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Notes to Accounts of Hindustan Flurocarbons Ltd.

Mar 31, 2015

NOTE 1

The company has only one class of shares referred to as equity shares having a par value of Rs 10/- each.

Each holder of the equity share, as reflected in the records of the company as of the date of the shareholders meeting, is entitled to one vote in respect of each share held for all matters submitted to vote in the shareholders meeting.

NOTE 2

Disclosure of shares held by its holding company

11060000 ( Pr. Year 11060000) Equity Shares fully paid up of Rs.1106 lakhs (Pr. Year Rs. 1106 lakhs ) are held by M/s Hindustan Organics Chemicals Limited, the holding company.

3. The Term loan from HOCL is secured by part of the land to the extent of 62 acres of the Factory & Plant and Buildings at Rudraram Village.

4. The Term loan from HOCL of Rs. 2744.06 lakhs is Zero coupon loan as per terms of the BIFR agreement and is repayable in seven equal annual installments as per the loan agreement commencing from F Y 2010-11. The installment due for F Y 2010-11 , 2011-12 , 2012-13, 2013-14, 2014-15 amounting to Rs.1960.04 lacs is not paid by the company and current maturities of F Y 2015-16 amounting to Rs.392.01 lacs are shown in Note - 8 under the head ' Other Current liabilities' being current maturities of long term debt.

5. The Term loan from HOCL of Rs.756.42 lakhs is Interest bearing @ 10.25% to 14.50% repayable in 5 annual installments commencing from F Y 2010-11 as per the loan agreement. The company is continuing default in payment of all the installments due and interest during the F Y 2010-11 to 2014-15 amounting to Rs.456.43 lacs is not paid by the company & shown in Note -8 of the financial statements under the head 'Other Current liabilities' being current maturities of long term debt and interest due amounting to Rs.616.23 lakhs under Interest accrued and due.

6. Term loan of Rs. 5.00 Crore @14.20% p.a. (floating) for refurbishment of PTFE plant and setting up Modified PTFE plant repayable in 5 years 3 months including moratorium period of 9 months after the completion of the project commencing from April, 2015. The company hypothecated land of 60.285 acres and plant and machinery as collateral security besides furnishing of corporate guarantee by promoter company Viz., HOCL to this extent. Further, HOCL has given an undertaking that they will not withdraw their investments during the period of loan.

7. The company has received plan loan from government of India Rs. 3,60,00,000/-for manufacture of MPTFE on 22.8.2014 and Rs. 13,20,00,000/- for refurbishment of the Plant and HFP and FEP related items on 01.01.2015 @11.5% p.a. repayable in 5 annual installments commencing from F.Y. 2015-16. The 1st installment due for F.Y. 2015-16 amounting to Rs. 336.00 lakhs shown in Note-8 under the head 'Other Current liabilities being Govt. Plan Loan current maturities of long term debt'.

8. Secured by hypothecation of the company's entire stock of raw materials, finished goods, stock in process, consumables, stores & spares and book debts, plant and machinery and part of the land to the extent of Acres 60.285 out of the total land of Acres126.13 at Rudraram Village and guaranteed by the holding company, viz. Hindustan Organic Chemicals Ltd. The cash credit is repayable on demand and carries interest @14.2% p.a.

9. Margin money deposits are subject to first charge/ lien to secure the company's cash credit loan and term loan with a maturity period of 6 to 12 months. 15(B). The company has made a deposit with SBH (Corporate Liquid Term Deposit) for a maturity period of 1 year.

10. Balance standing to the debit/credit of parties is subject to confirmation by them and review by the Company. 14(B) Debts overdue for a period exceeding six months includes towards case filed in High Court of Andhra Pradesh, which is pending amounting to Rs.129.16 Lacs (Previous year Rs.129.16 Lacs)

11. Both employer and employees make monthly contributions of 10% instead of 12% as per BIFR scheme to a separately managed exempted EPF Trust.

12. As per Accounting Standard 15 "Employee benefits", the disclosures as defined in the Accounting Standard are given below:

The Company's Provident Fund is exempted under section 17 of Employees' Provident Fund and Miscellaneous Provisions Act,1952. Conditions for grant of exemption stipulate that the employer shall make good deficiency, if any, in the interest rate declared by the trust vis-à-vis statutory rate.

Defined Benefit Plan

The employees' gratuity fund scheme managed by a trust (Life Insurance Corporation of India) is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected unit credit Method, 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. The obligation for leave encashment is recognized in the same manner as gratuity.

Note - 13

The company has prepared these financial statements as per the format prescribed by Schedule III of the Companies Act, 2013 ('' the schedule'') issued by Ministry of Corporate Affairs. Previous period's figures have been recast/restated to conform to the classification required by the Schedule - III

Note - 14

Previous year's figures have been regrouped/reclassified, wherever necessary to confirm to current year's classification.


