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Notes to Accounts of National Fertilizers Ltd.

Mar 31, 2013

Rs. Crore

As at As at 31st March 2013 31st March 2012

1. CONTINGENT LIABILITIES

Claims against the Company not acknowledged as debts

a. Pending Appellate/Judicial decisions:

Income tax 277.57 269.00

Purchase tax 1.30 59.23

Excise, customs and service tax 6.56 6.04

VAT 0.30 0.14

Land compensation/development claims 3.90 3.86

Arbitration and civil cases 45.61 37.77

b. Other claims 0.62 1.20

c. Claims in respect of legal cases filed against the company for labour and other matters, amount whereof is not ascertainable 335.86 377.24

2 Exceptional item represents Purchase Tax Liability of Rs.57.41 crore (excluding interest liability) for the past period 1st September, 2001 to 31st March, 2006, hitherto considered as contingent liability has been provided. The Review petition in the matter filed on 30th August, 2012 in the Hon''ble Supreme Court of India has been dismissed on 1st November, 2012. Based on the opinion, no interest liability is envisaged upto the period final assessment order is passed.

3.1.1 In terms of notification No. G.S.R 914(E) dated 29th December, 2011 relating to AS 11 issued by Ministry of Corporate affairs and consequent upon exercising of option by the company during financial year 2011-12 to treat long term foreign currency loan as long term foreign currency monetary items as per Clause 46A (i) of AS- 11, an amount of Rs.7.92 crore has been included in the addition to Fixed Assets/Capital Work in Progress as on 31st March, 2013.

3.1.2 Other Employee Benefit Schemes:

Provision of Rs.2.15 crore (Previous year Rs.1.44 crore) towards Employees'' Family Economic Rehabilitation Scheme and Social Security Benefits scheme has been made on the basis of actuarial valuation and charged to the Profit & Loss account. A net liability of Rs.14.03 crore has been recognized in the Balance Sheet as at 31st March 2013 on account of these schemes.

3.1.3 Provident Fund: 12% of Basic Pay plus Dearness allowance contributed to the Provident Trust of the Company. The Company does not anticipate any further obligation in the near foreseeable future having regard to the amount of the fund and return on investment as confirmed by the actuary.

3.1.4 During the year, Company has set up a separate Pension Trust for operation of Employees Defined Contribution Pension Scheme through Life Insurance Corporation of India and provided Rs.8.09 crore towards Company''s liability under the said policy under the heading contribution to provident and other funds in note 27.

3.2 AS-17: Segment Reporting

3.2.1 Business Segments:

Company''s primary business segments are Rs.Urea'' & Rs.Other Products'' (which include Industrial Products and Bio Fertilizers, traded goods which have got similar risk and return profiles) and are reportable segments under Accounting Standard-17 on Rs.Segment Reporting'' issued by the Institute of Chartered Accountants of India.

3.2.2 Geographical Segment:

The operations of the company are conducted within India and there is no separate reportable geographical segment

3.3 AS-19: LEASES

The Company''s significant leasing arrangements are in respect of operating leases of premises for offices, godowns, residential use of employees and vehicles. These leasing arrangements are usually renewable on mutually agreed terms but are not non-cancellable. Note: 27 Employee benefit expense remuneration and benefits include Rs.0.13 crore (Previous year Rs.0.19 crore) towards lease payments, net of recoveries, in respect of premises for residential use of employees. Lease payments in respect of premises for offices, godowns and vehicles, Rs.3.08 crore (Previous year Rs.3.32 crore) are shown in Note: 31-Other expenses.

3.4 AS-28: Impairment of assets

In accordance with Accounting Standard (AS)-28, the carrying amount of fixed assets have been reviewed at year-end for indication of impairment loss, if any, by considering assets of entire one plant as Cash Generating Unit. As there is no indication of impairment, no loss has been recognized during the year.

