Notes to Accounts of Everest Kanto Cylinder Ltd.

Mar 31, 2018

NOTE 1:

Company information

Everest Kanto Cylinder Limited (‘the Company’) is a listed company domiciled and incorporated in India in 1978. The registered and corporate office of the Company is situated at 204, Raheja Centre, Free Press Journal Marg, 214, Nariman Point, Mumbai - 400002. 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.

Basis of Preparation

The Company has prepared its separate financial statements to comply in all material respects with the provisions of the Companies Act, 2013 (the Act) and rules framed thereunder and the guidelines issued by Securities and Exchange Board of India. In accordance with the notification issued by the Ministry of Corporate Affairs, the Company has adopted Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 under Section 133 of the Act, with effect from 1 April 2017. Till 31 March 2017, the Company used to prepare its financial statements as per Companies (Accounting Standards) Rules, 2014 (Previous GAAP) read with rule 7 and other relevant provisions of the Act. There are the first Ind AS Financial Statements of the Company. The transition from Previous GAAP to Ind AS has been accounted for in accordance with Ind AS 101 “First Time Adoption of Indian Accounting Standards”, with 1 April 2016 being the transition date and balance for the comparative period have been restated accordingly. As per Ind As 101, the Company has presented a reconciliation of its transition Previous GAAP to Ind AS of its total equity as at 1 April 2016 and 31 March 2017 and reconciliation of total comprehensive income for the year ended 31 March 2017. Please refer note 46 for detailed information on the transition.

The separate financial statements have been prepared on a historical cost convention and accrual basis, except for the following assets and liabilities:

i) Certain financial assets and liabilities that are measured at fair value

ii) Defined benefit plans-plan assets measured at fair value

All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out in Schedule III of Companies Act, 2013.

# Execution of lease deed for land acquired at Tarapur Plant is pending, Rs.111.42 lakhs (31 March 2017: Rs.111.42 lakhs) (1 April 2016: Rs. 111.42 lakhs)]. ## Includes Rs.750 (31 March 2017: Rs.750) (1 April 2016: Rs.750) paid for shares acquired in co-operative societies.

* Includes vehicles in the personal name of directors having gross block of Rs.118.50 lakhs and written down value of Rs.76.24 lakhs[(31 March 2017 Rs.118.50 lakhs and written down value of Rs.87.65 lakhs) (1 April 2016 - Gross block Rs.118.50 lakhs and written down value Rs.104.39 lakhs).

** Gas Cylinders includes Gas Cylinders given on lease having gross block of to Rs.Nil and written down value of Rs.Nil (31 March 2017 Rs.14.18 lakhs and written down value of Rs.12.63 lakhs).

As at 31st March, 2018, the Company is holding a majority stake of Rs.431.72 lakhs (Rs.431.72 lakhs as at 1st April, 2016 and as at 31 March 2017) in its subsidiary, Calcutta Compression & Liquefaction Engineering Limited (CC&L). Further, the Company has trade receivables, loans and other receivables, aggregating Rs.1,201.40 lakhs [(Rs.1,406.40 lakhs as at 31 March 2017)] due from it. The Net Worth of CC&L has fully eroded. Provision of Rs.Nil (31 March 2017 Rs. 43.87 Lakhs and 1st April 2016: Rs.826.47 lakhs) towards trade receivables, loans and other receivables have been made on management’s assessment and independent valuation of the recoverable value of the investment, loans and receivables. This provision has been disclosed as an Exceptional item in the Statement of Profit and Loss.

i) Since 31st March, 2013, the investment in equity shares, amounting to Rs.6,925.07 lakhs of EKC Industries (Tianjin) Company Ltd., 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.4,181.70 lakhs as on 31st March, 2018 [(Rs.4,167.20 lakhs as at 31st March, 2017) (Rs.4,296.76 as at 1 April 2016)] have been classified as current assets. The Company, based on the assessment of the fair value of the assets of EKC Industries (Tianjin) Company Ltd., is of the considered view, 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.1,000 lakhs [(31 March, 2017: Rs.2,000 lakhs)] has been provided towards such diminution and has been disclosed as an Exceptional Item in the Statement of Profit and Loss. The total provision towards such diminution as at 31 March, 2018 stands at Rs.6,500 lakhs [(Rs.5,500 lakhs as at 31st March, 2017) (Rs.3,500 lakhs as at 1 April 2016)].

ii) The Company and EKC International FZE (UAE subsidiary) had, in earlier years, provided loan to EKC Industries (Tianjin) Co., Ltd. (China subsidiary). During the current period, the Company has obtained in-principle approval from Commerce Bureau, Tianjin for conversion of loans of the Company and its UAE subsidiary into equity shares of the China subsidiary. Upon receipt of final approval, the shareholding of the Company and UAE subsidiary in China subsidiary would be in proportion of 63.96% and 36.04% respectively.

