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Notes to Accounts of IOL Chemicals and Pharmaceuticals Ltd.

Mar 31, 2016

1. Remuneration paid to whole time directors is the minimum remuneration payable in case of no profit or inadequate profits as approved by the Central Government and by the shareholders.

Mr Vijay Kumar Garg has been re-appointed as Joint Managing Director with effect from 02 March 2016 by the Board of Directors at a remuneration of Rs. 7,50,000 per month subject to approval of shareholders and Central Government under Sections 196, 197 and Schedule V of the Companies Act, 2013. The approval of the shareholders shall be obtained in the ensuing Annual General Meeting. The Company has already applied to the Central Government for its approval which is awaited.

2. Segment information

Segment information as required by Accounting Standard (AS)-17 on “Segment Reporting” issued by Companies (Accounting Standards) Rules 2006, has been complied on the basis of the financial statements and is disclosed in the notes to accounts forming part of the financial statements in accordance with the above standard.

The business segments have been identified based on the nature and class of the product and services, their customers and assessment of differential risks and returns and financial reporting system within the Company. Secondary information is reported geographically.

The operating businesses are organized and managed separately according to the nature of the products produced, with each segment representing a strategic business unit that offers different products and serves different markets.

The “Chemicals” segment produces and sells Ethyl Acetate, Acetic Anhydride, Acetyl Chloride, Mono Chloro Acetic Acid and Iso Butyl benzene. The “Drugs” segment produces and sells various API’s viz. Ibuprofen, Metformin, etc.

Segment accounting policies: In addition to the significant accounting policies, applicable to the business the accounting policies in relation to segment accounting are as under:

i. Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consists principally of cash, debtors, inventories and fixed assets, net of allowances and provisions, which are reported as direct off set in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities.

ii. Segment revenue and expenses:

Joint revenue and expenses of segment are allocated amongst them on reasonable basis. All other segment revenue and expenses are directly attributable to the segments.

3. Leases:

The Company has leased facilities under cancellable and non-cancellable operating leases arrangements with a lease term ranging from one to five years, which are subject to renewal at mutual consent thereafter. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expenses recognized during the year amounts to Rs. 11,37,904/-(previous year Rs. 10,04,360/-). The future minimum lease payments in respect of the non-cancellable operating leases as at 31 March 2016 are:

4. Amortization of intangible assets

Software’s have been amortized on estimated life of six years.

5. In accordance with the Accounting Standard 28 “On Impairment of Assets” the Company has assessed on the balance sheet date whether there are any indications (as listed in paragraph 8 to 10 of the Standard) with regard to the impairment of any of the assets.

Based on such assessment, it has been ascertained that no potential loss is present and therefore formal estimate of recoverable amount has not been made. Accordingly no impairment loss has been provided in the books of account.

6. Excise duty of Rs. 2,58,84,644 (Previous year Rs. 11,85,382) related to the difference between the closing inventory and opening inventory has been recognized in statement of profit and loss and shown under head Other expenses. (Refer note no. 28)

7. Corporate Social Responsibility (CSR)

The provisions of Section 135 of the Companies Act 2013 regarding Corporate Social Responsibility activity is not applicable to the Company.

8. The Company uses forward contracts to hedge its risk associated with fluctuation in foreign currency relating to foreign currency assets and liabilities. The use of the aforesaid financial instruments is governed by the Company’s overall strategy. The Company does not use forward contracts for speculative purposes. The details of the outstanding forward contracts as at 31 March, 2016 is as under:

9. Figures in bracket indicate deductions.

10. Previous year figures have been regrouped/recanted/rearranged wherever necessary to confirm to its classification of the current year.

11. Figures have been rounded off to the nearest rupee.


Mar 31, 2015

1. Corporate information

IOL Chemicals and Pharmaceuticals Limited (The Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956 on 29th of September 1986. Its shares are listed on two stock exchanges in India. The company is engaged in the manufacturing and selling of Organic Chemicals and Bulk Drugs. The company caters to both domestic and international market.

b. Terms/rights attached to equity shares

The company presently has one class of equity shares having a par value of Rs.10/- each. Each holder of equity shares is entitled to one vote per share. The dividend proposed 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 any of the remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

The company has not declared dividend during the year ended March 31,2015.

Increase in equity share capital

The Company has issued 22,00,000 equity shares on 21 June 2014 and 11,50,000 equity shares on 04 July 2014 of face value of Rs.10/- each at a premium of Rs.18/- per share aggregating to Rs.9.38 Crore to Non Promoters.

The Company has issued 58,93,911 equity shares of face value of Rs.10/- each at a premium of Rs.67/- per share aggregating to Rs.45.38 Crore on 28 November 2014 to FCCB holders by conversion of Foreign currency convertible bonds (FCCB) into equity.

c. Terms/rights attached to Preference shares

7% Non-Cumulative Preference Shares 50,00,000 of Rs. 10/- each

The company has converted 50,00,000, 7% non-cumulative redeemable Preference Shares of Rs.10/- each into 17,85,714 equity shares of face value of Rs.10/- each at a premium of Rs.18/- per share aggregating to Rs.5 Crore on 21 June 2014 in accordance with the terms and conditions of the preference shares. The earliest date of redemption of these preference shares was 30 June 2015.

1% Non-cumulative Preference shares 1,50,10,000 of Rs.10 each

The company has converted 1,50,10,000 1% non-cumulative redeemable Preference Shares of Rs.10/- each into 53,60,713 equity shares of face value of Rs.10/- each at a premium of Rs.18/- per share aggregating to Rs.15.01 Crore on 21 June 2014 in accordance with the terms and conditions of the preference shares. These preference shares were redeemable at par on expiry of 10 years from the date of allotment i.e. 5 November 2013

d. Terms/rights attached to Share warrants

The company has allotted 1,10,00,000 Share warrants to non- promoter company with an option to subscribe to an equity share of face value of Rs.10/- at a premium of Rs.18/- per share within the period of 18 months from the date of allotment of warrants i.e. 4 July 2014.

The company had received 25% of the price of equity shares at the time of allotment of share warrants and balance will be received at the time of exercising option to subscribe to equity shares by the share warrant holder. In the absence of exercise of options within the prescribed period of 18 months, the payment made at the time of allotment of share warrants will be forfeited.

Out of above on receipt of balance payment against 24,50,000 share warrants and exercise of option by the share warrant holder, the Company has allotted 24,50,000 equity shares of face value of Rs.10/- each at a premium of Rs.18/- per share aggregating to Rs.6.86 Crore during the month of November 2014.

Consequent upon the issue of equity shares of 1,88,40,338 (inaggregate) the total paid-up as stated in para (b), (c), and (d) above the share capital of the Company stands increased to 4,76,55,502 fully paid equity shares of Rs. 10/- each.

e. Details of shares held by holding company or the ultimate holding company or their subsidiaries and associates

There is no holding company of the company and therefore no subsidiary/ associate of holding /ultimate holding Company.

f. Foreign currency convertible Bonds

The company has converted zero coupon unsecured foreign currency convertible bonds (FCCB) aggregating to US $ 7 Million into equity shares as on 28 November 2014 as per terms of Foreign Currency Convertible Bonds issued on 28 May 2010.

g. Details of security for term loans

1 Term loans from banks and financial institutions are secured by way of equitable mortgage of all present and future immovable properties of the company ranking pari-passu charge by way of hypothecation of all the Company's movable properties, save and except Book Debts but including movable machinery, spares, tools and accessories both present and future subject to prior charges created / to be created in favour of the Company's Bankers on specified movable properties for securing borrowings for working capital requirements.

