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Notes to Accounts of Andhra Paper Ltd.

Mar 31, 2022

33. Contingent Liabilities and Commitments A. Contingent Liabilities (to the extent not provided for):		(H in lakhs)
Particulars	As at March 31, 2022	As at March 31, 2021
Claims against the Company not acknowledged as debt: -Matters under litigation
a. Income tax matters	640.67	640.67
b. Excise duty claims disputed by the Company relating to issues of applicability, classification and valuation	3,911.51	3,913.39
c. Sales tax claims disputed by the Company relating to issues of applicability, royalty and discounts	796.08	755.90
d. Electricity duty towards consumption of energy generated by captive power unit (refer note 47)	1,571.62	1,571.62
e. Other matters (third party claims, interest on royalty, ex-employees claims etc.,)	3,551.31	2,403.97

The amounts disclosed above represent best estimates and the uncertainties are dependent on the outcome of the legal processes initiated by the Company or the claimant as the case may be.

B. Commitments:		(H in lakhs)
Particulars	As at March 31, 2022	As at March 31, 2021
Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances)	5,246.01	1,386.56

34. Employee Benefits

A. Defined contribution plans:

Provident fund:

The Company contributed H 495.96 lakhs (Previous year: H 468.36 lakhs) to the Provident Fund Trust maintained by the Company and H 125.45 lakhs (Previous year: H 124.67 lakhs) to Regional Provident Fund Commissioner, which was recognized as an expense in Statement of Profit and Loss during the year.

Superannuation:

The Company recognized H 15.76 lakhs (Previous year: H 18.83 lakhs) as an expense towards contribution as superannuation in the Statement of Profit and Loss during the year.

The current service cost and the net interest expense for the year are included in the âEmployee benefits expense'' line item in the Statement of profit and loss.

The re-measurement of the net defined benefit liability is included in other comprehensive income.

Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

35. Segment reporting

Operating Segments

The Chairman & Managing Director of the Company has been identified as the Chief Operating Decision Maker (CODM) who evaluates the Company''s performance and allocates resources for manufacture and sale of pulp, paper and paperboard. Accordingly, manufacturing and sale of pulp, paper and paperboard is considered as the single operating segment of the Company.

The Company''s revenue includes H 12,402.47 lakhs (2020-21: H 9,180.68 lakhs) which arose from sales to the Company''s largest customer. No other single customer contributed 10 per cent or more to the Company''s revenue in either 2021-22 or 2020-21.

41. Provision for contingencies

The Company carries a general provision for contingencies towards various disputed matters / claims made against the Company based on the Management''s assessment. Also, refer Note 22. The movement of this provision account is as under:

43. Calculation of fair values

The fair values of the financial assets and liabilities are defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Methods and assumptions used to estimate the fair values are consistent with those used for the year ended March 31,2021.

Financial assets and liabilities measured at fair value as at Balance Sheet date.

The fair values of investments in unquoted equity investments has been estimated using a discounted cash flow model under income approach. The valuation requires Management to make certain assumptions about model inputs, including forecast cash flows, discount rate and credit risk, the probabilities of the various estimates within range can be reasonably assessed and are used in Management''s estimate of fair value for these unquoted investments.

44. Fair value hierarchy:

The fair value of financial instruments as referred to in Note 42 above have been classified into three categories depending on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active markets for identified assets or liabilities (Level 1 measurements) and lowest priority to unobservable inputs (Level 3 measurements).

i. If the Long-term growth rates used were 1% higher / lower while all other variables were held constant, the carrying amount of the shares would increase / (decrease) by H 76.00 lakhs and Nil respectively [as at March 31,2021: increase/(decrease) by H 83.00 lakhs and H (72.00) lakhs.].

ii. A 1% increase / (decrease) in WACC or discount rate used while holding all other variables constant would (decrease) / increase the carrying amount of the unquoted equity investments by H (110.00) lakhs and H 126.00 lakhs respectively [as at March 31,2021: (decrease) / increase by H (115.00) lakhs and H 132.00 lakhs].

iii. These investments in equity instruments are not held for trading. Instead, they are held for long term strategic purpose. Upon the application of Ind AS 109, the Company has chosen to designate these investments in equity instruments as at FVTOCI irrevocably as the Management believes that this provides a more meaningful presentation for long term strategic investments, than reflecting changes in fair value immediately in profit or loss.

45. Financial Risk Management and Capital Management

The Company''s business activities are exposed to a variety of financials risks, namely Interest rate risk, credit risk, liquidity risk and foreign currency risk. The Company''s senior management has the overall responsibility for establishing and governing the Company''s risk management framework. The Company''s risk management policies are established to identify and analyse the risks faced by the Company, periodically review the changes in market conditions and reflect the changes in the policy accordingly. The key risks and mitigating actions are overseen by the Board of Directors of the Company.

A. Interest rate risk

The Company is exposed to interest rate risk because Company borrow funds at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings.

The sensitivity analyses below have been determined based on the exposure to interest rates for the non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 50-basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management''s assessment of the reasonably possible change in interest rates.

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Company''s:

Profit for the year ended March 31, 2022 would decrease/increase by H 15.64 lakhs (for the year ended March 31, 2021: decrease/ increase by H 5.55 lakhs). This is mainly attributable to the Company''s exposure to interest rates on its variable rate borrowings.

B. Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

Customer credit risk is managed by the Company''s established policy, procedures and control relating to the customer credit risk management. The Company uses financial information and past experience to evaluate credit quality of majority of its customers and individual credit limits are defined in accordance with this assessment. Outstanding receivables and the credit worthiness of its counterparties are periodically monitored and taken up on case to case basis. Considering the historical experience of collecting trade receivables, the Company evaluates the concentration of risk with respective trade receivables as low.

The credit risk on cash and bank balances and deposits with financial institutions is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies.

C. Liquidity risk management

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due. Also, the Company has un-utilised credit limits with banks. The Company maintained a cautious liquidity strategy, with a positive cash balance throughout the year ended March 31,2022 and March 31,2021. Cash flow from operating activities provides the funds to service the financial liabilities on a day to day basis.

The Company regularly maintains the rolling forecasts to ensure it has sufficient cash on an on-going basis to meet operational needs. Any short-term surplus cash generated, over and above the amount required for working capital management and other operational requirements, is retained as cash and cash equivalents (to the extent required) and any excess is invested in interest bearing short term deposits with appropriate maturities to optimise the cash returns on investments while ensuring sufficient liquidity to meet its liabilities.

D. Financing facilities

The Company has access to financing facilities (Fund and non-fund based) of which H 13,527.27 lakhs (March 31, 2021: H 11,267.51 lakhs) were unused at the end of the reporting period. The Company expects to meet its other obligations from operating cash flows and proceeds of maturing financial assets.

E. Foreign currency risk management

The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise.

Foreign currency sensitivity analysis

Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar, Great Britain Pound and Euro against the functional currency of the Company.

H 1 strengthening of INR against US Dollar, to which the Company is majorly exposed would have led to approximately H 25.42 lakhs loss in the Statement of Profit and Loss (Year ended March 31,2021 - H 18.03 lakhs loss). A H 1 weakening of the INR against US Dollar would have led to an equal but opposite effect.

The sensitivity analysis includes only outstanding foreign currency denominated monetary items.

Capital management

The Company''s capital management objective is to maximise the total shareholder return by optimising cost of capital through flexible capital structure that supports growth. Further, the Company ensures optimal credit risk profile to maintain/enhance credit rating.

The Company determines that amount of capital on the basis of annual operating plan and long-term strategic plans. The funding requirements are met through internal accruals and long-term/short-term borrowings. The Company monitors the capital structure on the basis of Net debt to equity ratio and maturity profile of the overall debt portfolio of the Company.

For the purpose of Capital management, capital includes equity capital, securities premium and all other reserves. Net debt includes all long and short-term borrowings as reduced by cash and cash equivalents.

46. The Company''s wholly owned subsidiary, Andhra Paper Foundation, carries out Corporate Social Responsibility activities. The same is not considered for the purpose of consolidation, as the objective of control over this entity is not to obtain economic benefits from its activities.

47. In the year ended March 31,2017, the Hon''ble High Court for the State of Telangana and the State of Andhra Pradesh upheld the validity of levy of electricity duty @ 25 paisa per unit by the State Government on consumption of electricity by captive generating units relating to earlier years. The Company (along with other petitioners) filed a Special Leave Petition in the Hon''ble Supreme Court, which in the interim, directed the petitioners to pay partial amount without prejudice to the rights and contentions of the petitioners, pursuant to which the Company had paid H 1,502.05 lakhs under protest in the year ended March 31,2017. The matter is pending hearing.

In view of the inherent uncertainty in predicting the final outcome of the above litigation, the Management has, on grounds of prudence and abundant caution, made a provision amounting to H 2,357.43 lakhs during the year ended March 31,2017 towards the potential liability in the event of an un-favourable verdict in this matter. Additionally, an amount of H 1,571.62 lakhs has been disclosed as a contingent liability. On the basis of the legal advice obtained, in the opinion of the Management no further provision would be required in relation to this disputed matter.

48. Exceptional items

During the year ended March 31,2021, the Management determined to de-commission certain plant and equipment. Consequently, there was a write-down of the net book value of such plant and equipment amounting to H 440.85 lakhs which was disclosed as an exceptional item in the Statement of Profit and Loss.

49. The Code on Social Security, 2020 (âCode'') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.

50. As per Section 135 of the Companies Act, 2013 (âAct), a company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on Corporate Social Responsibility (CSR) activities. The focus areas of Company''s CSR activities are Education, Health & Wellness and Community Engagement. The CSR activities of the Company are in line with the Schedule VII of the Companies Act, 2013. A CSR committee has been formed by the Company as per the Act.

51. Investments and Loans & Advances:

No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (âIntermediariesâ) with the understanding that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

52. On March 24, 2021, the Ministry of Corporate Affairs (MCA) through notification, amended Schedule III of the Companies Act, 2013, applicable for financial periods commencing from April 01,2021. Pursuant to such amendments,

a. Current maturities of non-current borrowings has been re-grouped to âCurrent Borrowings'' from âOther current financial liabilities''.

b. Current/non-current lease liabilities has been re-grouped and shown as a separate line item on the face of Balance Sheet as item (ia) of current /non-current financial liabilities from other financial liabilities.

Amounts as at March 31,2021 have also been re-grouped in accordance with the above amendments

(1) Net Profit after taxes Non-cash operating expenses Interest other adjustments like loss on sale of Fixed assets etc.

(2) Interest & Lease Payments Principal Repayments

(3) Net worth deferred tax liabilities lease liabilities Total debt

54. The financial statements are approved for issue by the Board of Directors on May 05, 2022.

Mar 31, 2019

1. Employee Benefits

A. Defined contribution plans :

Provident fund:

The Company contributed Rs, 415.34 lakhs (Previous year: Rs, 402.95 lakhs) to the Provident Fund Trust maintained by the Company and Rs, 112.50 lakhs (Previous year: Rs, 122.48 lakhs) to Regional Provident Fund Commissioner, which was recognized as an expense in Statement of Profit and Loss during the year.

Superannuation:

The Company recognized Rs, 23.04 lakhs (Previous year: Rs, 28.95 lakhs) as an expense towards contribution as superannuation in the Statement of Profit and Loss during the year.

The current service cost and the net interest expense for the year are included in the ''Employee benefits expense'' line item in the Statement of profit and loss.

The re-measurement of the net defined benefit liability is included in other comprehensive income.

Significant actuarial assumptions for the determination of the defined obligation are discount rate, expected salary increase and mortality. The sensitivity analyses below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

There has been no change in the process used by the Company to manage its risks from prior periods.

2. Segment reporting Operating Segments

Geographical Information

The Company operates in India and makes certain sales to customers situated outside of India. The revenue from external customers by location of customers is detailed below. All the non-current assets of the Company are situated within India.