4 "For FY 2012-13, Company has approved budget amount of Rs.3.15 crore towards Corporate Social Responsibility (CSR) activities, During FY 2010-11 and 2011-12, Company earmarked Rs.3.00 crore and Rs.3.25 respectively crore for CSR activities against which an expenditure of Rs.1.60 crore have been incurred till 31.03.2012. Company has incurred total CSR expenditure of Rs.1.47 crore during the FY 2012-2013. The budget for unspent amount of Rs.6.33 crore does not lapse and the same has been carried forward to FY 2013-14 on account of CSR activities."

5 As per requirements of the listing agreements with the stock exchanges, the requisite details of loans and advances in the nature of loans given by the Company are as under:

(i) There are no loans and advances in the nature of loans to any subsidiary.

(ii) No loans have been given (other than loans to employees), wherein there is no repayment schedule or repayment is beyond seven years; and

(iii) There are no loans and advances in the nature of loans to firms/companies in which Directors are interested.

6 REMITTANCE IN FOREIGN CURRENCIES FOR DIVIDENDS

The Company has not remitted any amount in foreign currencies on account of dividend during the year and does not have information as to the extent to which remittances, if any, in foreign currencies on account of dividends have been made by/on behalf of non-resident shareholders. The particulars of dividend for the year 2011-12 paid in current year on account of non- resident shareholders in Indian rupees are as under:

7 Debit/Credit balances of some of the parties are in the process of confirmation/ reconciliation.

8 Figures of previous year/period have been re-arranged / regrouped / re-cast, wherever necessary.


Mar 31, 2012

A. There has been no movement in the Issued, Subscribed and Paid -up capital of the Company.

b. Terms/Rights attached to equity shares

The Company has only one class of equity share having a par value of Rs.10 per share. Each holder of equity shares is entitled to one vote per share and entitled to dividends approved by shareholders.

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

a. 9.42% Secured Redeemable Non-Convertible Bonds of Rs.10,00,000/- each issued with five years tenor redeemable at par in three installments at the end of third year from issue date of 15th September, 2011 (30% at end of 3rd year, 30% at the end of 4th year and balance 40% at end of 5th year). These bonds are secured by mortgage/charge on land and building of Company located at Corporate office at Noida.

b. Rupee loan from scheduled banks, with total sanctioned amount of Rs.3850 crore for Ammonia Feedstock Conversion Projects is secured by first charge ranking pari-passu inter-se on entire fixed assets, movable and immovable (present & future) related to Nangal, Bathinda & Panipat units and second charge over the entire current assets and subsidy (excluding reimbursement related to energy savings and interest expenses) of the Company. Repayment of sanctioned term loan would fall due for Rs.770 crore in FY 2013-14, Rs.770 crore in FY 2014-15, Rs.770 crore in FY 2015-16, Rs.770 crore in FY 2016-17 and Rs.770 crore in FY 2017-18. The rate of interest on the term loan is linked to the SBI base rate and during the year varied between 9.75%-11.50% p.a.

c. Foreign currency External Commercial Borrowing (ECB) loan from Schedule Banks, with total sanctioned limit of USD 50 million has been used for energy saving and urea capacity augmentation projects at Vijaipur and is secured by first pari-passu charge on all fixed assets, movable and immovable (both present and future) related to Vijaipur and second pari-passu charge on the current assets (both present and future) and subsidy of the company. The rate of interest is 6 months USD LIBOR plus margin of 3.05% p.a. and upfront arrangement fee of 1.58% of facility. Repayment of ECB loan would fall due for Rs.6.12 crore in FY 2014-15, Rs.14.09 crore in FY 2015- 16, Rs.14.10 crore in FY 2016-17, Rs.09 crore in FY 2017-18, Rs.14.10 crore in FY 2018-19 and Rs.14.95 crore in FY 2019-20.

d. Foreign currency loans - Buyers Credit from scheduled Banks, total drawn amount of USD 15.68 million for energy saving and urea capacity augmentation projects at Vijaipur. The rate of interest is 6 months LIBOR plus margin of 2.00% p.a. for Buyer Credit of USD 9.89 million and 6 months USD LIBOR plus margin of 1.50%p.a. and upfront fee of 1.1% p.a. for Buyer's credit of USD 5.79 million. Repayment of Buyer's credit would fall due for Rs.47.05 crore in FY 2013-14, Rs.31.45 crore in FY 2014-15 and Rs.2.46 crore in FY 2015-16.

