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Notes to Accounts of Essel Propack Ltd.

Mar 31, 2017

Notes:

(i) Buildings include roads, residential flats, tube well, and water tanks and share in co-operative society.

(ii) Additions to plant and machinery includes exchange difference of Rs. 334 lakhs capitalized during the financial year 2016-17.

(iii) For details of property, plant and equipment pledged as security, refer note 46.

Notes:

(i) Buildings include roads, residential flats, tube well, and water tanks and share in co-operative society.

(ii) Additions to plant and machinery includes exchange difference of Rs. 628 lakhs capitalized during the financial year 2015-16.

(iii) For details of property, plant and equipment pledged as security, refer note 46.

(iv) * Refer notes 3A(b)(iii) and 3A(c)(ii).

@ The Company has given an undertaking that it will continue to hold / control at least 51% of equity share capital and preference share capital during the tenure of credit facility availed by the subsidiaries from the banks.

Security deposits are interest free non-derivative financial assets carried at amortized cost. These primarily include deposits given against rented premises and various deposits with government authorities. The carrying value may be affected by changes in the credit risk of the counterparties.

Inventories were written down to net realizable value by Rs.78 lakhs (31 March 2016 Rs. 27 lakhs). This amount is recognized as an expense during the year and included in "Changes in inventories of finished goods and goods-in-process" in the statement of profit and loss.

* Deposited with / lien in favour of various Government authorities / banks. Deposits with banks earns interest at floating rates based on daily bank deposit rates.

b) Terms/ rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs.2 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The final 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 the equity shares will be entitled to receive remaining assets of the Company, after distribution of preferential amount. The distribution will be in proportion to the number of equity shares held by the shareholders.

* During the year, all the shares held by Whitehills Advisory Services Private Limited have been transferred to Ashok Goel Trust pursuant to a scheme of amalgamation (Refer note 62). As such, there is no holding company or ultimate holding Company w.e.f. 6 October 2016.

* During the year, all the shares held by Whitehills Advisory Services Private Limited have been transferred to Ashok Goel Trust pursuant to a scheme of amalgamation (Refer note 62). As such, there is no holding company w.e.f. 6 October 2016.

e) No bonus shares have been issued and no shares bought back during five years preceding 31 March 2017.

f) For details of shares reserved for issue under the employee share based payment plan of the Company (Refer note 43).

g) 500,155 equity shares of Rs.2 each fully paid up were allotted on 14 September 2012 for consideration other than cash, pursuant to the Scheme of Merger of Ras Propack Lamipack Limited and Ras Extrusions Limited with the Company.

h) Forfeited shares consist of 35,725 partly paid up equity shares and 21,395 fully paid up bonus shares forfeited during the previous year. The amount of Rs. 1 Lakh in relation to the forfeiture will be transferred to reserves upon cancellation of these shares.

Nature and purpose of reserves

i) Capital reserve

Capital reserve represents capital surplus and not normally available for distribution as dividend.

ii) Securities premium

Securities premium is used to record the premium received on issue of shares. The reserve is utilized in accordance with the provisions of the Companies Act, 2013.

iii) Debenture redemption reserve (DRR)

The Company had issued redeemable non-convertible debentures and accordingly DRR is required to be created pursuant to the Companies (Share capital and Debentures) Rules 2014. DRR is required to be created, out of profits of the Company available for payment of dividend, up to an amount which is equal to 25% of the total value of the debentures issued.

iv) Share options outstanding account

Represent the fair value at respective grant dates of options issued to employees under Essel Employee Stock Option Scheme 2014. This balance will be transferred to share capital and security premium account as and when the options get exercised from time to time.

v) General reserve

The reserve is a distributable reserve maintained by the Company out of transfers made from annual profits.

vi) Retained earnings

Retained earnings represent the accumulated earnings net of losses if any made by the Company over the years.

vii) Other comprehensive income

Other comprehensive income comprises of re-measurement gains/(losses) of defined benefit obligations.

d) The Company has brought forward long term capital losses of Rs. 2,714 lakhs (31 March 2016 Rs. 2,714 lakhs, 1 April 2015 Rs. Nil) that are available for offsetting for eight years against future taxable long term capital gains till FY 2023-2024. Deferred tax assets of Rs.615 lakhs (31 March 2016 Rs. 615 lakhs, 1 April 2015 Rs. Nil) have not been recognized in respect of these losses in view of uncertainty of future taxable long term capital gains.

Fair value hierarchy

The fair values of the financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

This section explains the judgments and estimates made 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 its financial instruments into three levels prescribed under the Ind AS. An explanation for each level is given below.

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices.

Level 2: The fair value of 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. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. Instruments in the level 2 category for the Company include foreign exchange forward contracts.

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

Financial assets (other than investment in subsidiaries) and liabilities measured at fair value through profit or loss at each reporting date

The carrying amounts of trade receivables, cash and bank balances, current loans, current borrowings, trade payables and other financial liabilities are considered to be approximately equal to the fair value due to the short -term maturities of these financial assets/liabilities.

The fair values of non-current loans, other non-current financial assets and non-current borrowings are based on discounted cash flows using a current borrowing rate. They are classified as level 3 fair values in the fair value hierarchy due to the use of unobservable inputs. During the periods mentioned above, there have been no transfers amongst the levels of hierarchy.

Valuation techniques used to determine fair value:

- the fair value of foreign exchange forward contracts is determined using forward exchange rates at the balance sheet date

1 Financial risk management A Credit risk

The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and other financial instruments. Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses the financial reliability of counter party, taking into account the financial condition, current economic trends, and the analysis of historical bad debts and ageing of accounts receivable etc. Individual risk limits are set accordingly.

i) Trade receivables

The Company extends credit to customers in normal course of business. The Company considers factors such as credit track record in the market and past dealings for extension of credit to customers. The Company monitors the payment track record of the customers. Outstanding customer receivables are regularly monitored. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets. The Company has also taken advances and security deposits from certain customers, which mitigate the credit risk to an extent.

ii) Financial instruments and cash deposits

The Company considers factors such as track record, size of the institution, market reputation and service standards to select the banks with which balances and deposits are maintained. Generally, the balances are maintained with the institutions from whom the Company has also availed borrowings.

B Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. For the Company, liquidity risk arises from obligations on account of financial liabilities - borrowings, trade payables, derivative instruments and other financial liabilities.

The Company''s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation. The Company manages liquidity risk by maintaining adequate reserves, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of the financial assets and liabilities. The Company regularly monitors liquidity position through rolling forecast based on estimated free cash flow generated from business.

C Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company''s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return. The sensitivity analysis excludes the impact of movements in market variables on the carrying value of post-employment benefit obligations provisions and on the non-financial assets and liabilities. The sensitivity of the relevant profit and loss item is the effect of the assumed changes in respective market risks.

The Company''s activities expose it to risks on account of changes in foreign currency exchange rates and interest rates. The Company uses derivative financial instruments such as foreign exchange forward contracts of varying maturity depending upon the underlying contract as a risk management strategy to manage its exposures to foreign exchange fluctuations and interest rate.

I Foreign currency risk

Currency risk is the risk that the fair value or future cash flows fluctuate because of changes in market prices. The Company is exposed to foreign exchange risk on their receivables, payables and foreign currency loans which are mainly held in the United State Dollar (""USD""), the Euro ("EUR"), the Swiss Franc (""CHF"") and Chinese Yuan (""CNY""). Consequently, the Company is exposed primarily to the risk that the exchange rate of the Indian Rupees ("INR") relative to the USD, the EUR, the CHF, and the CNY may change in a manner that has a material effect on the reported values of the Company''s assets and liabilities that are denominated in these foreign currencies.

The Company evaluates exchange rate exposure arising from foreign currency transactions and follows established risk management policies, including minimizing cross currency transactions, using natural hedge and the use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk.

