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Notes to Accounts of Chembond Chemicals Ltd.

Mar 31, 2013

1 During the year Company has commenced the manufacturing of Anti Corrosive Coatings Chemicals at its Dhudhwada Plant.

2 SEGMENT REPORTING

The Company has determined that it operates in a single business segment, namely "Speciality Chemicals". Therefore the information pursuant to the Accounting Standard 17 - "Segment Reporting" issued by the Institute of Chartered Accountants of India is not applicable.

3 EMPLOYEE STOCK OPTION PLAN a) Employee Stock Option Plan

The Board at its meeting held on July 30, 2011, approved an issue of Stock Options up to a maximum of 5% of the issued Equity Capital of the Company aggregating to 3,18,000 Equity Shares in a manner provided in the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 subject to the approval of the shareholders under section 81(1A) of the Companies Act, 1956. The Shareholders of the Company at the Annual General Meeting held on September 10, 2011approved the aforesaid issue of 3,18,000 Equity Shares of the Company under one or more Employee Stock Option Scheme(s). The Compensation & Nomination Committee has approved the following grants to a list of senior level executives of the Company and some of its Subsidiaries in accordance with the Chembond Chemicals

Out of the above option granted 4800 options has been lapsed due to resignation of the Employees.

The fair value of options used to compute Proforma net profit and earnings per Equity Share have been estimated on the date of the grant using Black-Scholes model by an independent Consultant.

4 RELATED PARTY DISCLOSURES

Related party disclosures as required under Accounting Standard on "Related Party Disclosures" issued by the Institute of Chartered Accountants of India are given below:

a) Relationship:

i. Subsidiary Companies:

Chembond Ashland Water Technologies Ltd., Protochem Industries Pvt. Ltd., H2O Innovation India Ltd & Chembond

Inver Coatings Ltd. ii. Joint Venture:

Henkel Chembond Surface Technologies Ltd. iii. Associates:

Chembond Distribution Ltd., Chembond Enzyme Company Ltd. & Chembond Bioengineering Company Ltd.

(Subsidiary of Associate) iv. Key Management Personnel (KMP) and their relatives

Key Management Personnel:

Sameer V. Shah, Nirmal V. Shah, Ashwin R. Nagarwadia, Perviz H. Dastur, Bhadresh D. Shah, O.P. Malhotra, Jayantilal S.

Vasani

Relatives :

Dr. Vinod D.Shah, Padma V. Shah, Gulu P. Dastur, Dr Shilpa S. Shah, Mamta N. Shah, Alpana S. Shah, Jyoti N. Mehta,

Zarna K. Shah

Entities over which Key Management personnel are able to exercise influence:

CCL Optoelectronics Pvt Ltd., Finor Piplaj Chemicals Ltd., S and N Ventures Ltd., GTK Intermediates Pvt. Ltd., Bentec

Organo Clays Pvt. Ltd. & Visan Holdings and Financial Services Pvt Ltd.

5 INFORMATION ON JOINT VENTURES

Henkel Chembond Surface Technologies Ltd. (on the basis of Audited Financial Statements)

a Jointly Controlled Entity - Henkel Chembond Surface Technologies Ltd

Country of Incorporation - India

Percentage of ownership interest - 49% b Interest in the assets, liabilities, income and expenses with respect to jointly controlled enterprises.

6 The Ministry of Corporate Affairs, Government of India vide its General Circular No.2/2011 (No.51/12/2007-CL-III) dated February 08, 2011 issued under section 212(8) of the Companies Act, 1956 has exempted the Company from attaching the Balance Sheet And Profit and Loss Account of its subsidiary Companies. As per the order, key details of each subsidiary are attached along with the Statement under Section 212 of the Companies Act, 1956.

7 Contingent Liabilites not provided for are in respect of :

As at 31/3/2013 As at 31/3/2012 (Rs. In lakhs) (Rs. In lakhs)

a. Outstanding LCs & Bank Guarantees issued by Bankers. 67.48 153.66

b. Corporate Guarantee given to Bank of India by the company on behalf of 900.00 900.00 Subsidiaries Chembond Ashland Water Technologies Ltd. & H2O Innovation India Ltd.

c. Income Tax matter under appeal 1.35 1.35

d. Balance Payment for Capital Commitments 52.40 8.57

e. Claim against the Company not acknowledged as debts 9.60 9.60

8 Derivative Instruments

a. The Company has entered into forward contracts to hedge the foreign currency risks arising from amounts designated in foreign currency. The counter party to such forward contract is a bank. Forward contracts outstanding at the year end are:

9 The previous year figures have been regrouped, reallocated or reclassified wherever necessary to conform to current year classification and presentation.


Mar 31, 2012

A Shares issued for consideration other than cash and bonus shares issued:

Out of the issued, subscribed and paid up share capital, during the last five years

i 1,90,206 (1,90,206) Equity Shares of Rs. 10/- each have been issued for consideration other than cash

ii 31,80,206 (31,80,206) Equity Shares of Rs. 10/- each have been issued as fully paid Bonus Shares by way of capitalization of Reserves & Surplus

b Terms/Rights attached to Equity Shares

The Company has only one class of Equity Shares having a par value of Rs. 10/- per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends 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 distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

1 The company had received "In Principle" approval from the Bombay Stock Exchange (BSE) for issue of 3,00,000 Convertible Warrants on preferential basis to company's promoters & promoter group, at a price of 7 183.97 per warrant, aggregating Rs. 551.91 Lakhs. Each warrant is convertible into one equity share of Rs. 10each within 18 months from the date of allotment of warrants. The approval from BSE was received on 7th May, 2012 and the allotment made on 12th May, 2012. As per the SEBI ICDR Regulation, 2009, 25% of the amount called for pending allotment and received as on 31st March, 2012 aggregating Rs.137.98 Lakhs has been shown as "Convertible warrants money pending allotment".

