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Notes to Accounts of GOCL Corporation Ltd.

Mar 31, 2015

A. CORPORATE INFORMATION

The Company is in the business of Energetics (Formerly Industrial Explosives), Mining & Infrastructure Services (Formerly Consult) and Realty (Formerly Property Development)

1. During the year, pursuant to the notification of Schedule II to the Companies Act, 2013 with effect from 1st April 2014, the Company has revised the estimated useful life of its fixed assets to align the useful life with those specified in Schedule II.

Pursuant to the transition provisions prescribed in Schedule II to the Companies Act, 2013, the Company has fully depreciated the carrying value of assets, net of residual value, where the remaining useful life was determined to be Nil as on 1 st April 2014 and has adjusted Rs. 146.99 Lakhs (Net of deferred tax of Rs. 75.69 Lakhs) against the opening balance in the Statement of Profit and Loss under Reserves and Surplus. Consequent to the change in the useful life of fixed assets, the impact on the depreciation expense for the year is not material.

2. Realty (Formerly Property Development)

i. Land meant for property development situated at Bengaluru and Hyderabad had been revalued as at 31st March 2008, based on a valuation by an approved valuer. The resultant surplus on such revaluation amounting to Rs. 183,896.69 Lakhs had been credited to Revaluation Reserve in the earlier years. In view of steep recession in the Realty Sector, management reassessed the valuation of the aforesaid properties as on 31st March 2009 and based on the guidelines issued by the Registration and Stamps Department of Karnataka and Andhra Pradesh, the value of the subject lands had been reassessed and the resultant surplus on revaluation amounted to Rs. 43,799.82 Lakhs. The resultant write down aggregating to Rs.140,096.87 Lakhs, in accordance with the requirement of Accounting Standard-10 "Accounting for Fixed Assets" had been debited to Revaluation Reserve.

ii. In the financial year 2011-12, the Company surrendered certain portion of the land for road laying and widening purposes to Greater Hyderabad Municipal Corporation. Consequently Rs. 3,285.67 Lakhs had been withdrawn from Revaluation Reserve.

iii. As at 31st March 2012, land meant for property development situated at Hyderabad, had been revalued based on valuation by an approved valuer. The resultant surplus on such revaluation amounting to Rs. 63,027.56 Lakhs had been credited to Revaluation Reserve.

iv. In the financial year 2010-11, land at Bengaluru (cost of Rs. 3,610.66 Lakhs) meant for Property Development transferred to Inventory as approvals necessary for development of land were obtained. In terms of the Joint Development Agreement between the Company and Hinduja Realty Venture Limited (HRVL), the Company granted development rights to develop the property. In consideration, HRVL, at its own cost and expenses develop the said property. Further the built up area, amenities and facilities so constructed shall be shared by Company and HRVL in the ratio of 30:70 respectively according to the other terms and conditions mentioned in the agreement. The Company created equitable mortgage by way of deposit of title deeds in respect of the aforesaid Land towards loan of Rs. 85,000 Lakhs availed by Co-Developer (HRVL) from various lenders.

3. Discontinuing Operations of Lubricants Undertaking

The Board of Directors of the Company in its meeting held on 7th August 2013 approved the Scheme of Arrangement ("the Scheme") between the Company and Gulf Oil Lubricants India Limited (formerly Hinduja Infrastructure Limited) (GOLIL), for demerger of its "Lubricants Undertaking". The Scheme was sanctioned by the Hon''ble High Court Judicature of Andhra Pradesh vide Order dated 16th April 2014, which was thereafter filed with Registrar of Companies. Post demerger, GOLIL has ceased to be subsidiary of the company.

Pursuant to the Scheme, the assets and liabilities relating to the Lubricants Undertaking were transferred to and vested in GOLIL with effect from 1st April 2014. In terms of the Scheme, the difference between the value of assets and liabilities including allocation of common liabilities amounting to Rs. 14,362.65 Lakhs has been appropriated first against the paid-up value of the Share Capital cancelled (Rs. 991.45 lakhs) pursuant to the Scheme and the balance has been appropriated against Securities Premium Account (Rs. 12,139.52 lakhs) and then the remaining difference appropriated to General Reserve (Rs. 1,231.68 lakhs) of the Company.

In consideration for the above and in terms of the Scheme, one fully-paid up equity share of face value of Rs. 2 each of GOLIL was allotted to the shareholders of the Company, in lieu of every two equity shares of face value of Rs. 2 each held in the Company, prior to giving effect to reduction of Share Capital (i.e., from Rs.1,982.90 Lakhs to Rs. 991.45 Lakhs). The paid-up Share Capital of the Company, consequent to the implementation of the Scheme, comprises of 4,95,72,490 equity shares of Rs. 2 each. Further, as a consequence of the reduction of capital of the Company, the authorised share capital was re-organised to comprise of 7,54,27,51 0 equity shares of Rs. 2 each.

In view of the aforesaid implementation of the Scheme with effect from 1st April 2014, the figures for the current year are strictly not comparable with those of corresponding previous year figures.

4.1 Contingent Liabilities and Commitments:

(Rs. Lakhs)

As at As at 31st March 2015 31st March 2014

A. Contingent Liabilities:

Claims against the Company not acknowledged as Debts

a) Income Tax Demands 2944.24 1452.52

b) Sales Tax Demands 210.08 2098.11

c) Excise Demands 643.68 856.39

d) Additional Demands towards cost of land 3.81 3.81

e) Claims of workmen/ex- employees 147.50 145.75

f) Other Matters (also Refer Notes 3 and 4 below) 48.05 23.16

B. Commitments:

(a) Corporate Guarantees (Refer Note 1 below) 47413.00 12913.00

(b) Letters of Comfort (Refer Note 2 below) 110625.00 107847.00

(c) Estimated amount of contracts remaining to be executed on capital account [Net of advance of Rs. 34.83 Lakhs (As at 31st March 2014 - Rs. 155.67 Lakhs)] 56.58 1,487.54

Notes:

1) (a) The Company has given Corporate Guarantees aggregating to Rs. 12,913.00 Lakhs (31st March 2014 - Rs. 12,913.00 Lakhs) to the banks on behalf of its wholly owned subsidiary, IDL Explosives Limited. The amount of loan outstanding as on 31st March 2015 is Rs. 5,818.95 Lakhs (31st March 2014 - Rs.3,338.83 Lakhs)

(b) During the current year, the Company has given Corporate Guarantee for sums not exceeding Rs. 34,500 Lakhs to the banks on behalf of its one of the group company, Gulf Oil Lubricants India Limited. The amount of loan outstanding as on 31st March 2015 is Rs. 21,562.75 Lakhs.

