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Notes to Accounts of Rashtriya Chemicals & Fertilizers Ltd.

Mar 31, 2023

Provisions And Contigent liabilty

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a
past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation. When a provision is expected
to be reimbursed, the reimbursement is recognized as a separate asset, but only when the reimbursement is
virtually certain. The expense relating to a provision is presented in the Statement of Profit and Loss net of any
reimbursement.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that
reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision
due to the passage of time is recognized as finance cost.

N) Contingencies

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by
the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a
present obligation that is not recognized because it is not probable that an outflow of resources will be required
to settle the obligation. A contingent liability also arises where a reliable estimate of the amount of the obligation
cannot be made. Contingent assets are not recognized but are disclosed where an inflow of economic benefits is
probable. The estimation of financial effect in respect of contingent liabilities and contingent assets wherever not
practicable, is not disclosed and such fact is accordingly stated.

O) Financial Instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity.

a. Financial Assets

Initial Recognition and Measurement

All financial assets are recognized initially at fair value, plus in the case of financial assets not recorded at fair
value through profit or loss (FVTPL), transaction costs that are attributable to the acquisition of the financial
assets. However, trade receivables that do not contain a significant financing component are measured at
transaction price.

Subsequent Measurement

Financial assets presently held by the Company are classified as under:-

• Debt instruments at amortized cost

• Debt instruments, TDRs and derivatives at Fair Value Through Profit or Loss (FVTPL)

• Equity instruments measured at Fair Value Through Other Comprehensive Income (FVTOCI)

i. Debt Instruments at Amortized Cost

A ‘debt instrument’ is measured at the amortized cost if both of the following conditions are met:

(i) The asset is held within a business model whose objective is to hold assets for collecting contractual
cash flows, and

(ii) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of
principal and interest (SPPI) on the principal amount outstanding.

After initial measurement, such financial assets are subsequently measured at amortized cost using the
effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is
included in finance income in the profit or loss. The losses arising from impairment are recognized in the
statement of profit or loss. This category generally applies to trade and other receivables.

ii. Debt Instrument at FVTPL

FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria
for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.

Debt instruments included within the FVTPL category are measured at fair value with all changes
recognized in the Statement of profit or loss.

iii. Equity Investments

All equity investments in scope of Ind AS 109 - Financial Instruments are measured at fair value. Equity
instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the
Company may decide to classify the same as at FVTOCI. The Company makes such election on an
instrument-by-instrument basis upon on initial recognition and same is irrevocable.

Upon classification of equity instruments as at FVTOCI, all fair value changes on the instrument, excluding
dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to Statement of Profit
and Loss, even on sale of investments. The Company may transfer the cumulative gain or loss within
equity.

Equity instruments included within the FVTPL category are measured at fair value with all changes
recognized in the statement of profit or loss.

Investments in Joint ventures, subsidiaries and associates are recognized at cost.

iv. Derivative Financial Instruments

The Company enters into a variety of derivative financial instruments to manage its exposure to interest
and foreign exchange rate risks, like foreign exchange forward contracts, interest rate swaps and cross
currency swaps.

Derivatives are initially recognized at fair value on the date the derivative contracts are entered into and
are subsequently re-measured to their fair value (Mark to Market) at the end of each reporting period.
The resulting gain or loss is recognized in the Statement of profit and loss. Company does not designate
any of its derivative instruments as hedge instruments. Derivatives are carried as financial assets when
fair value is positive and as financial liabilities when the fair value is negative.

Transaction costs incurred for such derivative instruments are charged off to Statement of Profit and Loss
on initial recognition.

Derecognition

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset
expires or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset.

When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass¬
through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership.
When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor
transferred control of the asset, the Company continues to recognize the transferred asset to the extent of
the Company’s continuing involvement. In that case, the Company also recognizes an associated liability. The
transferred asset and the associated liability are measured on a basis that reflects the rights and obligations
that the Company has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower
of the original carrying amount of the asset and the maximum amount of consideration that the Company
could be required to repay.

Impairment of Financial Assets

In accordance with Ind AS109 - Financial Instruments, the Company applies Expected Credit Loss (ECL) model
for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:

i. Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities,
deposits, trade receivables and bank balance.

ii. Lease receivables

iii. Trade receivables or any contractual right to receive cash or another financial asset that result from
transactions that are within the scope of Ind AS 115 - Revenue From Contracts with Customers.

iv. Financial guarantee contracts which are not measured as at FVTPL

Expected credit losses are the weighted average of credit losses with the respective risks of default occurring
as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company
in accordance with the contract and all the cash flows that the Company expects to receive (i.e. All cash
shortfalls) discounted at the original effective interest rate.

While estimating cash flows, Company considers all contractual terms of financial instrument over the
expected life of the financial instrument including cash flows from the sale of collateral held that are integral
to contractual terms.

In case of Trade receivables, the Company has used a practical expedient as permitted under Ind AS 109 -
Financial Instruments. This expected credit loss allowance is computed based on a provision matrix which
takes in account historical credit loss experience with adjustments for collaterals available and forward
looking information, if required.

ECL allowance is not recognized on Subsidy receivables since they are due from Government of India and also
on other receivables which are largely due from Government agencies, as the Company does not perceive any
risk of default which would be material.

For recognition of impairment loss on other financial assets and risk exposure, the Company determines
that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has
not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has
increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves
such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts
to recognising impairment loss allowance based on 12-month ECL.

ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in
the Statement of Profit and Loss (P&L). This amount is reflected under the head ‘other expenses’ in the P&L.
The Balance Sheet presentation for various financial instruments is described below:

• Financial assets measured as at amortised cost, trade receivables and lease receivables.

• ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the
balance sheet.

• The allowance reduces the net carrying amount, until the asset meets write-off criteria.

• Trade receivables, other receivables, loans and advances are also fully provided for as doubtful upon
review on case to case basis, to the extent of such loss considered as incurred.

b. Financial Liabilities

Initial Recognition and Measurement

Financial liabilities are classified, at initial recognition as loans and borrowings, payables, derivatives and
financial liabilities at fair value through profit or loss. The Company’s financial liability consists of trade and
other payables, loans and borrowings, bank overdrafts, financial guarantee contracts and derivative financial
instruments.

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs, if any.

Subsequent Measurement

The subsequent measurement of financial liabilities of the Company depending on their classification is
described below:-

i. Loans and Borrowings Including Bank Overdrafts

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized
cost using the EIR method. Gains and losses are recognized in profit or loss when the liabilities are
derecognized as well as through the EIR amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees
or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the
statement of profit and loss.

This category generally applies to interest-bearing loans and borrowings.

ii. Financial Guarantee Contracts

Financial guarantee contracts issued by the Company are those contracts that require a payment to
be made to reimburse the holder of the guarantee for a loss it incurs because the specified debtor fails
to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee
contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly
attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of
the amount of loss allowance determined as per impairment requirements of Ind AS 109- Financial
Instruments and the amount recognized less cumulative amortization.

Derecognition

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different
terms, or the terms of an existing liability are substantially modified, such an exchange or modification is
treated as the derecognition of the original liability and the recognition of a new liability. The difference in the
respective carrying amounts is recognized in the statement of profit and loss.

P) Cash and cash equivalents

Cash and cash equivalents comprise of cash at banks and on hand and short-term deposits with a maturity of
three months or less. For the purpose of the cash flow statement, cash and cash equivalents include cash on
hand, in banks, demand deposits with banks and other short term highly liquid investments, net of outstanding
overdrafts that are repayable on demand and are considered part of the Company’s cash management system.

Q) Non - Current Assets Held for Sale

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered
principally through a sale transaction rather than through continuing use. Non-current assets (and disposal groups)
classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Also,
such assets are classified as held for sale only if the management expects to complete the sale within one year
from the date of classification.

R) Government Grants

Government grants are not recognized until there is reasonable assurance that the Company will comply with the
conditions attaching to them and that the grants will be received.

Government grants are recognized in statement of profit and loss on a systematic basis over the periods in which
the Company recognizes as expenses the related costs for which the grants are intended to compensate and are
presented within Other income.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose
of giving immediate financial support to the Company with no future related costs are recognized in profit or loss
in the period in which they become receivable.

Government grants relating to purchase of property, plant and equipment are included in Other non-current
liabilities and are credited to profit or loss on a straight-line basis over the expected lives of the related assets.

In the event of such property, plant and equipment being disposed off before completion of its estimated useful life,
the outstanding amount of such capital grant is fully credited to profit or loss in the year of its disposal.

S) Employee Benefits

a. Short Term Employee Benefits:

All employee benefits payable within twelve months of rendering the service are classified as short term
employee benefits and they are recognized in the period in which the employee renders the related service.
The Company recognizes the undiscounted amount of short term employee benefits expected to be paid in
exchange for services rendered as a liability (accrued expense) after deducting any amount already paid.

b. Retirement Benefit Costs and Termination Benefits and Other Long Term Employee Benefits
Defined Contribution Schemes

Payments to defined contribution retirement benefit plans are recognized as an expense when employees
have rendered service entitling them to the contributions.

Company’s defined Contribution made to its Superannuation scheme is charged off to Statement of Profit and
Loss on accrual basis.

Defined Benefit Plans

Provident Fund

Contribution to Provident Fund is accounted for on accrual basis as per actuarial valuation done on
deterministic basis. The Provident Fund contributions are made to a Trust administered by the Company by
both the employer as well as employee. The Trust invests in specific designated instruments as permitted by
Indian Law. The interest rate payable to the members of the Trust is being administered by the Government.
The Company has an obligation to make good the shortfall, if any between the return from the investments
of the Trust and the notified interest rate. Further in the event there is a deficit, owing to the fair valuation of
plan assets being lower than defined benefit obligation at the Balance Sheet date, Company has to fund the
shortfall. Such shortfall including shortfall in the interest is recognized in the Statement of Profit and Loss.

Gratuity and Post-retirement Medical Benefits

For Defined Benefit plans comprising of gratuity, post-retirement medical benefits the cost of providing
benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at
the end of each annual reporting period. Re-measurements, comprising actuarial gains and losses, the effect
of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is
reflected immediately in the balance sheet with a charge or credit recognized in other comprehensive income
in the period in which they occur. Re-measurements recognized in other comprehensive income is reflected
immediately in retained earnings and is not reclassified to profit or loss. Past service cost is recognized in
profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the
beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorized as
follows:

• Service cost (including current service cost, past service cost, as well as gains and losses on curtailments
and settlements);

• Net interest expenses or income; and

• Re-measurements

The Company presents the first two components of defined benefit costs in the Statement of profit and loss
in the line item ‘Employee Benefits Expense’. Curtailment gains and losses are accounted for as past service
costs.

The retirement benefit obligation recognized in the balance sheet represents the actual deficit or surplus in the
Company’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of
any economic benefits available in the form of refunds from the plans or reductions in future contributions to
the plans.

The cost of the defined benefit gratuity plan and other Post employment medical benefits and the present
value of gratuity obligation are determined using actuarial valuation techniques.

Termination Benefits

A liability for a termination benefit is recognized at the earlier of when the entity can no longer withdraw the
offer of the termination benefit and when the entity recognizes any related restructuring costs.

Other Long term benefits

Liabilities recognized in respect of other long term benefits like leave encashment and long term service
awards are measured at the present value of the estimated future cash outflows to be made by the Company
(based on actuarial valuation) in respect of services provided by employees upto the reporting date.

T) Segment Reporting

The Company has recognized the following operating segments, viz Fertilizers, Industrial Chemicals and Trading,
the business activities it is primarily engaged into. The same has been done based on the review of the operating
results, internal reporting, review of performance, decision making relating to future allocation of resources, policy
parameters influencing business etc. carried out by its Chief Operating Decision Maker i.e. Executive Management
Committee/Board of Directors.

U) Prepaid Expenses

Individual expenses up to ''1,00,000 is not considered in classifying prepaid expenses.

V) Research and Developments expenses

Revenue expenditure on Research activity is recognized separately and charged to Statement of Profit and Loss.
Expenditure on development activities is capitalized when its future economic benefits can reasonably be regarded
as assured.

W) Earnings per Share (EPS)

Basic earnings per share is calculated by dividing net profit or loss after tax for the year attributable to equity
shareholders by the weighted average number of equity shares outstanding during the year.

Upon discontinuation of an operation the basic and diluted amount per share for the discontinued operation is
separately reported, as applicable.

X) Cash Dividend

The Company recognizes a liability to make cash distributions to shareholders when the distribution is authorized
and the same is no longer at the discretion of the Company. A corresponding amount is recognized directly in
equity.

IV) Exemptions applied

Ind AS101- First Time Adoption of Indian Accounting Standards, allows first-time adopters certain exemptions from the
retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions.

Company has elected to continue with the carrying value for all of its property, plant and equipment as recognized in
the financial statements as at the date of transition measured as per Indian GAAP and use that as its deemed cost as
at date of transition. The same is applicable even for Investment property, intangible assets and its investments in Joint
venture, associates and subsidiaries.

Company has also reviewed the necessary adjustments required to be done in accordance with paragraph D21
this standard (i.e. adjustments arising on account of decommissioning or restoration liabilities) and has accordingly
considered the impact of the same wherever applicable.

The Company has designated unquoted equity instruments held at 1 April 2015 as fair value through OCI.


Mar 31, 2022

Contingent Liabilities not provided for:

Claims against the Company not acknowledged as debts to the extent ascertainable (including interest wherever, ascertainable/can be reliably estimated) and not provided for net of payment/liability provided: -

('' Crore)

Sr.

Particulars

As at

As at

No

31.03.2022

31.03.2021

1

a

Invoices/ debit notes and claims raised by GAIL(India) Ltd.

Increased gas transmission charges for ONGC pipeline. Stay order obtained from Mumbai High Court and directed to resolve through arbitration. (Refer Note no. 52)

-

64.30

Levy of Market priced gas differential for use of APM/Domestic Gas for Non-

-

1246.12

b

Fertilizer Non-Urea operations (Refer Note no. 52)

c

For non-submission for FICC certified gas utilization data (Refer Note no. 52)

-

39.39

Sub total

-

1349.81

2

Claims on the Company not acknowledged as debts by Contractors / Suppliers/ Arbitrators etc.

