1 Significant Accounting Policies-

1.1 Basis for brparation of financial statements

The financial statements have been brpared on historical cost convention and as a going concern and in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the Section 211(3C) ofthe Companies Act, 1956.The company follows mercantile system of accounting and recognizes income and expenditure on accrual basis.

Estimates and Assumptions used in the brparation of financial statements are based upon the management's evaluation of relevant fact and the circumstances as of the date ofthe financial statements, which may differ from the actual results at a subsequent date.

1.2 Inventories;

Inventories are valued at cost or net realizable value whichever is lower; cost is ascertained on the following basis:

a. Raw Material, Packing Material, tools, spares and consumable are valued at cost on plus direct cost incurred to bring the stock to its existing level.

b. Work in progress are valued at cost of manufacturing based on cost of Raw material and labour and overheads cost up to the relevant stage of completion.

c. Finished Goods valued at cost or Market price which ever is less.

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

Cash comprises cash in 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 amounts of cash and which are subject to insignificant risk of changes in value.

1.4 Events occurring after the date of Balance Sheet:

Material events occurring after the date of Balance Sheet are considered up to the date of approval of the accounts by the board of directors. There are no substantial events having an impact on the results of the current year Balance Sheet.

1.5 Prior Period Items and Changes in Accounting Policies:

No Prior Period items have materially affected this year's financial statements.

1.6 Debrciation:

Debrciation on all tangible assets has been calculated on Straight Line Method (SLM) as per the rates and manner brscribed under Schedule XIV of the Companies Act, 1956.

1.7 Revenue recognition:

Sales are accounted on net of tax, less sales Returns / rejection. Revenue from sale of products is recognized upon passage of title to the customer on acceptance of goods which generally coincides with the dispatch of materials.

Export Incentives receivable are accounted on accrual basis.

Dividend Income is recognized when the right to receive the dividend is unconditional at the Balance Sheet date. Interest Income is recognized on accrual basis.

1.8 Fixed Asset:

Fixed Assets are accounted at cost of acquisition or construction. Fixed assets are capitalized net of CENVAT / VAT for which credit is taken and includes borrowing cost directly attributable to construction or acquisition of fixed assets, up to the date the asset is ready to use.

1.9 Employee Benefits

The Company makes annual contributions to the Employee's

Group Gratuity-cum-life assurance scheme of Life Insurance Corporation of India, a funded, defined benefit plan for qualifying employees. Gratuity is payable to all eligible employees on super annuation, death or separation / termination in terms of the provisions ofthe payment of Gratuity Act or as per the Company's policy whichever is beneficial to the employees.

1.10 Borrowing costs:

Borrowing costs that are directly attributable to the acquisition,  construction or production of fixed assets are capitalized as part of the cost of that asset. Other borrowing costs are recognized as an expense in the period in which they are incurred.

1.11 Related Party Transactions:

The related parties are identified by the management of the  Company and relied upon by the Auditors. The related party transactions are reported at their net value (Excluding indirect taxes).

1.12 Taxes on income:

Tax Expenses for the year, comprising Current Tax including

Wealth Tax, and is included in determining the net profit for the year. A provision is made for the current tax and based on tax liability computed in accordance with relevant tax rates and tax laws.

1.13 Deferred Tax-Asset/Liability:

The Accounting Standard 22 "Accounting for Taxes on Income"  issued by the Institute of Chartered accountants of India, has become applicable to the Company. The Deferred Tax is recognized for all timing differences being the difference between "Taxable Income" and "Accounting Income" that originate in one period, and are capable of reversal in one or more subsequent periods and measured using relevant enacted tax rates. Deferred Tax Assets are recognized only if there is reasonable certainly that they will be realized and are reviewed for the appropriateness of their respective carrying value at each balance sheet date.

1.14 Miscellaneous Expenditure:

Miscellaneous expenditure is written off over a period of future  economic benefit available not exceeding five years.

1.15 Foreign Currency Transaction

All transactions in foreign currency are recorded at the rate of exchange brvailing on dates when the relevant transactions take place. In case of payment/realizations against these transactions in the same accounting year the respective expense/income head is debited/credited. In case of transactions where payments/realizations take place in the subsequent years the exchange gains/losses are accounted under exchange rate difference.

1.16 Provisions and contingencies:

The company recognizes provisions when there is a brsent legal or  constructive obligation as a result of past event that probably require an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure of a contingent liability is made when there is possible obligation or a brsent obligation that may, but probably will not, require an outflow of resources. Where there is possible obligation or a brsent obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made. Provisions are not discounted to its brsent value and are determined based on best estimates required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect current best estimates.

1.17 Capital work in Progress:

The Expenditure which is of Capital nature and the assets for which  it is incurred which has not come into existence/put to use during the year is shown under this head.

1.18 Earning Per Shares:

The basic earning per share is computed using the weighted average number of common shares outstanding during the periods. Diluted earning per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive.

As per Our Report of Even date

For and on Behalf of THANAWALA & Co.

Chartered Accountants

FirmReg.No.ll0948W

For, SKY Industries Limited

[V.K. Thanawala]

Proprietor [Director] Director]

M.N. 15632

Place: Mumbai,

Dated: 30*May2015