NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE

YEAR ENDED 31st MARCH 2015

[1A] GENERAL INFORMATION

Scan Projects Limited ('the Company') is a Public limited company engaged in Engineering Services (i.e. Erection, commissioning, supervision, project drawing and designing services) and trading of fabricating material, equipment parts and other items etc. The Company's registered office is at Village Jorian, Delhi Road, Yamunanagar (Haryana). The company is also listed on Bombay Stock Exchange Limited (BSE), Delhi Stock Exchange Limited (DSE), Jaipur Stock Exchange and Ahemdabad Stock Exchange.

[1B] SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a) Basis of Preparation of Financial Statement

These financial statements have been brpared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. These financial statements have been brpared to comply in all material aspects with the accounting standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and other relevant provisions of the Companies Act, 2013.

All assets and liabilities have been classified as current or non-current, wherever applicable as per the operating cycle of the Company as per the guidance as set out in the Schedule III to the Companies Act, 2013.

The accounts of Foreign Branch/Permanent Establishment for execution of Job contracted have been brpared in compliance with the local laws and applicable accounting standards and the same are duly incorporated in the Consolidated financial Statement of the company as if the transactions of the foreign Branch operation have been those of the Company itself. In cases where the financial year of foreign operation of Branch/Permanent Establishment is different from that of the Company, the financial statements of the said foreign branch operations have been drawn up so as to be aligned with the financial year of the company.

b) Presentation of Financial Statements

The Balance Sheet and the Statement of Profit and Loss are brpared and brsented in the format brscribed in the Schedule III to the Companies Act, 2013 ("the Act"). The Cash Flow Statement has been brpared and brsented as per the requirements of Accounting Standard (AS) 3 "Cash Flow Statement". The disclosure requirements with respect to items in the Balance Sheet and Statement of Profit and Loss, as brscribed in the Schedule III to the Act, are brsented by way of notes forming part of accounts along with the other notes required to be disclosed under the notified Accounting Standards and the Listing Agreement.

c) Use of Estimates

The brparation 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 the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.

d) Tangible Fixed Assets:

i) Fixed Assets have been stated at historical cost less accumulated debrciation and cumulative impairment. Expenses directly related to the construction or acquisition of the fixed assets have been capitalized and added to the particular assets. Pre-operative expenses incurred till the date of capitalization have been apportioned on pro­rata basis. Items of fixed assets not capitalized and other br-operative expenses to the extent not apportioned are shown under the head "Capital work in progress". ii) Debrciation/Amortization:

Debrciation up to March 31, 2014 was provided on W.D.V. method on prorate basis at the rate brscribed in schedule XIV to the Companies Act, 1956.

In respect of fixed assets (other than freehold land and capital work-in-progress) acquired during the year, debrciation/amortization is charged on written down value method so as to write off the cost of the assets over the useful life and for the assets acquired prior to April 1, 2014, the carrying amount as on April 1, 2014 is debrciated over the remaining useful life of assets as brscribed in Schedule II to the Companies Act, 2013. Debrciation in respect of addition/deduction to fixed assets during the year has been charged on pro-rata basis.

Due to transition from schedule XIV to Schedule II, debrciation on assets existing as on March 31, 2014, which useful life has already been exhausted but debrciation already charged was less than 95% of original cost of the assets than difference of 95% of original cost and debrciation charged till last year transferred to retained earning and if debrciation charged was more than 95% of original cost of the assets than same has been considered as remaining WDV as on first day of the current financial year.

e) Impairment of Assets

At each Balance Sheet date, the management reviews the carrying amounts of its assets to determine whether there is any indication that those assets were impaired. If any such indication exists, the recoverable amount of the assets is estimated in order to determine the extent of impairment loss. Recoverable amount is the higher of an asset's net selling price and value in use. In assessing value in use, the estimated future cash flows expected from the continuing use of the assets and from its disposal and discounted to their brsent value using a br-tax discounted rate that reflects the current market assessments of time value of money and risks specific to the asset.

