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Notes to Accounts of Dharamsi Morarji Chemicals Company Ltd.

Mar 31, 2015

1. In view of the "Unabsorbed Depreciation" & "Unabsorbed Business Losses" accruing from the past years, there is no taxable income during the year ended 31st March, 2015 and for the year ended 31st March, 2014. Accordingly, No provision has been made in respect of current income tax.

2. During the year, the manufacturing of Fertilizsers at Khemli Factory of the Company remained closed for the entire year and hence the fertilizer segment will no longer be a primary business of the Company. There is only one reportable segment i.e chemicals business of the Company.

3. Since the manufacturing operations of Fertilizsers at Khemli Factory of the Company have been closed, the services of all employees of that factory have been separated. The Company has provided for the compensation and other retirement benefits to those employees amounting to Rs. 142.60 Lacs which have been considered as an Exceptional item.

4. Segment Reporting :

The Company is operating in one reportable primary business segment i.e. Chemicals. Secondary segment information in relation to domestic markets and foreign markets is disclosed to the extent possible taking into account the nature of products, the different risks and returns, the organisation structure and the internal reporting system.

5. Figures in respect of the previous year have been regrouped / rearranged wherever necessary


Mar 31, 2014

1 Contingent Liabilities not provided for:

Rs. in Lacs

As at 31st March, 2014 As at 31st March, 2013

(i) Outstanding claims in respect of Excise Duty, Sales-Tax, etc. 110.14 44.55

(ii) Guarantees given by the Company''s Bankers 36.46 36.46

(iii) Arrears of Cumulative Preference Dividend 571.81 516.81

(iv) Claims against Company not acknowledged as debts 55.76 55.76

(v) Estimated Amount of Contracts remaining to be executed on Capital Account & not provided for (Net of Advances) 10.36 7.25

2 Wages, Salaries and Bonus include provision made as per actuarial valuation in respect of accumulated leave salary encashable on retirement in accordance with Accounting Standard 15 notified pursuant to the Companies (Accounting Standards) Rules, 2006 . Contribution to Provident and other funds includes Company''s contribution to Provident Fund, Family Pension Fund, Gratuity Fund (based on actuarial valuation) and Superannuation Fund.

3 In view of the "Unabsorbed Depreciation" & "Unabsorbed Business Losses" accruing from the past years, there is no taxable income during the year ended 31st March, 2014 and for the year ended 31st March, 2013. Accordingly, No provision has been made in respect of current income tax.

4 The Company had obtained the requisite approval of the shareholders under section 293(1)(a) of the Companies Act, 1956 for sale / transfer / disposal of its Land, Factory Buildings and Plant & machinery at its Ambernath factory. (Written Down Value of the fixed assets of the Company at its Ambarnath factory as on 31-03-2014 is Nil (previous year is Rs. 736.87 Lacs). Therefore, while reporting "Segment Results", in Note No. (6) to the accounts, depreciation of Ambarnath factory has been shown separetly . Also Profit on sale of Fixed Assets of Ambarnath factory and Written Down Value of Assets scrapped of Ambarnath Factory along with Current Assets and Current Liabilities relating to the Ambarnath factory of the Company has been excluded for segment-wise reporting of "Capital Employed".

5 Segment Reporting :

The Company has disclosed Business Segments as its primary segments. Reporting segments have been identified as Fertilisers, Chemical and others/unallocated, taking into account the nature of products, the different risks and returns, the organisation structure and the internal reporting system.

Segment Revenue, Segment Results, Segment Assets and Segment Liabilities include the respective amounts identifiable to each of the segments as also the amounts allocated on a reasonable basis to the respective segments. The expenses, which are not directly related to the business segments, are shown as unallocated costs. Corporate current assets and liabilities have been allocated on the basis of turnover of the segments. Assets and Liabilities that can not be allocated between the segments are shown as a part of unallocated assets & liabilities. Inter Segment Transfers are at cost of production.

6 The Company has prepared the financial statements for the year ended 31.03.2014 on a "Going Conern Basis" since the Company is confident that its profitablity will improve in future in view of the following:

The Company''s export business over the last three years has been growing at an impressive rate of 50%. This has been possible due to appropriate marketing efforts coupled with quality consciousness on the part of the company. The focused R & D activity to identify and develop relevant products meeting high quality standards has always remained vital to the company''s business, and efforts are undertaken to spread this message across the customer base both abroad as well as domestic. The company is confident of improving the current growth rate substantially in overseas business in addition to consolidating the domestic market both in Speciality and Bulk chemicals. In the near term, the company expects to achieve this objective by making use of the available unutilized capacity as well as building up additional capacity. The marketing team is also being strengthened.

7 The Company has elected to present Profit/(Loss) before Finance Costs, Depreciation and Tax i.e.(EBITDA) as a separate line item on the fface of the statement of the profit and loss.

8 Figures in respect of the previous year have been regrouped wherever necessary.


Mar 31, 2013

1 Contingent Liabilities not provided for:

Rs. in Lacs As at As at 31st March, 2013 31st March, 2012

(i) Outstanding claims in respect of Excise Duty, Sales-Tax, etc. 44.55 44.55

(ii) Guarantees given by the Company''s Bankers / 36.46 51.46

(iii) Arrears of Cumulative Preference Dividend 516.81 461.81

(iv) Claims against Company not acknowledged as debts 55.76 55.76

(v) Estimated Amount of Contracts remaining to be executed on Capital Account & not 7.25 54.00 provided for (Net of Advances)

2 Wages, Salaries and Bonus include provision made as per actuarial valuation in respect of accumulated leave salary encashable on retirement in accordance with Accounting Standard 15 notified pursuant to the Companies (Accounting Standards) Rules, 2006 . Contribution to Provident and other funds includes Company''s contribution to Provident Fund, Family Pension Fund, Gratuity Fund (based on actuarial valuation) and Superannuation Fund.

3 In view of the "Unabsorbed Depredation" & "Unabsorbed Business Losses" accruing from the past years, there is no taxable income during the year ended 31st March, 2013 and for the year ended 31st March, 2012. Accordingly, No provision has been made in respect of current income tax.

4 The Company had obtained the requisite approval of the shareholders under section 293( 1 )(a) of the Companies Act, 1956 for sale / transfer / disposal of its Land, Factory Buildings and Plant & machinery at its Ambemath factory. (Written Down Value of the fixed assets of the Company at its Ambamath factory as on 31-03-2013 is Rs. 736.87 Lacs). Therefore, while reporting "Segment Results", in Note No. (6) to the accounts, depreciation of Ambamath factory has been shown separetly . Also Profit on sale of Fixed Assets of Ambamath factory and Written Down Value of Assets scrapped of Ambamath Factory along with Current Assets and Current Liabilities relating to the Ambamath factory of the Company has been excluded for segment-wise reporting of "Capital Employed". ~

5 Segment Reporting:

The Company has disclosed Business Segments as its primary segments. Reporting segments have been identified as Fertilisers, Chemical and others/unallocated, taking into account the nature of products, the different risks and returns, the organisation structure and the internal reporting system.

Segment Revenue, Segment Results, Segment Assets and Segment Liabilities include the respective amounts identifiable to each of the segments as aiso the amounts allocated on a reasonable basis to the respective segments. The expenses, which are not directly related to the business segments, are shown as unallocated costs. Corporate current assets and liabilities have been allocated on the basis of turnover of the segments. Assets and Liabilities that can not be allocated between the segments are shown as a part of unallocated assets & liabilities. Inter Segment Transfers are at cost of production.