2 Further, the term loans from banks and financial institutions are secured by second pari-passu charge on all current assets present and future and the personal guarantee of the Managing Director of the company.

3 Term loan from others are secured by hypothecation of vehicles purchased against these loans.

h. Varinder Foundation a related party alongwith company as co- applicant borrowed a sum of Rs.10 Crore from Corporation Bank on behalf of the company, to meet the additional working capital requirements of the company. The said loan is shown under the head unsecured loan, from related party.

Security of such loan to bank is provided by the said party.

i. Terms of repayment of Foreign Currency Convertible Bonds

Foreign Currency Convertible Bonds has been converted into equity share capital on 28 November 2014 at a premium of 36.29% of their principal amount as per terms of offering.

Details of security

Loans repayable on demand from banks are secured by way of first pari-passu charge on all present and future finished goods, work-in-progress, raw materials, stores and spares, book debts and second pari-passu charge on fixed assets and further secured by personal guarantee of the Managing Director. terms:-

1 Working capital borrowings from banks are repayable on demand.

2 Working capital borrowings from bank carries interest @ 11% P.A.

2 Contingent liabilities and provisions (to the extent not provided for) (No cash outflow is expected)

Particulars As at As at 31 March 2015 31 March 2014

I Contingent Liabilities

i Claims not acknowledged as 30,05,040 18,37,762 debts

ii Letter of Credit outstanding 1,19,75,000 1,49,07,494

iii Bills discounted with bankers - 7,06,31,239 against irrevocable letter of credit

iv Bank Guarantee issued in 16,50,000 13,00,000 favour of others

1,66,30,040 8,86,76,495

II Commitments

i Estimated amount of contracts 2,27,59,425 3,16,16,391 remaining to be executed on Capital account and not provided for (net of advances)

ii Export obligations under 52,79,69,398 55,28,94,762 Advance Authorisation/Duty Free Import Authorisation #

55,07,28,823 58,45,11,153

# During the year, the company has executed bonds for an aggregate amount of NIL (Previous Year Rs. 3,93,60,300) in favour of The President of India under sub section (I) of the section 142 of the Custom Act 1962 for fulfillment of the obligation under the said Act.

3 The company has contested the additional demands in respect of value added tax amounting to Rs. 38.45 lacs (Previous years Rs. 23.03 lacs). As against this, a sum of Rs. 9.67 lacs (Previous year Rs. 5.81 lacs) is deposited under protest and has been included under Note 15 'Long Term Loans and Advances'. The company has filed appeals/petitions with the appellate authorities and is advised that the demands are not in accordance with the law. Pending decision thereof, no provision has been made in books of account.

i) The estimates of future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

h) The financial assumptions considered for the calculations are as under:-

i Discount Rate: The discount rate has been chosen as 7.75% on long-term basis as desired by the company.

ii Salary Increases: Salary Increase rate has been chosen as 5.75% on long-term basis as desired by the company.

iii Expected Rate of Return: In case of gratuity, the actual return has been taken.

i) The plan assets are maintained with Life Insurance Corporation of India (LIC). The detail of investments maintained by LIC have not been furnished to the Company. The same have therefore not been disclosed.

g) The estimates of future salary increases considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

h) The company has recognized an expense of Rs. 1,42,21,508/- (Previous year Rs. 1,47,72,853/-) in respect of Contribution to Provident Fund.

4 The company has charged Rs. 1,43,56,037/- (Gross) (Previous year Rs. 2,83,31,122/-)(Gross) premium on Foreign Currency Convertible Bonds directly to the Security Premium Account in accordance with the provisions of Section 52 of the Companies Act, 2013. No tax benefits have been reduced from the amount of premium on FCCB as the company has converted the said amount into equity shares in terms of offer of FCCB.

5 Rs. 79.94 lacs (previous year Rs. 115.38 lacs) being amount of borrowing cost have been capitalized during the year.

6 The related party disclosures as per Accounting Standard - 18 prescribed by the Companies (Accounting Standard) Rules, 2006.

a) Enterprises over which Key Management Personnel (KMP) and relative of such personnel is able to exercise significant influence or control:

NM Mercantiles Limited Mayadevi Polycot Limited * NCG Enterprises Limited Varinder Foundation Towels India

True Value Traders Limited

b) Key Management Personnel:

Mr. Varinder Gupta Managing Director

Mr. Vijay Singla Director (Works)

Mr. Vijay Kumar Garg Joint Managing Director

Mr. Rakesh Mahajan Chief Financial Officier

Mr. Krishan Singla Vice President and Company Secretary

c) Relative of Key Management Personnel: Mr Vikas Gupta

* Enterprise having significant influence over the company.

7 Remuneration paid to whole time directors is the minimum remuneration payable in case of no profit or inadequate profits as approved by the Central Government and by the shareholders.

8 Segment information

Segment information as required by Accounting Standard (AS)-17 on "Segment Reporting" issued by Companies (Accounting Standards) Rules 2006, has been complied on the basis of the financial statements and is disclosed in the notes to accounts forming part of the financial statements in accordance with the above standard.

The business segments have been identified based on the nature and class of the product and services, their customers and assessment of differential risks and returns and financial reporting system within the company. Secondary information is reported geographically.

The operating businesses are organized and managed separately according to the nature of the products produced, with each segment representing a strategic business unit that offers different products and serves different markets.

The "Chemicals" segment produces and sells Ethyl Acetate, Acetic Anhydride, Acetyl Chloride, Mono Chloro Acetic Acid and Iso Butyl benzene. The "Drugs" segment produces and sells various API's viz. Ibuprofen, Metformin, etc.

Segment accounting policies: In addition to the significant accounting policies, applicable to the business the accounting policies in relation to segment accounting are as under:

i. Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consists principally of cash, debtors, inventories and fixed assets, net of allowances and provisions, which are reported as direct off set in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities.

ii. Segment revenue and expenses:

Joint revenue and expenses of segment are allocated amongst them on reasonable basis. All other segment revenue and expenses are directly attributable to the segments.

iii. Inter segment sales:

Inter segment sales are eliminated in consolidation.

9 Leases:

The company has leased facilities under cancellable and non- cancellable operating leases arrangements with a lease term ranging from one to five years, which are subject to renewal at mutual consent thereafter. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expenses recognized during the year amounts to Rs. 10,04,360/- (previous year Rs. 15,15,244/-). The future minimum lease payments in respect of the non-cancellable operating leases as at 31st March 2015 are:

10 Amortisation of intangible assets

Softwares have been amortised on estimated life of six years.

11 Depreciation for the year has been provided on Straight Line Method on the basis of useful lives specified in the Schedule-II of the Companies Act, 2013 as against the amount of depreciation calculated on the basis of rates of depreciation in respect of various assets contained in Schedule XIV to the Companies Act, 1956.