125.15

142.65

3

Demands raised by various authorities that may arise in respect of matters in appeal

Excise Duty (D) (Refer note no 45.1.1)

70.33

70.33

Excise Duty (S)

18.52

18.52

Sales Tax

6.26

7.33

Income Tax

48.20

39.19

Service Tax (D)

13.92

13.92

Service Tax (S)

2.40

2.40

Custom Duty (D)

80.93

80.93

Custom Duty (secured by Bank Guarantee)

-

25.62

4

Water charges claimed by Municipal Corporation of Greater Mumbai(Refer note no 45.1.2)

36.86

38.24

5

Claims preferred by local authorities

8.85

8.79

GRAND TOTAL

411.41

1797.74

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

45.1.1 Includes an amount of ? 24.82 crores (P.Y. ? 24.82 crores) towards duty, interest and penalty relating to purchase of Naphtha at concessional rate of excise duty for the purposes other than mentioned in the exemption notification for the period November-1996 to October-2005. The demand for the period upto February-2005 for ? 21.28 crores (P.Y. ? 21.28 crores) has been appealed against by the Company and the matter is resting with the Honorable Supreme Court, which is yet to be heard. For the balance demand pertaining to subsequent period (i. e March 2005), amounting to ? 3.54 crore order has been stayed by CESTAT, which has been appealed by the department to High Court. Pending hearing, no provision is considered necessary.

45.1.2 Demand of ? 33.48 crore raised by Municipal Corporation of Greater Mumbai (BMC) towards additional sewerage charges levied from 05.04.1987 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 '' 16.00 crore to BMC 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 '' 33.48 crore as the claim of BMC is not tenable.

45.1.3 Owing to non-compliance of Corporate Governance requirements as mandated by SEBI, with reference to composition of Independent Directors in the Board and appointment of Woman Independent Director, Company is in receipt of notice of penalty aggregating to ? 0.79 crore (P.Y.? 0.65 Crore) from the stock exchanges (BSE & NSE).Since the appointment of Directors is done by Government of India, Company had approached its Administrative Ministry for ensuring the compliance and has also approached the stock exchanges for condonation/waiver of the penalty. Company is confident that this penalty would be waived. Further the Company had complied with the said Corporate Governance requirements during the period 01st Dec, 2021 to 06th March, 2022.

45.2 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 and hence no provision is made. However, with respect to matter relating to payment of overtime wages, a stay order has been obtained by the Company from High Court, pending disposal with submission of Bank guarantee amounting to ''12.00 Crore.

45.3 In respect of clause 45.1 to 45.2 above, it is not practicable for the Company to estimate the closure of these issues and the consequential timing of cash flows, if any.

46. Other Commitments:

('' Crore)

Particulars

As at

31.03.2022

As at

31.03.2021

Capital Expenditure Commitments (net of advances)

187.63

92.92

Commitment Towards Investments in JV ( Talcher Fertilizers Ltd)

378.71

648.71

Corporate Guarantee

2.20

2.20

47. Wagons leased to Indian Railways “Under Own your Wagons Scheme”

The lease agreement with Railways has expired in FY 2019-20 and is under renewal. As the wagons are still in the custody of Railways, Company has recognized income of '' 0.35 crore (P.Y '' 0.35 crore) for the period after completion of finance lease based on the minimum lease rentals expected to be negotiated with Railways.

As the terms of lease are yet to be finalized the said transaction is now treated as Short-term Operating Lease.

48 Formalities relating to transfer of certain immovable and other properties situated at Trombay Unit, 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 30,42,108 Sq. meters (P.Y. 30,44,530 Sq. meters), property cards for 3,75,826 Sq. meters (P.Y. 3,75,826 Sq. meters) are yet to be transferred in the name of the Company. The Company is in the process of obtaining transfer of title deeds in its favour.

Out of total area of 50,52,476 Sq. meters’ area at Thal Unit, the title deeds relating to area of 32,27,573 Sq. meters (P.Y. 32,27,573 Sq. meters) area are in the name of the Company. The balance title deeds w.r.t 18,24,903 Sq meter of land are in the process of being transferred in the name of Company. The capitalization of Freehold land at Thal Unit includes land at Kihim having carrying cost of '' 0.02 crore, pending execution of documents and transfer of title deeds in the name of Company, due to dispute.

49. In respect of immovable properties other than land i.e. buildings and other structures, situated at its Trombay and Thal

units they are self-constructed properties on the land owned by the Company as evidenced by property cards/title deeds of land.

The Company asserts that all these properties are its own and has clear title to the same since such properties are self-constructed on Company’s land, although no separate title documents for self-constructed properties are readily available. Company has obtained opinion to that effect from legal and regulatory experts on land matters and also has other documentary evidence in that regard.

The Company had come into existence in 1978 as a result of Government of India reorganizing Fertilizer Corporation of India Ltd. and National Fertilizers Ltd. Consequent to the same, major portion of immovable assets at its Trombay unit became vested with the Company. In case of Thal unit, such properties on the Company’s land were erected over the years following land acquisition effected around 1978. Thus records pertaining to self-constructed properties are not readily available since they date back to more than 40 years. Company has initiated the process of obtaining appropriate evidence of the approvals/permissions taken for construction of the self-constructed properties from the respective regulatory authorities.

Balance of subsidy receivables including subsidy receivable from Government are recognized on estimated basis and are subject to confirmation. Some of the balances of trade payables, current liabilities, loans and advances are subject to confirmation / reconciliation and consequential adjustments if any.

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.

Subsidy is further adjusted for escalations/de-escalations in the cost of inputs and other costs, as estimated by the management based on the prescribed norms in line with known policy parameters. Accordingly, the subsidy adjusted on account of this escalations/de-escalations basis for the year amounts to '' 1588.30 crore receivable from FICC/DOF (PY '' 82.44 crore refundable).

Upon introduction of Direct Benefit Transfer(DBT) schemes for all Fertilizer Companies, there is shift in procedure for generation of subsidy claims with respect to Price subsidy & disbursement thereon. As per the same, Company is entitled for generation of claims on the basis of actual sale by the retailers on weekly basis through POS machines. Accordingly, as on 31.03.2022, quantity of 4.54 LMT of urea and P&K having subsidy amounting '' 1037.19 Crore has been recognized in the current period, as such quantity has been sold to dealers but the payment of the same will become due under DBT on actual sale by the retailers through POS machines. (PY quantity 6.08 LMT and subsidy '' 716.21 crore)

Pursuant to the Ministry of Petroleum & Natural Gas (MoPNG) order No. L-13013/3/2012- GP-I, dated: 16th December 2015, GAIL (I) Ltd. had sought a differential levy on usage of gas for non-fertilizer/Non-Urea operations, amounting to ?1457.92 crore for the period commencing from 1st July, 2006 till 30th June, 2019 by initiating arbitration proceeding before Administrative Mechanism for Resolution of CPSEs Disputes (AMRCD).

The matter was heard in the meeting of the AMRCD on 17th June 2021 and vide its order dated 6th July 2021, AMRCD has determined the total claim to be paid by the company in this regard at an amount of '' 87.17 crore. This sum thus settles the price differential towards the use of APM/Domestic gas for non-fertilizer/Non-Urea operations for the period commencing from 1st July 2006 till 15th May, 2016 (subsequent to which Company sourced market priced gas). Further, a related claim by GAIL(I) Ltd in regard to the Gas Transportation Charges of '' 19.65 crore, for the period December 2013 to January 2016 have also been directed to be paid. The aggregate sum of '' 106.82 crore has been fully paid by the Company in accordance with the resolution by AMRCD.

Possible liability from the FY 2016-17 onwards is yet to be crystalized as the Company has submitted the data to FICC for verification in order to recalculate the claim as per MoPNG directives dated 16th December 2015 as per highest rate of RLNG. Taking a conservative estimate of any liability arising from such claim, the excess provision of '' 127.35 crore not considered necessary has been derecognized and reported as exceptional item.

Accordingly, the demand from GAIL (I) Ltd towards the issues referred to in Sr.No.1 (A, B & C) of note no. 45.1 stands settled.

On 20th and 22nd March, 2019 respectively, both the Gas Turbine Generator (GTG) plants at Thal unit stopped operating. Upon failure, the matter was taken up with the LSTK contractor who had supplied the turbines, for repair, as the same were covered under warranties. The matter was referred by the LSTK contractor for repairs to the Original Equipment Manufacturer (OEM) who had indicated a total estimated expenditure of about 98 Million SEK ('' 74.51 crore excluding taxes and duties).

To mitigate future losses, Company procured a Gas generator and commissioned a Gas Turbine Generator plant in August 2019.

In the best interests of the Company, based on the acceptance of Notice to Proceed as proposed by the LSTK contractor, the equipment’s were sent for repair to the foreign Original Equipment Manufacturer (OEM) which has been received during the year. As per the Notice to proceed, the final settlement of the repair costs can either be decided mutually or in the event not agreed upon, the settlement of disputes clause as per contract can be invoked.

As the equipment’s are covered under warranties, the Company is of the view that no additional costs would devolve on the Company. Further the Company has initiated arbitration proceedings towards the LSTK contractor citing loss of profits owing to higher energy costs, higher maintenance costs etc. In response, counterclaims have been made by the LSTK contractor.

Disclosures relating to Impairment of Non-Financial Assets:

Company has carried out impairment testing of its Cash Generating Units (CGU) which is carried out considering an estimated useful life of 10 Years for arriving at the value in use. In determining value in use for the CGU, the cash flows were discounted at a rate of 7.00% on pre-tax basis.

The recoverable amount of '' 2.44 crore PY ('' 2.44 crore) is based on value in use and is determined at the level of the CGU.

Higher raw material prices coupled with steep fall in realizations warranted in carrying out a review of the recoverable amount of the said plants and related equipment’s resulting in provision towards impairment.

Key assumptions based on which recoverable amount is most sensitive.

The calculation of value in use for the identified CGU is most sensitive to the following assumptions.

1. Selling Prices

The extant selling prices are considered for forecasting cash flow estimates for arriving at the value in use. The selling prices are assumed to be kept constant in future year projections.

2. Discount Rate

Discount rate is estimated considering the entity’s incremental borrowing rate which is arrived at considering the present debt structure etc.

3. Sales Quantity

The sales projections have been worked out considering the present demand scenario and the operating capacities of the plants.

4. Raw Material Prices - Considering current prices of raw materials.

The estimates of cash flows are done considering current raw material prices at the reporting date and the same are assumed to be remain constant in the future year projections as any increase in the same is expected to be passed on to the market.

Company has given guarantee of '' 2.20 crore, PY ('' 2.20 crore) for working capital facilities from banks on behalf of FRBL. Since such facility has not been availed, no provision towards financial guarantee and corresponding asset has been recognized.

Transactions with other entities- where Directors are interested:

Name of the entity & transactions

(i) Fertilizers and Chemicals Travancore Ltd (FACT Ltd) -Owing to Shri K. U. Thankachen Director (Marketing) given additional charge of Director (Marketing) of the said entity upto 31.05.2020.

Transaction with other Government related Entities

Since Government of India owns 75% of the Company’s equity share capital (under the administrative control of Ministry of Chemicals and Fertilizers), the disclosures relating to transactions with Government controlled entities have been reported in accordance with para 26 of Ind AS 24 - Related Party Disclosures.

Employee Benefits:

The required disclosure under Ind AS 19 Employee Benefits is given below.

General Description of Defined Benefit Plan

1) Provident Fund: -

a) 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 '' 43.82 crore (P.Y. '' 28.70 crore) has been charged off to statement of Profit and loss towards contribution by the Company.

b) As per Ind AS 19 Employee Benefits, for Defined Benefit plans, Company is required to ascertain the present value of the defined benefit obligation and compare with the fair value of the Plan assets to determine the surplus or deficit, if any, as at Balance Sheet date. Deficit, if any, needs to be accounted in the books of the Company. Accordingly, Company had recognized a liability of '' 3.59 crore as at 31.03.2021. Upon review of fair value plan assets as compared to present value of the defined benefit obligation, the deficit stands increased to '' 16.09 crore as at 31.03.2022 resulting in an additional provision of '' 12.50 Crore during the year. (P.Y. '' 15.48 crore reversal in provision).

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, the charge on account of Gratuity to Statement of Profit and Loss is '' 13.99 crore (PY '' 0.34 crore).

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 Sheet date.

The liability for the leave encashment on retirement as at 31st March 2022 is '' 175.93 crore (P.Y. '' 179.13 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 agreed upon scheme in force.

The liability for the Post-Retirement Medical Benefits on retirement as at 31st March 2022 is '' 124.83 crore (P.Y. '' 106.30 crore).

5) Long Term Service Award:

As a part of cordial relation and appreciation of long dedicated service, Company is honoring 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 Government of India guidelines. During the year Company has recognized an expenditure of '' 12.11 crore (P.Y.'' 11.05 crore) as contribution towards the said scheme.

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Furthermore, in presenting the above sensitivity analysis the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognized in the balance sheet.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

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.

Contingent Assets:

a) As per the Arbitration award received in its favor for the compensation claimed in respect of surrender of land to Mumbai Metropolitan Regional Development Authority (MMRDA) on 23rd May, 2018, Company is eligible for compensation either in the form of cash / TDRs amounting to '' 75.17 crore along with interest over and above the entitled compensation as recommended by Arbitration award. Company has filed an execution application, however MMRDA has obtained stay against the same from Mumbai High Court subject to deposit of 25% of the disputed amount with the Court. MMRDA has deposited 25% of the disputed amount as directed by the Court and the Company has withdrawn the same amounting to '' 27.93 crores in F.Y.2020-21 upon submission of bank guarantees of equivalent amount in favour of the Court.

b) Further, in respect to action initiated towards certain parties for recovery of its dues, Company has filed Execution Petitions attaching properties in existence upon receipt of favorable orders from Court amounting to '' 0.63 crore (P.Y. '' 0.63 crore)

Hedging activities and derivatives

Derivatives not designated as hedging instruments

The Company has foreign currency denominated borrowings in the nature of External Commercial borrowings (ECBs), Foreign Currency Term Loan (FCTL) for its long term requirements and Buyers Credit, Suppliers credit for meeting its short term fund requirement. The Company has a hedging policy in place to manage its foreign currency risk relating to these borrowings. The Company uses various products for hedging like Forex Forward Contracts, Forward Rate Agreements, Plain Vanilla Options (call option and put option), Seagull options, Interest Rate Swaps, Currency Swaps including CrossCurrency Swaps etc. The Company undertakes hedging through these products considering the tenor of the underlying instrument and the same are not designated as cash flow hedges.

Fair values

The management has assessed that its financial assets and liabilities like cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term

maturities of these instruments.

