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Notes to Accounts of Gujarat State Fertilizer & Chemicals Ltd.

Mar 31, 2016

1. Employees Benefits

a) The Company operates post employment and other long term employee benefits defined plans as follows:

I Funded II Unfunded

i. Gratuity i. Leave Encashment Benefit

ii. Pension ii. Post Retirement Medical Benefit Scheme (PRMBS)

b) Defined contribution plans:

Amount towards Defined Contribution Plans have been recognised under ''''Contributions to Providend, Gratuity and Superannuation Fund (pension) Funds (including provisions)'''' in Note:25 Rs 2521.06 lakhs (2014-1 5 Rs 1873.98 lakhs)

2. Related Party Transactions

Related Party Disclosures as required by AS-18 "Related Party Disclosures" are given below :

1. Relationship :

(a) Subsidiary Company : GSFC Agrotech Ltd.

(b) Associate Company :

(i) Vadodara Enviro Channel Ltd.

(Erstwhile Effluent Channel Project Ltd.)

(ii) Gujarat Green Revolution Company Ltd.

(iii) Gujarat Data Electronics Ltd.

(c) Key Managerial Personnel and their relatives:

(i) Dr. S K Nanda - Chairman cum Managing Director upto 31/01/2016

(ii) Shri. AMTiwari -Managing Director w.e.f. 01/02/2016

(iii) Shri V D Nanavaty - Sr VP (Finance) & CFO

(iv) Shri V V Vachharajani- Company Secretary & VP (Legal)

(d) Others : GSFC Education Society

2. Details of transactions with related parties :

3. Details on derivative instruments and unhedged

I. foreign currency exposures

(a) Forward exchange contracts and options (being derivative instruments), which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

(i) Outstanding forward exchange contracts entered into by the Company as on 31 March, 2016

(b) Interest rate swaps to hedge against fluctuations in interest rate changes: No. of contracts:2, Amount: 30.67 Mn USD Principal (As at 31 March, 2015 :No of contracts 2, Amount :37.33 Mn USD Principal)

(c) Currency Futures (other than forward exchange contracts stated above) which are not intended for trading or speculative purposes but for hedge purposes to hedge against fluctuations in changes in exchange rate.

II. The year-end foreign currency exposures that have not been hedged by a derivative instrument or otherwise, represented in equivalent USD: USD 8.62 Mn (As at March 31, 2015: : USD 7.08 Mn)

4. Subsidy on Ammonium Sulphate:

Department of Fertilizers (DoF) vide Office Memorandum dated 18th March, 2013 had sought to recover subsidy on Ammonium Sulphate fertilizer produced by the Company, under the Nutrient Based Subsidy scheme of Govt. of India w.e.f. April 1, 2010, and also to stop further disbursal of subsidy on said fertilizer.

The management believes that since its Ammonium Sulphate (AS), is specifically covered in the Nutrient Based Subsidy (NBS) Policy right from inception of the scheme w.e.f.1-4-2010, it has been allowed to upload various data on Fertilizers Monitoring System website of DoF.

The Company filed a writ petition in the Honourable Delhi High Court and obtained a stay. The company is trying to resolve matter with Government of India. DoF has also presented its view in the Honourable Delhi high Court about amicable settlement in the matter. The Company has already made representation to DoF for releasing interim subsidy and as per the last order of the court dated 11th May 2016, DoF has confirmed to a decision for disposing of the representation within a period of six weeks and has adjourned the date of next hearing to July 18, 2016.

Following amounts already have been recognised in the books of accounts for respective years/periods and the management strongly believes that amounts mentioned below are recoverable or not required to be paid back to government in case already received.

Such subsidy received from the Department of Fertilizers amounting to Rs. 26,866 lakhs for the period from April 1, 2010 to November 30, 2011 has been accounted for as Net sales/ Income from operations in the respective accounting periods.

Net sales/ Income from operations and trade receivables in the financial statements include amounts of such subsidy as under:

Based on the given scenario, management of the Company believes that there is no ground for removing AS from NBS and has been done in arbitrary and discriminatory manner and amount accounted as above is recoverable from the DoF.

5. Previous Year''s Figures

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


Mar 31, 2015

Note 1:

Rights, preferences and restrictions attached to shares

Equity shares

The Company has one class of equity shares having a par value of Rs. 2/- each. Each shareholder is eligible for one vote per share held. The dividend proposed by Board of Directors is subject to approval of 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 their shareholding.

During the year ended 31st March, 2015, the amount of per share dividend recognized as distributions to equity shareholders was Rs. 2.20 (31st March, 2014: Rs. 2/-) per equity share of face value of Rs. 2 each.

Note 2:

The Company has acquired land through Government and also through direct negotiations. The entire land is in possession of the Company. In respect of portion of land for which the Company has still not received the award/sale deed, the advance paid to land owners have been treated as land. In respect of other portion of land acquired through direct negotiations, compensation has been paid at the negotiated price. The Company also holds possession of a portion of land for which no amount has been paid in absence of receipt of awards.

b) The Company has leased a portion of its land to Bank of Baroda for bank premises at Fertilizernagar and Sikka and Gas Authority of India Ltd. (GAIL) for establishment of CNG pumping station.

c) Buildings include Rs.0.02 lakh being the value of shares in Co-operative Housing Societies.

d) The Company established Sikka Jetty at its own cost, which is in operation since 1987. After due discussion with Gujarat Maritime Board (GMB), a consensus was arrived at establishing ownership of jetty with the Company. Thereafter, in terms of resolution passed by GMB, the onwership of the jetty at Sikka was transferred to the Company. However, during 1994, GMB has reversed its earlier decision not supported by resolution and contended that the ownership of the jetty rests with GMB. The Company has made representation to the appropriate authority with regards to the ownership of the jetty with the Company.

