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Notes to Accounts of Ion Exchange (India) Ltd.

Mar 31, 2015

(A) Terms/rights attached to equity shares

The company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended 31st March 2015, the amount of per share dividend recognized as distribution to equity shareholders is Rs. 3 (2013-2014 : Rs. 2). This include special dividend of Re. 1 on the occasion of company's golden jubilee.

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 preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

(B) Shares reserved for issued under ESOS

For details of shares allotted under various Employee Stock Option Schemes (ESOS) and shares reserved for issue under the Employees Stock Option Scheme (ESOS) of the company please refer note 31.

2. LONG-TERM BORROWINGS:

(a) Indian rupees loan from finance company for capital expenditure carries interest @ 13.00% p.a. Loan is repayable within 48 months from the month of first disbursement being 01.10.2014. The loan is secured by exclusive first charge on residential properties of the company situated at Mumbai and Thane.

(b) Indian rupees loan from bank taken for capital expenditure carries interest @ 13.25% p.a. Indian rupees loan from bank is repayable within 36 months from the month following the month of first disbursement being 16.08.2013. The loan is secured by exclusive first charge on properties situated at Mumbai. The loan was repaid during the year.

(c) Indian rupees loan from a financial institution carries interest @ 15.00% p.a. The loan is secured by first charge on property situated at Bangalore and is repayable in 6 years.

(d) Indian rupee vehicle loans from banks and finance company carries interest @ 10.25% to 13.75% p.a. The loans are repayable within a period of 36 to 60 months in equal monthly installments along with interest, from the various dates of disbursements. The loans are secured by hypothecation of under lying vehicles.

(e) Finance lease obligations are secured by hypothecation of under lying plant and machinery and equipment's taken on lease. Lease obligations are discharged by monthly / quarterly lease rental payments. The lease terms are for 3 to 4 years.

(f) Deposits from shareholders and public carry interest @7.00% to 8.00% p.a for deposits repayable after 1 year to 3 years from the respective dates of deposits

Provision for warranties

A provision is recognised for expected warranty claims on Consumer Product Division's products sold during last one year, based on past experience of the level of repairs and returns.

(a) Includes working capital loan of Rs. 33,87,44,054 (2013-2014 : Rs. 54,47,49,817) is secured by joint hypothecation of book debts and stocks and collateral security by way of pari passu first charge on all immovable and movable properties and plant and machinery situated at Hosur and Patancheru and pari passu second charge on movable and immovable properties situated at Mumbai (Office Premises), Vashi and Goa. The Working Capital Loan is repayable on demand and carries interest @ 10.70% to 14.75% p.a.

(b) Includes working capital loan of Rs. Nil (2013-2014 : Rs. 4,19,29,687) from a bank is secured by joint hypothecation of book debts and stocks and collateral security by way of first charge on the immovable property situated at Kolkata and second charge of immovable property situated at Bangalore apart from fixed deposit of Rs. Nil (2013-2014 : Rs. 1,64,34,278). The working capital loan is repayable on demand.

3. TANGIBLE ASSETS

a. Buildings on freehold land includes residential flats, the cost ofwhich includes:

- Rs. 250 (2013-2014 : Rs. 250) being the value of 5 Shares (unquoted) of Rs. 50 each, fully paid-up in Sunrise Co-operative Housing Society Limited.

- Rs. 3,500 (2013-2014 : Rs. 3,500) being the value of 70 Shares (unquoted) of Rs. 50 each, fully paid-up in Usha Milan Co-operative Society Limited.

b. Buildings on freehold land includes residential flats acquired at Mumbai, the society formation ofwhich is in progress.

Gross book value Rs. 62,16,250 (2013-2014 : Rs. 62,16,250)

Net book value Rs. 42,18,471 (2013-2014 : Rs. 43,22,204)

c. Buildings on freehold land includes residential flats comprising of 2 LIG flats (Nos. B-16 and B-17) and 1 MIG flat (No. B-14) at Hosur, the title deeds of which are awaited from authorities.

Gross book value Rs. 76,882 (2013-2014 : Rs. 76,882)

Net book value Rs. Nil (2013-2014 : Rs. Nil)

d. Buildings on freehold land includes office premises given on operating lease :

Gross book value Rs. 2,30,77,146 (2013-2014 : Rs. 2,30,77,146)

Accumulated depreciation Rs. 96,81,060 (2013-2014 : Rs. 90,10,859)

Depreciation for the year Rs. 6,70,201 (2013-2014 : Rs. 5,66,774)

Net book value Rs. 1,33,96,086 (2013-2014 : Rs. 1,40,66,287)

e. Office equipment includes data processing items taken on finance lease :

Gross book value Rs. 2,28,95,891 (2013-2014 : Rs. 2,17,75,889)

Accumulated depreciation Rs. 1,47,18,981 (2013-2014 : Rs. 83,18,541)

Depreciation for the year Rs. 64,00,438 (2013-2014 : Rs. 52,53,210)

Net book value Rs. 81,76,910 (2013-2014 : Rs. 1,34,57,348)

A) The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn basic salary) for each completed year of service. The scheme is funded to a separate trust duly recognized by Income tax authorities.

The guidance note on implementing AS 15, 'Employee Benefits' issued by the Accounting Standard Board (ASB) of the Institute of Chartered Accountants of India states that provident funds set up by employers that guarantee a specified rate of return and which require interest shortfall to be met by the employer would be defined benefit plans in accordance with the requirements of paragraph 26(b) of AS 15.

