Notes to Accounts of Mangalam Organics Ltd.

Mar 31, 2018

1. Segment reporting

The Company is mainly engaged in the business of Manufacturing of Chemicals. Considering the nature of business and financial reporting of company, the company has only one segment viz "Chemicals" product as reportable segment. The company operates in Local/Export segment geographically of which the exports have amounted to Rs. 1,238.62 Lacs (P.Y.Rs. 828.01 Lacs) out of Total Turnover of Rs. 24,082.82 Lacs (P.Y.Rs. 17,650.59 Lacs). But due to the nature of business, the assets/ liabilities and expenses for these activities cannot be bifurcated separately.

2. Related parties'' disclosure as per Ind AS-24 Related Party Disclosures "(Specified under Section 133 of the Companies Act 2013, read with Rule 7 of Companies (Accounts) Rules, 2015.):

[A] Key Management Personal (KMP) and their Relatives.

Mr. Kamalkumar Dujodwala Chairman

Mr. Pannkaj Dujodwala Managing Director

Mr. Akshay Dujodwala Son of Chairman

Mrs. Manisha Dujodwala Spouse of Managing Director

Mrs. Alka Dujodwala Spouse of Chairman

[B] Companies /Firm controlled by Directors/Relatives who have the authority and controlling their activities.

- Balaji Pine Chemicals Ltd

- Speciality Chemicals

- Dujodwala Resin & Terpenes Ltd.

- Indo-Euro Securities Ltd.

- Dujodwala Exports Pvt. Ltd.

- Inspirations.

- Dujodwala Charities

- Pine Forest Products & Investment Pvt. Ltd.

- Chemexil Corporation

The Directors are the Key Management Personal (KMP) who has the authority and controlling the activities of the Company.

Note: - Related party relationship is as identified by the Company and relied upon by the Auditors.

3. Disclosure in accordance with Ind AS - 19 on "Employee Benefits"

The Company has classified the various benefits provided to employees as under: -(i) Defined Contribution Plans

During the year, the Company has recognized the following amounts in the Statement of Profit and Loss:

4. The balance of Sundry Debtors, Sundry Creditors, Loans & Advances and others are shown net of advances from/to Customers/Suppliers of the same party and are as per books and subject to confirmations and reconciliation if any.

5. In the opinion of the Board and to the best of their knowledge the value of realization of current assets, loans & advances in the ordinary course of business, would not be less than the amount at which they are stated in the Balance Sheet.

6. Payments to Micro, Small and Medium Enterprises are made in accordance with the agreed credit terms and to the extent ascertained from available information, there is no overdue payable to MSME units beyond the period specified in Micro, Small and Medium Enterprises Development Act, 2006

7. There was major fire in the Company''s plant at Kumbhivali in the first quarter of financial year 2015-16, for which claim of Rs. 30.60 crore was lodged with the insurance company. Out of this claimed amount, Company had received Rs. 24 Lakhs in 4th quarter of F.Y. 2015-16. Further, Management was confident of expediting and settling balance claim amount from the insurance Company and therefore claim amount of Rs. 30.36 crore was disclosed as "Insurance Claim Receivable" under Short Term Loans and Advances. However, during the year, Company has received surveyor''s final report dated 24th December 2016 wherein final loss was assessed at Rs. 18.02 crores and therefore balance amount of Rs. 12.33 crores not recoverable was written off in Statement of Profit & Loss during year ended 31st March 2017. Further, during the current year amount of Rs. 8.09 crores have been received from insurance company and balance amount is still receivable.

8. Notes to first time adoption:

9. Employee Benefit Cost:

Under Ind AS the actuarial gains and losses form part of the remeasurement of the net defined benefit Liability / Assets and is recognized in other comprehensive income. Under IGAAP, actuarial gains and losses were recognized in profit or loss. Consequently, the deferred tax effect of the same has also been recognized in other comprehensive income under Ind AS instead of profit or loss.

10. Fair Valuation of Investment:

Under IGAAP investment in equity / other instruments were classified into long term and current investments. Long term investments were carried at cost less provision, other than temporary in nature. Current investments were carried at lower of cost as fair value. Under Ind AS, these investments are required to be measured at fair value either through other comprehensive income or through profit and loss. The company has opted to fair value of these investments through profit & loss.

11. Deferred Taxes:

Under previous GAAP, deferred taxes were recognized based on profit and loss approach i.e. tax impact on difference between the accounting income and taxable income. Under Ind AS deferred tax is recognized by following Balance Sheet approach i.e. tax impact on temporary difference between the carrying value of assets and liabilities in the books and their respective tax base. Also deferred tax has been recognized on the adjustments made on transition to Ind AS.

12. Excise Duty:

Under previous GAAP, revenue from sale of goods was presented net of excise duty on sale. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. Excise duty is presented in statement of profit and loss as an expense.

5. Other Equity:

Adjustments to retained earnings and other comprehensive income have been made in accordance with Ind AS, for the above-mentioned items.

6. Optional Exemption availed:

Deemed Cost

The Company has elected to continue with the carrying value for all of its property, plant and equipment and intangible assets as recognized in the financial statement as at 31.03.2016 measured as per the previous GAAP and use that as its deemed cost as at the transition date.

13. Applicable Mandatory Exceptions

a) Estimates

An entity''s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies)

Ind AS estimates as at 1st April 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP.

(i) Impairment of financial assets based on expected credit loss model.

b) Depreciation of financial assets and financial liabilities

Ind AS 101 requires first time adopter to apply the derecognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows the first time adopter to apply the de-recognition requirement in Ind AS 109 retrospectively from the date to the entities choosing, provided that the information needed to apply Ind AS 109 to financial assets and financial liabilities to derecognized as a result of past transactions was obtained at the time of initially accounting for those transactions. The Company has elected to apply the de-recognition provision of Ind AS 109 prospectively from the date of transition to Ind AS.

c) Classification and measurement of financial assets

As required under Ind AS 101 the Company has assessed the classification and measurement of financial assets on the basis of the facts and circumstances that exist at the date of transition Ind AS. Where practicable, measurement

of financial assets accounted at amortized cost has been done retrospectively.

d) Impairment of financial assets

Ind AS 101 requires an entity to apply the Ind AS requirements retrospectively if it is practicable, without undue cost and effort to determine the credit risk that debt financial instruments where initially recognized. The Company has measured impairment losses on financial assets as on the date of transition i.e. 1st April 2016 in view of cost and effort.

Transition to Ind AS -Reconciliations

The following reconciliations provide a quantification of the effect of significant differences arising from the transition from previous GAAP to Ind AS as required under Ind AS 101:

(i) Reconciliation of Balance sheet as at 1st April 2016 (Transition Date);

(ii) Reconciliation of Balance sheet as at 31st March 2017;

(iii) Reconciliation of Total Comprehensive Income for the year ended 31st March 2017;

(iv) Reconciliation of Total Equity as at 1st April 2016 and as at 31st March 2017;

(v) Adjustments to Cash Flow Statements as at 31st March, 2017

The presentation requirements under previous GAAP differs from Ind AS, and hence, previous GAAP information has been regrouped for ease of reconciliation with Ind AS. The re-grouped previous GAAP information is derived from the Financial Statements of the Company prepared in accordance with previous GAAP.

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Mar 31, 2016

Note 1: Of these 431080 equity shares of Rs. 10 each fully paid up issued at premium of Rs. 11.09 per share upon conversion of convertible warrants issued on preferential basis in the F.Y.2010-11)

C) Terms/ rights attached to Equity Shares:

The Company has only one class of equity shares having par value of Rs.10/-. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividend 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.

In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the share holders. - -

F) Bonus shares / Buy Back / Shares for consideration other than cash issued during the period of five years immediately preceding the financial year ended on 31st March 2016.

(i) Aggregate number of equity shares allotted as fully paid up pursuant to contracts without payment being received in cash: Nil

(ii) Aggregate number of equity shares allotted as fully paid up by way of Bonus Shares: Nil

(iii) Aggregate number of equity shares bought back: Nil

NOTE 2.

The borrowings are secured by:

a) Against hypothecation of Inventories and Book Debts.

b) Equitable mortgage of Factory Land and Building at Kumbhivali village, Savroli Kharpada Road, Tal. Khalapur, Khopoli -410202, Dist. Raigad, Maharashtra.

c) Hypothication of Plant and Machinery.

d) Personal Guarantee of Mr. Kamalkumar Dujodwala and Mr. Pannkaj Dujodwala Directors of the Company.

NOTE-3.

Due to small-scale industrial undertakings and due to micro enterprises and small enterprises:

The Company is in process of compiling relevant information from its suppliers about their coverage under the Micro, Small and Medium Enterprises Development Act, 2006. Since the relevant information is not readily available, no disclosure have been made in the accounts. However, in view of the Management the impact of interest, if any, that may be payable in accordance with the provisions of this Act is not expected to be material.

Note 4

Trade payable includes Rs. 8,21,32,608/-to foreign creditors which is sub-juiced and therefore rupees liability is freeze.

Note 5.

Trade payables are subject to confirmations.