The matter of deciding the status of Jetty was under examination at GMB & Government of Gujarat levels since long back. Various meetings were also held and after due diligence on the matter, it is decided by the Board of GMB supported by a resolution to assign the status of Captive Jetty to sikka jetty and the Company has to sign Captive Jetty Agreement with GMB. The matter is under discussion with GMB authorities. Pending finalization of the Captive Jetty Agreemnt, no provision is considered necessary in respect of various claims against the Company and counter-claims of the Company (both the amounts not determined). At present the Company is in possession of the Jetty and continues to be the onwer of the Jetty pending signing of the Agreement.

e) Consequent upon enactment of Schedule-II of the New Company''s Act,2013, the Fixed Assets have been reclassified. In the respect of the fixed assets having completed their useful life, an amount of Rs.2133.29 Lakhs has been adjusted against the opening balance of retained earnings.

Note 3:

a) As one of the promoters of the Gujarat Chemical Port Terminal Company Limited (GCPTCL), the Company has given undertaking to ICICI Bank for not to transfer, assign, dispose off, pledge, charge or create any lien or in any way encumber Company''s existing or future shareholding in the GCPTCL in favour of any person so long as money remains due by GCPTCL to ICICI Bank or till the project is duly completed, whichever is later.

b) The equity shares held by the Company in Tunisian Indian Fertilizers S.A., Tunisia (TIFERT) have been pledged to secure the obligations of TIFERT to their lenders. During the year, TIFERT has commissioned the phosphoric acid plant and has commenced production. Pursuant to the shareholders'' agreement in this respect, the day to day operations have been assumed by the Tunisian partners and the Company has accordingly discontinued the same as Joint venture, and accordingly treating its investments in TIFERT under other Investments as per AS-13 - "Accounting for Investments".

c) The Company has consented for the proposed scheme of amalgamation and arrangement between the GSPC Gas Company Limited and GSPC Distribution Networks Limited.

d) As a promoter of Bhavnagar Energy Company Limited (BECL), the Company has signed the Sponsors'' Support Agreement (SSA) and as per the said Agreement, the promoters collectively shall not, till the final settlement date (being the date on which all obligations under the SSA have been irrevocably and unconditionally paid and discharged in full to the satisfaction of lenders), dispose-off their shareholdings which would result in dilution of their shareholding below 51 %.

e) The equity shares of Karnalyte Resources Inc., Canada, held by the Company are pledged to secure the Company''s long term borrowings from bank.

f) For basis of valuation refer Note 1 - Significant accounting policies

Note 4:

Contingent Liabilities

(Rs. in lakhs)

Particulars As at 31st March

2015 2014

Claims against the Company not acknowledgement as debt

(i) Excise Duty 4,404 4,454

(ii) Central Sales Tax and Value Added Tax 4,309 3,076

(iii) Income Tax 2,904 3,965

(iv) Other Claims by :

- Statutory Corporations 1,122 3,826

- Department of Fertilizers, total Refer note Refer amount not quantifiable, no.36 note demands stayed, matter pending no.36 with High Courts

- Employees/ex-employees, contractual labour - pending before courts Not Not ascert ascert ainable ainable

It is not practicable for the Company to estimate the timings of cash flow, if any, in respect of the above.

Guarantees

The Company has provided sponsor''s Guarantee towards the borrowing of Tunisian Indian Fertilizers S.A., Tunisia (TIFERT) upto 15% of the amount due and outstanding 32,391 31,102

Note 5:

Employees Benefits

a) The Company operates post employment and other long term employee benefits defined plans as follows:

I Funded II Unfunded

i. Gratuity i. Leave Encashment Benefit

ii. Pension ii. Post Retirement Medical Benefit Scheme (PRMBS)

b) Defined contribution plans:

Amount towards Defined Contribution Plans have been recognised under "Contributions to Providend, Gratuity and Superannuation Fund (pension) Funds (including provisions)'''' in Note:25 Rs 1873.98 lakhs (2013-14 Rs 1751.76 lakhs)

Note 6:

Related Party Transactions

Related Party Disclosures as required by AS-18 "Related Party Disclosures" are given below :

1. Relationship :

(a) Subsidiary Company : GSFC Agrotech Ltd.

(b) Associate Company :

(i) Vadodara Enviro Channel Ltd. (Erstwhile Effluent Channel Project Ltd.)

(ii) Gujarat Green Revolution Company Ltd.