The following table summarises the components of net benefit expense recognized in the statement of profit and loss and the funded status and amounts recognized in the balance sheet for the gratuity and provident fund plan.

B. Defined contribution plan:

Amount recognized as an expense and included in the note 25:

"Contribution to provident and other funds" ofthe statement ofprofit and loss Rs. 2,11,82,263 (2013-2014 : Rs. 1,97,66,567)

C. Otheremployeebenefits:

Amounts recognized as an expense and included in note 25:

Leave encashment in "Salaries, wages and bonus" Rs. 1,74,39,841 (2013-2014 : Rs. 1,26,34,140)

ESOS 2001

The employee stock compensation committee in its meeting held on 5th June 2007, granted 30,0,000 options to directors and other employees at a price of Rs. 94.00 per share, which constituted a discount of approximately 25% to the price as calculated on the basis of average of weekly closing price on The stock exchange, Mumbai for 13 weeks prior to the date of the grant. As in the case of first and second grant, 25% of these options shall vest and become exercisable in June every year. Pursuant to this, fourth 25% of the options vested in June 2012.The vested options are exercisable upto 5th June 2016.

ESOS 2003

The employee stock compensation committee in its meeting held on 5th June 2007, granted 3,50,000 options to directors and other employees at a price of Rs. 94.00 per share, which constituted a discount of approximately 25% to the price as calculated on the basis of average of weekly closing price on the stock exchange, Mumbai for 13 weeks prior to the date of the grant. As in the case of first grant, 25% of these options shall vest and become exercisable in June every year. Pursuant to this, the fourth 25% of the options vested in June 2012. The vested options are exercisable upto 5th June 2016.

ESOS 2008

Pursuant to the resolution passed by the shareholders at the annual general meeting held on 26th September 2008, the employee stock compensation committee at its meeting held on 13th October 2008 implemented the fourth employees stock options scheme (ESOS 2008) and granted 12,00,000 options to directors and other employees at a price of Rs. 58.20 per share which constituted a discount of approximately 25% of the closing market price prior to the date of the grant. Under the scheme, the options shall vest after one year from the date of the grant. The vested options were exercisable upto 13th October 2013.

The method of settlement of the above options is equity settled.

As at 31st March 2015, the company has received commitment deposit of Rs. 33,348 (2013-2014 : Rs. 33,348) from its directors and employees under ESOS 2001 and ESOS 2003.

Weighted average remaining contractual life is 1.2 years (2013-2014 : 2.2 years).

No options were exercised during the year. Weighted average share price at exercise date during the previous year was Rs. 96.72.

III. Notes:

(a) The company's operations are organized into three business segments, namely:

Engineering division - comprising of water treatment plants, spares and services in connection with the plants.

Chemicals - comprising of resins, water treatment chemicals, sugar chemicals and paper chemicals.

Consumer Products - comprising of domestic water purifiers.

(b) The segment revenue in the geographical segments considered for disclosure are as follows:

Revenue within India includes sales to customers located within India and earnings in India. Revenue outside India includes sales to customers located outside India and earnings outside India.

4. RELATED PARTY DISCLOSURES (As identified by the Management):

Where control exists

a) Subsidiary Companies Ion Exchange Enviro Farms Limited

Watercare Investments (India) Limited Aqua Investments (India) Limited Ion Exchange Asia Pacific Pte. Ltd., Singapore Ion Exchange Asia Pacific (Thailand) Limited*

IEI Environmental Management (M) Sdn. Bhd., Malaysia

Ion Exchange Environment Management (BD) Limited, Bangladesh

Ion Exchange Infrastructure Limited

Ion Exchange LLC, USA

Ion Exchange And Company LLC, Oman

Ion Exchange WTS (Bangladesh) Limited

Ion Exchange Projects and Engineering Limited

Global Composites and Structurals Limited

Ion Exchange Safic Pty. Ltd., South Africa

Total Water Management Services (India) Limited

Ion Exchange Purified Drinking Water Private Limited

Others

b) Associates

Aquanomics Systems Limited

IEI Water-Tech (M) Sdn. Bhd., Malaysia **

Astha Technical Services Limited

Ion Exchange PSS Co. Limited, Thailand **

Ion Exchange Financial Products Pvt. Limited **

c) Joint Venture Ion Exchange Waterleau Limited

d) Entityhavingsignificantinfluence IEI Shareholding Trusts

e) Key Management Personnel

Mr. Rajesh Sharma - Chairman & Managing Director Mr. Dinesh Sharma - Executive Director Mr. Aankur Patni - Executive Director

f) Relatives of Key Mr. Mahabir Patni - Father of Mr. Aankur Patni

Management Personnel

Mrs. Nirmala Patni - Mother of Mr. Aankur Patni Mrs. Aruna Sharma - Wife of Mr. Rajesh Sharma Mrs. Poonam Sharma - Wife of Mr. Dinesh Sharma Mrs. Nidhi Patni - Wife of Mr. Aankur Patni Ms. Pallavi Sharma - Daughter of Mr. Rajesh Sharma

g) Enterprise owned or significantly

influenced by key management personnel or their relatives

Ion Foundation

** Subsidiary Company of Subsidiary * Associate Companies of Subsidiaries

III. Stock options granted to key management personnel during the year: Nil (2013-2014 : Nil).

IV. Disclosure pursuant to clause 32 of the listing agreement:

5. In early 90s, the company had given loans to Employees' IEI Shareholding Trusts. The amount outstanding as at 31st March 2015 is Rs.21,86,35,000 (2013-2014 : Rs. 22,27,46,000). The Company has carried out valuation of the assets held by the Trusts. Considering the valuation, book value of the corpus of the Trusts as on the Balance Sheet date and future opportunities, the Management does not anticipate any ultimate loss arising out of these loans.