The following methods and assumptions were used to estimate the fair values for the given below financial assets.

• UNQUOTED EQUITY SHARES Of INDIAN POTASH LIMITED

The fair values of the unquoted equity shares have been estimated using a DCF model. The Company avails the services of professional valuer’ s for valuation of the same and the fair values so reported are based on a valuation report received from an investment valuation expert.

• investment in mutual fund

The fair values of investments in mutual fund units is based on the net asset value (NAV) as stated by the issuers of these mutual fund units in the published statements as at Balance Sheet date. NAV represents the price at which the issuer will issue further units of mutual fund and the price at which issuers will redeem such units from the investors.

• derivatives not designated as hedges

The Company enters into derivative financial instruments with various banks. Interest rate swaps, foreign exchange forward contracts, derivative instruments are valued using valuation techniques, which employs the use of market observable inputs (i.e. based on inputs/statement of position received from banks). All derivative contracts with banks are unsecured.

• investment properties

The value of the investment properties are based on the information and a study of the micro market in discussions with industry experts, local brokers and regional developers.

Financial risk Management objectives and policies

The Company’s principal financial liabilities, other than derivatives, comprise of loans and borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Company’s operations and to provide guarantees to support operations of its subsidiaries/joint ventures, if any.

The Company’s principal financial assets include loans, trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company also holds FVTOCI investments and enters into derivative transactions.

The Company is exposed to market risk (including interest rate risk and currency risk), credit risk and liquidity risk. The Company seeks to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures, the use of financial derivatives is governed by the Company’s polices approved by the board of directors, which provide written principles on foreign exchange risk, interest rate risk, use of financial hedging instruments.

The Company’s management oversees these risks with the support of a Risk Management Committee that advises on financial risks and the appropriate financial risk governance framework for the Company. The Risk Management Committee provides assurance to the Company’s management that the Company’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives.

All derivative activities for risk management purposes are carried out by designated officers who have the appropriate skills, experience and supervision. It is the Company’s policy that no trading in derivatives for speculative purposes may be undertaken. These risks are summarized below:

• Interest Rate Risk:

Interest Rate Risk Management:

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risks because the Company borrows funds at both fixed and floating interest rates.

The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings. Hedging activities are evaluated regularly to align interest rate views and defined risk appetite, ensuring the most cost-effective hedging structures are applied and accordingly the Company enters into interest rate swaps.

• Credit Risk:

Credit Risk Management:

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigation the risk of financial loss from defaults.

Trade receivables consist of a large number of customers, spread across diverse geographical areas for its fertilizers segment and across geographical areas and industries in respect of its chemicals segment. Ongoing credit evaluation is performed on the financial condition of accounts receivable.

The credit risk on liquid funds is limited because the counterparties are primarily Public Sector mutual funds and further the Company invests only in 100% debt oriented schemes of such funds. As regards derivative financial instruments the same is also limited because the counterparties are banks whose operations are regulated by the Reserve Bank of India.

• Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. The Company’s activities expose it’s primarily to the financial risk of changes in foreign currency risk and interest rates risk.

• Liquidity risk

Liquidity risk management

Liquidity risk management refers to the management of the Company’s short-term, medium-term and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

The following table details the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period.

• Foreign Currency Risk:

The Company undertakes transactions denominated in foreign currencies, consequently, exposure to exchange rate fluctuations arise. The Company has a Board approved Hedging Policy in place entailing parameters for hedging its foreign currency exposures completely before their maturities. The Company manages its exchange rate exposures within the approved parameters of the hedging policy through various derivative instruments such as options, swaps etc.

Foreign Currency Sensitivity Analysis:

The Company is mainly exposed to the currency of USD and EUR. The following table details the Company’s sensitivity to a 5% increase and decrease in the INR as against the USD/EUR. The sensitivity analysis includes only outstanding foreign currency denominated monetary items i.e. loans in foreign currency and adjusts their translation at the period end for a 5% change in foreign currency rates. A positive number indicates an increase in profit or equity where the INR strengthens 5% against USD/EUR. For a 5% weakening of INR as against USD/EUR, there would be a comparable impact on the profit or equity, and the number would be negative.

Capital Management

For the purpose of the Company’s Capital management, capital includes equity capital and all other reserves. The primary objective of the Company’s capital management is to maximize the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The Company, for its capex requirement, borrows to the extent of 70% of the requirement and the remaining 30% shall be sourced from the internal accruals. Further, the Company, being a Public sector undertaking, is governed by the guidelines of the Department of Investment & Public Asset Management (DIPAM), which specifies the minimum percentage of dividend that can be declared. Accordingly, the Company has to manage its capex in such a way that the minimum dividend payout as stipulated is met. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt.

Gearing Ratio:

In order to achieve this overall objective, the Company’s capital management, amongst other things, aims to ensure that its meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in financial covenants of any interest-bearing loans and borrowings in the currency period.

Disclosures relating to borrowings availed against security of current assets

Quarterly returns of current assets filed by the company with banks and financial institutions are in agreement with books of accounts.

The Company has not been declared willful defaulter by any bank or financial institution or any other lender.

There are no material transactions with respect to struck off companies as mentioned under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956.

85. The Company does not have any charges or satisfaction of charges which are yet to be registered with ROC beyond the statutory period.

86. Provision regarding the number of layers prescribed under Section of Section 2 (87) of the Act read with the Companies (Restriction on number of layers) Rules, 2017 is not applicable.

87. The Company does not have any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of Income Tax Act, 1961).

88. The Company has not traded or invested in crypto currency or virtual currency during the respective financial year/period.

89. The Company does not have any scheme of arrangements which have been approved by the Competent Authority in terms of Section 230 to 237 of the Companies Act, 2013.

90. The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (intermediaries) with the understanding that the intermediary shall:

a. Directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or

b. Provide any guarantee, security or like to or on behalf of the Ultimate Beneficiaries.

91. The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

a. Directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the funding party (Ultimate Beneficiaries) or

b. Provide any guarantee, security or the like on the behalf of the Ultimate Beneficiaries.

Restatement for the year ended 31st March 2022, 31st March 2021 and as at 01st April 2020

A) EAC Opinion: Company was charging off the utilities generated from trial run production and consumed internally to Profit and Loss Account and only net commissioning expenses were included under Capital Work in progress. In the absence of any specific guidance under Indian Accounting Standard, as to value of trial run production consumed internally and the treatment thereof, the matter has been referred to the Expert Advisory Committee of ICAI by the Company, for a seeking an opinion on the said matter.

On 26th July 2022 Company has received an opinion stating that Company is not correct in crediting CWIP with the value of utilities during trial run phase and consumed in ongoing commercial production and charging off the said amount to the Statement of Profit and Loss Account. Further, they have opined that financial statements are required to be restated since the accounting treatment w.r.t trial run production is not as per Indian Accounting Standards and thus the Company has to give effect to the same in accordance with Ind-AS 8, for all accounting periods, where such treatment was followed after applicability of Ind-AS. Accordingly such restatement is being done effective from FY 2017-18 onwards

B) Change in Accounting Policy: Consequent to receipt of an EAC opinion Company has suitably modified its Accounting Policy w.r.t treatment of expenditure on account of utilities generated and internally consumed in compliance with EAC opinion.

In accordance with Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors’ and Ind AS 1, ‘Presentation of Financial Statements’, the Company has retrospectively restated its Balance Sheet as at 31st March 2022(Current Year), 31st March 2021(Previous Year) and 1st April 2020 (beginning of the preceding period) and Statement of Profit and Loss

and Statement of Cash Flows for the year ended 31st March 2022 and 31st March 2021, for the reasons as stated above

The standalone financial statements were authorized for issue in accordance with a resolution passed by the Board of Directors on 12th August, 2022.

The financial statements as approved by the Board of Directors are subject to audit by Comptroller and Auditor General of India and final approval by its Shareholders.

Covid-19 Impact Analysis:

For the year financial year 2021-22 Company has assessed the situation anticipates adverse impact in delay in commissioning of projects and the ensuing benefits due to delayed supply of equipments and restrictions in movement of personnel from foreign countries / within India required for the project.

''The figures of the previous year have been re-arranged and regrouped wherever necessary and / or practicable to make them comparable with those of the current year and as per Schedule III amendments as mandated by Companies Act, 2013.

Events occurring after the Balance sheet date

Board of Directors have recommended a final dividend of ? 2.50 per equity share of ? 10/- each (P.Y. ? 1.78 per equity share of ?10/- each) i.e. 25.00 % on paid up equity share capital of the Company for the financial year 2021-22 which is subject to approval of Shareholders of the Company.


Mar 31, 2021

Contingent Liabilities not provided for:

Claims against the Company not acknowledged as debts to the extent ascertainable (including interest wherever, ascertainable/ can be reliably estimated) and not provided for, net of payment/liability provided:-

Sr.

No

Particulars

As at

31.03.2021

As at

31.03.2020

1

a

Invoices/ debit notes and claims raised by GAiL(india ) ltd.

Increased gas transmission charges for ONGC pipeline. Stay order obtained from Mumbai High

64.30

64.30

b

Court and directed to resolve through arbitration.

Levy of Market priced gas differential for use of APM/Domestic Gas for Non-Fertilizer Non-

1246.12

1231.05

c

Urea operations (Refer Note no. 48)

For non-submission for FICC certified gas utilization data

39.39

39.39

Sub total

1349.81

1334.74

2

claims on the company not acknowledged as debts by contractors / Suppliers/ arbitrators etc.

143.11

81.83

3

Demands raised by various authorities that may arise in respect of matters in appeal

Excise Duty (D) (Refer note no 41.1.1)

70.33

67.49

Excise Duty (S)

18.52

20.10

Sales Tax

7.33

6.45

Income Tax

39.19

20.08

Service Tax (D)

13.92

7.24

Service Tax (S)

2.40

5.59

Custom Duty (D)

80.93

80.93

Custom Duty (secured by Bank Guarantee)(Refer note no 41.1.2)

25.62

25.62

4

Water charges claimed by Municipal Corporation of Greater Mumbai(Refer note no 41.1.3)

38.24

38.79

5

Claims preferred by local authorities

8.34

8.37

grand total

1797.74

1697.23

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

41.1.1 Includes an amount of '' 24.82 crores (P.Y. '' 24.82 crores) towards duty, interest and penalty relating to purchase of Naphtha at concessional rate of excise duty for the purposes other than mentioned in the exemption notification for the period November-1996 to October-2005. The demand for the period upto February-2005 for '' 21.28 crores (P.Y. '' 21.28 crores) has been appealed against by the Company and the matter is resting with the Honorable Supreme Court, which is yet to be heard. For the balance demand pertaining to subsequent period ( i.e March 2005), amounting to '' 3.54 crore order has been stayed by CESTAT, which has been appealed by the department to High Court. Pending hearing, no provision is considered necessary.

41.1.2 Company’s appeal filed before the bench of CESTAT, was heard during FY 2019-20 and a favorable order is expected and no provision is required. Further, the bank guarantee offered as security amounting to '' 29.07 crore is not renewed as advised by the Company’s solicitors.

41.1.3 Demand of '' 33.48 crore raised by Municipal Corporation of Greater Mumbai (BMC) towards additional sewerage charges levied from 05.04.1987 were 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 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. Upon disposal of matter by the High Court, Company approached the 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 '' 16.00 crore to BMC 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 '' 33.48 crore as the claim of BMC is not tenable.

With reference to additional demand received as per orders of Sub Divisional Officer (SDO) Mumbai Suburban District and as revised by Tahsildar, towards Non Agriculture (NA) Tax and 100% Increase in Land Revenue (ILR), Company had recognized a liability of '' 22.00 crore in earlier years, against which '' 21.48 crore has been paid. As per the notices received, Company may also be subjected to pay additional NA tax and ILR for any future revision in the same. Company has been advised by its solicitors to appeal against the said demand as the same is not tenable.

Owing to non-compliance of Corporate Governance requirements as mandated by SEBI, with reference to composition of Independent Directors in the Board and appointment of Woman Independent Director, Companyis in receipt of notice of penalty aggregating to '' 0.65 crore (P.Y '' 0.76 Crore) from the stock exchanges (BSE & NSE). Since the appointment of Directors is done by Government of India, Company had approached its Administrative Ministry for ensuring the compliance and has also approached the stock exchanges for condonation/waiver of the penalty. Company is confident that this penalty would be waived.

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. However, with respect to matter relating to payment of overtime wages, a stay order has been obtained by the Company from High Court, with submission of a Bank guarantee amounting to '' 12.00 Crore. The matter is yet to be heard.

In respect of clause 41.1 to 41.2 above, it is not practicable for the Company to estimate the closure of these issues and the consequential timing of cash flows, if any.

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 of30,44,530 Sq. meters (P.Y. 30,44,530 Sq. meters), property cards for 3,78,321 Sq. meters (P.Y. 3,78,321 Sq. meters) are yet to be transferred in the name of the Company. The Company is in the process of transferring the title deeds in its favor.

Out of total area of 50,52,476 Sq. meters area at Thal Unit, the title deeds relating to area of 32,27,573 Sq. meters (P.Y. 32,27,573 Sq. meters) area are in the name of the Company. The balance title deeds w.r.t 18,24,903 Sq meter of land are in the process of being transferred in the name of Company. The capitalization of Freehold land at Thal Unit includes land at Kihim having carrying cost of '' 0.02 crore, pending execution of documents and transfer of title deeds in the name of Company, due to dispute.

Balance of subsidy receivables including subsidy receivable from Government are recognized on estimated basis and are subject to confirmation. Some of the balances of trade payables, current liabilities, loans and advances are subject to confirmation / reconciliation and consequential adjustments if any.

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.

Subsidy is further adjusted for escalations/de-escalations in the cost of inputs and other costs, as estimated by the management based on the prescribed norms in line with known policy parameters. Accordingly, subsidy adjusted on account of this escalations/de-escalations basis for the year amounts to '' 82.44 crore refundable to FICC/DOF (PY '' 247.18 crore receivable).

