NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED ON 31 MARCH 2015

1. GENERAL INFORMATION

Archies Ltd. is a public limited company, domiciled in India and its shares are listed on N.S.E. and B.S.E. The Company is a leader in the social exbrssion industry in India and deals in Greeting Cards, Gifts and Stationery Products under the Brand name "Archies".The Company has 17 branches sbrad all over India and performs its operations through a systematic distribution network comprising of company owned Stores, Franchisee, Distributors and Retailers. It also exports its products.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1. Basis of brparation of Financial Statements

The Financial Statements have been brpared to comply with all material aspects of the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013. The Financial Statements have been brpared under the historical cost convention on an accrual basis of accounting in accordance with Generally Accepted Accounting Principles (GAAP). The accounting policies have been consistently applied by the Company.

All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Branch has ascertained its operating cycle as 12 months for the purpose of current - non current classification of assets and liabilities.

The brparation of the Financial Statements in conformity with accounting principles requires that:

(i) The management makes estimates and assumptions that affect the reported amounts of assets and liabilities,

(ii) Disclosure of contingent liabilities as of the date of the Financial Statements.

Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from those estimates.

Advertisement, Postage, Packing & Forwarding and Business Promotions & Development expenses are shown at net figures after reducing the recovered amounts.

2.2 Revenue Recognition

Revenue from sale of goods/job work is recognised when the sales/job work has been completed with the passing of title and are recorded net of returns, trade discounts, rebates, sales tax and excise duty. Sales on consignment basis are recognised upon receiving confirmation of sale from consignee.

Interest income is recognised on proportionate basis inclusive of tax deducted at source thereof.

Royalties accrue in accordance with the terms of the relevant agreement and are recognised on that basis.

Dividend income is recognised when the right to receive dividend is established.

2.3 Tangible Fixed Assets

Tangible Fixed Assets are stated at cost of acquisition and subsequent improvements thereto including borrowing costs, tax, duties, freight and other incidental expenses related to acquisition and installation.

CENVAT credit wherever claimed has been reduced from the cost of acquisition.

The Company capitalises assets taken on Finance Lease, in accordance with the Accounting Standard 19 (Accounting For Leases)

2.4 Capital Advances

Advances paid towards acquisition of fixed assets, not received before the year-end are disclosed under Capital Advances.

2.5 Capital Work in Progress

The costs of assets not ready for use, before the year-end, are disclosed under Capital Work in Progress.

2.6 Debrciation

Debrciation on tangible fixed assets is provided using the Straight Line Method, based on the life brscribed in the Schedule II of the Companies Act, 2013 except for certain fixed assets, where useful life is considered higher based on management's estimate.

Leasehold improvements are amortised over the period of the lease or the useful life of the asset, whichever is lower.

Debrciation is charged on pro-rata basis for assets purchased/sold during the year. Individual assets costing upto Rs. 5,000/- are debrciated in the year of purchase.

2.7 Investments

(i) Current Investments

Investments that are readily realisable and intended to be held for not more than a year are classified as Current Investments. All other investments are classified as Non Current Investments. Current Investments are carried at lower of cost and fair value determined on an individual investment basis.

(ii) Non Current Investments

Non Current Investments are carried at cost and provision for diminution in value is made only if such decline is other than temporary in the opinion of the management.

2.8 Miscellaneous Expenditure

Miscellaneous Expenditure is being written off in accounting period in which incurred.

2.9 Valuation of Inventories

i)

Manufactured Goods, Work-in-Progress, Traded Goods

and Raw Materials are valued at lower of cost and net realisable value.

ii) Other Misc. Inventories are valued at cost.

iii) The valuation of inventory is being done based on FIFO (First in First Out) method.

The finished goods, which are not saleable, are categorised as dead stock, which are taken and valued at net realisable value. The Company has consistently followed this method of valuation of inventory.

2.10 Branch Accounting

Stock is being transferred to the Branches at a Mark-up to the cost price and is valued accordingly by the Branch but at the time of consolidation, the same is valued at as per valuation basis adopted by the Company.