a. Title/Lease Deed for land acquired at Nangal (Rs.0.93 crore), Vijaipur (Rs.4.36 crore), Bathinda (Rs.0.15 crore), Building at Scope Complex, New Delhi (Rs.2.07 crore) and Land/Building at Bhopal (Rs.0.38 crore) are pending execution.

b. 325.70 acres of land at Nangal (Rs. 0.01 crore) had been symbolically possessed by the Punjab Government on 29.10.1998 without determination of consideration. Though the ownership of the entire land including 325.70 acres vests with the Company, however, the physical possession of 325.70 acres of land is with its erstwhile owners.

c. Consequent upon the implementation of Feed Stock changeover Projects and its expected completion during 2012-2013, depreciation on plant & machinery expected to be replaced has been charged over the reduced residual life and accordingly during the year, in respect of plant & machinery, depreciation provided is higher by Rs.0.82 crore (previous year Rs.0.84 crore) in the accounts.

a. Capital work-in-progress includes amount ofRs.2161.52 crore incurred upto 31st March, 2012 relating to feedstock conversion projects from fuel oil to natural gas at Panipat, Nangal and Bathinda units. In terms of Government policy notified on 6th March, 2009, the Company is entitled to capital subsidy after successful commissioning of the projects over a period of 5 years, which shall be appropriately accounted for in terms of the policy.

b. * Addition to capital work in progress under the head Expenditure during construction period includes Rs.3.37 crore (previous year Rs.Nil) on account of foreign exchange fluctuation on longterm loan relating to acquisition of Fixed Assets pursuant to the Company exercising the option under Clause 46 A (i) of AS-11 to treat Foreign Currency Loans as Long Term Foreign Currency monetary items under the Notification number (G.S.R. 914(E) dated 29th December, 2011) issued by the Ministry of Corporate affairs relating to Accounting Standard 11.

* Includes amount due from Directors - Rs. 23000/- (Previous year Rs. NIL)

# Includes an advance of Rs.130.69 crore (US$ 37.62 million) given to a foreign supplier M/s. Karsan during the year 1995-96 against import of Urea, the supplies of which were not received and subsequently the contract was terminated. Pending litigation, the amount has been fully provided for in the earlier years from the revenue reserve and surplus.

The outstanding advance (net of recovery) of Rs.129.64 crore is shown in the Accounts under "Loans and Advances Recoverable" with corresponding adjustment in revenue reserve. Adjustment, if any, shall be made on settlement of the litigation.

Rs. Crore

As at As at 31st March 2012 31st March 2011

1. CONTINGENT LIABILITIES

Claims against the Company not acknowledged as debts a Pending Appellate/Judicial decisions:

Income tax 269.00 201.31

Purchase tax 59.23 59.23

Excise, customs and service tax 6.04 7.37

VAT 0.14 -

Land compensation / development claims 3.86 13.69

Arbitration and civil cases 37.77 29.23

b. Other claims 1.20 1.18

c. Claims in respect of legal cases filed against the company for labour and other matters, amount whereof is not ascertainable

377.24 312.01

Note:

1. The company has funded the gratuity liability through a separate Gratuity Fund. The fair value of the plan assets is mainly based on the information given by the insurance companies through whom the investment have been made by the fund. Gratuity liability of Rs. 7.72 crore is unfunded as on 31st March, 2012.

2. The defined benefit obligations, other than gratuity are unfunded.

3.1.1 Other Employee Benefit Schemes:

Provision of Rs.1.44 crore (Previous year Rs.3.07 crore) towards Employees' Family Economic Rehabilitation Scheme and Social Security Benefits scheme has been made on the basis of actuarial valuation and charged to the Statement of Profit & Loss. A net liability of Rs.13.09 crore has been recognized in the Balance Sheet as at 31st March 2012 on account of these schemes.