Note 6) Sundry creditors for expenses, advance from customers and advance from contractors / service providers are subject to confirmation.

Note 7) Advance from customers includes Rs.3097958 from the related party as per transactions specified in business parlance.

6. Contingent liabilities - Not provided for in respect of

Bank guarantees issued by banks on behalf of the Company Rs. 32.59 Lacs (Previous Year Rs 29.57 Lacs). These are secured by the charge created in favor of the Company''s bankers byway of pledge of Fixed Deposit Receipts,

ii. Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for Rs.NIL (P.Y.Rs. 86,81,151/-)

a) In the earlier year the Company received Show Cause Notice from the Excise Department for the period February 2004 to May 2005 demanding sum of Rs. 2, 47, 49, 315/- for Excise Duty on price difference. The Company has received order in its favour from CESTAT against the Order passed by the Commissioner of Central Excise & Custom against which the department has filed an civil appeal in Supreme Court for condemnation of delay in filling the Petition of appeal, hence no provision has which was allowed as per Order dated 18^th November 2015, giving direction to Commissioner to arrive at correct transaction value after giving deduction and on the basis of our calculation submitted, we have debited Rs 11,12,067/- in RG 23 Part II on 31^s1 March 2016 and hence no provision has been made in books of account for Excise duty of Rs 2,47,49,315/- as

b) In the earlier year the Company has received notice from Commissioner of Central Excise & Customs determining interest on excise duty liability for the period July 1999 to January 2004 of Rs. 1,68,38,001/- as against interest of Rs. 77,07,386/- calculated and paid by the company in financial year 2011-12. The excise department has demanded balance interest of Rs. 91,30,615/- (Rs. 1,68,38,001/- minus Rs. 77,07,386/-) from the Company and recovered an amount of Rs. 35,19,301/-out of export rebate of the Company and an amount of Rs. 56,11,314/-was paid by the Company by crediting RG23 balance. Since the Company has not agreed to the interest calculation of the department, it has filed an appeal before the Commissioner of Central Excise and Customs (Appeals) and the amount of Rs. 91,30,615/- paid has been shown as paid under protest.

c) The Excise department has gone in appeal against the Show Cause Notice decided in favor of Company by Commissioner of Central Excise and Customs (Appeals) for Rs.11,58,94,818/- in respect of Excise Duty on Turpentine & Rosin manufactured (exempted from excise manufactured without aid of power) for the period April 99 to March 04. The Company has further received Show Cause Notice from the Department for the period April 04 to November 04 of Rs. 1,01,92,867/- for which the Company has obtained Stay Order from the CESTAT against the Order passed by the Commissioner against it. Against all the above show cause notices for the period from April-99 to November-04 CESTAT passed order confirming cum-duty demand for the normal period. Against the said order, during the current financial year, the Company paid under protest Rs. 1,45,58,818/- towards excise duty as demanded by Commissioner of Central Excise & Customs for the period September-03 to November-04 and for which Appeal has been filed by the Company and is pending for adjudication before Commissioner (Appeals) .For the show cause notice received for the period December 04 to September 05 for Rs 81,44,105/-,appeal has been filed in CESTAT for adjudication against the order passed by the Commissioner of Central Excise & Custom confirming the demand has been provided for in books of account and an amount of Rs 6,10,808 has been paid in cash for the appeal and for the balance amount of Rs 63,90,658/-the duty has been debited in RG 23 Part II on 01.09.2015. During the previous year the Company has also received notice from Commissioner of Central Excise & Customs, determining interest on excise duty for the period Sept-03 to Nov-04 amounting to Rs. 2,20,73,762/- against which Company has paid Rs. 20,00,000/- under protest in the last financial year and during the current financial. Export rebate for amount of Rs 1,63,52,526/- have been further appropriated in current financial year under protest and for the balance interest amount no provision has been made in books of account as for the entire demand amount for the period from April-1999 to November 2004, appeal is pending before the Mumbai High Court and Appeal before Commissioner Appeal for the duty demand for the period September 03 to November 04.

d) Company''s petition for IIC notification was rejected by Delhi High Court and Company has filed SLP in Supreme Court. If decision comes in Company''s favour, then the above excise liabilities will be null and void and

iv. Letter of credit issued by the bankers of the Company Rs. 21,40,70,143/- (P.Y. Rs. 35,04,74,495/-)

v. The Company has cleared 19 MT of Pentair thriftily against Bill of Entry No. 616414 dated 20.10.2005. The custom department had asked the Company to pay Rs. 2,16,772/- on account of Anti Dumping Duty for clearance of the

said goods as per Notification No. 93/2005 of customs issued on 20.10.2005 wherein the said goods were covered for levy of anti dumping duty imported from certain countries. The Company has deposited the said amount on 25.11.2008 as per CESTAT order No. S/603/WAB/MUM/2008/CSTB/CII dated 20.10.2008, but no provision has been made in books of accounts as the management is of the view that the consignment will not be covered under the notification, as on date of clearance of the goods the notification was not published in Gazette of India.

vi. The company has imported certain raw materials during the earlier years of which the supplies being defective have been disputed by the Company with the suppliers and accordingly payment has not been made to the suppliers of Rs.79053366/-. The party has filed litigation for the same during current financial year for which the Company has not acknowledged the claim. The Company is contingently liable to pay interest & foreign exchange fluctuation impact, if any. The necessary RBI permission either for write backs or payments will be made based on the judicial decision, since the matter is sub-juice in the Bombay High Court.

9. Segment reporting

The Company is mainly engaged in the business of Manufacturing of Chemicals. Considering the nature of business and financial reporting of company, the company has only one segment viz "Chemicals" product as reportable segment. The company operates in Local/Export segment geographically of which the exports have amounted to Rs. 1428.89 Lacs (P.Y.Rs. 1793.67 Lacs) out of Total Turnover of Rs.16963.34 Lacs (P.Y.Rs.23909.66 Lacs). But due to the nature of business, the assets/ liabilities and expenses forthese activities cannot be bifurcated separately.

10. In consonance with the Accounting Standards on Inventory Valuation (AS2) and Guidance Note on Accounting Treatment for Excise issued by The Institute of Chartered Accountants of India, the Company has provided for liability of excise duty payable on finished goods amounting to Rs.256.76 Lacs (P.Y. Rs.156.82 Lacs).

11. Related parties'' disclosure as per Accounting Standard 18.

[A] Key Management Personal (KMP) and their Relatives.

Kamalkumar R. Dujodwala Chairman

Pannkaj R. Dujodwala Managing Director

Akshay Dujodwala Son of Chairman

Mrs. Manisha P. Dujodwala Spouse of Managing Director

Mrs. Alka K Dujodwala Spouse of Chairman

[B] Companies/Firm controlled by the Directors & their relatives who have the authority for controlling their activities.

- Balaji Pine Chemicals Ltd

- SpecialityChemicals

- Dujodwala Resin&Terpenes Ltd.

- Indo-Euro Securities Ltd.

- Dujodwala Exports Pvt. Ltd.

- Inspirations.

- Dujodwala Charities

- Pine Forest Products & Investment Pvt. Ltd.

The Directors are the Key Management Personal (KMP) who have the authority for controlling the activities of the Company.

[C] Information on related party transactions as required by accounting Standard-18 for the year ended on 31-03 2016.

Note: - Related party relationship is as identified by the Company and relied upon by the Auditors.

12. Disclosure in accordance with Revised AS -15 on "Employee Benefits"

The Company has classified the various benefits provided to employees as under:-(i) Defined Contribution Plans

During the year, the Company has recognized the following amounts in the Statement of Profit and Loss:

iii) Defined Benefit Plan for Leave Encashment Benefits

a) The following assumptions are made by the actuary for the calculation of leave Encashment Benefits:

Valuation Basis

i. Mortality rate : IALM (2006-08) Ultimate Table

ii. Discount rate : 7.85% p.a.

iii. Salary Escalation : 5% p.a.

iv. Withdrawal Rate : 2% p.a.

Valuation Method

i. The method of Valuation adopted was the Projected Unit Credit Method as specified in AS-15 (Revised 2005) of I.C.A.I.

ii. A suitable allowance has been made for a ailment of leave during the future service of employees.

iii. The computation of Leave liability is based on the basis of the data and information furnished by the Company. A summary of data is given below:

13. No provision for current taxation is made for the current accounting period (reporting period) in accordance with Income Tax Act 1961 for relevant assessment year, in view of losses.

14. In the opinion of the management, there is no impairment of assets in accordance with Accounting Standard (AS-28) as on 8alance Sheet date.

15. The balance of Sundry Debtors, Sundry Creditors, Loans & Advances and others are shown net of advances from/to Customers/Suppliers of the same party and are as per books and subject to confirmations and reconciliation if any.

16. In the opinion of the Board and to the best of their knowledge the value of realization of current assets, loans & advances in the ordinary course of business, would not be less than the amount at which they are stated in the Balance Sheet.

17. Previous year figures have been regrouped, rearranged and reclassified, wherever necessary, to conform to current year''s presentation.

18. With the major fire in Companies plant during first quarter of the F.Y. 2015-16, there was a loss of inventory of Rs. 3059.51 Lakhs and to that extent inventory has been written off.

