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Notes to Accounts of Dai Ichi Karkaria Ltd.

Mar 31, 2014

1. COMPANY OVERVIEW

Dai-ichi Karkaria Ltd. (DKL) was incorporated on 13 May, 1960 under the laws of the Republic of India and has its registered office at Mumbai (Maharashtra). DKL is engaged in manufacturing of Specialty Chemicals. The Company has joint venture with CTI Chemicals Asia Pacific Pte. Ltd., Singapore.

The activities of the Company are carried out at its plants located at Kasarwadi and Kurkumbh, Pune (Maharashtra).

Note (i) The term loans are secured against hypothecation of the vehicles purchased under the loans and are payable in equated monthly installments (EMI) detailed as under :

Note (ii) Under the package scheme of incentive for industries in backward area, the Company has been sanctioned deferral of payment of sales tax collection for a period of 74 months commencing August 1, 2000 up-to an amount of Rs.4,84,42,000/- for the Kurkumbh unit at Pune. The deferred amount is recognized as long term borrowing and is unsecured, interest free and payable after a moratorium period of 10 years in 5 yearly equal installments which commence from year 2011.

The deferred sales tax liability is payable in annual installments as below:

Principal amount payable to Micro and Small Enterprises (to the extent identified by the Company from available information and relied upon by the auditors) is Rs.1,91,202/- (2013: Rs.61,643/-) including unpaid amounts of Rs. Nil (2013: Rs. Nil) outstanding for more than 45 days. No interest is due thereon.

(b) Wage agreement at Kasarwadi Plant had expired on 30 November, 2008. Negotiations with employees are in progress. The Company does not expect any significant additional liability on this account.

Future cash outflows in respect of the matters specified in a) (i) and c) are determinable only on receipt of judgments/ decisions pending at various forums/authorities.

2. Employee Benefits:

(A) Defined Benefit Plans

The Company makes Provident Fund, Employee State Insurance Scheme and Maharashtra Labour Welfare Fund contributions which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs.54,52,592 (Year ended 31 March, 2013 Rs.50,88,208) for Provident Fund contributions, Rs.5,81,025 (Year ended 31 March, 2013 Rs.7,99,149) for Employee State Insurance Scheme contributions, Rs.14,760 (Year ended 31 March, 2013 Rs.15,408) for Maharashtra Labour Welfare Fund in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

3. Employee Benefits (Contd.)

(i) The Defined Benefit Plans comprise of Gratuity. Gratuity is a benefit to an employee based on 15 days last drawn salary for each completed year of service.

(a) The Discount rate is based on the prevailing market yields of Indian Government securities as at the Balance Sheet date for the estimated terms of the obligations.

(b) Expected Rate of Return of Plan Assets: This is based on the expectation of the average long term rate of return expected on investments of the Fund during the estimated term of obligations.

(c) Salary Escalation Rate: The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.

4. Disclosure as per Clause 32 of the Listing Agreements with the Stock Exchanges

(i) Loans and advances in the nature of loans given to subsidiaries, associates, firms/companies in which directors are interested:

Note: Figures in bracket relate to the previous year.

5. I n the arbitration proceedings under order no. C/1438A & C/1438B of September 12, 1986, arbitration award was declared on September 25, 2006, pursuant to which ONGC was directed to pay Rs.55,45,325/- along-with interest at 9% from the date of award till the date of payment.

The Company and ONGC had filed appeals against the award in the Mumbai High Court. Vide order dated December 6, 2012, the Court upheld the award. ONGC has paid a sum of Rs.66,74,457/- to the company towards full and final settlement which has been accounted for in 2012-13.

6. Lease payable/ receivable under cancellable operating lease:

The Company has taken office under operating lease. The lease is not non cancellable. The lease payment recognized in the Statement of Profit and Loss, debited to rent account is Rs.25,17,556/- (2013: Rs.22,01,646/-)

The Company has given commercial premises under leave and license agreement for a period of 18 months. The said agreement is non-cancellable for the first 6 months, and the future minimum lease payments (all not later than one year) under the non-cancellable period is Rs.12,06,660/- (2013: Rs.11,71,170/-). The lease rental credited to the Statement of Profit and Loss is Rs.1,40,89,530/- (2012: Rs.1,43,97,850/-).

