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Himadri Chemicals & Industries Ltd. Notes to Accounts, Himadri Chemicals & Industries Ltd. Company
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Notes to Accounts of Himadri Chemicals & Industries Ltd.

Mar 31, 2015

1. COMPANY OVERVIEW

Himadri Chemicals & Industries Limited ("the Company") is a public company domiciled and headquartered in India. It was incorporated on 28 July 1987 and its shares are listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The Company is primarily engaged in the manufacturing of carbon materials and chemicals. The Company has operations in India and caters to both domestic and international markets. The Company also has a wholly-owned subsidiary in India in the name of Equal Commodeal Private Limited and step down subsidiary in the name of AAT Global Limited (previously known as Himadri Global Investment Limited), incorporated in Hong Kong and another subsidiary having 94% shareholding in Shandong Dawn Himadri Chemical Industry Limited incorporated in China.

a. Rights, preferences and restrictions attached to equity shares

The Company has a single class of equity shares with par value of Rs. 1 per share. Accordingly, all equity shares rank equally with regard to dividends and share in the Company's residual assets. The equity shareholders are entitled to receive dividend as declared by the Company from time to time. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to its share of the paid-up equity capital of the Company. On winding up of the Company, the holders of equity shares will be entitled to receive the residual assets of the Company, remaining after distribution of all preferential amounts in proportion to the number of equity shares held.

b. Shares reserved for issue under options:

For details of equity shares reserved for issue on conversion of Foreign Currency Convertible Bonds (FCCB) which were issued by the Company on 13 April 2009, refer note 5 regarding terms of conversion/ redemption of Foreign Currency Convertible Bonds.

Amount in Rs. Lakhs

31 March 31 March 2015 2014

2. CONTINGENT LIABILITIES AND COMMITMENTS (to the extent not provided for)

a) Contingent Liabilities:

(i) Standby letter of credit issued on behalf of the Company to secure the financial assistance 3,805.52 3,654.07 to its subsidiary

(ii) Sales tax matters in dispute/ under appeal 3,319.73 3,972.14

(iii) Excise/ Service Tax matters in dispute/under appeal 535.29 517.37

(iv) Customs matters in dispute/ under appeal 28.83 28.83

(v) Entry Tax in dispute/ under appeal 2,587.58 1,468.64

(vi) Income Tax in dispute/ under appeal 59.54 -

Amount in Rs. Lakhs

31 March 31 March 2015 2014

b) Commitments:

i) Estimated amount of contracts remaining to be executed on capital account and 1,332.82 1,119.90 not provided for (net of advances)

ii) Estimated amount of export obligations to be fulfilled in respect of goods 1,333.65 7,246.49 imported under advance license/ Export Promotion Capital Goods Scheme (EPCG)

c) The Company had filed Writ petition on 7 January 2013 before the Hon'ble High Court of Calcutta and challanged the constitutional validity of Entry Tax levied by the Government of West Bengal. The Hon'ble High Court of Calcutta during the previous year, passed an order on 24 June 2013 declaring The West Bengal tax on Entry of Goods into Local Areas Act, 2012 as unconstitutional against which the government filed an appeal which is still pending to be disposed off. In the opinion of the management, there is a strong merit of the case ; hence the Company has not made provision for entry tax liability in the books for the current year and during the previous year. The liability relating to the period prior to 31 March 2013 amounting to Rs. 771.77 Lakhs was written back.

3. AMOUNTS RECEIVABLE/PAYABLE IN FOREIGN CURRENCY

(a) The Company enters into various forms of derivative instruments such as foreign exchange forward contracts, options, cross currency swaps and interest rate swaps to hedge its exposure to movements in foreign exchange and interest rates.

(c) All derivative contracts outstanding as at the year end are marked to market. The Company has applied the hedge accounting principles set out in the Accounting Standard (AS) 30 Financial Instruments: Recognition and Measurement as issued by The Institute of Chartered Accountants of India.

Accordingly, loss aggregating to Rs. 3,925.75 Lakhs (previous year Rs. 4,889.44 Lakhs), being the effective portion of the contracts designated as effective hedge for future cash flows has been recognised in the Hedging Reserve Account to be ultimately recognised in the Statement of Profit and Loss, depending on the exchange rate fluctuation till and when the underlying forecasted transactions occur.

Gain/(loss) on contracts not designated as effective hedge and ineffective portion of the contracts designated as effective hedge are included in foreign exchange fluctuation account, after adjustment of periodic premium received on cross currency/ interest rate swaps.

Trade receivables include an amount of Rs. 798.10 Lakhs (previous year Rs. 798.10 Lakhs) due from a customer which is currently under arbitration proceedings. Based on the merits of the case, the management believes that the outcome of the said proceedings would be in favour of the Company.

4. EMPLOYEE BENEFITS: POST EMPLOYMENT BENEFIT PLANS

1. Defined contribution plans

The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund and Superannuation Fund, which are defined contribution plans. The Company has no obligations other than to make the specified contributions. The contributions are charged to the Statement of Profit and Loss as they accrue. The amount recognised as an expense towards contribution to Provident Fund and Superannuation fund for the year aggregated to Rs. 93.44 Lakhs (previous year Rs. 75.11 Lakhs) and Rs. 30.90 Lakhs (previous year Rs. 24.23 Lakhs) respectively.