6. The Company has an investment of Rs. 54,70,000 (2013-2014 : Rs.54,70,000) in Equity Shares and 15,00,000 (2013-2014 : 15,00,000) 7% secured redeemable non-convertible debentures of Rs. 100 each fully paid-up, in Ion Exchange Enviro Farms Limited (IEEFL), a subsidiary company, as at 31st March 2015 and it has also granted loans and advances aggregating Rs. 12,31,74,629 (2013-2014 : Rs. 10,86,84,680) as at 31st March 2015 to IEEFL. As at 31st March 2015, the accumulated losses of IEEFL have substantially exceeded its paid-up share capital.

IEEFL has undertaken various cost reduction programs and it expects better returns in the coming years from its organic farming activities, bio-pesticides and bio-fertilizers marketing. Moreover, IEEFL has adequate assets in the form of developed and undeveloped land and the redeemable non-convertible debentures are secured by way of mortgage of office premises.

Also the company had hied appeal against the Security Appellate Tribunal Order of refunding monies to investors with return and winding- up of scheme with Supreme Court of India on 4th July 2006. The Hon'ble Supreme Court of India had dismissed the company's appeal on 26th February, 2013. Subsequent to this dismissal, IEEFL approached SEBI with a proposal related to the compliance of the said order vide letter dated 17th May 2013. During personal hearing with SEBI officials on 27th November 2013, pursuant to the above letter, SEBI had called for furnishing additional details which have been duly complied with vide letter dated 13th December, 2013. Pursuant to this, IEEFL has initiated actions in line with the aforesaid meetings with SEBI officials and letters submitted to SEBI. The company does not envisage any liability on this account.

In view of the foregoing, the Management is of the opinion, that there is no diminution, other than temporary, in value of investment and the advances are fully recoverable. Hence, presently no provision is considered necessary.

7. LEASE

A. Operating Lease

Company as lessee:

The Company has entered into lease agreements for certain items of plants and machineries. The lease agreement is for 5 years. There are no restrictions placed upon the company by entering into this lease.

Company as lessor:

The Company has entered into commercial property lease of its surplus office. The lease agreement is for 5 years. The lease includes a clause to enable upward revision by 15% after completion of 3 years from the date of commencement of the lease agreement.

8. CAPITAL AND OTHER COMMITMENTS

Estimated amount of contracts (net of advances) remaining to be executed on capital account not provided for is Rs. 4,31,54,846 (2013-2014 : Rs. 95,89,322).

9. CONTINGENT LIABILITIES

Contingent liabilities not provided for:

(a) Guarantee given by the company on behalf of :

i) Subsidiaries - Rs. 1,09,66,62,488 (2013-2014 : Rs. 80,86,05,930)

ii) Associates - Rs. 16,39,07,683 (2013-2014 : Rs. 16,50,50,000)

iii) Joint venture - Rs. 5,00,00,000 (2013-2014 : Rs. 5,00,00,000)

iv) Others - Rs. 38,88,000 (2013-2014 : Rs. 38,88,000)

(b) Demand raised by authorities against which the company has hied an appeal.

i) Income tax - Rs. 53,82,201 (2013-2014 : Rs. Nil)

ii) Excise duty - Rs. 16,78,600 (2013-2014 : Rs. 16,78,600)

iii) Service tax - Rs. 10,52,535 (2013-2014 : Rs. 5,61,092)

iv) Customs Duty - Rs. 22,58,117 (2013-2014 : Rs. 22,58,117)

(c) Claims against the company arising in the course of business not acknowledged as debts (to the extent ascertainable) Rs. 4,82,16,849 (2013-2014 : Rs. 1,79,72,673).

Note: Future cash outflows/uncertainties, if any, in respect of above are determinable only on receipt of judgments/decisions pending with various forums/authorities.

10. During the year 2013-2014, 47,800 equity shares were allotted to employees and directors under ESOS 2008 on 30th May 2013 and 24th July 2013. Accordingly, dividend of Rs. 2.00 per share (20%) declared at the annual general meeting held on 24th September 2013 was also paid to those shareholders (Book closure date being 24th September 2013).

11. Back charges represent reimbursement of costs incurred by customers on the company's behalf in the course of contract execution.

12. Book values of certain long term unquoted investments, aggregating to Rs. 32,14,34,875 (2013-2014 : Rs. 30,75,67,625) are lower than its cost. Considering the strategic and long term nature of the aforesaid investments, and asset base and business plan of the investee companies; in the opinion of the management, the decline in the book value of the aforesaid investments is of temporary nature, requiring no provision.

13. Capital advance includes amount of Rs. 25,33,481 (2013-2014 : Rs. 25,33,481) paid for acquiring furnished office premises at Hyderabad, the ownership of which is under legal dispute for which transfer formalities are in progress.

