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Notes to Accounts of Chambal Fertilisers & Chemicals Ltd.

Mar 31, 2016

1. Segment Information

Primary Segment : Business Segment

The Company has identified the business segment as its primary reportable segment as the Company''s risks and rates of return are affected predominantly by differences in the products and services produced.

The Company''s operating businesses are organized and managed separately according to the nature of products manufactured, traded and services provided. The two identifiable reportable segments are viz. Fertilisers and other Agri inputs and Shipping. A description of the types of products and services provided by each reportable segment is as follows:

Fertilisers and other Agri-inputs segment includes manufacture and marketing of Urea, Single Super Phosphate (SSP) and purchase and sale of other fertilisers and Agri-inputs.

Shipping Segment includes transportation of crude oil and liquid products through vessels owned and/ or hired by the Shipping Division.

2. Gratuity and other Post Employment Benefit Plans :

(a) Gratuity

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure @ 15 days (15 to 30 days in case of Shipping Division) salary (last drawn salary) for each completed year of service. The Scheme is funded with insurance companies in the form of a qualifying insurance policies except in the case of crew employees of the Shipping division.

(b) Provident Fund

The Company has set up provident fund trusts, which are managed by the Company in respect of Fertiliser and Shipping division of the Company and as per the Guidance Note on implementing AS-15, Employee Benefits (revised 2005) issued by the Accounting Standard Board (ASB), provident funds set up by employers, which requires interest shortfall to be met by the employer, needs to be treated as defined benefit plan. The actuarial valuation of Provident Fund was carried out in accordance with the guidance note issued by Actuarial Society of India and provided the interest shortfall of Provident Fund liability in the books of accounts.

3. Government Grants and Subsidies

(a) Nitrogenous Fertilizers are under the Concession Scheme including freight as per the New Pricing Scheme (NPS- Stage III) and New Investment Policy 2008 (for the period from April 1, 2015 to May 31, 2015), New Urea Policy 2015 (from June 1, 2015 onwards) and Uniform Freight Policy. The concession price and freight has been accounted for on the basis of notified prices, further adjusted for input price escalation/ de-escalation and as estimated by the management based on the prescribed norms in line with known policies parameters.

Contribution from sale of surplus ammonia has been accounted for in accordance with the known policy parameters. Current year''s subsidy income of Urea is inclusive of Rs.968.69 lacs (Previous year Rs.628.16 lacs) being the subsidy income, pertaining to earlier years, but determined during the year.

(b) Subsidy on traded fertilisers (other than Gypsum) has been accounted for as per concession rates based on Nutrient Based Subsidy Policy as notified by the Government of India.

(c) Subsidy on Gypsum has been accounted as notified by the Government of Rajasthan.

4. Leases

(a) The lease payment made during the year amounts to Rs. 92.08 Lacs (Previous year Rs.92.08 lacs ), out of which Rs.41.21 lacs (Previous year Rs.31.45 lacs) has been adjusted against Principal and Rs.50.87 lacs (Previous year Rs.60.63 lacs) has been shown as Interest expenses. The interest rate on finance leases is around 27.34% p.a. There is no renewal and escalation clause as well as restriction imposed in the lease agreement. There are no sub-leases.

5. Employees Stock Option Scheme

The shareholders of the Company had approved CFCL Employees Stock Option Scheme, 2010 on August 27, 2010 which was amended by the shareholders on September 13, 2013. Consequent upon promulgation of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 ("ESOP Regulations"), the shareholders of the Company had approved the revised CFCL Employees Stock Option Scheme, 2010 on September 15, 2015 in compliance with the ESOP Regulations. As per the Plan, 41,62,000 Stock Options can be issued to Managing Director and other specified categories of employees of the Company. The options are to be granted at market price. As per SEBI Guidelines, the market price is taken as the closing price on the day preceding the date of grant of options, on the stock exchange where the trading volume is the highest. Each option, upon vesting, shall entitle the holder to acquire 1 equity share of Rs.10.

The Company, in its annual general meeting held on September 15, 2015, also modified the exercise period of all the outstanding stock options, by increasing it from 5 years to 8 years, effective from September 15, 2015. The Company has accounted for this change in accordance with the Guidance Note on "Accounting for Employee Share-based Payments" issued by the Institute of Chartered Accountants of India.

6. Pending receipt of appeal effect orders for the assessment years where appeals have been decided in favour of the Company by the Commissioner of Income Tax (Appeals) and/ or Income Tax Appellate Tribunal, interest on income tax refund has not been recognized thereof as the amount is presently not reasonably determinable. Interest income on this refund shall be recognized in the year the appeal effect order is received from Income Tax Department.

7. The current tax is net of tax on dividend received from a foreign subsidiary to the extent of dividend distribution tax on dividend distributed to shareholders of the Company as per the provision of Section 115-O of the Income Tax Act,1961.

8. The Company has, during the year, accounted for income tax credit of Rs.661.14 lacs (including tax credit of Rs.190.48 lacs pertaining to earlier years) against income tax paid on profits by its subsidiary company M/s India Steamship Pte. Ltd. Singapore in proportion to the dividend received from the said subsidiary. The income tax credit is available in line with Article 25(2) of the Double Taxation Avoidance Agreement between India and Singapore.

9. In pursuance of the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, the Company has discontinued the consolidation of accounts of CFCL Employees Welfare Trust (Trust) with the accounts of the Company. Accordingly, the Company has not made downward adjustment of Rs.225.34 lacs, on account of the face value of equity shares held by Trust, in the paid up share capital of the Company as at March 31, 2016. Further, the downward adjustment of Rs.1389.91 lacs, earlier appearing in the reserves of the Company, representing the cost of acquisition of shares held by ESOP Trust (net of dividends) in excess of face value of such shares, has been added back to the reserves as at March 31, 2016.

10. During the year, the Company has obtained the approval of shareholders of the Company for sale or disposal of one or more than one or all 5 ships/ Vessels or entire shipping undertaking/business of the Company. The Company has entered into an agreement for sale of the ship - Ratna Puja in March 2016 and the ship was delivered to the buyer in April 2016. Thus, the Company has made a provision for impairment loss of Rs.11199.17 lacs as a result of sale transaction of the aforesaid ship. Further action regarding sale of other ships shall be taken after considering best available options and market conditions.

11. Previous Year''s figures have been regrouped and/or rearranged wherever necessary to conform to this year''s classification. However, current year figures are not strictly comparable with those of previous year due to sale of Textile division w.e.f April 1, 2015.


Mar 31, 2015

1. Corporate Information

The Company is one of the largest manufacturer of Urea in private sector in India and is also into the trading of fertilisers and other agri inputs. The Company is also into manufacturing of Synthetic and Cotton Yarn. Shipping Division of the Company is engaged in the business of running of ships for cargo.

2. Basis of Preparation

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under Section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rule 2014. The financial statements have been prepared on an accrual basis and under the historical cost convention except for derivative financial instruments and investment acquired in exchange for another asset which have been measured at fair value.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in accounting policy explained below.

a) Reconcilation of the shares outstanding at the beginning and at the end of the reporting period There is no movement in the shares outstanding at the beginning and at the end of the reporting period.

b) Terms / rights attached to equity shares

The Company has only one class of shares having a par value of Rs.10 per share fully paid up. Each holder of equity shares is entitled to one vote per share and will rank pari passu with each other in all respects. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders in the ensuing annual general meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after payment of all liabilities.

3 (A) Contingent liabilites (not provided for) in respect of parent company

a) (Rs. in Lacs)

S. Particulars 2014-15 2013-14 No.

i) Demand raised by Service Tax, Sales Tax 624.07 469.79 and Income Tax (IT) authorities being disputed by the Company*

ii) Penalty levied by FERA Board under appeal 1.30 1.30 before the Calcutta High Court

iii) Claim against Nihat Shipping Company Limited - 222.04 in legal suits /notices, in which the Parent Company has been made a party, is being contested, since the Company acted as Agents / Technical

iv) Various labour cases Amount Amount not not ascerta ascerta -inable -inable

v) Other claims against the Company not 402.93 386.77 acknowledged as debts

* Brief description of liabilities for (ii) above:

(Rs. in Lacs)

s. partliculars 2014-15 2013-14 no Income tax:

Demand raised by IT authorities on account of various disallowances for AY 2003-04 including 1.28 1.28 penalties.

Demand raised by IT authorities on account of various disallowances for AY 2004-05 including 5.87 5.87 penalties.

Demand raised by IT authorities on account of various disallowances for AY 2008-09 including 123.23 123.23 penalties.

1 Demand raised by IT authorities on account of various disallowances for AY 2009-10. 98.50 98.50

Demand raised by IT authorities on account of various disallowances for AY 2010-11. 70.33 70.33

Demand raised by IT authorities on account of various disallowances for AY 2011-12. 104.37 104.37

Demand raised by IT authorities on account of various disallowances for AY 2012-13. 154.22

Demand raised by IT authorities on account of short deduction of TDS and interest thereon for AY 2008-09 to 2012-13. 1.05 0.99

Sales Tax:

2 Disallowance of VAT credit on raw materials 22.18 22.18 used in the manufacturing of finished goods and lying in stock on April 1, 2006.

Miscellaneous Rajasthan Sales Tax and Central Sales Tax demand. 38.47 38.47

Service tax:

3 Service Tax demand received on services from foreign parties in respect of service tax not paid on Tax deducted at source (TDS) portion. 4.57 4.57

Total 621.07 469.79

(b) The Company had received a demand of Rs.352.34 lacs (Previous year Rs.352.34 lacs) from Sales Tax Department, Kota in an earlier year towards use of natural gas for ammonia fuel, power and steam generation for the period April, 1996 to May, 2001. The Company has obtained a stay from Hon'ble High Court of Rajasthan, Jodhpur on 11th July, 2001. However, in the event of the Company having to pay the above, it is reimbursable by Fertiliser Industry Coordination Committee (FICC) of Ministry of Chemicals and Fertilisers, the Government of India under Subsidy Scheme.

(c) The Company as well as other users of natural gas under HBJ Gas Pipeline had in earlier years received letters from GAIL (India) Limited (erstwhile Gas Authority of India Ltd), informing about the possibility of levy of excise duty on natural gas (presently not levied) with retrospective effect. The amount of such levy is not ascertainable. However, in the event of its levy, it is reimbursable by Fertiliser Industry Coordination Committee (FICC) of Ministry of Chemicals and Fertilisers, the Government of India under Subsidy Scheme.

