Notes to Accounts of Dynamic Industries Ltd.

Mar 31, 2018

Rights, Preferences and Restrictions

The Company has only class of equity shares having a par value of Rs,10/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors, if any, is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, if any, in proportion to their shareholding.

Nature of Security

1 The above term loans HDFC Bank Ltd are primarily secured against Hypothecation of present and future stocks and book debts and Plant & Machineries. It is further secured by Equitable Mortgage on Leasehold land bearing Plot / Shed No 125, in aggregate admeasuring 1330 Sq mts in phase I, Vatva Industrial Estate, lying at Mouje: Vatva, in Taluka Dascroi, and building constructed thereon and Equitable Mortgage on Non Agricultural Constructed Leasehold Property bearing plot / Shed No. 5501/2, in aggregate admeasuring 7363 Sq. Mtrs. in Phase III, in Vatva Industrial Estate and building constructed thereon.

2 The above loans are secured against hypothecation of vehicles.

Terms of Repayment of Loans

Term loans

1 HDFC Bank Ltd.The company has availed term loan for acquition of plant and machinery and It is repayable in 60 numbers of monthly installments of Rs,1.91 lacs each (including interest), commencing from July 2014. The last installment falls due in June, 2019.

The company has availed term loan for working capital and It is repayable in 60 numbers of monthly installments of Rs,4.24 lacs each (including interest), commencing from November 2017. The last installment falls due in September 2022.

The company has availed term loan for acquition of working capital and It is repayable in 60 numbers of monthly installments of Rs,1.39 lacs each (including interest), commencing from April 2018. The last installment falls due in March 2023.

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined obligation calculated with the projected unit credit method at the end of reporting period) has been applied as when calculating the defined benefit liability recognized in the balance sheet. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior year.

(e) Risk exposure

Through its defined benefit plans, the group is exposed to a number of risks, the most significant of which are detailed below:

Asset volatility

The plan liabilities are calculated using a discount rate set with reference to bond yields; if plan assets underperform this yield, this will create a deficit.

The gratuity fund is administered through Life Insurance Corporation of India (insurer) under its group gratuity scheme. Accordingly almost the entire plan asset investment is maintained by the insurer. These are subject to interest rate risk which is managed by the insurer.

Changes in bond yields

A decrease in bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans’ assets maintained by the insurer.

The gratuity fund is administered through Life Insurance Corporation(LIC) of India under its Group Gratuity Scheme.

(f) Defined benefit liability and employer contribution

The Company generally eliminates the deficit in the defined benefit gratuity plan with in next one year.

Expected contribution to the post -employment benefit plan (Gratuity) for the next year is Rs 6.13 Lakhs.

The weighted average duration of the defined benefit obligation is 3.38 years (2017 - 4.25 years, 2016- 3.64 years).

Note 3: Segment Information

The Company operates within a solitary business segment i.e. manufacturing of dyes, chemicals and pigments which constitute a single business segment. These activities are mainly conducted only in one geographical segment viz, India. Therefore, the disclosure requirements under the Ind AS 108 “Operating Segments” are not applicable.

Note 4:

1. Related Party Disclosures for the year ended March 31, 2018

(a) Details of Related Parties Sr.

^ Description of Relationship Names of Related Parties

1 Wholly Owned Subsidiary Companies Neo Farbe Pvt. Ltd.

2 Key Management Personnel (KMP) Harin D. Mamlatdarna

Dipakkumar N. Choksi Dinesh Jain

3 Relatives of KMP Ronak D. Choksi

Bimal D. Choksi Mansi Talati Asita Mamlatdarna

4 Enterprise over which KMP/Relatives of KMP exercise Ornet Intermediate Pvt. Ltd. significant influence through controlling interest

(Other Related Party)

2. Related Party Disclosures for the year ended March 31, 2017

(a) Details of Related Parties

Description of Relationship Names of Related Parties

1 Wholly Owned Subsidiary Companies Neo Farbe Pvt. Ltd.

2 Key Management Personnel (KMP) Harin D. Mamlatdarna

Dipakkumar N. Choksi Dinesh Jain

3 Relatives of KMP Ronak D. Choksi

Bimal D. Choksi Mansi Talati Asita Mamlatdarna

4 Enterprise over which KMP/Relatives of KMP exercise Ornet Intermediate Pvt. Ltd. significant influence through controlling interest

(Other Related Party)

(b) Details of transaction with related parties for the year ended March 31, 2017 in the ordinary course of business

Note 5 : Capital Management

The Company manages its capital to ensure that entities in the Company will be able to continue as going concerns while maximizing the return to stakeholders through the optimization of the debt and equity balance. The capital structure of the Company consists of net debt (borrowings offset by cash and bank balances) and total equity of the Company.

* Excluding investments in subsidiaries, joint control entities and associates measured at cost in accordance with Ind AS-27

Fair value hierarchy

The following section explains the judgments and estimates made in determining the fair values of the financial instruments that are recognized and measured at fair value through profit or loss. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial investments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

Notes:

Level 1 hierarchy includes financial instruments measured using quoted prices (unadjusted) in active market for identical assets that the entity can access at the measurement date. This represents mutual funds that have price quoted by the respective mutual fund houses and are valued using the closing Net asset value (NAV).