14. The Company with effect from 1st April 2014 has charged depreciation based on the revised remaining useful life of the assets as per the requirement of Schedule II of the Companies Act, 2013. Due to above, depreciation charge for the year ended 31st March 2015 is higher by Rs. 1,52,72,081. Further based on transitional provision provided in note 7(b) of Schedule II of the Companies Act, 2013 depreciation of Rs. 2,46,50,132 and deferred tax of Rs. 83,81,047 have been adjusted to retained earnings.

15. During the year ended 31st March 2013, Ion Exchange Services Limited was amalgamated with Ion Exchange India Limited (the Company) with effect from 1st April 2012, pursuant to a scheme of amalgamation sanction by the High Court. Consequent to this amalgamation, during the year 2013-2014, the company issued 11,80,256 equity shares of Rs. 10 each against the 'Share Capital suspense account' of Rs. 1,18,02,560 outstanding as at 31st March 2013.

16. CORPORATE SOCIAL RESPONSIBILITY EXPENSES:

A. Gross amount required to be spent by the company during the year 2014-2015 : Rs. 58,81,224

B. Amount spent during the year on:

C. Related party transaction in relation to Corporate Social Responsibility : Rs. Nil

D. Provision during the year 2014-2015 : Rs. Nil

17. The company has paid remuneration to the directors as per the terms of their respective service contracts with the company which were approved by the board of directors and shareholders. In view of inadequacy of profit in the current year, pursuant to provision of section 197 read with section II of part II of Schedule V of the Companies Act 2013, the company has made an application with the Central Government for payment of the excess remuneration amounting to Rs. 73,74,532 to the said directors, which is pending approval.

18. Previous year figures have been regrouped / reclassified wherever necessary, to conform to current year's classification. The Financial statement of the previous year have been audited by other auditors


Mar 31, 2013

1. Basis of Preparation:

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The financial statements have been prepared under historical cost convention on accrual basis except in case of assets for which revaluation is carried out. The financial statements comply in all material respects with the Accounting Standards notified under the Companies Accounting Standard Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956 of India (the "Act"). The accounting policies adopted in the preparation offinancial statements are consistent with those of previous year.

The operating cycle in case of projects division comprising of turnkey projects which forms a part of engineering segment is determined for each project separately based on the expected execution period of the contract. In case of the other divisions the company has ascertained its operating cycle as twelve months.

2. EMPLOYEE STOCK OPTION SCHEME (ESOS)

ESOS 2001

The Employee Stock Compensation Committee in its meeting held on 5th June 2007, granted 3,00,000 options to directors and other employees at a price of Rs. 94.00 per share, which constituted a discount of approximately 25% to the price as calculated on the basis of average of weekly closing price on The Stock Exchange, Mumbai for 13 weeks prior to the date of the grant. As in the case of First and Second grant, 25% of these options shall vest and become exercisable in June every year. Pursuant to this, Fourth 25% of the options vested in June 2012.The vested options are exercisable upto 5th June 2016.

ESOS 2003

The Employee Stock Compensation Committee in its meeting held on 5th June 2007, granted 3,50,000 options to directors and other employees at a price of Rs. 94.00 per share, which constituted a discount of approximately 25% to the price as calculated on the basis of average of weekly closing price on The Stock Exchange, Mumbai for 13 weeks prior to the date of the grant. As in the case of First grant, 25% of these options shall vest and become exercisable in June every year. Pursuant to this, the Fourth 25% of the options vested in June 2012. The vested options are exercisable upto 5th June 2016.

ESOS 2008

Pursuant to the resolution passed by the shareholders at the Annual General Meeting held on 26th September 2008, the Employee Stock Compensation Committee at its meeting held on 13th October 2008 implemented the Fourth Employees Stock Options Scheme (ESOS 2008) and granted 12,00,000 options to directors and other employees at a price of Rs. 58.20 per share which constituted a discount of approximately 25% of the closing market price prior to the date of the grant. Under the scheme, the options shall vest after one year from the date of the grant. The vested options are exercisable upto 13th October 2013.

The method of settlement of the above options is equity settled.

3. RELATED PARTY DISCLOSURES (As identified by the Management):

Where control exists

a) Subsidiary Companies Ion Exchange Enviro Farms Limited

Watercare Investments (India) Limited

Aqua Investments (India) Limited

Ion Exchange Asia Pacific Pte. Ltd., Singapore

Ion Exchange Asia Pacific (Thailand) Limited

IEI Environmental Management (M) Sdn. Bhd., Malaysia

Ion Exchange Environment Management (BD) Limited, Bangladesh

Ion Exchange Infrastructure Limited

Ion Exchange LLC, USA

Ion Exchange & Company LLC, Oman

Ion Exchange WTS (Bangladesh) Limited

Ion Exchange Projects and Engineering Limited (w.e.f. 11.04.2011) Global Composites and Structurals Limited (w.e.f. 29.03.2012)

Ion Exchange Safic Pty. Ltd., South Africa (w.e.f. 20.08.2012)

Total Water Management Services (I) Limited (w.e.f. 01.04.2012)

