Notes to Accounts of De Nora India Ltd.

Mar 31, 2018

1 Company overview

De Nora India Limited (“the Company” or "De Nora") was incorporated in June 1989 as Titanor Components Limited (''Titanor'') and commenced business in November 1989. The Company''s name was changed to De Nora India Limited on 27 June 2007. The Company has been incorporated under the provisions of India Companies Act and its equity shares are listed on National Stock Exchange (NSE) in India. The Company has its manufacturing facilities at Kundaim, Goa which is also its principal place of business and is involved in the business of manufacturing and servicing of Electrolytic products.

Terms / rights, preferences and restrictions 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 the 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.

2 (c) Nature and Purpose of Reserves:

a) Securities premium reserve

Securities premium account comprises of the premium on issue of shares. The reserve is utilised in accordance with the specific provision of the Companies Act, 2013.

b) General reserve

The General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the General reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the General reserve will not be reclassified subsequently to the statement of profit and loss.

c) Capital redemption reserve

Capital redemption reserve up to the nominal value of shares is created out of distributable profit for buyback of shares as per Section 69 of the Companies Act 2013.

3 Financial Risk Management

The Company has exposure to the following risks arising from financial instruments:

- Credit risk;

- Market risk; and

- Liquidity risk

The Company''s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Board of Directors along with the top Management are responsible for developing and monitoring the Company''s risk management policies.

The Company''s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are monitored & reviewed periodically to reflect changes in market conditions and the Company''s activities. The Company, through its training, standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations. The key risks and mitigating actions are placed before Management of the Company who then evaluates and takes the necessary corrective action.

[A] Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers, cash and cash equivalents and deposits with banks, investment in securities and other financial instruments measured at amortized cost.

The carrying amounts of financial assets represents maximum credit risk exposure.

Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The Company establishes an allowance for doubtful debts and impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments.

However, the credit risk arising on cash and cash equivalents is limited as the Company invest in deposits with banks and financial institution with credit ratings and strong repayment capacity. Investment in securities primarily include investment in liquid mutual funds units and equity shares.

Trade receivables

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.

Expected credit loss assessment

The Company allocates each exposure to a credit risk grade based on a variety of data that is determined to be predictive of the risk of loss (e.g. timeliness of payments, available press information etc.) and applying experienced credit judgement.

Exposures to customers outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. Historical trends of impairment of trade receivables do not reflect any significant credit losses. Given that the macroeconomic indicators affecting customers of the Company have not undergone any substantial change, the Company expects the historical trend of minimal credit losses to continue.

Cash and cash equivalent

As at the year end, the Company held cash and cash equivalents of Rs. 82.62 lakhs (31 March 2017 - Rs. 260.21 lakhs , 1 April 2016 - Rs. 124.36 lakhs ). The cash and cash equivalents are held with banks with good credit rating.

Other bank balances

Other bank balances are held with banks with good credit rating.

Investments

The Company limits its exposure to credit risk by generally investing in liquid mutual funds and securities of counterparties that have a good credit rating. The Company does not expect any losses from non-performance by these counter-parties.

Other financial assets

Other financial assets are neither past due nor impaired.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

The Company regularly monitors the rolling forecasts to ensure it has sufficient cash on an on-going basis to meet operational needs. Any short term surplus cash generated, over and above the amount required for working capital management and other operational requirements, is retained as cash and cash equivalents (to the extent required) and any excess is invested in interest bearing term deposits and liquid mutual funds with appropriate maturities to optimize the cash returns on investments while ensuring sufficient liquidity to meet its liabilities

[C] Market risk

Market risk is the risk that changes in market prices - such as foreign exchange rates and equity prices - will affect the Company’s income or the value of its holdings of financial instruments. The Company is exposed to market risk primarily related to foreign exchange rate risk. Thus, our exposure to market risk is a function of revenue generating and operating activities in foreign currency. The objective of market risk management is to avoid excessive exposure in our foreign currency revenues and costs.

(i) Foreign currency risk

The Company is subject to the risk that changes in foreign currency values impact the Company’s exports revenue and imports of raw material. The risk exposure is with respect to various currencies viz. USD, GBP and EURO. The risk is measured through monitoring the net exposure to various foreign currencies and the same is minimized to the extent possible.

(ii) Price risk

The Company is mainly exposed to the price risk due to its investment in mutual funds and equity shares. The price risk arises due to uncertainties about the future market values of these investments.

At 31 March 2018, the investments in mutual funds amounts to Rs. 2,013.25 lakhs (31 March 2017: Rs. 2,027.63 lakhs and 1 April 2016: Rs. 1,921.80 lakhs ). These are exposed to price risk.

The Company has laid policies and guidelines which it adheres to in order to minimize price risk arising from investments in equity mutual funds.

1% increase in prices would have led to approximately an additional Rs. 20.13 lakhs gain in the Statement of Profit and Loss (2015-16: Rs. 20.28 lakhs gain). 1% decrease in prices would have led to an equal but opposite effect.

4 Fair Value Measurements

Accounting classification and fair values

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities if the carrying amount is a reasonable approximation of fair value.

