Notes to Accounts of SRM Energy Ltd.

Mar 31, 2015

1 CORPORATE INFORMATION

SRM Energy Limited (the Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange. The Company has been engaged in setting up Thermal power project in its wholly owned subsidary.

d 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 dividend in Indian rupees. The dividend, if any proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of Equity Shares will be entitled to receive the 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.

2. Capital and other commitments

i) Estimated amount of contract remaining to be executed on capital account net of advances paid as at 31/03/2015 : Nil (Previous year: Nil)

3. Contingent Liabilities:

4. Disputed dues of income tax due to non/late deposit of TDS for the assessment years 2003-04 to 2006-07: Rs 0.73 million/- (Previous year - Rs 0.73 million)

5. There has been an instance of non-compliance of Section 295 and 297 of Companies Act, 1956 in 2007-08 for which compounding application has been filed with Company Law Board.

6. CIF VALUE OF IMPORTS, EXPENDITURE, REMITTANCES AND EARNINGS IN FOREIGN CURRENCY - Nil

7. Segment Reporting :

The Company has been engaged in setting up Thermal power project, in its wholly owned subsidary, which at present, constitutes its single operating segment as per AS-17 on 'Segment Reporting'.

8. Related Party Transactions as per Accounting Standard - 18:

A. List of Related Parties

1) Holding Company: Spice Energy Pvt. Ltd

2) Subsidiaries: SRM Energy Tamilnadu Pvt. Ltd. (Wholly owned subsidiary)

3) Key Management Personnel:

Mr. Vishal Rastogi Managing Director

Mr. Gagan Rastogi Director (Resigned on November 14, 2014)

9. Deferred Tax:

Deferred tax asset has not been recognized considering the principle of virtual certainty as per Accounting Standard -22 'Accounting for Taxes on Income'.

10. Disclosure as required under AS-19 :

Disclosure as required under AS - 19 "Accounting for Leases" as prescribed under Companies (Accounting Standards) Rules, 2006 is given below:

(a) The Company has entered into cancellable / non-cancellable leasing agreement for office premises renewable by mutual consent on mutually agreeable terms.

(b) Future minimum lease payments under non-cancellable operating lease are as under:

11. In the opinion of the management, the realizable value of Current Assets, loans and Advances in the ordinary course of business would not be less than the amount at which they are stated in the Balance Sheet and provision for all known and determined liabilities are adequately made.

12. Going Concern

Though the Company's net worth has been significantly reduced and it has been incurring Cash Losses, the promoters have infused funds by way of unsecured loan and are committed to provide necessary funding to meet the liabilities and future running expenses of the company. Further,the Board of Directors of the Company, in its meeting held on March 09, 2015 have decided to sell/dispose off the Power plant transferred in its wholly owned subsidiary, subject to necessary approvals from the shareholders and other statutory authorities, if any. In view of above development, the accounts have been prepared under going concern basis.

13. Information Pertaining To Loans And Guarantees Given To Subsidiaries (Information Pursuant To Clause 32 Of Listing Agreements With Stock Exchanges And Section 186 Of The Companies Act, 2013):

14. Previous year figures have been regrouped and rearranged wherever necessary, to make them comparable to those for the current year. Figures in bracket indicate previous year's figures.

15. Figures are rounded off to the million.@'-represents figures less than Rs. 5,000 which have been shown at actual in brackets with @.

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Mar 31, 2014

1 CORPORATE INFORMATION

SRM Energy Limited (the Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange. The company is in the process of setting up the Thermal Power Project in variious parts of India particularly in Maharashtra, Eastern India.

2.SCHEME OF ARRANGEMENT :

The Board of Directors in their meeting held on October 18, 2013 has approved the effect of the orders of the Hon''ble Bombay High Court dated 3rd September 2013, (which was filed with the Registrar of Companies on 11th October 2013 - the Effective date) approving the Scheme of Arrangement under Section 391 to 394 of the Companies Act, 1956 for hive off of the Cuddalore Power Division of the Company to the SRM Energy Tamilnadu Private Limited,with effect from 1st April 2012 (the "Appointed Date"), Accordingly all the assets and liabilities of the Cuddalore Power Division of the Company at book value as on 01.04.2012 along with increase or decrease thereafter were transferred to the SRM Energy Tamilnadu Private Limited. However, the formalities of transfer of properties, assets, consents, approvals, sanctions, licenses, contracts etc pertaining to the Cuddalore Power Division in the name of the SRM Energy Tamilnadu Private Limited are in progress.