Mar 31, 2014

NOTE NO. 1

BASIS OF PREPARATION OF FINANCIAL STATEMENTS:

The financial statements have been prepared under the historical cost convention on accrual basis to comply in all material aspects and in accordance with generally accepted accounting principles in India and the relevant provisions of the Companies Act,1956. The accounting policies have been consistently applied by the Company unless otherwise stated.

NOTE 2 (B)

Disclosure of shares held by its holding company

11060000 ( Pr. Year 11060000) Equity Shares fully paid up of Rs.1106 lakhs (Pr. Year Rs. 1106 lakhs ) are held by M/s Hindustan Organics Chemicals Limited, the holding company.

NOTE 2 (D)

The company has only one class of shares referred to as equity shares having a par value of Rs 10/- each.

Each holder of the equity share, as reflected in the records of the company as of the date of the shareholders meeting, is entitled to one vote in respect of each share held for all matters submitted to vote in the shareholders meeting.

4(A). The Term loan from HOCL is secured by part of the land to the extent of 82 acres of the factory & Plant and Buildings at Rudraram Village.

4(B). The Term loan from HOCL of Rs. 2744.06 lakhs is Zero coupon loan as per terms of the BIFR agreement and is repayable in seven equal annual instalments as per the loan agreement commencing from F Y 2010-11. The instalment due for F Y 2010-11 , 2011-12,2012-13, 2013-14 amounting to Rs.1568.03 lacs is not paid by the company and current maturities of F Y 2014-15 amounting to Rs.392.01 lacs are shown in Note -8 under the head '' Other Current liabilities'' being current maturities of long term debt.

4(C). The Term loan from HOCL of Rs.756.42 lakhs is Interest bearing @ 10.25% to 14.50% repayable in 5 annual instalments commencing from F Y 2010-11 as per the loan agreement. The company is continuing default in payment of instalment due and interest during the F Y 2010-11,2011-12 , 2012-13, 2013-14 amounting to Rs.305.14 lacs is not paid by the company and current maturities of F Y 2014-15 amounting to Rs.151.29 lacs are shown in Note -8 of the financial statements under the head ''Other Current liabilities'' being current maturities of long term debt and interest due amounting to Rs.558.65 lakhs under Interest accrued and due.

4(D) Term loan of Rs. 5.00 Crore @14.20% p.a. (floating) for refurbishment of PTFE plant and setting up Modified PTFE plant repayable in 5 years 3 months including monatorium period of 9 months after the completion of the project commencing from April, 2015. The company hypothecated land of 60.285 acres and plant and machinery as collateral security besides furnishing of counter guarantee by promotor company Viz., HOCL to this extent.

6(A).Secured by hypothecation of the company''s entire stock of raw materials, finished goods, stock in process, consumables, stores & spares and book debts, plant and machinery and part of the land to the extend of Acres 60.285 out of the total land of Ac 146.13 cents at Rudraram Village and guaranteed by the holding company, viz. Hindustan Organic Chemicals Ltd. The cash credit is repayable on demand and carries interest @14.2% p.a.

7(B).The 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.

13(B). Excise duty on closing finished goods in respect of goods manufactured by the company amounting to Rs. 21.24 lacs (previous year Rs.52.04 lacs) is included in the valuation of such stocks.

13(C). Finished goods, which have not moved for more than 3 years are valued at Rs.1.00/kg and the consequential difference in value of Rs.1.31 lacs (Previous year Rs.2.24 lacs) and there is no difference to charge off during the year.

14(A). Balance standing to the debit/credit of parties is subject to confirmation by them and reviews by the Company.

14(B) Debts over due for a period exceeding six months includes towards case filed in High Court of Andhra Pradesh, which is pending amounting to Rs.129.16 Lacs( Previous year Rs.129.16 Lacs)

15(A) Margin money deposits are subject to first charge/ lien to secure the company''s cash credit loan and term loan.

16A. The changes in valuation of Inventory of Finished goods for the year includes depletion on account of fall in selling price of finished goods at net realizable value being lower than cost amounting to Rs. 373.77 Lacs (previous year Rs. 836.19 Lacs).

17(A). Both employer and employees make monthly contributions of 10% instead of 12% as per BIFR scheme to a separately managed exempted EPF Trust.

18(B). As per Accounting Standard 15 "Employee benefits", the disclosures as defined in the Accounting Standard are given below:

The Company''s Provident Fund is exempted under section 17 of Employees'' Provident Fund and Miscellaneous Provisions Act,1952. Conditions for grant of exemption stipulate that the employer shall make good deficiency, if any, in the interest rate declared by the trust vis-a-vis statutory rate.

Defined Benefit Plan

The employees'' gratuity fund scheme managed by a trust (Life Insurance Corporation of India) is a defined benefit plan.The present value of obligation is determined based on actuarial valuation using the Projected unit credit Method,which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit seperately to build up the final obligation. The obligation for leave encashment is recognised in the same manner as gratuity.