(B) FAIR VALUE HEIRARCHY

Fair value is the amount for which an asset could be exchanged, or a liability settled between knowledgeable willing parties in an arm’s length transaction. The Company has made certain judgements and estimates in determining the fair values of the financial instruments that are (a) recognized and measured at fair value and (b) measured at amortized cost and for which fair values are disclosed in the financial statements.

To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified the financial instruments into three levels prescribed under the accounting standard. An explanation of each level is as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. This includes mutual funds and listed equity instruments that have quoted price. The mutual funds are valued using the closing NAV.

Level 2: Level 2 hierarchy includes financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates.

Level 3: If one or more of the significant inputs is not based on the observable market data, the instrument is included in Level 3 hierarchy.

(C) VALUATION TECHNIQUES

Specific valuation techniques used to value financial instruments include

- the use of quoted market prices for mutual funds

- the use of quoted market prices for equity instruments

There are no items in the financial instruments, which required level 3 valuation.

5. Capital Management

Equity share capital and other equity are considered for the purpose of Company’s capital management.

The Company manages its capital so as to safeguard its ability to continue as a going concern. The capital structure of the Company is based on Management’s judgement of its strategic and day-to-day needs with a focus on total equity so as to maintain investor, creditors and market confidence.

The Management and the Board of Directors monitor the return on capital as well as the level of dividends to shareholders. The Company may take appropriate steps in order to maintain, or if necessary adjust, its capital structure.

6. Segment Information

A. Basis for segmentation

The Company operates only in one segment namely manufacturing and servicing of Electrolytic products. The products being sold under this segment are of similar nature. The Company''s Chief Operating Decision Maker (CODM) reviews the internal management reports prepared based on an aggregation of financial information for the Company on a periodic basis.

7 Employee Benefit Obligations

(a) Defined Contribution plans

The Company offers its employees defined contribution plan in the form of provident fund, family pension fund and superannuation fund. Provident fund and family pension fund cover substantially all regular employees while the superannuation fund covers certain executives. The Company makes specified monthly contributions towards employees provident fund to government administrative provident fund scheme which is a defined contribution plan. Contributions are paid during the period into separate funds under certain approved securities. While both the employees and the Company pay predetermined contributions into the provident fund, contributions into the family pension fund and the superannuation fund are made only by the Company. The contributions are normally based on a certain proportion of the employee’s salary. The Company does not have any obligation beyond the amounts already contributed.

(b) Defined Benefit plans

Gratuity: The Company provides for gratuity, a defined benefit plan (the “Gratuity Plan”) covering eligible employees in accordance with the Payment of Gratuity Act, 1972. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee’s salary and the tenure of employment. The Company’s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. The fair value of the plan assets of the trust administered by the Company, is deducted from the gross obligation.

Notes:

1. Discount rate: The discount rate is based on the prevailing market yields of Indian government securities for the estimated term of the obligations.

2. Salary escalation rate: The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.

3. Assumptions regarding future mortality experience are set in accordance with the statistics published by the Life Insurance Corporation of India.

The above sensitivity analysis are based on a change in an assumption while holding all other assumptions constant. In practice it is unlikely to occur, and changes in some of the assumptions may be correlated. The methods and types of assumption used in preparing the sensitivity analysis did not change compared to previous period.

Terms and conditions of transactions with related parties:

The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm’s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. For the year ended 31 March 2018, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (31 March 2017 - Rs. Nil, 01.04.2016 - Rs. Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

8 Provisions

Warranties/ recoating

The Company offers warranties for one of the critical parts of certain electro chlorinators and for some of its coating / recoating services for an initial period of two years followed by support contracts for a period of four years in the case of electro chlorinators and for a period of six years in the case of coating, eight years in case of recoating services during which period amounts are recoverable from the customers based on pre-defined terms. Estimated costs from warranty terms standard to the deliverable are recognised when revenue is recorded for the related deliverable. The Company estimates its warranty costs standard to the deliverable based on historical warranty claim experience and applies this estimate to the revenue stream for deliverables under warranty. Future costs for warranties applicable to revenue recognised in the current period are charged to the revenue account.

The warranty accrual is reviewed periodically to verify that it properly reflects the remaining obligation based on the anticipated expenditures over the balance of the obligation period. Adjustments are made when the actual warranty claim experience differs from estimates. Provisions include estimated costs of support maintenance contracts to the extent such estimated costs are expected to exceed the expected recovery during the obligation period. No assets are recognised in respect of the expected recovery on support contracts.

9 First time adoption of Ind AS Transition to Ind AS:

For the purposes of reporting as set out in Note 1, the Company has transitioned its basis of accounting from accounting standards specified in the Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act IGAAP (hereinafter referred to as "IGAAP") to accounting standards notified as per Companies (Indian Accounting Standards) Rules, 2014 as amended (hereinafter referred to as "Ind AS"). The accounting policies set out in note 1 have been applied in preparing the financial statements for the year ended 31 March 2018, the comparative information presented in these financial statements for the year ended 31 March 2017 and in the preparation of an opening Ind AS balance sheet at 1 April 2016 (the “transition date”).

