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Notes to Accounts of Hindustan Organic Chemicals Ltd.

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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