NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2014

1 CORPORATE INFORMATION

Fineotex Chemical Limited (The Company) is a public limited Company domiciled in India and incorporated under the Companies Act, 1956. The Company was incorporated in 2004 and is listed on Bombay Stock Exchange and on the National Stock Exchange. The Company is engaged in the business of manufacturing and trading of Chemicals. The Company is one of the leading manufacturers of chemicals for textiles, construction, water-treatment, fertiliser, leather and paint industry.

2 SIGNIFICANT ACCOUNTING POLICIES

A. Basis of Preparation of Financial Statements:

These financial statements have been brpared to comply with the Generally Accepted Accounting Principles in India (Indian GAAP). Pursuant to S. 133 of the Companies Act, 2013 read with rule 7 of Companies (Accounts) Rules, 2014 till the standards of accounting or any addedum thereto are brscribed by central government in consultation and recommendation of the National Financial reporting Authority, the existing accounting standards notified under Companies Act, 1956 shall continue to apply. Consequently these financial statements have been brpared to comply in all material aspects with the Accounting Standards notified under Sec 211(3C) [Companies (Accounting Standard) Rules, 2006 as amended] of the Companies Act, 1956 and other relevant provisions of the Companies Act, 2013.

B. Use of Estimates:

The brparation of financial statements in conformity with Indian GAAP required judgements, estimates and assumptions to be made that affect the reported amount of assets and liabilities, disclosure of contingent liabiltities on the date of the financial statements and the reported amount of revenues and expenses during the reporting briod. Estimates and assumptions used in the brparation of the financial statements are based upon management's evaluation of the relevant facts and circumstances as of the date of the Financial Statements, which may differ from the actual results at a subsequent date. Differences between the actual results and estimates are recognized in the year in which the results are known / materialized.

C. Basis of Accounting:

The financial statements are brpared:

i. On the historical cost convention.

ii. On a going concern basis.

iv. On mercantile system of accounting and recognizes income and expenditure on an accrual basis except those with significant uncertainties.

v. In accordance with the relevant brsentation requirements of Schedule III of the Companies Act, 2013 to the extent applicable.

D. Fixed Assets:

i. Tangible Assets

Fixed Assets are stated at their original cost of acquisition including incidental expenses related to acquisition and installation of the concerned assets. Fixed Assets are shown net of accumulated debrciation and amortisation. Historical cost comprises of the acquisition price or construction price and all direct and indirect costs attributable to bring the asset to the working condition for intended use, but excluding any Cenvat/Service Tax / Value Added Tax credit available. Borrowing cost directly attributable to acquisition / construction of fixed asset which necessarily takes a substantial period of time to get ready for their intended use are capitalised.

Capital Work in Progres comprises the cost of fixed assets that are not yet readu for their intended use at the reporting date.

ii. Intangible Assets

Intangible Assets are stated at cost of acquisition less accumulated amortization. Amortization is done on Straight Line Method.

E. Debrciation:

i. Pursuant to the enactment of Companies Act 2013, the company has applied the estimated useful lives as specified in Schedule II to the Companies Act, 2013. Accordingly, the unamoritsed carrying value is being debrciated / amortised over the revised / remaining useful lives. The written down value of Fixed Assets whose lives have expired as at 1st April, 2014 have been adjusted net of tax, in the opening balance of Profit and Loss Account.

ii. Debrciation on additions to assets during the year is being provided on pro-rata basis from the date of acquisition/ installation.

iii. Debrciation on assets sold, discarded or demolished during the year, is being provided at their respective rates on pro-rata basis upto the date on which such assets are sold, discarded or demolished.

iv. For assets costing Rs.5000/- or less, debrciation is fully provided.

F. Inventories:

i. Cost of Inventories have been computed to include all cost of Purchases, Cost of Conversion and other costs incurred in bringing the inventories to their brsent location and condition.

ii. Raw materials are valued at cost. The costs are ascertained using the FIFO method, except in case of slow moving and obsolete materials, at lower of cost or estimated realizable value. Materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.

iii. Work-in-progress and finished goods are valued at the lower of cost or estimated realizable value. Cost rebrsents prime cost, and includes appropriate portion of overheads.

iv. Scrap is valued at estimated realizable value.

G. Foreign Currency Transactions:

i. Transactions in foreign currencies are normally recorded at the exchange rate brvailing on the date of the transaction.

ii. Monetary items denominated in foreign currencies at the year end are restated at the year end rates.

iii. Exchange difference arising on reporting of long term foreign currency monetary items (other than related to acquisition of debrciable Fixed Assets) at rates different from those at which they were initially recorded during the period or reported in brvious financial statement which were until now being recognized in the statement of Profit and Loss are now being accumulated in "Foreign Currency Monetary Item Translation Reserve Account" and amortized in the statement of Profit and Loss over the remaining life of the long term foreign currency monetary items.

iv. Non Monetary items denominated in foreign currencies are carried at cost.