(c) Key Managerial Personnel and their relatives:

(i) Shri Atanu Chakraborty - Managing Director up to 31/10/2014

(ii) Dr. S K Nanda - Chairman cum Managing Director w.e.f. 01/11/2014

(iii) Shri V D Nanavaty - Sr VP (Finance) & CFO

(iv) Shri V V Vachharajani- Company Secretary & VP (Legal)

(d) Others : GSFC Education Society

Note 6:

Details on derivative instruments and unhedged I. foreign currency exposures

(a) Forward exchange contracts and options (being derivative instruments), which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

(b) Interest rate swaps to hedge against fluctuations in interest rate changes: No. of contracts:2, Amount: 37.33 Mn USD Principal (As at 31 March, 2014 :No of contracts 2, Amount :44 Mn USD Principal)

(c) Currency Futures (other than forward exchange contracts stated above) which are not intended for trading or speculative purposes but for hedge purposes to hedge against fluctuations in changes in exchange rate.

II. The year-end foreign currency exposures that have not been hedged by a derivative instrument or otherwise, represented in equivalent USD: USD 7.08 Mn (As at March 31,2014: : USD 4.87 Mn)

Note 7:

Previous Year''s Figures

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


Mar 31, 2014

1. Contingent Liabilities

(Rs. in lakhs)

As At 31st March 2014 2013

Claims against the Company not acknowledgement as debt

(i) Excise and Customs Duty 4,454 4,659

(ii) Sales Tax, Interest on Turnover Tax and Purchase Tax 3,076 3,233

(iii) Income Tax 3,965 4,013

(iv) Other Claims by :

- Statutory Corporations 3,826 4,097

- Department of Fertilizers, total amount not quantifiable, demands stayed, matter pending with High Courts

- Employees/ex-employees, contractual labour - pending before courts Not ascer -tainable Not ascerta -inable

- Third party claims relating to disputes from contracts 752 752

It is not practicable for the Company to estimate the timings of cash flow, if any, in respect of the above.

Guarantees

The Company has provided sponsor''s Guarantee towards the Borrowing of the Joint Venture Company, Tunisian Indian Fertilizers S.A., Tunisia (TIFERT) upto 15% of the amount due and outstanding 31,102 28,146

2. Employees Benefits

(a) The Company operates post employment and other long term employee benefits defined plans as follows:

I Funded II Unfunded

i. Gratuity i. Leave Encashment Benefit

ii. Pension ii. Post Retirement Medical Benefit Scheme (PRMBS)

3. Assumptions :

a. Discount Rate (per annum)

b. Estimated Rate of return on Plan Assets (per annum)

c. The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors.

d. Provident Fund contributions are made to Trusts administered by the Company. The interest rate payable to the members of the Trusts shall not be lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made good by the Company. Having regard to the assets of the Fund managed by the Trusts and the return on the investments, the Company does not expect any deficiency in the foreseeable future.

i) SECONDARY SEGMENT INFORMATION :

The Company operates mainly in Indian market and there are no reportable geographical segments.

ii) OTHER DISCLOSURES :

1. The Products and Services covered under each business segment are as under :

Fertilizer Products :

Urea, Ammonium Sulphate, Di-ammonium Phosphate, Ammonium Phosphate Sulphate, NPK (12:32:16)(10:26:26), traded fertilizer products etc.

Industrial Products :

Caprolactam, Nylon-6, Nylon Filament Yarn, Nylon Chips, Melamine, Methanol, Polymer products, traded industrial products etc.

2. Segment revenue, results, assets and liabilities include the respective amounts identifiable to each of the segment and amounts allocated on reasonable basis.

4. Related Party Transactions

Related Party Disclosures as required by AS-18 "Related Party Disclosures" are given below :

1. Relationship :

(a) Subsidiary Company : GSFC Agrotech Ltd. (Incorporated on 02.04.2012)

(b) Associate Company :

(i) Vadodara Enviro Channel Ltd.

(Erstwhile Effluent Channel Project Ltd.) (ii) Gujarat Green Revolution Company Ltd.

(c) Directors and their relatives :

Shri Atanu Chakraborty - Managing Director

(d) Others :

GSFC Education Society

2. Details of transactions with related parties :

5. Interest in Subsidiary and Joint Venture

The Company incorporated a wholly owned subsidiary - GSFC Agrotech Limited (GATL) during the year ended 31 March 2013 for undertaking investment in new schemes. The Company considers the subsidiary to be not material in terms of its investment and the level of operations as at 31 March 2014 and hence consolidated financial statements are not prepared.

Value of Imported and Indigenous Raw Materials and Spare Parts consumed and percentage thereof to total consumption:

Balance of certain creditors and debtors/advances are subject to confirmation/reconciliation and consequential adjustments, if any.

6. Details on derivative instruments and unhedged foreign currency exposures

I.(a)Forward exchange contracts and options (being derivative instruments), which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

(i) Outstanding forward exchange contracts entered into by the Company as on 31st March, 2014 :

(b) Interest rate swaps to hedge against fluctuations in interest rate changes:

No. of contracts: 2, Amount: 44Mn USD Principal (As at 31st March, 2013: No. of contracts: 2, Amount: 44Mn USD Principal)

(c) Currency Futures (other than forward exchange contracts stated above) which are not intended for trading or speculative purposes but for hedge purposes to hedge against fluctuations in changes in exchange rate :

II. The year-end foreign currency exposures that have not been hedged by a derivative instrument or otherwise, represented in equivalent USD : USD 4.87 Mn. (As at March 31, 2013: NIL)

7. Previous Year''s Figures

Previous year''s figures have been regrouped/reclass- ified wherever necessary to correspond with the current year''s classification/disclosures.


