Mar 31, 2018
1. Corporate Information
Hindustan Organic Chemicals Limited (the company) is a public limited company domiciled in India and is incorporated under the provisions of the Companies Act applicable in India. Its shares are listed on Bombay Stock Exchange (BSE) in India. The registered office of the company is located at Rasayani, Raigad Dist. Maharashtra. The Company is principally engaged in the business of bulk industrial chemicals and chemical intermediates.
2. Significant Accounting Policies
2.1 Basis of Preparation of Financial Statement
âThese financial statements are prepared in accordance with Indian Accounting Standards (IND AS) under the historical cost convention on the accrual basis except for certain financial instruments and land which are measured at fair values, the provisions of the Companies Act , 2013 (âActâ) (to the extent notified). The IND AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.
The Company has adopted IND AS standards and the adoption was carried out in accordance with IND AS 101 First time adoption of Indian Accounting Standards. The transition was carried out from Indian Accounting Principles generally accepted in India as prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (IGAAP), which was the previous GAAP. Reconciliations and descriptions of the effect of the transition have been summarized in note to accounts.
Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
The separate financial statements have been prepared on accrual basis and under historical cost basis, except for the following assets and liabilities which have been measured at fair value:
Derivative financial Instrument
Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments),The financial statements are presented in Indian Rupee (âINRâ) or (âââ) which is also the Companyâs functional currency and all values are rounded to the nearest Lakhs upto two decimals, except when otherwise indicated. Wherever the amount represented â â0â (zero) construes value less than Rupees a lakh.
Significant accounting estimates, assumptions and judgements
The preparation of the Companyâs separate financial statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Estimates and assumptions
âThe preparation of the financial statements in conformity with IND AS requires management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. Application of accounting policies that require critical accounting estimates involving complex and subjective judgments and the use of assumptions in these financial statements have been disclosed at appropriate places.
Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.
Taxes
Tax expense (Income Tax and Deferred Tax) in accordance with Ind-AS 12: Accounting for Taxes on Income has been recognised .There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. Where the final tax outcome of these matters is different from the amounts initially recorded, such differences will impact the current and deferred tax provisions in the period in which the tax determination is made. The deferred tax asset is recognized and carried forward only to the extent that there is a virtual certainty that the assets will be realized in future.
Employee benefits
i. Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employeesâ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
ii. Other long-term employee benefit obligations
The liabilities for earned leave and sick leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Re measurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or loss. The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
iii. Post-employment obligations
âThe Company operates the following post-employment schemes:
(a) Defined benefit plans such as gratuity, pension, post-employment medical plans; and
(b) Defined contribution plans such as provident fund.
iv. Defined benefit plans
The Companyâs gratuity scheme is a defined benefit plan. A defined benefit plan is a post employment benefit plan. The Companyâs net obligation in respect of defined benefit plans is calculated by estimating the amount of future benefits that employee have earned in return for their services in the current and prior periods.
v. Defined contribution plans
The companyâs provident fund scheme is a defined contribution plan. A defined contribution plan is a post employment benefit plan under which an entity pays fixed contributions and will have no obligation to pay further amounts. Obligation for contributions to defined contribution plans are recognised as employees benefit expenses in the statement of Profit and Loss when they are due.
i. Gratuity
Gratuity is a post employment defined benefit plan. The liability recognised in the Balance Sheet in respect of gratuity is the present value of the defined benefit obligation at the Balance Sheet date. The Companyâs liability is actuarially determined at the end of each year. Actuarial gains/ losses through re-measurement are recognised in other comprehensive income.
Pension and gratuity obligations
The liability or asset recognised in the balance sheet in respect of defined benefit pension and gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation denominated in INR is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation. The benefits which are denominated in currency other than INR, the cash flows are discounted using market yields determined by reference to high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.
Re measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income.
They are included in retained earnings in the statement of changes in equity and in the balance sheet. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.
a) Defined benefit plans (gratuity benefits), liability in respect of defined benefit plans is recognised in the balance sheet, and is measured as the present value of the defined benefit obligation at the reporting date less the fair value of the planned assets. The present value of the defined benefit obligation is based on expected future payments which arise from the fund at the reporting date, calculated annually by independent actuaries. Consideration is given to expected future salary levels and period of service etc.
b) Companyâs contribution to provident fund is accounted for on accrual basis.
c) Temporary employee benefits are recognized as an expense at the undiscounted amount in the statement of profit and loss of the year in which the related service is rendered.
d) Bonus is provided in accordance with provisions of Payment of bonus act,1965 on the basis of profitability.
e) Post employment and other long term employee benefits are recognised as an expense in the statement of profit and loss for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation technique. Actuarial gain and loss in respect of post employment and other long term benefits are charged to statement of profit and loss.
Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured on the basis of quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs to these models are taken from observation of the market where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
Provision against obsolete and slow-moving inventories
The Company reviews the condition of its inventories and makes provision against obsolete and slow-moving inventory items which are identified as no longer suitable for sale or use, on the basis of technical assessment. The Company carries out an inventory review at each balance sheet date and makes provision against obsolete and slow-moving items. The Company reassesses the estimation on each balance sheet date.
Impairment of financial assets
Provision for doubtful debts / Loans / Advances is made in the Books in respect of Sundry Debtors outstanding for more than 3 years except for in respect of receivable from Government Departments / Companies. In respect of other Debtors, Loans and Advances, provisions are made to the extent considered as not recoverable by the management. Impairment of non- financial assets
âThe Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the assetâs recoverable amount.
An assetâs recoverable amount is the higher of an assetâs fair value less cost of disposal and its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset should be considered as impaired and it is written down to its recoverable amount.
In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre- tax discount rate that reflects current market assessment of the time value of money and the risk specific to the asset. In determining fair value less cost of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share price for publicly traded subsidiaries or other available fair value indicators.â
Terms/ rights attached to equity shares
The Company has only one class of equity shares having a par value of Rs.10 per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
3 Implementation of Restructuring plan
i. The Company has implemented the Government approved restructuring plan which includes closure of all plants at Rasayani unit except the Conc. Nitric Acid / N204 Plant (handed over to ISRO) and given VRS to the employees (Direct and Indirect) rendered surplus due to shutting down of the plants at Rasayani except those employees associated with operation of CNA/N2O4 plant at Rasayani and the skeletal staff required for implementation of the proposed restructuring plan.
ii. The Company had announced a VRS Scheme on 20.02.2017 to 21.03.2017 which was kept open for one month initially and further extended by another 15 days. The company received 409 applications from the employees (including the 36 employees opted in 2013). The company has relieved 274 employees on 28.2.2018, 24 employees on 15.3.2018, and 1 employee on 11.4.2018 and 8 employees on 30.4.2018. Out of 150 employees transferred to ISRO 19 employees had opted for VRS and they were relieved on 15.11.2017. In addition there are 8 employees retained for Corproate functions and 15 employees for completion of the restructruing related works, who will be releived after completion of restructuring related works. Total amount paid / payable as VRS compensation to employees is Rs.6000 Lakhs upto 31st March 2018.
iii) The Board also approved a Volantary Separation Scheme (VSS) for the indirect employees (Canteen, Adhoc and Mathadi workers) of Rasayani Unit, who have been relieved in the month of March 2018. Total amount paid towards VSS is Rs.1739 Lakhs.
iv) 22 employees who have not opted for VRS has been transferred to the Kochi Unit of the company
v) Salary arrears of all past and present employeesâ payables and provided for at respective years will be paid in due course.
4 EMPLOYEES BENEFIT PLAN:
A. Provision for leave encashment
Rasayani: The Company has made provision of Rs.630.05 Lakhs (previous year â Nil) for leave encashment as per IND AS-19 issued by Institute of Chartered Accountants of India based on Actuarial Valuation. As per the restructuring plan approved by the Government all the employees of Rasayani unit except those employees taken over by ISRO are being given VRS and the leave encashment dues has been settled at the time of relieving them on VRS.
Kochi: The Company has made provision of Nil (previous year Rs.1.20 Lakhs) for leave encashment as per IND IND AS-19 issued by Institute of Chartered Accountants of India based on Actuarial Valuation and the unpaid amount of leave encashment claims submitted by the employees.
B. Employees receive benefits from the provident fund managed by the Company. The employee and employer each make monthly contributions to the Provident Fund/Pension Fund plan equal to 12% of the employeesâ salary/wages. Provident Fund is managed by a separate Exempted Trust. The Provident fund dues of VRS optees has been settled by the Trust.
C. Gratuity
Gratuity plan is governed by the Payment of Gratuity Act, 1972 and employee who has completed five years of service is entitled to gratuity and the level of benefits provided depended on the memberâs length of service and salary at retirement age. The Employeesâ Gratuity Fund Scheme, which is a defined benefit plan, is managed by the Trust through an Annuity Scheme maintained with Life Insurance Corporation of India (LIC). The gratuity liability of Rasayani unit employees has been setteld by the company since the fund available with LIC of India is not sufficient to settle all the liablities. The balance fund available with LIC is Rs.45.47 Lakhs.
The gratuity liability as on 31st March, 2017 of the retired employees on above account amounting to Rs.187.54 Lakhs has been settled during the year and no further payments are due. All dues of gratuity of Rasayani unit and Kochi unit employees relieved upto 31.03.2018 have been paid and there are no further payment dues. The ceiling of gratuity has been enhanced from Rs.10 Lakhs to Rs.20 Lakhs as per GoI Notification dt. 29th March 2018 on Payment of Gratuity (Amendment) Act 2018.
(i) Reconciliation of opening and closing balances of the present value of the defined benefit obligations.
A description of methods used for sensitivity analysis and its Limitations:
Sensitivity analysis is performed by varying a single parameter while keeping all the other parameters unchanged.
Sensitivity analysis fails to focus on the interrelationship between underlying parameters.
Hence, the results may vary if the two or more variables are changed simultaneously.
The method used does not indicate anything about the likelihood of change in any parameter and the extent of the change if any
Details of Asset-Liability Matching Strategy
It was informed by the company that Gratuity Benefits liabilities of the company are Funded
There are no minimum funding requirements for a Gratuity Benefits plan in India and there is no compulsion on the part of the Company to fully or partially pre-fund the liabilities under the Plan.
The trustees of the plan have outsourced the investment management of the fund to an insurance company. The insurance company in turn manages these funds as per the mandate provided to them by the trustees and the asset allocation which is within the permissible limits prescribed in the insurance regulations. Due to the restrictions in the type of investments that can be held by the fund, it may not be possible to explicitly follow an asset-liability matching strategy to manage risk actively in a conventional fund.
Effect of the defined benefit plan on the entityâs future cash flows
When the benefits of the plan are changed, or when a plan is curtailed or settlement occurs, the portion of the changed benefit related to past service by employees, or the gain or loss on curtailment or settlement, is recognized immediately in the profit or loss account when the plan amendment or when a curtailment or settlement occurs.
A. Acturial Risk:
It is the risk that benefits will cost more than expected. This can arise due to one of the following reasons: Adverse salary growth experience:
Salary hikes that are higher than the assumed salary escalations will result into an increase in obligation at a rate that is higher than expected.
Variability in mortality rates:
If actual mortality rates are higher than assumed mortality rate assumptions than the gratuity benefits will be paid earlier than expected. Since there is no condition of vesting on the death benfit, the accelaration of cashflow will lead to an acturial loss or gain depending on the relative values of the assumed salary growth and discount rate. Variability in withdrawal rates: If actual withdrawal rates are higher than assumed withdrawal rate assumptions than the gratuity benefits will be paid earlier than expected. The impact of this will depend on whether the benefits are vested as at the resignation date.
B. Investment Risk
For Funded Plans that rely on insurers for managing the assets, the value of assets certified by the insurers may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.
C. Liquidity Risk :
Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level of benefits .If some of such employees resign/retire from the companies there can be strain on the cashflows.
D. Market Risk:
Market risk is a collective term for risks that are related to the changes and fluctuations of the financial maiM One acturial assumption that has a material effect if the disount rate. The disount rate reflects the time value of money.An increase in disount rate leads to decrease in defined benefit obligations of the plan benefits and vice-versa. This assumption depends on the yields on the corporate/Government bonds and hence the valuation of liability is exposed to fluctuations in the yields as at the valuation date.
E. Legislative Risk:
Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to change in the legislation /regulation. The Government may amend the payment of Gratuity Act thus requiring the companies to pay higher benefits to the employees. This will directly affect the present value of defned benefit obligations and the same will have to be recognised immediately in the year when any such amendemnt is effective.
5 PROVISION FOR EMPLOYEE REMUNERATION
PROVISION FOR ARREARS OF WAGES
The company has made provision on account of wage revision (1997 & 2007), EL / DA difference etc due to Rasayani unit employees amounting to Rs.4278.81 Lakhs and Rs.604.82 Lakhs on account of VRS compensation and Gratuity due to 15 employees who are retained for completion of the restructuring plan related works.
6 FIXED ASSETS
Land in possession of the Company at Rasayani admeasuring 1010.655 acres (previous year 1010.655 acres) which is valued at the current ready reckoner rate total value of Rs.143099.52 Lakhs by creating a revaluation reserve. Out of the said land, 39.63 acreas as per the report of the consultant appointed in 2015 has been idenitified as encroached and hence considered at Nil value. There is public road constructed approximating 10.776 acres valued at Nil . The company has during the year initiated survey proceedings with Government of Maharashtra and the survey of the entire land is in progress upto the balance-sheet signing date. The adjustments if any to the actual land holdings of the company would be done on completion of the survey.
As per the restructuring plan approved by the Government of India, vide order dated May 22, 2017, the company is to close its Rasayani Units, and sell the property, plant and equipment. It has also been stated that the C.N.A / N2O4 plant has to be transferred to ISRO. In accordance with the said order, the company has run its activities upto September 30, 2017 at Rasayani. Thereafter, the company has transferred the land and equipment to ISRO. Similarly all the non-operating plants have been sold and certain plants are under sale in accordance with procedure. These plants in the Asset Register of the company are transferred to Assets held for disposal. Certain utility plant as per the requirement of ISRO are retained by the Company and will be disposed of once ISRO constructs its own facilties.
Capital Work-in-Progress and Expenditure during Construction includes Rs.2978.91 Lakhs (previous year Rs.2978.91 Lakhs) towards cost of JNPT Tank Terminal project wherein management had decided to suspend further construction. The company has gone into arbitration against JNPT for various issues. Provision for Impairment amounting to Rs.2885.56 Lakhs has been made based on the valuer report. The company has provided for the lease rentals liability to JNPT upto March 2013 in accordance with the confirmation received from JNPT.
With respect to the Companyâs leased land at Kharghar, the commencement of construction certificate issued by CIDCO was valid upto 29.12.2012. However the company has not carried out any construction on the said leased land. The company has provided for Rs.490.99 Lakhs towards charges/premium payable to CIDCO upto March 31, 2018. The company is also in the process selling the partially constructed Tank facilties through JNPT and therefore the same is treated as held for sale.
7 INVESTMENT
a) The Company has an investment of Rs.1106.00 Lakhs (previous year Rs.1106.00 Lakhs) in the equity share of subsidiary company M/s. Hindustan Fluorocarbons Ltd. (HFL) which is under BIFR since 1994. The net worth of the Company based on its latest audited balance sheet as at 31st March, 2018 is negative. Provision has been made during earlier year towards permanent diminution in the value of these investments amounting to Rs.221.20 Lakhs. No provisions are made during the year. As per the decision of the Government of India, the company has decided to divest the entire stake in the Subsidiary for which the Transaction and Legal Advisors have been appointed.
During the year 2007-08, the Modified Draft Rehabilitation Scheme (MDRS) for revival of subsidiary -Hindustan Flurocarbon Ltd. (HFL) was approved by BIFR for implementation. As part of implementation of MDRS, HOCL had waived interest of Rs.2260.26 Lakhs accumulated on loan given to HFL and converted the unsecured loan amounting to Rs.2744.06 Lakhs as Zero Coupon Loan (ZCL), into secured loan by on HFL creating first charge on immovable property (land 84.31 acre valued to the extent of Rs.2041.76 Lakhs as per Govt. rate) in favour of HOCL. This loan was payable in 7 equal annual instalments commencing from 2010-11, aggregating to Rs.2744.06 (Previous year Rs.2732.06) which has become due and payable in full. Further, the Company had given loans to HFL aggregating to Rs.453.01 (Previous Year Rs.453.01) 10.25% to 14.50% which has become payable in full. This loan is also secured by first charge on the HFL immovable property . A provision has been made for the shortfall in the security to the extent of Rs.1943.45 Lakhs till date.
The company has entered into an agreement dt. 16.10.2006 to lease the school infrastructure facilities to M/s.Mahatma Education Society (MES) for managing the school for a period of 30 years. The management of MES in order to start professional courses has constructed new buildings and facilities in the premises in contravention of the terms of agreement. The company has sent a notice for termination as per the tems of the agreement to M/s.MES. M/s.MES has filed a petition challenging the termination notice in the Dist. Magistrates Court Alibag. MES has filed petition in the Bombay High Court for appointment of Arbitrator in the dispute between HOCL and MES. The District Court has granted stay pending the final disposal of the Arbitration petition of MES. Company has filed a petition to vacate the stay granted by the District Court in the Bombay High Court.
8 SEGMENT REPORTING.
Since the company is manufacturing only Chemicals, there are no separate reportable primary and secondary segments and all the chemicals manufactured by the company are considered to have been representing as single reportable segment. The requirements of Indian Accounting Standard 108 with regard to disclosure of segmental results are therefore considered not applicable to the company.
8 BALANCE CONFIRMATION
Balances of trade receivables, trade payables, loans, advances, other current assets and borrowings are subject to confirmation / reconciliation and subsequent adjustments.
9 RELATED PARTY DISCLOSURE AS PER Ind- AS 24
a) The company is a Government related entity as the Government of India holds its major equity capital and therefore transactions with its related parties being other Government related entities have not been seperately disclosed herein in view of the exemption from such disclosure under Ind-As 24. These entities are the subsidiaries and joint ventures of the company and these transactions relate to investments, Loans and advances granted and interest earned/accrued on such loan and allowances for these current and non current assets created in the Balance Sheet to arrive at the fair value. The outstanding balances in respect of such transactions have been disclosed under the respective Notes .
As per Ind AS 24 (para 26), the disclosures of transactions with the related parties are given below:
List of related parties where control exists and also related parties with whom transactions have taken place and relationships:
Note-10 Financial Instruments :
10a. Financial Instrument
A Fair Values hierarchy :
Level 1 â Quoted (unadjusted) market prices in active ma^ets for identical assets or liabilities
Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
B Financial assets and liabilities measured at fair value-recurring fair value measurements :
11-I. Reconciliation of Equity
The effect of the Companyâs transition to Ind AS is summarized as reconciliations of Equity, Profit and Total comprehensive income with Indian GAAP as explained below:
1) Reconciliation of equity as previously reported under Indian GAAP to Ind AS.