(d) The Company as well as other users of Natural Gas under HBJ Gas Pipeline had received a letter in an earlier year from GAIL (India) Limited (erstwhile Gas Authority of India Ltd), informing about the possibility of levy of Central Sales Tax. The Company has been taking the delivery of Gas in the State of Rajasthan and has been accordingly paying Rajasthan Sales Tax on the supply. Therefore, the Company feels that no Central Sales Tax is payable by it. Further, the amount of such levy is not ascertainable. However, in the event of its levy, it is reimbursable by Fertiliser Industry Coordination Committee (FICC) of Ministry of Chemicals and Fertilisers, the Government of India under Subsidy Scheme.

(e) Under the Jute Packaging Material (Compulsory use of Packing Commodities) Act, 1987, a specified percentage of fertilisers dispatched were required to be supplied in Jute bags up to 31.8.2001. The provisions of the said Act were challenged in the Supreme Court, which upheld the constitutional validity of this Act in its judgment in 1996. In spite of making conscious efforts to step up use of jute packaging material, the Company had been unable to adhere to the specified percentage, due to strong customer resistance to use of jute bags. The Company had received show cause notice from the Office of the Jute Commissioner, Kolkata, for levying a penalty of Rs.7380.36 lacs (Previous year Rs.7380.36 lacs) for non compliance of the provisions of the said Act. The Company has obtained a stay order from Delhi High Court against the above show cause notice and has been advised that the said levy is not tenable in law and accordingly no provision has been considered.

Based on favorable decisions in similar cases, legal opinion taken by the Company, discussions with the solicitors, etc., the Company believes that there is fair chance of decisions in its favour in respect of all the items listed in (a) (ii) to (vi) and (b) to (e) above and hence no provision is considered necessary against the same.

(B) The Company is involved in various litigations, the outcomes of which are considered probable, and in respect of which the Company has made aggregate provision of Rs.15050.73 lacs as at March 31, 2015.

4 Segment Information

Primary Segment : Business Segment

The group has identified the business segment as its primary reportable segment as the group's risks and rates of return are affected predominantly by differences in the products and services produced.

The group's operating businesses are organized and managed separately according to the nature of products manufactured, traded and services provided. The three identifiable reportable segments are viz. Fertilisers and other Agri inputs, Textile and Shipping. A description of the types of products and services provided by each reportable segment is as follows:

Fertilisers and other Agri-inputs segment includes manufacture and marketing of Urea, SSP and purchase and sale of Fertilisers and Agricultural inputs. During the beginning of financial year, the Company has changed the policy of reporting of its segment information. The segment information is now being reported into three business segments (Fertilisers and other Agri-inputs, Shipping and Textile) by merging 'Own manufactured Fertiliser' and 'Traded Goods' segments into one business segment, namely Fertilisers and other Agri-inputs. The change has been made to reflect the Company's segment revenue, results and capital employed more appropriately as it caters to the same geography, market, customers and needs of the farmers. The new segment information namely Revenue, Results and Capital Employed is derived by a simple arithmetic additions of the aforesaid particulars of the consolidating segments and as such there is no financial effect of the change.

Textile segment includes manufacturing and sale of synthetic and cotton yarn.

Shipping segment includes transportation of crude oil and liquid products through vessels owned and/ or hired by the Shipping Division.

Secondary Segment : Geographical Segment

The analysis of geographical segment is based on the geographical location i.e., domestic and overseas markets, of the customers. Secondary Segment Reporting (by Geographical Segments)

5 Gratuity and other Post Employment Benefit Plans:

(a) Gratuity

The company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure @ 15 days (15 to 30 days in case of Shipping Division) salary (last drawn salary) for each completed year of service. The Scheme is funded with insurance companies in the form of a qualifying insurance policies except in the case of crew employees of the Shipping division.

(b) Provident Fund

The Company has set up provident fund trusts, which are managed by the Company in respect of Fertiliser and Shipping division of the Company and as per the Guidance Note on implementing AS-15, Employee Benefits (revised 2005) issued by the Accounting Standard Board (ASB), provident funds set up by employers, which requires interest shortfall to be met by the employer, needs to be treated as defined benefit plan. The actuarial valuation of Provident Fund was carried out in accordance with the guidance note issued by Actuarial Society of India and provided the interest shortfall of Provident Fund liability in the books of accounts.

The following tables summarise the components of net benefit expense recognised in the Statement of Profit and Loss and the funded status and amounts recognised in the balance sheet for the respective plans.

(c) Post Retirement Medical Benefits Plan

The Company has post retirement benefit schemes in the nature of defined benefit plan which is unfunded. The following table summarises the components of net benefit/ expense recognised in the Statement of Profit and Loss and Balalnce Sheet for the plan.

6 Related Party Disclosures

During the year, the group has entered into transactions with the related parties. Those transactions along with related balances as at March 31, 2015 and for the year then ended are presented below.

List of related parties under Accounting Standard- 18 along with nature and volume of transactions:

(a) Subsidiaries

CFCL Overseas Limited, Cayman Islands (under liquidation) # Chambal Infrastructure Ventures Limited, India India Steamship Pte. Limited, Singapore India stearnship Limited. India CFCL Technologies Limited, Cayman Islands (w.e.f. 25.03.2015)

Subsidiary of CFCL Overseas Limited, Cayman Islands

CFCL Technologies Limited, Cayman Islands (till 24.03.2015) Step-down subsidiaries of CFCL Technologies Limited

* CFCL Ventures Limited, Cayman Islands * ISGN Corporation, USA

Subsidiaries and step-down subsidiaries of ISGN Corporation, USA

ISGN Solutions Inc, USA

* Richmond Investors, LLC, USA

* Richmond Title Genepar, LLC, USA

* Richmond Title Services, LP , USA

* ISGN Fulfillment Services, Inc. (Pennsylvania, USA)

* ISGN Fulfillment Services, Inc (AZ, USA)

* ISGN Fulfillment Agency, LLC (DE, USA)

* ISGN Fulfillment Agency, of Alabama, LlC (AL, USA)

Subsidiaries and step-down subsidiaries of CFCL Ventures Limited

ISG Novasoft Technologies Limited, India Inuva Info Management Private Limited, India

Subsidiaries of Chambal Infrastructure Ventures Limited

Chambal Energy (Chhattisgarh) Limited Chambal Energy (Orissa) Limited

Subsidiaries of India Steamship Pte. Limited, Singapore

India Steamship International FZE, UAE

7 Government Grants and Subsidies

(a) Nitrogenous Fertilizers are under the Concession Scheme including freight as per New Pricing Scheme (NPS-Stage III), Uniform Freight Policy and New Investment Policy 2008. The concession price and freight has been accounted for on the basis of notified prices, further adjusted for input price escalation/ de-escalation and as estimated by the management based on the prescribed norms in line with known policy parameters. The NPS - Stage III policy was applicable for the period from October 1,2006 to March 31,2010, which has been extended thereafter provisionally till further orders. Accordingly, the impact of revised concession price has been accounted for.

Contribution from sale of surplus ammonia has been accounted for in accordance with the known policy parameters.

Current year's subsidy income is inclusive of Rs. 628.16 lacs (Previous year Rs. 2872.89 lacs) being the subsidy income, pertaining to earlier years, but determined during the year.

(b) Subsidy on traded fertilisers (other than Gypsum) has been accounted based on Nutrient Based Policy as notified by the Government of India. Current year's subsidy income is inclusive of NIL (Previous year Rs. -1014.87 lacs) being the subsidy income, pertaining to earlier years but determined during the year.

(c) Subsidy on traded fertilisers (Gypsum) has been accounted as notified by the Government of Rajasthan.

(d) The Textile Division of the Company is eligible for interest concession under the TUFS (Technology Upgradation Fund Scheme) of the Government of India. Accordingly, the Company has availed interest concession of Rs.158.20 lacs (Previous year Rs. 242.65 lacs) during the year and reduced the same from interest expenses.

8 Leases

(a) The lease payment made during the year amounts to Rs. 92.08 Lacs (Previous year Rs. 92.16 lacs ), out of which Rs. 31.45 lacs (Previous year Rs. 24.00 lacs) has been adjusted against Principal and Rs. 60.63 lacs (Previous year Rs. 68.16 lacs) has been shown as Interest expenses. The interest rate on finance leases is around 27.34% p.a. There is no renewal and escalation clause as well as restriction imposed in the lease agreement. There are no sub-leases.

(b) The lease payments, other than cases covered in point no. (b) above i.e. non - cancelable leases, recognized in the Statement of Profit and Loss during the year amounts to Rs. 1090.67 lacs (Previous year Rs.1721.25 lacs). The renewal of leases will be as per the mutual understanding of lessee and lessor and there is no escalation clause. There are no restrictions imposed by lease arrangements.

9 Employees Stock Option Scheme

In terms of approval of shareholders accorded at the Annual General Meeting held on 27th August, 2010 and in accordance with Securities and Exchange Board of India (Employee Stock Option Scheme & Employee Stock Purchase Scheme) Guidelines, 1999, (SEBI Guidelines) the Company formulated CFCL Employees Stock Option Scheme, 2010 ("Plan") for specified categories of employees and managing director of the Company. The Nomination and Remuneration Committee comprising of majority of independent directors administer the Plan. As per the Plan, 41,62,000 Stock Options can be issued to managing director and other specified categories of employees of the Company. The options are to be granted at market price. As per SEBI Guidelines, the market price is taken as the closing price on the day preceding the date of grant of options, on the stock exchange where the trading volume is the highest. Each option, upon vesting, shall entitle the holder to acquire 1 equity share of Rs.10 . Details of the scheme are as under:

10 Pending receipt of appeal effect orders for the assessment years where appeals have been decided in favour of the Company by the Commissioner of Income Tax (Appeals) and/ or Income Tax Appellate Tribunal, interest on income tax refund has not been recognized thereof as the amount is presently not reasonably determinable. Interest income on this refund shall be recognized in the year the appeal effect order is received from Income Tax Department.

11 The Deferred Tax charge and dividend distribution tax for the current year ended March 31,2015 includes additional charge of Rs.760.85 lacs and Rs. 28.75 lacs respectively. This is due to increase in rate of surcharge of income tax as proposed in the Finance Bill, 2015.

12 Based on the favourable decision by Income Tax Appellate Tribunal (ITAT) and CIT (Appeals), the Company had, during the previous year, reversed the amount of provision for Income Tax relating to Section 80-IA of Income Tax Act, 1961 for various years aggregating to Rs. 5975.82 lacs. The same was shown as Income tax credit related to earlier years.

