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Notes to Accounts of Rashtriya Chemicals & Fertilizers Ltd.

Mar 31, 2015

1. CONTINGENT LIABILITIES NOT PROVIDED FOR:

1.1 Claims against the Company not acknowledged as debts to the extent ascertainable (Interest cannot be estimated reliably) aggregates to Rs. 392.00 Crore (P.Y. Rs. 472.75 Crore) which include the following:

a) Claims preferred by local Authorities amounting to Rs. 8.34 Crore (P.Y. Rs. 8.34 Crore) (net of payment made/liability provided of Rs. 3.95 Crore (P.Y. Rs. 3.95 Crore). The Capitalization of land at Kurul Township and factory at Thal Unit has been made subject to Arbitration awards/Court decisions in this behalf.

b) Invoices/debit notes raised by M/s GAIL (India) Ltd. which are as under:

Rs. Crore

Sr. Particulars Current Previous no Year year

1 Increased gas transmission 56.59 50.34 charges for ONGC pipeline*

2 Price difference between 97.99 97.99 APM and Non APM gas supplies for the period February 2012 to November 2013

3 For non-submission 39.39 - for FICC certified gas utilization data SCADA Charges 1.47 1.47

Total 195.44 149.80

* With reference to item mentioned in serial no.1 above, during the year GAIL (India) Ltd. demanded payment towards the same and threatened to adjust the same against the Letter of credit issued in their favour. Company had filed an appeal on the above said matter in Mumbai High Court. As per the orders of Mumbai High Court, GAIL (India) Ltd. has been restrained from taking any further action on the matter and directed both the Companies to resolve the matter through arbitration.

c) Water charges claimed by Municipal Corporation of Greater Mumbai. Rs.1.22 Crore (P.Y. Rs.0.67 Crore).

d) Claims before arbitrators/courts, are Rs.11.05 Crore (P.Y. Rs.13.03 Crore).

e) Claims against the Company not acknowledged as debts.

(Rs. in Crore)

In respect of As at As at Matters under 31st March 31st March dispute with various 2015 2014 authorities

Excise Duty (D) 22.58 21.66

Excise Duty (S) 4.05 131.03

Sales Tax (D) 27.82 32.01

Income Tax (D) * 28.52 18.19

Service Tax (D) 12.06 17.09

Custom Duty (D) 80.93 80.93

(D) (Demands raised)/(S) (Show cause notice issued).

* Against which an amount of Rs. 4.03 Crore has been deposited with Tax authorities.

f) The amount of claims in respect of legal cases filed against the Company for labour matters relating to regular employees and not acknowledged as debts is not ascertainable.

1.2 In respect of Naphtha purchased by the company at concessional rate of excise duty for the purposes other than mentioned in the exemption notification for the period November 1996 to February 2005, the Company's appeal against the order of CESTAT confirming the demand of excise duty was set aside by the Bombay High Court and the Company paid an amount of Rs.9.66 Crore towards duty and Rs.2.00 Crore towards penalty which was charged to Statement of Profit and Loss account in an earlier year. The Company has appealed against the said order and obtained a Stay in the Hon'ble Supreme Court towards the demand of penalty amounting to Rs.4.67 Crore (inclusive of payment of Rs.2.00 Crore). Further an intimation was received from excise authorities seeking payment of '18.61 Crore towards interest in the said matter in year 2013- 14 which has been disputed by the Company since the matter is already resting with Hon'ble Supreme Court. The appeal is yet to be heard.

Further, for the period from March 2005 to October 2005, a show cause notice has been served on similar issue for payment of duty amounting to Rs.1.77 Crore, penalty of similar amount and interest at an appropriate rate which has been stayed by CESTAT on a Stay application filed by the Company.

Pending court hearing, no provision is considered necessary.

1.3 Demand of Rs.33.48 Crore raised by Municipal Corporation of Greater Mumbai (BMC) towards additional sewerage charges levied from 5-4-1987 are disputed by the Company in a Writ Petition filed in Bombay High Court. The Honorable High Court vide its interim Order dated 10-11-92 has granted stay on recovery of the demand for the period up to the date of the Order and directed the Company to pay sewerage charges from the date of the order which is being paid by the Company. The matter has been disposed off by the High Court and the Company approached Supreme Court. Supreme Court has now directed the Bombay High Court to hear the matter and decide on merits based on facts of the case. The Stay granted on the said matter continues.

As a part of an agreement entered into with BMC for obtaining raw sewerage, the Company has paid an interest free deposit of Rs.16 Crore to BMC (included in Note no.12) representing approximately 50% of the disputed demand which would be adjustable against the disputed demand in case the Court rules in favor of BMC. No provision is considered necessary for the disputed demand of Rs.33.48 Crore as the claim of BMC is not tenable.

1.4 During 2004-05, Commissioner of Customs (Imports) Mumbai had allowed clearance of the Air Compressor package consignment under provisional assessment on payment of applicable custom duties, furnishing of Bank guarantees towards demand and a revenue deposit of Rs.5.75 Crore.

Thereafter Commissioner of Customs passed an Order for payment of Custom Duty and penalty aggregating to Rs.25.62 Crore against the above matter. Company has paid Rs.9.27 Crore against provisional assessment and furnished bank guarantees amounting to Rs. 29.07 Crore based on which the said revenue deposit was returned.

The Order has been challenged before CESTAT / High Court and by an Order dated 20th June 2007, Bombay High Court stayed the order passed by the Commissioner of Customs and also against invoking the bank guarantees. Bombay High Court has now ordered CESTAT to hear the Appeal filed by RCF and the Appeal before bench of CESTAT is expected to be heard. Company has been advised by solicitors and advocates that the demand is not sustainable and no provision is considered necessary.

In respect of clause 25.1 to 25.4 above, it is not practicable for the Company to estimate the closure of these issues and the consequential timing of cash flows, if any.

2. Corporate Guarantee executed by the Company on behalf of its Joint Venture Company, FACT-RCF Building Products Ltd aggregates to Rs. 37.66 Crore(P.Y.'37.66 Crore).

3. Formalities relating to transfer of certain immovable and other properties from Fertilizer Corporation of India Limited to the Company on reorganization of the former in 1978 are not yet completed. Out of property cards for a total area of 3097278 sq. meter, property cards for 393198 sq. meters (P. Y. 409582 sq. meters) are yet to be transferred in the name of the Company.

4. Out of total area of 5052476 Sq. meter area at Thal Unit, the title deeds relating to area of 3203543 Sq. meter area are in the name of the Company. The capitalization of Freehold land at Thal Unit includes land at Kihim having carrying Cost of Rs. 0.02 Crore, pending execution of documents and transfer of title deeds in the name of Company, due to dispute.

5. Balances of subsidy claim receivable and tax refunds from Government authorities are subject to confirmation. Some of the balances of Trade Payables, current liabilities and loans and advances are subject to confirmation, reconciliation and consequential adjustments if any. In the opinion of the management, such adjustments would not be material.

6. The Company is eligible to receive subsidy from Fertilizer Industry Co-Ordination Committee (FICC) / Department of Fertilizers (DOF) on Urea, Phosphatic and Potassic (P & K) Fertilizers at the rates notified from time to time.

For the rates yet to be notified, due to escalations/de- escalations in the cost of inputs and other costs, subsidy has been accounted on estimated basis.

The matter relating to the issue of unintended benefits accruing to units using domestic gas for manufacture of Nutrient "N" has been referred and is pending before an Inter-Ministerial Committee of Government of India. An amount of Rs.96.89 Crore has been withheld by Department of Fertilizers during the year towards the said matter. Pending final decision on the said matter and in the Company's view that no unintended benefits have accrued, it has continued to recognize subsidy income on P&K fertilizers at the rates notified by Department of Fertilizers.

7. (a) As per requirements of Accounting Standard -28, Company has carried out impairment testing of its Cash Generating Units/Fixed Assets at the year end. Such a test of impairment is carried out considering an estimated useful life of 10 Years for arriving at the value in use. Accordingly, a provision for impairment has been made towards, Methanol Rapid wall and Sodium Nitrate plants at Trombay unit and Formic acid Plant at Thal unit since the expected value in use as arrived at of the said plants are lower than their carrying amount. A provision of Rs. 62.10 Crore has been made towards impairment. Company has reversed the impairment provision recognized towards its Argon plant amounting to Rs. 15.47 Crore during the year.