Level 2 hierarchy includes the fair value of financial instruments measured using quoted prices for identical or similar assets in markets that are not active.

Level 3 if one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted compound instruments.

There are no transfers between any of these levels during the year. The Company’s policy is to recognize transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.

C. Valuation techniques used to determine fair value

Specific valuation techniques used to value financial instruments include:

(i) The use of quoted market prices or mutual fund houses quotes (NAV) for such instruments. This is included in Level 1

D. Fair value of financial assets and liabilities measured at amortized cost

The Management has assessed that fair value of loans, trade receivables, cash and cash equivalents, other bank balances, other financial assets and trade payables approximate their carrying amounts largely due to their short-term nature. Difference between carrying amount of Bank deposits, other financial assets , borrowings and other financial liabilities subsequently measured at amortized cost is not significant in each of the years presented.

For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.

Note 6: Financial risk management

The Company’s board of directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The board has established the Audit Committee, which is responsible for developing and monitoring the Company’s risk management policies. The Committee holds regular meetings and report to board on its activities.

The Company’s risk management policies are established to identify and analyses the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

The audit committee oversees how management monitors compliance with the Company’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.

This note explains the sources of risk which the entity is exposed to and how the entity manages the risk.

(a) Credit risk

Credit risk is the risk of financial loss to the company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The company is exposed to the credit risk from its trade receivables, unbilled revenue, investments, cash and cash equivalents, bank deposits and other financial assets. The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of managing counterparty credit risk is to prevent losses in financial assets.

Trade and other receivables

Trade receivables comprise a widespread customer base. Management evaluates credit risk relating to customers on an ongoing basis. If customers are independently rated, these ratings are used. Otherwise, if there is no independent rating, risk control assesses the credit quality of the customer, taking into account its financial position, past experience and other factors

For trade receivables, provision is provided by the company as per the below mentioned policy :

Cash and Cash Equivalents

Credit risk on cash and cash equivalents and other deposits with banks is limited as the Company generally invests in deposits with banks with high credit ratings assigned by external credit rating agencies; accordingly the Company considers that the related credit risk is low. Impairment on these items is measured on the 12-month expected credit loss basis.

(b) 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, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

The Company’s treasury maintains flexibility in funding by maintaining liquidity through investments in liquid funds and other committed credit lines. Management monitors rolling forecasts of the group’s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows.

Liquidity Table

The Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods is given below. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. The contractual maturity is based on the earliest date on which the Company may be required to pay.

(c) Market Risk

Market risk is the risk arising from changes in market prices - such as foreign exchange rates and interest rates - will affect the Company’s income or the value of its holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables and long term debt. The Company is exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and the market value of the investments. Thus, the exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currency.

(i) Currency Risk

The Company is exposed to currency risk on account of foreign currency transactions including recognized assets and liabilities denominated in a currency that is not the Company’s functional currency (''), primarily in respect of US$, and Euro. The Company ensures that the net exposure is kept to an acceptable level and is remain a net foreign exchange earner.

Sensitivity Analysis

Any change with respect to strengthening (weakening) of the Indian Rupee against various currencies as at March 31, 2018 and March 31, 2017 would have affected the measurement of financial instruments denominated in respective currencies and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates. .

(ii) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s debt obligations with floating interest rates and investments

Most of the Company’s borrowings are on a floating rate of interest. The Company has exposure to interest rate risk, arising principally on changes in Marginal Cost of Funds based Lending Rate (MCLR). The Company uses a mix of interest rate sensitive financial instruments to manage the liquidity and fund requirements for its day to day operations like short term credit lines besides internal accruals.

Interest rate risk sensitivity:

The below mentioned sensitivity analysis is based on the exposure to interest rates for floating rate borrowings. For this it is assumed that the amount of the floating rate liability outstanding at the end of the reporting period was outstanding for the whole year. If interest rate had been 50 basis points higher or lower, other variables being held constant, following is the impact on profit. .

(iii) Price Risk Exposure

The Company’s exposure to securities price risk arises from investments held in mutual funds and classified in the balance sheet at fair value through profit or loss. To manage its price risk arising from such investments, the Company diversifies its portfolio. Further these are all debt base securities for which the exposure is primarily on account of interest rate risk. Quotes (NAV) of these investments are available from the mutual fund houses.

Profit for the year would increase/decrease as a result of gains/losses on these securities classified as at fair value through profit or loss.

Note 7 : Reconciliation between previous GAAP and Ind AS

Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from previous GAAP to Ind AS.

Notes to reconciliation between Indian GAAP and Ind AS

(i) Revenue Recognition

Under Indian GAAP revenue is disclosed net of excise duty. However under Ind AS revenue is disclosed including excise duty.

(ii) Actuarial gain or loss

Under Indian GAAP any actuarial gain or loss on valuation of defined benefit plan is recognized in statement of profit or loss. Under Ind AS such actuarial gain or loss is recognized under Other comprehensive income ( OCI).

(iii) Amortization of processing charges

Under Indian GAAP ancillary cost of borrowing is recognized as expense or capitalized ( in case of qualifying asset) in the year in which it is incured. Under Ind AS the ancillary cost of borrowing is expensed or capitalized at effective interest rate over the period of loan.

(iv) The Company has measured its investments in Real Estate fund at Fair Value through profit and loss.