3. Related party disclosures

a. List of related parties and relationships

(i) Ultimate Holding Company

International Paper Company, USA

(ii) Holding Company

International Paper Investments (Luxembourg) S.a.r.l

(iii) Subsidiary Company IP India Foundation

(iv) Fellow Subsidiaries

International Paper (India) Private Limited

(v) Entity where the Company is in a position to exercise control

The Employees Provident Fund of The Andhra Pradesh Paper Mills Limited

(vi) Key Management Personnel

- Mr. Donald Paul Devlin - Chairman & Managing Director (with effect from April 28, 2017)

- Mr. Rampraveen Swaminathan - Chairman & Managing Director (till April 27, 2017)

4 Calculation of fair values

Financial assets and liabilities measured at fair value as at Balance Sheet date

5. Fair value hierarchy:

The categories used are as follows:

Level 1 â Quoted prices for identified instruments in an active market.

Level 2 â Directly or indirectly observable market inputs, other than Level 1 inputs; and Level 3 â Inputs which are not based on observable market data.

This note provides information about how the Company determines fair values of various financial assets and financial liabilities.

Fair value of the Company''s financial assets and financial liabilities that are measured at fair value on a recurring basis.

Some of the Company''s financial assets and financial liabilities are measured at the fair value at the end of each reporting period. The following table gives information about how the fair value of these financial assets and financial liabilities are determined (in particular, the valuation technique and other inputs used).

Notes:

i. If the Long-term growth rates used were 1% higher / lower while all other variables were held constant, the carrying amount of the shares would increase / (decrease) by Rs, 62.00 lakhs and Rs, (53.00) lakhs respectively [as at March 31, 2018: increase/(decrease) by Rs, 131.83 lakhs and Rs, (113.99) lakhs.].

ii. A 1% increase / (decrease) in WACC or discount rate used while holding all other variables constant would (decrease) / increase the carrying amount of the unquoted equity investments by Rs, (94.00) lakhs and Rs, 108.00 lakhs respectively (as at March 31, 2018: (decrease) / increase by Rs, (97.35) lakhs and Rs, 112.48 lakhs).

as at FVTOCI irrevocably as the Management believes that this provides a more meaningful presentation for long term strategic investments, than reflecting changes in fair value immediately in profit or loss.

6. Financial Risk Management and Capital Management

The Company''s business activities are exposed to a variety of financial risks, namely Interest rate risk, credit risk, liquidity risk and foreign currency risk. The Company''s senior management has the overall responsibility for establishing and governing the Company''s risk management framework. The Company''s risk management policies are established to identify and analyse the risks faced by the Company, periodically review the changes in market conditions and reflect the changes in the policy accordingly. The key risks and mitigating actions are overseen by the Board of Directors of the Company.

A. Interest rate risk

The sensitivity analyses below have been determined based on the exposure to interest rates for the non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management''s assessment of the reasonably possible change in interest rates.

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Company''s:

Profit for the year ended March 31, 2019 would decrease/increase by Rs, Nil lakhs (for the year ended March 31, 2018: decrease/increase by Rs, 103.76 lakhs). This is mainly attributable to the Company''s exposure to interest rates on its variable rate borrowings.

B. Credit risk management

C. Liquidity risk management

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due. Also, the Company has unutilized credit limits with banks. The Company maintained a cautious liquidity strategy, with a positive cash balance throughout the year ended March 31, 2019 and March 31, 2018. Cash flow from operating activities provides the funds to service the financial liabilities on a day to day basis.

The Company regularly maintains the rolling forecasts to ensure it has sufficient cash on an on-going basis to meet operational needs. Any short-term surplus cash generated, over and above the amount required for working capital management and other operational requirements, is retained as cash and cash equivalents (to the extent required) and any excess is invested in interest bearing short term deposits with appropriate maturities to optimize the cash returns on investments while ensuring sufficient liquidity to meet its liabilities.

* Other financial liabilities include deposits received from customers amounting to Rs, 2,434.30 lakhs (March 31, 2018: Rs, 2,361.91 lakhs). These deposits do not have a contractual re-payment term but are repayable on demand. Since, the Company does not have an unconditional right to defer the payment, these deposits have been classified as current balances. For including these amounts in the above mentioned maturity analysis, the Company has assumed that these deposits, including interest thereon, will be repayable at the end of the reporting period. The actual maturity period for the deposit amount can differ based on the date on which these deposits are settled to customers.

Foreign currency sensitivity analysis

Rs, 1 strengthening of INR against US Dollar, to which the Company is majorly exposed would have led to approximately Rs, 17.66 lakhs loss in the Statement of Profit and Loss (Year ended March 31, 2018 - Rs, 26.36 lakhs gain).

A Rs, 1 weakening of the INR against US Dollar would have led to an equal but opposite effect.

The sensitivity analysis includes only outstanding foreign currency denominated monetary items.

7. Capital management

The Company determines that amount of capital on the basis of annual operating plan and long term strategic plans. The funding requirements are met through internal accruals and long-term/short-term borrowings. The Company monitors the capital structure on the basis of Net debt to equity ratio and maturity profile of the overall debt portfolio of the Company.

8. The Company''s wholly owned subsidiary, IP India Foundation, carries out Corporate Social Responsibility activities. The same is not considered for the purpose of consolidation, as the objective of control over this entity is not to obtain economic benefits from its activities.

9. Disclosure as per Regulation 34(3) and 53(f) of Securities and Exchange Board of India (Listing Obligations and Disclosures Requirements) Regulations, 2015:

Loans and advances in the nature of loans given to subsidiaries, associates, firms/companies in which directors are interested '' Nil (March 31, 2018: '' Nil).

10. Pursuant to the approval of National Company Law Tribunal (NCLT) vide its order dated November 16, 2018 in respect of the Scheme of Arrangement amongst the Company and its Members under the provisions of Sections 391 to 394 of the Companies Act, 1956, to transfer on the Appointed Date, the entire amount of Rs, 28,876.29 lakhs lying in the General Reserve to the Profit & Loss Account of the Company ("the Scheme"), the required transfers as envisaged by the Scheme have been made in the books of accounts.

11. Performance Share Plan - Restricted Stock Units Equity-settled share-based payments

Certain employees of the Company have been granted performance-based restricted stock units ("PSUs") of International Paper Company, USA, the ultimate holding company, ("IP Co") in accordance with the terms and conditions specified in the Performance Share Plan ("PSP"), from time to time.

The PSP is assessed, managed and administered by IP Co and the PSUs granted as part of the PSP will vest after a period of

3 years from the year the grant is given.

As per the arrangement with IP Co, the cost pertaining to the PSUs granted to the employees of the Company, is recharged to the Company, based on a fair valuation model.

12. The Government of India introduced the Goods and Services tax (GST) with effect from July 01, 2017. Accordingly, in compliance with Indian Accounting Standards (Ind AS), Revenue from operations for the periods beginning July 1, 2017 to March 31, 2019 is presented net of GST. Revenue from operations of earlier periods included Excise duty which now is subsumed in GST.

13. In the year ended March 31, 2017, the Hon''ble High Court for the State of Telangana and the State of Andhra Pradesh upheld the validity of levy of electricity duty @ 25 paisa per unit by the State Government on consumption of electricity by captive generating units relating to earlier years. The Company (along with other petitioners) filed a Special Leave Petition in the Hon''ble Supreme Court, which in the interim, directed the petitioners to pay partial amount without prejudice to the rights and contentions of the petitioners, pursuant to which the Company had paid '' 1,502.05 lakhs under protest in the year ended March 31, 2017. The matter is pending hearing.

In view of the inherent uncertainty in predicting the final outcome of the above litigation, the Management has, on grounds of prudence and abundant caution, made a provision amounting to Rs, 2,357.43 lakhs during the year ended March 31, 2017 towards the potential liability in the event of an unfavourable verdict in this matter. Additionally, an amount of Rs, 1,571.62 lakhs has been disclosed as a contingent liability. On the basis of the legal advice obtained, in the opinion of the Management no further provision would be required in relation to this disputed matter.

54. Exceptional items

a. During the year ended March 31, 2019:

In respect of a disputed matter which is pending resolution, the Management has, considering the developments in the case and based on grounds of prudence, made a provision towards the interest demand amounting to Rs, 542.61 lakhs. The Company has already paid the related duty amount in the earlier years.

b. During the year ended March 31, 2018:

The Management on evaluation of the performance and usefulness of all the fixed assets in use, determined to de-commission certain fixed assets which are not required for the continued or future business operations of the Company. Consequently, the net book value of these assets (net of its fair value less costs to sell) has been reclassified in the Balance Sheet as ''Assets classified as held for sale'' and Rs, 836.56 lakhs representing the write-down of the net book value was disclosed as an Exceptional Item in the Statement of Profit and Loss.

14. The financial statements are approved for issue by the Board of Directors on May 02, 2019.

Mar 31, 2018

b) Non-derivative financial liabilities

i. Financial liabilities at fair value through profit or loss (FVTpL)

Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any interest paid on the financial liability and is included in the ''Other income'' line item.

ii. Financial liability subsequently measured at amortized cost

Financial liabilities at amortized cost represented by borrowings, trade and other payables are initially recognized at fair value, and subsequently measured at amortized cost using the effective interest method.

The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

De-recognition of financial liability

The Company de-recognizes financial liabilities, when and only when, the

Company''s obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liabilities de-recognized and the consideration paid and payable is recognized in the Statement of Profit and Loss.

O. Leases Finance Lease

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Assets held under finance leases are initially recognized as assets of the Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the less or is included in the balance sheet as a finance lease obligation.

Operating Lease

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the less or, are recognized as operating lease. Operating lease payments are recognized on a straight line basis over the lease term in the Statement of Profit and Loss, unless the lease agreement explicitly states that increase is on account of inflation.

p. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

i. Current tax

Current tax is determined as the amount of tax payable in respect of the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961. Taxable profit differs from ''profit before tax'' as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible under the Income Tax Act, 1961. The tax rates and tax laws used to compute the current tax amount are those that are enacted or substantively enacted by the reporting date and applicable for the period. The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis or to realize the asset and liability simultaneously.

ii. Deferred Tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of such deferred tax assets to be utilized.

Deferred tax assets include Minimum Alternate Tax (MAT) paid in accordance with the tax laws in India, which gives future economic benefits in the form of availability of set-off against future income tax liability. Accordingly, MAT is recognized as a deferred tax asset in the Balance Sheet when the asset can be measured reliably and it is probable that the future economic benefits associated with it will be realized.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

iii. Current and deferred tax for the year

Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively.

Q. provisions, contingent liabilities and contingent assets

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources embodying economic benefits or the amount of such obligation cannot be measured reliably. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources embodying economic benefits is remote, no provision or disclosure is made.

R. Cash flow statements

Cash flows are reported using the indirect method, whereby profit/ (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

S. Earnings per share

Basic earnings per share is computed by dividing the profit/ (loss) attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year.

Diluted earnings per share is determined by adjusting the profit or loss attributable to equity shareholders and the weighted average number of equity shares outstanding for the effects of all dilutive potential equity shares.

T. Exceptional item

Significant gains/losses or expenses incurred arising from external events that is not expected to recur are disclosed as ''Exceptional item''.

U. New standards and interpretations not yet adopted

Ministry of Corporate Affairs ("MCA") through Companies (Indian Accounting Standards) Amendment Rules, 2018 has notified the following new Ind AS and amendments to Ind ASs which the Company has not applied as they are effective for annual periods beginning on or after April 1, 2018:

Ind AS 115 Revenue from Contracts with Customers -New Ind AS

Ind AS 21 The Effect of Changes in Foreign Exchange Rates - Amendment to Ind AS

Ind AS 115 - Revenue from Contracts with Customers

Ind AS 115 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Ind AS 115 will supersede the current revenue recognition standard Ind AS 18 -Revenue and Ind AS 11 - Construction Contracts when it becomes effective. The core principle of Ind AS 115 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Under Ind AS 115, an entity recognizes revenue when (or as) a performance obligation is satisfied, i.e. when ''control'' of the goods or services underlying the particular performance obligation is transferred to the customer. The Company is currently evaluating the possible impact of the Ind AS 115 on the financial statements.