13 The Company had during the previous year consolidated the financial statements of CFCL Employees Welfare Trust ('Trust') with the standalone financial statements of the Company as per the opinion of Expert Advisory Committee (EAC) of Institute of Chartered Accountant of India (issued in the month of March 2014). The Trust had acquired in the past equity shares of the Company from the secondary market for transfer to the eligible employees as per the CFCL Employees Stock Option Scheme of the Company. Consequently, the Shareholders' Funds of the Company had been adjusted by Rs.1656.92 lacs i.e. (a) downward adjustment in share capital by Rs.225.34 lacs being the face value of 2,253,402 equity shares held by the Trust, (b) downward adjustment in reserves by Rs.1518.79 lacs representing the purchase price in excess of face value of such equity shares; and (c) increase in reserves by Rs.87.21 lacs towards the accumulated profits of the Trust till 31.03.2013 and dividend received by the Trust during the year 2012-13. Further, the amount of loan of Rs.1665.10 lacs outstanding in the name of Trust in the books of the Company as at 31.03.2014 had been eliminated against the amount of loan outstanding in the name of Company appearing in the books of Trust as at 31.03.2014.

14 discontining operation

In view of the Company's strategy to focus more on its core business, Board of Directors of the Company at its meeting held on March 14, 2015, inter alia, has approved the transfer of its textile business i.e. Birla Textile Mills (non core business) located in Himachal Pradesh, to Sutlej Textiles and Industries Limited, as a going concern on slump sale basis w.e.f. April 01,2015 at a consideration not less than the book value of assets.The aforesaid transaction is subject to requisite approvals as may be required. Further, the Company has already received a sum of Rs. 500 lacs as an advance towards the aforesaid sale.

15 Previous Year's figures have been regrouped and/or rearranged wherever necessary to conform to this year's classification.


Mar 31, 2014

1. Corporate Information

The Company is one of the largest manufacturer of Urea in private sector in India and is also into the trading of fertilisers and other agri inputs. The Company is also into manufacturing of Synthetic and Cotton Yarn. Shipping Division of the Company is engaged in the business of running of ships for cargo.

2. Basis of Preparation

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956 read with General Circular 8/2014 dated April 04, 2014, issued by the Ministry of Corporate Affairs. The financial statements have been prepared on an accrual basis and under the historical cost convention except for derivative financial instruments which have been measured at fair value.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in accounting policies explained below.

NOTE 3 :SHORT-TERM BORROWINGS

i Rupee loans include Rs.80893.07 lacs (Previous year Rs.33053.05 lacs) from consortium of Banks under Special Banking Arrangement against the subsidy on Urea and Phosphatic and Potassic (P&K) fertilisers receivable from the Government of India. The Banks have charged interest @ 10.40% p.a. (including 8% p.a. paid by Government of India directly to banks). Accordingly, Rs.327.35 lacs (Previous year 30.63 lacs) (at the rate of 2.40% p.a.) have been charged as interest expense. These loans are secured by hypothecation of subsidy receivables upto Rs.80900.00 lacs (Previous year Rs. 33600.00 lacs) from Government of India.

ii Rupee loans of Rs. 65000.00 lacs are to be secured by second charge on the Company''s current assets (except assets of Shipping Division), carry interest @ 10.40% p.a.

iii Rupee loans of Rs. 43500.00 lacs (Previous year Rs. 28000.00 lacs) carrying interest in the range of 10.15% - 10.30% p.a. and Cash credit facilities carrying interest in the range of 9.95% - 14.95% p.a., from banks are secured by hypothecation of all the Company''s current assets including all stocks and book debts and other movables, both present & future (except assets of Shipping Division). These loans are further secured by second charge on all the immovable properties (except assets of Shipping Division) of the Company.Rupee loans, Foreign currency loans and Packing credit foreign currency loans carry interest in the range of 10.15% - 10.25% p.a., 0.63% - 1.89% p.a.and 2.33% - 3.49% p.a. respectively. Maximum amount of commercial papers outstanding during the year - Rs.172500.00 lacs (Previous year Rs.117500.00 lacs).

NOTE 4 : REVENUE FROM OPERATIONS

# Excise duty on sales amounting to Rs.2322.98 lacs (Previous year Rs.2095.99 lacs) has been reduced from sales in statement of profit and loss and excise duty on increase/ (decrease) in stock amounting to Rs.(51.63) lacs (Previous year Rs.35.53 lacs) has been considered as (income)/ expense as per note no. 29 of the financial statements.

5. (a) CONTINGENT LIABILITES (NOT PROVIDED FOR) IN RESPECT OF :

(Rs. in Lacs)

S.No. Particulars 2013-14 2012-13

i) Outstanding amount against corporate guarantee given to Bank on account of loans given by such Bank to stepdown subsidiary Company. (refer note no.15) 13182.40 11943.80

ii) Bills discounted with bank and remaining outstanding as on date. - 153.06

iii) Demand raised by Customs, Sales Tax and Income Tax (IT) authorities being disputed by the Company.* 469.79 582.74

iv) Penalty levied by FERA Board under appeal before the Calcutta High Court. 1.30 1.30

v) Claim against Nihat Shipping Company Limited in legal suits / notices, in which the Company has been made a party, is being contested, since the Company acted as Agents / Technical & Operational Managers. 222.04 222.04

vi) Various labour cases Amount not Amount not ascertainable ascertainable

vii) Other claims against the Company not acknowledged as debts. 386.77 343.75

* Brief description of liabilities for (iii) above :

(b) The Company had received a demand of Rs.352.34 lacs (Previous year Rs.352.34 lacs) from Sales Tax Department, Kota in an earlier year towards use of natural gas for ammonia fuel, power and steam generation for the period April, 1996 to May, 2001. The Company has obtained a stay from Hon''ble High Court of Rajasthan, Jodhpur on 11th July, 2001. However, in the event of the Company having to pay the above, it is reimbursable by Fertiliser Industry Coordination Committee (FICC) of Ministry of Chemicals and Fertilisers, the Government of India under Subsidy Scheme.

(c) The Company as well as other users of natural gas under HBJ Gas Pipeline had in earlier years received letters from GAIL (India) Limited (erstwhile Gas Authority of India Ltd), informing about the possibility of levy of excise duty on natural gas (presently not levied) with retrospective effect. The amount of such levy is not ascertainable. However, in the event of its levy, it is reimbursable by Fertiliser Industry Coordination Committee (FICC) of Ministry of Chemicals and Fertilisers, the Government of India under Subsidy Scheme.

(d) The Company as well as other users of Natural Gas under HBJ Gas Pipeline had received a letter in an earlier year from GAIL (India) Limited (erstwhile Gas Authority of India Ltd), informing about the possibility of levy of Central Sales Tax. The Company has been taking the delivery of Gas in the State of Rajasthan and has been accordingly paying Rajasthan Sales Tax on the supply. Therefore, the Company feels that no Central Sales Ta x is payable by it. Further, the amount of such levy is not ascertainable. However, in the event of its levy, it is reimbursable by Fertiliser Industry Coordination Committee (FICC) of Ministry of Chemicals and Fertilisers, the Government of India under Subsidy Scheme.

(e) Under the Jute Packaging Material (Compulsory use of Packing Commodities) Act, 1987, a specified percentage of fertilisers dispatched were required to be supplied in Jute bags up to 31.8.2001. The provisions of the said Act were challenged in the Supreme Court, which upheld the constitutional validity of this Act in its judgment in 1996. In spite of making conscious efforts to step up use of jute packaging material, the Company had been unable to adhere to the specified percentage, due to strong customer resistance to use of jute bags. The Company had received show cause notice from the Office of the Jute Commissioner, Kolkata, for levying a penalty of Rs.7380.36 lacs (Previous year Rs.7380.36 lacs) for non compliance of the provisions of the said Act. The Company has obtained a stay order from Delhi High Court against the above show cause notice and has been advised that the said levy is not tenable in law and accordingly no provision has been considered.

Based on favorable decisions in similar cases, legal opinion taken by the Company, discussions with the solicitors, etc., the Company believes that there is fair chance of decisions in its favour in respect of all the items listed in (a) (iii) to (vii) and (b) to (e) above and hence no provision is considered necessary against the same.

6. SEGMENT INFORMATION

Primary Segment : Business Segment

The Company has identified the business segment as its primary reportable segment as the Company''s risks and rates of return are affected predominantly by differences in the products and services produced.

The Company''s operating businesses are organized and managed separately according to the nature of products manufactured, traded and services provided. The four identifiable reportable segments are viz. Own Manufactured Fertilizers, Trading, Textile and Shipping. A description of the types of products and services provided by each reportable segment is as follows:

Own Manufactured Fertilizer segment includes manufacture and marketing of Urea & SSP. Urea price is fully controlled by the Government of India (GOI) and distribution is partly controlled.

Trading segment includes the purchase and sale of Fertilizers and Agricultural Inputs and this activity, though different in risk perception from own manufactured urea, is carried out mainly with an objective of providing Fertilizers/ Agricultural Inputs under one roof.

Textile segment includes manufacturing and sale of synthetic and cotton yarn.

Shipping segment includes transportation of crude oil and liquid products through vessels owned and/ or hired by the Shipping Division.

Secondary Segment : Geographical Segment

The analysis of geographical segment is based on the geographical location i.e., domestic and overseas markets, of the customers.

Secondary Segment Reporting (by Geographical Segments)

The following is the distribution of the Company''s revenue from operation (net) by geographical markets, regardless of where the goods were produced :

7. GRATUITY AND OTHER POST EMPLOYMENT BENEFIT PLANS :

(a) Gratuity

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days'' (15 to 30 days in case of Shipping Division) salary (last drawn salary) for each completed year of service. The Scheme is funded with insurance companies in the form of a qualifying insurance policies except in the case of crew employees of the Shipping Division.

(b) Provident Fund

The Company has set up provident fund trusts, which are managed by the Company in respect of Fertiliser and Shipping division of the Company and as per the Guidance Note on implementing AS-15, Employee Benefits (revised 2005) issued by the Accounting Standard Board (ASB), provident funds set up by employers, which requires interest shortfall to be met by the employer, needs to be treated as defined benefit plan. The actuarial valuation of Provident Fund was carried out in accordance with the guidance note issued by Actuarial Society of India and provided the interest shortfall of Provident Fund liability in the books of accounts.

The following tables summarise the components of net benefit expense recognised in the Statement of Profit and Loss and the funded status and amounts recognised in the balance sheet for the respective plans.