The above table exclude foreign currency exposures (financial liabilities) of Rs. 5,255 lakhs (31 March 2016: Rs.7,008 lakhs, 1 April 2015: Rs. 8,492 lakhs) denominated primarily in USD, EUR and CHF currencies for which the exchange differences (net) are being capitalized to cost of property, plant and equipment. Accordingly the corresponding forward contracts against these financial liabilities amounting to Rs. 4,828 lakhs (31 March 2016: Rs. 3,646, 1 April 2015: Rs. 1,648 lakhs) have been excluded.

''0'' Zero denotes less a than lakh.

Sensitivity to foreign currency risk

The following table demonstrates the sensitivity in the USD, EUR, CHF, CNY and other currencies with all other variables held constant. The below impact on the Company''s profit before tax is based on changes in the fair value of unhedged foreign currency monetary assets and liabilities at balance sheet date:

II Interest rate risk

This refers to risk to Company''s cash flow and profits on account of movement in market interest rates.

For the Company the interest risk arises mainly from interest bearing borrowings which are at floating interest rates. To mitigate interest rate risk, the Company closely monitors market interest and as appropriate make use of hedged products and optimize borrowing mix / composition.

b) Interest rate Sensitivity

The following table illustrates the sensitivity of profit and equity to a reasonably possible change in interest rate of 50 basis point increase or decrease. The calculations are based on the variable rate borrowings outstanding at balance sheet date. All other parameters are held constant.

2 Capital Management Risk management

The Company manages its capital structure and makes necessary adjustments in light of changes in economic conditions and the requirement of financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders, issue new shares or raise / retire debt. The primary objective of the Company''s capital management is to maximize the shareholders'' value.

For the purpose of the Company''s capital management, equity includes issued capital, securities premium and other reserves. Net debt includes loans less cash and bank balances. The Company manages capital by monitoring gearing ratio which is net debt divided by equity plus net debt.

Loan Covenants

Bank loans contain certain debt covenants relating to limitation on indebtedness, debt-equity ratio, debt to EBITDA ratio, interest service coverage ratio and debt service coverage ratio. The limitation on indebtedness covenant gets suspended once the Company meets certain prescribed criteria. The debt covenant related to limitation on indebtedness remained suspended as of the date of adoption of the financial statements. The Company has also satisfied all other debt covenants prescribed in the respective sanction of bank loan. The deferred sales tax loans and finance leases do not carry any debt covenant.

3 Share-based payments

Employee stock option plan

a) During the year 2014-15, the Company had instituted an Essel Employee Stock Option Scheme 2014 ("the Scheme") as approved by the Board of Directors for issuance of stock options to the eligible employees of the Company and of its subsidiaries, other than directors, promoters or person belonging to promoter group.

Subject to terms and conditions of the Scheme, the said options will vest on each of 1July 2016, 1July 2017 and 1July 2018 to the extent mentioned in the letter of grant and can be exercised within a maximum period of four years from the date of vesting. When exercisable, each option is convertible into one equity share of Rs. 2 each fully paid up.

*The weighted average share price at the date of exercise of options exercised during the year ended 31 March 2017 was Rs.249.39.

4 Gratuity and other long-term benefit plans

As per Indian Accounting Standard - 19 "Employee Benefits", the disclosures of employee benefits as defined in the Indian Accounting Standard are given below:

a. The Company makes annual contributions to the employees'' gratuity fund scheme, a funded defined benefit plan which is managed by LIC of India. The present value of obligation is determined based on actuarial valuation using the projected unit credit method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

b. Leave encashment is a non-funded defined benefit scheme. The obligation for leave encashment is recognized in the same manner as gratuity.

c. Details of post retirement gratuity plan are as follows:-

i. Expenses recognized during the year in the statement of profit and loss

Notes:

5 Amounts recognized as an expense and included in the Note 35 "Employee benefits expense" are gratuity Rs.125 lakhs (31 March 2016 Rs.133 lakhs) and leave encashment Rs.241 lakhs (31 March 2016 Rs.120 lakhs)

6 The estimate of future salary increases considered in the actuarial valuation, takes into account the rate of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

7 Contribution to provident and other funds" which is a defined plan is recognized as an expense in Note 35 of the financial statements.

8 Specified bank notes (SBN)

The Company has no transactions in cash and hence disclosures w.r.t. Specified Bank Notes (SBN) are not applicable.

9 Collateral / security pledged

The carrying amount of assets pledged as security for current and non-current borrowings of the Company and for a loan of USD 12.50 Million (31 March 2016: USD Nil, 1 April 2015: USD 9.00 Million) availed by a subsidiary are as under:

* Does not include disputed excise duty of Rs. Nil (31 March 2016 Rs.1,154 lakhs and 1 April 2015 Rs.1,154 lakhs) for alleged undervaluation in inter unit transfer of web, for captive consumption as it does not have significant impact on profits of the Company since excise duty paid by one unit is admissible as Cenvat credit at other unit. Further, the appeal filed by Excise Department against the decision (in Company''s favour) of High Court has been set aside by the Hon''ble Supreme Court during the year.

10 This claim is in respect of transit damage to the plant and machinery, which is under litigation before National Consumer Dispute Rederssal Commission, New Delhi (Refer Note 16).

11 Leases

a. Finance Lease

The Company has acquired plant and machinery and equipments under finance lease which are capitalized under property, plant and equipment. The minimum lease payments required under this finance lease that have initial or remaining non-cancellable lease terms in excess of one year as at 31 March 2017 and its present value are as follows:

b. Operating Lease

The Company has taken premises, residential facilities, plant and machinery (including equipment) and vehicles under cancellable/ non-cancellable operating lease agreements that are renewable on a periodic basis at the option of both the lessor and the lessee. The initial tenure of the leases varies from eleven to one hundred and eight months. The rental obligations are as follows:

12 Segment information

The financial statements of the Company contain both the consolidated financial statements as well as the separate financial statements of the parent Company. Hence, the Company has presented segment information on the basis of the Consolidated Financial Statements as permitted by Ind As 108 "Operating Segments." The Company has only one major identifiable business segment viz. Plastic Packaging Material.

13 Divestment of Packaging India Private Limited

On 13 July 2015, the Company had divested its stake in wholly owned subsidiary, Packaging India Private Limited for full cash consideration as part of its strategy to pursue growth opportunity in its tube packaging business which has great potential across the globe in the Beauty & Cosmetics, Pharma & Health and Food categories. Gain on divestment of Rs.4,689 lakhs is credited to the statement of profit and loss of the previous year net off transaction costs and contingencies for any possible indemnity/claim.

14 Exceptional items for the previous year Rs.4,529 lakhs include

a) Gain of Rs.4,689 lakhs on divestment of its wholly owned subsidiary (Refer Note 51)

b) Rs.160 lakhs write off of ancillary borrowing costs on account of pre-payment of long-term borrowings and related charges thereof.

15 Micro, Small and Medium Enterprises

Disclosure required under the Micro, Small and Medium Enterprises Development Act, 2006 ("The Act") are given as follows:

Note: The information has been given in respect of such vendors to the extent they could be identified as "Micro and Small" enterprises on the basis of information available with the Company.