Others

b) Associates Aquanomics Systems Limited

IEI Water-Tech (M) Sdn. Bhd., Malaysia *

Astha Technical Services Limited

Ion Exchange PSS Co. Limited, Thailand *

Ion Exchange Financial Products Pvt. Limited *

c) Joint Venture Ion Exchange Waterleau Limited

d) Entityhavingsignificantinfluence IEI Shareholding Trusts

e) Key Management Personnel Mr. Rajesh Sharma - Chairman & Managing Director

Mr. Dinesh Sharma - Executive Director Mr. Aankur Patni - Executive Director

f) Relatives of Key

Management Personnel

Mr. Mahabir Patni - Father of Mr. Aankur Patni Mrs. Nirmala Patni - Mother of Mr. Aankur Patni Mrs. Aruna Sharma - Wife of Mr. Rajesh Sharma Mrs. Poonam Sharma - Wife of Mr. Dinesh Sharma Mrs. Nidhi Patni - Wife of Mr. Aankur Patni Ms. Pallavi Sharma - Daughter of Mr. Rajesh Sharma

g) Enterprise owned or significantly influenced by Key Management Personnel or their Relatives

Arkepp and Associates Ion Foundation

* Associate Companies of Subsidiaries

4. In early 90s, the Company had given loans to Employees'' IEI Shareholding Trusts. The amount outstanding as at 31st March 2013 is Rs. 22,68,53,000 (2011-2012 : Rs. 23,09,53,000). The Company has carried out valuation of the assets held by the Trusts. Considering the valuation, book value of the corpus of the Trusts as on the Balance Sheet date and future opportunities, the Management does not anticipate any ultimate loss arising out of these loans.

5. The Company has an investment of Rs. 54,70,000 (2011-2012 : Rs. 54,70,000) in Equity Shares and 15,00,000 (2011-2012 : 15,00,000) 7% Secured Redeemable Non-Convertible Debentures of Rs. 100 each fully paid up, in Ion Exchange Enviro Farms Limited (IEEFL), a subsidiary company, as at 31st March 2013 and it has also granted Loans and Advances aggregating Rs. 8,63,80,524 (2011-2012 : Rs. 6,62,65,730) as at 31st March 2013 to IEEFL. As at 31st March 2013, the accumulated losses of IEEFL have substantially exceeded its paid-up share capital. IEEFL has undertaken various cost reduction programs and it expects better returns in the coming years from its organic farming activities, bio-pesticides and bio-fertilizers marketing. Moreover, IEEFL has adequate assets in the form of developed and undeveloped land and the Redeemable Non-Convertible Debentures are secured by way of mortgage of office premises. The Hon''ble Supreme Court of India had dismissed the company''s appeal on 26th February, 2013. IEEFL in order to comply with SAT order dated 5th May 2006 has submitted a letter on 17th May 2013 to SEBI seeking its directions to comply with the SAT order. In view of the foregoing, the Management is of the opinion, that there is no diminution, other than temporary, in value of investment and the advances are fully recoverable. Hence, presently no provision is considered necessary.

6. CAPITAL AND OTHER COMMITMENTS

Estimated amount of contracts (net of advances) remaining to be executed on Capital Account not provided for is Rs. 1,92,08,722 (2011-2012 : Rs. 1,98,81,429).

7. CONTINGENT LIABILITIES

Contingent Liabilities not provided for:

(a) Guarantee given by the Company on behalf of :

i) Subsidiaries - Rs. 50,04,06,485 (2011-2012 : Rs. 30,66,76,925)

ii) Associates - Rs. 16,55,60,000 (2011-2012 : Rs. 7,00,00,000)

iii) Joint Venture - Rs. 8,00,00,000 (2011-2012 : Rs. 8,00,00,000)

iv) Others - Rs. 38,88,000 (2011-2012 : Rs. 38,88,000)

(b) Demand raised by authorities against which the Company has filed an appeal.

i) Income Tax - Rs.63,13,907 (2011-2012 : Rs. 83,01,220)

ii) Excise Duty - Rs. 16,78,600 (2011-2012 : Rs. 16,78,600)

iii) Service Tax - Rs. 8,55,356 (2011-2012 : Rs. 16,74,395)

iv) Customs Duty (to the extent ascertainable) - Rs. 22,58,117 (2011-2012 : Rs. 22,58,117)

(c) Claims against the Company arising in the course of business not acknowledged as debts (to the extent ascertainable) Rs. 2,68,40,673 (2011-2012 : Rs. 1,94,94,696).

Note : Future cash outflows/uncertainties, if any, in respect of above are determinable only on receipt ofjudgments/decisions pending with various forums/authorities.

8. During the year 17,300 (2011-2012: 98,250) equity shares were allotted to employees and directors under ESOS 2008 on 25th May, 2012 and 25th July, 2012. Accordingly, dividend of Rs. 2.00 per share (20%) declared at the Annual General Meeting held on 26th September 2012 was also paid to those shareholders (book closure date being 26th September 2012).

9. Back charges represent reimbursement of costs incurred by customers on the Company''s behalf in the course of contract execution.

10. Book values of certain long term unquoted investments, aggregating to Rs.28,58,67,625 (2011-2012 :Rs.14,25,36,619) are lower than its cost.

Considering the strategic and long term nature of the aforesaid investments, and asset base and business plan of the investee companies; in the opinion of the Management, the decline in the book value of the aforesaid investments is of temporary nature, requiring no provision.

11. DISCONTINUED OPERATIONS

The Board of Directors of the Company at their meeting held on 22nd February 2011, had accorded their approval for the proposal to sell its Project Division (covering domestic turnkey projects) as a going concern under a ''Slump Sale'' basis to Ion Exchange Projects and Engineering Limited, a wholly owned subsidiary company. On 11th April 2011, the Company has received approval of the shareholders for the transfer of the Project Division (covering domestic turnkey projects) by way of postal ballot, accordingly the Company has transferred the Project Division (covering domestic turnkey projects) with effect from 31st July, 2012 on completion of necessary formalities. The Company has transferred the assets and liabilities of Project Division (covering domestic turnkey projects) at book values. The Project Division is being reported as a part of Engineering segment under Segment disclosures as given in note 31.