2) Reconciliation of profit or loss and Total Comprehensive income as previously reported under Indian GAAP to Ind AS.
g 24 Employee Benefit Expenses
Wage revision arrears Rs.2207 Lakhs to Employees reclassified from Other Expenses (Prior Year expenses) to Employees Benefit Expenses in 2016-17.
h 27 Other Expenses
Increase in Repairs & Maintenance by 1.33 Lakhs, Admin Expenses by Rs.17.53 Lakhs and GoI loan Penalty by Rs.26.81 Lakhs.
The following additional Notes / modification to Notes given in compliance with provisions of Ind AS.
a. 3d Non- Current Assets held for sale, .
b. 13(iv) GoI loan Penal Interest on interest Rs.24163 Lakhs not provided.
c. 29c Employee Benefit Plan on account amendment to Gratuity, Actuarial valuation assumptions.
d. 37 Related Party disclosure related to Subsidiary Company, Trusts and significant transaction with other Govt. Companies and Key Managerial Personnel. e 39I Reconciliation of Equity f 39II Reconciliation of Statement of Profit and Loss g Cashflow statement
h 39III Effect of Ind AS adoption on Cash Flow.
12. Notes to Statement of Profit and Loss and Other Comprehensive Income
a) The Company has elected to continue with the carrying value for all its Property, Plant and Equipment as of April 1, 2016 measured under Indian GAAP as deemed cost as of April 1, 2016 (transition date) except Freehold Land where fair value (circle rate) has been considered as deemed cost.
b) Under Indian GAAP, the Company measured financial assets at cost. As at the transition date, the company recognised the provision for expected credit loss for certain financial assets as per the criteria set out in Ind AS 101. All the financials liabilities have been carried at amortized cost and such differences have been appropriately addressed.
c) Represents Deferred Tax adjustments on the Ind AS transition adjustments. However considering the losses of the company no current tax impact was given.
d) The Company recognises costs related to its post-employment defined benefit plan on an actuarial basis both under Indian GAAP and Ind AS. Under Indian GAAP, the entire cost including actuarial gains and losses and return on planned assets are charged to profit or loss. Under Ind AS, actuarial gains and losses and return on planned assets recognised immediately in the Balance Sheet with a corresponding debit or credit to retained earnings through Other Comprehensive Income.
e) Consequential sum of the adjustments carried out in the other comprehensive income net of tax implications thereon.
Previous yearâs figures have been regrouped / reclassified wherever necessaiy to correspond with the current yearâs classification / disclosure.
Mar 31, 2016
1A During the year 2010-11, the Company forfeited 193000 shares of Rs.10 each (Rs. 5 paid up) for nonpayment of allotment and call monies and the amount paid towards application money in respect of these forfeited shares has been transferred to "Share''s Forfeiture Account".
2A An amount of Rs. 2096.84 lakhs (previous year Rs. 1932.33 lakhs) has been received from ISRO (Government of India) towards Capital Grant for refurbishment of CNA Plant. An amount of Rs. 2273.33 lakhs (Previous year Rs. 1796.00 lakhs) has been spent upto 31st March, 2016 and balance unspent amount of Rs. Nil (previous year Rs. 136.33 lakhs ) has been shown as deposit under the head - Other Long-term Liabilities. The refurbishment Project has been completed and commissioned on 19.01.2016 and a balance amount of Rs. 176.49 lakhs has been shown as receivable from ISRO. As per AS - 12 - ''Accounting for Government Grants'', income for the year has been recognised from this grant of Rs. 102.03 lakhs (previous year Rs. 92.47 lakhs) to the extent of depreciation charged and is included in ''Miscellaneous income''.
3B The Government of India had released in earlier year Rs. 27000 lakhs (for financial restructuring Rs. 25000 lakhs and Caustic Soda Plant recommissioning Rs. 2000 lakhs ) against allotment of 8% Non-Cumulative Redeemable Preference Shares, thereby broadening the capital base as per the revival scheme. The 8% Preference Shares were allotted to Government of India by the Board on 28th January, 2008, redeemable @ 20% commencing from 4th year with last redemption in the 8th year. The first, second, third, forth & fifth installments of 20% i.e. Rs. 5400.00 lakhs each was due for redemption in financial year 2011-12, 2012-13, 2013-14, 2014-15 & 2015-16 respectively. At the request of the Company, Government of India has extended the commencement of redemption from financial year 2011-12 to financial year 2015-16 onwards in four equal installments @ 25% each year. The Board has authorised the company to request the Govt. for further extension of the redemption date by another four years. The consultant has recommended for conversion of Preference shares into equity in the revival report submitted to the government.
4D Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of Rs.10 per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
5A i) Term Loan from Bank is secured by equitable mortgage conveying first charge over all immovable assets at factory & township suited at Ambalamugal, Rasayani & Nestle apartments (10 Flats) at Mumbai
ii) The Company has raised Bonds for Rs. 10000 lakhs (series XX unsecured 10.57% p.a. redeemable bonds) on 28.08.2013 to redeem the bonds (series XIX unsecured 8.73% p.a. redeemable bond) matured on 28.08.2013.
iii) The Company has raised Bonds for Rs. 15000 lakhs (series XXI unsecured 9.36% p.a. redeemable bonds) on 01.10.2014 for working capital requirement.
iv) In the absence of profit during the year and due to accumulated losses, Bond redemption reserve has not been created against the bonds raised during the year under series XXI for Rs. 15000 lakhs
v) There is a continuing default in repayment of loan from Government of India since the year 2002-03 and the overdue amount towards principal is Rs. 6800.00 lakhs (previous year Rs. 6388.00 lakhs) and for interest accrued is Rs. 7379.15 lakhs (previous year Rs. 6379.90 lakhs ). These amounts are shown under ''Other Current Liabilities''. Further an amount of Rs. 844.20 lakhs (previous year Rs. 412.00 lakhs ) maturing in next 12 months is shown under Other Current Liabilities as ''current maturity of long-term borrowings''.
vi) The Company has not made provision for penal interest payable amounting to Rs. 1475.51 lakhs (previous year Rs. 1268.87 lakhs) on overdue Government Loan upto 31st March, 2016 since the same is leviable at the discretion of Government of India. The Company has not received any demand from the Government of India for the same. The same has been disclosed under Contingent Liabilities.
6B The other loans shown above is Canara Bank towards housing finance for employees. The loans from Canara Bank Rs. 152.40 lakhs (Previous year Rs. 158.14 lakhs ) are secured by way of mortgage assignment of rights available to the Company on the housing properties. The amounts re-payable to Canara Bank within one year amounting to Rs. 46.04 lakhs (previous year Rs. 44.06 lakhs) is shown under other ''as ''current liabilities'' ''current maturity of long-term borrowings''.
7A Cash Credit from State Bank of India is secured by :
i. Hypothecation of the Company''s entire stock of raw materials, finished goods, stock-in-process, consumable stores and spares and book debts in favour of the bank.
ii. Equitable mortgage conveying First charge over all immovable assets at factory and township situated at Ambalamugal, Dist: Ernakulam in the state of Kerala and over the immovable properties situated at village Deolali, Posari, Wasambe, Parade, Savale, Turade, Dapivali and Ambivali of Panvel and Khalapur talukas, District Raigad in the State of Maharashtra and plant and machinery, equipments, fixtures and fittings, movable machinery, spares, articles and things in the State of Maharashtra (excluding current _assets)._
8 RASAYANI ---
i) The Company has introduced VRS Scheme on 12.09.2013 and was open for 1 month up to 12.10.2013 and further re-opened from 11.11.2013 to 18.11.2013. The Company received 151 applications in total out of which 15 applicants were relieved, one applicant was expired. Further 66 applicants have been superannuated in the normal course on attaining the retirement age during the last three years. The balance 69 (previous year 97) applications are kept pending for want of funds and the VRS Compensation of Rs. 856.00 lakhs (previous year Rs. 1202.00 lakhs) has been shown under Other Commitments. (refer note-44)
ii) The Board in its meeting held on 13.11.2013 had approved a Voluntary Separation Scheme (VSS) for the canteen workers of Rasayani Unit through the Canteen Contractor for curtailing the expenditure towards canteen facility. It is estimated that the amount payable to each canteen worker on account of this would be Rs. 5.50 lakhs approx. The Company has not invited any application from the canteen workers through the contractors for the VSS. However, since the Board has approved such a scheme, an amount of Rs. 404.00 lakhs (previous year Rs. 478.50 lakhs) being the estimated amount of the compensation of VSS scheme payable on implementation of this scheme to 79 canteen workers (previous year 87) is shown under Other Commitments (refer note-44).
NOTE No.
9 EMPLOYEES BENEFIT PLAN:
10.A Provision for leave encashment
The Company has made provision of Rs. Nil (previous year Rs. 795.92 lakhs) for leave encashment as per revised AS-15 issued by Institute of Chartered Accountants of India based on Actuarial Valuation and the unpaid amount of leave encashment claims submitted by the employees.
12.B Employees receive benefits from the provident fund managed by the Company. The employee and employer each make monthly contributions to the Provident Fund/Pension Fund plan equal to 12% of the employeesâ salary/wages. Provident Fund is managed by a separate Exempted Trust.
13.C Gratuity
The Employeesâ Gratuity Fund Scheme, which is a defined benefit plan, is managed by the Trust through an Annuity Scheme maintained with Life Insurance Corporation of India (LIC). The present value of obligation is determined based on actuarial valuation of liability done by using 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 ceiling of gratuity has been enhanced from Rs. 3.50 lakhs to Rs. 10.00 lakhs with effect from 1st January, 2007. The gratuity liability as on 31st March, 2016 includes the provision towards arrears for the retired employees on above account amounting to Rs. 187.54 lakhs (previous year Rs. 187.54 lakhs).
(i) Reconciliation of opening and closing balances of the present value of the defined benefit obligations.
14. PROVISION FOR EMPLOYEE REMUNERATION RASAYANI
PROVISION FOR ARREARS OF WAGES
15.A During the year, the Company has paid an amount of Rs. Nil (previous year Rs. Nil) towards arrears on account of wage revision of employees pertaining to the period January 1, 1997 to December 31, 2000. No provision has been made for the liability amounting to Rs. 1887.79 lakhs (previous year Rs. 1887.79 lakhs) and which is shown under contingent liability.
16.B Wage Settlement / Salary Revision w.e.f. 1/1/2007 - Officer
During the year, the Company has paid an amount of Rs. Nil (previous year Rs. Nil) towards arrears on account of wage revision of employees pertaining to the period January 1, 2007 to March 31, 2008. No provision has been made for the liability of Rs. 161.55 lakhs (previous year Rs. 161.55 lakhs) and it is shown under contingent liability.
17.C Wage Settlement / Salary Revision w.e.f. 1/1/2007 - Staff
During the year, the Company has paid an amount of Rs. Nil (previous year Rs. Nil) towards arrears on account of wage revision of employees pertaining to the period January 1, 2007 to March 31, 2008. No provision has been made for the liability towards balance amount of Rs. 148.26 lakhs (previous year Rs. 148.26 lakhs) and it is shown under contingent liability.
18. FIXED ASSETS
19.A Land in possession of the Company at Rasayani admeasuring 455.69 hectares (previous year 455.69 hectares) has been given free of cost for use, by the Government of Maharashtra, against which a nominal value of Re.1/- is included in âLand and Land developmentâ by creating âCapital Reserveâ. Land at Panvel amounting to Rs. 0.80 lakhs (previous year Rs. 0.80 lakhs) included in âLand and Land developmentâ has been given by the Government of Maharashtra for the business/ residential purpose of of the company.
20.B The Company appointed consultant/valuers during the year for assessing the impairment of Fixed Assets as per the provisions of ''As-28 ''Impairment of Assetsâ for Rasayani Unit. As per the report of the consultant the loss on account of impairment has been worked out by comparing the fair market value as on date with the WDV as on 31st March, 2016 and an additional amount of Rs. 1593.70 lakhs (previous year Rs. 1424.91 lakhs) has been provided for during the year. This includes a provision of Rs. 1593.25 lakhs on Caustic Soda Plant.
21.C The Acetanilide, Sulphuric Acid, Nitro Toluene, Aniline-II and Hydrogen-II plants having WDV (net of impairment) Rs. 228.97 lakhs (previous year Rs. 244.44 lakhs) are in working condition but are not in operation due to uneconomical conditions.
22.D Upon implementation of Schedule II of Companies Act 2013, the useful life of the fixed assets has been revised by the Company in terms of the schedule in 2014-15. Accordingly the company has revised its depreciation rate so as to depreciate its assets over the balance useful life of the assets keeping the residual value at 5%. The depreciation charge during the year 2014-15 pertaining to assets whose revised useful life has expired prior to commencement of the financial year 2014-15 has been adjusted against retained earnings in terms of Schedule II. An amount of Rs. 638.01 lakhs has been adjusted against the opening Retained Earnings for the year 2014-15 as per the provisions of Schedule II. Due to the change in useful life of the assets, the depreciation charge during the year 2014-15 (including adjusted against opening Retained Earnings) was higher by Rs. 340.64 lakhs.
23.E RASAYANI
The Caustic Soda Plant having WDV of Rs. 1032.22 lakhs (previous year Rs. 2607.90 lakhs) net of impairment has been transferred to held for disposal as per the decision of the Board in the meeting held on 13th Nov 2013. An impairment provision of Rs. 1593.70 Lakhs (previous year Rs. 14.25 Lakhs) has been made against the caustic soda plant held for disposal during the year.
KOCHI
The Recycle column reboiler, Cumene column reboiler and Propane surge drum having wdv Rs. Nil (previous year Nil) have been transferred to assets held for disposal were sold during the year 2014,15.
24F i) Capital Work-in-Progress and Expenditure during Construction includes Rs. 2978.91 lakhs (previous year Rs. 2978.91 lakhs) towards cost of JNPT Tank Terminal project wherein management had decided to suspend further construction. Even though the lease period has expired in June 2010, the Company has written to JNPT authorities for extension of the lease period and is hopeful of getting extension. The company has gone into arbitration along with other Liquid Berth Users Association against JNPT for various issues including lease period issue. Provision for Impairment amounting to Rs. 2634.54 lakhs has been made based on the valuers report during earlier year.
ii) As per Lease Agreement with JNPT, the Lease Rentals provide for escalation @ 10% on Lease Rent payable to JNPT. The Company had provided for Lease Rentals with old rates upto 31.03.2014 without considering the escalation @ 10% per annum as the matter is under arbitration. The amount accumulated on account of escalation up to 31.03.2014 amounting to Rs. 1351.08 lakhs has been provided in the books during earlier years. Based on the statement of accounts received from JNPT the amount excess provided during earlier years has amounting to Rs. 532.88 lakhs has been withdrawn during the year under prior period expenses.
25G An amount of Rs. 2658.09 lakhs (previous year Rs. 2429.40 lakhs) has been spent for refurbishment of CNA plant, funded by ISRO, is complete and capitalized during the year. The CNA plant was restarted on 19.01.2016. An amount of Rs. 176.49 lakhs balance receivable from ISRO has been shown under Misc. Receivable a/c. During the year an amount of Rs. 102.03 lakhs (previous year 92.47 lakhs) representing the depreciation has been transferred to other income.
26H An amount of Rs. 25.41 lakhs (previous year Rs. 25.41 lakhs) incurred towards feasibility study of captive power plant was carried forward as Capital WIP from the previous year. The project is on hold now due to high gas prices and may be taken up at a later date only. Full impairment provision has been recognized for the same in earlier year.
27I With respect to the Companyâs leased land at Kharghar, the commencement of construction certificate issued by CIDCO was valid up to 29.12.2012. Further the Company paid a premium of Rs. 15.41 lakhs and got extension for commencement of construction upto 25.05.2013. For further extension for a period of one year up to 25.05.2014 the agreement provides for an additional premium payment of Rs. 30.81 lakhs failing which CIDCO reserves the right for taking back the possession of the land. Since the Company was facing financial crunch the payment has not been made to CIDCO. So far CIDCO has not initiated any steps to take back the land.
The Company has plans to construct buildings on the said land on the Public Private Partnership (PPP) model basis as per the decision of the Board in its meeting held on 14.11.2014. This will avoid cash outflow by the company for the construction purpose.
28 a) The company had invested Rs. 3.00 lakhs in the Equity of M/s. HOC-Chematur Ltd. by way of joint venture as a co-promoter. The company holds 60% of the Paid-up Equity Capital of HOC-Chematur Ltd., hence HOC-Chematur is a subsidiary company of HOCL. HOC-Chematur Ltd., had initiated the process of implementing the project, however, abandoned subsequently due to inadequate support from financial institutions. In view of such uncertainties involved in implementing the project, the company had fully provided for the losses against the investment. Since the project has been abandoned, the board of directors has decided to wind up the company under the early exit scheme of ministry of Corporate Affairs.
b) The advance amounting to Rs. 1067.46 lakhs (previous year Rs. 1066.75 lakhs).) paid during earlier years has been written off during the year against provision made in earlier year.
29 a) The Company has an investment of Rs. 1106.00 lakhs (previous year Rs. 1106.00 lakhs) in the equity share of subsidiary company M/s. Hindustan Fluorocarbons Ltd. (HFL) which is under BIFR since 1994. HFL had made profits in the 4 financial years prior to financial year 2013 -14. During the financial year 2013-14, 2014-15 and 2015-16 HFL has incurred a loss. The shares are traded below nominal value since Dec 2012 and the net worth of the Company based on its latest audited balance sheet as at 31st March, 2016 is negative. Hence provision has been made during earlier year towards diminution in the value of these investments amounting to Rs. 221.20 lakhs. No provisions are made during the year.
b) During the year 2007-08, the Modified Draft Rehabilitation Scheme (MDRS) for revival of subsidiary - Hindustan Flurocarbon Ltd. (HFL) was approved by BIFR for implementation. As part of implementation of MDRS, HOCL had waived interest of Rs. 2260.26 lakhs accumulated on loan given to HFL and converted the unsecured loan amounting to Rs. 2744.06 lakhs as Zero Coupon Loan (ZCL), into secured loan by creating first charge on HFL immovable property (land valued to the extent of Rs. 2900.00 lakhs) in favour of HOCL. This loan was payable in 7 equal annual installments commencing from 2010-11. HFL has not paid the installments for the year 2010-11, 2011-12, 2012-13, 2013-14, 2014-15 and 2015-16 aggregating to Rs. 2352.05 lakhs (previous year Rs. 1960.05 lakhs). Further, the Company had given loans to HFL aggregating to Rs. 453.01 lakhs (previous year Rs. 453.01 lakhs) bearing interest ranging from 10.25% to 14.50% out of which Rs. 445.20 lakhs (previous year Rs. 381.42 lakhs) being the installments due from financial year 2010-11 to 2015-16 remains unpaid.
