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Notes to Accounts of Everest Kanto Cylinder Ltd.

Mar 31, 2015

1. Rights, Preferences and Restrictions attached to Shares

The Company has only one class of Equity Shares having a par value of Rs. 2/- per Share. Each Shareholder is eligible for one vote per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts in proportion to the share holding.

2. Loan Funds:

(a) Term Loans:

(i) Term Loan of US$ 5.00 Million from a bank is secured by way of first pari passu charge on entire fixed assets both present and future (excluding residential flat at Cuffe Parade, Mumbai and office premises situated at Nariman Point, Mumbai), Second pari passu charge on current assets of the Company (both present & future), unconditional and irrevocable personal guarantees from three promoter directors and non- disposal undertaking of shareholding of the Company in the subsidiary in China. The loan has been renewed during the year and is repayable in bullet in May 2016. The interest rate of the Borrowings is 6 Months' LIBOR plus 5.50% per annum.

(ii) Term Loan from another bank up to Rs. 32,500.00 Lakh is secured by way of (a) first pari passu charge on all the fixed assets of the Company, excluding specific immovable properties (b) second pari passu charge on the current assets of the Company (c) pledge of 29.99% of the shares of the Company held by the promoters (d) pledge of all the shares of the subsidiaries held by the Company (e) personal guarantees from three promoter directors and (f) exclusive charge on certain residential and commercial immovable properties owned by the Company, promoters, group companies/firms. The loan is repayable in quarterly unequated installments commencing from January 2015 and ending in October 2020. The current interest rate of the Borrowing is 13% per annum.

(b) Working Capital facilities from banks are secured by way of (i) first pari passu charge in the form of hypothecation of stocks and book debts of the Company and (ii) second pari passu charge on all the fixed assets (excluding specific fixed assets) of the Company. One of the banks has been provided personal guarantees from two directors. Two of the banks have been provided additional security over separate specific immovable properties of the Company. The interest rate of the working capital facilities ranges from 13.20% per annum to 15.50% per annum.

(c) The Interest-free Sales Tax Deferment Loan is repayable in six equal annual installments, with the last installment falling due in financial year 2018-19.

(d) Short-term unsecured loans from related parties are repayable on demand and carry interest rate of 12% per annum.

(e) Details of borrowings due and outstanding as on March 31, 2015:

Name of Nature of Amount Period to the parties the dues (in Lakh) which payment the amount relates

Yes Bank Interest on 94.86 FY 2014-15 term loan 166.69 FY 2014-15

Everest Kanto Interest on 26.10 FY 2013-14 Investment & unsecured Finance Ltd loan

Khurana Interest on 0.48 FY 2013-14 Fabrication unsecured Industries loan Limited

Khurana Interest on 4.80 FY 2013-14 Gases unsecured Private Ltd loan

Name of Due date Date of the parties

Yes Bank 1-March-15 24-April-15

1-March-15 29-April-15

Everest Kanto 1- April-14 Not paid Investment & till date Finance Ltd

Khurana 1- April-14 Not paid Fabrication till date Industries Limited

Khurana 1- April-14 Not paid Gases till date Private Ltd

3. Contingent Liabilities As at As at in respect of: 31st March, 31st March, 2015 2014 (Rs. in Lakh) Rs. in Lakh)

(a) Disputed Tax Matters

Income Tax 806.30 1,664.60

Sales Tax and Value Added Tax 461.36 53.92

Lease Tax 21.05 21.05

Future cash flows in respect of the above are determinable only on pronouncements of judgments/ decisions pending with various forums/authorities.

(b) Corporate Guarantees given on behalf of subsidiaries and step down subsidiaries. 11,579.30 11,118.46

Amounts outstanding there against 7,258.56 9,206.27

(c) Claims against the Company not acknowledged as Debts 56.80 233.80

(d) Bonds executed in favour of Government Authorities (Also refer Clause No. 12 of Note xxvii) 2,978.77 3,222.14

4. (a) Trade Payables include Rs. 157.40 Lakh (Rs. 117.03 Lakh as at 31/03/2014) due to Micro and Small Enterprises registered under the Micro, Small and Medium Enterprises Development Act, 2006 (MSME).

(b) No interest is paid/payable during the year to any enterprise registered under MSME.

(c) The above information has been determined to the extent such parties could be identified on the basis of the information available with the Company regarding the status of suppliers under the MSME.