Ind AS 21 - The Effect of Changes in Foreign Exchange Rates

The amendment clarifies on the accounting of transactions that include the receipt or payment of advance consideration in a foreign currency. The appendix explains that the date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the non-monetary prepayment asset or deferred income liability. If there are multiple payments or receipts in advance, a date of transaction is established for each payment or receipt. The Company is evaluating the impact of this amendment on its financial statements.

Notes:

(i) The average credit period on sales of goods is 10 days. No interest is charged on trade receivables for the first 30 days from the date of the invoice. Thereafter, interest is charged at 15% per annum on the outstanding balance.

(ii) Before accepting any new customer, the Company has a credit evaluating system to assess the potential customer''s credit quality and defines credit limits by customer. Limits and scoring attributed to customers are reviewed twice a year. Of the trade receivables balance, Rs, 852.10 lakhs (as at March 31, 2017: Rs, 517.95 lakhs; as at April 1, 2016: Rs, 708.72 lakhs) is due from customers who represent more than 5% of the total balance of trade receivables.

(iii) The Company maintains an allowance of doubtful accounts based on financial condition of the customer, ageing of customer receivable and overdues, available collaterals and historical experience of collections from customers. Accordingly, the Company creates provision towards doubtful receivables after recovering the underlying collaterals. Besides, the Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a Historical loss rate method. The historical loss rate takes into account historical credit loss experience and adjusted for forward-looking information. The expected credit loss allowance is based on the average loss rate of the collections against the receivables.

Note: Margin money deposits amounting to Rs, Nil (March 31, 2017: Rs, 16.35 lakhs; April 1, 2016: Rs, 35.85 lakhs) which have a maturity of more than 12 months from the Balance sheet date have been classified under other non-current financial assets (Refer Note 7).

1 Rights, preferences and restrictions attached to the equity shares

The Company has only one class of issued, subscribed and fully paid up equity shares having a face value of Rs, 10 each per share. Each holder of equity shares is entitled to one vote per share. The dividend (other than interim dividend) proposed, if any, by the Board of Directors is subject to the approval of the Shareholders in the ensuing Annual General Meeting. 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 number of equity shares held by the shareholders.

Notes:

(i) Term loans

During the year, the Company has availed unsecured term loans from banks aggregating to Rs, 5,000 lakhs (March 31, 2017 -Rs, 22,000 lakhs; April 1, 2016 - Rs, 22,000 lakhs ) outstanding at the year end Rs, 7,500 lakhs (March 31, 2017 - Rs, 22,000 lakhs;

April 1, 2016 - Rs, 22,000 lakhs) (Refer Note 20 for current maturities). Letter of Comfort has been provided to the banks by International Paper Company, USA, the ultimate holding company. The interest rates of these loans range from 7.55% to 8%. These term loans are repayable as under:

a. Term Loan I: Rs, 15,000 lakhs which was payable in 6 equal quarterly installments commenced at the end of 21st month i.e.

September 2017. The Company has pre-paid certain quarterly installments and only Rs, 2,500 lakhs which is due next year has been disclosed as current portion of the loan (Refer Note 20).

b. Term Loan II: Rs, 7,000 lakhs which was payable after completing moratorium of 18 months and in 10 equal quarterly installments commenced at the end of 21st month i.e. September 2017 was fully repaid in December 2017.

c. Term Loan III: Rs, 5,000 lakhs (March 31, 2017 - Rs, Nil) is payable after completing moratorium of 18 months and is repayable in 6 equal quarterly installments commencing at the end of 21st month i.e. November 2019.

(ii) Deferred payment liabilities

Deferred payment liabilities represent sales tax deferral loan availed by the Company, from the Government of Andhra Pradesh and is repayable after a period of 14 years from the end of the financial year of its availment. These are interest free loans. An amount of Rs, 172.28 lakhs (March 31, 2017 - Rs, 323.01 lakhs; April 1, 2016 - Rs, 252.28 lakhs) is due within next twelve months and is included under the head ''Current maturities of long-term debts'' disclosed under Note 20.

(iii) Loans from related parties

The Company has availed unsecured foreign currency loan from International Paper Investments (Luxembourg) S.a r.l at interest rate of 6 month Libor plus 250 basis points repayable in six half-yearly instalments commencing from June 30, 2015. USD Nil equivalent Rs, Nil is outstanding as on March 31, 2018 (March 31, 2017 - USD 4 Million equivalent Rs, 2,594.20 lakhs; April 1, 2016 - USD 8 million equivalent Rs, 5,300.80 lakhs).

2. Employee Benefits

A. Defined contribution plans : provident fund:

The Company contributed Rs, 402.95 lakhs (Previous year: Rs, 399.03 lakhs) to the Provident Fund Trust maintained by the Company and Rs, 122.48 lakhs (Previous year: Rs, 119.36 lakhs) to Regional Provident Fund Commissioner, which was recognized as an expense in Statement of Profit and Loss during the year.

Superannuation:

The Company recognized Rs, 28.95 lakhs (Previous year: Rs, 25.85 lakhs) as an expenses towards contribution as superannuation in the Statement of Profit and Loss during the year.

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognized in the balance sheet.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

There has been no change in the process used by the Company to manage its risks from prior periods.

3. Segment reporting

Operating Segments

The Chairman and Managing Director of the Company has been identified as the Chief Operating Decision Maker (CODM) who evaluates the Company''s performance and allocates resources for manufacture and sale of pulp, paper and paperboard. Accordingly, manufacturing and sale of pulp, paper and paperboard is considered as the single operating segment of the Company.

Geographical Information

4. Related party disclosures

a. List of related parties and relationships

(i) Ultimate Holding Company

International Paper Company, USA

(ii) Holding Company

International Paper Investments (Luxembourg) S.a.r.l IP Holding Asia Singapore Pte. Limited (Up to June 22, 2016)

(iii) Subsidiary Company

IP India Foundation

(iv) Fellow Subsidiaries

International Paper (India) Private Limited

(v) Entity where the Company is in a position to exercise control

The Employees Provident Fund of The Andhra Pradesh Paper Mills Limited

(vi) Key Management personnel

Mr. Donald Paul Devlin - Chairman & Managing Director (with effect from April 28, 2017) Mr. Rampraveen Swaminathan - Chairman & Managing Director (till April 27, 2017)

# Also represents fair value

* Loans include loans given to employees

** Other financial assets includes Security deposits with the vendors, advances given to employees, Receivable from related parties and margin money deposits.

*** Other financial liabilities includes interest accrued on the long term debt, security deposits received from customers and payable on purchase of fixed assets, excluding current maturities of long term debt.

5. Calculation of fair values

Financial assets and liabilities measured at fair value as at Balance Sheet date

6. Fair value hierarchy:

The categories used are as follows:

Level 1 â Quoted prices for identified instruments in an active market.

Level 2 â Directly or indirectly observable market inputs, other than Level 1 inputs; and Level 3 â Inputs which are not based on observable market data.

This note provides information about how the Company determines fair values of various financial assets and financial liabilities.

Fair value of the Company''s financial assets and financial liabilities that are measured at fair value on a recurring basis.

Notes:

i. If the Long-term growth rates used were 1% higher / lower while all other variables were held constant, the carrying amount of the shares would increase / (decrease) by Rs, 131.83 lakhs and Rs, (113.99) lakhs respectively [as at March 31, 2017: increase/(decrease) by Rs, 99 lakhs and Rs, (84.57) lakhs; as at April 1, 2016: increase/(decrease) by Rs, 110.12 lakhs and Rs, (93.64) lakhs respectively].

ii. A 1% increase / (decrease) in WACC or discount rate used while holding all other variables constant would (decrease) / increase the carrying amount of the unquoted equity investments by Rs, (97.35) lakhs and Rs, 112.48 lakhs respectively (as at March 31, 2017: (decrease) / increase by Rs, (71.95) lakhs and Rs, 83.58 lakhs; as at April 1, 2016: (decrease) / increase by Rs, (80.11) lakhs and Rs, 93.61 lakhs respectively).

7. Financial Risk Management and Capital Management

A. Interest rate risk

The sensitivity analyses below have been determined based on the exposure to interest rates for the non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management''s assessment of the reasonably possible change in interest rates.

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Company''s:

Profit for the year ended March 31, 2018 would decrease/increase by Rs, 103.76 lakhs (for the year ended March 31, 2017: decrease/ increase by Rs, 179.72 lakhs). This is mainly attributable to the Company''s exposure to interest rates on its variable rate borrowings.

B. Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.

The credit risk on cash and bank balances is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies.

C. Liquidity risk management

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due. Also, the Company has unutilized credit limits with banks. The Company maintained a cautious liquidity strategy, with a positive cash balance throughout the year ended March 31, 2018 and March 31, 2017. Cash flow from operating activities provides the funds to service the financial liabilities on a day to day basis.

The Company regularly maintains the rolling forecasts to ensure it has sufficient cash on an on-going basis to meet operational needs. Any short-term surplus cash generated, over and above the amount required for working capital management and other operational requirements, is retained as cash and cash equivalents (to the extent required) and any excess is invested in interest bearing short term deposits with appropriate maturities to optimize the cash returns on investments while ensuring sufficient liquidity to meet its liabilities.

The table below provides details regarding the contractual maturities of significant financial liabilities as of March 31, 2018, March 31, 2017 and April 1, 2016:

* Other financial liabilities include deposits received from customers amounting to Rs, 2,361.91 lakhs (March 31, 2017: Rs, 2,315.52 lakhs; April 01, 2016: Rs, 2,062.33 lakhs). These deposits do not have a contractual re-payment term but are repayable on demand. Since, the Company does not have an unconditional right to defer the payment, these deposits have been classified as current balances. For including these amounts in the above mentioned maturity analysis, the Company has assumed that these deposits, including interest thereon, will be repayable at the end of the reporting period. The actual maturity period for the deposit amount can differ based on the date on which these deposits are settled to customers.

D. Foreign currency risk management

The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise.

The carrying amounts of the Company''s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:

Foreign currency sensitivity analysis

Rs, 1 strengthening of INR against US Dollar, to which the Company is majorly exposed would have led to approximately Rs, 26.36 lakhs loss in the Statement of Profit and Loss (Year ended March 31, 2017 - Rs, 29.82 lakhs gain). A Rs, 1 weakening of the INR against US Dollar would have led to an equal but opposite effect.

The sensitivity analysis includes only outstanding foreign currency denominated monetary items.

8. Capital management

The Company''s capital management objective is to maximize the total shareholder return by optimizing cost of capital through flexible capital structure that supports growth. Further, the Company ensures optimal credit risk profile to maintain/enhance credit rating.

The following table summarizes the net debt to equity ratio of the Company:

9 The Company''s wholly owned subsidiary, Ip India Foundation, carries out Corporate Social Responsibility activities. The same is not considered for the purpose of consolidation, as the objective of control over this entity is not to obtain economic benefits from its activities.

10. Disclosure as per Regulation 34(3) and 53(f) of Securities and Exchange Board of India (Listing Obligations and Disclosures Requirements) Regulations, 2015:

Loans and advances in the nature of loans given to subsidiaries, associates, firms/companies in which directors are interested Rs, Nil (March 31, 2017: Rs, Nil).

11. The Board of Directors of the Company at their meeting held on April 22, 2016 approved, subject to the approval of the Members, Stock Exchanges, Hon''ble High Court of Andhra pradesh and Telangana, ("the High Court") or National Company Law Tribunal ("NCLT") and other statutory authorities, a Scheme of Arrangement amongst the Company and its Members under the provisions of Sections 391 to 394 of the Companies Act, 1956, to transfer on the Appointed Date, the entire amount of '' 28,876.29 lakhs lying in the General Reserve to the profit & Loss Account of the Company ("the Scheme").

As per the Scheme, the Appointed Date is the close of the business hours of March 31, 2016, or such other date as may be fixed by the High Court.

During the previous year, the shareholders have approved the Scheme in the Court convened meeting.

Necessary approvals from NCLT as aforesaid are awaited, pending which, no adjustments as envisaged by the Scheme have been made in these accounts.

