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Notes to Accounts of Indo Rama Synthetics (India) Ltd.

Mar 31, 2015

1. General information

Indo Rama Synthetics (India) Limited (hereinafter referred to as 'the Company' or 'IRSL') is a manufacturer of Polyester Filament Yarn (PFY), Polyester Staple Fibre (PSF), Draw Texturised Yarn (DTY) and Chips. The Company is also engaged in power generation, which is used primarily for captive consumption. The Company's manufacturing facilities are located at Butibori, Nagpur.

Note 2: Disclosure pursuant to Accounting Standard 15 on "Employee Benefits"

a) Defined contribution plans

An amount of Rs.4.33 Crores (previous year Rs. 4.36 Crores) for the year has been recognized as an expense in respect of the Company's contributions towards Provident Fund which is deposited with the government authorities and has been included under employee benefit expenses in the Statement of Profit and Loss.

b) Defined benefit plans

Gratuity is payable to all eligible employees of the Company on superannuation, death or permanent disablement in terms of the provisions of the Payment of Gratuity Act or as per the Company's Scheme, whichever is more beneficial.

The following table sets forth the status of the gratuity plan of the Company and the amounts recognised in the Balance Sheet and Statement of Profit and Loss:

Discounting Rate: The discount rate is estimated based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of the obligation.

Salary Escalation Rate: The estimates of salary increases, considered in actuarial valuation, take account of inflation, promotion and other relevant factors.

c) Other long term benefits:

An amount of Rs. 1.76 Crores (previous year Rs.1.82 Crores) pertains to expense towards compensated absences and included in "Employee benefits expense."

Note 3: Segment information:

(a) Information about primary business segment

The Company recognises 'Polyester' as its only primary segment since its operations consist of manufacturing of this product and related activities. Accordingly, 'Polyester' segment is the only segment comprising the primary basis of segmental information set out in these financial statements.

(b) Information on secondary/ geographical segment

The Company sells its products to various manufacturers within the country and also exports to other companies. Considering the size and proportion of exports to local sales, the Company considers sales made within the country and exports as two geographical segments. Information of geographical segment is based on the geographical location of the customers.

Note 4: Related party disclosures (As per Accounting Standard - 18)

(i) Related parties where control exists:

(a) Wholly owned subsidiaries

Indo Rama Renewables Limited ('IRRL') Indo Rama Renewables Porbandar Limited Indo Rama Renewables Ramgarh Limited Indo Rama Renewables Jath Limited

(ii) Other related parties with whom Company had transactions:

(a) Key management personnel and their relatives

Mr. Mohan Lal Lohia, Chairman Emeritus

Mr. Om Prakash Lohia, Chairman cum Managing Director ('CMD')

Mr. Vishal Lohia, Whole Time Director ('WTD')

Mr. Ashok Jagjivan Gupta (Executive Director till 30 June 2013)

Mr. Anant Kishore (Executive Director with effect from 8 August 2013)

Mrs. Urmila Lohia, Wife of CMD

Mr. Aloke Lohia, Brother of CMD

Mrs. Ritika Kumar, Daughter of CMD

Ms. Aruna Goenka, Sister of CMD

Mrs. Rimple Lohia, Wife of WTD

(b) Enterprises over which key management personnel or their relatives have significant influence

Indorama Petrochem Limited, Thailand T P T Petrochemicals Public Co. Limited, Thailand PT. Indorama Petrochemicals, Indonesia P.T. Indo Rama Synthetics TBK, Jakarta

Note 5: Contingent liabilities and commitments (to the extent not provided for)

Contingent liabilities:

- Claims against the Company not acknowledged as debts.

As at As at Particulars 31 March 2015 31 March 2014

Excise / customs / service tax matters in dispute/ under appeal 62.83 63.19

Income tax matters in dispute/ under appeal 11.88 15.52

Sales tax/ VAT matters in dispute/ under appeal 11.04 6.46

Claims by ex-employees, vendors, customers and civil cases 0.84 0.71

- Customs duty claims (including penalties) against the Company aggregating to Rs.214.25 Crores (previous year Rs.214.25 Crores) have not been considered contingent as favourable orders have been received, in some of the cases, by the Company from the CESTAT. The Company believes that its position is strong in this regard. The matter is pending with the Honorable Supreme Court. In addition, the Company has also received a show cause notice amounting to Rs.6 Crores.

- The Company is in the process of finalizing a compensation arrangement with its workers union for the past few years, starting November 2011 and the matter is pending with the Labour Court of Nagpur. During the previous year, the Company received an interim order from the Court to pay an interim increment w.e.f. November 2013, pending the final judgment. As and when the final judgment is received, the Company would accrue and pay for any differential compensation.

The Company believes that the above issues, when finally settled, are not likely to have any significant impact on the financial position of the Company.

- Commitments:

a) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) is Rs. 25.48 Crores (previous year Rs. nil).

b) On 25 January 2012, the Company entered into a memorandum of understanding ('MOU') with Indorama Ventures PCL, Thailand, for manufacturing of Purified Terepthalic Acid (PTA) and downstream products Polyethylene (PET) and Polyester Staple Fibre (PSF). As a part of the above process, the Company has entered into a Memorandum of Understanding (MOU) with the Government of Tamil Nadu to set up the above project. The project continues to be at an initial stage of conceptualization.

c) The Company has commitments to export 285,985 MT (previous year 264,077 MT) of finished goods as per foreign trade policy pursuant to import of duty free material under advance license scheme.