16 Related party disclosures

i. Ultimate holding company

Rupee Finance and Management Private Limited (Ceased to be ultimate holding company w.e.f. 6 October 2016 pursuant to the scheme of amalgamation (Refer note 62)

ii. Holding company

White hills Advisory Services Private Limited (Ceased to be holding company w.e.f. 6 October 2016 pursuant to the scheme of amalgamation (Refer note 62)

* 7.35% is held through Lamitube Technologies (Cyprus) Limited ** Divested on 13 July 2015 (Refer note 51)

# Subsidiary has discontinued its operations and is under liquidation

## Ceased to be joint ventures and became wholly owned subsidiaries w.e.f. 30 September 2016. A Merged with Lamitube Technologies Limited during the previous year 2015-16 AA Incorporated during the previous year 2015-16 @ Under deregistration process

## Ceased to be joint ventures and became wholly owned subsidiaries w.e.f. 30 September 2016

vi Other related parties with whom transactions have taken place during the year and balances outstanding at the year-end Other related parties

Aqualand (India) Limited, Ayepee Lamitubes Limited, Ganjam Trading Company Private Limited, Pan India Paryatan Private Limited, Rama Associates Limited, Zee Entertainment Enterprises Limited, Sprit Textiles Private Limited, ITZ Cash Card Limited, Shrotra Enterprises Private Limited.

vii Key Management Personnel

Executive Director Mr. Ashok Goel (Chairman and Managing Director)

Notes:

i) All transactions with related parties are made on arm''s length basis in the ordinary course of business. The outstanding balances at year end are unsecured due to be settled for consideration in cash.

ii) ''0'' Zero denotes less then a Lakh

A Excludes leave encashment and gratuity provided on the basis of actuarial valuation on an overall Company basis. Further the Essel Employee Stock Option Scheme 2014 does not extend to chairman and managing director, hence there is no share based compensation benefit.

* The performance bonus for the current year has been provided in the accounts as recommended by the nomination and remuneration committee and approved by the Board of Directors. The total remuneration to Managing Director on this basis as computed as per the Companies Act, 2013 is within limits prescribed u/s 197 of the Companies Act, 2013.

* Repayment received of loan taken over pursuant to the scheme of amalgamation (Refer note 62)

b. Investments made

There are no investments other than disclosed in Note 6 - Non-current investments.

Notes

i. All the loans/guarantees and security given are for general business purposes.

ii. The loans are interest bearing and at arm''s length.

iii. Loans given to Sprit Textiles Private Limited is repayable on demand.

iv. The outstanding loan amount availed by the subsidiaries against the corporate guarantees/security given by the Company as at 31 March 2017 is Rs.46,332 lakh (31 March 2016 Rs.41,044 lakhs; 1 April 2015 Rs.40,155)

v. Amounts disclosed in (c) and (d) are translated at respective year-end foreign exchange rates.

17 Dividend of Rs.2 lakhs (31 March 2016 Rs.7 lakhs; 31 March 2015 Nil) unclaimed for a period of more than seven years is transferred to Investor Education and Protection Fund during the year. There is no amount due and outstanding to be credited to Investor Education and Protection Fund as at 31 March 2017.

18 Corporate Social Responsibility (CSR)

During the year, the Company has towards various CSR initiatives spent Rs.42 lakhs (31 March 2016 Rs.63 lakhs) as against Rs.165 lakhs (31 March 2016 Rs.141 lakhs) as required by Section 135 read with Schedule VII of the Companies Act 2013. CSR spend has been charged to the Statement of Profit and Loss under "Other Expenses" in line with ICAI guidance note issued in May 2015.

19 Research and Development expenditure (R&D)

During the year, the Company has incurred total R&D expenditure of Rs.562 lakhs (31 March 2016 Rs.634 lakhs) including capital expenditure of Rs. 66 lakhs (31 March 2016 Rs.125 lakhs), out of which the Company has claimed weighted tax deduction on eligible R&D expenditure of Rs. 470 lakhs (31 March 2016 Rs. 373 lakhs) including capital expenditure of Rs.66 lakhs (31 March 2016 Rs.125 lakhs) under Section 35(2AB) of the Income Tax Act, 1961.

20 Scheme of Amalgamation

i A Scheme of Amalgamation of the holding company White hills Advisory Services Private Limited ("transferor company") with Essel Propack Limited ("transferee company") and their respective shareholders (the Scheme) was sanctioned by Hon''ble High Court of Judicature at Mumbai vide its order dated 1 September 2016. The Scheme became effective on 6 October 2016 and consequently all assets, liabilities and reserves vested in the Company on the appointed date i.e. 1 November 2015. Accordingly, the financial statements for the year ended 31 March 2017 includes the transactions of the transferor company.

ii The amalgamation is accounted for as per the accounting treatment mentioned in the Scheme approved by the Hon''ble High Court i.e. as per the pooling of interest method.

iii Pursuant to the Scheme:-

a. All assets and liabilities appearing in the books of the transferor company have been recorded by the transferee company at their respective book values at the appointed date.

b. 88,829,014 and 88,829 equity shares of Rs.2 each fully paid up of the Company have been allotted to the participating preference shareholders and equity shareholders respectively of the transferor company and equivalent number of equity shares of Rs.2 each fully paid up held by the transferor company have been cancelled. There is no change in the paid up equity share capital of the Company post allottment of the above equity shares.

c. The net assets taken over have been credited to capital reserve and expenses incurred in relation to and in connection with the Scheme have been debited to capital reserve as detailed below:

d. The authorized equity share capital of the Company stands increased by 50,050,000 equity shares of Rs.2 each.

e. During the period between the appointed date and the effective date, as transferor company has carried on the existing business in "trust" on behalf of the Company, all vouchers, documents etc; for that period are in the name of transferor company.

21 Prior period comparatives

Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with current year''s classifications / disclosures.

22 First time adoption of Ind AS A First Ind AS financial statements

These are the Company''s first separate financial statements prepared in accordance with Ind AS applicable as at 31 March 2017.

The accounting policies set out in note 3 have been applied in preparing the financial statements for the year ended 31 March 2017, the comparative information presented in these financial statements for the year ended 31 March 2016 and in the preparation of an opening Ind AS balance sheet as at 1 April 2015 (the date of transition). In preparing its opening Ind AS balance sheet, the Company has restated the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2014 and other relevant provisions of the Act (previous GAAP or Indian GAAP) so as to comply in all material respects with Ind AS.

An explanation of how the transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows is as follows:"

i Optional exemptions availed

a) Deemed cost

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognized in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption is also applicable for intangible assets covered by Ind AS 38.

Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value.

b) Investment in subsidiaries

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its investment in subsidiaries as recognized in the financial statements at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition.

Accordingly, the Company has elected to measure all of its investments in subsidiaries at their previous GAAP carrying value.

c) Long-term foreign currency monetary items

A first-time adopter may continue the policy adopted for accounting for exchange differences arising from translation of long-term foreign currency monetary items recognized in the financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period as per the previous GAAP

Accordingly, the Company has elected to continue the current accounting policy adopted for accounting of exchange differences arising from translation of long-term foreign currency monetary items .

ii Mandatory exceptions applied

a) Estimates

An entity''s estimates in accordance with Ind ASs at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.

Ind AS estimates as at 1 April 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP except where Ind AS required a different basis for estimates as compared to the previous GAAP.

b) De-recognition of financial assets and liabilities

Ind AS 101 requires a first-time adopter to apply the de-recognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows a first-time adopter to apply the de-recognition requirements in Ind AS 109 retrospectively from a date of the entity''s choosing, provided that the information needed to apply Ind AS 109 to financial assets and financial liabilities derecognized as a result of past transactions was obtained at the time of initially accounting for those transactions.

The Company has applied the de-recognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS.

c) Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification and measurement of financial assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

d) Government loans

As per Ind AS 101, if a first-time adopter did not, under its previous GAAP, recognize and measure a government loan at a below-market rate of interest on a basis consistent with Ind AS requirements, it shall use its previous GAAP carrying amount of the loan at the date of transition to Ind ASs as the carrying amount of the loan in the opening Ind AS Balance Sheet. An entity shall apply Ind AS 109 to the measurement of such loans after the date of transition to Ind As.

Under the previous GAAP, these loans were carried at amounts that will be repaid. Accordingly, the Company applies this exception and does not make any changes to the interest free deferred sales tax loans outstanding as at the date of transition.

Impact of Ind AS adoption on the statement of cash flows for the year ended 31 March 2016 -

All the adjustments on account of Ind AS are non - cash in nature and hence, there is no material impact on the statement of cash flows.

