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Notes to Accounts of Gujarat Alkalies & Chemicals Ltd.

Mar 31, 2015

Note 1

Tax Expense :

(i) Deferred Tax of Rs.1,195.46 lakhs includes reversal of timing difference pertaining to claim u/s 80 IA of Income Tax Act,1961 for wind mills commissioned in earlier years.

(ii) During the current year there is no tax liability under normal provisions of the Income Tax Act,1961 and hence the Company is required to pay the tax under MAT provisions of Income Tax Act,1961. Accordingly, the total amount paid under MAT is reflected as MAT credit entitlement.

Note 2

In the earlier Financial Year 2012-13, the Company received a demand of Rs. 1,719.66 lakhs from the revenue authorities for excise duty,interest and penalty thereon. The same has been shown as provision for other liabilities under Long Term Provision (note no. 6). The Company has contested the demand and has paid under protest Rs. 924.23 lakhs and Rs. 333.31 lakhs (Total Rs.1,257.54 lakhs) during 2012-13 and 2013-14 repsectively. The amount paid has been shown under balance with excise and custom under Other Non- Current Assets

Note 3 [ Rs. in Lakhs ]

Contingent Liabilities and As At As At Commitments (to the extent not provided for) 31.03.2015 31.03.2014

(i) Contingent Liabilities :

(a) Claims against the Company not acknowledged as debt 13,041.07 7,051.11

(b) Various pending cases before Labour court and Industrial Not Not Tribunal ascertainable ascertainable

(c) Disputed Purchase Tax liability (1998-99 to 2005-06) 20,431.56 20,884.60

(d) Disputed Income Tax liability (excluding interest) :

(i) Pending Before Appellate Authorities in respect of which the Company is in appeal 12,670.00 13,165.00

(ii) Decided in Company's favour by Appellate Authorities and Department is in further appeal 8,503.00 9,165.00

54,645.63 50,265.71

In respect of above matters, future cash outflows in respect of contingent liabilities are determinable only on receipt of judgements pending at various forums / authorities.

(e) Guarantees :

(i) Total loans outstanding under corporate guarantees aggregating to Rs. 424.65 lakhs (Previous Year Rs. 424.65 lakhs) to Housing Development Finance Corporation Limited (HDFC) for housing loans extended to employees. 7.94 25.59

(ii) Guarantees given by the Company's Bankers for various purposes are 5,738.33 4,164.29

(f) Sponsor Support Agreement executed with Bhavnagar Energy Not Not Co. Ltd. and their lenders. ascertainable ascertainable

Total (i) 60,391.90 54,455.59

(ii) Commitments :

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for 17,373.31 7,963.41

(b) Other commitments - liability to GIDC for leasehold land at Dahej (including pending execution of lease deeds) Not ascertainable Not ascertainable

Total (ii) 17,373.31 7,963.41

Total : 77,765.21 62,419.00

Note 4

The Company's operations fall under single segment namely "Chemicals", hence no separate disclosure of segment reporting

is required to be made as required under Accounting Standard -17 of Institute of Chartered Accountants of India.

Note 5

Employee Benefits [Accounting Standard -15 (Revised)] :

(i) Defined Contribution Plans :

An amount of Rs. 603.09 lakhs (Previous Year Rs.555.05 lakhs) contributed to Provident Fund Trust and amount of Rs. 574.31 lakhs (Previous Year Rs. 575.00 lakhs) contributed to Employees Superannuation Trust is recognised as an expense and included in "Employee Benefits Expenses" (Note 25) of Statement of Profit & Loss.

Note 6

Related Party Information :

(1) List of Related Parties :

Key Management Personnel : Shri Atanu Chakraborty, IAS, Managing Director (up to 28th August,2014)

Shri A M Tiwari, IAS, Managing Director (From 29th August, 2014)

Dr. H B Patel, Executive Director (Finance) & Chief Financial Officer (From 14th May, 2014)

Shri S S Bhatt, Company Secretary & Additional General Manager (Legal, HR & CC) (From 14th May, 2014)

Note 7

Borrowing cost capitalised during the year is Rs.NIL (Previous Year Rs.457.39 lakhs) for acquisition of long term assets.