Reversal of impairment loss is recognized immediately as income in the Statement of Profit and loss.

f) Foreign currency transactions and foreign operations

i) The reporting currency of the Company is Indian rupee.

ii) Foreign currency transactions are recorded on initial recognition in the reporting currency, using the exchange rate at the date of the transaction. At each balance sheet date, foreign currency monetary items are reported using the closing rate. Non-monetary items, carried at historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction.

iii) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Statement of Profit and Loss, except in case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.

iv) In respect of Branch/Permanent Establishment for execution of Job contracted, which are integral foreign operations, the same are translated as if the transactions of the foreign operation have been those of the Company itself. For non-integral foreign operation, the assets and liabilities are translated at the rates brvailing at the end of the year. Income and expenses items of the non-integral foreign operation are translated at the average rate brvailing during the year. Any exchange difference arising on consolidation is recognized in the "Foreign Currency Translation Reserve" until the disposal of the operations.

g) Revenue Recognition

i) Revenue from the sale of traded goods i.e. fabricating material, equipment parts, electrical material/components and other items etc. are recognized upon delivery, which is when title passes to the customer.

ii) Revenue from erection, commissioning, supervision, project drawing and designing services/related project is recognized as follows:

a) Cost plus contracts: Contract revenue is determined by adding the aggregate cost plus proportionate margin as agreed with the customer.

b) Fixed price contract revenue is recognized by adding the aggregate cost and proportionate margin using the percentage completion method. Percentage of completion is determined as a proportion of cost incurred-to-date to the total estimated contract cost.

c) Full provision is made for any loss in the period in which it is foreseen.

d) Services revenue is recognized on time proportion basis and excludes service tax.

iii) Revenue from maintenance contracts are recognized pro-rata over the period of contract.

iv) Interest income is accounted at applicable rates on respective investment.

v) Other items of income are accounted as and when the right to receive arises.

h) Retirement Benefits

(i) The Company's contribution to the recognized Provident/Family Pension Fund and Employees State Insurance Fund (Defined Contribution Scheme) schemes whether in pursuance of any law or otherwise is accounted on accrual basis and charged to the Statement of Profit and Loss of the year.

(ii) Gratuity Fund: The retirement gratuity benefit to employees is accounted for on accruing basis for the employees', based on their last drawn salary, completed years of services, instead of ascertaining actuarial impact.

(iii) Leave encashment benefit is considered and provided, based on actual as at the end of the financial year.

i) Valuation of Inventories

Inventories are valued as under: -

-Stores, spares, loose tools and other items At cost or net realizable value whichever is less.

 -Finished/Traded goods At cost or net realizable value whichever is less.

Project and erection/commissioning related work-in-progress is valued at cost till such time the outcome of the job cannot be ascertained reliably and at realizable value thereafter.

j) Government Grants/Subsidy

The Government grants relating to particular fixed assets are brsented by deducting them from the gross value of fixed assets. The grant is recognized as income over the life of debrciable asset by way of a reduced debrciation charge. In respect of Government grants in the nature of Project Subsidy (capital investment state subsidy) are credited to capital reserves.

k) Excise and Other Duties

Excise duty is accounted on finished goods on clearance thereof. CENVAT benefit is accounted for by reducing the purchase cost of material/fixed assets

l) Borrowing Cost

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred.

m) Taxes on income

(i) Provision for current tax is made on the basis of taxable income and tax credits computed in accordance with the provisions of Income Tax Act, 1961.

(ii) Deferred tax expenses or benefit is recognized on 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. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

(iii) In the event of unabsorbed debrciation and carry forward of losses, deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available to realize these assets. In other situations, deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available to realize these assets.

(iv) Minimum alternative tax (MAT) paid in accordance with the tax laws, which gives rise to future economic benefits in the form of adjustment of future income tax liability, is recognized as an assets in the balance sheet when it is probable that the future economic benefit associated with it will flow to the company and the asset can be measured reliably.

n) Miscellaneous Expenditure

i) Preliminary expenses are being written off over a period of 10 years.

ii) Share issue expenditure is being amortized from the year of commercial production over a period of 10 years.

o) Project Development Expenses pending Adjustment

Expenditure incurred during the developmental and brliminary stages of the Company's new expansion/diversification project are carried forward. However, if any project is abandoned, the expenditure relevant to such project is written off through the natural heads of expenses in which it is so abandoned.

p) Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a brsent obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

q) Cash and Cash Equivalents

The Company considers all highly liquid financial instruments, which are readily convertible into cash and have original maturities of three months or less from the date of purchase, to be cash equivalents.