The company has initiated the process of obtaining confirmation from suppliers who have registered themselves under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act, 2006). The above mentioned information has been compiled to the extent of responses received by the company from its suppliers with regard to their registration under Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act, 2006).

(b) The company has circulated letters of Balance Confirmation to Sundry Debtors, Sundry Creditors and the parties to whom loans and advances have been granted. Confirmations were received in some cases.

Note 8 : Corporate Social Responsibility

Note 9 : Un-hedged Foreign Currency Exposure

The copany does not enter into forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The company does not enter into any derivative instruments for trading or speculative purposes.

Note 10 : Statement of Management

(a) The non current financial assets, current financial assets and other current assets are good and recoverable and are approximately of the values, if realized in the ordinary courses of business unless and to the extent stated otherwise in the Accounts. Provision for all known liabilities is adequate and not in excess of amount reasonably necessary. There are no contingent liabilities except those stated in the notes.

(b) Balance Sheet, Statement of Profit and Loss, cash flow statement and change in equity read together with Notes to the accounts thereon, are drawn up so as to disclose the information required under the Companies Act, 2013 as well as give a true and fair view of the statement of affairs of the Company as at the end of the year and financial performance of the Company for the year under review.

---

Mar 31, 2015

During the period of five financial years immediately preceding the Balance Sheet date, the company has not;

(i) allotted any fully paidup equity shares by way of bonus shares;

(ii) allotted any equity shares pursuant to any contract without payment being received in cash;

(iii) brought back any equity shares

1 Reserves and Surplus

Earmarked for Eco-development measure including community welfare measures in a manner mentioned in a circular bearing no. J-21011/8/98-IA, II(I) of Ministry of Environment Forests, Government of India.

Nature of Security

1 The above term loans from Central Bank of India (up to 26.06.2014) and HDFC Bank Ltd are secured against Hypothecation of Plant & Machineries purchased and personal guarantees of Directors. It is further secured by Equitable Mortgage on Leasehold land bearing Plot / Shed No 125, in aggregate admeasuring 1330 Sq mts in phase I, Vatva Industrial Estate, Survey no. 494 Paiki, lying at Mouje: Vatva, in Taluka Dascroi, and building constructed thereon AND Equitable Mortgage on Non Agricultural Constructed Leasehold Property bering plot / Shed No. 5501/2, in aggregare admeasuring 7383 Sq. Mtrs. in Phase III, in Vatva Industrial Estate and building constructed thereon.

2. The above loans are secured against hypothecation of vehicles Terms of Repayment of Loans

HDFC Bank Ltd. It is repayable in 60 numbers of quarterly installments.

Toyota Financial Services It is repayable in 36 numbers of equal monthly installments of Rs. 0.94 lacs each (including India Limited interest) commencing from January, 2014. The last installment falls due in November, 2016.

Secured Loans

The above loans are secured by hypothecation of inventories, book debt, bills, claims, monies receivables, outstandings, invoice documents, contracts, guarantees, movable plant and machinery & other fixed assets and personal guarantees of Directors

3. Trade Payables

The company is yet to initiate the process of obtaining the confirmation from suppliers who have registered themselves under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act, 2006). In the absence of relevant information relating to the suppliers registered under the Micro, Small and Medium Enterprises (Development) Act, 2006, the balance due to Micro, Small and Medium Enterprises at year end and interest paid or payable under MSMED Act, 2006 during the year could not be complied and disclosed.

4 Employee Benefits

(a) Defined contribution to Provident Fund and Employee state insurance

The company makes contribution towards employees' provident fund and employees' state insurance plan scheme. Under the rules of these schemes, the Company is required to contribute a specified percentage of payroll costs. The Company during the year recognized Rs. 8.32 lacs (P Y Rs. 7.16 lacs) as expense towards contributions to these plans.

(b) Defined Contribution Plans

The following table sets out the status of the gratuity scheme plans as at 31st March, 2015.

5 Segment Reporting

The Company operates within a solitary business segment i.e., manufacturing of chemicals and pigments, the disclosure requirements of Accounting Standard - 17 "Segment Reporting", issued by the Institute of Chartered Accountants of India is not applicable.

6 Related Party Disclosures

As per Accounting Standard 18, issued by the Institute of Chartered Accountants of India, the disclosures of transactions with the related parties as defined in the Accounting Standard are given below :

(a) List of related parties with whom transactions have taken place during the year and relationship:

Sr. Name of related party Relationship No.

1 Harin D. Mamlatdarna

2 Deepak N. Chokshi Key Management Personnel

3 Dinesh Jain

4 Ronak D. Chokshi

5 Bimal D. Chokshi Relatives of Key Management Personnel

6 Mansi Talati

7 Asita Mamlatdarna

8 Ornet Intermediates Ltd. Enterprise over which director of the company exercises significant influence / control.

35. Pursuant to Accounting Standard - 29. "Provisions, Contingent, Liabilities and Contingent Assets", the disclosure relating to contingent liabilities and provisions made in the accounts for the year ended 31st March, 2014 is as follows :

(a) Contingent Liabilities

As at As at Particulars 31st March 31st March 2015 2014

(a) Claims not acknowledge by the company in respect of :

* Income Tax (See Note - (i) below) 11.23 78.29

* Custom Duty (See Note - (ii) below) 171.14 171.14

* Custom Duty (See Note - (ii) below) 5.51 5.51

* Service Tax (See Note - (iii) below) 31.65 40.89

(b) Custom Duty (Import under Advance Licenses Export 103.98 296.34 Obligation Pending)

(i) The Company has not recognised and acknowledged the Income Tax demands as liability in its books of accounts aggregating to Rs. 11.23 lacs in respect of Assessment Year 2008-09 & 2014-15 since the company has disputed the demands and has filed appeals before appropriate authorities. The same are pending for final adjudication.