3.1.2 Provident Fund: 12% of Basic Pay plus Dearness allowance contributed to the Provident Trust of the Company. The Company does not anticipate any further obligation in the near foreseeable future having regard to the amount of the fund and return on investment as confirmed by the actuary.

3.2 AS-17: SEGMENT REPORTING

3.2.1 Business Segments:

Company's primary business segments are 'area' & 'Other Products' (which include Industrial Products and Bio Fertilizers, traded goods which have got similar risk and return profiles) and are reportable segments under Accounting Standard-17 on 'Segment Reporting' issued by the Institute of Chartered Accountants of India.

3.2.2 Geographical Segment:

The operations of the company are conducted within India and there is no separate reportable geographical segment

C) Transactions with Related parties:

(I) There is no transaction with related party at A) above except investment of Rs. Nil crore towards its paid-up capital during the year (previous year Rs.0.03 crore). Against total investment of Rs.0.18 crore as on 31st March, 2012, provision of Rs. 0.15 crore has been made in the Accounts on account of diminution in value of investments).

(ii) Remuneration to Key Management Personnel at B) above is Rs.0.86 crore (Previous year Rs.0.77 crore) which does not include remuneration to Key Management Personnel at (i) and (ii) above who have been given additional charge of the Company by GOI.

3.3 AS-19: LEASES

3.3.1 Assets taken on Operating lease:

The Company's significant leasing arrangements are in respect of operating leases of premises for offices, godowns, residential use of employees and vehicles. These leasing arrangements are usually renewable on mutually agreed terms but are not non-cancellable. Note: 26 Employee benefit expense remuneration and benefits include Rs.0.19 crore (Previous year Rs.0.26 crore) towards lease payments, net of recoveries, in respect of premises for residential use of employees. Lease payments in respect of premises for offices, godowns and vehicles, Rs.3.32 crore (Previous year Rs.3.62 crore) are shown in Note: 31-Other expenses.

3.4 AS-27: FINANCIAL REPORTING OF INTERESTS IN JOINT VENTURES

3.4.1 The disclosure of Company's interest in Joint Venture entity in terms of Accounting Standard-27 issued by the Institute of Chartered Accountants of India is as under:

(i) Name of the Joint Venture entity: 'UrvarakVidesh Limited'

(ii) Co-Joint Venture companies: Krishak Bharti Co-operative Ltd. and Rashtriya Chemicals & Fertilizers Ltd. as equal partners.

(iii) Company has an investment of Rs.0.18 crore towards paid up equity capital representing one third share.

(iv) The Company's share of ownership interest assets, liabilities, income, expenses, contingent liabilities and capital commitment in the Joint Venture Company, incorporated in India, are given below:

3.5 AS-28: IMPAIRMENT OF ASSETS

In accordance with Accounting Standard (AS)-28, the carrying amount of fixed assets have been reviewed at year-end for indication of impairment loss, if any, by considering assets of entire one plant as Cash Generating Unit. As there is no indication of impairment, no loss has been recognized during the year.

3.6 In terms of notification No. G.S.R 914(E) dated 29th December, 2011 relating to AS 11 issued by Ministry of Corporate affairs and consequent upon exercising of option by the company to treat long term foreign currency loan as long term foreign currency monetary items as per Clause 46A (i) of AS-11, an amount of Rs.3.37 crore has been included in the CWIP and profit are higher by Rs.3.37 crore due to change in accounting policy.

4 REMITTANCE IN FOREIGN CURRENCIES FOR DIVIDENDS

The Company has not remitted any amount in foreign currencies on account of dividend during the year and does not have information as to the extent to which remittances, if any, in foreign currencies on account of dividends have been made by/on behalf of non-resident shareholders. The particulars of dividend for the year 2010-11 paid in current year on account of non-resident shareholders in Indian rupees are as under:

Note:

The Chairman & Managing Director and Functional Directors are allowed the use of company's car for private purposes upto 1000 km per month and recoveries wherever required are made as per Government guidelines.