In view of this change, carrying amounts of various tangible fixed assets as at 1st April, 2014 after retaining the residual value an amount of Rs. 262.04 lacs has been recognized in the opening balance of retained earning net of deferred tax of Rs. 117.18 lacs where the useful life of an asset is Nil. In other cases, the carrying amounts as at 1st April, 2014 have been depreciated over the revised remaining useful life of the asset as per Schedule II. The depreciation for the year is lower to the extent of Rs. 229.17 lacs on account of this change and accordingly the loss for the year is lower by Rs. 229.17 lacs.

12 In accordance with the Accounting Standard 28 "On Impairment of Assets" the company has assessed on the balance sheet date whether there are any indications (as listed in paragraph 8 to 10 of the Standard ) with regard to the impairment of any of the assets. Based on such assessment, it has been ascertained that no potential loss is present and therefore formal estimate of recoverable amount has not been made. Accordingly no impairment loss has been provided in the books of account.

13 Excise duty of Rs. 11,85,380 (Previous year Rs. (39,05,976) related to the difference between the closing inventory and opening inventory has been recoganised in statement of profit and loss and shown under head Other expenses. (Refer note no.28)

14 Corporate Social Responsibility (CSR)

The provisions of Section 135 of the Companies Act 2013 regarding Corporate Social Responsibility activity is not applicable to the company.

15 Debt restructuring

The operations of the company adversely impacted during the year on account of damped economic sentiments, batch losses/ quality issues of Ibuprofen intermediate, working capital gap and change in economies of chemical business. On account of losses incurred due to these factors, the company faced the stretched liquidity during the period. In order to correct the scenario, the company has requested its lenders for overall restructuring of its debts through Joint Lender Forum (JLF) with cut-off date as on September 01, 2014.

Accordingly, the lenders has sanctioned the comprehensive restrucruring of all debts of the company. The restructuring of facilities included restructuring of repayment schedule, interest funding, reduction in interest rates, sanction of working capital term loans. The Master Restructuring Agreement (MRA) between the Borrowers and the JLF Lenders has been executed on March 23, 2015. The impact in terms of the sanctioned restructuring has been given effect in financial statements with effect from the cut-off date being September 01,2014.

Interest has been accounted for based upon terms of restrucuring of facilities sanctioned by the respective lenders. The Funded Interest Term Loans (FITLs) has been created on certain credit facilities. Other conditions as stipulated under the scheme are being complied with.

16 Figures in bracket indicate deductions.

17 Previous year figures have been regrouped/recasted/rearranged wherever necessary to confirm to its classification of the current year.

18 Figures have been rounded off to the nearest rupee.


Mar 31, 2014

1. Corporate information

IOL Chemicals and Pharmaceuticals Limited (The Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956 on 29th September 1986. Its shares are listed on two stock exchanges in India. The company is engaged in the manufacturing and selling of Organic Chemicals and Bulk Drugs. The Company caters to both domestic and international market.

2 Contingent liabilities and provisions (to the extent not provided for) (No cash outfl ow is expected)

Particulars As at As at 31 March 2014 31 March 2013

I Contingent liabilities

i Claims not acknowledged as 18,37,762 51,31,891 debts

ii Letter of Credit outstanding 1,49,07,494 74,65,423

iii Bills discounted with bankers 7,06,31,239 2,76,44,124 against irrevocable letter of credit

iv Bank Guarantee issued in 13,00,000 - favour of others

8,86,76,495 4,02,41,438 3 Employee Benefits

The summarized position of post-employment benefi ts and long term employee benefi ts recognized in the profi t and loss account and Balance Sheet in accordance with AS (15) is as under:-

g) The estimates of future salary increases, considered in actuarial valuation, take into account infl ation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

h) The financial assumptions considered for the calculations are as under:- i Discount Rate: The discount rate has been chosen as 8.75% on long-term basis as desired by the Company. ii Salary Increases: Salary Increase rate has been chosen as 6.75% on long-term basis as desired by the Company. iii Expected Rate of Return: In case of gratuity, the actual return has been taken.

i) The plan assets are maintained with Life Insurance Corporation of India (LIC). The detail of investments maintained by LIC have not been furnished to the Company. The same have therefore not been disclosed.

j) Short term employee''s benefi ts includes in the present value of obligation

g) The estimates of future salary increases considered in actuarial valuation take into account infl ation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

h) The Company has recognized an expense of Rs. 1,47,72,853/- (Previous year Rs. 1,16,18,680/-) in respect of Contribution to Provident Fund.

4 The Company has excercised the option given under notifi cation no. GSR 914E dated 29 December 2011 of Ministry of Corporate Affairs, Govt. of India and in accordance therewith the Company during the year has capitalised Rs. 3,24,11,559/- (Previous year Rs. 1,83,48,667/-) the exchange difference arising on reporting of long term foreign currency borrowings at rates different from those at which these were reported in previous fi nancial statements in so far as they relate to the acquisition of depreciable fi xed assets. The said amount is required to be amortised over the remaining life of the assets in accordance with above notifi cation. Out of the above Rs. 27,80,616/- (Previous year Rs. 9,68,810/-) has been amortized during the year and the unamortized balance as at year end is Rs. 4,70,10,800/- (previous year Rs. 1,73,79,857/-)

5 The Company has charged Rs. 2,83,31,122/- (Previous year Rs. 2,19,67,401/-) (Gross) premium on Foreign Currency Convertible Bonds directly to the Security Premium Account in accordance with the provisions of Section 78 of the Companies Act, 1956. The tax benefi t as and when admissible shall be recognised in the Security Premium Account.

6 Rs. 115.38 lacs (previous year Rs. 108.92 lacs) being amount of borrowing cost have been capitalized during the year.

7 Leases:

The Company has leased facilities under cancellable and non- cancellable operating leases arrangements with a lease term ranging from one to fi ve years, which are subject to renewal at mutual consent thereafter. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expenses recognized during the year amounts to Rs. 15,15,244/- (previous year Rs. 15,49,424/-). The future minimum lease payments in respect of the non-cancellable operating leases as at 31 March 2014 are:

8 Remuneration paid to whole time directors is the minimum remuneration payable in case of no profi t or inadequate profi ts in accordance with schedule XIII of Companies Act, 1956 and duly approved by shareholders.

9 Segment information

Segment information as required by Accounting Standard (AS)-17 on "Segment Reporting" issued by Companies (Accounting Standards) Rules 2006, has been complied on the basis of the fi nancial statements and is disclosed in the notes to accounts forming part of the fi nancial statements in accordance with the above standard.

The business segments have been identifi ed based on the nature and class of the product and services, their customers and assessment of differential risks and returns and fi nancial reporting system within the company. Secondary information is reported geographically.

The operating businesses are organized and managed separately according to the nature of the products produced, with each segment representing a strategic business unit that offers different products and serves different markets.

The "Chemicals" segment produces and sells Ethyl Acetate, Acetic Anhydride, Acetyl Chloride, Mono Chloro Acetic Acid and Iso Butyl benzene.