19. The Company has initiated the CSR spending in accordance with section 135 of the Companies Act 2013, though the full required amount as per the provisions was not spent during the year. The Company has, since close of the year further initiated various objectives for full spending during the next year as per CSR provisions.

20. During the previous year amount of Rs. 292.70 Lakhs has been taken as insurance claim receivable but of which the final settlement with the insurance Company is done for Rs. 64.19 Lakhs and balance amount of Rs. 228.51 has been written off during the current year.

21. There was major fire in the Companies plant at Kumbhivali in the first quarter of financial year 2015-16, for which claim of Rs. 30.60 crore was lodged with the insurance company. Out of this claimed amount, Company has received Rs. 24 Lakhs in 4rth quarter of F.Y. 2015-16. Further management is confident of expediting and settling balance claim amount from the insurance Company and virtual certainty of the claim lodged the amount of Rs. 30.36 crore as insurance claim receivable is taken as other income in the profit and loss account.

22. The Balance-sheet of the Company has been prepared as per schedule III of the Companies Act, 2013.

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Mar 31, 2015

1. Of these 4,31,080 equity shares of Rs. 10 each fully paid up issued at premium of Rs. 8.59 per share upon conversion of convertible warrants issued on preferential basis in the financial year 2010-11.

2. The calls unpaid of Rs. 152000/- as conveyed by the Management has received and relied upon by the Auditors.

3. Terms/ rights attached to Equity Shares:

The Company has only one class of equity shares having par value of Rs.10/-. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividend 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.

In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the share holders.

4. Bonus shares / Buy Back / Shares for consideration other than cash issued during the period of five years immediately preceding the financial year ended on 31st March 2015:

(i) Aggregate number of equity shares allotted as fully paid up pursuant to contracts without payment being received in cash: Nil

(ii) Aggregate number of equity shares allotted as fully paid up by way of Bonus Shares: Nil

(iii) Aggregate number of equity shares bought back: Nil

5.Due to small-scale industrial undertakings and due to micro enterprises and small enterprises:

The Company is in process of compiling relevant information from its suppliers about their coverage under the Micro, Small and Medium Enterprises Development Act, 2006. Since the relevant information is not readily available, nodisclosure have been made in the accounts. However,in view of the Management, the impact of interest, if any, that may be payable in accordance with the provisions of this Act is not expected to be material.

6. Trade payable includes Rs. 8,21,32,608/-to foreign creditors which is sub-judiced and therefore rupees liability is freezed.

7. Contingent liabilities - Not provided for in respect of

31th March 2015 (Rs.) 31TH March 2014 (Rs.)

Bank Guarantee 29,57,420 38,76,420

Bank guarantees issued by banks on behalf of the Company Rs. 29.57 Lacs (Previous Year Rs 38.76 Lacs). These are secured by the charge created in favour of the Company's bankers by way of pledge of Fixed Deposit Receipts, ii. Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for Rs. 86,81,151/- (P.Y. Rs. 25,31,459/-)

iii. Excise Duty

31ST March 31st March 2015 (Rs.) 2014 (Rs.)

Feb 04 to May 05 (Price Difference) 2,47,49,315 2,47,49,315

April 99 to March 04 (Central excise duty) 11,58,94,818 11,58,94,818

April 04 to Nov 04 (Central excise duty) 1,01,92,867 1,01,92,867

Dec 04 to Sept 05 (Central excise duty) 81,44,105 81,44,105

July 99 to Jan-04 91,30,615 91,30,615

Sept-03 to Nov-04 1,45,58,818 -

Sept-03 to Nov-04 2,20,73,762 -

a) In the earlier year the Company received Show Cause Notice from the Excise Department for the period February 2004 to May 2005 demanding sum of Rs. 2,47,49, 315/- for Excise Duty on price difference. The Company has received order in its favour from CESTAT against the Order passed by the Commissioner of Central Excise & Custom against which the department has filed an civil appeal in Supreme Court for condemnation of delay in filling the Petition of appeal, hence no provision has been made in books of account for Excise duty of Rs 2,47,49,315/-.

b) In the earlier year the Company has received notice from Commissioner of Central Excise & Customs determining interest on excise duty liability for the period July 1999 to January 2004 of Rs. 1,68,38,001/- as against interest of Rs. 77,07,386/- calculated and paid by the company in financial year 2011-12. The excise department has demanded balance interest of Rs. 91,30,615/-(Rs. 1,68,38,001/-minus Rs. 77,07,386/-) from the Company and recovered an amount of Rs. 35,19,301/- out of export rebate of the Company and an amount of Rs. 56,11,314/- was paid by the Company by crediting RG23 balance. Since the Company has not agreed to the interest calculation of the department, it has filed an appeal before the Commissioner of Central Excise and Customs (Appeals) and the amount of Rs. 91,30,615/- paid has been shown as paid under protest.

c) The Excise department has gone in appeal against the Show Cause Notice decided in favour of Company by Commissioner of Central Excise and Customs (Appeals) for Rs.11,58,94,818/- in respect of Excise Duty on Turpentine & Rosin manufactured (exempted from excise manufactured without aid of power) for the period April 99 to March 04. The Company has further received Show Cause Notice from the Department for the period April 04 to November 04 of Rs. 1,01,92,867/- for which the Company has obtained Stay Order from the CESTAT against the Order passed by the Commissioner against it. Against all the above show cause notices for the period from April-99 to November-04 CESTAT passed order confirming cum-duty demand for the normal period. Against the said order, during the current financial year, the Company paid under protest Rs. 1,45,58,818/- towards excise duty as demanded by Commissioner of Central Excise & Customs for the period September-03 to November-04. For the show cause notice received for the period December 04 to September 05 for Rs 81,44,105/-,appeal has been filed in CESTAT for adjudication against the order passed by the Commissioner of Central Excise & Custom confirming the demand has not been provided for in books of account. During the current year the Company has also received notice from Commissioner of Central Excise & Customs, determining interest on excise duty for the period Sept-03 to Nov-04 amounting to Rs. 2,20,73,762/-against which Company has paid Rs. 20,00,000/- under protest in the current financial year and for which no provision has been made in books of account as for the entire demand amount for the period from April-1999 to November 2004, appeal is pending before the Mumbai High Court.

iv. Claim not acknowledged

31st March 2015 31ST March 2014 (Rs.) (Rs.)

Others 9,10,000 9,10,000

The (Other) claim against Company not acknowledged as debt is for suite filed in Mumbai High court for Rs 7.65 lac by Mumbai Port Trust and claim for Rs 1.27 Lacs by Marine Container Service Ltd and Rs 0.18 lac by Pacific International Ltd as damages charges for container received through them.

v. Letter of credit issued by the bankers of the Company Rs. 35,04,74,495/- (P.Y. Rs. 30,15,58,334/-)

vi. In respect of income tax matter: For AY 2009-10 claim of set off of unabsorbed depreciation of Rs. 22,57,397/- was disallowed by AO and appeal of the Company was rejected by Commissioner of Income Tax (Appeals) Also. Aggrieved by the order of CIT-A, the Company has preferred an appeal before Hon'ble Income Tax Appellate Tribunal which is not yet heard and hence no provision is made in books.

vii. The Company has cleared 19 MT of Pentaerythritol against Bill of Entry No. 616414 dated 20.10.2005. The custom department had asked the Company to pay Rs. 2,16,772/- on account of Anti Dumping Duty for clearance of the said goods as per Notification No. 93/2005 of customs issued on 20.10.2005 wherein the said goods were covered for levy of anti dumping duty imported from certain countries. The Company has deposited the said amount on 25.11.2008 as per CESTAT order No. S/603/WAB/MUM/2008/CSTB/CII dated 20.10.2008, but no provision has been made in books of accounts as the management is of the view that the consignment will not be covered under the notification, as on date of clearance of the goods the notification was not published in Gazette of India.

viii. The Company has imported certain raw materials during the earlier years of which the supplies being defective have been disputed with the suppliers and accordingly payment has not been made to the suppliers of Rs.79053366/- which is under negotiation with the party and same shall be dealt as per RBI guidelines. As the party has filed litigation for the same during current financial year for which the Company has not acknowledged the claim. The Company is contingently liable to pay interest & foreign exchange fluctuation impact, if any.

8. Segment reporting

The Company is mainly engaged in the business of Manufacturing of Chemicals. Considering the nature of business and financial reporting of Company, the Company has only one segment viz "Chemicals" product as reportable segment. The Company operates in Local/Export segment geographically of which the exports have amounted to Rs. 1793.67 Lacs (P.Y.Rs. 2481.58 Lacs) out of Total Turnover of Rs.23909.66 Lacs (P.Y.Rs.23165.85 Lacs). But due to the nature of business, the assets/ liabilities and expenses for these activities cannot be bifurcated separately.

9. The advances recoverable includes a sum of Rs. 292.70 Lacs (P.Y. Rs. 165.00 Lacs) of Insurance claim receivable on account of claims lodged on insurance companies due to fire and other losses suffered of Company's various assets & under business interruption policy due to the fire as on 29th January, 2014. The said claims are under active consideration of the insurance Company.