In preparing the opening Ind AS balance sheet, the amounts reported in financial statements prepared in accordance with previous GAAP have been adjusted for the transition to Ind AS. An explanation of how the transition from previous GAAP to Ind AS has affected the financial performance, cash flows and financial position is set out in the following tables and the notes that accompany the tables. On transition, we did not revise estimates made under previous GAAP were not required except where required by Ind AS.

C. Reconciliation of Statement of Cash Flows

There were no material differences between the Statement of Cash Flows presented under Ind AS and under IGAAP.

Notes to the reconciliation:

1 Fair valuation of investments in mutual funds

Under previous GAAP, investments in mutual funds were measured at lower of cost or market price as of each reporting date.

Under Ind AS, these investments are required to be measured at fair value. The resulting fair value changes of these investments (other than equity instruments designated at FVOCI) have been recognised in the retained earnings at the date of transition and subsequently in profit or loss for the year ended 31 March 2017.

2 Fair valuation of investments in equity instruments

Under previous GAAP, investments in equity shares were measured at cost less provision for other than temporary decline in the value of such investments.

Under Ind AS, these investments are required to be measured at fair value. Fair value changes with respect to investments in equity instruments have been recognized in FVOCI - Equity investments reserve.

3 Proposed dividend

Under Indian GAAP, proposed dividends are recognized as a liability in the period to which they relate, irrespective of when they are declared. Under Ind-AS, a proposed dividend is recognised as a liability in the period in which it is declared by the Company (usually when approved by shareholders in a general meeting) or paid.

In the case of the Company, the declaration of dividend occurs after period end. Therefore, the liability recorded for this dividend and tax thereon, has been derecognised against retained earnings.

4 Remeasurements of post-employment benefit obligations

Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognized in Other Comprehensive Income (OCI) instead of profit or loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year.

5 Rectification of Employee Benefit Provision

It represents adjustment in respect of capped sick leave benefits as per Company policy which were considered as uncapped by the actuary in prior years.

6 Deferred tax adjustments :

Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP.

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Mar 31, 2016

1 Segment information

The Company’s primary (business) segment is singular viz. “Electrolytic Products”. Further, the Company caters mainly to the needs of the domestic market. The export turnover is not significant in proportion to the total turnover. As such, there are no reportable geographic segments either. Therefore, segment information required by Accounting Standard 17 (AS-17) notified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules 2014, is not furnished.

2 Disclosure relating to provisions

Warranties/ recoating

The Company offers warranties for one of the critical parts of certain electro chlorinators and for some of its coating / recoating services for an initial period of two years followed for a period of four years in the case of electro chlorinators and for a period of six years in the case of coating, eight years in case of recoating services during which period amounts are recoverable from the customers based on pre-defined terms. Estimated costs from warranty terms standard to the deliverable are recognized when revenue is recorded for the related deliverable. The Company estimates its warranty costs standard to the deliverable based on historical warranty claim experience and applies this estimate to the revenue stream for deliverables under warranty. Future costs for warranties applicable to revenue recognized in the current period are charged to the revenue account.

The warranty accrual is reviewed periodically to verify that it properly reflects the remaining obligation based on the anticipated expenditures over the balance of the obligation period. Adjustments are made when the actual warranty claim experience differs from estimates. Provisions include estimated costs of support maintenance contracts to the extent such estimated costs are expected to exceed the expected recovery during the obligation period. No assets are recognized in respect of the expected recovery on support contracts.

Factors that could impact the estimated claim information include the Company’s productivity, costs of materials, power and labour, and the actual recoveries on support contracts.

3 Employee benefits

a) Defined Contribution Plans

The Company offers its employees defined contribution plan in the form of provident fund, family pension fund and superannuation fund. Provident fund and family pension fund cover substantially all regular employees while the superannuation fund covers certain executives. The Company makes specified monthly contributions towards employees provident fund to government administrative provident fund scheme which is a defined contribution plan. Contributions are paid during the period into separate funds under certain approved securities. While both the employees and the Company pay predetermined contributions into the provident fund, contributions into the family pension fund and the superannuation fund are made only by the Company. The contributions are normally based on a certain proportion of the employee’s salary. The Company does not have any obligation beyond the amounts already contributed.

b) Defined-Benefit Plans

The Company offers its employees defined-benefit plans in the form of a gratuity scheme. Benefits under the defined benefit plan is typically based on years of service and the employee’s compensation (generally immediately before retirement). The gratuity scheme covers substantially all regular employees. The Company contributes funds to Life Insurance Corporation of India, which is irrevocable. Commitments are actuarially determined at year-end. The actuarial valuation is done based on “Projected Unit Credit” method. Gains and losses of changed actuarial assumptions are charged to the statement of profit and loss.

i. Reconciliation of opening and closing balance of obligation

4 Taxation

a) The tax year for the Company being the year ending 31 March 2016, the ultimate tax liability will be determined on the basis of the results for the period 1 April 2015 to 31 March 2016.

b) The Company''s international transactions with associated enterprises are at arm''s length as per the independent accountant''s report for the year ended 31 March 2015. The Company is in the process of updating the documentation for the international transactions entered into with the associated enterprises during the period subsequent to 31 March 2016. Management believes that the Company''s international transactions with associated enterprises post 31 March 2015 continue to be at arm''s length and that the transfer pricing legislation will not have any impact on the financial statements particularly on the amount of the tax expense for the year and the amount of the provision for taxation at the year end.