2). During the year ended 31st March 2013, the Company through its then stepdown subsidiary GHGL London Limited, UK (immediate subsidiary being HGHL Holdings Limited) (HGHL), had acquired Houghton International Inc. in USA. HGHL had taken a loan of USD 300 million from Lenders to part finance the acquisition. During the previous year, USD 120 million was repaid by HGHL to t he Lenders. The amount of loan outstanding as on 31st March 2015 is Rs. 110,625 Lakhs (31st March 2014 - Rs. 107,847 Lakhs). The said loan was extended on the basis of Letter of Comfort/Stand-By Letter of Credit Facility Agreement between the Company, HGHL (both being Co-Obligators to the said Facility) and lenders on the strength of guarantee of Gulf Oil International Limited, Cayman and Cash Deficit Undertaking from its specified subsidiaries and also from the Company, wherein they are obligated to make contributions to HGHL in case of deficiencies in resources for servicing the said facilities. Gulf Oil International Limited, Cayman has provided a Guarantee to the Company for due serving and repayment of entire balance outstanding loan, as per repayment schedule of the Lender. During the current year, Gulf Oil Lubricants India Limited has also provided the similar Cash Deficit Undertaking in favour of the SBLC lenders.

In terms of the aforesaid agreement, the loan is also secured by: (i) first pari-passu charge by way of equitable mortgage on land of the Company admeasuring 64.125 acres at Kukatpally, Hyderabad and (ii) first pari-passu charge along with existing lenders by way of equitable mortgage on land admeasuring 115.10 acres at Hyderabad and buildings, and plant & machinery belonging to Energetics Division. GHGL London Limited and its step down subsidiaries including Houghton International Inc. ceased to be subsidiaries of the company, consequent to infusion of fresh equity to the extent of 90% by Gulf Oil International Limited in GHGL London Limited during the previous year.

3) The Competition Commission of India has passed an order in a case filed by a customer imposing a penalty of Rs. 2,894.76 Lakhs during the previous year. Against the said order, the Company filed an appeal in Competition Appellate Tribunal ("COMPAT"). The appeal was disposed off by reducing the penalty amount to Rs. 289 Lakhs. The Company filed an appeal in the Supreme Court and the appeal has been admitted. The interim stay on deposit of penalty amount of Rs. 289 lakhs to continue till the next date of hearing. The case was not heard by the Honourable Supreme Court during the year as the pleadings are in progress before the Judicial Registrar and the same is pending.

4) The Company has registered lease deeds of land on various dates with Sri Udasin Mutt for certain parcels of land at Kukatpally, Hyderabad for 99 years after obtaining permission from the then Government of Andhra Pradesh. However, the Mutt filed eviction proceedings before the AP Endowment Tribunal on various untenable grounds and claimed use and occupation charges.

Aggrieved by the Tribunal order, the Company filed a Writ Petition (WP) in 2011 in the Hon''ble High Court of Andhra Pradesh (AP High Court). The Mutt has also filed a separate Writ Petition in the AP High Court with regard to the Tribunal''s decision on use and occupation charges. The AP High Court vide common order dismissed the WP filed by the Company and allowed the WP filed by the Mutt.

Both the parties filed Special Leave Petition (SLP) in 2013 before the Hon''ble Supreme Court against the aforesaid common order. The Hon''ble Supreme Court directed the parties to maintain status quo in all respects. Subsequently in August 2014, the Hon''ble Supreme Court while granting leave, directed the Company to deposit Rs.100 Lakhs per annum for the year 2014 provisionally towards use and occupation of the subject land, which the Company has deposited with the Supreme Court Registry.

5. Fixed Assets: Buildings include:

(i) Rs.7.09 Lakhs, which represents the cost of ownership of the flats Rs. 7.08 Lakhs and Rs. 0.01 Lakh being the value of share money in Sett Minar Co-operative Housing Society Limited.

(ii) Rs. 4.70 Lakhs, which represents the cost of ownership of five flats Rs. 4.43 Lakhs and Rs. 0.27 Lakh being the value of 270 ordinary shares of Rs.100 each, fully paid up in Shree Nirmal Commercial Limited

6. Odisha Sales Tax

The Honorable Supreme Court vide its order dated 16th November 2007, held that the stock transfers constituted inter-state sale in respect of assessment year viz., 1976-77 to 1983-84, 1989-90 & 1990-91 and also directed the authorities to examine the fact ual aspects and assess tax on supplies made by the Company to the subsidiaries of Coal India Limited (CIL) as inter-state sale. The Company filed writ petitions in the Honorable High Court of Odisha in August 2009 impleading other state Governments, CIL and its subsidiary companies seeking directions for issue of Form ''C'' and pass over of local sales tax to the State of Odisha. The Honorable Supreme Court has permitted the Company to take the matter in appropriate Forum.

The Company has been legally advised that as per the settled cases, the Company is entitled for concessional sales tax rates as per Central Sales Tax and Interest should be charged from re-computation order.

However, necessary provision has been made and is included in Provision – Indirect Taxes under Note 6.