18 (C) Actuarial valuation was carried out from F Y 2011-12 onwards.

18 (D) As per BIFR-MDRS, the company has implemented the wage revision for officers and non- officers of 1997 w.e.f. December 2010 and wage revision of 2007 w.e.f.October, 2012. Salary for the year includes arrears provided on account of pay fixation in the revised scale vide wage revision settlement as per DPE guidelines, based on 2007 wage revision for officers and non- officers amounting to Rs.1018.34 lacs (Pr.year Rs. 1044.57 lacs).

NOTE - 3 CONTINGENT LIABILITIES AND COMMITMENTS:

(Rs. In lacs) As at As at 31 March 2014 31 March 2013

(i) Contingent Liabilities

(a) ESI 13.46 13.46

(b) Wage Revision arrears for employees 0.00 1070.34

13.46 1083.80

(ii) Commitments

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for 287.25 0.00

300.71 1083.80

Note - 4 - TAXES ON INCOME:

26(A)The company has not provided deferred tax asset due to huge accumulated losses incurred since there is no virtual certanity to realise in future.

Note - 5

The company has prepared these financial statements as per the format prescribed by Revised Schedule VI of the Companies Act, 1956 (" the schedule'''') issued by Ministry of Corporate Affairs. Previous period''s figures have been recast/restated to confirm to the classification required by the revised Schedule - VI

Note - 6

Previous year''s figures have been regrouped/reclassified, wherever necessary to confirm to current year''s classification.


Mar 31, 2013

BASIS OF PREPARATION OF FINANCIAL STATEMENTS:

The financial statement have been prepared under the historical cost convention on accrual basis to comply in all material aspects and in accordance with generally accepted accounting principles in India and the relevant provisions of the Companies Act,1956. The accounting policies have been consistently applied by the company unless otherwise stated.

NOTE - 1 CONTINGENT LIABILITIES AND COMMITMENTS:

(Rs. In lacs) As at As at 31 March 2013 31 March 2012 (i) Contingent Liabilities

(a) ESI 13.46 13.46

(b) Wage Revision arrears for employees 1070.34 1159.85

1083.80 1173.31

(ii) Commitments

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for 0.00 65.00

1083.80 1238.31

Note - 2 - TAXES ON INCOME:

2(A). Provision for current tax on profits for the year has not been made under Minimum Alternate Tax under section 115JB of Income Tax Act 1961 since the minimum of carried forward of losses or unabsorbed depreciation as per books of accounts are set off during the year against the current year book profit.

2 (B). The company has not provided deferred tax asset due to huge accumulated losses incurred since there is no virtual certanity to realise in future.

Note - 3

The company has prepared these financial statements as per the format prescribed by Revised Schedule VI of the Companies Act, 1956 (''''the schedule'''') issued by Ministry of Corporate Affairs. Previous period''s figure have been recast/restated to confirm to the classification required by the revised Schedule-VI

Note - 4

Previous year''s figures have been regrouped/reclassified, wherever necessary to confirm to current year''s classification.


Mar 31, 2012

NOTE NO. 1

BASIS OF PREPARATION OF FINANCIAL STATEMENTS:

The financial statements have been prepared under the historical cost convention on accrual basis to comply in all material aspects and in accordance with generally accepted accounting principles in India and the relevant provisions of the Companies Act, 1956. The accounting policies have been consistently applied by the Company unless otherwise stated.

NOTE 2 : SHARE CAPITAL

NOTE 2 (D)

The company has only one class of shares referred to as equity shares having a par value of Rs 10.

Each holder of the equity share, as reflected in the records of the company as of the date of the shareholder meeting, is entitled to one vote in respect of each share held for all matters submitted to vote in the shareholder meeting.

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 Annual General Meeting.

3(A). The Term loan is secured by part of the land to the extent 82.13 acres of the factory at Rudraram Village

3(B). The Term loan of Rs. 2744.06 lakhs is Zero coupon loan as per terms of the BIFR agreement and is repayable in seven equal installment as per the loan agreement commencing from F Y 2010-11. The installment due for F Y 2010-11 & 2011-12 amounting to Rs. 784.01 lakhs is not paid by the company and same is shown in Note - 9 under the head 'Other Current liabilities' being current maturities of long term debt.

3(C). The Term loan of Rs. 754.42 lakhs is Interest bearing @ 10.25% to 14.50% repayable in 5 annual installment commencing from F Y 2010-11 as per the loan agreement. The company is in continuing default in payment of installment due and interest during the F Y 2010-11 & 2011-12. The installment due of Rs. 301.77 lakhs is shown in Note -9 of the financial statements under the head "Other Current liabilities" being current maturities of long term debt and interest due amounting to Rs. 428.83 lakhs under Interest accrued and due.