With the advent of Direct Benefit Transfer (DBT) schemes for all Fertilizer Companies, there is shift in procedure for generation of subsidy claims with respect to Price subsidy & disbursement thereon. As per the same, Company is entitled for generation of claims on the basis of actual sale by the retailers on weekly basis through POS machines. Accordingly, as on 31.03.2021, on quantity of 6.08 LMT of Urea and P&K fertilizers subsidy amounting '' 716.21 crore has been recognized in the current period as such quantity has been sold to dealers but the payment of the same will become due under DBT only on actual sale by the retailers through POS machines. (P.Y quantity 4.63 LMT and subsidy '' 667.94 crore)

Consequent to Gas pooling being made applicable to Fertilizer (Urea) sector w.e.f. June 1, 2015, it is expected that a differential pricing of gas may be made applicable for non-urea usage. Company has represented to DoF for maintaining supply of domestic gas for P&K fertilizers and chemicals. Ministry of Petroleum & Natural Gas (MoPNG) vide its order No. L-13013/3/2012-GP-I, dated: December 16, 2015 has directed GAIL (India) Limited to levy a higher gas price (i.e. the highest rate of RLNG used for production of urea) for gas consumed in nonurea operations. As the matter relating to the same is pending before the IMC for decision, the Company has represented that any decision on the same be taken only upon the issue being settled by the IMC of GoI. However, pending finalization of price payable as per the said letter, Company is recognizing liability based on the difference between domestic gas price and pool / market price of gas for its non-urea operations. The difference is provided considering domestic gas first for urea operations on cumulative basis for the year and the balance if any, for nonurea operations. As no domestic gas has been consumed in non-urea operations during the year, there is no impact for the year ended March 31, 2021. The Company has recognized a liability of '' 211.79 Crore for the period commencing from June 1, 2015 to March 31, 2021 C 211.79 Crore upto March 31, 2020) on this account.

The Company has entered into a contract for procurement of market priced gas for non-urea operations at Trombay unit, effective from May 16, 2016.

Pursuant to the said order, GAIL has sought a differential levy amounting to '' 1457.92 Crores for the period commencing from July 1, 2006 till June 30, 2019 and has initiated arbitration proceedings towards non-payment of the same. The Company has represented this matter to Department of Fertilizers for dispute resolution as the matter relating to the same is pending before the IMC of GoI. The said matter has been referred to Administrative Mechanism for Resolution of CPSEs Disputes (AMRCD).

On 20th and 22nd March, 2019 respectively, both the Gas Turbine Generator (GTG) plants at Thai unit stopped operating. Upon failure, the matter was taken up with the LSTK contractor who had supplied the turbines, for repair, as the same were covered under warranties. The matter was referred by the LSTK contractor for repairs to the Original Equipment Manufacturer (OEM) who had indicated a total estimated expenditure of about 98 Million SEK (? 74.51 crore excluding taxes and duties).

To mitigate future losses, Company procured a Gas generator and commissioned a Gas Turbine Generator plant in August 2019.

In the best interests of the Company, based on the acceptance of Notice to Proceed as proposed by the LSTK contractor, the equipments were sent for repair to the foreign Original Equipment Manufacturer (OEM) which has been received during the year. As per the Notice to proceed, the final settlement of the repair costs can either be decided mutually or in the event not agreed upon, the settlement of disputes clause as per contract can be invoked.

As the equipments are covered under warranties, the Company is of the view that no additional costs would devolve on the Company. Further the Company has initiated arbitration proceedings towards the LSTK contractor citing loss of profits owing to higher energy costs, higher maintenance costs etc.

Disclosures relating to Impairment of Non-Financial Assets:

Company has carried out impairment testing of its Cash Generating Units (CGU) which is carried out considering an estimated useful life of 10 Years for arriving at the value in use. In determining value in use for the CGU, the cash flows were discounted at a rate of 7.00% on pre-tax basis.

Higher raw material prices coupled with steep fall in realizations warranted in carrying out a review of the recoverable amount of the said plants and related equipment’s resulting in provision towards impairment.

Key assumptions based on which recoverable amount is most sensitive.

The calculation of value in use for the identified CGU is most sensitive to the following assumptions.

Selling Prices

The extant selling prices are considered for forecasting cash flow estimates for arriving at the value in use. The selling prices are assumed to be kept constant in future year projections.

Discount Rate

Discount rate is estimated considering the entity’s incremental borrowing rate which is arrived at considering the present debt structure etc.

Sales Quantity

The sales projections have been worked out considering the present demand scenario and the operating capacities of the plants.

Raw Material Prices - Considering current prices of raw materials.

The estimates of cash flows are done considering current raw material prices at the reporting date and the same are assumed to be remain constant in the future year projections as any increase in the same is expected to be passed on to the market.

entory includes stores and spares declared as surplus with further classification as disposable surplus. Since h surplus stores on disposal may not fetch full book value a suitable provision has been made. Consequent mll provision for impairment made in respect of plants referred in Note. No. 50, Company has also provided /ards inventory of specific spares relating to the said plants. The value of such inventory and provision towards same is as under:-

Transaction with other Government related Entities

Since Government of India owns 75% of the Company’s equity share capital (under the administrative control of Ministry of Chemicals and Fertilizers), the disclosures relating to transactions with Government controlled entities have been reported in accordance with para 26 of IND AS 24.

Certain transactions which are individually and collectively significant carried out with Government related entities for purchase of Gases, for procurement of Raw Materials / Finished Goods, Assets / Spare parts from Original equipment manufacturers etc. the details of which are as under:

Employee Benefits:

The required disclosure under IND AS 19 is given below.

General Description of Defined Benefit Plan

1) Provident Fund:-

a) 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 '' 32.20 crore (P.Y. '' 57.18 crore) has been charged off to statement of Profit and loss towards contribution by the Company.

b) As per Ind AS 19, for Defined Benefit plans, Company is required to ascertain the present value of the defined benefit obligation and compare with the fair values of the Plan assets to determine the surplus or deficit, if any, as at Balance Sheet date. Deficit, if any, needs to be accounted in the books of the Company. Accordingly, Company had recognized an amount of '' 19.07 crore in FY 2019-20 crores as contribution to Trust owing to such deficit in previous financial year. Owing to appreciation in fair value of plan asset the deficit stands reduced to '' 3.59 crore as at 31.03.2021 resulting in a reversal of provision of '' 15.48 Crore during FY 2020-21.

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, the charge on account of Gratuity to Statement of Profit and Loss is '' 0.34 crore (PY '' 12.46 crore).

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 Sheet date.

The liability for the leave encashment on retirement as at 31st March 2021 is '' 179.13 crore (P.Y. '' 200.57 crore)

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 agreed upon scheme in force.

Long Term Service Award:

As a part of cordial relation and appreciation of long dedicated service, Company is honoring 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 Government of India guidelines. During the year Company has recognized an expenditure of '' 11.05 crore (P.Y. '' 12.25 crore) as contribution towards the said scheme.

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Furthermore, in presenting the above sensitivity analysis the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognized in the balance sheet.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

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.

Contingent Assets:

As per the Arbitration award received in its favor for the compensation claimed in respect of surrender of land to Mumbai Metropolitan Regional Development Authority (MMRDA) on 23 rd May, 2018, Company is eligible for compensation either in the form of cash / TDRs amounting to '' 75.17 crore along with interest over and above the entitled compensation as recommended by Arbitration award. Company has filed an execution application, however MMRDA has obtained stay against the same from Mumbai High Court subject to deposit of 25% of the disputed amount with the Court. MMRDA has deposited 25% of the disputed amount as directed by the Court and the Company has withdrawn the same (? 27.93 crore) upon submission of bank guarantees of equivalent amount in favour of the Court

Hedging activities and derivatives • Derivatives not designated as hedging instruments

The Company has foreign currency denominated borrowings in the nature of External Commercial borrowings (ECBs), Foreign Currency Term Loan (FCTL) for its long term requirements and Buyers Credit, Suppliers credit for meeting its short term fund requirement. The Company has a hedging policy in place to manage its foreign currency risk relating to these borrowings. The Company uses various products for hedging like Forex Forward

Contracts, Forward Rate Agreements, Plain Vanilla Options (call option and put option), Seagull options, Interest Rate Swaps, Currency Swaps including Cross-Currency Swaps etc. The Company undertakes hedging through these products considering the tenor of the underlying instrument and the same are not designated as cash flow hedges.

Fair values

The management has assessed that its financial assets and liabilities like cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

The following methods and assumptions were used to estimate the fair values for the given below financial assets.

• Unquoted Equity Shares of Indian Potash Limited

The fair values of the unquoted equity shares have been estimated using a weighted average of DCF, PE and NAV model. The Company avails the services of professional valuer’ s for valuation of the same and the fair values so reported are based on a valuation report received from an investment valuation expert.

• Derivatives not designated as hedges

The Company enters into derivative financial instruments with various banks. Interest rate swaps, foreign exchange forward contracts, derivative instruments are valued using valuation techniques, which employs the use of market observable inputs (i.e. based on inputs/statement of position received from banks). All derivative contracts with banks are unsecured.

• Investment Properties

The value of the investment properties are based on the information and a study of the micro market in discussions with industry experts, local brokers and regional developers.

Financial risk Management objectives and policies

The Company’s principal financial liabilities, other than derivatives, comprise of loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company’s operations and to provide guarantees to support operations of its joint ventures, if any.

The Company’s principal financial assets include loans, trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company also holds FVTOCI investments and enters into derivative transactions.

The Company is exposed to market risk (including interest rate risk and currency risk), credit risk and liquidity risk. The Company seeks to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures, The use of financial derivatives is governed by the Company’s polices approved by the board of directors, which provide written principles on foreign exchange risk, interest rate risk, use of financial hedging instruments.

The Company’s management oversees these risks with the support of a Risk Management Committee that advises on financial risks and the appropriate financial risk governance framework for the Company. The Risk Management Committee provides assurance to the Company’s management that the Company’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives.

All derivative activities for risk management purposes are carried out by designated officers who have the appropriate skills, experience and supervision. It is the Company’s policy that no trading in derivatives for speculative purposes may be undertaken. These risks are summarized below:

• Interest Rate Risk:

Interest Rate Risk Management:

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risks because the Company borrows funds at both fixed and floating interest rates.

The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings. Hedging activities are evaluated regularly to align interest rate views and defined risk appetite, ensuring the most cost-effective hedging structures are applied and accordingly the Company enters into interest rate swaps.

Interest Rate Sensitivity Analysis:

The sensitivity analysis has been determined based on the exposure to interest rate risk on the borrowings outstanding as at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year with a 50 basis point increase or decrease. The detailed sensitivity analysis is given below:

Credit Risk:

Credit Risk Management:

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigation the risk of financial loss from defaults.

Trade receivables consist of a large number of customers, spread across diverse geographical areas for its fertilizers segment and across geographical areas and industries in respect of its chemicals segment. Ongoing credit evaluation is performed on the financial condition of accounts receivable.

The credit risk on liquid funds is limited because the counterparties are primarily Public Sector mutual funds and further the Company invests only in 100% debt oriented schemes of such funds. As regards derivative financial instruments the same is also limited because the counterparties are banks whose operations are regulated by the Reserve Bank of India.

Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. The Company’s activities exposes it’s primarily to the financial risk of changes in foreign currency risk and interest rates risk.

Liquidity risk Liquidity risk management

Liquidity risk management refers to the management of the Company’s short-term, medium-term and longterm funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

The following table details the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period.

Foreign Currency Risk:

The Company undertakes transactions denominated in foreign currencies, consequently, exposure to exchange rate fluctuations arise. The Company has a Board approved Hedging Policy in place entailing parameters for

hedging its foreign currency exposures completely before their maturities. The Company manages its exchange rate exposures within the approved parameters of the hedging policy through various derivative instruments such as options, swaps etc.

Foreign Currency Sensitivity Analysis:

The Company is mainly exposed to the currency of USD and EUR. The following table details the Company’s sensitivity to a 5% increase and decrease in the INR as against the USD/EUR. The sensitivity analysis includes only outstanding foreign currency denominated monetary items i.e. loans in foreign currency and adjusts their translation at the period end for a 5% change in foreign currency rates. A positive number indicates an increase in profit or equity where the INR strengthens 5% against USD/EUR. For a 5% weakening of INR as against USD/EUR, there would be a comparable impact on the profit or equity, and the number would be negative.

Capital Management

For the purpose of the Company’s Capital management, capital includes equity capital and all other reserves. The primary objective of the Company’s capital management is to maximize the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions

and the requirements of the financial covenants. The Company, for its capex requirement, borrows to the extent of 70% of the requirement and the remaining 30% shall be sourced from the internal accruals. Further, the Company, being a Public sector undertaking, is governed by the guidelines of the Department of Investment & Public Asset Management (DIPAM), which specifies the minimum percentage of dividend that can be declared. Accordingly, the Company has to manage its capex in such a way that the minimum dividend payout as stipulated is met. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt.

Gearing Ratio:

In order to achieve this overall objective, the Company’s capital management, amongst other things, aims to ensure that its meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in financial covenants of any interest-bearing loans and borrowings in the currency period.

In respect of certain operating leases where the Company is a lessor, as per initial assessment straight lining of lease rentals was not adopted since the lease terms are cancellable at any time with either parties giving suitable notice thus no fixed lease term could be established. Despite such terms in the agreement, based on the substance of the agreement it is certainly expected that the lease will remain effective over the lease term as per agreement. Accordingly straight lining of rental income has been done over the lease term. This method is more representative compared to the earlier estimates done by the Company wherein rentals were structured to increase in line with general inflation. This is with accordance with IND AS 8 wherein change in estimate is required to be done to represent the carrying value of the asset as at the Balance sheet date.

Owing to the same, there is an impact in Profit & Loss by '' 3.18 crore and the corresponding effect being reported under lease receivables which would be unwound in future over the remaining lease period. Further the impact on account of change in estimate is not material.

The standalone financial statements were authorized for issue in accordance with a resolution passed by the Board of Directors on 27th May 2021.

The financial statements as approved by the Board of Directors are subject to audit by Comptroller and Auditor General of India and final approval by its Shareholders.

Covid-19 Impact Analysis:

For the year ended 31st March, 2021 operations of the Company were marginally scaled down on account of issues arising out of lockdown due to Covid-19 pandemic. However results for the year ended 31st March, 2021 have not been impacted. Management has assessed the potential impact of Covid-19 based on the current circumstances and expects that there will be no significant impact on the continuity of operations of the Company, on useful life of the assets, on financial position etc. on a long term basis.

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


Mar 31, 2018

1. Out of total area of 50,52,476 Sq. meters area at Thal Unit, the title deeds relating to area of 32,27,573 Sq. meters (P.Y. 32,03,543 Sq. meters) 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.

2. Balance of subsidy receivables and tax refund 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.

3. 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.