12. AMALGAMATION

The Honorable High Court of Bombay, on 24th May 2013, sanctioned the "scheme of amalgamation" ("the Scheme") under sections 391 to 394 of the Companies Act, 1956. In accordance with the Scheme, Ion Exchange Services Limited (transferor company) merges with Ion Exchange (India) Limited ("the Company") with effect from 1st April 2012. The transferor company was engaged in the business of providing total water solutions for industry, homes and communities. The amalgamation is expected to channelize synergies and lead to better utilization of available resources and result in greater economies of scale.

Pursuant to the Scheme, the Assets and Liabilities of transferor Company were transferred to and vested in the Company with effect from 1st April 2012. Accordingly, the Scheme has been given effect to in these accounts.

The Company discharged the purchase consideration through issuing 42 fully paid up Equity shares of Rs. 10 each against every 19 Equity shares of the transferor Company. Equity shares were not allotted by 31st March 2013.

The Amalgamation has been accounted for under the "Pooling of interest" method as prescribed under AS -14 "Accounting for Amalgamations" issued by the Institute of Chartered Accountants of India. Accordingly the accounting treatment has been given as under -

i. The assets, liabilities, reserves and credit balance of profit and loss of the transferor company as at 1st April 2012 have been incorporated at their book values in the financial statements of the company.

ii. 8,28,800 equity shares of Rs. 10 each fully paid up of transferor company stands cancelled. Further, 2,87,058 equity shares of Rs. 10 each fully paid up of the Company held by the transferor company also stands cancelled.

iii. Consequent to this amalgamation and after considering the extinguishment of shares held in transferor company by the Company, 11,80,256 Equity Shares of Rs. 10 each, aggregating to Rs. 1,18,02,560, of the company are to be issued to the share holders of the transferor company. Pending allotment of the said equity shares, such amount of Rs. 1,18,02,560 has been included in the share capital suspense account as at 31st March 2013.

iv. The excess of the book value of the investment held by transferor company in the equity share capital of Company amounts to Rs.1,41,48,997, Investment held by company in the Equity share capital of transferor Company amounts to Rs.9,20,948 and the excess of share capital of transferor company over the amount credited by the company to the share capital suspense account amounts to Rs. 35,14,560 and accordingly the net amount of Rs. 1,85,84,505 has been adjusted to the Capital Reserves of the Company.

v. Consequently, the financial statement for the year ended on 31st March 2013 includes the operations of transferor company with effect from 1st April 2012.

vi. The Company has as per AS-14, during the current year, changed (with retrospective effect) the method of providing depreciation on fixed assets, from Written Down Value (''WDV'') method to Straight line method (SLM) method at the rates prescribed in Schedule XIV of the Companies Act, 1956 in respect of assets held by transferor company to ensure that uniform set of accounting policies are followed after amalgamation. Had the Company continued to use the earlier basis of providing depreciation, the charge to the Profit and loss account for the current period would have been higher by Rs.47,48,129 and net block of fixed assets would correspondingly have been lower by Rs.47,48,129.

13. Pursuant to the amalgamation of Ion Exchange Services Limited (Refer note 51) and discontinued operations (refer note 49), the figures of the current year are strictly not comparable to those of the previous year. Previous year figures have been regrouped / reclassified wherever necessary, to confirm to current year''s classification.


Mar 31, 2010

1. Employee Stock Option Scheme (ESOS):

ESOS 2001

Pursuant to the resolution passed by the shareholders at the Annual General Meeting held on 27th September 2000, the Company has introduced ESOS for its directors and employees. The ESOS Compensation Committee formed for implementation of the scheme, in its meeting held on 20th July 2001, granted 3,84,500 options to eligible directors and employees of the Company at a price of Rs. 12.50 per share which constituted a discount of approximately 25% to the price as calculated on the basis of average of weekly closing price on The Stock Exchange, Mumbai for 13 weeks prior to the date of the grant. Under the scheme, 25% of the granted options shall vest and become exercisable in July every year. Pursuant to this, Fourth 25% of the options vested in July 2005. The vested options are exercisable upto 20th July 2009.

The Employee Stock Compensation Committee in its meeting on 8th August 2002, further granted 5,36,100 options to directors and other employees at a price of Rs. 19.00 per share, which constituted a discount of approximately 25% to the price as calculated on the basis of average of weekly closing price on The Stock Exchange, Mumbai for 13 weeks prior to the date of the grant. As in the case of First grant, 25% of these options shall vest and become exercisable in August every year. Pursuant to this, the Fourth 25% of the options vested in August 2006. The vested options are exercisable upto 8th August 2010.

The Employee Stock Compensation Committee in its meeting held on 5th June 2007, further granted 3,00,000 options to directors and other employees at a price of Rs. 94.00 per share, which constituted a discount of approximately 25% to the price as calculated on the basis of average of weekly closing price on The Stock Exchange, Mumbai for 13 weeks prior to the date of the grant. As in the case of First and Second grant, 25% of these options shall vest and become exercisable in June every year. Pursuant to this, Fourth 25% of the options will vest in June 2012. The vested options are exercisable upto 5th June 2016.

