The Financial statements have been prepared to comply in at! material respects with the notified Accounting standards issued by the Institute of Chartered Accountants of India and the relevant provisions of Ihe Companies Act, 1956. The Financial Statements have been prepared tinder the historical cost convention on an accrual basis. The accounting policies have been consistently applied by ihe Company and are consistent with those applied in She previous year.

1.2 Fixed assets :

Fixed assets are stated ai Cost less accumulated depreciation, if any. Cost comprises purchase price and any other attributable cost of bringing (he assets to its working condition tor its intended use.

1.3 Depreciation :

Depreciation is provided on straight line method at the rates prescribed in schedule XIV of the Companies Act. 1956. While providing depreciation it is assumed that on day of the receipt of assets ihey are put to use.

1.4 Inventories :

Stock in Frade comprising of Raw Material, Component and Semi-finished goods are stated at cost (arrived at on the first in first out method with the inclusion of appropriate manufacturing overheads where applicable) or net realizable value whichever is less. Finished Goods are valued at cost or market value whichever is lower.

1.5 Unsecured Loans :

It comprises of Business. Loans taken Jrom members The said loans are as such not secured hence the same are shown under the head Unsecured Loans.

1.6 Revenue Recognition ;

Revenue is recognized to ihe extent that it is portable lhat the economies benefits will flow to the company and the revenue can be reliably measured.

1.7 Retirement and other Employee benefits:

a. Retirement Benefits in the form of Provident Fund are charged to the profit and loss account of the period when the contributions to the respective funds are due and thereafter ihe same are deposited under the scheme framed under the Employees Provident Fund and .Misc. Provision Act, 1952. There are no obligations other then contribution payable to the respective fund.

b. Gratuity- the company follows cash system of accounting of gratuity and leave encashment and has not obtained actuarial valuation ot the present value of gratuity liability & unutilized leave benefit, I lence Liability for the same is not quantified and provided for.

1.8 Income Taxes :

i i) Income Tax: Tax expenses comprise of Current Tax and are measured at the amount expected to be paid to The las authorities in accordance with the income Tax Act. J 961.

fii) Deferred Taxes : As per the requirements of the Accounting Standard 22 on "Accounting for Taxes, on income" issued by the Institute of Chartered Accountants of India, the Asset is created for the excess amount to be deferred. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years, if any.

1.9 Provisions :

A. provision is recognized when an enterprise has a obligation as a result of past events and its probable that an outflow of resources wili be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present values and are determined based on best estimate required to settle the obligations at the balance sheet date. These are reviewed at each balance sheer date and adjusted to reflect the current management estimates.

1.10 Contingent Liabilities:

We have been informed by the management that, their banker namely Madhavpura Mercantile Co- operative Bank Ltd. has gone into liquidation. TheMMCB Ltd had offered the settlement under OTS for an amount of Rs.4.75 Crores {against outstanding of the Term. Loan facility amounting to Rs. 4J9 Ci. and Cash Credit facility of Rs. 2.22 Cr.i The matter is under re-consideration by the bank. The management has provided for interest based on communication iram Bank dated 04/01/2012. Based on legal opinions taken by the Company's Lr. Solicitors the Company believes that it has good cases in respect of the settlement of account under OTS offered in 2008-2009. To the extent of un-providcd interest the Losses arc under stated. The portion of un-providcd interest Liability shall stand as contingent liability.

1.11 Cash and Cash Equivalents :

Cash and Cash Equivalent comprises of Cash on hand. Cash at Bank and Cheques in Hand.

1.12 Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006 :

Micro, Small 1.13 Secured loans;

We have been informed by the management that, their bankers namely Madhavpura Mercantile Co- operative bank ltd lias gone into liquidation. Due to hod - availability of foreign L.C, facilities and additional working capital facility from this bank, the company had incurred huge losses oa account of cancellation of export sales. Company had filed suit against the Rank. The management has requested to revalidate earlier offered OTS Scheme. The matter is under consideration by the bank, The management has provided for interest partly taking the base of communication received from Bank as referred in Audit Report.

The accounts have been prepared ®n "Going concern Concept". Since, the company do not have intention, to.,su*>pcrtC the operational activities.