5 AS PER REQUIREMENTS OFTHE LISTING AGREEMENTS WITH THE STOCK EXCHANGES,THE REQUISITE DETAILS OF LOANS AND ADVANCES IN THE NATURE OF LOANS GIVEN BYTHE COMPANY ARE AS UNDER:

(I) There are no loans and advances in the nature of loans to any subsidiary.

(ii) No loans have been given (other than loans to employees), wherein there is no repayment schedule or repayment is beyond seven years; and

(iii) There are no loans and advances in the nature of loans to firms/companies in which Directors are interested.

6 Debit/Credit balances of some of the parties are in the process of confirmation/ reconciliation.

7 Figures of previous year have been re-arranged / regrouped / re-cast, wherever necessary and to comply with the requirement of revised Schedule VI of the Companies Act.


Mar 31, 2011

1. CONTINGENT LIABILITIES

(Rs. in crore)

Particulars As at As at 31st March,2011 31st March, 2010

i) Claims against the Company not acknowledged as debts

(a) Pending Appellate/Judicial decisions:

- Income Tax 201.31 123.33

- Purchase Tax 59.23 59.23

- Excise& Customs Duty 7.37 2.29

- Land Compensation/Development claims 13.69 13.33

- Arbitration and civil cases 29.23 25.05

(b) Other claims 1.18 1.17

(c) Claims in respect of legal cases filed against the company for labour and other matters, extent whereof is not ascertainable.

TOTAL 312.01 224.40

ii) Estimated amount of contracts remaining to be executed 3165.86 3515.56 on capital accounts and not provided for (net of advances).The amount as at 31 * March 2011 includes Project contracts relating to changeover of feedstock from Fuel oil to natural gas at Nangal, Panipat and Bathinda unit (Rs.2949.41 crore) and energy saving & capacity enhancement at Vijaipur I & II (Rs.192.17 crore).

iii) Unutilized amount of Letter of Credit. 179.03 8.33

2.Capital work-in-progress includes amount of Rs.485.68 crore incurred upto 31st March, 2011 relating to feedstock | conversion projects from fuel oil to natural gas at Panipat, Nangal and Bathinda units. In terms of Government J policy notified on 6th March, 2009, the Company is entitled to capital subsidy after successful commissioning of the projects over a period of 5 years, which shall be appropriately accounted for in terms of the policy.

3. An advance of Rs.130.69 crore (US$ 37.62 million) was given to a foreign supplier M/s. Karsan during the year 1995-96 against import of Urea, the supplies of which were not received and subsequently the contract was terminated. Pending litigation, revenue reserves have been reduced to the extent of this advance during the year 1996-97. The outstanding advance (net of recovery) of Rs.129.64 crore is shown in the Accounts under "Loans and Advances Recoverable" with corresponding adjustment in revenue reserve. Adjustment, if any, shall be made on settlement of the litigation.

Further, fixed deposit of Rs.1.32 crore (US$ 380,000) is maintained with a scheduled bank, as case property, in terms of the order dated 16.11.2000 of the Hon'ble Delhi High Court and shown in Schedule 1.11 Loans and Advances. As the matter is subjudice the exchange variation and interest accrued thereon is not being accounted for in the books.

4. Based on the information received by the Company from the suppliers, regarding their coverage under the Micro, Small and Medium Enterprises Development Act, 2006, the disclosure as required under the said Act is as under:

5. Subsidy on Urea from Government of India includes Rs.23.28 crore net debit (Previous yearRs.42.05 crore net credit) for the earlieryears as notified during the year.

6. Debit/Credit balances of some of the parties are in the process of confirmation/ reconciliation.

7.1.0 Other Employee Benefit Schemes:

Provision of Rs.3.07 crore (Previous year Rs.1.33 crore) towards Employees' Family Economic Rehabilitation Scheme and Social Security Benefits scheme has been made on the basis of actuarial valuation and charged to the Profit & Loss account. A net liability of Rs.11.65 crore has been recognized in the Balance Sheet as at 31 * March 2011 on account of these schemes.