Figures in brackets represents subsidy refundable to Govt. of India.

b. 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 (IMC) of Government of India (GoI). An amount of Rs, 198.94 crore has been withheld by Department of Fertilizers (DOF) for the period January, 2014 to September, 2015 towards the same. DoF has recently agreed to release the amount withheld against submission of bank guarantee, which has since been submitted. Pending final decision on the said matter and since the Company is of the view that no unintended benefits have accrued to it and is expecting full recoverability of the same, Company has continued to recognize subsidy income on P&K fertilizers at the rates notified by DoF.

4. Consequent to Gas pooling being made applicable to Fertilizer (Urea) sector w.e.f. 1st June, 2015, it is expected that a differential pricing of gas may be made applicable for non-urea usage. Company has represented to DoF for maintaining supply of domestic gas for P&K fertilizers and chemicals. Further effective from 16th May, 2016 the Company has entered into a contract for procurement of market priced gas for non-urea operations at Trombay unit.

In the interim, Ministry of Petroleum & Natural Gas (MoPNG) vide its order No. L-13013/3/2012-GP-I, dated: 16th December, 2015 has directed GAIL (India) Limited to levy a higher gas price (i.e. the highest rate of RLNG used for production of urea) for gas consumed in non-urea operations. As the matter relating to the same is pending before the IMC for decision, Company has represented that any decision on the same be taken only upon the issue being settled by the IMC of GoI.

Pursuant to the said order, GAIL has sought a differential levy amounting to Rs, 1442.84 crore for the period commencing from 1st July 2006 till 31st March 2017 and has initiated arbitration proceeding towards non-payment of the same, which has been currently referred to Administrative Mechanism for Resolution of CPSEs Disputes (AMRCD).

Company has also represented this matter to Department of Fertilizers for dispute resolution as the matter relating to the same is pending before the IMC of GoI.

However, pending finalization of price payable as per the MoPNG order, a liability of Rs, 211.79 crore as on 31st March, 2018 (Rs, 210.63 crore upto 31st March, 2017) has been recognized for the period commencing from 1st June, 2015 based on the difference between the domestic gas price and pooled / market price of gas for its non-urea operations as applicable.

5. Disclosures relating to Impairment of Non-Financial Assets:

Company has carried out impairment testing of its Cash Generating Units (CGU) which is carried out considering an estimated useful life of 10 Years for arriving at the value in use. In determining value in use for the CGU, the cash flows were discounted at a rate of 8% on pre-tax basis. Accordingly, no provision towards impairment is reckoned during the year.

As the Methylamine plant at Trombay is expected to be disposed off, the residual value of certain assets have been transferred to asset held for disposal with certain assets transferred to other CGU. Accordingly the impairment provision reckoned in previous year has been reversed.

The recoverable amount of Rs, 2.27 crore was based on value in use and was determined at the level of the CGU.

Higher raw material prices coupled with steep fall in realizations warranted in carrying out a review of the recoverable amount of the said plants and related equipment’s resulting in provision towards impairment.

Key assumptions based on which recoverable amount is most sensitive.

The calculation of value in use for the identified CGU is most sensitive to the following assumptions.

1. Selling Prices

The extant selling prices are considered for forecasting cash flow estimates for arriving at the value in use. The selling prices are assumed to be kept constant in future year projections.

2. Discount Rate

Discount rate is estimated considering the entities incremental borrowing rate which is arrived at considering the present debt structure etc.

3. Sales Quantity

The sales projections have been worked out considering the present demand scenario and the operating capacities of the plants.

4. Raw Material Prices - Considering current prices of raw materials.

The estimates of cash flows are done considering current raw material prices at the reporting date and the same are assumed to be remain constant in the future year projections as any increase in the same is expected to be passed on to the market.

5. Inventory includes stores and spares declared as surplus with further classification as disposable surplus. Since such surplus stores on disposal may not fetch full book value a suitable provision has been made. Consequent to full provision for impairment made in respect of plants referred in Note. No. 49, Company has also provided towards inventory of specific spares relating to the said plants.

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.

6. Based on the nature of business activities undertaken by the Company and requirement of IND AS 108, following are the operating segments identified

Segment Nature of activities

Fertilizers Production and supply of various grades of Fertilizers for agricultural use.

Industrial Production of various chemicals and supply to diverse industries Chemicals

Trading Represents fertilizers imported / locally sourced and marketed for agricultural use.

The necessary disclosures as required under IND AS 108 are given in Annexure-1.

The segment revenue and segment results are arrived at based on the revenues generated out of sale of such products and the costs attributable are reduced for arriving at the segment results. Assets are allocated to operating segments based on the intended use for which the asset was primarily installed. Liabilities are allocated to operating segments to which it relates to.

No operating segments have been aggregated to form the above reportable operating segments.

53. Disclosures under IND AS 24 on Related Party Transactions are given below:

Since Government of India owns 75% of the Company’s equity share capital (under the administrative control of Ministry of Chemicals and Fertilizers), the disclosures relating to transactions with Government and other Government controlled entities have been reported in accordance with para 26 of IND AS 24.

Company has received 5000000 shares of Rs, 10 each from JV Talcher Fertilizers Ltd. against its share of contribution during the year.

The provision towards the amount given as advances and additional equity contribution pending allotment in FRBL made in the earlier financial years continues and during the year an amount of Rs, 16.25 crores towards certain advances given to FRBL has also been fully provided for.

Out of Guarantees given by the Company on behalf of FRBL to its bankers, guarantees amounting to Rs, 35.47 crore has been recognized as a financial asset at fair value. Expecting the liability of repayment of debt obligations to FRBL bankers may devolve on the Company, loss on impairment of its corporate guarantee amounting to Rs, 35.47 crore towards term loan has been done with adjustment to its opening reserves as at 1st April 2015,consequent to transition to Ind AS.

One time settlement has been entered with the bankers and FRBL with the Company contributing towards the same. Accordingly the liability towards corporate guarantee obligation / one time settlement stands restricted to Rs, 19.50 crores on account of payment of Rs, 15.97 crore towards the same and the existing liability towards the same stands reversed.

Upon payment of the balance amount under OTS the corporate guarantee would be discharged.

Out of the total value of guarantees given, Rs, 2.20 crore pertains to guarantee given for working capital facilities from banks on behalf of FRBL. Since such facility has not been availed, no provision towards financial guarantee and corresponding asset has been recognized.

2) Key Management Personnel

(i) Shri Umesh V. Dhatrak, Chairman & Managing Director from 14.09.2017

(ii) Shri Sudhir Panadare, Director (Technical) from 18.12.2017

(iii) Shri CMT Britto, Director ( Technical) upto 30.06.2017

(iv) Shri Suresh Warior, Director (Finance) and CFO upto 30.11.2017.

(v) Shri Umesh Dongre, Director (Finance) and CFO from 09.02.2018

(vi) Shri D M Sati, Company Secretary upto 30.09.2017

(vii) Shri Jai Bhagwan Sharma, Company Secretary from 01.10.2017

The above amount includes salaries and allowances, contribution to Provident fund, pension etc. and actual payments towards leave encashment, if any.

The remuneration to key management personnel does not include the provisions made for gratuity; leave encashment and post-retirement medical benefits as they are determined on an actuarial basis for the Company as a whole. Further the above figures do not include the arrears of wage revision due from 01.01.2017 as approved by Board.

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

Figures in brackets are in respect of previous year.

* In accordance with DPE OM dated 3rd August, 2017 prescribing guidelines for wage revision, Company has approved the same. Consequently the existing provision is transferred to other current liabilities.

Disputes, Claims and Others represent estimates made mainly for probable claims arising out of litigations / disputes pending with authorities /Trade Payable. Deferred Tax Asset of Rs, 0.70 crore (Previous year Rs, 0.69 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.

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, the charge on account of Gratuity to Statement of Profit and Loss is Rs, 125.73 crore (PY Rs, NIL).

There has been significant increase in gratuity liability mainly owing to revision in the limits relating to maximum gratuity payable from Rs, 10 lakhs to Rs, 20 lakhs. Accordingly the Past service cost relating to gratuity which is one time in nature amounting to Rs, 108.06 crore has been reported as an exceptional item.

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 Sheet date.

The liability for the leave encashment on retirement as at 31st March 2018 is Rs, 205.86 crore (P.Y. Rs, 184.75 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 agreed upon scheme in force.

5) Long Term Service Award:

As a part of cordial relation and appreciation of long dedicated service, Company is honoring 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 Government of India guidelines. During the year Company has paid an amount of Rs, 9.89 crore (P.Y. Rs, 10.34) crore, as contribution towards the said scheme.

Furthermore in presenting the above sensitivity analysis the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognized in the balance sheet.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

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.

7. Provision made for an amount of Rs, 2.93 crore (P.Y. Rs, 3.83 crore) being the amount due in dispute relating to manufacture of Single Super Phosphate given on job work basis to third party continues. Company has also lodged counter claims on the said party and the matter has been referred to arbitration.

Contingent Assets:

8. In accordance with Modified New Pricing policy scheme (NPS III) effective from 01.04.2014, Company is eligible for increased compensation of fixed cost components for production of urea. As the price concessions relating to urea manufactured by the Company are yet to be notified, no additional compensation towards the same has been reckoned and further impact on account of the same is not quantifiable.

9. Company is expected to receive Rs, 2.86 crore towards certain plant and machinery including storage tank to be taken over by Mumbai Port Trust (MBPT) ,which is situated on the land taken on lease from them, upon handing over its possession. Since the assets are still in Company’s possession with the risk and reward yet to be passed on, the same is not considered as income for the year.

10. Company is in receipt of an arbitration award in its favor for the compensation claimed in respect of surrender of land to Mumbai Metropolitan Regional Development Authority (MMRDA) on 23rd May, 2018. As per the award, Company is eligible for compensation either in the form of cash / TDRs amounting to Rs, 75.17 crore along with interest over and above the entitled compensation as recommended by MMRDA. However MMRDA can appeal against the said award.

11. Exceptional items:

a) Net fair value gain of Rs, 107.94 crore on account of valuation of Development Right Certificate received / receivable from Municipal Corporation of Greater Mumbai towards surrender of land in accordance with IND-AS 38 and Guidance Note on Accounting for Real Estate Transactions issued by Institute of Chartered Accountants of India. Tax expense includes Capital Gains Tax impact on the same.

b) Past service gratuity cost of Rs, 108.06 crore on account of increase in gratuity limits from Rs,10 lakh to Rs, 20 lakh in line with Notification dated 29th march, 2018 issued by the Ministry of Labour and Employment.

12. Disclosure relating to Corporate Social Responsibility “CSR” Activities

Company during the year has incurred an expenditure of Rs, 7.79 crore (P.Y. Rs, 8.63 crore) towards the same which is reported under Note No. 37 “Other Expenses”& Note 37B “Miscellaneous expenses”.

13. Hedging activities and derivatives

Derivatives not designated as hedging instruments

The Company has foreign currency denominated borrowings in the nature of External Commercial borrowings (ECBs), Foreign Currency Term Loan (FCTL) for its long term requirements and Buyers Credit, Suppliers credit for meeting its short term fund requirement. The Company has a hedging policy in place to manage its foreign currency risk relating to these borrowings. The Company uses various products for hedging like Forex Forward Contracts, Forward Rate Agreements, Plain Vanilla Options (call option and put option), Seagull options, Interest Rate Swaps, Currency Swaps including Cross-Currency Swaps etc. The Company undertakes hedging through these products considering the tenor of the underlying instrument and the same are not designated as cash flow hedges.

Currency Swap arrangement converted the principal and coupon amount of its rupee term loan to foreign currency liability in US Dollar (USD) terms.

Under this swap arrangement, Company receives a differential interest amount between the floating rate of interest on the converted foreign currency liability (USD) at the rate of 6m Libor 2.65% p.a. and fixed interest of 10% on the rupee liability. As regards the principal portion, the differential between the installment amount payable in rupee terms and installment in foreign currency is either received or paid by the Company.

The decrease in fair value of the currency swap of Rs, NIL (P.Y. Rs, 0.40 crore) has been recognized under miscellaneous expenses in the Statement of Profit or loss.

14. Fair values

The management has assessed that its financial assets and liabilities like cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

The following methods and assumptions were used to estimate the fair values for the given below financial assets. Unquoted Equity Shares of Indian Potash Limited

The fair values of the unquoted equity shares have been estimated using a weighted average of DCF, PE and NAV model. The Company avails the services of professional valuer’ s for valuation of the same and the fair values so reported are based on a valuation report received from an investment valuation expert.

Derivatives not designated as hedges

The Company enters into derivative financial instruments with various banks. Interest rate swaps, foreign exchange forward contracts, derivative instruments are valued using valuation techniques, which employs the use of market observable inputs (i.e. based on inputs/statement of position received from banks). All derivative contracts with banks are unsecured.

Investment Properties

The value of the investment properties are based on the information and a study of the micro market in discussions with industry experts, local brokers and regional developers.

15. Financial risk Management objectives and policies

The Company’s principal financial liabilities, other than derivatives, comprise of loans and borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Company’s operations and to provide guarantees to support operations of its subsidiaries/joint ventures, if any.

The Company’s principal financial assets include loans, trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company also holds FVTOCI investments and enters into derivative transactions.

The Company is exposed to market risk (including interest rate risk and currency risk), credit risk and liquidity risk. The Company seeks to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives is governed by the Company’s polices approved by the board of directors, which provide written principles on foreign exchange risk, interest rate risk, use of financial hedging instruments.

The Company’s management oversees these risks with the support of a Risk Management Committee that advises on financial risks and the appropriate financial risk governance framework for the Company. The Risk Management Committee provides assurance to the Company’s management that the Company’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives.

All derivative activities for risk management purposes are carried out by designated officers who have the appropriate skills, experience and supervision. It is the Company’s policy that no trading in derivatives for speculative purposes may be undertaken. These risks are summarized below:

Interest Rate Risk: Interest Rate Risk Management:

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risks because the Company borrows funds at both fixed and floating interest rates.

The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings. Hedging activities are evaluated regularly to align interest rate views and defined risk appetite, ensuring the most cost-effective hedging structures are applied and accordingly the Company enters into interest rate swaps.

Credit Risk: Credit Risk Management:

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigation the risk of financial loss from defaults.

Trade receivables consist of a large number of customers, spread across diverse geographical areas for its fertilizers segment and across geographical areas and industries in respect of its chemicals segment. Ongoing credit evaluation is performed on the financial condition of accounts receivable.