S.N. Explanation to reconciliation:

B.1 Security deposits

Under the previous GAAP, interest free lease security deposits given (that are refundable in cash on expiry/termination of the lease term) were recorded at their transaction value. Under Ind AS, all financial assets are required to be measured at fair value. Accordingly, the Company has fair valued lease security deposits under Ind AS. Difference between the fair value and transaction value of the security deposits has been recognized as prepaid expenses. Consequent to this change, security deposits decreased by Rs. 378 lakhs as at 31 March 2016 (1 April 2015: Rs.497 lakhs) and prepaid expenses increased by Rs. 326 lakhs as at March 2016 (1 April 2015: Rs. 448 lakhs). Total equity decreased by Rs.49 lakhs as at 1 April, 2015. The profit for the year ended on 31 March 2016 decreased by Rs.3 lakhs due to recognition of prepaid expenses over the lease term amounting to Rs.155 lakhs which is partially offset by notional interest income of Rs. 152 lakhs recognized on security deposits.

B.2 Proposed dividend

Under the previous GAAP, proposed dividend including tax thereon was recognized as a liability in the period to which they relate, irrespective of when they are declared. Under Ind AS, proposed dividend is recognized as a liability in the period in which it is declared by the Company i.e. as and when approved by the shareholders. Therefore the proposed dividends and tax thereon amounting to Rs.4,158 lakhs and Rs. 3,015 lakhs for the year ended 31 March 2016 and 31 March 2015 respectively have been credited to retained earnings.

B.3 Tax adjustments

Tax adjustments include deferred tax impact on account of differences between previous GAAP and Ind AS. Consequently, the deferred tax liability increased by Rs. 2 lakhs as on 31 March 2016 ( decreased by '' ''0'' as at 1 April 2015).

B.4 Remeasurements of defined benefit plans

Under the previous GAAP, remeasurements i.e. actuarial gains and losses on the net defined benefit liability were recognized in the statement of profit and loss. Under Ind AS, these remeasurements are recognized in other comprehensive income instead of the statement of profit and loss. As a result of this change, the profit for the year ended 31 March 2016 increased by Rs.50 lakhs (net of deferred tax of Rs.27 lakhs). There is no impact on the total equity as at 31 March 2016.

B.5 Other comprehensive income (OCI)

Under previous GAAP, the Company was not required to present other comprehensive income (OCI) separately. Hence, it has reconciled Indian GAAP profit or loss to profit or loss as per Ind-AS. Further, Ind-AS profit or loss is reconciled to total comprehensive income as per Ind-AS.

B.6 Fair valuation of forward contracts

Under the previous GAAP, the premium or discount arising at the inception of foreign exchange forward contracts (except on contracts related to long term monetary item) entered into to hedge an existing asset / liability, were amortized as expense or income over the life of the contract. Exchange differences on such contracts were recognized in the statement of profit and loss in the reporting period in which the exchange rate changes. Under the IND AS 109, foreign exchange forward contracts are carried at fair value and the resultant gains /(losses) are recorded in the statement of profit and loss. Accordingly, the same has been fair valued resulting in decrease in equity by Rs.6 lakhs as at 31 March 2016 (increase Rs.1 lakhs as at 1 April 2015).

B.7 Employee stock options

Under the previous GAAP, the cost of employee stock option plan was recognized using the intrinsic value method. Under Ind AS, employee stock option plan is now recognized based on the fair value of the options as at the grant date. Consequently the amount recognized in share options outstanding account stands at Rs.722 lakhs as at 31 March 2016 (1 April 2015: Rs.23 lakhs). Of this, Rs.346 lakhs (March 2015 - Rs.12 lakhs) pertains to options granted to the employees of subsidiaries which is recognized as deemed investments in subsidiaries and recorded equivalent increase in equity. The proft for the year ended 31 March 2016 decreased by Rs.365 lakhs.

B.8 Excise duty

Under the previous GAAP, revenue from sale of products was presented exclusive of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty paid is presented on the face of the statement of profit and loss as part of expenses. This change has resulted in an increase in total revenue and total expenses for the year ended 31 March 2016 by Rs.7454 lakhs. There is no impact on the total equity and profit.

Notes:

Previous year figures are regrouped / reclassified wherever necessary.


Mar 31, 2014

1. Contingent Liabilities not provided for

(Amount in Rs.)

2014 2013

a) Unexpired Letters of credit (net of Liability provided) 17,040,962 26,159,580

b) Guarantees and counter guarantees given by the Company (includes Rs. 5,297,214,117 5,676,306,052 Rs. 5,294,214,117 (Rs. 5,673,306,052) for loans taken by subsidiaries]. Loans outstanding against these guarantees are Rs. 4,233,113,957 (Rs. 3,635,492,582)

c) Disputed Indirect Taxes* 185,688,926 245,881,848

d) Disputed Direct Taxes 83,355,624 109,705,949

e) Claims not acknowledged as debts 4,996,550 4,996,550

f) Deferred Sales Tax liability assigned 68,605,087 68,605,087

g) Duty benefit availed under EPCG scheme, pending export obligations 181,207,500 114,657,607

* Does not include disputed excise duty of Rs. 115,428,779 (Rs. 115,428,779) for alleged undervaluation in inter unit transfer of web, for captive consumption as it does not have significant impact on profits of the Company since excise duty paid by one unit is admissible as Cenvat credit at other unit. Further, the appeal filed by Excise Department against the decision (in Company''s favour) of High Court is pending before the Hon''ble Supreme Court.

A Without considering relief granted by the Appellate Authorities in favour of the Company, tax effect Rs. 35,347,198 (Rs. 33,477,720) (approx.), which is pending with relevant authority.

b) Performance bonus payable to managing director for the year ended 31 March 2011 to the extent of Rs. 5,208,255 not covered by the Central Government approval is written back during the year.

c) The current year financial statements include commission paid to Non-executive independent directors Rs. 4,176,986 for the year ended 31 March 2013 and payable Rs. 3,600,000 for the year ended 31 March 2014. (Previous year Rs. 3,600,000)

2. Investments

a) The Company''s wholly owned subsidiary (WOS), Essel Packaging (Nepal) Private Limited, had discontinued its operations and disposed off assets and paid off liabilities. The Management is of the opinion that the realizable value of investment will not be less than its carrying value.

b) During the year, the Company has transferred its investment in a wholly owned direct subsidiary Lamitube Technologies Limited, Mauritius to its step down wholly owned subsidiary EP Lamipack Limited, India as a part of reorganisation of its investment in subsidiaries at a value determined by the independent valuer. In substance, pattern of ownership, beneficial interest and control of the company''s investment has not, in any way, been altered. Gain of Rs. 20,564,418 on the transaction has been shown as an exceptional item in the Statement of Profit and Loss.

3. During the year, the Company has fulfilled its export obligations under the "Zero Duty EPCG Scheme" of erstwhile Ras Propack Lamipack Limited ("RPLL") (the merged entity) and accordingly remaining custom duty provision, which was capitalised in earlier years of Rs. 24,445,620 (Rs. 18,783,126) is reduced from the cost of fixed assets and consequently interest on custom duty of Rs. 61,623,062 (Rs. 47,348,915) is written back to the Statement of Profit and Loss as an exceptional item.

4. Exceptional item includes (a) write back of Rs. 61,623,062 (Rs. 47,348,915) being interest provided by erstwhile RAS Propack Lamipack Limited (merged) on custom duty provision on imports under EPCG scheme, no longer required, (b) Cenvat credit of Rs. 69,283,365 (Rs. Nil) of prior years, not realisable hence written off and (c) gain of Rs. 20,564,418 (Rs. Nil) on sale of investment (refer note 29 (b)).

5. Foreign Exchange Difference

The Companies (Accounting Standards) Amendment Rules, 2011 has amended provisions of AS-11 related to "The Effect of Changes in Foreign Exchanges Rates" vide notification dated 11 May 2011 (as amended on 29 December 2011 and further clarification dated 9 August 2012) issued by The Ministry of Corporate Affairs (MCA). In terms of these amendments,

a) Exchange difference loss (net) of Rs. 95,105,514 (Rs. 54,844,301) is capitalised to cost of fixed assets/capital work in progress.