10. In consonance with the Accounting Standards on Inventory Valuation (AS2) and Guidance Note on Accounting Treatment for Excise issued by The Institute of Chartered Accountants of India, the Company has provided for liability of excise duty payable on finished goods amounting to Rs. 156.82 Lacs (P.Y. Rs. 129.24 Lacs).

11. The Company was earlier enjoying the benefit of sales tax deferment under State Incentive Package Scheme as the unit was situated in a state notified backward area. During the earlier period i.e. 1997-98 to 2001-02 the company has included in the income the sales tax deferment amount but has not created liability till previous years. Since the current years outstanding amount was Rs. 38,16,769/- towards Sales tax deferment Liability which is paid and debited to Profit & Loss since taken as income in the earlier years as per the management.

11. Related parties' disclosure as per Accounting Standard 18. [A] Key Management Personal (KMP) and their Relatives.

Kamalkumar R. Dujodwala Chairman

Pannkaj R. Dujodwala Managing Director

Akshay Dujodwala Son of Chairman

Mrs. Manisha P. Dujodwala Spouse of Managing Director

Mrs. Alka K Dujodwala Spouse of Chairman

[B] Companies/Firm controlled by the Directors & their relatives who have the authority for controlling their activities.

* Balaji Pine Chemicals Ltd

* Speciality Chemicals

* Dujodwala Resin&Terpenes Ltd.

* Indo-Euro Securities Ltd.

* Dujodwala Exports Pvt. Ltd.

* Inspirations.

* Dujodwala Charities

* Pine Forest Products & Investment Pvt. Ltd.

The Directors are the Key Management Personal (KMP) who have the authority for controlling the activities of the Company.

12. Provision for current taxation is made for the current accounting period (reporting period) on the basis of the taxable profits computed in accordance with Income Tax Act 1961 for relevant assessment year. As per the normal provision of Income Tax Act, 1961, there are taxable profits and hence tax provision has been made as per provisions of the IT Act, 1961.

13. In the opinion of the management, there is no impairment of assets in accordance with Accounting Standard (AS-28) as on Balance Sheet date.

14. The balance of Sundry Debtors, Sundry Creditors, Loans & Advances and others are shown net of advances from/to Customers/Suppliers of the same party and are as per books and subject to confirmations and reconciliation if any.

15. In the opinion of the Board and to the best of their knowledge the value of realization of current assets, loans & advances in the ordinary course of business, would not be less than the amount at which they are stated in the Balance Sheet.

16. Previous year figures have been regrouped, rearranged and reclassified, wherever necessary, to conform to current year's presentation.

17. The Company has been supporting varies charity projects, however in view of recent guidelines for the expenditure on CSR activities; the Board of Directors of the Company will be appointing CSR committee which will be exploring best avenues within the allowable expenditure on CSR pending same. The Company, through has not spent any amount during the year; however it has decided to carry CSR activities during the next financial year onwards.

18. The Balance sheet of the Company has been prepared as per schedule III of the Companies Act, 2013.

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Mar 31, 2014

NOTE 1

a) Secured against hypothecation of Inventories and book debts of the Company.

b) Equitable mortgage of Factory Land and Building at Kumbhivali village, Savroli Kharpada Road, Tal. Khalapur, Khopoli -410202, Dist. Raigad, Maharashtra.

c) Hypothication of Plant and Machinery.

d) Personal Guarantee of Shri Kamalkumar Dujodwala and Shri Pannkaj Dujodwala Directors of the Company

NOTE 2

Due to small-scali industrial undertakings and due to micro enterprises and small enterprises:

The Company is in process of compiling relevant information from its suppliers about their coverage under the Micro, Small and Medium Enterprises Development Act, 2006. Since the relevant information is not readily avilable, no disclosure have been made in the accounts. However,in view of the mangement, the impact of interest, if any, that may be payable in accodance with the provisions of this Act is not expected to be material.

3. CONTINGENT LIABILITIES - Not provided for in respect of:

i. 31st March 2014 31st March 2013 (Rs.) (Rs.)

Bank Guarantee 38,76,420 41,21,420

Bank guarantees issued by banks on behalf of the Company Rs. 38.76 Lacs (Previous Year Rs. 41.21 Lacs). These are secured by the charge created in favour of the Company''s bankers by way of pledge of Fixed Deposit Receipts.

ii. Estimated amount of contracts (net of Advances) remaining to be executed on capital account and not provided for Rs. 25,31,459/- (P.Y. Rs. 35,77,367/-)

iii. Excise Duty

31st March 2014 31st March 2013 (Rs.) (Rs.)

Feb 04 to May 05 (Price Difference) 2,47,49,315 2,47,49,315

April 99 to March 04 (Central excise duty) 11,58,94,818 11,58,94,818

April 04 to Nov 04 (Central excise duty) 1,01,92,867 1,01,92,867

Dec 04 to Sept 05 (Central excise duty) 81,44,105 81,44,105

July 99 to Jan-04 91,30,615 91,30,615

a) In the earlier year the Company received Show Cause Notice from the Excise Department for the period February 2004 to May 2005 demanding sum of Rs. 2,47,49,315/- for Excise Duty on price difference. The Company has received order in its favour from CESTAT against the Order passed by the Commissioner of Central Excise & Custom against which the department has filed an civil appeal in Supreme Court for condemnation of delay in filling the Petition of appeal, hence no provision has been made in books of account for Excise Duty of Rs. 2,47,49,315/-.

b) In the last year the Company has received notice from Commissioner of Central Excise & Customs determining interest on Excise Duty liability for the period July 1999 to January 2004 of Rs. 1,68,38,001/- as against interest of Rs. 77,07,386/- calculated and paid by the Company in financial year 2011-12. The Excise Department has demanded balance interest of Rs. 91,30,615/- (Rs. 1,68,38,001/- minus Rs. 77,07,386/-) from the Company and recovered an amount of Rs. 35,19,301/- out of export rebate of the Company and an amount of Rs. 56,11,314/- was paid by the Company by crediting RG23 balance. Since the Company has not agreed to the interest calculation of the department, it has filed an appeal before the Commissioner of Central Excise and Customs (Appeals) and the amount of Rs. 91,30,615/- paid by it has been shown as paid under protest.

c) The Excise department has gone in appeal against the Show Cause Notice decided in favour of Company by Commissioner of Central Excise and Customs (Appeals) for Rs.11,58,94,818/- in respect of Excise Duty on Turpentine & Rosin manufactured (exempted from excise manufactured without aid of power) for the period April 99 to March 04. The Company has further received Show Cause Notice from the Department for the period April 04 to November 04 of Rs. 1,01,92,867/- for which the Company has obtained Stay Order from the CESTAT against the Order passed by the Commissioner against it, hence no provision has been made in books of account. Further show cause notice for the period December 04 to September 05 for Rs 81,44,105/- have been received, and the same is pending before the Commissioner of Central Excise & Custom for adjudication, not provided for in books of account.

iv. Claim not acknowledged

31st March 2014 (Rs.) 31st March 2013 (Rs.)

Others 9,10,000/- 9,10,000/-

The (Other) claim against Company not acknowledged as debt is for suite filed in Mumbai High court for Rs 7.65 lac by Mumbai Port Trust and claim for Rs 1.27 Lacs by Marine Container Service Ltd and Rs 0.18 lac by Pacific International Ltd as da mages charges for container received through them.

v. Letter of credit issued by the bankers of the Company Rs. 30,15,58,334/-(P.Y. Rs. 24,89,89,815/-)

vi. In respect of Income Tax matter: For AY 2009-10 claim of set off of unabsorbed depreciation of Rs. 22,57,397/- was disallowed by AO and appeal of the Company was rejected by Commissioner of Income Tax (Appeals) Also.

Aggrieved by the order of CIT-A, the Company has preferred an appeal before Hon''ble Income Tax Appellate Tribunal which is not yet heard and hence no provision is made in books.

vii. The Company has cleared 19 MT of Pentaerythritol against Bill of Entry No. 616414 dated 20.10.2005. The Custom Department had asked the Company to pay Rs. 2,16,772/- on account of Anti Dumping Duty for clearance of the said goods as per Notification No. 93/2005 of customs issued on 20.10.2005 wherein the said goods were covered for levy of anti dumping duty imported from certain countries. The Company has deposited the said amount on 25.11.2008 as per CESTAT order No. S/603/WAB/MUM/2008/CSTB/CII dated 20.10.2008, but no provision has been made in books of accounts as the management is of the view that the consignment will not be covered under the notification, as on date of clearance of the goods the notification was not published in Gazette of India.

4. Segment reporting

The Company is mainly engaged in the business of Manufacturing of Chemicals. Considering the nature of business and financial reporting of Company, the Company has only one segment viz "Chemicals" product as reportable segment. The Company operates in Local/Export segment geographically of which the exports have amounted to Rs. 2481.58 Lacs (P.Y.Rs. 2323.96 Lacs) out of Total Turnover of Rs. 23165.85 Lacs (P.Y.Rs. 20952.32 Lacs). But due to the nature of business, the assets/ liabilities and expenses for these activities cannot be bifurcated separately.