(ii) In the Financial year 2008-2009 the Department of Excise and Customs had inspected certain records related to materials imported under license removed for jobwork to various parties whose name did not appear in the license as job-worker or as supporting manufacturer. The department had objected such removal and also observed that aforesaid materials have not been returned back under job work challan from the above parties but under sales invoices. The department also seized certain records related to job work for the Financial Year 2006-07 and 2007-08. The company had deposited a sum of Rs. 5.08 lacs under protest. However based on legal opinion obtained from the excise consultant, the company has transferred the aforesaid deposit to PLA under intimation to department concerned. After that the company has received an order on 28th March, 2012 confirming the demand of custom duty amounting to Rs. 85.57 lacs and penalty of Rs. 85.57 lacs under section 114A of the Custom Act aggregating to Rs. 171.14 lacs and interest at applicable rates on the amount of duty evaded. Further, the department has also raised demand of Rs. 5.51 lacs being custom duty on imported goods for financial year 2007-08.

The company has filed an appeals and Hon'ble Tribunal has granted stay against aforesaid demand. The Custom Authority against such stay has referred the matter to Hon'ble High court, Gujarat which is yet to be heard. Pending final outcome, the company does not expect any liability and accordingly no provision in respect thereof has been made but disclosed the same as contingent liability.

The Custom Authorities Mumbai, in another case, has raised the demand of Rs. 5.51 lacs against which the Hon'ble Tribunal Mumbai has granted stay. The matter is pending for final disposal.

(iii) The company has been served with show cause notices in respect of service tax credit aggregating amounting to Rs.28.45 lacs availed by the company in the current financial year as well as in earlier financial years. The Company has already filed its reply against the aforesaid show cause notices before appropriate authorities & such authorities are yet to react on such replies.

The Company has not recognised and acknowledged the service tax demand as liability in its books of accounts amounting to Rs. 3.2 lacs, since the company has disputed such demand and filed appeals before appropriate authorities. The same are pending for final adjudication.

(b) Provisions [Rs. in Lacs]

Provision for Provision for Particulars Leave Encashment Bonus Payable

Opening Balance 10.71 10.66

Additions (1.66) 6.22

Utilization / Reversals NIL 10.66

Closing Balance 9.05 6.23

Provision for Excise Duty Provision for Particulars on Closing Stock of Gratuity Finished Goods

Opening Balance 117.41 38.51

Additions 84.89 9.58

Utilization / Reversals 117.41 26.02

Closing Balance 84.89 22.07

7. Hitherto, in pursuance of Guidance Note on Treatment of Reserve Created on Revaluation of Fixed Assets issued by the Institute of Chartered Accountants of India, the company transferred an amount equivalent to the additional depreciation on account of the upward revaluation of fixed assets from revaluation reserve to the Statement of Profit and Loss. However pursuant to Schedule II to the Companies Act, 2013, the depreciation is required to be provided for on historical cost or the amount substituted for historical cost. Therefore, in respect of revalued asset, the company has charged depreciation / amortization based on the revalued amount for the current financial year and transferred the additional depreciation amounting to Rs. 17.10 lacs on account of upward revaluation directly to General Reserve without routing it through Statement of Profit and Loss.

8. In accordance with provisions contained in Section 203 of the the Companies Act, 2013 read with Rule 8 of The Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 and section 149(1) of the the Companies Act, 2013 read with Rule 3 of The Companies (Appointment and qualification of Directors) Rules, 2014 the appointment of Key Managerial Personnel and Woman Director has becoming mandatory. The Company, at year end date, is yet in the process of appointing Company Secretary, Chief Financial Officer and Woman Director so as to comply with the aforesaid provisions.

9. Balances of trade payables, trade receivables and loans and advances are subject to confirmations and reconciliations by the parties concerned.

10. Additional information as required under para 5(viii)(c) of general instructions of profit and loss as per Schedule III to the Companies Act, 2013

11. Statement of Management

(a) The current assets, loans and advances are good and recoverable and are approximately of the values, if realized in the ordinary courses of business unless and to the extent stated other wise in the Accounts. Provision for all known liabilities is adequate and not in excess of amount reasonably necessary. There are no contingent liabilities except those stated in the notes.

(b) Balance Sheet, Profit & Loss Account and Cash Flow Statement read together with the schedules to the accounts and notes thereon, are drawn up so as to disclose the information required under the Companies Act, 2013 as well as give a true and fair view of the statement of affairs of the Company as at the end of the year and results of the Company for the year under review.

12. Previous year figures have been regrouped, reclassified and reworked wherever necessary for comparative purpose.

---

Mar 31, 2013

1 Employee Benefits

(a) Defined contribution to Provident Fund and Employee state insurance

The company makes contribution towards employees'' provident fund and employees'' state insurance plan scheme. Under the rules of these schemes, the Company is required to contribute a specified percentage of payroll costs. The Company during the year recognized Rs. 4.40 lacs (P. Y. Rs. 4.71 lacs) as expense towards contributions to these plans.