8. Company has recognized its factory at Trombay, factory at Thal and Trading, as geographical segments (primary segments) and its activities of manufacture and sale of fertilizers, and manufacture and sale of industrial products as business segments (secondary segments) in accordance with Accounting Standard -17 on Segment reporting prescribed under the Companies Act, 2013. The segment wise revenue, expenses and capital employed are given in Annexure-1.

9. Information as per Accounting Standard (AS-18) on Related Party Disclosures is given below:- Company is under the administrative control of Ministry of Chemicals and Fertilizers, Government of India and is within the meaning of state controlled enterprise as per para

10.13 of Accounting Standard-18.

1) Key Management Personnel

(i) Shri R. G. Rajan, Chairman & Managing Director

(ii) Shri CMT Britto, Director (Technical)

(iii) Shri Ashok Kumar Ghasghase, Director (Marketing)

(iv) Shri Gautam Sen Director (Finance) up to 31st January 2014.

(v) Shri.Suresh Warior Director (Finance) & CFO from 18th July 2014

(vi) Shri R. H. Kulkarni (Executive Director Finance) & CFO from 13th May 2014 to 17th July 2014

(vii) Shri K. C. Prakash, Company Secretary up to 31st July, 2014.

(viii) Shri D. M. Sati, Company Secretary from 1st August, 2014.

11. Investments in Joint Ventures and Subsidiary

A) Urvarak VideshLtd.

The company has made a full provision for diminution in value of investment amounting to Rs. 0.18 Crore in the year 2013-14, in respect of its joint venture Urvarak Videsh Limited.

B) FACT RCF Building Products Ltd. (FRBL)

Investments held primarily to protect, facilitate existing business or trading relations, often called Trade Investments are not made with the intention that they will be available as additional cash resources and are classified as Long term. The investment in FRBL has been made with a long term perspective and is strategic in nature and categorized under Long term Trade Investments. Further as a part of Corporate Debt Restructuring program of FRBL, additional equity and Corporate Guarantees have been given by the Company. The unaudited financial statements of FRBL as at 31st March 2015 report a loss of Rs. 23.86 Crore, thus resulting in accumulated loss of Rs.60.54 Crore.

Despite the actual performance for the year 2014-15 being not so encouraging as compared to expectations, it is felt that operations of FRBL are expected to improve in future. Being a very novel concept acceptance of FRBL's product in lieu of conventional items would take time for sales to pick up and for operations turning around.

Since the assessment of diminution in value of long term investment is required to be done based on existing Net worth etc. and in accordance with Accounting Standard-13, a full provision towards the value of investments in FRBL amounting to Rs. 32.87 Crore and also towards the outstanding loans & advances amounting to Rs. 1.79 Crore as on 31st March, 2015 has been reckoned.

C) Rajasthan Rashtriya Chemicals and Fertilizers Ltd.

Winding up proceedings in respect of Company's subsidiary Rajasthan Rashtriya Chemicals and Fertilizers Ltd. is in process and during the year an application has been made to the Registrar for striking of the Company's name in a fast track mode. No objection also from Department of Fertilizers has been received during the year for the same.

12. Company has handed over possession of land measuring 48849.74 sq.mtrs adjacent to the company's township at Chembur, Mumbai, to MMRDA (Mumbai Metropolitan Region Development Authority) (a statutory body under Government of Maharashtra) for the construction of public road. However formalities pertaining to transfer of ownership and consideration for exchange of land are yet to be completed, pending which company has classified the same as assets held for disposal under Note No.10 to financial statements.

13. Disclosure under Clause 32 of Listing Agreement

There are no specific disclosures required to be made under clause 32 of Listing Agreement.

14. Employee Benefits:-

The required disclosure under the Revised Accounting Standard 15 is given below.

General Description of Defined Benefit Plan 1) Provident Fund:-

The Provident Fund contributions are made to a Trust administered by the Company. The interest rate payable to the members of the Trust shall not be lower than statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952.

During the year an amount of Rs. 30.99 Crore (P.Y. Rs.29.20 Crore) has been charged of to statement of Profit and loss towards contribution by the Company.

In terms of the guidance on implementing the revised AS-15 issued by the Accounting Standard Board of the Institute of Chartered Accountants of India, the Provident Fund Trust set up by the Company is treated as Defined Benefit Plan since the Company has to meet the shortfall in the fund assets, if any. However, as at the year end, no shortfall remains un provided for. Further, having regard to the assets of the Fund and the Return on the Investments, the Company does not expect any deficiency in the foreseeable future. In terms of the guidance note issued by the Institute of Actuaries of India, the actuary has provided a valuation of provident fund liability based on the assumptions listed below and determined that there is no shortfall as at 31st March, 2015.

The assumptions used in determining the present value of obligation of the interest rate guarantee under deterministic approach are:

a) Projection is restricted to five years or earlier, if retirement occurs

b) Expected guaranteed interest rate 8.75 %

c) Discount rate 7.95 %

The total plan liabilities under the RCF Ltd. Employees Provident Fund Trust as at 31st March 2015 as per the unaudited financial statement for the year ended is Rs. 888.33 Crore (P.Y. Rs. 806.64 Crore) as against total plan assets of Rs. 888.33 Crore (PY. Rs. 806.64 Crore). The funds of the trust have been invested under various securities as prescribed by regulatory authorities.

2) Gratuity:-

The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service depending upon the date of joining .The same is payable on death, separation from service, or retirement, whichever is earlier. The benefit vests after five years of continuous service. During the year, charge on account of Gratuity to Statement of Profit and Loss amounts to Rs. 16.15 Crore. During the year Company settled Rs.

19.04 Crore towards gratuity of which Rs. 14.91 Crore is payable to the Trust.

3) Leave Encashment:-

The company has been accounting for provision on account of leave encashment on retirement based on actuarial valuation carried out as at the Balance date.

The liability for the leave encashment on retirement as at 31st March 2015 is Rs. 178.48 Crore (P.Y. Rs. 163.20 Crore)

4) Post-Retirement Medical Benefits:-

The company has been accounting for provision on account of post-retirement medical benefits based on actuarial valuation carried out as at the Balance Sheet date. Employees of the company upon retirement/ separation under Voluntary Retirement Scheme are entitled to medical benefits as per the scheme in force.

5) Long Term Service Award

As a part of cordial relation and appreciation of long dedicated service, Company is honouring its employees with a memento on completion of 25 years of service.

General Description of Defined Contribution Plan

Contributory Superannuation Scheme: -The scheme is a defined contribution scheme. Employees are required to exercise their option to be a part of the scheme and make a contribution equivalent to the amount contributed by the company to the fund, upon becoming the member of the scheme. Under the scheme the employee shall be eligible for pension provided they have put in at least 15 years of service in the company and superannuate from the company which is as per Govt. of India guideline. During the year company has paid an amount of Rs.10.98 Crore as contribution towards the said scheme.

15. In line with the principle of prudence enunciated in Accounting Standard-1, Disclosure of Accounting policies as per the announcement of Institute of Chartered Accountants of India, Company has not recognized an amount of Rs.5.72 Crore (P.Y. Rs. 0.30 Crore) being the mark to market gains on outstanding derivative contracts as at 31st March 2015.

16. The dispute relating to manufacture of Single Super Phosphate on job work basis given to third party has been referred to arbitration. Company's provision towards amount doubtful of recovery amounting to Rs. 3.83 Crore still continues.

17. Since implementation of SAP, creation of liability for expenses takes place in two stages and Income tax is deducted at the second stage. According to the legal opinion obtained by the Company and as per the practice followed by other companies using SAP the process of deduction and remittance of Tax at source is correctly followed.

18. Effective 1st April 2014, the company has charged depreciation based on the revised remaining useful life of the assets as per the requirements of Schedule II of the Companies Act, 2013. Due to above, depreciation charge for the year ended 31st March 2015 is higher by Rs. 34.57 Crore.

Consequently the profit for the year is lower by Rs. 34.57 Crore and the deferred tax charge being lower by Rs. 11.96 Crore.

Further, consequent to Notification GSR 627(E) dated August 29, 2014 amending Para 7(b) under Schedule II, Company has during the year, charged off transitional depreciation amounting to Rs. 42.56 Crore to Statement of Profit and Loss.

19. Disclosure relating to Corporate Social Responsibility "CSR" Activities

Company during the year has incurred an expenditure of Rs. 8.30 Crore towards the same which is reported under Note No. 24 "Other Expenses"& Note 24B "Miscellaneous expenses".

20. Previous year figures have been re-arranged and regrouped wherever necessary and/or practicable to make them comparable with those of the current year.