NOTE 4 : OTHER LONG TERM LIABILITIES (Rs. In lakhs)

4(A). Creditors for capital goods includes an amount of Rs.850.74 lacs payable to M/S SRF Ltd towards supply and erection of Plant and Machinery relating to CDM Project. The total outstanding amount as per contract for plant and machinery supply and mechanical completion is Rs.1250.00 lacs. As per the terms of BOT contract dated 14-8-2007, the payment is to be made in the form of CERs. The contract equated Rs.1250.00 lacs to 6,59,500 CERs in 5 installments of 131900 each. However, the total installments of CERs are reduced to 4.13 and the company has so far transferred 210652 CERs as 1.32 installments for a value of Rs.399.26 lacs. The balance Rs.850.74 lacs is payable in balance 2.81 installments as per revised contract terms equaling to 448848 CERs.

5(A).Secured by hypothecation of the company's entire stock of raw materials, finished goods, stock in process, consumables, stores & spares and book debts, plant and machinery and part of the land to the extent of Ac 64 out of the total land of Ac 146.13 cents at Rudraram Village and guaranteed by the holding company, viz. Hindustan Organic Chemicals Ltd. The cash credit is repayable on demand and carries interest 15.5% p.a.

NOTE 6: TRADE PAYABLES (Rs. In lakhs)

7(A). Disclosure in accordance with Section 22 of Micro, Small and Medium Enterprises Development Act, 2006

7(B). The 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.

NOTE 8 : INVENTORIES

8(B). Excise duty on closing finishing goods in respect of goods manufactured by the company amounting to Rs.16.87 lacs (previous year 5.34 lacs) is included in the valuation of such stocks.

8(C). Finished goods, which have not moved for more than 3 years are valued at Rs. 1.00/kg and the consequential difference in value of Rs. 2.24 lacs (Previous year Rs. 0.00 lacs) has been charged off during the year.

NOTE 9: TRADE RECEIVABLES

15(A). Balance standing to the debit/credit of parties is subject to confirmation by them and reviews by the Company.

NOTE 10: OTHER INCOME

10(A). The company has determined the Defined Benefit Plans being Gratuity and leave encashment during the year on actuarial valuation, as certified by actuary. This has resulted in excess provision of Rs. 65.89 lacs made in earlier years, which has been written back included in other non-operating income.

NOTE 11: EMPLOYEE BENEFITS EXPENSES

11(A). Both employer and employees make monthly contributions of 10% instead of 12% as per BIFR scheme to a separately managed exempted EPF Trust.

11(B). As per Accounting Standard 15 "Employee benefits", the disclosures as defined in the Accounting Standard are given below:

The Company's Provident Fund is exempted under section 17 of Employees' Provident Fund and Miscellaneous Provisions Act, 1952. Conditions for grant of exemption stipulate that the employer Shall make good deficiency, if any, in the intrerest rate declared by the trust vis-a-vis statutory rate.

Defined Benefit Plan

The employees' gratuity fund scheme managed by a trust (Life Insurance Corporation of India) is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected unit credit Method, which recognises 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. The obligation for leave encashment is recognised in the same manner as gratuity.

11(C). Previous year's figures are not reported, as the actuary valuation was not carried out in earlier years and respective details are unavailable.

11(D). The arrears on account of pay fixation in the revised scale with effect from 01-01-1997 vide wage revision settlement as per DPE guidelines, have not been provided for in books at the close of the year amounting to Rs.1160 lakhs (Pr. year Rs.1552 Lakhs). As per BIFR-MDRS, the company has implemented the wage revision for officers and non officers w.e.f. December 2010 and arrears to this effect could not be charged to profit and loss account since BIFR categorically has stipulated that arrears should be released subject to availability of funds. Accordingly, the liability has been shown under contingent liability.

11 (E) An amount of Rs.95.71 lacs had been incurred towards VRS payments for employees (Rs. 58.45 for 6 employees for the current year and Rs. 37.26 lacs towards balance amount of an amortized) inprevious year Rs. 74.52 lacs in accordance with BIFR's Modified Draft Rehabilitation Scheme(MDRS) in August 2011. This total amount is taken to P & L Account. In accordance with BIFR's Modified Draft Rehabilitation Scheme (MDRS). As per AS-15 issued by ICAI, VRS expenditure is to be written off

over the pay back period only and cannot be amortized. However the company is following the BIFR Scheme.

NOTE - 12 CONTINGENT LIABILITIES AND COMMITMENTS:

(Rs. In lakhs)

As at As at 31 March 2012 31 March 2011 (i) Contingent Liabilities

(a) Claims against the company not acknowledged as debt 0.00 12.01

(b) Guarantees/FLC/ILC/Obtained as on 31-03-12 0.00 10.00

(d) ESI 13.46 13.46

(e) Wage Revision arrears for employees 1159.85 1800.00

1173.31 1835.47

(ii) Commitments

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for 65.00 0.00

65.00 0.00

1238.31 1835.47 Note - 13 - TAXES ON INCOME:

13(A). Provision for current tax on profits for the year has not been made under Minimum Alternate Tax under section 115JB of Income Tax Act 1961 since the minimum of carried forward of losses or unabsorbed depreciation as per books of accounts are set off during the year against the current year book profit.