Note 7: Insurance claim receivables:

(a) The Company had lodged claims with its insurance company for the loss of certain assets and loss suffered due to business interruption under loss of profit policy relating to a fire incidence at Butibori plant in 2007- 08. Since the matter has been under dispute with the insurance company, as per the terms and conditions of the above policy, the Company has, during the previous years, initiated the arbitration process for a claim of Rs.72.94 Crores for loss of business interruption and for the claim of Rs.6.43 Crores for loss of assets. While the said matter was pending conclusion by the Arbitral Tribunal, the Company, on a conservative basis, carried forward insurance recoverable (recorded in the financial year ended 31 March 2008) to the extent of Rs.33.53 Crores (net of receipt/adjustment) as advances recoverable, without prejudice to its right to claims aggregating Rs. 79.37 Crores. On 1 August 2012, the Arbitral Tribunal decided the matter in the favour of the Company with an award of Rs.32.45 Crores (net off receipt/adjustment) and interest at 9% per annum from July 2008 till the date of payment. Pursuant to the above award, the Company had during the year 2012-13 recorded the interest receivable amounting to Rs.11.69 Crores upto July 2012 (the date of order) and aligned the carrying amount of insurance claim. The Insurance Company had filed an appeal in the Delhi High Court against the same. On 20 January 2015, the Delhi High Court Single bench pronounced the order wherein the Court has remanded the matter back to Arbitral Tribunal for computation of claim on "turnover basis". Subsequently, the Company had filed an appeal with the Delhi High Court double bench and an interim stay has been awarded pending disposal. As a matter of prudence, the Company has not recognized the interest for the period after July 2012 based on the earlier arbitral tribunal's favourable judgment and also as legally advised, the Company is of the view that the amounts carried forward are fully recoverable.

(b) Consequent to an incident of fire during the year 2011-12, the Company had spent Rs.7.58 Crores on refurbishment of the concerned plant and machinery, which has been recognized as a receivable from the insurance company under other current assets. During the previous year, the management has submitted the claims to the surveyor. The final settlement is pending with insurance company.

Further, the Company strongly believes and is reasonably certain that the above cases do not have any significant impact on the financial position of the Company and it will be able to realize the above amounts in the normal course and, therefore, all the claims have been classified as current.

Note 7: The Company's business mainly comprises manufacture of polyester.

During the past few years, there has been significant volatility in raw material prices which are linked with crude oil prices and is subject to foreign exchange fluctuations. In comparison, the sales realization in the industry has been low in comparison to the raw material price variations. In addition, stiff competition in certain products, low capacity utilisation, high inflation, high interest rates and weakened rupee has resulted in a temporary phase of low operating margins/losses in the recent past and also accumulation of significant unabsorbed depreciation as per tax laws. However, the Company's products command a premium in the market due to cost competitiveness and quality standards and its premium product lines are operating at full capacity. The Company has internally assessed its position and the future outlook and has also initiated various measures including strategic steps to ensure profitable operations. To achieve the projected level of profitability, the Company has initiated steps including increase in the capacity for its premium products by making further investment in the product line and is also confident of the market demand for the increased production. These actions would be coupled with other initiatives which include cost saving measures, exploration of new markets especially exports, streamlined utilisation of export benefits, developing backward integration facilities towards producing certain key input materials. The Company is also arranging for funds to meet the above plans. Accordingly, the Company believes that considering the expected investment and resultant profitability over the next years & in future years, no provision is required for impairment of assets and is confident that the MAT Credits carried at the end of the year is fully recoverable and there are no indications of impairment of assets.

Note 8: The Company had made an early application, since the year 2010-11, of Accounting Standard 30 "Financial Instruments- Recognition and Measurement", issued by the Institute of Chartered Accountants of India for accounting for forward exchange contracts taken for highly probable / forecast transactions, which are not covered by Accounting Standard 11. An amount of Rs.4.69 Crores has been recognized as expense (previous year an expense of Rs.10.40 Crores) in the financial statements for the year ended 31 March 2015 and included in exceptional items as an adjustment on the said application of Accounting Standard 30. During the current and previous year, due to significant volatility in the foreign currency vis-a-vis local currency, the Company has considered the foreign exchange fluctuation as an exceptional item in the Statement of Profit and Loss.

Note 9: During the current year, due to unprecedented fall in global prices of crude oil, the Company has incurred a loss of Rs.20.75 Crores (i.e.Rs.15.26 Crores for raw material and Rs.5.49 Crores for finished goods) on account of write down of inventories which has been considered as an exceptional item.

Note 10: The Company has considered it as appropriate to include interest of Rs.9.41 Crore (previous year Rs.8.33 Crore), received from customers as other operating income which hitherto was considered as other income upto the previous year.

Note 11: The figures relating to the previous year have been regrouped and reclassified, wherever necessary, to confirm to the current year's classification.


Mar 31, 2013

1. GENERAL INFORMATION

Indo Rama Synthetics (India) Limited (herein after referred to as ''the Company'' or ''IRSL'') is a manufacturer of Polyester Filament Yarn (PFY), Polyester Staple Fibre (PSF), Draw Texturised Yarn (DTY) and Chips. The Company is also engaged in power generation, which is used primarily for captive consumption. The Company''s manufacturing facilities are located at Butibori, Nagpur.

Foot notes:

1. During the current year and in the previous year, there have been no movements in the number of equity shares outstanding.