(c) Post Retirement Medical Benefits Plan

The fertiliser division of the Company has post retirement medical benefits scheme in the nature of defined benefit plan which is unfunded. The following table summarises the components of net benefit/ expense recognised in the statement of Profit and Loss and Balalnce Sheet for the plan.

8. RELATED PARTY DISCLOSURES

During the year, the Company has entered into transactions with the related parties. Those transactions along with related balances as at March 31, 2014 and for the year then ended are presented below.

List of related parties along with nature and volume of transactions:

(a) Subsidiaries

CFCL Overseas Limited, Cayman Islands

Chambal Infrastructure Ventures Limited, India

India Steamship Pte. Limited, Singapore

India Steamship Limited, India

Subsidiaries and step-down subsidiaries of CFCL Overseas Limited CFCL Technologies Limited, Cayman Islands

* CFCL Ventures Limited, Cayman Islands

* ISGN Corporation, USA

Subsidiaries and step-down subsidiaries of ISGN Corporation, USA NITC GmbH (Germany) dissolved w.e.f. January 03, 2013 ISGN Solutions Inc, USA

* Richmond Investors, LLC, USA

* Richmond Title Genepar, LLC, USA

* Richmond Title Services, LP , USA

* ISGN Fulfillment Services, Inc. (Pennsylvania, USA)

* ISGN Fulfillment Services, Inc (AZ, USA)

* ISGN Fulfillment Agency, LLC (DE, USA)

* ISGN Fulfillment Agency, of Alabama, LLC (AL, USA) dissolved w.e.f. July 30, 2013

Subsidiaries and step-down subsidiaries of CFCL Ventures Limited ISG Novasoft Technologies Limited, India Inuva Info Management Private Limited, India Subsidiaries of Chambal Infrastructure Ventures Limited Chambal Energy (Chhattisgarh) Limited Chambal Energy (Orissa) Limited

Subsi diaries of India Steamship Pte. Limited, Singapore India Steamship International FZE, UAE

9. INTEREST IN JOINT VENTURE

The Company has 33.33% ownership interest in Indo Maroc Phosphore S.A. Morocco, which is engaged in manufacturing of phosphoric acid.

The Company''s share of the assets, liabilities, income and expenses (each without elimination of the effect of transaction between the Company and the Joint Venture) of the jointly controlled entity are as follows :

10. GOVERNMENT GRANTS AND SUBSIDIES

(a) Nitrogenous Fertilizers are under the Concession Scheme including freight as per New Pricing Scheme (NPS-Stage III), Uniform Freight Policy and New Investment Policy 2008. The concession price and freight has been accounted for on the basis of notified prices, further adjusted for input price escalation/ de-escalation and as estimated by the management based on the prescribed norms in line with known policy parameters. The NPS - Stage III policy was applicable for the period from October 1, 2006 to March 31, 2010, which has been extended thereafter provisionally till further orders. Accordingly, the impact of revised concession price has been accounted for.

Contribution from sale of surplus ammonia has been accounted for in accordance with the known policy parameters.

Current year''s subsidy income is inclusive of Rs.2872.89 lacs (Previous year Rs.4964.36 lacs) being the subsidy income, pertaining to earlier years, but determined during the year.

(b) Subsidy on traded fertilisers (other than Gypsum) has been accounted based on Nutrient Based Policy as notified by the Government of India.

Current year''s subsidy income is inclusive of Rs.(-)1014.87 lacs (Previous year Rs.477.52 lacs) being the subsidy income, pertaining to earlier years but determined during the year.

(c) Subsidy on traded fertilisers (Gypsum) has been accounted as notified by the Government of Rajasthan.

(d) The Textile Division of the Company is eligible for interest concession under the TUFS (Technology Upgradation Fund Scheme) of the Government of India. Accordingly, the Company has availed interest concession of Rs. 242.65 lacs (Previous year Rs.318.23 lacs) during the year and reduced the same from interest expenses.

11. LEASES

(a) The lease payment made during the year amounts to Rs.92.16 (Previous year Rs.92.23 lacs ), out of which Rs.24.00 lacs (Previous year Rs.18.31 lacs) has been adjusted against Principal and Rs.68.16 lacs (Previous year Rs.73.92 lacs) has been shown as Interest expenses The interest rate on finance leases is around 27.34%. There is no renewal and escalation clause as well as restriction imposed in the lease agreement. There are no sub-leases.

(c) The lease payments, other than cases covered in point no. (b) above i.e. non - cancelable leases, recognized in the Statement of Profit and Loss during the year amounts to Rs.1721.25 lacs (Previous year Rs.1420.43 lacs). The renewal of leases will be as per the mutual understanding of lessee and lessor and there is no escalation clause. There are no restrictions imposed by lease arrangements.

12. EMPLOYEES STOCK OPTION SCHEME

In terms of approval of shareholders accorded at the Annual General Meeting held on 27th August, 2010 and in accordance with Securities and Exchange Board of India (Employee Stock Option Scheme & Employee Stock Purchase Scheme) Guidelines, 1999, (SEBI Guidelines) the Company formulated CFCL Employees Stock Option Scheme, 2010 ("Plan") for specified categories of employees and managing director of the Company. The Company has constituted a Compensation Committee comprising of majority of independent directors to administer the Plan. As per the Plan, 41,62,000 Stock Options can be issued to managing director and other specified categories of employees of the Company. The options are to be granted at market price. As per SEBI Guidelines, the market price is taken as the closing price on the day preceding the date of grant of options, on the stock exchange where the trading volume is the highest. Each option, upon vesting, shall entitle the holder to acquire 1 equity share of Rs.10 . Details of the scheme are as under:

The expected volatility was determined based on historical volatility data. For calculating volatility, the Company has considered the daily volatility of the stock prices of the Company on National Stock Exchange over a period prior to the date of grant, corresponding with the expected life of the options.

Since the Company used the intrinsic value method, the impact on the reported net profit and earnings per share by applying the fair value based method

In March 2005, the ICAI has issued a guidance note on "Accounting for Employees Share Based Payments" applicable to employee based share plan, the grant date in respect of which falls on or after April1, 2005. The said guidance note requires the Proforma disclosures of the impact of the fair value method of accounting of employee stock compensation in the financial statements. Applying the fair value based method defined in the said guidance note, the impact on the reported net profit and earnings per share would be as follows:

In FY 2010-11, CFCL Employees Welfare Trust ("Trust") was constituted, inter alia, for the purpose of subscribing/ acquiring equity shares of Chambal Fertilisers and Chemicals Limited from the Company /Secondary market , to hold the shares and to allocate/ transfer these shares to eligible employees of the Company from time to time on the terms and conditions specified under the Plan. The Board of Directors at its meeting held on May 8, 2010 had approved grant of financial assistance upto Rs.3,000 lacs by the Company to Trust in such manner and on such terms as agreed between the trustee(s) of the Trust and Managing Director of the Company for the purpose of subscribing/acquiring shares of the Company. The outstanding loan to the trust as at March 31, 2014 is Rs.1665.10 lacs (Previous year Rs.1,710.10 lacs). Trust has purchased 2,442,202 equity shares (Previous year 2,442,202 equity shares) of the Company from the open market, out of interest free loan provided by the Company till March 31, 2014.

In the last year, SEBI vide its circular no.CIR/CFD/DIL/3/2013 dated 17.01.2013, prohibited listed entities to frame or continue ESOP schemes through trust formed for the purpose of acquiring its own shares for the purpose of the scheme. For the existing schemes SEBI had earlier given a time limit upto June 30, 2013 to comply with the circluar. In view of the same, advance given to ESOP trust was considered as short term in the last year and accordingly based on prudence, provision of Rs.573.98 lacs towards diminution was made in the books in the last year. During the year, SEBI vide its circular no. CIR/CFD/DIL/7/2013 dated May 13, 2013 permitted companies to continue to hold the already acquired shares through Trust to meet its ESOP obligation. Accordingly, provision of Rs.573.98 lacs made in the last year against diminution of the value has been written back in the current year.

13. Pending receipt of appeal effect orders for the assessment years where appeals have been decided in favour of the Company by the Commissioner of Income Tax (Appeals) and/ or Income Tax Appellate Tribunal, interest on income tax refund has not been recognized thereof as the amount is presently not reasonably determinable. Interest income on this refund shall be recognized in the year the appeal effect order is received from Income Tax Department.

14. The current tax is net of tax on dividend received from a foreign subsidiary, to the extent of dividend distribution tax on such dividend distributed to shareholders of the Company, as per the provisions of Section 115-O of the Income Tax Act,1961.

15. Based on the favourable decision by Income Tax Appellate Tribunal (ITAT)/ and CIT (Appeals), the Company has, during the year, reversed the amount of provision for Income Tax relating to Section 80-IA of Income Tax Act, 1961 for various years aggregating to Rs.5,975.82 lacs. The same has been shown as Income Tax credit related to earlier years.

16. The Company has during the year consolidated the financial statements of CFCL Employees Welfare Trust (Trust) with the standalone financial statements of the Company as per the recent opinion of Expert Advisory Committee (EAC) of Institute of Chartered Accountant of India (issued in the month of March 2014). The Trust has acquired in the past equity shares of the Company from the secondary market for transfer to the eligible employees as per the CFCL Employees Stock Option Scheme of the Company. Consequently, the Shareholders'' Funds of the Company has been adjusted by Rs.1656.92 lacs i.e.

(a) downward adjustment in share capital by Rs.225.34 lacs being the face value of 2,253,402 equity shares held by the Trust,

(b) downward adjustment in reserves by Rs.1518.79 lacs representing the purchase price in excess of face value of such equity shares; and (c) increase in reserves by Rs.87.21 lacs towards the accumulated profits of the Trust till last year and dividend received by the Trust during the year. Further, the amount of loan of Rs.1665.10 lacs outstanding in the name of Trust in the books of the Company at the year end has been eliminated against the amount of loan outstanding in the name of Company appearing in the books of Trust at the year end.

17. Previous Year''s figures have been regrouped and/or rearranged wherever necessary to conform to this year''s classification.


Mar 31, 2013

1. Corporate Information

The Company is the largest manufacturer of Urea in private sector in India and is also into the trading of fertilisers and other agri inputs. The Company is also into manufacturing of Synthetic and Cotton Yarn. Shipping Division of the Company is engaged in the business of running of ships for cargo.