6. Gratuity and Other Post Employment Benefit Plans

As per Accounting Standard - 15 "Employee Benefits", the disclosures of employee benefits as defined in the Accounting Standard are given below:

a) The Company makes annual contributions to the employees'' gratuity fund scheme, a funded defined benefit plan which is managed by LIC of India. The present value of obligation is determined based on actuarial valuation using the projected unit credit method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

b) Leave encashment is a non-funded defined benefit scheme. The obligation for leave encashment is recognized in the same manner as gratuity.

c) Details of post retirement gratuity plan are as follows:-

i. Expenses recognised during the year

d) Fellow Subsidary

White hills Advisory Services Private Limited (w.e.f. 12 February 2014)

ii) Other related parties with whom transactions have taken place during the year and balances outstanding at the year end.

a) Other Related Parties

Aqualand (India) Limited, Ayepee Lamitubes Limited, Churu Trading Company Private Limited (merged with Sprit Textiles Private Limited w.e.f. 1 October 2012), Continental Drug Company Private Limited, Essel Corporate Resources Private Limited, Ganjam Trading Company Private Limited, Pan India Paryatan Private Limited, Prajatma Trading Company Private Limited (merged with Sprit Textiles Private Limited w.e.f. 1 October 2012), Rama Associates Limited, Zee Entertainment Enterprises Limited, Sprit Textiles Private Limited.

b) Directors of the Company

Non-Executive Director Mr. Subhash Chandra

Executive Director Mr. Ashok Goel

(Vice-Chairman and Managing Director)

7. Dividend of Rs. 829,918 [t 858,629) unclaimed for a period of more than seven years is transferred to Investor Education and Protection Fund during the year. There is no amount due and outstanding to be credited to Investor Education and Protection Fund as at 31 March 2014.

8. Service charges include prior period income of Rs. Nil (Rs. 832,498).

9 Segment Information.

The financial statements of the Company contain both the consolidated financial statements as well as the separate financial statements of the parent Company. Hence, the Company has presented segment information on the basis of the Consolidated Financial Statements as permitted by Accounting Standard -17.

10. Prior Period Comparatives

Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with current year''s classifications / disclosures. Figures in brackets pertain to previous year.


Mar 31, 2013

1. CORPORATE INFORMATION

Essel Propack Limited (hereinafter referred to as ''EPL'' or ''the Company'') is a producer of plastic packaging material in the form of multilayer collapsible tubes and laminates used primarily for packaging of toothpaste, personal care, cosmetics, pharmaceuticals, household and industrial products.

a) Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 2 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The final 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 the equity shares will be entitled to receive remaining assets of the Company, after distribution of preferential amount. The distribution will be in proportion to the number of equity shares held by the shareholders.

b) No bonus shares have been issued and no shares bought back during five years preceding 31 March 2013.

c) 5,00,155 equity shares of Rs. 2 each fully paid up were allotted on 14 September 2012 for consideration other than cash.

(Refer note 30)

Short-term borrowings of

a) Rs. 151,623,902 (Rs. 260,541,770) are secured by first pari-passu charge on current assets and second pari-passu charge on fixed assets situated at Vasind, Murbad, Wada, Goa and Nalagarh units. These loans are also collaterally secured by security provided and guarantee issued by related party.

b) Rs. 392,346,144 (Rs. 391,540,623) are secured by first pari-passu charge on current assets and second pari-passu charge on fixed assets situated at Vasind, Murbad, Wada, Goa and Nalagarh units.

c) Rs. Nil (Rs. 81,740,051) are secured by first pari-passu charge on current assets of the Company.

d) Unsecured short term loan from banks of Rs.250,000,000 (Rs. 250,000,000) are against security provided and guarantee issued by related party.

2. CAPITAL AND OTHER COMMITMENTS

Estimated amount of contracts remaining to be executed on capital account, not provided for (net of advances) Rs. 229,063,283 (Rs. 265,249,641).

* Does not include disputed excise duty of Rs. 115,428,779 (Rs. 115,428,779) for alleged undervaluation in inter unit transfer of web, for captive consumption as it does not have significant impact on profits of the Company since excise duty paid by one unit is admissible as Cenvat credit at other unit. Further, the appeal filed by Excise Department against the decision (in Company''s favour) of High Court is pending before the Hon''ble Supreme Court.

A Without considering relief granted by the Appellate Authorities in favour of the Company, tax effect Rs. 53,583,923 (Rs. 50,576,133) (approx.), which is pending.

b) The performance bonus payable to managing director for the year ended 31 March 2011 as approved by the Central Government vide letter dated 16 May 2012 was less than performance bonus approved by the Board of Directors by Rs. 5,208,255. The Company has made a representation to the Central Government for approval of the said amount which remains unpaid.

c) During the year, the Company has paid commission of Rs. 3,600,000 (Rs. 3,600,000) to Non-executive independent directors for the year ended 31 March 2012.

3. LEASES

The Company has taken premises, residential facilities, plant and machinery (including equipments) and vehicles under cancellable / non-cancellable operating lease agreements that are renewable on a periodic basis at the option of both the lessor and the lessee. The initial tenure of the leases varies from eleven to sixty months. The rental obligations are as follows:

4. The Company''s wholly owned subsidiary (WOS), Essel Packaging (Nepal) Private Limited, had discontinued its operations and disposed off assets and paid off liabilities. The Company in earlier years, has received Rs. 60,000,000 upon reduction of the Subsidiary''s capital, and provided total Rs. 18,996,622 towards diminution in value of Investment and the Management is of the opinion that the realizable value of investment will not be less than its carrying value.

5. Scheme of Merger of Ras Propack Lamipack Limited ("RPLL") and Ras Extrusions Limited ("REL") with the Company

a) Scheme of Merger ("the Scheme") of Ras Propack Lamipack Limited ("RPLL") and Ras Extrusions Limited ("REL") with the Company as part of Modified Scheme was sanctioned by Board for Industrial and Financial Reconstruction ("BIFR") on 10 May 2012 vide summary record of proceedings issued on 28 August 2012. The Scheme became effective on 30 August 2012 and consequently, the entire undertaking of the transferor companies including all assets, liabilities and reserves, vested in the Company on appointed date i.e. 1 April 2011. The Scheme has been given effect to in the financial statements for the year ended 31 March 2012 as per "Pooling of interest" method prescribed under Accounting Standard 14 "Accounting of Amalgamation" and surplus of Rs. 74,690,690, being difference between the value of assets, liabilities and reserves transferred, is adjusted in general reserve.

b) Pursuant to the Scheme, 380,248 and 119,907 equity shares of Rs. 2 each fully paid up have been allotted to the shareholders of RPLL and REL respectively on 14 September 2012.

c) Certain assets and liabilities acquired pursuant to the Scheme are under process of transfer in the name of the company.

6. Provision for custom duty (including interest) of Rs. 86,068,682 (Rs. 152,200,723) is towards possible liability on account of non- fulfilment of export obligations under the "Zero Duty EPGC Scheme" of erstwhile Ras Propack Lamipack Limited ("RPLL") (the merged entity).

During the year, custom duty provision of Rs. 18,783,126 is adjusted in the cost of fixed assets and provision for interest on custom duty provision of Rs. 47,348,915 is written back to the Statement of Profit and Loss and included in other income, to the extent of fulfilment of export obligations by the Company. Related procedural formalities will be completed in due course.