2. The Company has only one class of equity shares, having a par value of Rs. 10 per share. Each shareholder is eligible to one vote per share held, except for shares held against Global Depository Receipts (GDR). The dividend proposed, if any, by the Board of Directors is subject to approval of shareholders in the ensuing Annual General Meeting, except in case of interim dividend. The repayment of equity share capital in the event of liquidation and buy back of shares are possible subject to prevalent regulations. In the event of liquidation, normally the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

On 9 November 2010, the Company had allotted 20,000,000 Fully Convertible Preferential warrants (FCPs) at Rs. 40.60 per warrant (aggregating Rs. 81.20 Crores) as per Securities and Exchange Board of India (SEBI) and other guidelines, as applicable. As per the terms of the warrants, Rs. 10.15 per warrant (aggregating Rs. 20.30 Crores) have been received and balance amount of Rs. 30.45 per warrant (aggregating Rs. 60.90 Crores) was payable within 18 months of allotment of the warrants. The warrants were convertible into equity shares within a period of 18 months from the date of allotment of warrants at the option of the warrant holders. Upon conversion, one warrant will be converted into one fully paid equity share of Rs. 10 each and amount of Rs. 30.60 will be adjusted towards share premium account. Subsequently, the Company has received request from warrant holders for extending the period upto May 2014 for payment of balance amount of Rs. 60.90 Crores. Accordingly, the Company has requested for extension of time to Securities and Exchange Board of India (SEBI) and is in the process of filing application to Ministry of Corporate Affairs for approval.

* Excluding deferred tax assets aggregating Rs. 296.37 Crores (Previous year Rs. 288.84 Crores) in relation to unabsorbed depreciation amounting to Rs. 871.92 Crores (Previous year Rs. 890.25 Crores), which have not been recorded. The same have been a subject matter of litigation by the Income Tax Authorities and appeals in this regard are pending with the higher authorities.

Nature of security

Cash credit and other working capital facilities from banks are secured by way of hypothecation of stocks of raw materials, work-in- progress, finished goods, stores and spares, packing material, goods at port/in transit/under shipment, outstanding money, book debts, receivables and other current assets of the Company, both present and future. These are further secured by a second charge on all the immovable properties of the Company, both present and future.

NOTE 2

DISCLOSURE PURSUANT TO ACCOUNTING STANDARD 15 ON "EMPLOYEE BENEFITS"

Defined contribution plans

An amount of Rs. 4.47 Crores (Previous year Rs. 5.01 Crores) for the year has been recognised as an expense in respect of the Company''s contributions towards Provident Fund which is deposited with the government authorities and has been included under employee benefit expenses in the Statement of Profit and Loss.

Defined benefit plans

Gratuity is payable to all eligible employees of the Company on superannuation, death or permanent disablement in terms of the provisions of the Payment of Gratuity Act or as per the Company''s Scheme, whichever is more beneficial.

The following table sets forth the status of the gratuity plan of the Company and the amounts recognised in the Balance Sheet and Statement of Profit and Loss:

NOTE 3

SEGMENTAL INFORMATION:

(a) Information about primary business segment

The Company recognises ''polyster'' as its only primary segment since its operations consist of manufacturing of this product and related activities. Accordingly, ''Polyster'' segment is the only segment comprising the primary basis of segmental information set out in these financial statements.

(b) Information on secondary/ geographical segment

The Company sells its products to various manufacturers within the country and also exports to other companies. Considering the size and proportion of exports to local sales, the Company considers sales made within the country and exports as two geographical segments. Information of geographical segment is based on the geographical location of the customers.

For certain insurance claims, refer to note 41.

Commitments:

a) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 0.29 Crores (previous year Rs. 21.12 Crores).

b) On 25 January 2012, the Company has entered into a memorandum of understanding (''MoU'') with Indorama Ventures PCL, Thailand, for manufacturing of Purified Terepthalic Acid (PTA) and downstream products Polyethylene (PET) and Polyester Staple Fiber (PSF). The project is at an initial stage of conceptualisation. As a part of the above process, the Company has entered into a Memorandum of Understanding (MoU) with Government of Tamil Nadu to set up the above project.

c) The Company has commitments to export 343,010 MT (previous year 380,632 MT) of finished goods over a period of three years pursuant to import of duty free material under advance license scheme.

NOTE 4

INSURANCE CLAIM RECEIVABLES:

(a) The Company had lodged claims with an insurance company for the loss of certain assets and loss suffered due to business interruption under loss of profit policy relating to the fire incidence at Butibori plant in 2007-08. Since the matter has been under dispute with the insurance company, as per the terms and conditions of the above policy, the Company has, during the previous years, initiated the arbitration process for the claim of Rs. 72.94 Crores for loss of business interruption and for the claim of Rs. 6.43 Crores for loss of assets. While the said matter was pending conclusion by the Arbitral Tribunal, the Company , on a conservative basis, carried forward insurance recoverable (recorded in the financial year ended 31 March 2008) to the extent of Rs. 33.53 Crores (net of receipt/adjustment) as advances recoverable, without prejudice to its right to claims aggregating Rs. 79.37 Crores. During the year, on 1 August 2012, the Arbitral Tribunal has decided the matter in the favour of the Company with an award of Rs. 32.45 Crores (net off receipt/adjustment) and interest at 9% per annum from July 2008 till the date of payment. Pursuant to the above award, the Company has recorded the interest receivable amounting to Rs. 11.69 Crores upto July 2012 (the date of order) and aligned the carrying amount of insurance claim. The Insurance Company had filed an appeal in the Delhi High Court. Pending disposal by the High Court and as a matter of prudence, the Company has not recognised the interest for the period after July 2012.