Note 8

(a) Previous Year's figures have been regrouped / reclassified wherever necessary to correspond with current year's

classification / disclosure.

(b) Balances shown under Long-term borrowings, Short-term borrowings, Long term provisions, Short term provisions, Trade payables, Other current liabilities, Long term loans and advances, other non-current assets, inventories, Trade Receivables, Short term loans and advances and other current assets etc. are subject to confirmation / reconciliation, if any. The management does not expect any material difference affecting the current year's financial statements.


Mar 31, 2013

1 - During the current year, other exceptional item amounting to Rs.1,719.67 lakhs represents provision made towards demand of Excise Duty and delay payment charges paid under protest and interest payable for earlier years.

2 - Tax expense includes Rs.971.96 lakhs being reversal of excess provision for Income Tax in respect of earlier years (Previous Year Rs. Nil).

3 - The Company''s operations fall under single segment namely "Chemicals", hence no separate disclosure of segment reporting is required to be made as required under AS-17 of ICAI.

4 - Employee Benefits AS -15 (Revised) :

(i) Defined Contribution Plans :

An amount of Rs.481.40 lakhs (Previous Year Rs.480.00 lakhs) contributed to employees superannuation trust is recognised as an expense and included in "Employee Benefits Expenses" (Note 26) of Statement of Profit & Loss.

(ii) Defined Benefit Plans : - As per Actuarial Valuation as on March 31, 2013 :

5 - Related Party Information :

(1) List of Related Parties :

(a) Key Management Personnel : Dr. Guruprasad Mohapatra, IAS, Managing Director

(up to 18th July, 2011)

Shri M S Dagur, IAS, Managing Director (from 19th July, 2011)

(2) Transactions with related parties :

Details related to parties referred to in (1) (a) above.

6 - Borrowing cost capitalised during the year is Rs.471.26 lakhs (Previous Year Rs.56.56 lakhs) for acquisition of long term assets.

7 - (a) Previous Year''s figures have been regrouped / reclassified wherever necessary to correspond with current year''s classification / disclosure.

(b) Balances shown under Secured/Unsecured Loan, Advances, Deposits, Debtors, Creditors, Loans and Materials with others, etc. are subject to confirmation / reconciliation, if any. The management does not expect any material difference affecting the current year''s financial statements.


Mar 31, 2012

NOTES :

* Lease hold land amortised during Financial Year 2011-12 for the expired period of the lease of Rs.27.43 lakhs (Ref. Sr. No. 3 (c) of Note No. 1) and shown as deduction in Gross Block.

** The lease deed in respect of Plot No. 3, land admeasuring 44,032 sq. mtrs. acquired at Dahej Complex having value of Rs.15.86 lakhs is pending for execution. The refund of amount as per GIDC Rs.132.86 lakhs is yet to be received and rectification deed is yet to be executed, in respect of land admeasuring 61,700 sq. mtrs of Plot No. CH-17, surrendered to GIDC. The actual amounts payable / receivable in both the cases will be as per policy of GIDC.

*** Depreciation and amortization for the year includes Net Debit of Rs.25.94 lakhs for prior period adjustment (Previous Year Net Debit of Rs.2.32 lakhs)

# The Company's contribution or expenditure towards Power, Water and Services not owned by the Company is capitalized under the general head "Capital Expenditure" and written off to revenue over a period of eighteen years starting from 15.08.1998 i.e. date of start of operations.

* Advances for capital goods includes payment and provision of (1) Rs.1,695.82 lakhs (Previous Year Rs.1,591.20 lakhs) towards lease hold land allotted at Dahej admeasuring 5,20,000 sq. mtrs and (2) Rs.4,611.70 lakhs (Previous Year Rs.4,410.19 lakhs) towards lease hold land allotted at village Dahej admeasuring 10,20,900 sq. mtrs. and (3) Rs.930.57 lakhs (Previous Year Rs.793.53 lakhs) towards plot B-37 to B-44 lease hold land admeasuring 50,714.48 sq. mtrs. allotted at village Atali for proposed Housing Colony, for which possession is yet to be taken from GIDC.