The "Drugs" segment produces and sells various API''s viz. Ibuprofen, Lamotrigine, etc.

Segment accounting policies: In addition to the signifi cant accounting policies, applicable to the business the accounting policies in relation to segment accounting are as under:

i. Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consists principally of cash, debtors, inventories and fi xed assets, net of allowances and provisions, which are reported as direct off set in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities.

ii. Segment revenue and expenses:

Joint revenue and expenses of segment are allocated amongst them on reasonable basis. All other segment revenue and expenses are directly attributable to the segments.

iii. Inter segment sales:

Inter segment sales are eliminated in consolidation.

The potential equity shares in case of Foreign Currency Convertible Bonds are anti dilutive on their conversion into equity shares.

Therefore has not been considered for computing the diluted earning per share.

10 Amortisation of intangible assets

Softwares have been amortised @ 16.21% on straight line basis as estimated life is considered to be not more than six years.

11 In accordance with the Accounting Standard 28 "On Impairment of Assets" the company has assessed on the balance sheet date whether there are any indications (as listed in paragraph 8 to 10 of the Standard ) with regard to the impairment of any of the assets.

Based on such assessment, it has been ascertained that no potential loss is present and therefore formal estimate of recoverable amount has not been made. Accordingly no impairment loss has been provided in the books of account.

12 The Company has received a notice from the income tax department under the provisions of sub section (3) of section 226 of the Income Tax Act,1961 for recovery of demand of Rs.1,49,02,390/- due from NCG Enterprises Limited and Rs. 6,26,73,740/- from NM Merchantiles Limited.

The Company has explained to the income tax authorities that the Company does not hold any money for and on account of these companies.

The management has been advised that nothing contained in the above said section requires the Company to pay any sum in this regard therefore the notice is not in accordance with law.

13 Excise duty of Rs. (39,05,976) (Previous year Rs. 25,19,213) related to the difference between the closing inventory and opening inventory has been recognised in statement of profi t and loss and shown under head Other expenses. (Refer note no. 27)

14 Figures in bracket indicate deductions.

15 Previous year fi gures have been regrouped/recasted wherever necessary to confi rm to its classifi cation of the current year.

16 Figures have been rounded off to the nearest rupee.

17 The Company uses forward contracts to hedge its risk associated with fluctuation in foreign currency relating to foreign currency assets and liabilities. The use of the aforsaid financial instruments is governed by the company''s overall strategy. The company does not use forward contracts for speculative purposes. The details of the outstanding forward contracts as at 31 March 2014 is as under:


Mar 31, 2013

1. Corporate information

IOL Chemicals and Pharmaceuticals Limited (the Company) is a public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956, on 29 September 1986. Its shares are listed on two stock exchanges in India. The Company is engaged in the manufacturing and selling of Organic Chemicals and Bulk Drugs. The Company caters to both domestic and international market.

2 The Company has exercised the option given under notifcation no. GSR 914E dated 29 December 2011 of Ministry of Corporate Affairs , Govt. of India and in accordance therewith the Company has capitalised Rs. 1,83,48,667/- the exchange difference arising on reporting of long term foreign currency borrowings at rates different

from those at which these were reported in previous fnancial statements in so far as they relate to the acquisition of depreciable fxed assets. The said amount is required to be amortised over the remaining life of the assets in accordance with above notifcation. Out of the above Rs. 9,68,810/- has been amortized during the year and the unamortized balance as at year end is Rs. 1,73,79,857/-.

Had the Company not exercised the option given under the aforesaid notifcation, gross fxed assets would have been Rs. 5,56,00,42,273/- (against reported fgure Rs. 5,57,83,90,940/-), depreciation would have been Rs. 31,27,71,831/- (against reported fgure Rs. 31,37,40,641/-) and exchange loss would have been Rs. 53,52,158/- (against reported fgure of proft Rs. 1,29,96,509/-) and proft before tax would have been Rs. 1,22,04,146/- (against reported fgure Rs. 2,95,84,003/-)

3 The Company has charged Rs. 2,19,67,401/- (Gross) premium on Foreign Currency Convertible Bonds directly to the Security Premium Account in accordance with the provisions of Section 78 of the Companies Act, 1956. The tax beneft as and when admissible shall be recognised in the Security Premium Account.

4 Rs. 108.92 lacs (previous year Rs. 1,114.60 lacs) being amount of borrowing cost have been capitalized during the year.

5 Mr Varinder Gupta, was re-appointed as Managing Director of the Company by the Board of Directors and the shareholders with effect from 01.09.2012 at a remuneration of Rs.4,00,000/- per month, subject to approval of the Central Government u/s 269,198,309 read with schedule XIII of the Companies Act ,1956. The Company has already applied to the Central Government for its approval which is awaited.

Mr Vijay Kumar Garg, was appointed as whole time director w.e.f. 02 March 2013 by the Board of Directors at a remuneration of Rs.2,50,000 per month subject to approval of shareholders and Central Government u/s 269, 198/309 and schedule XIII of the Companies Act, 1956 . The approval of the sharholders shall be obtained in the ensuing Annual General Meetting of the Company and the Company is in process of making the application to the Central Government for its approval.

Pending approval of the Central Government, an amount of Rs.30,50,000/- being excess remuneration paid in the year, the said amount is being held in trust by managerial personnel.

6 Segment information

Segment information as required by Accounting Standard (AS)-17 on "Segment Reporting" issued by Companies (Accounting Standards) Rules 2006, has been complied on the basis of the fnancial statements and is disclosed in the notes to accounts forming part of the fnancial statements in accordance with the above standard.

The business segments have been identifed based on the nature and class of the product and services, their customers and assessment of differential risks and returns and fnancial reporting system within the Company. Secondary information is reported geographically.

The operating businesses are organized and managed separately according to the nature of the products produced, with each segment representing a strategic business unit that offers different products and serves different markets.

The "Chemicals" segment produces and sells Ethyl Acetate, Acetic Anhydride, Acetyl Chloride, Mono Chloro Acetic Acid and Iso Butyl benzene.

The "Drugs" segment produces and sells Ibuprofen.

Segment accounting policies: In addition to the signifcant accounting policies, applicable to the business the accounting policies in relation to segment accounting are as under:

i. Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consists principally of cash, debtors, inventories and fxed assets, net allowances and provisions, which are reported as direct off set in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities.

ii. Segment revenue and expenses: Joint revenue and expenses of segment are allocated amongst them on reasonable basis. All other segment revenue and expenses are directly attributable to the segments. iii. Inter segment sales: Inter segment sales are eliminated in consolidation.

7 Leases:

The Company has leased facilities under cancellable and non- cancellable operating leases arrangements with a lease term ranging from one to fve years, which are subject to renewal at mutual consent thereafter. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expenses recognized during the year amounts to Rs.15,11,760 (previous year Rs.10,60,260/-). The future minimum lease payments in respect of the non-cancellable operating leases as at 31 March 2013 are:

8 Amortisation of intangible assets

Softwares have been amortised @ 16.21% on straight line basis as estimated life is considered to be not more than six years.

