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Notes to Accounts of Atul Ltd.

Mar 31, 2013

General information

Founded by Mr Kasturbhai Lalbhai in 1947, Atul Ltd has emerged, starting with the manufacture of a few dyes, as one of the diverse chemical companies, serving industries such as Adhesives, Aerospace, Agriculture, Animal feed, Automobile, Chemical, Composites, Construction, Cosmetics, Defence, Dyestuff, Electrical & Electronics, Flavour & Fragrance, Glass, Home Care, Paint & Coatings, Paper, Personal Care, Pharmaceutical, Plastic, Polymer, Rubber, Soap & Detergent, Textile and Tyre. The Company has established subsidiary companies in Brasil, China, Germany, the UK and the USA to work closely with its customers and expand its business. The Company is listed on Bombay Stock Exchange Ltd and National Stock Exchange of India Ltd. (Rs.cr)

NOTE 1.1 CONTINGENT LIABILITIES As at As at March 31, 2013 March 31, 2012

(i) Claims against the Company not acknowledged as debts in respects of:

(a) Excise 5.84 6.25

(b) Income tax 35.03 27.70

(c) Sales tax - 0.74

(d) Customs 2.78 2.78

(e) Water charges 71.92 68.63

(f) Others 13.54 13.26

Note: Future cash outflows in respect of (a) to (f) above are determinable on receipt of judgements | decisions pending with various forums | authorities.

(ii) Guarantees given by the Company :

(a) Corporate guarantee to a bank on behalf of subsidiary company for facilities availed by them 8.23 1.11

NOTE 1.2 LEASE

(a) The Company has taken various residential and office premises under operating lease or leave and license Agreements. These are generally cancellable, having a term between 11 months and 3 years and have no specific obligation for renewal. Payments are recognised in the Statement of Profit and Loss under ''Rent'' in Note 26.

(b) The Company has given certain buildings and plant and machinery on operating lease, the details of which are as under:

NOTE 1.3 DERIVATIVES

The use of Derivative instruments is governed by the policies of the Company approved by the Board of Directors, which provide written principles on the use of such financial derivatives consistent with risk management strategy of the Company.

(a) Derivatives outstanding as at Balance Sheet date

(b) The year end foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given below.

(c) Financial Derivatives Hedging Transactions:

Pursuant to the announcement issued by The Institute of Chartered Accountants of India dated March 29, 2008 in respect of derivatives, the Company has applied the Hedge Accounting Principles set out in the Accounting Standard-30 ''Financial Instruments : Recognition and Measurement''. Accordingly, Derivatives are Mark-to-Market and the gain aggregating Rs. 0.74 cr (Previous year loss Rs. 0.78 cr) arising consequently on contracts that were designated and effective as hedges of future cash flows has been recognized directly in the Hedging Reserve Account. Actual gain or loss on exercise of these Derivatives or any part thereof is recognised in the Statement of Profit and Loss. Hedge accounting will be discontinued if the hedging instrument is sold, terminated or no longer qualifies for hedge accounting.

NOTE 1.4 INTEREST IN JOINT VENTURE COMPANY

The Company has acquired 50 percent interest in Rudolf Atul Chemicals Limited (RACL), a Joint Venture Company in India between IB Industriechemie Beteiligungs GmbH, Germany and Atul Ltd on August 18, 2011. RACL is engaged in the business of manufacturing and marketing textile chemicals. As per the contractual arrangement between the Shareholders of RACL, both the parties have significant participating rights such that they jointly control the operations of the Joint Venture Company. The aggregate amount of assets, liabilities, income and expenses related to the share of the Company in RACL as at and for the year ended March 31, 2013 as per audited financial statements are given below :-

NOTE 1.5 REGROUPTED / RECAST / RECLASSIFED

Figures of the earlier year have been regrouped | recast | reclassified wherever necessary.

NOTE 1.6 ROUNDING OFF

Figures less than Rs. 50,000 has been shown at actual in bracket.


Mar 31, 2011

1 Included under Loans and Advances is an amount of Rs. 11.29 crores (Previous year Rs. 21.29 crores) given to an associate company. The said company is registered under BIFR and is implementing its revival plan. First charge over all their assets has been assigned exclusively in favour of the Company. The Company has also given an unsecured loan of Rs. 3.59 crores (Previous year Rs. Nil) as promoters contribution (repayable in two equal instalments in financial year 2015-16 and 2016-17). Considering the progress of the revival plan, the present market value of assets, etc these amounts included under loans and advances are considered as good and recoverable.

2 The Company has revalued (i) Leasehold land and (ii) Commercial land & building at Ahmedabad, Mumbai and Delhi as at March 31, 2008 at fair market value as determined by an independent valuer appointed for the purpose. Resultant increase in book value amounting to Rs. 107.47 crores has been transferred to Revaluation Reserve.