Mar 31, 2013

1. Related Party Transactions

Related Party Disclosures as required by AS-18 "Related Party Disclosures" are given below :

1. Relationship :

(a) Subsidiary Company :

GSFC Agrotech Ltd.

(Incorporated on 02.04.2012)

(b) Associate Company :

(i) Vadodara Enviro Channel Ltd.

(Erstwhile Effluent Channel Project Ltd.)

(ii) Gujarat Green Revolution Company

(c) Joint Venture :

Tunisian Indian Fertilizers, S.A. (TIFERT)

(d) Directors and their relatives :

Shri Atanu Chakraborty - Managing Director

(e) Others :

GSFC Education Society

2. Interest in subsidiary and Joint Venture

The Company has incorporated a wholly owned subsidiary - GSFC Agrotech Limited (GATL) during the year ended 31 March 2013 for undertaking investment in new schemes. GATL''s business blue print was under consideration and no commercial operations has commenced during the year. The Company considers the subsidiary to be not material in terms of its investment and the level of operations as at 31 March 2013 and hence consolidated financial statements are not prepared.

The proportionate share of assets, liabilities, income and expenditure of subsidiary-GSFC Agrotech Limited and Jointly Controlled Entity- Tunisian Indian Fertilizers, S.A. (TIFERT) are given below :-

3. Details on derivative instruments and unhedged foreign currency exposures

I. (a) Forward exchange contracts and options (being derivative instruments), which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

(i) Outstanding forward exchange contracts entered into by the Company as on 31 March, 2013 :

4. Previous Years Figures

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


Mar 31, 2012

A) Rights, preferences and restrictions attached to shares

Equity shares

The Company has one class of equity shares having a par value of Rs. 10/- each. Each shareholder is eligible for one vote per share held. The dividend proposed by Board of Directors is subject to approval of 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 their shareholding.

During the year ended 31st March, 2012, the amount of per share dividend recognized as distributions to equity shareholders was Rs. 7.50 (31st March, 2011: Rs. 7/- per equity share).

Notes :

a) The Company has acquired land through Government and also through direct negotiations. The entire land is in possession of the Company. In respect of portion of land for which the Company has still not received the award/sale deed, the advance paid to land owners have been treated as land. In respect of other portion of land acquired through direct negotiations, compensation has been paid at the negotiated price. The Company also holds possession of a portion of land for which no amount has been paid in absence of receipt of awards.

b) The Company has leased a portion of its land to Bank of Baroda for bank premises at Fertilizer agar and Sikka and Gas Authority of India Ltd. (GAIL) for establishment of CNG pumping station.

c) Buildings include Rs.0.02 lakh being the value of shares in Co-operative Housing Societies.

d) The addition in Leasehold Land of Rs.528 lakhs (Previous year Rs.441 lakhs) is for Wind Mill Project taken on lease for a period of 20 years.

e) The Company established Sikka Jetty at its own cost, which is in operation since 1987. After due discussion with Gujarat Maritime Board (GMB), a consensus was arrived at establishing ownership of jetty with GSFC. Thereafter, in terms of resolution passed by GMB, the ownership of the jetty at Sikka was transferred to the Company. However, during 1994, GMB has reversed its earlier decision not supported by resolution and contended that the ownership of the jetty rests with GMB. The Company has made representation to the appropriate authority with regards to the ownership of the jetty with the Company.

The matter of deciding the status of Jetty was under examination at GMB & Government of Gujarat levels since long back. Various meetings were also held and after due diligence on the matter, it is decided by the Board of GMB supported by a resolution to assign the status of Captive Jetty to sikka jetty and the Company has to sign Captive Jetty Agreement with GMB. The matter is under discussion with GMB authorities. Pending finalization of the Captive Jetty Agreement, no provision is considered necessary in respect of various claims against the Company and counter-claims of the Company (both the amounts not determined). At present the Company is in possession of the Jetty and continues to be the owner of the Jetty till the Captive Jetty Agreement is signed.

Notes :

a) As one of the promoters of the Gujarat Industries Power Company Ltd. (GIPCL), the Company has given undertaking to Industrial Development Bank of India (IDBI), Power Finance Corporation Ltd. (PFC) and Gujarat Industrial Investment Corporation Ltd. (GIIC) for non disposal of and non creation of a charge against the Company's investment in the shares of the said company during the pendency of loans given to GIPCL by IDBI, PFC and GIIC.

b) As one of the promoters of the Gujarat Chemical Port Terminal Company Limited (GCPTCL), the Company has given undertaking to ICICI Bank for not to transfer, assign, dispose off, pledge, charge or create any lien or in any way encumber company's existing or future shareholding in the GCPTCL in favour of any person so long as money remains due by GCPTCL to ICICI Bank or till the project is duly completed, whichever is later.

c) The ordinary shares of Tunisian Indian Fertilizers S.A., Tunisia (TIFERT) held by the Company and included under Investment have been pledged to secure the obligations of TIFERT to their lenders.

d) As per the Security and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulation 2009 ("ICDR Regulations"), the Company has given consent for lock-in of its shareholding of equity shares in Gujarat State Petroleum Corporation Ltd. for a period of one year or for such other time as may be required from the date of allotment of Public issue.

e) As a promoter of Bhavnagar Energy Company Limited (BECL), the Company has signed the Sponsors' Support Agreement (SSA) and as per the said Agreement, the promoters collectively shall not, till the final settlement date (being the date on which all obligations under the SSA have been irrevocably and unconditionally paid and discharged in full to the satisfaction of lenders), dispose-off their shareholdings which would result in dilution of their shareholding below 51 %.