7. The Company has not received any intimation from "Suppliers" regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosure if any, relating to amounts unpaid as at the year-end together with interest paid/ payable as required under the said Act have not been given.

(iv) The Company makes Provident Fund, Superannuation Fund and Employee State Insurance Scheme contributions which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized Rs. 96.28 Lakhs (Previous Year: Rs. 270.10 Lakhs) for Provident Fund contributions, Rs. 44.54 Lakhs (Previous Year: Rs. 110.29 Lakhs) for Superannuation Fund contributions and Rs. 1.98 Lakhs (Previous Year: Rs. 38.80 Lakhs) for Employee State Insurance Scheme contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

8. Related Party Disclosure:

(i) Information relating to Related Party Transactions as per "Accounting Standard 18 - Related Party Transactions":

A. Holding Company:

Gulf Oil International (Mauritius) Inc. (Till 17th March 2015) Hinduja Power Limited (from 18th March 2015)

B. Subsidiaries:

1. IDL Explosives Limited

2. HGHL Holdings Limited

3. Gulf Oil Lubricants India Limited (Till 31st March 2014)

4. IDL Buildware Limited

5. Gulf Carosserie India Limited

6. Gulf Oil Bangladesh Limited (Till 31st December 2013)

7. PT Gulf Oil Lubricants Indonesia (Till 31st December 2013)

8. Gulf Oil (Yantai) Limited, China (Till 31st December 2013)

C. Entity Holding More than 20% of the shareholding in the company: Gulf Oil International (Mauritius) Inc. (Till 1st April 2014)

D. Key Management Personnel:

Mr. S. Pramanik – Managing Director

E. Fellow Subsidiary:

Gulf Oil Lubricants India Limited (Till 17th March 2015)

9. Leases

(i) Operating Lease: Where the Company is a Lessee:

a. The Company''s significant leasing arrangements are in respect of operating leases for premises (residences, office, storage godowns for finished goods etc.).The leasing arrangements, which are not non-cancellable range generally between 11 months to 5 years and are usually renewable by mutual consent on agreed terms. The aggregate lease rents payable are charged as rent in the Statement of Profit and Loss.

Notes:

(a) Business Segment:

The Company has considered business segment as the primary segment for disclosure.

Segments are identified and reported taking into account the Organization structure, the nature of products and services, the deferring risks and the returns of the segments.

The business segments of the Company are (i) Energetics, (ii) Mining and Infrastructure Contracts, (iii) Realty (iv) Lubricating Oils and (v) Others.

(b) Geographical Segment:

The Geographical segments considered for disclosure are as follows:

· Revenue within India includes sales to customers located within India and earnings in India, and

· Revenue outside India includes sales to customers located outside India and earnings outside India.

10. Previous year''s figures have been regrouped / reclassified, wherever necessary to correspond with the current year''s classification / disclosure.


Mar 31, 2014

1. Property Development:

i. Land meant for property development situated at Bengaluru and Hyderabad had been revalued as at 31st March, 2008, based on a valuation by an approved valuer. The resultant surplus on such revaluation amounting to – 183,896.69 Lakhs had been credited to Revaluation Reserve in the earlier years. In view of steep recession in the realty sector, management reassessed the valuation of the aforesaid properties as on 31st March, 2009 and based on the guidelines issued by the Registration and Stamps Department of Karnataka and Andhra Pradesh, the value of the subject lands has been reassessed and the resultant surplus on revaluation amounted to – 43,799.82 Lakhs. The resultant write down aggregating to –140,096.87 Lakhs has, in accordance with the requirement of Accounting Standard-10 "Accounting for Fixed Assets" was debited to Revaluation Reserve.

ii. During the year ended 31st March 2012, the Company surrendered certain portion of the land for road widening purposes to Greater Hyderabad Municipal Corporation. Consequently – 3,285.67 Lakhs had been withdrawn from Revaluation Reserve.

iii. As at 31st March 2012, land meant for property development situated at Hyderabad, had been revalued based on valuation by an approved valuer. The resultant surplus on such revaluation amounting to – 63,027.56 Lakhs has been credited to Revaluation Reserve.

iv. During the year ended 31st March 2011, land at Bengaluru (cost of – 3,294.41 Lakhs) meant for Property Development has been transferred to Inventory as approvals necessary for development of land have been obtained. In terms of the Joint Development Agreement between the Company and Hinduja Realty Venture Limited (HRVL), the Company has granted development rights to develop the property. In consideration HRVL, at its own cost and expenses develop the said property. Further the built up area, amenities and facilities so constructed shall be shared by Company and HRVL in the ratio of 30:70 respectively according to the other terms and conditions mentioned in the agreement. The Company has created equitable mortgage by way of deposit of title deeds in respect of the aforesaid Land towards loan of – 85,000 Lakhs availed by Co-Developer Hinduja Realty Venture Limited from various lenders.

2. Discontinuing Operations of Lubricants Undertaking

The Board of Directors of the Company in its meeting held on 7th August 2013 have approved Scheme of Arrangement ("the Scheme") for demerger of its ''Lubricants Undertaking'' and transfer to Gulf Oil Lubricants India Limited (formerly Hinduja Infrastructure Limited), a wholly owned subsidiary, effective from 1st April 2014, subject to necessary regulatory and statutory approvals. The said Scheme has been approved by the Honorable High Court of Andhra Pradesh vide Order dated 16th April 2014.

In accordance with the Scheme, one equity share of – 2 face value in Gulf Oil Lubricants India Limited (GOLIL) will be allotted to shareholders of the Company, for every 2 equity shares of –2 each of fully paid- up in the Company. In terms of the Scheme, the issued, subscribed and paid-up equity share capital of the Company shall be reduced by reducing the face value of the equity shares from one equity share of – 2 each fully paid-up to one equity share of – 1 each fully paid- up. As a result, the issued, subscribed and paid-up share capital of the Company shall stand reduced by an amount of – 9,91,44,980 to – 9,91,44,980 comprising 9,91,44,980 equity shares of – 1 each. Simultaneously, 2 equity shares each of – 1 shall be consolidated into one fully paid-up equity share of – 2 each.