As at As at 5. Commitments: 31st March, 31st March, 2015 2014 (Rs. in Lakh) Rs. in Lakh)

(a) Estimated amount of contracts remaining to be executed on Capital Account and not provided for (net of advances) 218.44 218.44

(b) Uncalled amount on partly paid Equity Shares of a Subsidiary Company 128.56 128.56

10. Related Parties Disclosures:

1. Relationships:

(a) Subsidiary Companies :

EKC Industries (Tianjin) Co. Limited, China

EKC International FZE, UAE

EKC Industries (Thailand) Co. Limited, Thailand

Calcutta Compressions & Liquefaction Engineering

Limited (C C & L), India

(b) Step Down Subsidiary Companies :

EKC Hungary Kft, Hungary

EKC Europe GmbH, Germany

CP Industries Holdings Inc., USA

(c) Other Related Parties where Promoters, Directors & Relatives exercise significant influence :

Everest Kanto Investment and Finance Private Limited

Khurana Gases Private Limited

Medical Engineers (India) Limited

Khurana Fabrication Industries Private Limited

Khurana Exports Private Limited

Everest Industrial Gases Private Limited

Khurana Charitable Trust

Khurana Education Trust

G.N.M. Realtors Private Limited

Ukay Valves & Founders Private Limited

(d) Key Management Personnel :

Mr. Prem Kumar Khurana (Chairman and Managing Director)

Mr. Vipin Chandok (Chief Financial Officer)

Ms. Kanika Sharma (Company Secretary) (till February 20, 2015)

(e) Relatives of Key Management Personnel, with whom transactions have taken place :

Mr. S. S. Khurana

Mrs. Suman Khurana

Mr. Pushkar Khurana

Mr. Puneet Khurana

Mr. Varun Khurana

# Foreign currency balances are restated at year end rates.

* Loans given to subsidiaries and loans raised by subsidiaries backed by guarantees given on their behalf have been utilised by them for acquisition of fixed assets and for working capital.

@ Personal Guarantees given to banks of ' 34,700.00 Lakh and US$ 5 Mn (Rs. 32,500.00 Lakh and US$ Nil as on March 31,2014) by Promoter Directors for the Term Loans against which Rs. 31,219.90 Lakh (Rs. 26,531.53 Lakh as on March 31, 2014) were outstanding as at the end of the year. (Previous year figures are in brackets).

6. Bonds/Undertakings given by the Company under concessional duty / exemption schemes to government authorities (net of obligations fulfilled) aggregate Rs. 2,978.77 Lakh as at the close of the year (March 31,2014: Rs. 3,222.14 Lakh).

7. (a) During the year 2014-15, the Chairman & Managing

Director (CMD) is entitled to a remuneration of Rs. 61.95 Lakh as per Schedule V to the Companies Act, 2013. However, in absence of profits, the CMD has voluntarily decided not to draw any remuneration from the Company.

(b) In the absence of profits during the financial year 2012- 13, the remuneration of Rs. 289.84 Lakh for that financial year of the CMD and two Whole Time Directors (WTDs) as per their respective terms of appointments was in excess by Rs. 228.78 Lakh computed in accordance with the provisions of the Companies Act, 1956 and Schedule XIII thereto. The Company had obtained approval of the shareholders of the Company by way of postal ballot for payment of the excess remuneration and had applied to the Central Government for seeking its approval. During the year 2014-15, the Central Government has approved 50% of the remuneration paid to the CMD and the two WTDs. The CMD and the two WTDs have refunded the excess remuneration not approved by the Central Government.

8. In accordance with Accounting Standard (AS) 15 - "Employee Benefits", an amount of Rs. 69.89 Lakh (Previous Year Rs. 77.48 Lakh) as contribution towards defined contribution plans is recognised as expense in the Statement of Profit and Loss.

Expected Employer's Contribution next year ' 25.00 Lakh (Previous Year Rs. 30.00 Lakh)

* The estimate of future salary increases considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors.

9. In accordance with Accounting Standard - 17 'Segment Reporting, segment information has been given in the Consolidated Financial Statements of the Company and, therefore, no separate disclosure on Segment information is given in these financial statements.

10. The Company has an investment of Rs. 200 Lakh in 2,000,000 Equity Shares of GPT Steel Industries Private Limited (GPT). Based on the financial statements of GPT, its Net Worth has fully eroded. The Company had made an assessment during the year 2010-11 and had accordingly provided for 100% diminution in value of investments made in GPT. The position at the end of this financial year remains the same.