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

Discount rate is based on the prevailing market yield of Indian Government securities as at the year end for the estimated term of the obligation.

Assumptions regarding future mortality are based on published statistics and mortality tables. The calculation of the defined benefit obligation is sensitive to the mortality assumptions.

5. Information in accordance with the requirements of Accounting Standard 18 on Related Party Disclosures notified by the Companies (Accounting Standards) Rules, 2006

(i) List of related party and relationship where control exists

(a) Enterprises over which the Company has control

Equal Commodeal Private Limited, India (ECPL) Wholly owned subsidiary

AAT Global Limited, Hongkong (formerly Himadri Global Wholly owned subsidiary of ECPL Investment Limited) (AAT)

Shandong Dawn Himadri Chemical Industry Limited, China (SDHCIL) Subsidiary of AAT

(ii) Names of the other related parties with whom transactions have taken place during the year

(a) Key Managerial Personnel

Mr. Damodar Prasad Choudhary, Chairman (resigned w.e.f. 13.08.2013) Mr. Bankey Lal Choudhary, Managing Director Mr. Shyam Sundar Choudhary, Executive Director Mr. Vijay Kumar Choudhary, Executive Director Mr. Anurag Choudhary, Chief Executive Officer Mr. Amit Choudhary, President - Projects Mr. Tushar Choudhary, President - Operations

(b) Enterprises owned or significantly influenced by the Key Managerial Personnel or their relatives

Himadri Credit & Finance Limited Himadri Coke & Petro Limited Himadri Industries Limited Sri Agro Himghar Limited Himadri e-Carbon Limited

(c) Associate

BC India Investments Himadri Dyes & Intermediates Limited

6. In accordance with Accounting Standard 29 - 'Provisions, Contingent Liabilities and Contingent Assets', the Company as a prudent measure has made provisions in the earlier year amounting to Rs. 78.42 Lakhs representing estimates made mainly for probable claims arising out of disputes pending with the sales tax authorities. The probability and timing of the outflow with regard to these matters depend upon the ultimate settlement with the relevant authorities. The carrying amount at the beginning of the year was Rs. 78.42 Lakhs and provision of Rs. Nil made during the year is carried forward at the end of the year and neither the amount has been used nor the used amount reversed during the year under audit

a) The Company has taken various commercial premises and equipment under cancellable operating leases. These lease agreements are normally renewed on expiry.

7. EXCEPTIONAL ITEM

During the previous year, the Company had sold it's investments in equity shares of its wholly owned susbsidary, AAT Global Limited for a consideration of Rs. 5,202.60 Lakhs. Profit on sale of above investment was Rs. 704.99 Lakhs.

8. RESEARCH AND DEVELOPMENT EXPENSES

Research and development expenses aggregating to Rs. 239.92 Lakhs (previous year Rs. 268.43 Lakhs) in the nature of revenue expenditure and Rs. Nil (previous year Rs. 29.20 Lakhs) in the nature of capital expenditure have been included under the appropriate account heads.

9. SEGMENT INFORMATION

In accordance with Accounting Standard 17 "Segment Reporting", segment information has been given in the consolidated financial statements of the Company, and therefore, no separate disclosure on segment information is given in these financial statements.

The Company does not make any direct remittances of dividends in foreign currencies to non-resident shareholders. Dividend to non-resident shareholders has been deposited into their Rupee account in banks in India.

10. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulations under sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documents for the international transactions entered into with the associated enterprises during the financial year. The management is of the opinion that its international transactions are at arms length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense for the year and that of provision for taxation.

11. Total expenditure incurred on Corporate Social Responsibility activities during the year ended 31 March 2015 is Rs. 27.99 Lakhs (previous year Rs. 73.84 Lakhs) .

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


Mar 31, 2014

1. company overview

Himadri Chemicals & Industries Limited is a public company domiciled and headquartered in India. It is incorporated under the Companies Act, 1956 and its shares are listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The Company is primarily engaged in manufacturing of carbon materials and chemicals. The Company has operations in India and caters to both domestic and international markets. The Company also has a wholly-owned subsidiary in India in the name of Equal Commodeal Private Limited (w.e.f 8 March 2014) and step down subsidiary in the name of AAT Global Limited (previously known as Himadri Global Investment Limited) incorporated in Hong Kong, an another subsidiary having 94% shareholding in Shandong Dawn Himadri Chemical Industry Limited incorporated in China.

1.a. Rights, preferences and restrictions attached to equity shares

The Company has a single class of equity shares with par value of Rs. 1 per share. Accordingly, all equity shares rank equally with regard to dividends and share in the Company''s residual assets. The equity shareholders are entitled to receive dividend as declared by the Company from time to time. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to its share of the paid-up equity capital of the Company. On winding up of the Company, the holders of equity shares will be entitled to receive the residual assets of the Company, remaining after distribution of all preferential amounts in proportion to the number of equity shares held.

b. Shares reserved for issue under options:

For details of equity shares reserved for issue on conversion of Foreign Currency Convertible Bonds (FCCB) which were issued by the Company on 13 April 2009, refer note 5 regarding terms of conversion/ redemption of Foreign Currency Convertible Bonds.

