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Notes to Accounts of Meghmani Organics Ltd.

Mar 31, 2017

i Borrowing Cost capitalized during the years. Rs. 77.61 Lakhs (Previous Year Rs. 214.55 Lakhs) to respective Qualifying Assets.

ii The management has technically reviewed the estimated useful life of Plant and Machinery related to Power Generating Unit as 20 years which is different from those prescribed under Part C of Schedule II to the Companies Act 2013.

I Borrowing Cost capitalized during the year Rs.214.55 Lakhs (Previous Year Rs. 42.65 Lakhs) to respective Qualifying Assets.

ii The management has technically reviewed the estimated useful life of Plant and Machinery related to Power Generating Unit as 20 years which is different from those prescribed under Part C of Schedule II to the Companies Act 2013.

I The Company has availed deemed cost exemption in relation to Property, Plant and Equipment on the date of transition i.e. 1st April 2015 and hence net block carrying amount has been considered as the gross block carrying amount on that date. Refer Note 2a for the gross book value and accumulated depreciation as on 1st April 2015 under Previous GAAP.

ii Borrowing Cost capitalized @ effective rate of Interest of 10.50% during the year Rs. 42.65 Lakhs to respective Qualifying Assets.

iii The management has technically reviewed the estimated useful life of Plant and Machinery related to Power Generating Unit as 20 years which is different from those prescribed under Part C of Schedule II to the Companies Act 2013.

i The Company had made assessment of investment in its Subsidiary Latasha Exports Limited and Meghmani Europe BVBA (Wholly Owned) and taken into account the past business performances and prevailing condition and as a matter of prudence has written off diminution in carrying value of investments of Rs.600.00 Lakhs and Rs.811.44 Lakhs as on 1st April 2015 and 31st March 2016 respectively.

Term Deposit held as margin money Rs.7.81 Lakhs (Previous Year as at 31st March 2016 Rs.6.73 Lakhs and as at 1st April 2015 Rs.6.79 Lakhs) that are restricted for use pertains to lien against Bank Guarantee with State Bank of India.

Notes-

i For Method of Valuation of Inventories refer Note No. 1.10

ii Stock of Finished Goods includes Excise Duty of Rs.737.00 Lakhs (Previous Year Rs.1147.76 Lakhs)

Notes-

i Trade Receivables exceeding six months includes Rs.128.41 Lakhs as at 31st March 2017(Previous Year as at 31st March 2016 Rs.142.77 Lakhs and as at 1st April 2015 Rs. 281.26 Lakhs) due from Subsidiary Company and Rs.15.95 Lakhs as at 31st March 2017 (Previous Year as at 31st March 2016 Rs.10.19 Lakhs and as at 1st April 2015 '' Nil) due from firm or a Company in which some of the Directors are interested.

ii Trade Receivables Others Includes Rs.1011.54 Lakhs as at 31st March 2017(Previous Year as at 31st March 2016 Rs. 2316.27 Lakhs and as at 1st April 2015 Rs. 4280.39 Lakhs) due from Subsidiary Company and Rs.447.15 Lakhs as at 31st March 2017 (Previous Year as at 31st March 2016 Rs.538.74 Lakhs and as at 1st April 2015 Rs.78.62 Lakhs) due from firm or a Company in which some of the Directors are interested.

iii The Company has called for balance confirmation of Trade Receivables on random basis. Out of which the Company has received response from some of the parties, which are subject to reconciliation with Company’s account. The other balances of Trade Receivables are subject to confirmation.

iv Refer Note No - 39 for information about Credit Risk and Market Risk of Trade Receivables.

i Fixed Deposit with banks which is held as Margin Money or Security, Guarantee etc Rs.37.34 Lakhs as at 31st March 2017 (Previous Year as at 31st March 2016 Rs.34.74 Lakhs and as at 1st April 2015 Rs.32.15 Lakhs) and Fixed Deposit Rs.753.03 Lakhs as at 31st March 2017 (Previous Year as at 31st March 2016 Rs.751.51 Lakhs and as at 1st April 2015 Rs.773.41 Lakhs) as lien against Borrowings with Standard Chartered Bank.

ii The Current Account balance includes unpaid dividend of Rs.23.01 Lakhs as at 31st March 2017 (Previous Year as at 31st March 2016 Rs.44.71 Lakhs and as at 1st April 2015 Rs.35.58 Lakhs) which have been kept in separate earmarked accounts and no transactions except for the stated purpose are done through such accounts.

Note

The Company had made assessment of Loan given to its Subsidiary PT Meghmani Organics Indonesia (Wholly Owned) and taken into account the past business performances and prevailing condition and as a matter of prudence has written off carrying value of Loan of Rs.413.42 Lakhs as on 31st March 2017 as an impairment loss.

The Company has only one class of Equity Shares having face value of Re 1/- per share. Each Equity Shareholder has one voting right. All Equity Shareholders have equal dividend rights in proportion to their shareholding.

The Company has paid Interim dividend of Rs.Nil Per Equity Share amounting to Rs.Nil (Previous Year Interim dividend of Rs.0.30 per Equity Share was paid amounting to Rs.762.94 Lakhs on 25,43,14,211 Equity Shares of Re 1/- each. The Interim Dividend was considered as Final Dividend.)

Refer Note No - 39 For Liquidity Risk Details of Security and Repayment Terms :

i Rupee Term Loan facility of Rs.3000 Lakhs from HDFC Bank, Nr. Mithakhali Cross Road, Ahmedabad. The facility is Secured by First Pari Passu charge with ICICI Bank Limited on moveable and immoveable fixed assets held at Z-31 and Z-32, Dahej SEZ Limited, Dahej, Taluka Vagra, District Bharuch and repayable in 20 Quarterly installments of Rs.1500 Lakhs each commencing from 30th April, 2016 and interest @ base rate plus 1.75% per annum with monthly rests. At present interst rate is 9.65% with moratorium of 2 years.

ii Rupee Term Loan facility of Rs. 4500 Lakhs from ICICI Bank Limited, JMC House, Ambawadi, Ahmedabad. The facility is Secured by First Pari Passu charge with HDFC Bank on moveable and immoveable fixed assets held at Z-31 and Z-32, Dahej SEZ Limited, Dahej, Taluka Vagra, District Bharuch and repayable in 24 Quarterly installments of Rs.187.50 Lakhs each commencing from 30th June, 2016 and interest @ base rate plus 2.10% per annum with monthly rests. At present interst rate is 12.10% with moratorium of 2 years. The Company has prepaid the said Term Loan on 29th December, 2015.

iii Rupee Term Loan facility of Rs.6500 Lakhs from Yes Bank Limited 4th Floor, Nehru Centre, Discovery of India Bldg, Dr. A. B. Road, Worli, Mumbai- 400018. The facility is secured by exclusive charge on leasehold admeasuring 50,000 Square Meter bearing Plot No. CH-1 2/A GIDC Industrial Estate Dahej, Taluka Vagra, District Bharuch, with all the buildings and structures standing thereon and all Plants, Machineries, Fixtures and Fittings attached to the earth and or permanently fastened to earth pertaining to Company''s unit at Plot No. CH-1 2/A GIDC Dahej and repayable in 20 Equal Quarterly Installments of Rs.325 Lakhs starting after a moratorium period of 1 year from the date of disbursement i.e. from 02.10.2015 The current applicable interest rate is 9.90% p.a.

The Company has prepaid the said Term Loan on 7th December, 2015.

iv The Term Loan facility of Rs.10675 Lakhs from State Bank of India, Corporate Accounts Group Branch, 58, Shrimali Society, Ahmedabad, is secured by Agreement of Hypothecation of Goods and Assets dated 30.11.2015. The facility is secured by first charge on all the Company''s movable fixed assets at (a) Agro Division III Plant at Plot No. CH 1 2/A, GIDC Dahej, Taluka Vagra, District-Bharuch 392130 and (b) Pigment Blue Division at Plot No. Z-31, Z-32, Dahej SEZ Limited, Dahej, Taluka Vagra, District Bharuch The current effective rate is 9.90% p. a. on floating basis with monthly rests. The Term Loan will be repaid in 26 quarterly installments starting from 31st December, 2015 and on 31st March, 2022. The details are as under.

1 Two Quarterly installments of Rs.325 Lakhs each starting from 31.12.2015

2 Seventeen Quarterly installments of Rs.512.50 Lakhs each starting from 30.06.2016

3 Seven Quarterly installments of Rs.187.50 Lakhs each starting from 30.09.2020

v. Rupee Term Loan facility of Rs.6500.00 Lacs from Yes Bank Limited 4th Floor, Nehru Centre, Discovery of India Bldg, Dr. A. B. Road, Worli, Mumbai- 400018. The facility is secured by exclusive charge on leasehold admeasuring 50,000 Square Meter bearing Plot No. CH-1 2/A GIDC Industrial Estate Dahej, Taluka Vagra, District Bharuch, with all the buildings and structures standing thereon and all plants, machineries, fixtures and fittings attached to the earth and or permanently fasted to earth pertaining to Company''s unit at Plot No. CH-1 2/A GIDC and repayable in 20 equal quarterly installments of Rs.325.00 Lacs starting after a moratorium period of 1 year from the date of disbursement i.e. from 02.10.2015 The current applicable interest rate is 11.75% p.a.The Company has Prepaid the said Term Loan on 30th November 2015.

i The interest rate on Working Capital facilities from State Bank of India, HDFC Bank Limited, Standard Chartered Bank and ICICI Bank Limited (Collectively known as Consortium Bankers) varies within the range of 8.15% to 10.45% (both inclusive) and are secured by :-

(a) First Pari Passu charge created on 9th October, 2003 for Rs.7945 Lakhs was further extended on 28th May 2005 for Rs.15535 Lakhs, on 23rd January, 2007 for Rs.21865 Lakhs and on 28th August, 2009 for Rs.34308 Lakhs in favour of State Bank of India and its Consortium Banks by way of hypothecation of the entire stock of raw materials, work in process, finished goods, stores and spares and receivables. The present consortium is lead by State Bank of India.

(b) First Pari Passu charge on immovable fixed assets to State Bank of India and its consortium bank as collateral security for the working capital facilities of Rs.34308 Lakhs. The present consortium is lead by State Bank of India.

(c) The indenture of the mortgage created on immovable properties are located at :

(i) Plot No. 168,180,183 and 184 of GIDC Industrial Estate Vatva, Ahmedabad.

(ii) Block No. 402,403,404 and 452 at Village Chharodi, Taluka Sanand, District Ahmedabad.

(iii) Plot No. 21 & 21/1 of GIDC Industrial Estate Panoli, Taluka Ankleshwar, Bharuch.