7. Segment information:

The Company is principally engaged in single business segment - manufacturing of specialty chemicals and operates materially in one geographical segment as per Accounting Standard 17 on segment reporting.

8. During the year, management has reviewed the identification and classification of related party relationships. Based on this review the related party relationships identified and transactions with them are detailed below:

(A) Relationships:

(i) Related parties where the control exists

Dai-Ichi Gosei Chemicals (India) Limited (DGCIL) - a Subsidiary company

(ii) Other related parties with whom the company had transactions

(a) Jointly controlled entity:

Champion Dai-ichi Technologies India Ltd. (CDTIL).

(b) Key management personnel (KMP):

Mrs. S. F. Vakil - Managing Director (SFV)

(c) Relatives of key management personnel:

(i) Mr. D. M. Neterwala - Father of Managing Director (DMN)

(ii) Ms. Meher F. Vakil - Daughter of Managing Director (MFV)

(iii) Ms. P R. Mehta - Sister of Managing Director (PRM)

(d) Other Related Parties:

(i) Indian Oxides & Chemicals Limited (IOCL)

(ii) Rose Investments Limited (RIL)

(iii) Inogent Laboratories Private Limited (ILPL)

(iv) SDN Company (SDNC)

(v) Uni Klinger Limited (UKL)

(vi) Anosh Finance & Investment Pvt. Ltd. (AFIPL)

(vii) Universal Ferro & Allied Chemicals Limited (UFACL)

(viii) General Pharmaceuticals Pvt. Ltd. (GPPL)

(ix) Netel India Limited (NIL)

(x) Neterwala Consulting & Corporate Services Limited (NCCS)

(xi) Chemicals and Ferro Alloys Private Limited (CFAPL)

Note: Related party relationship is as identified by the company and relied upon by the auditors.

(B) Transactions carried out with related parties referred in A above, in ordinary course of business:

Notes:

(i) The accompanying notes are an integral part of the financial statements

(ii) The Cash flow is prepared under the ''Indirect Method'' as set in Accounting Standard 3 - Cash flow Statement.


Mar 31, 2013

1. COMPANY OVERVIEW

Dai-ichi Karkaria Ltd. (DKL) was incorporated on 13 May, 1960 under the laws of the Republic of India and has its registered office at Mumbai (Maharashtra). DKL is engaged in manufacturing of Specialty Chemicals. The Company has joint venture with CTI Chemicals Asia Pacific Pte. Ltd., Singapore.

The activities of the Company are carried out at its plants located at Kasarwadi and Kurkumbh, Pune (Maharashtra).

As at As at 31 March, 2013 31 March, 2012 Rs. Rs.

2. (a) Contingent liabilities and commitments (to the extent not provided for)

(i) Contingent Liabilities

(i) Guaranty issued to others by Bank secured by counter guarantee f the company and by charge on the fixed assets, inventories and book debts of the Company. 1,41,97,321 1,94,13,765

(ii) Customs duty bonds 8,62,91,546 7,35,52,625

3. Employee Benefits:

(A) Defined contribution plans

The Company makes Provident Fund, Employee State Insurance Scheme and Maharashtra Labour Welfare Fund contributions which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs.50,88,208/- (Year ended 31 March, 2012 Rs.47,18,160/-) for Provident Fund contributions, Rs.7,99,149/- (Year ended 31 March, 2012 Rs.7,73,387/-) for Employee State Insurance Scheme contributions and Rs.15,048/- (Year ended 31 March, 2012 Rs.15,012/-) for Maharashtra Labour Welfare Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

4. In the arbitration proceedings under order no. C/1438A & C/1438B of September 12, 1986, arbitration award was declared on September 25, 2006, pursuant to which ONGC was directed to pay Rs.55,45,325/- along-with interest at 9% from the date of award till the date of payment.