(b) During the previous year, the Company has accrued income in regard to insurance claims aggregating to Rs. 8.73 Crores (including interest and compensation for cost) pertaining to the financial year ended 31 March 2000. The claim has been recorded based on the arbitration award decided in the favour of the Company. The Delhi High Court has already released the amount of Rs. 8.7 Crores in the favour of the Company against a corporate guarantee.

(c) Consequent to an incident of fire during the year 2011-12, the Company has during the year spent Rs. 7.58 Crores on refurbishment of the concerned plant and machinery, which has been recognised as a receivable under other current assets. The Company is in the process of filing a claim with the insurance Company.

The Company strongly believes and is reasonably certain that it will be able to realise the above amounts in the normal course and, therefore, all the claims have been classified as current.

Hitherto, the exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest cost, were treated as borrowing cost in terms of the Accounting Standard (AS) -16, "Borrowing Costs" During the year, pursuant to a clarification dated 9 August 2012 from the MCA, the Company has changed the accounting policy, w.e.f from 1 April 2011 to treat the same as "foreign exchange fluctuation" to be accounted as per AS-11, "The Effects of Changes in Foreign Exchange Rates" instead of the "borrowing costs". This change has resulted into increase in other income by Rs. 2.75 Crores (pertaining to the year ended 31 March 2012) for the year ended 31 March 2013 and the increase in depreciation for the year ended 31 March 2013 by Rs. 0.15 Crores (pertaining to the year ended 31 March 2012).

NOTE 5

During the past few years, there has been significant volatility in the raw material prices which are linked with crude oil prices and is subject to foreign exchange fluctuations. In comparison, the sales realisation in the industry has not been encouraging to respond to the raw material price variations. In addition, stiff competition, low capacity utilisation, high inflation, high interest rates and weakened rupee has resulted into a temporary phase of low operating margins/losses in the recent past. However, the Company''s product command a premium in the market due to cost competitiveness and quality standards. Further, the Company has internally assessed its position and the future outlook and also has initiated various measures including strategic steps to ensure profitable operations. These initiatives and business outlook include cost savings initiatives, exploration of new markets, focussing on value added products, developing backward integration facilities towards producing certain key input materials.

NOTE 6

The Company had made an early application, since the year 2010-11, of Accounting Standard 30 "Financial Instruments- Recognition and Measurement", issued by Institute of Chartered Accountants of India for accounting for forward exchange contracts taken for highly probable / forecast transactions, which are not covered by Accounting Standard 11. An amount of Rs. 21.11 Crores (previous year Rs. 27.09 Crores) has been recognised as income in these financial statements for the year ended 31 March 2013 and included in exceptional items as an adjustment on the said application of Accounting Standard 30.

NOTE 7

During the current and previous year, due to significant volatility in the foreign currency vis-a-vis local currency, the Company has considered the foreign exchange fluctuation as an exceptional item in the Statement of Profit and Loss.

NOTE 8

The figures relating to the previous year have been regrouped wherever necessary to conform to the current years classification including- Advance tax amounting to Rs. 12.55 Crores have been regrouped from short term loans and advances to long term loan and advances.

Miscellaneous expenses amounting to Rs. 11.43 Crores have been regrouped to repair and maintenance expenses.


Mar 31, 2012

1. During the current year and in the previous year, there have been no movements in the number of equity shares outstanding.

2. The Company has only one class of equity shares, having a par value of Rs.10 per share. each shareholder is eligible to one vote per share held, except for shares held against Global Depository Receipts (GDR). The dividend proposed, if any, by the Board of Directors is subject to approval of shareholders in the ensuing Annual General Meeting, except in case of interim dividend. The repayment of equity share capital in the event of liquidation and buy back of shares are possible subject to prevalent regulations. In the event of liquidation, normally the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

3. Above equity shares of Rs.10 each include:

a) 20,000,000 (previous year 20,000,000) equity shares issued during the year 2007-08 as fully paid-up shares to shareholders of erstwhile Indo Rama Petrochemicals Limited, pursuant to a scheme of amalgamation, for consideration other than cash.

b) 10,291,360 equity shares (representing 6.78% of total number of shares) are outstanding against 1,286,420 Global Depository Receipts (GDR), each GDR comprising 8 underlying fully paid up equity shares of Rs. 10 each [previous year 10,531,360 equity shares (representing 6.94% of total number of shares) against 1,316,420 GDRs].

During the previous year, pursuant to shareholders approval in Annual General Meeting held on 25 October 2010, the Company had allotted 20,000,000 Fully Convertible Preferential warrants (FCPs) to promoter group companies on 9 November 2010 at Rs.40.60 per warrant (aggregating Rs.81.20 crore) as per Securities and exchange Board of India (SEBI) and other guidelines, as applicable. As per the terms of the warrants, Rs. 10.15 per warrant (aggregating Rs.20.30 crore) have been received and balance amount of Rs.30.45 per warrant (aggregating Rs.60.90 crore) would be received within 18 months of allotment of the warrants. The warrants would be convertible into equity shares within a period of 18 months from the date of allotment of warrants at the option of the warrant holders. upon conversion, one warrant will be converted into one fully paid equity share of Rs.10 each and amount of Rs.30.60 will be adjusted towards share premium account

a) Rupee term loans from banks:

i) amounting to Rs.23.00 crore (previous year Rs.40.50 crore) is secured by equitable mortgage on all the immovable properties (excluding land in the state of Gujarat) by way of deposit of title deeds and hypothecation of movable assets of the Company (save and except book debts and assets exclusively hypothecated to banks and bodies corporate), including movable machinery, machinery spares, tools and accessories, both present and future, ranking pari-passu with the charges created/to be created in favour of banks and financial institutions for securing rupee and foreign currency term loans.