Related party relationships are as identified by the Company and relied upon by the Auditors. Figures in brackets pertain to Previous Year

6 The Company has prepared the financial statements for the year ended 31.03.2013 on a "Going Concern Basis" since the Company is confident that its profitablity will improve in future in view of the following:

The Company''s export business over the last three years has been growing at an impressive rate of 55%. This has been possible due to appropriate marketing efforts coupled with quality consciousness on the part of the company. The focused R&D activity to identify and develop relevant product meeting high quality standards has always remained vital to the company''s business and efforts are undertaken to spread this message across the customer base both abroad as well as domestic. The company is confident of improving the current growth rate substantially in overseas business in addition to consolidating the domestic market both in Speciality and Bulk chemicals. In the near term, the company expects to achieve this objective by making use of the available unutilized capacity as well as building up additional capacity. The marketing team is also being strengthened.

7 Employee Benefits:

The Company has made provision for following benefit plans as per Accounting Standard 15 (Revised 2005)" Employee Benefits". Defined Benefit Plans / Long Term Compensated Absences: As per Actuarial Valuation as on 31.03.2013, the required data is as follows:

8 The Company has elected to present Profit/(Loss) before Finance Costs, Depreciation and Tax i.e.(EBITDA) as a separate line item on the face of the statement of the profit and loss.

9 Figures in respect of the previous year have been regrouped wherever necessary


Mar 31, 2012

NOTE: I SHARE CAPITAL

Terms/Rights attached to Equity Shares:

The Company is having only one class of Equity shares having a nominal value of Rs. 10/- per share.

Every holder of the equity share of the Company is entitled to one vote per share held.

In the event of liquidation of the Company, the equity shareholders will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution to the Equity shareholders will be in proportion of the number of shares held by each shareholder.

Terms/Rights attached to Preference Shares:

(i) 600000, 8% Redeemable Cumulative non- convertible Preference Shares of Rs. 100/- each aggregating to Rs. 600 Lacs were to be redeemed in 5 Equal instalments of Rs. 120 Lacs each commencing from 2008-09 to 2012-13. However, the Company has not redeemed these preference shares as per this redemption schedule in view of the carried forward losses.

The cumulative dividend on these Preference Shares aggregating to Rs. 432 Lacs (Previous year Rs. 384 Lacs) is to be paid as and when declared by the Company.

(ii) 280000, 2.5% Redeemable Cumulative non convertible Preference Shares of Rs. 100/- each aggregating to Rs. 600 Lacs are redeemable in 16 Equal quarterly instalments of Rs. 17.50 Lacs each commencing from 1st April, 2012.

The cumulative dividend on these Preference Shares aggregating to Rs. 29.81 Lacs (Previous year Rs. 22.81 Lacs) is to be paid as and when declared by the Company.

The holders of all Preference shares do not have any voting rights.

The holders of all Preference shares have a first right of cumulative dividend as compared to the shareholders of Equity shares in case the Company declares any dividend.

In the event of liquidation of the Company, all preference shareholders will have a priority over the Equity shareholders to receive remaining assets of the Company, after distribution of all other preferential amounts. The distribution to the Preference shareholders will be in proportion of the number of shares held by each shareholder.

V - (a) FIXED ASSETS - TANGIBLE

NOTE: V(d) AND V(e)

(*) The Company has made a provision for Doubtful Debts and Advances aggregating to Rs. 1998.22 lacs upto the period ended 31.03.2012 (Previous Year 1898.22 lacs). In the opinion of the Management of the Company, this provision is adequate to cover the Doubtful Debts & Advances as on 31.03.2012, including those in respect of dues from GFC, Syria stated below (to the extent considered doubtful).

A contract was entered into in 1993 between the Company and General Fertiliser Co., (GFC) Horns, Syria for revamping of two streams of Sulphuric Acid Plant of GFC by the Company. The value of the contract was USD 12.8 million plus Syrian Pounds 72 million, equivalent to Rs. 44.24 crores, considering the exchange rates prevailing in 1993. The Company has completed this project and has also given the required performance test runs on the two streams of the Sulphuric Acid plant. The Company has also received all payments from GFC, Syria except payment of certain invoices aggregating to USD 1.37 million (included in "Sundry Debtors") equivalent to Rs. 620.56 lacs as on 31.03.2012. The Company has also made claims from GFC, Syria towards interest on delayed payments, bank charges for extension of the validity period of the Letter of Credit/bank Guarantees and other overheads.

The Company has not taken any credit for these claims in the books of account. As provided in the contract, the case was referred to the Arbitration Tribunal at Damascus, Syria. The Arbitration Tribunal has given its award, according to which GFC, Syria was required to make payment to the Company of the aforesaid unpaid dues aggregating to USD 1.37 million.

Further, the Arbitration Tribunal has accepted certain claims made by the Company as also by GFC, Syria. The Company as well as GFC, Syria have filed their respective appeals against the Arbitration award with the State Council at Damascus, Syria. The Company as well as GFC, Syria have made certain claims on each other, in their respective appeals as filed with the State Council. The State Council constituted a seven member Expert Committee in October 2002 to examine these claims and give its recommendations. The Report of this Expert Committee, containing its recommendations has been submitted to the State Council. The comments received from GFC, Syria and the Company (in response to the recommendations of the Expert Committee) have been forwarded by the State Council to the Expert Committee. Based on these comments, the Expert Committee has submitted its Report to the State Council recommending payment to the Company of the aforesaid invoices aggregating to USD 1.37 million (equivalent to Rs. 620.56 lacs) and certain other claims of the Company.

On this basis, the Supreme Administrative Court of Syria has given its judgement according to which a net amount of about USD 0.90 Million (equivalent to Rs. 456.48 lacs) is payable by GFC to the Company as on 31.03.2012. The shortfall in receivable between the amount included in "Sundry Debtors" as on 31.03.2012 (i.e. Rs. 620.56 lacs) and the net amount payable to the Company as on 31.03.2012 as per the judgement given by Supreme Administrative Court of Syria (i.e. Rs. 456.48 lacs), has already been provided in earlier Financial Year.

The Company has made a provision for Doubtful Debts and Advances aggregating to Rs. 1998.22 lacs upto the period ended 31.03.2012 (Previous Year 1898.22 lacs), in the opinion of the Management of the Company, this provision is adequate to cover the Doubtful Debts & Advances as on 31.03.2012, including those in respect of dues from GFC, Syria (to the extent considered doubtful).

The Debtors as on 31.03.2012 are subject to confirmations from customers.

1. Contingent Liabilities not provided for:

As at As at 31st March, 2012 31st March, 2011

(i) Outstanding claims in respect of Excise Duty, Sales Tax, etc. 44.55 46.40

(ii) Guarantees given by the Company's Bankers 51.46 51.46

(iii) Arrears of Cumulative Preference Dividend 461.81 406.81

(iv) Claims against Company not acknowledged as debts 55.76 55.76

(v) Estimated Amount of Contracts remaining to be executed on Capital Account & 54.00 - not provided for (Net of Advances)

2. Wages, Salaries and Bonus include provision made as per actuarial valuation in respect of accumulated leave salary encashable on retirement in accordance with Accounting Standard 15 notified pursuant to the Companies (Accounting Standards) Rules, 2006. Contribution to Provident and other funds includes Company's contribution to Provident Fund, Family Pension Fund, Gratuity Fund (based on actuarial valuation) and Superannuation Fund.