(iv) Plot No.5001/B of GIDC Industrial Estate, Ankleshwar, Bharuch.

ii HDFC Bank Limited short term Unsecured loan of Rs.1000 Lakhs has been paid by the Company on 11.05 2015.

i The Company has called for balance confirmation of Creditors on random basis. Out of which the Company has received response from some of the parties, which are subject to reconciliation with Company’s account. The other balances of Creditors are subject to confirmation.

ii The Company has received certain intimation from “Suppliers” regarding their status under the Micro, Small and Medium Enterprises Development Act,2006 (MSMED) and accordingly the Company has provided for interest of Rs.259.99 Lakhs (Previous Year Rs.213.41 Lakhs) being payable as required under the said Act.

iii The Company has reversed Interest Accrued and remaining unpaid for a period exceeding 3 years at the end of accounting year. Accordingly the Company has reversed Rs.41.93 Lakhs (Previous Year Rs.Nil)

iv Trade Payable includes amount due to Related Parties Rs.1579.56 Lakhs as at 31st March 2017(Previous Year as at 31st March 2016 Rs.1606.60 Lakhs and as at 1st April 2015 Rs.443.69 Lakhs)

Details of Security and Repayment Terms :

(i) Redemption of 10.40 % Non Convertible Debentures of Rs.5000 Lakhs redeemed on 12.10.2015

(ii) There is no amount outstanding in respect of Unpaid Dividend to be transferred to Investor Education & Protection Fund Under Section 125 of the Companies Act, 2013.

i Excise Duty Expenses includes Rs.410.76 Lakhs being decrease (Previous Year Rs.311.18 Lakhs increase) pertains to variation in opening and closing stock of finished goods.

ii The Company has operating lease from various premises which are renewable on a periodic basis and cancellable at its option. Rental expenses for operating leases charged to Statement of Profit and Loss for the year Rs.188.69 Lakhs (Previous Year: Rs.67.89 Lakhs) pretains to not later than 1 year.

iii Other Administration expenses Includes Rs.413.42 Lakhs being Impairment Loss written off Pertaining to Loan due from a Subsidiary Company - PT Meghmani Organics Indonesia.

iv Corporate Social Responsibility Expenditure - spent during the year is Rs.87.98 Lakhs (Previous Year Rs.85.00 Lakhs)

Details of Corporate Social Responsibility (CSR Expenditure)

Exceptional Item during the year pertains to estimated loss occured due to fire at Plot No. Z31, Z32, Dahej SEZ Limited, Dahej, Bharuch, Gujarat, (India). The Company has All Risk Insurance Policy (including Loss of Profit Policy) and is fully covered for insurance claim. The Surveyor is assessing the claim. (Previous Year Exceptional Item consists of Diminution of investment in Subsidiary Meghmani Europe BVBA (Refer Note - 3)

B CAPITAL COMMITMENTS

The estimated amount of contracts remaining to be executed on capital accounts of Rs.369.41 Lakhs as at 31st March 2017 (Previous Year: as at 31st March 2016 Rs.170.50 Lakhs and as at 1st April 2015 Rs.119.75 Lakhs) is not provided for.

4. EMPLOYEE BENEFITS OBLIGATIONS

(a) Retirement Benefits

As per Ind AS 19 the Company has recognized “Employees Benefits” ,in the financial statements in respect of Employee Benefits Schemes as per Actuarial Valuation as on 31st March 2017

(B) Defined Contribution Plans

Amount recognized as expenses on account of “Contribution / Provision to and for Provident and other Funds” of Statement of Profit and Loss - Rs.149.31 Lakhs (Previous year Rs.135.18 Lakhs)

5. SEGMENT REPORTING

As per Management Chief Operating Decision Maker (CODM) for purpose of resource allocation and assessment of segment performance focuses on, two major operating divisions - Pigments and Agro Chemicals. These divisions are the basis on which the Company reports its primary segment information.

Principal activities are as follows:

Pigment Business

Manufacture and Sales of Phthalocynine Green 7, Copper Pthalocynine Blue (CPC), Alpha Blue and Beta Blue.

Agrochemicals Business

Manufacture and Sales of Technical, Intermediates, Formulations of Insecticides and Herbicides.

( a ) Analysis By Business Segment Segment Revenue and Expense:

Segment Revenue and Expense are the operating revenue and expense reported in the Company’s Statement of Profit and Loss that are directly attributable to a segment and the relevant portion of such revenue and expense that can be allocated on a reasonable basis to a segment.

Segment Assets and Liabilities:

Segment Assets include all operating assets used by a segment and consist principally of operating receivables, inventories and property, plant and equipment, net of allowances and provisions. Capital Expenditure includes the total cost incurred to acquire Property, Plant and Equipment directly attributable to the segment. Segment liabilities include all operating liabilities and consist principally of trade payables and accrued expenses.

Inter-segment transfers:

Segment Revenue and Expenses include transfers between business segments. Inter-segment sales are charged at prevailing market rates. These transfers are eliminated at the Company level.

*Others includes Trading Activity

( b ) Analysis By Geographical Segment Segment Revenue:

Segment revenue is analysed based on the location of customers regardless of where the goods are produced. The following provides an analysis of the Company''s sales by geographical Markets:

( c ) Segment Assets and Capital expenditure :

Segment Assets and Capital expenditure are analysed based on the location of those assets. Capital expenditure includes the total cost incurred to purchase Property, Plant and Equipment.

An analysis of the carrying amount of segment assets and capital expenditure by geographical locations is not presented, as the assets are all located in India.

6. FINANCIAL INSTRUMENTS-FAIR VALUES AND RISK MANAGEMENT

A. Accounting classification and Fair Values

The following table shows the carrying amounts and Fair Values of Financial Assets and Financial Liabilities, including their levels in the Fair Value hierarchy. It does not include Fair Value information for Financial Assets and Financial Liabilities not measured at Fair Value if the carrying amount is a reasonable approximation of Fair Value

“(1) Investment in Subsidiary/Associate carried at amortized cost. Fair Value of financial Assets and Liabilities are measured at Amortized cost is not materially different from the Amortized cost Furthers impact of time value of money is not Significant for the financial instrument classified as current. Accordingly fair value has not been disclosed separately. ”

Types of inputs are as under:

Input Level I (Directly Observable) which includes quoted prices in active markets for identical assets such as quoted price for an Equity Security on Security Exchanges

Input Level II (Indirectly Observable) which includes prices in active markets for similar assets such as quoted price for similar assets in active markets, valuation multiple derived from prices in observed transactions involving similar businesses etc.

Input Level III (Unobservable) which includes management''s own assumptions for arriving at a fair value such as projected cash flows used to value a business etc.

B. Financial Risk Management:-

The Company has exposure to the following risks arising from financial instruments:

-Credit Risk;

-Liquidity Risk; and

- Market Risk

Risk Management framework

The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Company manages market risk through a treasury department, which evaluates and exercises independent control over the entire process of market risk management. The treasury department recommends risk management objectives and policies, which are approved by Board of Directors. The activities of this department include management of cash resources, borrowing strategies, and ensuring compliance with market risk limits and policies.

The Company’s Risk Management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk Management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Audit Committee oversees how management monitors compliance with the Company’s Risk Management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Audit Committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

i. Credit Risk

Credit Risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers and investments in debt securities.

The carrying amount of following Financial Assets represents the maximum credit exposure:

Other Financial Assets

The Company maintains its Cash and Cash equivalents and Bank deposits with banks having good reputation, good past track record and high quality credit rating and also reviews their credit-worthiness on an on-going basis. The derivatives are entered into with bank and financial institution counter parties, which are rated AA- to AA , based on ratings

Trade Receivables

The Sales Department has established a Credit Policy under which each new customer is analysed individually for creditworthiness before the Company’s standard payment and delivery terms and conditions are offered. The Company’s review includes external ratings, if they are available, and in some cases bank references. The Sale limits are established for each customer and reviewed quarterly. Any sales exceeding those limits require approval from the Board of Directors.

Goods are sold subject to retention of title clauses, so that in the event of non-payment the Company may have a secured claim. The Company does not otherwise require collateral in respect of trade and other receivables.

Trade Receivables of the Company are typically unsecured ,except to the extent of the security deposits received from the customers or financial guarantees provided by the market organizers in the business. Credit Risk is managed through credit approvals and periodic monitoring of the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The Company performs ongoing credit evaluations of its customers’ financial condition and monitors the creditworthiness of its customers to which it grants credit terms in the normal course of business. The allowance for impairment of Trade receivables is created to the extent and as and when required, based upon the expected collect ability of accounts receivables. The Company has no concentration of Credit Risk as the customer base is geographically distributed in India.

The Company measures the expected credit loss of trade receivables and loan from individual customers based on historical trend, industry practices and the business environment in which the entity operates. Loss rates are based on actual credit loss experience and past trends. Based on the historical data, as per management perceptions, loss on collection of receivable is not material hence no additional provision considered

The maximum exposure to Credit Risk for Trade Receivables by geographic region was as follows:

Management believes that the unimpaired amounts that are past due by more than 30 days are still collectible in full, based on historical payment behavior and extensive analysis of customer Credit Risk, including underlying customers’ Credit Ratings if they are available.

Management estimates that there are no instances of past due or impaired trade and other receivables.

ii. Liquidity Risk

Liquidity Risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its Financial Liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

Exposure to Liquidity Risk

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include estimated interest payments and exclude the impact of netting agreements.

The gross inflows/(outflows) disclosed in the above table represent the contractual undiscounted Cash Flows relating to derivative financial liabilities held for risk management purposes and which are not usually closed out before contractual maturity. The disclosure shows net cash flow amounts for derivatives that are net cash-settled and gross cash inflow and outflow amounts for derivatives that have simultaneous gross cash settlement.

Excessive Risk Concentration

Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Company’s performance to developments affecting a particular industry

In order to avoid excessive concentrations of risk, the policies and procedures include specific guidelines to focus on the maintenance of a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly. Selective hedging is used within the Group to manage risk concentrations at both the relationship and industry levels Interest Rate Risk

Interest Rate Risk is the risk that the fair value or future Cash Flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s long-term debt obligations with floating interest rates.

Exposure to Interest Rate Risk

The Company’s Interest Rate Risk arises from borrowings obligations. Borrowings issued exposes to fair value interest rate risk. The interest rate profile of the Company’s interest-bearing financial instruments as reported to the management of the Company is as follows:-

Cash Flow Sensitivity Analysis For Variable-Rate Instruments

A reasonably possible change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.

Financial instruments - Fair Values and Risk Management

iii. Market Risk

Market Risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company’s income or the value of its holdings of financial instruments.Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables and long term debt. We are exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and the market value of our investments. Thus, our exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currency. The objective of market risk management is to avoid excessive exposure in our foreign currency revenues and costs.

Currency Risk

The Company is exposed to currency risk on account of its borrowings and other payables in foreign currency. The functional currency of the Company is Indian Rupee. The Company uses forward exchange contracts to hedge its currency risk, most with a maturity of less than one year from the reporting date.

The Company does not use derivative financial instruments for trading or speculative purposes.

Exposure to Currency Risk

The currency profile of Financial Assets and Financial Liabilities with exposure to foreign currency risk at the end of the reporting period expressed in rupees, are as follows

Sensitivity analysis

A reasonably possible strengthening / (weakening) of the Indian Rupee against US dollars at March 31 would have affected the measurement of financial instruments denominated in US dollars and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases.

7. Capital Management

The Company’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return on capital as well as the level of dividends to ordinary shareholders.

The Board of Directors seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position.

The Company monitors capital using a ratio of ‘adjusted net debt’ to ‘adjusted equity’. For this purpose, adjusted net debt is defined as total liabilities, comprising interest-bearing loans and borrowings and obligations under finance leases, less cash and cash equivalents. Adjusted equity comprises all components of equity.