5 Corporate Social Responsibility (CSR) expenditure

The Company has set up a Corporate Social Responsibility (CSR) Committee as per Section 135 and Schedule

VII of the Companies Act, 2013 (‘the Act’) read with the Companies (Corporate Social Responsibility Policy) Rules, 2014. The Company is in the process of identifying the Projects for CSR spending. The efforts are being undertaken to implement the same in the financial year 2016-17.

a) Gross amount required to be spent by the Company for the fifteen months ended 31 March 2016 Rs. 21,46,994/-

b) Amount spent during the year Rs 704,439/-

6 Dues to micro, small and medium enterprises:

Under the Micro Small and Medium Enterprises Development Act, 2006, (MSMED) which came into force from October 2, 2006, certain disclosures are required to be made relating to Micro Small and Medium enterprises. On the basis of the information and records available with the Management, the following disclosures are made for the amounts due to the Micro Small and Medium enterprises, who have registered with the competent authorities:

7 Prior year comparatives

Previous year’s figures have been regrouped/ reclassified as under, to confirm current year’s classification. Figures for the 31 December 2014 were audited by a firm of chartered accountants other than B S R & Associates LLP.

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Dec 31, 2014

1 Background

De Nora India Limited (''the Company'' or ''De Nora'') was incorporated in June 1989 as Titanor Components Limited (Titanor'') and commenced business in November 1989. The Company''s name was changed from Titanor to De Nora on 27 June 2007. The Company has its manufacturing facilities at Kundaim, Goa and is involved in the business of manufacturing and servicing of Electrolytic products.

a. Rights, preferences and restrictions 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 the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended 31 December 2014, the amount of per share dividend recognized as distribution to equity shareholders was Rs 1.5 per share (previous year: Rs 4 per share). The dividend appropriation for the year ended December 2014 amounted to Rs 7,962,951 (previous year: Rs 21,234,536) plus corporate dividend tax of Rs 1,353,304 (previous year: Rs 3,609,871)

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.

b. Aggregate number of bonus shares issued, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date Pursuant to the Shareholders'' approval for buyback of equity shares under section 77A of the Companies Act, 1956, the Company has bought back 135,451 during the year ended 31 December 2012, through open market transactions for an aggregate amount of Rs 13,432,195. The said shares have been subsequently extinguished. Capital redemption reserve has been created by transfer of Rs 1,354,510 during the year ended 31 December 2012. from General Reserve being the nominal value of shares bought back in terms of section 77AA of the Companies Act, 1956.

31 December, 2014 31 December, 2013 2 Contingent liabilities Claims in respect of:

Excise matters 1,467,590 1,467,590

3 Segment information

The Company''s primary (business) segment is singular viz. "Electrolytic Products". Further, the Company caters mainly to the needs of the domestic market. The export turnover is not significant in proportion to the total turnover. As such, there are no reportable geographic segments either. Therefore, segment information required by Accounting Standard No. 17 (AS-17) notified under the Companies (Accounting Standards) Rules, 2006, is not furnished.

4 Disclosure relating to provisions

Warranties/ recoating

The Company offers warranties for one of the critical parts of certain electrochlorinators and for some of its coating / recoating services for an initial period of two years followed by support contracts for a period of four years in the case of electrochlorinators and for a period of six years in the case of coating, eight years incase of recoating services during which period amounts are recoverable from the customers based on pre-defined terms. Estimated costs from warranty terms standard to the deliverable are recognised when revenue is recorded for the related deliverable. The Company estimates its warranty costs standard to the deliverable based on historical warranty claim experience and applies this estimate to the revenue stream for deliverables under warranty. Future costs for warranties applicable to revenue recognised in the current period are charged to the revenue account.

The warranty accrual is reviewed periodically to verify that it properly reflects the remaining obligation based on the anticipated expenditures over the balance of the obligation period. Adjustments are made when the actual warranty claim experience differs from estimates. Provisions include estimated costs of support maintenance contracts to the extent such estimated costs are expected to exceed the expected recovery during the obligation period. No assets are recognised in respect of the expected recovery on support contracts.

Factors that could impact the estimated claim information include the Company''s productivity, costs of materials, power and labour, and the actual recoveries on support contracts.

The movement in the provision for warranties/ recoating are summarised as under :

5 Employee benefits

a) Defined-Contribution Plans

The Company offers its employees defined contribution plan in the form of provident fund, family pension fund and superannuation fund. Provident fund and family pension fund cover substantially all regular employees while the superannuation fund covers certain executives. The company makes specified monthly contributions towards employees provident fund to government administrative provident fund scheme which is a defined contribution plan. Contributions of superannuation fund are made to LIC. While both the employees and the Company pay predetermined contributions into the provident fund, contributions into the family pension fund and the superannuation fund are made only by the Company. The contributions are normally based on a certain proportion of the employee''s salary. The comapny does not have any obligation beyond the amounts already contributed.

b) Defined-Benefit Plans

The Company offers its employees defined-benefit plans in the form of a gratuity scheme. Benefits under the defined benefit plan is typically based on years of service and the employee''s compensation (generally immediately before retirement). The gratuity scheme covers substantially all regular employees. The Company contributes funds to Life Insurance Corporation of India, which is irrevocable. Commitments are actuarially determined at year-end. The actuarial valuation is done based on "Projected Unit Credit" method. Gains and losses of changed actuarial assumptions are charged to the statement of profit and loss.