(b) Defined Contribution Plans

The following table sets out the status of the gratuity scheme plans as at 31 st March, 2013.

2 Segment Reporting

The Company operates within a solitary business segment i.e., manufacturing of chemicals and pigments, the disclosure requirements of Accounting Standard -17 "Segment Reporting", issued by the Institute of Chartered Accountants of India is not applicable.

3 Related Party Disclosures

As per Accounting Standard 18, issued by the Institute of Chartered Accountants of India, the disclosures of transactions with the related parties as defined in the Accounting Standard are given below:

(a) List of related parties with whom transactions have taken place during the year and relationship:

4. Pursuant to Accounting Standard - 29. "Provisions, Contingent, Liabilities and Contingent Assets", the disclosure relating to contingent liabilities and provisions made in the accounts for the year ended 31st March, 2013 is as follows:

(a) Contingent Liabilities As at As at Particulars 31" March 2013 31" March 2012

(a) Claims not acknowledge by the company in respect of:

- Income Tax (See Note-(i) below) 78.29 12.30

- Custom Duty (See Note -(ii) below) 171.14 171.14

(b) Custom Duty (Import under Advance Licenses Export 141.22 144.97 Obligation Pending)

(c) Customs Duty 5.51

(d) Service Tax 28.67

(i) In respect of demand of Rs. 78.29 lacs pertaining td the A. Y. 2003-04, the company had received order of Hon''ble ITAT Ahmedabad. In the order Hon''ble ITAT Ahmedabad had set aside the matter and restored it back to the Assessing officer for the fresh assessment. Aggrieved upon the fresh amendment order, the company has preferred an appeal before appropriate authority. Pending final outcome the company has not provided for and considered the same as contingent in nature.

(ii) In the Financial year 2008-2009 the Department of Excise and Customs had inspected certain records related to materials imported under license removed for jobwork to various parties whose name did not appear in the license as job-worker or as supporting manufacturer. The department had objected such removal and also observed that aforesaid materials have not been returned back under job work challan from the above parties but under sales invoices. The department also seized certain records related to job work for the Financial Year 2006-07 and 2007-08. The company had deposited a sum of Rs. 5.08 lacs under protest. However based on legal opinion obtained from the excise consultant, the company has transferred the aforesaid deposit to PLA under intimation to department concerned. After that the company has received an order on 28th March, 2012 confirming the demand of custom duty amounting to Rs. 85.57 lacs and penalty of Rs. 85.57 lacs under section 114A of the Custom Act aggregating to Rs. 171.14 lacs and interest at applicable rates on the amount of duty evaded. The Company is in process of filling an appeal against the order with the appropriate authority. The company has filed an appeal and appropriate authority has granted stay against aforesaid demand. Pending final outcome, the company does not expect any liability and accordingly no provision in respect thereof has been made but disclosed the same as contingent liability.

5. In the opinion of the Directors, Current Assets, Loans and Advances have a value on realisation in the ordinary course of business equal to the amount at which they are stated in the Balance Sheet.

6. Balance of sundry debtors, creditors, loans and advances are subject to confirmation.

7. The company has been advised that the computation of net profits for the purpose of Directors'' Remuneration under section 349 of the Companies Act, 1956, need not be enumerated since no commission has been paid to the Directors. Fixed monthly remuneration has been paid to the Directors as per Schedule XIII to the Companies Act, 1956. The Directors were paid total remuneration of Rs. 42.39 (R Y. Rs. 32.61) during the period under review.

8. Statement of Management

(a) The current assets, loans and advances are good and recoverable and are approximately of the values, if realized in the ordinary courses of business unless and to the extent stated other wise in the Accounts. Provision for all known liabilities is adequate and not in excess of amount reasonably necessary. There are no contingent liabilities except those stated in the notes.

(b) Balance Sheet, Profit & Loss Account and Cash Flow Statement read together with the schedules to the accounts and notes thereon, are drawn up so as to disclose the information required under the Companies Act, 1956 as well as give a true and fair view of the statement of affairs of the Company as at the end of the year and results of the Company forthe year under review.

9. Previous year figures have been regrouped, reclassified and reworked wherever necessary for comparative purpose.

---

Mar 31, 2012

Explanatory Notes to Cash Flow Statement

1 The Cash Flow Statement is prepared in accordance with the format prescribed by Securites and Exchange Board of India & Accounting Standard 3 as prescribed by The Institute of Chartered Accountants of India.

2 In Part A of the Cash Flow Statements, figures in brackets indicates deductions made from the net profit for deriving the cash flow from operating activities. In part B & part C, figures in brackets indicates cash outflows.

3 Figures of the previous year have been regrouped wherever necessary, to confirm to current years presentation.

Note:

During the period of five financial years immediately preceeding the Balance Sheet date, the company has not:

(i) allotted any fully paid up equity shares by way of bonus shares;

(ii) allotted any equity shares pursuant to any contract without payment being received in cash;

(iii) brought back any equity shares

(d) Rights, Preferences and Restrictions attached to shares

Equity Shares : The Company has only class of equity shares having a par value of Rs. 10/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors, if any, is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, if any, in proportion to their shareholding.