9 In accordance with the Accounting Standard 28 "On Impairment of Assets" the Company has assessed on the balance sheet date whether there are any indications (as listed in paragraph 8 to 10 of the Standard) with regard to the impairment of any of the assets.

Based on such assessment, it has been ascertained that no potential loss is present and therefore formal estimate of recoverable amount has not been made. Accordingly no impairment loss has been provided in the books of account.

10 The details of amounts outstanding to Micro, Small and Medium Enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act), based on the available information with the Company are as under:

11 Excise duty of Rs.25,19,213/- {Previous year Rs.(18,05,291)} related to the difference between the closing inventory and opening inventory has been shown under Other expenses. (Refer note no.28)

12 Figures in bracket indicate deductions.

13 Previous year fgures have been regrouped/recasted wherever necessary.

14 Figures have been rounded off to the nearest rupee.

15 The Company uses forward contracts to hedge its risk associated with fuctuation in foreign currency relating to foreign currency assets and liabilities. The use of the aforsaid fnancial instruments is governed by the Company''s overall strategy. The Company does not use forward contracts for speculative purposes. The details of the outstanding forward contracts as at 31 March 2013 is as under:


Mar 31, 2012

1. Corporate information

IOL Chemicals and Pharmaceuticals Limited (The Company) is a public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956 on 29th September 1986. Its shares are listed on two stock exchanges in India. The Company is engaged in the manufacturing and selling of Organic Chemicals and Bulk Drugs. The Company caters to both domestic and international market.

a. Terms/rights attached to equity shares

The Company presently has one class of equity shares having a par value of Rs. 10/- each. Each holder of equity shares is entitled to one vote per share. The dividend proposed 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 any of the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

The Company has not declared dividend during the year ended 31 March 2012.

b. Terms/rights attached to preference shares

The rate of dividend on preference shares is decided by the Board of Directors as and when issued. Preference shares have the non-cumulative right to receive dividend as and when declared and shall have perferential right of repayment of amount of capital.

The Company has issued 7% non-cumulative preference shares shall be redeemable at par on expiry of 10 years from the date of allotment i.e. 20 March 2004. The earliest date of redemption is 20 March 2014.

c. Details of shares held by holding Company or the ultimate holding Company or their subsidiaries and associates

There is no holding Company of the Company and therefore no subsidiary/ associate of holding /ultimate holding Company.

d. Aggregate number and class of shares allotted as fully paid up pursuant to contract(s) without payment being received in cash, bonus shares and shares bought back for the period of 5 years immediately preceding the balance date:

e. Foreign Curreny Convertible Bonds

The Company has issued zero coupon unsecured foreign currency convertible bonds (FCCB) aggregating to US $ 7 Million.

The bond holders have option to convert into equity shares of the Company at price of Rs. 78 per share (subject to adjustment, if any) with a fixed exchange rate of Rs. 47.57 per US $ at any time on or after 28 May 2010 but on or before 28 May 2015 subject to satisfaction of certain conditions. The Company has also option to convert all outstanding bonds into equity shares at the prevailing conversion price at any time on or after 28 November 2014 but on or before 28 May 2015.

a. Details of security for term loans

1 Term loans from banks and financial institutions are secured by way of equitable mortgage of all present and future immovable properties of the Company ranking pari-passu charge by way of hypothecation of all the Company's movable properties, save and except Book Debts but including movable machinery, spares, tools and accessories both present and future subject to prior charges created / to be created in favour of the Company's Bankers on specified movable properties for securing borrowings for working capital requirements.

2 Further, the term loans from banks and financial institutions are secured by second pari-passu charge on all current assets present and future and the personal guarantee of the Managing Director of the Company.

3 Term loan from others are secured by hypothecation of vehicles purchased against these loans.

b. Terms of repayment of term loans from banks

1 Term Loan from Punjab National Bank amounting to Rs. 477.49 lacs carries interest rate @ base rate 3.75% Term Premium 0.50%.

The term loan is repayable in 5 quarterly installments of Rs. 79.17 lacs each and one installment of Rs. 81.64 lacs.

2 Term Loan from Punjab National Bank amounting to Rs. 306.98 lacs carries interest rate @ base rate 3.75% Term Premium 0.50%.

The term loan is repayable in 5 quarterly installments of Rs. 50 lacs each and one installment of Rs. 56.98 lacs.

3 Term Loan from Punjab National Bank amounting to Rs. 389.56 lacs carries interest rate @ base rate 3.75% Term Premium 0.50%.

The term loan is repayable in 10 quarterly installments of Rs. 35.42 lacs each and one installment of Rs. 35.36 lacs.

4 Term Loan from Punjab National Bank amounting to Rs. 4,650 lacs carries interest rate @ base rate 3.75% Term Premium 0.50%.

The term loan is repayable in 18 quarterly installments of Rs. 250 lacs each and one installment of Rs. 150 lacs.

5 Term Loan from Punjab National Bank amounting to Rs. 471.83 lacs carries interest rate @ base rate 3.75% Term Premium 0.50%.

The term loan is repayable in 18 quarterly installments of Rs. 24.83 lacs each and one installment of Rs. 24.89 lacs.

6 Term Loan from Punjab National Bank amounting to Rs. 2,375 lacs carries interest rate @ base rate 3.75% Term Premium 0.50%.

The term loan is repayable in 19 quarterly installments of Rs. 125 lacs each.

7 Term Loan from Punjab National Bank amounting to Rs. 4,994.05 lacs carries interest rate @ base rate 3.50% Term Premium 0.50%.

The term loan is repayable in 27 quarterly installments of Rs. 178.57 lacs each and one installment of Rs. 172.66 lacs.

8 Term Loan from Allahabad Bank amounting to Rs. 131.73 lacs carries interest rate @ base rate 4%

The term loan is repayable in 4 quarterly installments of Rs. 26.33 lacs each and one installment of Rs. 26.41 lacs.

9 Term Loan from Allahabad Bank amounting to Rs. 150 lacs carries interest rate @ base rate 4%

The term loan is repayable in 6 quarterly installments of Rs. 25 lacs each.

10 Term Loan from Allahabad Bank amounting to Rs. 126.73 lacs carries interest rate @ base rate 4%

The term loan is repayable in 4 quarterly installments of Rs. 26.33 lacs each and one installment of Rs. 21.41 lacs.

11 Term Loan from Allahabad Bank amounting to Rs. 2,624.57 lacs carries interest rate @ base rate 2.75%

The term loan is repayable in 17 quarterly installments of Rs. 145.83 lacs each and one installment of Rs. 145.46 lacs.

12 Term Loan from Allahabad Bank amounting to Rs. 1,500 lacs carries interest rate @ base rate 3.25%

The term loan is repayable in 27 quarterly installments of Rs. 53.57 lacs each and one installment of Rs. 53.61 lacs.

13 Term Loan from State Bank of India amounting to Rs. 1,505.95 lacs carries interest rate @ base rate spread of 4.50%

The term loan is repayable in 18 quarterly installments of Rs. 79.33 lacs each and one installment of Rs. 78.01 lacs.

14 Term Loan from Oriental Bank of Commerce amounting to Rs. 49.88 lacs carries interest rate @ base rate 4% Term Premium 0.50%.