3. The cost to the Company arising out of the conversion of Lenders' Sacrifice (by way of the reduction in the interest rates) was being amortised equally over the period of repayment of term loans to the Lenders, upto 30th June 2010. In view of the completion of the negotiated settlements with the Lenders during the period ended 31/03/2011, the entire unamortised amount of Lenders' Sacrifice amounting to Rs. 70.97 lacs as on 30/06/2010 has been amortised during the period ended 31/03/2011 (i.e. 1st July, 2010 to 31st March, 2011).

4. No provision has been made in respect of current income tax since there is no taxable income during the year ended 31st March 2012 and for the period ended 31st March, 2011.

5. The Company has obtained the requisite approval of the shareholders under section 293(1)(a) of the Companies Act, 1956 for sale/transfer/ disposal of its Land, Factory Buildings and Plant & machinery at its Ambernath factory. (Written Down Value of the fixed assets of the Company at its Ambarnath factory as on 31-03-2012 is Rs. 1739.73 Lacs). Therefore, while reporting "Segment Results", in Note No. (18) to the accounts, depreciation of Ambarnath factory has been shown separately and remaining loss of Ambarnath factory has been included in "Others/Unallocated Expenditure". Also, Fixed Assets, Current Assets and Current Liabilities relating to the Ambarnath factory of the Company has been excluded for segment-wise reporting of "Capital Employed".

6. Segment Reporting:

The Company has disclosed Business Segments as its primary segments. Reporting segments have been identified as Fertilisers, Chemical and Others/Unallocated, taking into account the nature of products, the different risks and returns, the organisation structure and the internal reporting system.

Segment Revenue, Segment Results, Segment Assets and Segment Liabilities include the respective amounts identifiable to each of the segments as also the amounts allocated on a reasonable basis to the respective segments. The expenses, which are not directly related to the business segments, are shown as unallocated costs. Corporate current assets and liabilities have been allocated on the basis of turnover of the segments. Assets and Liabilities that cannot be allocated between the segments are shown as a part of unallocated assets & liabilities. Inter Segment Transfers are at cost of production.

7. Related Parties Disclosures :

(A) Promoters holding more than 20% of the voting power

Name of the Nature of Relationship Related Parties

(i) Shri L.N. Goculdas Promoter and Chairman (holding more than 20% of the voting power)

(B) Associate/Other Related Companies

Name of the Related Parties Nature of Relationship

(i) Borax Morarji Ltd. Associate Company

(ii) The Natural Gas Co. Pvt. Ltd. Other Related Company

(iii) L.P. Gas Transport & Bottling Co. Pvt. Ltd. Other Related Company

(iv) Phoenix Distributors Pvt. Ltd. Other Related Company

(v) Jasraj Trading Co. Other Related Company

(vi) Kosan Industries Pvt. Ltd. Other Related Company

(vii) Bombay Foods Pvt. Ltd. Other Related Company



(C) Key Management Personnel

Name of the Related Parties Nature of Relationship

(i) Shri B.L. Goculdas Chief Executive Officer

(ii) Shri D.N. Vaze Chief Finance Officer

(iii) Shri D.T. Gokhale Vice President (Legal/Corporate Affairs) & Company Secretary.

8. The Company has prepared the financial statements for the year ended 31.03.2012 on a "Going Concern Basis" since the Company is confident that its profitably will improve in future in view of the following:

a) A new activity of trading (in various fertilizers and other agri inputs) which the Company will commence in association with a "strategic investor" after completing sale of Fixed Assets of the Company situated at Ambernath, and

b) Continued efforts by the Company for improving efficiency, restructuring/rationalisation of operations and optimisation of cost.

9. Employee Benefits:

The Company has made provision for following benefit plans as per Accounting Standard 15 (Revised 2005)" Employee Benefits". Defined Benefit Plans/Long Term Compensated Absences: As per Actuarial Valuation as on 31.03.2012, the required data is as follows:

10. The Company has elected to present Profit(Loss) before Finance Costs, Depreciation and amortisation and Tax i.e. (EBITDA) as a separate line item on the face of the statement of the profit and loss.

11. During the year ended 31st March, 2012 the revised schedule VI notified under the Companies Act, 1956 has become applicable to the Company for preparation and presentation of its financial statements. The adoption of revised schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The Company has also reclassified the previous year's figures in accordance with the requirements applicable in the current year.

12. As required by the revised Schedule VI to the Companies Act, 1956, Trade Receivables could not be classified as outstanding for a period of more than six months from the due date instead of the invoice date. The necessary modification in the existing computer program will be carried out in the current Financial year. However, it does not have any significant impact on the financial statements.

13. The figures as per these financial statements are not comparable with the figures in respect of previous financial year as the current financial year is of twelve months period commencing from April, 2011 to March, 2012 where as the financial statements of the previous financial year were prepared for a period of 9 months commencing from 1st July, 2010 to 31 March, 2011.

14. Figures in respect of the previous year have been regrouped wherever necessary.


Mar 31, 2011

July 10 to April 09 to March 11 June 10

1. Contingent Liabilities not provided for:

(i) Outstanding claims in respect of Excise Duty, Sales-Tax, etc. 46.40 44.21

(ii) Guarantees given by the Company's Bankers 51.46 33.75

(iii) Arrears of Cumulative Preference Dividend 406.81 365.56

(iv) Claims against Company not acknowledged as debts 55.76 55.76

(v) Estimated Amount of Contracts remaining to be executed on Capital Account & not provided for. - 29.77

2. Wages, Salaries and Bonus include provision made as per actuarial valuation in respect of accumulated leave salary encashable on retirement in accordance with Accounting Standard 15 notified persuant to the companies (Accounting Standards) Rules, 2006. Contribution to Provident and other funds includes Company's contribution to Provident Fund, Family Pension Fund, Gratuity Fund (based on actuarial valuation) and Superannuation Fund.

3. In case of payments made from 1st April, 2000, under the Voluntary Retirement Schemes of the Company, the total amount paid is treated as a deferred revenue expenditure and amortised over a period of 84 months or the number of months service foregone, whichever is lower, using the sum of digits method. Under this method the charge to Profit and Loss account is lowest in the first year and the highest in the last year. However, the amount to be amortised beyond 31st March 2010 also is charged during the period of April 2009 to June 2010, in accordance with Accounting Standard (AS 15) (Revised 2005) on Employee Benefits. Accordingly a sum of Rs.Nil (Previous Year Rs.741.88 lacs) has been charged to the Profit and Loss Account as deferred revenue expenditure, on account of compensation paid to employees under Early Voluntary Retirement Schemes and Rs. Nil (Previous Year Rs.Nil) has been carried forward to Deferred Revenue Expenditure account as per the method of accounting followed by the Company.

4. The cost to the Company arising out of the conversion of Lenders' Sacrifice (by way of the reduction in the interest rates) was being amortised equally over the period of repayment of term loans to the Lenders, upto 30th June 2010. In view of the completion of the negotiated settlements with the Lenders during the period ended 31/03/2011, the entire unamortised amount of Lenders' Sacrifice amounting.to Rs. 70.97 lacs as on 30/06/2010 has been amortised during the period ended 31/03/2011.