Secured Loan

1) The above loans are secured against Equitable Mortgage on land & Building and Hypothecation of Plant & Machineries purchased and personal guarantees of Directors. It is further secured by Equitable Mortgage on Leasehold bearing Plot/Shed No 125, admeasuring 1330 Sq mts in phase I, Vatva Industrial Estate and others, situtate, lying at Mouje: VINZOL, in Taluka Dascroi, and building constructed thereon AND Equitable Mortgage on Non Agricultural Constructed Leasehold Property bering plot / Shed No. 5501/2, admeasuring 7383 Sq. Mtrs. in Phase III, in Vatva Industrial Estate and building constructed constructed thereon.

2) The above loans are secured against hypothecation of vehicles Terms of Repayment of Loans

Central Bank of India

It is repayable in 16 numbers of quarterly installments ofRs. 10.31 lacs commencing from 1st January, 2011. The last installment falls due on 1st October, 2014 and rate of interest is 14.75%.

Sundram Finance Ltd.

It is repayable in 36 numbers of monthly installments of Rs. 0.62 lacs commencing from 7th January, 2011. The last installment falls due on 22nd December, 2013

Tata Capital Ltd.

It is repayable in 48 numbers of monthly installments of Rs. 0.83 lacs commencing from 29th September, 2010. The last installment falls due on 9th August, 2014.

1.1 Deferred tax liabilities (Net)

The Company estimates deferred tax/(charge) using the applicable rate of taxation based on the impact of timing difference between financial statements and estimated taxable income for the current year.

1.2 Tangible Assets

Note : Pursuant to Board Resolution passed by Board of Director in its meeting held on 31st March, 2012 with regard to Revaluation of Lease Hold Land, the company has based on Valuation Report dated 31st March, 2012 by approved valuer, revalued the Lease Hold Land and accordingly stated at revalued amount with corresponding credit to revaluation Reserve Account.

1.3 Trade Receivable

Due by company in which director is a director or member is Rs. 55.15 Lacs (previous year Rs 55.15 Lacs)

1.4 Cash and Cash Equivalents

The amount of fixed deposits with banks includes deposits placed as Margin Money amountingRs. 65.17 lacs (P.Y. Rs. 6.00 lacs) for leter of credits and Rs. 8.38 lacs (P.Y. Rs. 1.82 Lacs) for bank Guarantees.

Amount receivable from related parties, directors and officers Rs. NIL. (P.Y. Rs. NIL)

1.5 Employee Benefits '

(a) Defined contribution to Provident Fund and Employee State Insurance

The company makes contribution towards employees' provident fund and employees' state insurance plan scheme. Under the rules of these schemes, the Company is required to contribute a specified percentage of payroll costs. The Company during the year recognized Rs. 4.71. (P.Y. Rs. 5.14) as expense towards contributions to these plans.

1.6 Segment Reporting

The company operates within a solitary business segment i.e. manufacturing of chemicals and pigments, the disclosure requirements of Accounting Standard -17 "Segment Reporting", issued by the Institute of Chartered Accountants of India is not applicable.

1.7 Related Party Disclosures

As per Accounting Standard 18, issued by the Institute of Chartered Accountants of India, the disclosures of transactions with the related parties as defined in the Accounting Standard are given below:

1.8 Pursuant to Accounting Standard-29, "Provisions, Contingent Liabilities and Contingent Assets", the disclosure relating to contingent liabilities and provisions made in the accounts for the year ended 31st March, 2012 is as follows :

(a) Contingent Liabilities (Rs. in Lacs) Particulars As at As at

31st March 2012 31st March 2011

(a) Claims not acknowledge by the company in respect of:

- Income Tax (See Note - (i and ii) below) 12.30 12.30

- Custom Duty (See Note - (iii) below) 171.14 Indeterminable

(b) Custom Duty (Import under Advance Licenses Export Obligation Pending) 144.97 93.74

(i) The income tax department has raised the demand of Rs. 5.06 lacs and Rs. 7.24 lacs pertaining to A.Y. 2001-2002 & A.Y. 2008-2009 (P.Y. Rs 1.13 lacs for A.Y. 2007-2008) for which the company has filed appeal with CIT Appeal.

(ii) In respect of demand of Rs. 78.29 lacs pertaining to the A.Y. 2003-2004, the company had received order of Hon'ble ITAT Ahmedabad. In the order Hon'ble IT AT Ahmedabad had set aside the matter and restored it back to the Assessing officer for the fresh assessment. Pending fresh assessment, the company has not considered the aforesaid demand of Rs. 78.29 lacs as contingent in nature and accordingly not disclosed.

(iii) In the Financial Year 2008-2009 the Department of Excise and Customs had inspected certain records related to materials imported under license removed for job work to various parties whose name did not appear in the license as job-worker or as supporting manufacturer. The department had objected such removal and also observed that aforesaid materials have not been returned back under job work challan from the above parties but under sales invoices. The department also seized certain records related to job work for the Financial Year 2006-2007 and 2007-2008. The company had deposited a sum ofRs. 5.08 lacs under protest. However based on legal opinion obtained from the excise consultant, the company has transferred the aforesaid deposit to PLA under intimation to department concerned. After that the company has received an order on 28th March, 2012 confirming the demand of custom duty amounting to Rs. 85.57 lacs and penalty ofRs. 85.57 lacs under section 114A of the Custom Act aggregating to Rs. 171.14 lacs and interest at applicable rates on the amount of duty evaded. The Company is in process of filing an appeal against the order with the appropriate authority. The company does not expect any liability and accordingly no provision in respect thereof has been made.