On 15 April 2018, the Company along with UAE subsidiary has entered into an agreement to sell the China subsidiary to You Yuan office Union (Tianjin) Company limited for an aggregate consideration of RMB 93.50 million (approx. Rs.9700 lakhs) subject to shareholders and various regulatory approvals in India and China. The Company has already initiated the process of obtaining the requisite shareholders approvals by circulating postal ballot notice in this regard.

The Company had advanced an inter-corporate deposit to Hubtown Limited during the year ended 31 March 2012. However, in the absence of certainty, the Company had discontinued the recognition of revenue with effect from 1 April 2015. Currently, the Company has entered into a revised agreement with Hubtown Limited and have made recoveries in accordance with the revised agreement. Accordingly, considering the recent positive developments, the Company has recognized interest income of Rs.815 lakhs (including unrecognised income of Rs.532 lakhs till 31 March 2017). Further, the provision towards doubtful recovery of intercorporate deposit of Rs.100 Lakhs has also been reversed during the year ended 31 March 2018. These amounts are forming part of ''Other Income'' for the year ended 31 March 2018.

i) During the year ended 31 March 2017, the Company has entered into an agreement towards sale of building, electrical installations along with land appurtenant thereto (the “Specified Assets”), situated at Gandhidham, for an aggregate consideration of USD 29 Million. Pursuant to this transaction and subsequent realizations post year end, the Company has recognised sale of the Specified Assets (except agricultural land) and have considered the gain of Rs.12,923.38 lakhs from the transaction as an ‘Exceptional Item’ in the the Statement of Profit and Loss for the year ended 31 March 2017. However, pending receipt of relevant government approvals towards conversion of agricultural land to industrial land, the agricultural land has been continued as ‘Assets held for sale’. The sales consideration and carrying value of the agricultural land is USD 4 Million and Rs.273.85 lakhs [(31 March 2017: Rs.273.85 lakhs) (1 April 2016: Rs.235.56 lakhs), respectively]. An amount of USD 2 Million received in the previous year as an advance against the said agricultural land has been included under ‘Other Current Liabilities’.

To give effect to the above agreement and ensure smooth continuance of the business, the Company has shifted its manufacturing facilities from Gandhidham to Kandla Plant and have incurred shifting expenses to the extent of '' Nil ('' 696.33 lakhs in the previous year ended 31 March 2017). These shifting expenses have also been disclosed as an Exceptional Item in the Statement of Profit and Loss.

ii) During the year ended 31 March 2017, the Company has sold/discarded certain items of plant of machinery rendered unusable for an aggregate loss of Rs.1,539.44 lakhs (including impairment loss of Rs.61.92 lakhs on Assets held for sale with residual carrying value Rs.19.97 lakhs). The loss has been disclosed as an Exceptional Item in the Statement of Profit and Loss during the year ended 31 March 2017. These impaired assets were disposed off during the year ended 31 March 2018.

iii) During the year ended 31 March 2017, the Company has decided to sell certain items of plant and machinery forming part of ‘Capital work in progress’. Accordingly, these assets have been considered as ‘Assets held for Sale’. The carrying value of these assets has been written down to their net realizable value at Rs.1,548.48 lakhs as on 31 March 2017 and an impairment loss of Rs.628.71 lakhs has been disclosed as an Exceptional Item in the Statement of Profit and Loss. ‘Assets held for Sale’ as on 31 March 2018 also includes assets amounting to Rs.1,548.48 lakhs as stated above.

iv) As at 31st March, 2018, ''Assets classified as held for sale'' include office premises at Mumbai having book value Rs.1,248.29 lakhs (Rs.1,235.68 lakhs as at 31 March 2017) (Rs.1,235.68 lakhs as at 1st April, 2016)] being property, plant and equipment''s considered as ‘Assets held for Sale’, pursuant to the decision of the Company to dispose off the same in the near future.

v) Assets classified as held for sale during the reporting period was measured at the lower of its carrying amount and fair value less costs to sell at the time of the reclassification. This has resulted in write down of the value of the assets by Rs.Nil (Rs.690.63 lakhs as at 31 March 2017) (Nil as at 1st April, 2016).

