-arranged wherever necessary.

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Mar 31, 2014

1. Detail of dues to micro and small enterprises defined under the MSMED Act 2006

The Company has requested its vendors to confirm their status under Micro, Small and Medium Enterprises Development Act, 2006. Based on the confirmations received, there are no amounts due to any micro or small enterprise under the MSMED Act, 2006.

2. Commitments and contingent liabilities

a) Firm capital commitments

Estimated amount of contracts remaining to be executed on capital account is Rs.105.82 lacs (previous year Rs. 114.26 lacs)

3. Imported and indigenous raw materials, components and spare parts consumed

4. Previous year''s figures havve been re-grouped or re-arranged wherever necessary.

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Mar 31, 2013

1. Corporate information

Vikas Granaries Limited was incorporated in the year 1994. Te shares of the Company were listed on Bombay Stock Exchange Limited ("the stock exchange") and other stock exchanges in India in 1996. Te Company is an agro based industry manufacturer of Guar Gum Powder and its derivatives.

2. Basis of preparation

Te fnancial statements are prepared under historical cost convention on accrual basis in accordance with Generally Accepted Accounting Principles (GAAP) in India, applying the accounting standards notifed under the Companies (Accounting Standards) Rules, 2006, (as amended) and other relevant provisions of the Companies Act, 1956.

All assets and liabilities have been classifed as current or non-current as per the company''s normal operating cycle and other criteria set out in Revised Schedule VI to the companies Act, 1956. Company has determined its operating cycle as twelve months for the purpose of current/ non-current classifcation of assets and liabilities.

3. Segment information

Te Company is engaged in the business of manufacturing of guar gum and its derivatives which as per Accounting Standard 17 on Segment Reporting" is considered to be the only reportable business segment.

4. Detail of dues to micro and small enterprises defned under the MSMED Act 2006

Te Company has requested its vendors to confrm their status under Micro, Small and Medium Enterprises Development Act, 2006. Based on the confrmations received, there are no amounts due to any micro or small enterprise under the MSMED Act, 2006.

5. Commitments and contingent liabilities a) Firm capital commitments

Estimated amount of contracts remaining to be executed on capital account is Rs.114.26 lacs (previous year Rs. 12.09 lacs)

6. Previous year''s fgures have been re-grouped or re-arranged wherever necessary.

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Mar 31, 2012

1. Corporate information

Vikas Granaries Limited was incorporated in the year 1994. The shares of the Company were listed on Bombay Stock Exchange Limited (“the stock exchange”) and other stock exchanges in India in 1996. The Company is an agro based industry manufacturer of Guar Gum Powder and its derivatives.

2. Basis of preparation

Te financial statements of Vikas Granaries Limited (“the Company”) have been prepared to comply with the Accounting Standards referred to in the Companies (Accounting standards) Rule 2006 issued by the Central Government in exercise of the power conferred under sub-section (I) (a) of section 642 and the relevant provisions of the Companies Act, 1956 (the Act'). The financial statements have been prepared under the historical cost convention on accrual basis.

3. Segment information

Te Company is engaged in the business of manufacturing of guar gum and its derivatives which as per Accounting Standard 17 on Segment Reporting” is considered to be the only reportable business segment.

4. Detail of dues to micro and small enterprises defned under the MSMED Act 2006

Te Company has requested its vendors to confirm their status under Micro, Small and Medium Enterprises Development Act, 2006. Based on the confirmations received, there are no amounts due to any micro or small enterprise under the MSMED Act, 2006.

5. Commitments and contingent liabilities

a) Firm capital commitments

Estimated amount of contracts remaining to be executed on capital account is Rs.14.26 lacs (previous year Rs. 12.09 lacs)

6. Previous year figures havve been regrouped or recast wherever necessary to make comparable with those of the current year.

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Mar 31, 2010

1. Vikas Granaries Limited (Formerly known as Adarsh Derivatives Limited) was incorporated in the year 1994. The shares of the Company were listed on Bombay Stock Exchange Limited ("the stock exchange") and other stock exchanges in India in 19%. The Company is an agro based industry manufacturer of Guar Gum Powder and its derivatives.

2. During the year the Company has raised its authorized share capital from 31,000,000 equity shares of Rs.10 each to 60,000,000 equity shares of Rs. 10 each.

3. The Company is engaged in the business of manufacturing of guar gum and its derivatives which as per Accounting Standard 17 on "Segment Reporting" is considered to be the only reportable business segment.

4. Information required as per the Micro, Small and Medium Enterprises Development Act, 2006

The Company has requested its vendors to confirm their status under Micro, Small and Medium Enterprises Development Act, 2006. Based on the confirmations received, there are no amounts due to any micro or small enterprise under the MSMED Act, 2006.

5. Commitments and contingent liabilities Firm capital commitments

Estimated amount of contracts remaining to be executed on capital account Rs 117.54 lacs (Previous year Rs. 284.05 lacs).

6. Previous year figures have been regrouped or recast wherever necessary to make them comparable with those of the current year.