12. performance Share plan - Restricted Stock Units

Certain employees of the Company have been granted Performance-based restricted Stock Units ("PSUs") of International Paper Company, USA, the ultimate holding company, ("IP Co") in accordance with the terms and conditions specified in the Performance Share Plan ("PSP"), from time to time. The PSP is assessed, managed and administered by IP Co and the PSUs granted as part of the PSP will vest after a period of 3 years from the year the grant is given.

As per the arrangement with IP Co, the cost pertaining to the PSUs granted to the employees of the Company, is recharged to the Company, based on a fair valuation model. During the year, an amount of Rs, 89.18 lakhs (March 31, 2017: Rs, 78.59 lakhs) is recorded as compensation cost in the Statement of Profit and Loss. However, no other details are available with the Company with respect to the disclosures required to be made as per the "Ind AS 102 - Employee Share-based Payments", issued by the Institute of Chartered Accountants of India.

13. The Government of India introduced the Goods and Services tax (GST) with effect from July 01, 2017. Accordingly, in compliance with Indian Accounting Standard (Ind AS) 18 - "Revenue", Revenue from Operations for the period beginning July 01, 2017 to March 31, 2018 is presented net of GST. Revenue from Operations of earlier periods included Excise duty which now is subsumed in GST.

14. Exceptional items

a. The Management on evaluation of the performance and usefulness of all the fixed assets in use, determined to de-commission certain fixed assets which are not required for the continued or future business operations of the Company. Consequently, the net book value of these assets (net of its fair value less costs to sell) has been re-classified in the Balance Sheet as ''Assets classified as held for sale'' and Rs, 836.56 lakhs representing the write-down of the net book value has been disclosed as an Exceptional Item in the Statement of Profit and Loss.

b. During the year ended March 31, 2017:

(i). In the previous year, the Hon''ble High Court for the State of Telangana and the State of Andhra Pradesh upheld the validity of levy of electricity duty @ 25 paisa per unit by the State Government on consumption of electricity by captive generating units relating to earlier years. The Company (along with other petitioners) filed a Special Leave Petition in the Hon''ble Supreme Court, which in the interim, directed the petitioners to pay partial amount without prejudice to the rights and contentions of the petitioners, pursuant to which the Company had paid Rs, 1,502.05 lakhs under protest in the previous year. The matter is pending hearing.

In view of the inherent uncertainty in predicting the final outcome of the above litigation, the Management has, on grounds of prudence and abundant caution, made a provision amounting to Rs, 2,357.43 lakhs during the previous year towards the potential liability in the event of an unfavourable verdict in this matter, which amount was disclosed as an exceptional item. Additionally, an amount of Rs, 1,571.62 lakhs has been disclosed as contingent liability. On the basis of the legal advice obtained, in the opinion of the Management no further provision would be required in relation to this disputed matter.

(ii). The Company had in the earlier years made an application for the refund of excise duty on cash discounts, freight rebates and quantity discounts extended to the dealers post clearance through the issue of credit notes. Based on the favourable orders of the Hon''ble High Court of Andhra Pradesh dated February 19, 2014 and July 1, 2015, a major portion of refund of duty was sanctioned to the Company in July 2015 and August 2016 and also a small portion of refund was received in the earlier years as well. On appeal made by the Department of Central Excise and Customs, the Hon''ble Supreme Court vide its order dated August 29, 2016 ruled in favour of the Department. Consequently, the Company had created a provision of '' 461.16 lakhs during the year ended March 31, 2017, which was disclosed as an Exceptional item.

15. Transition to Ind AS

For periods up to and including the year ended March 31, 2017, the Company had prepared its financial statements in accordance with the Standards as per Companies (Accounting Standards) Rules, 2006, notified under section 133 of the Act ("Previous GAAP" / "IGAAP"). The Company''s financial statements for the year ended March 31, 2018 are prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of the Act read together with the Companies (Indian Accounting Standards) Rules, 2015 as amended. The adoption of Ind AS was carried out in accordance with Ind AS 101 First time Adoption of Indian Accounting Standards, using April 1, 2016 as the transition date. Ind AS 101 requires that all Ind AS standards and interpretations that are issued and effective for the first Ind AS financial statements be applied consistently and retrospectively for all financial years presented. Accordingly, the Company has prepared financial statements which comply with Ind AS for the year ended March 31, 2018, together with the comparative information as at and for the year ended March 31, 2017 and the opening Ind AS Balance Sheet as at April 1, 2016, the date of transition to Ind AS.

In preparing these financial statements, the Company has availed certain exemptions and exceptions in accordance with Ind AS 101 as explained below. The resulting difference between the carrying values of the assets and liabilities in the financial statements as at transition date under Ind AS and Previous GAAP have been recognized directly in equity [retained earnings or another appropriate category of equity]. This note explains the principal adjustments made by the Company in restating its financial statements prepared under previous GAAP, including the Balance Sheet as at April 1, 2016 and the financial statements as at and for the year ended March 31, 2017.

A. Exemption from full retrospective application

i. Estimates: As per Ind AS 101, an entity''s estimates in accordance with Ind AS at the date of transition to Ind AS at the end of the comparative period presented in the entity''s first Ind AS financial statements, as the case may be, should be consistent with estimates made for the same date in accordance with the Previous GAAP unless there is objective evidence that those estimates were in error. However, the estimates should be adjusted to reflect any differences in accounting policies.

As per Ind AS 101, where application of Ind AS requires an entity to make certain estimates that were not required under Previous GAAP, those estimates should be made to reflect conditions that existed at the date of transition (for preparing opening Ind AS balance sheet) or at the end of the comparative period (for presenting comparative information as per Ind AS).

The Company''s estimates under Ind AS are consistent with the above requirement. Key estimates considered in preparation of the financial statements that were not required under the previous GAAP are listed below:

a. Fair valuation of financial instruments carried at FVTPL.

b. Determination of the discounted value for financial instruments carried at amortized cost.

c. Impairment of financial assets based on the expected credit loss model.

ii. Classification and measurement of financial assets: Ind AS 101 requires an entity to assess classification of financial assets on the basis of facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortized cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable.

Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Measurement of the financial assets accounted at amortized cost has been done retrospectively except where the same is impracticable.

iii. Government Loans: The Company has applied the requirements in Ind AS 109, Financial Instruments, and Ind AS 20, Accounting for Government Grants and Disclosure of Government Assistance, prospectively to the government loan that existed as at the date of transition to Ind AS i.e. April 1, 2016. Consequently, the carrying amount of such interest - free loans as per the financial statements of the Company prepared under Previous GAAP have been considered for recognition in the opening Ind AS Balance Sheet.

B. Exemption from retrospective application:

i. Past business combinations: The Company has elected not to apply Ind AS 103 Business Combinations retrospectively to past business combinations that occurred before the transition date of April 1, 2016.

ii. Deemed cost for property, plant and equipment, investment property, and intangible assets: The Company has elected to continue with the carrying value of all of its plant and equipment and intangible assets recognized as of April 1, 2016 (transition date) measured as per the Previous GAAP and use that carrying value as its deemed cost as of the transition date.

c. Transition to Ind AS - Reconciliations:

The following reconciliations provide a quantification of the effect of significant differences arising from the transition from

Previous GAAP to Ind AS in accordance with Ind AS 101:

i. Reconciliation of Equity as previously reported under previous IGAAP to Ind AS

ii. Reconciliation of Total Comprehensive Income for the year ended March 31, 2017; and

iii. Material adjustment to Statement of cash flows

Notes to the Reconciliations:

a) Trade Receivables - Under Previous GAAP, provision towards impairment allowance of receivables was created in respect of specific amount for incurred losses. Under Ind AS, impairment allowance has been determined based on Expected Credit Loss model (ECL). Due to which, the Company impaired its trade receivable by Rs, 0.63 lakhs as on April 01, 2016, and consequently,

Rs, 0.41 lakhs has been eliminated against retained earnings.

b) Security Deposits - Under Previous GAAP, interest free lease security deposits (that are refundable in cash on completion of the lease term) were recorded at their transaction value. Under Ind AS, all financial assets are required to be measured at fair value. Accordingly, the Company has fair valued these security deposits under Ind AS. Difference between the fair value and transaction value of the security deposits has been recognized as prepaid rent. Such prepaid rent is being amortized over lease period which is being partially off-set by the notional interest income recognized in security deposits.

c) Under Previous GAAP, Minimum Alternate Tax (MAT) credit was disclosed in the Balance Sheet as part of loans and advances. Under Ind AS, the same was re-classified under deferred tax liabilities (net). Accordingly, the MAT credit in the Statement of Profit and Loss has also been re-classified as deferred tax expense / gain to correspond to the Balance Sheet re-classification.

d) Lease rental - Straight lining - Under Previous GAAP, the Company created lease equalisation reserve for the rental straight lining of the lease arrangements with rent escalation terms. Under Ind AS, where the increase of lease rentals is in line with the expected general inflation so as to compensate the lessor for expected inflationary cost, the increases in the rentals need not be straight lined. Accordingly, the Company has reversed the provision created for the lease straight lining, net of tax thereon, against the retained earnings as on April 1, 2016.

e) Derivative Instruments - Under the Previous GAAP, the Company applied the requirements of Accounting Standard - 11 "The effect of changes in foreign exchange rates", to account for Forward contracts entered for hedging foreign exchange risk related to borrowings and the buyers credit.

Under Ind AS, derivatives which are not designated as hedging instruments are fair valued with resulting changes being recognized in profit or loss. Accordingly, the fair value adjustments were carried out in respect of opening contracts.

f) Fair valuation of Investments - Under Previous GAAP, long term investments were measured at cost less provision for diminution, other than temporary. Under Ind AS, these financial assets have been classified as FVTOCI. On the date of transition to Ind AS, these financial assets have been measured at their fair value which is lesser than the cost as per previous GAAP, resulting in a decrease in the carrying amount. The corresponding deferred taxes have also been recognized. These changes do not affect profit before tax for the year ended March 31, 2017 because the investments have been classified as FVTOCI.

g) Re-measurement of defined benefit obligation - Under Previous GAAP, actuarial gains and losses were recognized in profit or loss. Under Ind AS, the actuarial gains and losses form part of re-measurement of the net defined benefit liability / asset which is recognized in other comprehensive income. Consequently, the tax effect of the same has also been recognized in other comprehensive income under Ind AS instead of profit or loss. The actuarial loss for the year ended March 31, 2017 was

Rs, 158.40 lakhs and the tax effect thereon Rs, 54.82 lakhs was recognized in other comprehensive income.

h) Lease arrangement - As per Ind AS 17, "Leases", the Company has assessed certain long term arrangements in the nature of minimum guaranteed offtake embedded in a materials supply contract and classified such arrangements as finance lease.

Consequently, the amounts capitalised on account of such finance lease amounted to Rs, 900 lakhs as at March 31, 2017 (April 01,

2016 - '' 1,080 lakhs) and the corresponding Finance Lease Obligation was recognized under Other financial liabilities (current and non-current portion) amounting to Rs, 1,071.06 lakhs as at March 31, 2017 (April 01, 2016 - Rs, 1,240.10 lakhs). Accordingly, depreciation of Rs, 180 lakhs against the property, plant and equipment and the notional interest expense of Rs, 99.21 lakhs towards the Finance lease obligation was recognized, which was off-set by the reduction of Rs, 268.25 lakhs in materials consumed.

i) Cash discounts on sales - Under Previous GAAP, revenue was recognized net of trade discounts. Under Ind AS, discounts including cash discounts have been netted off from revenue. The change does not affect total equity as at March 31, 2017, profit before tax or total comprehensive income for the year ended March 31, 2017.

j) Deferred tax in respect of the above Ind AS adjustments, to the extent applicable, have also been accounted.

16. The financial statements are approved for issue by the Board of Directors on May 02, 2018.

Mar 31, 2017

2. Deferred payment liabilities represent sales tax deferral loan availed by the Company, from the Government of Andhra Pradesh and is repayable after a period of 14 years from the end of the financial year of its a ailment. These are interest free loans. An amount of Rs,323.01 lakhs (March 31, 2016: Rs,252.28 lakhs) is due within next twelve months and is included under the head Rs,Current maturities of long-term debtsâ disclosed under Note 7 - Other current liabilities.