1 - Disclosure pursuant to Note No. T of Part I of Schedule VI to the Companies Act, 1956

[ Rs. in Lakhs ]

Contingent Liabilities and commitments As at As at

(to the extent not provided for) 31.03.2012 31.03.2011

(i) Contingent Liabilities :

(a) Claims against the Company not acknowledged as debt 7,380.57 6,829.43

(b) Various pending cases before Labour Court and Industrial Tribunal Not ascertainable Not ascertainable

(c) Guarantees :

(i) The Company has given corporate guarantees aggregating to Rs. 484.25 lakhs (Previous Year Rs. 484.25 lakhs) to Housing Development Finance Corporation Limited (HDFC) for housing loans extended to employees. Total loans outstanding under the arrangement, are : 83.15 113.27

(ii) Guarantees given by the Company's bankers for various purposes are : 4,283.97 4,529.88

(d) Disputed Purchase tax liability 20,925.52 20,947.88

(e) Disputed Income Tax liability 4,114.07 -

Total (i) 36,787.28 32,420.46

(ii) Commitments :

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for 9,696.89 3,258.08

(b) Other commitments - Unascertained land liability to GIDC for leasehold land at Dahej Not ascertainable Not ascertainable

Total (ii) 9,696.89 3,258.08

Total : 46,484.17 35,678.54

The Board of Directors of the Company has recommended dividend of Rs.3.00 per share on 7,34,36,928 equity shares of Rs.10/- each, amounting to Rs.2,203.11 lakhs (excluding tax on dividend Rs.357.40 lakhs). The provision for proposed dividend is shown separately in Note -11 - Short Term Provisions.

2 - Under Clean Development Mechanism, various projects of the Company have been registered with UNFCCC. Three Wind Mill projects of Company are in the process of registration.

3 - Disclosure of Sundry Creditors under Trade Payables is based on the information available with the Company regarding the status of the suppliers as defined under the "Micro, Small and Medium Enterprises Development Act, 2006". Amount overdue as on 31st March, 2012, to Micro, Small and Medium Enterprises on account of principal amount with interest in aggregate is Rs. NIL (Previous Year Rs. Nil).

4 - The Company's operations fall under single segment namely "Chemicals", hence no separate disclosure of segment reporting is required to be made as required under AS-17 of ICAI.

5 - Employee Benefits AS -15 (Revised) :

(i) Defined Contribution Plans :

An amount of Rs.480.00 lakhs (Previous Year Rs.490.12 lakhs) contributed to employees superannuation trust is recognised as an expense and included in "Employee Benefits Expenses" (Note 28) of Statement of Profit & Loss.

The expected return on plan assets is based on market expectation, at the beginning of the period, for returns over the entire life of the related obligation. The Gratuity Scheme is invested in Group Gratuity-cum-life Assurance cash accumulation policy offered by Life Insurance Corporation (LIC) of India. The investment return earned on the policy comprises bonuses declared by LIC having regard to LIC's investment earnings. The information on the allocation of the fund into major assets classes and expected return on each major class are not readily available. We understand that LIC's overall portfolio of assets is well diversified as such, the long term return on the policy is expected to be higher than the rate of return on Central Government Bonds. Historically too, the returns declared by LIC on such policies have been higher than Government bond yields. As such, the expected return on assets assumption is taken by adding a margin on the current market yield on the Central Government bonds (of term consistent with the terms of liabilities).

6 - Related Party Information :

(1) List of Related Parties :

(a) Where control exists : Joint Venture Parties

Gujarat Alkalies and Chemicals Ltd. (99.10%); and Dow-Europe GmbH (0.90%)

(b) Joint Venture : Dow-GACL SolVenture Ltd.