1.9 In the opinion of the Directors, Current Assets, Loans and Advances have a value on realisation in the ordinary course of business equal to the amount at which they are stated in the Balance Sheet.

1.10 Balance of sundry debtors, creditors, loans and advances are subject to confirmation.

1.11 The company has been advised that the computation of net profits for the purpose of Directors' Remuneation under section 349 of the Companies Act, 1956, need not be enumerated since no commission has been paid to the Directors. Fixed monthly remuneration has been paid to the Directors as per Schedule XIII to the Companies Act, 1956. The Directors were paid total remuneration ofRs. 32.61 lacs (P. Y. Rs. 32.68 lacs) during the period under review.

1.12 The company is yet to intiate the process of obtaining the confirmation from suppliers who have registered them- selves under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act, 2006). In the absence of relevant information relating to the suppliers registered under the Micro, Small and Medium Enterprises (Development) Act, 2006, the balance due to Micro, Small and Medium Enterprises at year end and interest paid or payable under MSMED Act, 2006 during the year could not be compiled and disclosed.

1.13 Statement of Management

(a) The current assets, loans and advances are good and recoverable and are approximately of the values, if realized in the ordinary courses of business unless and to the extent stated other wise in the Accounts. Subject to the notes regarding depreciation, other notes and the method of accounting followed by the Company, provision for all known liabilities is adequate and not in excess of amount reasonably necessary. There are no contingent liabilities except those stated in the notes.

(b) Balance Sheet, Profit & Loss Account and Cash Flow statement read together with the schedules to the accounts and notes thereon, are drawn up so as to disclose the information required under the Companies Act, 1956 as well as give a true and fair view of the statement of affairs of the Company as at the end of the year and results of the Company for the year under review.

1.14 The financial statements for the year ended 31st March, 2011 had been prepared as per the then applicable, prerevised Schedule VI to the companies Act, 1956. Consequent to the notification to the Revised Schedule-VI under the companies Act, 1956, the financial statements for the year ended 31st March, 2012 are prepared as per the Revised Schedule VI. According to previous year figures have also been reclassified to confirm this year's classification.

---

Mar 31, 2011

1. Employee Benefits

(a) Defined contribution to Provident fund and Employee state insurance

The company makes contribution towards employees' provident fund and employees' state insurance plan scheme. Under the rules of these schemes, the Company is required to contribute a specified percentage of payroll costs. The Company during the year recognized Rs. 5,13,934/- (P.Y. Rs. 4,58,988/-) as expense towards contributions to these plans.

2. Segment Reporting

The Company operates within a solitary business segment i.e. manufacturing of chemicals and pigments, the disclosure requirements of Accounting Standard -17 "Segment Reporting", issued by the Institute of Chartered Accountants of India is not applicable.

3. Related Party Disclosures

As per Accounting Standard 18, issued by the Institute of Chartered Accountants of India, the disclosures of transactions 'with the related parties as defined in the Accounting Standard are given below:

Sr. Name of Related Party Relationship No. 1 Harin M. Mamlatdarna Key Management Personnel

2 Deepak N. Choksi

3 Dinesh Jain

4 Ronak D. Choksi Relatives of Key Management Personnel

5 Bimal D. Choksi

6 Mansi Talati

7 Asita Modi

8 Ornet Intermediate Ltd. Enterprise over which director of the company exercises significant influence/control.

4. Pursuant to Accounting Standard-29, Provisions, Contingent Liabilities and Contingent Assets, the disclosure relating to provisions made in the accounts for the year ended 31 st March, 2011 is as follows :

(a) Contingent Liabilities [Rs. In lacs]

Particulars 2010-2011 2009-2010

(a) Claims not acknowledge by the company in respect of:

Income Tax (See Note-(i) below) 12.30 1.13

Custom Duty (See Note - (ii) below) Indetermin Indetermin able able

(b) Custom Duty (Import under Advance Licenses Export Obligation Pending) 93.74 67.26

(i) The Income tax department had raised the demand of Rs.5.06 lacs and 7.24 Lacs pertaining to Assessment year 2001 -2002 and A.Y. 2008-2009 (P.Y. Rs. 1.13 Lacs for A.Y. 2007-2008) for which the company has filed appeal with CIT Appeal.

(ii) In respect of demand of Rs. 78.29 lacs pertaining to the A. Y. 2003-04, the company has received order of Hon'ble ITAT Ahmedabad. In the order Hon'ble ITAT Ahmedabad has set aside the matter and restored it back to the Assessing officer for the fresh assessment. Considering the same no contingent liability towards demand of Rs. 78.29 lacs has been recognised during the year under consideration.

(iii) In the Financial year 2008-2009 the Department of Excise and Customs had inspected certain records related to materials imported under license removed for jobwork to various parties whose name did not appear in the license as job-worker ro as supporting manufacturer. The department had objected such removal and also observed that aforesaid materials have not been returned back under job work challan from the above parties but under sales invoices. The department also sized certain records related to job work for the Financial Year 2006-07 and 2007-08. The Company had deposited a sum of Rs. 5,08,273/- under protest. However based on legal opinion obtained from the excise consultant, the company has transferred the aforesaid deposit to PLA under intimation to department concerned. As the matter has not been disposed of yet and the company does not expect any liability, no provision in respect thereof has been made.