3 SHARE CAPITAL

The shareholders of the Company have given their approval for increase of Authorised Capital to Rs.15 million pursuant a resolution passed on August 13, 2010 through postal ballot. The process with Registrar of Companies is underway to increase the same.

b 6.45 million (Previous year 6.45 million) Equity Shares are held by the Holding Company - Spice Energy Pvt. Ltd. c Details of Equity Shares issued for consideration other than cash during the period of last five years:

e 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 dividend in Indian rupees. The dividend, if any proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of Equity Shares will be entitled to receive the 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.

4 Capital work in Progress

The Company is in the process of setting up the Thermal Power Projects in various parts of the Country, particularly in Maharashtra and Eastern India. During the year, company has not incurred any expenses related to project.

5 Capital and other commitments

i) Estimated amount of contract remaining to be executed on capital account net of advances paid as at 31/03/2014 : Nil (Previous year: Nil)

6 Contingent Liabilities:

6.1 Disputed dues of Income tax due to non/late deposit of TDS for the assessment years 2003-04 to 2006-07: Rs.0.73 million/- (Previous year - Rs.0.73 million)

6.2 There has been an instance of non-compliance of Section 295 of Companies Act in 2007-08 for which compounding apllication has been filed with Company Law Board.

In assessing the Companies Post retirement liabilities, the Company monitors mortality assumptions and uses up to date mortality tables, the base being the LIC 1994-96 ultimate tables.

The estimates of future salary increase considered in actuarial valuation take account of inflation, seniority, promotion, and other relevant factors, such as supply and demand in the employment market.

7 Segment Reporting :

The Company is in the process of setting up Thermal Power Project, which in the context of AS-17 on ''Segment Reporting'', constitutes single operating segment.

8 Related Party Transactions as per Accounting Standard - 18:

A. List of Related Parties

1) Holding Company:

Spice Energy Pvt. Ltd

2) Subsidiaries:

SRM Energy Tamilnadu Pvt. Ltd. (Wholly owned subsidiary)

3) Key Management Personnel :

Vishal Rastogi Managing Director w.e.f February 21, 2014 Gagan Rastogi Director

D. Sundararajan Managing Director & CEO up to February 11,2014

4) Enterprises over which key management personnel and relatives of such personnel exercise significant influence

Sovinchem Industries Pvt. Ltd.

9 Deferred Tax:

Deferred tax asset has not been recognized considering the principle of virtual certainity as per Accounting Standard -22 ''Accounting for Taxes on Income''.

10 In the opinion of the management, the realizable value of Current Assets, loans and Advances in the ordinary course of business would not be less than the amount at which they are stated in the Balance Sheet and provision for all known and determined liabilities are adequately made.

11 Going Concern

Though the Company''s net worth has been substantially eroded and the Company has been incurring Cash Losses, the management is of strong view that that the Company would turnaround with power project of the Wholly Owned Subsidiary getting operational. The Company also intends to restart the projects in Maharashtra and Eastern India. The Company''s present assets are adequate to meet the liabilities. The Promoters are also committed to provide necessary funding to meet the liabilities and have provided Rs.5.12 million as unsecured loan till March 31,2014. Accordingly, the accounts have been drawn under the going concern assumption. However, there is a material uncertainty based in the above facts that may cast significant doubt on the Company''s ability to continue as a Going Concern and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business.

12 Previous year figures have been regrouped and rearranged wherever necessary.

13 Figures are rounded off to the million.

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Mar 31, 2013

1 CORPORATE INFORMATION

SRM Energy Limited (the Company) is a public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange. The Company is in the process of setting up the Thermal Power Project in various parts of India particularly in Maharashtra and Eastern India.

