The accounting policies not specifically referred to otherwise, are consistent and in consonance with the generally accepted accounting principles.

1.2. Basis of Accounting :

The financial statements are prepared under the historical cost convention on accrual basis and in conformity with all material aspects with the Accounting Standards issued by the Institute of Chartered Accountants of India and the requirements of the Companies Act, 1956.

1.3. Use of estimates :

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the Financial Statements and reported amount of revenues and expense during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

1.4. Inventories :

(i) Raw materials, stores and spares and packaging material are valued at landed cost on FIFO basis.

(ii) Semi-finished goods are valued at cost / transfer price of raw materials consumed in process and cost of conversion incurred to bring the inventory to its present location , however in the current year it is accounted on Net Realisable Value.

(iii) Finished goods are valued at Net Realisable Value.

(iv) Residual and by products generated during the process of production are valued at Net Realisable Value except in cases where there is no certainty of Realisation.

(v) Trading goods are valued at Realisable value

(vi) All items of closing stock were obsolete and as per the new provisions of revised Schedule - VI. All stock was written off and accounted in P&L.

1.5. Cash and cash equivalents (for purposes of Cash Flow Statement) :

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amount.

1.6. Cash flow statement :

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments.

1.7. Depreciation and Amortisation :

The Depreciation is provided on straight line method by applying rates prescribed under schedule XIV of the companies Act 1956 to the W.D.V. as on 31st March, 1990 and on actual cost of acquisition after that date. Depreciation on addition / deletion to the assets during the year is provided on pro-rata basis. Impairment of Assets An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the profit and loss account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is revered if there has been a change in the estimate of recoverable amount in subsequent period. Intangible Assets It is the Policy of the Company to state the Intangible Assets at cost of acquisition Less accumulated amortisation. Technical know how is amortised over useful life of the underlying plant. However there are no Intangible Assets accounted till year end in the Company's Accounts.

1.8. Revenue Recognition :

Revenue in respect of insurance claims, interest and other claims is recognised when it is reasonably certain that the ultimate collection will be made. The company values its secret formula know-how Designs & Proprietary items in the books of accounts based on the valuation of the same by approved valuer and when it is reasonably certain that the ultimate collection will be made.

Revenue from the sale of goods are recognized by the passage of title of the goods to the customers - which generally coincides with the despatch / supply / delivery of the goods.

1.9. Other Income :

Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is established.

1.10. Fixed Assets :

Fixed Assets are stated at cost of acquisition including cost which are incidental and attributable for bringing the assets to its working condition for its intended use, less accumulated depreciation.

Fixed assets are stated at cost of acquisition / construction net of Cenvat credit on capital goods but inclusive of inward freight, duties and taxes, incidental expenses related to acquisition and, interest incurred up to the date of commercial production. The figures of land and building , which have been revalued during the accounting year 1994-95, are on the basis of the valuation report of an approved valuer. Fixed Assets sold during the year were accounted and reduced from gross block, accumulated depreciation and depreciation revaluation reserve. Reserve were reversed on pro-rata basis. Capital work-in-progress:

There is No Capital Work In Progress at year end.

However there are no Intangible Assets accounted till year end in the Company's Accounts.

1.11. Foreign currency transactions and translations :

Treatment of exchange differences

Transactions in foreign exchange are recognised at exchange rates prevailing at the time of transaction. The gain / loss arising on settlement during the year is recognised in the profit and loss account on remittance / realisation of the amount.

Duty free imports of Raw Materials under Advance Licence for imports as per the import and export policy are matched with the exports made against the said licence and the net benefit / obligation is accounted by making suitable adjustments in the raw material consumption.

The benefits accrued under the duty entitlement pass book scheme as per the import and export policy in respect of exports made under the said scheme have been included under the head "export incentives".

However there is no Export during the year.