The fair value of the land has been determined based on contractual rate agreed with the buyer. The fair value of the building was determined based on government notified rates plus market value margin which represents the fair value of the building in that area. The key inputs under this approach are price per square meter of comparable lots of building in the area of similar location and size. Plant and Machinery (CWIP) has been valued based on independent quotes received from various vendors. The fair valuation has been categorized under level 2 of the fair value hierarchy (Refer note 39).

(ii) Rights, preferences and restrictions

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.

Nature and Purpose of Reserves

i) Securities Premium Account

Securities premium reserve is created due to premium on issues of shares. This reserve is utilised in accordance with the provisions of the Act.

ii) General Reserve

The general reserve represents amounts appropriated out of retained earnings based on the provisions of the Act prior to its amendment.

iii) Retained earnings

Retained earnings pertain to the accumulated earnings / losses made by the Company over the years.

iv) FVOCI - Equity investments

The Company has elected to recognise changes in the fair value of certain investments in equity securities in other comprehensive income. These changes are accumulated within FVOCI equity investments reserve within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.

Refer note 2 for liquidity risk

Notes :

i) Indian Rupee Term Loan from a bank up to Rs.32,500.00 lakhs is secured by way of (a) first pari passu charge on all the property, plant and equipment''s 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) unconditional and irrevocable 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 unequaled instalments by October 2020. The interest rate of the Borrowing is 11% per annum.

ii) Foreign Currency Term Loan of US$ 5.00 Million from a bank is secured by way of (a) first pari passu charge on entire property, plant and equipment''s both present and future (excluding residential flat at Cuffe Parade, Mumbai and office premises situated at Nariman Point, Mumbai) (b) Second pari passu charge on current assets of the Company (both present and future)

(c) Unconditional and irrevocable personal guarantees from three promoter directors (d) no disposal undertaking of shareholding of the Company in its subsidiaries located in China and Dubai (e) pledge of 29.99% of the shares held by the Company in its subsidiaries located in China and Dubai. The loan has bullet repayment in June 2018. The interest rate of the Borrowings is 6 Months’ LIBOR plus 5.0% per annum.

iii) Vehicle Loans from Bank and Financial Institution are repayable in 60 and 35 monthly instalment respectively, with the last instalment falling due in February 2023 and April 2019 respectively. These loans are secured by hypothecation of underlying vehicle and are at fixed rate of interest of 8.35% and 10.83% per annum respectively.

iv) The Interest-free Sales Tax Deferment Loan is repayable in six equal annual instalments, with the last instalment falling due in financial year 2018-19.

v) Unsecured loans from related parties are repayable on demand and carry interest rate of 12% per annum. However, as per the terms of the loans, except for an amount of Rs.201.95 lakhs (31 March 2017 : Nil) (1 April 2016 : Nil) repayment of loans cannot be demanded before 1 April 2019.

I. 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 judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised 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 group has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. For example, listed equity instruments that have quoted market price.

Level 2: The fair value of financial instruments that are not traded in an active market (for example, traded bonds, over-the- counter derivatives) is determined using valuation techniques which maximise 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.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities, contingent consideration and indemnification asset included in level 3.

II. Valuation techniques used to determine fair value

Significant valuation techniques used to value financial instruments include:

The fair values for investment in equity instrument are based on discounted cash flows using a discount rate determined considering Company''s incremental borrowing rate.

(a) The above financial assets and liabilities are categorised under level 2 of fair value hierarchy.

(b) During the periods mentioned above, there have been no transfers amongst the levels of hierarchy.

(c) The carrying amounts of Trade receivables, Cash and cash equivalents, other bank balances, loans, other current financial assets, current borrowings, trade payables, other current financial liabilities are considered to be approximately equal to the fair value.