3. Contingent Liabilities and Commitments:

A. Contingent Liabilities:

(i) Claims against the Company not acknowledged as Debts

a) Income Tax Demands 1452.52 2119.41

b) Wealth Tax Demands - 197.93

c) Sales Tax Demands 2098.11 2159.67

d) Excise Demands 856.39 849.16

e) Additional Demands towards cost of land 3.81 3.81

f) Claims of workmen/ex-employees 145.75 96.41

g) Other Matters (Refer Note 3 below) 23.16 66.88

B. Commitments: (a) Corporate Guarantees (Refer Note 1 below) 12913.00 10626.60

(b) Letters of Comfort (Refer Note 2 below) 107847.00 165855.00

(c) Estimated amount of contracts remaining to be executed on capital account [Net of advance of Rs 155.67 Lakhs (As at 31st March 2013 - Rs 5.25 Lakhs) 1487.54 4139.83

Notes:

1) The Company has given Corporate Guarantees aggregating to – 12,913 lakhs (31st March 2013 - – 9,913.00 Lakhs) to the banks on behalf of its wholly owned subsidiary IDL Explosives Limited. The amount of loan outstanding as on 31st March 2014 is – 3,338.83 Lakhs (31st March 2013 - – 655.15 Lakhs)

2) (a) In previous year the company, had given a Letter of Comfort of – 3,000.00 Lakhs to a bank on behalf of its wholly owned subsidiary, IDL Explosives Limited. The amount outstanding as on 31st March 2014 is – Nil (31st March 2013 is – 2,424.60 Lakhs).

(b) During the previous year, the Company through its step down subsidiary GHGL London Limited, UK (immediate subsidiary being HGHL Holdings Limited) (HGHL), had acquired Houghton International Inc. in USA. HGHL had taken a loan of USD 300 million from Lenders to part finance the acquisition. During the year, USD 120 million was repaid by HGHL to the Lenders. The amount of loan outstanding as on 31 March 2014 is – 1,07,847 Lakhs (31st March 2013 is – 162,855 Lakhs). The said loan was extended on the basis of Letter of Comfort/Stand-By Letter of Credit Facility Agreement between the Company, HGHL (both being Co-Obligors to the said Facility) and lenders on the strength of guarantee of Gulf Oil International Limited, Cayman and Cash Deficit Undertaking from its specified subsidiaries and also from the Company, wherein they are obligated to make contributions to HGHL in case of deficiencies in resources for servicing the said facilities. Gulf Oil International Limited has provided a Guarantee to the company for due serving and repayment of entire balance outstanding loan, as per repayment schedule of the Lender.

In terms of the aforesaid agreement the loan is also secured by: (i) first pari-passu charge by way of equitable mortgage on land of the Company admeasuring 112.26 acres at Kukatpally, Hyderabad and (ii) first pari-passu charge along with existing lenders by way of equitable mortgage on land admeasuring 115.25 acres at Hyderabad and buildings, and plant & machinery belonging to Explosives Division. GHGL London Limited and its step- down subsidiaries including Houghton International Inc. have ceased to be subsidiaries of the company, consequent to infusion of fresh equity to the extent of 90% by Gulf Oil International Limited in GHGL London Limited during the year.

3) The Competition Commission of India has passed an order in a case filed by a customer imposing a penalty of – 2,894.76 Lakhs. Against the said order, the Company filed an appeal in Competition Appellate Tribunal ("COMPAT"). The appeal was disposed off by reducingthe penalty amount to – 289.00 Lakhs. The Company has filed an appeal in the Supreme Court and appeal has been admitted. Interim stay for deposit of penalty amount has been granted until next hearing. The amount of –150.09 Lakhs deposited with Competition Commission of India in the previous year has been refunded during the year.

4. Fixed Assets: Buildings include:

(i) – 7.09 Lakhs, which represents the cost of ownership of the flats – 7.08 Lakhs and – 0.01 Lakhs being the value of share money in Sett Minar Co-operative Housing Society Limited.

(ii) – 4.70 Lakhs, which, represents the cost of ownership five flats – 4.43 Lakhs and – 0.27 Lakhs being the value of 270 ordinary shares of – 100 each, fully paid up in Shree Nirmal Commercial Limited.

5. The Honorable Supreme Court vide its order dated 16th November 2007, held that the stock transfers constituted inter- state sale in respect of assessment years viz., 1976-77 to 1983-84,1989-90 & 1990-91 and also directed the authorities to examine the factual aspects and assess tax on the supplies made by the Company to the subsidiaries of Coal India Limited (CIL) as inter-state sale.

The Company has filed writ petitions in the Honorable High Court of Orissa in August 2009 impleading other State Governments, CIL and its subsidiary companies seeking directions for issues of Form ''C'' and pass over of local sales tax to the State of Orissa. The Honorable High Court has permitted the Company to approach appropriate forum to take the matter.

The Company has been legally advised that as per the settled cases, the Company is entitled for concessional sales tax rates as per Central Sales Tax and interest should be charged from recomputation order. However, necessary provision has been made and is included in Provision – Indirect Taxes under Note 7.

6. Trade payables- Dues to Micro and Small Enterprises:-

The Company has received intimation from "Suppliers" regarding their status under the Micro, Small and Medium Scale Enterprises Development Act, 2006. Disclosure required under Section 22 of Micro, Small and Medium Enterprises

7. Employee Benefits

(i) Disclosure in respect of Gratuity as required under Accounting Standard 15–Employee Benefits:

(iv) The Company makes Provident Fund, Superannuation Fund and Employee State Insurance Scheme contributions which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized Rs 270.10 Lakhs (Previous Year Rs.– 313.41 Lakhs) for Provident Fund contributions, Rs 110.29 Lakhs (Previous Year Rs – 118.29 Lakhs) for Superannuation Fund contributions and Rs 38.80 Lakhs (Previous Year Rs. 36.73 Lakhs) for Employee State Insurance Scheme contributions in the Statement of Profit and Loss (Refer Note 23). The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

8. Related Party Disclosure:

(i) Information relating to Related Party transactions as per " Accounting Standard 18" notified by the Companies (Accounting Standards) Rules, 2006.