ii) amounting to Rs. Nil (previous year Rs.33.94 crore) is secured by equitable mortgage on all the immovable properties (excluding land in the state of Gujarat) by way of deposit of title deeds and hypothecation of movable assets of the Company ( save and except book debts and assets exclusively hypothecated to banks and bodies corporate), including movable machinery, machinery spares, tools and accessories, both present and future, ranking pari-passu with the charges created/to be created in favour of banks and financial institutions for securing rupee and foreign currency term loans. The loan has been repaid during the year and the Company is in the process of vacating charges.

iii) amounting to Rs.6.87 crore (previous year Rs. 68.06 crore) is secured by equitable mortgage on all the immovable properties (excluding land in the state of Gujarat) by way of deposit of title deeds and hypothecation of movable assets of the Company ( save and except book debts and assets exclusively hypothecated to banks and bodies corporate), including movable machinery, machinery spares, tools and accessories, both present and future, ranking pari-passu with the charges created/to be created in favour of banks and financial institutions for securing rupee and terms of repayment and defaults Repayable in 6 equal half yearly installments commencing from 31 January 2010 along with interest at State Bank Advance Rate ("SBAR"). The default in repayment at the end of the current year amounts to Rs. 9.50 crore pertaining to the period of 61 days. The default at the end of the previous year amounted to Rs. Nil.

The loan has been repaid during the year. The default in repayment at the end of the previous year amounted to Rs.33.94 crore pertaining to the period from 6 months to 1 year 4 months.

As per rescheduled agreement, balance as at 18 February 2008 was repayable in 14 equal quarterly installments commencing from November 2008, along with interest at SBAR. The default in repayment at the end of the current year amounts to Rs.6.87 crore pertaining to the period of 59 days. The default at the end of the previous year amounted to Rs. 40.56 crore pertaining to the period from 58 days to 1 year 5 months.

nature of security

a) Rupee term loans from banks:

iv) amounting to Rs.20.00 crore (previous year Rs. 35.98 crore) is secured by first specific charge over the specific assets purchased under the loan agreement for thermal power project of the Company.

v) amounting to Rs.2.11 crore (previous year Rs. Nil) is

secured by first specific charge over the specific assets to be purchased under the loan agreement.

vi) aggregating to Rs.0.50 crore (previous year Rs.0.17 crore) are secured by hypothecation of specific vehicles.

vii) Working capital term loans aggregating Rs.17.83 crore (previous year Rs.37.62 crore) are secured by way of first charge on the Company's entire fixed assets, ranking pari-passu with other banks.

b) Foreign currency term loans from banks:

i) amounting to Rs128.76 crore (previous year Rs.146.10 crore), are secured by first pari-passu specific charge on the equipment purchased under the loan agreement for the Company's Polyester expansion Project and a first charge on the land situated at Mehsana, Gujarat.

ii) amounting to Rs. 60.31 crore (previous year Rs.64.32 crore) is secured by first pari-passu specific charge on the equipment purchased under the loan agreement for the Company's Polyester expansion Project and a first charge on the land situated at Mehsana, Gujarat.

Terms of repayment and defaults

As per rescheduled agreement, balance as at 4 February 2009 was repayable in 15 equal quarterly installments commencing from 30 September 2009 along with interest at SBAR. The default in repayment at the end of the current year amounts to Rs.4.00 crore pertaining to the period of one day. The default in repayment at the end of the previous year amounted to Rs.2.50 crore pertaining to the period of one day. Repayable in 18 equal quarterly installments commencing from June 2012, along with interest at BR plus 1% plus 0.50%.

(a) Repayable in 36 equated monthly installments commencing from July 2010.

(b) Repayable in 36 equated monthly installments commencing from August 2011.

(c) Repayable in 36 equated monthly installments commencing from January 2012.

(a) Working capital term loan amounting to Rs.6 crore (previous year Rs. 10 crore) is repayable in 15 equal quarterly installments commencing from January 2010 along with interest at SBAR.

(b) Working capital term loan amounting to Rs.11.83 crore (previous year Rs.27.60 crore) is repayable in 12 equal quarterly installments commencing from 21 January 2009 along with interest at Base Rate plus 3%.

Repayable in 20 equal half yearly installments commencing from April 2007 along with interest at six month euripi plus 0.95%. Further, two installments due on 15 April 2009 and 15 October 2009 have been rescheduled to be paid in 10 equal half yearly installments from 30 September 2009 along with interest at six month euripi plus 0.95%. Repayable in 20 equal half yearly installments commencing from April 2007 along with interest at six month LIBOR plus 0.95%. Further, two installments due on 15 April 2009 and 15 October 2009 have been rescheduled to be paid in 10 equal half yearly installments from 30 September 2009 along with interest at six month LIBOR plus 0.95%. nature of security

c) Rupee term loan from others:

amounting to Rs.12.49 crore (previous yearRs. 18.76 crore) is secured by equitable mortgage on all the immovable properties (excluding land in the state of Gujarat), by way of deposit of title deeds and hypothecation of movable assets of the Company (save and except book debts and assets exclusively hypothecated to banks and bodies corporate), including movable machinery, machinery spares, tools and accessories, both present and future, ranking pari-passu with the charges created/to be created in favour of banks and financial institutions for securing rupee and foreign currency term loans.

d) Foreign currency term loans from others: amounting to Rs. 58.14 crore (previous year Rs. 72.46 crore) is secured by equitable mortgage on all the immovable properties (excluding land in the state of Gujarat), by way of deposit of title deeds and hypothecation of movable assets of the Company (save and except book debts and assets exclusively hypothecated to banks and bodies corporate) including movable machinery, machinery spares, tools and accessories, both present and future, ranking pari-passu with the charges created/to be created in favour of banks and financial institution for securing rupee and foreign currency term loans.