6 Taxation

a) The tax year for the Company being the year ending 31 March 2015, the ultimate tax liability will be determined on the basis of the results for the period 1 April 2014 to 31 March 2015.

b) The Company''s international transactions with associated enterprises are at arm''s length as per the independent accountant''s report for the year ended 31 March 2014. The Company is in the process of updating the documentation for the international transactions entered into with the associated enterprises during the period subsequent to 31 March 2014. Management believes that the company''s international transactions with associated enterprises post 31 March 2014 continue to be at arm''s length and that the transfer pricing legislation will not have any impact on the financial statements particularly on the amount of the tax expense for the year and the amount of the provision for taxation at the year end.

7 Previous year''s figures

Certain comparative figures have been reclassified to conform to the presentation adopted in these financial statements as under.

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Dec 31, 2013

1 Background

De Nora India Limited (''the Company'' or ''De Nora'') was incorporated in June 1989 as Titanor Components Limited (Titanor'') and commenced business in November 1989. The Company''s name was changed from Titanor to De Nora on 27th June, 2007. The Company has its manufacturing facilities at Kundaim, Goa and is involved in the business of manufacturing and servicing of Electrolytic products.

2. Segment information

The Company''s primary (business) segment is singular viz. "Electrolytic Products". Further, the Company caters mainly to the needs of the domestic market. The export turnover is not significant in proportion to the total turnover. As such, there are no reportable geographic segments either. Therefore, segment information required by Accounting Standard No. 17 (AS-17) notified under the Companies (Accounting Standards) Rules, 2006, is not furnished.

3. Disclosure relating to provisions

Warranties/recoating

The Company offers warranties for one of the critical parts of certain electro chlorinators and for some of its coating/ recoating services for an initial period of two years followed by support contracts for a period of four years in the case of electro chlorinators and for a period of six years in the case of coating, eight years in case of recoating services during which period amounts are recoverable from the customers based on pre-defined terms. Estimated costs from warranty terms standard to the deliverable are recognised when revenue is recorded for the related deliverable. The Company estimates its warranty costs standard to the deliverable based on historical warranty claim experience and applies this estimate to the revenue stream for deliverables under warranty. Future costs for warranties applicable to revenue recognised in the current period are charged to the revenue account.

The warranty accrual is reviewed periodically to verify that it properly reflects the remaining obligation based on the anticipated expenditures over the balance of the obligation period. Adjustments are made when the actual warranty claim experience differs from estimates. Provisions include estimated costs of support maintenance contracts to the extent such estimated costs are expected to exceed the expected recovery during the obligation period. No assets are recognised in respect of the expected recovery on support contracts.

Factors that could impact the estimated claim information include the Company''s productivity, costs of materials, power and labor, and the actual recoveries on support contracts.

4. Employee benefits

a) Defend-Contribution Plans

The Company offers its employees defined contribution plan in the form of provident fund, family pension fund and superannuation fund. Provident fund and family pension fund cover substantially all regular employees while the superannuation fund covers certain executives. Contributions are paid during the year into separate funds under certain fiduciary-type arrangements. While both the employees and the Company pay predetermined contributions into the provident fund, contributions into the family pension fund and the superannuation fund are made only by the Company. The contributions are normally based on a certain proportion of the employee''s salary. The Company does not have any obligation beyond the amounts already contributed.

b) Defined -Benefit Plans

The Company offers its employees defined -benefit plans in the form of a gratuity scheme. Benefits under the defined benefit plan is typically based on years of service and the employee''s compensation (generally immediately before retirement). The gratuity scheme covers substantially all regular employees. The Company contributes funds to Life Insurance Corporation of India, which is irrevocable. Commitments are actuarially determined at year-end. The actuarial valuation is done based on "Projected Unit Credit" method. Gains and losses of changed actuarial assumptions are charged to the statement of profit and loss.

5. Taxation

a) The tax year for the Company being the year ending 31 March, 2014, the ultimate tax liability will be determined on the basis of the results for the period 1 April, 2013 to 31 March, 2014.

b) The Company''s international transactions with associated enterprises are at arm''s length as per the independent accountant''s report for the year ended 31 March, 2013. The Company is in the process of updating the documentation for the international transactions entered into with the associated enterprises during the period subsequent to 31 March, 2013. Management believes that the company''s international transactions with associated enterprises post 31 March, 2013 continue to be at arm''s length and that the transfer pricing legislation will not have any impact on the financial statements particularly on the amount of the tax expense for the year and the amount of the provision for taxation at the year end.