5. In the opinion of the Directors, Current Assets, Loans and Advances have a value on realisation in the ordinary course of business equal to the amount at which they are stated in the Balance Sheet.

6. Balance of sundry debtors, creditors, loans and advances are subject to confirmation.

7. The company has been advised that the computation of net profits for the purpose of Directors' Remuneration under section 349 of the Companies Act, 1956, need not be enumerated since no commission has been paid to the Directors. Fixed monthly remuneration has been paid to the Directors as per Schedule XIII to the Companies Act, 1956. The Directors were paid total remuneration of Rs. 32,68,001/- (P. Y. Rs. 32,85,324/-) during the period under review.

8. The company is yet to initiate the process of obtaining the confirmation from suppliers who have registered them selves under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act, 2006). In the absence of relevant information relating to the suppliers registered under the Micro, Small and Medium Enterprises (Devel- opment) Act, 2006, the balance due to Micro, Small and Medium Enterprises at year end and interest paid or payable under MSMED Act, 2006 during the year could not be compiled and disclosed.

9. Additional information pursuant to provision of para 3,4C and 4D of Part-ll of Schedule-VI of the Companies Act, 1956:

10. The previous year's figures have been reworked, regrouped and reclassified wherever necessary so as to make them comparable with those of the current year.

---

Mar 31, 2010

1. Employee Benefits

(a) Defined contribution to Provident fund and Employee state insurance

The company makes contribution towards employees provident fund and employees state insurance plan scheme. Under the rules of these schemes, the Company is required to contribute a specified percentage of payroll costs. The Company during the year recognized Rs. 4,58,988/- (P.Y. Rs. 4,59 719/-) as expense towards contributions to these plans.

2. Segment Reporting

The Company operates within a solitary business segment i.e. manufacturing of chemicals and pigments, the disclosure requirements of Accounting Standard - 17 "Segment Reporting", issued by the Institute of Chartered Accountants of India is not applicable.

3. Related Party Disclosures

As per Accounting Standard 18, issued by the Institute of Chartered Accountants of India, the disclosures of trans- actions with the related parties as defined in the Accounting Standard are given below:

4. The Company estimates deferred tax/(charge) using the applicable rate of taxation based on the impact of timing difference between financial statements and estimated taxable income for the current year.

5. Pursuant to Accounting Standard-29, Provisions, Contingent Liabilities and Contingent Assets, the disclosure relat- ing to provisions made in the accounts for the year ended 31st March, 2010 is as follows :

(a) Contingent Liabilities [Rs. In lacs]

Particulars 2009-2010 2008-2009

(a) Claims not acknowledge by the company in respect of:

Income Tax (See Note - (i) below) 1.13 76.39

Custom Duty (See Note - (ii) below) Indeterminable Indeterminable

(b) Custom Duty (Import under Advance Licenses Export Obligation Pending) 67.26 61.78

(i) The Income tax department had raised the demand of Rs.1.13 lacs pertaining to Assessment year 2007- 2008, for which the company has filed appeal with CIT Appeal.

(ii) In respect of demand of Rs. 76.39 lacs pertaining to the A. Y. 2002-03 and 2003-04, the company has received order of Honble ITAT Ahmedabad. In the order Honble ITAT Ahmedabad has set aside the matter and restored it back to the Assessing officer for the fresh assessment. Considering the same no contingent liability towards demand of Rs. 76.39 lacs has been recognised during the year under consid- eration.

6. In the opinion of the Directors, Current Assets, Loans and Advances have a value on realisation in the ordinary course of business equal to the amount at which they are stated in the Balance Sheet.

7. Balance of sundry debtors, creditors, loans and advances are subject to confirmation.

8. The company has been advised that the computation of net profits for the purpose of Directors Remuneration under section 349 of the Companies Act, 1956, need not be enumerated since no commission has been paid to the Directors. Fixed monthly remuneration has been paid to the Directors as per Schedule XIII to the Companies Act, 1956. The Directors were paid total remuneration of Rs. 32,62,247/- (P. Y. Rs. 32, 91,619/-) during the period under review.

9. The company is yet to initiate the process of obtaining the confirmation from suppliers who have registered them selves under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act, 2006). In the absence of relevant information relating to the suppliers registered under the Micro, Small and Medium Enteiprises (Devel- opment) Act, 2006, the balance due to Micro, Small and Medium Enterprises at year end and interest paid or payable under MSMED Act, 2006 during the year could not be compiled and disclosed.

10. The previous years figures have been reworked, regrouped and reclassified wherever necessary so as to make them comparable with those of the current year.

---

Mar 31, 2009

1 The Cash Flow Statement is prepared in accordance with the format prescribed by Securites and Exchange Board of India & Accounting Standard 3 as prescribed by The Institute of Chartered Accountants of India.

2 In Part A of the Cash Flow Statements, figures in brackets indicates deductions made from the net profit for deriving the cash flow from operating activities. In part B & part C, figures in brackets indicates cash outflows.

3 Figures of the previous year have been regrouped wherever necessary, to confirm to current years presentation.