The credit risk on liquid funds is limited because the counterparties are primarily Public Sector mutual funds and further the Company invests only in 100% debt oriented schemes of such funds. As regards derivative financial instruments the same is also limited because the counterparties are banks whose operations are regulated by the Reserve Bank of India.

In addition, the Company is exposed to credit risk in relation to financial guarantees given to the banks provided by the Company. Owing to one time settlements entered during the year with the lenders to whom such financial guarantees have been provided, the expected outgo on account of the same stands at Rs, 19.50 Crore as at March 31, 2018 (as at March 31, 2017, Rs, 35.47 Crores).

Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. The Company’s activities exposes it’s primarily to the financial risk of changes in foreign currency risk and interest rates risk.

Liquidity risk

Liquidity risk management

Liquidity risk management refers to the management of the Company’s short-term, medium-term and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

The following table details the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period.

Foreign Currency Risk:

The Company undertakes transactions denominated in foreign currencies, consequently, exposure to exchange rate fluctuations arise. The Company has a Board approved Hedging Policy in place entailing parameters for hedging its foreign currency exposures completely before their maturities. The Company manages its exchange rate exposures within the approved parameters of the hedging policy through various derivative instruments such as options, swaps etc.

Foreign Currency Sensitivity Analysis:

The Company is mainly exposed to the currency USD and EUR. The following table details the Company’s sensitivity to a 5% increase and decrease in the INR as against the USD/EUR. The sensitivity analysis includes only outstanding foreign currency denominated monetary items i.e. loans in foreign currency and adjusts their translation at the period end for a 5% change in foreign currency rates. A positive number indicates an increase in profit or equity where the INR strengthens 5% against USD/EUR. For a 5% weakening of INR as against USD/EUR, there would be a comparable impact on the profit or equity, and the number would be negative.

manage its capex in such a way that the minimum dividend payout as stipulated is met. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt.

Gearing Ratio:

In order to achieve this overall objective, the Company’s capital management, amongst other things, aims to ensure that its meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in financial covenants of any interest-bearing loans and borrowings in the currency period.

No changes have been made in the objectives, policies and processes for managing capital during the years ended 31st March 2018 & 31st March 2017.

73. Standards Issued but not yet effective

The standard issued, but not yet effective up to the date of issuance of the company financial statement is disclosed below. The Company intends to adopt the standard when it becomes effective.

IND AS 115 Revenue from Contracts with Customers

IND AS 115 was issued in February 2015 and establishes a five step model to account for revenue arising from contracts with customers. Under IND AS 115 revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled for transferring goods or services to a customer. The new revenue standard will supersede the current revenue recognition requirements under IND AS. The standard comes into force from accounting period commencing on or after 1st April, 2018. The Company will adopt the new standard on the required effective date. The Company has analyzed all the existing contracts with customers in respect of applicability of IND-AS 115 and is of the view that no material impact on the financial statements of the Company is expected upon implementation of IND-AS 115.

16. The standalone financial statements were authorized for issue in accordance with a resolution passed by the Board of Directors on 28th May 2018.

17. The financial statements as approved by the Board of Directors are subject to audit by Comptroller and Auditor General of India and final approval by its Shareholders.

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


Mar 31, 2017

I) Corporate information

The Company is a public company domiciled in India and is incorporated under provisions of the Companies Act applicable in India. Its shares are listed on two recognized stock exchanges in India. The registered office of the Company is located at Priyadarshini, Eastern Express Highway, Sion Mumbai 400022.

The Company is engaged in the manufacturing and marketing of fertilizers and industrial chemicals.

II) Basis of preparation

a. The standalone financial statements of the Company have been prepared in accordance with accounting standards prescribed under Section 133 of the Companies Act, 2013 (the Act), Companies (Indian Accounting Standards) Rules, 2015 as amended by Companies (Indian Accounting Standards)(Amendment) Rules, 2016 and other relevant provisions of the Act.

b. The standalone financial statements have been prepared under the historical cost and on accrual basis, except for the following:-

- Certain financial assets and liabilities (including Derivative financial instruments) measured at fair value

- Certain provisions recognized using actuarial valuation techniques

- Non-current assets classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell.

c. The standalone financial statements are presented in Indian Rupees (Rs.) and all values are rounded to the nearest crores (Rs. 00,00,000), except when otherwise indicated.

d. Significant accounting judgements, estimates and assumptions

1.1 The preparation of the Company’s standalone financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities as at the Balance Sheet date.

1.2 Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. Any revisions to the accounting estimates are recognized prospectively when revised, in current and future periods.

Some of the significant judgements and assumptions exercised are given as under:-

1.2.1 Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. The key assumptions used to determine the recoverable amount for the different CGUs, including a sensitivity analysis, are disclosed separately.

1.2.2 Taxes

Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

1.2.3 Defined benefit plans

The cost of the defined benefit gratuity plan and other post-employment medical benefits and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans, the management considers the interest rates of government bonds in India.

The mortality rate is based on publicly available mortality tables as defined by LIC. Future salary increases is based on Company’s assessment based on past trends.

1.2.4 Subsidy Income

As per extant policies covering subsidy of Urea, major inputs like cost of energy, water etc. are a pass through in the same. Since the notified rates of subsidy of urea incorporating actual revision takes time, recognition of subsidy is generally made on the basis of in principle recognition/ approval /settlement of claims from Government of India/Fertilizer Industry Co-ordination Committee while finalising the financial statements.

1.2.5 Provision for obsolescence

Provision towards obsolete/surplus inventory are recognized as per management estimates under the assumption that they may fetch 5% of their book value upon disposal.

1.2.6 Fair value measurements of financial instruments

When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow model. The inputs to these models are from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Changes in assumptions could affect the reported value of fair value of financial instruments.

1.2.7 Application of Discount rates

Estimates of rates of discounting are done for measurement of fair values of certain financial assets and liabilities, which are based on prevalent bank interest rates and the same are subject to change.

1.2.8 Estimates of Useful lives of assets/components

Company has identified significant components of plant and machinery and provides for depreciation over their useful lives as per its technical assessment.

1.2.9 Operating Lease

The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement, is or contains a lease is fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly not specified in an arrangement.

For arrangements entered into prior 1st April 2015, the Company has determined whether the arrangement contain lease on the basis of facts and circumstances existing on the date of transition.

Lease arrangements in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases.

III) First-time adoption of Ind AS

These financial statements, for the year ended 31st March 2016, are the first the Company has prepared in accordance with Ind AS. For periods up to and including the year ended 31st March 2015, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2015 (Indian GAAP).

The Company has adopted all the applicable Ind AS standards and the adoption was carried out in accordance with Ind AS 101, First time adoption of Indian Accounting Standards. The transition was carried out from Indian Accounting principles generally accepted in India as prescribed under Section 133 of the Act ,read with Rule 7 of the Companies Accounts Rules, 2014 (IGAAP), which was the previous GAAP.

Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on 31st March 2016 as described in the significant accounting policies. In preparing these financial statements, the Company’s opening balance sheet was prepared as at 1st April 2015, the Company’s date of transition to Ind AS. Reconciliations and descriptions of the effect of the transition have been summarized in Note no. 69 to financial statements.

IV) Exemptions applied

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

Company has elected to continue with the carrying value for all of its property, plant and equipment as recognized in the financial statements as at the date of transition measured as per Indian GAAP and use that as its deemed cost as at date of transition. The same is applicable even for Investment property, intangible assets and its investments in Joint venture, associates and subsidiaries.

Company has also reviewed the necessary adjustments required to be done in accordance with paragraph D21 this standard (i.e. adjustments arising on account of decommissioning or restoration liabilities) and has accordingly considered the impact of the same wherever applicable.

The Company has designated unquoted equity instruments held at 1st April 2015 as fair value through OCI.

Terms/Rights Attached to Equity shares

The Company has only one class of equity shares having par value of Rs.10 per share. Each share holder is entitled to one vote per share.The Company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

For FY 2016-17, The board of directors have recommended a dividend of Rs. 1.10 per share (P.Y. Rs. 1.10 per share) amounting to Rs. 60.69 crore (P.Y. Rs. 60.69 crore) which is subject to approval of the shareholders. Further the same is subject to dividend distribution tax at the applicable rate which works out to Rs.12.35 crore (P.Y. Rs. 12.35 crore)

*Cash Credit and Working Capital Demand Loan from banks is secured by hypothecation of entire current assets, present and future. The said arrangement carries a rate of interest which varied between 7.95% to 9.40% per annum during the year.

Trade payables are normally non-interest bearing and are usually settled within 30-days from the date of receipt of invoice unless they are contracted with specific credit terms as applicable.

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) and not provided for net of payment/liability provided:-

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

*includes an amount of Rs.23.05 crore (P.Y. Rs.23.05 crore) towards duty, interest and penalty relating to purchase of Naphtha at concessional rate of excise duty for the purposes other than mentioned in the exemption notification for the period November-1996 to October-2005. The demand for the period upto February-2005 for Rs.21.28 crore (P.Y. Rs.21.28 crore) has been appealed against by the Company and the matter is resting with the Honorable Supreme Court, which is yet to be heard. For the subsequent period the show cause notice has been stayed by CESTAT and appeal is yet to be heard. Pending hearing, no provision is considered necessary.

** The demand of duty is secured by Bank Guarantees and the Company has filed an appeal against the same before the bench of CESTAT, which is yet to be heard. Company has been advised by solicitors and advocates that the demand is not tenable and no provision is considered necessary.

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 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.8) 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.

In respect of clause 40.1 to 40.2 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. Disclosures relating to Finance Lease:

Relating to 416 Wagons leased to Indian Railways “Under Own your Wagons Scheme”

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 30,89,013 Sq. meters (P.Y. 30,97,278 Sq. meters), property cards for 3,78,321 Sq. meters (P.Y. 3,78,321 Sq. meters and 3,93,198 Sq. meters as at 01.04.2015) are yet to be transferred in the name of the Company.

4. Out of total area of 50,52,476 Sq. meters area at Thal Unit, the title deeds relating to area of 32,03,543 Sq. meters 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. Balance of subsidy receivables and tax refund 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.

a. 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:-

Figures in brackets represents subsidy refundable to Govt. of India.

**Includes Subsidy against marketing margin against RIL gas for use of production of Urea of ‘ NIL (P.Y. Rs.4.03 crores), as an interim relief, as directed by Delhi High Court on the referred matter.

b. The matter relating to unintended benefits accruing to units using domestic gas for manufacture of Nutrient “N” has been referred to and is pending before an Inter-Ministerial Committee (IMC) of Government of India (GoI). An amount of Rs.198.94 crore has been withheld as at 31st March 2017 (Rs.198.94 crore as at 31st March 2016) by Department of Fertilizers 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. As per notification no. L-120223/2015-GP-II, dated 20th May, 2015 of Ministry of Petroleum and Natural Gas (MOPNG), Gas Pooling has become applicable from 1st June, 2015 onwards for all Urea Manufacturing units. Under this mechanism gas for urea production will be made available at a uniform price of pooled gas for production of urea. Consequently it is expected that a differential pricing of gas may be made applicable for non-urea usage also. Company has represented to DoF for maintaining supply of domestic gas for P&K fertilizers and chemicals.

MOPNG vide its letter no. L-13013/3/2012-GP-1, dated 16th December, 2015 has directed GAIL (India) Ltd. to levy a higher gas price (i.e. the highest rate of RLNG used for production of urea) for use of gas in non-urea operations. Company has represented that any decision on the same be taken only upon the issue being settled by the IMC of GoI. Effective from 16th May, 2016, Company has entered into a contract for procurement of market priced gas for non-urea operations at Trombay unit.

However, pending finalization of price payable as per the said letter of MOPNG, a liability of Rs.210.63 crore as on 31st March 2017 C181.97 crore, as on 31st March 2016) has been recognized based on the pooled price of gas/Market price of gas, also for its non-urea operations as applicable.

In pursuant to the said order, GAIL (India) Ltd. has sought a differential levy amounting to Rs. 1244.80 crore for the period commencing from 1st July 2006 till 31st March 2016 and has initiated arbitration proceedings towards nonpayment of the same. Company has represented this matter to Department of Fertilizers for dispute resolution as the matter relating to the same is pending before the Inter Ministerial Committee of Government of India.

8. Disclosures relating to Impairment of Non-Financial Assets:

Company has carried out impairment testing of its Cash Generating Units (CGU) which is carried out considering an estimated useful life of 10 Years for arriving at the value in use. In determining value in use for the CGU, the cash flows were discounted at a rate of 8% on pre-tax basis. Accordingly, no provision towards impairment is reckoned during the year.

The status of provision made towards impairment is as under:-

The recoverable amount of Rs.2.53 crore was based on value in use and was determined at the level of the CGU.

Higher raw material prices coupled with steep fall in realizations warranted in carrying out a review of the recoverable amount of the said plants and related equipment’s resulting in provision towards impairment.

Key assumptions based on which recoverable amount is most sensitive.

The calculation of value in use for the identified CGU is most sensitive to the following assumptions.

1. Selling Prices

The extant selling prices are considered for forecasting cash flow estimates for arriving at the value in use. The selling prices are assumed to be kept constant in future year projections.

2. Discount Rate

Discount rate is estimated considering the entities incremental borrowing rate which is arrived at considering the present debt structure etc.

3. Sales Quantity

The sales projections have been worked out considering the present demand scenario and the operating capacities of the plants.

4. Raw Material Prices - Considering current prices of raw materials.

The estimates of cash flows are done considering current raw material prices at the reporting date and the same are assumed to be remain constant in the future year projections as any increase in the same is expected to be passed on to the market.

9. Inventory includes stores and spares declared as surplus with further classification as disposable surplus. Since such surplus stores on disposal may not fetch full book value a suitable provision has been made. Consequent to full provision for impairment made in respect of plants referred in Note. No. 48, Company has also provided towards inventory of specific spares relating to the said plants.

The value of such inventory and provision towards the same is as under:-

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.

The necessary disclosures as required under IND AS 108 are given in Annexure-1.

The segment revenue and segment results are arrived at based on the revenues generated out of sale of such products and the costs attributable are reduced for arriving at the segment results. Assets are allocated to operating segments based on the intended use for which the asset was primarily installed. Liabilities are allocated to operating segments to which it relates to.

No operating segments have been aggregated to form the above reportable operating segments.

10. Disclosures under IND AS 24 on Related Party Transactions are given below:

Since Government of India owns 80% of the Company’s equity share capital (under the administrative control of Ministry of Chemicals and Fertilizers), the disclosures relating to transactions with Government and other Government controlled entities have been reported in accordance with para 26 of IND AS 24.