7. FOREIGN EXCHANGE DIFFERENCE

The Companies (Accounting Standards) Amendment Rules, 2011 has amended provisions of AS-11 related to "The Effect of Changes in Foreign Exchanges Rates" vide notification dated 11 May 2011 (as amended on 29 December 2011 and further clarification dated 9 August 2012) issued by The Ministry of Corporate Affairs (MCA). In terms of these amendments,

a) Exchange difference loss (net) of Rs. 54,844,301 (Rs. 18,646,059) is capitalised to cost of fixed assets/capital work in progress.

b) Movement in "Foreign Currency Monetary Item Translation Difference account" (FCMITD) is as under:-

Note: The information has been given in respect of such vendors to the extent they could be identified as "Micro and Small" enterprises on the basis of information available with the Company.

8. GRATUITY AND OTHER POST EMPLOYMENT BENEFIT PLANS

As per Accounting Standard - 15 "Employee Benefits", the disclosures of employee benefits as defined in the Accounting Standard are given below:

a) The Company makes annual contributions to the employees'' gratuity fund scheme, a funded defined benefit plan which is managed by LIC of India. The present value of obligation is determined based on actuarial valuation using the projected unit credit method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

b) Leave encashment is a non-funded defined benefit scheme. The obligation for leave encashment is recognised in the same manner as gratuity.

Notes:

1. Amount recognised as an expense and included in the Note 22 "Employee benefits expenses" are gratuity Rs. 16,178,281 (Rs. 4,053,970) and leave encashment Rs. 13,964,340 (Rs. 7,759,085)

2. The estimate of future salary increases considered in the actuarial valuation, taking into account rate of inflation, seniority, promotions and other relevant factors, such as supply and demand in the employment market.

3. "Contribution to provident and other funds" is recognised as an expense in note 22 of the statement of Profit and Loss.

ii) Other related parties with whom transactions have taken place during the year and balances outstanding at the year end.

(a) Other Related Parties

Aqualand (India) Limited , Ayepee Lamitubes Limited, Churu Trading Company Private Limited (merged with Sprit Textiles Private Limited w.e.f. 1 October 2012) , Continental Drug Company Private Limited, Essel Corporate Resources Private Limited, Ganjam Trading Company Private Limited, Pan India Paryatan Private Limited, Prajatma Trading Company Private Limited (merged with Sprit Textiles Private Limited w.e.f. 1 October 2012), Rama Associates Limited, Zee Entertainment Enterprises Limited, Sprit Textiles Private Limited.

(b) Directors of the Company

Non-Executive Directors Mr. Subhash Chandra

Mr. Boman Moradian

Mr. K. V. Krishnamurthy (deceased on 16 January 2013)

Mr. Tapan Mitra Mr. Mukund M. Chitale

Executive Director Mr. Ashok Kumar Goel

(Vice-Chairman and Managing Director)

"Major Parties" denotes entries who account 10% or more of the aggregate for that category of transactions. For details of remuneration to directors (refer note 27) and guarantee / security given by related party (Refer Note 5 and 9)

* Churu Trading Company Private Limited and Prajatma Trading Company Private Limited have merged with Sprit Textiles Private Limited w.e.f 1 October 2012

Note:

Loans to others are repayable on demand and hence not considered in the above disclosure requirements. However, interest is charged on terms not prejudicial to the interests of the company.

9. Dividend of Rs. 858,629 (Rs. 968,099) unclaimed for a period of more than seven years is transferred to Investor Education and Protection Fund during the year. There is no amount due and outstanding to be credited to Investor Education and Protection Fund as at 31 March 2013.

10. Service charges include prior period income of Rs. 832,498 (Rs. 15,324,924).

11. Provision for current tax is made as per the provisions of section 115JB (Minimum Alternate Tax) of the Income-Tax Act, 1961 (Act) after considering set-off of brought forward losses and unabsorbed depreciation of the transferor companies as allowed under section 72A of the Act.

12. SEGMENT INFORMATION

The financial statements of the Company contain both the consolidated financial statements as well as the separate financial statements of the parent company. Hence, the company has presented the segment information on the basis of the consolidated financial statements as permitted by Accounting Standard-17.

13. PRIOR PERIOD COMPARATIVES

Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with current year''s classifications / disclosures. Figures in brackets pertains to previous year.


Mar 31, 2012

1. Corporate Information

Essel Propack Limited (hereinafter referred to as 'EPL' or 'the Company') is a producer of plastic packaging material in the form of multilayer collapsible tubes and laminates used primarily for packaging of toothpaste, personal care, cosmetics, pharmaceuticals, household and industrial products.

Nature of security and terms of repayments for long-term borrowings

a) Term loan from banks of Rs. 1,429,669,917 (Rs. 1,543,759,972) are secured by pari passu first charge on fixed assets situated at Vasind, Wada, Murbad, Goa, Nalagarh units. These loans are further secured by way of security provided and guarantee issued by a promoter group Company.

b) Term loan from bank of Rs. 84,375,000 (Rs. 121,875,000) is secured by subservient charge on movable assets situated at Vasind, Wada, Murbad, Goa, Nalagarh units. The loan is further secured by way of security provided and corporate guarantee issued by a promoter group Company.

Term loan from banks carrying interest rate ranging from 13% to 16.50% p.a. and are repayable in monthly / quarterly installments by 2015-16. Charge is yet to be created for term loan from banks of Rs. 399,969,917 (Rs. Nil).

c) Buyers credit from bank of Rs. 58,512,128 (Rs. Nil) is secured by pari passu first charge on fixed assets situated at Vasind, Wada, Murbad, Goa, Nalagarh units and second charge on current assets of the company.

d) Buyers credit from banks of Rs. 38,179,541 (Rs. 35,656,459) are secured by hypothecation of current assets and second charge on fixed assets situated at Vasind, Murbad, Wada, Goa and Nalagarh units.

Buyers credit from banks carrying interest rate ranging from 2.38% to 4.15% p.a. and are repayable in maximum period of three year from the date of transaction. Charge is yet to be created for buyers credit of Rs. 58,512,128 (Rs. Nil).

e) Out of Unsecured term loan and buyers credit from banks Rs. 1,135,504,301, Rs. 707,322,442 (Rs. 665,625,000) are against exclusive charge on land owned and guarantee issued by a promoter group company.

Term loan from banks carrying interest rate ranging from 12.45% to 16.50% p.a. and are repayable in monthly / quarterly installments by 2014-15. Buyers credit carrying interest rate ranging from 2.24% to 4.04 % p.a. and are repayable in maximum period three years from the date of transaction.

f) Deferred sales tax interest free loans are repayable after a period of 10 to 14 years upto 2024-25.

1. Capital and other commitments

Estimated amount of contracts remaining to be executed on capital account, not provided for (net of advances) Rs. 265,249,641 (Rs. 120,229,324)

2. Contingent Liabilities not provided for

(Amount in Rs.)

2012 2011

a) Unexpired Letters of Credit (net of liability provided) 260,288,175 63,951,109

b) Guarantees and counter guarantees given by the Company [includes 5,148,597,625 4,909,534,605 Rs. 5,133,821,625 (Rs. 4,897,618,605) for loans taken by Subsidiaries]. Loans outstanding against these guarantees are Rs. 2,788,793,162 (Rs. 3,575,862,493)

c) Disputed Indirect Taxes * 276,118,838 274,559,769

d) Disputed Direct Taxes 28,805,069 18,467,097

e) Claims not acknowledged as debts 3,331,550 3,556,550

f) Deferred Sales Tax Liability assigned 84,496,517 112,609,023

g) Duty benefit availed under EPCG scheme, pending export obligations 117,430,117 88,214,189

* Does not include disputed excise duty of Rs. 198,191,799 (Rs. 198,191,799) for alleged undervaluation in inter unit transfer of Web, for captive consumption as it does not have significant impact on profits of the Company since excise duty paid by one unit is admissible as Cenvat credit at other unit. Further, the appeal filed by Excise Department against the decision (in Company's favour) of High Court is pending before Supreme Court.

3. Managerial remuneration

b) During the year, the Company has paid commission of Rs. 3,600,000 (Rs. 4,125,000) to Non-Executive Independent Directors based on the Profits for the year ended 31 March 2011.