30. During the year 2001-2002, a case of misappropriation of Companyâs funds to the tune of Rs. 64.81 lakhs (net and to the extent identified) by an official of the Company, involving fraudulent / fake payments / withdrawals under various heads of accounts including sales tax, debtors etc. had been detected. The case is at present under investigation of CBI. In the meantime, based on the report of the Vigilance Department, a civil suit has been filed for recovery of the amount involved from the concerned employee who was dismissed from the services of the Company. Since in the opinion of the Management the value of assets seized by CBI is sufficient to cover the losses occurred on account of fraud, no provision in the accounts is made and the amount is shown as recoverable.
31. The company has entered into an agreement dt. 16.10.2006 to lease the school infrastructure facilities to M/s.Mahatma Education Society (MES) for managing the school for a period of 30 years. The management of MES in order to start professional courses has constructed new buildings and facilities in the premises in contravention of the terms of agreement. The company has sent a notice for termination as per the agreement to M/s.MES. M/s.MES has filed a petition challenging the termination notice in the Dist. Magistrates Court Alibag.
32. SEGMENT REPORTING.
Since the company is manufacturing only Chemicals, there are no separate reportable primary and secondary segments and all the chemicals manufactured by the company are considered to have been representing as single reportable segment. The requirements of Accounting Standard 17 with regard to disclosure of segmental results are therefore considered not aDDlicable to the comDany.
33. DEFERRED TAXES
The company had reviewed its net deferred tax assets as at 31st March, 2004 and decided not to carry forward such assets due to uncertainty of realizing this assets against future taxable income in view of the huge accumulated loss. This decision is followed this year also in view of Accounting Standard Interpretation issued by the Institute of Chartered Accountants of India.
34 BALANCE CONFIRMATION
Balances of trade receivables, trade payables, loans, advances, other current assets and borrowings are subject to confirmation / reconciliation and subsequent adjustments.
35 In the previous year, the Company has made an application for reference to Board for Industrial and Financial Reconstruction (BIFR) in terms of Sec-15(1) of the Sick Industrial Companyâs (Special Provisions Act, 1985) for declaring the Company as sick under the said Act and it has been registered as per order dated 30.09.2014 and it has been declared as a sick company in the meeting held on 22.07.2015 by BIFR.
BIFR have appointed State bank of India (SBI) as operating agency and directed SBI to submit a report on the revival of the company or otherwise in the next meeting. The company appointed consultant has submitted a revival report which has been approved by the Board and submitted to the government which is under the consideration of the government. In view of this, the financial statement have been prepared on Going Concern Basis although the net worth of the company is fully eroded.
36 The Company had entered into long term supply contract with Gas Authority of India (GAIL) at Kochi for supply of Liquefied Natural Gas in 2011 for a period of 15 years ending in 2016. Material foreseeable losses can not be identified in the current scenario.
37 Previous year figures have been re-grouped / re-classified wherever necessary to make them comparable with those of the current year.
Mar 31, 2015
1. Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of
Rs. 10 per share. Each holder of equity shares is entitled to one vote
per share. In the event of liquidation of the Company, the holders of
equity shares will be entitled to receive remaining assets of the
Company, after distribution of all preferential amounts. The
distribution will be in proportion to the number of equity shares held
by the shareholders.
2. Provision for leave encashment
The Company has made provision of Rs. 795.92 lacs (previous year Rs.
389.64 lacs) for leave encashment as per revised AS-15 issued by
Institute of Chartered Accountants of India based on Actuarial
Valuation and the unpaid amount of leave encashment claims submitted by
the employees.
3. Employees receive benefits from the provident fund managed by the
Company. The employee and employer each make monthly contributions to
the Provident Fund/Pension Fund plan equal to 12% of the employees'
salary/wages. Provident Fund is managed by a separate Exempted Trust.
4. Gratuity
The Employees' Gratuity Fund Scheme, which is a defined benefit plan,
is managed by the Trust through an Annuity Scheme maintained with Life
Insurance Corporation of India (LIC). The present value of obligation
is determined based on actuairal valuation, of liability done by using
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.
5. The ceiling of gratuity has been enhanced from Rs. 3.50 lacs to Rs.
10 lacs with effect from 1st January, 2007. The gratuity liability as on
31st March, 2015 includes the provision towards arrears for the retired
employees on above account amounting to Rs. 187.54 lacs. (previous year
Rs. 189.31 lacs).
6. PROVISION FOR EMPLOYEE REMUNERATION RASAYANI
PROVISION FOR ARREARS OF WAGES
7. During the year, the Company has paid an amount of Rs. Nil
(previous year Rs. 40.73 lacs) towards arrears on account of wage
revision of employees pertaining to the period January 1, 1997 to
December 31, 2000 and the same has been charged to statement of profit
and loss and shown under employee benefit expenses. No provision has
been made for the liability towards balance amount of Rs. 1887.79 lacs
(previous year Rs. 1887.79 lacs) and it is shown under contingent
liability.
8. Wage Settlement / Salary Revision w.e.f.1/1/2007 - Officer
During the year, the Company has paid an amount of Rs. Nil (previous
year Rs. 3.19 lacs) towards arrears on account of wage revision of
employees pertaining to the period January 1, 2007 to March 31, 2008
and the same has been charged to statement of profit and loss and shown
under employee benefit expenses. No provision has been made for the
liability towards balance amount of Rs. 161.55 lacs (previous year Rs.
161.55 lacs) and it is shown under contingent liability.
9. Wage Settlement / Salary Revision w.e.f.1/1/2007 - Staff:
During the year, the Company has paid an amount of Rs. Nil (previous
year Rs. 0.67 lacs) towards arrears on account of wage revision of
employees pertaining to the period January 1, 2007 to March 31, 2008
and the same has been charged to statement of profit and loss and shown
under employee benefit expenses. No provision has been made for the
liability towards balance amount of Rs. 148.26 lacs (previous year Rs.
148.26 lacs) and it is shown under contingent liability.
10. STAFF:
The arrears payable for the period from 1st April, 2008 up to 31st
March, 2015 in case of 5 employees Rs. 1.88 lacs (previous year 6
employees amounting to Rs. 2.09 lacs) has been provided for and shown
under Short-term provisions.
11 FIXED ASSETS
12. Land in possession of the Company at Rasayani admeasuring 455.69
hectares (previous year 455.69 hectares) has been given free of cost
for use, by the Government of Maharashtra, against which a nominal
value of Rs. 1 is included in "Land and Land development" by creating
"Capital Reserve". Land at Panvel amounting to Rs. 0.80 lacs (previous
year Rs. 0.80 lacs) included in "Land and Land development" has been
given by the Government of Maharashtra for the business/residential
purpose of the company.
13. Various plants NCB(X), NCB(CD), PNCB Separation, CHA, Pollution
Control, Incinerator, Boiler No. MR-9618, Cooling Tower CT4, Old Weigh
Bridges and other specfic assets having wdv of Rs. 161.75 lacs have
been sold during the year. The profit on sale of these assets amounting
to Rs.195.97 lacs (previous year Rs. Nil) has been booked and provision
for impairment on these plants made in the earlier years of Rs. 14.07
lacs (previous year Rs. Nil) has been written back.
14. Upon implementation of Schedule II of Companies Act 2013, the
useful life of the fixed assets has been revised by the Company in
terms of the schedule. Accordingly the company has revised its
depreciation rate so as to depreciate its assets over the balance
useful life of the assets keeping the residual value at 5%. The
depreciation charge during the year pertaining to assets whose revised
useful life has expired prior to commencement of the financial year has
been adjusted against retained earnings in terms of Schedule II. An
amount of Rs. 638.01 lacs has been adjusted against the opening
Retained Earnings as per the provisions of Schedule II. Due to the
change in useful life of the assets, the depreciation charge during the
year (including adjusted against opening Retained Earnings) is higher
by Rs. 340.64 lacs.
15. The Company appointed consultant/valuers during the year, for
assessing the impairment of Fixed Assets as per the provisions of AS-28
'Impairment of Assets' for Rasayani Unit. As per the report of the
consultant the loss on account of impairment has been worked out by
comparing the fair market value as on date with the wdv as on 31st
March, 2015 and an additional amount of Rs. 14.25 lacs(previous year
Rs. 79.36 lacs) has been provided for during the year.
16. The Acetanilide, Sulphuric Acid, Nitro Toluene, Aniline-II and
Hydrogen-II plants having wdv (net of impairment) Rs. 244.44 lacs
(previous year Rs. 261.33 lacs) are in working condition but are not in
operation due to uneconomical conditions.
17. RASAYANI
The Caustic Soda Plant having wdv of Rs. 2607.90 lacs (previous year
Rs. 2632.81 lacs) net of impairment has been transferred to held for
disposal as per the decision of the Board in the meeting held on 13th
Nov 2013.
18.KOCHI
The Recycle column reboiler, Cumene column reboiler and Propane surge
drum having wdv Rs. Nil (previous year Rs. 1.37 lacs) have been
transferred to assets held for disposal during the year.
19.i) Capital Work-in-Progress and Expenditure during Construction
includes Rs. 2978.91 lacs (previous year Rs. 2978.91 lacs) towards cost
of JNPT Tank Terminal project wherein management had decided to suspend
further construction. Even though the lease period has expired in June
2010, the Company has written to JNPT authorities for extension of the
lease period and is hopeful of getting extension.
The company has gone into arbitration alongwith other Liquid Berth
Users Association against JNPT for various issues including lease
period issue.
Prior period expenses includes provision for impairment of JNPT Tank
Terminal project which formed part of Auditors qualification in earlier
years and have been provided during the current year on the basis of
"recast of accounts" for FY 2012-13 as per SEBI circular and directives
as directed by NSE vide letter dt.26.12.2014 and based on FRRB's
opinion to restate the financial statements. The Company appointed
consultant / valuers during the year for assessing the impairment of
JNPT Tank Terminals Project as per the provisions of AS-28 'Impairment
of Assets'. As per the report of the consultant the loss on account of
impairment has been worked out by comparing the fair market value as on
date with the project cost incurred to date and an amount of Rs.
2634.54 lacs (previous year Nil) has been provided for during the year
as impairment under prior period expenditure. The report was placed
before the Board and the same has been approved by the Board in its
meeting held on 12.02.2015.
ii) As per Lease Agreement with JNPT, the Lease Rentals provide for
escalation @ 10% on Lease Rent payable to JNPT. The Company had
provided for Lease Rentals with old rates upto 31.03.2014 without
considering the escalation @ 10% per annum as the matter is under
arbitration. The amount accumulated on account of escalation upto
31.03.2014 amounting to Rs. 1351.08 lacs was disclosed as contingent
liability.
Prior period expenses includes provision for Lease Rent on JNPT Land
for earlier years which formed part of Auditors qualification in
earlier years and have been provided on the basis of "recast of
accounts" for FY 2012-13 as per SEBI circular and directives as
directed by NSE vide letter dt.26.12.2014 and based on FRRB's opinion
to restate the financial statements. During the current year provision
has been made for the escalation amounting to Rs. 1351.08 lacs and has
been charged to prior period expenditure and the same has been approved
by the Board in its meeting held on 12.02.2015. The total lease rentals
for current year has been accounted amounting to Rs. 289.58 lacs
including escalation.
20. An amount of Rs. 2429.40 lacs (previous year Rs. 2400.46 lacs ) has
been spent to date on Refurbishment of CNA Plant, which is funded by
ISRO. During the year, an amount of Rs. 23.97 lacs (previous year Rs.
157.59 lacs) has been capitalised and the balance amount of Rs. 633.39
lacs (previous year Rs. 628.42 lacs) has been carried forward as
Capital Work in progress in respect of works not completed.
21. An amount of Rs. 25.41 lacs (previous year Rs. 25.41 lacs) incurred
towards feasibility study of captive power plant was carried forward as
Capital WIP from the previous year. The project is on hold now due to
high gas prices and may be taken up at a later date only. Full
impairment provision has been recognised for the same in earlier year.
22. With respect to the Company's leased land at Kharghar, the
commencement of construction certificate issued by CIDCo was valid upto
29.12.2012. Further the Company paid a premium of Rs. 15.41 lacs and
got extension for commencement of construction upto 25.05.2013. For
further extension for a period of one year upto 25.05.2014 the
agreement provides for an additional premium payment of Rs. 30.81 lacs
failing which CIDCO reserves the right for taking back the possession
of the land. Since the Company was facing financial crunch the payment
has not been made to CIDCO. So far CIDCO has not initiated any steps to
take back the land.
The Company has plans to construct buildings on the said land on the
Public Private Partnership (PPP) model basis as per the decision of the
Board in its meeting held on 14.11.2014. This will avoid cash outflow
by the company for the construction purpose.
23. a) The Company has an investment of Rs. 1106.00 lacs (previous year
Rs. 1106.00 lacs) in the
equity share of subsidiary company M/s. Hindustan Fluorocarbons Ltd.
(HFL) which is under BIFR since 1994. HFL had made profits in the 4
financial years prior to financial year 2013 -14. During the financial
year 2013-14 HFL has incurred a loss. The shares are traded below
nominal value since Dec 2012 and the net worth of the Company since Dec
2012 and the net worth of the Company based on its latest audited
balance sheet as at 31st March, 2015 is negative. Hence provision has
been made during the year towards dimunition in the value of these
investments amounting to Rs. 221.20 lacs.
24 b) The Company had invested Rs. 3.00 lacs in the Equity of M/s.
HOC-Chematur Ltd. by way of joint venture as a co-promoter. The company
holds 60% of the Paid-up Equity Capital of HOC-Chematur Ltd., hence
HOC-Chematur is a subsidiary company of HOCL. HOC-Chematur Ltd., had
initiated the process of implementing the project, however, abandoned
subsequently due to inadequate support from financial institutions. In
view of such uncertainties involved in implementing the project, the
Company had fully provided for the losses against the investment. There
is no change in the status of M/s HOC-Chematur Ltd., and the provision
against the investment is continued.
25 a) During the year 2007-08, the Modified Draft Rehabilitation Scheme
(MDRS) for revival of subsidiary - Hindustan Flurocarbon Ltd. (HFL) was
approved by BIFR for implementation. As part of implementation of MDRS,
HOCL had waived interest of Rs. 2260.26 lacs accumulated on loan given
to HFL and converted the unsecured loan amounting to Rs.2744.06 lacs as
Zero Coupon Loan (ZCL), into secured loan by creating first charge on
HFL immovable property (land valued to the extent of Rs. 2900 lacs) in
favour of HOCL. This loan was payable in 7 equal annual instalments
commencing from 2010-11. HFL has not paid the instalments for the year
2010-11, 2011-12, 2012-13, 2013-14 and 2014-15 aggregating to Rs.
1960.05 lacs (previous year Rs. 1568.04 lacs). Further, the Company had
given loans to HFL aggregating to Rs. 453.01 lacs (previous year Rs.
456.42 lacs) bearing interest ranging from 10.25% to 14.50% out of
which Rs. 381.42 lacs (previous year Rs. 305.14 lacs ) being the
installments due from financial year 2010-11 to 2014-15 remains unpaid.
26 b) Advances to joint venture Company M/s HOC-Chematur Ltd. includes
advance paid to M/s Chematur Engg. A.B amounting to Rs. 664.71 lacs and
expenses allocated in earlier years, aggregating to Rs. 1067.46 lacs
(previous year Rs. 1066.75 lacs). In view of uncertainties involved in
recovery/completion of the joint venture company project, a provision
for doubtful advance of equivalent amount was made in earlier years.
Since there is no improvement in the status of the joint venture
project, the provision for doubtful advances is continued.
27 During the year 2001-2002, a case of misappropriation of Company's
funds to the tune of Rs.64.81 lacs (net and to the extent identified)
by an official of the Company, involving fraudulent / fake payments /
withdrawals under various heads of accounts including sales tax,
debtors etc. had been detected. The case is at present under
investigation of CBI. In the meantime, based on the report of the
Vigilance Department, a civil suit has been filed for recovery of the
amount involved from the concerned employee who was dismissed from the
services of the Company. Since in the opinion of the Management the
value of assets seized by CBI is sufficient to cover the losses
occurred on account of fraud, no provision in the accounts is made and
the amount is shown as recoverable.
28 SEGMENT REPORTING.
Since the company is manufacturing only Chemicals, there are no
separate reportable primary and secondary segments and all the
chemicals manufactured by the company are considered to have been
representing as single reportable segment. The requirements of
Accounting Standard 17 with regard to disclosure of segmental results
are therefore considered not applicable to the company.
29 RELATED PARTY DISCLOSURE AS PER AS-18
a) The company is a State controlled enterprise therefore the
disclosures as per Accounting Standard 18 are not considered
applicable.
30 DEFERRED TAXES
The company had reviewed its net deferred tax assets as at 31st March,
2004 and decided not to carry forward such assets due to uncertainty of
realizing this assets against future taxable income in view of the huge
accumulated loss. This decision is followed this year also in view of
Accounting Standard Interpretation issued by the Institute of Chartered
Accountants of India.
31 BALANCE CONFIRMATION
Balances of trade receivables, trade payables, loans, advances, other
current assets and borrowings are subject to
confirmation/reconciliation and subsequent adjustments.
32 Contingent Liabilities & Commitments (Rs. Lacs)
i) Contingent Liabilities 31.03.2015 31.03.2014
a) Claims against the Company not
Acknowledged as debts:
i) Differential tax on account of
concessional forms in respect of 381.28 301.31
concessional sales
ii) Income Tax Claims 819.10 822.65
iii) Sales Tax Claim 642.48 872.11
iv) Excise Claims 594.07 481.74
v) JNPT claims - 1351.08
vi) Rental claim Harchandrai House 4378.41 3825.99
31.03.2015 31.03.2014
vii) Wage revision employees (Refer note 33) 2197.60 2197.60
viii) Other Statutory Claims 2.17 2.17
ix) Delayed Payment Charges claimed by BPCL 1057.48 806.43
x) Other Claims 739.98 519.06
xi) Penal Interest on Government Loan 1268.87 1062.51
xii) Claims not acknowledge as debts by
suppliers 49.33 -
b) Letters of Credit opened, cheques
and bills of exchange discounted with 195.38 68.57
the bankers and remaining outstanding
c) bankers and remaining outstanding
Bank guarantee given 265.15 809.09
d) Guarantees given on behalf of the
Subsidiary Company, 1103.00 1103.00
Hindustan Fluoro-carbons Limited to
Financial Institutions and Commercial
Banks for securing loans and cash credit
facilities.
e) Security Bond given to Commercial
Taxes Dept., Govt. ofK erala 3053.30 4290.74
ii) Commitments
i) Estimated amount of contracts
remaining to be executed on 246.81 262.93
capital account and not provided
for (Net of advances)
ii) Other Commitments (Refer note - 30A) 1680.50 2283.34
33 In the previous year, the Company has made an application for
reference to Board for Industrial and Financial Reconstruction (BIFR)
in terms of Sec-15(1) of the Sick Industrial Company's (Special
Provisions Act, 1985) for declaring the Company as sick under the said
Act. and it has been registered as per order dt. 30.09.2014.
The Company has engaged a consultant for preparation of the revival
plan for submission to the administrative ministry. The preparation of
the revival plan is in progress. In view of this, the financial
statements have been prepared on going concern basis although the net
worth of the Company is fully eroded.