8. Transition to Ind AS:

"These are the Company''s first financial statements prepared in accordance with Ind AS.

The accounting policies set out in note 1 have been applied in preparing the financial statements for the year ended 31st March 2017, the comparative information presented in these financial statements for the year ended 31st March, 2016 and in the preparation of an opening Ind AS Balance Sheet at 1st April, 2015 (the Company’s date of transition).

In preparing its opening Ind AS Balance Sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the Company’s financial position, financial performance and Cash Flows is set out in the following tables and notes”

Exemption applied

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:

Optional exemption

(i) Deemed cost- Fair value of Property, Plant and Equipment (PPE)

The Company has elected to measure all the items of PPE, intangible assets and investment property at its Indian GAAP carrying values which shall be the deemed cost as at the date of transition. As per Frequently Asked Questions (FAQs) issued by Accounting Standards Board (ASB) by Ind AS Transition Facilitation Group of Ind AS (IFRS) Implementation Committee of ICAI, deemed cost, is the amount used as a surrogate for the cost or depreciated cost and for the purpose of subsequent depreciation or amortization, deemed cost becomes the cost as the starting point. Information regarding gross block of assets, accumulated depreciation and provision for impairment under Indian GAAP has been disclosed by way of a note forming part of the financial statements.

(ii) Investments in Subsidiaries, Joint Ventures and Associates

"Under, Ind AS 101 an entity can determine the value of investment in a Subsidiary, Associate or Joint ventures as either of the below:- Cost determined in accordance with Ind AS 27 (i.e. retrospective application of Ind AS 27)- Fair value at the entity’s date of transition to Ind AS- Previous GAAP carrying amount Accordingly, if an entity chooses to measure its investment at fair value at the date of transition then that is deemed to be cost of such investment for the Company and, therefore, it shall carry its investment at that amount (i.e. fair value at the date of transition) after the date of transition. The Company has elected to carry forward the previous GAAP amounts as the deemed cost for investment in equity shares of Subsidiary, Associates and Joint Ventures in the Standalone Financial Statements.”

Mandatory Exemption

(i) Hedge Accounting

The Company uses derivative financial instruments, such as forward currency contracts to hedge its foreign currency risks. Under Indian GAAP, there is no mandatory standard that deals comprehensively with hedge accounting, which has resulted in the adoption of varying practices. The Company has designated various economic hedges and applied economic hedge accounting principles to avoid profit or loss mismatch. All the hedges designated under Indian GAAP are of types which qualify for hedge accounting in accordance with Ind AS 109 also. Moreover, the Company, before the date of transition to Ind AS, has designated a transaction as hedge and also meets all the conditions for hedge accounting in Ind AS 109. Consequently, the Company continues to apply hedge accounting after the date of transition to Ind AS.

(ii) Estimates

On an assessment of the estimates made under Indian GAAP the Company has concluded that there was no necessity to revise the estimates under Ind AS except where estimates were required by Ind AS and not required by Indian GAAP or the basis of measurement were different.

(iii) Classification and Measurement of Financial Assets

Ind AS 101 requires an entity to assess classification and measurement of Financial Assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

Notes to the Reconciliation:

9. Impairment of Investment

The Company has shown investment in Latasha Exports Limited of Rs. 600 Lakhs However, the investments is fully impaired and hence, the Company has provided for the same. As a result of this the net worth of the Company decreased by Rs. 600 Lakhs as on 1st April 2015, with a corresponding impact of the same amount on the value of investment.

10. Interest Accrued but not due

Under Indian GAAP, the Company has invested in fixed deposits with the banks & the interest is accrued on the same at each reporting date. Under Ind AS Fixed Deposits are to be reported at amortized cost with reclassification of interest accrued but not due with fixed deposits. This has resulted in increase of non current financial assets by Rs.15.00 Lakhs Cash and Cash Equivalent by Rs.11.17 Lakhs and other bank balances by Rs.0.70 Lakhs with a corresponding decrease in other current assets as on 1st April 2015. As on 31st March 2016 Other Current Assets increased by Rs.1.51 Lakhs, Cash and cash equivalent increased by Rs.15.22 Lakhs and other bank balances increased by Rs.0.76 Lakhs with resultant decrease in other Current Assets by Rs.17.49 Lakhs

11. Deferral of Sales

Under Ind AS, revenue is recognized on transfer of significant risk and rewards to the customer with the seller retaining no continuing managerial involvement in the goods. This requires careful consideration of the sales delivery terms. On account of this, the sales made on CIF/DDU basis, which were recorded on bill of lading date under IGAAP, have been deferred with the corresponding inventory and sales deferral account being recognized. Also the related cost incurred for freight and ther purposes is to be reversed. This has resulted in increase in inventory by Rs.738,537 Lakhs and 5974.46 Lakhs as on 31st March 2016 and 1st April 2015 respectively. The value of trade receivables decreased by Rs.8564.91 Lakhs and Rs.6654.77 Lakhs as on 31st March 2016 and 1st April 2015 respectively. Due to reversal of related cost the trade paybles have reduced by Rs.210.01 Lakhs and Rs.241.86 Lakhs as on 31st march 2016 and 1st April 2015 respectively. Also Sales for the year ended 31st March 2016 has decreased by Rs.1910.14 Lakhs.

12. Interest bearing Loans and Borrowings

Under Indian GAAP, transaction costs incurred in connection with interest bearing loans and borrowings are amortized upfront and charged to Profit or Loss for the period. Under Ind-AS, transaction costs are included in the initial recognition amount of financial liability and charged to profit or loss using the effective interest method. This has resulted in decrease in long term borrowing by Rs.40.55 Lakhs and Rs.133.03 Lakhs as on 31st March 2016 and 1st April 2015 respectively. Other Current Financial Liabilities decreased by Rs.38.94 Lakhs and Rs.27.42 Lakhs as on 31st March 2016 and 1st April 2015 respectively. Also finance cost for the year ended 31st march 2016 has increased by Rs.46.71 Lakhs.

13. Financial Guarantee Contract

The Company had issued Corporate Guarantee for its subsidiary. Under IGAAP this was disclosed as a contingent liability. Under Ind AS, issuer is required to recognize financial guarentee contract at fair value. As no payment from the subsidiary to the parent are agreed for such a guarantee, the Company has provided the guarantee in its capacity as a shareholder and has accounted for the issuance of the guarantee as a capital contribution to the Subsidiary. As the Company had opted for exemption under Ind AS 101 for value of investment in Subsidiaries, Joint Venture and Associates, there is no impact on the date of transition. For the year ending 31st March 2016, the Company has increased the value of investment in the subsidiary by Rs.34.24 Lakhs with a corresponding decrease in the finance cost.

14. Sale of Goods

Under Indian GAAP, Sale of Goods was presented as net of excise duty. However, under Ind AS, Sale of Goods includes excise duty. Excise duty on Sale of Goods is separately presented on the face of statement of Profit and Loss. Also under Indian GaAp cash incentives given to customer in the form of rebates and discount was accounted as other expense. Under Ind AS these are required to be netted off from revenue. Accordingly the rebates and cash discounts totaling to Rs.874.91 Lakhs has been netted off from revenue. Also Excise duty on Sales of Rs.7105.27 Lakhs is grossed up.

15. Employee Benefits

Under Ind AS, the Company recognizes all remeasurement gains and losses arising from defined benefit plans in Other Comprehensive Income in the period in which they occur. Under Indian GAAP the Company recognized actuarial gains and losses in the statement of profit or loss in the period in which they occur. this has resulted in the increase of employee emoluments by Rs.7.17 Lakhs for the year ended 31st March 2016. Further, this reclassification has no impact on the total comprehensive income for the year ended 31 March 2016 and on Equity as at that date.

16. Other Comprehensive Income

Under Indian GAAP, the Company has not presented Other Comprehensive Income (OCI) separately. Hence, it has reconciled Indian GAAP Profit or Loss to Ind AS Profit or Loss. Further, Indian GAAP Profit or Loss is reconciled to total Comprehensive Income as per Ind AS.

17. Statement of Cash Flows

The transition from Indian GAAP to Ind AS has not had a material impact on the statement of Cash Flows.

18. Deferred Tax

Indian GAAP requires Deferred Tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind-AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind-AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAp. Further, the Company has recognized MAT Credit entitlement as deferred tax assets.


Mar 31, 2016

The Company has only one class of Equity Shares having face value of Rs, 1/– per share. Each Equity shareholder has 1 voting right. All equity shareholders have equal dividend rights in proportion to their Capital.

The Company has paid Interim dividend of Rs, 0.30 Per Equity Share amounting to Rs, 7,62,94,263 on 25,43,14,211 Equity Shares of Rs, 1/– each (Previous Year Interim dividend of Rs, 0.40 per Equity Share was paid amounting to Rs, 10,17,25,684 on 25,43,14,211 Equity Shares of Rs, 1/– each). The Interim dividend is considered as Final Dividend.

Details of Security and Repayment Terms :

i Rupee Term Loan facility of Rs, 30,00,00,000 from HDFC Bank, Nr. Mithakhali Cross Road, Ahmadabad. The facility is Secured by First Pari Passu charge with ICICI Bank Limited on moveable and immoveable fixed assets held at Z–31 and Z–32, Dahej SEZ Limited, Dahej, Taluka Vagra, District Bharuch and repayable in 20 quarterly installments of Rs, 1,50,00,000 each commencing from 30th April, 2016 and interest @ base rate plus 1.75% per annum with monthly rests. At present interst rate is 11.75% with moratorium of 2 years.

ii Rupee Term Loan facility of Rs, 45,00,00,000 from ICICI Bank Limited, JMC House, Ambawadi, Ahmadabad. The facility is Secured by First Pari Passu charge with HDFC Bank on moveable and immoveable fixed assets held at Z–31 and Z–32, Dahej SEZ Limited, Dahej, Taluka Vagra, District Bharuch and repayable in 24 quarterly installments of Rs, 1,87,50,000 each commencing from 30th June, 2016 and interest @ base rate plus 2.10% per annum with monthly rests. At present interest rate is 12.10% with moratorium of 2 years. During the year, the Company has prepaid the loan on 29th December, 2015.

iii Rupee Term Loan facility of Rs. 65,00,00,000 from Yes Bank Limited 4th Floor, Nehru Centre, Discovery of India Bldg, Dr. A. B. Road, Worli, Mumbai– 400018. The facility is secured by exclusive charge on leasehold admeasuring 50,000 Square Meter bearing Plot No. CH–1 2/A GIDC Industrial Estate Dahej, Taluka Vagra, District Bharuch, with all the buildings and structures standing thereon and all plants, machineries, fixtures and fittings attached to the earth and or permanently fastened to earth pertaining to Company''s unit at Plot No. CH–1 2/A GIDC and repayable in 20 equal quarterly installments of Rs, 3,25,00,000 starting after a moratorium period of 1 year from the date of disbursement i.e. from 02.10.2015 The current applicable interest rate is 11.75% p.a. During the year, the Company has prepaid the loan on 07th December, 2015.

iv The Term Loan facility of Rs, 1,06,75,00,000 from State Bank of India, Corporate Accounts Group Branch, 58, Shrimali Society, Ahmadabad, is secured by Agreement of Hypothecation of Goods and Assets dated 30.11.2015. The facility is secured by first charge on all the Company''s movable fixed assets at (a) Agro Division III plant at Plot No. CH-1 2/A, GIDC Dahej, Taluka Vagra, District–Bharuch 392130 and (b) Pigment Blue Division at Plot No. Z–31, Z–32, Dahej SEZ Limited, Dahej, Taluka Vagra, District Bharuch. The current effective rate is 10% p. a. on floating basis with monthly rests. The Term Loan will be repaid in 26 quarterly installments starting from 31st December, 2015 and on 31st March 2022. The details are as under.