11 Miscellaneous expenses for the period ended 31.03.2011 includes gain / (loss) Rs.(18.28) lacs (previous year Rs. (12.24) lacs )on foreign exchange.

5. There are no Micro, Small and Medium Enterprises, to whom the Company owes dues at the Balance Sheet date, computed on unit wise basis. Further, the Company has not paid any interest to any Micro, Small and Medium Enterprises during the 9 months period ended on the Balance Sheet date, nor is any interest payable to any Micro, small and Medium Enterprises on the Balance sheet date.

The above information has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

13 (a) A contract was entered into in 1993 between the Company and General Fertiliser Co., (GFC) Horns, Syria for revamping of two streams of Sulphuric Acid Plant of GFC by the Company. The value of the contract was USD 12.8 million plus Syrian Pounds 72 million, equivalent to Rs.44.24 crores, considering the exchange rates prevailing in 1993. The Company has completed this project and has also given the required performance test runs on the two streams of the Sulphuric Acid plant. The Company has also received all payments from GFC, Syria except payment of certain invoices aggregating to USD 1.37 million (included in "Sundry Debtors") equivalent to Rs.620.01 lacs as on 31.03.2011. The Company has also made claims from GFC, Syria towards interest on delayed payments, bank charges for extention of the validity period of the Letter of Credit/bank Guarantees and other overheads.

The Company has not taken any credit for these claims in the books of accounts. As provided in the contract, the case was referred to the Arbitration Tribunal at Damascus, Syria. The Arbitration Tribunal has given its award, according to which GFC, Syria was required to make payment to the Company of the aforesaid unpaid dues aggregating to USD 1.37 million. .

Further, the Arbitration Tribunal has accepted certain claims made by the Company as also by GFC. Syria. The Company as well as GFC, Syria have filed their respective appeals against the Arbitration award with the State Council at Damascus, Syria. The Company as well as GFC, Syria have made certain claims on each other, in their respective appeals as filed with the State Council. The State Council constituted a seven member Expert Committee in October 2002 to examine these claims and give its recommendations. The Report of this Expert Committee, containing its recommendations has been submitted to the State Council. The comments received from GFC, Syria and the Company (in response to the recommendations of the Expert Committee) have been forwarded by the State Council to the Expert Committee. Based on these comments, the Expert Committee has submitted its Report to the State Council recommending payment to the Company of the aforesaid invoices aggregating to USD 1.37 million (equivalent to Rs.620.01 lacs) and certain other claims of the Company.

On this basis, the Supreme Administrative Court of Syria has given its judgement according to which a net amount of about USD 0.90 Million (equivalent to Rs. 398.43 lacs) is payable by GFC to the Company as on 31.03.2011 The shortfall in receivable between the amount included in "Sundry Debtors" as on 31.03.2011 (i.e. Rs.620.01 lacs) and the net amount payable to the Company as on 31.03.2011 as per the judgement given by Supreme Administrative Court of Syria (i.e. Rs. 398.43 lacs), has already been provided in earlier Financial Year.

(b) The Company has made a provision for Doubtful Debts and Advances aggregating to Rs.1898.22 lacs upto the period ended 31.03.2011 (Previous Year 1823.22 lacs). In the opinion of the Management of the Company, this provision is adequate to cover the Doubtful Debts & Advances as on 31.03.2011, including those in respect of dues from GFC, Syria (to the extent considered doubtful).

(c) The Debtors as on 31.03.2011 are subject to confirmations from customers.

6 Consequent to the negotiated settlements with the Secured/Unsecured Lenders, an amount aggregating to Rs.3362.76 Lacs payable by the Company to these lenders has been waived by the said lenders. The Company has credited this amount of Rs. 3362.76 Lacs to 'Capital Reserve' during the period ended 31.03.2011, since it consists of principal amount of borrowings only (without any interest component). Those negotiated settlements do not involve any cash flows and hence are not included in the Cash Flow from "Financing Activities'' as disclosed in the attached Cash Flow Statement for the period ended 31 st March 2011.

7 Interest expense for the period ended 31 st March 2011 and for the period ended 30th June 2010 is net off interest income of Rs.10.55 lacs and Rs.12.67 lacs, respectively. Tax deducted at source in respect of aforesaid interest income for the period ended 31st March 2011 is Rs. 1.55 lacs (Previous year Rs.1.01 lacs).

8 (a) No provision has been made in respect of current income tax since there is no taxable income during the period ended 31st March 2011 and for the period ended 30th June 2010.

(b) The Company will start trading in various fertilisers and other agri inputs in association with a " Strategic Investor", after completing sale of fixed assets of the Company at its Ambamath factory. This will result in significant additional turnover and profits. Consequently, there is virtual certainty of realisation in respect of "Deferred Tax Asset" mainly resulting from unabsorbed depreciation and carried forward losses. Accordingly, the Company had recognised "Deferred Tax Asset" amounting to Rs. 2148.17 Lacs, in the Financial Accounts for the 18 months ended 30th September 2007, considering unabsorbed depreciation and unabsorbed business losses upto 31.03.2007. The Company has recognised further "Deferred Tax Asset" amounting to Rs. 505.98 lacs in the Financial Accounts for the period of 18 months ended 31.03.2009, mainly resulting from Unabsorbed Depreciation upto 31.03.2009 and Unabsorbed Business Losses upto 31.03.2008. The Company will also recognise "Deferred Tax Asset" resulting from further "Unabsorbed Depreciation" and further "Unabsorbed Business Losses", after completing sale of fixed assets of the Company at its Ambamath factory.

8. (a) The non-viable operations of the Company's fertiliser and chemical business at its Ambemath factory had resulted in continued losses and delayed payment of wages and salaries to employees for last several months. With a view to reduce losses, the Management had submitted its Charter of Demands on the Company's recognised Union at Ambemath, which has been rejected by the Union. The Management, therefore, has suspended the operations of its Ambemath factory, with effect from 23rd January, 2009 and has issued a notice of "Lock Out" of the said factory with effect from 9th February, 2009. Consequently, the Company has not provided for the employees cost with effect from 9th February, 2009 (being not payable), in respect of those employees who are covered by "Lock Out.

The Company's recognised Union at Ambemath requested the Industrial Court, Maharashtra, at Thane to grant various interim reliefs (including granting of stay on the effect, implementation, and operation of the afforsaid notice of "Lock Out"). This request of the Union was rejected by the Industrial Court, Maharashtra, at Thane.

Subsequently, the Company signed a Memorandum of Agreement dated 30th June 2010 with the Company's recognised Union at Ambarnath, under which a Voluntary Separation Scheme was introduced for the workmen at Ambemath (including workmen of Head Office). Accordingly ail workmen at the Company's Ambarnath factory (including workmen of Head Office) have since applied for Voluntary Separation from the services of the Company. The "Separation Compensation" (aggregating to Rs.707.01 lacs) payable to all these workmen has been provided in the books of account for the extended Financial Year ended 30/06/2010 and same has since been paid to these workmen in August, 2010 alongwith all other legal dues.

(b) The Company has obtained the requisite approval of the shareholders under section 293(1 )(a) of the Companies Act, 1956 for sale / transfer / disposal of its Land, Factory Buildings and Plant & Machinery at its Ambemath factory. (Written Down Value of the Fixed Assets of the Company at its Ambemath factory as on 31.03.2011 is Rs. 2380.12 lacs). Therefore, while reporting "Segment Results", in Note No. 18 to the accounts, depreciation of Ambarnath factory has been shown separetly and remaining loss of Ambarnath factory has been included in "Others/Unallocated Expenditure". Also, Fixed Assets, Current Assets and Current Liabilities relating to the Ambarnath factory of the Company have been excluded for segment-wise reporting of "Capital Employed".