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Dec 31, 2012

1 Background

De Nora India Limited (''the Company'' or ''De Nora'') was incorporated in June 1989 as Titanor Components Limited (''Titanor'') and commenced business in November 1989. The Company''s name was changed from Titanor to De Nora on 27th June, 2007. The Company has its manufacturing facilities at Kundaim, Goa and is involved in the business of manufacturing and servicing of Electrolytic products.

a. Rights, preferences and restrictions 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 the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended 31 December, 2012, the amount of per share dividend recognized as distribution to equity shareholders was Rs. 7 per share (previous year: Rs. 6 per share). The dividend appropriation for the year ended December 2012 amounted to Rs. 37,160,438 (previous year: Rs. 32,664,510) plus corporate dividend tax of Rs. 6,028,352 (previous year: Rs. 5,299,000)

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.

b. Aggregate number of bonus shares issued, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date

Pursuant to the Shareholders'' approval for buyback of equity shares under section 77A of the Companies Act, 1956, the Company has bought back 135,451 equity shares (previous year: 111,049) through open market transactions for an aggregate amount of Rs. 13,432,195 (previous year: Rs. 9,447,490). The said shares have been subsequently extinguished. Capital redemption reserve has been created by transfer of Rs. 1,354,510 (previous year: Rs. 1,110,490) from General Reserve being the nominal value of shares bought back in terms of Section 77AA of the Companies Act, 1956.

31 December, 2012 31 December, 2011

2. Contingent liabilities

Claims in respect of Excise matters 1,467,590 1,467,590

3. Segment information

The Company''s primary (business) segment is singular viz. "Electrolytic Products". Further, the Company caters mainly to the needs of the domestic market. The export turnover is not significant in proportion to the total turnover. As such, there are no reportable geographic segments either. Therefore, segment information required by Accounting Standard No. 17 (AS-17) notified under the Companies (Accounting Standards) Rules, 2006, in respect thereof is not furnished.

4. Disclosure relating to provisions Warranties/recoating

The Company offers warranties for one of the critical parts of certain electrochlorinators and for some of its coating / recoating services for an initial period of two years followed by support contracts for a period of four years in the case of electrochlorinators and for a period of six years in the case of coating, eight years in case of recoating services during which period amounts are recoverable from the customers based on pre-defined terms. Estimated costs from warranty terms standard to the deliverable are recognised when revenue is recorded for the related deliverable. The Company estimates its warranty costs standard to the deliverable based on historical warranty claim experience and applies this estimate to the revenue stream for deliverables under warranty. Future costs for warranties applicable to revenue recognised in the current period are charged to the revenue account.

The warranty accrual is reviewed periodically to verify that it properly reflects the remaining obligation based on the anticipated expenditures over the balance of the obligation period. Adjustments are made when the actual warranty claim experience differs from estimates. Provisions include estimated costs of support maintenance contracts to the extent such estimated costs are expected to exceed the expected recovery during the obligation period. No assets are recognised in respect of the expected recovery on support contracts.

Factors that could impact the estimated claim information include the Company''s productivity, costs of materials, power and labour, and the actual recoveries on support contracts.

5. Employee benefits

a) Defined-Contribution Plans

The Company offers its employees defined contribution plan in the form of provident fund, family pension fund and superannuation fund. Provident fund and family pension fund cover substantially all regular employees while the superannuation fund covers certain executives. Contributions are paid during the year into separate funds under certain fiduciary-type arrangements. While both the employees and the Company pay predetermined contributions into the provident fund, contributions into the family pension fund and the superannuation fund are made only by the Company. The contributions are normally based on a certain proportion of the employee''s salary.

b) Defined-Benefit Plans

The Company offers its employees defined-benefit plans in the form of a gratuity scheme. Benefits under the defined benefit plan is typically based on years of service and the employee''s compensation (generally immediately before retirement). The gratuity scheme covers substantially all regular employees. The Company contributes funds to Life Insurance Corporation of India, which is irrevocable. Commitments are actuarially determined at year-end. The actuarial valuation is done based on "Projected Unit Credit" method. Gains and losses of changed actuarial assumptions are charged to the statement of profit and loss.

6. Transfer pricing

The Company''s international transactions with associated enterprises are at arm''s length as per the independent accountant''s report for the year ended 31 March, 2012. The Company is in the process of updating the documentation for the international transactions entered into with the associated enterprises during the period subsequent to 31 March, 2012. Management believes that the company''s international transactions with associated enterprises post 31 March, 2012 continue to be at arm''s length and that the transfer pricing legislation will not have any impact on the financial statements particularly on the amount of the tax expense for the year and the amount of the provision for taxation at the year end.

7. Previous year''s figures

The financial statements for the year ended 31 December, 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Act. Consequent to the notification of Revised Schedule VI under the Act the financial statements for the year ended 31 December, 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year''s classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed in preparation of financial statements.

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Dec 31, 2011

1 Background

De Nora India Limited ('the Company' or 'De Nora') was incorporated in June 1989 as Titanor Components Limited ('Titanor') and commenced business in November 1989. The Company's name was changed from Titanor to De Nora on 27th June 2007. The Company has its manufacturing facilities at Kundaim, Goa and is involved in the business of manufacturing and servicing of Electrolytic products.