1. Two quarterly installments of Rs, 3,25,00,000 each starting from 31.12.2015

2. Seventeen quarterly installments of Rs, 5,12,50,000 each starting from 30.06.2016

3. Seven quarterly installments of Rs, 1,87,50,000 each starting from 30.09.2020

i The interest rate on working capital facilities from State Bank of India, HDFC Bank Limited, Standard Chartered Bank and ICICI Bank Limited (Collectively known as Consortium Bankers) varies within the range of 10.90% to 13.00% (both inclusive) and are secured by :–

(a) First Pari Passu charge created on 9th October, 2003 for Rs, 79.45 Crores was further extended on 28th May 2005 for Rs, 155.35 Crores, on 23rd January, 2007 for Rs, 218.65 Crores and on 28th August, 2009 for Rs, 343.08 Crores in favour of State Bank of India and its Consortium Bank by way of hypothecation of the entire stock of raw materials, work in process, finished goods, stores and spares and receivables. The present consortium is lead by State Bank of India, with ICICI Bank and HDFC Bank.

(b) First Pari Passu charge on immovable fixed assets to State Bank of India and its consortium bank as collateral security for the working capital facilities of Rs, 343.08 Crores. The present consortium is lead by State Bank of India.

(c) The indenture of the mortgage created on immovable properties are located at :

(i) Plot No. 168,180,183 and 184 of GIDC Industrial Estate Vatva, Ahmedabad.

(ii) Block No. 402,403,404 and 452 at Village Chharodi, Taluka Sanand, District Ahmedabad.

(iii) Plot No. 21 & 21/1 of GIDC Industrial Estate Panoli, Taluka Ankleshwar, Bharuch.

(iv) Plot No.5001/B of GIDC Industrial Estate, Ankleshwar, Bharuch.

ii During the year, unsecured outstanding short term loan of Rs, 10,00,00,000 of HDFC Bank Limited has been has paid by the Company on 11.05 2015.

Notes : –

i The Company has called for balance confirmation of Creditors on random basis. Out of which the Company has received response from some of the parties, which are Subject to reconciliation with Company''s account. The other balances of Creditors are subject to confirmation.

ii The Company has received certain intimation from "Suppliers" regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED) and accordingly the Company has provided for interest of Rs, 2,13,40,655 (Previous Year Rs, 1,34,55,997) being payable as required under the said act.

Notes : –

Details of Security and Repayment Terms :

i Secured Non–Convertible Debentures of Rs, Nil (Previous Year Rs, 50,00,00,000) were secured by way of pari passu charge on Mortgage of immovable and movable properties situated at GIDC Vatva, GIDC Panoli, GIDC Ankleshwar and Village Chharodi, Taluka Sanand, District – Ahmedabad.

ii Redemption detail of 10.40 % Non Convertible Debentures Rs, 50,00,00,000

Notes –

i The Advance of Rs, 6,00,00,000 given to Latasha Export Limited has now been treated as Investment. These investments are carried at cost to the Company and are accounted for in accordance with Accounting Standard (AS) 13 Accounting for Investment in the Financial Statement.

ii The Company had made assessment of fair value of investment in its Wholly Owned Subsidiary Meghmani Europe BVBA and taken into account the past business performances and prevailing condition and as a matter of prudence has written off diminution in carrying value of investments of Rs, 8,11,43,713 to the Statement of Profit and Loss as an exceptional item.

i Trade Receivables exceeding six months Includes Rs, 1,42,77,348 (Previous Year: Rs, 2,81,25,729) due from Subsidiary Company and Rs, 10,19,177 (Previous Year : Rs, Nil) due from Firm or a Company in which some of the Directors are interested.

ii Trade Receivables Others Includes Rs, 23,16,26,615 (Previous Year: Rs, 42,80,38,748) due from Subsidiary Company and Rs, 5,38,74,091 (Previous Year: Rs, 78,62,049) due from Firm or a Company in which some of the Directors are interested.

iii The Company has called for balance confirmation of Trade Receivables on random basis. Out of which the Company has received response from some of the parties, which are subject to reconciliation with Company''s account. The other balances of Trade Receivables are subject to confirmation.

Notes

i The Current Account balance includes unpaid dividend of Rs, 22,48,800 (Previous Year Rs, 35,58,190) which have been kept in separate earmarked accounts and no transactions except for the stated purpose are done through such accounts

ii Fixed Deposit with banks is due within one year and held as margin money Rs, 38,69,850 (Previous Year Rs, 32,84,529) and Fixed Deposit Rs, 7,50,00,000 (Previous Year Rs, 7,62,23,438) as lien with Standard Chartered Bank.

Notes

i Excise Duty expenses includes Rs, 3,11,18,068 being increase (Previous Year Rs, 1,47,16,539 decrease) pertains to variation in opening and closing stock of finished goods.

ii The Company has operating lease from various premises which are renewable on a periodic basis and cancellable at its option. Rental expenses for operating leases charged to Statement of Profit and Loss for the year Rs, 67,89,152 (Previous Year: Rs, 81,32,882) pertains to not later than 1 year.

Exceptional Item consists of Diminution of investment in Subsidiary Meghmani Europe BVBA (Refer Note – 12 (i)) Previous Year Exceptional Item consists of Profit on Sale of Land at GIDC Ankleshwar and Loss on Sale of Long term Investment in Subsidiary – Meghmani Energy Limited.

Investment written off includes investment in (i) Joint Venture – Triance Specility Chemicals Private Limited and (ii) Subsidiary – Meghmani Chemtech Limited.

1. EMPLOYEE BENEFITS – AS 15

As per revised Accounting Standard 15 (AS–15) "Employees Benefits" , the Company has recognized in the financial statements in respect of Employee Benefits Schemes as per Actuarial Valuation as on 31st March 2016

(B) Defined Contribution Plans

Amount recognized as expenses on account of "Contribution / Provision to and for Provident and other Funds" of Statement of Profit and Loss Rs,1,35,35,596 (Previous Year Rs, 1,13,01,970)

2. SEGMENT REPORTING

For Management purpose, the Company is currently organized into two major operating divisions – Pigments and Agro Chemicals. These divisions are the basis on which the Company reports its primary segment information.

Principal activities are as follows:

Pigment Business

To Manufacture and Sales of Phthalocynine Green 7, Copper Phthalocynine Blue (CPC), Alpha Blue and Beta Blue.

Agrochemicals Business

To Manufacture and Sales of Technical, Intermediates and Formulations of Insecticides.

(a) Analysis By Business Segment

Segment Revenue and Expense:

Segment revenue and expense are the operating revenue and expense reported in the Company''s Statement of profit and loss that are directly attributable to a segment and the relevant portion of such revenue and expense that can be allocated on a reasonable basis to a segment.

Segment Assets and Liabilities:

Segment assets include all operating assets used by a segment and consist principally of operating receivables, inventories and property, plant and equipment, net of allowances and provisions. Capital Expenditure includes the total cost incurred to acquire property, plant and equipment directly attributable to the segment. Segment liabilities include all operating liabilities and consist principally of trade payables and accrued expenses.

Inter–segment transfers:

Segment revenue and expenses include transfers between business segments. Inter–segment sales are charged at prevailing market rates. These transfers are eliminated at the Company level.

(c) Segment Assets and Capital expenditure :

Segment Assets and Capital expenditure are analyzed based on the location of those assets. Capital expenditure includes the total cost incurred to purchase property, plant and equipment.

An analysis of the carrying amount of segment assets and capital expenditure by geographical locations is not presented, as the assets are all located in India.

3. RELATED PARTIES DISCLOSURES :–

- Holding Company : Nil

- Subsidiaries of the Company : Meghmani Organics USA, Inc.(MOL–USA)

Meghmani Europe BVBA(MOL–EUROPE)

PT Meghmani Organics Indonesia(MOL–INDONESIA)

Meghmani Overseas FZE–Dubai

Meghmani Finechem Limited (MFL)

- Associates : Latasha Exports Limited

- Enterprises in which Key Managerial : Meghmani Pigments

Personnel [KMP] & their relatives have

Ashish Chemicals

significant influence

Tapsheel Enterprise

Meghmani Infrastructures

Meghmani Dyes & Intermediates LLP

Meghmani Industries Limited

Meghmani Chemicals Limited

Vidhi Global Chemicals Limited

Panchratna Corporation

Meghmani LLP

Matangi Industries LLP

Diamond Engineering Co.

Delta Electricals

- Key Managerial Personnel : Mr. Jayanti Patel

Mr. Ashish Soparkar Mr. Natwarlal Patel Mr. Ramesh Patel Mr. Anand Patel

- Relatives of Key Managerial : Ms. Deval Soparkar

Personnel (Employee)

Mr. Karana Patel

Mr. Ankit Patel

Mr. Darshan Patel

Mr. Maulik Patel

Mr. Kaushal Soparkar

- Relative of Key Managerial Personnel : Ms.Taraben Patel

4. DISCLOSURES ON FINANCIAL DERIVATIVES (AS–30)

The Company uses derivative financial instruments such as Forwards, Swaps and Options to hedge its risks associated with foreign exchange fluctuations. The Company uses Interest Rate Swaps specifically to protect against Interest Rate Volatility on the floating rate External Commercial Borrowings (ECBs). It also uses Cross Currency Swaps to protect against foreign currency exchange rate as well as interest rate fluctuations on its foreign currency loans. Swaps and Forwards are also used to hedge the currency risk inherent in the settlement of the liabilities denominated in foreign exchange.

For derivative financial instruments and foreign currency monetary items designated as Cash Flow hedges, the effective portion of the fair value of the derivative financial instruments are recognized in Hedge Reserve and reclassified to Statement of Profit and Loss as per guidance in AS 30. Hedge reserves have been debited to the extent of Rs, 2,27,99,437 during the financial year 2015-16 (credited during financial year 2014-15 Rs, 18,01,86,501). During the financial year 2015–16 Rs, 8,59,49,793 has been recycled from the reserves and debited to the Statement of Profit and Loss (during financial year 2015-16 Reserves was debited to the extent of Rs, 5,61,39,959 and credited to Statement of Profit and Loss).

The ineffective portion of the change in fair value of such instruments is recognized in the Profit and Loss in the period in which they arise. The various cash flows with reference to the hedged items and the hedging instruments are expected to occur over the coming years and are expected to affect the Statement of Profit and Loss Account over the same period of time. If the hedging relationship ceases to be effective or it becomes probable that the expected transaction will no longer occur, hedge accounting is discontinued and the fair value changes arising from the derivative financial instruments are recognized in Statement of Profit and Loss.