Mar 31, 2014

1. CONTINGENT LIABILITIES NOT PROVIDED FOR:

1.1 Claims a''gainst.the'' Company not acknowledged as debts -to .''the extent," ascertainable (Interest cannot be. estimated reliably) aggregates to Rs. 23.50 crore (P.Y..''Rs. 23.62* crore) which include the following:

a) Claims preferred by local Authorities amounting to Rs. 8.34 crore (net of payment made/liability provided ofRs. 3.95 crore). The Capitalization of land at Kurul Township and factory at Thal Unit has been made subject to Arbitration awards/Court decisions in this behalf.

b) SCADA charges claimed by M/s GAIL (I) Ltd. Rs. 1.47 crore (P.Y. Rs. 1.47 crore)

c) Water charges claimed by Municipal Corporation of Greater Mumbai. Rs. 0.67 crore (P.Y. Rs. 0.41 crore).

d) Claims before arbitrators/courts, are Rs. 13.03 crore (P.Y. * 13.41 crore).

2.2 Corporate Guarantee executed by the Company on behalf of its Joint Venture Company, FACT- RCF Building Products Ltd aggregates to Rs. 37.66 crore (P.YRs. 17.50 crore).

2.3 Claims against the Company not acknowledged as debts.

(Rs. in crore)

In respect of matters As at As at under dispute with 31st March, 31st March, various authorities 2014 2013

Excise Duty (D) 21.66 21.66

Excise Duty (S) 131.03 131.03

Sales Tax (D) 32.01 0.00

Income Tax (D) * 18.24 21.56

Service Tax (D) 17.09 15.20

Custom Duty (D) 97.28 80.93

(D) (Demands raised)/(S) (Show cause notice issued). * Against which an amount of Rs. 4.03 crore has been deposited with Tax authorities.

2.4 The amount of claims in respect of legal cases fled against the Company for labour matters and not acknowledged as debts is not ascertainable.

2.5 CESTAT vide its order No.A/270-271/12/EB/C- II dated 27.03.2012 confirmed the demand of excise duty as per the Order in Original issued by Commissioner Excise LTU amounting to Rs. 9.66 crore, interest at appropriate rate and a reduced penalty of Rs. 4.67 crore in respect of Naphtha purchased by the company at concessional rate of excise duty for the purposes other than mentioned in the exemption notification for the period November 1996 to February 2005. Company''s appeal against the above order was set aside by Bombay High Court consequent to which the demand was enforced for payment. Company has deposited an amount of Rs. 9.66 crore towards duty demanded. Company has appealed against the order of CESTAT and also filed a Stay application against demand of interest and penalty in Hon''ble Supreme Court. While granting the Stay, Hon''ble Supreme Court directed the Company to deposit an amount of Rs. 2.00 crore towards penalty as against Rs. 4.67 crore originally demanded, which has since been deposited. The said amount of Rs. 11.66 crore has been charged off to statement of profit and loss in the previous year. The appeal is yet to be heard.

During the year, intimation was received from excise authorities seeking payment of Rs. 18.61 crore towards interest in the said matter. Company has disputed the same since the matter is already resting with Hon''ble Supreme Court.

For the period from March 2005 to October 2005, show cause notice is served for Rs. 1.77 crore for the same reason. Commissioner of excise passed an order for payment of excise duty of Rs. 1.77 crore and penalty of Rs. 1.77 crore plus interest at an appropriate rate. Company filed an appeal cum Stay application before CESTAT. Stay on recovery has been granted by CESTAT; however the appeal is yet to be heard.

2.6 Demand of Rs. 33.48 crore raised by Municipal Corporation of Greater Mumbai (BMC) towards additional sewerage charges levied from 5-4-1987 are disputed by the Company in a Writ Petition fled in Bombay High Court. The Honorable High Court vide its interim Order dated 10-11- 92 has granted stay on recovery of the demand for the period up to the date of the Order and directed the Company to pay sewerage charges from the date of the order which is being paid by the Company. The matter has been disposed off by the High Court and the Company approached Supreme Court. Supreme Court has now directed the Bombay High Court to hear the matter and decide on merits based on facts of the case. The Stay granted on the said matter continues.

As a part of an agreement entered into with BMC for obtaining raw sewerage, the Company has paid an interest free deposit of Rs. 16 crore to BMC (included in Note no.12) representing approximately 50% of the disputed demand which would be adjustable against the disputed demand in case the Court rules in favor of BMC. No provision is considered necessary for the disputed demand ofRs. 33.48 crore as the claim of BMC is not tenable.

2.7 The Company had entered into a lumpsum turn key contract with M/s Uhde India Ltd (UDL) for revamp of its Old Nitric Acid plant at Trombay Unit .During 2004-05, Commissioner of Customs (Imports) Mumbai had allowed clearance of the Air Compressor package consignment under provisional assessment after payment of applicable custom duties, furnishing of Bank guarantees towards demand and a revenue deposit ofRs. 5.75 crore.

Thereafter Commissioner of Customs passed an Order for payment of Custom Duty and penalty aggregating to Rs. 25.62 crore against the above matter. Company has paid Rs. 9.27 crore against provisional assessment including Countervailing . Duty (CVD) and Cenvat credit amounting to Rs. 4.49 crore has been availed on the CVD paid. On furnishing of bank guarantees amounting to Rs. 29.07 crore the said revenue deposit was returned.

The Order has been challenged before CESTAT / High Court and by an Order dated 20th June 2007, Bombay High Court stayed the order passed by the Commissioner of Customs and also against invoking the bank guarantees. The Company has renewed the Bank guarantees amounting to Rs. 29.07 crore. Bombay High Court has now ordered CESTAT to hear the Appeal fled by RCF and the Appeal before bench of CESTAT is expected to be heard. Company has been advised by solicitors and advocates that the demand is not sustainable and no provision is considered necessary.

2.7 Company has received ¦ invoic.es ¦ amounting to Rs. 50.34 crore from GAIL (India) Ltd. towards increase in trans''mission ''charges on account of Petroleum and "Natural- Gas''. Regulatory Board (PNGRB)". "order revising the tariffs of ONGC pipeline *for* supply ''of gas to Trombay unit. As opine by Company''s legal consultants there is no privity of contract between ONGC and RCF and thus such an increase cannot be passed by GAIL (India) Ltd to RCF. As advised by Company''s" legal consultants this demand is not tenable and therefore no provision has been made towards the same.

2.8 Company has a contract with GAIL (India) Ltd for supply of APM gas to its Trombay and Thal units. The price of this gas has been defined under Article 10 of the contract where GAIL (India) Ltd. has the right to revise gas price at any time in future as per the directives of Government of India issued from time to time which clearly connotes that such revision would be prospective- in nature. GAIL (India) Ltd had intimated to the Company in November 2013, in view of dwindling supply of APM gas, any additional gas supplied over and above the available gas under APM allocation would be market determined. GAIL (India) Ltd had accordingly preferred invoices for supply of such gas from November 2013. Company accepted the contention of GAIL (India) Ltd and made payments accordingly.

However Company is now in receipt of invoices from GAIL (India) Ltd., amounting to approximately Rs. 98 crore for the period February 2012 to November 2013 for supply of such gas. As mentioned above any revision should be prospective and any retrospective revision is against the spirit of Article 10 of the contract with GAIL (India) Ltd. Company has challenged the unilateral decision of GAIL to revise gas prices with them and has not agreed for the increase. Company has also represented this matter to Department of Fertilizers, Government of India.

As advised by Company''s legal consultants this retrospective price increase has no sanctity in law and is not tenable and accordingly no provision has been made in the accounts.

3. Company has acquired entire wagons ''(416. .wagons) originally under lease from SBI Leasing Group. Further, under the "Own Your Wagons Scheme" of Indian Railways, these wagons have been sub-leased to Indian Railways. The estimated future revenue on this account is Rs. 4.24 crore (PYRs. 4.94 crore) .Period wise'' '' classifications is as below.

4. Formalities relating to transfer of certain immovable and other properties from Fertilizers Corporation of India Limited to the Company on reorganization of the former in 1978 are not yet completed. Out of property cards for a total area of 3097278 sq. meter , property cards for 409582 sq. meter (P.Y409582) are yet to be transferred in the name of the Company.

5. Out of total area of 5052476 Sq. meter area at Thal Unit, the title deeds relating to area of 3203543 Sq. meter area are in the name of the Company. The capitalization of Freehold land at Thal Unit includes land at Kihim having carrying Cost of Rs. 0.02 crore, pending execution of documents and transfer of title deeds in the name of Company, due to dispute.