5. The advances recoverable includes a sum of Rs. 1,65,00,500 (P.Y. Rs. Nil) of Insurance claim receivable on account of claims lodged on insurance companies due to fire and other losses suffered of Company''s various assets from the fire as on 29th January, 2014. The said claims are under active consideration of the Insurance Company.

6. The Company has imported certain raw materials during the earlier years of which the supplies being defective have been disputed with the suppliers and accordingly payment has not been made to the suppliers of Rs. 7,90,53,366/- which is under negotiation with the party and same shall be dealt as per RBI guidelines.

7. In consonance with the Accounting Standards on Inventory Valuation (AS2) and Guidance Note on Accounting Treatment for Excise issued by The Institute of Chartered Accountants of India, the Company has provided for liability of excise duty payable on finished goods amounting to Rs. 129.24 Lacs (Rs.172.41 Lacs).

8. The Company was earlier enjoying the benefit of Sales Tax deferment under State Incentive Package Scheme as the unit was situated in a state notified backward area. During the earlier period i.e. 1997-98 to 2001-02 the Company has included in the income the Sales Tax deferment amount but has not created liability till previous years. Since the current year the amount created is Rs. 55,80,715/- is credited as Sales Tax deferment Liability which is pending & the same amount is debited as Sales Tax Deferment Asset which will be nullified as & when it is paid and debited to Statement of Profit & Loss in the coming years. During the current year Rs. 56,43,730/- Is paid as Sales Tax Deferment and debited to Statement of Profit & Loss since taken as income in the earlier years as per the management.

9. Provision for current taxation is made for the current accounting period (reporting period) on the basis of the taxable profits computed in accordance with Income Tax Act 1961 for relevant assessment year. As per the normal provision of Income Tax Act, 1961, there are taxable profits and hence tax provision has been made as per provisions of the IT Act, 1961.

10. In the opinion of the management, there is no impairment of assets in accordance with Accounting Standard (AS-28) as on Balance Sheet date.

11. The balance of Sundry Debtors, Sundry Creditors, Loans & Advances and others are shown net of advances from/to Customers/Suppliers of the same party and are as per books and subject to confirmations and reconciliation if any.

12. In the opinion of the Board and to the best of their knowledge the value of realization of current assets, loans & advances in the ordinary course of business, would not be less than the amount at which they are stated in the Balance Sheet.

13. Previous year figures have been regrouped, rearranged and reclassified, wherever necessary, to conform to current year''s presentation.

14. The quantitative and other details as required under para 3 and 4 of Part II of the Schedule VI of the Companies Act, 1956 are annexed here to as per Annexure ''A''

15. The details as required under Part- IV of the schedule VI of the Companies Act, 1956 as amended are given as per Annexure-B.

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Mar 31, 2013

A) In the earlier year the Company received Show Cause Notice from the Excise Departmentfortheperiod February 2004 to May 2005 demanding sum of Rs. 2,47, 49, 315/- for Excise Duty on price deference. The Company has received order in its favour from CESTAT against the Order passed by the Commissioner of Central Excise & Custom against which the department has filed a civil appeal in Supreme Court for condemnation of delay in filling the Petition of appeal, hence no provision has been made in books of account for Excise duty of Rs 2,47,49,315/-.

B) During the year the Company has received notice from Commissioner of Central Excise & Customs determining interest on excise duty liability for the period July 1999 to January 2004 of Rs. 1,68,38,001/- as against interest of Rs. 77,07,386/- calculated and paid by the Company in financial year 2011-12. The excise department has demanded balance interest of Rs. 91,30,615/- (Rs. 1,68,38,001/- minus Rs. 77,07,386/-) from the Company and recovered an amount of Rs. 35,19,301/- out of export rebate of the Company and an amount of Rs. 56,11,314/- was paid by the Company by crediting RG23 balance. Since the Company has not agreed to the interest calculation of the department, it has filed an appeal before the Commissioner of Central Excise and Customs (Appeals) and the amount of Rs. 91,30,615/- paid by it has been shown as paid under protest.

C) The Excise department has gone in appeal against the Show Cause Notice decided in favour of Company by Commissioner of Central Excise and Customs (Appeals) for Rs.11,58,94,818/- in respect of Excise Duty on Turpentine & Rosin manufactured (exempted from excise manufactured without aid of power) for the period April 99 to March 04. The Company has further received Show Cause Notice from the Department for the period April 04 to November 04 of Rs. 1,01,92,867/- for which the Company has obtained Stay Order from the CESTAT against the Order passed by the Commissioner against it, hence no provision has been made in books of account. Further show cause notice for the period December 04 to September 05 for Rs 81,44,105/- have been received, and the same is pending before the Commissioner of Central Excise & Custom for adjudication, not provided for in booksof account.

The (Other) claim against Company not acknowledged as debt is for suite filed in Mumbai High court for Rs 7.65 lac by Mumbai Port Trust and claim for Rs 1.27 lac by Marine Container Service Ltd and Rs 0.18 lac by Pacific International Ltd as damages chargesfor container received through them.

d) Letter of credit issued by the bankers of the Company Rs. 24,89,89,815/- (P.Y. Rs. 26,36,50,194/-)

e) In respect of income tax matter: For AY 2009-10 claim of set off of unabsorbed depreciation of Rs. 22,57,397/- was disallowed by AO and appeal of the Company was rejected by Commissioner of Income Tax (Appeals) also. Aggrieved by the order of CIT-A, the Company has preferred an appeal before Hon''ble IncomeTax Appellate Tribunal which is not yet heard and hence no provision is made in books.

f) The Company has cleared 19 MT of Pentaerythritol against Bill of Entry No. 616414 dated 20.10.2005. The custom department had asked the Company to pay Rs. 2,16,772/- on account of Anti Dumping Duty for clearance of the said goods as per Notification No. 93/2005 of customs issued on 20.10.2005 wherein the said goods were covered for levy of anti dumping duty imported from certain countries. The Company has deposited the said amount on 25.11.2008 as per CESTAT order No. S/603/WAB/MUM/2008/CSTB/CII dated 20.10.2008, but no provision has been made in books of accounts as the management is of the view that the consignment will not be covered under the notification, as on date of clearance ofthegoods the notification was not published in Gazetteof India.

NOTE 1

Segment reporting

The Company is mainly engaged in the business of Manufacturing of Chemicals. Considering the nature of business and financial reporting of Company. The Company has only one segment viz "Chemicals" product as reportable segment. The Company operates in Local/Export segment geographically of which the exports have amounted to Rs. 2323.96 Lacs (P.Y.Rs. 1373.16 lacs) out of Total Turnover of Rs. 20952.32 Lacs (P.Y. Rs. 22022.72 lacs). But due to the nature of business, the assets/ liabilitiesandexpensesfortheseactivitiescannot be bifurcated separately.

NOTE 2

The Company does not have complete information to determine Micro, Small and Medium Enterprises as specified in Micro, Small and Medium Enterprises Development Act, 2006 hence it is not possible for us to verify the amount due to such enterprises.

NOTE 3

In consonance with the Accounting Standards on Inventory Valuation (AS2) and Guidance Note on Accounting Treatment for Excise issued by The Institute of Chartered Accountants of India, the Company has provided for liability of excise duty payable on finished goods amounting to Rs 60.57 Lacs (Rs. 100.99 Lacs).

NOTE 4

The Company was earlier enjoying the benefit of sales tax deferment under state incentive package scheme as the unit was situated in a state notified backward area. During the earlier period i.e. 1997-98 to 2001-02 the deferred sales tax liability of Rs. 4,23,76,294/- was included in sales and not shown as liability. Therefore the unsecured liability of sales tax deferment as shown in the balance sheet is understated to an extent of Rs. 4,23,76,294/- for which no provision was made and Reserve & Surplus have been overstated to that extent. In current year the Company has paid Rs. 1,10,41,222/- (P.Y. Rs. 1,12,69,801/-) out of the above mentioned deferred sales tax liability which is debited to General Reserve hence reserve & surplus as on 31a March 2013 is now overstated to the extent of Rs. 96,57,869/- only.

NOTE 5

Pursuant to the approval of the members by way of special resolution passed at the Extra-Ordinary General Meeting of the Company held on 28th December 2009, the Company has allotted 19,42,857 warrants on 25th February 2010. Each warrant carried entitlement to subscribe for one equity share of Rs. 10/- each at a premium of Rs. 8.59/- per share. The subscriber to warrant had paid 25% amount being Rs. 90.29 lacs on application. The holders of the warrants were entitled to exercise the right to apply for Equity Shares in one or more tranches but within 18 months from the date of allotment of Warrants, subject to full payment of the exercise price. In the event the proposed allottees does not exercise the right to subscribe to the equity shares within a period of 18 months from the date of allotment of warrants, the amount paid by the proposed allottees shall stand forfeited and the proposed allottees shall not be entitled for refund of the same. Out of the above, 4,31,080 warrants have been converted into equity shares during the year ended 31st March 2011 and full payment have been received by the Company from the allottees of the above stated equity shares and an additional premium of Rs. 2.50/- per share was also paid by the said allottees as per the revised price calculation in accordance with SEBI regulations. Since the holders of balance 15,11,777/- warrants have not exercise their right to subscribe to the equity shares of the Company within the period of 18 months, amount of Rs. 70,25,984/- being 25% advance money received on subscription of warrants is forfeited and transferred to capital reserve account.