(A) Terms of repayment/ conversion

(i) Bonds / debentures

a) The Company on 24 September 2001 had issued Deep Discount Debentures of face value of Rs. 100,000 each aggregating Rs. 12,300.00 Lakhs at a discount of 90% on face value and are redeemable at par at the end of 20 years from the date of allotment. The Deep Discount Debentures carry an implicit rate of interest of approximately 12.18% compounded annually.

b) The Company on 29 October 2013 had issued 12.50% Redeemable Non-convertible Debentures of face value of Rs. 1,000,000 each aggregating Rs. 5,000.00 Lakhs to be redeemed at par at the end of 7 years from the date of allotment on private placement basis to Life Insurance Corporation of India.

c) The Company on 24 August 2010 had issued 10% Redeemable Non-convertible Debentures of face value of Rs. 400 each aggregating Rs. 10,000.00 Lakhs to be redeemed at par at the end of 10 years from the date of allotment on private placement basis to Life Insurance Corporation of India.

d) The Company on 28 June 2010 had issued 9.60% Redeemable Non-convertible Debentures of face value of Rs. 1,000,000 each aggregating Rs. 10,000.00 Lakhs to be redeemed at par at the end of 10 years from the date of allotment on private placement basis to ICICI Bank Limited. These debentures can be redeemed at par on or after 7 years from the date of allotment, at the option of the either party.

e) The Company on 13 April 2009 had issued 70 Foreign Currency Convertible Bonds (FCCB) of face value of USD 100,000 each aggregating USD 70 Lakhs to International Finance Corporation (IFC). As per the terms of the issue, the bond holder has an option of converting these bonds into equity shares within a period of 7 years from the date of issue at an initial conversion price of Rs. 13.50 per equity share of face value of Rs. 1 each at the foreign exchange rate prevailing on the date of conversion request. In case the conversion option is not exercised, the outstanding FCCBs would be redeemed at par together with interest accrued at the rate of 6 months LIBOR spread of 3.35% per annum accrued on a compounded 6 monthly basis. As at 31 March 2014, conversion option has not been exercised in respect of the above FCCBs. Till 31 March 2014, the Company made provision of Rs. 935.58 Lakhs (previous year Rs. 619.86 Lakhs) as interest on outstanding FCCBs.

a) The Company had been granted sales tax deferment by the Government of Andhra Pradesh under the "Target 2000 - New Industrial Policy". The same is repayable from the end of the 14th year without payment of interest during the period from August 2014 to October 2017.

b) Loans against vehicles and equipments are for a period of three years and repayable by way of equated monthly instalments.

(B) Details of security

i) 12.50% Redeemable Non-convertible Debentures and 10% Redeemable Non- convertible Debentures issued to Life Insurance Corporation of India and 9.60% Redeemable Non-convertible Debentures issued to ICICI Bank Limited, aggregating to Rs. 25,000.00 Lakhs are secured by way of Equitable Mortgage on land situated at Mouza Maharaj Pura Dist - Mahsana (Gujarat), First Pari Passu charge on immovable properties (Leasehold Land) situated at Mahistikry and hypothecation of all movable fixed assets (including plant and machinery) of the Company in favour of Axis Trustee Services Limited, being the trustee of the Debenture Holders.

ii) Rupee term loan from Axis Bank Limited, Foreign currency borrowings from International Finance Corporation (IFC), The Hongkong and Shanghai Banking Corporation Limited (HSBC) and DBS Bank Limited (DBS) are secured by way of mortgage of immovable properties situated at Mahistikry Unit (Leasehold Land), Liluah Unit, and Vishakhapatnam Unit and hypothecation of all movable fixed assets (including plant and machinery) on pari passu basis with other lenders.

iii) Foreign currency borrowings from DEG - Deutsche Investitionsund Entwicklungsgesellschaft MBH (DEG) and ICICI Bank Limited are secured by way of mortgage of immovable properties (Leasehold Land) and hypothecation of movable fixed assets (including plant and machinery) situated at Mahistikry on pari passu basis with other lenders.

iv) Foreign currency loan from Citibank N.A. and rupee term loan from The Hongkong and Shanghai Banking Corporation Limited and Deutsche Bank AG are secured by way of pledge of investments in mutual funds.

v) Loans against vehicles and equipment are secured by way of hypothecation of the underlying asset financed.

Details of security

Working capital loans from banks aggregating Rs. 54,850.19 Lakhs (previous year Rs. 53,893.74 Lakhs) are secured by hypothecation of currents assets of the Company both present and future on pari passu basis and Rs. Nil (previous year Rs. 2,845.99 Lakhs) are secured by pledge of investments in mutual funds. These loans include Rs. 4,494.36 Lakhs (previous year Rs. 6,677.47 Lakhs), being personally guaranteed by the promoter directors of the Company.

* There is no amount due and outstanding to be credited to Investor Education and Protection Fund as at 31 March 2014.