11. As on March 31, 2015, the Company is holding majority stake of Rs. 431.72 Lakh (Rs. 431.72 Lakh as on March 31, 2014) in its subsidiary, Calcutta Compression & Liquefaction Engineering Limited (CC&L). Further, the Company has loans and other receivables, aggregating Rs. 1,328.09 Lakh (Rs. 1,068.91 Lakh as at March 31,2014) due from it. The Net Worth of CC&L has fully eroded. Provision for impairment of Rs. 431.72 Lakh towards the investment and Rs. 48.28 Lakh towards loans and receivables have been made during the year 2014-15 (Financial Year 2013-14: Nil) based on management's assessment and independent valuation of the recoverable value of the investment, loans and receivables. These provisions have been disclosed as an Exceptional Item in the Statement of Profit and Loss.

12. Since March 31, 2013, the investment in equity shares, amounting to Rs. 6,925.07 Lakh of EKC Industries (Tianjin) Company Limited, the subsidiary in China, has been considered as current investment pursuant to the decision of the Board of Directors of the Company to dispose off the investment in the subsidiary by sale of the equity shares or in any other manner most beneficial to the Company. Accordingly, the amounts recoverable as loans and advances and interest thereon aggregating to Rs. 3,950.82 Lakh as on March 31, 2015 (Rs. 7,628.67 Lakh as at March 31,2014) have been classified as current. The Company is of the considered view based on the assessment of the relevant factors, such as, the long term nature of the investment, future business prospects in the markets in which EKC Industries (Tianjin) Company Limited operates, expected appreciation in the fair value of the assets of EKC Industries (Tianjin) Company Limited, etc., that no provision for the diminution in the value of the Investment is required. However, on conservative basis, during the current year, an amount of Rs. 1,500 Lakhs (Rs. Nil as at March 31, 2014) has been provided towards such diminution and has been disclosed as an Exceptional Item in the Statement of Profit and Loss.

13. As on March 31,2015, Other Current Assets include land at Gandhidham having book value Rs. 223.25 Lakh and office premises at Mumbai having book value Rs. 1,235.68 Lakh being Fixed assets held for disposal, pursuant to the decision of the Board of Directors of the Company to dispose off the same during near future.

14. Previous year's figures have been reclassified/regrouped to conform to current year's classification/grouping.

15. Significant Accounting Policies followed by the Company are as stated in the Statement annexed to this note as Annexure I.




Mar 31, 2014

1. Loan Funds:

(a) Term Loans:

(i) Term Loan of US$ 5.00 Million from a bank is secured by way of first pari passu charge on movable fixed assets of the plant at Kandla SEZ up to a value of 125% of the loan amount and non-disposal undertaking of the shareholding of the Company in the subsidiary in China. The loan is repayable in bullet in May 2014. The interest rate of the Borrowings is 6 Months'' LIBOR plus 5.50% pa.

(ii) Term Loan from another bank up to Rs. 32,500.00 Lakh is secured by way of (a) first pari passu charge on all the fixed assets of the Company, excluding specific immovable properties (b) second pari passu charge on the current assets of the Company (c) pledge of 29.99% of the shares of the Company held by the promoters (d) pledge of all the shares of the subsidiaries held by the Company (e) personal guarantees from promoter directors and (f) exclusive charge on certain residential and commercial immovable properties owned by the Company, promoters, group companies/firms. The loan is repayable in quarterly unequated installments commencing from January 2015 and ending in October 2020. The current interest rate of the Borrowing is 13% pa.

(b) Working Capital facilities from banks are secured by way of (i) first pari passu charge in the form of hypothecation of stocks and book debts of the Company and (ii) second pari passu charge on all the fixed assets (excluding specific fixed assets) of the Company. One of the banks has been provided additional security over a specific immovable property of the Company.

(c) The Interest-free Sales Tax Deferment Loan is repayable in six equal annual installments, with the last installment falling due in financial year 2018-19. Short-term unsecured loans from related parties are repayable on demand and carry interest rate of 12% p.a.

2. Contingent Liabilities As at As at in respect of: 31st March, 31st March, 2014 2013 (Rs. in Lakh)
(a) Disputed Tax Matters

Income Tax 1,664.60 108.12

Sales Tax and Value Added Tax 53.92 440.48

Lease Tax 21.05 14.34

Future cash flows in respect of the above are determinable only on pronouncements of judgments/ decisions pending with various forums/ authorities.

