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Notes to Accounts of Hindustan Organic Chemicals Ltd.

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

“These 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 (‘Act’) (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 (‘INR’) or (‘‘‘) which is also the Company’s functional currency and all values are rounded to the nearest Lakhs upto two decimals, except when otherwise indicated. Wherever the amount represented ‘ ‘0’ (zero) construes value less than Rupees a lakh.

Significant accounting estimates, assumptions and judgements

The preparation of the Company’s 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

“The 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 employees’ 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

“The 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 Company’s gratuity scheme is a defined benefit plan. A defined benefit plan is a post employment benefit plan. The Company’s 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 company’s 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 Company’s 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) Company’s 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

“The 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 asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s 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.”

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 employees’ 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 ‘ 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 employees’ 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 member’s length of service and salary at retirement age. 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 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 entity’s 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 Company’s 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 — Quoted (unadjusted) market prices in active ma^ets for identical assets or liabilities

Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

Level 3 — 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 Company’s 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 year’s figures have been regrouped / reclassified wherever necessaiy to correspond with the current year’s 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 employees’ salary/wages. Provident Fund is managed by a separate Exempted Trust.

13.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 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 “Land and Land development” by creating “Capital Reserve”. Land at Panvel amounting to Rs. 0.80 lakhs (previous year Rs. 0.80 lakhs) included in “Land and Land development” 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 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, 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 Company’s 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 Company’s 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 Company’s (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 ¦ 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.

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