Terms of repayment and defaults

As per rescheduled agreement balance as on 1 July 2010 was repayable in 8 equal half yearly installments beginning 1 July 2010 along with interest at 8.25 %.

As per rescheduled agreement, the balance as on 9 February 2010 is repayable in 9 equal half yearly installments commencing from 15 November 2010 along with interest at arbor plus 2.35% p.a.

* excluding deferred tax assets aggregating Rs.288.84 crore (Previous year Rs269.60 crore) in relation to unabsorbed depreciation amounting to Rs890.25 crore (Previous year Rs.811.62 crore), which have not been recorded. The same have been a subject matter of litigation by the Income Tax Authorities and appeals in this regard are pending with the appellate authorities.

nature of security

Cash credit and other working capital facilities from banks are secured by way of hypothecation of stocks of raw materials, work-in-progress, finished goods, stores and spares, packing material, goods at port/in transit/under shipment, outstanding money, book debts, receivables and other current assets of the Company, both present and future. These are further secured by a second charge on all the immovable properties of the Company, both present and future.

Defined contribution plans

An amount of Rs.5.01 Crore (Previous year Rs.4.46 Crore) for the year, has been recognized as an expense in respect of the Company's contributions towards Provident Fund, deposited with the government authorities and have been included under employee benefit expense in the Statement of Profit and Loss.

Defined benefit plans

Gratuity is payable to all eligible employees of the Company on superannuation, death or permanent disablement in terms of the provisions of the Payment of Gratuity Act or as per the Company's Scheme, whichever is more beneficial.

The following table sets forth the status of the gratuity plan of the Company and the amounts recognised in the Balance Sheet and Statement of Profit and Loss:

Discount Rate: The discount rate is estimated based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of the obligation.

Salary escalation Rate: The estimates of salary increases, considered in actuarial valuation, take account of inflation, promotion and other relevant factors.

note 35: Segmental information:

Hitherto, up to the previous year ended 31 March 2011, the Company considered two reportable segments, viz Polyester and Power. During the year ended 31 March

(a) information about primary business segment: Segment revenues, results and other information 2012, the management reassessed its reportable segments, taking into consideration the economic environment; risks and returns; future business plans; and reporting system. Management evaluated and concluded that power plant is being used primarily for captive consumption with an insignificant portion being sold to outside customers. Based on the current plan and projections, the Company envisages that the power generation would continue to be primarily for captive purposes only. Accordingly, the Company has only one business segment, i.e., Polyester and, therefore, segment reporting disclosures are no longer applicable. The figures reported during the previous year have been disclosed as under:

note: The Company has common assets for producing goods for domestic market and overseas markets. Hence, separate figures for other assets/ additions to other assets cannot be furnished.

The Company has taken office space on operating lease.

The lease rentals charged during the year in respect of cancellable and non cancellable operating leases and maximum obligations on long term non-cancellable operating lease payable as per the rentals stated in the agreement are as follows:

a) estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 21.12 Crore (previous year Rs.86.53 Crore).

b) On 25 January 2012, the Company has entered into a memorandum of understanding ('MOu') with Indorama Ventures PCL, Thailand, for manufacturing of

Purified Terepthalic Acid (PTA) and downstream products Polyethylene (PeT) and Polyester Staple Fiber (PSF). The project is at an initial stage of conceptualization.

c) The Company has commitments to export 380,632 MT (previous year 333,085 MT) of finished goods over a period of three years pursuant to import of duty free materials under advance license scheme.

note 40: insurance Receivables:

(a) The Company had lodged claims with an insurance company for the loss of certain assets and loss suffered due to business interruption under loss of profit policy relating to the fire incidence at Butibori plant in 2007-08. Since the matter has been under dispute with the insurance company, as per the terms and conditions of the above policy, the Company has, during the previous year, initiated the arbitration process for the claim of Rs.72.94 Crore for loss of business interruption and for the claim of Rs.6.43 Crore for loss of assets. While the said matter is pending conclusion by the Arbitral Tribunal, the Company has on a conservative basis carried forward insurance recoverable (recorded in the financial year ended 31 March 2008) to the extent of Rs.33.53 Crore (net of receipt/adjustment) as advances recoverable, without prejudice to its right to claims aggregating Rs. 79.37 Crore. Any adjustments consequent to Arbitral proceedings would be accounted for on final settlement of the claim.

(b) During the current year, the Company has accrued income in regard to insurance claims aggregating Rs.8.73 Crore (including interest and compensation for cost) pertaining to the financial year ended 31 March 2000. The claim has been recorded based on the arbitration award decided in the favour of the Company. The matter is subject to litigation and is pending at the High Court, the income has been accrued considering arbitration award in favour of the Company.

NOTE 41: Based on the information available, there are certain vendors who have confirmed that they are covered under the Micro, Small and Medium enterprises Development Act, 2006. Disclosures as required by section 22 of The Micro, Small and Medium enterprises Development Act, 2006, are given below:

note 42: During the current year, due to significant volatility in the foreign currency vis-à-vis local currency, the Company has considered the foreign exchange fluctuation as an exceptional item in the statement of profit and loss. The foreign exchange fluctuations pertaining to corresponding previous year ended 31 March 2011 have been regrouped only to make them comparable.

Note] 43: The financial statements for the year ended 31 March 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956.

Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended 31 March 2012 are prepared as per the Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification. The adoption of Revised Schedule VI for the previous year figures does not impact recognition and measurement principles followed for preparation of financial statements. The following is a summary of significant effects that revised Schedule VI has primarily on presentation of Balance Sheet of the Company as at 31 March 2011.


Mar 31, 2011

1. Nature of operations

Indo Rama Synthetics (India) Limited (hereinafter referred to as the Company or IRSL) is a manufacturer of Polyester Filament Yarn (PFY), Polyester Staple Fibre (PSF), Draw Texturised Yarn (DTY) and Chips. The Company is also engaged in power generation, which is used for captive consumption and surplus power is sold through grid. The Companys manufacturing facilities are located at Butibori, Nagpur.

2. During the current year, pursuant to shareholders approval in Annual General Meeting held on 25 October 2010, the Company has allotted 20,000,000 Fully Convertible Preferential warrants (FCPs) to promoter group companies on 9 November 2010 at Rs. 40.60 per warrant (aggregating Rs. 81.20 Crore) as per Securities and Exchange Board of India (SEBI) and other guidelines, as applicable. As per the terms of the warrants, Rs. 10.15 per warrant (aggregating Rs. 20.30 Crore) have been received and balance amount of Rs. 30.45 per warrant (aggregating Rs. 60.90 Crore) would be received within 18 months of allotment of the warrants. The warrants would be convertible into equity shares within a period of 18 months from the date of allotment of warrants at the option of the warrant holders. Upon conversion, one warrant will be converted into one fully paid equity share of Rs.10 each and amount of Rs. 30.60 will be adjusted towards share premium account. (Refer note 9 of schedule 18)

3. The Company had lodged claims with an insurance company for the loss of certain assets and loss suffered due to business interruption under loss of profit policy relating to the fire incidence at Butibori plant in 2007-08. Since the matter has been under dispute with the insurance company, as per the terms and conditions of the above policy, the Company has, during the year, initiated the arbitration process for the claim of Rs. 72.94 Crore for loss of business interruption and for the claim of Rs. 6.43 Crore for loss of assets. While the said matter is pending conclusion by the Arbitral Tribunal, the Company has on a conservative basis carried forward insurance recoverable (recorded in the financial year ended 31 March 2008) to the extent of Rs. 33.53 Crore (net of receipt/adjustment) as advances recoverable, without prejudice to its right to claims aggregating Rs. 79.37 Crore. Any adjustments consequent to Arbitral proceedings would be accounted for on final settlement of the claim.

4.1 Particulars in respect of goods manufactured

Notes:

i) The Company manufactures varying denier/ qualities of fibers/ yarn. The above capacity is calculated based on a mix of product range as certified by the management and relied on by the auditors being a technical matter.

ii) Delicensed vide notification no. 477 (E) dated 27 July 1991 and press note No 1 (1998 series) dated 8 June 1998.

iii) TPA-Tonnes per annum

iv) MWPH-Mega watt per hour

v) Pursuant to press note no. 2/2011 dated 8 February 2011, issued by Ministry of Corporate Affairs, disclosures required by part - II, paras 3(i) (a), 3(ii)(a) and 3(ii)(b) of Schedule VI to the Companies Act, 1956, have not been given.

5.1 Managerial remuneration

As the future liability for gratuity and leave encashment is provided on an actuarial basis for the Company as a whole, the amount pertaining to the managing director/whole time director is not ascertainable and, therefore, not included above.

6. Disclosure pursuant to Accounting Standard 15 on "Employee Benefits"

Defined contribution plans

An amount of Rs. 4.46 Crore (Previous year Rs. 3.64 Crore) for the year, has been recognised as an expense in respect of the Companys contribution for Provident Fund and Employees State Insurance deposited with the government authorities and have been included under operating and other expenditure in the Profit and Loss Account.

Defined benefit plans

Gratuity is payable to all eligible employees of the Company on superannuation, death or permanent disablement in terms of the provisions of the Payment of Gratuity Act or as per the Companys Scheme, whichever is more beneficial.

Discount Rate: The discount rate is estimated based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of the obligation.

Salary Escalation Rate: The estimates of salary increases, considered in actuarial valuation, take account of inflation, promotion and other relevant factors.

7. Segmental information:

(a) Information about primary business segment:

The Company primarily deals in polyester business and, considering the risks and rewards and reporting systems, has viewed Polyester Staple Fibre (PSF), Polyester Filament Yarn (PFY) and Draw Texturised Yarn (DTY) as one integrated business. The Company is also engaged in sale of surplus power. Accordingly, the Company has organised its operations into two major business segments, i.e., Polyester and Power.

8. Related party disclosures

(i) Related parties where control exists: None

(ii) Other related parties with whom Company had transactions:

Key management personnel Mr. O.P. Lohia, Chairman cum Managing Director

Mr. Vishal Lohia, Whole Time Director

Enterprises over which key management personnel or Indo Rama Retail Holdings Private Limited (IRRHPL) their relatives have significant influence Indo Rama Petrochem Limited (IRPL), Thailand

T P T Petrochemicals PCL (TPT Petro), Thailand

Lohia Industries (Pvt.) Ltd (LIPL)

9. Deferred tax liability

* Above excludes deferred tax asset aggregating Rs. 269.60 Crore (Previous year Rs. 258.36 Crore) in relation to unabsorbed depreciation amounting to Rs. 811.62 Crore, which have not been recorded. The same has been a subject matter of litigation by the Income Taxes Authorities and appeals in this regard are pending with the appellate authorities.