A. Subsidiaries:

1. IDL Buildware Limited

2. Gulf Carosserie India Limited

3. Gulf Oil Lubricants India Limited (formerly Hinduja Infrastructure Limited)

4. IDL Explosives Limited

5. HGHL Holdings Limited (From 21st November, 2012)

6. Gulf Oil Bangladesh Limited (Till 31st December 2013)

7. PT Gulf Oil Lubricants Indonesia (Till 31st December 2013)

8. Gulf Oil (Yantai) Limited, China (Till 31st December 2013)

B. Entity holding more than 20% of the shareholding in the Company:

Gulf Oil International (Mauritius) Inc.

C. Key Management Personnel:

Mr. S. Pramanik – Managing Director

9. Leases

(i) Operating Lease: Where the Company is a Lessee:

a. The Company''s significant leasing arrangements are in respect of operating leases for premises (residences, office, storage godowns for finished goods etc.).The leasing arrangements, which are not non-cancellable range generally between 11 months to 5 years and are usually renewable by mutual consent on agreed terms. The aggregate lease rents payable are charged as rent in the Statement of Profit and Loss.

Lease Rent on the aforesaid vehicle amounting to – Nil (31st March 2013 Rs– 561.26 Lakhs) has been charged to Statement of Profit and Loss under Rent.

(ii) Where the Company is Lessor:

Details in respect of assets given on operating lease:

The assets given on lease are not non-cancellable and range generally between 11 months to 5 years and are usually renewable by mutual consent, on agreeable terms. The aggregate lease rentals are recognized as income from property in the Statement of Profit and Loss. Initial direct costs are recognized as an expense in the year in which these are incurred.

(iii) Hire Purchase:

(a) The Company has taken plant and machinery, motor vehicles under hire purchase arrangements for which the ownership will be transferred to the Company at the end of the hire purchase term.

(b) Reconciliation between the total of minimum hire purchase payments at the balance sheet date and the present value:

Notes:

(a) Business Segment:

The Company has considered business segment as the primary segment for disclosure.

Segments are identified and reported taking into account the Organization structure, the nature of products and services, the deferring risks and the returns of the segments.

The business segments of the Company are (i) Explosives, (ii) Consult dealing in Mining & Infrastructure Contracts, (iii) Property Development (iv) Lubricating Oils and (v) Others.

(b) Geographical Segment:

The Geographical segments considered for disclosure are as follows:

Revenue within India includes sales to customers located within India and earnings in India, and

Revenue outside India includes sales to customers located outside India and earnings outside India.

10. Previous year''s figures have been regrouped / reclassified, wherever necessary to correspond with the current year''s classification / disclosure.


Mar 31, 2013

A. CORPORATE INFORMATION

The Company is in business of Lubricants, Industrial Explosives, Mining&lnfrastructure services and Property Development.

1. Property Development:

i. Land meant for property development situated at Bengaluru and Hyderabad had been revalued as at 31st March, 2008, based on a valuation by an approved valuer. The resultant surplus on such revaluation amounting to Rs. 183,896.69 Lakhs had been credited to Revaluation Reserve in the earlier years. In view of steep recession in the realty sector, management reassessed the valuation of the aforesaid properties as on 31st March, 2009 and based on the guidelines issued by the Registration and Stamps Department of Karnataka & Andhra Pradesh, the value ofthe subject lands has been reassessed and, the resultant surplus on revaluation amounted to Rs. 43,799.82 Lakhs. The resultant write down aggregating to Rs. 140,096.87 Lakhs has, in accordance with the requirement of Accounting Standard-10 "Accounting for Fixed assets" was debited to Revaluation Reserve.

ii. During the previous year, the Company surrendered certain portion of the land for road widening purposes to Greater Hyderabad Municipal Corporation. Consequently Rs. 3,285.67 Lakhs had been withdrawn from revaluation reserve in the previous year.

iii. As at 31st March 2012, land meant for property development situated at Hyderabad, had been revalued based on valuation by an approved valuer. The resultant surplus on such revaluation amounting to Rs. 63,027.56 Lakhs has been credited to Revaluation Reserve

iv. During the year ended 31st March, 2011, land at Bengaluru (cost ofRs. 3,294.41 Lakhs) meant for Property Development has been transferred to Inventory as approvals necessary for development of land has been obtained. The Company has created equitable mortgage by way of deposit of title deeds in respect of the aforesaid Land towards loan of Rs.85,000 Lakhs availed by Hinduja Reality Venture Limited from various lenders.

2. Contingent liabilities and Commitments:

As at As at 31st March 2013 31st March 2012 Rs. Lakhs Rs. Lakhs

A. Contingent liabilities:

(i) Claims against the Company not acknowledged as debts

(a) Income Tax Demands 2119.41 1756.90

(b) Wealth Tax 197.93 196.66

(c) Sales Tax Demands 2159.67 1942.24

(d) Excise Demands 849.16 793.03

(e) Additional Demands towards cost of land 3.81 54.93

(f) Claims of workmen/ex-employees 96.41 85.40

(g) Other Matters @ 66.88 93.26

3. Fixed Assets: Buildings include:

(i) Rs. 7.09 Lakhs, which represents the cost of ownership of the flats Rs. 7.08 Lakhs and Rs. 0.01 Lakhs being the value of share money in Sett Minar Co-operative Housing Society Limited.