The Company and ONGC had filed appeals against the award in the Mumbai High Court. Vide order dated December 6, 2012, the Court upheld the award. ONGC has paid a sum of Rs.66,74,457/- to the company towards full and final settlement which has been accounted for during the year.

5. Lease payable/ receivable under cancellable operating lease:

The Company has taken office under operating lease. The lease is not non cancellable. The lease payment recognized in the Statement of Profit and Loss, debited to rent account is Rs.22,01,646/- (2012: Rs.23,78,146/-)

The Company has given commercial premises under leave and license agreement for a period of 18 months. The said agreement is non-cancellable for the first 8 months, and the future minimum lease payments (all not later than one year) under the non-cancellable period is Rs.11,71,170/- (2012: Rs. Nil). The lease rental credited to the Statement of Profit and Loss is Rs.1,43,97,850/- (2012: Rs.1,48,79,184/-).

6. Segment reporting:

The Company is principally engaged in single business segment – manufacturing of specialty chemicals and operates materially in one geographical segment as per Accounting Standard 17 on segment reporting.

7. During the year, management has reviewed the identification and classification of related party relationships. Based on this review the related party relationships identified and transactions with them are detailed below:

(A) Relationships:

(i) Related parties where the control exists

Dai-Ichi Gosei Chemicals (India) Limited (DGCIL) – a Subsidiary company

(ii) Other related parties with whom the company had transactions

(a) Jointly controlled entity:

Champion Dai-ichi Technologies India Ltd. (CDTIL).

(b) Key management personnel (KMP): Mrs. S. F. Vakil – Managing Director (SFV)

(c) Relatives of key management personnel:

(i) Mr. D. M. Neterwala – Father of Managing Director (DMN) (ii) Ms. Meher F. Vakil – Daughter of Managing Director (MFV)

(d) Other Related Parties:

(i) Indian Oxides & Chemicals Limited (IOCL)

(ii) Rose Investments Limited (RIL)

(iii) Inogent Laboratories Private Limited (ILPL)

(iv) SDN Company (SDNC)

(v) Uni Klinger Limited (UKL)

(vi) Anosh Finance & Investment Pvt. Ltd. (AFIPL)

(vii) Universal Ferro & Allied Chemicals Limited (UFACL)

(viii) General Pharmaceuticals Pvt. Ltd. (GPPL)

(ix) Netal India Limited (NIL)

(x) Neterwala Consulting & Corporate Services Limited (NCCS)


Mar 31, 2012

1. COMPANY OVERVIEW

Dai-ichi Karkaria Limited ("the Company") was incorporated on 13th May, 1960 under the laws of the Republic of India and has its registered office at Mumbai (Maharashtra). The Company is engaged in manufacturing of Specialty Chemicals. The Company has a joint venture with CTI Chemicals Asia Pacific Re. Ltd., Singapore.

The manufacturing activities of the Company are carried out at its plants located at Kasarwadi and Kurkumbh, Pune (Maharashtra).

(A) The Company has one class of equity shares having a par value of Rs 10/- per share. Each equity share holder is eligible for one vote per share held. Each equity share holder is entitled to dividend as and when the Company declares and pays dividend after obtaining share holders approval. Dividends are paid in Indian Rupees.

Note (i) : The term loan of Rs 4,61,000/- from HDFC Bank Ltd. is secured against hypothecation of the vehicle purchased under the loan and is payable in 60 equated monthly installments of Rs 10,268/- each commencing from October 2011 at an interest rate of 12.50% p.a. on reducing balance.

Note (ii) : Under the package scheme of incentive for industries in backward area, the company has been sanctioned deferral of payment of sales tax collection for a period of 74 months commencing August 1, 2000 up to an amount of Rs 48,442,000 for the Kurkumbh unit at Pune. The deferred amount is recognized as long term borrowing and is unsecured, interest free and payable after a moratorium period of 10 years in 5 yearly equal installments which commence from year 2011.