H. Research and Development:

i. Capital Expenditure, if any is shown separately in Fixed Assets.

ii. Research and development cost (other than cost of fixed assets acquired) are charged as an expense in the year in which they are incurred.

I Investments:

i. Investments are stated at their cost of acquisition. Long term investments are carried at cost. In case there is any diminution of permanent nature in value of Investments, the same is provided for.

ii. Current Investments are valued at cost of acquisition, less provision for dimunition, as necessary, if any.

iii. Unquoted current investments are stated at the lower of cost and fair value where available.

J. Revenue Recognition:

i. The Company recognizes revenues on the sale of products when the products are delivered to the customer or when delivered to the carrier for exports sales, which is when risks and rewards of ownership pass to the customer. Sales are net of taxes on sales and sales returns.

ii. Other income is accounted for on accrual basis when it is reasonably certain that the ultimate collection will be made.

iii. Interest is accrued over the period of loan/ investment.

iv. Dividend on shares and mutual funds is accounted as and when the right to receive is established.

K. Leases:

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operatingleases. Operating lease payments are recognized as an expense in Statement of Profit and Loss.

L. Impairment of Assets:

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is charged to the

Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount

 M. Borrowing Costs:

i. Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalised as part of cost of such assets till such time as the assets are ready for its intended use or sale. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale.

ii All other borrowing costs are recognised as an expense in the period in which they are incurred.

N. Taxation:

Provision for taxation is made on the basis of the taxable profits computed for the current accounting period in accordance with the applicable tax rates and tax laws. Deferred Tax resulting from timing difference between Book Profits and Tax Profits is accounted for at the applicable rate of tax to the extent the timing differences are expected to crystallize, in case of Deferred Tax Liabilities with reasonable certainty and in case of Deferred Tax Assets with virtual certainty that there would be adequate future taxable income against which Deferred Tax Assets can be realized.

O. Employment Retirement Benefits:

i. Benefits in the form of Provident Fund whether in pursuance of law or otherwise which are defined contributions is accounted on accrual basis and charged to Statement of Profit and Loss of the year.

ii. Long term employee benefits under defined benefit scheme such as contribution to gratuity are determined at the close of the year at brsent value of the amount payable using actuarial valuation techniques. Actuarial gains and losses are recognized in the year when they arise.

iii. Termination benefits such as compensation under voluntary retirement scheme are recognized as a liability in the year of termination.

P. Cash Flow Statements:

The Cash Flow Statement has been compiled from and is based on the Balance Sheet as at 31st March 2015 and the related Statement of Profit and Loss for the year ended on that date. The cash Flow Statement has been brpared under the indirect method as set out in the Accounting Standard - 3 on Cash Flow Statement issued by the ICAI.

Q. Provisions, Contingent Liabilities and Contingent Assets:

Necessary provisions are made for brsent obligations that arise out of past events prior to the Balance Sheet date entailing future outflow of economic resources. Such provisions are not discounted to their brsent value and are determined based on the best estimates required to settle the obligation at the reporting date. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.

R. Earnings per share:

i Basic earning per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

ii For the purpose of calculating the diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

iii. The number of shares and potentially dilutive equity shares are adjusted retrospectively for all periods brsented for any share splits and bonus shares issue, including for changes effected prior to the approval of the financial statements by the Board of directors.

S. Operating Cycle for current and non-current classification:

Operating cycle for the business activites of the Company covers the duration of product line/ service including the defect liability period, wherever applicable and extends up to the realization of receivables within the agreed credit period normally applicable to the respective lines of business

1 The shareholders of the Company have approved sub-division of one Equity Share having face value of Rs.10/- into five equity share of face value Rs.2/- each through postal ballot declared on 28th May, 2015.

2 Segment Reporting

The Company is primarily engaged in the business of manufacturing of textile chemicals, auxilliaries and specialty chemicals. These in the context of Accounting Standard 17 on Segment Reporting, are considered to constitute one single primary segment. There is no other secondary reportable segment.

3 During the year under consideration, the Company has not given any loans to related parties u/s. 186 of the Companies Act, 2013. The Company has made investments in subsidiary which is reflected at Note no. 11

4 The Company has not received any intimation from suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures, if any, relating to amounts unpaid as at the year end together with interest paid / payable as required under the said Act could not be furnished.

5 Balance of sundry debtors, creditors and loans and advances are subject to confirmation, reconciliation, if any.

6 In the opinion of board and to the best of their knowledge and belief, the value on realisation of loans, advances and current assets in the ordinary course of business will not be less than the amount at which they are stated in the Balance sheet.

7 In the opinion of the board, provision for all known liabilities is adequate and not in excess of the amount reasonably necessary.

8 Previous year's figures have been regrouped, rearranged and reclassified wherever necessary.

For on behalf of Board of Directors

As per our Report of even date

For UKG & Associates

Chartered Accountants

(Firm Registration No : 123393W)

Champak K. Dedhia

Partner

Membership No.: 101769

A. V. Nerurkar

Company Secretary

Sanjay Tibrewala

Executive Director & CFO DIN : 00218525