Accounting Policies of Solid Carbide Tools Ltd. Company

Mar 31, 2015

(a) Basis of preparation of Financial statement.

(i) Basis ofAccounting

The Financial Statements have been prepared in accordance with the Generally Accepted Accounting Principles in India ('Indian GAAP") to comply with the Accounting standards specified under Section 133 of the Companies Act,2013, read with Rule 7 of the Comapnies (Accounts) Rules, 2014 and relevant provisions of the Companies Act,2013 and other accounting pronouncements of the Institute of Chartered Accountants of India. The financial statements have been prepared under historical cost convention and on accrual basis. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

(ii) Uses of Estimates

The presentation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates.

(b) Fixed Assets

Fixed asstes are stated at cost less accumalated depreciation

(c) Depreciation

Depreciation has been provided for on the "Straight Line Basis" at the rates prescribed in Schedule II of the Companies Act, 2013.

(d) Inventories

Inventories are valued at cost or net realisable value, whichever is lower.

(e) Revenue Recognition

Sales comprise of sale of goods and services, and are recognised net of trade discounts and include excise duty / service tax.

(f) Earning Per Shares

Basic earning per share are calculated by dividing the net profit or loss for the period attributable to equity share holders by the weighted average number of equity shares outstanding during the period.

(g) Provision

A Provision is recognised when there is present obligation as a result of a past event, that probably requires an outflow of resources and a reliable estimate can be made to settle the amount of obligation. Provision is not discounted to its present value and is determined based on the last estimate required to settle the obligation at the year end. These are reveiwed at each year end and adjusted to reflect the best current estimate.

(h) Taxation

Income Taxes are accounted for in accordance with Accounting Standard 22 "Accounting for Taxes on Income" notified under the Companies (Accounting Standard) Rules2006.Income Tax comprises both current and deferred tax. Current tax in measured on the basis of estimated income and tax credits computed in accordance with the provisions of the Income Tax Act,1961. Deferred Tax is recognised on timing differences between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

(i) Employee benefit

No provision is made in respect of payment of gratuity & other retirement benefits payable to employees, Nor is the liability in respect of the same is ascertained

(j) Issue of shares against debts

Pursuant to the order dated August 12,2012 passed by honourable high court of bombay in the matter of scheme of arrangement between Solid Carbide Tools Ltd.and its shareholders and creditors,the board of directors at their meeting held on March 18,2015 have allotted 2,03,86,631 Equity Shares of Rs 1/-each to Mr.Dilip Shah,the promoter of the company against conversion of debts into equity shares

(k) Cash and Cash equivalents

Cash and cash equivalents for the purpose of cash flow statement comprise cash in hand, cash at bank, demand deposits with banks and other short-term highly liquid investments / deposits with an original maturity of three months or less.

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Mar 31, 2014

ANNEXURE REFERRED TO IN PARAGRAPH [41 OF OUR REPORT OF EVEN DATE ON THE ACCOUNTS OF SOLID CARBIDE TOOLS LIMITED FOR THE YEAR ENDED 31st MARCH, 2014.

A) Entrustment of Management of the Company to the Administrator appointed by Honourable High court of Mumbai and the preparation of books of account thereafter.

1) During the FY-2003-04 to FY-2013-14 the company''s manufacturing activity has by and large remained suspended except for FY 2007-08, in which there was some manufacturing activity. The sales for FY-2003-04, FY 2004-05 ,FY 2005-06, F Y 2009-10,F Y 2010-11, FY 2011-12 & FY 2012-13 were Rs.Nil/-. The sales were Rs 1,81,993/- for FY 2006-07, Rs 36,04,583/- for FY 2007-08, Rs 1,38,080/ for FY 2008-09.

2) Certain cases were filed by the creditors of the company for recovering their dues from the company and subsequently the Honourable High Court of Mumbai has appointed Administrator for the purpose of implementing the scheme submitted by the creditors for running the company.

3) a) The premises of the company were sealed by the order of the court. Accordingly, the registered office of the company and the factory of the company situated at R-402, TTC Industrial Area, Rabale, Navi Mumbai-400 701 was under court''s seal.

b) The said seal of the court was removed on 12th November, 2005 after the order of the court, and the administrator appointed by the court was allowed to take charge of the affairs of the company and run the company as per the scheme approved by the court.

4) The administrator of the company after taking over charge on 12th November, 2005 as per the courts directions has started taking inventory of the Fixed Assets, Stocks, Account Records etc. and the process of reconciling the same with the books of account.

5) During the period in which the company was locked, there were also signs of theft in the company''s office and factory situated at R-402, TTC Industrial Area, Rabale, Navi Mumbai-400 701, for which also the complaints have been filed with the police.

6) a) After taking the charge of the company on 12th November, 2005 the administrator has taken necessary steps and efforts to get the books of account completed for the FY-2004- 05 & subsequent years on the basis of available records.

b) The administrator has also made arrangements to send the letters to Sundry Creditors of the company, Sundry Debtors of the company, Banks and financial Institutions, to get the balance confirmation as on 31-03-2005.

c) The confirmation letters have been received from some of the Sundry Creditors and Sundry Debtors but have not been received from the other Sundry Debtors & Creditors. In some cases the letters sent to the Creditors/Debtors have been returned back as such Sundry Creditors/Sundry Debtors have left the address which was last available with the company.

d) Even certain Banks & Financial Institutions have not responded to the letters sent to them for confirming the balances.

7) In the Balance Sheet as at 31-03-2014 & 31-03-2013 and Statement of Profit & Loss for the year ended on 31st March, 2014 & 31st March, 2013, the balances for the following accounts have been considered as under:-

a) Cash on Hand Rs 61,917/- (as at 31-03-2014) & Rs.1.00.516/-(as at 31-03-2013)

The cash on hand as on 31st March, 2014 has been taken as per the books of account prepared for the F.Y. 2013-14. The cash balance as on 31-03-2014 has not been physically verified as on 31-03-2014.

b) Closing Stock of Inventory Rs12,95,299/-(as on 31-03-2014 & as on 31-03-2013)

The closing stock of inventory has been taken on the basis of statement prepared and available with the Company.

c) Fixed Assets:

In the absence of physical verification of the Fixed Assets as on 31-03-2013 & 31-03- 2014 and in the absence of availability of Fixed Assets register, the balances of Fixed Assets have been taken as per the books of account.

1. General :

The Accounts are prepared on the historical cost basis and on the accounting principles of a going concern.

The adjustments on account of Profit / Loss due to exchange rate fluctuations in respect of the outstanding debts for (exports) / outstanding creditors (for imports) is accounted at the time of realisation of debt / payment to creditors.

All other expenses and income to the extent considered payable and receivable respectively, unless specifically stated to be otherwise, are accounted for on accrual basis.

2. FIXED ASSETS :

Fixed Assets are stated at cost less accumulated depreciation.

3. DEPRECIATION :

Depreciation has been provided for on the "Straight Line Basis" at the rates prescribed in the Schedule XIV to the Companies Act, 1956. No depreciation is provided for in respect of Factory Lease Hold Land.

4. INVENTORIES :

All categories of stock-in-trade are valued at cost or net realisable value, whichever is less upto 31-3-2002. However, thereafter the method of valuation of stock-in-trade is not ascertainable.

5. GRATUITY AND OTHER RETIREMENT BENEFITS :

No provision is made in respect of payment of gratuity & other retirement benefits payable to employees, Nor is the liability in respect of the same is ascertained.

6. CONTINGENT LIABILITIES

No evaluation and estimate has been made by the management in respect of contingent liabilities.