ESOS 2003

Pursuant to the resolution passed by the shareholders at the Annual General Meeting held on 25th September 2003, the Employee Stock Compensation Committee in its meeting on 2nd April 2004 implemented the Second Employees Stock Options Scheme (ESOS 2003) and granted 6,50,000 options to directors and other employees at a price of Rs. 19.00 per share, which constituted a discount of approximately 25% to the price as calculated on the basis of average of two weeks high and low of the share traded on The Stock Exchange, Mumbai prior to the date of the grant. Under the scheme 25% of these options shall vest and become exercisable in April every year. Pursuant to this, the Second 25% of the options vested in April 2006. Further, pursuant to Shareholders approval at the Annual General Meeting held on 4th August 2006, the Employee Stock Compensation Committee decided to advance the date of vesting of balance 50% option. Pursuant to this, the Third and Fourth 25% (in all 50%) of the options vested in October 2006. The vested options are exercisable upto 26th October 2010.

The Employee Stock Compensation Committee in its meeting held on 5th June 2007, further granted 3,50,000 options to directors and other employees at a price of Rs. 94.00 per share, which constituted a discount of approximately 25% to the price as calculated on the basis of average of weekly closing price on The Stock Exchange, Mumbai for 13 weeks prior to the date of the grant. As in

the case of First grant, 25% of these options shall vest and become exercisable in June every year. Pursuant to this, the Fourth 25% of the options will vest in June 2012. The vested options are exercisable upto 5th June 2016.

ESOS 2005

Pursuant to the resolution passed by the shareholders at the Annual General Meeting held on 29th September 2005, the Employee Stock Compensation Committee at its meeting on 29th March 2006 implemented the Third Employees Stock Options Scheme (ESOS 2005) and granted 5,00,000 options to directors and other employees at a price of Rs. 67.00 per share, which constituted a discount of approximately 25% of the closing market price prior to the date of the grant. Under the scheme, the options shall vest after one year from the date of the grant. The vested options are exercisable upto 29th March 2011.

The Employee Stock Compensation Committee in its meeting held on 24th July 2006, further granted 5,00,000 options to directors and others employees at a price of Rs. 54.50 per share, which constituted a discount of approximately 25% of the closing market price prior to the date of the grant. As in the case of the First grant, the options shall vest after one year from the date of the grant. The vested options are exercisable upto 24th July 2011.

ESOS 2008

Pursuant to the resolution passed by the shareholders at the Annual General Meeting held on 26th September 2008, the Employee Stock Compensation Committee at its meeting held on 13th October 2008 implemented the Fourth Employees Stock Options Scheme (ESOS 2008) and granted 12,00,000 options to directors and other employees at a price of Rs. 58.20 per share which constituted a discount of approximately 25% of the closing market price prior to the date of the grant. Under the scheme, the options shall vest after one year from the date of the grant. The vested options are exercisable upto 13th October 2013.

The method of settlement of the above options is equity settled.

2. Related Party Disclosures (As identified by the Management) : Where control exists a) Subsidiary Companies

Ion Exchange Enviro Farms Limited

Watercare Investments (India) Limited

Aqua Investments (India) Limited

Ion Exchange Asia Pacific Re. Ltd., Singapore

Ion Exchange Asia Pacific (Thailand) Limited

IEI Environmental Management (M) Sdn. Bhd., Malaysia

Ion Exchange Environment Management (BD) Limited, Bangladesh

Ion Exchange Infrastructure Limited

Ion Exchange LLC, USA

Ion Exchange & Company LLC, Oman

Others b) Associates

Ion Exchange Services Limited

Aquanomics Systems Limited

IEI Water-Tech (M) Sdn. Bhd., Malaysia *

Astha Technical Services Limited

Total Water Management Services (I) Limited

Ion Exchange Financial Products Pvt. Limited *

Global Composites and Structurals Limited

c) Joint Venture Ion Exchange Waterleau Limited

d) Entity having significant influence IEI Shareholding Trusts

e) Key Management Personnel Mr. Rajesh Sharma - Vice Chairman & Managing Director

Mr. Dinesh Sharma - Executive Director Mr. Aankur Patni - Executive Director

f) Relatives of Key Mr. Mahabir Patni - Father of Mr. Aankur Patni Management Personnel Mrs. Nirmala Patni - Mother of Mr. Aankur Patni

Mrs. Aruna Sharma - Wife of Mr. Rajesh Sharma

Mrs. Poonam Sharma - Wife of Mr. Dinesh Sharma

Mrs. Nidhi Patni - Wife of Mr. Aankur Patni

Ms. Pallavi Sharma - Daughter of Mr. Rajesh Sharma * Associate Companies of Subsidiaries

3. In early 90s, the Company had given loans to Employees IEI Shareholding Trusts. The amount outstanding as at 31st March 2010 is Rs. 23,82,77,000 (2008-2009 : Rs. 24,01,78,500). The Company has carried out valuation of the assets held by the Trusts. Considering the valuation, book value of the corpus of the Trusts as on the Balance Sheet date and future opportunities, the Management does not anticipate any ultimate loss arising out of these loans.