The term loan is repayable in 5 quarterly installments of Rs. 8.33 lacs each and one installment of Rs. 8.23 lacs.

15 Term Loan from Oriental Bank of Commerce amounting to Rs. 1,500 lacs carries interest rate @ base rate 4% Term Premium 0.50%.

The term loan is repayable in 17 quarterly installments of Rs. 83.33 lacs each and one installment of Rs. 83.39 lacs.

16 Term Loan from Oriental Bank of Commerce amounting to Rs. 700 lacs carries interest rate @ base rate 4% Term Premium 0.50%.

The term loan is repayable in 28 quarterly installments of Rs. 25 lacs each.

c. Terms of repayment of term loans from financial institutions

1 Term Loan from Export-Import Bank of India amounting to Rs. 1,764 lacs (sanctioned amount Rs. 1800 lacs) carries interest rate @ 11.50% for Rs. 1038 Lacs and @ 11.75% for Rs. 762 lacs. The term loan is repayable in 27 quarterly installments of Rs. 64.29 lacs each and one installment of Rs. 64.17 lacs.

2 Term Loan from Export-Import Bank of India amounting to Rs. 900 lacs (sanctioned amount Rs. 4,000 lacs) carries interest rate @ G-Sec (1 year) 4%. The term loan is repayable in 27 quarterly installments of Rs. 143 lacs each and one installment of Rs. 139 lacs.

d. Terms of repayment of term loans from others

1 Vehicle loan from Kotak Mahindra Prime Limited amounting to Rs. 2.19 lacs carries interest @ 8.96%. The loan is repayable in 8 monthly installments (including interest) of Rs. 28,350 each.

2 Vehicle loan from Kotak Mahindra Prime Limited amounting to Rs. 2.13 lacs carries interest @ 8.35%. The loan is repayable in 7 monthly installments (including interest) of Rs.31,350 each.

3 Vehicle loan from Kotak Mahindra Prime Limited amounting to Rs. 9.02 lacs carries interest @ 12.19%. The loan is repayable in 51 monthly installments (including interest) of Rs. 23,030 each.

4 Vehicle loan from Tata Capital Financial Services Limited amounting to Rs. 7.19 lacs carries interest rate @ 10.77 %. The loan is repayable in13 monthly installments (including interest).

5 monthly installments of Rs. 71,820 each and 8 monthly installments of Rs. 51,300 each.

* Figures of term loan stated above in para (b), (c ) and (d) includes current maturities of long term debt shown separately in note 12.

g. Terms of repayment of Foreign Currency Convertible Bonds

Foreign Currency Convertible Bonds are redeemable on 05 June 2015 at a premium of 41.25% of their principal amount unless previously redeemed, repurchased and cancelled or converted.

h. Loan from related parties is as per stipulation of banks. These loans are interest free and not repayable during the currency of the credit facilities availed from these banks.

Details of security

Loans repayable on demand from banks are secured by way of first pari-passu charge on all present and future finished goods, work-in- progress, raw materials, stores and spares, book debts and second pari-passu charge on fixed assets and further secured by personal guarantee of the Managing Director.

Terms of repayment

Working capital borrowings from Punjab National Bank and Oriental Bank of Commerce are repayable on demand and carries interest @ 4% over base rate.

Working capital borrowings from Allahabad Bank are repayable on demand and carries interest @ 3.25% over base rate.

1. Contingent liabilities and provisions (to the extent not provided for) (No cash outflow is expected)

As at As at

Particulars 31 March 2012 31 March 2011

I Contingent liabilities

i Claims not acknowledged 42,85,732 37,71,561 as debts

ii Letter of Credit outstanding 3,39,90,075 1,55,68,200

iii Bills discounted with 2,16,49,121 6,03,57,890 bankers against irrevocable letter of credit

iv Bank Guarantee issued in 5,00,000 - favour of others 6,04,24,928 7,96,97,651

As at As at

Particulars 31 March 2012 31 March 2011

II Commitments

i Estimated amount of contracts 5,93,14,851 9,38,22,184 remaining to be executed on Capital account and not provided for (net of advances)

ii Export obligations under 64,59,04,365 74,23,38,596 Advance Authorisation / Duty Free Import Authorisation # 70,52,19,216 83,61,60,780

# The Company has executed bonds for an aggregate amount of Rs. 3,62,65,000 (Previous Year Rs. 22,97,000) in favour of The President of India under sub section (I) of the section 142 of the Custom Act 1962 for fulfillment of the obligation under the said Act.

g) The estimates of future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

h) The financial assumptions considered for the calculations are as under:-

i Discount Rate: The discount rate has been chosen as 8.00% on long-term basis as desired by the Company.

ii Salary Increases: Salary Increase rate has been chosen as 7.00% on long-term basis as desired by the Company.

iii Expected Rate of Return: In case of gratuity, the actual return has been taken.

g) The estimates of future salary increases considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

2 Rs. 2,193.33 lacs (previous year Rs. 433.12 lacs) being amount of borrowing cost, raw material expenses, power and fuel,personnel expenses and insurance etc (reduced by sales and foreign exchange fluctuation, if any) have been capitalized during the year.

3 Remuneration paid to whole time directors is the minimum remuneration payable in case of no profit or inadequate profits in accordance with schedule XIII of Companies Act 1956 and duly approved by shareholders. However the appointment and remuneration of whole time director Mr N.K.Pundir appointed on 31 March 2012 by Board of Directors and paid a remuneration of Rs. 7,902/- during the year is subject to approval of shareholders.

4 Segment information

Segment information as required by Accounting Standard (AS)-17 on "Segment Reporting" issued by Companies (Accounting Standards) Rules 2006, has been complied on the basis of the financial statements and is disclosed in the notes to accounts forming part of the financial statements in accordance with the above standard.

The business segments have been identified based on the nature and class of the product and services, their customers and assessment of differential risks and returns and financial reporting system within the Company. Secondary information is reported geographically.

The operating businesses are organized and managed separately according to the nature of the products produced, with each

segment representing a strategic business unit that offers different products and serves different markets.

The "Chemicals" segment produces and sells Acetic Acid, Ethyl Acetate, Acetic Anhydride, Acetyl Chloride, Mono Chloro Acetic Acid and Iso Butyl benzene.

The "Drugs" segment produces and sells Ibuprofen.

Segment accounting policies: In addition to the significant accounting policies, applicable to the business the accounting policies in relation to segment accounting are as under:

i. Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consists principally of cash, debtors, inventories and fixed assets, net of allowances and provisions, which are reported as direct off set in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities.

ii. Segment revenue and expenses:

Joint revenue and expenses of segment are allocated amongst them on reasonable basis. All other segment revenue and expenses are directly attributable to the segments.

5 Leases:

The Company has leased facilities under cancellable and non- cancellable operating leases arrangements with a lease term ranging from one to five years, which are subject to renewal at mutual consent thereafter. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expenses recognized during the year amounts to Rs. 10,10,760 (previous year Rs. 10,02,696/-). The future minimum lease payments in respect of the non-cancellable operating leases as at 31st March 2012 are:

6 Amortisation of intangible assets

Softwares have been amortised @ 16.21% on straight line basis as estimated life is considered to be not more than six years.