2.11 Foreign Exchange Transactions

i) Transactions in foreign currency are accounted at the exchange rate brvailing at the time of transaction.

ii) Outstanding monetary items denominated in foreign currency are translated at the year-end exchange rates.

iii) Any gain or loss on account of exchange differences is charged to the Statement of Profit and Loss.

iv) The brmium or discount arising on forward contracts is amortised as expense or income over the life of the contract. Exchange differences on such contracts are recognised in the statement of profit and loss in the year in which the exchange rate changes. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or expense for the year.

v) The capital cost of respective fixed assets are adjusted for increase or decrease in liabilities incurred for the purpose of acquiring such fixed assets due to application of exchange rate brvailing at the Balance Sheet date.

2.12 Employees Benefits

Short-term Employee Benefits

i) The undiscounted amount of short-term employee benefits expected to be paid in exchange of services rendered by employees is recognised during the period when the employee renders the services. These benefits include salaries, wages and bonus and performance incentives.

Post-employment Benefit Plans

i) Leave encashment due to employees is covered by the New Group Leave encashment Plan under Cash Accumulation Scheme of Life Insurance Corporation of India (LIC). Leave encashment is being given to the employees every year in the month of April while retaining upto 30 days credit. Unpaid leave upto 30 days is charged to the statement of Profit and Loss on the basis of actuarial valuation. Leave beyond 30 days is recognised on accrual basis as short term leave.

ii) Contributions are made by the company to the Provident Fund on a monthly basis and charged to the Statement of Profit and Loss.

iii) Gratuity due to employees is covered by the Group Gratuity Policy under Cash Accumulation Scheme of Life Insurance Corporation of India (LIC). The contributions in respect of such scheme, based on the advices received from LIC, are made to the Gratuity Fund Trust. The liability towards gratuity is provided on the basis of actuarial valuation carried out by an independent Actuary in accordance with the Accounting Standard 15 (Employee Benefits).

2.13 Provisions and Contingent Liabilities

The Company recognises a provision when there is a brsent obligation as a result of a past event and it is probable that it would involve an outflow of resources and a reliable estimate can be made of the amount of such obligation. Such provisions are not discounted to their brsent value and are determined based on the management's estimation of the obligation required to settle the obligation at the balance sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect management's current estimates.

A disclosure for a Contingent Liability is made where it is more likely than not that a brsent obligation or possible obligation may result in or involve an outflow of resources. When no brsent or possible obligation exists and the possibility of an outflow of resources is remote, no disclosure is made.

2.14 Taxes on Income

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.

Deferred tax is recognised, on timing differences, being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

Deferred tax asset in respect of unabsorbed debrciation and carry forward of losses, if any, are recognised if there is virtual certainty that there will be sufficient future taxable income available to realise such losses.

2.15 Segment Reporting

(i) Primary Segment

The company operates in three primary business Segments-Greeting Cards, Stationery and Gifts.

(ii) Secondary Segment

The company has operations within India as well as entities located in other countries. Its reportable segment is based on geographical location of its customers.

2.16 Impairment of Assets

At each balance sheet date, the company assesses whether there is any indication that an asset may be impaired. If any such indication exists, the company estimates the recoverable amount. If the carrying amount of the asset exceeds its recoverable amount, an impairment loss is recognised in the statement of profit and loss to the extent the carrying amount exceeds the recoverable amount.

2.17 Leases

Operating lease payments are recognised as an expense in the Statement of profit and loss as per the terms of the agreements which are rebrsentative of the time pattern of the user's benefit.

2.18 Earnings Per Share

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

For the purpose of calculating 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, except where the results would be anti-dilutive.

2.19 Cash and Cash Equivalents

Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term investment with maturity of three months or less.

2.20 Previous Year Figures

Figures of the brvious year have been reworked, regrouped, rearranged and reclassified wherever necessary, to make them comparable with the current year figures.