3 Financial risk management

The Company is exposed primarily to fluctuations in foreign currency exchange rates, credit, liquidity and interest rate risk which may adversely impact the fair value of its financial instrument. The Company has a risk management policy which covers risk associated with the financial assets and liabilities. The risk management policy is approved by Board of Directors. The focus of the risk management committee is to assess the unpredictability of the financial environment and to mitigate potential adverse effect on the financial performance of the company.

The Company''s principal financial liabilities comprises of borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company’s operations. The Company’s principal financial assets include loans, trade and other receivables, cash and bank balances, bank deposits and investments that derive directly from its operations.

The Company is exposed to credit risk, market risk and liquidity risk. The Company’s senior management oversees the management of these risks.

A. Credit risk

The Company is exposed to credit risk from its operating activities (primarily for trade receivables) and from its financing activities (deposits with banks and other financial instruments) except loans to related parties. Further, the Inter Corporate deposits given by the Company are based on adequate collateral provided by the party.

Credit risk arises from the possibility that the counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses financial reliability of customers and other counter parties, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of financial assets. Individual risk limits are set and periodically reviewed on the basis of such information. The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis through each reporting period. To assess whether there is a significant increase in credit risk, the Company compares the risk of default occurring on asset as at the reporting date with the risk of default as at the date of initial recognition. It considers reasonable and supportive forwarding-looking information such as:

i) Actual or expected significant adverse changes in business,

ii) Actual or expected significant changes in the operating results of the counter-party,

iii) Financial or economic conditions that are expected to cause a significant change to the counter-party’s ability to meet its obligations,

iv) Significant increase in credit risk on other financial instruments of the same counter-party,

v) Significant changes in the value of the collateral supporting the obligation or in the quality of the third-party guarantees or credit enhancements.

Financial assets are written off when there is no reasonable expectations of recovery, such as a debtor failing to engage in a repayment plan with the Company. Where loans or receivables have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognized as income in the statement of profit and loss.

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 - trade payables and other financial liabilities.

Liquidity risk management

The Company’s corporate treasury department is responsible for liquidity and funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company’s net liquidity position through rolling forecasts on the basis of expected cash flows.

C Market risk

(i) Foreign currency risk

The Company is exposed to foreign exchange risk on their receivables and payables which are held in USD, Thai Baht, AED and EUR.

Foreign currency risk management

In respect of the foreign currency transactions, the Company does not hedge the exposures since the management believes that the same will be offset by the corresponding receivables and payables which will be in the nature of natural hedge.

4. Capital Management

Risk managementThe Company’s objectives when managing capital are as below -

- safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and

- maintain an optimal capital structure to reduce the cost of capital.

The Company monitors its capital by using gearing ratio, which is net debt divided to total equity. Net debt includes non-current and current borrowings net of cash and bank balances and total equity comprises of Equity share capital, security premium, general reserve, other comprehensive income and retained earnings.

Loan covenants

Bank loans availed by the Company contain certain debt covenants which are required to be complied with. The Limitation of indebtedness covenant gets suspended once the Company meets the certain prescribed criteria. As of the reporting date, the Company is not in compliance with certain performance linked financial covenants. The Company is trying to ensure compliance with the covenants as soon as possible. The banks have not levied any interest/penalty towards above matter.

Notes:

i) Foreign currency balances are restated at year end rates.

ii) Loans given to subsidiaries and loans raised by subsidiaries backed by guarantees given on their behalf have been utilised by them for acquisition of property, plant and equipments and for working capital.

iii) Personal Guarantees given to banks of Rs. 40,000.00 lakhs and US$ 5 Mn (Rs. 40,000.00 lakhs and US$ 5 Mn as on 31 March 2017 and April 1, 2016) by Promoter Directors for the Term Loans and Working Capital Loans against which Rs.14,787.69 lakhs (Rs. 28,544.38 lakhs as on 31 March 2017) and (Rs. 29,477.42 lakhs as on April 1, 2016) were outstanding as at the end of the year.

(B) Defined Benefit Plan :

(1) Contribution to Gratuity fund (funded scheme)

The Company provided for gratuity for employee in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity plan is funded plan and the Company makes contribution to recognised funds in India.

The Plan typically exposes the Company to actuarial risk such as Interest Risk, Longevity Risk and Salary Risk

a) Interest Risk:- A decrease in the bond interest rate will increase the plan liability.

b) Longevity Risk: The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan’s liability.

c) Salary Risk: The present value of the defined plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan’s participants will increase the plan’s liability.