(ii) Rs. 4.70 Lakhs, which, represents the cost of ownership five flats Rs. 4.43 Lakhs and Rs. 0.27 Lakhs being the value of 270 ordinary shares of Rs. 100 each, fully paid up in Shree Nirmal Commercial Limited.

4. The Honorable Supreme Court vide its order dated 16th November 2007, held that the stock transfers constituted interstate sale in respect of assessment years viz. 1976-77 to 1983-84,1989-90 & 1990-91 and also directed the authorities to examine the factual aspects and assess tax on the supplies made by the Company to the subsidiaries of Coal India Limited as interstate sale.

The Company has filed writ petitions in the Honorable High Court of Orissa in August 2009 impleading other State Governments, CIL and its subsidiary Companies seeking directions for issues of C forms and pass over of local sales tax to the State of Orissa. The Honorable High Court has held it and permitted the Company to approach appropriate forum to take the matter. The Company has been legally advised that as per the settled cases, the Company is entitled for concessional sales tax rates as per Central Sales Tax and interest should be charged from recomputation order. However, necessary provision has been made and is included in Provision - Indirect Taxes.

5. Trade payables- Dues to Micro and Small enterprise:

The Company has received intimation from"Suppliers" regarding their status under the Micro, Small and Medium Scale Enterprises Development Act, 2006.

6. Leases

(i) Operating Lease: Where the Company is a Lessee:

(a) The Company''s significant leasing arrangements are in respect of operating leases for premises (residences, office, storage godowns for finished goods etc.).The leasing ar-rangements, which are not non-cancellable range generally between 11 months to 5 years and are usually renewable by mutual consent on agreed terms. The aggregate lease rents payable are charged as rent in the Statement of Profit and Loss.

(b) The Company has taken certain Plant and Machinery under non-cancellable leases :

Lease Rent on the aforesaid plant and machinery amounting to Rs. 697.57 Lakhs (31st March, 2012-Rs. 1107.11 Lakhs) has been charged to Statement of Profit and Loss under rent.

(ii) Where the Company is Lessor:

Details in respect of assets given on operating lease:

The assets given on lease are not non-cancellable and range generally between 11 months to 5 years and are usually renewable by mutual consent, on agreeable terms. The aggregate lease rentals are recognised as income from property in the Statement of Profit & Loss.

Initial direct costs are recognised as an expense in the year in which these are incurred.

(iii) Hire Purchase:

(a) The Company has taken plant and machinery, motor vehicles under hire purchase arrangements for which the ownership will be transferred to the Company at the end of the hire purchase term.

(b) Reconciliation between the total of minimum hire purchase payments at the balance sheet date and the present value:

7. Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current period''s classification / disclosure


Mar 31, 2012

A. Terms / rights attached to Equity Shares

The company has one class of equity shares having a par value of Rs.2/- per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution shall be according to the members right and interest in the Company.

Security / terms and conditions of repayment

I) Term loans for capital expenditure are secured by a primary security on the fixed assets created out of the loan, ranking pari- passu with other term loan lenders and collateral security by i) first pari passu charge by way of equitable mortgage on land owned by the Company admeasuring acres 115.25 situated at Kukatpally, Hyderabad and ii) second pari passu charge on manufacturing buildings, plant and machinery charged to the other term lenders.

(a) Term loan from State Bank of India was taken during the financial year 2006-07 and carries floating rate of interest (15% per annum as on 31st March 2012) with an option to reset after every two years. The loan is repayable in 48 monthly installments of Rs.10.40 Lakhs each.

(b) Term loan from State Bank of Hyderabad was taken during the financial year 2006-07 and carries floating rate of interest (14.50% per annum as on 31st March 2012) . The loan is repayable in 48 monthly installments of Rs. 8.33 lakhs each.

(c) Term loan from Andhra Bank was taken during the year 2006-07 and carries rate of interest at par with State Bank of India. The loan is repayable in 48 monthly installments commencing from 30th July 2007.

(d) Term loan from Oriental Bank of Commerce was taken during the year 2006-07 and carries rate of interest at par with State Bank of India. The loan is repayable in 48 monthly installments commencing from 30th July 2007.

II) Term loans for Overseas Investment are secured by collateral security i) first pari passu charge by way of equitable mortgage on land owned by the Company admeasuring acres 115.25 situated at Kukatpally, Hyderabad and ii) second pari passu charge on manufacturing buildings, plant and machinery charged to the other term lenders.

(a) From State Bank of India was taken during the financial year 2007-08 and carries floating rate of interest (15% per annum as on 31st March 2012) with an option to reset after every two years. The loan is repayable in 60 monthly installments of Rs.17 Lakhs each after 21 months moratorium period.

(b) From State Bank of Hyderabad was taken during the financial year 2007-08 and carries floating rate of interest (14.50% per annum as on 31st March 2012) The loan is repayable in 60 monthly installments of Rs. 17.07 Lakhs each commencing from April 2008.

III) Term Loan from State Bank of Hyderabad was taken during the year 2009-10 and carries floating rate of interest (14.25% per annum as on 31st March 2012) with reset after 2 years from the date of 1st disbursement. The loan is repayable in 36 monthly installments of Rs. 69.45 Lakhs after a moratorium of 12 months from the date of first disbursement. The loan is secured by a primary charge by way of hypothecation of raw material, finished goods, stocks in process, stores and spares and receivables of the Company ranking pari-passu with other working capital lenders under consortium arrangement and collateral security by way of i) first pari passu charge along with consortium working capital bankers and term lenders on land admeasuring acres 115.10 at Kukatpally, Hyderabad belonging to the Company ii) Second charge on manufacturing building, plant and machinery charged to term lenders.