2.1 Disclosure relating to provisions

Warranties/ recoating

The Company offers warranties for one of the critical parts of certain electrochlorinators and for some of its coating / recoating services for an initial period of two years followed by support contracts for a period of four years in the case of electrochlorinators and for a period of six years in the case of coating, eight years incase of recoating services during which period amounts are recoverable from the customers based on pre-defined terms. Estimated costs from warranty terms standard to the deliverable are recognised when revenue is recorded for the related deliverable. The Company estimates its warranty costs standard to the deliverable based on historical warranty claim experience and applies this estimate to the revenue stream for deliverables under warranty. Future costs for warranties applicable to revenue recognised in the current period are charged to the revenue account.

The warranty accrual is reviewed periodically to verify that it properly reflects the remaining obligation based on the anticipated expenditures over the balance of the obligation period. Adjustments are made when the actual warranty claim experience differs from estimates. Provisions include estimated costs of support maintenance contracts to the extent such estimated costs are expected to exceed the expected recovery during the obligation period. No assets are recognised in respect of the expected recovery on support contracts.

Factors that could impact the estimated claim information include the Company's productivity, costs of materials, power and labour, and the actual recoveries on support contracts.

2.2 Employee benefits

a) Defined-Contribution Plans

The Company offers its employees defined contribution plan in the form of provident fund, family pension fund and superannuation fund. Provident fund and family pension fund cover substantially all regular employees while the superannuation fund covers certain executives. Contributions are paid during the year into separate funds under certain fiduciary-type arrangements. While both the employees and the Company pay predetermined contributions into the provident fund, contributions into the family pension fund and the superannuation fund are made only by the Company. The contributions are normally based on a certain proportion of the employee's salary.

b) Defined-Benefit Plans

The Company offers its employees defined-benefit plans in the form of a gratuity scheme. Benefits under the defined benefit plan is typically based on years of service and the employee's compensation (generally immediately before retirement). The gratuity scheme covers substantially all regular employees. The Company contributes funds to Life Insurance Corporation of India, which is irrevocable. Commitments are actuarially determined at year-end. The actuarial valuation is done based on "Projected Unit Credit" method. Gains and losses of changed actuarial assumptions are charged to the profit and loss account.

@ Cathodic protection (anti corrosion) systems include diverse bought out components which are affixed to the electrolytic products manufactured by the Company. While the value corresponds to the aggregate cost of such assemblies in inventory as at the year end, the quantities reported relate to elements manufactured and held in inventory as at the year end.

@ Cathodic protection (anti corrosion) systems include diverse bought out components which are affixed to the electrolytic products manufactured by the Company. While the value corresponds to the aggregate amounts invoiced for such assemblies by the Company, the quantities reported relate to the aggregate quantities of elements manufactured and invoiced during the year.

2.3 Transfer pricing

The Company's international transactions with associated enterprises are at arm's length as per the independent accountant's report for the year ended 31 March 2011. The Company is in the process of updating the documentation for the international transactions entered into with the associated enterprises during the period subsequent to 31 March 2011. Management believes that the company's international transactions with associated enterprises post 31 March 2011 continue to be at arm's length and that the transfer pricing legislation will not have any impact on the financial statements particularly on the amount of the tax expense for the year and the amount of the provision for taxation at the year end.

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Dec 31, 2010

1. Background

De Nora India Limited (the Company or De Nora) was incorporated in June 1989 as Titanor Components Limited (Titanor) and commenced business in November 1989. The Companys name was changed fromTitanorto De Nora on 27th June 2007. The Company has its manufacturing facilities at Kundaim, Goa and is involved in the business of manufacturing and servicing of Electrolytic products.

Year ended Year ended 31st Dec, 2010 31st Dec, 2009

2.1 Contingent liabilities

Claims in respect of:

Excise matters 1,467,590 1,868,748

2.2 Disclosure relating to provisions

Warranties/ recoating

The Company offers warranties for one of the critical parts of certain electrochlorinators and for some of its coating / recoating services for an initial period of two years followed by support contracts for a period of four years in the case of electrochlorinators and for a period of six years in the case of coating, eight years incase of recoating services during which period amounts are recoverable from the customers based on pre-defined terms. Estimated costs from warranty terms standard to the deliverable are recognised when revenue is recorded for the related deliverable. The Company estimates its warranty costs standard to the deliverable based on historical warranty claim experience and applies this estimate to the revenue stream for deliverables under warranty. Future costs for warranties applicable to revenue recognised in the current period are charged to the revenue account.

The warranty accrual is reviewed periodically to verify that it properly refects the remaining obligation based on the anticipated expenditures over the balance of the obligation period. Adjustments are made when the actual warranty claim experience differs from estimates. Provisions include estimated costs of support maintenance contracts to the extent such estimated costs are expected to exceed the expected recovery during the obligation period. No assets are recognised in respect of the expected recovery on support contracts.

Factors that could impact the estimated claim information include the Companys productivity, costs of materials, power and labour, and the actual recoveries on support contracts.