5. Segment reporting

In accordance with Ind AS 108- ''operating Segment'', segment information has been given in the Consolidated Financial Statements of the Company, therefore, no separate disclosure on Segment information is given in these financial statements.

6. 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 2018.

The accounting policies set out in note 1 have been applied in preparing the financial statements for the year ended 31 March 2018, the comparative information presented in these financial statements for the year ended 31 March 2017 and in the preparation of an opening Ind AS balance sheet at 1 April 2016 (the date of transition). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). Consequently, in preparing these Ind AS financial statements, the Company has availed certain exemptions and complied with the mandatory exceptions provided in Ind AS 101, as explained below. The resulting difference in the carrying values of the assets and liabilities as at the transition date between the Ind AS and Previous GAAP have been recognised directly in equity (retained earnings or another appropriate category of equity).

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

i) Optional exemptions availed

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 recognised 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 can also be used for intangible assets covered by Ind AS 38 Intangible Assets and investment property covered by Ind AS 40 Investment Properties.

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

Business combinations

Ind AS 101 provides the option to apply Ind AS 103 prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combination prior to the transition date.

The Company has availed the business combination exemption on first time adoption of Ind AS and accordingly the business combinations prior to date of transition have not been restated to the accounting prescribed under Ind AS 103 - Business combinations.

Investment in subsidiaries

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its subsidiaries as recognised 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.

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

ii) Mandatory exceptions applied Estimates

An entity’s estimates in accordance with Ind AS 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.

The estimates as at 1 April 2016 and 31 March 2017 are consistent with those made for the same dates in accordance with previous GAAP (after adjustment to reflect differences if any, in accounting policies) apart from the below item where the application of previous GAAP did not require estimation: - Impairment of financial assets based on the expected credit loss model.

De-recognition of financial assets and liabilities

Ind AS 101 requires a first-time adopter to apply the derecognition 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 derecognised 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.

Classification and measurement of financial assets

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

As per Ind AS 101, if the first time adopter did not, under the previous GAAP, recognise and measure a government loan at below market rate of interest on the basis consistent with Ind AS requirement, 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 ASs.

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 loan outstanding as at the date of transition.

7. In accordance with Indian Accounting Standard (AS) - 18 -''Revenue from customers'', the Company has deferred the recognition of interest income of Rs.158.37 lakhs [(as at 31 March 2017: Rs.537.69 lakhs) (as at 1 April, 2016: Rs.298.79 lakhs)], due to uncertainties involved in ultimate collection of the outstanding amounts.

8. During the year, the Chairman & Managing Director was entitled to remuneration. However, the CMD has voluntarily decided not to draw any remuneration from the Company.

9. The outstanding balances as at 31 March, 2018 include trade payables aggregating Rs.8,469.71 lakhs, trade receivables aggregating Rs.16.26 lakhs and interest receivable aggregating to Rs.1,341.00 lakhs to/from companies situated outside India. These balances are pending for settlement due to financial difficulties and have resulted in delays in remittance of payments, receipts of receivables and receipt of interest, beyond the timeline stipulated by the FED Master Direction No. 17/2016-17, FED Master Direction No. 16/2015-16 and Notification No. FEMA 120/ RB-2004 respectively, under the Foreign Exchange Management Act, 1999. The Company is in the process of regularizing these defaults by filing necessary applications with the appropriate authority for condonation of delays.

10. The Company currently does not have Chief Financial officer and Company Secretary as required under Section 203 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The Company is in the process of hiring a suitable candidate.

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Mar 31, 2016

SIGNIFICANT ACCOUNTING POLICIES AND EXPLANATORY INFORMATION TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31st MARCH, 2016

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 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 its subsidiary located in China. The loan 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) unconditional and irrevocable 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 by October 2020. The interest rate of the Borrowing ranges from 11% to 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, book debts and all other current assets 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 and one other bank has been provided personal guarantee from a director. 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 11% to 15% 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) Unsecured loans from related parties are repayable on demand and carry interest rate of 12% per annum. However, as per the terms of the loans, repayment of loans cannot be demanded before 1 April 2017.