34 The Company had entered into long term supply contract with Gas
Authority of India (GAIL) at Kochi for supply of Liquefied Natural Gas
in 2011 for a period of 15 years ending in 2016. Material foreseeable
losses can not be identified in the current scenario.
35 Previous year figures have been re-grouped / re-classified whereever
necessary to make them comparable with those of the current year.
Mar 31, 2014
SHARE CAPITAL:
During the year 2010-11, the Company forfeited 193000 shares of Rs.
10 each ( Rs. 5 paid up) for non payment of allotment and call monies
and the amount paid towards application money in respect of these
forfeited shares has been transferred to "Share''s Forfeiture Account".
The Government of India had released in earlier year Rs. 27000 lacs
(for financial restructuring Rs. 25000 lacs and Caustic Soda Plant
recommissioning '' 2000 lacs) against allotment of 8% Non-Cumulative
Redeemable Preference Shares, thereby broadening the capital base as
per the revival scheme. The 8% Preference Shares were allotted to
Government of India by the Board on 28th January, 2008, redeemable ''@
20% commencing from 4th year with last redemption in the 8th year. The
first, second & third installments of 20% i.e. '' 5400 lacs each was due
for redemption in financial year 2011-12, 2012-13 and 2013-14
respectively. At the request of the Company, Government of India has
extended the commencement of redemption from financial year 2011-12 to
financial year 2015-16 @ 25% each year.
Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of
10 per share. Each holder of equity shares is entitled to one vote per
share. In the event of liquidation of the Company, the holders of
equity shares will be entitled to receive remaining assets of the
Company, after distribution of all preferential amounts. The
distribution will be in proportion to the number of equity shares held
by the shareholders.
DEFFERRED GOVERNMENT GRANTS
An amount of Rs. 1834.27 lacs (previous year Rs. 1642.06 lacs) has been
received from ISRO (Government of India) towards Capital Grant for
refurbishment of CNA Plant. Out of this, an amount of Rs. 1799.65 lacs
(previous year Rs. 1642.06 lacs) has been spent upto 31st March, 2014
and balance unspent amount of Rs. 34.62 lacs (previous year Nil) has
been shown as deposit under the head - Other Long-term Liabilities. As
per AS - 12 - ''Accounting for Government Grants'', income has been
recognised from this grant of Rs. 89.81 lacs (previous ''year Rs. 17.77
lacs ) to the extent of depreciation charged and is included in
''Miscellaneous Income''.
LONG-TERM BORROWINGS :
A.i) Term loan from bank is secured by equitable mortgage conveying first
charge over all immovable assets at factory and township situated at
Ambalamugal & Nestle Apartments (10 flats) at Mumbai.
ii) The Company has raised Bonds for Rs. 10000 lacs (series XX
unsecured 10.57% p.a. redeemable bonds) on 28.08.2013 to redeem the
bonds (series XIX unsecured 8.73% p.a.redeemable bonds) matured on
28.08.2013.
iii) There is a continuing default in repayment of loan from Government
of India since the year 2002-03 and the overdue amount towards
principal is '' 5619.50 lacs (previous year Rs. 4791.00 lacs) and for
interest accrued is Rs. 5429.07 lacs (previous year Rs. 4480.06 lacs).
These amounts are shown under ''Other Current Liabilities''. Further an
amount of Rs. 768.50 lacs (previous year Rs. 828.50 lacs) maturing in
next 12 months is shown under Other Current Liabilities as ''Current
maturity of long-term borrowings''.
iv) The Company has not made provision for penal interest payable
amounting to '' 1062.51 lacs (previous year '' 830.30 lacs) on overdue
Government Loans upto 31st March, 2014 since the same is leviable at
the discretion of Government of India. The Company has not received any
demand from the Government of India for the same. The same has been
disclosed under Contingent Liabilities.
B. i) The Other Loans shown above are loans taken from HDFC Ltd. and
Canara Bank towards housing finance for employees. The loans from HDFC
Rs. 7.22 lacs (previous year Rs.11.44 lacs) is secured by an equitable
charge on the employee''s housing properties.
The loans from Canara Bank Rs. 192.16 lacs (previous year Rs. 210.69
lacs) are secured by way of mortgage assignment of rights available to
the Company on the housing properties.
ii) There is a continuing default in repayment of Other Loans from
Canara Bank since Jan 2014 and the overdue amount towards principal is
Rs. 9.34 lacs (previous year Nil) and for interest accrued is Rs. 7.37
lacs (previous year Nil) and from HDFC since Nov 2013 and the overdue
amount towards principal is Rs. 2.41 lacs (previous year Nil) and for
interest accrued is Rs. 0.38 lacs (previous year Nil). These amounts
aRs. re shown under ''Other Current Liabilities''. Further for Canara
Bank an amount of Rs. 40.68 lacs (previous year Rs. 35.28 lacs) and for
HDFC an amount of Rs. 3.18 lacs (previous year Rs. 6.37 lacs) maturing
in next 12 months is shown under Other Current Liabilities as ''Current
maturity of long-term borrowings''.
SHORT-TERM BORROWINGS:
A. The Bonds ware guaranteed by Government of India for repayment of
principal and interest thereupon. The Government of India guarantee was
for Rs. 10000 lacs was for total Bond issue created by way of
Registered Bond Trust Deed and the guarantee was effective for a period
of one year from 28.08.2012 i.e date of allotment. The Bonds of Rs.
10000 lacs have since been redeemed out of the proceeds of new bonds of
Rs. 10000 lacs (series XX) issued on 28.08.2013.
B. Loan from Central Bank of India is secured against pledge of Bank
term deposit receipts of Rs. 2228.77 lacs (previous year Rs. 2197.76
lacs).
C. Cash Credit from State Bank of India is secured by :
i. Hypothecation of the Company''s entire stock of raw materials,
finished goods, stock-in- process, consumable stores and spares and
book debts in favour of the bank.
ii. Equitable mortgage conveying first charge over all immovable assets
at factory and township situated at Ambalamugal, Dist : Ernakulam and
over the immovable properties situated at village Deolali, Posari,
Wasambe, Parade, Savale, Turade, Dapivali and Ambivali of Panvel and
Khalapur talukas, District Raigad in the State of Maharashtra and plant
and machinery, equipments, fixtures and fittings, movable machinery,
spares, articles and things in the State of Maharashtra (excluding
current assets).
INVENTORIES
A Excise duty provided on goods manufactured but not removed '' 89.00
lacs (previous year '' 190.84 lacs).
B Stores and spares include items not moved for more than five years
Rs. 532.41 lacs (previous year Rs. 467.50 lacs) and obsolete items of
Rs. 5.84 lacs (previous year Rs. 128.81 lacs). An adhoc provision of
Rs. 390.17 lacs (previous year Rs. 452.46 lacs) has been made for
obsolescence. Further provision for obsolescence has been made for raw
materials Rs. 26.31 (previous year Nil).
SHORT-TERm LOANS AND ADVANCES
Duties and Taxes Receivable includes an amount of Rs. 872.11 Lacs
(previous year Rs. 569.12 Lacs) being VAT refund due from year 2005-06
to to 2012-13 recovered from the input tax refunds by Commercial Taxes
dept. This has been challenged by the company by filing appeals with
Dy. Commissioner (Appeals). The said disputed VAT refund will have to
be written off in the event of the company loosing the appeal before
the Appellate Authorities and hence the same has been shown under
contingent liability.
OTHER EXPENSES
At Kochi unit, the SPA1 Catalyst of 76.330 MT valuing Rs. 333.41 lacs
was charged into the reactor in the Cumene plant in the month of May
2013. The estimated life of the Catalyst is to achieve a production of
1100MT of Cumene per MT of catalyst under good operating conditions.
During the 2013-14 the Company has produced 12218.458MT of Cumene from
May 2013 to March 2014. Due to intermittent shutdown of Cumene plant
during the year which affects the life of Catalyst, the Company may
fall short of achieving guarantee norms.
RASAYANI
i) The Company has introduced VRS Scheme under Gujarat pattern on
12.09.2013 and was open for 1 month upto 12.10.2013 and further
re-opened from 11.11.2013 to 18.11.2013. The Company received 151
applications in total out of which first 7 applicants were relieved on
10.10.2013 and the compensation amounting to '' 84.83 lacs has been paid
and 1 applicant was relieved on 16.12.2013 and the compensation
amounting to Rs. 29.30 lacs has been provided. Further 12 applicants
have superannuated in the normal course on attaining the retirement
age. The balance 131 applications are kept pending for want of funds
and the VRS Compensation of Rs. 1793.84 lacs has been shown under Other
Commitments. (refer note-43)
ii) The Board in its 347th meeting had approved a Voluantary Separation
Scheme (VSS) for the canteen workers of Rasayani Unit through the
Canteen Contractor for curtailing the expenditure towards canteen
facility. It is estimated that the amount payable to each canteen
worker on account of this would be Rs. 5.50 lacs. The Company has not
invited any application from the canteen workers through the
contractors for the VSS. However, since the Board has approved such a
scheme, an amount of Rs. 489.50 lacs being the estimated amount of the
compensation of VSS scheme payable on implementation of this scheme to
89 canteen workers is shown under Other Commitments (refer note-43).
EMPLOYEES BENEFIT PLAN:
A Provision for leave encashment
The Company has made provision of Rs. 389.64 lacs (previous year Rs.
724.63 lacs) for leave encashment as per revised AS-15 issued by
Institute of Chartered Accountants of India based on Actuarial
Valuation and the unpaid amount of leave encashment claims submitted by
the employees.
B Employees receive benefits from the provident fund managed by the
Company. The employee and employer each make monthly contributions to
the Provident Fund/Pension Fund plan equal to 12% of the employees''
salary/wages. Provident Fund is managed by a separate Exempted Trust.
C Gratuity
The Employees'' Gratuity Fund Scheme, which is a defined benefit plan,
is managed by the Trust through an Annuity Scheme maintained with Life
Insurance Corporation of India (LIC). The present value of obligation
is determined based on actuarial valuation, of liability done by using
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 ceiling of gratuity has been enhanced from Rs. 3.50 lacs to Rs. 10
lacs with effect from 1st January, 2007. The gratuity liability as on
31st March, 2014 includes the provision towards arrears for the retired
employees on above account amounting to Rs. 187.54 lacs. (previous year
Rs. 189.31 lacs).
PROVISION FOR EMPLOYEE REMUNERATION
RASAYANI
PROVISION FOR ARREARS OF WAGES
A During the year, the Company has paid an amount of Rs. 40.73 lacs
(previous year Rs. 379.57 lacs) towards arrears on account of wage
revision of employees pertaining to the period January 1, 1997 to
December 31, 2000 and the same has been charged to statement of profit
and loss and shown under employee benefit expenses. No provision has
been made for the liability towards balance amount of Rs. 1887.79 lacs
(previous year Rs. 1928.51 lacs) and it is shown under contingent
liability.
B Wage Settlement / Salary Revision w.e.f.1/1/2007 - Officer
During the year, the Company has paid an amount of Rs. 3.19 lacs
(previous year Rs. 114.22 lacs) towards arrears on account of wage
revision of employees pertaining to the period January 1, 2007 to March
31, 2008 and the same has been charged to statement of profit and loss
and shown under employee benefit expenses. No provision has been made
for the liability towards balance amount of Rs. 161.55 lacs (previous
year Rs. 164.74 lacs) and it is shown under contingent liability.
C Wage Settlement / Salary Revision w.e.f.1/1/2007 - Staff:
During the year, the Company has paid an amount of Rs. 0.67 lacs
(previous year Rs. 97.38 lacs) towards arrears on account of wage
revision of employees pertaining to the period January 1, 2007 to March
31, 2008 and the same has been charged to statement of profit and loss
and shown under employee benefit expenses. No provision has been made
for the liability towards balance amount of Rs. 148.26 lacs (previous
year Rs. 148.93 lacs) and it is shown under contingent liability.
D STAFF:
The arrears payable for the period from 1stApril, 2008 up to 31st
March, 2014 in case of 6 employees Rs. 2.09 lacs (previous year 8
employees amounting to Rs. 11.80 lacs) has been provided for and shown
under Short-term provisions.
FIXED ASSETS
A Land in possession of the Company at Rasayani admeasuring 455.69
hectares (previous year 455.69 hectares) has been given free of cost
for use, by the Government of Maharashtra, against which a nominal
value of Rs. 1 is included in "Land and Land development" by creating
"Capital Reserve". Land at Panvel amounting to Rs. 0.80 lacs (previous
year Rs. 0.80 lacs) included in "Land and Land development" has been
given by the Government of Maharashtra for the business/residential
purpose of the company.
B AN-I, FD-I, NB-I, HYD-I, DNB, BDP, MCB, NCB Old, COGEN Boiler,
ACETYL, COMP AIR-I, PUSH, DM WATER-I & II, MPP Plant, Steam Boiler-III
having wdv at Rs. 1317.77 lacs have been sold during the year. The loss
on sale of these plants amounting to Rs. 166.47 lacs (previous year
Nil) has been booked and provision for impairment on these plants made
in the earlier years of Rs. 99.84 lacs (previous year Nil) has been
written back.
C The Company appointed consultant/valuers during the year, for
assessing the impairment of Fixed Assets as per the provisions of AS-28
''Impairment of Assets'' for Rasayani Unit. As per the report of the
consultant the loss on account of impairment has been worked out by
comparing the fair market value as on date with the wdv as on 31st
March, 2014 and an additional amount of Rs. 79.36 lacs(previous year
Rs. 40.49 lacs) has been provided for during the year.
D The Acetanilide, Sulphuric Acid, Nitro Toluene, Aniline-II and
Hydrogen-II plants having wdv (net of impairment) Rs. 261.33 lacs
(previous year Rs. 307.34 lacs) are in working condition but are not in
operation due to uneconomical conditions.
E RASAYANI
The Caustic Soda Plant having wdv of Rs. 2632.81 lacs net of impairment
has been transferred to held for disposal as per the decision of the
Board in the meeting held on 13th Nov 2013. Further various plants
NCB(X), NCB(CD), PNCB Separation, CHA, Pollution Control, Incinerator,
Boiler No. MR-9618, Cooling Tower CT4, Old Weigh Bridges and other
specific assets having wdv of Rs. 161.75 lacs net of impairment have
been transferred to held for disposal as per decision of the Board in
the meeting held on 12th Feb. 2014
KOCHI
The Recycle column reboiler, Cumene column reboiler and Propane surge
drum having wdv Rs. 1.37 lacs (previous year Nil) have been transferred
to assets held for disposal during the year.
F i) Capital Work-in-Progress and Expenditure during Construction
includes Rs. 2978.91 lacs (previous year Rs. 2978.91 lacs) towards cost
of JNPT Tank Terminal project wherein management had decided to suspend
further construction. Even though the lease period has expired in June
2010, the Company has written to JNPT authorities for extension of the
lease period and is hopeful of getting extension. Hence the assets are
carried at cost in view of the decision of the management.
ii) As per Lease Agreement with JNPT, the Lease Rentals provide for
escalation @ 10 % on Lease Rent payable to JNPT. The Company has
provided for Lease Rentals with old rates without considering the
escalation @ 10% per annum as the matter is under arbitration. The
amount accumulated till date comes to Rs. 1351.08 lacs (previous year
Rs. 1137.83 lacs), which has been disclosed as contingent liability.
G An amount of Rs. 2403.92 lacs (previous year Rs. 2287.23 lacs) has
been spent to-date on Refurbishment of CNA Plant, which is funded by
ISRO. During the year, an amount of Rs. 157.59 lacs (previous year Rs.
1617.90 lacs) has been capitalised and the balance amount of Rs. 628.42
lacs (previous year Rs. 669.32 lacs) has been carried forward as
Capital Work in progress in respect of works not completed.
H An amount of Rs. 25.41 lacs (previous year Rs. 25.41 lacs) incurred
towards feasibility study of captive power plant was carried forward as
Capital WIP from the previous year. The project is on hold now due to
high gas prices and may be taken up at a later date only. Hence
impairment provision has been made for Rs. 25.41 lacs (previous year
Nil) during the current year for the asset.
I With respect to the Company''s leased land at Kharghar, the
commencement of construction certificate issued by CIDCO was valid upto
29.12.2012. Further the Company paid a premium of Rs. 15.41 lacs and
got extension for commencement of construction upto 25.05.2013. For
further extension for a period of one year upto 25.05.2014 the
agreement provides for an additional premium payment of Rs. 30.81 lacs
failing which CIDCO reserves the right for taking back the possession
of the land. Since the Company was facing financial crunch the payment
has not been made to CIDCO. So far CIDCO has not initiated any steps to
take back the land.
The Company has plans to construct buildings on the said land subject
to availability of funds.
a) The Company has an investment of Rs. 1106.00 lacs (previous year Rs.
1106.00 lacs) in the equity share of subsidiary company M/s. Hindustan
Fluorocarbons Ltd. (HFL) which is under BIFR since 1994. HFL had made
profits in the 4 financial years prior to financial year 2013 -14.
During the financial year 2013-14 HFL has incurred a loss. The shares
are traded below nominal value since Dec 2012 and the net worth of the
Company based on its latest audited balance sheet as at 31st March,
2014 is negative. However as the net worth of the Company based on
market value of its assets is positive after considering the land at
market value as per the valuation certificate obtained from an
independent valuer, there is no other than temporary dimunition in the
value of these investments in the opinion of the management and hence
no provision has been made for the same in the financial statements.
b) The Company had invested Rs. 3.00 lacs in the Equity of M/s.
HOC-Chematur Ltd. by way of joint venture as a co-promoter. The company
holds 60% of the Paid-up Equity Capital of HOC-Chematur Ltd., hence
HOC-Chematur is a subsidiary company of HOCL. HOC- Chematur Ltd., had
initiated the process of implementing the project, however, abandoned
subsequently due to inadequate support from financial institutions. In
view of such uncertainties involved in implementing the project, the
Company had fully provided for the losses against the investment. There
is no change in the status of M/s HOC-Chematur Ltd., and the provision
against the investment is continued.
c) During the year 2007-08, the Modified Draft Rehabilitation Scheme
(MDRS) for revival of subsidiary - Hindustan Flurocarbon Ltd. (HFL) was
approved by BIFR for implementation. As part of implementation of
MDRS, HOCL had waived interest of Rs. 2260.26 lacs accumulated on loan
given to HFL and converted the unsecured loan amounting to Rs. 2744.06
lacs as Zero Coupon Loan (ZCL), into secured loan by creating first
charge on HFL immovable property (land valued to the extent of Rs.
2900.00 lacs) in favour of HOCL. This loan was payable in 7 equal
annual installments commencing from 2010-11. HFL has not paid the
installments for the year 2010-11, 2011-12, 2012-13 & 2013-14
aggregating to Rs. 1568.04 lacs (previous year Rs. 1176.02 lacs).