13 (B). The company has not provided deferred tax asset due to huge accumulated losses incurred since there is no virtual certainty to realise in future.

Note - 14

The company has prepared these financial statements as per the format prescribed by Revised Schedule VI of the Companies Act, 1956 ("the schedule") issued by Ministry of Corporate Affairs. Previous period's figure have been recast/restated to confirm to the classification required by the revised Schedule-VI

Note - 15

Previous year's figures have been regrouped/reclassified, wherever necessary to confirm to current year's classification.


Mar 31, 2011

1. The Company entered into a lease-cum-sale agreement with Andhra Pradesh Industrial Infrastructure Company (APIIC) in April 1986 for the land acquired by APIIC under the Land acquisition act and allotted 146.13 acres to the company. Subsequently the title in respect of the land had been transferred in favour of the company.

2. SECURED LOANS:

2.1 Cash Credit, ILC/FLC/BG, Short Term Corporate Loan and Long Term Loan facilities from State Bank of Hyderabad is secured by hypothecation of raw materials, stock-in-process, finished goods, consumable stores,book debts, Buildings, Plant and Machinery and Company's Land (Ac.64.00 cents out of the total land of Ac 146.13 cents at Rudraram Village).

2.2 Cash Credit, ILC/FLC/BG, Short Term Corporate Loan and Long Term Loan facilities from State Bank of Hyderabad are guaranteed by the holding company, viz. Hindustan Organic Chemicals Ltd.

2.3. An amount of Rs.3874.22 lacs (Previous year Rs.3753.17 lacs) is due to Hindustan Organic Chemicals Limited (HOCL) including Rs.121.06 lacs (Previous year Rs.128.97 lacs) provided during the year as interest on HOCL loan for which 1st Charge was created on Company's land (Ac. 82.00 cents of land out of the total land of Ac 146.13 cents at Rudraram Village).

2.4 The company has provided an amount of Rs. 135.99 lacs towards interest on HOCL Loan. However no interest was provided for loan amount of Rs.2609.72 lacs pursuant to BIFR Modified Draft Rehabilitation Scheme.

2.5 During the year an amount of Rs.130.00 lacs was received from HOCL (Holding Co.) as Unsecured Loan and interest to the extent of Rs. 14.93 accrued on the loan.

3. FIXED ASSETS:

3.1. The Company entered into a lease-cum-sale agreement with Andhra Pradesh Industrial Infrastructure Company (APIIC) in April 1986 for the land acquired by APIIC under the Land acquisition act and allotted to the company. Subsequently the title in respect of the land had been transferred in favour of the company in the year 1999-2000.

3.2. During the year the company has recognized an addition of Rs.1250.00 lacs in the head Plant and Machinery pursuant to BOT contract dated 14.8.2007 entered with M/S SRF LTD. As per the terms of the contract the CDM Project is to be implemented with terms and conditions.

The terms and conditions in brief are as under:

a. SRF Ltd. shall procure and install the CDM Plant for a contract price of Rs.1250.00 lacs, the plant is used for incinerating R-23 gas to claim for CERs from UNFCCC.

b. The Plant shall be handed over to the company after the Mechanical run and commissioning of the system.

c. During the year 2010-11 the mechanical completion and commissioning of the plant was completed in April 2010 (7th April, 2010) and handed over to the company.

Pursuant to the above the company had capitalised Rs. 1250.00 lacs as Plant and Machinery addition during the year. Along with the above addition the company had capitalised the below amounts as addition to the fixed assets.

Plant and Machinery Rs.260.70 lacs

Furniture and Fixtures Rs.1.91 lacs

Computers along with software Rs.14.14. lacs

Machinery spares are accounted in closing stock as they are of general usage.

3.3 No impariment of assets is done during the current financial year as per AS-28.

4. INVENTORIES:

4.1 During the year the company reported the closing inventory of Rs.2081.07 lacs. Out of the total the stock-in-process amounts to Rs.65.86 lacs has detailed under and CER's stock was valued at Rs.1697.07 lacs. With regard to CERs (Carbon Emission Reductions), they are the Credits issued by UNFCCC(United Nations Framework Convention on Climate Change) to the company for successful reduction / incineration of R-23 gas. R-23 gas falls in the list of gases having potential of global warming and is eligible category of Carbon Credits as per the KYOTO Protocol. Hence the company is eligible for claiming Carbon Credits after the incineration of the R-23 gas. In the previous year, the company incinerated R-23 gas with technology help with BOT Contractor SRF Ltd. (vide Built-operate-transfer agreement dated(14-8-2007) and filed the data to UNFCCC for getting Carbon Credits (CERs) During the current financial year 2010-11, UNFCCC confirmed 420793 CERs to the company in its site (www.unfccc.int) after deducting 2% i.e., 8588 CERs as adaptation fund deduction. Of the above CERs received, the company had forgone 210652 CERs as instalments payment to SRF Ltd., for the Plant and Machinery as per the BOT agreement of Plant & Machinery entered 14th August,2007. After the above outflow of CERs, the company is left with 210142 CERs treated as finished closing stock. The value of the CERs is taken at Rs.169706945/- adopting the value of 1 CER in the International Exchange as on 31-03-2011 at 13.07 Euros and taking the Euro value at Rs.63.05 in terms of INR and valued at 98% of the total value (considering 2% margin for valuation)