2. Basis of Preparation

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention except for derivative financial instruments which have been measured at fair value.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in accounting policy explained below:

3 SEGMENT INFORMATION

Primary Segment : Business Segment

The Company has identified the business segment as its primary reportable segment as the Company''s risks and rates of return are affected predominantly by differences in the products and services produced. The Company''s operating businesses are organized and managed separately according to the nature of products manufactured, traded and services provided. The four identifiable reportable segments are viz. Own Manufactured Fertilizers, Trading, Textile and Shipping. A description of the types of products and services provided by each reportable segment is as follows: Own Manufactured Fertilizer segment includes manufacture and marketing of Urea & SSP. Urea price is fully controlled by the Government of India (GOI) and distribution is partly controlled.

Trading segment includes the purchase and sale of Fertilizers and Agricultural Inputs and this activity, though different in risk perception from own manufactured urea, is carried out mainly with an objective of providing Fertilizers/ Agricultural Inputs under one roof.

Textile segment includes manufacturing and sale of synthetic and cotton yarn. Shipping segment includes transportation of crude oil and liquid products through vessels owned and/ or hired by the Shipping Division.

4 Gratuity and other Post Employment Benefit Plans :

(a) Gratuity

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days'' (15 to 30 days in case of Shipping Division) salary (last drawn salary) for each completed year of service. The Scheme is funded with insurance companies in the form of a qualifying insurance policy except in the case of crew employees of the Shipping division.

(b) Provident Fund

The Company has set up provident fund trusts, which are managed by the Company in respect of Fertiliser and Shipping division of the Company and as per the Guidance Note on implementing AS-15, Employee Benefits (revised 2005) issued by the Accounting Standard Board (ASB), provident funds set up by employers, which requires interest shortfall to be met by the employer, needs to be treated as defined benefit plan. The actuarial valuation of Provident Fund was carried out in accordance with the guidance note issued by Actuary Society and provided the shortfall of Provident Fund liability in the books of accounts.

The following tables summarises the components of net benefit expense recognised in the Statement of Profit and Loss and the funded status and amounts recognised in the balance sheet for the respective plans.

5. Related Party Disclosures

During the year, the Company entered into transactions with the related parties. Those transactions along with related balances as at March 31, 2013 and for the year then ended are presented below. List of related parties along with nature and volume of transactions:

(a) Subsidiaries

CFCL Overseas Limited, Cayman Islands Chambal Infrastructure Ventures Limited, India India Steamship Pte. Limited, Singapore India Steamship Limited, India Subsidiaries and step-down subsidiaries of CFCL Overseas Limited CFCL Technologies Limited, Cayman Islands *CFCL Ventures Limited, Cayman Islands *ISGN Corporation, USA Subsidiaries and step-down subsidiaries of ISGN Corporation, USA NITC GmbH (Germany) dissolved w.e.f. January 03, 2013 ISGN Solutions Inc, USA

*Richmond Investors, LLC, USA *Richmond Title Genepar, LLC, USA *Richmond Title Services, LP , USA *ISGN Fulfillment Services, Inc. (Pennsylvania, USA) *ISGN Fulfillment Services, Inc (AZ, USA) *ISGN Fulfillment Agency, LLC (DE, USA) *ISGN Fulfillment Agency, of Alabama, LLC (AL, USA) Subsidiaries and step-down subsidiaries of CFCL Ventures Limited ISG Novasoft Technologies Limited, India Inuva Info Management Private Limited, India Subsidiaries of Chambal Infrastructure Ventures Limited Chambal Energy (Chhattisgarh) Limited Chambal Energy (Orissa) Limited Subsidiaries of India Steamship Pte. Limited, Singapore India Steamship International FZE, UAE

6. Government Grants and Subsidies

(a) Nitrogenous Fertilizers are under the Concession Scheme as per New Pricing Scheme (NPS-Stage III) implemented w.e.f. 1st April, 2003. The concession price and freight has been accounted for on the basis of notified prices, further adjusted for input price escalation/ de-escalation, as per known policy parameters of NPS - Stage III, applicable for the period from October 1, 2006 to March 31, 2010, extended thereafter provisionally till further orders. Accordingly, the impact of revised concession price has been accounted for.

Contribution from sale of surplus ammonia has been accounted for in accordance with the known policy parameters.

Current year''s subsidy income is inclusive of Rs.4964.36 lacs (Previous year Rs.4442.38 lacs) being the subsidy income, pertaining to earlier years, but determined during the year.

(b) Subsidy on traded fertilisers (other than Gypsum) has been accounted based on Nutrient Based Policy as notified by the Government of India.

Current year''s subsidy income is inclusive of Rs.477.52 lacs (Previous year Rs.0.62 lac) being the subsidy income, pertaining to earlier years but determined during the year.

(c) Subsidy on traded fertilisers (Gypsum) has been accounted as notified by the Government of Rajasthan. "Current year''s subsidy income is inclusive of Rs.Nil (Previous year Rs.0.31 lac) being the subsidy income, pertaining to earlier years but, determined during the year.

(d) The Textile Division of the Company is eligible for interest concession under the TUFS (Technology Upgradation Fund Scheme) of the Government of India. Accordingly, the Company has availed interest concession of Rs.318.23 lacs (Previous year Rs.380.97 lacs) during the year and reduced the same from interest expenses.

7. Leases

(a) The lease payment made during the year amounts to Rs.92.23 lacs (Previous year Rs.103.55 lacs), out of which Rs.18.31 lacs (Previous year Rs.22.07 lacs) has been adjusted against Principal and Rs.73.92 lacs (Previous year Rs 81.84 lacs) has been shown as Interest expenses. The interest rate on finance leases is around 28%. There is no renewal and escalation clause as well as restriction imposed in the lease agreement. There are no subleases.

8. During the year, the Company has revised the estimated useful life of software and other assets based on technical estimates made by the management. Accordingly, additional depreciation of Rs.108.39 lacs has been accounted for in the financial statements.

Had the Company continued to use the earlier basis of providing depreciation, the charge to the Statement of Profit and Loss for the current year would have been lower by Rs.73.22 lacs (net of tax of Rs.35.17 lacs) and the net block of fixed assets would correspondingly have been higher by Rs.108.39 lacs.

9. Employee Stock Option Plan

In terms of approval of shareholders accorded at the Annual General Meeting held on 27th August, 2010 and in accordance with Securities and Exchange Board of India (Employee Stock Option Scheme & Employee Stock Purchase Scheme) Guidelines, 1999, (SEBI Guidelines) the Company formulated CFCL Employees Stock Option Scheme, 2010 ("Plan") for specified categories of employees and managing director of the Company. The Company has constituted a Compensation Committee comprising of majority of independent directors to administer the Plan. As per the Plan, 41,62,000 Stock Options can be issued to managing director and other specified categories of employees of the Company. The options are to be granted at market price. As per SEBI Guidelines, the market price is taken as the closing price on the day preceding the date of grant of options, on the stock exchange where the trading volume is the highest. Each option, upon vesting, shall entitle the holder to acquire 1 equity share of Rs.10 . Details of the scheme are as under:

10. Pending receipt of appeal effect orders for the assessment years 2003-04, 2004-05 and 2009-10 where appeals have been decided in favour of the Company by the Commissioner of Income Tax (Appeals) and/ or Income Tax Appellate Tribunal, interest on income tax refund has not been recognized thereof as the amount is presently not reasonably determinable. Interest income on this refund shall be recognized in the year the appeal effect order is received from Income Tax Department.

11. The Deferred Tax charge for the current year ended March 31, 2013 includes additional charge for deferred tax liability of Rs.1891.35 lacs. Further, tax on proposed equity dividend includes additional charge of Rs.61.09 lacs. These are due to increase in rate of surcharge of income tax as proposed in the Finance Bill, 2013.

12. During the Previous year, the Shipping Division of the Company had opted out of Tonnage Tax Scheme under the Income Tax Act, 1961 and therefore was assessed under the normal tax regime w.e.f. April 01, 2011. The computation of current tax and deferred tax for the previous year was done accordingly. Consequent to the above, the Company had accounted for net deferred tax liability on the difference between the written down value of the fixed assets pertaining to the shipping division as per books of accounts and the Income Tax Act, 1961 as on April 1, 2011 amounting to Rs.18420.67 lacs and the same had been disclosed as ''Exceptional Deferred tax charge'' in the statement of Profit and Loss.

13. Previous Year''s figures have been regrouped and/or rearranged wherever necessary to conform to this year''s classification.


Mar 31, 2012

1. CORPORATE INFORMATION

The Company is the largest manufacturer of Urea in private sector in India and is also into the trading of fertilisers and other agri inputs. The Company is also into manufacturing of Synthetic and Cotton Yarn. Shipping Division of the Company is engaged in the business of running of ships for cargo.

2. BASIS OF PREPARATION

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in accounting policy explained below.

3 (a) CONTINGENT LIABILITIES (NOT PROVIDED FOR) IN RESPECT OF :

(Rs.in Lacs)

Sl. No. Particulars 2011-12 2010-11

i) Outstanding amount against corporate guarantee given to Bank on account of loans 11193.60 - given by such Bank to step down subsidiary Company. (Refer Note No.15)

ii) Bills discounted with bank and remaining outstanding as on date. 529.65 1306.93

iii) Demand raised by Customs, Sales Tax and Income Tax (IT) authorities being disputed 595.98 6285.91 by the Company.

iv) Other claims against the Company not acknowledged as debts. 4.24 4.24

v) Claim against Nihat Shipping Company Limited in legal suits / notices, in which the 222.04 222.04 Company has been made a party, is being contested, since the Company acted as Agents / Technical & Operational Managers.

vi) Penalty levied by FERA Board under appeal before the Calcutta High Court. 1.30 1.30

vii) Various labour cases Amount not Amount not ascertainable ascertainable

Based on favorable decisions in similar cases, legal opinion taken by the Company, discussions with the solicitors, etc., the Company believes that there is fair chance of decisions in its favour in respect of all the items listed in (iii) to (vii) above and hence no provision is considered necessary against the same.

(b) The Company had received a demand of Rs.352.34 lacs (Previous year Rs.352.34 lacs) from Sales Tax Department, Kota in an earlier year towards use of natural gas for ammonia fuel, power and steam generation for the period April, 1996 to May, 2001. The Company has obtained a stay from Hon'ble High Court of Rajasthan, Jodhpur on 11th July, 2001. However, in the event of the Company having to pay the above, it is reimbursable by Fertiliser Industrial Coordination Committee (FICC) / Government of India under Subsidy Scheme.