(b) Corporate Guarantees given on behalf of subsidiaries and step down subsidiaries. 11,118.46 8,702.29

Amounts outstanding there against 9,206.27 6,935.35

(c) Claims against the Company not acknowledged as Debts 233.80 189.57

3. (a) Trade Payables include Rs. 117.03 Lakh (Rs. 55.27 Lakh as at 31/03/2013) due to Micro and Small Enterprises registered under the Micro, Small and Medium Enterprises Development Act, 2006 (MSME).

(b) No interest is paid / payable during the year to any enterprise registered under MSME.

(c) The above information has been determined to the extent such parties could be identified on the basis of the information available with the Company regarding the status of suppliers under the MSME.

10. Related Parties Disclosures:

1. Relationships:

(a) Subsidiary Companies :

EKC Industries (Tianjin) Co. Limited, China EKC International FZE, UAE EKC Industries (Thailand) Co. Limited, Thailand Calcutta Compressions & Liquefaction Engineering Limited (C C & L), India

(b) Step Down Subsidiary Companies : EKC Hungary Kft, Hungary

EKC Europe GmbH, Germany CP Industries Holdings Inc., USA

(c) Other Related Parties where Promoters, Directors & Relatives exercise significant influence :

Everest Kanto Investment and Finance Private Limited Khurana Gases Private Limited Medical Engineers (India) Limited

Khurana Fabrication Industries Private Limited

Khurana Exports Private Limited

Everest Industrial Gases Private Limited

Khurana Charitable Trust

Khurana Education Trust

G.N.M. Realtors Private Limited

Ukay Valves & Founders Private Limited

(d) Key Management Personnel : Mr. Prem Kumar Khurana

Mr. Puneet Khurana (Till 30th September, 2012) Mr. Pramod Samvatsar (Till 28th February, 2013)

(e) Relatives of Key Management Personnel and their Enterprises, with whom transactions have taken place : Mr. S.S. Khurana

Mrs. Suman Khurana Mr. Pushkar Khurana Mr. Puneet Khurana (Since 1st October, 2012)

12. Bonds / Undertakings given by the Company under concessional duty / exemption schemes to government authorities (net of obligations fulfilled) aggregate Rs. 3,222.14 Lakh as at the close of the year (March 31, 2013: Rs. 3,554.24 Lakh).

13. (a) During the year 2013-14, the remuneration paid to

Chairman & Managing Director (CMD) is within the limits prescribed under Schedule XIII to the Companies Act, 1956. However, in absence of profits, the CMD has voluntarily decided not to draw any remuneration from the Company from November 2013.

(b) In absence of the profits for the financial year 2012-13, the remuneration of Rs. 289.84 Lakh for the previous year of the CMD and the two Whole Time Directors (WTD) as per their respective terms of appointments was in excess by Rs. 228.78 Lakh computed in accordance with the provisions of the Companies Act, 1956 and Schedule XIII thereto. The Company has obtained approval of the shareholders of the Company by way of postal ballot for payment of the excess remuneration and has applied to the Central Government for seeking its approval. The Central Government has approved 50% of the remuneration paid to the two WTDs. The WTDs have refunded to the Company, the excess remuneration not approved by the Central Government. The approval of the excess remuneration of CMD amounting to Rs. 149.90 Lakh has not yet been received and the remuneration paid to him is held in trust by him.

14. In accordance with Accounting Standard (AS) 15 – "Employee Benefits", an amount of Rs. 77.48 Lakh (Previous Year Rs. 100.72 Lakh) as contribution towards defined contribution plans is recognised as expense in the Statement of Profit and Loss.

15. In accordance with Accounting Standard – 17 ''Segment Reporting,'' segment information has been given in the Consolidated Financial Statements of the Company and, therefore, no separate disclosure on Segment information is given in these financial statements.

16. The Company has an investment of Rs. 200 Lakh in 2,000,000 Equity Shares of GPT Steel Industries Private Limited (GPT). Based on the audited financial statements of GPT, its Net Worth has fully eroded. The Company had made an assessment during the year 2010-11 and had accordingly provided for diminution in value of investments made in GPT. The position at the end of this financial year remains the same.