Principal amount payable to Micro and Small Enterprises (to the extent identified by the Company from available information and relied upon by the auditors) as at 31st March, 2012 is Rs Nil (2011: Rs 64,525) including unpaid amounts of Rs Nil (2011: Rs Nil) outstanding for more than 45 days. No interest is due thereon.

2012 2011 Rs. Rs. 2. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances)........................... 18,32,873 83,96,708

3. (a) Contingent Liabilities not provided for:

(i) Guarantees issued to others by Bank secured by counter guarantee of the company and by charge on the fixed assets, inventories and book debts of the company and personal guarantee of the Chairman of the company............................ 1,94,13,765 2,83,79,092

(ii) Guarantee given to Bank of Baroda, for credit facilities extended to Joint Venture - Champion Dai-ichi Technologies India Ltd............. - 2,25,00,000

(iii) Customs duty bonds.................**7,35,52,625 5,26,50,472

** Includes Rs 5,06,70,7517- of Bonds, issued jointly in name of the Company and Champion Dai-ichi Technologies India Ltd.

(b) Wage agreement at Kasarwadi Plant was expired on 30th November, 2008. Negotiations with employees are in progress. The Company does not expect any significant additional liability on this account.

(c) Claims against the company not acknowledged as debts relating to:

4. Employee Benefits:

A. Defined Benefit Plan:

The Defined Benefit Plans comprise of Gratuity. Gratuity is a benefit to an employee based on 15 days last drawn salary for each completed year of service.

(a) The Discount rate is based on the prevailing market yields of Indian Government securities as at the Balance Sheet date for the estimated terms of the obligations.

(b) Expected Rate of Return of Plan Assets : This is based on the expectation of the average long term rate of return expected on investments of the Fund during the estimated term of obligations.

(c) Salary Escalation Rate : The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.

(B) Defined Contribution Plan

Amount recognized as an expense in the Statement of Profit & Loss in respect of Defined Contribution Plan is Rs 55,11,559 (2011: 53,67,009).

5. In 2010-11, the Company had executed a tripartite shareholders agreement dated 26th May, 2010, with CTI Chemicals Asia Pacific Re. Ltd. and its wholly owned subsidiary - Basic Oil Treating (India) Ltd,(now known as Champion Dai-ichi Technologies India Ltd), for formation of Joint Venture.

Pursuant to the formation of Joint Venture, the shareholding of Champion Dai-ichi Technologies India Ltd (formerly known as Basic Oil Treating (India) Ltd.), is held by the Company and CTI Chemicals Asia Pacific Re. Ltd. in the ratio of 50:50. Accordingly Champion Dai-ichi Technologies India Ltd. (Formerly known as Basic Oil Treating (India) Ltd), has ceased to be a subsidiary of the Company w.e.f 7th September, 2010.

6. Oil and Natural Gas Corporation Limited (ONGC):

In the arbitration proceedings under order no C/1438-a and C/1438-b of September 12,1986, arbitrator declared the award and directed the ONGC to pay Rs 55,45,325 after retaining Rs 29,36,060 for dosage compensation and release of bank guarantee. -

The Company and ONGC have filed appeals against the award hence no adjustment have been recognized in the accounts.

7. Lease payable/receivable under cancellable operating lease:

The Company has taken office under operating lease. The lease is not non cancellable. The lease payment recognized in the statement of profit and loss, debited to rent account is Rs 23,78,146/- (2011- Rs 21,48,561/-).

The Company has given commercial premises under leave and licence agreement, which is not non cancellable. Lease rental credited to the statement of profit and loss is Rs 1,48,79,184/- (2011- Rs 1,39,27,607/-).

8. Although the Company's equity interests in Inogent Laboratories Private Limited (IPIL) and Performance Polymers and Chemicals Private Limited (PPCL) exceed 20%, these have been treated (as in earlier year) as under:

PPCL has been classified as trade investment as the proposed JV for which the Company invested in PPCL was not pursued. During the year, the Company has sold the Shares of PPCL to the Director of that Company.