Further, the Company had given loans to HFL aggregating to Rs. 456.42
lacs (previous year Rs. 456.42 lacs) bearing interest ranging from
10.25% p.a. to 14.50% p.a. out of which Rs. 305.14 lacs (previous year
Rs. 153.85 lacs ) being the installments due from financial year
2010-11 to 2013-14 remains unpaid.
d) Advances to joint venture Company M/s HOC-Chematur Ltd. includes
advance paid to M/s Chematur Engg. A.B amounting to Rs. 664.71 lacs and
expenses allocated in earlier years, aggregating to Rs. 1066.75 lacs
(previous year Rs. 1066.55 lacs). In view of uncertainties involved in
recovery/completion of the joint venture company project, a provision
for doubtful advance of equivalent amount was made in earlier years.
Since there is no improvement in the status of the joint venture
project, the provision for doubtful advances is continued.
During the year 2001-2002, a case of misappropriation of Company''s
funds to the tune of Rs. 64.81 lacs (net and to the extent identified)
by an official of the Company, involving fraudulent / fake payments /
withdrawals under various heads of accounts including sales tax,
debtors etc. had been detected. The case is at present under
investigation of CBI. In the meantime, based on the report of the
Vigilance Department, a civil suit has been filed for recovery of the
amount involved from the concerned employee who was dismissed from the
services of the Company. Since in the opinion of the Management the
value of assets seized by CBI is sufficient to cover the losses
occurred on account of fraud, no provision in the accounts is made and
the amount is shown as recoverable.
SEGMENT REPORTING.
Since the company is manufacturing only Chemicals, there are no
separate reportable primary and secondary segments and all the
chemicals manufactured by the company are considered to have been
representing as single reportable segment. The requirements of
Accounting Standard 17 with regard to disclosure of segmental results
are therefore considered not applicable to the company.
DEFERRED TAXES
The company had reviewed its net deferred tax assets as at 31st March,
2004 and decided not to carry forward such assets due to uncertainty of
realizing this assets against future taxable income in view of the huge
accumulated loss.
This decision is followed this year also in view of Accounting Standard
Interpretation issued by the Institute of Chartered Accountants of
India.
BALANCE CONFIRMATION
Balances of trade receivables, trade payables, loans, advances, other
current assets and borrowings are subject to
confirmation/reconciliation and subsequent adjustments.
Contingent Liabilities & Commitments
i) Contingent Liabilities 31.03.2014 31.03.2013
a) Claims against the Company not
Acknowledged as debts:
i) Differential tax on account of 301.31 506.02
concessional forms in respect of
concessional sales
ii) Income Tax Claims 822.65 819.10
iii) Sales Tax Claims 872.11 574.82
iv) Excise Claims 481.74 610.34
v) Customs claims - 10.80
vi) JNPT claims 1351.08 1137.83
vii) Rental claim Harchandrai House 3825.99 3361.42
viii) Wage revision employees (Refer note 33) 2197.60 2242.18
ix) Other Statutory Claims 2.17 2.17
x) Delayed Payment Charges claimed by BPCL 806.43 -
xi) Other Claims 519.06 513.59
xii) Penal Interest on Government Loan 1062.51 830.30
b) Letters of Credit opened, cheques and 68.57 428.91
bills of exchange discounted with the
bankers and remaining outstanding
c) Bank guarantee given 809.09 265.09
d) Guarantees given on behalf of the 1103.00 1253.00
Subsidiary Company, Hindustan
Fluoro-carbons Limited to Financial
Institutions and Commercial Banks for
securing loans and cash credit facilities.
e) Security Bond given to Commercial Taxes 4290.74 3053.30
Dept., Govt. of Kerala
BPCL has claimed delayed payment charges during
the year for delay in payments / outstanding
amount due for raw material supplied amounting
to Rs. 1679.66 lacs (previous year Nil) with
interest rates varying from 14.45% to
16.75% p.a. As per the purchase order terms,
the credit period for payment is 30 days.
In the absence of an agreement for supply of
raw material executed during the year 2012-13
& 2013-14 the Company has gone by agreement
for supply of raw material entered into for
the year 2011-12 wherein interest is payable
for delay in payment beyond the agreed credit
period at SBI lending rate which is considered
as 9.75% for 2012-13 and 10% for 2013-14
(base rate of SBI). Accordingly an amount of
Rs. 873.23 lacs (previous year Nil) has been
provided during the year (including Rs. 206.36
lacs relating to earlier year) and balance
amount of Rs. 806.43 lacs (previous year Nil)
claimed by BPCL but not provided and has been
shown as contingent liability pending a final
decision on the claim.
ii) Commitments
i) Estimated amount of contracts remaining 262.93 873.34
to be executed on capital account and not
provided for (Net of advances)
ii) Other Commitments (Refer note - 30A) 2283.34 -
During the year, the Company has made an application for reference to
Board for Industrial and Financial Reconstruction (BIFR) in terms of
Sec-15(1) of the Sick Industrial Company''s (Special Provisions Act,
1985) for declaring the Company as sick under the said Act. The
registration of the Company under BIFR is awaited.
The Company has engaged a consultant for preparation of the revival
plan for submission to the BRPSE through the administrative ministry.
The preparation of the revival plan is in progress. In view of this,
the financial statements have been prepared on going concern basis
although the net worth of the Company is fully eroded.
Previous year figures have been re-grouped / re-classified where ever
necessary to make them comparable with those of the current year.
Mar 31, 2013
1A The Company has introduced VRS Scheme under Gujarat pattern on
20.02.2012 and was open for 1 month upto 19.03.2012. 28 applications
were received from employees who opted for VRS and all were accepted by
the management. 20 employees were relieved on 31.03.2012 and VRS
liability amounting to Rs. 221.59 lacs was provided for during the year
2011- 12 and shown under exceptional items in statement of profi t and
loss. Out of remaining 8 employees, 7 employees were relieved during
the year and 1 employee was relieved after 31.03.2013 and the VRS
liability amounting to Rs. 130.06 lacs has been paid / provided for
during the year and shown under exceptional items in the statement of
Profi t and loss
2 EMPLOYEES BENEFIT PLAN:
2A Provision for leave encashment
The Company has made provision of Rs. 724.63 lacs (previous year Rs. 625.62
lacs) for leave encashment as per revised AS-15 issued by Institute of
Chartered Accountants of India based on Actuarial Valuation 31B
Employees receive benefi ts from the provident fund managed by the
Company. The employee and employer each make monthly contributions to
the Provident Fund/Pension Fund plan equal to 12% of the employees''
salary/wages. Provident Fund is managed by a separate Exempted Trust.
2B Gratuity
The Employees'' Gratuity Fund Scheme, which is a defi ned benefi t plan,
is managed by the Trust through an Annuity Scheme maintained with Life
Insurance Corporation of India (LIC). The present value of obligation
is determined based on actuairal valuation, of liability done by using
Projected Unit Credit Method, which reognises each period of service as
giving rise to additional unit of employee benefi t entitlement and
measures each unit separately to build up the fi nal obligation. The
ceiling of gratuity has been enhanced from Rs. 3.50 lacs to Rs. 10 lacs
with effect from 1st January, 2007. The gratuity liability as on 31st
March, 2013 includes the provision towards arrears for the retired
employees on above account amounting to Rs. 189.31 lacs. (previous yearRs.
207.30 lacs).
3 PROVISION FOR EMPLOYEE REMUNERATION RASAYANI PROVISION FOR ARREARS
OF WAGES
33A During the year, the Company has paid an amount of Rs. 379.57 lacs
(previous year Nil) towards arrears on account of wage revision of
employees pertaining to the period January 1, 1997 to December 31, 2000
and the same has been charged to statement of profi t and loss and
shown under employee benefi t expenses. No provision has been made for
the liability towards balance amount of Rs. 1928.51 lacs (previous year Rs.
2308.08 lacs) and it is shown under contingent liability.
3B Wage Settlement / Salary Revision w.e.f.1/1/2007 - Offi cer During
the year, the Company has paid an amount ofRs. 114.22 lacs (previous year
Nil) towards arrears on account of wage revision of employees
pertaining to the period January 1, 2007 to March 31, 2008 and the same
has been charged to statement of profi t and loss and shown under
employee benefi t expenses. No provision has been made for the
liability towards balance amount of Rs. 164.74 lacs (previous year Rs.
278.96 lacs) and it is shown under contingent liability.
3C Wage Settlement / Salary Revision w.e.f.1/1/2007 - Staff: During
the year, the Company has paid an amount of Rs. 97.38 lacs (previous year
Nil) towards arrears on account of wage revision of employees
pertaining to the period January 1, 2007 to March 31, 2008 and the same
has been charged to statement of profi t and loss and shown under
employee benefi t expenses. No provision has been made for the
liability towards balance amount of Rs. 148.93 lacs (previous year Rs.
246.31 lacs) and it is shown under contingent liability.
3D STAFF:
The arrears payable for the period from 1st April, 2008 up to 31st
March, 2013 in case of 8 employeesRs. 11.80 lacs (previous year 280
employees amounting to Rs. 346.12 lacs) has been provided for and shown
under Short Term Provisions.
KOCHI
Provision for employee remuneration includes an amount of Rs. Nil
(previous year Rs. 69.90 lacs) towards the balance amount of arrears in
respect of pay and allowance w.e.f 01.01.2007 of Board level and below
Board level executives, Rs. 20.81 lacs (previous year Rs. 50 lacs) towards
performance related incentive in the form of gold coin to be
distributed to employees.
4 FIXED ASSETS
4A Land in possession of the Company at Rasayani admeasuring 455.69
hectares (previous year 455.69 hectares) has been given free of cost
for use, by the Government of Maharashtra, against which a nominal
value of Rs. 1 is included in "Land and Land development" by creating
"Capital Reserve". Land at Panvel amounting to Rs. 0.80 lacs (previous
yearRs. 0.80 lacs) included in "Land and Land development" has been given
by the Government of Maharashtra for the business/ residential purpose
of the company
4B AN-I, FD-I, NB-I, HYD-I, DNB, BDP, MCB, NCB Old, COGEN Boiler
ACETYL, COMP AIR-I, PUSH, DM WATER-I & II, MPP Plant, Steam Boiler-III
having wdv at Rs. 1317.71 lacs (previous year Rs. 1346.84 lacs) are held
for disposal. These assets have been carried at lower of net book value
and net realisable value ascertained on the basis of technical
assessment made by the management / outside expert.
4C The Company appointed consultant/valuers during the year, for
assessing the impairment of Fixed Assets as per the provisions of AS-28
''Impairment of Assets'' for Rasayani Unit. As per the report of the
consultant the loss on account of impairment has been worked out by
comparing the fair market value as on date with the wdv as on 31st
March, 2013 and an additional amount of Rs. 40.49 lacs(previous year Rs.
31.47 lacs) has been provided for during the year.
4D The Acetanilide, Sulphuric Acid, Nitro Toluene, Caustic Soda, Nitro
Chloro Benzene, Cyclo Hexyl Amine (CHA), Aniline-II and Hydrogen-II
plants having wdv (net of impairment) Rs. 3505.51 lacs (previous year Rs.
4215.31 lacs) are in working condition but are not in operation due to
uneconomical conditions.
4E Capital Work-in-Progress and Expenditure during Construction
includes Rs. 2978.91 lacs (previous yearRs. 2976.65 lacs) towards cost of
JNPT Tank Terminal project wherein management had decided to suspend
further construction. Even though the lease period has expired in June
2010, the Company has written to JNPT authorities for extension of the
lease period and is hopeful of getting extension Hence the assets are
carried at cost in view of the decision of the management. As per Lease
Agreement with JNPT, the Lease Rentals provide for escalation @ 10 % on
Lease Land payable to JNPT. The Company has provided for Lease Rentals
with old rates without considering the escalation @ 10% per annum as
the matter is under arbitration. The amount accumulated till date on
account of lease rent not provided and way leave charge comes to Rs.
1137.83 lacs (previous year Rs. 2531.80 lacs),which has been disclosed as
contingent liability.
4F An amount ofRs. 2287.23 lacs (previous yearRs. 506.01 lacs) has been
spent todate on Refurbishment of CNA Plant which is funded by ISRO. The
plant was re-started after re-furbishment and production commenced
w.e.f. 12.01.2013. During the year, an amount of Rs. 1617.90 lacs
(previous year Rs. Nil) has been capitalised and the balance amount of Rs.
669.32 lacs (previous year Rs. 506.01 lacs) has been carried forward as
Capital Work in progress in respect of works not completed.
4G The Company had incurred expenditure of Rs. 46.35 lacs in earlier
years towards feasibility study for Combined Heat and Power Project and
Captive Co-gen Power Plant to be erected at Rasayani, which was shown
under Capital Work in Progress. An amount of Rs. 20.94 lacs towards
Combined Heat and Power Project was charged to the Statement of Profi t
and Loss in previous year as the project was not being taken up.
4H An amount of Rs. 25.41 lacs (previous year Rs. 25.41 lacs) incurred
towards feasibility study of captive power plant is carried forward as
the project is on hold now due to high gas prices and will be taken up
at a later date.
5 a) The Company has an investment of Rs. 1106 lacs (previous year Rs.
1106 lacs) in the equity share of subsidiary company M/s. Hindustan
Fluorocarbons Ltd. (HFL) which is under BIFR since 1994. HFL has
declared profi ts in the last 4 fi nancial years, as the shares are
traded below nominal value since Dec 2012 and the net worth of the
Company based on its latest audited balance sheet as at 31st March,
2013 is negative. However as the net worth of the Company based on
market value of its assets is positive as per the valuation certifi
cate obtained from an independent valuer, there is no other than
temporary dimunition in the value of these investments in the opinion
of the Management and hence no provision has been made for the same in
the fi nancial statement. b) The Company had invested Rs. 3.00 lacs in
the Equity of M/s. HOC- Chematur Ltd. by way of joint venture as a
co-promoter. The company holds 60% of the Paid-up Equity Capital of
HOC-Chematur Ltd., hence HOC-Chematur is a subsidiary company of HOCL.
HOC- Chematur Ltd., had initiated the process of implementing the
project, however, abandoned subsequently due to inadequate support from
fi nancial institutions. In view of such uncertainties involved in
implementing the project, the Company had fully provided for the losses
against the investment. There is no change in the status of M/s
HOC-Chematur Ltd., and the provision against the investment is
continued.
6 a) During the year 2007-08, the Modifi ed Draft Rehabilitation
Scheme (MDRS) for revival of subsidiary - Hindustan Flurocarbon Ltd. (HFL)
was approved by BIFR for implementation. As part of implementation of MDRS,
HOCL had waived interest of Rs. 2260.26 lacs accumulated on loan given to
HFL and converted the unsecured loan amounting to Rs. 2609.72 lacs as
Zero Coupon Loan (ZCL), which is secured by creating fi rst charge on
HFL immovable property (land valued to the extent of Rs. 4000 lacs) in
favour of HOCL. Further, the Company had given loans aggregating to Rs.
590.77 lacs (previous year Rs. 890.77 lacs) which included additional
loans of Rs. 134.34 lacs given to settle its dues to the fi nancial
institutions. On this 10% interest was charged by HOCL during the
earlier years as per agreement entered into between HOCL and HFL. Out
of the above loan HFL has made re-payment of Rs. 300 lacs (previous year
Nil) during the year b) Advances to joint venture Company M/s
HOC-Chematur Ltd includes advance paid to M/s Chematur Engg. A.B
amounting to Rs. 664.71 lacs and expenses allocated in earlier years,
aggregating to total Rs. 1066.55 lacs (previous year Rs. 1066.26 lacs). In
view of uncertainties involved in recovery/completion of the joint
venture company project, a provision for doubtful advance of equivalent
amount was made during the earlier years. Since there is no improvement
in the status of the joint venture project the provision for doubtful
advances is maintained.
7 During the year 2001-2002, a case of misappropriation of Company''s
funds to the tune of Rs. 64.81 lacs (net and to the extent identifi ed)
by an offi cial of the Company, involving fraudulent / fake payments /
withdrawals under various heads of accounts including sales tax,
debtors etc. had been detected. The case is at present under
investigation of CBI. In the meantime, based on the report of the
Vigilance Department, a civil suit has been fi led for recovery of the
amount involved from the concerned employee who was dismissed from the
services of the Company. Since in the opinion of the Management the
value of assets seized by CBI is suffi cient to cover the losses
occurred on account of fraud, no provision in the accounts is made and
the amount is shown as recoverable.
8 SEGMENT REPORTING
Since the company is manufacturing only Chemicals, there are no
separate reportable primary and secondary segments and all the
chemicals manufactured by the company are considered to have been
representing as single reportable segment. The requirements of
Accounting Standard 17 with regard to disclosure of segmental results
are therefore considered not applicable to the company.
9 DEFERRED TAXES
The company had reviewed its net deferred tax assets as at 31st March,
2004 and decided not to carry forward such assets due to uncertainty of
realizing this assets against future taxable income in view of the huge
accumulated loss. This decision is followed this year also in view of
Accounting Standard Interpretation issued by the Institute of Chartered
Accountants of India.
10 BALANCE CONFIRMATION
Balances of trade receivables, trade payables, loans, advances, other
current assets and borrowings are subject to confi rmation /
reconciliation and subsequent adjustments.
11 Contingent Liabilities (Rs. lacs)
31.03.2013 31.03.2012
a) Claims against the Company not
Acknowledged as debts:
i) Differential tax on account of
concessional 506.02 457.58
forms in respect of
concessional sales
ii) Income Tax Claims 819.10 892.22
iii) Sales Tax Claim 5.70 5.70
iv) Excise Claims 424.34 212.01
v) Customs claim 10.80 10.80
vi) JNPT claims 1137.83 2531.80
vii) Rental claim Harchandrai House 3361.42 2921.65
viii) Wage revision employees (Refer
note 33) 2242.18 2833.35
ix) Statutory Claims 757.29 240.88
ix) Other Claims 513.59 499.52
x) Penal Interest on Government Loan 830.30 672.56
b) Letters of Credit opened,
cheques and bills 428.91 401.44
of exchange discounted with
the bankers and remaining outstanding
c) Bank guarantee given 157.09 141.56
d) Guarantees given on behalf
of the Subsidiary 1253.00 1253.00
Company, Hindustan Fluoro-carbons Limited to Financial Institutions and
Commercial Banks for securing loans and cash credit facilities.
e) Security Bond given to Commercial Taxes Dept, 3053.30 4290.74 Govt.
of Kerala
12 Capital Commitments
i) Estimated amount of contracts remaining 873.34 20.38 to be executed
on capital account and not provided for (Net of advances)
ii) Other Commitments (Refer note - 30A) - 129.15
13 During the year, the Company made a report to the Board for
Industrial and Financial Reconstruction (BIFR) in terms of Sec-23 of
the Sick Industrial Company''s (Special Provisions Act, 1985) on erosion
of more than fi fty percentage of the peak net worth during the
immediately Preceding four fi nancial year. Further as per the audited
fi nancial statements accounts of the year 2012 - 13, the net worth has
been completely eroded and stands negative atRs. 13115.06 lacs as on
31.03.2013. Accordingly, the Company will make reference to BIFR as per
the provisions of Sick Industrial Company''s Special Provision Act 1985
after the Annual General Meeting Consequent to the meeting in the
administrative ministry, the management has been asked to prepare a
Revival Plan for the Company and submit to ministry for their
consideration and approval. In view of this, the fi nancial statements
have been prepared on going concern basis although the net worth of the
Company is fully eroded.