(c) Key Management Personnel : Dr. Guruprasad Mohapatra, IAS, Managing Director

(up to 18th July, 2011)

Shri M S Dagur, IAS, Managing Director (from 19th July, 2011)

(d) Relatives of key management personnel and their enterprises, where transactions have taken place : Nil

* During the year, pursuant to allotments of further 28,62,339 equity shares in JV, the percentage ownership of the Company in JV increased to 99.10%, which is held temporarily. Since Dow-GACL SolVenture Ltd. (JV) has filed an application on 16th April, 2012 for striking off the name of Dow-GACL SolVenture Ltd. from Registrar of Companies under the Fast Track Exit Scheme of MCA, Government of India pursuant to the same, the total amount of Rs.288.86 lakhs paid as subscription to equity shares in Dow-GACL SolVenture Ltd. has been written off for the diminution in equity investments and charged to Statement of Profit and Loss of the Company for the Financial Year 2011-12. Therefore, financials of JV are not being consolidated as per AS-21.

7 - (a) Pursuant to the Notification No. F.No.2/6/2008-C.L-V dated 30th March, 2011 issued by Ministry of Corporate Affairs, Government of India, the Company has prepared the financial statements as per Revised Schedule VI to the Companies Act, 1956. 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 current year's classification / disclosure.

Company is not availing the exemption granted vide Notification dated 8th February, 2011 issued by Ministry of Corporate Affairs, Government of India regarding disclosure of paragraph 3 (i) (a) and 3 (ii) (a) of Part II of erstwhile Schedule VI of the Companies Act, 1956.

(b) Balances shown under Secured/Unsecured Loan, Advances, Deposits, Debtors, Creditors, Loans and Materials with others, etc. are subject to confirmation / reconciliation, if any. The management does not expect any material difference affecting the current year's financial statements.

8 - Borrowing cost capitalised during the year is Rs.56.56 lakhs (Previous Year NIL) for acquisition of long term assets.

9 - Other exceptional item represents provision made towards interest Rs.1,141.86 lakhs and delay payment charges of Rs.456.75 lakhs on electricity duty paid under protest for earlier years.


Mar 31, 2010

Rs.in Lakhs 2009-2010 2008-2009

1, Contingent Liabilities. (a) The Company has given corporate guarantees aggregating to Rs.661,90 lakhs (Previous Year 7682.80 lakhs) to Housing Development Finance Corporation Limited (HDFC) for housing loans extended to employees. Total loans outstanding under the arrangement, are : 142.65 175.32 (b) (i) Estimated amount of contracts on Capital Account remaining to be executed and not provided for are : 8,857.40 4,945.74

(ii) Amount for Leasehold Land at Dahej. Not ascertainable Not ascertainable

(c) Claims from various parties disputed but not acknowledged as debt : 6,616.18 5,471.96

(d) Guarantees given by the Companys bankers for various purposes are : 4,065.31 2,657.86

(e) Disputed Purchase tax liability (Net of provision made). 21,185.69 21,316,56

2. The Sundry Debtors include overdue outstanding from various parties aggregating to Rs.1,555.94 lakhs, (Previous Year Rs.1,568.39 lakhs), for which the Company has taken legal steps for recovery of the outstanding dues and the management is hopeful of the recovery. However, cumulative provision of 71,076.27 lakhs (Previous Year 71,022.03 lakhs) exists for such doubtful debts.

3. Provisions were made by the Company in F.Y. 2005-06 and 2006-07 without taking into consideration the deduction allowable in respect of its 90 MW combined cycle power plant set up in its Dahej Complex for captive requirements towards tax liability under section 80-IA of the Income Tax Act, 1961. As per para 52 of the AS 29, issued by ICAI, "Provision should be reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision should be reversed". Accordingly ?6,405.69 lakhs has been written back in its tax provisions in view of the Revised / Original returns filed for the respective years and the same being allowed in tax assessment / appeal orders during the year.

4. Under Clean Development Mechanism, three projects of the Company have been registered with UNFCCC. The Company in the meantime has put up three Wind Mill projects for which the process of registration has been started. It has further identified small energy saving projects and expects to start the process of registration for these projects also. It has monetized 83783 CERs during the financial year 2009-10.

5. Derivative Transactions :

In line with the requirement of AS-30 ( Financial Instruments : Recognition and Measurement) to provide for mark-to-market (MTM) losses on open positrons in derivative contracts as on the date of the Balance Sheet, the Company has reduced the provision to Rs.1,356.71 lakhs from Rs. 1,804.17 lakhs provided till previous year for such tosses in respect of its open positions in Cross Currency Swap transactions and the same is shown separately in Schedule 11 - "Current Liabilities and Provisions" and in Schedule 13 - "Other Income".