In line with the Company''s risk management policy, the various financial risks mainly relating to changes in the exchange rates and interest rates are hedged by using a combination of forward contracts, swaps and other derivative contracts, besides the natural Hedges.

B The estimated amount of contracts remaining to be executed on capital accounts of Rs,1,70,50,232 (Previous Year: Rs, 1,19,74,608) is not provided for.


Mar 31, 2015

(1) Figures in brackets indicate cash outgo.

(2) The previous year figures have been regrouped/restated where ever necessary to conform to this year's classification.

3 EMPLOYEE BENEFITS - AS 15

As per revised Accounting Standard 15 (AS-15) "Employees Benefits" , the Company has recognized in the financial statements in respect of Employee Benefits Schemes as per Actuarial Valuation as on 31st March 2015

(A) Defined Benefit Plans

I. Components of Employer Expenses

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market VI Major Categories of plan assets as a percentage of total plan assets

(A) Defined Contribution Plans

Amount recognised as expenses on account of "Contribution / Provision to and for Provident and other Funds" of Statement of Profit and Loss - Rs. 1,13,01,970/- (Previous year Rs. 85,32,807/-)

31. SEGMENT REPORTING

For Management purpose, the Company is currently organised into two major operating divisions - Pigments and Agro Chemicals. These divisions are the basis on which the Company reports its primary segment information.

Principal activities are as follows:

Pigment Business

To Manufacture and distribute Phthalocynine Green 7, Copper Phthalocynine Blue (CPC), Alpha Blue and Beta Blue. Agrochemicals Business

To Manufacture and sales of Technical, Intermediates and Formulations of Insecticides.

(a) Analysis By Business Segment Segment revenue and expense:

Segment revenue and expense are the operating revenue and expense reported in the Company's Statement of profit and loss that are directly attributable to a segment and the relevant portion of such revenue and expense that can be allocated on a reasonable basis to a segment.

Segment Assets and Liabilities:

Segment assets include all operating assets used by a segment and consist principally of operating receivables, inventories and property, plant and equipment, net of allowances and provisions. Capital Expenditure includes the total cost incurred to acquire property, plant and equipment directly attributable to the segment. Segment liabilities include all operating liabilities and consist principally of trade payables and accrued expenses.

Inter-segment transfers:

Segment revenue and expenses include transfers between business segments. Inter-segment sales are charged at prevailing market rates. These transfers are eliminated at the Company level.

'Others includes trading activity and Power generation (b) Analysis By Geographical Segment Segment Revenue:

Segment revenue is analysed based on the location of customers regardless of where the goods are produced. The following provides an analysis of the Company's sales by geographical Markets:

( c ) Segment Assets and Capital expenditure :

Segment Assets and Capital expenditure are analysed based on the location of those asstes. Capital expenditure includes the total cost incurred to purchase property, plant and equipment.

An analysis of the carrying amount of segment assets and capital expenditure by geographical locations is not presented, as the assets are all located in India.

4 RELATED PARTIES DISCLOSURES :-

- Holding Company : Nil

- Subsidiaries of the company : Meghmani Organics USA, Inc.(MOL-USA) Meghmani Europe BVBA(MOL-EUROPE) PT Meghmani Organics Indonesia (MOL-INDONESIA) Meghmani Overseas FZE-Dubai Meghmani Energy Limited (MEL)* Meghmani Finechem Limited (MFL) Meghmani Chemtech Limited (MCTL)*

- Enterprises in which Key : Meghmani Pigments Managerial Personnel [KMP] & Ashish Chemicals their relatives have significant influence Tapsheel Enterprise Meghmani Infrastructures Meghmani Dyes & Intermediates Pvt Ltd Meghmani Industries Limited Meghmani Chemicals Limited Fidelity Exports Private Limited Vidhi Global Chemicals Limited Vanguard Overseas Limited Panchratna Corporation Meghmani Unichem LLP Matangi Industries Meghmani Industries Limited - SEZ Unit Diamond Engineering Co. Delta Electricals

- Key Managerial Personnel : Mr. Jayanti M Patel Mr. Ashish N Soparkar Mr. Natwarlal M Patel Mr. Ramesh M Patel Mr. Anand I Patel

- Relatives of Key Managerial : Ms. Deval Soparkar Personnel (Employee) Mr. Karana R Patel Mr. Ankit N Patel Mr. Darshan Patel

- Relative of Key Managerial : Taraben J Patel Personnel

- Joint Venture : Trience Speciality Chemicals Private Limited*

Ceased to be subsidiary and joint venture as on 31st March 2015.

5. DISCLOSURES ON FINANCIAL DERIVATIVES (AS-30)

The Company uses derivative financial instruments such as Forwards, Swaps and Options to hedge its risks associated with foreign exchange fluctuations. The Company uses Interest Rate Swaps specifically to protect against Interest Rate Volatility on the floating rate External Commercial Borrowings (ECBs). It also uses Cross Currency Swaps to protect against foreign currency exchange rate as well as interest rate fluctuations on its foreign currency loans. Swaps and Forwards are also used to hedge the currency risk inherent in the settlement of the Liabilities denominated in foreign exchange

For derivative financial instruments and foreign currency monetary items designated as Cash Flow hedges, the effective portion of the fair value of the derivative financial instruments are recognized in Hedge Reserve and reclassified to Statement of Profit and Loss as per guidance in AS 30. Hedge reserves have been credited to the extent of Rs. 18,01,86,501/-during the financial year 2014-15 (Debited during financial year 2013-14Rs.12,82,48,806/-). During the financial year 2014-15Rs.5,61,39,959/-has been recycled from the Reserves and credited to the Statement of Profit and Loss (during financial year 2013-14Rs.9,40,84,074/- was debited to Statement of Profit and Loss).

The ineffective portion of the change in fair value of such instruments is recognised in the Profit and Loss in the period in which they arise. The various cash flows with reference to the hedged items and the hedging instruments are expected to occur over the coming years and are expected to affect the Statement of Profit and loss account over the same period of time. If the hedging relationship ceases to be effective or it becomes probable that the expected transaction will no longer occur, hedge accounting is discontinued and the fair value changes arising from the derivative financial instruments are recognized in Statement of Profit and Loss.

In line with the Company's risk management policy, the various financial risks mainly relating to changes in the exchange rates and interest rates are hedged by using a combination of forward contracts, swaps and other derivative contracts, besides the natural Hedges.

( A ) Particulars of the derivative contracts entered into for hedging purpose outstanding as on reporting date are as under:

6 CONTINGENT LIABILITIES and COMMITMENTS A NOT PROVIDED FOR IN THE ACCOUNTS

PARTICULARS (Figures in Rs) As at As at 31st March 2015 31st March 2014

In respect of Bank Guarantee 12,56,61,282 12,90,18,599

In respect of Letter of Credit 32,65,19,275 22,76,19,135

In respect of Corporate Guarantee 1,05,35,71,375 1,79,08,00,017

Name of Statute Nature of Dues (Figures in Rs) As at 31st As at 31st March 2015 March 2014

Income Tax Act. Income Tax / Penalty for 5,82,12,413 6,45,90,593 Various Financial Year 2000-2001,2002-2003 to 2008-2009

Central Excise Tariff Act. Excise Duty/ Penalty/ Interest 3,87,26,873 3,87,26,873

Service Tax Service Tax/ Penalty/ Interest 3,10,75,189 2,81,86,979

Labour Laws Compensation Claims 1,76,44,659 1,76,65,351

Value Added Tax Input Tax Credit 2,29,13,312 2,29,13,312



Name of Statute Forum where Dispute is pending

Income Tax Act. Commissioner of Income Tax (Appeal) / Income Tax Applicant Tribunal / High Court.

Central Excise Commissioner of Central Excise / Director General Tariff Act. of Central Excise /Audit team of Central Excise / Central Excise Service tax Appellate Tribunal

Service Tax Commissioner of Central Excise / Deputy Commissioner of Central Excise / Central Excise Services Tax Appellate Tribunal

Labour Laws Labour Court

Value Added Tax The Joint Commercial Tax Commissioner Appeal 1



B The estimated amount of contracts remaining to be executed on capital accounts of Rs. 1,19,74,608 (Previous Year: Rs. 4,58,93,008) is not provided for.


Mar 31, 2014

The Company has only one class of Equity Shares having a par value of Rs. 1/- per share. Each equity shareholder has 1 voting right. All equity shareholders have equal dividend rights in proportion to the holding.

The Company has declared dividend of Rs. 0.10 Per Equity share amounting to Rs. 2,54,31,421,On 25,43,14,211 shares of Rs. 1/- each (Previous Year Rs. 0.10/- Per Equity share amounting to Rs. 2,54,31,421 on 25,43,14,211 share of Rs. 1/- each.)

1 LONG TERM BORROWINGS

1 Secured Non-Convertible Debentures of Rs. 100,00,00,000/- are secured by way of pari passu charge on Mortgage of immovable and movable properties situated at GIDC Vatva, GIDC Panoli, GIDC Ankleshwar and Village Chharodi, Taluka Sanand, District - Ahmedabad.

2 External Commercial Borrowing of USD 1,10,00,000 equivalent to Rs. 51,13,90,000 from Standard Chartered Bank, Ahmedabad.The facility is secured by First charge on all the present and future movable fixed assets financed under term loan including moveable fixed assets held at CH-1-2/A. GIDC Dahej,Taluka Vagra, Bharuch and repayable in 13 Quarterly Installment amount of USD 7,85,400 of each & last Instalment of USD 7,89 800 and interest @3 Month LIBOR 2.5%.

3 Rupee Term Loan facility of Rs. 300,000,000 from HDFC Bank, Nr. Mithakhali Cross Road, Ahmedabad. The facility is Secured by First Pari Passu charge with ICICI Bank Limited on moveable and immoveable fixed assets held at Z-31 and Z- 32, Dahej SEZ Limited, Dahej, Taluka Vagra, District Bharuch and repayable in 20 Quarterly installments of INR 15,000,000 each commencing from 30th April, 2016 and interest @ base rate plus 1.75% per annum with monthly rests. At present interest rate is 11.75% with moratorium of 2 years.

4 Rupee Term loan facility of Rs. 450,000,000 from ICICI Bank Limited, JMC House, Ambawadi, Ahmedabad. The facility is Secured by First Pari Passu charge with HDFC Bank on moveable and immoveable fixed assets held at Z-31 and Z-32, Dahej SEZ Limited, Dahej, Taluka Vagra, District Bharuch and repayable in 24 Quarterly installments of INR 18,750,000 each commencing from 30th June, 2016 and interest @ base rate plus 2.10% per annum with monthly rests. At present interst rate is 12.10% with moratorium of 2 years.

i The interest rate on working capital facilities from State Bank of India, HDFC Bank Limited, Standard Chartered Bank and ICICI Bank Limited (Collectively known as Consortium Bankers) varies within the range of 10.90% to 14.00% (both inclusive) and are secured by :- (a) First Pari Passu charge created on 9th October, 2003 for Rs. 79.45 Crore was further extended on 28th May 2005 for Rs. 155.35 Crore, on 23rd January, 2007 for Rs. 218.65 Crore and on 28th August, 2009 for Rs. 343.08 Crore in favour of State Bank of India and its Consortium Bank by way of hypothecation of the entire stock of raw materials, work in process, finished goods, stores and spares and receivables. The present consortium is lead by State Bank of India.