7 In accordance with the Accounting Standard 28 "On Impairment of Assets" the Company has assessed on the balance sheet date whether there are any indications (as listed in paragraph 8 to 10 of the Standard ) with regard to the impairment of any of the assets. Based on such assessment, it has been ascertained that no potential loss is present and therefore formal estimate of recoverable amount has not been made. Accordingly no impairment loss has been provided in the books of account.

8 Excise duty of Rs. 18,05,291/- (Previous year Rs. 28,92,533/-) related to the difference between the closing inventory and opening inventory has been included in miscellaneous expenses under Other expenses. (Refer note no.28)

9 Figures in bracket indicate deductions

10 (a) The financial statements for the year ended 31 March 2012 have been prepared as per Revised Schedule VI to the Companies Act, 1956. Accordingly the previous year figures have been reclassified to confirm to this year's classification.

(b) The figures of current year are not comparable with preceding year figures on account of merger of G. Drugs and Pharmaceuticals Ltd. with Company.

11 The Company uses forward contracts to hedge its risk associated with fluctuation in foreign currency relating to foreign currency assets and liabilities. The use of the aforsaid financial instruments is governed by the Company's overall strategy. The Company does not use forward contracts for speculative purposes. The details of the outstanding forward contracts as at 31 March 2012 is as under:

12 Accounting for amalgamation

In accordance with the scheme of merger between G Drugs and Pharmaceuticals Limited (Transferor Co) and IOL Chemicals and Pharmaceuticals Limited (Transferee Co), all assets and liabilities of Transferor Company have been vested in Transferee Company with effect from 01 April 2010 i.e. the appointed date in terms of scheme of merger sanctioned by H'ble Board for Industrial and Financial Reconstruction (BIFR) vide its order 15 March 2012 . In terms of such order, all assets, liabilities, rights, debts, duties and obligations of the Transferor Company stand transferred and vested in transferee Company with effect from said date. As a result the following assets, liabilities and debit balance in profit and loss Rs. 8,25,55,000 i.e. the difference between the share capital to be issued and the amount of share capital of the Transferor Company is treated as Capital Reserve.

In consideration of the aforesaid assets and liabilities vested to Company, the Company had to issue 4,34,500 equity shares of Rs. 10/- each aggregating to Rs. 43,45,000 in the ratio of 1 equity share of transferee Company for every 20 equity shares of Rs. 10/- each held in transferor Company.The said shares have been allotted on 02 May 2012. In view of the pending allotment of the aforesaid shares, a sum of Rs. 43,45,000 has been shown as "Equity Share Capital pending allotment pursuant to scheme of merger".

The Amalgamation is in the nature of merger and the Company has applied pooling of interest method of accounting to give the impact of merger in the books of accounts.


Mar 31, 2011

1. Contingent liabilities not provided for:

No outflow is expected in view of the past history relating to these items.

(Rs in lac)

Particulars As at As at 31 March 31 March 2011 2010

Claims against the 37.72 38.26 company not acknowledged as debt

Letter of Credit 155.68 253.47 outs tanding

Bills discounted with 603.58 599.46 bankers against irrevocable letter of credit

2. In the opinion of the Board of Directors and to the best of their knowledge and belief, the value on realisation of Current Assets, Loans and Advances in the ordinary course of business will not be less than the amount at which they are stated in the balance sheet.

3. In accordance with the Accounting Standard (AS) -28 on "Impairment of Assets”, the company has assessed as on the balance sheet date, whether there are any indications (listed in paragraph 8 to 10 of the Standard) with regard to the impairment of the assets. Based on such assessment, it has been ascertained that no potential loss is present and therefore, formal estimate of recoverable amount has not been made. Accordingly no impairment loss has been provided in the books of account.

4. Increase in Share Capital

The issued and paid up equity share capital of the company has been increased from Rs. 22,71,66,640 to Rs. 25,71,66,640. The detail of such increase is as under:

a) The Company has allotted 15,00,000 equity shares of Rs. 10/- each at a premium of Rs. 46/- per share. on conversion of equivalent number of equity warrants.

b) The Company has also allotted 15,00,000 equity shares of Rs. 10/- each at a premium of Rs. 68/- per share on the conversion of equivalent number of equity warrants. The above said allotment were made in accordance with SEBI (Issue of Capital and Disclosure Requirements) Regulation 2009.

5. Equity Warrants

The company had issued 30,00,000 equity warrants during the previous 2009-10 carrying an option to convert each warrant into one equity shares of Rs. 10/- each at a premium of Rs. 46/- per share, within a period of 18 months from the date of allotment i.e.16th January 2010 in accordance with the SEBI guidelines and out of which 15,00,000 equity warrants have been converted into equity shares during the year.

6. Foreign Currency Convertible Bonds (FCCB)

The company has issued zero coupon unsecured foreign currency convertible bonds (FCCB) aggregating to US $ 7 Million. The bond holders have option to convert into equity shares of the company at price of Rs. 78 per share (subject to adjustment, if any) with a fixed exchange rate of Rs. 47.57 per US $ at any time on or after 28 May, 2010 but on or before 28 May, 2015 subject to satisfaction of certain conditions.

The company has also option to convert all outstanding bonds into equity shares at the prevailing conversion price at any time on or after 28 November, 2014 but on or before 28 May, 2015.

These FCCB are redeemable on 5 June, 2015 at a premium of 41.25% of their principal amount unless previously redeemed, repurchased and cancelled or converted.

7. The company has received financial assistance of Rs.100 lac during the year for installation of 13 MW co-generation power plant for captive use from Ministry of New and Renewable Energy (MNRE) and the same has been reduced from the cost of the said asset.

8. The company has identified Micro, Small and Medium Enterprises on the basis of information made available. Accordingly Sundry creditors amounting to Rs. 2.47 lac (Previous Year Rs. 1.93 lac) being principal amount outstanding to Micro, Small and Medium Enterprises that are reportable under the.Micro, Small and Medium Enterprises Development Act 2006.

9. Borrowing cost capitalised during the year is Rs. 500.94 lac (Previous year Rs. 1958.95 lac) included under the head capital work in progress.

10. The preference shares shall be redeemable at par on expiry of 10 years from the date of allotment i.e. 20th March 2004. The earliest date of redemption is 20 March 2014.

11. The proceeds received from issuance of equity shares and warrants during the year have been used for the purpose for which they have been raised.

12. Excise Duty attributable to finished goods sold during the year is reduced from Gross Turnover in the Profit and Loss Account. Increase/ (Decrease) in excise duty on differential between opening and closing stock of finished goods is also disclosed separately in the Profit and Loss Account.

13. Related Party Disclosure:

a) Name of related parties and description of relationship:

1. Enterprises over which Key G. Drugs and Pharmaceuticals Management Personnel (KMP) Limited is able to exercise significant influence NM Mercantiles Limited

IOL Lifesciences Limited

Mayadevi Polycot Limited

NCG Enterprises Limited

2. Key Management Personnel Mr Varinder Gupta

Mr Raj Kumar Thukral

3. Relatives of Key Management Mrs. Dimple Gupta Personnel

14. Employee Benefits

The summarised position of post-employment benefits and long term employee benefits recognised in the Profit and Loss Account and Balance Sheet as required in accordance with Accounting Standard (AS) 15 is as under:

A. Gratuity and Leave Encashment

e Major categories of plan The plan assets are maintained assets as a percentage of with Life Insurance Corporation total plan assets of India. The details of investment made has not been provided by LIC therefore has not been disclosed.