During the year, an income of Rs.50.00 lakhs (Previous Year Rs. 100.00 lakhs) has been recognised on realisation basts towards coupon settlement of the Cross Currency Swap transaction and is shown in Schedule 13 - "Other Income".

6. In accordance with the provisions of Value Added Tax Act, 2003, the amount collected as VAT and eligible for remission benefit at Dahej Complex, during the year Rs.1,357.63 lakhs (Previous Year Rs.1,822.06 lakhs) has been treated as Other Income.

7. Disclosure of Sundry Creditors under Current Liabilities is based on the information available with the Company regarding the status of the suppliers as defined under the "Micro, Small and Medium Enterprises Development Act, 2006". Amount overdue as on 31st March, 2010, to Micro, Small and Medium Enterprises on account of principal amount with interest in aggregate is Rs.NIL(Previous Year Rs. Nil).

8. Borrowing cost capitalised during the year is Rs. NIL (Previous Year Rs.406.88 lakhs) for acquisition of long term assets.

9. The Companys operations fall under single segment namely "Chemicals", hence no separate disclosure of segment reporting is required to be made as required under AS-17 of ICAI.

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

(v) Amount recognised as an expense in respect of Compensated Leave absences is 7927.97 lakhs (Previous Year Rs.587.95 lakhs) on actuarial valuation basis as on 31,03.2010.

(vi) Basis used to determine expected rate of return on assets :

The expected return on plan assets is based on market expectation, at the beginning of the period, for returns over the entire life of the related obligation. The Gratuity Scheme is invested in Group Gratuity-cum-life Assurance cash accumulation policy offered by Life Insurance Corporation (LIC) of India. The investment return earned on the policy comprises bonuses declared by LIC having regard to LICs investment earnings. The information on the allocation of the fund into major assets classes and expected return on each major class are not readily available. We understand that LICs overall portfolio of assets is well diversified as such, the long term return on the poticy is expected to be higher than the rate of return on Central Government Bonds. Historically too, the returns declared by LIC on such policies have been higher than Government bond yields. As such, the expected return on assets assumption is taken by adding a margin on the current market yield on the Centra! Government bonds (of term consistent with the terms of liabilities).

10. The Company has been allotted 10,00,000 equity shares of Rs.10/- each fully paid-up on 30th March, 2009 as bonus shares in the ratio 1 : 1 on the equity investment with Gujarat State Petroleum Corporation Ltd. {GSPC). The Company has made a further investment of Rs.1,249.99 lakhs on 17th December, 2009 in 1,54,320 equity shares of Rs.10/- each of GSPC at a premium of Rs.800/- per share.

Thereafter, GSPC has splitted one equity share of the face value of 710/- each into ten equity shares of the face value of Re.1/- each on 29th December, 2009. Hence, the Companys shareholding in GSPC as at 31st Marcb,2010, stands at 2,15,43,200 fully paid-up equity shares of Re.1/- each.

The Company has paid 7 1,000 lakhs on 15th February, 2010 and further 71,000 lakhs on 5th April,2010, as Share Application Money for allotment of 40,00,000 fully paid-up equity shares of 710/- each at a premium of 740/- per share in GSPC Gas Company Ltd. Allotment is pending as at 31" March, 2010.

The Company has paid 7210 lakhs on 26th November, 2009, as advance Share Application Money to Dow-GACL Sol Venture Ltd. (DGSL). Allotment is pending as at 31st March, 2010.

11. The Company holds 1.14,90,000 fully paid-up Bquity shares of 710/- each of Gujarat Chemical Port Terminal Company Ltd. (GCPTCL). The net worth of GCPTCL has substantially eroded and it was referred to Corporate Debt Restructuring {CDR) Cell. As per CDR scheme approved by CDR Cell on 26tn February,2010 and the resolution passed by the Shareholders of GCPTCL at the EOGM held on 15th December,2009, the paid-up value of the said equity shares has been written down from Rs.10/- per share to Re.1/- per share and accordingly, there is a permanent diminution in the value of the said investment by 71,034.10 lakhs. The said amount has been provided and charged to the Profit and Loss Account of the Company for the Financial Year 2009-10.