Mar 31, 2011

A) Contingent Liabilities not provided for

(Amount in Rs.)

As at As at

Sr.No. Particulars March 31, 2011 March 31, 2010

a) Unexpired Letters of Credit (net of liability provided) 63,951,109 24,903,527

b) Guarantees and counter guarantees given by the Company [includes Rs. 4,897,618,605 (Rs. 4,619,879,977) for loans taken by Subsidiaries. 4,909,534,605 4,660,722,516 Loans outstanding against these guarantees are Rs. 3,575,862,493 (Rs. 3,643,691,169)

c) Disputed Indirect Taxes * 274,559,769 244,789,742

d) Disputed Direct Taxes 18,467,097 72,838,393

e) Claims not acknowledged as debts 3,556,550 3,556,550

f) Deferred Sales Tax Liability assigned 112,609,023 144,937,480

g) Duty benefit availed under EPCG scheme, pending export obligations 88,214,189 53,578,077

* Does not include disputed excise duty of Rs. 198,191,799 (Rs. 198,191,799) for alleged undervaluation in inter unit transfer of Web, for captive consumption as it does not have significant impact on profits of the Company since excise duty paid by one unit is admissible as Cenvat credit at other unit. Further, the appeal filed by Excise Department against the decision (in Company's favour) of High Court is pending before Supreme Court.

2) Investments - Restructuring

a) Essel Packaging Nepal Private Limited

The Company's wholly owned subsidiary (WOS), Essel Packaging (Nepal) Private Limited, had discontinued its operations and disposed off assets and paid off liabilities. The Company had received Rs. 60,000,000 upon reduction of the Subsidiary's capital, and provided Rs. 16,996,622 towards diminution in value of Investment in earlier years and the Management is of the opinion that the realizable value will not be less than its carrying value.

b) During the year, the Company has transferred its equity and preference shareholding in its wholly owned direct subsidiary, Essel Propack America, LLC to Arista Tubes Inc., USA, a wholly owned step down subsidiary, which has in consideration allotted its own equity shares to the Company, based on swap ratio determined on valuation by ndependent professional valuers. This was done as part of consolidation of the Company's operations in the USA.B However, the substance of the pattern of ownership, beneficial interest, direction and control of the investee Companies! has not, in any way, been altered. In compliance with paragraph 17.b of Accounting standard 1, the company has! continued to value the equity shares so allotted by Arista Tubes Inc., USA at the same amount as the carrying value ofl its erstwhile shareholding in Essel Propack America, LLC so as to subserve the truth and fairness of the transaction and! its result.

c) Pursuant to the directions issued by the Board for Industrial and Financial Reconstruction ("BIFR") on the Miscellaneous! Applications filed by Ras Propack Lamipack Limited ("RPLL") and Ras Extrusions Limited ("REL"), a Draft Modifiedl Rehabilitation Proposal ("DMRP") including draft Scheme of Merger for proposed merger of RPLL and REL with thel Company was approved by the Board of Directors of Essel Propack Limited (the "Company"), in its meeting held on I May 30, 2011 which is subject to the approval by the members of the Company, BIFR and other regulatory approvals I as applicable.

3) Exceptional item represents loss on sale of long term investments Rs. Nil (Rs.1,041,636).

4) a) The Companies (Accounting Standards) Amendment Rules, 2011 has amended the provisions of AS-11 related to 'Effects of the changes in Foreign Exchange Rates' vide Notification dated May 11, 2011. The Company has unamortised opening balance in "Foreign Currency Monetary Item Translation Difference Account" (FCMITD Account) of Rs. 80,041,332. During the year, exchange gain of Rs. 53,217,235 is transferred to FDMITD Account and Rs. 19,541,656 has been written off and balance Rs. 7,282,441 has been carried over.

5) As per Accounting Standard – 15 "Employee Benefits", the disclosures of employee benefits as defined in the Accounting Standard are given below:

a) The Company makes annual contributions to the employees' gratuity fund scheme, a funded defined benefit plan which is managed by LIC of India. The present value of obligation is determined based on actuarial valuation using the projected unit credit method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

b) Leave encashment is a non funded defined benefit scheme. The obligation for leave encashment is recognised in the same manner as gratuity.

11) Capital Work In Progress includes Capital advances of Rs. 29,083,166 (Rs.124,577,517).

ii) Other related parties with whom transactions have taken place during the period and balances outstanding at the year- end.

a) Other Related Parties

Ayepee Lamitubes Limited, Churu Trading Company Private Limited, Continental Drug Company Private Limited, Essel Corporate Resources Private Limited, Ganjam Trading Company Private Limited, Pan India Paryatan Private Limited, Premier Finance and Trading Company Limited, Prajatma Trading Company Private Limited, Zee Entertainment Enterprises Limited, Briggs Trading Company Private Limited.

b) Directors of the Company

Non-Executive Directors

Mr. Subhash Chandra

Mr. Boman Moradian

Mr. K.V. Krishnamurthy

Mr. Tapan Mitra

Mr. Mukund M. Chitale

Late Mr. Davendra Ahuja (expired on August 20, 2010)

Executive Director

Mr. Ashok Kumar Goel

(Vice Chairman & Managing Director)

6) Financial Statements of Subsidiary Companies

The Ministry of Corporate Affairs, Government of India vide its circular no.2/2011 dated February 8, 2011 has provided an exemption to companies from complying with Section 212, provided such companies publish the audited consolidated financial statements in the Annual Report. Accordingly, the Annual Report of Financial Year 2010-11 does not contain the financial statements of Subsidiaries. As per the Order, key details of each subsidiary are attached along with statements under Section 212 (1) of the Act.

7) Secured Loans

(i) Term loans amounting to Rs. 1,543,759,972 (Rs. 2,512,611,625) are secured by pari passu first charge on Company's fixed assets situated at Vasind, Wada, Murbad, Goa and Nalagarh units and further by security provided and guarantee issued by a promoter group company.

(ii) Term loan amounting to Rs. 121,875,000 (Rs. 150,000,000) is secured by subservient charge on Company's movable fixed assets situated at Vasind, Wada, Murbad, Goa and Nalagarh units, both present and future and further by security provided and corporate guarantee issued by a promoter group company.

(iii) Term loans repayable within one yearRs. 551,559,972 (Rs. 1,007,340,450).

(iv) Working capital loans repayable within one yearRs. 85,411,879 (Rs. 44,061,672).

(v) Working Capital loan is secured by :

a) Rs. 40,464,412 (Rs. 29,363,762) by way of hypothecation of current assets of the Company and second charge on Company's fixed assets situated at Vasind, Murbad, Wada, Goa and Nalagarh units.

b) Rs. 244,240,574 (Rs. Nil) by way of hypothecation of current assets of the Company and second charge on Company's! fixed assets and further collaterally secured by immovable property and guarantee issued by a promoter group Company.

c) Rs. 74,789,387 (Rs. 44,061,672) by way of first pari passu charge on current assets of the Company. Charge is yet tol be created.

d) Rs. 77,725,355 (Rs. Nil) by way of first pari passu charge on current assets of the Company and second mortgage pari! passu basis over the immovable properties of the Company situated at Wada and Vasind units.

8) Unsecured Loans

(i) Term Loan from Banks includes Rs. 665,625,000 (Rs. 830,000,000) which is against security and guarantee issued by al promoter group company.

(ii) Short Term Loan from banks includes:

a) Rs. 250,000,000 (Rs. Nil) against exclusive charge on immovable property owned by a promoter group Company.

b) Rs. Nil (Rs. 500,000,000) against letter of comfort issued by a promoter group company. (iii) Repayable within one yearRs. 486,289,379 (Rs. 192,500,000).

9) Comparatives

a) The previous year's financial statements are for fifteen months period from January 1, 2009 to March 31, 2010. Current year figures relate to the twelve months ended March 31, 2011. Accordingly, Current year's figures are not comparable with those of the previous year.

b) Previous year figures are regrouped, rearranged or recast wherever necessary to confirm to this year's classification. Figures in brackets pertain to previous year.