1. Bonds / Undertakings given by the Company under concessional duty / exemption schemes to government authorities (net of obligations fulfilled) aggregate Rs. 19.94 Lakh as at the close of the year (March 31, 2015: Rs. 2,978.77 Lakh).

2. During the year 2015-16, the Chairman & Managing Director (CMD) is entitled to a remuneration of Rs. 61.19 Lakh (March 31, 2015: 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.

3. In accordance with Accounting Standard (AS) 15 -“Employee Benefits”, an amount of Rs. 57.85 Lakh (Previous Year Rs. 69.89 Lakh) as contribution towards defined contribution plans is recognised as expense in the Statement of Profit and Loss.

4 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.

5 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.

6 As on March 31, 2016, the Company is holding a majority stake of Rs. 431.72 Lakh (Rs. 431.72 Lakh as on March 31, 2015) in its subsidiary, Calcutta Compression & Liquefaction Engineering Limited (CC&L). Further, the Company has trade receivables, loans and other receivables, aggregating Rs. 1,413.40 Lakh (Rs. 1,328.09 Lakh as at March 31, 2015) due from it. The Net Worth of CC&L has fully eroded. Provision for impairment of Rs. Nil (Previous year Rs. 431.72 Lakh) towards the investment in share capital and Rs. 826.47 Lakh (Previous year Rs. 48.28 Lakh) towards trade receivables, loans and other receivables have been made 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.

7 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.4,295.76 Lakh as on March 31, 2016 (Rs. 3,950.82 Lakh as at March 31, 2015) 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. 2,000 Lakhs (Previous year Rs. 1,500 Lakhs) has been provided towards such diminution and has been disclosed as an Exceptional Item in the Statement of Profit and Loss. The total provision towards such diminution as at 31 March 2016 stands at Rs. 3,500 Lakhs (Previous year Rs. 1,500 Lakhs).

8 Exceptional Item includes benefit on closure of borrowing obligation of Rs. 507.73 Lakhs (Previous year Rs. Nil).

9 Exceptional item includes provision towards diminution in value for slow and non-moving inventory of Rs. 615.68 Lakhs (Previous year Rs. Nil).

10 Short term loans and advances and other current assets includes an aggregate amount of Rs. 1,724.09 Lakh (Rs. 1,779.2 Lakh as at 31 March 2015) towards secured inter-corporate deposit advanced to Akruti City Limited (now Hubtown Limited) and accrued interest thereon. The deposit and accrued interest are outstanding for a considerable period. These deposits are secured against mortgage rights of an under-construction commercial property in favor of the Company. Based on on-going discussion with Akruti City Limited (now Hubtown Limited), the management is confident of recovering the inter-corporate deposit with accrued interest thereon and therefore believes that no provision for losses on account of non-recoverability of amounts, if any, is necessary at present.

11 As on March 31, 2016, Other Current Assets include land at Gandhidham having book value Rs. 235.56 Lakh (As on March 31, 2015 Rs. 223.25 Lakh) and office premises at Mumbai having book value Rs. 1,235.68 Lakh (As on March 31, 2015 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 in the near future.

12 In accordance with Accounting Standard (AS) - 9 - Revenue recognition, the Company has deferred the recognition of interest income of Rs. 299 Lakh, due to uncertainties involved in ultimate collection of the outstanding amounts.

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

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

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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.

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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.

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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.

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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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Mar 31, 2011

1. Loan Funds:

(a) External Commercial Borrowing from DBS Bank is secured by first charge on the specific fixed assets of the Kandla SEZ.

(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. The borrowings are guaranteed by Directors and their relatives.

2. Contingent liabilities not As at As at provided for in respect of: 31.03.2011 31.03.2010 (Rs. in Lac) (Rs. in Lac)

(a) Disputed Tax and other Matters

Income Tax 21.14 –

Sales Tax 114.82 –

Lease Tax 16.34 16.34

Claims not acknowledged

as debts – 1.74

The Company has taken legal and other steps necessary to protect its position in respect of these claims, which in its opinion, based on professional advice are not expected to devolve. It is not possible to make any further determination of the liabilities which may arise or the amounts which may be refundable in this respect.