# Includes amount due towards employee benefits and security deposits.

b) Rs. Nil (previous year Rs. 383.50 Lakhs), being exchange differences recognised under Para 46A of Accounting Standard - 11 "The Effects of Changes in Foreign Exchange Rates".

* Includes consultancy charges, inspection charges, testing charges, etc.

* For the purpose of computation of dilutive EPS for the year ended 31 March 2014 and 31 March 2013, potential equity shares that could arise on conversion of Foreign Currency Convertible Bonds are not resulting in dilution of EPS. Hence, they have been considered as anti-dilutive.

Amount in Rs. Lakhs 31 March 2014 31 March 2013

NOTE 2 - CONTINGENT LIABILITIES AND COMMITMENTS (to the extent not provided for)

a) Contingent Liabilities:

(i) Standby letter of credit issued on behalf of the Company to secure 3,654.07 3,306.87 the financial assistance to its subsidiary

(ii) Sales tax matters in dispute/ 3,972.14 4,038.69 under appeal

(iii) Excise/ Service Tax matters 517.37 483.67 in dispute/under appeal

(iv) Customs matters in dispute/ 28.83 28.83 under appeal

c) The Company had filed Writ petition on 7 January 2013 before the Hon''ble High Court, Calcutta and challenged the constitutional validity of Entry Tax levied by the Government of West Bengal. The Hon''ble High Court, Calcutta during the current year, passed an order on 24 June 2013 declaring The West Bengal tax on Entry of Goods into Local Areas Act, 2012 as unconstitutional against which the government filed an appeal which is still pending to be disposed off. In the opinion of the management, there is remote possibility of any such liability on the Company. Hence the Company has not made any provision for entry tax liability in the books for the current year and the liability relating to the previous year has been written back.

NOTE 3 - AMOUNTS RECEIvABLE/ PAYABLE IN FOREIGN CURRENCY

(a) The Company uses various forms of derivative instruments such as foreign exchange forward contracts, options, cross currency swaps and interest rate swaps to hedge its exposure to movements in foreign exchange and interest rates.

(c) All derivative contracts outstanding as at the year end are marked to market. The Company has applied the hedge accounting principles set out in the Accounting Standard (AS) 30 Financial Instruments: Recognition and Measurement as issued by The Institute of Chartered Accountants of India.

Accordingly, loss aggregating to Rs. 4,889.44 Lakhs (previous year Rs. 2,634.80 Lakhs), being the effective portion of the contracts designated as effective hedges for future cash flows has been recognised in the Hedging Reserve Account to be ultimately recognised in the Statement of Profit and Loss, depending on the exchange rate fluctuation till and when the underlying forecasted transactions occur. Gain/(loss) on contracts not designated as effective hedges and ineffective portion of the contracts designated as effective hedges are included in foreign exchange fluctuation account, after adjustment of periodic premium received on cross currency/ interest rate swaps.

NOTE 4

Trade receivables include an amount of Rs. 798.10 Lakhs (Previous Year Rs. 798.10 Lakhs) due from a customer which is currently under arbitration proceedings. Based on the merits of the case, the management believes that the outcome of the said proceedings would be in favour of the Company.

NOTE 5 - EMPLOYEE BENEFITS: POST EMPLOYMENT BENEFIT PLANS

1. Defined contribution plans

The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund and Superannuation Fund, which are defined contribution plans. The Company has no obligations other than to make the specified contributions. The contributions are charged to the Statement of Profit and Loss as they accrue. The amount recognised as an expense towards contribution to Provident Fund and Superannuation fund for the year aggregated to Rs. 75.11 Lakhs (previous year Rs. 60.30 Lakhs) and Rs. 24.23 Lakhs (previous year Rs. 21.81 Lakhs) respectively.

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

Discount rate is based on the prevailing market yield of Indian Government securities as at the year end for the estimated term of the obligation.

Assumptions regarding future mortality are based on published statistics and mortality tables. The calculation of the defined benefit obligation is sensitive to the mortality assumptions.

Proposed contribution for next year

The Company expects to pay Rs. 5.57 Lakhs as contribution to its defined benefit plan in the next year (previous year : Rs. 11.80 Lakhs).

NOTE 6

Information in accordance with the requirements of Accounting Standard 18 on Related Party Disclosures notified by the Companies (Accounting Standards) Rules, 2006

NOTE 7

In accordance with Accounting Standard 29 - ''Provisions, Contingent Liabilities and Contingent Assets'', the Company as a prudent measure has made provisions amounting to Rs. 78.42 Lakhs representing estimates made mainly for probable claims arising out of disputes pending with the sales tax authorities. The probability and timing of the outflow with regard to these matters depend upon the ultimate settlement with the relevant authorities. The carrying amount at the beginning of the year was Rs. Nil and provision of Rs. 78.42 Lakhs made during the year is carried forward at the end of the year and neither the amount has been used nor the used amount reversed during the year under review.