14 Previous year fi gures have been re-grouped / re-classifi ed
whereever necessary to make them comparable with those of the current
year.
Mar 31, 2012
1A During the previous year, the Company has forfeited 1,93,000 shares
of Rs. 10 each (Rs. 5 paid up) for non payment of allotment and call monies
and the amount paid towards application money in respect of these
forfeited shares has been transferred to "Share's Forfeiture
Account".
1B The Government of India had released Rs. 270 crores (for financial
restructuring Rs. 250 crores and Caustic Soda Plant recommissioning Rs. 20
crores) against allotment of 8% Non- Cumulative Redeemable Preference
Shares, thereby broadening the capital base as per the revival scheme.
The 8% Preference Shares were allotted to Government of India by the
Board on 28th Januaiy, 2008, redeemable @ 20% commencing from 4th year
with last redemption in the 8th year. The first installment of 20% i.e.
Rs. 54 crores was due for redemption in financial year 2011-12. The
Company has requested the Government of India to extend the
commencement of redemption starting in financial year 2014-15 @ 25%
each year.
1C Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of Rs.
10 per share. Each holder of equity share is entitled to one vote per
share. In the event of liquidation of the company, the holders of
equity shares will be entitled to receive remaining assets of the
company, after distribution of all preferential amounts. The
distribution will be in proportion to the number of equity shares held
by the shareholders.
1D The preference shareholders have no voting rights.
2A An amount of Rs. 1136.47 lacs (Previous year Rs. 698.45 lacs) has been
received from ISRO (Government of India) towards Capital Grant for
refurbishment of CNA Plant to date. Out of this, an amount of Rs. 506.01
lacs (Previous year Rs. 211.52 lacs) has been spent upto 31 st March,
2012 and accordingly same has been shown as Deferred Government Grant
and balance amount of Rs. 630.46 lacs (Previous year Rs. 486.93 lacs) has
been shown as deposit under the head - 'Other Long-term Liabilities',
pending utilisation. As per AS - 12 - 'Accounting for Government
Grants', after capitalization of the refurbishment of CNA Plant work,
income will be recognised from this grant over the usefull life of the
asset, to the extent of depreciation charged.
3A The Bonds are guaranteed by Government of India for repayment of
principal and interest thereupon. The Government of India guarantee for
Rs. 10000 lacs is for total Bond issue created by way of Registered Bond
Tut Deed and the guarantee is effective for a period of two years from
28.08.2010 i.e.date of allotment. These Bonds have been shown in the
current year under Other Current Liabilities as 'current maturity of
Long-term Borrowings'.
3B i) There is a continuing default in repayment of loan from
Government of India since the year 2002-03 and the overdue amount
towards principal is Rs. 4103.50 lacs (Previous year Rs. 3354.40 lacs) and
for interest accwed is Rs. 3733.45 lacs (Previous year Rs. 2986.84 lacs).
These amounts are shown under Other Current Liabilities. Further an
amount of Rs. 712.50 lacs maturing in next 12 months is shown under Other
Current Liabilities as 'Current maturity of Long-term Borrowings'.
ii) The Company has not made provision for penal interest payable
amounting to Rs. 672.56 lacs (Previous year Rs. 519.10 lacs) on overdue
Government Loan upto 31st March, 2012 since the same is leviable at the
discretion of Government of India. The Company has not received any
demand from the Government of India for the same.
3C The other loans shown above are loans taken from HDFC Ltd. and
Canara Bank towards housing finance for employees. The loans from HDFC
Rs. 12.30 lacs (previous year Rs. 18.85 lacs) is secured by an equitable
charge on the housing properties. The loans from Canara Bank Rs. 217.11
lacs (previous year Rs. 241.32 lacs) are secured by way of mortgage
assignment of rights available to the Company on the housing
properties.
4A Loan from Central Bank of India is secured against pledge of the
term deposit receipts of Rs. 2699.96 lacs (previous year Rs. 2574.96 lacs).
4B Cash Credit from State Bank of India is secured by :
a. Hypothecation of the Company's entire stock of raw materials,
finished goods, stock-in-process, consumable stores and spares and book
debts in favour of the bank to the extent of Rs. 15500 lacs (Previous
year Rs. 15500 lacs)
b. Equitable mortgage conveying 1st Pari Passu charge over all
immovable assets at factory and township situated at Ambalamugal, Dist
: Ernakulam and 2nd Pari Passu charge over the immovable properties
situted at village Deolali, Posari, Wasambe, Parade, Savale, Turade,
Dapivali and AmbivaliTalukas of Panvel and Khalapur, District Raigad in
the State of Maharashtra and plant and machinery, equiptments, fixtures
and fittings, movable machinery, spares, articles and things in the
State of Maharashtra (excluding current assets).
5A The other loan shown above are loans taken from HDFC Ltd. and Canara
Bank towards housing finance for employees. The loan from HDFC Rs. 6.55
lacs (previous year Rs. 7.03 lacs) is secured by an equitable charge on
the housing properties against the loan and interest outstanding. The
loans from Canara Bank Rs. 24.21 lacs (previous year Rs. 22.33 lacs) are
secured by way of mortgage assignment of right available to the Company
on the housing properties against the loan and interest outstanding.
6A The Company has introduced VRS Scheme under Gujarat pattern on
20.02.2012 and was open for 1 month upto 19.03.2012. 28 applications
were received from employees who opted for VRS and all were accepted by
the management. 20 employees were relieved on 31st March 2012 and VRS
liability amounting to Rs. 221.59 lacs has been provided for during the
year and shown under exceptional item in statement of profit and loss.
The commitments towards VRS liability for 8 emplyees retiring after
31st March 2012 amounting to Rs. 129.15 lacs is shown under other
commitments.
7 EMPLOYEES BENEFIT PLAN:
7A Provision for leave encashment
The Company has made provision of Rs. 625.62 lacs (Previous Year Rs. 640.14
lacs) for leave encashment as per revised AS-15 issued by Institute of
Chartered Accountants of India based on Actuarial Valuation.
7B Employees receive benefits from the provident fund managed by the
Company. The employee and employer each make monthly contributions to
the Provident Fund/Pension Fund plan equal to 12% of the employees'
salary/wages. Provident Fund is managed by a separate Exempted Trust.
NOTES TO THE FINANCIAL STATEMENTS 31C Gratuity
The Employees' Gratuity Fund Scheme, which is a defined benefit plan,
is managed by the Trust through an Annuity Scheme maintained with Life
Insurance Corporation of India (LIC). The present value of obligation
is determined based on actuairal valuation, of liability done by using
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 ceiling of gratuity has been enhanced from Rs. 3.50 lacs to Rs. 10 lacs
with effect from 1st January, 2007. The gratuity liability as on 31st
March, 2012 includes the provision towards arrears for the retired
employees on above account amounting to Rs. 207.30 lacs (previous year Rs.
207.30 lacs).
8 PROVISION FOR EMPLOYEE REMUNERATION
RASAYANI
PROVISION FOR ARREARS OF WAGES 33A No provision has been made for the
liability towards wage revision of employees (other than Kochi Unit)
for the period January 1,1997 to December 31, 2000 amounting to Rs.
2308.08 lacs, (previous year Rs. 2308.08 lacs) and it is shown under
contingent liability.
8B Wage Settlement / Salary Revision w.e.f.1/1/2007 - Officer
The arrears payable for the period from 1st January, 2007 to 31st
March, 2008 amounting to Rs. 278.96 lacs (Previous year Rs. 278.96 lacs)
which is subject to the Company generating adequate cash resourses has
not been provided for and the same has been shown under contingent
liability.
8C Wage Settlement / Salary Revision w.e.f.1/1/2007 - Staff: The
arrears payable for the period from 1st January, 2007 to 31st March,
2008 amounting to Rs. 246.31 lacs (Previous year Rs. 246.31lacs) which is
subject to the Company generating adequate cash resourses has not been
provided for and the same has been shown under contingent liability.
8D STAFF:
The arrears payable for the period from 1st April, 2008 up to 31st
March, 2012 in respect of 280 employees amounting to Rs. 346.12 lacs has
been provided for and shown under Short Term Provisions.
KOCHI
Provision for employee remuneration includes an amount of Rs. 69.90 lacs
(Previous year Nil) towards the balance amount of arrears in respect of
pay and allowance w.e.f. 01.01.2007 of Board level and below Board
level executives and Rs. 50.00 lacs (Previous year Nil) towards
performance related incentive in the form of gold coin to be
distributed to employees.
9 Fixed Assets
9A a) Land in possession of the Company at Rasayani admeasuring 455.69
hectares (previous year 455.69 hectares) has been given free of cost
for use, by the Government of Maharashtra, against which a nominal
value of Rs.1 is included in "Land and Land development" by creating
"Capital Reserve". Land at Panvel amounting to Rs. 0.80 lac (previous
year Rs. 0.80 lac) included in "Land and Land development" has been
given by the Government of Maharashtra for the business/residential
purpose of the company.
9B i) AN-I, FD-I, NB-I, HYD-I, DNB, BDP, MCB, NCB Old, COGEN Boiler,
ACETYL,COMP. AIR-I, PUSH, DM WATER-I & II, MPP Plant, Steam Boiler-III
having WDV (net of impairment) at Rs. 1346.85 lacs (Previous year Rs.
1376.00 lacs) are held for disposal. These assets have been carried at
lower of net book value and Net Realisable Value ascertained on the
basis of technical assessment made by the management / outside expert.
9C The Company appointed consultant/valuers during the year, for
assessing the impairment of Fixed Assets as per the provisions of AS-28
Impairment of Assets' for Rasayani Unit. As per the report of the
consultant the loss on account of impairment has been worked out by
comparing the fair market value as on date with the W.D.V as on 31st
March, 2012 and an additional amount of Rs. 31.47 lacs (Previous year Rs.
56.73 lacs) has been provided for during the year.
9D The Acetanilide, Sulphuric Acid, Nitro Toluene, Caustic Soda, Nitro
Chloro Benzene (CD) and Cyclo Hexyl Amine (CHA) plants gross block Rs.
14998.25 lacs (Previous year Rs. 14995.18 lacs) are in working condition
but are not in operation due to uneconomical conditions.
9E Capital Work-in-Progress and Expenditure during Construction
includes Rs. 2976.65 lacs (previous year Rs. 2976.65 lacs) towards cost of
JNPT Tank Terminal project wherein Management had decided to suspend
further construction. Even though the lease period has expired in June
2010 the company has written to JNPT authorities for extension of the
lease period and is hopeful of getting extension.
Hence the assets are carried at cost in view of the decision of the
management.
As per Lease Agreement with JNPT, the Lease Rentals provide for
escalation @ 10 % on Lease Land payable to JNPT. The Company has
provided for Lease Rentals with old rates without considering the
escalation @ 10% per annum as the matter is under arbitration. The
amount accumulated till date comes to Rs. 621.55 lacs (Previous year Rs.
453.99 lacs), which has been disclosed as contingent liability.
9F An amount of Rs. 506.01 lacs (Previous year Rs. 211.52 lacs) has been
spent on Refurbishment of CNA Plant which is funded by ISRO and is
shown under Capital Work In Progress.
9G The Company had incurred expenditure of Rs. 46.35 lacs in earlier
years towards feasibility study for Combined Heat and Power Project and
Captive Co-gen Power Plant to be erected at Rasayani, whih was shown
under Capital Work in Progress. An amount of Rs. 20.94 lacs towards
Combined Heat and Power Project has been charged to the Statement of
Profit and Loss in current year as the project is not being taken up.
The balance amount of Rs. 25.41 lacs towards feasibility study of captive
power plant is carried forward as the project is on hold now due to
high gas prices and will be taken up at a later date.
10 The Company had an investment of Rs. 1106 lacs (previous year Rs. 1106
lacs) in the subsidiary company M/s. Hindustan Fluorocarbons Ltd (HFL)
which was under BIFR since 1994. HFL has been reporting profit in the
last 3 years. The Subsidiary Company HFL has also been sanctioned CERs
by UNFCCC under the CDM Project which has generated substantial revenue
for the Company. In view of the improved financial position of HFL, its
shares are traded much above the nominal value. In view of this, the
investment in HFL is stated at cost.
The Company had invested Rs. 3.00 lacs in the Equity of M/s.
HOC-Chematur Ltd. by way of joint venture as a co- promoter. The
company holds 60% of the Paid-up Equity Capital of HOC-Chematur Ltd.,
hence HOC-Chematur is a subsidiary company of HOCL. HOC-Chematur Ltd.,
had initiated the process of implementing the project, however,
abandoned subsequently due to inadequate support from financial
institutions.
In view of such uncertainties involved in implementing the project, the
Company had fully provided for the losses against the investment. There
is no change in the status of M/s HOC-Chematur Ltd., and the provision
against the investment is continued.
11 a) During the year 2007-08, the Modified Draft Rehabilitation Scheme
(MDRS) for revival of subsidiary - Hindustan Flurocarbon Ltd. (HFL) was
approved by BIFR for implementation. As part of implementation of MDRS,
HOCL had waived interest of Rs. 2260.26 lacs accumulated on loan given to
HFL and converted the unsecured loan amounting to Rs. 2609.72 lacs as
Zero Coupon Loan (ZCL), which is secured by creating first charge on
HFL immovable property (land valued to the extent of Rs. 4000 lacs) in
favour of HOCL. Further, the Company had given loans aggregating to Rs.
890.77 lacs (Previous year Rs.1020.77 lacs) which included additional
loans of Rs. 134.34 lacs given to settle its dues to the financial
institutions. On this 10% interest was charged by HOCL during the
earlier years as per agreement entered into between HOCL and HFL. Since
as per the MDRS, no interest is leviable on the additional loan, the
Company has, during the year, reversed the interest on this loan
accrued in earlier years amounting to Rs. 46.18 lacs, which is shown
under Prior Year Adjustments. The above loans are also secured under
the above mortgage of land by HFL.
b) Advances to joint venture Company M/s HOC- Chematur Ltd. includes
advance paid to M/s Chematur Engg. A.B amounting to Rs. 664.71 lacs and
expenses allocated in earlier years, aggregatting to total Rs. 1066.26
lacs (previous year Rs.1065.89 lacs). In view of uncertainties involved
in recovery/completion of the joint venture company project, a
provision for doubtful advance of equivalent amount was made during the
earlier years. Since there is no improvement in the status of the joint
venture project the provision for doubtful advances is maintained.
12 During the year 2001-2002, a case of misappropriation of Company's
funds to the tune of Rs. 64.81 lacs (net and to the extent identified) by
an official of the Company, involving fraudulent / fake payments /
withdrawals under various heads of accounts including sales tax,
debtors etc. had been detected. The case is at present under
investigation of CBI. In the meantime, based on the report of the
Vigilance Dept., a civil suit has been filed for recovery of the amount
involved from the concerned employee who was dismissed from the
services of the Company. Since in the opinion of the Management the
value of assets seized by CBI is sufficient to cover the losses
occurred on account of fraud, no provision in the accounts is made and
the amount is shown as recoverable.
13 ACCOUNTING FOR TAXES ON INCOME AS PER AS-22
The Company had reviewed its net deferred tax assets as at 31st March,
2004 and decided not to carry forward such assets due to uncertainty of
realizing this assets against future taxable income due to uncertainty
of its realization on account of accumulated losses. This decision is
followed this year also in view of Accounting Standard Interpretation
issued by the Institute of Chartered Accountants of India.
14 BALANCE CONFIRMATION
Balances of debtors, creditors, loans, advances, other current assets
and borrowings are subject to confirmation/reconciliation and
subsequent adjustments.
15 Contingent Liabilities
31.03.2012 31.03.2011
a) Claims against the Company not
Acknowledged as debts:
i) Differential tax on account of
concessional forms in respect
of concessional sales 457.58 808.51
ii) Income Tax Claims 892.22 761.58
iii) Sales Tax Claim 5.70 5.70
iv) Excise Claims 212.01 212.01
v) Customs claim 10.80 10.80
vi) JNPT claims 2531.80 2007.99
vii) Rental claim Harchandrai House 2921.65 2457.75
viii) Wage revision employees (See note 33) 2833.35 2931.95
ix) Other Claims 740.40 701.37
b) Letters of Credit opened, cheques and bills of exchange
discounted with the bankers and remaining outstanding 198.32 98.19
c) Guarantees given on behalf of the Subsidiary Company,
Hindustan Fluoro-carbons Limited to Financial Institutions and
Commercial Banks for securing loans and cash credit facilities.
1253.00 1253.00
d) Security Bond given to Commercial Taxes Dept., Govt. of Kerala
4290.74 2498.30
16 Till the year ended 31 March 2011, the Company was using pre-revised
schedule VI to the Companies Act, 1956, for preparation and
presentation of its financial statements. During the year ended 31
March 2012, the revised Schedule VI notified under the Companies Act,
1956, has become applicable to the Company. The Company has
reclassified previous year figures to conform to this year's
classification. The application of revised Schedule VI does not impact
recognition and measurement principles followed for preparation of
financial statements. However, it significantly impacts presentation
and disclousers made in the financial statements.
Mar 31, 2011
1- SHARE CAPITAL
a) During the year the Company has forfeited 1,93,000 shares of Rs.
10/- each (Rs.5/- paid up) for non payment of allotment and call monies
with the approval of the Board of Directors and the amount paid towards
application money in respect of these forfeited shares has bpen
transferred to Shares Forfeiture Account.
b) The Government of India had released Rs.270 crores (for financial
restructuring Rs.250 crores and Caustic Soda Plant recommisskMing Rs.20
crores) against allotment of 8% Non-Cumulative Redeemable Preference
Shares, thereby broadening the capital base as per the retjval scheme.
The 8% Preference Shares were allotted to Govt, of India by the
Board on 28th January, 2008, redeemable O 20% commencing from 4th year
with last redemption in the 8th year. The first installment of (20%)
i.e. Rs. 54 crores Is due for redemption in financial year 2011-12. The
Company has requested to the Government of India to extend redemption
starting in financial year 2014-15 O 25% each year. c) During the
year, the Unpaid Allotment Money Account and the Security Premium
Account has been reconciled. As a result, It was found that an amount
of Rs.0.405 lac received earlier from the shareholders was credited to
Unpaid Allotment Money Account, although Rs.0.28 lac belonged to the
Security Premium Account and Rs.0.125 lac for the Miscellaneous Deposit
Account. This has been set right during the year by debiting Rs.0.405
lac to Unpaid Allotment Money with corresponding credit of Rs.0.28 lacs
to the Security Premium Account and Rs.0.125 lacs to the Miscellaneous
Deposit Account. The amount of Rs.0.125 lacs credited to Miscellaneous
Deposit Account is subject to final reconciliation.