2 CAPITAL AND OTHER COMMITMENTS

i) Estimated amount of contract remaining to be executed on capital account net of advances paid as at 31/03/2013 : Nil (Previous yean Nil)

3 CONTINGENT LIABILITIES

3.1 Disputed dues of Income tax due to non/late deposit of TDS for the assessment years 2003-04 to 2006-07: Rs. 0.73 million (Previous year - Rs. 0.73 million)

3.2 There has been an instance of non-compliance of Section 295 of Companies Act in 2007-08 for which compounding application has been filed with Company Law Board

In assessing the Companies Post retirement liabilities, the Company monitors mortality assumptions and uses . up to date mortality tables, the base being the LIC 1994-96 ultimate tables.

The estimates of future salary increase considered in actuarial valuation take account of inflation, seniority, promotion, and other relevant factors, such as supply and demand in the employment market.

4 SEGEMENT REPORTING

The Company is in the process of setting up Thermal Power Projects, which in the context of AS-17 on ''Segment Reporting'', constitutes single operating segment.

5 RELATED PARTY TRANSACTIONS AS PER ACCOUNTING STANDARD - 18:

A. List of Related Parties

1) Holding Company:

Spice Energy Pvt. Ltd

2) Subsidiaries:

SRM Energy Tamilnadu Pvt. Ltd.

3) Key Management Personnel :

Gagan Rastogi Director D. Sundararajan Managing Director & CEO

4) Enterprises over which key management personnel and relatives of such personnel exercise significant influence [Parties with whom the Company has entered into transactions during the year]

Sovinchem Industries Pvt. Ltd.

Note: Please refer note no. 4 for transactions with wholly owned subsidiary -SRM Energy Tamilnadu Pvt. Ltd. as per the Scheme of Arrangement.

6 Particulars of Derivative Instruments as at March 31, 2013 :

i) No derivative instruments are acquired for hedging purposes.

ii) No derivative instruments are acquired for speculation purposes.

iii) Foreign currency exposures that are not hedged by derivative instruments or otherwise are :

- Capital advance of nil (previous year USD 0.10 million)

7 In the opinion of the management, the realizable value of Current Assets, loans and Advances in the ordinary course of business would not be less than the amount at which they are stated in the Balance Sheet and provision for all known and determined liabilities are adequately made.

8 Going Concern

Though the Company''s net worth has been substantially eroded and the Company has been incurring Cash Losses, the management is of strong view that that the Company would turnaround with power project of the Wholly Owned Subsidiary getting operational. The Company also intends to restart the projects in Maharashtra and Eastern India. The Company''s present assets are adequate to meet the liabilities. The Promoters are also committed to provide necessary funding to meet the liabilities and have provided Rs. 2.42 million as unsecured loan till March 31, 2013. Accordingly, the accounts have been drawn under the going concern assumption. However, there is a material uncertainty based in the above facts that may cast significant doubt on the Company''s ability to continue as a Going Concern and therefore it may be unable to realize its assets and discharge its liabilities in the normal course of business.

9 Previous year figures have been regrouped and rearranged wherever necessary. However, the previous year figures are not comparable since it includes figures of the Cuddalore Power Division, which has been since hived off to Company''s Wholly Owned Subsidiary, as per the Scheme of Arrangement approved by the Hon''ble Bombay High Court.

10 Figures are rounded off to the million.

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Mar 31, 2012

1 Corporate Information

SRM Energy Limited (the Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange. The company is in the process of setting up the Thermal Power Project of 3x660 MW i.e. 1980 MW capacity in Tamilnadu.

2 Capital and other commitments

i) Estimated amount of contract remaining to be executed on capital account net of advances paid as at 31/ 03/2012 : Nil and as at 31/03/2011 : Nil

ii) For commitment relating to lease arrangements, please Refer Note 23 below.

3 Contingent Liabilities:

Disputed dues of Income tax due to non/late deposit of TDS for the assessment years 2003-04 to 2006-07: t 0.73 million (Previous year - Rs. 1.07 million)

4 Capital work in Progress

The Company is in the process of setting up the Thermal Power Project of 3x660 MW i.e. 1980 MW capacity in Tamil Nadu. As such the related expenses incurred during the current year as per details below are considered as pre operative expenses pending capitalization (included under Capital Work in Progress) and will be apportioned to the assets on completion of the project: .