3. a. Unsecured loan availed from International Paper (India) Private Ltd at interest rate of 7.9% aggregating Rs,3,600 lakhs during the previous year and outstanding as at March 31, 2016 being Rs,3,400 lakhs was fully repaid during the current year.

b. The Company has availed unsecured foreign currency loan from International Paper Investments (Luxembourg) S.a.r.l. at interest rate of 6 month Libor plus 250 basis points repayable in six half-yearly instalments commencing from June 30,

2015. USD 4 Million equivalent Rs,2,594.20 lakhs (March 31, 2016: USD 8 Million equivalent Rs,5,300.80 lakhs) is outstanding as on March 31, 2017 which is repayable within next one year and is included under the head ''Current maturities of long-term debts'' disclosed under Note - Other current liabilities.

4. Secured loans from banks repayable on demand represents cash credit/buyers credit/export packing credit loan during the year at interest rates ranging from 4.7% to 9.65%. These are secured by hypothecation of current assets of the Company.

5. Unsecured loans from banks repayable on demand represents Working capital demand loans/cash credit/export packing credit loan/Buyers credit during the year at interest rates ranging from 4.11% to 9.1%.

6. Short-term loan (Unsecured) from bank amounting to Rs,2,000 lakhs as at March 31, 2016 was fully repaid during the year and a fresh loan of Rs,5,000 lakhs was borrowed during the year, which is repayable entirely in 11 months.

7. Short-term loan (Unsecured) from others amounting to Rs,9,000 lakhs outstanding as at March 31, 2016 was fully repaid during the year.

Note: Margin money deposits amounting to Rs,16.35 lakhs (As at March 31, 2016: Rs,35.85 lakhs) which have a maturity of more than 12 months from the Balance Sheet date have been classified under other non-current assets (Refer Note 13A).

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

Expected rate of return on plan assets: This is based on the expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

Salary escalation rate: The estimates of future salary increases considered take into account inflation, seniority, promotion and other relevant factors.

b. Compensated absences

The key assumptions, as provided by an independent actuary, used in the computation of compensated absences are referred in Sl. No. (a) (vi) above.

B. Defined contribution plans

a. Superannuation

The Company recognized Rs,25.85 lakhs (Previous year: Rs,29.67 lakhs) as an expense towards contribution of superannuation in the Statement of Profit and Loss during the year.

b. Provident Fund (Including Pension)

The Company contributed Rs,399.03 lakhs (Previous year: Rs,416.06 lakhs) to the Provident Fund Trust maintained by the Company and Rs,119.36 lakhs (Previous year: Rs,110.91 lakhs) to Regional Provident Fund Commissioner, which was recognized as an expense during the year.

9. Segment information

The Company is in the business of manufacture and sale of pulp, paper and paperboard. Considering the core activities of the Company, the management is of the view that manufacture and sale of pulp, paper and paperboards is a single reportable business segment and hence information relating to primary segment is not required to be disclosed.

10. Related party transactions

a. List of related parties and relationships:

i. Ultimate holding company

International Paper Company, USA

ii. Holding companies

IP Holding Asia Singapore Pte. Limited (up to June 22, 2016)

International Paper Investments (Luxembourg) S.a.r.l. (Fellow subsidiary up to June 22, 2016)

iii. Subsidiary company

IP India Foundation

iv. Fellow subsidiaries

International Paper (India) Private Limited International Paper Nordic Sales Company

v. Entity where the Company is in a position to exercise control

The Employees Provident Fund of The Andhra Pradesh Paper Mills Limited

vi. Key Management Personnel

Notes: i. Represents remuneration paid to CMD. The remuneration was paid in his capacity as independent professional appointed by the Company, who possesses requisite professional qualifications with expert knowledge in his field of profession.

ii. In respect of certain borrowings (refer Note 5A), Letter of Comfort has been provided to the banks by International Paper Company, USA, the ultimate holding company.

11. Leases

The Company''s significant leasing arrangements are in respect of operating leases for premises (Offices, god owns etc.) ranging from 3 years to 20 years. The aggregate lease rentals payable are charged as âRentâ under Note 23 - Other expenses.

12. Change in accounting policy in the previous year

Effective April 1, 2015, the Company with retrospective effect changed its method of providing depreciation on Buildings and Electrical Installations (forming part of Plant and equipment) at Rajahmundry Plant from the ''Written Down Value'' method to the ''Straight Line'' method, as per the useful lives specified in Schedule II of the Companies Act, 2013. Management believes that this change will result in more appropriate presentation and will give a systematic basis of depreciation charge. Accordingly, the Company reversed the depreciation charged till March 31, 2015 amounting to Rs,2,361.32 lakhs in the Statement of Profit and Loss as per the requirements of Accounting Standard (AS) 6 - Depreciation Accounting which was disclosed as Exceptional item [Refer Note 42 (a)] in the previous year 2015-16.

13. Derivative instruments

i. The following are the outstanding forward exchange contracts entered into by the Company:

14. The Company''s wholly owned subsidiary, IP India Foundation, carries out Corporate Social Responsibility activities. The same is not considered for the purpose of consolidation, as the objective of control over this entity is not to obtain economic benefits from its activities.

15. Exceptional items

a. The Hon''ble High Court for the State of Telangana and the State of Andhra Pradesh dismissed the Company''s writ petition (along with the other petitions on the same matter filed by other companies) vide its common order dated 19th May 2016 (''the Order'') in which it upheld the validity of levy of electricity duty @ 25 paisa per unit by the State Government on consumption of electricity by captive generating units relating to earlier years. During the year, the Company (along with other petitioners) filed a Special Leave Petition in the Hon''ble Supreme Court, which has listed the case for further hearing in end April 2017. In the interim, the Hon''ble Supreme Court directed the petitioners to pay partial amount without prejudice to the rights and contentions of the petitioners, pursuant to which the Company has paid Rs,1,502.05 lakhs under protest which has been disclosed under Note 12A Long-term loans and advances.

In view of the inherent uncertainty in predicting the final outcome of the above litigation, the Management has, on grounds of prudence and abundant caution, made a provision amounting to Rs,2,357.43 lakhs during the year (Refer Note 8B Short-term provisions) towards the potential liability in the event of an unfavorable verdict in this matter, which amount has been disclosed as an Exceptional item. Additionally, an amount of Rs,1,571.62 lakhs has been disclosed as Contingent liability. On the basis of the legal advice obtained, in the opinion of the management no further provision would be required in relation to this disputed matter.

b. Based on the favorable orders of the Hon''ble High Court of Andhra Pradesh, a major portion of refund of excise duty on credit notes for discounts/rebates were sanctioned to the Company. On appeal made by the Department of Central Excise and Customs, the Hon''ble Supreme Court vide its order dated 29th August 2016 ruled in favour of the Department. Consequently, the Company created a provision of Rs,461.16 lakhs during the year, which has been disclosed as an exceptional item. The Company has filed a review petition in the Hon''ble Supreme Court for waiver of interest.

c. During the year ended March 31, 2016:

i. Change in accounting policy in respect of method of providing depreciation for certain assets, resulting in reversal of depreciation amounting to Rs,2,361.32 lakhs (Refer Note 38).

ii. The Company revised its estimate based on internal assessment and fresh legal opinion obtained, in respect of provision created in earlier years for a disputed matter and reversed Rs,540.83 lakhs.

iii. A provision amounting to Rs,202.11 lakhs was created in the earlier years due to an adverse order issued by CESTAT, Bangalore, in connection with the tax position adopted by the Company which was upheld by the Hon''ble Supreme Court on July 21, 2015 and consequently, the aforesaid provision was reversed during the quarter ended September 30, 2015.

iv. The Asst. Commissioner granted interest on delayed refund of excise duty paid on cash discounts vide Order Nos. 30 and 31 dated July 31, 2015. The resultant income of Rs,166.39 lakhs was accounted during the previous year.

16. Disclosure as per Regulation 34(3) and 53(f) of Securities and Exchange Board of India (Listing Obligations and Disclosures Requirements) Regulations, 2015:

Loans and advances in the nature of loans given to subsidiaries, associates, firms/companies in which directors are interested Rs,Nil (March 31, 2016: Rs,Nil).

17. The Board of Directors of the Company at their meeting held on April 22, 2016 approved, subject to the approval of the Members, Stock Exchanges, Hon''ble High Court of Andhra Pradesh and Telangana (âthe High Courtâ) or National Company Law Tribunal and other statutory authorities, a Scheme of Arrangement amongst the Company and its Members under the provisions of Sections 391 to 394 of the Companies Act, 1956, to transfer on the Appointed Date, the entire amount of Rs,28,876.29 lakhs lying in the General Reserve to the Statement of Profit & Loss of the Company (âthe Schemeâ).

As per the Scheme, the Appointed Date is the close of the business hours of March 31, 2016, or such other date as may be fixed by the High Court.

During the year, the Members have approved the Scheme in the Court convened meeting.

The Company is in the process of obtaining other necessary approvals as aforesaid, pending which, no adjustments as envisaged by the Scheme have been made in these accounts.

18. Performance Share Plan - Restricted Stock Units

Certain employees of the Company have been granted performance-based restricted stock units (PSUs) of International Paper Company, USA, the ultimate holding company, (IP Co) in accordance with the terms and conditions specified in the Performance Share Plan (PSP), from time to time. The PSP is assessed, managed and administered by IP Co and the PSUs granted as part of the PSP will vest after a period of 3 years from the year the grant is given.

As per the arrangement with IP Co, the cost pertaining to the PSUs granted to the employees of the Company, is recharged to the Company, based on a fair valuation model. During the year, an amount of Rs,78.59 lakhs (March 31, 2016: Rs,Nil) is recorded as compensation cost in the Statement of Profit and Loss. However, no other details are available with the Company with respect to the disclosures required to be made as per the Guidance Note on Accounting for Employee Share-based Payments, issued by the Institute of Chartered Accountants of India.

19. Previous year''s figures have been regrouped/reclassified wherever necessary to correspond with the current year''s classification/disclosures.

Mar 31, 2016

I. Rights, preferences and restrictions attached to the equity shares

The Company has only one class of issued, subscribed and paid up equity shares having a face value of Rs.10 each per share. Each holder of equity shares is entitled to one vote per share. The dividend (other than interim dividend) proposed, if any, by the Board of Directors is subject to the approval of the shareholders in the Annual General Meeting. 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 number of equity shares held by the shareholders.

Notes

1. The Company has availed unsecured term loans from banks aggregating Rs.22,000.00 lakhs (March 31, 2015 - Rs.30,657 lakhs) outstanding at the year end Rs.22,000 lakhs (March 31, 2015 Rs.16,124 lakhs). Letter of comfort has been provided to the banks by International Paper Company, USA, the ultimate holding company. The interest rates are ranging from 9% - 11%. These term loans are repayable as under:

a. Term Loan I: Rs.15,000 lakhs (March 31, 2015 - Rs.Nil) is payable in 6 equal quarterly instalments commencing at the end of 21st month.

b. Term Loan II: Rs.7,000 lakhs (March 31, 2015 - Rs.Nil) is payable after completing moratorium of 18 months and is repayable in 10 equal quarterly instalment''s commencing at the end of 21st month.

c. Term Loan III: Rs.Nil (March 31, 2015 - Rs.6,825 lakhs) has a tenor of 18 months, which is renewable automatically for a successive period of 18 months.

d. Term Loan IV: Rs.Nil (March 31, 2015 - Rs.10,000 lakhs) is payable in 3 unequal quarterly instalments at the end of 24th month from the date of the loan.

e. Term Loan V: Rs.Nil (March 31, 2015 - Rs.4,832 lakhs) is payable in 8 quarterly instalments after completion of 12 months from the date of the loan.

f. Term Loan VI: Rs.Nil (March 31, 2015 - Rs.9,000 lakhs) has a tenor of 18 months, which is renewable automatically for a successive period of 18 months, subject to consent of both the parties.