6. Some of the balances of Trade Receivable, Trade Payable, Current Liability and Loans and advances are subject to confirmation, reconciliation and consequential adjustments if any. In the opinion of the management, such adjustments would not be material.

7. Inventory includes stores and spares costing Rs. 6.73 crore (P.Y. Rs. 6.70 crore) declared as surplus. The amount includes stores/spares valued at Rs. 4.29 crore (P.YRs. 4.18 crore) identified as disposable surplus which on disposal may not fetch full book value and accordingly, provision of Rs. 4.08 crore (P.YRs. 3.97 crore) has been made on account of estimated loss on disposal thereof.

8. The Company is eligible to receive subsidy from Fertilizer Industry Co-Ordination Committee (FICC) / Department of Fertilizers (DOF) on Urea, Phosphatic and Potassic (P & K) Fertilizers at the rates notified from time to time.

For the rates yet to be notified, due to escalations/de- escalations in the cost of inputs and other costs, subsidy has been accounted on estimated basis.

Dues to Micro and small enterprises have been* * determined to the extent such parties have been identified on the basis of information given by such parties/ available with the company. This has been relied upon by the auditors.

9. Company has recognized its factory at Trombay, factory at Thal and Trading, as geographical segments (primary segments) and its activities of manufacture and sale of fertilizers, and manufacture and sale of industrial products as business segments (secondary segments) in accordance with Accounting Standard - 17 on Segment reporting prescribed under the Companies (Accounting Standard) Rules, 2006. The segment wise revenue, expenses and capital employed are given in Annexure-1.

10. Information as per Accounting Standard (AS-18) on Related Party Disclosures is given below:-

Company is under the administrative control of Ministry of Chemicals and Fertilizers, Government of India and is within the meaning of state controlled enterprise as per para 10.13 of Accounting Standard-18.

1) Key Management Personnel

Whole time Directors:-

(i) Shri. R.G. Rajan, Chairman and Managing Director

(ii) Shri. C.M.T Britto, Director (Technical)

(iii) Shri. Ashokkumar Ghasghase, Director (Marketing)

(iv) Shri. Gautam Sen, Director (Finance) upto 31st January 2014.

The above amount includes salaries and allowances, ", contribution to Provident fund, pension etc. and actual payments towards leave encashment, if any. In addition to the above they are eligible for non-monetary perquisites as per Government of India guidelines.

There have been no outstanding loans and advances from the above referred parties as at year end.

11. As per requirements of Accounting Standard -28, Company has carried out impairment testing of its Cash Generating Units/Fixed Assets at the year end. Such a test of impairment is carried out considering an estimated useful life of 10 Years for arriving at the value in use. Accordingly, a provision for impairment has been made towards the Rapidwall and Sodium Nitrate plants at Trombay unit and Argon Plant at Thal unit since the expected value in use as arrived at of the said plants are lower than their carrying amount. A provision of Rs. 6.48 crore has been made towards impairment.

Consequent to making full provision for impairment towards its Rapidwall and Sodium Nitrate /Nitrite plants, Company has also provided for an amount of Rs. 0.41 crore towards the inventory of specific spares relating to the said plants.

Figures in brackets are in respect of previous year

(*) Disputes, Claims and Others represent estimates made mainly for probable claims arising out of litigations / disputes pending with authorities /Trade Payable. Deferred Tax Benefit of Rs. 0.86 crore (Previous year Rs. 0.86 crore) has been recognized on above. The timing and probability of outflow with regard to these matters depends on the ultimate settlement /conclusions with relevant authorities.

12. In compliance with Accounting Standard 27 on "Financial Reporting of Interests in Joint Ventures". The required information is as under:-

A) FACT-RCF BUILDING PRODUCTS LTD:-

A Joint venture Company with Fertilizers and Chemicals Travancore Ltd. (FACT) for manufacture of rapid building materials from Gypsum at Kochi.

B) URVARAK VIDESH LTD:- A joint venture with National Fertilizers Ltd. and KRIBHCO for revival of closed Fertilizer Units of FCI/HFC group of companies has been formed. Since the company has made full provision for diminution in the value of investment, accounts of the Joint Venture entity is not consolidated.

The Company''s share in assets, liabilities, income, expenditure, contingent liabilities and capital commitments compiled on the basis of audited/un- audited financials received from the joint venture entity FACT-RCF BUILDING PRODUCTS LTD is as follows:-

The Corporate Debt Restructuring program of the Joint Venture Company FACT RCF Building Products Ltd. (FRBL) has been approved during the year and as per the same, Company has to subscribe additional equity capital in the Joint venture entity. During the year, Company has contributed to additional equity of Rs. 9.69 crore pending allotment and further, as given in the note no.25.2 a corporate guarantee has been executed in favor of the bankers. Being the initial years of operations FRBL has reported losses. However sales have started picking up and thus there is tremendous potential for growth and the company is expected to turnaround.

Considering the above fact and taking into account the long term and strategic nature of the investment, in the opinion of the management the diminution in the value of the investment is temporary.

Winding up proceedings in respect of Company''s subsidiary Rajasthan Rashtriya Chemicals and Fertilizers Ltd has been initiated. Further the joint venture company RCF-HM Construction Solutions Pvt. Ltd. has been wound up. Accordingly investment in said companies, which were fully provided for earlier amounting to Rs. 0.59 crore have fully been written off during the year.

Pending disposal, the said carbon credits are valued (at cost) as inventory.

13. Company has handed over possession of land measuring 48849.74 sq.mtrs adjacent to the company''s township at Chembur, Mumbai, to MMRDA (Mumbai Metropolitan Region Development Authority) (a statutory body under Government of Maharashtra) for the construction of public road. However formalities pertaining to transfer of ownership and consideration for exchange of land are yet to be completed, pending which company has classified the same as assets held for disposal under Note No.10 to financial statements.

14. During the year Company has incurred expenditure towards Corporate Social Responsibility (CSR) related activities amounting to Rs. 14.82 crore (P.Y. Rs. 9.05 crore) which is reported under Note no. 24B "Miscellaneous expenses".

15. Employee Benefits:-

The required disclosure under the Revised Accounting Standard 15 is given below.

General Description of Defined Benefit Plan

1) Provident Fund:-

The Provident Fund contributions are made to a Trust administered by the Company. The interest rate payable to the members of the Trust shall not be lower than statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952.

During the year an amount of Rs. 29.20 crore (PY. Rs. 28.71 crore) has been charged of to statement of Profit and loss towards contribution by the Company.

In terms of the guidance on implementing the revised AS-15 issued by the Accounting Standard Board .01'' the .Institute 01 Chartered Accountants of India, the Provident Fund Trust set up by the Company, is treated ."as Defined Benefit Plan since the Company has'' ,to meet the shortfall in the fund assets, if any.. However,,"as *at the year end, no shortfall remains -un, provided ."for. Further, having regard to the assets of the Fund and the Return on the Investments, the- Company does not expect any deficiency in the foreseeable future^. "In terms of the guidance note issued by the Institute of Actuaries of India, the actuary has provided a valuation of provident fund liability based on the assumptions listed below and determined that there is no shortfall as at 31st March, 2014.

The assumptions used in determining the present value of obligation of the interest rate guarantee under deterministic approach are:

a) Projection is restricted to five years or earlier, if retirement occurs

b) Expected guaranteed interest rate 8.75 %

c) Discount rate 9.03 %

The total plan liabilities under the RCF Ltd. Employees Provident Fund Trust as at 31st March 2014 as per the unaudited financial statement for the year then ended is Rs. 806.64 crore (PY. Rs. 729.61 crore) as against total plan assets of Rs. 806.64 crore (P.Y.Rs. 729.61 crore). The funds of the trust have been invested under various securities as prescribed by regulatory authorities.

2) Gratuity:-

The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to ffteen days salary last drawn for each completed year of service depending upon the date of joining. The same is payable on death, separation from service, or retirement, whichever is earlier. The benefit vests after five years of continuous service. During the year Company has settled Rs. 15.50 crore

towards gratuity of which Rs. 6.62 crore is receivable from the Trust.

3) Leave Encashment:-

The company has been accounting for provision on account of leave encashment on retirement based on actuarial valuation carried out as at the Balance date.

The liability for the leave encashment on retirement as at 31st March 2014 is Rs. 163.20 crore (PY. Rs. 160.08 crore)

4) Post Retirement Medical Benefits:-

The company has been accounting for provision on account of post-retirement medical benefits based on actuarial valuation carried out as at the Balance Sheet date. Employees of the company upon retirement/separation under Voluntary Retirement Scheme are entitled to medical benefits as per the scheme in force.