(c) The Company as well as other users of natural gas under HBJ Gas Pipeline had in earlier years received letters from GAIL (India) Limited (erstwhile Gas Authority of India Ltd), informing about the possibility of levy of excise duty on natural gas (pres- ently not levied) with retrospective effect. The amount of such levy is not ascertainable. However, in the event of its levy, it is reimbursable by Fertiliser Industry Coordination Committee (FICC) of Ministry of Chemicals and Fertilisers, the Government of India under Subsidy Scheme.

(d) The Company as well as other users of Natural Gas under HBJ Gas Pipeline had received a letter in an earlier year from GAIL (India) Limited (erstwhile Gas Authority of India Ltd), informing about the possibility of levy of Central Sales Tax. The Company has been taking the delivery of Gas in the State of Rajasthan and has been accordingly paying Rajasthan Sales Tax on the supply. Therefore, the Company feels that no Central Sales Tax is payable by it. Further, the amount of such levy is not ascer- tainable. However, in the event of its levy, it is reimbursable by Fertiliser Industry Coordination Committee (FICC) of Ministry of Chemicals and Fertilisers, the Government of India under Subsidy Scheme.

(e) Under the Jute Packaging Material (Compulsory use of Packing Commodities) Act, 1987, a specified percentage of fertilisers dispatched were required to be supplied in Jute bags up to 31.8.2001. The provisions of the said Act were challenged in the Supreme Court, which upheld the constitutional validity of this Act in its judgment in 1996. In spite of making conscious efforts to step up use of jute packaging material, the Company had been unable to adhere to the specified percentage, due to strong customer resistance to use ofjute bags. The Company had received show cause notice from the Office of the Jute Commissioner, Kolkata, for levying a penalty of Rs.7380.36 lacs (Previous year Rs. 7380.36 lacs) for non compliance of the provisions of the said Act. The Company has obtained a stay order from Delhi High Court against the above show cause notice and has been advised that the said levy is not tenable in law and accordingly no provision has been considered.

4. SEGMENT INFORMATION

Primary Segment : Business Segment

The Company's operating businesses are organized and managed separately according to the nature of products manufactured, traded and services provided. The four identifiable reportable segments are viz. Own Manufactured Fertilizers, Trading, Textile and Shipping. A description of the types of products and services provided by each reportable segment is as follows:

Own Manufactured Fertilizer segment includes manufacture and marketing of urea for which price is fully controlled by the Government of India (GOI) and distribution is partly controlled.

Trading segment includes the purchase and sale of Fertilizers and Agricultural Inputs and this activity, though different in risk perception from own manufactured urea, is carried out mainly with an objective of providing Fertilizers/ Agricultural Inputs under one roof. Textile segment includes manufacturing and sale of synthetic and cotton yarn.

Shipping segment includes transportation of crude oil and liquid products through vessels owned and/ or hired by the Shipping Division.

The Company has common fixed assets in India for producing in India goods for Domestic Market and Overseas Market. Hence, separate figures for asset/additions to fixed asset cannot be furnished.

5. GRATUITY AND OTHER POST EMPLOYMENT BENEFIT PLANS :

(a) Gratuity

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days (15 to 30 days in case of Shipping Division) salary (last drawn salary) for each completed year of service. The Scheme is funded with insurance companies in the form of a qualifying insurance policy in respect of Fertiliser and Shipping Division of the Company.

(b) Provident Fund

The Company has set up provident fund trusts, which are managed by the Company in respect of Fertiliser and Shipping Division of the Company and as per the Guidance Note on implementing AS-15, Employee Benefits (revised 2005) issued by the Accounting Standard Board (ASB), provident funds set up by employers, which requires interest shortfall to be met by the employer, needs to be treated as defined benefit plan. During the current financial year, actuarial valuation of Provident Fund for financial year 2011-12 was carried out in accordance with the guidance note issued by Actuary Society and provided the shortfall of Provident Fund liability in the books of accounts. There was no actuarial valuation carried out till last year pending issuance of guidance note in this regard and there was no shortfall in the provident fund liability as ascertained by the Company during the last year. In veiw of this, comparable figures for earlier years have not been given.

6. RELATED PARTY DISCLOSURES

During the year, the Company entered into transactions with the related parties. Those transactions along with related balances as at March 31, 2012 and for the year then ended are presented below.

List of related parties along with nature and volume of transactions:

(a) Subsidiaries

CFCL Overseas Limited., Cayman Islands Chambal Infrastructure Ventures Limited, India India Steamship Pte. Limited, Singapore India Steamship Limited,India Subsidiaries and step-down subsidiaries of CFCL Overseas Limited CFCL Technologies Limited, Cayman Islands

* CFCL Ventures Limited, Cayman Islands

* ISGN Corporation, USA

Subsidiaries and step-down subsidiaries of ISGN Corporation, USA

NITC GmbH (Germany) (formerly known as NovaSoft Information Technology Corporation Gmbh,)

ISGN Solutions Inc, USA

* Richmond Investors, LLC, USA

* Richmond Title Genepar, LLC, USA

* Richmond Title Services, LP , USA

* Flex Agents Signing Team, LLC , USA dissolved w.e.f. February 14, 2012

* Richmond Title Services, LLC (Alabama) , USA dissolved w.e.f. October 28, 2011

* ISGN Fulfillment Services, Inc. (Pennsylvania, USA)

* ISGN Fulfillment Services, Inc (AZ, USA)

* ISGN Fulfillment Services, South Inc (FL, USA) dissolved w.e.f. November 02, 2011

* ISGN Fulfillment Services, of Alabama LLC (AL, USA) dissolved w.e.f. November 10, 2011

* ISGN Fulfillment Services, of Maryland Inc. (MD, USA) dissolved w.e.f. February 10, 2012

* ILS Services, LLC (DE, USA) dissolved w.e.f. November 10, 2011

* ISGN Fulfillment Agency, LLC (DE, USA)

* ISGN Fulfillment Agency, of Alabama, LLC (AL, USA)

7. GOVERNMENT GRANTS AND SUBSIDIES

(a) Nitrogenous Fertilizers are under the Concession Scheme as per New Pricing Scheme (NPS-Stage III) implemented w.e.f. 1st April, 2003. The concession price and freight has been accounted for on the basis of notified prices, further adjusted for input price escalation/ de-escalation, as per known policy parameters of NPS - Stage III, applicable for the period from October 1, 2006 to March 31, 2010, extended thereafter provisionally till further orders. Accordingly, the impact of revised concession price has been accounted for. Contribution from sale of surplus ammonia has been accounted for in accordance with the known policy parameters.

Current year subsidy income is inclusive of Rs.4442.38 lacs (Previous year Rs.1138.84 lacs) being the subsidy income, pertaining to earlier years, but determined during the year.

(b) Subsidy on traded fertilisers (other than Gypsum) has been accounted based on Nutrient Based Policy as notified by the Government of India. Current year subsidy income is inclusive of Rs.0.62 lacs (Previous year Rs.167.61 lacs) being the subsidy income, pertaining to earlier years but determined during the year.

(c) Subsidy on traded fertilisers (Gypsum) has been accounted as notified by the Government of Rajasthan. Current year subsidy income is inclusive of Rs.0.31 lacs (Previous year Nil) being the subsidy income, pertaining to earlier years but, determined during the year.

(d) The Textile Division of the Company is eligible for interest concession under the TUFS (Technology Upgradation Fund Scheme) of the Government of India. Accordingly, the Company has availed interest concession of Rs.380.97 lacs (Previous year Rs.433.40 lacs) during the year and reduced the same from interest expenses.

8. LEASES

(a) The lease payment made during the year amounts to Rs.103.55 lacs (Previous year Rs.181.59 lacs), out of which Rs.22.07 lacs (Previous year Rs.69.62 lacs) has been adjusted against Principal and Rs.81.48 lacs (Previous year Rs111.97 lacs) has been shown as Interest expenses

The interest rate on finance leases is around 28%. There is no renewal and escalation clause as well as restriction imposed in the lease agreement. There are no subleases.

The break up of minimum lease payment outstanding as at March 31, 2012 is as follows:

(c) The lease payments, other than cases covered in point no. (b) above i.e. non - cancelable leases, recognized in the Statement of Profit and Loss during the year amounts to Rs. 401.12 lacs (Previous year Rs. 327.42 lacs). The renewal of leases will be as per the mutual understanding of lessee and lessor and there is no escalation clause. There are no restrictions imposed by lease arrangements.

9. DURING THE YEAR, THE COMPANY HAS REVISED THE ESTIMATED USEFUL LIFE OF VEHICLES BASED ON TECHNICAL ESTIMATES MADE BY THE MANAGEMENT. ACCORDINGLY, ADDITIONAL DEPRECIATION OF RS.125.26 LACS HAS BEEN ACCOUNTED FOR IN THE FINANCIAL STATEMENTS.

Had the Company continued to use the earlier basis of providing depreciation, the charge to the Statement of Profit and Loss for the current year would have been lower by Rs.84.62 lacs (net of tax of Rs.40.64 lacs) and the net block of fixed assets would correspondingly have been higher by Rs.125.26 lacs.

Notes :

(a) Unhedged Loans of Rs.112754.28 lacs (Previous year Rs. 114189.86 lacs) are not payable within next one year.

(b) The hedging of Foreign Currency outflows is decided after considering the extent of natural hedge available from foreign currency inflows from export of goods and shipping activities.

(c) In case of hedged transactions mentioned in (a) above, all losses, wherever applicable, as of March 31, 2012 have been provided for.

(d) Previous year figures have been given in brackets.

10. EMPLOYEE STOCK OPTION PLAN

In terms of approval of shareholders accorded at the Annual General Meeting held on 27th August, 2010 and in accordance with Securities and Exchange Board of India (Employee Stock Option Scheme & Employee Stock Purchase Scheme) Guidelines, 1999, (SEBI Guidelines) the Company formulated CFCL Employees Stock Option Scheme, 2010 ("Plan") for specified categories of employees and Managing Director of the Company. The Company has constituted a Compensation Committee comprising of majority of independent directors to administer the Plan. As per the Plan, 41,62,000 Stock Options can be issued to managing director and other specified categories of employees of the Company. The options are to be granted at market price. As per SEBI Guidelines, the market price is taken as the closing price on the day preceding the date of grant of options, on the stock exchange where the trading volume is the highest. Each option, upon vesting, shall entitle the holder to acquire 1 equity share of Rs.10. Details of the scheme are as under:

In FY 2010-11, CFCL Employees Welfare Trust ("Trust") was constituted, inter alia, for the purpose of subscribing / acquiring equity shares of Chambal Fertilisers and Chemicals Limited from the Company / Secondary market , to hold the shares and to allocate/ transfer these shares to eligible employees of the Company from time to time on the terms and conditions specified under the Plan. The Board of Directors at its meeting held on May 8, 2010 had approved grant of financial assistance upto Rs.3000 lacs by the Company to Trust in such manner and on such terms as agreed between the trustee(s) of the Trust and Managing Director of the Company for the purpose of subscribing/acquiring shares of the Company. The outstanding loan to the trust as at March 31, 2012 is Rs.1610.10 lacs. (Previous year Rs.677.10 lacs) Trust has purchased 22,42,202 equity shares (Previous year 8,47,002 equity shares) of the Company from the open market, out of interest free loan provided by the Company till March 31, 2012.