Certain transactions are carried out with other government related entities for purchase of Gases, for procurement of Raw Materials / Finished Goods, Assets / Spare Parts from Original equipment manufacturers, which are significant in terms of value, the details of which are as under:

Consequent to full provision recognized towards the investments made in FRBL as per Indian GAAP, the carrying value as on the date of transition has been recognized as deemed cost of investment which is NIL as on the transition date .i.e. 1stApril 2015.

The provision towards the amount given as advances and additional equity contribution pending allotment in FRBL made in the earlier financial years continues and during the year an amount of Rs.0.27 crore towards certain advances given to FRBL has been fully provided for.

Out of the guarantees given by the Company on behalf of FRBL to its bankers, guarantees amounting to Rs. 35.47 crore as a part of the Debt restructuring scheme has been accounted for as a financial asset required to be measured at fair value and also tested for loss allowance. Expecting the liability of repayment of debt obligations to FRBL bankers may devolve on the Company, the Company has provided for loss on impairment of its corporate guarantee amounting to Rs. 35.47 crore towards term loan which has been adjusted to its opening reserves as at 1st April 2015, the date of transition to Ind AS. The liability towards financial guarantee given is reported under other financial liabilities.

Out of the total value of guarantees given, Rs. 2.20 crore pertains to guarantee given for working capital facilities from banks on behalf of FRBL. Since such facility has not been availed, no provision towards financial guarantee and corresponding asset has been recognized.

2) Key Management Personnel

(i) Shri R.G.Rajan, Chairman & Managing Director upto 14.06.2016

(ii) Shri. Manoj Mishra, Chairman & Managing Director from 15.6.2016 to 13.3.2017

(iii) Shri. CMT Britto, Director (Technical) and Chairman and Managing Director from 14.3.2017

(iv) Shri.Ashok Kumar Ghasghase, Director (Marketing) upto 30.06.2016

(v) Shri. Suresh Warior Director (Finance) & CFO

(vi) Shri. D.M.Sati, Company Secretary

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.

The remuneration to key management personnel does not include the provisions made for gratuity; leave encashment and post-retirement medical benefits as they are determined on an actuarial basis for the Company as a whole.

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

Figures in brackets are in respect of previous year.

a) Disputes, Claims and Others represent estimates made mainly for probable claims arising out of litigations / disputes pending with authorities /Trade Payable. Deferred Tax Asset 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.

b) Company has made provision on estimated basis in respect of certain obligations expected out of contract; post their expiry during the year. This provision has been made based on the past practice followed by the Company considering provisional guidelines received towards the same.

* Owing to the company’s share of losses exceeding its interest in the joint venture the share of loss stands discontinued. Accordingly company has not recognized share of loss of Rs.11.03 crore for the year (P.Y. Rs.9.24 crore) and Rs.17.91 crore cumulatively upto the year ended 31.03.2017 (Rs. 6.88 crore cumulatively upto the year ended 31.03.2016.

11 Employee Benefits:

The required disclosure under IND AS 19 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. 34.08 crore (P.Y. Rs. 33.35 crore) has been charged off to statement of Profit and loss towards contribution by the Company.

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

The funds of the trust have been invested under various securities as per the pattern of investment mandated by Employees Provident Fund Organization (EPFO) Guidelines.

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, the charge on account of Gratuity to Statement of Profit and Loss is ‘ NIL owing to excess funding over the benefit obligation.

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 Sheet date.

The liability for the leave encashment on retirement as at 31st March 2016 is Rs.184.75 crore (P.Y. Rs.188.11 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 agreed upon scheme in force.

5) Long Term Service Award:

As a part of cordial relation and appreciation of long dedicated service, Company is honoring 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 Government of India guidelines. During the year Company has paid an amount of Rs.10.34 crore (P.Y. Rs.10.81 crore) as contribution towards the said scheme.

Gratuity & Post-Retirement Medical Benefits:

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

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Furthermore in presenting the above sensitivity analysis the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognized in the balance sheet.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

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.

12. Change in Accounting Policy

i) Provision towards Subsidy Receivable

Upto the period ended 31.3.2015, a provision was being reckoned on subsidy receivables outstanding from Government of India for a period more than three years. However during the recent past there have been delays in settlement of subsidy. Since the settlement of subsidy by Government is highly probable despite delays, Company has changed its policy of recognizing any such provision towards such receivables irrespective of its ageing.

Consequent to change in the accounting policy Company has not made a provision of Rs.71.77 crore, (P. Y. Rs.16.22 crore) towards subsidy receivables outstanding for a period of more than three year during the year.

IND AS 8 requires application of change in accounting policy with retrospective effect from the last available financial statement. Accordingly an amount of Rs.8.74 crore has been adjusted to retained earnings as on 1st April 2015 and during the year 2015-16, the doubtful subsidy recovered amounting to Rs.4.36 crore has been adjusted to Statement of Profit and Loss.

ii) Prepaid Expenses

Upto the period ended 31.3.2015, individual expenses upto Rs.25,000 were not considered in classifying prepaid expenses which has now been revised to Rs.1,00,000.

As IND AS 8 requires application of change in accounting policy with retrospective effect from the last available financial statement, an amount of Rs.0.04 crore has been adjusted to retained earnings as on 1st April 2015. During the year 2015-16, an amount of Rs.0.01 crore charged as prepaid expenses has been adjusted to Statement of Profit and Loss.

13. Provision made for an amount of Rs. 3.83 crore ( P.Y. Rs. 3.83 crore and as at 01.04.2015 Rs. 3.83 crore) being the amount due in dispute relating to manufacture of Single Super Phosphate given on job work basis to third party continues. Company has also lodged counter claims on the said party and the matter has been referred to arbitration.

14. Disclosure relating to Corporate Social Responsibility “CSR” Activities

Company during the year has incurred an expenditure of Rs. 8.63 crore (P.Y. Rs. 9.66 crore) towards the same which is reported under Note No. 37 “Other Expenses”& Note 37B “Miscellaneous expenses”.

15. Hedging activities and derivatives

- Derivatives not designated as hedging instruments

The Company has foreign currency denominated borrowings in the nature of External Commercial borrowings (ECBs), Foreign Currency Term Loan (FCTL) for its long term requirements and Buyers Credit, Suppliers credit for meeting its short term fund requirement. The Company has a hedging policy in place to manage its foreign currency risk relating to these borrowings. The Company uses various products for hedging like Forex Forward Contracts, Forward Rate Agreements, Plain Vanilla Options (call option and put option), Seagull options, Interest Rate Swaps, Currency Swaps including Cross-Currency Swaps etc. The Company undertakes hedging through these products considering the tenor of the underlying instrument and the same are not designated as cash flow hedges.

Currency Swap arrangement converted the principal and coupon amount of its rupee term loan to foreign currency liability in US Dollar (USD) terms.

Under this swap arrangement, Company receives a differential interest amount between the floating rate of interest on the converted foreign currency liability (USD) at the rate of 6m Libor 2.65% p.a. and fixed interest of 10% on the rupee liability. As regards the principal portion, the differential between the installment amount payable in rupee terms and installment in foreign currency is either received or paid by the Company.

The decrease in fair value of the currency swap of Rs.0.40 crore, (P.Y. Rs.3.05 crore) has been recognized under miscellaneous expenses in the Statement of Profit or loss.

16. Fair values

The management has assessed that its financial assets and liabilities like cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

The following methods and assumptions were used to estimate the fair values for the given below financial assets.

- Unquoted Equity Shares of Indian Potash Limited

The fair values of the unquoted equity shares have been estimated using a weighted average of DCF, PE and NAV model. The Company avails the services of professional valuer’s for valuation of the same and the fairvalues so reported are based on a valuation report received from an investment valuation expert.

- Derivatives not designated as hedges

The Company enters into derivative financial instruments with various banks. Interest rate swaps, foreign exchange forward contracts, derivative instruments are valued using valuation techniques, which employs the use of market observable inputs (i.e. based on inputs/statement of position received from banks). All derivative contracts with banks are unsecured.

- Investment Properties

The value of the investment properties are based on the information and a study of the micro market in discussions with industry experts, local brokers and regional developers.

17. Financial risk Management objectives and policies

The Company’s principal financial liabilities, other than derivatives, comprise of loans and borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Company’s operations and to provide guarantees to support operations of its subsidiaries/joint ventures, if any.

The Company’s principal financial assets include loans, trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company also holds FVTOCI investments and enters into derivative transactions.

The Company is exposed to market risk (including interest rate risk and currency risk), credit risk and liquidity risk. The Company seeks to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures, The use of financial derivatives is governed by the Company’s polices approved by the board of directors, which provide written principles on foreign exchange risk, interest rate risk, use of financial hedging instruments.

The Company’s management oversees these risks with the support of a Risk Management Committee that advises on financial risks and the appropriate financial risk governance framework for the Company. The Risk Management Committee provides assurance to the Company’s management that the Company’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives.

All derivative activities for risk management purposes are carried out by designated officers who have the appropriate skills, experience and supervision. It is the Company’s policy that no trading in derivatives for speculative purposes may be undertaken. These risks are summarized below:

- Interest Rate Risk: Interest Rate Risk Management:

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risks because the Company borrows funds at both fixed and floating interest rates.

The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings. Hedging activities are evaluated regularly to align interest rate views and defined risk appetite, ensuring the most cost-effective hedging structures are applied and accordingly the Company enters into interest rate swaps.

Interest Rate Sensitivity Analysis:

The sensitivity analysis has been determined based on the exposure to interest rate risk on the borrowings outstanding as at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year with a 50 basis point increase or decrease. The detailed sensitivity analysis is given below:

- Credit Risk: Credit Risk Management:

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigation the risk of financial loss from defaults.

Trade receivables consist of a large number of customers, spread across diverse geographical areas for its fertilizers segment and across geographical areas and industries in respect of its chemicals segment. Ongoing credit evaluation is performed on the financial condition of accounts receivable.

The credit risk on liquid funds is limited because the counterparties are primarily Public Sector mutual funds and further the Company invests only in 100% debt oriented schemes of such funds. As regards derivative financial instruments the same is also limited because the counterparties are banks whose operations are regulated by the Reserve Bank of India.

In addition, the Company is exposed to credit risk in relation to financial guarantees given to the banks provided by the Company. The Company’s maximum exposure in this respect is the maximum amount the Company could have to pay if the guarantee is called on is Rs.35.47 Crore as at March 31, 2016 (as at 1st April 2015, Rs.35.47 Crores).

- Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. The Company’s activities exposes it’s primarily to the financial risk of changes in foreign currency risk and interest rates risk.

- Liquidity risk Liquidity risk management

Liquidity risk management refers to the management of the Company’s short-term, medium-term and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

The following table details the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period.

- Foreign Currency Risk:

The Company undertakes transactions denominated in foreign currencies, consequently, exposure to exchange rate fluctuations arise. The Company has a Board approved Hedging Policy in place entailing parameters for hedging its foreign currency exposures completely before their maturities. The Company manages its exchange rate exposures within the approved parameters of the hedging policy through various derivative instruments such as options, swaps etc.

Foreign Currency Sensitivity Analysis:

The Company is mainly exposed to the currency of United State of America i.e. in USD.

The following table details the Company’s sensitivity to a 5% increase and decrease in the INR as against the USD. The sensitivity analysis includes only outstanding foreign currency denominated monetary items i.e. loans in foreign currency and adjusts their translation at the period end for a 5% change in foreign currency rates. A positive number indicates an increase in profit or equity where the INR strengthens 5% against USD. For a 5% weakening of INR as against USD, there would be a comparable impact on the profit or equity, and the number would be negative.

18. Capital Management

For the purpose of the Company’s Capital management, capital includes equity capital and all other reserves. The primary objective of the Company’s capital management is to maximize the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The Company, for its capex requirement, borrows to the extent of 70% of the requirement and the remaining 30% shall be sourced from the internal accruals. Further, the Company, being a Public sector undertaking, is governed by the guidelines of the Department of Investment & Public Asset Management (DIPAM), which specifies the minimum percentage of dividend that can be declared. Accordingly, the Company has to manage its capex in such a way that the minimum dividend payout as stipulated is met. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt.

Gearing Ratio:

In order to achieve this overall objective, the Company’s capital management, amongst other things, aims to ensure that its meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in financial covenants of any interest-bearing loans and borrowings in the currency period.

No changes have been made in the objectives, policies and processes for managing capital during the years ended 31st March 2017, 31st March 2016 and 1st April 2015.

19.1 Explanatory notes to the reconciliation of equity as at 1 April 2015 and 31 March 2016 and profit or loss for the year ended 31 March 2016

a. Property, plant and equipment (PPE)

The Company has opted for deemed cost exemption option and accordingly the carrying value of items of Property Plant and Equipment as per previous IGAAP as on 01.04.2015 (transition date) has been recognized as the carrying amount under IND AS.

Certain spares, having a unit value of Rs.10.00 lacs and above (threshold based on materiality considering the size of operations of the Company) which meet the definition of PPE as per IND AS 16, i.e. having a life of more than one year, have been capitalized. The carrying value of such spares amounting to Rs. 59.68 crore have been capitalized and accordingly the value of the inventory of stores and spares as on transition date stands reduced.

Depreciation on such spares amounting to Rs. 39.14 crore has been provided (based on such spares becoming available for use) and have been adjusted to the retained earnings as on 01.04.2015 and an amount of Rs. 2.74 crore has been charged off to Statement of Profit and Loss during the year 2015-16.

The value of Lease hold land amounting to Rs. 3.88 crore (net block) being the lease premium, originally recognized under Fixed Assets as per previous IGAAP stands derecognized and has been reported as Prepaid Expense under IND AS as on 01.04.2015. An amount of Rs. 0.7 crore from the value of leasehold originally capitalized has been derecognized and charged off to retained earnings.

The value of Railway Wagons amounting to Rs. 0.48 crore (net block) given on lease recognized as part of fixed assets under previous IGAAP has been reclassified as Lease Receivable under finance lease arrangement as per IND AS. The impact of reclassification as Lease Receivable amounting to Rs. 1.99 crore has been credited to retained earnings.

b. Investment Property

Under previous IGAAP separate classification of properties held as Investment Property was not required and was included under Fixed Assets. However under IND AS an amount of Rs. 5.51 crore has been shown separately as Investment Property as on date of transition.

c. FVTOCI financial assets

Under previous IGAAP, Company had accounted for long term investment in unquoted equity shares of Indian Potash Limited (IPL) at cost less provision for other than temporary diminution in the value of investments, if any.