4.2. Excise duty on closing finishing goods in respect of goods manufactured by the company amounting to Rs.5.34 lacs (previous year 5.47 lacs) is included in the valuation of such stocks.

4.3. During the current year finished goods, which have not moved for more than 3 years are valued at Rs.1.00/kg and the consequential difference in value is Rs.0.00 lacs (Previous year Rs.0.00 lacs).

5. SUNDRY DEBTORS:

5.1. Debtors for the year amount to Rs.284.17 lacs net of provision for doubtful debts provided for Rs.309.64 lacs.

6. LOANS AND ADVANCES:

6.1 Telephone deposits amounting to Rs.0.57 lacs pertains to more than 3 years period. No provision is made against this as it is recoverable in nature.

7. CURRENT LIABILITIES :

7.1 Sundry Creditors includes Rs.2.23 lacs payable to Micro and small enterprises as against nil amount in the previous year. No interest is payable on the above amount.

7.2 Creditors for capital goods include an amount of Rs.862.25 lacs is payable to M/S SRF Ltd towards supply and erection of Plant and Machinery relating to CDM Project. The total outstanding amount as per contract for plant and machinery supply and mechanical completion is Rs. 1250.00 lacs. As per the terms of BOT Contract dated 14-8-2007, the payment is to be made in form of CERs. The Contract equated Rs.1250-00 lacs to 6,59,500 CERs in 5 instalments of 131900 each. However, the total instalments are reduced to 4.13 and the company transfered 210652 CERs as 1.32 instalments and valued them Rs.399.26 lacs. The balance Rs.850.74 lacs is payable in balance 2.81 installments as per revised contract terms equalant to 448848 CERs.

7.3 Amounts payable to PF, Property Tax, Nala Tax, AP Commercial Tax pertain to more than one year payables.

7.4 Wage Revision (1997) settlement arrears pertaining to employees are not provided in the books of accounts since the arrears are payable only when the company generates adequate surplus of funds. However, it is considered as Contingent liability in the Financial Statements on an estimated amount basis.

8. EMPLOYEES' BENEFIT PLANS:

8.1 Both employer and employees make monthly contributions of 10% each to a separately managed exempted EPF Trust.

8.2 Employees Gratuity Fund Scheme is managed a separate Trust maintained with LIC of India through annuity scheme. The present value of the obligation is determined by acturial valuation using projected unit credit method which recognizes the period of service proportionate to unit of employee benefits.

8.3 PROVISION FOR LEAVE ENCASHMENT:

An amount of Rs.147.98 lacs is provided as provision for the period ended 31.3.2011 (previous year Rs.86.10 lacs). This provision is made as per revised AS-15 issued by ICAI

9. INCOME:

9.1. Income for the company consist of sales (taken at gross) and later net of exsice duty and other income. In accounting sales the company had deducted an amount of Rs.89059.00 as trade discount on sale of CFM which is passed by way of journal entry and not in the invoices raised.

9.2. The other income of the company includes sale of CERs, job work of Vikram Sarabhai Space Centre (VSSC) and others. The company accounted for sale of CERs during the year. During the current financial year 210652 CERs received by the company are transferred to M/S SRF Ltd against payment of instalment for CDM Plant and 9587.62 CERs are deducted while issuing by UNFCCC against adaptation fund. The transfered CERs are considered as income as the risk and reward was transferred and reported under the head other income as 'CERs Sale' valued at Rs.399.26 lacs. The CERs given to SRS Limited are valued as per the BOT Agreement, dated 14-08-2007 wherein, the company equated Rs.12,50,00,000 (total cost of Plant & Machinery and Installation / commissioning cost of the CDM Plant and Machinery) to Rs.6,59,500 CERs in the contract. The CERs given to UNFCCC are valued at the market price in Stock Exchange of CERs on the date of such deduction by UNFCCC.