(b) First Pari Passu charge on immovable fixed assets to State Bank of India and its consortium bank as collateral security for the working capital facilities of Rs. 343.08 Crore. The present consortium is lead by State Bank of India.

(c) The indenture of the mortgage created on immovable properties are located at :

(i) Plot No. 168,180,183 and 184 of GIDC Industrial Estate Vatva, Ahmedabad.

(ii) Block No. 402,403,404 and 452 at Village Chharodi, Taluka Sanand, District Ahmedabad.

(iii) Plot No. 21 & 21/1 of GIDC Industrial Estate Panoli, Taluka Ankleshwar.

(iv) Plot No.5001/B of GIDC Industrial Estate, Ankleshwar.

ii Unsecured Short Term loan of Rs. 60,00,00,000 has been sanctioned by HDFC Bank Limited. The outstanding Short Term

Loan as on 31st March, 2014 is Rs. 42,00,00,000 comprising of three short term loans of Rs. 15,00,00,000 Rs. 17,00,00,000 and Rs. 10,00,00,000 for 90 days availed on 13th January, 2014, 24th January, 2014 and 14th February, 2014 respectively, with interest rate ranging from 10.50% per annum to 10.70% per annum.

5 EMPLOYEE BENEFITS - AS 15

As per revised Accounting Standard 15 (AS-15) "Employees Benefits", the Company has recognized in the financial statements in respect of Employee Benefits Schemes as per Actuarial Valuation as on 31st March 2014

(A) Defined Contribution Plans

Amount recognised as expenses on account of "Contribution / Provision to and for Provident and other Funds" of Statement of Profit and Loss - Rs. 85,32,807/- (Previous year Rs. 73,45,584/-)

6. SEGMENT REPORTING

For Management purpose, the Company is currently organised into two major operating divisions – Pigments and Agro Chemicals. These divisions are the basis on which the Company reports its primary segment information.

Principal activities are as follows:

Pigment division

To Manufacture and distribute Phthalocynine Green 7, Copper Phthalocynine Blue (CPC), Alpha Blue and Beta Blue.

Agrochemicals division

To Manufacture and distribute Technical, Intermediates and Formulations of Insecticides.

(a) Analysis By Business Segment

Segment revenue and expense:

Segment revenue and expense are the operating revenue and expense reported in the Company''s Statement of profit and loss that are directly attributable to a segment and the relevant portion of such revenue and expense that can be allocated on a reasonable basis to a segment.

Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consist principally of operating receivables, inventories and property, plant and equipment, net of allowances and provisions. Capital Expenditure includes the total cost incurred to acquire property, plant and equipment directly attributable to the segment. Segment liabilities include all operating liabilities and consist principally of trade payables and accrued expenses.

Inter-segment transfers:

Segment revenue and expenses include transfers between business segments. Inter-segment sales are charged at prevailing market rates. These transfers are eliminated at the Company level.

(c) Segment assets and capital expenditure :

Segment assets and capital expenditure are analysed based on the location of those asstes. Capital expenditure includes the total cost incurred to purchase property, plant and equipment.

An analysis of the carrying amount of segment assets and capital expenditure by geographical locations is not presented, as the assets are all located in India.

7 RELATED PARTIES DISCLOSURES :-

Holding Company : Nil

Subsidiaries of the company :

Meghmani Organics USA, Inc.(MOL-USA)

Meghmani Europe BVBA(MOL-EUROPE)

PT Meghmani Organics Indonesia(MOL-INDONESIA)

Meghmani Overseas FZE-Dubai

Meghmani Energy Limited (MEL)

Meghmani Finechem Limited (MFL)

Meghmani Chemtech Limited (MCTL)

Enterprises in which Key

Managerial Personnel [KMP] & their relatives have significant influence

Meghmani Pigments

Ashish Chemicals

Tapsheel Enterprise

Meghmani Infrastructures

Meghmani Dyes & Intermediates Limited

Meghmani Industries Limited

Meghmani Chemicals Limited

Fidelity Exports Private Limited

Vidhi Global Chemicals Limited

Vanguard Overseas Limited

Panchratna Corporation

Meghmani Unichem LLP

Alpanil Industries

Matangi Industries

Meghmani Industries Limited - SEZ Unit

Key Managerial Personnel

Mr. Jayanti M Patel Mr. Ashish N Soparkar Mr. Natwarlal M Patel Mr. Ramesh M Patel Mr. Anand I Patel

Relatives of Key Managerial Personnel (Employee)

Ms. Deval Soparkar

Mr. Maulik J Patel

Mr. Kaushal Soparkar

Mr. Karana R Patel

Mr. Ankit N Patel

Mr. Darshan Patel

Relatives of Key Managerial Personnel (Consultant)

Mr. K M Patel

Mr. Saurabh Soparkar

Joint Venture

Trience Speciality Chemicals Private Limited

8. DISCLOSURES ON FINANCIAL DERIVATIVES (AS-30)

The Company uses derivative financial instruments such as Forwards, Swaps and Options to hedge its risks associated with foreign exchange fluctuations. The Company uses Interest Rate Swaps specifically to protect against Interest Rate Volatility on the floating rate External Commercial Borrowings (ECBs). It also uses Cross Currency Swaps to protect against foreign currency exchange rate as well as interest rate fluctuations on its foreign currency loans. Swaps and Forwards are also used to hedge the currency risk inherent in the settlement of the Liabilities denominated in foreign exchange.

For derivative financial instruments and foreign currency monetary items designated as Cash Flow hedges, the effective portion of the fair value of the derivative financial instruments are recognized in Hedge Reserve and reclassified to Statement of Profit and Loss as per guidance in AS 30. Hedge Reserves have been debited to the extent of Rs. 12,82,48,806/- during the financial year 2013-14 (during financial year 2012-13 Rs. 4,61,99,399/-). During the financial year 2013-14 Rs. 9,40,84,074/- has been recycled from the reserves and debited to the Statement of Profit and Loss (during financial year 2012-13 Rs. 9,09,20,514/- was credited to Statement of Profit and Loss).

The ineffective portion of the change in fair value of such instruments is recognised in the Profit and Loss in the period in which they arise. During the financial year 2013-14 Rs. NIL (during financial year 2012-13 Rs. NIL) was charged to Profit and Loss being the ineffectiveness portion of the effective hedging instrument. The various cash flows with reference to the hedged items and the hedging instruments are expected to occur over the coming years and are expected to affect the Statement of Profit and Loss Account over the same period of time. If the hedging relationship ceases to be effective or it becomes probable that the expected transaction will no longer occur, hedge accounting is discontinued and the fair value changes arising from the derivative financial instruments are recognized in Statement of Profit and Loss.

In line with the Company''s risk management policy, the various financial risks mainly relating to changes in the exchange rates and interest rates are hedged by using a combination of forward contracts, swaps and other derivative contracts, besides the natural Hedges.

9 CONTINGENT LIABILITIES and COMMITMENTS A NOT PROVIDED FOR IN THE ACCOUNTS

PARTICULARS (Figures in Rs.)

As at As at 31st March 2014 31st March 2013

In respect of Bank Guarantee 129,018,599 113,140,173

In respect of Letter of Credit 227,619,135 57,524,892

In respect of Corporate Guarantee 1,790,800,017 1,878,550,000

B The estimated amount of contracts remaining to be executed on capital accounts of Rs. 4,58,93,008/- (Previous Year: Rs. 11,17,48,008/-) is not provided for.

10 Excise duty Expenses of Rs. 20,81,43,514/- includes Rs. 11,90,23,658/- towards differential excise duty and Rs. 5,49,78,587/- towards Interest there on. During the year Revenue Department recovered the said differential duty on DTA sales for the period 31st January, 2014, along with interest on amount of excise duty.


Mar 31, 2013

1. SEGMENT REPORTING

For management purpose, the Company is currently organized into two major operating divisions - Pigments and Agro Chemicals. These divisions are the basis on which the Company reports its primary segment information.

Principal activities are as follows:

Pigment division : To Manufacture and distribute Phthalocynine Green 7, Copper Phthalocynine Blue (CPC), Alpha Blue and Beta Blue.

Agrochemicals division : To Manufacture and distribute Technical, Intermediates and Formulations of Insecticides.

(a) Analysis By Business Segment Segment revenue and expense:

Segment revenue and expense are the operating revenue and expense reported in the Company''s Statement of profit and loss that are directly attributable to a segment and the relevant portion of such revenue and expense that can be allocated on a reasonable basis to a segment.

Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consist principally of operating receivables, inventories and property, plant and equipment, net of allowances and provisions. Capital Expenditure includes the total cost incurred to acquire property, plant and equipment directly attributable to the segment. Segment liabilities include all operating liabilities and consist principally of trade payables and accrued expenses.

Inter-segment transfers:

Segment revenue and expenses include transfers between business segments. Inter-segment sales are charged at prevailing market rates. These transfers are eliminated at the Company level.

(c) Segment assets and capital expenditure :

Segment assets and capital expenditure are analysed based on the location of those assets. Capital expenditure includes the total cost incurred to purchase property, plant and equipment.

An analysis of the carrying amount of segment assets and capital expenditure by geographical locations is not presented, as the assets are all located in India.

Note - 2 AS-30

DISCLOSURES ON FINANCIAL DERIVATIVES

The Company uses derivative financial instruments such as Forwards, Swaps and Options to hedge its risks associated with foreign exchange fluctuations. The Company uses Interest Rate Swaps specifically to protect against Interest Rate Volatility on the floating rate External Commercial Borrowings (ECBs). It also uses Cross Currency Swaps to protect against foreign currency exchange rate as well as interest rate fluctuations on its foreign currency loans. Swaps and Forwards are also used to hedge the currency risk inherent in the settlement of the Liabilities denominated in foreign exchange.

For derivative financial instruments and foreign currency monetary items designated as Cash Flow hedges, the effective portion of the fair value of the derivative financial instruments are recognized in Hedge Reserve and reclassified to Statement of Profit and Loss as per guidance in AS 30. Hedge reserves have been debited to the extent of Rs. 4,61,99,399/- during the financial year 2012-13 (during financial year 2011-12 Rs. 17,90,51,761). During the financial year 2012-13 Rs. 9,09,20,514/- has been recycled from the reserves and debited to the Statement of Profit and Loss (during financial year 2011-12 Rs. 1,87,01,520 was credited to Statement of Profit and Loss).

The ineffective portion of the change in fair value of such instruments is recognized in the Profit and Loss in the period in which they arise. During the financial year 2012-13 Rs. NIL (during financial year 2011-12 Rs. 59,46,659) was charged to Profit and Loss being the ineffectiveness portion of the effective hedging instrument. The various cash flows with reference to the hedged items and the hedging instruments are expected to occur over the coming years and are expected to affect the Statement of Profit and Loss over the same period of time. If the hedging relationship ceases to be effective or it becomes probable that the expected transaction will no longer occur, hedge accounting is discontinued and the fair value changes arising from the derivative financial instruments are recognized in Statement of Profit and Loss.