Current value of the shares outstanding as on March 31, 2012 is Rs.1587.28 lacs based on last closing price, whereas value of shares purchased in the trust books stand to Rs.1603.53 lacs resulting into temporary diminution of Rs.16.25 lacs. However, such loss has not been accounted for in the books of accounts, as such investment by the trust has been considered as long term investment as per AS 13, "Accounting for investments" notified by the Companies (Accounting Standards) Rules, 2006.

11 Tax related to earlier years' represents income-tax credit amounting to Rs.5,604.94 lacs (Previous year Nil) substantially on certain benefits allowed by Income Tax Appellate Tribunal, Jaipur and reversal of excess income tax provision for earlier years and provision for income-tax pertaining to earlier years amounting to Rs.1,146.40 lacs (Previous year Nil), which has been recognized during the current year.

12 Pending receipt of appeal effect orders for the assessment years 2003-04, 2004-05 and 2008-09, where appeals have been decided in favour of the Company by the Commissioner of Income Tax (Appeals) and/ or Income Tax Appellate Tribunal, interest on income tax refund has not been recognized thereof as the amount is presently not reasonably determinable. Interest income on this refund shall be recognized in the year the appeal effect order is received from Income Tax Department.

13 Till the year ended March 31, 2011, the Company was preparing its accounts based on the Schedule VI to the Companies Act 1956, During the year ended March 31, 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the Company. The Company has reclassified previous year figures to conform to this year's classification.

14 During the year, the Shipping Division of the Company has opted out of Tonnage Tax Scheme under the Income Tax Act, 1961 and therefore will be assessed under the normal tax regime w.e.f. April 01, 2011. The computation of current tax and deferred tax for the year has been done accordingly. Consequent to the above, the Company has accounted for net deferred tax liability on the difference between the written down value of the fixed assets pertaining to the shipping division as per books of accounts and the Income Tax Act, 1961 as on April 1, 2011 amounting to Rs.18,420.67 lacs and the same has been disclosed as 'Exceptional Deferred tax charge' in the statement of Profit & Loss.


Mar 31, 2011

1. Contingent Liabilities

(a) Contingent liabilities (not provided for) in respect of:

(Rs. in Lacs)

Sl. No. Particulars 2010-11 2009-10

i) Outstanding amount against counter guarantees given to Banks/ Financial Institutions on account of loans given by the said Banks/ Financial Institutions to Bodies Corporate. - 314.30

ii) Demand raised by Customs, Sales Tax and Income Tax (IT) authorities being disputed by the Company 6285.91* 5835.84*

iii) Various labour cases Amount not Amount not ascertainable ascertainable

iv) Other claims against the Company not acknowledged as debts. 4.24 4.24

v) Claim against Nihat Shipping Company Limited in legal suits/ notices, in which the Company has been made a party, is being contested, since the Company acted as Agents/ Technical & Operational managers. 222.04 222.04

vi) Penalty levied by FERA Board under appeal before the Calcutta High Court. 1.30 1.30

* Brief Description of liabilities as per (ii) above:

(Rs. in Lacs)

Sl. No. Particulars 2010-11 2009-10

1. Income Tax: Demand raised by IT authorities on account of various disallowances for A.Y. 2002-03 including penalties. 70.26 838.92

Demand raised by IT authorities on account of various disallowances for A.Y. 2003-04 including penalties. 2808.10 4674.78

Demand raised by IT authorities on account of various disallowances for A.Y. 2004-05 including penalties. 2320.91 135.21

Demand raised by IT authorities on account of various disallowances for A.Y. 2006-07 including penalties. 28.93 28.93

Demand raised by IT authorities on account of various disallowances for A.Y. 2008-09 including penalties. 481.48 -

Demand raised by IT authorities on account of short deduction of TDS and interest thereon for A.Y 2008-09 & 2009-10. 508.93 -

2. Sales Tax: Disallowance of VAT credit on raw materials used in the manufacturing of finished goods and lying in stock on April 1, 2006 22.18 22.18

Miscellaneous RST & CST demand 38.47 38.90

3. Land Tax: Demand raised by Registrar for usage of land other than specifi ed purposes. - 92.33

4. Service Tax/ Excise Duty/ Custom Duty:

Service Tax demand received on services from foreign parties in respect to service tax not paid on Tax deducted at source (TDS) portion. 4.59 4.59

Show cause notice dated 16.03.11 related to non payment of service tax on "Renting Income" received during FY 2009-10 for Rs. 2.54 lac. 2.06 -

Total 6285.91 5835.84

Based on favourable decisions in similar cases, legal opinion taken by the Company, discussions with the solicitors, etc., the Company believes that there is fair chance of decisions in its favour in respect of all the items listed in (ii), (iv), (v) and (vi) above and hence no provision is considered necessary against the same.

(b) The Company had received a demand of Rs.352.34 lacs from Sales Tax Department, Kota in an earlier year towards use of natural gas for ammonia fuel, power and steam generation for the period of April, 1996 to May, 2001. The Company has obtained a stay from Hon'ble High Court of Rajasthan, Jodhpur on 11th July, 2001. However, in the event of the Company having to pay the above, it is reimbursable by Fertiliser Industry Coordination Committee (FICC)/ Government of India under Subsidy Scheme.

(c) The Company as well as other users of natural gas under HBJ Gas Pipeline had in earlier years received letters from GAIL (India) Limited (erstwhile Gas Authority of India Ltd), informing about the possibility of levy of excise duty on natural gas (presently not levied) with retrospective effect. The amount of such levy is not ascertainable. However, in the event of its levy, it is reimbursable by FICC of Ministry of Fertilisers, the Government of India under Subsidy Scheme.

(d) The Company as well as other users of Natural Gas under HBJ Gas Pipeline had received a letter in an earlier year from GAIL (India) Limited (erstwhile Gas Authority of India Ltd), informing about the possibility of levy of Central Sales Tax. The Company has been taking the delivery of Gas in the State of Rajasthan and has been accordingly paying Rajasthan Sales Tax on the supply. Therefore, the Company feels that no Central Sales Tax is payable by it. Further, the amount of such levy is not ascertainable. However, in the event of its levy, it is reimbursable by FICC of Ministry of Fertilisers, the Government of India under Subsidy Scheme.

(e) Under the Jute Packaging Material (Compulsory use of Packing Commodities) Act, 1987, a specifi ed percentage of fertilisers dispatched were required to be supplied in Jute bags up to 31.8.2001. The provisions of the said Act were challenged in the Supreme Court, which upheld the constitutional validity of this Act in its judgment in 1996. In spite of making conscious efforts to step up use of jute packaging material, the Company had been unable to adhere to the specifi ed percentage, due to strong customer resistance to use of jute bags. The Company had received show cause notice from the Offi ce of the Jute Commissioner, Kolkata, for levying a penalty of Rs.7380.36 lacs for non compliance of the provisions of the said Act. The Company has obtained a stay order from Delhi High Court against the above show cause notice and has been advised that the said levy is not tenable in law and accordingly no provision has been considered.

6. Segment Information

Primary Segment: Business Segment

The Company's operating businesses are organized and managed separately according to the nature of products manufactured, traded and services provided. The four identifi able reportable segments are viz. Own Manufactured Fertilizers, Trading, Textile and Shipping. A description of the types of products and services provided by each reportable segment is as follows:

Own Manufactured Fertilizers segment includes manufacture and marketing of urea for which price is fully controlled by the Government of India (GOI) and distribution is partly controlled.

Trading segment includes the purchase and sale of Fertilizers and Agricultural Inputs and this activity, though different in risk perception from own manufactured urea, is carried out mainly with an objective of providing Fertilizers/ Agricultural Inputs under one roof.

Textile segment includes manufacturing and sale of synthetic and cotton yarn.

Shipping segment includes transportation of crude oil and liquid products through vessels owned and/ or hired by the Shipping Division.

Secondary Segment: Geographical Segment

The analysis of geographical segment is based on the geographical location i.e., domestic and overseas markets, of the customers.

7. Gratuity and Other Post Employment Benefit Plans:

a) Gratuity

The Company has a defi ned benefit gratuity plan. Every employee who has completed fi ve years or more of service gets a gratuity on departure at 15 days (15 to 30 days in case of Shipping Division) salary (last drawn salary) for each completed year of service. The Scheme is funded with an insurance company in the form of a qualifying insurance policy in respect of Fertiliser and Shipping division of the Company.

The following tables summarise the components of net benefit expense recognised in the profit and loss account and the funded status and amounts recognised in the balance sheet for the respective plans.

b) Provident fund

The Company has set up provident fund trust, which is managed by the Company in respect of Fertiliser and Shipping division of the Company and as per the Guidance Note on implementing AS-15, Employee Benefits (revised 2005) issued by the Accounting Standard Board (ASB), provident funds set up by employers, which requires interest shortfall to be met by the employer, needs to be treated as defi ned benefit plan. Pending the issuance of the Guidance Note from the Actuarial Society of India, the Company's actuary has expressed his inability to reliably measure the provident fund liability. However, the Company has ascertained that at the year end there is no shortfall in the Provident Fund Trust.