9 Segment Reporting :

The Company has disclosed Business Segments as its primary segments. Reporting segments have been identified as Fertilisers, Chemical, and Others / Unallocated, taking into account the nature of products, the different risks and returns, the organisation structure and the internal reporting system.

Segment Revenue, Segment Results, Segment Assets and Segment Liabilities include the respective amounts identifiable to each of the segments as also the amounts allocated on a reasonable basis to the respective segments. The expenses, which are not directly related to the business segments, are shown as unallocated costs. Corporate current assets and liabilities have been allocated on the basis of turnover of the segments. Assets and Liabilities that cannot be allocated between the segments are shown as a part of unallocated assets & liabilities. Inter Segment Transfers are at cost of production.

10 Related Parties Disclosures :

(A) Promoters holding more than 20% of the voting power

Name of the Related Parties Nature of Relationship

(i) Shri L.N.Goculdas Promoter and Chairman (holding more than 20%.of the voting power)

(B) Associate/Other Related Companies

Name of the Related Parties Nature of Relationship

(i) Borax Morarji Ltd. Associate Company

(ii) The Natural Gas Co.Pvt.Ltd. Other Related Company

(iii) L.P.Gas Equipment Pvt.Ltd. Other Related Company

(iv) Phoenix Distributors Pvt.Ltd. Other Related Company

(v) Jasraj Trading Co. Other Related Company

(vi) Kosan Industries Pvt.Ltd. Other Related Company

(vii) Bombay Foods Pvt.Ltd. Other Related Company

(C) Key Management Personnel

Shri D.P.Goculdas Chief Executive Officer upto 06.04.2011

Shri B.L.Goculdas Chief Executive Officer

Shri D.N.Vaze Chief Finance Officer

Shri D.T.Gokhale Vice President (Legal / Corporate Affairs) &

Company Secretary

11 The Company has prepared the financial statements for the period ended 31.03.2011 on a "Going Conern Basis" since the Company is confident that its profitablity will improve in future in view of the following:

a) A new activity of trading (in various fertilizers and other agri inputs) which the Company will commence in association with a "Strategic Investor" after completing sale of Fixed Assets of the Company situated at Ambernath, and

b) Continued efforts by the Company for improving efficiency, restructuring / rationalisation of operations and optimisation of cost.

12 The Company has closed the current Financial Year of 9 months on 31/03/2011, as decided by the Board of Directors of the Company. Accordingly Financial Statements for the Current Financial Year have been prepared for a period of 9 months commencing from 1st July, 2010 and ending on 31 st March, 2011. Therefore, figures as per these Financial Statements are not comparable with the figures in respect of previous financial year i.e. 1st April, 2009 to 30th June, 2010 (which was a period of 15 months).

13 Figures in respect of the previous year have been regrouped wherever necessary.


Jun 30, 2010

1. Professional Fees include Payments to Auditors for : April 09 to Oct 07 to June 10 March 09

2. No provision has been made towards Commission to Directors due to inadequacy of profit for the years April 2009 to June 2010, Oct. 2007 to March 2009, April 2006 to Sept. 2007, 2005-2006, 2004-2005 & 2003-2004. Remuneration and benefits paid to Chief Executive Officers/ Executive Directors for the years, April 2009 to June 2010, Oct. 2007 to Mar. 2009, April 2006 - Sept. 2007, 2005-2006, 2004-2005 and 2003- 2004 are within the limit prescribed under Schedule XIII to the Companies Act, 1956.

3. Contingent Liabilities not provided for:

(i) Outstanding claims in respect of Excise Duty, Sales-Tax, etc. 44.21 81.13

(it) Guarantees given by the Company and Companys Bankers 33.75 950.83

(iii) Arrears of Cumulative Preference Dividend 365.56 296.81

(iv) Claims against Company not acknowledged as debts 55.76

(v). Estimated Amount of Contracts remaining to be executed on Capital Account & not provided for. 29.77

4. Wages, Salaries and Bonus include provision made as per actuarial valuation in respect of accumulated leave salary encashable on retirement in accordance with Accounting Standard 15 of the Institute of Chartered Accountants of India. Contribution to Provident and other funds includes Companys contribution to Provident Fund, Family Pension Fund, Gratuity Fund (based on actuarial valuation) and Superannuation Fund.

5. In case of payments made from 1st April, 2000, under the Voluntary Retirement Schemes of the Company, the total amount paid is treated as a deferred revenue expenditure and amortised over a period of 84 months or the number of months service foregone, whichever is lower, using the sum of digits method. Under this method the charge to Profit and Loss account is lowest in the first year and the highest in the last year. However, the amount to be amortised beyond 31st March 2010. also is charged during the period of April 2009 to June 2010, in accordance with Accounting Standard (AS 15) (Revised 2005) on Employee Benefits. Accordingly a sum of Rs.741.88 lacs (Previous Year Rs.369.26 lacs) has been charged so the Profit and Loss Account as deferred revenue expenditure, on account of compensation paid to employees under Early Voluntary Retiremr-it Schemes and Rs. Nil (Previous Year Rs.741.88 lacs) has been carried forward to Deferred Revenue Expenditure account as per the method of accounting followed by the Company.

6. Subsidy from Govrnments of Gujarat (Rs.25 lacs), Maharashtra (Rs.20 lacs) and Rajasthan (Rs.15 lacs) for setting up of industrial units at Jhar, (Dist.Amreli), at Roma (Dist.Raigad) and Khemti (Dist.Udaipur), respectively, is repayable in the event of non-fuifilment of stipulated conditions.

7. Miscellaneous expanses for the period ended 30.06.2010 includes gain / (loss) Rs.(12.24) lacs {previous year Rs. (103.07) lacs} on foreign exchange.

8. There are no Mici Small and Medium Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days at the Balance Sheet data computed on unit wise basis. Further, the Company has not paid any interest to any Micro, Small and Medium Enterprises during the 15 months period ended on the Balance Sheet date, nor is any interest payable to any Micro, Small and Medium Enterprises on the Balance sheet date.

The above information has been determined to the extent such parties have been identified on the basis of information available with the Company. This has, been relied upon by the auditors.

9. A contract was en-red into in 1993 between the Company and General Fertiliser Co., (GFC) Horns, Syria for revamping of two streams of Sulphuric Acid Plant of GFC by the Company. The value of the contract was USD 12.8 million plus Syrian Pounds 72 million,equivalent to Rs.44.24 crores, Considering the exchange rates prevailing in 1993. The Company has completed this project and has also given the required performance testingss on the two streams of the Sulphuric Acid plant. The Company has also received all payments from GFC, Syria except payment of certain invoices aggregating to USD 1.37 million (included in "Sundry Debtors") equivalent to Rs.645.91 lacs as on 30.06.2010. The Company has also made claims from GFC, Syriatowards interest on delayed payments, bank charges for extention of the validity period of the Letter of Credit/bank Guarantees and other overheads.

The Company has not taken any credit for these claims in the books of accounts. As provided in the contract, the case was referred to the Arbitration Tribunal at Damascus, Syria. The Arbitration Tribunal has given its award, according to which GFC, Syria was required to make payment to the Company of the aforesaid unpaid dues aggregating to USD 1.37 million.