For basis of valuation refer Note 1 - Significant Accounting Policies.

1. Contingent Liabilities

(Rs.in lakhs)

2011-12 2010-11

Claims against the Company not acknowledgement as debt

Disputed Excise and Customs Duty (net of provision) 5,326 4,516

Disputed demand of Sales Tax, Interest on Turnover Tax &

Purchase Tax against which the Company has preferred appeals 3,556 462

Claims by Statutory Corporations and others not acknowledged as debt 4,264 4,111

Disputed gas price/royalty on gas with ONGC 752 752

Claims by employees/ex- employees pending before courts Not ascertainable Not ascertainable

The Industrial Tribunal, Vadodara vide its award dated 27/01/2009 in reference (IT) No.88/1999 directed the Company to pay to the concerned employees 50% of the amount calculated by working out double the amount qua the extra hours relating to the overtime done by concerned employees i.e. Supervisors and Sr. Supervisors during the period from 01/01/2001 to 31/03/2009. It has further been directed that the aforesaid would be effective upto March-2009 and thereafter if the concerned employees i.e. Supervisors and Sr. Supervisors are made to work overtime then in that situation such overtime wages would have to be paid at double the rate. The Industrial Tribunal's award has been challenged by the Company in the Hon'ble High Court of Gujarat and the Hon'ble High Court has granted Ad-interim relief thereby stayed the implementation, operations and execution of the award dated 27/01/2009. Vide an order dated 11/03/2010, the Hon'ble High Court has confirmed the interim relief granted earlier till final disposal of the petition.

Aggrieved by the said order, the Grade-II Employees' Union filed the Letters Patent Appeal before the Division Bench of the High Court, which has been dismissed by the Div. Bench.

The Company has not provided liability at this juncture as the matter can be proceeded if required, on merit at both the High

Court and Supreme Court stages 839 839

Guarantees

The Company has provided sponsor's Guarantee towards the borrowing of the joint venture company, Tunisian Indian Fertilizers S.A., Tunisia (TIFERT) upto 15% of the amount due and outstanding 26,473 18,237

ii) SECONDARY SEGMENT INFORMATION :

The Company operates mainly in Indian market and there are no reportable geographical segments.

iii) OTHER DISCLOSURES :

1. The Products and Services covered under each business segment is as under :

Fertilizer Products :

Urea, Ammonium Sulphate, Di-ammonium Phosphate, Ammonium Phosphate Sulphate, NPK (12:32:16X10:26:26), traded fertilizer products etc.

Industrial Products :

Caprolactam, Nylon-6, Nylon Filament Yarn, Nylon Chips, Melamine, Polymer products, traded industrial products etc.

2. Segment revenue, results, assets and liabilities include the respective amounts identifiable to each of the segment and amounts allocated on reasonable basis.

2. Related Party Transactions

Related Party Disclosures as required by AS-18 "Relatec Party Disclosures are given below :

1. Relationship :

(a) Associate Company :

Vadodara Enviro Channel Ltd.

(Erstwhile Effluent Channel Project Ltd.)

(b) Joint Venture :

Tunisian Indian Fertilizers, S.A. (TIFERT)

(c) Directors and their relatives :

Shri H. V. Patel

- Managing Director upto 13-07-11

Shri Atanu Chakraborty

- Managing Director w.e.f. 13-07-11

3. Joint Ventures

As on 31st March, 2012, the Company is holding 15% shares in a Joint Venture Company, Tunisian Indian Fertilizers, S.A. (TIFERT), incorporated in Tunisia and the proportionate share in the Assets, Liabilities, Income and Expenditure as per their Financial Year ending on 31st December 2011 are given below :

Balance of certain creditors and debtors/advances are subject to confirmation/reconciliation and consequential adjustments, if any.

4. Previous Years Figures

The Revised Schedule VI has become effective from 1st April, 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. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.


Mar 31, 2011

1. Contingent Liabilities not provided for :

2010-11 2009-10

Rs. in lakhs

(a) Disputed Excise Duty and Customs Duty (net of provision). 626 487

(b) Disputed demand of Sales Tax and Interest on Turnover Tax & Purchase Tax against which the Company has preferred appeals. 462 1580

(c) Claims by Statutory Corporations and others disputed and not acknowledged as debt. 4111 4208