2. SCHEDULE 2-RESERVES a SURPLUS
Capital Reserve: An amount of Rs.698.45 lacs (Previous year Rs.279.38
lacs) has been received from ISRO (Government of India) towards Capital
Grant tor refurbishment of CNA Plant. Out of this, an amount of Rs.
211.52 lacs has been spent upto 31st March, 2011 and accordingly same
has been shown as Capital Reserve and balance amount of Rs.486.93 lacs
has been shown as deposit under the head - Current Liabilities (Deposit
from contractors & others) pending utilisation.
3. SCHEDULE 3-SECURED LOANS
a) Interest on bonds, which are live at the year end, is provided at
the coupon rate.
b) As per the existing practice followed by the Company, the cheques in
hand as on 31 st March, 2011 amounting to Rs.240.28 lacs (Previous year
Rs.130.09 lacs) are included under Cash end Bank Balance as well as in
Bank on Cash Credit Account (under the head Secured Loans).
4. SCHEDULE 4-UNSECURED LOANS
b) The Company has not made provision for penal interest payable
amounting to Rs.519.01 lacs (Previous year Rs.348.37 lacs) on overdue
Government Loan upto 31st March, 2011 since the same is leviable at the
discretion of Government of India. The Company has not received any
demand from the Government of India for the same.
5. SCHEDULE 5-FIXED ASSETS
a) Land in possession of the Company at Rasayani admeasuring 455.69
hectares (previous year 455.69 hectares) has been given free of cost
for use, by the Government of Maharashtra, against which a nominal
value of Re.i/- Is Included in "Land and Land Development" by creating
"Capital Reserve". Land at Panvel amounting to Rs.0.80 lac (previous
year Rs.0.80 lac) included in "Land & Land development" has been given
by the Government of Maharashtra for the business/residential purpose
of the Company.
b) i) Capital Work-in-Progress and Expenditure during Construction
includes Rs.2976.65 lacs (previous year Rs.2972.22 lacs) towards cost
of JNPT Tank Terminal project wherein Management had decided to suspend
further construction. Even though 1he lease period has expired in June,
2010, the Company has written to JNPT authorities for extension of the
lease period and Is hopeful of getting extension. Hence the assets are
carried at cost In view of the decision or the management.
ii) An amount of Rs.211.52 lacs (Previous year Rs.3B.69 lacs) has been
spent on Refurbishment of CNA Plant and shown under Capital
Work-in-Progress.
IB) Company has incurred an expenditure of Rs. 46.35 lacs (previous
year Rs. 48.35 lacs) towards feasibility study for Combined Heat and
Power Project and Captive Co-gen Power Plant to be erected at Rasayani
which is shown as capital work-in-progress. The said expenditure will
be capitalized after the erection and commissioning of the proposed Gas
based power plant
c) I) AN-I, FD-I, NB-I, HYD-I, DNB, BOP, MCB, NCB, COGEN Boiler,
ACETYL.COMP. AIR, PUSH, DM WATER, MPP Plants having WDV at Rs. 1376.00
lacs (previous year Rs. 88.76 lacs) are held for disposal.
These assets have been carried at lower of net book value and Net
Realisable Value ascertained on the basis ol technical assessment made
by the management / outside expert.
ii) The Company has appointed consultant/valuers for assessing the
impairment of Fixed Assets as per the provisions of AS-28 (impairment
of Fixed Assets) for Rasayani Unit. As per the report of the consultant
there is impairment of Fixed Assets and an amount of Rs.121.97 lacs was
assessed by consultants by comparing the fair market value as on date
with the WDV as on 31st March, 2010. Hence the impairment was
recomputed considering the WDV as on 31st March, 2011 and the revised
impairment loss worked out to Rs. 56.73 lacs which has been provided in
the accounts. iii) After a detailed feasibility study conducted by
outside expert during 2007-08, actions ware taken to restart the
Caustic Soda plant in the month of September, 2008 (Gross Block
Rs.1137S.62 lacs). However, the Caustic Soda plant operation has been
stopped temporarily from October, 2009 due to uneconomical operation.
The above asset Is carried at cost in view of the decision of the
management.
d) ERP IMPLEMENTATION (Kochl):
The unit implemented ERP system integrating an departments using SAP
during the year. The implementation partner was Tata Consultancy
Services (TCS). The Consultant of the Project was WIPRO. All the
modules except HCM went Go Live on 16-9-2010. The support period of TCS
was available up to 31-12-2010 for the modules except HCM. Since
additional support was required for several modules, for incorporating
the modifications, development of reports, annual closing of accounts
and annual shut down for the first time on ERP, the support period was
extended for 31 man months with effect from 21-1-2011 at an additional
cost of Rs.41 lacs excluding taxes. The HCM module went Go Live on
31-1-2011. The support period for HCM module was for a period of three
months.
The unit has capttaUsed the ERP system covering Consultancy charges,
hardware cost, software cost, development cost, cost of license,
networking costs etc. on 31-03-2011 based on the completed milestones.
The cost Includes the cost of hardware and networking of the Disaster
Recovery Centre set up at Rasayani Unit amounting to Rs. 172.44 lacs.
The Cost of work awarded to TCS was Rs.854.95 lacs and out of this, an
amount of Rs.670.80 lacs has been paid up to 31.3.2011 towards the
supplies effected and services rendered. As per the contract with TCS,
the final 20% has to be paid only after the warranty period or on
submission of the Performance Bank Guarantee (PBG) after the completion
of the project. The unit has also paid consultancy charges to WIPRO til
31-3-2011 amounting to Rs.24.16 lacs (previous year Rs.11.23 lacs). The
Project was capitalised on 31st March 2011.
6. SCHEDULE 7-INVESTMENTS
a) The Company had an investment of Rs.1106 lacs (previous year Rs.1106
lacs) in the subsidiary Company M/s. Hindustan Fluorocarbons Ltd (HFL)
which was under BIFR since 1994. HFL has been reporting profit in the
last 3 years. The Subsidiary Company HFL has also been sanctioned CERs
by UNFCCC under the CDM Project which has generated substantial revenue
for the Company. In view of the improved financial position of HFL, its
shares are traded much above the nominal value. In view of this, the
Investment in HFL is stated at cost.
b) The Company had invested Rs.3.00 lacs in the Equity of M/s. HOC
Chematur Ltd. by way of joint venture as a co-promoter. The Company
holds 60% of the Paid-up Equity Capital of HOC Chematur Ltd., hence
HOC-Chematur Is a subsidiary Company of HOCL. HOC-Chematur Ltd., had
initiated the process of implementing the project, however, abandoned
subsequently due to Inadequate support from financial institutions. In
view of such uncertainties involved In implementing the project, the
Company had fully provided for the losses against the Investment. There
is no change in the status of M/s HOC- Chematur Ltd., and the provision
against the Investment is continued.
7. SCHEDULE 8 - INVENTORIES
a) Excise duty and Educational Cess provided on goods manufactured but
not removed Rs.486.95 lacs (Previous year Rs.315.06 lacs).
b) Inventories include Items not moved for last more than five years
Rs.527.74 lacs (previous year Rs.498.76 lacs) and obsolete Inventory of
Rs.30.66 lacs (previous year Rs.30.66 lacs). An adhoc provision of
Rs.442.53 lacs (previous year Rs.431.05 lacs) has been made In the
Accounts for obsolescence.
C) KOCHIUNIT:
I) The closings tocx of Stock-In-Process incluo Wunder the head
lnvertors during the previous year Includes the stock of Lean
Propylene valuing Rs.17.21 lacs. But the value of Lean Propylene was
included under the head Finished Products for Captive consumption also
as was done during earlier years. The Production department has now
certified that the stock of Lean Propylene is included under the head
Stock-in-Process and there is no separate stock of Lean Propylene which
has to be included under the head Finished Products for Captive
consumption. Hence the value of Lean Propylene amounting to Rs.17.21
lacs included under the opening stock of finished goods for captive
consumption Is written off during the year.
i) The Stock-in-Process consisting of LPG and Benzene lying in the
pipeline in Propylene and Cumene plants which were shown under Stock-
In-Process for Captive consumption during earlier years has now been
included under the head Raw materials as part of SAP implementation.
ii) The stock of main products shown under the head Stock-in-Process
during earlier years is now included under the head Stock-in-Process -
Cumene equivalent in Phenol plant.
8. SCHEDULE 11-LOANS AND ADVANCES
a) During the year 2007-08, for revival of HFL the Modified Draft
Rehabilitation Scheme (MDRS) was approved by BIFR and accepted by HOCL
& HFL for Implementation. As a part of mplsmentation of MDRS, HOCL had
waived interest (Rs. 2260.26 lacs) accumulated on loan given to HFL and
converted unsecured loan given to HFL amounting to Rs.2609.72 lacs
(previous year Rs. 2609.72 lacs) as Zero Coupon Loan (ZCL), which is
secured by creating first charge on HFL immovable properly (land valued
to the extent of Rs.40 Crores) in favour of HOCL. In addition, the
Company has provided loan amounting to Rs.1020.77 lacs (previous year
Rs. 890.77 lacs) to meet the working capital need of HFL, out of which
the loan of Rs.890.77 lacs is secured under the above mortgage of land.
b) Expenses amounting to Rs.1065.89 lacs (previous year Rs.1065.62
lacs) including amount paid to M/s Chematur Engh. A.B. Rs.664.71 lacs
had been allocated as advances to joint venture M/s HOC- Chematur Ltd.
In view of uncertainties involved in recovery/completion of the
project, a provision for doubtful advance of equivalent amount was made
during the earlier years. Since there is no improvement in the status
of the joint venture project the provision for doubtful advances is
maintained.
c) During the year 2001-2002, a case of misappropriation of Company's
funds to the tune of Rs.64.81 lacs (net and to the extent identified)
by an official of the Company, Involving fraudulent / fake payments /
withdrawals under various heads of accounts including sales tax,
debtors etc. had been detected. The case is at present under
Investigation of CBI. In the meantime, based on the report of the
Vigilance Dept., a civil suit has been filed for recovery of the amount
involved from the concerned employee who was dismissed from the
services of the Company. Since in the opinion of the Management the
value of assets seized by CBI is sufficient to cover the losses
occurred on account of fraud, no provision in the accounts is made and
the amount is shown as recoverable.
d) Deposits/Advances include Rs.98.57 lacs (previous year Rs.97.60
lacs) which are more than three years old. No provision has been made
against these Deposits/Advances as the same are found to be good and
furry recoverable.
B. JNPT ESCALATION CHARGES
As per Lease Agreement with JNPT, the Lease Rentals provide for
escalation O 10% on Leased Land payable to JNPT. The Company has
provided for Lease Rentals with old rates without considering the
escalation 0 10% per annum as the matter Is under arbitration. The
amount accumulated till date comes to Rs.431.01 lacs (previous year
Rs.426.01 Lacs), which has been disclosed as contingent liability.
10. PROVISION FOR ARREARS OF WAGES RASAYAM UNIT:
a) No provision has been made for the liability towards wage revision
of employees (other than Kbchi Unit) for the period January 1,1997 to
December 31,2000 amounting to Rs.2308.08 lacs, (previous year
Rs.2308.08 lacs) since the arrears are payable only with the prior
approval of Administrative Ministry and when the Company generates
adequate surplus. This amount has been
shown under Contingent Liability.
b) Wage Settlement / Salary Revision w.e.f.1/1/2007: Rasayanl Unit:
(I) OFFICERS:
As per the recommendations of the 2nd Pay Revision Committee, the
revision of pay and allowances of Board level and below Board level
executives had become due from 01.01.2007. The pay revision of the
officers has been approved and the pay scales have been revised with
effect from 1st January, 2007 for a period of 10 years. The actual
payment of the revised salary has been made w.e.f. 1st August, 2009 and
the Prior Period arrears from 1st January, 2007 are being paid in two
financial years I.e. the financial year 2010-2011 and 2011-12, subject
to condition that the Company generate adequate cash resources through
improved productivity and profitability in line with the directions of
Government of India and decision of Board. The arrears due from the
period 1st April, 2008 to 31st July, 2009 has already paid/provided
during the year. However, no provision has been made for arrears
payable in the year 2011-12, for the period from 1st January, 2007 to
31st March, 2008 amounting to Rs.278.96 lacs which is subject to the
Company generating adequate cash resources which has been, however
shown under contingent liability.
(II) STAFF:
For staff, though revision of pay scales is due with effect from 1st
January, 2007, the same has not been implemented. However, provision
has been made based on MOU signed with the unions, pending
implementation of the revised pay scale for the period 1st April, 2008
to 31st March,2011, on the same basis as that of officers. However, no
provision has been made for the arrears payable for the period from 1st
January,2007 to 31st March,2008 amounting to Rs.246.31 lacs in line
with the principle followed in the case of officers and the MOU signed
with the workmen/ unions stipulate that the arrears will be payable at
par with officers which has been, however shown under contingent
liability.
KOCHI UNTT:
i) The revision of Pay and Allowances with effect from 1-1-2007 of
Board Level and below Board level executives was sanctioned by the
Competent authority during the year 2009-10. The Board in its 327th
meeting held on 9-8-2010 decided to release the arrear for the period
1-1-2007 to 31-7- 2009 in eight quarterly installments subject to the
Company generating cash surpluses in every quarter. Accordingly the
arrear towards the four quarterly installments was paid/provided during
the year. The unit has not provided the liability for the balance
amount of arrears of Pay and allowances amounting to Rs.98.60 lacs
(Previous year Rs.227.98 lacs) which is in line with the pay revision
orders of the competent authority of HOC. The unit has introduced the
Cafeteria approach for perks and allowances with a ceiling of 37% of
the Basic Pay with effect from 1-8- 2009 and also granted four
increments with effect from 1.1.2007 as per decisions of the Board.
ii) The wage settlement with effect from 1-1-2007 was signed with trade
unions representing workers on 25-3-2011. The arrears of wage revision
was paid along with the salary for the month of March, 2011. The unpaid
amount of certain allowances such as overtime allowances (part), shift
allowance, nutrition allowance etc and the unpaid amount of wages &
allowances of retired workmen has been provided for In the accounts.
11. EMPLOYEES BENEFIT PLAN :
a) Provision for Leave Encashment
Company has made provision of Rs. 640.14 lacs (Previous Year Rs. 767.14
lacs) for leave encashment as per revised AS-15 issued by Institute of
Chartered Accountants of India based on Actuarial valuation.
b) Provident Fund/Pension Fund
Employees receive benefits from the provident fund managed by the
Company. The employee and employer each make monthly contributions to
the Provident Fund/Pension Fund plan equal to 12% of the employees'
salary/ wages. Provident Fund is managed by a separate Exempted Trust.
c) Gratuity
The Employees' Gratuity Fund Scheme, which is a defined benefit plan,
is managed by the Trust through an Annuity Scheme maintained with Life
Insurance Corporation of India (LIC). The present value of obligation
is determined based on actuarial valuation, of liability done by using
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 .bulk) up the final obligation.
The celling of gratuity has been enhanced to Rs.10 lacs with effect
from 1-1-2007 for executives and from 24-5-2010 for workmen. The
gratuity paid prior to 1.7.2010 in excess of Rs.3.50 lacs by the
Company, not reimbursable by LIC and the gratuity arrear payable to
retired employees has been debited to Profit and loss Account under
Employees Remuneration and Benefits. (I) Reconciliation of opening and
closing balances of the present value of the defined benefit obligation
based on the present limit of Rs. 10 lacs (Previous year Rs. 3.50
lacs):
12. In Kochi Unit, the excess provision of Rs. 2.99 lacs (Previous Year
Nil) towards the repair charges provided during earlier years of the
Captive Power Plant, which was damaged due to an accident in year
2005-06 has been written back to Profit & Loss Account.
14. SEGMENT REPORTING.
Since the Company is manufacturing only Chemicals, there are no
separate reportable primary and secondary segments and all the
chemicals manufactured by the Company are considered to have been
representing as single reportable segment. The requirements of
Accounting Standard 17 with regard to disclosure of segmental results
are therefore considered not applicable to the Company.
15. RELATED PARTY DISCLOSURE AS PER AS-18
a) Related Parties
The Company is a State controlled enterprise therefore the disclosures
as per Accounting Standard 18 are not considered applicable.
16. ACCOUNTING FOR TAXES ON INCOME AS PER AS-22
The Company had reviewed its net deferred tax assets as at 31 st March,
2004 and decided not to carry forward such assets due to uncertainty of
realizing these assets against future taxable income due to uncertainty
of its realization on account of accumulated losses. This decision is
followed this year also in view of Accounting Standard Interpretation
issued by the Institute of Chartered Accountants of India.
17. BALANCE CONFIRMATION
Balances of debtors, creditors, loans, advances, other current assets
and borrowings are subject to confirmation/reconciliation and
subsequent adjustments.
18. CONTINGENT LIABILITIES
(Rs in lacs)
2010-11 2009-10
1 a) Contingent Liabilities
Claims against the Company not
Acknowledged as debts: Nil Nil
i) Differential tax on account of concessional
forms in respect of concessional sales 808.51 521.27
ii) Income Tax Claims 761.58 Nil
ill) Sales Tax Claim 5.70 Nil
iv) Excise Claims 212.01 212.01
v) Customs claim 10.80 10.80
vl) JNPT claim 2007.99 1631.95
vh) Rental claim Harchandrai House 2457.75 Nil
viii) Wage revision employees 2931.95 3787.68
ix) Other Claims 701.37 1887.59
b) Letters of Credit opened, cheques and
bills of exchange discounted with
the bankers and remaining outstanding 98.19 189.75
c) Counter guarantees given against
bank guarantees 3382.37 2586.31
d) Guarantees given on behalf of the
Subsidiary Company, Hindustan
Fluoro-carbons Limited to Financial
Institutions and Commercial Banks for
securing loans and cash credit facilities. 1253.00 1253.00
e) Security bond given to commercial
taxes Dept. Govt, of Kerala 2498.30 883.30
2 Estimated amount of contracts remaining
to be executed on capital account and not
provided for (Net of advances) 338.61 877.65
19. The Company has taken bank guarantee for Rs.Nil (Previous year
Rs.814.00 lacs) against the term deposit receipt of Rs.2574.96 lacs
(previous year Rs.2538 lacs) from Central Bank of India, Marine Lines,
Mumbai, apart from loan amount of Rs.2164.12 lacs (Previous year
Rs.1516 lacs) including interest thereon.
20. Previous year's figures have been regrouped and readjusted
wherever necessary and practicable.
21. Previous year's figures are shown In bracket.
Mar 31, 2010
A) Interest on bonds, which are live at the year end is provided at the
con- tacted rate.
b) Pursuant to consistent efforts during last few years all the Bond
holders agreed to settle their dues having restricted the interest
claim till the date of maturity. Accordingly, on overdue bonds worth
Rs. Nil (Previous year Rs. 131.25 lacs), the reduction in liability on
account of reversal of interest for earlier years amounting to Rs.Nil
(Previous year Rs. 47.54 lacs) is credited to miscellaneous income.
c) As per the existing practice followed by the Company, the cheques in
hand as on 31.03.2010 amounting to Rs. 130.09 lacs (previous year Rs.