Further, the Arbitration Tribunal has accepted certain claims made by the Company as also by GFC.Syria. The Company as well as GFC, Syria have filed their respective appeals against the Arbitration award with the State Council at Damascus, Syria. The Company as well as GFC, Syria have made certain claims on each other, in their respective appeals as filed with the State Council. The State Council constituted a seven members Expert Committee in October 2002 to examine these claims and give its recommendations. The Report of this Expert Committee, containing its recommendations has been submitted to the State Council. The comments received from GFC, Syria and the Company (in response to the recommendations of the Expert Committee) have been forwarded by the State Council to the Expert Committee. Based on these comments, the Expert Committee has submitted its Report to the State Council recommending payment to the Company of the aforesaid invoices aggregating to USD 1.37 million (equivalent to Rs.645.91 lacs) and certain other claims of the Company.

On this basis, the Supreme Administrative Court of Syria has given its judgement according to which a net amount of about USD 0.90 Million (equivalent to Rs. 415.44 lacs) is payable by GFC to the Company as on 30.06.2010. The shortfall is receivable between the amount included in "Sundry Debtors" as on 30.06.2010 (i.e. Rs.645.91 lacs) and the net amount payable to the Comapany as on 30.06.2010 as per the judgement given by Supreme Administrative Court of Syria (i.e. Rs.415.44 lacs), has already been provided in earlier Financial Years.

10. (a) The Company has made a provision for Doubtful Debts and Advances aggregating to Rs.1823.22 lacs upto the period ended 30.06.2010

(Previous Year 1723.22 lacs). In the opinion of the Management of the Company, this provision is adequate to cover the Doubtful Debts & Advances as on 30.06.2010, including those in respect of dues from GFC, Syria (to the extent considered doubtful).

(b) The Debtors as on 30.06.2010 are subject to confirmations from customers.

11. Interest expense for the period ended 30th June 2010 and for the period ended 31st March 2009 is net off interest income of Rs. 12.67 lacs and Rs.9.25 lacs, respectively. Tax deducted at source in respect of aforesaid interest income for the period ended 30 th June 2010 is Rs. 1.01 lacs (Previous year Rs.0.98 lacs)

12. (a) No provision has been made in respect of current income tax since there is no taxable income during the period ended 30th June 2010 and for the period ended 31 st March 2009.

(b) The Company will start trading in various fertilisers and other agri inputs in association with a " Strategic Investor", after completing One Time settlement (OTS) of dues to secured lenders (presently in progress). This will result in significant additional turnover and profits. Consequently, there is virtual certainty of realisation in respect of "Deferred Tax Asset" mainly resulting from unabsoberd depreciation and carried forward losses. Accordingly, the Company had recognised "Deferred Tax Asset" amounting to Rs. 2148.17 Lacs, in the Financial Accounts for the 18 months ended 30th September 2007, considering unabsorbed depreciation and unabsorbed business losses upto 31.03.2007. The Company has recognised further "Deferred Tax Asset" amounting to Rs. 505.98 lacs in the Financial Accounts for the period of 18 months ended 31.03.2009, mainly resulting from Unabsorbed Depreciation upto 31.03.2009 and Unabsorbed Business Losses upto 31.03.2008. The Company will also recognise "Deferred Tax Asset" resulting from further "Unabsorbed Depreciation" and further "Unabsorbed business losses" after completing OTS of dues to secured lenders.

13. (a) The non-viable operations of trie Companys fertiliser and chemical business at its Ambemath factory had resulted in continued losses and delayed payment of wages and salaries to employees for last several months. With a view to reduce losses, the Management had submitted its Charter of Demands on the Companys recognised Union at Ambemath, which has been rejected by the Union. The Management, therefore, has suspended the operations of its Ambemath factory, with effect from 23rd January, 2009 and has issued a notice of "Lock Ouf of the said factory with effect from 9th February, 2009. Consequently, the Company has not provided for the employees cost with effect from 9th February, 2009* (being not payable), in respect of those employees who are covered by "Lock Ouf.

The Companys recognised Union at Ambemath requested the Industrial Court, Maharashtra, at Thane to grant various interim reliefs (including granting of stay on the effect, implementation, and operation of the afforsaid notice of "Lock Out"). This, request of the Union was rejected by the Industrial Court, Maharashtra, at Thane.

Subsequently, the Company signed a Memorandum of Agreement dated 30th June 2010 with the Companys recognised Union at Ambamath, under which a Voluntary Separation Scheme was introduced for the workmen at Ambemath (including workmen of Head Office). Accordingly all workmen at the Companys Ambamath factory (including workmen of Head Office) have since applied for Voluntary Separation from the* services of the Company. The "Separation Compensation" (aggregating to Rs.707.01 lacs) payable to all these workmen has been provided in the books of account for the extended Financial Year ended 30/06/2010 and same has since been paid to these workmen in August, 2010 alongwith all other legal dues.

(b) The Company is in the process of obtaining the requisite approval of the shareholders under section 293(1 )(a) of the Companies Act, 1956 for sale / transfer / disposal of its Land, Factory Buildings and Plant & machinery at its Ambemath factory. The Company has already issued the Postal Ballot Forms for the same to its shareholders for this purpose.

In view of the above, Fixed Assets, Current Assets and Current Liabilities relating to Ambemath Factory of the Company have been excluded from the" Segment Assets" and the "Segment Liabilities" indicated in Note No. 18 to the Accounts.

14. Segment Reporting:

The Company has disclosed Business Segments as its primary segments. Reporting segments have been identified as Fertilisers and Chemical, taking into account the nature of products, the different risks and returns, the organisation structure and the internal reporting system.

Segment Revenue, Segment Results, Segment Assets and Segment Liabilities include the respective amounts identifiable to each of the segments as also the amounts allocated on a reasonable basis to the respective segments. The expenses, which are not directly related to the business segments, are shown as unallocated costs. Corporate assets and liabilities have been allocated on the basis of turnover of the segments! Assets and Liabilities that cannot be allocated between the segments are shown as a part of unallocated assets & liabilities. Inter Segment Transfers are at cost of production.

15. Related Parties Disclosures :

(A) Promoters holding more than 20% of the voting power

Name of the Related Parties Nature of Relationship

(I) LateShriR.M.Goculdas Promoter and Chairman, (holding more than 20% of the voting power), upto 09th November, 2009

(li) Shri LN.Goculdas Promoter and Vice Chairman (holding more than 20% of the voting power) upto 9th November, 2009, and Promoter and Chairman (holding more than 20% of the voting power), from 10th November, 2009

(B) Substdiary/Assocfate/Other Related Companies

Name of the Related Parties Nature of Relationship

(I) DMCC Oil Terminals (Navlakhi) Ltd. Subsidiary Company upto 30.06.2009

(II) Borax Morarji Ltd. Associate Company

(III) The Natural Gas Co.Pvt.Ltd. Other Related Company

(IV) LP.Gas Equipment Pvt.Ltd. Other Related Company

(V) Phoenix Distributors Pvt.Ltd. Other Related Company

(VI) Jasraj Trading Co. Other Related Company

(VII) Kosan Industries Pvt.Ltd. Other Related Company

(VIII) Bombay Foods Pvt.Ltd. Other Related Company

(C) Key Management Personnel

(I) Shri D.P.Gocuidas Chief Executive Officer

(II> Shri B.L.Goculdas * Chief Executive Officer

(III> Shri D.N.Vaze Chiaf Finance Officer

16. Since the Equity Shares held by the Company in DMCC Oil Terminal (NavlakW) Limited (DOTL), were sold during the current year, DOTL is not a subsidiary of the Company after this sale. Therefore, the Company is not required to prepare the Consolidated Financial Statements.