9.3. The company entered into a MOU with Vikram Sarabhai Space Centre (VSSC) in Financial Year 2009-10 for research and development of certain chemical compounds. As per the MOU it is a tripartite MOU with each party having its own mile stones and responsibilities. The company income amounted to Rs.40.00 lacs in the MOU. The company raised invoice of Rs.20.00 lacs from VSSC in financial year 2009-10 and received the same in the current financial year 2010-11 and the second invoice was raised for Rs.15.00 lacs in the financial year 2010-11. The company treated the amount received in financial year 2009- 10 amounting to Rs.20.00 lacs as prior paid income and Rs. 15.00 lacs received in the year 2010-11 as 'miscellaneous income'. The company accounted the amount received from VSSC as income as the milestones were achieved and also as the agreement with VSSC does not contain clauses of any refund of money to VSSC.

10. VRS EXPENDITURE

10.1 An amount of Rs.223.57 lacs had incurred towards VRS payments for 31 employees in accordance with BIFR's Modified Draft Rehabilitation Scheme(MDRS) in Jan 2009. This amount is amortized and taken to P & L Account over a period of 3 years. (Rs.37.26 in 2008-09, Rs. 74.52 lacs in 2009-2010, Rs.74.52 Lacs in 2010-11 included in Schedule-15) the balance of Rs.37.27 Lacs will be amortised in the next financial year 2011-12. This is in accordance with BIFR's Modified Draft Rehabilitation Scheme (MDRS). As per AS-15 issued by ICAI , VRS expenditure is to be written off over the pay back period only and cannot be amortised. However the company is following the BIFR Scheme.

11. REFURBISHMENT EXPENDITURE:

11.1 An amount of Rs.285.14 lacs has been incurred towards Refurbishment Expenditure on Plant and Machinery. This amount is amortised over a period of 5 years. Till the financial year 2010-11 Rs.180.01 lacs was taken to P & L Account and balance will be charged to P & L Account for the next two years in accordance with BIFR's Modified Draft Rehabilitation Scheme (MDRS). As per AS-6 issued by ICAI, any expenditure incurred for improvement in performance of the Plant & Machinery, should be capitalized and depreciated accordingly as per Schedule -XIV applicable to the Company. However the Company is following the guide lines contained in the BIFR's MDRS in this matter deviating from AS-6 issued by ICAI.

12. CONTINGENT LIABILITIES NOT PROVIDED FOR:

2010-11 2009-10 Rs.in lacs Rs.in lacs

A Claims against the Company not acknowledged as debts. 12.01 12.01

B FLC/ILC Obtained as on 31-03-2010 0.00 0.00

C ESI 13.46 13.46

D Wage Revision(1997) settlement -Salary arrears for Officers on estimated basis 700.00 600.00

E Wage Revision(1997) settlement -Salary arrears for Non-officers 1100.00 1100.00

TOTAL 1825.47 1725.47

7 Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances). 0.00 0.00

8 Expenditure incurred in foreign currency NIL NIL

13. Unpaid overdue amounts due on 31st March, 2011 to Small Scale/Ancillary Industrial suppliers on account of principal amount together with interest aggregated to Rs.0.00 lacs (Previous year Rs.0.00 lacs). This disclosure is based on information available with the company with regard to the status of the suppliers as defined under interest on delayed payments to Small Scale and Ancillary Industries Undertaking Act, 1993.

14. Balance standing to the debit/credit of parties is subject to confirmation by them and reviews by the Company.

16. ACCOUNTING FOR TAXES:

16.1.The company has not provided deferred tax asset/liability due to huge'accumulated losses in the balance sheet and is uncertain of realizing deferred tax asset against future taxable income.

17. Statutory Auditors' remuneration for Statutory Audit is Rs.0.60 lacs and Limited review fee of Rs.0.24 lacs.

22. RELATED PARTIES DISCLOSURE:

The company is a subsidiary of HOCL (HINDUSTAN ORGANIC CHEMICALS LIMITED)

Interest payable to HOCL Rs.135.99 lacs

Secured Loan from HOCL (including interest) Rs.4019.15 lacs

KEY MANAGEMENT PERSONNEL: SHRI T S GAIKWAD, Managing Director

23. SEGMENT REPORTING:

The company is in full-fledged manufacturing activity of Chemicals. There are no separate Primary and Secondary reportable segments. All the manufacturing activity is considered as Single segment.

24. PRIOR PERIOD ITEMS:

During the year the company had net off Rs.20.08 lacs prior period expense with Rs.23.24 lacs of prior period income and reported a net prior period income of Rs.3.16 lacs.The prior period income is the unpaid liabilities/unclaimed liabilities for more than 3 years.

25. LITIGATIONS AT VARIOUS AUTHORITIES:

SI.Authorities Nature of Quantam Remarks No. Litigations 1 Hon'ble High Recovery from Rs.132.00 lacs The company had Court of A.P Debtors a favorable judgment from the single bench. The deponent had approached full bench of High Court.

2 Dy.Commissio Penalty u/s Rs.19.00 lacs The case is yet ner of 53(3) of to come for Appeals, A.P. Vat Act, first hearing. VAT 2005 Not provided F.Y. 2010-11. in the books of accounts.