5) Long Term Service Award

As a part of cordial relation and appreciation of long dedicated service, Company is honouring its employees with a memento on completion of 25 years of service.

General Description of Defined Contribution Plan

Contributory Superannuation Scheme:- The

scheme is a defined contribution scheme. Employees are required to exercise their option to be a part of the scheme and make a contribution equivalent to the amount contributed by the company to the fund, upon becoming the member of the scheme. Under the scheme the employee shall be eligible for pension provided they have put in at least 15 years of service in the company and superannuate from the company which is as per Govt. of India guideline. During the year company has paid an amount ofRs. 11.15 crore as contribution towards the said scheme.

Estimates of future salary increase considered -in "the* * actuarial valuation take into account inflation, seniority, promotion and other relevant factors such as demand and supply in the employment market.

16. In line with the principle of prudence enunciated in Accounting Standard-1, Disclosure of Accounting policies as per the announcement of Institute of Chartered Accountants of India, Company has not recognized an amount of Rs. 0.30 crore (P.Y.Rs. 1.01) being the mark to market gains on outstanding derivative contracts as at 31st March 2014.

17. Company had entered into an arrangement for manufacture of Single Super Phosphate (SSP) on job work basis with a third party. Owing to party''s failure to fulfill contractual obligations, the said agreement was terminated by the Company and an amount of Rs. 5.84 crore receivable from the party was provided for as doubtful during the previous year. Company has initiated arbitration proceedings against the said party during the year. Inventory amounting to Rs. 2.01 crore stands recovered from the said party. Thus the amount of provision stands reduced to Rs. 3.83 crore as on 31st March 2014.

18. Since implementation of SAP, creation of liability for expenses takes place in two stages and Income tax is deducted at the second stage. According to the legal opinion obtained by the Company and as per the practice followed by other companies using SAP the process of deduction and remittance of Tax at source is correctly followed.

19. During the year 2012-13 a fire occurred in the stores department of Trombay Unit consequent which Company received an ad-hoc payment of Rs. 3.00 crore towards the same .Company had recognized an amount of Rs. 0.48 crore as income during the said year matching revenues with costs. An insurance claim of Rs. 7.95 crore has been provisionally accepted towards the amounts claimed by the Company during the year of which an amount of Rs. 2.50 crore was further settled. Company has recognized an amount of Rs. 7.47 crore as income towards the same during the year. The expenditure/losses claimed have been appropriately dealt in the books. C.Y. Rs. 8.39 crore (PY. Rs. 2.02 crore)

20. Additional Information:

Additional information in respect of goods manufactured, value of imports calculated on CIF basis, expenditure in foreign currency during the year on account of royalty, know-how etc., consumption of raw material, spare parts and components during the year, earnings in foreign exchange, etc. is as follows:

21. Previous year figures have been re-arranged and regrouped wherever necessary and/or practicable to make them comparable with those of the current year.


Mar 31, 2013

1. CONTINGENT LIABILITIES NOT PROVIDED FOR:

1.1 Claims against the Company not acknowledged as debts to the extent ascertainable (Interest cannot be estimated reliably) aggregates to Rs. 23.62 crore (Previous year Rs. 23.81 crore) which include the following:

a) Claims preferred by local Authorities amounting to Rs. 8.34 crore (net of payment made/liability provided of Rs. 3.95 crore). The Capitalization of land at Kurul Township and factory at Thal Unit has been made subject to Arbitration awards/Court decisions in this behalf.

b) SCADA charges claimed by M/s GAIL (I) Ltd. Rs. 1.47 crore (P.Y. Rs. 1.47 crore) & water charges claimed by Municipal Corporation of Greater Mumbai. Rs. 0.41 crore, (P.Y. Rs. 0.21 crore).

c) Claims before arbitrators/courts, are Rs. 13.41 crore (previous year Rs. 13.79 crore).

1.2 Corporate Guarantee executed by the Company on behalf of its Joint Venture Company, FACT- RCF Building Products Ltd. aggregates to Rs. 17.50 crore (Previous year Rs. 17.50 crore).

1.3 Show cause notices issued by Excise Authorities aggregating to Rs. 131.03 crore (Previous year Rs. 4.09 crore), disputed by the company.

1.4 Demand raised by Excise Authorities (other than as mentioned in Para 25.3) and other authorities aggregating to Rs. 21.66 crore (Previous year Rs. 20.90 crore), disputed by the company.

1.5 a) Demands raised by Income Tax Authorities, disputed by the company aggregating to Rs. 21.56 crore (Previous year Rs. 316.85 crore), against which the amount of Rs. 4.05 crore has been deposited with Tax authorities.

b) Demands raised by Sales Tax Authorities, disputed by the company aggregating to Rs. Nil (previous year Rs. 3.57 crore)

c) Demands raised by Service Tax Authorities, disputed by the company aggregating to Rs. 15.20 crore (previous year Rs. 0.15 crore)

d) Demand raised by Custom Authorities (other than as mentioned in Para 26.9) disputed by the company aggregating to Rs. 80.93 crore (previous year Rs. 80.77 crore).

1.6 The amount of claims in respect of legal cases filed against the Company for labour matters and not acknowledged as debts is not ascertainable.

1.7 CESTAT vide its order No. A/270-271/12/EB/C-II dated 27.03.2012 confirmed the demand of excise duty as per the Order in Original issued by Commissioner Excise LTU amounting to Rs. 9.66 crore, interest at appropriate rate and a reduced penalty of Rs. 4.67 crore in respect of Naphtha purchased by the company at concessional rate of excise duty for the purposes other than mentioned in the exemption notification for the period November 1996 to February 2005.Company''s appeal against the above order was set aside by Bombay High Court during the year, consequent to which the demand was enforced for payment. Company has deposited an amount of Rs. 9.66 crore towards duty demanded. Company has appealed against the order of CESTAT and also filed a Stay application against demand of interest and penalty in Hon''ble Supreme Court. While granting the Stay, Hon''ble Supreme Court directed the Company to deposit an amount of Rs. 2.00 crore towards penalty as against Rs. 4.67 crore originally demanded, which has since been deposited. Company has charged to Statement of Profit and Loss an amount of Rs. 11.66 crore towards the same.

For the period from March 2005 to Oct. 2005, show cause notice is served for Rs. 1.77 crore for the same reason. Commissioner of excise passed an order for payment of excise duty of Rs. 1.77 crore & penalty of Rs. 1.77 crore plus interest at appropriate rate, The Company has filed an appeal in CESTAT & stay has been granted.

1.8 Demand of Rs. 33.48 crore raised by Municipal Corporation of Greater Mumbai (BMC) towards additional sewerage charges levied from 5-4-1987 are disputed by the Company in a Writ Petition filed in Bombay High Court. The Honorable High Court vide its interim Order dated 10-11- 92 has granted stay on recovery of the demand for the period up to the date of the Order and directed the Company to pay sewerage charges from the date of the order which is being paid by the Company. The matter has been disposed off by the High Court, and is now resting in Supreme Court, with stay granted to continue.

As a part of an agreement entered into with BMC for obtaining raw sewerage, the Company has paid an interest free deposit of Rs. 16 crore to BMC (included in Note no. 12) representing approximately 50% of the disputed demand which would be adjustable against the disputed demand in case the Court rules in favor of BMC. No provision is considered necessary for the disputed demand of Rs. 33.48 crore as the claim of BMC is not tenable.

1.9 The Company had entered into a lumpsum turn key contract with M/s Uhde India Ltd. (UDL) for revamp of its Old Nitric Acid plant at Trombay Unit. During 2004-05, Commissioner of Customs (Imports) Mumbai had allowed clearance of the Air Compressor package consignment under provisional assessment after payment of applicable custom duties, furnishing of Bank guarantees towards demand and a revenue deposit of Rs. 5.75 crore.

Thereafter Commissioner of Customs passed an Order for payment of Custom Duty and penalty aggregating to Rs. 25.62 crore against the above matter. Company has paid Rs. 9.27 crore against provisional assessment including Countervailing Duty (CVD) & Cenvat credit amounting to Rs. 4.49 crore has been availed on the CVD paid.

The Order has been challenged before CESTAT/ High Court and by an Order dated 20th June 2007, Bombay High Court stayed the order passed by the Commissioner of Customs and also against invoking the bank guarantees. The Company has renewed the Bank guarantees. Bombay High Court has now ordered CESTAT to hear the Appeal filed by RCF and the Appeal before bench of CESTAT is expected to be heard. Company has been advised by their solicitors and advocates that the demand is not sustainable and no provision is considered necessary.