2.3 Employee benefits

a) defined-Contribution Plans

The Company offers its employees defined contribution plan in the form of provident fund, family pension fund and superannuation fund. Provident fund and family pension fund cover substantially all regular employees while the superannuation fund covers certain executives. Contributions are paid during the year into separate funds under certain fduciary-type arrangements. While both the employees and the Company pay predetermined contributions into the provident fund, contributions into the family pension fund and the superannuation fund are made only by the Company. The contributions are normally based on a certain proportion of the employees salary.

b) defined-benefit Plans

The Company offers its employees defined-benefit plans in the form of a gratuity scheme. benefits under the defined benefit plan is typically based on years of service and the employees compensation (generally immediately before retirement). The gratuity scheme covers substantially all regular employees. The Company contributes funds to Life Insurance Corporation of India, which is irrevocable. Commitments are actuarially determined at year-end. The actuarial valuation is done based on "Projected Unit Credit" method. Gains and losses of changed actuarial assumptions are charged to the Profit and loss account.

2.4 Transfer pricing

The Companys international transactions with associated enterprises are at arms length as per the independent accountants report for the year ended 31 March, 2010. The Company is in the process of updating the documentation for the international transactions entered into with the associated enterprises during the period subsequent to 31 March, 2010. Management believes that the companys international transactions with associated enterprises post 31 March, 2010 continue to be at arms length and that the transfer pricing legislation will not have any impact on the financial statements particularly on the amount of the tax expense for the year and the amount of the provision for taxation at the year end.

2.5 Prior year figures

Previous years figures have been regrouped / reclassified to confirm to the current years presentation.

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Dec 31, 2009

1 Background

De Nora India Limited (the Company or De Nora) was incorporated in June 1989 as Titanor Components Limited (Titanor) and commenced business in November 1989. The Companys name was changed from Titanor to De Nora on 27th June 2007. The Company has its manufacturing facilities at Kundaim, Goa and is involved in the business of manufacturing and servicing of Electrolytic products.

2. Provisions and contingent liabilities

The Company creates a provision when there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

3 Related party transactions

a) Parties where control exists

Name of related party Relationship

Oronzio De Nora International B.V. Holding Company (holds 51.29% of the equity share capital as at 31 December 2009)

Industrie De Nora S.p.A. Ultimate Holding Company (UHC)

b) Other related parties with whom transactions have taken place during the year.

Relationship Name of related party

i. Entities under common control (EUCC) Uhdenora S.p.A. Industrie De Nora S.p.A., Singapore Branch

De Nora Elettrodi (Suzhou) Ltd.

De Nora Tech Inc. ii. Fellow Subsidiaries (FS) De Nora Deutschland GmbH

De Nora Do Brasil Ltda. iii. Key Management personnel (KMP) S .C. Jain (Managing Director)

4. Disclosure relating to provisions.

Warranties/ recoating

The Company offers warranties for one of the critical parts of certain electrochlorinators and for some of its coating / recoating services for an initial period of two years followed by support contracts for a period of four years in the case of electrochlorinators and for a period of six years in the case of coating, eight years in case of recoating services during which period amounts are recoverable from the customers based on pre-defined terms. Estimated costs from warranty terms standard to the deliverable are recognised when revenue is recorded for the related deliverable. The Company estimates its warranty costs standard to the deliverable based on historical warranty claim experience and applies this estimate to the revenue stream for deliverables under warranty. Future costs for warranties applicable to revenue recognised in the current period are charged to the revenue account.

The warranty accrual is reviewed periodically to verify that it properly reflects the remaining obligation based on the anticipated expenditures over the balance of the obligation period. Adjustments are made when the actual warranty claim experience differs from estimates. Provisions include estimated costs of support maintenance contracts to the extent such estimated costs are expected to exceed the expected recovery during the obligation period. No assets are recognised in respect of the expected recovery on support contracts.

Factors that could impact the estimated claim information include the Companys productivity, costs of materials, power and labour, and the actual recoveries on support contracts.

5. Employee benefits

a) Defined-Contribution Plans.

The Company offers its employees defined contribution plan in the form of provident fund, family pension fund and superannuation fund. Provident fund and family pension fund cover substantially all regular employees while the superannuation fund covers certain executives. Contributions are paid during the year into separate funds under certain fiduciary-type arrangements. While both the employees and the Company pay predetermined contributions into the provident fund, contributions into the family pension fund and the superannuation fund are made by only the Company. The contributions are normally based on a certain proportion of the employees salary.

b) Defined-Benefit Plans

The Company offers its employees defined-benefit plans in the form of a gratuity scheme. Benefits under the defined benefit plan is typically based on years of service and the employees compensation (generally immediately before retirement). The gratuity scheme covers substantially all regular employees. The Company contributes funds to Life Insurance Corporation of India, which is irrevocable. Commitments are actuarially determined at year-end. The actuarial valuation is done based on "Projected Unit Credit" method. Gains and losses of changed actuarial assumptions are charged to the profit and loss account.

6. Transfer pricing

The Companys international transactions with associated enterprises are at arms length as per the independent accountants report for the year ended 31 March 2009. The Company is in the process of updating the documentation for the international transactions entered into with the associated enterprises during the period subsequent to 31 March 2009. Management believes that the companys international transactions with associated enterprises post 31 March 2009 continue to be at arms length and that the transfer pricing legislation will not have any impact on the financial statements particularly on the amount of the tax expense for the year and the amount of the provision for taxation at the year end.

7. Prior year figures

Previous years figures have been regrouped / reclassified to conform to the current years presentation.