Mar 31, 2010

1) b) Contingent Liabilities not provided for

(Amount in Rs.)

Sr. No. Particulars As at As at

31-Mar-2010 31-Dec-2008

a) Unexpired Letters of Credit 24,903,527 17,532,064

b) Guarantees and counter guarantees given by the Company [includes Rs.4,619,879,977 (Rs.6,230,497,924) for loans taken by Subsidiaries]. Loans outstanding against these guarantees are Rs. 3,643,691,169 (Rs. 4,913,293,952) 4,660,722,516 6,331,124,474

c) Disputed Indirect Taxes* 244,789,742 166,253,616

d) Disputed Direct Taxes 72,838,393 49,784,919

e) Claims not acknowledged as debts 3,556,550 3,556,550

f) Deferred Sales Tax Liability assigned 144,937,480 180,319,450

g) Duty benefit availed under EPCG scheme, pending export obligations 59,213,138 65,793,947

* Does not include Rs.198,191,799 (Rs.198,191,799) for alleged undervaluation in inter unit transfer of Web, for captive consumption as it does not have significant impact on profits of the Company since excise duty paid by one unit is admissible as Cenvat credit at other unit. Further,the appeal filed by Excise Department against the decision (in Companys favour) of High Court is pending before Supreme Court.

2) Investments

a) Essel Packaging Nepal Private Limited

The Companys wholly owned subsidiary (WOS), Essel Packaging (Nepal) Private Limited, had discontinued its operation and disposed its assets and paid off its liabilities. The Company had received Rs. 40,000,000 upon reduction of the Subsidiarys capital,and provided Rs.16,996,622 towards diminution in value of Investment in earlier years. In 2008, the WOS made an application to concerned authorities for further reduction of capital by 50% (NPR 32,000,000 equivalent to Rs.20,000,000) and repayment thereof to shareholders. Pursuant to approval, the Company has received Rs. 20,000,000 during the current period.

The Management is of the opinion that the realizable value of balance Investment will not be less than its carrying value.

b) Bericap India Private Limited

In accordance with the terms of agreement with Bericap Holding Gmbh and Bericap India Private Limited, the Company had in December, 2008 exercised the Put option for sale and transfer of 3,141,971 equity shares held by the Company in Bericap India Private Limited to Bericap Holding Gmbh. The transfer of shares has been effected and money received during the period.

c) In the year 2007, the Company had consented to act as Co-promoter in the rehabilitation and revival scheme of RAS Propack Lamipack Limited (RPLL) and RAS Extrusion Limited (REL), before the Board for Industrial and Financial Reconstruction (BIFR), New Delhi. Pursuant to the BIFR orders dated February 6,2009 and February 17,2009 the Company

i) made an investment of Rs.41,091,000 in Equity shares and Rs.30,000,000 as unsecured loans to RPLL during the period.

ii) made an investment of Rs.7,500,000 in Equity shares and Rs. 15,000,000 as unsecured loans to REL, subsequent to March 31, 2010.

3) a) The Companies (Accounting Standards) Amendment Rules 2009 has amended the provision of AS-11 related to Effects of the changes in Foreign Exchange Rates. Accordingly, the Company has adjusted exchange difference gain of Rs. 5,650,224 (net of Tax Rs.2,810,413) through General Reserve pertaining to earlier periods and exchange difference loss of Rs. 126,096,690 is transferred to Foreign Currency Monetary Item Translation Difference Account to be amortised over the balance period of such long term assets/liabilities. Out of the above, Rs. 37,594,721 has been written off in the current year and Rs. 80,041,332 has been carried over.

4) During the period,ancillary costs for arrangement of borrowings are amortised over the period of borrowings instead of expensed when incurred. Accordingly, Profit before Tax for the period is higher by Rs.37,079,803. This change is as permitted under AS 16 on "Borrowing Costs"

5) During the period with the implementation of ERP software cost formulae for valuation of inventories is changed to Moving Weighted Average basis instead of First in First out (FIFO). Impact of this change on Profit before Tax is not determinable.

6) As per Accounting Standard - 15 "Employee Benefits" the disclosures of employee benefits as defined in the Accounting Standard are given below:

The employees gratuity fund scheme managed by LIC of India is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the projected unit credit method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognised in the same manner as gratuity.

7) a) Capital Work In Progress includes Capital advances of Rs.124,577,517 (Rs. 43,753,974)

b) Sundry Creditors for others include cheques overdrawn to the tune of Rs. Nil (Rs.41,044,439) which are since presented and paid.

8) Related Party Disclosure

i) List of Parties where control exists a) Subsidiary Companies

* These subsidiaries have discontinued their operations and are in the process of liquidation.

* These Companies ceased to be Subsidiaries w.e.f. December 23, 2009 following sale by Companys overseas Subsidiaries of their shareholding in these Companies.

ii) Other Related parties with whom transactions have taken place during the period and balances outstanding at the year- end.

a) Other Related Parties

Ayepee Lamitubes Limited,BriggsTrading Company Private Limited,ChuruTrading Company Private Limited, Continental Drug Company Private Limited, Pan India Network Infravest Private Limited, Essel Corporate Resources Private Limited, Ganjam Trading Company Private Limited, Pan India Paryatan Private Limited, Premier Finance and Trading Company Limited, Prajatma Trading Company Private Limited.

b) Directors of the Company

Non-Executive Directors Mr.Subhash Chandra

Mr.Boman Moradian

Mr.Dev Ahuja

Mr.K.V.Krishnamurthy

Mr.Tapan Mitra

Mr. Mukund M. Chitale

Executive Director Mr. Ashok Kumar Goel

(Vice-Chairman & Managing Director)

9) Financial Statements of Subsidiary Companies

The Ministry of Corporate Affairs, Government of India vide its order no.47/289/2010-CL-lll dated June 21, 2010 issued under section 212(8) of the Companies Act, 1956 ("The Act") has exempted the Company from attaching the Balance Sheets and Profit and Loss Accounts of its subsidiaries under section 212(1) of the Act. As per the orders, key details of each subsidiary are attached along with statements under section 212 (1) of the Act.

10) Secured Loans

i) Term loans amounting to Rs.2,512,611,625 are secured by pari passu first charge on Companys fixed assets situated at Vasind,Wada,Murbad, Goa and Nalagarh units and further by security provided and guarantees issued by group companies.

ii) Term loan amounting to Rs.150,000,000 is secured by subservient charge on Companys movable fixed assets situated at Vasind, Wada, Murbad, Goa and Nalagarh units, both present and future and further by security provided and corporate guarantee issued by a group company.

iii) Term loans repayable within one year Rs.1,007,340,450 (Rs.97,500,000)

iv) Working Capital loan is secured by hypothecation of current assets of the Company and second charge on fixed assets of the Companys units situated atVasind,Wada, Murbad, Goa and Nalagarh.

11) Unsecured Loans

i) Short Term Loan from Banks includes Rs.500,000,000 (Rs.400,000,000) which is against letter of comfort issued by a group company

ii) Other Loans from Banks of Rs.830,000,000 (Rs.Nil) which is against security and guarantee issued by a group company

iii) Repayable within one year Rs.192,500,000 (Rs.97,500,000)

12) Comparatives

a) Pursuant to the approval of the Board of Directors at its meeting held on October 28,2009 the Companys current accounting year has been aligned with the fiscal year of the Goverment. Hence the current years financial statements are in respect of the fifteen months period from January 1,2009 to March 31,2010. Previous year figures relate to the twelve months ended December 31,2008. Current years figures are accordingly, not comparable with those of the previous year.

b) Previous year figures are regrouped, rearranged or recast wherever necessary to confirm to this years classification. Figures in brackets pertain to previous year.

13) Segment Reporting

Under AS-17,the Company has only one major identifiable business segment viz. Plastic packaging material.

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