2. Deferred payment liabilities represent sales tax deferral loan availed by the Company, from the Government of Andhra Pradesh and is repayable after a period of 14 years from the end of the financial year of its availment. These are interest free loans. An amount of Rs.252.28 lakhs (March 31, 2015 - Rs.340.02 lakhs) is due within next twelve months and is included under the head Rs.Current maturities of long-term debts. disclosed under Note 7B - Other current liabilities.

3. a. Unsecured loan availed from International Paper (India) Private Limited at interest rate of 7.9% aggregating Rs.3,600 lakhs during the year and outstanding as at the year end Rs.3,400 lakhs is repayable by December 31, 2017.

b. The Company has availed unsecured foreign currency loan from International Paper Investments (Luxembourg) S.a r.l. at interest rate of 6 month Libor plus 250 basis points repayable in six half-yearly instalments commencing from June 30, 2015. Out of USD 8 Million (equivalent Rs.5,300.80 lakhs) [March 31, 2015 - USD 12 Million (equivalent Rs.7,500.60 lakhs)] outstanding, Rs.2,650.40 lakhs is repayable within next one year and is included under the head ''Current maturities of long-term debts'' disclosed under Note 7B - Other current liabilities.

4. Secured loans from banks repayable on demand represent working capital demand loans/cash credit facilities/buyers credit/ Export packing credit loan from certain banks, at interest rates ranging from 5.90% to 10.40% during the year. These are secured by hypothecation of current assets of the Company.

5. Unsecured loans from bank repayable on demand represent working capital demand loans/cash credit facilities/buyers credit from certain banks, at interest rates ranging from 7.98% to 9.50% during the year.

b. Compensated absences

The key assumptions, as provided by an independent actuary, used in the computation of compensated absences are referred in Sl. No. (a) (vi) above.

B. Defined contribution plan

a. Superannuation

The Company recognized Rs.29.67 lakhs (Previous year - Rs.31.72 lakhs) as an expense towards contribution of superannuation in the Statement of Profit and Loss during the year.

b. Provident Fund

The Company contributed Rs.416.06 lakhs (Previous year - Rs.383.69 lakhs) to the Provident Fund Trust maintained by the Company and Rs.110.91 lakhs (Previous year - Rs.106.96 lakhs) to Regional Provident Fund Commissioner, which was recognized as an expense during the year.

1. Segment information

The Company is in the business of manufacture and sale of pulp, paper and paperboard. Considering the core activities of the Company, the management is of the view that manufacture and sale of pulp, paper and paperboards is a single reportable business segment and hence information relating to primary segment is not required to be disclosed.

2. Leases

The Company''s significant leasing arrangements are in respect of operating leases for premises (Offices, godowns etc.) ranging from 3 years to 20 years. The aggregate lease rentals payable are charged as ''Rent'' under Note 23.

3. a. Change in accounting policy

Effective April 1, 2015, the Company has with retrospective effect changed its method of providing depreciation on Buildings and Electrical Installations (forming part of Plant and equipment) at Rajahmundry Plant from the ''Written Down Value'' method to the ''Straight Line'' method, as per the useful lives specified in Schedule II of the Companies Act, 2013. Management believes that this change will result in more appropriate presentation and will give a systematic basis of depreciation charge. Accordingly, the Company has reversed the depreciation charged till March 31, 2015 amounting to Rs.2,361.32 lakhs in the Statement of Profit and Loss as per the requirements of Accounting Standard (AS) 6 - Depreciation Accounting and this has been disclosed as Exceptional item [Refer Note 42 (a)].

Had the Company continued to use the earlier method of depreciation, the profit after tax for the current year would have been lower by Rs.1,705 lakhs.

b. Component accounting of fixed assets

In accordance with the requirements of component accounting of fixed assets as per Schedule II to the Companies Act, 2013, the Company has identified and accounted for the components of fixed assets during the current year. Consequently, the depreciation on such components amounting to Rs.1,250.97 lakhs has been charged in the Statement of Profit and Loss.

c. In the previous year, the Company had with effect from April 1, 2014, revised the estimated useful life of certain assets to align them with those specified in Schedule II and in accordance with the transitional provisions of Schedule II adjusted an amount of Rs.139.77 lakhs (net of deferred tax of Rs.71.97 lakhs) in respect of those assets where the remaining life on April 1, 2014 was Nil.

4. The Company''s wholly owned subsidiary, IP India Foundation, carries out Corporate Social Responsibility activities.

The same is not considered for the purpose of consolidation, as the objective of control over this entity is not to obtain economic benefits from its activities.

5. Exceptional items

a. Change in accounting policy in respect of method of providing depreciation for certain assets resulting in reversal of depreciation amounting to Rs.2,361.32 lakhs [Refer Note 38(a)].

b. The Company has revised its estimate based on internal assessment and fresh legal opinion obtained, in respect of provision created in earlier years for a disputed matter and reversed Rs.540.83 lakhs during the current year.

c. A provision amounting to Rs.202.11 lakhs had been created in earlier years in the books due to an adverse order issued by CESTAT, Bangalore, in connection with the tax position adopted by the Company, treating gunny pulp as unconventional raw material used in the manufacture of Kraft paper at the Company''s Kadiyam unit. The Company''s position was upheld by the Hon''ble Supreme Court on July 21, 2015. Based on the Hon''ble Supreme Court''s Judgement, the aforesaid provision has been reversed during the current year.

d. The Asst. Commissioner granted interest on delayed refund of excise duty paid on cash discounts vide order Nos. 30 and 31 dated July 31, 2015. The resultant income of Rs.166.39 lakhs has been accounted during the current year.

e. During the previous year, the Company based on internal assessment reversed the provision of Rs.112.92 lakhs relating to minimum royalty which was made in earlier years, consequent to the Hon''ble Supreme Court''s Order on March 17, 2015 remanding the disputed matter to the Government of Andhra Pradesh by setting aside the Order passed by the Hon''ble High Court of Andhra Pradesh.

6. Disclosure as per Regulation 34(3) and 53(f) of Securities and Exchange Board of India (Listing Obligations and Disclosures Requirements) Regulations, 2015:

Loans and advances in the nature of loans given to subsidiaries, associates, firms/companies in which directors are interested Nil (March 31, 2015: Nil).

7. The Board of Directors of the Company at their meeting held on April 22, 2016 approved, subject to the approval of the Members, stock exchanges, Hon''ble High Court of Andhra Pradesh and Telangana or National Company Law Tribunal and other statutory authorities, a Scheme of Arrangement amongst the Company and its Members under the provisions of Sections 391 to 394 of the Companies Act, 1956, to transfer on the Appointed Date, the entire amount of Rs.28,876.29 lakhs lying in the General Reserve to the Profit & Loss Account of the Company.

As per the Scheme, the Appointed Date is the close of the business hours of March 31, 2016, or such other date as may be fixed by the High Court.

The Company is in the process of obtaining the necessary approvals as aforesaid, pending which, no adjustments as envisaged by the Scheme have been made in these accounts.

8. Previous year''s figures have been regrouped/reclassified wherever necessary to correspond with the current year''s classification/disclosures.

Mar 31, 2015

1. Corporate Information

International Paper APPM Limited (''IP APPM''/''the Company'') is an integrated pulp and paper manufacturer. IP APPM was incorporated on June 29, 1964 in pursuance of an agreement dated May 13, 1964 between Government of Andhra Pradesh (GOAP) and Mr. G.D. Somani. By an agreement dated February 10, 1966, Mr. G.D. Somani transferred all his rights, powers and authorities contained in the agreement dated May 13, 1964 in favour of The West Coast Paper Mills Limited (WCPM). By an agreement dated April 16, 1981, WCPM assigned to Digvijay Investments Limited (DIL) all its rights and obligations under the agreement dated February 10, 1966.

Consequent upon disinvestment of its entire shareholding in favour of DIL in December, 2003, GOAP and DIL agreed by an agreement dated December 12, 2003 that all subsisting rights and obligations of GOAP and DIL arising out of the above agreements dated February 10, 1966 and April 16, 1981 stand terminated with effect from December 18, 2003. In October 2011, IP Holding Asia Singapore Pte. Limited has acquired controlling stake of 75% of paid up share capital in the Company from the then promoters and public shareholders. Pursuant to such acquisition, IP Holding Asia Singapore Pte. Limited became the Holding Company of International Paper APPM Limited (formerly The Andhra Pradesh Paper Mills Limited) and International Paper Company, USA, being the ultimate holding company.

The Company owns and operates two manufacturing units located in the State of Andhra Pradesh, India, one at Rajahmundry and the other at Kadiyam in East Godavari District.

2. Contingent liabilities and commitments

As at As at (In Rs. Lakhs) March 31, March 31 2015 , 2014

Contingent liabilities (to the extent not provided for)

i. Matters under litigation

a. Pending decisions on various appeals made by the Company and by the Department

- Income tax matters 133.14 120.44

- Excise matters 7,709.55 7,539.16

- Sales tax matters 357.52 372.95

- Other matters 357.65 330.24

b. Vacant land tax 470.72 435.85

c. Electricity duty

(Levy of electricity duty towards consumption of energy generated by captive power unit) 4,983.22 4,154.72

d. Demand raised by Eastern Power Distribution Corporation of Andhra Pradesh Limited for surplus power supplied by APGPCL disputed by the Company. The appeal filed by APTRANSCO is pending before A.P High Court in which other companies similarly placed are made respondents. 87.66 87.66

ii. Guarantees and Letters of Credit

a. Guarantees issued by banks 1,838.09 1,651.81

b. Letters of credit outstanding 731.42 446.51

Commitments

Estimated amount of contracts remaining to be executed on

capital account and not provided for (Net of advances) 739.03 1,134.34

Export Commitment under the Export Promotion

Capital Goods (EPCG) Scheme 26,567.16 42,107.96

3. Related party transactions

a. List of related parties and relationships:

i. Ultimate holding company

International Paper Company, USA

ii. Holding company

IP Holding Asia Singapore Pte. Limited

iii. Subsidiary company IP India Foundation

iv. Fellow subsidiaries where transactions exist

International Paper (India) Private Limited

International Paper Inc. TN USA

International Paper procurement (Shanghai) Limited

International Paper Investment (Shanghai) Limited

International Paper USA

IP Singapore Holding Pte. Limited

International Paper Nordic Sales Company

International Paper Investments (Luxembourg) S.a.r.l.

v. Entity where the Company is in a position to exercise control

The Employee''s Provident Fund of The Andhra Pradesh Paper Mills Limite

vi. Key Management Personnel

Name of the person Relationship Status

Mr. W. Michael Amick Jr. Executive Chairman From August 23, 2012 to October 31, 2014

Mr. Rampraveen Managing Director From March 2, 2012 Swaminathan & CEO to October 31, 2014

Chairman & From November 1,2014 Managing Director

vii. Non-Executive/Independent Directors

Name of the person Relationship Status

Mr. Praveen P Kadle Director

Mr. Michael Baymiller Director Till November 30, 2014

Mr. Kenneth P Huelskamp Director Till July 13, 2014

Mr. Thomas G. Kadien Director

Mr. M.S. Ramachandran Director

Ms. Ranjana Kumar Director

Mr. M.K. Sharma Director Till January 22, 2015

Mr. Adhiraj Sarin Director

Mr. Milind Sarwate Director

Ms. Shiela Pallerne Director Vinczeller

Ms. Jayashree Satagopan Director From July 22, 2014

Mr. W. Michael Amick Jr. Director From November 1,2014 to January 18, 2015

4. During the year, pursuant to the notification of Schedule II to the Companies Act, 2013 with effect from April 1, 2014, the Company revised the estimated useful life of its fixed assets to align the useful life with those specified in Schedule II.

Pursuant to the transition provisions prescribed in Schedule II to the Companies Act, 2013, the Company has fully depreciated the carrying value of assets, net of residual value, where the remaining useful life of the asset was determined to be nil as on April 1, 2014, and has adjusted an amount of Rs. 139.77 lakhs (net of deferred tax of Rs. 71.97 lakhs) against the Opening Reserves.