1.12. Investments :

The Long Term Investments in the nature of Trade Investments made by the Company have been valued at cost. There is diminution in the value of investments; but the Company has made necessary provision for the diminution in the value of investments as per the requirements of Accounting Standard 13 on Investment as notified by ICAI.

Long term Investments are stated at cost, except where there is diminution in value other than temporary, in which case the carrying value is reduced to recognise the decline. Current investments are stated at lower of cost and fair value computed category-wise.Investment in the shares of Ashok Alco-Chem Ltd. were sold to one of the Director at Loss and the value per share at which Investment was sold is Rs. 11.95 Per Share , in the last Year.

1.13. Employee benefits :

Short-term employee benefits

Short Term Employee Benefits are charged off at the undiscounted amount in the year in which the related services is rendered.

Long-term employee benefits

Long Term Employee Benefits and Post Employment Benefits are charged off in the year in which the employee has rendered services. The Amount charged off is recognised at the present value of the amounts payable determined using acturial valuation techniques. Acturail gain & loss in respect of post employment and other long term benefits are charged to profit & loss Account. The Provident Fund & Pensions contributions are made to a government administered Provident Fund towards which the company has no further obligations beyond its monthly contributions.

Retirement Benefits

The Company's contribution to Provident Fund is charged against revenue every year. In respect of gratuity, the Company has created approved gratuity trust and Company every year provides towards differential liability on the basis of Estimation Provision for leave encashment is not made. Management does not anticipate any further liability in the future on this account.

1.14. Borrowing Costs :

Borrowing cost that are directly or indirectly attributable to the acquisition, construction or production of an asset is capitalised upto the date these assets are put to intended use. Borrowing cost after the assets are put to intended use and incurred for the operations of the company is recognised as an expense in the period in which they are incurred.

1.15. Segment Reporting :

The Company is engaged in manufacture of chemicals, which as per Accounting Standard - As 17 is considered the only reportable business segment. The geographical segmentation is not relevant, as exports are in significant.

1.16. Accounting for Taxes on Income:

Taxes on Income are accounted for in accordance with Accounting Standard 22 on "Accounting for Taxes on Income" (AS 22) issued by the Institute of Chartered Accountants of India.

Income tax expenses comprises of current tax and deferred tax charge or credit. Provision for current tax is to be made on the basis of estimated tax payable for the year as per the applicable provisions of the Income Tax Act. The deferred tax charge or credit is recognized using current tax rate. Deferred tax asset is recognized only if there is sufficient evidence that future taxable income will be available. Deferred Tax is recognized subject to consideration of prudence, on timing differences that originate in one period and are capable of reversal in one or more subsequent period between taxable income and accounting income. Deferred Tax adjustments in terms of accounting standard 22 resulting from timing differences is not considered in the books of accounts as operations of the company are severely curtailed and no immediate benefit or claim is expected to arise in near future.

1.17. Research and Development Expenses :

Research and development costs (other than costs of fixed assets acquired) are charged as an expense in the year in which they are incurred and are reflected under the appropriate heads of accounts.

However there is no such Expenditure during the year.

1.18. Provisions and Contingencies :

Provisions are recognized when the company has a present legal or constructive as a result of past events and it is probable that an obligation of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the obligation can be made.

Contingent Liabilities are stated by way of notes to the Balance Sheet. Provision is made in the accounts in respect of those liabilities which are likely to materialise after the year end, till the finalisation of accounts and have material effect on the position stated in the balance sheet The Central Government vide its letter dated 8th February 2007, has permitted the Company with effect from 1st December 2006 to pay remuneration to its Managing Director in excess of the limits prescribed under section 309 (3) and 198 (1) of the Companies Act 1956. Accordingly the Company has to provided remuneration to the Managing Director as per the permission granted by the Central Government.

1.19. Pre-Operative Expenditure :

Pre-operative Expenditure is carried forward to be capitalised and apportioned to various assets on commissioning of the project.