1. Gratuity is administered through duly constituted and approved independent trust. The said trust has taken Group Gratuity Scheme with Life Insurance Corporation of India.

2. Leave encashment is administered through Group Leave Encashment scheme with Life Insurance Corporation of India.

3. Future salary increases considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

4. Basis used to determine expected rate of return on Plan Assets: The expected rate of return on plan assets is based on market expectation, at the beginning of the year, for returns over the entire life of the related obligation. The Gratuity contribution is invested in Group Gratuity-cum-Life Assurance cash accumulation policy and the Leave Encashment contribution is invested in a Group Leave Encashment policy offered by Life Insurance Corporation (LIC) of India.

15. Segment information

1) Segment Accounting Policies

a) The business segment comprises the following:

- Chemicals Acetic Acid, Ethyl Acetate, Acetic Anhydride, Acetyl Chloride, Mono Chloro Acetic Acid and Iso Butyl Benzene

- Drugs Ibuprofen

b) Business segments have been identified based on the nature and class of the product and services, their customers and assessment of differential risks and returns and financial reporting system within the company.

c) Segment accounting policies: In addition to the significant accounting policies, applicable to the business as set out in Note 1 of schedule 19 "Notes on Accounts” the accounting policies in relation to segment accounting are as under:

i. Segment assets and liabilities

Segment assets include all operating assets used by a segment and consists principally of cash, debtors, inventories and fixed assets, net of allowances & provisions, which are reported as direct off set in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities.

ii. Segment revenue and expenses

Joint revenue and expenses of segment are allocated amongst them on reasonable basis. All other segment revenue and expenses are directly attributable to the segments.

iii. Inter segment sales

Inter segment sales are eliminated in consolidation.

16. Information required by Para 3, 4C & 4D of part II of Schedule VI of the Companies Act, 1956. Particulars of Capacity, Production, Sales, Stocks and Raw Materials consumed.

17. Figures have been rounded off to the nearest rupee.

18. Previous year figures have been regrouped/ recasted wherever necessary.

19. Schedules 1 to 18 form an integral part of the balance sheet and profit and loss account


Mar 31, 2010

1. Contingent liabilities not provided for:

No outflow is expected in view of the past history relating to these items.

(Rs in lac) Particulars As at As at 31 March 2010 31 March 2009 Claims against 38.26 38.70 the Company not acknowledged as debt Letter of Credit 253.47 2,689:41 outstanding Bills discounted with 599.46 630.10 bankers against irrevocable letter of credit Estimated amount of 185.85 1,661.77 contracts remaining to be executed on capital account (net of Advances)

Provisions for gratuity liability and leave encashment have not been considered, since these are actuarially determined on overall basis.

2. In the opinion of the Board of Directors and to the best of their knowledge and belief, the value on realisation of current assets, loans and advances in the ordinary course of business will not be less than the amount at which they are stated in the balance sheet.

3. In accordance with the Accounting Standard (AS) - 28 on "Impairment of Assets", the Company has assessed as on the Balance Sheet date, whether there are any indications (listed in paragraph 8 to 10 of the Standard) with regard to the impairment of the assets. Based on such assessment, it has been ascertained that no potential loss is present and therefore, formal estimate of recoverable amount has not been made. Accordingly no impairment loss has been provided in the books of account.

4. Increase in Share Capital

The share capital of the Company has been increased from 1,81,50,000 equity shares to 2,27,16,664 equity shares. The detail of such increase is as under:

a) The Company has allotted 12,00,000 equity shares of Rs 10/- each at a premium of Rs 65/- per share on conversion of equivalent number of equity warrants.

b) The Company has allotted 18,66,664 equity shares of Rs 10/- each at a premium of Rs 65/- per share on conversion of 10%; 13,99,998 fully convertible debentures.

c) The Company has also allotted 15,00,000 equity shares of Rs 10/- each at a premium of Rs 46/- per share. The above said allotments were made in accordance with SEBI (Disclosures & Investor protection) Guidelines, 2000/ SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009.

5. Equity Warrants

The Company has issued 30,00,000 equity warrants carrying an option to convert each warrant into one equity shares of Rs 10/- each at a premium of Rs 46/- per share, within a period of 18 months from the date of allotment i.e. 16 January 2010 in accordance with the SEBI Regulations.

6. Sundry creditors amounting to Rs 1.93 lac (Previous year Nil) being principal amount due to the suppliers covered under "The Micro, Small and Medium Enterprises Development Act 2006", which have been identified from the information available with the Company.

7. Borrowing cost capitalised during the year is Rs 1,958.95 lac (Previous year Rs 1,070.53 lac) included under the head capital work in progress.

8. Excise Duty attributable to finished goods sold during the year is reduced from gross turnover in the Profit and Loss Account. Increase/ (decrease) in excise duty on differential between opening and closing stock of finished goods is also disclosed separately in the Profit and Loss Account.

9. Security received from customer amounting to Rs 135.10 lac being in the nature of long term accordingly included under head unsecured loan.

10. Leases

The Company has leased facilities under cancelable and non-cancelable operating leases arrangements with a lease term ranging from one to five years, which are subject to renewal at mutual consent thereafter. The cancelable arrangements can be terminated by either party after giving due notice. The lease rent expenses recognized during the year amounts to Rs 15.74 lac (Previous year Rs 14.58 lac). The future minimum lease payments in respect of the non-cancelable operating leases as at 31 March 2010 are:

11. Segment information

1) Segment Accounting Policies

a) The business segment comprises the following:

- Chemicals : Acetic Acid, Ethyl Acetate & Acetic Anhydride

- Drugs : Ibuprofen

b) Business segments have been identified based on the nature and class of the product and services, their customers and assessment of differential risks and returns and financial reporting system within the Company.

c) Segment accounting policies: In addition to the significant accounting policies, applicable to the business as set out in Note 1 of schedule 18 "Notes on Accounts" the accounting policies in relation to segment accounting are as under:

i. Segment assets and liabilities

Segment assets include all operating assets used by a segment and consists principally of cash, debtors, inventories and fixed assets, net of allowances & provisions, which are reported as direct off set in the balance sheet. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities.

ii. Segment revenue and expenses

Joint revenue and expenses of segment are allocated amongst them on reasonable basis. All other segment revenue and expenses are directly attributable to the segments.

12. Information required by Para 3, 4C & 4D of part II of Schedule VI of the Companies Act, 1956. Particulars of Capacity, Production, Sales, Stocks and Raw Materials consumed.

13. Figures have been rounded off to the nearest rupee.

14. Previous year figures have been regrouped/ recasted wherever necessary.

15. Schedules 1 to 18 form an integral part of the Balance Sheet and Profit and Loss Account.

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