7.1.1 Provident Fund: 12% of Basic Pay plus Dearness allowance contributed to the Provident Trust of the Company. The Company does not anticipate any further obligation in the near foreseeable future having regard to the amount of the fund and return on investment as confirmed by the actuary.

7.2.1 Business Segments:

Company's primary business segments are 'Urea' & 'Other Products' (which include Industrial Products and Bio Fertilizers, traded goods which have got similar risk and return profiles) and are reportable segments under Accounting Standard-17 on 'Segment Reporting' issued by the Institute of Chartered Accountants of India.

7.2.2 Geographical Segment:

The operations of the company are conducted within India and there is no separate reportable geographical segment.

7.2.3 The disclosure of segment-wise information is given at Annexure-I.

C) Transactions with Related parties:

i) There is no transaction with related party at A) above except investment of Rs.0.03 crore towards its paid-up capital during the year (in respect of total investment of Rs.0.18 crore as on 31 * March, 2011 full provision has been made in the Accounts).

ii) Remuneration to Key Management Personnel at B) above is Rs.0.77 crore (Previous year Rs.0.82 crore) which does not include remuneration to Key Management Personnel at (i) and (ii) above who have been given additional charge of the Company by Gol.

7.4 AS-19: Leases- Assets taken on Operating lease:

The Company's significant leasing arrangements are in respect of operating leases of premises for offices, godowns, residential use of employees and vehicles. These leasing arrangements are usually renewable on mutually agreed terms but are not non-cancellable.

Schedule 2.5 - Employees remuneration and benefits include Rs.0.26 crore (Previous year Rs.0.61 crore) towards lease payments, net of recoveries, in respect of premises for residential use of employees. Lease payments in respect of premises for offices, godowns and vehicles, Rs.3.62 crore (Previous yearRs.3.88 crore) are shown in Schedule 2.8 - Other expenses.

8.5.2 Provision for taxation has been made keeping in view the provisions of the law and various judicial pronouncements.

8.6 AS-27: Financial Reporting of Interests in Joint Ventures-

8.6.1 The disclosure of Company's interest in Joint Venture entity in terms of Accounting Standard-27 issued by the Institute of Chartered Accountants of India is as under: -

i) Name of the Joint Venture entity: 'UrvarakVidesh Limited'

ii) Co-Joint Venture companies: Krishak Bharti Co-operative Ltd. and Rashtriya Chemicals Ltd. as equal I partners.

Hi) Company has an investment of Rs.0.18 crore towards paid up equity capital representing one third share.

8.7 AS-28: Impairment of Assets-

In accordance with Accounting Standard (AS)-28, the carrying amount of fixed assets have been reviewed at year-end for indication of impairment loss, if any, by considering assets of entire one plant as Cash Generating Unit. As there is no indication of impairment, no loss has been recognized during the year.

9 As per requirements of the listing agreements with the stock exchanges, the requisite details of loans and

advances in the nature of loans given by the Company are as under:

i) There are no loans and advances in the nature of loans to any subsidiary.

ii) No loans have been given (other than loans to employees), wherein there is no repayment schedule or repayment is beyond seven years; and

iii) There are no loans and advances in the nature of loans to firms/companies in which Directors are interested.

9 Figures in brackets pertain to previous year and have been re-arranged / regrouped / re-cast, wherever necessary.










Mar 31, 2010

1. CONTINGENT LIABILITIES (Rupees in Crore)

As at As at

Particulars 31stMarch 2010 31st March 2009

i) Claims against the Company not acknowledged as debts

(a) Pending Appellate/Judicial decisions:

- Income Tax 123.33 126.76

- Purchase Tax 59.23 59.23

- Excise & Customs Duty 2.29 2.29

- Sales Tax - 0.04 Land Compensation/Development claims 13.33 13.55 Arbitration and civil cases 25.05 20.85

(b) Other claims 1.17 1.22

(c) Claims in respect of legal cases filed against the company for labour and other matters, extent whereof is not ascertainable. _ -