Mar 31, 2012

Each equity shareholders has 1 voting right. All equity shareholders have equal rights in proportion to the holding.

The Company has declared dividend Rs. 2,54,31,421 (Previous year Rs. 10,17,25,684 representing 10% (Previous year 40%) Paid up Capital and Rs. 0.10 per share (Previous year Rs. 0.40 per share)

Details of Security and Repayment Terms

1. Secured Non-Convertible Debentures of Rs. 1,000,000,000/- are secured by way of pan passu charge on Mortgage of immoveable properties situated at GIDC Vatva, GIDC Panoli, GIDC Dahej, GIDC Ankleshwar and Village Chharodi, Taluka Sanand, District - Ahmedabad.

2. Redemption detail of 10.4% secured Non Convertible Debenture Rs. 1,000,000,000

3. External Commercial borrowing of USD 11,000,000 equivalent to Rs. 51,13,90,000 from Standard Chartered Bank, Ahmedabad. The facility is secured by First charge on all the present and future Movable Fixed assets financed under term loan including movable fixed assets held at CH-1-2/A, GIDC Dahej, Taluka Varga, Bharuch and repayable in 13 installment of USD 785400 of each and last installment of USD 789,800 and interest @ 3 Month LIBOR 2.5%.

4. The interest rate on working capital facilities from State Bank of India, HDFC Bank Limited and ICICI Bank Limited (Collectively known as consortium Bankers) varies within the range of 10.95% to 14.50% (both inclusive) and are secured by:-

a) First Pan Passu charge created on 25.05.2005 to State Bank of India (with HDFC Bank Limited and ICICI Bank Ltd.) by way of hypothecation of the entire stock of raw material, work in process, finished goods, stores and spares and receivables.

b) First Pan Passu charge on immovable properties to State Bank of India (with HDFC Bank Limited and ICICI Bank Ltd.) as collateral security for the working capital facilities.

c) The indenture of the mortgage created on immovable porperties are located at:

i) Plot No. 168,180,183 and 184 of GIDC Industrial Estate Vatva Ahmedabad;

ii) Block No. 402,403,404 and 404 at Village Chharodi, Taluka Sanand, District Ahmedabad

iii) Plot No. 21 & 21/1 of GIDC Industrial Estate Panoli, Taluka Ankleshwar,

iv) Plot NO. 5001/B of GIDC Industrial Estate, Ankleshwar, 5 Short Term Loan from bank includes Commercial papers Rs. NIL (Previous Year Rs. 200,000,000) having maturity date of 21 April 2011 with an interest rate of 8.95%.

IPO Refund Payable represents share application money received at the time of IPO and pending for refund due to non-traceability of investors. The Company has kept the balance of such money in a separate account with Bank and as informed to statutory authorities no interest thereon is provided.

Provision for Interest-Micro, Small and Medium Enterprises

The Company has received certain intimation from "Suppliers" regarding their status under Micro, Small and Medium Enterprises Development Act, 2006 and accordingly, the company has provided for interest of interest of Rs. 1,393,523 (Previous Year Rs. 509,443) being payable as required under the said act.

As per revised Account in Standard 15(AS-15) "Employees Benefits", the Company has recognized in the financial statements in respects of Employee Benefits Schemes as per Actuarial Valuation as on 31st March, 2012.

1. SEGMENT REPORTING

For management purpose, the Company is currently organised into two major operating divisions - Pigments and Agro Chemicals. These divisions are the basis on which the Company reports its primary segment information. Principal activities are as follows:

Pigments division

To Manufacture and distribute Phthalocynlne Green 7, Copper Phthalocynine Blue (CPC), Alpha Blue and Beta Blue.

Agrochemicals division

To Manufacture and distribute Technical, Intermediates and Formulations of Insecticides.

A. Analysis By Business Segment

Segment revenue and expense:

Segment revenue and expense are the operating revenue and expense reported in the Company's profit and loss statement that are directly attributable to a segment and the relevant portion of such revenue and expense that can be allocated on a reasonable basis to a segment

Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consist principally of operating receivables, Inventories and property, plant and equipment, net of allowances and provisions. Capital Expenditure includes the total cost incurred to acquire property, plant and equipment directly attributable to the segment. Segment liabilities include all operating liabilities and consist principally of trade payables and accrued expenses.

Inter-segment transfers:

Segment revenue and expenses include transfers between business segments. Inter-segment sales are charged at prevailing market rates. These transfers are eliminated at the Company level.

b) Analysis By Geographical Segment Segment Revenue:

Segment revenue is analysed based on the location of customers regardless of where the goods are produced. The following provides an analysis of the Companys' sales by geographical Markets:

c) Segment assets and Capital expenditure:

Segment assets and capital expenditure are analysed based on the location of those assets. Capital expenditure includes the total cost incurred to purchase property, plant and equipment.

An analysis of the carrying amount of segment assets and capital expenditure by geographical locations is not presented, as the assets are all located in India.

2. RELATED PARTIES DISCLOSURES :-

Holding Company Nil

Subsidiaries of the company Meghmani Organics USA, Inc. (MOL-USA)

Meghmani Europe BVBA(MOL-EUROPE) Meghmani Energy Limited (MEL) Meghmani Finechem Limited (MFL) PT Meghmani Organics Indonesia (MOL-INDONESIA) Meghmani Chemtech Limited (MCTL) Meghmani Overseas FZE - Dubai

Enterprises In which Directors & Meghmani Pigments Key Managerial Personnel [KMP] Ashish Chemicals have significant influence: Tapsheel Enterprise Meghmani Dyes and Intermediates Ltd. Meghmani Industries Limited Meghmani Chemicals Limited Fidelity Exports Private Limited Panchratna Corporation

Key Managerial Personnel Mr. Jayanti M Patel Mr. Ashish N Soparkar Mr. Natwarlal M Patel Mr. Ramesh M Patel Mr.AnandlPatel

Relatives of Key Managerial Personnel Ms. Deval Soparkar (Employee) Mr. Kama R Patel Mr.AnkitN Patel Mr. Darshan I Patel Relatives of Key Managerial Personnel Mr. KM Patel (Consultant) Mr. Saurabh Soparkar

Joint Venture Trience Speciality Chemicals Pvt Ltd.


Mar 31, 2011

1. CONTINGENT LIABILITIES / CAPITAL COMMITMENTS

a) Contingent Liabilities not provided for in account:

Particulars As on 31.03.2011 As on 31.03.2010

In respect of Bank Guarantees 897.30 803.60

In respect of Letters of Credit 1412.42 1143.59

In respect of Corporate Bank Guarantees 5500.00 2500.00

b) Contingent Liabilities in respect of other statutes.

Name of Statute Nature of Dues Rsin lacs Forum whereDispute is pending

Income Tax Act. IncomeTax / Penalty for 877.78 Commissioner of Income Various (Appeal) / Income tax Financial year Appellate 1999-2000 to Tribunal / High Court 2006-2007

Central Excise Excise Duty 659.93 Commissioner of Tariff Act (Financial years Central 2007-2008 Director General of to 2010-2011) Central Excise Audit team of Central Excise / Central Excise Service tax AppellateTribunal Labour Laws Compensation Claims 105.79 Labour Court

Value Added Input Tax Credit 45.83 The Joint Commercial Tax Tax Commissioner Appeal 1 Professional Employees 0.40 Disputed between Tax Local Authority & ProfessionalTax Sales Tax Department

c) The estimated amount of contracts remaining to be executed on capital accounts of Rs. 360.02 lacs (P.Y. Rs. 982.83 lacs) is not provided for.

2.INTER DIVISION TRANSFER

Sales Purchases are shown net of Inter Divisional Transfer amounting to Rs. 6139.97 lacs (Previous year Rs. 6288.13 lacs). Other income and manufacturing expenses are shown net of Inter Divisional Job work charges income of Rs. 507.61 lacs (Previous year Rs. 384.45 lacs).

During the year 2005-06, the Company has installed Captive Power plants as separate business undertaking, to avail benefit of infrastructure under Section 80 IB of the Income Tax Act, 1961. From the same units the Company has sold power to the tune of Rs. 765.49 lacs (Previous year Rs. 710.56 lacs) to its other units. The same is knocked off from sales.

3. FOREIGN EXCHANGE RATE DIFFERENCE

The Net Foreign Exchange Rate difference pertaining to Export realisation and option derivatives amounting to Rs.(567.01) lacs (Previous Year Rs. 111.96 lacs) has been considered to be Exceptional Items in Profit and Loss Account.

4.IMPAIRMENT OF ASSETS

During the year, the Company has impaired its assets to the tune of Rs. Nil (Previous year Rs. Nil)

5. SUBSIDIARIES

The Company has following companies as its subsidiaries:-

- MeghmaniEurope BVBA

- Meghmani Organics USA Inc.

- Meghmani Energy Limited

- Meghmani Finechem Limited

- PT Meghmani Organics Indonesia

- Meghmani Chemtech Limited

6.SEGMENT REPORTING

For management purpose, the Company is currently organised into two major operating divisions - Pigments and Agro Chemicals. These divisions are the basis on which the Company reports its primary segment information. Principal activities are as follows:

Pigments division

To Manufacture and distribute Phthalocynine Green 7, Copper Phthalocynine Blue (CPC), Alpha Blue and Beta Blue.

Agrochemicals division

To Manufacture and distribute Technical, Intermediates and Formulations of Insecticides.

(a) Analysis By Business Segment

Segment revenue and expense:

Segment revenue and expense are the operating revenue and expense reported in the Company's profit and loss statement that are directly attributable to a segment and the relevant portion of such revenue and expense that can be allocated on a reasonable basis to a segment.

Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consist principally of operating receivables, inventories and property, plant and equipment, net of allowances and provisions. Capital Expenditure includes the total cost incurred to acquire property, plant and equipment directly attributable to the segment. Segment liabilities include all operating liabilities and consist principally of trade payable and accrued expenses.

Inter-segment transfers:

Segment revenue and expenses include transfers between business segments. Inter-segment sales are charged at

prevailing market rates. These transfers are eliminated at the Company level.

(b) Analysis By Geographical Segment

Segment revenue:

Segment revenue is analysed based on the location of customers regardless of where the goods are produced. The following provides an analysis of the Company's sales by geographical Markets:

(c) Segment assets and capital expenditure:

Segment assets and capital expenditure are analysed based on the location of those assets. Capital expenditure includes the total cost incurred to purchase property, plant and equipment. An analysis of the carrying amount of segment assets and capital expenditure by geographical locations is not presented, as the assets are all located in India.

7. MANAGERIAL REMUNERATION

Managerial remuneration U/S 198 of the Companies Act 1956 paid or payable during the financial year to the Directors and Computation of Net Profit in accordance with section 198(1) and section 349 of the Companies Act, 1956 are as under :-

8. PROVISION FOR TAXATION

The Company has made Income Tax provision of Rs. 1150.00 Lacs (Previous year Rs. 2300.00 Lacs) which includes Wealth tax provision of Rs. 4.10 Lacs for the year ended on 31st March, 2011 after taking into consideration the benefits of Export Oriented units under Section 10 B, U/S 80IB and U/S 35(2AB) of Income Tax 1961.