(b) Corporate Guarantees given on behalf of subsidiaries and step down subsidiaries 34,380.50 36,112.00

(Amounts outstanding there against) 10,848.92 19,247.55

3. (a) Sundry Creditors in Schedule L to the Accounts include (i) Rs. 16.77 Lac (Rs. 36.31 Lac as at 31.03.2010) due to micro and small enterprises registered under the Micro, Small and Medium Enterprises Development Act, 2006 (MSME) and (ii) Rs. 6,232.34 Lac (Rs. 9,226.86 Lac as at 31.03.2010) due to other creditors.

(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 an earlier year, the Company had raised a sum of USD 35 Million by issue of Zero Coupon Foreign Currency Convertible Bonds (FCCB) which is due in 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, upto 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 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 recognised if and as and when the redemption option is exercised. Such premium shall be first charged to the available balance in securities premium account.

5. Related parties disclosures: 1. Relationships:

(a) Subsidiary Companies:

EKC Industries (Tianjin) Co. Ltd., China

EKC International FZE, UAE

EKC Industries (Thailand) Co. Ltd., Thailand

Calcutta Compressions & Liquefaction Engineering Ltd. (CC&L)

(b) Step Down Subsidiary Companies:

EKC Hungary Kft, Hungary

CP Industries Holdings, Inc., USA

(c) Other related parties where control exists:

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

Mr. Pramod Samvatsar

(e) Relatives of Key management personnel and their enterprises, where transactions have taken place:

Mr. S.S. Khurana

Mrs. Suman Khurana

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

6. Bonds / Undertakings given by the Company under concessional duty / exemption schemes to government authorities (net of obligations fulfilled) aggregate Rs. 2,045.47 Lac as at the close of the year (31.03.2010 Rs. 5,874.44 Lac).

7. In accordance with Accounting Standard (AS) 15 - "Employee Benefits", an amount of Rs. 126.42 Lac (Previous Year Rs. 99.53 Lac) as contribution towards defined contribution plans is recognised as expense in the Profit and Loss Account.

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 Profit and Loss Account, discontinuing the Hedge Accounting principles followed upto 31st March, 2010. Accordingly, debit balance in the Hedging Reserve, as at 31st March, 2011, representing mark to market losses, considered as probable hedge transactions as at 31st March, 2010, contracts of which are maturing upto December, 2012, stands at Rs. 365.43 Lac.

10. The Company has an investment of Rs. 200 Lac in 2,000,000 Equity Shares of GPT Steel Industries Private Limited (GPT). As per the latest audited financial statements of GPT, the networth has fully eroded. The Company has during the year made an assessment and has accordingly provided for diminution in value of investments made in GPT.

11. The Company has investments of Rs. 238.88 Lac in and loans and other receivables aggregating Rs. 853.34 Lac recoverable from Calcutta Compressions & Liquefaction Engineering Limited (CC&L), a subsidiary with a majority stake. The networth of CC&L has fully eroded mainly on account of pre-operating losses. In the opinion of the management, after considering the projected earnings and cash flows of CC&L, the improvements in its operational performance during the last quarter of the current financial year 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 a part of its global expansion plans, the Company has formed a wholly owned subsidiary in Thailand viz., EKC Industries (Thailand) Company Limited on 7th October, 2010. The said Company will cater to the needs of Thailand market, since Thailand is promoting Natural Gas Vehicles in a big way.

13. The Company, during Financial Year 2009 - 2010, changed its method of providing for depreciation on fixed assets, from Written Down Value Method (WDV) to Straight Line Method (SLM). Accordingly, depreciation was recalculated in accordance with SLM from the date the assets were put to use and surplus of Rs. 1,986.69 Lac (net of tax) in respect of earlier years was credited to the Profit and Loss Account.

14. With a view to consolidate and promote synergy amongst similar facilities and effective utilisation of the manufacturing facilities, it was considered prudent to shift the entire activities of Aurangabad plant to larger unit located at Gandhidham, during the quarter ended 31st December, 2010.

15. Previous year figures have been regrouped / recast wherever necessary.

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Mar 31, 2010

1. Loan Funds:

(a) External Commercial Borrowing from DBS Bank is to be secured by first charge on the specific fixed assets of Kandla SEZ and till such time is guaranteed by a director.

(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. The borrowings are guaranteed by Directors and their relatives.