2. Estimated amount of contracts remaining to be executed on capital account and not provided for aggregates to Rs. 130.36 crore (Previous year Rs. 96.70 crore) net of advances.

3. The Company has acquired entire wagons (416 wagons) originally under lease from SBI Leasing Group. Further, under the "Own Your Wagons Scheme" of Indian Railways, these wagons have been sub-leased to Indian Railways. The estimated future revenue on this account is Rs. 4.94 crore (Previous year Rs. 5.65 crore). Period wise classification of which is as below.

4. Formalities relating to transfer of certain immovable and other properties from Fertilizers Corporation of India Limited to the Company on reorganization of the former in 1978 are not yet completed. Out of property cards for a total area of 3095022 sq. mts, property cards for 409582 sq. mts (P.Y.465340) are yet to be transferred in the name of the Company.

5. The capitalization of Freehold land at Thal Unit includes land at Kihim having carrying Cost of Rs. 0.02 crore, pending execution of documents and transfer of title deeds in the name of Company, due to dispute.

6. Some of the balances of Trade Receivable, Trade Payable, Current Liability and Loans and advances are subject to confirmation, reconciliation and consequential adjustments if any. In the opinion of the management, such adjustments would not be material.

7. Inventory includes stores and spares costing Rs. 6.70 crore (previous year Rs. 5.37 crore) declared as surplus. The amount includes stores/spares valued at Rs. 4.18 crore (Previous year Rs. 2.76 crore) identified as disposable surplus and which on disposal may not fetch full book value and accordingly, provision of Rs. 3.97 crore (previous year Rs. 2.60 crore) has been made on account of estimated loss on disposal thereof.

8. The Company is eligible to receive subsidy from Fertilizer Industry Co-Ordination Committee (FICC) / Department of Fertilizers (DOF) on Urea, Phosphatic & Potassic (P&K) Fertilizers at the rates notified from time to time.

For the rates yet to be notified, due to escalations/de- escalations in the cost of inputs and other costs, subsidy has been accounted on estimated basis.

The details of subsidy accounted on estimated basis are as under:-

9. Consequent to revamp of its Ammonia Plant at Thal, the production of Urea during the year has exceeded the qualifying level of production upon which it becomes entitled for subsidy as per the guidelines issued under the New Investment Policy for Urea 2008. Considering the same an amount of Rs. 79.64 crore has been recognized as subsidy income.

10. Company has recognized its factory at Trombay, factory at Thal and Trading, as geographical segments (primary segments) and its activities of manufacture and sale of fertilizers, and manufacture and sale of industrial products as business segments (secondary segments) in accordance with Accounting Standard - 17 on Segment reporting prescribed under the Companies (Accounting Standard) Rules, 2006. The segment wise revenue, expenses and capital employed are given in Annexure-1.

11. Information as per Accounting Standard (AS-18) on Related Party Disclosures is given below:-

Company is under the administrative control of Ministry of Chemicals & Fertilizers, Government of India and is within the meaning of state controlled enterprise as per para 10.13 of Accounting Standard-18.

1) Key Management Personnel

Whole time Directors:-

(i) Shri. R.G. Rajan, Chairman & Managing Director

(ii) Shri. Gautam Sen Director (Finance)

(iii) Shri. CMT Britto, Director (Technical) from 11th April, 2012

(iv) Shri. Ashok Kumar Ghasghase, Director (Marketing) from 16th August, 2012

(v) Shri. Manoj Priya, Director (Technical) upto 30th September 2011.

The above amount includes salaries & allowances, contribution to Provident fund, pension etc. and actual payments towards leave encashment, if any. In addition to the above they are eligible for non-monetary perquisites as per Government of India guidelines.

12. As per requirements of Accounting Standard -28 Company has carried out impairment testing of its Cash Generating Units/Fixed Assets at the year end. Such a test of impairment is carried out considering an estimated useful life of 10 Years for arriving at the value in use. Accordingly, a provision for impairment has been made towards the Rapidwall plant at Trombay unit and Argon Plant at Thal unit since the expected value in use as arrived at of the said plants, are lower than their carrying amount. A provision of Rs. 40.67 crore has been made towards impairment.

13. The company has made a full provision for diminution in value of investment in respect of it subsidiary Rajasthan Rashtriya Chemicals & Fertilizers Ltd. & Joint Venture Company RCF-HM Construction Solutions Pvt. Ltd. as under.

As Corporate Debt Restructuring program of the Joint Venture Company FACT RCF Building Products Ltd. is in process, Company would be subscribing to additional equity capital in the Joint venture company to the extent of Rs. 10 crore. Considering the above fact and taking into account the long term and strategic nature of the investment, in the opinion of the management the diminution in the value of the investment is temporary.

14. Company has handed over possession of land measuring 48849.74 sq. mtrs adjacent to the company''s township at Chembur, Mumbai, to MMRDA (Mumbai Metropolitan Region Development Authority) (a statutory body under Government of Maharashtra) for the construction of public road. However formalities pertaining to transfer of ownership & consideration for exchange of land are yet to be completed. Pending which company has classified the same as assets held for disposal under Note No.10 to financial statements.

15. During the year Company has incurred expenditure towards Corporate Social Responsibility (CSR) related activities amounting to Rs. 9.05 crore which is reported under Note no. 24B "Miscellaneous expenses".

16. Employee Benefits:-

The required disclosure under the Revised Accounting Standard 15 is given below.

General Description of Defined Benefit Plan

1) Provident Fund:-

The Provident Fund contributions are made to a Trust administered by the Company. The interest rate payable to the members of the Trust shall not be lower than statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952.

During the year an amount of Rs. 28.71 crore (P.Y. Rs. 25.60 crore) has been charged of to statement of Profit & loss towards contribution by the Company.

In terms of the guidance on implementing the revised AS-15 issued by the Accounting Standard Board of the Institute of Chartered Accountants of India, the Provident Fund Trust set up by the Company is treated as Defined Benefit Plan since the Company has to meet the shortfall in the fund assets, if any. However, as at the year end, no shortfall remains unprovided for. Further, having regard to the assets of the Fund and the Return on the Investments, the Company does not expect any deficiency in the foreseeable future. In terms of the guidance note issued by the Institute of Actuaries of India, the actuary has provided a valuation of provident fund liability based on the assumptions listed below and determined that there is no shortfall as at 31st March, 2013.

The assumptions used in determining the present value of obligation of the interest rate guarantee under deterministic approach are:

a) Projection is restricted to five years or earlier, if retirement occurs

b) Expected guaranteed interest rate - 8.50%

c) Discount rate - 8.25%

The total plan liabilities under the RCF Ltd. Employees Provident Fund Trust as at 31st March, 2013 as per the unaudited financial statement for the year then ended is Rs. 729.61 crore (P.Y. Rs. 651.83 crore) as against total plan assets of Rs. 729.61 (P.Y. Rs. 651.83 crore). The funds of the trust have been invested under various securities as prescribed by regulatory authorities.

2) Gratuity:-

The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service depending upon the date of joining. The same is payable on death, separation from service, or retirement, whichever is earlier. The benefit vests after five years of continuous service. During the year Company has settled Rs. 14.89 crore towards gratuity of which Rs. 4.68 crore is receivable from the Trust.

3) Leave Encashment:-

The company has been accounting for provision on account of leave encashment on retirement based on actuarial valuation carried out as at the Balance date.

The liability for the leave encashment on retirement as at 31st March, 2013 is Rs. 160.08 crore (P.Y. Rs. 153.37 crore)

4) Post Retirement Medical Benefits:-

The company has been accounting for provision on account of post-retirement medical benefits based on actuarial valuation carried out as at the Balance date. Employees of the company upon retirement/separation under Voluntary Retirement Scheme are entitled to medical benefits as per the scheme in force.

5) Long Term Service Award

As a part of cordial relation and appreciation of long dedicated service, Company is honouring its employees with a memento on completion of 25 years of service.

General Description of Defined Contribution Plan

Contributory Superannuation Scheme: - The scheme is a defined contribution scheme. Employees are required to exercise their option to be a part of the scheme & make a contribution equivalent to the amount contributed by the company to the fund, upon becoming the member of the scheme. Under the scheme the employee shall be eligible for pension provided they have put in at least 15 years of service in the company & superannuate from the company which is as per Govt. of India guideline. During the year company has provided an amount of Rs. 9.16 crore as contribution towards the said scheme.