17. During the year 2012-13, the Company had made additional investment of Rs. 96.42 Lakh in Calcutta Compression & Liquefaction Engineering Limited (CC&L), which is a subsidiary of the Company, wherein the Company has majority stake. As on March 31, 2014, the investment aggregates to Rs. 431.72 Lakh (Rs. 431.72 Lakh as on March 31, 2013). Further, the Company has recoverable loans and other receivables, aggregating Rs. 1,068.91 Lakh (Rs. 903.58 Lakh as at March 31, 2013) from it. The Net Worth of CC&L has fully eroded. However, in the opinion of the management, after considering the long term recurring nature of its business, its projected earnings and cash flows, the improvements in its current operational performance and the intention to hold this investment on a long term and strategic basis, no provision for diminution in the value of investment or for losses on account of loans and other receivables is considered necessary, at present.

18. As on March 31, 2014 and March 31, 2013, the investment in equity shares, amounting to Rs. 6,925.07 Lakh (Rs. 6,925.07 Lakh as on March 31, 2013), of EKC Industries (Tianjin) Company Limited, the subsidiary in China, has been considered as current investment pursuant to the decision of the Board of Directors of the Company to dispose off the investment in the subsidiary by sale of the equity shares or in any other manner most beneficial to the Company. Accordingly, the amounts recoverable as loans and advances and interest thereon aggregate Rs. 7,628.67 Lakh as on March 31, 2014 (Rs. 7,695.29 Lakh as at March 31, 2013) have been classified as current. As per the independent valuation obtained by the Company, the valuation of the Subsidiary exceeds the carrying value of the net assets.

19. Previous year''s figures have been reclassified / regrouped to conform to current year''s classification / grouping.

20. Significant Accounting Policies followed by the Company are as stated in the Statement annexed to this note as Annexure I.


Mar 31, 2013

GENERAL INFORMATION

The Company is engaged in the manufacture of high pressure seamless gas cylinders and other cylinders, equipments, appliances and tanks with their parts and accessories used for containing and storage of liquefied petroleum gases and other gases, liquids and air.

1. Loan Funds:

(a) Term Loans:

(i) Term Loan of US$ 5.00 Mn. from a bank is secured by way of first pari passu charge on movable fixed assets of the plant at Kandla SEZ up to 125% of the loan amount and non-disposal undertaking of the shareholding of the Company in the subsidiary in China. The loan is repayable in bullet in May 2014. The interest rate of the Borrowings is 6 Months'' LIBOR plus 5.50% pa.

(ii) Term Loan from another bank up to Rs. 325 Crore is secured by way of (a) first pari passu charge on all the fixed assets of the Company, excluding a specific immovable property (b) second pari passu charge on the current assets of the Company (c) pledge of 29.99% of the shares of the Company held by the promoters (d) pledge of all the shares of the subsidiaries held by the Company (e) personal guarantees from promoter directors and (f) exclusive charge on certain residential and commercial immovable properties owned by the Company, promoters, group companies/firms. The loan is repayable in quarterly unequated installments commencing from January 2015 and ending in October 2020. The interest rate of the Borrowing is 12.75% pa.

(b) Working Capital facilities from banks are secured by way of (i) first pari passu charge in the form of hypothecation of stocks and book debts of the Company and (ii) second pari passu charge on all the fixed assets (excluding specific fixed assets) of the Company. One of the banks has been provided additional security over a specific immovable property of the Company.

(c) The Interest-free Sales Tax Deferment Loan is repayable in six equal annual installments, with the last installment falling due in financial year 2018-2019.

2. Contingent Liabilities not As at As at provided for in respect of:

31.03.2013 31.03.2012 (Rs. in Lakh) (Rs. in Lakh)

(a) Disputed Tax Matters

Income Tax 108.12 156.54

Sales Tax and Value Added Tax 440.48 486.74

Lease Tax 14.34 16.34

Future cash flows in respect of the above are determinable only on receipt of judgments/ decisions pending with various forums/ authorities.

(b) Corporate Guarantees given on behalf of subsidiaries and step down subsidiaries. 8702.29 33,963.29

Amounts outstanding there against 6935.35 5,942.66

(c) Claims against the Company not acknowledged as Debt 189.57

3. (a) Trade Payables include Rs. 55.27 Lakh (Rs. 91.08 Lakh as at 31/03/2012) due to Micro and Small Enterprises registered under the Micro, Small and Medium Enterprises Development Act, 2006 (MSME).

(b) No interest is paid / payable during the year to any enterprise registered under MSME.