The depreciation expense in the Statement of Profit & Loss is lower by Rs. 1,663.35 lakhs consequent to the change in the useful life of the assets.

5. During the previous year, the Company has incorporated a subsidiary, IP India Foundation for its Corporate Social Responsibility activities. The same is not considered for consolidation, as the objective of control over this entity is not to obtain economic benefits from its activities.

6. Exceptional item During the year 2005, the Company had made a provision of `112.92 lakhs, relating to Minimum Royalty demand for the years 1988 and 1989 raised by the Government of Andhra Pradesh. Upon receipt of unfavourable orders from the Hon''ble High Court of Andhra Pradesh, the Company made an appeal to the Hon''ble Supreme Court and submitted additional documents which were not considered by the earlier authorities. The Hon''ble Supreme Court, has passed an Order on March 17, 2015 remanding the matter to the Government of Andhra Pradesh setting aside the Order passed by the Hon''ble High Court of Andhra Pradesh. Consequently, based on internal assessment, the Company has reversed the provision of `112.92 lakhs during the year.

7. Previous year''s figures have been regrouped/reclassified wherever necessary to correspond with the current year''s classification/ disclosures.

Mar 31, 2014

1. Contingent liabilities and commitments

As at As at March 31, 2014 March 31, 2013

Contingent liabilities (to the extent not provided for)

i. Guarantees and Letters of Credit Guarantees issued by banks 1,651.81 765.84

Letters of credit outstanding 446.51 445.62

ii. Claims against the Company not acknowledged as debts Pending decisions on various appeals made by the Company and by the Department

Income tax matters 120.44 121.50

Excise matters 7,539.16 7,687.59

Sales tax matters 372.95 373.81

Other matters 330.24 226.24

Vacant land tax 435.85 400.98

Electricity duty 4,154.72 3,912.75

(Levy of electricity duty towards consumption of energy generated by captive power unit)

Demand raised by Eastern Power Distribution Corporation of Andhra Pradesh Limited for surplus power supplied by APGPCL disputed by the Company. An amount of Rs.76.98 paid under protest (March 31, 2013: Rs.76.98) has been grouped under loans and advances. The appeal filed by APTRANSCO is pending before A.P. High Court in which other companies similarly placed are made respondents. 87.66 87.66

Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of advances) 1,134.34 3,998.27

Export Commitment under the Export Promotion

Capital Goods (EPCG) Scheme 42,107.96 35,197.75

2. Segment information

The Company is in the business of manufacture and sale of pulp, paper and paper board. Considering the core activities of the Company, the management is of the view that manufacture and sale of pulp, paper and paper boards is a single reportable business segment and hence information relating to primary segment is not required to be disclosed.

iii. Subsidiary company

IP India Foundation

iv. Fellow subsidiaries where transactions exist

International Paper (India) Private Limited

International Paper Inc., TN USA

International Paper Procurement (Shanghai) Limited

International Paper Investment (Shanghai) Limited

International Paper USA, Memphis

IP Singapore Holding PTE Limited

International Paper Nordic Sales Company

v. Entity where the Company is in a position to exercise control

The Employee''s Provident Fund of The Andhra Pradesh Paper Mills Limited

vi. Key Management Personnel

Name of the person Relationship Status

Mr. W. Michael Amick Jr. Executive Chairman From August 23, 2012

Mr. Rampraveen Swaminathan Managing Director & CEO From March 2, 2012

Mr. P.K. Suri Director (Operations) Up to July 13, 2012

Mr. Paul Brown Chairman & CEO From October 15, 2011 to

March 1, 2012

Executive Chairman From March 2, 2012 to

July 13, 2012

vii. Non-Executive/Independent Directors

Name of the person Relationship Status

Mr. Praveen P. Kadle Director From January 25, 2012

Mr. Michael Baymiller Director From July 13, 2012

Mr. Kenneth P. Huelskamp Director From July 13, 2012

Mr. Thomas G. Kadien Director From October 14, 2011

Mr. M.S. Ramachandran Director From December 6, 2011

Ms. Ranjana Kumar Director From December 6, 2011

Mr. M.K. Sharma Director From December 6, 2011

Mr. Adhiraj Sarin Director From December 6, 2011

Mr. Milind Sarwate Director From December 6, 2011

Ms. Shiela Pallerne Vinczeller Director From March 31, 2014

Mr. Brett A. Mosely Director From October 14, 2011 to February 28, 2014

Mr. Shreeyash Bangur Director From October 14, 2011 to July 12, 2012

3. During the period ended December 31, 2011, the Company paid Rs.415.99 towards managerial remuneration to the erstwhile Directors, which was in excess of the maximum limits specified in Schedule XIII to the Companies Act, 1956. The excess remuneration amounted to Rs.194.64. The Members at the Annual General Meeting held on March 22, 2012 approved the waiver of recovery of excess remuneration paid to the Directors, subject to Central Government''s approval. The requisite application was made to the Central Government on April 17, 2012 and the Company received Government''s approval towards waiver of recovery of excess remuneration paid to erstwhile Managing Director and Executive Directors. However, the Ministry of Corporate Affairs (MCA) has rejected the application made by the Company for the waiver of recovery of excess remuneration of Rs.70.07 paid to a Promoter Director. The Company has obtained legal advice in respect of the same and made a representation to the MCA to reconsider the said rejection.

4. During the 15 months period ended March 31, 2013, the Company based on its internal assessment of certain disputed matters relating to prior years and based on the legal opinion obtained on such matters, made a provision of Rs.1,619.32, being Rs.1,561.31 towards interest and Rs.58.01 towards taxes. The same was disclosed under exceptional items.

5. Disclosure as per Clause 32 of the Listing Agreement:

- Maximum balance outstanding during the year Rs.Nil (March 31, 2013: Rs.Nil)

- Balance as at March 31, 2014 Rs.Nil (March 31, 2013: Rs.Nil)

6. The name of the Company has been changed from ''The Andhra Pradesh Paper Mills Limited'' to ''International Paper APPM Limited'' with effect from December 16, 2013.

7. During the year, the Company has incorporated a subsidiary, IP India Foundation for its Corporate Social Responsibility activities. The same is not considered for consolidation, as the objective of control over this entity is not to obtain economic benefits from its activities.

8. The Board of Directors approved the extension of the financial period 2013 of the Company by a period of three months i.e. 15 months period ended March 31, 2013. Hence, the figures for the current year are not comparable with those of the previous period.

9. Previous period''s figures have been regrouped/reclassified wherever necessary to correspond with the current year''s classification/disclosures.

Mar 31, 2013

1. Corporate Information

The Andhra Pradesh Paper Mills Limited ("APPM"/"the Company") is an integrated pulp and paper manufacturer. APPM was incorporated on June 29, 1964 in pursuance of an agreement dated May 13, 1964 between Government of Andhra Pradesh (GoAP) and Mr. G.D. Somani. By an agreement dated February 10, 1966, Mr. G .D Somani transferred all his rights, powers and authorities contained in the Agreement dated May 13, 1964 in favour of The West Coast Paper Mills Limited (WCPM). By an agreement dated April 16, 1981, WCPM assigned to Digvijay Investments Limited (DIL) all its rights and obligations under the agreement dated February 10, 1966.

Consequent upon disinvestment of its entire shareholding in favour of DIL in December, 2003, GoAP and DIL agreed by an agreement dated December 12, 2003 that all subsisting rights and obligations of GoAP and DIL arising out of the above agreements dated February 10, 1966 and April 16, 1981 stand terminated with effect from December 18, 2003. In October 2011, IP Holding Asia Singapore Pte. Limited has acquired controlling stake of 75% of paid up share capital in the Company from the then promoters and public shareholders. Pursuant to such acquisition, IP Holding Asia Singapore Pte Limited, became the holding company of The Andhra Pradesh Paper Mills Limited and International Paper Company, USA, being the ultimate holding company.

The Company owns and operates two manufacturing units located in the State of Andhra Pradesh, India, one at Rajahmundry and the other at Kadiyam in East Godavari District.

2. Segment information

The Company is in the business of manufacture and sale of pulp, paper and paperboard. Considering the core activities of the Company, management is of the view that manufacture and sale of pulp, paper and paperboards is a single reportable business segment and hence information relating to primary segment is not required to be disclosed.

3. Related party transactions

a. List of related parties and relationships:

i. Ultimate holding company

International Paper Company, USA

ii. Holding company

IP Holding Asia Singapore Pte. Limited, Singapore

iii. Entity where principal shareholders have control

Samay Books Limited (up to October 14, 2011)

The Peria Karamalai Tea & Produce Company Limited (up to October 14, 2011)

iv. Fellow subsidiaries where transactions exists

IP Paper (India) Private Limited

International Paper Inc. TN USA

International Paper Procurement (Shanghai) Limited

MB Commercial Company Limited (up to October 14, 2011)

Swadeshi Commercial Company Limited (up to October 14, 2011)

v. Entity where the Company is in a position to exercise control

The Employees Provident Fund of APPM Limited

4. Leases

The Company''s significant leasing arrangements are in respect of operating leases for premises (Office, godowns, etc.) ranging from 3 years to 20 years. The aggregate lease rentals payable are charged as ''Rent'' under Note 23.

5. The amount due to Micro and Small Enterprises as defined in the ''The Micro, Small and Medium Enterprises Act, 2006'' has been determined to the extent such parties have been identified on the basis of information available with the Company. The disclosures relating to Micro and Small Enterprises as at March 31, 2013 are as under:

6. During the previous period ended December 31, 2011, the Company carried out an internal technical assessment based on its global standards and methodologies whereby assets with a book value of Rs.3,112.02 have been identified as unsuitable for future use and accordingly was debited to Statement of Profit and Loss for the 9 month period ended December 31, 2011. The same has been disclosed under Note 23 - Other Expenses.

7. During the previous period ended December 31, 2011, the Company accrued Rs.415.99 towards managerial remuneration to the erstwhile three promoter Directors, a Managing Director & CEO and a Director (Operations), which was in excess of the maximum limits specified in Schedule XIII to the Companies Act, 1956. The excess remuneration amounted to Rs.194.64. The shareholders at the AGM held on March 22, 2012 approved the remuneration payable to such Directors, through a special resolution, subject to the Central Government approval. The requisite application was made to the Central Government on April 17, 2012 and as of date; the Company received approval for Rs.52.81 towards remuneration paid to three Directors. The management is confident of obtaining the Central Government approval for the remaining two Directors for the balance amount of Rs.141.83.

8. During the period ended March 31, 2013, the Company based on its internal assessment of certain disputed matters relating to prior years and on the legal opinion obtained on such matters, made a provision of Rs.1,619.32 in the books, being Rs.1,561.31 towards interest and Rs.58.01 towards taxes. The same is disclosed under exceptional items.

9. The Company entered into an arrangement with a fellow subsidiary, pursuant to which professional services were rendered. The Company made an application on July 3, 2012 to the Regional Director, Ministry of Corporate Affairs for approval and pending such approval, the Company recognized and accounted a provision of Rs.1,400 in the books during the quarter/twelve month period ended December 31, 2012. Subsequently, the Company had withdrawn the application on February 6, 2013 and consequently, the provision was reversed in the books.

10. The Board of Directors approved the change of the current financial year between January 1, 2012 and December 31, 2012 to March 31, 2013 for a period of 15 months. Pursuant to such change, the Company has closed its accounts for 15 month period ended March 31, 2013 and the previous period figures are for 9 month period ended December 31, 2011. Hence the same are not comparable.

11. Disclosure as per Clause 32 of the Listing Agreement:

- Maximum balance outstanding during the period Rs.Nil (December 31, 2011 - Rs.Nil)

- Balance as at March 31, 2013 Rs.Nil (December 31, 2011 - Rs.Nil)

12. Comparative figures

Previous period''s figures have been regrouped/reclassified wherever necessary to correspond with the current period''s classification/disclosures.