17. In line with the principle of prudence enunciated in Accounting Standard-1, Disclosure of Accounting policies as per the announcement of Institute of Chartered Accountants of India, Company has not recognized an amount of Rs. 1.01 crore being the mark to market gains on outstanding derivative contracts as at 31st March, 2013.

18. Since implementation of SAP, creation of liability for expenses takes place in two stages and Income tax is deducted at the second stage. According to the legal opinion obtained by the Company and as per the practice followed by other companies using SAP the process of deduction and remittance of Tax at source is correctly followed.

19. On 9th August 2012, a fire occurred in the stores department of Trombay unit where items of stores, spares, office appliances, furniture and fixtures were damaged /destroyed. The loss on account of the same has been appropriately dealt with in the accounts. Consequent to lodging of an insurance claim, Company received an on-account payment of Rs. 3.00 crore. In accordance with principle of matching costs and revenues an amount of Rs. 0.48 crore has been adjusted against the losses and the balance amount of Rs. 2.52 crore has been accounted as income received in advance. Certain orders have been placed approximately amounting to Rs. 5.55 crore (exclusive of taxes and duties) for repairs to the damaged spares and expenditure towards the same to the extent of Rs. 4.63 crore (exclusive of taxes and duties) is expected to be incurred in the ensuing year. Accordingly necessary adjustments would be carried out in books during 2013-14 wherein the amount received as advance would be adjusted towards the actual expenditure upon in-principle recognition of the claim by the insurer.

20. Consequent to Department of Fertilizer''s notification No.23011/5/2013-MPR dated 3rd May 2013, and further directives from Government of India reduction in sales has been made by an estimated amount of Rs. 19.64 crore, on the stocks held by dealers/retailers expected to be sold at reduced MRP to farmers.

21. Additional Information:

Additional information in respect of goods manufactured, value of imports calculated on CIF basis, expenditure in foreign currency during the year on account of royalty, know-how etc., consumption of raw material, spare parts and components during the year, earnings in foreign exchange, etc. is as follows:

22. Previous year figures have been re-arranged and regrouped wherever necessary and / or practicable to make them comparable with those of the current year.


Mar 31, 2011

1. CONTINGENT LIABILITIES NOT PROVIDED FOR:

1.1 Claims against the Company not acknowledged as debts to the extent ascertainable (Interest cannot be estimated reliably) aggregates to Rs. 26.56 crore (Previous Year Rs. 23.81 crore) which include the following:

a) Claims preferred by local Authorities amounting to Rs. 8.34 crore (net of payment made/liability provided of Rs. 3.95 crore). The Capitalization of land at Kurul Township and factory at Thai Unit has been made subject to Arbitration awards/Court decisions in this behalf.

b) SCADA charges claimed by M/s GAIL(I) Ltd. Rs. 1.47 crore & water charges claimed by Municipal Corporation of Greater Mumbai Rs. 0.11 crore.

c) Claims before arbitrators/courts, are Rs. 16.64 crore (Previous Year Rs. 17.44 crore).

1.2 Guarantees issued by Bank in favour of Excise authorities, Customs authorities etc. aggregates to Rs. 170.57 crore (Previous Year Rs. 190.96 crore). This is secured by extension of charge over inventories and book debts.

Corporate Guarantee executed by the Company on behalf of its Joint Venture Company, FACT-RCF Building Products Ltd aggregates to Rs. 17.50 crore (Previous YearRs. 17.50 crore).

Letter of credit issued by banks in favour of suppliers etc. aggregates to Rs. 90.02 crore (Previous Year Rs. 205.33-crore)

1.3 Show cause notices issued by Excise Authorities aggregates to Rs. 3.98 crore (Previous YearRs. 0.79 crore).

1.4 A) Demands raised by Income Tax Authorities, disputed by the company aggregating to Rs. 5.61 crore (Previous YearRs. 4.43 crore), against which the amount of Rs.4.46 crore has been deposited with Tax authorities.

B) Demands raised by Excise (other than as mentioned in Para 1.6) and other authorities, disputed by the Company aggregating to Rs. 20.35 crore (Previous Year Rs. 19.85 crore).

C) Demands raised by Sales Tax Authority, disputed by the company aggregating to Rs. 3.57 crore (Previous Year Rs. 3.66 crore).

1.5 The amount of claims in respect of legal cases filed against the Company for labour matters and not acknowledged as debts is not ascertainable.

1.6 In case of Naphtha purchased by the Company at concessional rates of excise duty and used for the purpose other than mentioned in the exemption notification for the period from November 1996 to March 2001 & March-2005 to October 2005, the Commissioner of Excise (Adj.) has passed an order for payment of excise duty of Rs. 6.44 crore (P.Y.Rs. 6.44 crore) and penalty of Rs. 6.54 crore (P.Y.Rs. 6.54 crore) plus interest at appropriate rate. The Company has filed an appeal in CESTAT. For the period from April 2001 to February 2005, show cause notice is served for Rs. 4.99 crore (P.Y.Rs. 4.99 crore) for the same reason. Commissioner of Excise passed an order for payment of excise duty of Rs. 4.99 crore (P.Y.Rs. 4.99 crore) and penalty of Rs. 4.99 crore (P.Y.Rs.4.99 crore) plus interest at appropriate rate. Company has filed an appeal in CESTAT and stay has been granted. However, the company is yet to receive an order.

In case of. Naphtha purchased by the Company at concessional rate of excise duty & used for the purpose other than mentioned in the exemption notification for the period July 2007 to March 2008 the Commissioner of Excise (Adj.) has issued show cause notice demanding payment of excise duty of Rs. 6.11 crore (P.Y.Rs. 6.11 crore). Company replied to the show cause and a personal hearing was held on 14-10-2010. Order is still awaited on this issue.

For the period April 2008 to August 2009 show cause notice is served for Rs. 11.77 crore (P.Y.Rs. 11.77 crore) for the same reason. Company replied to the show cause and a personal hearing was held on 14-10-2010. Order is still awaited on this issue.

1.7 Demand' of Rs. 33.48 crore raised by Municipal Corporation of Greater Mumbai (BMC) towards additional sewerage charges levied from 5-4-1987 are disputed by the Company in a Writ Petition filed .in Bombay High Court. The Honourable High Court vide its interim Order dated 10-11-92 has granted stay on recovery of the demand for the period up to the date of the Order and directed the Company to pay sewerage charges from the date of the order which is being paid by the Company. The matter has been disposed off by the High Court, and is now resting in Supreme Court, with stay granted to continue. As a part of an agreement entered into with BMC for obtaining raw sewerage, the Company has paid an interest free deposit of Rs. 16 crore to BMC (included in Schedule K) representing approximately 50% of the disputed demand which would be adjustable against the disputed demand in case the Court rules in favour of BMC. No provision is considered necessary for the disputed demand of Rs. 33.48 crore as the claim of BMC is not tenable.

1.8 The Company had entered into a lumpsum turnkey contract with M/s Uhde India Ltd (UDL) for revamp of its Old Nitric Acid plant at Trombay Unit. During 2004- 05, Commissioner of Customs (Imports) Mumbai had allowed clearance of the Air Compressor package consignment under provisional assessment after payment of applicable custom duties, furnishing of Bank guarantees towards demand and a revenue deposit of Rs. 5.75 crore.

Thereafter Commissioner of Customs passed an Order for payment of Custom Duty and penalty aggregating to Rs. 25.62 crore against the above matter. Out of this Rs. 9.27 crore has been paid by the Company against provisional assessment of which Cenvat credit of Rs. 4.49 crore has been availed.

The Order has been challenged before CESTAT / High Court and by an Order dated 20th June 2007, Bombay High Court stayed the order passed by the Commissioner of Customs and also against invoking the bank guarantees. The Company has renewed the Bank guarantees. Bombay High Court, has now ordered CESTAT to hear the Appeal filed by RCF, which was earlier dismissed for want of permission from Committee on Disputes. Necessary action to bring the Appeal before appropriate bench of CESTAT is being taken by the Solicitors. Company has been.advised by their solicitors and advocates that the demand is not sustainable and no provision is considered necessary,

2. Estimated amount of contracts remaining to be executed on capital account and not provided for aggregates to Rs. 294.16 crore (Previous Year Rs. 55.19 crore) net of advances.

3. During the year, Company has purchased 166 wagons at an amount of Rs. 0.34 crore (Previous Year 250 wagons at Rs. 0.53 crore) from SBI Leasing Group which was originally held on lease by the company. During the year company incurred a lease rent of Rs. 0.04 crore.