5 Segment Reporting :

The Company is in the process of setting up Power Project in the state of Tamilnadu, which in the context of AS- 17 on Segment Reporting', constitutes single operating segment.

Deferred tax Asset has not been recognized considering the principle of virtual certainty as per Accounting Standard -22 Accounting for Taxes on Income'.

6 During the previous year, the Company has acquired a wholly-owned subsidiary Company, SRM Energy Tamil Nadu Private limited which has not commenced its operating activities. The Management is evaluating the option of transferring its Cuddalore Power Division to this subsidiary after successful completion of the proposed Rights Issue.

7 Information relating to Micro and Small Enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 have been determined based on the information available with the Company and the required disclosures are given below.

8 Going Concern

Though the Company's net worth has been substantially eroded and the Company has been incurring cash losses, the management is of the strong view that the Company would turnaround with the completion of rights issue and the power project getting operational. The Company's present assets are adequate to meet the Company's liabilities. The Promoter is also committed to provide necessary funding to meet the Company's liabilities and has also paid Rs. 498.20 million as share application money. Accordingly, the accounts have been drawn under the going concern assumption.

9 In the opinion of the management, the realizable value of Current Assets, loans and Advances in the ordinary course of business would not be less than the amount at which they are stated in the Balance Sheet and provision for all known and determined liabilities are adequately made.

10 Proposed Right Issue

The Company had filed Draft Letter of Offer to the Security Exchange Board of India (SEBI) for its proposed right issue on August 17, 2010. SEBI gave final observation vide letter dated February 8, 2011 but did not allow adjustment of Unsecured Loan brought in by the promoters against their Rights entitlement. The Company went on appeal to Securities Appellate Tribunal (SAT) and SAT vide its order dated June 6, 2011 allowed adjustment of funds brought in by the promoters against their entitlement and also against renunciations in the right issue. Subsequent to the SAT order, the Company filed Final Letter of Offer for Rights Issue at par on June 17, 2011 with SEBI for raising t 589 million.

SEBI vide its letter No. CFD/DIL/ISSUES/SP/RG/OW/3382/2012 dated February 7, 2012 informed our Merchant Banker that, as Cals Refineries Ltd.(Cals). a group Company, with a Common Promoter has been directed not to issue any equity shares or alter their capital structure in any manner till further directions in this regard, the Company is not satisfying the eligibility criteria as provided in Regulation 4(2)(a) and 4(2)(b) of the ICDR regulations and hence is not eligible to proceed with the Rights Issue till directions against Cals are in force. The Company filed an appeal to SAT on March 26, 2012 against the aforesaid direction of SEBI. The order of SAT is awaited. In the meanwhile, the Board has approved increase in amount of right issue up to Rs. 900 million. The Company intends to go ahead with right issue on receiving favorable order from SAT or when Cals is exonerated from the charges whichever is earlier.

11 Particulars of Derivative Instruments as at March 31, 2012 :

i) No derivative instruments are acquired for hedging purposes.

ii) No derivative instruments are acquired for speculation purposes

iii) Foreign currency exposures that are not hedged by derivative instruments or otherwise are :

- Capital advance of USD 0.10 million (previous year USD 0.10 million)

12 Previous year figures have been regrouped and rearranged wherever necessary.

13 Figures are rounded off to the million.

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Mar 31, 2011

1. Business Activities

The company is in the process of setting up the Thermal Power Project of 3* 660 MW i.e 1980MW capacities in Tamilnadu. As such the related expenses incurred during the current year as per details below are considered as pre operative expenses pending capitalization (included under Capital Work in Progress) and will be apportioned to the assets on completion of the project:

2. Contingent Liabilities not provided for (Amount in Rs.)

Sr. No. Particulars 2011 2009-10

I Disputed dues of Income tax due to non/late deposit of TDS for the assessment years 2003-04 to 2006-07 1,066,022 - 3. Capital Commitment

Estimated amount of contracts remaining to be executed on capital account (net of advances)and not provided for in the accounts as at 31.3.2011: Nil (Previous year: Nil).