NOTE 8 - OPERATING LEAsE

a) The Company has taken various commercial premises and equipment under cancellable operating leases. These lease agreements are normally renewed on expiry.

c) Lease payments recognized in Statement of Profit and Loss with respect to operating leases - Rs. 151.43 Lakhs (previous year Rs. 144.11 Lakhs) included under head Rent in "note 29".

NOTE 9 - EXCEPTIONAL ITEM

During the current year, the Company has sold it''s investments in equity shares of its wholly owned susbsidiary, AAT Global Limited on 8 June 2013 for a consideration of Rs. 5,202.60 Lakhs. Profit on sale of above investment is Rs. 704.99 Lakhs.

NOTE 10 - RESEARCH AND DEVELOPMENT EXPENSES

Research and development expenses aggregating to Rs. 268.43 Lakhs (previous year Rs. 215.60 Lakhs) in the nature of revenue expenditure and Rs. 29.20 Lakhs (previous year Rs. 90.84 Lakhs) in the nature of capital expenditure have been included under the appropriate account heads.

NOTE 11 - SEGMENT INFORMATION

In accordance with Accounting Standard 17 "Segment Reporting", segment information has been given in the consolidated financial statements of the Company, and therefore, no separate disclosure on segment information is given in these financial statements.

NOTE 12

The Company does not make any direct remittances of dividends in foreign currencies to non-resident shareholders. Dividend to non-resident shareholders has been deposited into their Rupee account in banks in India.

NOTE 13

The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulations under sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documents for the international transactions entered into with the associated enterprises during the financial year. The management is of the opinion that its international transactions are at arms length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense for the year and that of provision for taxation.

NOTE 14

The Ministry of Corporate Affairs, Government of India, vide General Circular No. 2 and 3 dated 8th February 2011 and 21st February 2011 respectively read with General Circular No. 08/2014 dated 4th April has granted a general exemption from compliance with section 212 of the Companies Act, 1956, subject to fulfilment of conditions stipulated in the circular. The Company has satisfied the conditions stipulated in the circular and hence is entitled to the exemption. Necessary information relating to the subsidiaries has been included in the Consolidated Financial Statements.

NOTE 15

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


Mar 31, 2013

Note 1 COMPANY OVERVIEW

Himadri Chemicals & Industries Limited is a public Company domiciled and headquartered in India. It is incorporated under the Companies Act, 1956 and its shares are listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The Company is primarily engaged in manufacturing of carbon materials and chemicals. The Company has operations in India and caters to both domestic and international markets. The Company also has a wholly-owned subsidiary in Hong Kong in the name of Himadri Global Investment Limited which has 94% shareholding in Shandong Dawn Himadri Chemical Industry Limited in China

Note 2 AMOUNTS RECEIVABLE/ PAYABLE IN FOREIGN CURRENCY

(a) The Company uses various forms of derivative instruments such as foreign exchange forward contracts, options, cross currency swaps and interest rate swaps to hedge its exposure to movements in foreign exchange and interest rates

(b) Forward contracts / hedging instruments outstanding as at balance sheet date:

Gain/ loss on contracts not designated as effective hedges and ineffective portion of the contracts designated as effective hedges are included in foreign exchange fluctuation account, after adjustment of periodic premium received on cross currency/ interest rate swaps.

Note 3

Trade receivables include an amount ofRs. 798.10 lakhs due from a customer which is currently under arbitration proceedings. Based on the merits of the case, the management believes that the outcome of the said proceedings would be in favour of the Company.

Note 4 EMPLOYEE BENEFITS: POST EMPLOYMENT BENEFIT PLANS

1. Defined contribution plans

The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund and Superannuation Fund, which are defined contribution plans. The Company has no obligations other than to make the specified contributions. The contributions are charged to the statement of profit and loss as they accrue. The amount recognised as an expense towards contribution to Provident Fund and Superannuation fund for the year aggregated to Rs. 64.73 lakhs (previous year Rs. 53.04 lakhs) and Rs. 21.81 lakhs (previous year Rs. 25.94 lakhs) respectively.

Note 5 RELATED PARTY DISCLOSURE

(i) List of related party and relationship where control exists

(a) Enterprise on which the Company has control

Himadri Global Investment Limited (HGIL) Wholly owned subsidiary

Shandong Dawn Himadri Chemical Industry Limited Subsidiary of HGIL

(ii) Names of the other related parties with whom transactions have taken place during the year

(a) Key Managerial Personnel

Mr. Bankey Lal Choudhary, Managing Director Mr. Shyam Sundar Choudhary, Executive Director Mr. Vijay Kumar Choudhary, Executive Director Mr. Anurag Choudhary, Chief Executive Officer Mr. Amit Choudhary, President - Projects Mr. Tushar Choudhary, President - Operations

(b) Relative of Key Managerial Personnel

Mr. Damodar Prasad Choudhary

(c) Enterprises owned or significantly influenced by the Key Managerial Personnel or their relatives

Himadri Credit & Finance Limited Himadri Dyes & Intermediates Limited Himadri Coke & Petro Limited Himadri Industries Limited Sri Agro Himghar Limited Himadri e-Carbon Limited

(d) Associate

BC India Investments

Note 6 OPERATING LEASE

a) The Company has taken various commercial premises and equipment under cancellable operating leases. These lease agreements are normally renewed on expiry.