17. The Company has prepared the financial statements for the period ended 30.06.2010 on a "Going Conern Basis", since the Company is confident that its profitablity will improve in future in view of the following:

a) A new activity of trading (in various fertilizers and other agri inputs ), which the Company w*l commence in association with a "strategic investor" after completing OTS of dues to Banks, and

b) Continued efforts by the Company for improving efficiency, restructuring / rationalisation of operations and optimisation of cost

18. The Company has extended the current Financial Year by 3 months upto 30/06/2010, as decided by the Board of Directors of the Company. Accordingly, Financial Statements for the current Financial year have been prepared for a period of 15 months commencing from 1st April, 2009 and ending on 30th June, 2010.

Therefore, figures as per these Financial Statements are not comparable with the figures in respect of previous financial year i.e. 1 st October, 2007 to 31 st March, 2009.

19. Figures in respect of the previous year have been regrouped wherever necessary.


Mar 31, 2009

1. No provision has been made towards Commission to Directors due to inadequacy of profit for the years Oct 2007 to March 2009, April 2006 to Sept. 2007, 2005-2006, 2004-2005 & 2003-2004. Remuneration and benefits paid to Executive Directors for the years Oct 2007 to Mar 2009, April 2006 - Sept. 2007, 2005-2006, 2004-2005 and 2003-2004 are within the limit prescribed under Schedule XIII to the Companies Act, 1956.

2. Contingent Liabilities not provided for:

(i) Outstanding claims in respect of Excise Duty, Sales-Tax, etc. 81.13 83.64

(ii) Guarantees given by the Company and Companys Bankers 950.83 1587.04

(iii) Arrears of Cumulative Preference Dividend 296.81 216.00

3. Wages, Salaries and Bonus include provision made as per actuarial valuation in respect of accumulated leave salary encashable on retirement in accordance with Accounting Standard 15 of the Institute of Chartered Accountants of India. Contribution to Provident and other funds includes Companys contribution to Provident Fund, Family Pension Fund, Gratuity Fund (based on actuarial valuation) and Superannuation Fund.

4. In case of payments made from 1st April, 2000, under the Voluntary Retirement Schemes of the Company, the total amount paid is treated as a deferred revenue expenditure and amortised over a period of 84 months or the number of months service foregone, whichever is lower, using the sum of digits method. Under this method the charge to Profit and Loss account is lowest in the first year and the highest in the last year. However, the amount to be amortised beyond 31 st march 2010, will be charged during the financial year 2009-10, in accordance with Accounting Standard (AS 15) (Revised 2005) on Employee Benefits.

A sum of Rs.369.26 lacs (Previous Year Rs.162.48 lacs) has been charged to the Profit and Loss Account as deferred revenue expenditure, on account of compensation paid to employees under Early Voluntary Retirement Schemes and Rs. 741.88 lacs (Previous Year Rs. 1111.14 lacs) has been carried forward to Deferred Revenue Expenditure account as per the method of accounting followed by the Company.

5. Subsidy from Governments of Gujarat (Rs.25 lacs), Maharashtra (Rs.20 lacs) and Rajasthan (Rs.15 lacs) for setting up of industrial units at Jhar, (Dist.Amreli), at Roha (Dist.Raigad) and Khemli (Dist.Udaipur), respectively, is repayable in the event of non-fulfilment of stipulated conditions.

6. (a) Miscellaneous income for the period ended 31.03.2009 includes gain / (loss) on foreign exchange (net) amounting to nil (previous year Rs. 107.92 Lacs).

(b) Miscellaneous expenses for the period ended 31.03.2009 includes gain / (loss) Rs.(103.07) lacs (previous year Nil) on foreign exchange.

7. There are no Micro, Small and Medium Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days at the Balance Sheet date, computed on unit wise basis. Further, the Company has not paid any interest to any Micro, Small and Medium Enterprises during the period of 18 months ended on the Balance Sheet date, nor is any interest payable to any Micro, Small and Medium Enterprises on the Balance sheet date.

The above information has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

8. A contract was entered into in 1993 between the Company and General Fertiliser Co., (GFC) Horns, Syria for revamping of two streams of Sulphuric Acid Plant of GFC by the Company. The value of the contract was USD 12.8 million plus Syrian Pounds 72 million, equivalent to Rs.44.24 crores, considering the exchange rates prevailing in 1993. The Company has completed this project and has also given the required performance test runs on the two streams of the Sulphuric Acid plant. The Company has also received all payments from GFC, Syria except payment of certain invoices aggregating to USD 1.37 million (included in "Sundry Debtors") equivalent to Rs.703;59 lacs as on 31.03.2009. The Company has also made claims from GFC, Syria towards interest on delayed payments, bank charges for extention of the validity period of the Letter of Credit/bank Guarantees and other overheads. The Company has not taken any credit for these claims in the books of accounts. As provided in the contract, the case was referred to the Arbitration Tribunal at Damascus, Syria. The Arbitration Tribunal has given its award, according to which GFC, Syria was required to make payment to the Company of the aforesaid unpaid dues aggregating to USD 1.37 million. Further, the Arbitration Tribunal has accepted certain claims made by the Company as also by GFC, Syria. The Company as well as GFC, Syria have filed their respective appeals against the Arbitration award with the State Council at Damascus, Syria. The Company as well as GFC, Syria have made certain claims on each other, in their respective appeals as filed with the State Council. The State Council constituted a seven member Expert Committee in October 2002 to examine these claims and give its recommendations. The Report of this Expert Committee, containing its recommendations has been submitted to the State Council. The comments received from GFC, Syria and the Company (in response to the recommendations of the Expert Committee) have been forwarded by the State Council to the Expert Committee. Based on these comments, the Expert Committee has submitted its Report to the State Council recommending payment to the Company of the aforesaid invoices aggregating to USD 1.37 million (equivalent to Rs.703.59 lacs) and certain other claims of the Company. On this basis, the Supreme Administrative Court of Syria has given its judgement according to which a net amount of about USD 0.90 Million (equivalent to Rs. 453.59 lacs) is payable by GFC to the Company as on 31.03.2009. In addition, the Company is entitled to receive interest @ 5% p.a. from GFC, Syria on the aforesaid net amount of about USD 0.90 million (equivalent to Rs. 453.59 lacs as on 31/03/2009), till the date of payment, as per the aforesaid judgement, which has not been accrued by the Company in the books of accounts. The shortfall in receivable between the amount included in "Sundry Debtors" as on 31.03.2009 (i.e. Rs.703.59 lacs) and the net amount payable to the Comapany by GFC, Syria as on 31.03.2009 as per the judgement given by Supreme Administrative Court of Syria (i.e. Rs.453.59 lacs), has already been provided in earlier Financial Year.

9. (a) The Company has made a provision for Doubtful Debts and Advances aggregating to Rs. 1723.22 lacs upto the period ended 31.03.2009

In the opinion of the Management of the Company, this provision is adequate to cover the Doubtful Debts & Advances as on 31.03.2009, including those in respect of dues from GFC, Syria (to the extent considered doubtful).