TOTAL 224.40 223.94

ii) Estimated amount of contracts remaining to be executed on 3515.56 31.05 capital accounts and not provided for (net of advances). The amount as at 31st March, 2010 includes Project contracts relating to changeover of feedstock from FO/LSHS to natural gas at Nangal, Panipat and Bathinda unit (Rs.3381.11 crore) and energy saving & capacity enhancement at Vijaipur I & II (Rs.118.21 crore).

iii) Unutilized amount of Letter of Credit. 8.33 6.18

2. INVESTMENTS. CURRENT ASSETS, LOANS & ADVANCES. CURRENT LIABILITIES AND PROVISIONS

2.1 Capital work-in-progress includes amount of Rs.0.63 crore incurred during the year relating to feedstock conversion projects from FO/LSHS to natural gas at Panipat, Nangal and Bathinda units. In terms of Government policy notified on 6lh March,2009 the Company is entitled to capital subsidy after successful commissioning of the projects over a period of 5 years, which shall be appropriately accounted for in terms of the policy.

2.2 An advance of Rs. 130.69 crore (US$ 37.62 million) was given to a foreign supplier M/s. Karsan in the year 1995- 96 against import of Urea, the supplies of which were not received and subsequently the contract was terminated. Pending litigation, revenue reserves have been reduced to the extent of this advance during the year 1996-97. The outstanding advance (net of recovery) of Rs. 129.64 crore is shown in the Accounts under "Loans and Advances Recoverable" with corresponding adjustment in revenue reserve. Adjustment, if any, shall be made on settlement of the litigation.

Further, fixed deposit of Rs.1.32 crore (US$ 380,000) is maintained with a scheduled bank, as case property, in terms of the order dated 16.11.2000 of the Honble Delhi High Court and shown in Schedule 1.11 Loans and Advances. As the matter is subjudice the exchange variation and interest accrued thereon is not being accounted for in the books.

2.3 Based on the information received by the Company from the suppliers, regarding their coverage under the Micro, Small and Medium Enterprises Development Act, 2006, the disclosure as required under the said Act is asunder:

3. PROFIT & LOSS ACCOUNT

3.1 Subsidy on Urea from Government of India includes Concession Price Subsidy for the earlier years of Rs.42.05 crore (Previous year Rs. 89.00 crore) as notified during the year.

3.2 In accordance with Accounting Standard (AS)-28 on "Impairment of Assets", the carrying amount of fixed assets have been reviewed at year-end for indication of impairment loss, if any, by considering assets of entire one plant as Cash Generating Unit. As there is no indication of impairment, no loss has been recognized during the year.

4. GENERAL

4.1 Employee Benefits : Disclosures as required by Accounting Standard (AS)-15 (Revised 2005) issued by the Institute of Chartered Accountants of India are as under:-

4.1.1 General description of defined benefit schemes:

Gratuity

Payable on separation @ 15 days pay for each completed year of service subject to maximum of Rs 10 lakh to eligible employees who render continuous service of 5 years or more.

Leave Encashment (Earned and Half Pay Leave)

Payable on separation to eligible employees who have accumulated earned leave and half pay leave. During the service period encashment of accumulated earned leave is allowed in a financial year leaving minimum balance leave of 30 days.

Post Retirement Medical Benefits (PRMB)

Mediclaim Insurance Policy available to the retiring employee and the spouse (for a cover of Rs.2 lakhs per annum) after rendering 15 years of continuous service.

Post Retirement Settlement Benefits (PRSB)

Travelling and Baggage expenses payable to retiring employees for settlement at their hometown.

Long Service Award (LSA)

Payable to employees on completion of specified years of service.

Social Security Benefits (SSB)

Available to employees who die while in service or suffer permanent/total disablement subject to a limit of 60 months salary or Rs.1 lakhs whichever is higher.

