Carnation Industries Limited (the Company) is a public company domiciled and incorporated in India. The company is engaged in the manufacture of foundry based engineering goods namely Cast Iron, Ductile Iron and Mild Steel Castings predominantly for export and also for domestic market having plants at various locations in West Bengal. Its shares are listed on two stock exchanges in India (Bombay Stock Exchange and The Calcutta Stock Exchange Ltd.).

2. Terms/rights attached to equity shares

The company has only one class of equity shares having face value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

3. During the year ended 31st March 2015, the amount of per share dividend recognised as distributable to equity shareholders is Re: 0.60 (31st March 2014: Re. 0.80). The total dividend appropriation for the year ended 31-03-2015 amounted to Rs.24.89 lacs (Previous year Rs.32.36 lacs) including corporate dividend tax of Rs. 4.15 lacs(Previous year Rs.4.70 lacs).

4. In the event of liquidation of the company, the holders of equity shares will be entitled to receive 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.

5. LONG -TERM BORROWINGS From Banks

(Secured against purchase of bills, hypothecation of stock in trade, Book Debts and receivables, Term Deposits, Equitable Mortgage of Land / Buildings owned by the Company as well as by some Direc- tors, charge on the existing and future plant & machinery owned by the Company and personal guar- antee of some Directors and guarantee by ECGC on pari-passu basis amongst the Bankers, including for short term borrowings)

6. SHORT-TERM BORROWINGS From Banks

(Secured against purchase of bills, hypothecation of stock in trade, Book Debts, and receivables, Term Deposits, Equitable Mortgage of Land / Buildings owned by the Company as well as by some Directors, charge on the existing and future plant & machinery owned by the Company and personal guarantee of some Directors and guarantee by ECGC on pari-passu basis amongst the Bankers including for long term borrowings.)

7 In view of insufficient information from the suppliers regarding their status as Micro, Small and Medium Enterprises, the amount remaining unpaid to such undertakings could not be ascertained for separate disclosure in our accounts.

8 Charge of hypothecation over Current Assets & Raw Materials procured under letter of credit in favour of bankers has been created for letter of credit issued. Agreegate value of such letter of credit outstanding as on 31st March, 2015 is Rs.787.64 lacs. (Previous Year Rs.695.36 lacs.)

9 Export proceeds in foreign exchange from a related party of Rs. 2907.51 lacs (Previous year Rs.1403 lacs) could not be realised within 12 month from the dates of export as at the end of the year. Total outstanding as on 31.03.2015 is Rs. 3173.04 lacs (Previous Year Rs. 3178.55 lacs). Out of that Rs. 64.75 lacs have since been realised.

10. OTHER NOTES

i) Estimated amount of contracts remaining to be executed on Capital Account is Rs. NIL (Net of advance of Rs. NIL) (Previous year Rs. 4.17 lacs, net of advance Rs. 25.63 lacs.)

ii) Contingent liability not provided for in respect of : (Rs. in Lacs)

                                              As at              As at
                                           31.03.15          3 1.03.14

a) Outstanding Bank Guarantee               104.68               57.33

b) Disputed Duty & Penalty under             86.56               86.56
Central Excise Law

c) Disputed Vat Demand for the              100.13              100.13
Financial Year 2007-08

11. In addition, the company has a few outstanding legal proceedings which have arisen in the ordinary course of business. However the company's management does not expect this legal proceedings, when concluded will have any material and adverse effect on the financial position of the company.

12 The Company, in respect of its claim for refund of Input Tax Credit amounting to Rs.106.03 lacs for the Financial Year 2005-06 had fled a revision petition u/s 87 of the VAT Act, 2003 against the Appellate Authority's order dt. 25/03/2011, rejecting the appeal and also fled an appeal before The West Bengal Commercial Taxes Appellate and Revisional Board for the financial year 2007-08 against the order passed by the Joint Commisioner of Sales Tax, Kolkata (South) Circle, rejecting the total claim of ITC for that year and also raised a demand for Rs.100.13 lacs.The revision petition and the appeal are still pending. Claims for the refund of Input Tax Credit in respect of other financial years are at various stages of adjudication with the Sales Tax Department. The Company expects realisation of these refund claims not later than 12 months from 31st March, 2015. The company had also been advised by its lawyer that these claims were worked out and made in confrmity and compliance with the stipulated rules and procedures. During the current financial year the company has partly received provisional refund of Input Tax Credit amounting to Rs.93.06 lacs, Rs.182.02 lacs and Rs. 50.05 lacs out of claims made for the financial year 2012-2013, 2013-2014 and 2014-2015 against submission of Indemnity Bonds equivalent to the amount of claim.

13 The company recognises overdue interest on export sales as and when the sale proceeds is realised as mutually agreed.

14 The Additional Commissioner of Central Excise, Kol-II and Haldia Commissionarate have raised two separate demands with penalty agreegating to Rs. 136.56 lacs out of which Rs. 50.00 lacs was paid in the financial year 2007-08. The Company had fled Appeals against the above demands before the Commissionarate (Appeal -I&II) of Central Excise Kolkata which are still pending.

15 Gratuity and Other Post-Employment Benefit Plans:

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service.

16 The Company also provides Leave Encashment Benefit to employees, whereby unutilised leave is carried forward and eligible for encashment upon retirement / termination.

17.The following tables summarise the components of net benefit expense recognised in the Profit and Loss Account and amounts recognised in the Balance Sheet for the respective plans.

18. In the opinion of the board, all Current Assets and Non-Current Assets have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated in the accounts.Balance confirmation from certain vendors are yet to be received by the company.

19 The assets and liabilities which are expected to be realised and payable in the ordinary course of business not later than 12 months from the reporting date have been classified as current assets and current liabilities in the Balance Sheet. All other assets and liabilities have been classified as non-current.

20 Foreign Exchange gain of Rs.228.38 lacs (Previous year gain Rs. 94.66 lacs) are net of exchange gain of Rs. 1.74 lacs (Previous year Rs.1.00 lacs) arising out of conversion of unexpired forward exchange contract at marked to market and loss of Rs. 1.72 lacs (P.Y. Rs.21.06 lacs) arising out of cancellation of forward exchange contract during the year.

21 The following table shows the distribution of the Company's consolidated sales by geographical market, regardless of where the goods were produced.

22. The Company has common cost, fixed assets and liabilities for all geographical segments, hence separate figures for segment results, fixed assets/addition to fixed assets and liabilities have not been furnished.

23. Provision for current tax has been made under the normal positions of the Income Tax Act, net of MAT credit.