NOTE 6

Provision for current taxation is made for the current accounting period (reporting period) on the basis of the taxable profits computed in accordance with Income Tax Act 1961 for relevant assessment year. As per the normal provision of Income Tax Act, 1961, there are no taxable profits and hence tax provision has been made as per provisions of section 115JB of the IT Act, 1961.

NOTE 7

As at March 31, 2013, the Company has reviewed the future earnings of all the cash generating units in accordance with the Accounting Standard 28 "Impairment of Assets. As the carrying amount of assets does not exceed the future recoverable amount,consequently,noadjustmenttocarryingamountof assetsisconsidered necessary bytheManagement.

NOTE 8

The balance of Sundry Debtors, Sundry Creditors, Loans & Advances and others are as per books and subject to confirmations and reconciliation if any.

NOTE 9

In the opinion of the Board and to the best of their knowledge the value of realization of current assets, loans & advances in the ordinary course ofbusiness, would not be less thantheamountatwhichtheyare stated in the BalanceSheet.

NOTE 10

Till the year ended 31st March 2011, the Company was using pre-revised Schedule VI to the Companies Act, 1956, for preparation and presentation of its financial statements. During the year ended 31st March 2012, the revised Schedule VI notified under the Companies Act, 1956 has become applicable to the company. The Company has reclassified previous year figures to conform to this year''s classification.

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Mar 31, 2012

A) Terms/ rights attached to Equity Shares:

The company has only one class of equity shares having par value of Rs.10/-. Each holder of equity share is entitled to one vote per share. The company declares and pays dividend 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. In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held

NOTE 1

Contingent liabilities - Not provided for in respect of

a) 31st March 2012 (Rs.) 31st March 2011 (Rs.)

Bank Guarantee 32,72,420 2,05,000

Bank guarantees issued by banks on behalf of the company Rs. 34.72 Lacs (Previous Year Rs.2.05 Lacs). These are secured bythe charge created in favour of the company's bankers by way of pledge of Fixed Deposit Receipts.

b) Excise Duty

31st March 2012 (Rs.) 31st March 2011 (Rs.)

Feb 04 to May 05 (Price Difference) 2,47,49,315 2,47,49,315

April 99 to March 04 (Central excise duty) 11,58,94,818 11,58,94,818

April 04 to Nov 04 ( Central excise duty) 1,01,92,867 1,01,92,867

Dec 04 to Sept 05 (Central excise duty) 81,44,105 81,44,105

A) In the earlier year the Company received Show Cause Notice from the Excise Department for the period July 1999 to May 2005 demanding sum of Rs.6,89,27,843/- for Excise Duty on price difference which included Rs. 4,41,78,530/- related to July 1999 to January 2004. As per the order of Customs & Central Excise Settlement Commission dated 06.11.2006 demand for period July 1999 to January 2004 was determined at Rs 3,80,84,939 with simple interest of 10% p.a. from the date the duty was due till it was paid. Aggrieved by the said order the Company filed writ petition on H'ble High Court, Mumbai challenging the calculation of excise duty determined/settled for Rs. 3,80,84,939/-. According to the direction of the H'ble High Court the Settlement Commission, Additional Bench, Mumbai passed an order dated 24th June 2009 and reduced determined/settled excise duty from Rs. 3,80,84,939/- to Rs. 3,34,06,319/-. The company sought review and direction from Settlement Commission regarding credit of payment made by it of Rs. 4,06,24,448/- during the pendency of writ petition and thereafter. Now as per the Settlement Commission order dated 26th July 2011, the duty amount has reached to finality and is settled at Rs. 3,34,06,319/- and it was also clarified the manner of payment and credit to be granted to company.

Thus the proceedings conducted earlier in the case could not reach finality as to the quantum of total duty liability and mode of payment till final order dated 26th July 2011 passed by settlement commission wherein it was also directed to recalculate the interest amount and the manner in which credit for payment is to be availed by the company. Now as per the Settlement Commission order dated 26th July 2011, the duty amount has reached to finality and is settled at Rs. 3,34,06,319/- The Company has paid an aggregate amount of Rs. 4,06,24,448/- during the pendency of writ petition and proceeding thereafter which was debited to general reserve during the financial year ended 31st March 2007 as payment of earlier period and had not claimed as expenses. Since the liability has been finalised during the current year and has been reduced by Rs. 72,18,129/- the said amount is again credited to general reserve account by debiting appropriate excise duty account. Further, with respect to the final liability of Rs. 3,34,06,319/-,. the company should have credited the said amount to General Reserve and debited equal amount to Statement of Profit & Loss but had not done so as a result profit has been over stated to that extent for the year.

For the demand of Rs. 2,47,49,315/- for the period Feb 04 to May 05, the Company has received order in its favour from the CESTAT against the Order passed by the Commissioner of Central Excise & Custom against which the department has filed an civil appeal in Supreme Court for condonation of delay in filling the Petition of appeal.; hence no provision has been made in books of account for Excise duty of Rs 2,47,49,315/-.

B) The Excise department has gone in appeal against the Show Cause Notice decided in favour of Company by Commissioner of Central Excise and Customs (Appeals) for Rs.11,58,94,818/- in respect of Excise Duty on Turpentine & Rosin manufactured (exempted from excise manufactured without aid of power) for the period April 99 to March 04. The Company has further received Show Cause Notice from the Department for the period April 04 to November 04 of Rs. 1,01,92,867/- for which the Company has obtained Stay Order from the CESTAT against the Order passed by the Commissioner against it, hence no provision has been made in books of account. Further show cause notice for the period December 04 to September 05 for Rs 81,44,105/- have been received, and the same is pending before the Commissioner of Central Excise & Custom for adjudication, not provided for in books of account.

The (Other) claim against company not acknowledged as debt is for suite filed in Mumbai High court for Rs 7.65 lac by Mumbai Port Trust and claim for Rs 1.27 lac by Marine Container Service Ltd and Rs0.18 lac by Pacific International Ltd as damages charges for container received through them.

d) Letter of credit issued by the bankers of the company Rs. 26,36,50,194/- (P.Y. Rs. 15,95,45,533/-)

e) In respect of income tax matter: During the year, assessment for AY 2009-10 was completed wherein the assessing officer (AO) has disallowed claim of set off of unabsorbed depreciation of Rs. 22,57,397/-. Aggrieved by the order of AO, the company has preferred an appeal before Commissioner of Income Tax (Appeals) which is not yet heard and hence no provision is made in books.

f) The Company has cleared 19 MT of Pentaery thritol against Bill of Entry No. 616414 dated 20.10.2005. The custom department had asked the Company to pay Rs. 2,16,772/- on account of Anti Dumping Duty for clearance of the said goods as per Notification No. 93/2005 of customs issued on 20.10.2005 wherein the said goods were covered for levy of anti dumping duty imported from certain countries. The Company has deposited the said amount on 25.11.2008 as per CESTAT order No. S/603/WAB/MUM/2008/CSTB/CII dated 20.10.2008, but no provision has been made in books of accounts as the management is of the view that the consignment will not be covered under the notification, as on date of clearance of the goods the notification was not published in Gazette of India.

NOTE 2

Segment reporting

The Company is mainly engaged in the business of Manufacturing of Chemicals. Considering the nature of business and financial reporting of company, the company has only one segment viz "Chemicals" product as reportable segment. The company operates in Local/Export segment geographically of which the exports have amounted to Rs. 1,373.16 Lacs (P.Y.Rs. 2,147.52 lacs) out of Total Turnover of Rs. 22,022.72 Lacs (P.Y.Rs. 19,075.20 lacs). But due to the nature of business, the assets/ liabilities and expenses for these activities cannot be bifurcated separately.

NOTE 3

The Company does not have complete information to determine Micro, Small and Medium Enterprises as specified in Micro, Small and Medium Enterprises Development Act, 2006 hence it is not possible for us to verify the amount due to such enterprises.

NOTE 4

In consonance with the Accounting Standards on Inventory Valuation (AS2) and Guidance Note on Accounting Treatment for Excise issued by The Institute of Chartered Accountants of India, the Company has provided for liability of excise duty payable on finished goods amounting to Rs 60.57 Lacs (Rs. 100.99 Lacs).

NOTE 5

The Company was earlier enjoying the benefit of sales tax deferment under state incentive package scheme as the unit was situated in a state notified backward area. During the earlier period i.e. 1997-98 to 2001-02 the deferred sales tax liability of Rs. 4,23,76,294/- was included in sales and not shown as liability. Therefore the unsecured liability of sales tax deferment as shown in the balance sheet is understated to an extent of Rs. 4,23,76,294/- for which no provision was made and Reserve & Surplus have been overstated to that extent. In current year the company has paid Rs. 1,12,69,801/- (P.Y. Rs. 96,66,695/-) out of the above mentioned deferred sales tax liability which is debited to General Reserve hence reserve & surplus as on 31st March 2012 is now overstated to the extent of Rs. 2,06,99,091 only.