IV) Term loan from State Bank of Mauritius Limited was taken during the year 2009-10 and carries floating rate of interest of 2.25% below BPLR (13.25% per annum as on 31st March 2012) and interest will be reset annually. The loan is repayable in 42 installments after a moratorium period of 6 months. Installments for first 12 months are of Rs. 40 lakhs and Rs. 50.67 lakhs for subsequent 30 months. The loan is secured by a primary charge by way of first charge along with other consortium lenders by way of Equitable Mortgage on land admeasuring acres 115.10 at Kukatpally, Hyderabad belonging to Company, except the manufacturing building, plant and machinery charged to the term lenders and first charge along with other consortium lenders on the current assets of the Company.

V) Term loan from Kotak Mahindra Bank was taken during the year 2008-09 and carries rate of interest of 10.25%. The loan is repayable in 32 monthly installments after a moratorium of 3 months from the date of first disbursement (outstanding as on 31st March 2012 is NIL). The loan is secured by way of a primary charge by way of first and exclusive charge on specific equipment procured out of the loan from the bank.

VI) Term loan from Karur Vysya Bank Limited was taken during current year and carries floating rate of interest of 1.50% over and above the base rate of the Bank (12.75% p.a. as on 31st March 2012) with an option to reset after one year from the date of disbursement. The loan tenure is for 3 years including initial holiday period of one year. Repayment of loan will be in two installments, Rs.1000 lakhs to be paid at end of 24th month (i.e., 29th March 2014) from the date of first disbursement and balance outstanding of the loan availed at the end of 36th month (i.e., 29th March 2015). The loan is secured by an exclusive charge on the industrial land admeasuring 4.29 acres located at Kukatpally, Hyderabad standing in the name of the Company.

VII) Term loan from SREI infrastructure Finance Limited are secured by a first charge on the mining equipment created out of the loan. Interest for various loans varies from 8.85% to 11.55% and installments vary from 22 months to 58 months.

(a) Management has been advised Rs. 354.90 Lakhs (31st March 2011 Rs. 917.10 Lakhs) received against advances and Rs. 1,500.00 Lakhs (31st March 2011 Rs. 700.00 Lakhs) towards redemption of Preference share adjusted to Revaluation Reserve in an earlier year, is not required to be considered in computing Minimum Alternate Tax (MAT).

(b) Deferred tax asset has not been created in respect of the adjustment made in an earlier year to Revaluation Reserve.

Security / terms and conditions of repayment

(a) Cash Credit facilities including foreign currency demand loan from Bank of Bahrain & Kuwait BSC and working capital loan from consortium banks is secured by hypothecation of all current assets of the Company including raw materials, finished goods, stock-in-process, stores and spares (not relating to plant & machinery) and present and future book debts of the Company ranking pari-passu and collateral security by (i) first pari passu charge by way of equitable mortgage on the land owned by the Company admeasuring acres 115.25 situated at Kukatpally, Hyderabad and (ii) second pari passu charge on manufacturing buildings, plant and machinery charged to other term lenders.

(b) Working Capital demand loan from Yes Bank Limited is secured by way of subservient charge on the movable fixed assets and current assets of the Company

Additional information to the financial statements

1. Scheme of Arrangement - Demerger of Explosives Undertaking of the Company:

(i) Pursuant to the Scheme of Arrangement under Sections 391 to 394 of the Companies Act, 1956 between the Company and IDL Explosives Limited (a wholly owned subsidiary) and their respective shareholders, which was sanctioned by the Honorable High Court of Andhra Pradesh by its Order dated 5th May 2011, the assets and liabilities of the Explosives Undertaking excluding those relating to manufacturing operations at Kukatpally, Hyderabad and certain assets located at Maharashtra and assets and liabilities pertaining to litigations on taxes and duties in favour or against Explosives Undertaking of the Company were transferred to and vested with IDL Explosives Ltd., with effect from 1st October 2010, the appointed date. The Scheme was given effect in the Financial Statements for the year ended 31st March 2011 in accordance with the Sanctioned High Court Order.

(ii) In terms of the Scheme, 249,000 Series A 10% Cumulative Redeemable Preference Shares of Rs. 100 each at a premium of Rs. 900 per share of IDL Explosives Limited aggregating to Rs. 2,490 Lakhs, were issued to the Company as per Scheme of Arrangement during the previous year (alloted on 25th May 2011), towards Rs. 2,255.36 Lakhs representing the excess of assets over liabilities of the Explosives Undertaking transferred to IDL Explosives Limited. The resultant surplus on transfer of the aforesaid Explosives undertaking amounting to Rs. 234.64 Lakhs was shown under "Exceptional item" in the Statement of Profit and Loss of the previous year. The Preference Share were originally to be redeemed the day before 12 months from the date of allotment or within 45 days of infusion of fresh capital in IDL Explosives Limited whichever is earlier, or at its option redeem all or any number of the Preference Shares earlier. The date of redemption has been mutually agreed to be deferred by one year or 45 days from the date of infusion of fresh capital in IDL Explosives Limited.

(iii) Consequent to the vesting of the Explosives undertaking of the Company in terms of the Scheme, the Financial Statements of the Company for the year ended 31st March 2011, include the operations of Explosives undertaking for the period of six months i.e., from 1st April 2010 to 30th September 2010, and are therefore strictly not comparable with figures of current year ended 31st March 2012.

2. Property Development:

(i) Land meant for property development situated at Bengaluru and Hyderabad had been revalued as at 31st March 2008, based on a valuation by an approved valuer. The resultant surplus on such revaluation amounting to Rs. 183,896.69 Lakhs had been credited to Revaluation Reserve in the earlier years. In view of steep recession in the realty sector, management reassessed the valuation of the aforesaid properties as on 31st March 2009 and based on the guidelines issued by the Registration and Stamps Department of Karnataka & Andhra Pradesh, the value of the subject lands has been reassessed and, the resultant surplus on revaluation amounted to Rs. 43,799.82 Lakhs. The resultant write down aggregating to Rs. 140,096.87 Lakhs has, in accordance with the requirement of Accounting Standard-10 "Accounting for Fixed assets" was debited to Revaluation Reserve.