8. Related Party Disclosures

During the year, the Company entered into transactions with the related parties. Those transactions along with related balances as at March 31, 2011 and for the year then ended are presented in the following table. List of related parties along with nature and volume of transactions is given below:

(a) Subsidiaries

CFCL Overseas Limited, Cayman Island

Chambal Infrastructure Ventures Limited, India India

Steamship Pte. Limited., Singapore

Subsidiaries and Step-down Subsidiaries of CFCL Overseas Limited

* CFCL Technologies Limited, Cayman Islands

* CFCL Ventures Limited, Cayman Islands

* ISGN Corporation, USA

Subsidiaries and Step-down Subsidiaries of ISGN Corporation, USA

* NITC GmbH (Germany) (formerly known as NovaSoft Information Technology Corporation GmbH,)

* Dynatek Inc., USA (merged with ISGN Corporation w.e.f. April 1, 2009)

* ISGN Solutions Inc,USA

* Richmond Investors, LLC ("Investors"),USA

* Richmond Title Genepar, LLC, USA

* Richmond Title Services, LP , USA

* Flex Agents Signing Team, LLC , USA

* Richmond Title Services, LLC (Alabama) , USA

* ISGN Fulfi llment Services, Inc. (Pennsylvania, USA) (acquired along with step down subsidiaries w.e.f. December 12, 2009) (formerly known as Fiserv Fulfi llment Services, Inc)

* ISGN Fulfi llment Services, Inc (AZ, USA) (formerly known as Fiserv Fulfi llment Services, Inc (AZ, USA))

* ISGN Fulfi llment Services, South Inc (FL, USA) (formerly known as Fiserv Fulfi llment Services, South Inc (FL, USA))

* ISGN Fulfi llment Services, of Alabama LLC (AL, USA) (formerly known as Fiserv Fulfi llment Services, of Alabama LLC (AL, USA))

* ISGN Fulfi llment Services, of Maryland, Inc (MD, USA)( formerly known as Fiserv Fulfi llment Services, of Maryland, Inc (MD, USA))

* ILS Services, LLC (DE, USA)

* ISGN Fulfi llment Agency, LLC (DE, USA) (formerly known as Fiserv Fulfi llment Agency, LLC (DE, USA))

* ISGN Fulfi llment Agency of Alabama, LLC (AL,USA)(formerly known as Fiserv Fulfi llment Agency of Alabama, LLC (AL,USA)

Subsidiaries and Step-down Subsidiaries of CFCL Ventures Limited

* ISG NovaSoft Technologies Limited, India

* Inuva Info Management Private Limited, India

* ISGN Solution Ltd, Ireland (Liquidated in May 2009)

Subsidiaries of Chambal Infrastructure Ventures Limited

* Chambal Energy (Chhattisgarh) Limited

* Chambal Energy (Orissa) Limited



(d) Key Management Personnel and their relatives

Mr. Anil Kapoor

Mrs. Deepali Kapoor (Spouse)

Mr. Hemant Kapoor (Son)

Ms. Priyanka Kapoor (Daughter)

10. Investments

a) The Company has made further investment of Rs.4480.14 lacs in its wholly owned subsidiary CFCL Overseas Limited, Cayman Island.

b) During the year, the Company has fully sold the stake in "Zuari Investments Limited" at a consideration of Rs.1060.97 lacs and recognized gain on sale of investment of Rs.436.87 lacs.

c) The Company has investments of Rs.31114.13 lacs in the Share Capital of CFCL Overseas Limited, Cayman Islands. CFCL Overseas Limited, in turn has investment in CFCL Ventures Ltd., India and ISGN Corporation, USA through its wholly owned subsidiary CFCL Technologies Ltd. In turn CFCL Ventures Limited has further invested in its wholly owned subsidiary ISG Novasoft Technologies Limited, India. As per the latest financial statements of ISG NovaSoft Technologies Limited, India and ISGN Corporation USA, their accumulated losses have resulted in erosion of signifi cant portion of the net worth of these companies. These being long-term strategic investments and also in view of projected profitable operations of these companies in near future, in the opinion of management, no provision for diminution in value of investment is required to be made as per Accounting Standard 13 "Accounting for Investment" notifi ed by Companies (Accounting Standards) Rules, 2006 (as amended).

12. Government grants and subsidies

a) Nitrogenous Fertilizers are under the Concession Scheme as per New Pricing Scheme implemented w.e.f. 1st April, 2003. The concession price and freight has been accounted for on the basis of notifi ed prices, further adjusted for input price escalation/ de-escalation, as per known policy parameters of NPS - Stage III, applicable for the period from October 1, 2006 to 31st March, 2010, extended thereafter provisionally till further orders. Accordingly, the impact of revised concession price has been accounted for.

Contribution from sale of surplus ammonia has been accounted for in accordance with the known policy parameters. The current year subsidy income is inclusive of Rs.1138.84 lacs (Previous Year Rs.3734.27 lacs) being the subsidy income, pertaining to earlier years, determined during the year.

b) Subsidy on traded fertilisers has been accounted based on Nutrient Based Policy as notifi ed by the Government of India. The current year subsidy income is inclusive of Rs.167.61 lacs (Previous Year Rs. Nil) being the subsidy income, pertaining to earlier years, determined during the year.

c) The Textile Division of the Company is eligible for interest concession under the TUFS (Technology Upgradation Fund Scheme) of the Government of India. Accordingly, the Company has availed interest concession of Rs.433.40 lacs (Previous year Rs.455.66 lacs) during the year and reduced the same from interest expenses.

13. During the year, Government of India has come up with guidelines for buy back of fertilizer bonds issued to the industry in two tranches and would also compensate part of loss suffered by the industry on these bonds. Accordingly, the Company has sold 50% of its holding of "Fertilizer Companies Government of India Special Bonds" at a specifi ed price as determined by the Reserve Bank of India (RBI) which has resulted into a loss of Rs.2681.55 lacs, against which the Company had already provided for mark to market losses of Rs.2155.00 lacs. However, loss of differential amount has not been charged to Profit and Loss Account as the Company is hopeful of getting at least the differential amount reimbursed by the Government of India.

Further, since the mechanism for determination of such compensation has not been notifi ed by Government of India, the Company has not accounted for entire compensation as it is not prudent in terms of Accounting Standard 9- Revenue Recognition / Accounting Standard 12-Accounting for Government Grants, notifi ed by Companies (Accounting Standards) Rules, 2006 (as amended) till the time of fi nal determination of compensation.

14. Leases

(a) The lease payment made during the year amounts to Rs.181.59 lacs (Previous year Rs.125.90 lacs), out of which Rs.69.62 lacs (Previous year Rs.91.06 lacs) has been adjusted against Principal and Rs.111.97 lacs (Previous year Rs.34.81 lacs) has been shown as Finance Lease Charges. Further, during the year, the Company has renegotiated the terms of the fi nance lease with the lessor. Accordingly, the fi xed assets taken on fi nance lease amounting to Rs.176.65 lacs (Previous Year Rs. Nil) have been decapitalised in the books of account. The interest rate on various fi nance leases is around 10% to 28%. There is no renewal and escalation clause as well as restriction imposed in the lease agreement. There are no subleases.

(c) The lease payments, other than cases covered in point no. (b) above i.e. non - cancelable leases, recognized in the statement of Profit and Loss Account during the period amounts to Rs.376.58 lacs (Previous year Rs.727.49 lacs). The renewal of leases will be as per the mutual understanding of lessee and lessor and there is no escalation clause. There are no restrictions imposed by lease arrangements.

3) In case of hedged transactions mentioned in (A) above, all losses, wherever applicable, as of March 31, 2011 have been provided for.

4) Previous year fi gures have been given in bracket.

17. Employee Stock Option Plan

In terms of approval of shareholders accorded at the Annual General Meeting held on 27th August, 2010 and in accordance with Securities and Exchange Board of India (Employee Stock Option Scheme & Employee Stock Purchase Scheme) Guidelines, 1999, (SEBI Guidelines) the Company formulated CFCL Employees Stock Option Scheme, 2010 ("Plan") for specifi ed categories of employees and managing director of the Company. The Company has constituted a Compensation Committee comprising of majority of independent directors to administer the Plan. As per the Plan, 4,162,000 Stock Options can be issued to managing director and other specifi ed categories of employees of the Company. The options are to be granted at market price. As per SEBI Guidelines, the market price is taken as the closing price on the day preceding the date of grant of options, on the stock exchange where the trading volume is the highest. Each option, upon vesting, shall entitle the holder to acquire 1 equity share of Rs.10 . Details of the scheme are as under:

Stock Options granted

The weighted average fair value of stock options granted during the year was Rs. 27.29. The Black Scholes valuation model has been used for computing the weighted average fair value considering the following inputs:

The expected volatility was determined based on historical volatility data. For calculating volatility, the Company has considered the daily volatility of the stock prices of the Company on National Stock Exchange over a period prior to the date of grant, corresponding with the expected life of the options.

Since the Company used the intrinsic value method, the impact on the reported net profit and earnings per share by applying the fair value based method

In March 2005 the ICAI has issued a guidance note on "Accounting for Employees Share Based Payments" applicable to employee based share plan, the grant date in respect of which falls on or after April1, 2005. The said guidance note requires the Proforma disclosures of the impact of the fair value method of accounting of employee stock compensation in the financial statements. Applying the fair value based method defi ned in the said guidance note, the impact on the reported net profit and earnings per share would be as follows:

In FY 2010-11, CFCL Employees Welfare Trust ("Trust") was constituted, inter alia, for the purpose of subscribing/ acquiring equity shares of Chambal Fertilisers and Chemicals Limited from the Company /Secondary market , to hold the shares and to allocate/ transfer these shares to eligible employees of the Company from time to time on the terms and conditions specifi ed under the Plan. The Board of Directors at its meeting held on May 8, 2010 had approved grant of financial assistance upto Rs.3,000 lacs by the Company to Trust in such manner and on such terms as agreed between the trustee(s) of the Trust and Managing Director of the Company for the purpose of subscribing/acquiring shares of the Company. The outstanding loan to the trust as at March 31, 2011 is Rs.677.10 lacs. Trust has purchased 847,002 equity shares of the Company from the open market, out of interest free loan provided by the Company till March 31, 2011. 18. Excise duty on sales amounting to Rs.341.67 lacs (Previous year Rs.189.77 lacs) has been reduced from sales in profit & loss account & excise duty on increase/decrease in stock amounting to Rs.59.80 lacs (previous year Rs. Nil) has been considered as expense in schedule 22 of the financial statements.

j) Shipping activity:

Shipping activities are not capable of being expressed in generic units. Hence quantitative details and related information required to be given under paragraphs 3 and 4C of part II of Schedule VI of the Companies Act, 1956 are not applicable to this business. Further, the Ministry of Corporate Affairs, Government of India, has exempted the shipping companies from the disclosure of quantitative details in respect of financial year ending on or after 31st March, 2011 in compliance of paragraphs 4 D (a) (b) (c) & (e) of part II of Schedule VI to the Companies Act 1956 as amended, vide Notifi cation dated the 8th February, 2011.

20. Previous Year's figures have been regrouped and/or rearranged wherever necessary to confirm to this year's classifications.

 
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