(c) The above information has been determined to the extent such parties could be identified on the basis of the information available with the Company regarding the status of suppliers under the MSME.

4. As none of the Zero Coupon Foreign Currency Convertible Bonds (FCCBs), 2007, of the aggregate principal value of USD 35 Million were converted into equity shares of the Company at the option of the holders, as per the terms of the issue, the FCCBs were fully redeemed on their due date i.e. October 10, 2012, at the premium of 42.8010% amounting to US$ 49.98 Mn. at the US$ / Rupee exchange rate of 52.64. The premium amounting to Rs. 87.62 Crore, including the withholding tax of Rs. 8.76 Crore, has been charged off to the Securities Premium Account.

5. Related Party Disclosures: 1. Relationships:

(a) Subsidiary Companies :

EKC Industries (Tianjin) Co. Limited, China

EKC International FZE, UAE

EKC Industries (Thailand) Co. Limited, Thailand

Calcutta Compressions &

Liquefaction Engineering Limited (C C & L)

(b) Step Down Subsidiary Companies : EKC Hungary Kft, Hungary

EKC Europe GmbH, Germany CP Industries Holdings Inc., USA

(c) Other Related Parties where Promoters, Directors & Relatives exercise significant influence : Everest Kanto Investment and Finance Private Limited Khurana Gases Private Limited

Medical Engineers (India) Limited

Khurana Fabrication Industries Private Limited

Khurana Exports Private Limited

Everest Industrial Gases Private Limited

Khurana Charitable Trust

Khurana Education Trust

G.N.M.Realtors Private Limited

Ukay Valves & Founders Private Limited

(d) Key Management Personnel : Mr. Prem Kumar Khurana

Mr. Puneet Khurana (Till 30th September, 2012) Mr. Pramod Samvatsar (Till 1st March, 2013)

(e) Relatives of Key Management Personnel and their Enterprises, where transactions have taken place : Mr. S.S. Khurana

Mrs. Suman Khurana

6. Bonds / Undertakings given by the Company under concessional duty / exemption schemes to government authorities (net of obligations fulfilled) aggregate Rs. 3,554.24 Lakh as at the close of the year (31/03/2012 : Rs. 3,708.24 Lakh).

7. (a) In absence of the profits for the financial year 2012-13, the remuneration of Rs. 289.84 Lakh for the year of the Managing Director (MD) and the two Whole-Time Directors (WTD) as per their respective terms of appointments is in excess by Rs. 228.78 Lakh computed in accordance with the provisions of the Companies Act, 1956 and Schedule XIII thereto. The Company has obtained approval of the shareholders of the Company by way of postal ballot for payment of the excess remuneration and have applied to the Central Government for seeking its approval. Pending approval of the Central Government such excess remuneration is being held in trust by the Managing Director and Whole-Time Directors.

(b) As regards the excess remuneration of Rs. 207.31 Lakhs of the Managing Director and the two Whole-Time Directors for the financial year 2011-12, approval of the waiver of the excess remuneration has been obtained from the shareholders at the Annual General Meeting held in August 2012. On applications by the Company, the Central Government has approved the excess remuneration of Rs. 91.63 Lakh of the two Whole- Time Directors while its approval for the excess remuneration of Rs. 115.68 Lakh of the Managing Director is awaited. Pending approval of the Central Government the amount is held in trust by the Managing Director.

8. In accordance with Accounting Standard (AS) 15- "Employee Benefits", an amount of Rs. 100.72 Lakh (Previous Year Rs. 127.98 Lakh) as contribution towards defined contribution plans is recognised as expense in the Statement of Profit and Loss.

The disclosures in respect of the Defined Benefit Gratuity

9. In accordance with Accounting Standard – 17 ''Segment Reporting,'' segment information has been given in the Consolidated Financial Statements of the Company and, therefore, no separate disclosure on Segment information is given in these financial statements.

10. The Company has an investment of Rs. 200 Lakh in 2,000,000 Equity Shares of GPT Steel Industries Private Limited (GPT). Based on the audited financial statements of GPT, its Net Worth has fully eroded. The Company had made an assessment during the year 2010-11 and had accordingly provided for diminution in value of investments made in GPT. The position at the end of this financial year remains the same.