12. Related Party Information :

(1) List of Related Parties :

(a) Where control exists : Joint Venture Parties

Gujarat Alkalies And Chemicals Ltd.

(50%); and

Dow-Europe GmbH (50%)

(b) Joint Venture : Dow GACL SotVenture Ltd.

(c) Key Management Personnel : Shri Guruprasad Mohapatra. IAS, Managing Director

(d) Relatives of key management personnel and their enterprises, where transactions have taken place : Nil

13. (a) Corresponding figures of the previous year have been regrouped to make them comparable with this years figures, wherever necessary (b) Balances shown under Secured/Unsecured Loan, Advances, Deposits, Debtors, Creditors, Loans and Materials with others, etc. are subject to confirmation / reconciliation, if any. The management does not expect any material difference affecting the current years financial statements.

14. Excise Duty :

As required under Accounting Standard AS-9 on Revenue Recognition issued by The Institute of Chartered Accountants of India :

(i) Gross Sales is reduced by the excise duty charged to arrive at net sales

(ii) The difference of excise duty payable on opening and closing stock of finished goods is reflected as a separate expenditure item in the Profit and Loss Account.

(iii) The difference in excise duty recovered and paid, if any, is shown as selling expenses under the head of Administration, General and Marketing Expenses.

15. a) Capacity, Production and Stocks :

NOTES : The Licensed Capacities and Installed Capacities are as certified by the Management.

(A) The over all Caustic Soda Lye / Caustic Potash Capacity as per Liecense of both Baroda and Oahej is 4,52,600 M.T.Thus overall Installed Capacity is 4,29,050 M.T.

(B) This represents 4,01,037 M.T. of Caustic Soda Lye and 20,802 M.T. of Caustic Potash Lye.

(1) Out of 4,01,037 M.T. Actual Production of Caustic Soda Lye, 1,87,798 M.T. consumed for manufacturing of Caustic Flakes/Prills and 7,188 M.T. consumed for production of Sodium Hypochlorite.

(2) Out of 20,802 M.T. Actual Production of Caustic Potash Lye, 9,283 M.T. consumed for manufacturing of Caustic Potash Flakes and 9,242 M.T. consumed for manufacturing of Potassium Carbonate.

(C) (1) The capacity of Caustic Soda Flakes/Prills and Caustic Potash Flakes is within the capacity of Caustic Soda Lye and Caustic Potash Lye for Baroda.

(2) The capacity of Caustic Soda Prills and Caustic Soda Flakes is within the capacity of Caustic Soda (100%) at Dahej.

(D) This represents 1,87,790 M.T. of Caustic Soda Flakes/Prills and 10.315 M.T. of Caustic Potash Flakes.

(E) Out of 3,80,236 M.T. Actual Production of Chlorine Gas, 2,81,521 M.T. consumed for manufacturing of Liquid Chlorine, Hydrochloric Acid, Sodium Hypochlorite & Anhydrous Aluminium Chloride.

(E1) Quantity and value of Chlorne includes value of stock of Chlorine with Jobwork Parties (CPW & ALC),

(F) For Baroda, Production from both Caustic Soda Plant and Chloromethanes Plant is included.

(G) Out of 12,01.70,520 NM3 Actual production of Hydrogen Gas, 4,60,93,437 NM3 consumed for manufacturing of Caustic Soda Flakes & 2,77,90,695 NM3 consumed for HCL for Baroda and Dahej Complex.

(H) Aluminium Chloride & Chlorinated Parafin Wax are manufactured on job work basis.

(I) 21 MW Wind Farm has been Commissioned on 22nd March, 2010 (5 nos.) on 29lh March, 2010 (4 nos.) and on 30th March, 2010 (2 nos.).

(J) Installed Capacity based on 100% of Calcium Chloride Lye and includes Flakes and Powder.

(K) Installed Capacity based on 18% of Poly Aluminium Chloride.

(L) Benzyl Chloride are manufactured on job work basis from November,2009.

 
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