(d) Disputed gas price/royalty on gas with ONGC. 752 752

(e) Claims by employees/ex- employees pending before courts. Not ascertainable

(f) The Industrial Tribunal, Vadodara vide its award dated 27/01/2009 in reference (IT) No. 88/1999 directed the Company to pay to the concerned employees 50% of the amount calculated by working out double the amount qua the extra hours relating to the overtime done by concerned employees i.e. Supervisors and Sr. Supervisors during the period from 01/01/ 2001 to 31/03/2009. It has further been directed that the aforesaid would be effective upto March-2009 and thereafter if the concerned employees i.e. Supervisors and Sr. Supervisors are made to work overtime then in that situation such overtime wages would have to be paid at double the rate. The Industrial Tribunal's award has been challenged by the Company in the Hon'ble High Court of Gujarat and the Hon'ble High Court has granted Ad-interim relief there by stayed the implementation, operations and execution of the award dated 27/01/2009. Vide an order dated 11/03/2010, the Hon'ble High Court has confirmed the interim relief granted earlier till final disposal of the petition. Aggrieved by the said order, the Grade-II Employees' Union filed the Letters Patent Appeal before the Division Bench of the High Court, which has been dismissed by the Div. Bench. The Company has not provided liability at this juncture as the matter can be proceeded, if required, on merit at both the High Court and Supreme Court stages. 839 839

(g) The Company has provided sponsor's Guarantee towards the borrowing of the joint venture company, Tunisian Indian Fertilizers S.A., Tunisia (TIFERT) upto 15% of the amount due and outstanding. 18237 9256

2. Estimated amount of contracts remaining to be executed on capital accounts, net of advances. 9831 12063

3. In respect of LSHS consumed for production of Steam, which is used for manufacturing fully exempted fertilizers, Central Excise authorities had issued various Show- Cause Notices (SCNs) denying MODVAT Credit availed by the Company from 1997 till 2001. The Company litigated against such denial and the Hon. Supreme Court gave favourable order against one of the SCNs in July 2008 upholding the MODVAT credit eligibility of the Company. Thereafter, the Company requested Excise authorities to adjudicate pending the Show Cause Notices on the basis of Supreme Court order. However, Commissioner, Central Excise & Customs, Vadodara adjudicated the matter in November 2010, against the Company on various grounds and ordered the Company to pay Rs. 3436.60 Lacs for Cenvet availed on LSHS and interest on the same of Rs. 453.78 Lacs. The Company has appealed to the CESTAT against this order. The Company has not provided liability at this juncture.

4. (a) As one of the promoters of the Gujarat Industries Power Company Ltd.(GIPCL), the Company has given undertaking to Industrial Development Bank of India (IDBI), Power Finance Corporation Ltd. (PFC) and Gujarat Industrial Investment Corporation Ltd. (GIIC) for non disposal of and non creation of a charge against the Company's investment in the shares of the said company during the pendency of loans given to GIPCL by IDBI, PFC and GIIC.

(b) As one of the promoters of the Gujarat Chemical Port Terminal Company Limited (GCPTCL), the Company has given undertaking to ICICI Bank for not to transfer, assign, dispose off, pledge, charge or create any lien or in any way encumber Company's existing or future shareholding in the GCPTCL in favour of any person so long as money remains due by GCPTCL to ICICI Bank or till the project is duly completed, whichever is later.

(c) The ordinary shares of Tunisian Indian Fertilizers S.A., Tunisia (TIFERT) held by the Company and included under Investment (Schedule-6) have been pledged to secure the obligations of TIFERT to their lenders.

(d) As per the Security and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulation 2009 ("ICDR Regulations"), the Company has given consent for lock-in of its shareholding of equity shares in Gujarat State Petroleum Corporation Ltd. for a period of one year or for such other time as may be required from the date of allotment of Public Issue.

5. The Sundry Creditors in Schedule-11 includes Rs. 60.05 lakhs (previous year Rs. 184.49 lakhs) due to Micro, Small and Medium Enterprises and Rs. 46443.09 lakhs due to other creditors. As per the provisions of "The Micro, Small and Medium Enterprises Development Act, 2006", the principal amount payable to Micro, Small and Medium Enterprises is Rs. 60.05 lakhs and no interest due thereon is remaining unpaid as on 31st March, 2011. This information has been determined to the extent such parties have been identified on the basis of information available with the Company.

6. (a) No provision has been considered necessary towards the income tax demand of Rs. 5719 lakhs for the assessment years 1987-88, 1992-93, 1997-98, 1999-2000, 2004-05, 2005-06, 2006-07 and 2008-09 as the same is disputed in appeals and the Company is hopeful of succeeding in the said appeals.

7. The Company established Sikka Jetty at its own cost, which is in operation since 1987. After due discussion with Gujarat Maritime Board (GMB), a consensus was arrived at establishing ownership of jetty with GSFC. Thereafter, in terms of resolution passed by GMB, the ownership of the jetty at Sikka was transferred to the Company. However, during 1994, GMB has reversed its earlier decision not supported by resolution and contended that the ownership of the jetty rests with GMB. The Company has made representation to the appropriate authority with regard to the ownership of the jetty with the Company.

The matter of deciding the status of Jetty was under examination at GMB & Government of Gujarat levels since long back. Various meetings were also held and after due diligence on the matter, it is decided by the Board of GMB supported by a resolution to assign the status of Captive Jetty to Sikka Jetty and the Company has to sign Captive Jetty Agreement with GMB. The matter is under discussion with GMB authorities. Pending finalization of the Captive Jetty Agreement, no provision is considered necessary in respect of various claims against the Company and counter-claims of the Company (both the amounts not determined).

At present the Company is in possession of the Jetty and continues to be the owner of the Jetty till the Captive Jetty Agreement is signed.