2. (a) Sundry Creditors in Schedule ‘ L’ to the Accounts include (i) Rs. 36.31 Lac (Rs. 2.05 Lac as at 31.03.2009) due to micro and small enterprises registered under the Micro, Small and Medium Enterprises Development Act, 2006 (MSME) and (ii) Rs. 9,226.86 Lac (Rs. 11,654.61 Lac as at 31.03.2009) due to other creditors.

(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.

5. During an earlier year, the Company had raised a sum of USD 35 Million by issue of Zero Coupon Foreign Currency Convertible Bonds (FCCB) which are due in 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, upto seven days prior to maturity, at a fixed conversion price, which has been reset w.e.f. 9th October, 2008 to Rs. 271.32 per share with a fixed rate of Rs. 39.84 to USD 1 (i.e. a conversion ratio of 14,684.0103 shares per bond).

(ii) 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% of the bonds originally issued.

(iii) 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% of the applicable early redemption amount.

(iv) 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 recognised if and as and when the redemption option is exercised. Such premium shall be first charged to the available balance in securities premium account.

The employee wise break - up of benefits, calculations of which are based on actuarial valuations are not ascertainable. The amounts relatable to the Directors are, therefore, disclosed in the year of payment.

3. The Company, during the year, has changed its method of providing for depreciation on fixed assets, from the existing Written Down Value (WDV) method to Straight Line Method (SLM). This change would enable the Company to make a more appropriate allocation of depreciation so as to charge a fair proportion of the depreciable amount in each accounting year during the expected useful and economical life of the assets. Consequently, the said change would also result in more accurate presentation of carrying value of fixed assets at the balance sheet date.

Accordingly, depreciation has been recalculated in accordance with SLM from the date the assets were put to use and the surplus of Rs. 1,986.69 Lac (net of tax) in respect of earlier years has been credited to the Profit and Loss Account. Consequent to such change in the method, the depreciation charge for the year is lower by Rs. 1,175.58 Lac and the profit for the year is higher by the said amount and the reserves and surplus is higher by Rs. 2,771.77 Lac.

4. Related parties disclosures:

1. Relationships:

a) Subsidiary Companies:

EKC Industries (Tianjin) Co. Limited, China

EKC International FZE, UAE

Calcutta Compressions &

Liquefaction Engineering Limited (CC&L)

(b) Step Down Subsidiary Companies: EKC Hungary Kft, Hungary CP Industries Holdings, Inc., USA

(c) Other related parties where control exists: Everest Kanto Investment and Finance Pvt. Ltd. Khurana Gases Pvt. Ltd.

Medical Engineers (India) Ltd. (MEIL) Khurana Fabrication Industries Pvt. Ltd. Khurana Exports Pvt. Ltd. Everest Industrial Gases Pvt. Ltd. Khurana Charitable Trust Khurana Education Trust G.N.M.Realtors Pvt. Ltd. Ukay Valves & Founders Pvt. Ltd.

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

Mr. Pramod Samvatsar

(e) Relatives of Key management personnel and their enterprises, where transactions have taken place:

Mr. S. S. Khurana Mrs. Suman Khurana

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

5. Bonds / Undertakings given by the Company under concessional duty / exemption schemes to government authorities (net of obligations fulfilled) aggregate Rs. 5,874.44 Lac as at the close of the year (31.03.2009 Rs. 3,104.65 Lac).

6. In respect of currency options contracts entered into, to hedge highly probable forecast export transactions, the Company has followed the principles set out in Accounting Standard - 30 - Financial Instruments: Recognition and Measurement issued by the Institute of Chartered Accountants of India. Consequently, such exchange variations are accumulated in hedging reserve and recognized in the Profit and Loss Account only on completion of the transaction. Accordingly, debit balance in the Hedging Reserve, as at 31st March, 2010, representing mark to market losses, in respect of contracts maturing upto December, 2012, stands at Rs. 640.15 Lac.

7. The Company has an investment of Rs. 200 Lac in 2,000,000 equity shares of GPT Steel Industries Private Limited (GPT). As per the latest audited financial statements of GPT, the net worth has eroded. However, as per information available with the Company, GPT continues to be a going concern and has now embarked upon a revival plan. Considering the same and the intention of the management to hold this investment on a long term basis, no diminution in the value of the above investment is considered necessary, at present.

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. Previous year figures have been regrouped / recast wherever necessary.