10. Capital commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of advances) Rs. 86.53 Crore (Previous year Rs. 34.35 Crore).

11. Contingent liabilities not provided for :

(Rs. crore)

As at 31 March As at 31 March 2011 2010

Excise / customs / service tax matters in dispute/ under appeal 66.84 62.86

Income tax matters in dispute/ under appeal 6.47 12.25

Sales tax matters in dispute/ under appeal 22.68 4.64

Claims by ex-employees, vendors, customers and civil cases 1.72 1.24

12. During the year, reschedulement arrangements have been reached with all the banks and financial institution for its long term borrowings except for a bank. The Company has initiated steps to comply with the terms and conditions, where applicable, of these reschedulement arrangements. In respect of a bank, an understanding has been reached to make the payment to the said bank of its dues in monthly instalments.

13. There are no amounts due to be deposited with the Investor Education and Protection Fund in respect of unclaimed dividends (Previous year Nil).

14. The figures relating to previous year have been regrouped, wherever necessary, to conform to the current years classification.


Mar 31, 2010

1. Nature of operations

Indo Rama Synthetics (India) Limited (hereinafter referred to as the Company or IRSL) is a manufacturer of Polyester Filament Yarn (PFY), Polyester Staple Fibre (PSF), Draw Texturised Yarn (DTY) and Chips. The Company is also engaged in power generation, which is used for captive consumption and surplus power is sold through grid. The Companys manufacturing facilities are located at Butibori, Nagpur.

2. Hitherto, upto the previous year, the Company followed a policy of recognising mark to market losses, and not gains, in relation to foreign exchange forward contracts taken for highly probable/ forecast transactions. During the current year, the Company has followed the principles of AS 30 "Financial Instruments: Recognition and Measurement", which has been recommendatory for the accounting periods commencing on or after 1 April 2009, and has recognised mark to market gain of Rs. 42,432 thousand. This change has resulted in the profit for the year and the reserves and surplus at the end of the year being higher by Rs. 42,432 thousand.

3. The Company had lodged claims with an insurance company for the loss of asset and loss suffered due to business interruption under loss of Profit policy relating to the fire incidence at Butibori plant in 2007-08.

During the year, the Company has filed an application with Insurance Regulatory Development Authority (IRDA) to appoint second surveyor to reassess the loss since the methodology adopted by surveyor appointed by the insurance Company for assessing the loss was incorrect. The Company is of the view, supported by legal advice, that the receipt of amounts as recognized in the books as recoverable is reasonably certain. (Also refer to note 9 in schedule 22 of financial statements for the year 2007-08).

4. Disclosure pursuant to Accounting Standard 15 on "Employee Benefits"

Defined contribution plans

An amount of Rs. 36,391 thousand (Previous year Rs. 34,699 thousand) for the year, have been recognized as an expense in respect of the Companys contribution for Provident Fund, deposited with the government authorities and have been included under operating and other expenditure in the Profit and Loss Account.

Defined benefit plans

Gratuity is payable to all eligible employees of the Company on superannuation, death or permanent disablement in terms of the provisions of the Payment of Gratuity Act or as per the Companys Scheme, whichever is more beneficial.

The following table sets forth the status of the gratuity plan of the Company and the amounts recognised in the balance sheet and profit and loss account:

Discount Rate: The discount rate is estimated based on the prevailing market yields of Indian government securities as at the balance sheet date for the estimated term of the obligation.

Salary Escalation Rate: The estimates of salary increases, considered in actuarial valuation, take account of inflation, promotion and other relevant factors.

5. Segmental information:

(a) Information about primary business segment:

The Company primarily deals in polyester business and considering the risks and rewards and reporting systems, has viewed Polyester Staple Fibre (PSF), Polyester Filament Yarn (PFY) and Draw Texturised Yarn (DTY) as one integrated business. The Company is also engaged in sale of surplus power. Accordingly, the Company has organised its operations into two major business segments, i.e., Polyester and Power.

6. Related party disclosure

(i) Related parties where control exists : None

(ii) Other related parties with whom Company had transactions:

Key management personnel

Relative of key management personnel

Enterprises over which key management personnel

or their relatives have significant influence

Mr. O. P. Lohia, Chairman cum Managing Director

Mr. Vishal Lohia, Whole Time Director

Mrs. Ritika Kumar

Indo Rama Retail Holdings Private Limited (IRRHPL)

Indo Rama Petrochem Limited (IRPL)

7. Capital commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of advances) Rs. 343,481 thousand (Previous year Rs. 186,424 thousand).

8. Contingent liabilities not provided for :

(Rs. 000)

As at As at

31 March 2010 31 March 2009

Excise matters in dispute/ under appeal 628,613 613,413

Income tax matters in dispute/ under appeal 122,451 37,168

Sales tax matters in dispute/ under appeal 46,378 5,605

Claims by ex-employees, vendors, customers etc. 12,391 15,733

9. During the year, the Company had applied to banks and financial institutions for reschedulement of certain long term borrowings. Subsequent to the year end, the banks and financial institutions have approved the reschedulement in principle with certain terms and conditions and the Company has initiated steps either to comply with such conditions or is in the process of renegotiating the same with the respective lenders.

10. There are no amounts due to be deposited with the Investor Education and Protection Fund in respect of unclaimed dividends (Previous year Nil).

11. During the previous year, buyers line of credit was shown under the unsecured loans. However, during the current year on account of reconsideration of facts by the management, the same has been shown under the secured loans.

12. The figures relating to previous year have been regrouped, wherever necessary, to conform to the current years classification. As per our report attached to the Balance Sheet.



 
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