b) The Company has also taken certain commercial premises under non-cancellable operating leases, the future minimum lease payments in respect of which are as follows

c) Lease payments recognized in Statement of Profit and Loss with respect to operating leases - Rs. 144.11 lakhs (previous year Rs. 135.50 lakhs) included under head "Rent in note 29"

Note 7 RESEARCH AND DEVELOPMENT EXPENSES

Research and Development expenses aggregating to

a. Rs. 215.60 lakhs (previous year Rs. 156.64 lakhs) in the nature of revenue expenditure and Rs. 90.84 lakhs (previous year Rs. 35.88

akhs) in the nature of capital expenditure have been included under the appropriate account heads.

b. Rs. Nil (previous year Rs. 724.72 lakhs) debited in earlier year to Capital work-in-progress has been capitalised

Note 8 SEGMENT INFORMATION

In accordance with Accounting Standard 17 "Segment Reporting", segment information has been given in the consolidated financial statements of the Company, and therefore, no separate disclosure on segment information is given in these financial statements

Note 9

The Company''s proposal for transfer of undertakings of Carbon Black including Power Plant situated at Mahistikry, Hooghly, West Bengal to its wholly owned subsidiary has been approved by the shareholders in terms of Section 293(1)(a) of the Companies Act, 1956 by means of postal ballot and the other approvals as required from the secured lenders including banks and financial institutions are under process. Post receiving all approvals, the Board of Directors of the Company and / or committee thereof may consider transfer of the said undertaking

Note 10

The Company does not make any direct remittances of dividends in foreign currencies to non-resident shareholders. Dividend to non-resident shareholders has been deposited into their Rupee account in banks in India

Note 11

The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulations under sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documents for the international transactions entered into with the associated enterprises during the financial year. The management is of the opinion that its international transactions are at arms length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense for the year and that of provision for taxation

Note 12

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

Note 13

The financials statements of the previous year were audited by one of the joint auditors, M/s S. Jaykishan, Chartered Accountants.


Mar 31, 2012

A. Terms/Rights attached to equity shares

The Company has only one class of equity shares having a par value of Re 1/- each. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

b. Shares reserved for issue under options

For details of shares reserved for issue on conversion of Foreign Currency Convertible Bonds which were issued on 13th April,2009, please refer note 4A(i)(d) regarding terms of conversion/redemption of Foreign Currency Convertible Bonds.

c. During the year 2009-10, the Company had issued and alloted 63,10,000 Equity Shares of Rs. 10/- each on preferential basis to Bain Capital India Investments at a premium of Rs.390 per share, aggregating to Rs. 25,240 Lacs. The object of the issue was to part finance its ongoing projects, capacity expansion and to meet increased working capital requirements. The Company has utilised the entire proceeds on the objects of the issue.

(A) Terms of Repayment/Conversion

(i) Bonds / Debentures

a) Deep Discount Debentures are redeemable at par at the end of 20 years from the date of allotment i.e. 24th September, 2001, due date being 24th September, 2021.

b) 10% Non-convertible Debentures are redeemable at par at the end of 10 years from the date of allotment, i.e. 24th August, 2010, due date being 24th August, 2020.

c) 9-60% Non-convertible Debentures are redeemable at par on or after 28th June, 2017 and before 28th June, 2020.

d) In the year 2009-2010, the Company had issued to International Finance Corporation (IFC), 70 Foreign Currency Convertible Bonds (FCCB) having a face value of USD 1 Lac each aggregating USD 70 Lacs. The FCCBs are hybrid instruments with an option of conversion into Equity Shares and an underlying foreign currency liability with redemption in the event of non conversion at the end of the period.

The bondholder has an option of converting these bonds into Equity Shares at any time within a period of 7 years from the date of issue at an initial conversion price of Rs. 13.50 per share (face value Re. 1/- each) at the exchange rate prevailing on the date of conversion request. Unless the conversion option is exercised, the outstanding FCCB's will be redeemed in full at their par value together with interest at the rate of 6 months LIBOR 3.35% p.a. accrued on a compounded 6-monthly basis.

As at 31st March, 2012 conversion option has not been exercised in respect of any bond. The Company expects that the bondholder will opt for conversion rather than redemption and consequently no interest is expected to be payable and therefore, the same is not provided for.

b) Deferred Sales Tax loan is interest free and sanctioned by the Government of Andhra Pradesh. The same has to be repaid monthly during the period from August 2014 to October 2017.

c) Loans against Vehicles & Equipments are repayable by way of Equated Monthly Instalments subsequent to taking of such loan. The period of loan is 3 years.