9. Segment reporting:

Primary Segment:

The Company is principally engaged in single business segment - manufacturing of specialty chemicals only.

10. During the year, management has reviewed the identification and classification of related party relationships. Based on this review the related party relationships identified and transactions with them are detailed below:

A. Relationships:

Related parties where control exists:

(i) Subsidiary Company:

Basic Oil Treating (India) Limited (BOTI), (Subsidiary upto 6th September, 2010 - Refer Note 33) Dai-ichi Gosei Chemicals (India) Limited (DGCIL)

(ii) Joint Venture

Champion Dai-ichi Technologies India Ltd. (CDTIL), (w.e.f. 7th September, 2010 - Refer Note 33)

(iii) Key management personnel

Mrs. S. F. Vakil - Managing Director (SFV).

(iv) Relatives of key management personnel

Mr. D. M. Neterwala - Father of Managing Director (DMN)

Mr. F. A. Vakil - Spouse of Managing Director (FAV)

(v) Other related parties

Chemicals & Ferro Alloys Limited (CFAL)

Universal Ferro & Allied Chemicals Limited (UFACL)

Indian Oxides & Chemicals Limited (IOCL)

Uni Klinger Limited (UKL)

Uni Abex Alloy Products Limited (UAAP)

SDN Company (SDNC)

Commercial Building Syndicate (CBS)

Rose Investments Limited (RIL)

General Pharmaceuticals Pvt. Ltd. (GPPL)

Uni Deritend Ltd. (UDL)

Oil Field Instrumentation (India) Pvt. Ltd. (OFIL)

Neterson Technologies Pvt. Ltd (NTPL)

Netal India Ltd (NIL)

Anosh Finance & Investment Pvt. Ltd. (AFIPL)

Inogent Laboratories Private Limited (ILPL)

Performance Polymers & Chemicals Pvt. Ltd. (PPCPL) - (Sold on 30/11/2011)

Neterwala Consulting & Corporate Service Limited (NCCSL)

Neterson Agrofarm Agency Pvt. Ltd.( NAAPL)

Uni VTL Engineering Pvt. Ltd. (UVEPV)

Unitel Finance & Investment Pvt. Ltd. (UFIPL)

Note: Related party relationship is as identified by the Company and relied upon by the auditors.

B. Transactions carried out with related parties referred in A above, in ordinary course of business:

11. The revised schedule VI has become effective from 1st April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statement. Previous year figures have been regrouped and reclassified wherever necessary to correspond with the current year's classification/disclosure.


Mar 31, 2010



2010 2009 Rupees Rupees

1. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances).................... 57,92,562 2,88,571

2. (a) Contingent Liabilities not provided for: (i) Guarantees issued to others by Bank secured by counter guarantee of the company and by charge on the fixed assets, inventories and book debts of the company and personal guarantee of the Chairman of the company........................ 2,37,92,021 2,44,61,851

(ii) Guarantee given to Bank of Baroda, for credit facilities extended to Subsidiary company Basic Oil Treating (India) Limited.......... 2,25,00,000 2,25,00,000

(iii) Customs duty bonds.......... 5,29,40,967 5,29,40,967

3. Wage agreement at Kasarwadi Plant was expired on 30th November, 2008. Negotiations with labour union are in progress. Ultimate liability resulting from the said negotiation is not ascertainable.

4. Under the package scheme of incentive for industries in backward area, the company has been sanctioned deferral of payment of sales tax collection for a period of 74 months commencing August 1, 2000 up-to an amount of Rs. 4,84,42,000 for the Kurkumbh unit at Pune.

The deferred amount aggregating Rs. 1,29,66,855 (2009 : Rs, 1,28,21,540) is recognized as unsecured loan and is payable after a moratorium period of 10 years in 5 yearly equal installments which commence from year 2011.