The Income-Tax assessments of the company have been completed up to Assessment Year 2007-08. The disputed demand outstanding up to the said assessment year is Rs. 877.78 Lacs. Based on the decisions of the Appellate authorities and the interpretation of other relevant provisions, the company has been legally advised that the demand is likely to be either deleted or substantially reduced and accordingly no provision has been made.

9. RELATED PARTIES DISCLOSURES :-

- Holding Company : Nil

- Subsidiaries of the company : Meghmani Organics USA, Inc.(MOL-USA) Meghmani Europe BVBA(MOL-EUROPE) Meghmani Energy Limited (MEL) Meghmani Finechem Limited (MFL) PT Meghmani Organics Indonesia(MOL- INDONESIA) Meghmani Chemtech Limited (MCTL)

- Enterprises in which Directors & : Meghmani Pigments Key Managerial Personnel[KMP] Ashish Chemicals have significant influence : TapsheelEnterprise Meghmani Dyes and Intermediates Ltd. Meghmani Industries Limited Meghmani Chemicals Limited Fidelity Exports Private Limited Vanguard Overseas Limited Panchratna Corporation

- Key Managerial Personnel Mr. Jayanti M Patel Mr. Ashish N Soparkar Mr. Natwarlal M Patel Mr. Ramesh M Patel Mr.Anand I Patel Mr. Ashvin Raythatha

- Relatives of Key Managerial Personnel Ms. Deval Soparkar (Employee) Mr. Karna R Patel Mr. Ankit N Patel

- Relatives of Key Managerial Personnel Mr. K M Patel (Consultant)

10. The Company has called for balance confirmation of Debtors and Creditors on random basis. Out of which the Company has received response from some of the parties, which are reconciled with Company's account. The other balances of Debtors and Creditors are subject to confirmation.

11. The Company has received certain intimation from "Suppliers" regarding their status under the Micro, Small and Medium Enterprises Development Act,2006 and accordingly company has provided for interest of Rs. 5.09 Lacs (P.Y. Rs. 1.01 Lacs) being payable as required under the said act.

12. The figures of previous year are regrouped and rearranged wherever necessary so as to make them comparable.

13. The Company has operating lease from various premises which are renewable on a periodic basis and cancellable at its option. Rental expenses for operating lease charged to Profit and Loss Account for the year Rs. 181.84 Lacs ( Previous year Rs. 82.24 Lacs)

Not later than 1 year Rs. 181.84 lacs (Previous year Rs. 82.24 Lacs)

Not later than 5 years Rs. Nil. (Previous year Rs. Nil)

14. a) During the year, a fire occurred in Unit - II of Panoli Division belonging to Pigment Segment. The Company incurred a loss / Expenses for Rs.211,780,309 relating to Stock of goods and Fixed Assets destroyed by fire. Accordingly, the Company has lodged a claim with Insurance Company and has received Rs.800 lacs towards part payment of the above claim.

As per the past practice, The Company's Management have estimated a loss of Rs. 2,500,000 being short recoverable from the insurance company which has been charged to Profit and Loss Account as an Extraordinary item

b) Loans and Advances include a sum of Rs. 129,280,309 towards claim preferred on account fire claim with Insurance Company on the basis of loss / expenses incurred by the Company which are pending settlement with the Insurance Company. The Management is of the view that this is fully recoverable & considered good.

15. The Company has written down the value of inventory of trading goods to the extent of Rs. 32.68 Lacs (Previous year Rs. 462.60 Lacs) in view of quality of goods.

16. Trading Purchase includes Rs. 32.68 Lacs and Selling & distribution Expenses Includes Rs. 19.23 Lacs (Previous Year Rs. Nil) related to Prior Period Expenses.

17. Retirement Benefits

As per revised Accounting Standard 15 (AS-15) "Employees Benefits" issued by The Institute of Chartered Accountants of India, the Company has recognized in the financial statements in respects of Employee Benefits Schemes as per Actuarial Valuation as on 31st March 2011.

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

(B) Defined Contribution Plans

Amount recognised as an expenses as "contribution / provision to and for Provident and other Funds" of profit and loss account - Rs. 71.34 Lacs (Previous year Rs. 63.39 Lacs)

1. Additional information required under para 3, 4 (c) and 4 (d) of part II of Schedule VI of the Companies Act, 1956 are as under :

1) Licensed & Installed Capacity and Production (in MT)

Note:

- Under the New Industrial Policy, No specific license is necessary for the manufacturing of the products mentioned above. The installed capacities are as per the certificates given by the Directors on which Auditors have relied.

2) Details of Turnover and production

Note: Sales include inter-divisional transfer.

3) Details of Turnover and production of Power Generation Units

Note: Sales include inter-divisional transfer. The above figures are obtained from SAP.


Mar 31, 2010

1. CONTINGENT LIABILITIES

Contingent liabilities not provided for in account:

Rs. In Lacs As on As on

In respect of Bank Guarantee 803.60 707.29

In respect of Letter of Credit 1143.59 2072.68

In respect of Corporate Bank Guarantee 2500.00 --

In respect of interest provision to MSM Enterprises 28.14 --

2. INTER DIVISION TRANSFER

Sales and Purchases are shown net of Inter Divisional Transfer amounting to Rs. 6288.13 lacs (Previous year Rs. 5089.94 lacs). Other income and manufacturing expenses are shown net of Inter Divisional Job work charges income of Rs. 384.45 lacs (Previousyear Rs. Nil).

During the year 2005-06, the Company has installed Captive Power plants as separate business undertaking, to avail benefit of infrastructure under Section 80 IB of the Income Tax Act, 1961. From the same units the Company has sold powerto the tune of Rs. 710.56 lacs (Previousyear Rs. 422.10 lacs) to its other units. The same is knocked off from sales.

3. FOREIGN EXCHANGE RATE DIFFERENCE

The Net Foreign Exchange Rate difference pertaining to Export realisation and option derivatives amounting to Rs. 111.96 lacs (Previous Year Rs. 2253.62 lacs) has been considered to be Exceptional Items in Profit and Loss Account.

4. IMPAIRMENT OF ASSETS

During the year, the Companyhasimpaired its assets to thetune of Rs. Nil (Previous year Rs. Nil).

5. SUBSIDIARIES

The Company has following companies as its subsidiaries:-

- Meghmani Europe BVBA

- Meghmani Organics USA, Inc.

- Meghmani Energy Limited

- Meghmani Finechem Limited

- PT Meghmani Organics Indonesia

- Meghmani Chemtech Limited

6. SEGMENT REPORTING

For management purpose, the Company is currently organised into two major operating divisions - Pigments and Agro Chemicals. These divisions are the basis on which the Company reports its primary segment information.

Principal activities are as follows:

Pigments division

To Manufacture and distribute Phthalocynine Green 7, Copper Phthalocynine Blue (CPC), Alpha Blue and Beta Blue.

Agrochemicals division

To Manufacture and distribute Technical, Intermediates and Formulations of Insecticides.

(a) Analysis By Business Segment

Segment revenue and expense:

Segment revenue and expense are the operating revenue and expense reported in the Companys profit and loss statement that are directly attributable to a segment and the relevant portion of such revenue and expense that can be allocated on a reasonable basis to a segment.

Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consist principally of operating receivables, inventories and property, plant and equipment, net of allowances and provisions. Capital expenditure includes the total cost incurred to acquire property, plant and equipment directly attributable to the segment. Segment liabilities include all operating liabilities and consist principally of trade payables and accrued expenses.

Inter-segment transfers:

Segment revenue and expenses include transfers between business segments. Inter-segment sales are charged at prevailing market rates. These transfers are eliminated at the Company level.

(c) Segment assets and capital expenditure:

Segment assets and capital expenditure are analysed based on the location of those assets. Capital expenditure includes the total cost incurred to purchase property, plant and equipment.

An analysis of the carrying amount of segment assets and capital expenditure by geographical locations is not presented, as the assets are all located in India.

7. PROVISION FOR TAXATION

The Company has made Income Tax provision of Rs. 2300 Lacs (Previous year Rs. 1175 Lacs) for the year ended on 31st March, 2010 after taking into consideration the benefit of Export Oriented units under Section 10 B, U/S 80IB and U/S 35(2AB) of Income Tax 1961. The Company has made FBT Provision of Rs. Nil (Previous year Rs. 25 lacs) forthe year ended on 31st March, 2010.

8. RELATED PARTIES DISCLOSURES :-

- Holding Company Nil

- Subsidiaries of the company

Meghmani Organics USA, Inc.(MOL-USA)

Meghmani Europe BVBA(MOL-EUROPE)

Meghmani Energy Limited (MEL)

Meghmani Finechem Limited (MFL)

PT Meghmani Organics Indonesia

(MOL-INDONESIA)

Meghmani Chemtech Limited (MCTL)

- Enterprises in which Directors & Key Managerial Personnel [KMP] have significant influence

Meghmani Pigments Ashish Chemicals Tapsheel Enterprise Meghmani Dyes and Intermediates Ltd. Meghmani Industries Limited Meghmani Chemicals Limited Fidelity Exports Private Limited Vanguard Overseas Limited

- Key Managerial Personnel

Mr. Jayanti M Patel Mr. Ashish Soparkar Mr. Natwarlal M Patel Mr. Ramesh M Patel Mr. Anand I Patel Mr. Ashvin Raythatha

- Relatives of Key Managerial Personnel (Employee)

Ms. Deval Soparkar Mr. Kama R Patel Mr. Ankit N Patel

- Relatives of Key Managerial Personnel (Consultant)

Mr. K M Patel

9. The Company has called for balance confirmation of Debtors and Creditors on random basis. Out of which the Company has received response from some of the parties, which are reconciled with Companys account. The other balances of Debtors and Creditors are subject to confirmation.

10. The estimated amount of contracts remaining to be executed on capital accounts of Rs. 982.83 lacs (P.Y. Rs. 720.09 lacs) is not provided for.

11. The Company has received certain intimation from "Suppliers" regarding their status under the Micro, Small and Medium Enterprises Development Act,2006 and accordingly company has provided for interest of Rs. 1.01 Lacs being payable as required under the said act.

11. The figures of previous year is regrouped and rearranged wherever necessary so as to make them comparable.

12. The Company has operating lease from various premises which are renewable on a periodic basis and cancellable at its option. Rental expenses for operating lease are charged to Profit and Loss Account for the year Rs. 82.24 Lacs (Previous year Rs. 46.12 Lacs)

Not laterthan 1 year Rs. 82.24 lacs (Previous year Rs. 46.12 Lacs)

Not laterthan 5 years Rs. Nil. (Previous year Rs. Nil)

13. During the year the Company has upgraded its SAP Programme to ECC 6 Version with Finance, Material Management, Production Planning, Quality Control and Costing Module.

14. The Company has written down the value of inventory of trading goods to the extent of Rs. 462.60 Lacs in view of quality of goods.

15. Retirement Benefits

As per revised Accounting Standard 15 (AS-15) "Employees Benefits" issued by The Institute of Chartered Accountants of India, the Company has recognized in the financial statements in respects of Employee Benefits Schemes as per Actuarial Valuation as on 31st March 2010.

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