1.20. Service tax/ Excise & Cenvat :

Excise :

Excise duty payable on company's products is accounted on production thereof.

Cenvat:

Cenvat credit available on raw material / inputs is accounted on accrual basis on consumption of materials and appropriated against payment of Excise Duty payable on clearance of finished goods. Consumption of Raw Material / Inputs is accordingly net of such cenvat credit. Cenvat Credit available on capital goods are appropriated after commissioning of the item / project as payment of excise duty payable on clearance of finished goods from factory premises, The Capital goods are stated net of Cenvat Credit.

1.21. Deferred Revenue Expenditure & Preliminary Expenditure. :

Deferred Revenue Expenses is written off oven 3 / 5 years and balance is carried forward under the head Miscellaneous Expenditure in the Balance Sheet.

1.22. Related Party Transaction :

As required by Accounting Standard AS - 18 " Related Parties Disclosure " Disclosure is made Only of the Related Parties with Whom Transactios were entered the details of the same are as follows:

List of Related Parties with whom Transactions are entered are as under (more than 20% control led by the Directors and Relatives.)

A. Associated companies

Kadakia Alkalies and Chemicals Limited USM Enterprise

B. Key Management Personnel and Relatives

Mr. Pankaj M Kadakia

C. Relatives of Key Management Personnel

Mrs.Madhavi Pankaj Kadakia (Wife of Mr. Pankaj M Kadakia)

1.23. Transaction Took Place During the Current Financial Year :

1 During the Year Account of Panoli Intermediates (I) Pvt. Ltd. is reconciled and thereby Balance of Rs.76,69,545/- is written off Vide Board Resolution No. Dated : 10/05/2014.

2 No TDS is deducted in One Case of Construction Contractor During the Year towards Payment made to Contractor.

3 During the Year the Companies Application to GBIFR is Registered for Relief in the State Government Statutory Dues in Interest and Penalty and thereby the Liabilities as provided in the Books of Accounts were written Off Treating the Provision already made Over & above the Principle Liability in respect of the State Government Dues as Excess Provision and only Principle Liability is Continued to be Accounted in O/s. Liability/Provisions. This is mainly in respect of Sales Tax/VAT Liability,GIDC Liability in respect of NAA Charges,Notified Area Taxes (Charges),Water Charges, Land Revenue, Drainage Cess & Contribution And Ukai Water Charges.

4 Excise Duty Payable is written off Fully as it is No More Payable , As Per Management Certificate.

5 Management decided to Writ off Old Outstanding Liabilities in respect of Various Expenses which were already Provided and Paid during the

Previous Year.

6 Staff Loan & Other Loans & Advances to Staff were Adjusted against the Salary Payable at the Previous Year end.

7 During the Year (Gratuity) Settlement with 8 Workers/Staff was Accounted Amounting to Rs.2,34,147/-. During the Year Salary Settlement with 2 Workers/Staff was Accounted Amounting to Rs. 1,00,000/- .

8 During the Previous Year Providend Fund Payable/Libility is Paid off for Ankleshear GIDC PF Dues and as regards other Two PF Numbers i.e.Towards Nandesari and Pungam it was informed to us that there is No Outstanding Libility towards the same.

9 During the Year One of the Director of the Company has given his Car on Rent to the Company and for the said Transaction Company has given Deposit of Rs. 10 Lacs to Director.The same is Authorised by the Resolution of Board Meeting. However the Said Deposit of Rs.10Lacs is Refunded back to the Company During the Current Year.

10 As per information & Explanantion given to us there are 38 Labour Cases & 16 Gratuity Cases are yet to be Settled at the Year End. Contingent Liability for the same is considered of Rs.60 Lacs in Excise & Other Matters.

11 Cash & Bank Balance as on 31/03/2014 is Certified by the Management.

* Cenvat credit not recouped in payment of excise duty on the dispatches of products, to the extent usable, is treated as Cenvat credit receivable and show nunder "Loans & Advances".