4. Formalities relating to transfer of certain immovable and other properties from Fertilizer Corporation of India Limited to the Company on reorganization of the former in 1978 are not yet completed. Out of property cards for a total area of 3095022 sq. mts, property cards for 1659352 sq. mts are yet to be transferred in the name of the Company.

5. The capitalization of Freehold land at Thai Unit includes land at Kihim having carrying Cost of Rs. 0.02 crore, pending execution of documents and transfer of title deeds in the name of Company due to dispute.

6. Some of the balances of Debtors, Creditors, Current Liability and Loans and advances are subject to confirmation, reconciliation and consequential adjustments if any. In the opinion of the management, such adjustments would not be material.

7. Inventory includes stores and spares costing Rs. 9.92 crore (Previous Year Rs. 9,77 crore) declared as surplus. The amount includes stores/spares valued at Rs. 8.44 crore (Previous Year Rs. 8.09 crore) identified as disposable surplus and which on disposal may not fetch full book value and accordingly, provision of Rs. 7.99 crore (Previous Year Rs. 7.68 crore) has been made on account of estimated loss on disposal thereof.

8. The Company is eligible to receive subsidy from Fertilizer. Industry Co-Ordination Committee (FICC) / Department of Fertilizers (DOF) on Urea, Phosphatic & Potassic (P&K) Fertilizers at the rates notified from time to time. Consequent to the implementation of Nutrient Based Subsidy for P & K fertilizers from 1/04/2010 subsidy rates for the same are fixed and thus no escalation or de-escalation in the cost of inputs etc. is considered.

For the rates yet to be notified, due to escalations/de- escalations in the cost of inputs and other costs, subsidy has been accounted on estimated basis.

9. Company has recognized its factory at Trombay, factory at Thai and Trading, as geographical segments (primary segments) and its activities of manufacture and sale of fertilizers, and manufacture and sale of industrial products as business segments (secondary segments) in accordance with Accounting Standard -17 on Segment reporting prescribed under the Companies (Accounting Standard) Rules, 2006. The segment wise revenue, expenses and capital employed are enclosed in Annexure-I.

10. Information as per Accounting Standard (AS-18) on Related Party Disclosures is given below:-

Names of Related Parties and Description of relationships (Excluding with State Controlled Entities) Company is under the administrative Control of Ministry of Chemicals & Fertilizers, Government of India and is within the meaning of state controlled enterprise of para 9 of Accounting Standard-18.

1) Relationship SUBSIDIARY:-

A) Rajasthan Rashtriya Chemicals & Fertilizers Ltd. JOINT VENTURES:-

A) FACT-RCF Building Products Ltd.

B) Urvarak Videsh Ltd.

C) RCF-HM Construction Solutions Pvt. Ltd.

2) Key Management Personnel

Whole time Directors:-

(i) Shri. R.G. Rajan, Chairman & Managing Director w.e.f 3rd Nov 2010.

(ii) Shri. J. Kohareswaran, Chairman & Managing Director from 1 st July 2010 to 31 st Oct 2010. Director (Marketing) (From 1st April, 2010 to 30th June, 2010).

(iii) Shri. U.S. Jha Chairman & Managing Director upto 30th June 2010.

(iv) Shri. Gautam Sen Director (Finance).

(v) Shri. Manoj Priya, Director (Technical).

3) Details relating to parties referred to in (2) above.

Excluding contributions to the Gratuity Fund since the same are on actuarial valuation for the group of employees and medical expenses as they are covered under Group Mediclaim Policy taken by the company for all the employees and their eligible dependents.

(i) Loans and advances receivable: Refer Schedule-K

The following transactions were carried out with the related parties in the ordinary course of business:-

The company has made a full provision for diminution in value of investment including amount paid as advance against equity pending allotment, in respect of its subsidiary M/s. Rajasthan Rashtriya Chemicals & Fertilizers Ltd. and Joint Venture.Company M/s. RCF-HM Construction Solutions Pvt. Ltd., amounting to Rs. 0.49 crore and Rs. 0.10 crore respectively due to its intention of closure

11. Chikton Plant at Thai impaired during the previous year continues to stand impaired at a provision of 95% of its carrying value. As at 31st March 2011 there is no change in the condition of the Asset. (Amount of provision made during the year Rs. Nil, P.Y. Rs. 0.84 crore)

12. Disclosure as per Accounting Standard 29 on "Provisions, Contingent Liabilities and Contingent Assets" as on 31st March 2011.

13. In compliance with Accounting Standard 27 on "Financial Reporting of Interests in Joint Ventures", the required information is as under:-

A) FACT-RCF BUILDING PRODUCTS LTD:- A Joint venture Company with Fertilizers & Chemicals Travancore Ltd. (FACT) for manufacture of rapid building materials from Gypsum at Kochi.

B) URVARAKVIDESH LTD:- A joint venture with National Fertilizers Ltd. and KRIBHCO for revival of closed Fertilizers Units of FCI/HFC group of companies has been formed.

C) RCF-HM CONSTRUCTION SOLUTIONS PVT. LTD.:-

A Joint venture with First Future Properties Pvt. Ltd. (a consortium of M/s. Mahimfura Consultants Pvt. Ltd. and M/s. Hiranandani Constructions Ltd.) for marketing of rapid wall manufactured by RCF and its nominees.

Consequent upon communication received from Government of India for the buy back of Fertilizer bonds, the company has disposed off 50% of the value of bonds amounting to Rs.348.72 crore at a loss of Rs. 42.78 crore. As per the buy back arrangement, Company is entitled to a compensation of at least 50% of the loss incurred on the transaction with Government of India. Conservatively company has recognized an amount of Rs. 21.39 crore being 50% of the loss incurred upon the sale of 1st tranche as compensation of sale of Fertilizer Bonds under Schedule IV "Other Income" of profit and loss account. The company is in the process of filing the claim with Government of India.

14. Freight and Handling Charges include payment of disputed dues for the period from November 2001 to February 2010 consequent to order passed by Bombay High Court (C.Y. Nil, P.Y.Rs.10.75 crore).

15. Under the project of Clean Development Mechanism (CDM) registered with UNFCCC Company has been allotted 152013 (Net) Certified Emission Reductions (CER'S) or Carbon Credits. Company is in the process of disposing off the same. Pending disposal, the said carbon credits are valued (at cost) as inventory.

16. Disclosure under Clause 32 of Listing Agreement

Since the company has not given any loans and advances in the nature of loans to its subsidiary and the subsidiary has not acquired any shares of the company, no disclosures under clause 32 of the Listing Agreement are required.

17. Employee Benefits:-

The required disclosure under the Revised Accounting Standard 15 is given below.

General Description of defined Benefit Plan

1) Provident Fund:-

The Provident Fund contributions are made to a Trust administered by the Company. The interest rate payable to the members of the Trust shall not be lower than Statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 shortfall if any, shall be made good by the RCF Employees Provident

Fund Trust out of the reserve created by the Trust, as per circular C.Ex. /Misc./Comp./Audit/2009/43789 dated 21st Oct 2010 issued, by EPFO. During the current year, as at the Balance Sheet date, the income earned by the Trust and reserves are sufficient to cover shortfall of interest payable to employees and thus no shortfall on account of the same is charged to Profit & Loss Account during the current year.

2) Gratuity:-

The Company operates gratuity plan wherein every employee are entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service depending upon the date of joining. The same is payable on death, separation from service, or retirement, whichever is earlier. The benefit vests after five years of continuous service.

3) Leave Encashment:-

The company has been accounting for provision on account of leave encashment on retirement based on actuarial valuation carried out as at the Balance date.

4) Post Retirement Medical Benefits:-

Employees of the company upon retirement/separation under VRS are entitled to medical benefits as per the scheme in force.

5) Long Term Service Award

As a part of cordial relation and appreciation of long dedicated service, Company is honouring its employees with a memento on completion of 25 years of service.

The following table shows the impact of actuarial valuation as recognized in the financial statements in respect of Gratuity and Post retirement medical benefits.

18. Since implementation of SAP, creation of liability for expenses takes place in two stages and Income tax is deducted at the second stage. According to the legal opinion obtained by the Company and as per the practice followed by other companies using SAP the process of deduction and remittance of Tax at source is correctly followed.

Additional Information:

Additional information in respect of goods manufactured, value of imports calculated on CIF basis, expenditure in foreign currency during the year on account of royalty, know- how etc., consumption of raw materials, spares parts and components during the year, earnings in foreign exchange, etc. is as per Annexure-ll.

19. Previous year figures have been re-arranged and regrouped wherever necessary and/or practicable to make them comparable with those of the current year.

 
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