26. Previous year figures have been regrouped/reclassified/recast wherever necessary to conform to current year's classification.


Mar 31, 2010

1. OTHERS:

1. The Company entered into a lease-cum-sale agreement with Andhra Pradesh Industrial Infrastructure Company (APIIC) in April 1986 for the land acquired by APIIC under the Land acquisition act and allotted to the company. Subsequently the title in respect of the land had been transferred in favour of the company.

2. LOANS:

2.1 Cash Credit, ILC/FLC/BG, Short Term Corporate Loan and Long Term Loan facilities from State Bank of Hyderabad is secured by hypothecation of raw materials, stock-in-process, finished goods, consumable stores,book debts, Buildings, Plant and Machinery and Companys Land Ac.64.00 cents out of the total land of Ac 146.00 cents.

2.2 Cash Credit, ILC/FLC/BG, Short Term Corporate Loan and Long Term Loan facilities from State Bank of Hyderabad are guaranteed by the holding company, viz. Hindustan Organic Chemicals Ltd..

3. An amount of Rs. 3753.17 lacs (Previous year Rs.3596.93 lacs) is due to Hindustan Organic Chemicals Limited (HOCL) including Rs.128.98 lacs (Previous year Rs.110.98 lacs) provided during the year as interest on HOCL loan for which 1st Charge was created on Companys Ac. 82.00 cents of land out of the total land of Ac 146.00 cents.

4. Credit has not been taken into account in respect of claims for penalty / damage recoverable from certain suppliers/ works contractors arising due to non- adherence to the stipulated contractual terms.

5. During the current year finished goods, which have not moved for more than 3 years are valued at Rs.1,00/kg and the consequential difference in value is Rs.0.00 lacs (Previous year Rs.O.OO lacs).

6. CONTINGENT LIABILITIES NOT PROVIDED FOR:

2009-10 2008-09 Rs.in lacs Rs.in lacs

A Claims against the Company not acknowledged as debts. 12.01 12.01

B FLC/ILC Obtained as on 31-03-2010 0.00 134.50

C ESI 13.46 13.46

D Salary arrears for Officers 600.00 570.00

E Salary arrears for Non-officers 1100.00 1030.00

F Differential Sales Tax due to non submission of "C" forms 13.88 276.07

TOTAL 1739.35 2036.04

7. Estimated amount of contracts remaining to be executed or capital account and not provided for (net of advances). 0.00 0.00

8. Expenditure incurred in foreign currency NIL NIL

9. Excise duty on closing finishing goods in respect of goods manufactured by the company amounting to Rs.5.47 lacs (previous year 1.79 lacs) is included in the valuation of such stocks.

10. Unpaid overdue amounts due on 31st March, 2010 to Small Scale/Ancillary Industrial suppliers on account of principal amount together with interest aggregated to Rs.O.OO lacs (Previous year Rs.O.OO lacs). This disclosure is based on information available with the company with regard to the status of the suppliers as defined under interest on delayed payments to Small Scale and Ancillary Industries Undertaking Act, 1993.

11. Balance standing to the debit/credit of parties is subject to confirmation by them and reviews by the Company.

12. As required by Accounting Standard 28 loss on impairment of incinerator system an amount of Rs.O.OO (Previous year 34.25 lacs) is charged off during the year.

13. As per AS- 22 issued by ICAI, the company has not accounted the related tax on them in its books as deferred tax assets/liability, as no sufficient income is available to realize them. Company shall recognize related tax on them, as deferred tax assets in succeeding years only when there is certainty that sufficient taxable income will be available.

14. Auditors remuneration includes Statutory Audit fee Rs.0.60 lacs and Limited review Rs.0.24 lacs.

15. During the year HFC viz. R-23 gas storage facilities were created under CDM project. The company accumulated HFC-23 Gas 42.5 MT, stored in the tank has been considered for eligible CERs to the tune of 497250 CERs. Out of this SRF(BOT Contractor of CDM Project) share is two years installments around 263800 CERs and PWC - CDM Project Consultants share is around 5% i.e. 11672.5 CERs. Balance is pertaining to HFL i.e. 221777.50 CERs. Insurance coverage is also taken for Rs.43.50 crores to cover any eventuality for one year accumulation of HFC-23 Gas. The eligible CERs of our portion 221777.50 CERs is considered as WIP and valued at the lowest rate quoted during the year in the international market i.e.Euro 10.5 per CER at exchange conversion rate of Rs.60 per EURO as on 31.3.2010. The value of CERs taken as WIP is Rs.1397.00 lacs. AsperAS-2 issued by ICAI in respect of closing stock valuation shall be made at Cost or Net Realisable value which ever is less. The cost of producing R-23 gas is Nil. The valuation of R-23 Gas is in deviation of AS-2.

16. Previous year figures have been regrouped/reclassified/recast wherever necessary to conform to current years classification.

 
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