Mar 31, 2011

1. Commitments and contingent liabilities

Rs. Lakhs

As at As at

31st March, 2011 31st March, 2010

i. Commitments/contingent liabilities

a. Guarantees issued by banks 684.36 767.15

b. Letters of credit outstanding 1014.83 240.55

c. Corporate guarantee given to forest department of Government of Andhra Pradesh 1472.09 1472.09

ii. Claims against the Company not acknowledged as debts in respect of:

a. Income tax matters, pending decisions on various appeals made by the Company and by the Department 138.82 107.07

b. Excise matters, under dispute 1647.02 3435.82

c. Sales tax matters, under dispute 365.33 347.04

d. Other matters, under dispute 297.25 438.27

e. Vacant land tax 228.31 228.31

f. Demand raised by Eastern Power Distribution Corporation of Andhra Pradesh Limited for surplus power supplied by APGPCL disputed by the company. An amount of Rs.76.98 lakhs paid under protest (Previous year Rs.76.98 lakhs) has been grouped under loans and advances. The appeal filed by APTRANSCO is pending before the HonÃble A.P. High Court in which other companies similarly placed are made respondents. 87.66 87.66

iii. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) 2136.94 1692.811

iv. Commitment under Export Promotion Capital Goods (EPCG) scheme 57613.38 57970.00

2. Deferred Taxation

The Company has since the inception of Accounting Standard 22 on Accounting for Taxes on Income, recognised the deferred tax expense, which arises primarily from depreciation on tangible fixed assets on the basis of the currently applicable enacted Minimum Alternate Tax rate rather than the regular tax rates as specified by paragraph 21 of Accounting Standard 22. The Company has challenged the provisions of Accounting Standard 22, in so far as it relates to the above matter and has accordingly filed a writ petition in June 2003 before the HonÃble High Court of Andhra Pradesh. The case has been subsequently transferred to the HonÃble Calcutta High Court. The writ petition has been admitted and is currently pending resolution. The quantification of the deferred tax liability, and consequential impact on the financial statement, which may arise due to the above, has been held in abeyance pending disposal of the writ petition.

3. Related Party Disclosures

a. Related parties where control exists or where significant influence exists and with whom transactions have taken place during the year:

Enterprises where principal shareholders have control

1. Samay Books Limited - Enterprise owned by principal shareholders

Enterprises where principal shareholders have significant influence

1. Digvijay Investments Limited - Enterprise owned by principal shareholders

2. Amalgamated Development Limited - Enterprise owned by principal shareholders

3. Apurva Export Private Limited - Enterprise owned by principal shareholders

4. MB Commercial Company Limited - Enterprise owned by principal shareholders

5. Maharaja Shree Umaid Mills Limited - Enterprise owned by principal shareholders

6. Mugneeram Ramcoowar Bangur Charitable & Religious Company - Enterprise owned by principal shareholders

7. Placid Limited - Enterprise owned by principal shareholders

8. Shree Krishna Agency Limited - Enterprise owned by principal shareholders

9. The General Investment Company Limited - Enterprise owned by principal shareholders

10. The Kishore Trading Company Limited - Enterprise owned by principal shareholders

11. The Peria Karamalai Tea & Produce Company Limited - Enterprise owned by principal shareholders

12. The Swadeshi Commercial Company Limited - Enterprise owned by principal shareholders

Key Management Personnel represented on the Board

Mr. L.N. Bangur Executive Chairman

Mr. M.K. Tara Managing Director & CEO

Ms. Sheetal Bangur Director (Commercial)

Mr. Shreeyash Bangur Director (Corporate)

Mr. P.K. Suri Director (Operations)

Non-Executive and Independent Directors on the Board

Mrs. Alka Bangur

Mr. N. Srinivasan

Mr. R.C. Sarin

Mr. P.J.V. Sarma

Mr. P.K. Paul

Mr. Rajiv Kapasi

Mr. P.R. Ramakrishnan

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

Expected rate of return on plan assets: This is based on the expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

Salary escalation rate: The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.

4. Segment information

The Company is in the business of manufacture and sale of pulp, paper and paper board. Considering the core activities of the Company, management is of the view that manufacture and sale of pulp, paper and paper board is a single reportable business segment and hence information relating to primary segment is not required to be disclosed.

5. Clean Development Mechanism (CDM) Emission Reductions:

On account of energy efficiency measures undertaken by the Company during the period from June 2000 to December 2006, UNFCCC (in accordance with the regulations of United Nations body on environment) has approved the project and accorded Certified Emission Reduction (CERs) points to the Company, which have been sold during the year. Income from such sales has been credited to the Profit and Loss Account and has been disclosed under other income.

6. The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26th August, 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allotted after filing of the Memorandum. Accordingly, the disclosure in respect of the amounts payable to such enterprises as at 31st March, 2011 has been made in the financial statements based on information received and available with the Company. Further in the view of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the Micro, Small and Medium Enterprises Development Act, 2006 is not expected to be material. The Company has not received any claim for interest from any supplier under the said Act.

7. Conversion of warrants

70,18,242 equity shares of Rs.10 each at a premium of Rs.40 per share offered to the shareholders on rights basis were allotted on 30th March, 2010. In terms of letter of offer dated 22nd February, 2010, 70,18,242 detachable warrants were also allotted on the same day which will be converted into equivalent number of equity shares of Rs.10 each on payment of warrant exercise price of Rs.50 per warrant at any time before the expiry of 18 months from the date of allotment i.e. 30th September, 2011. A sum of Rs.2,807.30 lakhs collected on account of premium at Rs.40 per share on 70,18,242 equity shares of Rs.10 each allotted on rights basis on 30th March, 2010 was credited to security premium account. Expenses of Rs.49.87 lakhs related to the rights issue was adjusted against the securities premium account.

During the year, the Company has allotted 70,18,242 equity shares of Rs.10 each at a premium of Rs.40 per share, by converting an equivalent number of detachable warrants. A sum of Rs.2,807.30 lakhs collected on account of premium at Rs.40 per share on 70,18,242 equity shares of Rs.10 each allotted on conversion of warrants on 2nd December, 2010 has been credited to securities premium account. Expenses of Rs.2.92 lakhs related to the issue of shares have been adjusted against the securities premium account.

8. Borrowing costs

Additions to fixed assets include an amount of Rs.222.69 lakhs (Previous year: Rs.1,034.55 lakhs) on account of capitalisation of interest costs as stipulated under AS 16 - Borrowing Costs.

9. The Promoters of the Company, LN Bangur Group informed the Company on 29th March, 2011 that they had entered into an agreement to sell their entire shareholding of 2,12,60,008 equity shares of Rs.10 each held by them in the Company to IP Holding Asia Singapore PTE Limited (Acquirer), a subsidiary of International Paper Company, USA. The transfer of the aforesaid shares will take place after receiving the necessary approvals from regulatory authorities in India by the Acquirer. The Acquirer is an unlisted company incorporated under the laws of Singapore. International Paper Company, USA is a global paper and packaging company and is listed on the New York Stock Exchange.

10. The Board of Directors has recommended a dividend of Rs.1.00 per share of Rs.10 each for the year.

11. Comparative figures

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

Mar 31, 2010

2009-10 2008-09 1. Estimated amount of contracts remaining to be executed on Capital Account and not provided for (net of advances & Letters of Credit opened) 1692.81 2803.65 2. Contingent Liabilities a. Unexpired Bank Guarantees and Letters of Credit 1007.70 791.03 b. Corporate guarantee given to Forest Department of State Government of Andhra Pradesh (against which Rs.100 lakhs deposited as per court orders) 1472.09 1472.09 c. Claims against the Company not acknowledged as debts 438.27 184.44 d. Demands raised by EPDC of AP Ltd. for surplus power supplied by APGPCL disputed by the Company. An amount of Rs.76.98 Lakhs paid under protest, (Previous Year - Rs.72.47 lakhs) is grouped under Loans & Advances. The appeal filed by APTRANSCO is pending before Honble High Court of Andhra Pradesh in which other companies similarly placed are made respondents.87.66 81.27 e. Demands of statutory authorities disputed by the Company in appeals with higher authorities in respect of: i. Income Tax 107.07 239.43 ii. Central Excise & Service Tax 3435.82 1536.34 iii. Sales Tax 347.04 234.94 iv. Vacant Land Tax 228.31 210.88

As against above demands, an amount of Rs.404.87 lakhs (Previous Year - Rs.706.10 lakhs) paid under protest is included in Loans & Advances.

3. 70,18,242 Equity Shares of Rs.10 each at a premium of Rs.40 per Share offered to the shareholders on rights basis were allotted on 30th March 2010. In terms of Letter of Offer dated 22nd February, 2010, 70,18,242 Detachable Warrants were also alloted on the same day which will be converted into equivalent number of Equity Shares of Rs.10 each on payment of warrant exercise price of Rs.50 per Warrant at any time before the expiry of 18 months from the date of allotment i.e. 30th September 2011. A sum of Rs.28,07,29,680 collected on account of premium at Rs.40 per Share on 70,18,242 equity shares of Rs.10 each allotted on rights basis on 30th March, 2010 has been credited to Share Premium Account. Expenses of Rs.49.87 lakhs related to the rights issue have been adjusted against the Share Premium Account.

4. As the aggregate market value of investments in the employees gratuity fund as on 31st March, 2010 is more than the actuarially ascertained gratuity liability, no contribution has been made for the year.

5. Diminution in value of investment held in UTI Service Industries Fund is of Rs.107.46 Lakhs, against which provision made in earlier year of Rs.60 Lakhs which in the opinion of the management is considered adequate.

6. Employee benefits

Defined benefit plans

7. The Company operates mainly in one business segment of paper and paper boards of different varieties. As the sale of surplus power is less than 10% of the total turnover, the same is not considered as a reportable segment. There is no reportable geographical segment.

8. Related Party Transactions

Related parties in terms of AS-18 issued by the Institute of Chartered Accountants of India a. Promoters

i. Individuals

Shri L.N. Bangur Smt. Alka Bangur Ms. Sheetal Bangur Shri Shreeyash Bangur Shri Yogesh Bangur Ms. Surbhi Bangur

ii. Bodies Corporate

Digvijay Investments Limited

Amalgamated Development Limited

Apurva Export Private Limited

MB Commercial Company Limited

Maharaja Shree Umaid Mills Limited1

Mugneeram Ramcoowar Bangur Charitable & Religious Company

Placid Limited

Shree Krishna Agency Limited

The General Investment Company Limited

The Kishore Trading Company Limited

The Peria Karamalai Tea & Produce Company Limited1

The Swadeshi Commercial Company Limited

Samay Books Limited

No transactions made during the year

b. Key Management Personnel

Shri M.K. Tara, Managing Director Ms. Sheetal Bangur, Director (Commercial) Shri Shreeyash Bangur, Director (Corporate) Shri P.K. Suri, Director (Operations)

9. The Company has been recognising Deferred Tax Liability at the effective rate applicable for the respective years. The applicablity or otherwise of the effective rate instead of the standard rate is a matter of reference in a writ petition pending before the Honble Calcutta High Court and the matter will be reviewed on disposal of the writ petition. The uncovered notional liability in this regard, if any, in the opinion of the management gets reversed in the next few years.

10. According to internal technical assessment, there is no material impairment in the carrying cost of cash generating units of the Company in terms of Accounting Standard 28 (AS-28) issued by the Institute of Chartered Accountants of India.

11. Provision for income tax has been made in accordance with Section 115JB of the Income Tax Act,1961. Based on projections of future profits, management expects that it would be in a position to pay normal tax within the period specified under the Income Tax Act, 1961.

Licensed capacity not applicable in terms of Government of Indias Notification. Installed capacities are as certified by the Managing Director.

1 Represents Finished Production of Paper and Paper Board. Production of Pulp is not separately ascertained as pulp plant is an integral part of paper and paper board plant. Includes pulp production of 24,705 MT (Previous Year - 31,609 MT) meant for external sales.

12. The Board of Directors have recommended a dividend of Re.1.00 per share of Rs.10 each for the year.

13. Previous years figures have been regrouped wherever necessary.

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