11. During the year, the Company has made additional investment of Rs. 96.42 Lakh in Calcutta Compression & Liquefaction Engineering Limited (CC&L), which is a subsidiary of the Company, wherein the Company has majority stake. Accordingly, the investment aggregates Rs. 431.72 Lakh (Rs. 335.30 Lakh as on 31/03/2012). Further, the Company has recoverable loans and other receivables, aggregating Rs. 903.58 Lakh (Rs. 877.16 Lakh as at 31/03/2012) from it. The Net Worth of CC&L has fully eroded. In the opinion of the management, after considering the projected earnings and cash flows of CC&L, the improvements in its current operational performance and the intention to hold this investment on a long term and strategic basis, no provision for diminution in the value of investment or for losses on account of loans and other receivables is considered necessary, at present.

12. As on March 31, 2013, the investment in equity shares, amounting to Rs. 6,925.07 lakhs, of EKC Industries (Tianjin) Company Limited, the subsidiary in China, has been considered as current investment pursuant to the decision of the Board of Directors of the company to dispose off the investment in the subsidiary by sale of the equity shares or in any other manner most beneficial to the company. Accordingly, the amounts recoverable as loans and advances and interest thereon aggregate Rs. 7,695.29 lakhs as on March 31, 2013 have been classified as current. As per the independent valuation obtained by the Company, the valuation of the Subsidiary exceeds the carrying value of the exposure.

13. Previous year''s figures have been reclassified / regrouped to conform to current year''s classification / grouping.


Mar 31, 2012

(a) Rights, Preferences and Restrictions attached to Shares

The Company has one class of Equity Shares having a par value of Rs 2/- per Share. Each Shareholder is eligible for one vote per share held. The Dividend proposed by the Board of Directors is subject to the approval of the Shareholders in the ensuing Annual General Meeting. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts in proportion to the share holding.

ADDITIONAL NOTES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 2012

1. Loan Funds:

(a) External Commercial Borrowing is secured by first charge on the specific fixed assets of the Kandla SEZ. The interest rate on the Borrowings is 5.75% per annum and the principal is repayable in two installments, the last installment falling due in September 2012.

(b) Working Capital facilities are secured against hypothecation of stocks and book debts of the Company and further secured by way of second charge on all the fixed assets (excluding specific fixed assets) of the Company. Out of the same Rs 1,389.99 Lakh (PY : Rs 3,127.45 Lakh) borrowings are guaranteed by Directors and their relatives.

(c) The Interest-free Sales Tax Deferment Loan is repayable in six equal annual installments, with the last installment falling due in financial year 2018-2019.

2. Contingent Liabilities not As at As at provided for in respect of: 31.03.2012 31.03.2011 (Rs in Lakh) (Rs in Lakh)

(a) Disputed Tax and other Matters

Income Tax 156.54 21.14

Sales Tax 486.74 114.82

Lease Tax 16.34 16.34

Future cash flows in respect of the above are determinable only on receipt of judgments/decisions pending with various forums/ authorities.

(b) Corporate Guarantees given on behalf of subsidiaries and step down subsidiaries 33,963.29 34,380.50

Amounts outstanding there against 5,942.66 10,848.92

3. (a) Trade Payables include Rs 91.08 Lakh (Rs 16.77 Lakh as at 31/03/2011) due to Micro and Small Enterprises registered under the Micro, Small and Medium Enterprises Development Act, 2006 (MSME).

(b) No interest is paid / payable during the year to any enterprise registered under MSME.

(c) The above information has been determined to the extent such parties could be identified on the basis of the information available with the Company regarding the status of suppliers under the MSME.

4. During the Financial Year 2007-08, the Company had raised a sum of USD 35 Million by issue of Zero Coupon Foreign Currency Convertible Bonds (FCCB) which are due in October 2012. The principal terms of the FCCBs are given below:

(i) The bond holders can exercise the option to convert into equity shares at any time after 41 days from the date of issue, up to seven days prior to maturity, at a fixed conversion price of Rs 303.36 per share with a fixed rate of Rs 39.84 to USD 1 (i.e. a conversion ratio of 13,133.1279 shares per bond).

(ii) On expiry of one year from the date of issue of the bonds, i.e. on the 9th October, 2008, the conversion price has been reset to Rs 271.32 (i.e. a conversion ratio of 14,684.0103 shares per bond).

(iii) The Company may opt for early redemption of the bonds at a redemption premium that gives the bond holder a gross yield of 7.25% per annum (compounded half yearly), provided bonds outstanding are less than 10 per cent of the bonds originally issued.