8. During the year, based on a favourable decision of the Court, pertaining to the year 1997-98, the Company has accounted subsidy on DAP amounting to Rs. 761.87 lakhs in Sales and interest thereon amounting to Rs. 688.33 lakhs in Other Income.

9. Disclosures pursuant to Accounting Standard - 15 (Revised) "Employee Benefits" :

(a) The Company operates post employment and other long term employee benefits defined plans as follows:

I Funded

i. Gratuity

ii. Pension

II Unfunded

i. Leave Encashment Benefit

ii. Post Retirement Medical Benefit Scheme (PRMBS)

(c) The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors.

(d) Provident Fund contributions are made to Trusts administered by the Company. The interest rate payable to the members of the Trusts shall not be lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made good by the Company. Having regard to the assets of the Fund managed by the Trusts and the return on the investments, the Company does not expect any deficiency in the foreseeable future.

10. Long term wage settlement at Baroda unit of the Company has expired in December 2010. Pending negotiation for wage settlement, no provision has been made for the period January to March 2011.

11. Related Party Disclosures :

Related Party Disclosures as required by AS-18 "Related Party Disclosures" are given below :

1. Relationship :

(a) Associate Company :

Effluent Channel Project Ltd.

(b) Joint Venture :

Tunisian Indian Fertilizers, S.A. (TIFERT)

(c) Directors and their relatives :

Shri H. V. Patel - Managing Director

15. Balance of certain creditors and debtors/advances are subject to confirmation/reconciliation and consequential adjustments, if any.

ii) SECONDARY SEGMENT INFORMATION :

The Company operates mainly in Indian market and there are no reportable geographical segments.

iii) OTHER DISCLOSURES :

1. The Products and Services covered under each business segment is as under :

Fertilizer Products :

Urea, Ammonium Sulphate, Di-ammonium Phosphate, Ammonium Phosphate Sulphate, NPK (12:32:16)(10:26:26), traded fertilizer products etc.

Industrial Products :

Caprolactam, Nylon-6, Nylon Filament Yarn, Nylon Chips, Melamine, Polymer products, traded industrial products etc.

2. Segment revenue, results, assets and liabilities include the respective amounts identifiable to each of the segment and amounts allocated on reasonable basis.

12. Previous year's figures have been regrouped wherever necessary.


Mar 31, 2010

1. Contingent Liabilities not provided for :

2009-10 2008-09

Rs. in lakhs

(a) Disputed Excise Duty and Customs Duty (net of provision). 487 478

(b) Disputed demand of Sales Tax and Interest on Turnover Tax & Purchase Tax against which the Company has preferred appeals. 1580 1004

(c) Claims by Statutory Corporations and others disputed and not acknowledged as debt. 4208 4666

(d) Claim by ONGC for royalty on gas. 81 81

(e) Claims by employees/ex- employees pending before courts. Not ascertainable

(f) The Industrial Tribunal, Vadodara vide its award dated 27/01/2009 in reference (IT) No.88/1999 directed the Company to pay to the concerned employees 50% of the amount calculated by working out double the amount qua the extra hours relating to the overtime done by concerned employee i.e. Supervisors and Sr. Supervisors during the period from 01/01/2001 to 31/03/2009.

It has further been directed that the aforesaid would be effective upto March-2009 and thereafter if the concerned employees i.e. Supervisors and Sr. Supervisors are made to work overtime then in that situation such overtime wages would have to be paid at double the rate. The Industrial Tribunals award has been challenged by the Company in the Honble High Court of Gujarat and the Honble High Court has granted Ad- interim relief thereby stayed the implementation, operations and execution of the award dated 27/ 01/2009. The Company has not provided liability at this juncture as the matter can be proceeded, if required, on merit at both the High Court and Supreme Court stages. 839 839

(g) The Company has provided sponsors Guarantee towards the borrowing of the joint venture

2009-10 2008-09

Rs. in lakhs

Company, Tunisian Indian Fertilizers S.A., Tunisia (TIFERT) upto 15% of the amount due and outstanding. 9256 Nil

2. Estimated amount of contracts remaining to be executed on capital accounts, net of advances. 12063 5984

3. (a) ONGC had submitted an application in Civil Court before Civil Judge (S.D.) Baroda for the recovery of gas price difference. The Company has challenged the same. However, as per the legal opinion, the aforesaid application for recovery is not tenable in law in the said Civil Misc. Application.

(b) Pending decision of Ministry of Petroleum and Natural Gas and Ministry of Fertilizers with regard to demanded higher price of gas by Oil & Natural Gas Commission (ONGC) for the period from1982 to 29-1-1987, the Company has provided and continued for the liability at the prices notified by Central Government in 1987 (net of amount recoverable through Retention Price Scheme and others). The Company is contingently liable for the price difference of Rs. 671 lakhs (net of amount recoverable) between the demanded higher price and the liability accounted for.

(c) The Company has filed a Petition in the Honble High Court of Gujarat to ensure uninterrupted gas supply from GAIL on which Honble High Court has ordered to maintain status quo for gas supply.

4. (a) As one of the promoters of the Gujarat Industries

Power Company Ltd.(GIPCL), the Company has given undertaking to Industrial Development Bank of India (IDBI), Power Finance Corporation Ltd. (PFC) and Gujarat Industrial Investment Corporation Ltd. (GIIC) for non disposal of and non creation of a charge against the Companys investment in the shares of the said company during the pendency of loans given to GIPCL by IDBI, PFC and GIIC.