4. In the opinion of the Board, the realizable value of Current Assets, Loans and Advances in the ordinary course of business would not be less than the amount at which they are stated in the Balance Sheet and provision for all known and determined liabilities are adequately made.

5. Segment Reporting :

The Company is in the process of setting up Power Project, which in the context.of AS-17 on Segment Reporting, constitutes single operating segment.

6. Disclosure as required by Accounting Standard (AS) -19 are as follows:

The company has taken office premises under leave and license agreement against refundable interest free deposit. These are generally cancellable and are renewable by mutual consent on mutually agreed terms. The obligation towards non-cancellable leases are as under: (Amount in)

7. Going Concern:

Though the Companys net worth has been substantially eroded, earlier businesses have been discontinued and the Company has been incurring cash losses, the management is of the strong view that once the power project, which is being set up by the Company gets going, the Company would have a turnaround. Even otherwise, the Companys present assets are adequate to meets its liabilities. The promoter is also committed to provide necessary funding to meet Companys Liabilities. Accordingly the accounts have been drawn under going concern assumption.-

8. During the year, the Company has acquired a wholly-owned subsidiary Company, SRM Energy Tamil Nadu Private Limited, which has not commenced its operating activities. The Management is evaluating the option of transferring its Cuddalore Power Division to this subsidiary after successful completion of the proposed Rights Issue.

9. Based on the information available with the company, both the balance due to Micro & Small Enterprises as defined under the MSMED Act, 2006 and interest paid / payable during the year under the terms of said act under the terms of MSMED Act are Nil (previous year Nil).

16. Previous year figures have been regrouped and rearranged wherever necessary.

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Mar 31, 2010

1. The company is in the process of setting up the Thermal Power Project of 1600 MW - 2000 MW capacities in Tamilnadu. As such the related expenses incurred during the current year as per details below are considered as pre operative expenses pending capitalization (included under Capital Work in Progress) and will be apportioned to the assets on completion of the project:

2. Contingent Liabilities:

Arrears of preference dividend for the years from 1989-90 to 1996-97 amounting to Rs. 2,400,000/ - (previous year Rs. -2,400,000/-).

3. During the year 2007-08, the Company has hived off its Non-woven Fabric Business comprising of manufacturing and marketing activities of the Company in respect of manufacture of Needle punched, non-woven fabrics along with all the assets and liabilities by way of a Slump Sale on a going concern basis to Hitkari Hi Tech Filters Private Ltd.(now known as Hitkari Fibres Pvt. Ltd.) as per Slump Sale Agreement dated 18-03-2008. Accordingly, all the assets and liabilities including materially known contingent liabilities and disputed dues and employees related to the said business of the Company as on 18-3-2008 have been transferred to Hitkari Hi Tech Fibres Pvt. Ltd. The necessary formalities for changing / transferring the name in respect to disputed dues of Sales Tax & Excise are under process.

4. The disclosure required as per AS -15, Employees Benefit, issued by ICAI are as under: The Company has classified the various benefits provided to employees as under: (i) Defined Contribution plans --Nil—

5. Segmental Reporting as per Accounting Standard (AS) -17 issued by ICAI: In the opinion of management, as the Company has already hived off its fibres business as explained in note no 3 above and is now in process of setting up Power Project, it operates in one segment only, separate segment wise reporting is not required.

6. Based on the information available with the company, the balance due to Micro & Small Enterprises as defined under the MSMED Act, 2006 is Nil (previous year nil). Further, no interest during the period has been paid or payable under the terms of the MSMED Act, 2006. (previous year nil).

7. Going Concern

Though the Companys net worth has been substantially eroded, earlier businesses have been discontinued and the Company has been incurring cash losses, the management is of the strong view that once the power project, which is being set up by the Company gets going, the Company would have a turnaround. Even otherwise, the Companys present assets are adequate to meets its liabilities. The management is also committed to provide necessary funding to meet Companys Liabilities. Accordingly the accounts have been drawn under going concern assumption.

8. Figures for the previous year have been regrouped / rearranged wherever necessary to confirm to this year of classification.

9. Figures are rounded off to the nearest rupee.