5. Pursuant to a product performance claim in earlier year, the Company had recognized a provision of Rs. 1,25,28,146. Although the arbitration award in 2006 had reduced the liability of the Company, the award had not been filed with the court and consequently did not become an enforceable decree. During the year the Company has been legally advised that the limitation period (for the enforcement of the award) has expired and consequently the provision of Rs. 1,25,28,146 has been reversed.

6. Oil and Natural Gas Corporation Limited (ONGC):

In the arbitration proceedings under order no C/1438-a and C/1438-b of September 12, 1986, arbitrator declared the award and directed the ONGC to pay Rs. 55,45,325 after retaining Rs. 29,36,060 for dosage compensation and release of bank guarantee.

The Company and ONGC have filed appeals against the award hence no adjustment have been recognized in the accounts.

7. The Board of Directors of the Company at its meeting held on 28/4/2009 announced a buy back of its fully paid equity shares for an aggregate amount not exceeding Rs. 212.40 lacs at a maximum price of Rs. 36 per share from the open market through stock exchanges. The buy back commenced on 25/5/09 and closed on 27/4/10 Upto 31st March, 2010, the company has bought back 1,55,171 equity shares at an average price of Rs. 35.75 per shares by absorbing amount of Rs. 55.47 lacs. Accordingly the paid up capital of the Company stands reduced to Rs. 745.12 Lacs. The aggregate premium amount paid on bought back shares of Rs. 39.95 Lacs has been debited to Securities premium account.

8. Principal amount payable to Micro and Small Enterprises (to the extent identified by the Company from available information and relied upon by the auditors) as at 31st March, 2010 is Rs. 2,42,246 (2009: Rs. 2,42,536) including unpaid amounts of Rs. Nil (2009: Rs. Nil) outstanding for more than 45 days. No interest is due thereon.

9. Although the companys equity interests in Inogent Laboratories Private Limited (ILPL) and Performance Polymers and Chemicals Private Limited (PPCL) exceed 20%, these have been treated (as in earlier year) as under:

- PPCL has been classified as trade investment as the proposed JV for which the company invested in PPCL was not pursued.

10. Segment reporting:

The company is principally engaged in single business segment - manufacturing of specialty chemicals and operates materially in one geographical segment as per Accounting Standard 17 on segment reporting.

11. During the year management has reviewed the identification and classification of related party relationships. Based on this review the related party relationships identified and transactions with them are detailed below:

A. Relationships:

i. Related parties where control exists Subsidiary company Basic Oil Treating (India) Limited (BOTI). Dai-ichi Gosei Chemicals (India) Limited (DGCL).

ii. Key management personnel

Mrs. S. F. Vakil - Managing Director (SFV)

iii. Relatives of key management personnel

Mr. D. M. Neterwala - Father of Managing Director (Director (DMN)

Mr. F. A. Vakil - Spouse of Managing Director (FAV)

iv. Other related parties

Chemicals & Ferro Alloys Limited (CFAL) Universal Ferro & Allied Chemicals Limited (UFACL) Indian Oxides & Chemicals Limited (IOCL) Uni Klinger Limited (UKL) Uni Abex Alloy Products Limited (UAAP) SDN Company (SDNC) Commercial Building Syndicate (CBS) Rose Investments Limited (RIL) General Pharmaceuticals Pvt. Ltd. (GPPL) Viva Chem Pvt. Ltd. (VCPL) Performance Polymers & Chemicals Pvt. Ltd. (PPCPL) Uni Deritend Ltd. (UDL) Oil Field Instrumentation Ltd. (OFIL) Neterson Technologies Pvt. Ltd. (NTPL) Netal India Ltd. (NIL) Netmech Engg. Pvt. Ltd. (NEPL) Anosh Finance & Investment Pvt. Ltd. (AFIPL) Inogent Laboratories Private Limited (ILPL) Note: Related party relationship is as identified by the company and relied upon by the auditors.

12. Figures are regrouped and rearranged, wherever necessary.

 
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