B) Details of Security

i) The Non- Convertible Debentures (NCD) issued to Life Insurance Corporation of India Limited and ICICI Bank Limited aggregating to Rs. 20,000 Lacs are secured by way of Equitable Mortgage on land situated at Mouza Maharaj Pura Dist - Mahesana (Gujarat), First Pari Passu Charge on Immovable Properties (Lease Hold Land) situated at Mahistikry and also hypothecation of Movable fixed assets (including plant & machinery) in favour of Axis Trustee Services Limited, being the trustee of the Debenture holders.

ii) Rupee Term loan from Hong Kong and Shanghai Banking Corporation Ltd and External Commercial Borrowings (ECB) from ICICI Bank Limited and The Hong Kong and Shanghai Banking Corporation Limited are secured by way of hypothecation of all the movable fixed assets (Including Plant & Machineries) and mortgage of immovable properties (Lease hold land) situated at Mahistikry on pari passu basis with other Lenders.

iii) Rupee Term Loan from Citibank N.A. is secured byway of hypothecation of movable and immovable fixed assets (including Plant & Machineries) of the Company at all locations.

iv) External Commercial Borrowing (ECB) from International Finance Corporation (IFC) is secured by way of hypothecation of movable fixed assets and mortgage of immovable properties (Lease Hold Land) situated at Mahistikry Unit, Liluah Unit-1 & II and Vishakhapatnam Unit on pari passu basis with other Lenders.

v) External Commercial Borrowings from Deutsche Investitionsund Entwicklungsgesellschaft MBH (DEG) and DBS Bank Ltd. are secured byway of mortgage of immovable properties (Leasehold Land) situated at Mahistikry on pari passu basis with other Lenders.

vi) Loans against Vehicles & Equipment are secured by way of hypothecation of the underlying asset financed.

a) Details of Security.

The Working Capital facilities from Banks are secured by hypothecation of currents assets of the Company both present and future on Pari-Passu basis

Additionally,

i) Working Capital facilities from Citi Bank to the extent of Rs. 8,000 Lacs are secured by way of pledge of investments in Mutual Funds.

ii) Working Capital facilities from HSBC Bank to the extent of Rs. 8,427 Lacs are secured by way of pledge of investments in Mutual Funds.

iii) Working Capital Loans from Banks to the extent of Rs. 9,201.56 Lacs (P.Y. Rs. 3,457.26 Lacs) are personally guaranteed by the promoter directors of the Company.

Note:

1) Original Cost as at 31st March, 2012 of Vehicles includes Rs. 259-58 Lacs (Previous Year-Rs. 137.11 Lacs) acquired under Auto Finance Scheme from Banks, of which Rs. 139-86 Lacs (Previous Year Rs. 69.49 Lacs) was outstanding as at 31st March, 2012.

2) Depreciation for the year includes Rs. Nil (Previous Year Rs. 52.38 Lacs) charged/allocated to Capital Work in Progress.

b) Rs. 1,077.09 Lacs on account of stock of stores and spares (Previous year Rs. 1,405.88 Lacs ).

c) Rs. 483.46 Lacs, being exchange diifferences recognised under Para 46A of AS-11 "The Effects of Changes in Foreign Exchange Rates". (Refer Note No. 33).

The Company has made current tax provision for Minimum Alternate Tax (MAT) u/s 115JB of the Income Tax Act, 1961. As per the provisions of Section 115JAA, MAT Credit receivable for the amount in excess over tax liability as per normal computation has been recognized as an asset. The said asset is created by way of a credit to the profit & loss account and shown as MAT Credit Entitlement.

Note CONTINGENT LIABILITIES AND COMMITMENTS

a) Contingent Liabilities not provided for in respect of:

a) Standby letter of credit to secure financial assistance to its subsidiary 1,534.70 -

b) Interest on FCCB 436.01 258.15

c) Bills discounted with Banks 5,816.94 2,406.25

d) Claims against the company in respect of statutory liabilities disputed under appeal:

-Custom Duty 28.83 28.83

-Sales Tax 257.91 257.91

- Service Tax / Excise Duty 228.25 77.44

b) Estimated amount of commitments on capital account (net of advances) - Rs. 1,752.94 Lacs (Previous Year Rs. 1,792.04 Lacs).

c) Estimated amount of export obligations to be fulfilled in respect of goods imported under advance license/ Export Promotion Capital Goods Scheme (EPCG) - Rs. 9,192.58 Lacs. (Previous Year Rs. 3,829-03 Lacs)

Note ^ AMOUNTS RECEIVABLE/PAYABLE IN FOREIGN CURRENCY

(a) The Company uses various forms of derivative instruments such as foreign exchange forward contracts, options, cross currency swaps and interest rate swaps to hedge its exposure to movements in Foreign Exchange and Interest rates.

(b) Forward Contracts / Hedging instruments outstanding as at Balance sheet date, as per information available with the Company, are as follows:

(c) All derivative contracts outstanding as on 31st March, 2012 are marked to market. The Company has applied the Hedge Accounting principles set out in the Accounting Standard (AS) 30 Financial Instruments: Recognition and Measurement.

Accordingly, loss aggregating to Rs. 1,630.66 Lacs (P.Y. Rs. 355.74 Lacs), being the effective portion of the contracts designated as effective hedges for future cash flows has been recognised in the Hedging Reserve Account to be ultimately recognised in the Profit & Loss Account, depending on the exchange rate fluctuation till and when the underlying forecasted transactions occur.

Gain/loss on contracts not designated as effective hedges and ineffective portion of the contracts designated as effective hedges is included in Foreign Exchange Fluctuation Account, after adjustment of periodic premium received on Cross Currency/Interest Rate Swaps.

