Note l: SIGNIFICANT ACCOUNTING POLICIES

a) Basis for Preparation of Accounts :

The financial Statement have been brpared inconformity with generally accepted accounting principle to comply in all material respect with the notified accounting standards ('AS') under companies accounting standards Rules, as amended, the relevant provisions of the companies Act, 2013 ('the Act') and the guidelines issued by the Reserve Bank of India (RBI) as applicable to an Non — Banking Finance Company ('NBFC'). The financial statements have been brpared under the historical cost convention on an accrual basis. The accounting policies have been consistently applied by the company and are consistent with those used in the brvious year. The company adopts accrual system of accounting unless otherwise stated.

b) Use of estimates:

The brparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting year end. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates. Any revisions to the accounting estimates are recognized prospectively in the current and future years

c) Fixed Assets :

Fixed assets are stated at cost less accumulated debrciation. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.

Intangible Assets expected to provide future enduring economic benefits are carried at cost less accumulated amortization and impairment losses, if any. Cost comprises of purchase price and directly attributable expenditure on making the asset ready for its intended use.

d) Debrciation & Impairment of Assets:

Debrciation on fixed assets is provided on Written down Value method, over the useful lives and in the manner brscribed in Schedule 11 to the Companies Act, 2013.

e) Investment:

Long-term investments are stated at cost. Provision of diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management. As in case of Sunshine Capital Limited such decline is brsumed to be temporary hence no provision has been created.

f) Loan Income:

a. In respect of loan agreements, the income is accrued by applying the implicit rate in the transaction on declining balance on the amount financed for the period of the agreement.

b. Dividend income on investments is accounted for as and when the right to receive the same is established.

c. No income is recognized in respect of Non-Performing assets, if any, as per the prudential norms for income recognition introduced for Non Banking Financial Corporation by Reserve Bank of India vide its notification DFC.No.119/DG/ (SPT)-98 date 31-01-1998 and revised notification no. DNBS.192/DG (VL)-2007 dated 22/02/2007.

g) Employee Benefits

Company do not follow the provision of the accounting Standard-15 "Employee benefits" as the company do not have employee more than 10 personnel's. So it is the policy of the company that any kind of provision mentioned in the AS -15 will not be entertained. And the company does not make provision for gratuity also.

In case the company's employee limits goes beyond the brscribed limits then AS-15 for Employee benefits will be taken into consideration.

h) Provisioning of Assets:

The Company makes provision for Standard and Non-Performing Assets as per the Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms Reserve Bank) Directions, 2007, as amended from time to time. The Company also makes additional provision towards loan assets, to the extent considered necessary, based on the management's best estimate.

Loan assets which as per the management are not likely to be recovered are considered as bad debts and written off.

i) Provision. Contingent Liabilities and Contingent Assets :

(i) A provision is recognized when the company has a brsent obligation as a result of past event and it is probable that outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are not discounted to their brsent value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

In respect of Non-Banking Finance Companies the provision for non-performing assets/investments and contingent provision against standard assets has been made as per prudential norms and Circular No. DNBS.PD.CC.No.207/03.02.2002/2010-11 as brscribed by the Reserve Bank of India.

(ii) Contingent Liabilities are disclosed separately by way of note to financial statement after careful evaluation by the management of the facts and legal aspects of the matter involved in case of :

a . A brsent obligation arising from the past event, when it is not probable that an outflow o f resources will be required to settle the obligation.

b. A possible obligation, unless the probability of outflow of resources is remote.

j) Taxation

Provision for current tax is made in accordance with and at the rates specified under the Income-Tax Act, 1961, in accordance with Accounting Standard 22 -'Accounting for taxes on Income', issued by the Institute of Chartered Accountant of India.

k) Earnings per share :

Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting attributable taxes) by the 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 weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares

I) Cash and Cash equivalents:

Cash and cash equivalents in the cash flow statement comprise cash at bank and in hand and highly liquid investments that are readily convertible into known amount of cash.

2. Previous year's figures have been reworked, regrouped, rearranged & reclassified wherever necessary to confirm to the current year brsentation.

3. In the opinion of Board of Director, the current assets, loans & advances have a value on realization in the ordinary course of business at least equal to the amount at which these are stated.

4. As per AS-13, all long term investments are to be carried at cost less diminution in the value except for temporary diminution. There is non provision of diminution in the value of Non Current Investment to the tune of " 12.00 Crore (P. Y. 12.06 Crore) by virtue of which profit of the company has been overstated by " 12.00 Crore.

5. As per the Provision of AS-2, Accounting of Inventories, Stock in trade should be valued at cost or market price whichever is lower, so that the company has valued it's currently purchased all stock in trade at less value that is cost.

6. Statutory Reserve rebrsents the Reserve Fund created u/s 45-IC of the Reserve Bank of India Act, 1934. An amount of " 6, 69,848/-. (Previous Year" 26,97,551/-) rebrsenting 20% of Net Profit is transferred to the fund for the year.

7. Contingent liabilities and pending litigations:

(a) There is a pending Tax demand of " 35, 33, 80,053/- against the company. The above demand was raised by Department in A.Y. 2008-09 as the company has raised share capital of " 100 crore in A.Y. 2008-09. The same has been added by the Assessing Officer. The Company has filed an appeal with ITAT. The demand of appeal is pending before ITAT till date. The Company is hopeful to get relieved from ITAT.

(b) There is a pending penalty prosecution by CIT Appeals for the above Capital Addition of " 100 Crore. The amount of penalty demand by the department is of" 3,99,00,000/-.

(c) There is also a pending Tax demand of " 5,14,66,300/- against the company. The above demand was raised by Department in A.Y. 2009-10. The Company has filed an appeal with ITAT. The demand of appeal is pending before ITAT till date. The Company is hopeful to get relieved from ITAT.

8. Contingent Assets:

The company has filed suit for recovery of amount from Sunderdeep Educational Society. The company has issued a notice in response of the same on 20th December, 2012 to the Sunderdeep Educational Society, 35, Nyay Ganj, Sunder Deep Nagar, NH-24, Ghaziabad-201001 and to Mr. Manoj Kumar Gupta Secretary of Sunder Deep Educational Society for recovery of Principal Amount of " 17,00,000/- along with interest of" 4,01,095/- i.e. a total sum of " 21,01,095/-. The case is pending before Hon'ble High Court and the company is hopeful of recovery.

9. Segment Reporting: The Company's business activity falls within single primary/secondary b u s i n e ss segment viz., Finance Activity. The disclosure requirement of Accounting Standard (AS) — 17 "Segment Reporting" issued by the Institute of Chartered Accountant of India, therefore is not applicable.

10. Information as required by Non Banking Financial (Non Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Direction, 2007 is Furnished vide Annexure -1 Attached Herewith.

11. Micro and Small Scale Business Industries:-

There are no Micro, Small and Medium Enterprises, to whom the company owes dues which outstanding for more than 45 days as at 31st March, 2015. This information as required to be disclosed under the Micro, Small and Medium Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with company.

Auditor's Report Signed in Terms of my Separate Report of even date

FOR SUNSHINE CAPITAL LIMITED

CA. ANIL KUMAR

 (Chartered Accountant)

M. No. 086223

MEG HA BANSAL (Company Secretary) M. No. A36741

SURENDRA KUMAR (Director) DIN: 00530035

JAIN PRITI JAIN(Managing Director) DIN: 0537234

Place: New Delhi

Date: 21.05.2015