(b) The Debtors as on 31.03.2009 are subject to confirmations from customers.

10. (a) Interest expense for the period ended 31.03.2009 is after reduction in interest cost on borrowings from lenders to the extent of Rs 20.69 lacs (Previous year Rs.153.10 Lacs) (due to reduction in the interest rates), persuant to revised Corporate Debt Restructuring (CDR) package approved by the lenders, effective from 1st April 2005, subject to certain conditions, which are being fulfilled by the Company.

(b) Interest expense for the period ended 31 st March 2009 and for the period ended 30th September 2007 is net off interest income of Rs.9.25 lacs and Rs. 9.14 lacs, respectively. Tax deducted at source in respect of aforesaid interest income for the period ended 31st March 2009 is Rs. 0.98 lacs (Previous year Rs.1.55 lacs)

(c) As per one of the conditions of the revised CDR package approved by the lenders (effective from 01.04.2005), the Company is required to convert a part of sacrifice undertaken by the lenders in the revised CDR package vis a vis, the earlier CDR package, due to reduction in the interest rates (on Net Present Value basis) amounting to Rs.267.90 lacs, partly into Equity Shares of the Company (valued at Rs.115.56 Lacs, inclusive of securities premium) and partly into unsecured loans (amounting to Rs.152.34 lacs). The cost to the Company arising out of conversion of the above sacrifice undertaken by the lenders (Rs. 267.90 lacs) is being amortised equally during eight Financial Years from 2005-06 to 2012-13, since all Term Loans are to be paid by the Company by 31st March 2013, as per revised CDR package. Accordingly, Rs. 80.95 lacs (Previous Year Rs.54.83 lacs) has been amortised during the period ended 31st March 2009 and the unamortised amount of Rs. 103.23 lacs has been carried forward as Deferred Revenue Expenditure, as on 31st March 2009

(d) The Company has not recognised interest aggregating to Rs.785.82 lacs for the eighteen months period ended 31.03.2009(Previous year Nil) as the banks concerned have not debited the same to the respective accounts of the Company.

11 (a) No provision has been made in respect of current income tax since there is no taxable income during the period ended 31st March 2009 and period ended 30th September 2007.

(b) The Company will start trading in various fertilisers and other agri inputs in association with a "Strategic Investor", after completing One Time settlement (OTS) of dues to Banks. This will result in significant additional turnover and profits. Consequently, there is virtual certainty of realisation in respect of "Deferred Tax Asset" mainly resulting from unabsoberd depreciation and carried forward losses. Accordingly, the Company had recognised "Deferred Tax Asset" amounting to Rs. 2148.17 Lacs, in the Financial Accounts for the period of eighteen months ended 30th September, 2007, considering unabsorbed depreciation and unabsorbed business losses upto 31.03.2007. The Company has recognised further "Deferred Tax Asset" amounting to Rs. 505.98 lacs in the Financial Accounts for the period of eighteen months ended 31.03.2009, mainly resulting from Unabsorbed Depreciation upto 31.03.2009 and Unabsorbed Business Losses upto 31.03.2008. The Company will also recognise Deferred Tax Asset resulting from Unabsorbed Business Loss for the Previous Year April 2008 to March 2009, after filing the Income Tax Return for this previous year (Assessment Year 2009-2010)

12. The non-viable operations of the Companys fertiliser and chemical business at its Ambernath factory had resulted in continued losses and delayed payment of wages and salaries to employees for last several months. With a view to reduce losses, the Management had submitted its Charter of Demands on the Companys recognised Union at Ambernath, which has been rejected by the Union. The Management has, therefore, suspended the operations of its Ambernath factory, with effect from 23rd January, 2009 and has issued a notice of "Lock Out" of the said factory with effect from 9th February, 2009. Consequently, the Company has not provided for the employees cost with effect from 9th February, 2009 (being not payable), in respect of those employees who are covered by "Lock Out".

The Companys recognised Union at Ambernath requested the Industrial Court, Maharashtra, at Thane to grant various interim reliefs (including granting of stay on the effect, implementation, and operation of the afforsaid notice of "Lock Out"). This request of the Union has been rejected by the Industrial Court, Maharashtra, at Thane.

13 Segment Reporting:

The Company has disclosed Business Segments as its primary segments. Reporting segments have been identified as Fertilisers and Chemical, taking into account the nature of products, the different risks and returns, the organisation structure and the internal reporting system.

Segments Revenue, Segment Results, Segment Assets and Segment Liabilities include the respective amounts identifiable to each of the segments as also the amounts allocated on a reasonable basis to the respective segments. The expenses, which are not directly related to the business segments, are shown as unallocated costs. Corporate assets and liabilities have been allocated on the basis of turnover of the segments. Assets and Liabilities that cannot be allocated between the segments are shown as a part of unallocated assets & liabilities. Inter Segment Transfers are at cost of production.

14 Related Parties Disclosures:

(A) Promoters holding more than 20% of the voting power

Name of the Related Parties Nature of Relationship

(i) Shri R.M.Goculdas Promoter and Chairman, holding more than 20% of the voting power (directly/ indirectly)

(ii) Shri L.N.Goculdas Promoter and Vice Chairman, holding more than 20% of the voting power (directly)

(B) Subsidiary/Associate/Other Related Companies

Name of the Related Parties Nature of Relationship

(i) DMCC Oil Terminals (Navlakhi) Subsidiary Company

Ltd.

(ii) Borax Morarji Ltd. Associate Company

(iii) The Natural Gas Co.Pvt.Ltd. Other Related Company

(iv) LP.Gas Equipment PvLLtd. Other Related Company

(v) Phoenix Distributors Pvt.Ltd. Other Related Company

(vi) Jasraj Trading Co. Other Related Company

(vii) Kosan Industries Pvt.Ltd. Other Related Company

(viii) Bombay Foods Pvt.Ltd. Other Related Company



(C) Key Management Personnel (Whole Time Directors)

Name of the Related Parties Nature of Relationship

(i) Shri D.P.Goculdas Managing Director (upto 31/03/09)

(ii) Shri B.LGoculdas Managing Director (upto 31/03/09)

(iii) Shri D.N.Vaze Whole time Director (upto 31/03/09)

15 Since it is proposed to sell the Equity Shares held by the Company in DMCC Oil Terminal (Navlakhi) Limited (DOTL), the control of the Company on DOTL is expected to be temporary. DOTL will not remain a subsidiary of the Company after this sale. Therefore, in terms of para 11 (a) of the Accounting Standard (AS-21) issued by the Institute of Chartered Accountants of India, the Company is not required to prepare the Consolidated Financial Statements.

16 The Company has prepared the financial statements for the eighteen months ended 31.03.2009 on a "Going Conern Basis" since the Company is confident that its profitablity will improve in future in view of the following:

a) A new activity of trading (in various fertilizers and other agri inputs ) which the Company will commence in association with a "statagic investor" after completing OTS of dues to Banks, and

b) Continued efforts by the Company for improving efficiency, restructuring / rationalisation of operations and optimisation of cost.

17 Company has extended the current financial year by 6 months upto 31/03/2009 in accordance with the approval received by the Company from the Registrar of Companies, Maharashtra State, Mumbai. Acoordingly financial statements for the current financial year have been prepared for a period of 18 months commencing from 01/10/2007 and ending on 31/03/2009.

18 Figures in respect of the previous year have been regrouped wherever necessary.

 
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