NOTE 6

Pursuant to the approval of the members by way of special resolution passed at the Extra-Ordinary General Meeting of the Company held on 28th December 2009, the Company has allotted 19,42,857 warrants on 25th February 2010. Each warrant carried entitlement to subscribe for one equity share of Rs. 10/- each at a premium of Rs. 8.59/- per share. The subscriber to warrant had paid 25% amount being Rs. 90.29 lacs on application. The holders of the warrants were entitled to exercise the right to apply for Equity Shares in one or more tranches but within 18 months from the date of allotment of Warrants, subject to full payment ofthe exercise price. In the event the proposed allottes does not exercise the right to subscribe to the equity shares within a period of 18 months from the date of allotment of warrants, the amount paid by the proposed allottes shall stand forfeited and the proposed allottes shall not be entitled for refund of the same. Out of the above , 4,31,080 warrants have been converted into equity shares during the year ended 31st March 2011 and full payment have been received by the company from the allottees of the above stated equity shares and listing of the aforesaid 4,31,080 shares is still pending with Bombay Stock Exchange.

NOTE 7

Provision for current taxation is made for the current accounting period (reporting period) on the basis of the taxable profits computed in accordance with Income Tax Act 1961 for relevant assessment year. As per the normal provision of Income Tax Act, 1961, there are no taxable profits and hence tax provision has been made as per provisions of section 115JB of the IT Act, 1961.

NOTE 8

As at March 31, 2012, the company has reviewed the future earnings of all the cash generating units in accordance with the Accounting Standard 28 "Impairment of Assets. As the carrying amount of assets does not exceed the future recoverable amount, consequently, no adjustment to carrying amount of assets is considered necessary by the Management.

NOTE 9

The balance of Sundry Debtors, Sundry Creditors, Loans & Advances and others are as per books and subject to confirmations and reconciliation if any.

NOTE 10

In the opinion of the Board and to the best of their knowledge the value of realization of current assets, loans & advances in the ordinary course of business, would not be less than the amount at which they are stated in the Balance Sheet.

NOTE 11

Till the year ended 31st March 2011, the company was using pre-revised Schedule VI to the Companies Act, 1956, for preparation and presentation of its financial statements. During the year ended 31st March 2012, the revised Schedule VI notified under the Companies Act, 1956 has become applicable to the company. The company has reclassified previous year figures to conform to this year's classification.

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Mar 31, 2011

1] CONTINGENT LIABILITIES-Not provided for in respect of

Current Year Previous Year (Rs.) (Rs.)

Bank Guarantee 2,05,000 1,05,000

Bank Guarantees issued by Banks on behalf of the company Rs. 2.05 Lacs (Previous Year Rs.1.05 Lacs). These are secured by the charge created in favour of the company's bankers byway of pledge of Fixed Deposit Receipts.

d) Letter of credit issued by the bankers of the company Rs. 15,95,45,533/- (P.Y. Rs. 16,29,63,915/-)

e) The Company has cleared 19 MT of Pentaerythritol against Bill of Entry No. 616414 dated 20.10.2005. The custom department had asked the Company to pay Rs. 2,16,772/- on account of Anti Dumping Duty for clearance of the said goods as per Notification No. 93/2005 of customs issued on 20.10.2005 wherein the said goods were covered for levy of anti dumping duty imported from certain countries. The Company has deposited the said amount on 25.11.2008 as per CESTAT order No. S/603/WAB/MUM/2008/CSTB/CII dated 20.10.2008, but no provision has been made in books of accounts as the management is of the view that the consignment will not be covered under the notification, as on date of clearance of the goods the notification was not published in Gazette of India.

3] Additional information pursuant to the provisions of paragraphs 3,4C and 4D of Part-ll of Schedule-VI to the Companies Act, 1956. (As per Annexure Attached)

4] The balance of Sundry Debtors, Sundry Creditors, Loans & Advances and others are as per books and subject to confirmations and reconciliation if any.

5] In the opinion of the Board and to the best of their krtowledge the value of realization of current assets, loans & advances in the ordinary course of business, would not be less than the amount at which they are stated in the Balance Sheet.

6] EXCISE & CUSTOM DUTY

A) The Company had received Show Cause Notice from the Excise Department for the period July 1999 to May 2005 of Rs.6,89,27,843/- for Excise Duty on price difference. Out of the said show cause, the demand in relation to July 1999 to January 2004 was Rs. 4,41,78,530/-. The Company had filed application with the Office of Customs & Central Excise Settlement Commission for such demand of Rs. 4,41,78,S30/-, which had passed an Final Order on 06.11.2006 confirming Demand of Rs 3,80,84,939 with simple interest of 10% p.a after the date the duty was due till it was paid. The Company has paid an aggregate amount of Rs.3,80,84,936/- and furthers an amount of Rs.25,39,508 toward Interest against the Interest demand of Rs. 1,89,31,646/-. The Company filed writ petition on Honorable High Court challenging the calculation of excise duty settled to Rs. 3,80,84,939/-. According to the direction of the Honorable High Court the Settlement Commission, Additional Bench, Mumbai passed an order dated 24* June 2009 and the settled excise duty was reduced from Rs. 3,80,84,939/- to Rs. 3,34,06,319/-. For the demand of Rs. 2,47,49,315/- for the period Feb 04 to May 05, the Company has received order in its favour from the CESTAT against the Order passed by the Commissioner of Central Excise & Custom against which the department has filed an civil appeal in Supreme Court for condonation of delay in filling the Petition of appeal.; hence no provision has been made in books of account for Excise duty of Rs 2,47,49,315/- & Interest liability of Rs 1,63,92,138/-

B) The Excise department has gone in appeal against the Show Cause Notice decided in favour of Company by Commissioner of Central Excise and Customs (Appeals) for Rs.11,58,94,818/- in respect of Excise Duty on Turpentine & Rosin manufactured (exempted from excise manufactured without aid of power) for the period April 99 to March 04. The Company has further received Show Cause Notice from the Department for the period April 04 to November 04 of Rs. 1,01,92,867/- for which the Company has obtained Stay Order from the' CESTAT against the Order passed by the Commissioner against it, hence no provision has been made in books of account. Further show cause notice for the period December 04 to September 05 for Rs 81,44,105/- have been received, and the same is pending before the Commissioner of Central Excise & Custom for adjudication, not provided for in books of account.

9] SEGMENT REPORTING

The Company is mainly engaged in the business of Manufacturing of Chemicals. Considering the nature of business and financial reporting of company, the company has only one segment viz "Chemicals" product as reportable segment. The company operates in Local/Export segment geographically of which the exports have amounted to Rs. 2,147.52 Lacs (P.Y.Rs. 819.14 lacs) out of Total Turnover of Rs. 19,075.20 Lacs (P.Y. Rs. 14,582.99 lacs). But due to the nature of business, the assets/ liabilities and expenses for these activities cannot be bifurcated separately.

10] The Company does not have complete information to determine Micro, Small and Medium Enterprises as specified in Micro, Small and Medium Enterprises Development Act, 2006 hence it is not possible for us to verify the amount due to such enterprises.

11] In consonance with the Accounting Standards on Inventory Valuation (AS2) and Guidance Note on Accounting Treatment for Excise issued by The Institute of Chartered Accountants of India, the Company has provided for liability of Excise duty payable on finished goods amounting to Rs 100.99 Lacs (Rs. 13.36 Lacs).

12] The Company was earlier enjoying the benefit of sales tax deferement under state incentive package scheme as the unit was situated in a state notified backward area. During the earlier period i.e. 1997-98 to 2001-02 the deferred sales tax liability of Rs. 4,23,76,294/- was included in sales and not shown as liability. Therefore the unsecured liability of sales tax deferement as shown in the balance sheet is understated to an extent of Rs. 4,23,76,294/- for which no provision was made and Reserve & Surplus have been overstated to that extent. In current year the company has paid Rs. 96,66,695/- (P.Y. Rs. 7,40,707/-) out of the above mentioned deferred sales tax liability which is debited to General Reserve hence reserve & surplus as on 31st March 2011 is now overstated to the extent of Rs. 3,19,68,892 only.

14] Related parties disclosure as per Accounting Standard 18.

[A] Key Management Personal (KMP) and their Relatives.

Kamalkumar R. Dujodwala Chairman

Pannkaj R. Dujodwala Managing Director

S.CSen Whole Time Director

Mrs. Manisha P. Dujodwala Spouse of Managing Director

Mrs. Alka K Dujodwala Spouse of Chairman

Mrs. Shampa Sen Spouse of whole time Director

[B] Companies/Firm controlled by Directors/Relatives who have the authority and controlling their activities.

Balaji Pine Chemicals Ltd

Speciality Chemicals

Dujodwala Resin & Terpenes Ltd.

Indo-Euro Securities Ltd.

Dujodwala Exports Pvt. Ltd.

Pine Forest & Investment Ltd.