(iv) The Company may at its absolute discretion, at any time on or after 3 years from the date of issue of bonds, convert all outstanding bonds, provided the closing price of shares, during the specified period, is at least 130 per cent of the applicable early redemption amount.

(v) Bonds outstanding on the maturity date will be redeemed at 142.8010 % of the principal amount.

Due to variables currently indeterminable, the premium on actual redemption is not computable and hence will be recognized if and as and when the redemption option is exercised. The premium shall be first charged to the available balance in Securities Premium Account.

** Loans availed by step down subsidiaries are secured by way of first charge on all fixed assets at the Aurangabad, Tarapur and Gandhidham units.

# Foreign currency balances are restated at year end rates.

@ To the extent of amounts outstanding there against.

(Previous year figures are in brackets.)

5. Bonds / Undertakings given by the Company under concessional duty / exemption schemes to government authorities (net of obligations fulfilled) aggregate Rs 3,708.24 Lakh as at the close of the year (31/03/2011 : Rs 2,045.47 Lakh).

6. In absence of the profits for the year, the remuneration of Rs 279.31 Lakh paid during the year to the Managing Director and the two Whole-Time Directors as per their respective terms of appointment is in excess by Rs 207.31 Lakh computed in accordance with the provisions of the Companies Act, 1956 and Schedule XIII thereto. The Company would be obtaining approval of the shareholders of the Company at the ensuing Annual General Meeting of the Company and of the Central Government for waiver of the excess remuneration.

7. In accordance with Accounting Standard (AS) 15 - "Employee Benefits", an amount of Rs 127.98 Lakh (Previous Year Rs 126.42 Lakh) as contribution towards defined contribution plans is recognized as expense in the Statement of Profit and Loss.

The disclosures in respect of the Defined Benefit Gratuity Plan (to the extent of information made available by LIC) are given below:

8. In accordance with Accounting Standard - 17 'Segment Reporting,' segment information has been given in the Consolidated Financial Statements of the Company and, therefore, no separate disclosure on Segment information is given in these financial statements.

9. Considering foreign exchange exposures and the volatility in exchange rates, mark to market losses during the year on outstanding foreign currency derivative contracts to hedge highly probable forecast transactions have been charged to the Statement of Profit and Loss, discontinuing the Hedge Accounting principles followed upto 31st March, 2010. Accordingly, debit balance in the Hedging Reserve, as at 31st March, 2012, representing mark to market losses, considered as probable hedge transactions as at 31st March 2012, contracts of which are maturing up to December, 2012, stands at Rs 154.81 Lakh (Rs 365.43 Lakh as at 31/03/2011).

10. The Company has an investment of Rs 200 Lakh in 2,000,000 Equity Shares of GPT Steel Industries Private Limited (GPT). Based on the audited financial statements of GPT, its Net Worth has fully eroded. The Company had made an assessment during the year 2010-11 and had accordingly provided for diminution in value of investments made in GPT. The position at the end of this financial year remains the same.

11. During the year, the Company has made additional investment of Rs 96.42 Lakh in Calcutta Compression & Liquefaction Engineering Limited (CC&L), which is a subsidiary of the Company, wherein the Company has majority stake. Accordingly, the investment aggregates Rs 335.30 Lakh (Rs 238.88 Lakh as on 31/03/2011). Further, the Company has recoverable loans and other receivables, aggregating Rs 877.16 Lakh (Rs 846.73 Lakh as at 31/03/2011) from it. The Net Worth of CC&L has fully eroded. In the opinion of the management, after considering the projected earnings and cash flows of CC&L, the improvements in its current operational performance and the intention to hold this investment on a long term and strategic basis, no provision for diminution in the value of investment or for losses on account of loans and other receivables is considered necessary, at present.

12. During the year, as a part of global expansion plans, the Company has set up a step down wholly owned subsidiary in Germany viz. EKC Europe Gmbh, through EKC International FZE, Dubai, a wholly owned subsidiary company. The said Company will cater to the needs of European market and will also be engaged in technical developments.

13. The financial statements for the year ended 31st March, 2011 had been prepared as per the then applicable, pre- revised Schedule VI to the Companies Act, 1956. Consequent to the notification under the Companies Act, 1956, the financial statements for the year ended 31st March, 2012 are prepared under revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification.

14. Significant Accounting Policies followed by the Company are as stated in the Statement annexed to this Schedule as Annexure I.

 
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