Foreign Exchange Fluctuation in the Statement of Profit & Loss includes gain of Rs. 226.98 Lacs, being periodic premium on certain contracts (net of mark to market loss) adjusted in the accounts for earlier year from borrowing costs included in Capital Work in Progress.

Note ^ CHANGE IN ACCOUNTING POLICY

The Company has exercised option available to it under Para 46Aof AS 11 "The Effects of Changes in Foreign Exchange Rates" as per Notification No. GSR No. 914(E) issued by the Ministry of Corporate Affairs, Government of India on 29th December, 2011 in respect of accounting for fluctuations in Foreign Exchange relating to long term monetary items. Accordingly, the Company has adjusted exchange fluctuations amounting to Rs. 2,235.41 Lacs to the cost of its Fixed Assets (including Capital Work in Progress) during the year which was hitherto charged to Profit & Loss Account.

Consequent to the change in the accounting policy, additions to Fixed Assets (including Capital Work in Progress) as at 31st March 2012 are higher by Rs. 2,235.41 Lacs, depreciation for the year higher by Rs. 94.20 Lacs, and the profit for the year higher by Rs. 2,141.21 Lacs.

Note ^ AMOUNT DUE TO MICRO, SMALL AND MEDIUM ENTERPRISES

The Company owes Rs. 124.12 Lacs (P.Y. Rs. Nil) to Micro, Small and Medium Enterprises as on 31st March, 2012. However, there are no Micro, Small and Medium Enterprises, to whom the company owes dues, which are outstanding for more than 45 days as at 31st March, 2012. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

Note ^ EMPLOYEE BENEFITS

The disclosures of Employee benefits as defined in the Accounting Standard are given below:

Defined Contribution Plan

Contribution to Defined Contribution Plan, recognised as expense for the year is as under:

Defined Benefit Plan

The employee gratuity fund scheme managed by a Trust is a defined benefit plan. The present value of obligation is determined based on the actuarial valuation using the Projected Unit Credit Method as on 31st March, 2012 which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

Note ^ EMPLOYEE BENEFITS (Contd.)

a) The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market.

b) The discounting rate is considered based on market yield on government bonds having currency and terms consistent with the currency in terms of the post employment benefit obligations.

c) Expected rate of return assumed by the insurance company is generally based on their investment pattern as stipulated by the Government of India.

viii. The above information is certified by the actuary.

ix. The Company expects to contribute Rs. 10.36 Lacs to the Gratuity Fund managed by the Life Insurance Corporation of India during the financial year 2012-13.

Note ^ OPERATING LEASE ~

The Company has taken an SNF manufacturing unit in Vapi, Gujarat on an operating lease vide agreement dated 27th Feb, 2009 from Chemsons Industrial Corporation for a period of 7 years with an option to exit or further renewal for a period of 10 years, effective from 1st April, 2009. The lease rent payable shall increase by 10% every 5 years without cascading effect.

Also, the Company has taken a Spraydrying Unit in Vapi, Gujarat on an operating lease vide agreement dated 20th May, 2011 from SkyLine Interchem for a period of 3 years with an option to exit or further renewal for a period of 3 years, effective from 7th June, 2011. The lease rent payable shall increase by 10% every year without cascading effect.

b) Lease payments recognized in Profit and Loss Account - Rs. 43.60 Lacs (P. Y. Rs.24 Lacs).

Note RESEARCH AND DEVELOPMENT EXPENSES ~

Research and Development expenses aggregating to:

a. Rs. 156.64 Lacs (Previous year Rs. 178.15 Lacs) in the nature of revenue expenditure and Rs. 35.88 Lacs (Previous year Rs. 738.20 Lacs) in the nature of capital expenditure have been included under the appropriate account heads.

b. Rs. 724.72 Lacs debited in earlier year to Capital Work in Progress has been capitalised during the year.

Note - SEGMENT REPORTING ~

Primary Business Segment

Based on the synergies, risks and returns associated with business operations and in terms of Accounting Standard -17, the Company is predominantly engaged in a single reportable segment of "Carbon Materials & Chemicals" during the year. The risks and returns of power plant are also directly associated with its manufacturing operations and hence not treated as a separate reportable segment.

Geographical Segment

The secondary segmental reporting is based on the geographical location of customers. The Geographical segments have been disclosed based on revenue within India (sales to customers within India) and revenue outside India (sales to customers located outside India). Secondary segment assets and liabilities are based on the location of such asset / liability.

Since the total carrying amount of assets located outside India is less than 10% of the total assets of the Company, information in respect of segment assets located outside India and capital expenditure incurred outside India has not been disclosed.

Note

The Company has not made any remittance in foreign currencies on account of dividend during the year and does not have information as to the extent to which remittance in foreign currencies on account of dividends have been made on behalf of non - resident shareholders.

Note

The Revised Schedule VI has become effective from 1 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. Accordingly amounts and other disclosures for the preceding year are included as an integral part of the current year financial Statements and are to be read in relation to the amounts and other disclosures relating to the current year.

 
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