(ii) During the year, the Company surrendered certain portion of the land for road widening purposes to Greater Hyderabad Municipal Corporation. Consequently Rs. 3,285.67 Lakhs has been withdrawn from revaluation reserve.

(iii) In the previous year, land at Bengaluru (cost of Rs. 3,294.41 Lakhs) meant for Property Development has been transferred to Inventory as approvals necessary for development of land has been obtained. Accordingly, Revaluation Surplus amounting Rs. 8,893.50 Lakhs on the aforesaid parcel of land was withdrawn from Revaluation Reserve.

(iv) As at 31st March 2012, land meant for property development situated at Hyderabad, has been revalued based on valuation by an approved valuer. The resultant surplus on such revaluation amounting to Rs. 63,027.56 Lakhs has been credited to Revaluation Reserve

3. Contingent liabilities:

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

Rs. Lakhs Rs.Lakhs

(i) Claims against the Company not acknowledged as debts

(a) Income Tax Demands 1756.90 1758.36

(b) Wealth Tax 196.66 196.66

(c) Sales Tax Demands 1942.24 2279.11

(d) Excise Demands 793.03 763.62

(e) Service Tax - 4.49

(f) Additional Demands towards cost of land 54.93 3.81

(g) Claims of workmen/ex-employees 85.40 76.04

(h) Other Matters 93.26 93.26

(i) Performance and Other Guarantees 542.01 178.62

(ii) Corporate Guarantees* 10559.80 644.70

*(a) The Company has given a Corporate Guarantee of 100 Million Taka to South East Bank Ltd., on behalf of Gulf Oil Bangladesh Ltd., a subsidiary of Gulf Oil Corporation Ltd. The amount outstanding as on 31st March 2012 is 10.40 Million Taka - Rs. 67.30 lakhs (31st March 2011 4.67 Million Taka - Rs.29.71 Lakhs).

*(b) During the year, the Company has given a Corporate Guarantee of Rs. 9,913.00 Lakhs to Banks on behalf of its wholly owned Subsidiary IDL Explosives Limited till such time charge on the security is created by IDL Explosives Limited . The amount outstanding as on 31st March 2012 is Rs. 541.58 lakhs (31st March 2011 Rs. 999.96 lakhs).

(iii) The Competition Commission of India has passed an order in a case filed by a customer imposing a penalty of Rs. 2,894.76 lakhs. The Company is in the process of initiating an appeal with the Competition Appellate Tribunal against the said order.

4. Fixed Assets: Buildings include:

(i) Rs. 7.09 Lakhs, which represents the cost of ownership flats Rs. 7.08 Lakhs and Rs. 0.01 Lakhs being the value of Share money in Sett Minar Co-operative Housing Society Limited.

(ii) Rs. 4.70 Lakhs, which, represents the cost of ownership flats Rs. 4.43 Lakhs and Rs. 0.27 Lakhs being the value of 270 ordinary shares of Rs. 100 each, fully paid up in Shree Nirmal Commercial Limited.

5. Expenses in the previous year include expenditure incurred by IDL Explosives Limited on marketing staff salaries, rent, distribution etc. aggregating to Rs. 308.40 lakhs and allocated to the Company.

6. The Honorable Supreme Court vide its order dated 16th November 2007, held that the stock transfers constituted interstate sale in respect of 10 years assessment year viz. 1976-77 to 1983-84,1989-90 & 1990-91 and also directed the authorities to examine the factual aspects and assess tax on the supplies made by the Company to the subsidiaries of Coal India Limited as interstate sale.

The Company has filed writ petitions in the Honorable High Court of Orissa in August 2009 impleading other State Governments, CIL and its subsidiary Companies seeking directions for issues of C forms and pass over of local sales tax to the State of Orissa. The Honorable High Court has held it and permitted the Company to approach appropriate forum to take the matter.

The Company has been legally advised that as per the settled cases, the Company is entitled for concessional sales tax rates as per Central Sales Tax and interest should be charged from recomputation order. However, necessary provision has been made and is included in Provision - Indirect Taxes.

7. Trade payables- Due to Micro Small and Medium enterprise: The Company has not received any intimation from "Suppliers" regarding their status under the Micro, Small and Medium scale Enterprises development Act 2006 and hence disclosures if any, relating to amounts unpaid as at the year end together with interest paid/payable are required under the said Act have not been given.

8. Interest income from customers Rs. 380.00 Lakhs has been accrued on the basis of favourable court order.

9. Leases (a) Operating Lease: Where the Company is a Lessee:

- The Company's significant leasing arrangements are in respect of operating leases for premises (residences, office, storage godowns for finished goods etc.).The leasing arrangements, which are not non-cancellable range generally between 11 months to 5 years and are usually renewable by mutual consent on agreed terms. The aggregate lease rents payable are charged as rent in the Profit and Loss Account.

The assets given on lease are not non-cancellable and range generally between 11 months to 5 years and are usually renewable by mutual consent, on agreeable terms. The aggregate lease rentals are recognised as income from property in the Profit & Loss account.

Initial direct costs are recognised as an expense in the year in which these are incurred.

(c) Hire Purchase:

(i) The Company has taken plant and machinery, motor vehicles under hire purchase arrangements for which the ownership will be transferred to the Company at the end of the hire purchase term.

(iii) Notes:

(a) Business Segment:

The Company has considered business segment as the primary segment for disclosure

Segments have identified and reported taking into account the Organisation structure, the nature of products and services, the deferring risks and returns of the segments

The business segments of the Company are (i) Explosives, (ii) Consult dealing in Mining & Infrastructure Contracts, (iii) Property Development (iv) Lubricating Oils, (v) Others.

(b) Geographical Segment:

The Geographical segments considered for disclosure are as follows:

- Revenue within India includes sales to customers located within India and earnings in India

- Revenue outside India includes sales to customers located outside India and earnings outside India

10. The Revised Schedule VI has become effective from 1st April 1, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.

 
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