a On the basis of a Revaluation Report obtained from an Approved Chartered Engineer, the company had revalued all the fixed assets existing as on 31st March, 1994. The fixed assets had accordingly been written-up by creating a Revaluation Reserve of Rs. 91.53 Lakhs and the valueof fixed asset is stated in the Balance Sheet at revalued figure.

b Depreciation on fixed assets is consistently being provided on the straight line method on the revalued figure for all the assets acquired upto 31st March, 1994 and additional depreciation due to revaluation aggregating Rs. 1.89 lakhs has been transferred from revaluation reserve to the profit & loss account during the year under consideration.

a As per the terms of the Joint Venture agreement with Henkei KGA, Germany, the Pre Treatment Chemicals (PTC) business of Chembond Chemicals Ltd. has been merged with the joint venture Henkel Chembond Surface Technologies Ltd "PTC compensation expenses" aggregating X 27.53 lakhs (Previous year t 90.35 lakhs) included in Manufacturing Expenses represents transfer by overriding title to Henkei Chembond Surface Technologies Ltd. the income arising on account of the said Pre Treatment Chemicals business that arose in Chembond Chemicals Ltd. b As per the terms of the Joint Venture agreement with Ashland International Holding Inc U.S.A. the Water Treatment Chemicals (WTC) business of Chembond Chemicals Ltd. has been merged with the joint venture Chembond Ashland Water Technologies Ltd. "WTC compensation expenses" aggregating Rs. 18.56 lakhs (Previous yearRs. 25.97 lakhs) included in Manufacturing Expenses represents transfer by overriding title to Chembond Ashland Water Technologies Ltd. the income arising on account of the said Water Treatment Chemicals business that arose in Chembond Chemicals Ltd. c As per the terms of agreement the Enzyme Chemicals business of Chembond Chemicals Ltd has been merged with the new company Chembond Habio Bioengineering Co. Ltd. "Enzyme compensation expenses" aggregating Rs. 17.05 lakhs (Previous year Rs. 3.43 lakhs) included in manufacturing expenses represents transfer by overriding title to Chembond Habio Bioengineering Co. Ltd. the income arising on account of the said Enzyme Chemical business that arose in Chembond Chemicals Ltd.

2 SEGMENT REPORTING

The Company has determined that it operates in a single business segment, namely "Speciality Chemicals". Therefore the information pursuant to the Accounting Standard 17 - "Segment Reporting" issued by the Institute of Chartered Accountants of India is not applicable.

3 RELATED PARTY DISCLOSURES

Related party disclosures as required under Accounting Standard on "Related Party Disclosures" issued by the Institute of Chartered Accountants of India are given below: a Relationship:

i. Subsidiary Companies:

Chembond Ashland Water Technologies Ltd., Protochem Industries Pvt. Ltd. & H20 Innovation India Ltd.

ii. Joint Venture:

Henkel Chembond Surface Technologies Ltd.

iii. Associates:

Chembond Distribution Ltd., Chembond Enzyme Company Ltd. & Chembond Habio Bioengineering Company Ltd.

iv Key Management Personnel and their relatives

Key Management Personnel: (KMP)

Dr. Vinod D.Shah, Sameer V. Shah, Nirmal V. Shah, Ashwin R. Nagarwadia, Perviz H. Dastur, Bhadresh D. Shah

v. Relatives :

Mrs. Padma V. Shah, Mrs. Gulu P. Dastur, Dr. Shilpa S. Shah, Mrs. Mamta N Shah, Mrs. Alpana S. Shah, Mrs. Jyoti N. Mehta, Mrs. Zarna K. Shah

Entities over which Key Management personnel are able to exercise influence - CCL Opto Electronics Pvt. Ltd., Finor Piplaj Chemicals Ltd., S and N Ventures Ltd. & Visan Holdings and Financial Services Pvt Ltd.

4 INFORMATION ON JOINT VENTURES

Henkel Chembond Surface Technologies Ltd.

(on the basis of Audited Financial Statements)

a Jointly Controlled Entity - Henkel Chembond Surface Technologies Ltd.

Country of Incorporation - India

Percentage of ownership interest - 49%

b Interest in the assets, liabilities, income and expenses with respect to jointly controlled enterprises

5 The Ministry of Corporate Affairs, Government of India vide its General Circular No 2/2011 :No51/12/2007-CL-i!i) dated February, 08, 2011 issued under section 212(8) of the Companies Act, 1956 has exempted the Companies from attaching the Balance Sheet And Profit and Loss Account of its subsidiary Companies. As per the order, key details of each subsidiary are attached along with the Statement under Section 212 of the Companies Act, 1956.

6 Contingent Liabilities not provided for are in respect of:-

Particulars As at 31/3/2012 As at 31/3/2011 In lakhs) Rs. In lakhs

a Outstanding L.C & Bank Guarantees issued by Bankers. 153.66 100.72

b. Corporate Guarantee given to Bank of India by the company on behalf of Subsi diaries Chembond Ashland Water Technologies Ltd. SH20 Innovation

India Ltd 900 900

c. Income Tax matter under appeal 1.35 135

d. Balance Payment for Capital Commitments 8.57 4 13

e. Claim against the Company not acknowledged as debts 9.60 9.60

7 The previous year figures have been regrouped, reallocated or reclassified wherever necessary to confirm to current year classification and presentation.

 
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