3 In the opinion of the management, the diminution in the value of the investment in shares (see Schedule 6) held by the Company is temporary in nature and accordingly, no provision is considered necessary by the management.

4 Significant accounting policies followed by the Company are as stated in the statement annexed to this Schedule.

5 Previous years figures have been regrouped recastreclassified wherever necessary


Mar 31, 2010

1 Contingent liabilities not provided for in respect of 2009-10 2008-10



(a) Disputed excise demands - matter under appeal 13.92 14.13 (b) Disputed customs demands - matter under appeal 11.99 12.03 (c) Disputed water charges - matter under appeal 61.96 59.26 Pursuant to the order passed by Honourable High Court of Gujarat, dated ; November 17, 2008 and April 17, 2009 in case of disputed water charges, Company i has created first charge over its certain land & buildings in favour of Government of i Gujarat. (d) Claims against the Company not acknowledged as debts 11.52 10.79 (e) Income tax demands (including interest) - matter under appeal 18.72 18.66

(f) Sales tax - matter under appeal 1.31 1.29 (g) Guarantees given by the Company to banks and financial institutions on behalf of 0.92 0.92 the third parties

a) As certified by General Manager - Works | Manufacturing | Executive Director and being a technical matter, accepted by the Auditors, as correct.

b) Class of goods based on classification given in the Industries (Development & Regulation) Act, 1951, under DGTD Registration.

c) In addition to existing licensed capacity, Colors Division has also filed memorandum for manufacture of 400 Tons of Vat Dyes with the Department of Industrial Development Ministry of Industry, Government of India

1 Segments have been identified in line with the Accounting Standard - 17 "Segment Reporting" taking into account the organisation structure as well-as the differing risks and returns.

2 Company has disclosed business segment as the primary segment.

3 Lease:

(a) The Company has taken various residential and office premises under operation lease or leave and license agreements. These are generally cancellable, having a term between 11 months and 3 years and have no specific obligation for renewal. Payments are recognised in the Profit and Loss Account under "Rent" in Schedule 15.

4 Provision for Contingency represents provision made for irrecoverable Loans & Advances created by way of utilisation of Capital Redemption Reserve Account totally and Security Premium Account partly in terms of Order dated February 01, 2005 passed by the Honourable High Court of Gujarat.

5 The use of Derivative instruments is governed by the policies of the Company approved by the board of Directors, which provide written principles on the use of such financial derivatives consistent with the Companys risk management strategy.

(a) The Company has entered into the following derivatives:

(1) The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and highly probable forecast transactions.

(c) Financial Derivatives Hedging Transactions:

Pursuant to the announcement issued by The Institute of Chartered Accountants of India dated March 29, 2008 in respect of forward exchange contracts and currency and interest rate swaps, the Company has applied the Hedge Accounting principles set out in the Accounting Standard (AS) 30 Financial Instruments: Recognition and Measurement. Accordingly, Range Forward Contracts are marked to market and the loss aggregating Rs 15.03 crores arising consequently on contracts that were designated and effective as hedges of future cash flows has been recognised directly in the Hedging Reserve Account. Actual gain or loss on exercise of these Range Forward contracts or any part thereof is recognised in the Profit and Loss Account. Hedge accounting will be discontinued if the hedging instrument is sold, terminated or no longer qualifies for hedge accounting.

6 Significant accounting policies followed by the Company are as stated in the statement annexed to this Schedule.

(b) Defined contribution plan:

Amount of Rs 5.93 crores (Previous year Rs 5.73 crores) is recognised as expense and included in the Schedule 13 " Contribution to Provident & Other Funds" to the Profit and Loss Account.

(c) The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. Mortality rates are obtained from the relevant data.

(d) Amount recognised as an expense in respect of Compensated Leave Absences in Rs 2.21 crores (Previous year Rs 3.00 crores).

7 Included under loan & advances is an amount of Rs 21.29 crores given to an associate company. The said Company is registered under BIFR and is in the process of implementing its revival plan. First charge over all their assets have been assigned exclusively in favour of the Company. Considering present market value of assets, this amount is considered as good and recoverable.

8 The Company has revalued (i) Leasehold land and (ii) Commercial land & building at Ahmedabad, Mumbai and Delhi as at March 31, 2008 at fair market value as determined by an independent valuer appointed for the purpose. Resultant increase in book value amounting to Rs 107.47 crores has been transferred to Revaluation Reserve.

9 With effect from April 01, 2009 the Company has implemented Oracle as ERP platform and the valuation of inventories is done on the basis of Moving Weighted Average Method instead of FIFO | YTD average basis applied in the earlier years. The impact on profits due to this change is not material.

10 Decline in value of a certain long term investment, considered as temporary in nature, has not been recognised and accordingly, no provision for diminution in value has been made (see Schedule 6, page 46 I 47)

11 Previous years figures have been regrouped wherever necessary.

12 Figures less than Rs 50,000 has been shown at actual in bracket as the figures have been rounded off to nearest lacs.

 
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