r) Cash Flow Statement

Cash flows are reported using the indirect method, whereby profit before tax is adjusted from the effect of transactions of non cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expenses associated with investing or financing cash flows. The cash flow from operating, investing and financing activities is segregated.

s) Extraordinary and exceptional items

Income or expenses that arise from events or transactions that are clearly distinct from the ordinary activities of the Company are classified as extraordinary items. Specific disclosures of such events/transactions are made in the financial statements. Similarly, any external event beyond the control of the Company significantly impacting income or expense is also treated as extraordinary item and disclosed as such.

On certain occasions, the size, type or incidence of an item of income or expenses, pertaining to the ordinary activities of the Company is such that its disclosure improves an understanding of the performance of the Company. Such income or expenses is classified as an exceptional item and accordingly disclosed in the notes to accounts.

t) Lease Accounting:

As a Lessor: The Company has given assets on an operating lease basis. Lease rentals are accounted on accrual basis in accordance with the respective lease agreements.

As a Lessee: Operating lease payments are recognized as expenditure in the Statement of Profit and Loss as per the terms of the respective lease agreements.

u) Earning Per Share

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

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

[2] OTHER NOTES FORMING PART OF THE ACCOUNTS

a) The Balance Sheet as on March 31, 2015 and the Statement of Profit and Loss for the year ended March 31, 2015 are drawn and brsented as per the new format brscribed under Schedule III to the Companies Act, 2013.

b) Previous year figures have been re-grouped/re-classified where ever necessary to confirm to the current brsentation.

c) The Company has started the new activities i.e. Erection, commissioning, supervision, project drawing and designing services and trading of fabricating material, equipment parts, electrical material/components and other items etc. Accordingly, the management has changed the name and main objects of the company as per their brsent activities and all the current year revenue is related to new activities.

d) The Company is engaged in single business activity (i.e. Erection, commissioning, supervision, project drawing and designing and Trading of fabricating material, equipment parts, electrical material/components and other material etc.) and there is no separate reportable segment as per AS-17.

e) Pursuant to enactment of the Companies Act, 2013, effective from 1st April 2014, the company has revised the estimated useful life of its fixed assets in accordance with Schedule II of the Companies Act, 2013. Accordingly, an amount of Rs.  35179.00 (net of deferred tax liability Rs.  15731.00) has been adjusted in the opening balance of retained earnings in respect of assets useful life exhausted as at 1st April 2014. Further, the consequential impact of debrciation charged for the current year ended 31st March 2015 is higher by Rs. 358331.00.

f) Management has periodically reviewed the value in use/net realizable value of all its assets and ascertained that the value in use/net realizable value of all its assets at the end of the year is more than the book value after debrciation (amortization), hence no provision for impairment has been made during the year.

g) In respect Branch Office/Permanent establishment at Nepal for execution of job contracted there, the Company has brpared and obtained the audited necessary additional financial statement as on 31st March 2015 in compliance with the local laws and applicable accounting standards. The same are duly incorporated in the overall financial results of the company as if the transactions of the foreign operation have been those of the Company itself. All monetary assets and liabilities are translated by using closing exchange rates, non- monetary items carried at historical cost denominated in foreign currency and all revenue and expenses by using average exchange rate brvailing during the period. Exchange differences (if any) arising on conversion are recognized in the Statement of Profit and Loss.

h) In respect of provision for retirement gratuity benefits to employees, the company has decided to give the benefit out of its own funds and creates the provision of Rs. 180757.00 by charging to statement of profit and loss as accruing liability during the year. Due to few persons being employed in the company, the accruing liability has been calculated as per method on the assumption that such benefits are payable to all the employees at the end of the accounting year, reviewable every year. The total accumulated provision for retirement gratuity benefits to employees as on March 31, 2015 amounts to Rs. 430882.00 (Previous year Rs.250125.00).

SUNIL CHANDRA  (Managing Director)

CHAITYANYA CHANDRA  (Whole Time Director)

For Jayant Bansal & Co.,

Chartered Accountants

JAYANT BANSAL

(PARTNER)

M. No. 086478

Place: Yamunanagar

Date: 30-05-2015