4. The Company has an investment of Rs. 54,70,000 in Equity Shares and 15,00,000 7% Secured Redeemable Non-Convertible Debentures of Rs. 100 each fully paid up, in Ion Exchange Enviro Farms Limited (IEEFL), a subsidiary company, as at 31st March 2010 and it has also granted Loans and Advances aggregating Rs. 3,31,16,178 (2008-2009 : Rs. 16,68,04,270) as at 31st March 2010 to IEEFL. As at 31st March 2010, the accumulated losses of IEEFL have substantially exceeded its paid-up share capital. IEEFL has undertaken various cost reduction programs and it expects better returns in the coming years from its organic farming activities, bio-pesticides and bio-fertilizers marketing. Moreover, IEEFL has adequate assets in the form of developed and undeveloped land and the Redeemable Non-Convertible Debentures are being secured by way of mortgage of office premises. Also, the Supreme Court of India has admitted lEEFLs appeal against the Security Appellate Tribunal Order of refunding monies to investors with return and winding-up of scheme. In the month of March 2008, the matter was listed for filing reply by SEBI. SEBI did not file their reply and asked for time. The matter was adjourned thereafter. IEEFL has been legally advised that it has got a fair chance of successfully contesting the appeal. In view of the foregoing, the Management is of the opinion, that there is no diminution, other than temporary, in value of investment and the advances are fully recoverable. Hence, presently no provision is considered necessary.

5. Capital expenditure incurred on Research and Development during the year is Rs. 3,16,846 (2008-2009 : Rs. 11,42,998). Revenue expenditure of Rs. 2,91,13,882 (2008-2009 : Rs. 2,84,91,588) incurred on Research and Development has been expensed to Profit and Loss Account under various expense heads.

6. Contingent Liabilities not provided for:

(a) Guarantee given by the Company on behalf of:

i) Subsidiary - Rs. 16,95,53,000 (2008- 2009 : Rs. 12,56,77,500)

ii) Associates - Rs. 5,00,00,000 (2008- 2009 : Rs. 5,00,00,000)

iii) Joint Venture - Rs. 14,00,00,000 (2008-2009 : Rs. 35,00,00,000)

iv) Others - Rs. 38,88,000 (2008-2009 : Rs. 38,88,000)

(b) Demand raised by authorities against which the Company has filed an appeal.

i) Income Tax - Rs. 1,89,38,294 (2008-2009 : Rs. 1,89,38,294)

ii) Excise Duty - Rs. 30,52,000 (2008-2009 : Rs. 30,52,000)

iii) Service Tax - Rs. 39,12,061 (2008-2009 : Rs. 41,05,224)

iv) Sales Tax - Rs. 22,39,166 (2008-2009 : Rs. 62,79,459)

v) Customs Duty (to the extent ascertainable) - Rs. 24,53,117 (2008-2009 : Rs. 24,53,117)

(c) Claims against the Company arising in the course of business not acknowledged as debts (to the extent ascertainable) Rs. 3,73,95,985 (2008-2009 : Rs. 4,65,74,595).

Note: Future cash outflows/uncertainities, if any, in respect of above are determinable only on receipt of judgments/decisions pending with various forums/authorities.

7. Capital Commitment:

Estimated amount of contracts (net of advances) remaining to be executed on Capital Account not provided for is Rs. 18,81,094 (2008-2009 : Rs. 27,84,469).

8. Sales include services rendered Rs. 36,36,85,284 (2008-2009 : Rs. 23,51,99,507) net of service tax.

Excise duty on sales amounting to Rs. 13,29,24,375 (2008-2009 : Rs. 18,26,29,891) has been reduced from sales in Profit and Loss Account and Excise duty on increase/decrease in stock amounting to Rs. 50,38,213 (2008-2009 : Rs. 28,01,240) has been considered as (income)/expenses in Schedule 15 of financial statements.

9. During the year 13,000 (2008-2009 : 33,550) equity shares were allotted to employees and directors under ESOS 2005 on 19th June 2009. Accordingly, dividend of Re. 1.00 per share (10%) declared at the Annual General Meeting held on 24th September 2009 was also paid to those shareholders (book closure date being 17th September 2009).

10. Back Charges represents reimbursement of costs incurred by customers on the Companys behalf in the course of contract execution.

11. The Company has initiated the process of obtaining confirmation from suppliers regarding the registration under the " Micro, Small and Medium Enterprises Development Act, 2006". The suppliers are not registered wherever the confirmation are received and in other cases, the Company is not aware of their registration status and hence information relating to outstanding balance or interest due is not disclosed as it is not determinable.

12. Book values of certain long term unquoted investments, aggregating to Rs. 3,20,01,853 are lower than its cost.

Considering the strategic and long term nature of the aforesaid investments, and asset base and business plan of the investee companies; in the opinion of the Management, the decline in the book value of the aforesaid investments is of temporary nature, requiring no provision.

13. During the current year, as per the out of court settlement terms agreed with a customer, the Company has paid an amount of Rs. 1,83,60,173.

14. Ion Exchange Enviro Farms Limited (IEEFL), a subsidiary company, has on 31st March 2010 allotted 15,00,000 7% Secured Redeemable Non-Convertible Debentures of Rs. 100 each fully paid-up against the unsecured loan given by the Company in the earlier years. IEEFL is in the process of issuing the Debenture certificate to the Company and also registering the charge with the Registrar of Companies and other concerned authorities.

27. Certain Office Premises are obtained on operating lease. There is no escalation clause in the lease agreement. There are no restrictions imposed by the lease arrangements. There are no sub-leases.f

 
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