5.1.2 Other disclosures/reconciliation, in respect of defined benefit obligations are as under: - i) Reconciliation of present value of defined benefit obligations and plan assets:

5.1.3 Provident Fund: 12% of Basic Pay plus Dearness allowance contributed to the Provident Trust of the Company. The Company does not anticipate any further obligation in the near foreseeable future having regard to the amount of the fund and return on investment as confirmed by the actuary.

5.1.4 During the year, Rs.14.02 crore has been provided towards defined contribution Pension Scheme for employees for the period 1S| January, 2007 to 31 s,March, 2010.

5.1.5 The disclosure above is in respect of the current year and two preceding years. The disclosure in respect of two immediate preceding annual periods as required by AS-15 (Revised 2005) is not presented as the management considered it impracticable in the absence of requisite information.

5.2.2. Provision for taxation has been made keeping in view the provisions of the law and various judicial pronouncements.

5.3 Segment Reporting

Business Segments:

Companys primary business segments are Urea & Other Products (which include Industrial Products and Bio Fertilizers, traded goods which have got similar risk and return profiles) and are reportable segments under Accounting Standard-17 on Segment Reporting issued by the Institute of Chartered Accountants of India.

Geographical Segment:

The operations of the company are conducted within India and there is no separate reportable geographical segment.

The disclosure of segment-wise information is given at Annexure-I.

5.4 Related party

A. As per Accounting Standard-18 Related Party Disclosures issued by the Institute of Chartered Accountants of

India the names of the related parties are given below:

Nature of Relationship Name of the Related Party

Joint Venture Urvarak Videsh Limited

Nature of Relationship Name of the Related Party

Key Management Personnel - Shri V. K. Sharma, Chairman & Managing Director

(C&MD) w.e.f. 27th August 2009 and prior to that Director (Technical) holding additional charge as C&MD.

- Shri K.B. Sachdev, Director (Marketing) upto 30
- Ms. NeeruAbrol, Director (Finance)

B. Transactions with Related parties:

i) There is no transaction with related party at A above except investment of Rs.0.10 crore towards its paid-up capital (in respect of total investment of Rs.0.15 crore as on 31.03.2010, full provision has been made in the Accounts).

ii) Remuneration to key management personnel atAabove is Rs. 0.82 crore (Previous year Rs.0.61 crore)

5.5 As per requirements of the listing agreements with the stock exchanges, the requisite details of loans and advances in the nature of loans given by the Company are as under:

i) There are no loans and advances in the nature of loans to any subsidiary.

ii) No loans have been given (other than loans to employees), wherein there is no repayment schedule or repayment is beyond seven years; and

iii) There are no loans and advances in the nature of loans to firms/companies in which Directors are interested.

5.6 Operating Leases

Assets taken on Operating lease:

The Companys leasing arrangements are in respect of operating leases of premises for offices, godowns, residential use of employees and vehicles. These leasing arrangements are usually renewable on mutually agreed terms but are not non-cancellable. Schedule 2.5 - Employees remuneration and benefits include Rs.0.61 crore (Previous year Rs.1.03 crore) towards lease payments, net of recoveries, in respect of premises for residential use of employees. Lease payments in respect of premises for offices, godowns and vehicles, Rs. 3.88 crore (Previous year Rs. 3.64 crore) are shown in Schedule 2.8 - Other expenses.

5.7 Interest in Joint Venture

The disclosure of Companys interest in Joint Venture entity in terms of Accounting Standard-27 on Financial Reporting of Interests in Joint Ventures issued by the Institute of Chartered Accountants of India is as under: -

i) Name of the Joint Venture entity: Urvarak Videsh Limited

ii) Co-Joint Venture companies: Krishak Bharti Co-operative Ltd. and Rashtriya Chemicals & Fertilizers Ltd. as equal partners.

iii) Company has an investment of Rs.0.15 crore towards paid up equity capital representing one third share.

iv) The Companys share of ownership interest, assets, liabilities, income, expenses, contingent liabilities and capital commitment in the Joint Venture Company, incorporated in India, are given below:

6. Figures in brackets pertain to previous year and have been re-arranged / regrouped / re-cast, wherever necessary.



 
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