(b) As one of the promoters of the Gujarat Chemical Port Terminal Company Limited (GCPTCL), the Company has given undertaking to ICICI Bank for not to transfer, assign, dispose off, pledge, charge or create any lien or in any way encumber Companys existing or future shareholding in the GCPTCL in favour of any person so long as money remains due by GCPTCL to ICICI Bank or till the project is duly completed, whichever is later.

(c) The ordinary shares of Tunisian Indian Fertilizers S.A., Tunisia (TIFERT) held by the Company and included under Investment (Schedule-6) have been pledged to secure the obligations of TIFERT to their lenders.

(d) As per the Security and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulation 2009 ("ICDR Regulations"), the Company has given consent for lock-in of its shareholding of equity shares in Gujarat State Petroleum Corporation Ltd. for a period of one year or for such other time as may be required from the date of allotment of Public Issue.

5. The Sundry Creditors in Schedule-11 includes Rs. 184.49 lakhs (previous year Rs. 207.36 lakhs) due to Micro, Small and Medium Enterprises and Rs.36039.46 lakhs due to other creditors. As per the provisions of "The Micro, Small and Medium Enterprises Development Act, 2006", the principal amount payable to Micro, Small and Medium Enterprises is Rs. 184.49 lakhs and no interest due thereon is remaining unpaid as on 31st March, 2010. This information has been determined to the extent such parties have been identified on the basis of information available with the Company.

6. (a) No provision has been considered necessary towards the income tax demand of Rs. 5387 lakhs for the assessment years 1987-88, 1992-93, 1997-98, 1999-2000, 2004-05, 2005-06 and 2008-09 as the same is disputed in appeals and the Company is hopeful of succeeding in the said appeals.

7. Extra Duty Deposits equivalent to 5% of CIF value levied on consignments of Caprolactam Expansion Project and capitalised is subject to adjustment on final assessment by special valuation branch of Customs Department.

8. The Company established Sikka Jetty at its own cost, which is in operation since 1987. After due discussion with Gujarat Maritime Board (GMB), a consensus was arrived at establishing ownership of jetty with GSFC. Thereafter, in terms of resolution passed by GMB, the ownership of the jetty at Sikka was transferred to the Company. However, during 1994, GMB has reversed its earlier decision not supported by resolution and contended that the ownership of the jetty rests with GMB. The Company has made representation to the appropriate authority with regard to the ownership of the jetty with the Company.

The matter of deciding the status of Jetty was under examination at GMB & Government of Gujarat levels since long back. Various meetings were also held and after due diligence on the matter, it is decided by the Board of GMB supported by a resolution to assign the status of Captive Jetty to Sikka Jetty and the Company has to sign Captive Jetty Agreement with GMB. The matter is under discussion with GMB authorities. Pending finalization of the Captive Jetty Agreement, no provision is considered necessary in respect of various claims against the Company and counter-claims of the Company (both the amounts not determined).

At present the Company is in possession of the Jetty and continues to be the owner of the Jetty till the Captive Jetty Agreement is signed.

9. Pending notification by Government of India of final rates of concession from July 2009 onwards on DAP & Complex Fertilizers, the Company has accounted downward impact of Rs. 5389 lakhs as difference between the estimated final rate of concession and the base rate of concession.

(d) Provident Fund contributions are made to Trusts administered by the Company. The interest rate payable to the members of the Trusts shall not be lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made good by the Company. Having regard to the assets of the Fund managed by the Trusts and the return on the investments, the Company does not expect any deficiency in the foreseeable future.

10. In the matter of Contract labourers, various issues regarding permanency and equal pay for equal work are under litigation and pending before Honble High Court and before the Industrial Tribunal. To amicably resolve these issues, the Company and the Chemical Mazdoor Panchayat Union has executed a Memorandum of Understanding and accordingly has estimated and provided for the liability for Rs. 3736.68 lakhs in the Personnel Expenses Schedule 16.

11. Balance of certain creditors and debtors/advances are subject to confirmation/reconciliation and consequential adjustments, if any.

ii) SECONDARY SEGMENT INFORMATION :

The Company operates mainly in Indian market and there are no reportable geographical segments.

iii) OTHER DISCLOSURES :

1. The Products and Services covered under each business segment is as under :

Fertilizer Products :

Urea, Ammonium Sulphate, Di-ammonium Phosphate, Ammonium Phosphate Sulphate, NPK (12:32:16)(10:26:26), traded fertilizer products etc.

Industrial Products :

Caprolactam, Nylon-6, Nylon Filament Yarn, Nylon Chips, Melamine, Polymer products, traded industrial products etc.

2. Segment revenue, results, assets and liabilities include the respective amounts identifiable to each of the segment and amounts allocated on reasonable basis.

12. Previous years figures have been regrouped wherever necessary.

13. Additional information pursuant to the relevant provisions of paragraphs 3 and 4 of Part-II of Schedule-VI to the Companies Act, 1956 is as per Annexure-I.

14. Balance sheet abstract and companys general business profile in terms of Part-IV of Schedule-VI to the Companies Act, 1956 is as per Annexure-II.

 
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