The directors are the key management Personal (KMP) who have the authority and controlling the activities of the Company.

17] Pursuant to the approval of the members by way of special resolution passed at the Extra-Ordinary General Meeting of the Company held on 28th December 2009, the Company has allotted 19,42,857 warrants on 25th February 2010. Each warrant carries entitlement to subscribe for one equity share of Rs. 10/- each at a premium of Rs. 8.59/- per share. The subscriber to warrant has paid 25% amount being Rs. 90.29 lacs on application. The holders of the warrants would be entitled to exercise the right to apply for Equity Shares in one or more tranches but within 18 months from the date of allotment of Warrants, subject to full payment of the exercise price. In the event the proposed allottees does not exercise the right to subscribe to the equity shares within a period of 18 months from the date of allotment of warrants, the amount paid by the proposed allottees shall stand forfeited and the proposed allottees shall not be entitled for refund of the same. Out of the above, 4,31,080 warrants have been converted into equity shares during the year and full payment have been received by the company from the allottees of the above stated equity shares.

18] As at March 31,2011, the Company has reviewed the future earnings of all the cash generating units in accordance with the Accounting Standard 28 "Impairment of Assets. As the carrying amount of assets does not exceed the future recoverable amount, consequently, no. adjustment to carrying amount of assets is considered necessary by the Management.

19] Previous year's figures have been rearranged/ regrouped wherever found necessary.

20] The balance sheet abstract and company general balance sheet profile as required by part IV of schedule VI to the Companies Act, 1956 are given in the Annexure.

---

Mar 31, 2010

2] CONTINGENT LIABILITIES - Not provided for in respect of

a)

Current Year (Rs.) Previous Year (Rs.)

Bank Guarantee 1,05,000 1,05,000

Bank Guarantees issued by Banks on behalf of the company Rs. 1.05 Lacs, (Previous Year Rs.1.05 Lacs). These are secured by the charge created in favour of the companys bankers by way of pledge of Fixed Deposit Receipts.

The (Other) claim against company not acknowledged as debt is for suite filed in Mumbai High court for Rs 7.65 lac by Mumbai Port Trust and claim for Rs 1.27 lac by Marine Container Service Ltd. and Rs 0.18 lac by Pacific International Ltd. as damages charges for container received through them.

b) Letter of credit issued by the bankers of the company Rs. 16,29,63,915/-

c) The Company has cleared 19 MT of "Pentaerythritol" against Bill of Entry No. 616141 dated 20.10.2005. The custom department has asked the company to pay Rs. 216772/- on account of Anti Dumping Duty for clearance of the said goods as per Notification No. 93/2005 of customs issued on 20.10.2005. Wherein the said goods were covered ,for levy of anti dumping duty imported from certain countries. The Company has deposited the said amount on 25.11.2008 as per CESTAT Order No.S/603A/VAB/MUM/2008/CSTB/CII dated 20.10.2008, but no provision has been made in books of accounts as the management is of the view that the consignment will not be covered under the notification as on the date of clearance of the goods, as the notification was not published in Gazette of India.

2] Additional information pursuant to the provisions of paragraphs 3, 4C and 4D of Part-ll of Schedule-VI to the Companies Act, 1956. (As per Annexure Attached)

3] The balance of Sundry Debtors, Sundry Creditors, Loans & Advances and others are as per books and subject to confirmations and reconciliation if any.

4] In the opinion of the Board and to the best of their knowledge the value of realization of current assets, loans & advances in the ordinary course of business, would not be less than the amount at which they are stated in the Balance Sheet.

5] EXCISE & CUSTOM DUTY

a) The Company had received Show Cause Notice from the Excise Department for the period July 1999 to May 2005 of Rs.6,89,27,843/- for Excise Duty on price difference. Out of the said show cause, the demand in relation to July 1999 to January 2004 was Rs. 4,41,78,530/-. The Company had filed application with the Office of Customs & Central Excise Settlement Commission for such demand of Rs. 4,41,78,530/-, which had passed an Final Order on 06.11.2006 confirming Demand of Rs 3,80,84,939 with simple interest of 10% p.a after the date the duty was due till it was paid. The Company has paid an aggregate amount of Rs.3,80,84,936/- and furthar amount of Rs 25,30,500 toward interst against the demand of Rs. 1,89,31 .646. The Company and with on Honornble High Court chalaging the calculation of excise duty settled to Rs. 3,80,84,939/-. According to the direction of the Honorable High Court the Settlement Commission, Additional Bench, Mumbai passed an order dated 24th June 2009 and the settled excise duty was reduced from Rs. 3,80,84,939/- to Rs. 3,34,06,319/-. For the demand of Rs. 2,47,49,315/- for the period Feb 04 to May 05, the Company has received order in its favour from the CESTAT against the Order passed by the Commissioner of Central Excise & Custom against which the department has filed an civil appeal in Supreme Court for condonation of delay in filling the Petition of appeal.; hence no provision has been made in books of account for Excise duty of Rs 2,47,49,315/- & Interest liability of Rs 1,63,92,138/-

b) The Excise department has gone in appeal against the Show Cause Notice decided in favour of Company for Rs.11,58,94,818/- in respect of Excise Duty on Turpentine & Rosin manufactured (exempted from excise manufactured without aid of power) for the period April 99 to March 04. The Company has further received Show Cause Notice from the Department for the period April 04 to November 04 of Rs. 1,01,92,867/- for which the Company has obtained Stay Order from the CESTAT against the Order passed by the Commissioner against it, hence no provision has been made in books of account. Further show cause notice for the period.

December 04 to September 05 for Rs 81,44,105/- have been received, and the same is pending before the - Commissioner of Central Excise & Custom for adjudication, not provided for in books of account.

9] SEGMENT REPORTING

The Company is mainly engaged in the business of Manufacturing of Chemicals. Considering the nature of business and financial reporting of company, the company has only one segment viz "Chemicals" product as reportable segment. The company operates in Local/Export segment geographically of which the exports have amounted to Rs. 819.14 lacs out of Total Turnover of Rs.14,582.99 lacs. But due to the nature of business, the assets/ liabilities and expenses for these activities cannot be bifurcated separately.

6] The Company does not have complete information to determine Micro, Small and Medium Enterprises as specified in Micro, Small and Medium Enterprises Development Act, 2006 hence it is not possible for us to verify the amount due to such enterprises.

7] In consonance with the Accounting Standards on Inventory Valuation (AS2) and Guidance Note on Accounting Treatment for Excise issued by The Institute of Chartered Accountants of India, the Company has provided for liability of Excise duty payable on finished goods amount to Rs. 13.36 Lacs.

8] The Company was earlier enjoying the benefit of sales tax deferement under state incentive package scheme as the unit was situated in a state notified backward area. During the earlier period i.e. 1997-98 to 2001-02 the deferred sales tax liability was included in sales and not shown as liability. Therefore the unsecured liability of sales tax deferement as shown in the balance sheet is understated to an extent of Rs. 4,23,76,294 /- for which no provision has been made and Reserve & Surplus have been overstated to that extent. In current year the company has paid Rs. 7,40,707/- out of the above mentioned deferred sales tax liability which is debited to General Reserve hence reserve & surplus as on 31st March 2010 is now overstated to the extent of Rs. 4,16,35,587 only.

9} Related parties disclosure as per Accounting Standard 18.

[B] Companies/Firm controlled by Directors/Relatives who have the authority controlling their activities.

- Sterling Products - Balaji Pine Chemicals Ltd. - Speciality Chemicals

- Dujodwala Resin & Terpenes Ltd.. - Indo-Euro Securities Ltd.

The directors are the key management Personal (KMP) who have the authority and controlling the Activities of the Company.

10] In accordance with Accounting Standard 22 - "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India deferred tax assets on account of timing difference for current year is Rs.25.34 Lacs (Previous year Rs. 29.63 Lacs is charged to Profit & Loss Account). The significant component and classification of deferred tax assets and liabilities on account of timing difference are as under: -

11] Disclosure in accordance with Revised AS -15 on "Employee Benefits"

The Company has classified the various benefits provided to employees as under:-

12] Pursuant to the approval of the members by way of special resolution passed at the Extra-Ordinary General Meeting of the Company held on 28th December 2009, the Company has allotted 19,42,85i warrants on 25th February 2010. Each warrant carries entitlement to subscribe for one equity share o Rs. 10/- each at a premium of Rs. 8.59/- per share. The subscriber to warrant has paid 25% amoun being Rs. 90.29 lacs on application. The holders of the warrants would be entitled to exercise the right to apply for Equity Shares in one or more tranches but within 18 months from the date o allotment of Warrants, subject to full payment of the exercise price. In the event the proposed allottes does not exercise the right to subscribe to the equity shares within a period of 18 months from the date of allotment of warrants, the amount paid by the proposed allottes shall stand forfeited and the proposed allottes shall not be entitled for refund of the same.

13] Previous years figures have been rearranged/ regrouped wherever found necessary.

14] The balance sheet abstract and company general balance sheet profile as required by part - IV o schedule - VI to the Companies Act, 1956 aregiven in the Annexure.