159.52 lacs) are included under cash and bank balance as well as in
Bank on cash credit account (under the head secured loan).
2. SCHEDULE 4 - UNSECURED LOANS
a) * Consequent upon continuous efforts during last few years all the
investors agreed to settle the dues having restricted their interest
claim upto the date of maturity. Accordingly, on such overdue bonds of
Rs. Nil (Previous yeer Rs. 50 lacs), the reduction in liability on
account of reversal of interest for earlier years amounting to Rs.Nil
(Previous year Rs. 2.81 lacs) on bonds æ is credited to the
miscellaneous income.
c) In view of Financial Restructuring approved by the Government of
India. the company is not required to pay any penal interest on
overdue principal amount of loan granted bythe Government of India upto
31st March,2005.
The company has not made provision for penal interest payable on over-
due Government Loan amounting to Rs. 348.37 lacs since the same are
leviable at the discretion of Government of India. The company has not
received any such demand. 3; SCHEDULE 5 - FIXED ASSETS
a) Land in possession of the Company at Rasayani admeasuring 455.69
hectares (previous year 455.69 hectares) has been grven free of cost
for, use, by the Government of Maharashtra, against which a nominal
value of Re.1/- is included in "Land and Land development" by creating
"Capital Reserve". Land at Panvel amounting to Rs.O.BQ lac (previous
year Rs.O.BO lac) included in "Land & Land development" has been given
by the Gov- ernment of-Maharashtra for the purpose of constructing
staff quarters.
b) i) Lease hold land having Written Down Value (WDV) of Rs.2.50 lakhs
{previous year Rs. 5.26 lacs) relates toJNPT Project.
ii) Capital Work-in-Progress and Expenditure during Construction in-
cludes Rs.2972.22 lacs (previous year Rs.2967.22lacs) towards cost of
JNPT Tank Terminal project wherein Management had decided to suspend
further construction. However, the Companyhas initiated the process of
restarting the-construction work including upgradation and enhancement
of capacity-through Build, Operate and Transfer (BOT) arrangement. The
assets are carried at cost in view of the decision.
iii) Company has incurred an expenditure of Rs.41.99 lacs (previous
year Rs.35.06 lacs) towards feasibility study for Combined Heat and
Power Project and captive Cogen. Power Plant to be erected at Rasayani
which is shown as capital work in progress. The said ex- penditure will
be capitalized after the erection and commissioning of the proposed Gas
based power plant.
c) i. Hydrogen Ph.-I, Dinitrobenzene, Formaldehyde-I, Butendiol,
Acetyldehyde, Plants having WDV at Rs.88.75 lacs (previous year Rs,
103.12 lacs) are held for disposal. These assets have been carried at
lower of net book value and Net Realisable Value ascer- tained on the
basis of technical assessment made by the manage- ment and outside
expert. ii. Certain plants viz. PUSH, MCB & NCB, having Gross Block
Rs.5986.13 lacs (previous year Rs. 5986.13 lacs), Net Block Rs.
1459.89 lacs (previous year Rs. 1762.73 lacs) which are not in ac- tive
use on the ground of temporary uneconomical operating condi- tion are
carried at cost. After a detailed feasibility study conducted by
outside expert during 2007-08, actions were taken to restart the Caus-,
tic Soda plant in- the month of September, 20Q8-(Gross Block
Rs,11378.62 lacs).
d) An amount of Rs. 38.69 lacs spent on Refurbishment of C.N.A. plant
which has been sho^n under Capital Work in Progress.
e) The company has appointed consultant/valuers for assessing the
impair- ment of Fixed Assets as per the provisions of AS-28 (impairment
of Fixed Assets) at Rasayani Unit. As per the reports of the consultant
and accord- ing to" management there has been no impairment of Fixed
Assets and hence no provision has been made on this Account.
4. SCHEDULE 7 - INVESTMENTS
a) The company had an investment of Rs.1106 lacs (previous year-Rs.1106
lacs) in the subsidiary company M/s. Hindustan Fluoroearbons Ltd (HFL)
which was under BIFR since 1994. BIFR had ordered sale of assets of HFL
to M/s. Guarniflon, Italy, however, the order subsequently became
inoperative due to withdrawal of the party from their acquisition plan.
The transactions of HFL shares in stock exchanges remain suspended
since 1998, hence, the company made suitable provision for the entire
invest- ment in the books during the year 2003-04. ThB provisionwas
carried forward till the financial year 2007-08; as there was no
significant change in status of company. However during the year
2008-09 status of the company had changed significantly due to:
i. Implementation of Modified Draft Rehabilitation Scheme (MDRS) ap-
proved by BIFR for revival of HFL.
ii. As apart of "rehabilitation scheme implementation at HFL a CDM
project is under implementation which is expected to generate sub-
stantial revenue earning through sale of Carbon Credits (CERs),
generating the profits in coming years on sustainable basis.
iii. Fte-listing of HFL shares on BSE. Also HOCL has opened new Dernat
trading account for transaction of HFL shares.
iv. During theyear as a responsible promoter company, HOCL had freed
all the assets of HFL by one time settlement with financial
institutions having stake in HFL and further signed a loan agreement
with HFL creating first charge of HFL assets in favour of HOCL and thus
con- verted unsecured loan into secured loan. (Total amount of loan
Rs.-3500.48 lacs).
In view of above changes during the last year, the company reversed the
provision made earlier towards doubtful investment in itssubsid- iary
company M/s. HFL.
b) The company had invested Rs.3.00 lacs in the Equity of M/s. HOC
Chematur Ltd. by way of joint venture as a co:promoter; the companys
total equity stake in the joint venture company shall be restricted to
30.60% of the total equity. Thus, its investment in HOC Chematur Ltd.
as on 31" March, 2010. though, exceeded 51%, the company does not
consider the said invest- ment "Investment in subsidiary company". HOC
Chematur Ltd. had initi- aled the process of implementing the project,
however, abandoned subse- quently due to inadequate support from
financial institutions. In view of such uncertainties involved in
Implementing the project, the company made provision for the investment
in earlier years. There is no change in the status of M/s HOC- Chematur
Ltd.. the provision against investment is continued.
5. SCHEDULE 8 - INVENTORIES
a) Excise duty and Educational Cess provided on goods manufactured but
not removed Rs.315.06 lacs (Previous year Rs. 189.47 lacs).-
b) Inventories include items not moved for last more than five years
Rs.498.76 lacs (previous year Rs.504.82 lacs) and obsolete inventory of
Rs.30.66 lacs (previous year Rs.26.81 iacs). An adhoc provision of
Rs.431.05 lacs (previous year Rs.457.09 lacs) has been made in the
Accounts for obso- lescence.
6. SCHEDULE 11 - LOANS AND ADVANCES
a) During the year 2007-08, for revival of HFL the Modified Draft
Rehabilita- I tion Scheme (MDRS) was approved by BIFR and accepted by
HOCL & HFL for implementation. As a part of implementation of MDRS,
HOCL had I waived interest (Rs. 2260.26 lacs) accumulated on loan given
to HFL and converted unsecured loan given to HFL (Rs. 2609.72 lacs ) as
Zero Cou- pon Loan (ZCL). Further as explained; at point No. 4 a
(Schedule 7 - Investment) the loan is now converted as Secured Loan by
creating first charge on HFL, immovable property (land to the extent of
Rs.40 Crores) in favour of HOCL.
In view of above dutirxg the previous year, HOCL had written back the
provision for doubtful advances amounting to Rs. 2609.72 lacs.
b) Short term loan amounting to Rs.890.77 lacs (previous year Rs.
890.77 lacs) has been sanctioned to meet the working capital need of
HFL. The new loan is considered to be recoverable with interest in view
of on going process of carbon credit activities being monitored by the
company, hence no provision for new loan is considered necessary.
c) Expenses amounting to Rs.1065.62 lacs (previous year Rs.1065.56
lacs) including amount paid to M/s Chematur Engg. A.B. Rs.664.71 lacs
had been allocated as advances to joint venture M/s HOC- Chematur Ltd.
In view of uncertainties involved in recovery/completion ef the project
a pro- vision for doubtful advance of equivalent amount was made during
the earlier years. Since there is no improvement in the status of the
joint ven- ture project the provision for doubtful advances is
maintained.
d) During the year 2001-2002, a case of misappropriation of Companys
funds to the tune of Rs.64.81 lacs (net and to the extent identified)
by an official of the Company, involving fraudulent / fake payments /
withdrawals under various heads of accounts including sales tax,
debtors etc. had been de- tected. The case is at present under
investigation of CBI. In the meantime, based on the report of the
Vigilance Dept., a civil suithas been filed for recovery of the amount
involved from the concerned employee who was dismissed irom the
services of the Company. Since in the opinion of the Management the
value of assets seized by CBI is sufficient to cover the losses
occurred on account of fraud, no provision in the accounts is made a*nd
the amount is shown as recoverable.
e) Deposits/Advances include Rs.97.60 lacs which are more than three
years old. No provision has been made against these Deposits/Advances
as the same are found to be good and fully recoverable.
f) In respect of Kochi Unit, physical verification of Fixed Assets was
con- ducted during the year and was compared with the Fixed Asset
Register of the unit. It was revealed that certain items of Fixed
Assets such as furni- ture, fixtures, electrical & other equipment
which has either been scraped or not identifiable with a written down
value of Rs.12.94 lacs as of 31.03.2010 is appearing in the Fixed
Assets Register. Provision has been created for an amount of Rs.12.94
lacs (Previous year Rs.Nil) by debiting the Profit & Loss Account
during the year.
C. JNPT Escalation Charges
As per Lease Agreement with JNPT, the Lease Rentals provide lor
escalation @ 10% on Leased Land payable to JNPT. The Company provides
for Lease Rent- als with o(d rates without considering the escalation @
10% per annum as the matter is under arbitration. The amount
accumulated till date as such comes to Rs. 426,01 Lacs.
8. PROVISION FOR ARREARS OF WAGES RASAYANIUNIT:
i) No. provision has been made for the liability towards wage revision
of em- ployees {other than Kochi Unit) for the period January 1, 1997
to Decem- ber 31, 2000 amounting to Rs.2308.08 lacs, (previous year
Rs.2308.08 lacs) and Rs. 854.61 lacs for the period 1St Jan, 2007 to 3V
July, 2009 since the arrears are payable only with the prior approval
of Administrative Ministry and when the company generates adequate
surplus.
ii) Wage Settlement / Salary Revision w.e.f.1/1/2007:
As per the recommendations of the 2nd Pay Revision Committee, the revi-
sion of pay and allowances of Board level and below Board level execu-
tives had become due from 01.01.2007. The pay revision of the officers
has been approved by the Board of Directors, and the Administrative
Ministry, vide letter No. 51/09/2009-CH-lll dtd. 17.7.2009. and the
Presi- dential directive has already been received. Accordingly
officers pay revi- sion order has been issued. As per the pay revision
order of officers, the pay scales are revised with effect from 1st
January, 2007 for a period of 10 years. However, the actual payment of
the revised salary will be made w.e.f. 1st August, 2009. The Prior
Period arrears from 1st January, 2007 to 31sr July, 2009 would be
considered to be paid in two installment in two financial years i.e.
the financial year 2010-2011 and 2011 -12 subject that the company
generate adequate cash resources through improved pro- ductivity and
profitability. Accordingly the revised salary to the officers has been
paid from December 2009 and provision for arrears of salary amount- ing
to Rs. 56.50 lacs has been made from 1" August,2009 to 30,h Novem-
her.2009. Far staff, though revision of pay scales is due with effect
from 1stApril, 2007. the same has not been implemented. However, an
adhoc provision of Rs.74.42 lacs has been made for the period 1st
August.2009 to 31" March,2010. based oh the pay revision parameters
applied to officers, which is shown under Head : Provisions.
KOCHl UNIT:
i) The revision of pay and allowances with effect from 1-1-2007 of
Board level and below Board level executives was sanctioned by the
competent authority "during the year. The unit has paid the revised pay
and allow- ances from August, 2009. As per the order, the prior period
arrears from 01.01.2007 to 31.07.2009 would be considered to be paid
in installments in financial years 2010-11 and 2011 -12 subject that
the company gener- ates adequate cash resources through improved
productivity and profit- ability and subject to the approval of the
Board. As the company has not generated cash surplus and has incurred
losses in F.Y 2009-10, the wage revision arrears amounting to Rs.227.98
Lakhs for Officers and Rs.397.01 Lakhs for Staff/workmen from
01.01.2007 to 31.07.2009 has not been pro- vided which is irf line with
the Pay revision orders of the Competent Author- ity of HOC. In view of
this, no liability has been provided tor the revised Salary for the
period from 01.01.2007 to 31.07.2009 and the interim relief provided in
2008-09 against the Pay revision arrears has been written back during
the year.
ii) The wage settlement for Staff/workmen is due from 1-1-2007.
Negotia- tions with Trade Unions representing the workers of the unit
is in progress and the wage settlement has not been arrived at yet. By
adopting the same basis applicable to executive category in respect of
the fitment ben- efit and other allowances and as a matter of prudence,
the unit has made a lump sum provision for Rs.155 Lakhs being the
approximate amount of pay and allowances due from 1-8-2009 to
31-03-2010. The interim relief provided for in 2008-09 against wage
revision arrears has been written back during the year.
However, an amount of Rs. 3787.68 lacs for arrears of wages (Rasayani &
Kochi Unit) has beenshown under Contingent Liability.
9. EMPLOYEES BENEFIT PLAN :
* a) Provision for Leave Encashment
Company has made, provision of Rs. 767.14 lacs (Previous Year Rs.
660.82 iacs) for leave encashment as per revised AS-15 issued by
Institute of Chartered Accountants of India.
b) Provident Fund
Employees receive benefits from the provident fund managed by the Com-
pany. The employee and employer each make monthly contributions to the
plan equal to 12% of the employees salary/wages. Provident Fund is
managed by a separate Exempted Trust.
c) Pension Fund
Company has opted for Governments Employees pension Scheme, 1995.
Company is contributing 8.33% from its equal contribution to Provident
Fund to the Employees Pension Scheme, 1995. The pension claims are
Settled by the Regional Provident Fund Office.
d) Gratuily ;
The Employees Gratuity Fund Scheme, which is a defined benefit plan,
is managed by the Trust through an Annuity Scheme maintained with Life
Insurance Corporation of India (LIC). The present value of obligation
is detormined based on actuarial valuation, of liability done by using
Pro- jected 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 frnal obligation.
(i) Reconciliation o) opening and closing balances of the present ualue
of the defined benefil obligation (based on (he present limit ol Rs.
3.50 lacs) :
(vi) The company has revised the limit of gratuity from Rs.3.50 lacs to
Rs.10 lacs with effect from 01.01.2007. The additional provision
required conse- quent to the increase in the limit has been arrived at
based on actuarial valuation of the liability as on 31st March, 2010 by
LIC of India and neces- sary provision in the Accounts to the tune of
Rs.708.31 lacs have been made in the accounts. Also the liability on
account of difference of gratuity payable to employees who have retired
from service from 01.04.2007 to 31.03.2010 has been assessed and
necessary provision has been made under current liabilities for an
amount of Rs.255.60 lacs. In respect of Kochi Unit the. Gratuity paid
in excess of Rs 3.50 Lacs has been debited o Profit & Loss Accounts
under Employees Remuneration and Benefits.
10. FINANCIAL RESTRUCTURING
The Government of India has approved financial restructuring scheme on
9th March, 2006. Accordingly the Government released Rs.250.00 crores
for allot- ment of 8% Non-Cumulative Redeemable Preference Shares for
broadening the capital base as per the scheme approved. The Government
further released Rs.20.00 crores for repairing and replacement of
Caustic Soda Plant for re- commissioning production. The Governmeni has
released this amount of Rs.20.00 crores for allotment of additional 8%
Non-Cumulative Redeemable Preference Shares. This amount of Rs.270.00
crores is shown as 8% Non- | Cumulative Preference Shares.
11. DEFERRED REVENUE EXPENDITURE:
The company has paid an amount of Rs.533.20 lacs as benefit towards
Volun- tary Retirement Scheme (VRS) introduced at R,asayani Unit during
earlier years as part of its approved financial restructuring scheme
which was amortisea over , a period of 5 years as per the policy of the
company. However as per revised AS-15 expenditure so deferred cannot be
carried forward to accounting period commencing on or after 01.04.2010.
Accordingly an amount of Rs. 163.07 lacs (previous year Rs. 183.07
lacs) has been charged to Profit & Loss account dur- ing the year. 12.
MISCELLANEOUS INCOME : .
Miscellaneous income includes Rs.758.97 lacs being write back of penal
inter- est waiver granted by the GOI provided in earlier years on
overdue Govefhrnent Loan as a result of waiver order from Government of
India order dated 26.08.2009.
14. SEGMENT REPORTING.
Since the company is manufacturing only Chemicals, (here are no
separate re- j portable primary and secondary segments and all the
chemicals manufactured by the company are considered to have been
representing as single reportable segment. The requirements of
Accounting Standard 17 with regard to disclosure of segmental results
are therefore considered not applicable to the" company.
15. .RELATED PARTY DISCLOSURE AS PER AS-18
a) Related Parties
The company is a State controlled enterprise therefore the disclosures
as per Accounting Standard 18 are not considered applicable.
b) Key Management Personnel
i) A. S. Didolkar, Chairman & Managing Director
ii) R. N.- Madangeri, Director, (Technical)
iit) M.K. Mittal, -Director (Finance) from 8
December 2009.
16. ACCOUNTING FOR TAXES ON INCOME AS PER AS 22
The company had reviewed its net deferred tax assets as at 31st March,
2004 and decided not to carry forward such assets due to uncertainty of
realizing this assets against future taxable income as accumulated
losses mounted up con- tinuously over a period. This decision is
followed this year also in view of Ac- counting Standard Interpretation
issued by the institute of Chartered Accountant of India.
17. BALANCE CONFIRMATION
Balances of debtors, creditors, loans, advances, other current assets
and bor- rowings are subject to confirmation/reconciliation and
subsequent adjustments.
18. CONTINGENT LIABILITIES
(Rs.in lacs)
2009 -10 2008-09
1 a) Contingent Liabilities
Claims against the Company not
Acknowledged as debts:
i) Differential lax on account of concessional 521.27 473.02
forms in respect of concessional sales
ii) Income Tax Claims Nil 220.86
iii) Excise Claims . 212.01 117.18
iv) Customs claim 10.80 10.80
v) Other Claims * 7307.22 5859.04
19.The Company has taken bank guarantee forHs.814 lacs against the
term deposit receipt of Rs.2538 lacs from Central Bank of India, Marine
Lines, Mumbai, apart from loan amount of Rs.1516 lacs including
interest thereon.