Under IND AS, Company has designated this investment as FVTOCI financial asset. IND AS requires such investments to be measured at fair value. As at the date of transition to IND AS, the difference between the fair value and previous IGAAP carrying amount has been recognized as a separate component of equity, in the FVTOCI reserve amounting to Rs Rs. 41.25 crore.

d. Trade receivables

Under previous IGAAP, provision for bad and doubtful debts has been made as per Company’s policy under the incurred loss model. Under IND AS, trade receivables are required to be tested for expected credit loss, if any. Accordingly an impairment allowance has been determined based on Expected Loss model (ECL). A provision of Rs. 2.03 crore as on 01.04.2015 has been recognized towards ECL by debiting retained earnings. An amount of Rs. 0.49 crore towards ECL for year ended on 31st March 2016 has been recognized in the Statement of profit and loss.

e. Prior Period Errors* / Change in Accounting Policy

1. VAT Setoff on Inputs (Prior Period Error)

Company has been filing return for VAT in Maharashtra in accordance with the extant rules and claiming Setoff on VAT paid on inputs. Effective from 01.05.2012 the rules relating to setoff in respect of purchase of natural gas other than fuel were revised, which was inadvertently not considered while filing the returns under VAT. Accordingly a higher setoff was claimed by the Company. During the year 2016-17 in the course of assessment proceedings for the year 2012-13 the fact was brought to the notice of Company and company is in receipt of an order dated 31.03.2017 disallowing the excess setoff claimed by the company. Accordingly a lower refund is expected to be received. Based on the same, Company has reassessed its VAT receivables for the years 2012-13 to 2015-16 and has accordingly adjusted its receivables towards VAT refund.

Consequent to reduction in setoff, Company is eligible to claim the increase in cost of gas consumed in urea through subsidy from Government of India.

Accordingly the impact on account of lower set off net of eligible subsidy, commencing from the period 01.05.2012 till 31.03.2015 has been adjusted to retained earnings as on 01.04.2015 i.e. date of transition to IND AS amounting to Rs.28.38 crore and for the year 2015-16 an amount of Rs.17.62 crore has charged to statement of profit and loss.

2. Valuation of Customs Duty (Prior Period Error)

A notice has been received from Customs authorities dated 15.03.2017 seeking certain information in connection with Customs Duty Payable on lighterage or barge charges. As per the same such charges need to be included for assessment of Customs Duty. Owing to incorrect valuation of custom duty paid on import of raw materials by the Company for the period commencing from 2012-13 to 2015-16 warranting payment of additional duty, a liability on account of the same has been considered as a past period expense with necessary adjustment being done to retained earnings amounting to Rs.0.51 crore as on transition date and statement of profit and loss for the year 2015-16 amounting to Rs.0.17 crore.

*As there is objective evidence that these estimates were in error, the above adjustments have been done as per Para 14 of IND AS 101 “First Time Adoption of Indian Accounting Standards” as issued under Company (Indian Accounting Standard) Rules, 2015.

3. Prior period expenses as per IGAAP

Since IND AS requires adjustment of prior period expenses to the financial statements to which it relates, an amount of Rs.1.08 crore pertaining to FY 2014-15 charged off to statement of profit and loss during the year 2015-16 as a prior period expense under IGAAP, has been debited to retained earnings as on 01.04.2015.

4. Change in Accounting Policy

i) Provision towards Subsidy Receivable **

Hitherto a provision was being reckoned on subsidy receivables outstanding from Government of India for a period more than three years. However during the recent past there have been delays in settlement of subsidy. Since the settlement of subsidy by Government is highly probable despite delays, Company has changed its policy of recognizing any such provision towards such receivables irrespective of its ageing.

IND AS 8 requires application of change in accounting policy with retrospective effect from the last available financial statement. Accordingly an amount of Rs.8.74 crore has been adjusted to retained earnings as on 1st April 2015. During the year 2015-16, the doubtful subsidy recovered amounting to Rs.4.36 crore has been adjusted to Statement of Profit and Loss.

Consequent to change in the accounting policy Company has not made a provision ofRs.16.22 crore towards subsidy receivables outstanding for a period of more than three year during the year 2015-16.

ii) Prepaid Expenses **

Hitherto individual expenses upto Rs.25,000 were not considered in classifying prepaid expenses which has now been revised to Rs.1,00,000.

As IND AS 8 requires application of change in accounting policy with retrospective effect from the last available financial statement, an amount of Rs.0.04 crore has been adjusted to retained earnings as on 1st April 2015. During the year 2015-16, an amount of Rs.0.01 crore charged as prepaid expenses has been adjusted to Statement of Profit and Loss.

** As per IND AS 101 para 27 A changes in the above referred accounting policies have been carried out in the financial statements.

f. Borrowings / Discounting Adjustments

Under previous IGAAP, transaction costs incurred in connection with borrowings were amortized upfront and charged to profit or loss for the period. Under IND AS, transaction costs are included in the initial recognition amount of financial liability and charged to statement of profit and loss equally over the term of the loan. Accordingly an amount of Rs.1.45 crore being the unamortized portion of transaction cost originally charged off under IGAAP has been reinstated with necessary adjustment to retained earnings as on 1st April 2015.

Further owing to restatement of financial liabilities at amortized cost the adjustment on account of discounting amounting to Rs.0.01 crore has been adjusted to retained earnings as on 1st April 2015.

g. Deferred tax

Previous IGAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. IND AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of IND AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under previous IGAAP.

In addition, the various transitional adjustments lead to temporary differences. According to the accounting policies, the company has to account for such differences. Deferred tax adjustments are recognized in correlation to the underlying transaction either in retained earnings or a separate component of equity. As on the date of transition the net impact on deferred tax liability is Rs.4 crore.

h. Deferred revenue / Other Non-Current Liabilities

Under previous IGAAP, one-time compensation received towards right to use arrangements was recognized in the statement of profit and loss in the year it was received. Under IND AS such consideration received has been recognized as Deferred Revenue and accordingly an amount of Rs.12.23 crore has been debited to retained earnings as at 1st April 2015, the date of transition.

Government grants, capital in nature, were adjusted to cost of asset under previous IGAAP. Under IND AS the unexpired portion of such grants amounting to Rs.2.31 crore as on the date of transition have been reclassified as Other Non-Current Liabilities by debiting retaining earnings.

i. Other current financial liabilities

The guarantees given by the company on behalf of FRBL (joint venture entity) to its bankers amounting to Rs.35.47 crore towards term loans as a part of the Debt restructuring scheme has been accounted for as a financial asset required to be measured at fair value and also tested for loss allowance. Expecting the liability towards financial guarantee to FRBL’s bankers may devolve, the Company has provided for loss on impairment of its corporate guarantee amounting to Rs.35.47 crore towards term loan which has been adjusted to its retained earnings as at 1st April 2015, the date of transition to IND AS.

j. Other payables

Under previous IGAAP, proposed dividend including Dividend Distribution tax is recognized as a liability in the period to which they relate, irrespective of when they are declared. Under IND AS, a proposed dividend is recognized as a liability in the period in which it is declared by the company (usually when approved by shareholders in a general meeting) or paid.

In the case of the Company, the declaration of dividend occurs after period end. Therefore, the provision towards the proposed dividend amounting to Rs. 119.52 crore as on 31st March 2015 has been derecognized under IND AS and adjusted against retained earnings on 1st April 2015. The proposed dividend for the year ended on 31st March 2016 of Rs. 73.04 crore recognized under previous IGAAP has been reduced from other payables with a corresponding impact in retained earnings.

k. Sale of goods

Under previous IGAAP, sale of goods was presented as net of excise duty and gross of cash discount. However, under IND AS, sale of goods includes excise duty and is net of cash discount.

Accordingly excise duty on sale of goods is separately presented as an expense in the statement of profit and loss and sales are reported net of cash discount.

Further applying the principal agent relationship for certain arrangements, under IND AS income / expenses has been recognized on net basis, hitherto which was recognized as gross under previous IGAAP.

l. Defined benefit obligation

Both under previous IGAAP and IND AS, the Company recognized costs related to its post-employment defined benefit plan on an actuarial basis. Under previous IGAAP, the entire cost, including actuarial gains and losses, are charged to statement of profit and loss. Under Ind AS, remeasurements are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI. Thus the employee benefit cost is increased by Rs. 2.13 crore and remeasurement gains on defined benefit plans has been recognized in the OCI net of tax during the year 2015-16.

m. Derivative instruments / Other Adjustments

Under previous IGAAP in line with the principle of prudence enunciated in Accounting Standard-1, Disclosure of accounting policies as per announcements of Institute of Chartered Accountants of India, Company had not recognized Marked to Market (MTM) gains on outstanding derivative contracts. Under IND AS derivative instruments that are not designated as hedging instruments have been classified as derivative instruments at fair value through profit or loss and accordingly fair valuation of the same has been done. On the date of transition, retained earnings were credited by Rs. 4.00 crore on account of MTM gain and during the year 2015-16, a net MTM loss Rs. 1.85 crore was recognized in the statement of profit and loss.

Further the transaction cost amounting to Rs. 1.53 crore on derivative instruments unamortized under IGAAP (prepaid premium) has been adjusted to retained earnings as on 01st April 2015.

20. Prior Period Errors and Adjustment

The reconciliation as referred to in note no. 69 also includes adjustments relating to prior period errors as detailed in para no. 69.3.e. In accordance with IND AS 8 the relevant disclosures are given as under:

A. Impact as on 01.04.2015

21. Standards Issued but not yet effective

The standard issued, but not yet effective up to the date of issuance of the company financial statement is disclosed below. The Company intends to adopt the standard when it becomes effective.

IND AS 115 Revenue from Contracts with Customers

IND AS 115 was issued in February 2015 and establishes a five step model to account for revenue arising from contracts with customers. Under IND AS 115 revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled for transferring goods or services to a customer. The new revenue standard will supersede the current revenue recognition requirements under IND AS. The standard comes into force from accounting period commencing on or after 1st April, 2018. The Company will adopt the new standard on the required effective date. The Company is in process of examining the applicability of the standard.

22. Disclosures relating to Specified Bank Notes

In accordance with Ministry of Corporate affairs notification number G.S.R. 308(E) dated: 30.3.2017 the disclosures relating to Specified Bank Notes (SBNs) held and transacted during the period from 8th November, 2016 to 30th December, 2016 is as under:

23. For all periods upto and including the year 31st March 2016 the company prepared its financial statements in accordance with the accounting standard prescribed under Section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).

24. The standalone financial statements were authorized for issue in accordance with a resolution passed by the Board of Directors on 19th May 2017.

25. The financial statements as approved by the Board of Directors are subject to audit by Comptroller and Auditor General of India and final approval by its Shareholders.

26. The figures as on the transition date and previous year have been re-arranged and regrouped wherever necessary and / or practicable to make them comparable with those of the current year.


Mar 31, 2016

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 tenable 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.

1. Corporate Guarantee executed by the Company on behalf of its Joint Venture Company, FACT-RCF Building Products Ltd aggregates to Rs, 37.67 crore (P.Y. Rs, 37.67 crore).

2. 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, 2.82 crore (P.Y. Rs, 3.53 crore). Period wise classification is as below.

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 30,97,278 Sq. meters, property cards for 3,78,321 Sq. meters (P.Y. 3,93,198 Sq. meters) are yet to be transferred in the name of the Company.

4. Out of total area of 50,52,476 Sq. meters area at Thal Unit, the title deeds relating to area of 32,03,543 Sq. meters 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. Balance of subsidy receivables and tax refund 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 details of subsidy accounted on estimated basis are as under:-

**Includes Subsidy against marketing margin against RIL gas for use in production of Urea of Rs,

7 crore (P.Y. Rs, 87.40 crore), as an interim relief, as directed by Delhi High Court on the referred matter.

The matter relating to unintended benefits accruing to units using domestic gas for manufacture of Nutrient “N” has been referred to and is pending before an Inter-Ministerial Committee (IMC) of Government of India. An amount of Rs, 198.94 crore has been withheld as at 31st March 2016 (Rs, 96.89 crore as at 31st March 2015) by Department of Fertilizers towards the said matter.

Pending final decision on the said matter and in the CompanyRs,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.

8. As per notification no. L-120223/2015-GP-II, dated 20th May, 2015 of Ministry of Petroleum and Natural Gas (MOPNG), Gas Pooling has become applicable from 1st June, 2015 onwards for all Urea Manufacturing units. Under this mechanism gas for urea production will be made available at a uniform price of pooled gas for production of urea. Consequently it is expected that a differential pricing of gas may be made applicable for non-urea usage also. Company has represented to DoF for maintaining supply of domestic gas for P&K fertilizers and chemicals. MOPNG vide its letter no. L-13013/3/2012-GP-1, dated 16th December, 2015 has directed GAIL (India) Ltd. to levy a higher gas price (i.e. the highest rate of RLNG used for production of urea) for use of gas in non-urea operations. As the matter relating to the same is pending before the Inter Ministerial Committee of Government of India, Company has represented that any decision on the same be taken only upon the issue being settled by the IMC. However pending finalization of price payable as per letter no. L-13013/3/2012-GP-1, dated 16th December, 2015 of MOPNG, a liability of Rs, 181.97 crore has been recognized based on the pooled price of gas, also for its nonurea operations.

9. In accordance with the policy of provision for bad and doubtful debts the Company makes provision towards subsidy due from the Government of India which is outstanding for a period more than 3 years. However, Company has not provided for an amount of Rs, 16.22 crore being the compensation towards recognition of increase in cost of gas on account of Petroleum and Natural Gas Regulatory Board (PNGRB) order for the periods relating to 2008-09 to 2010-11. Company expects the same to be notified by Government of India and accordingly no provision is required.

10. 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, aprovision for impairment has been made towards, Dimethyl Formamide, Carbon Monoxide Plants at Thal and Methylamines Plant at Trombay of Rs, 9.19 crore (P.Y. Rs, 46.64 crore).

11. Inventory includes stores and spares declared as surplus with further classification as disposable surplus. Since such surplus stores on disposal may not fetch full book value a suitable provision has been made. Consequent to full provision for impairment made in respect of plants referred in Note. No. 35, Company has also provided towards inventory of specific spares relating to the said plants.

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.

12. 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.

13. 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.

* (C.Y. Rs, 15,500, P.Y. Rs, 96,518)

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. Further a full provision for diminution in the value of investment amounting to Rs, 32.87 crore has been reckoned in respect of its joint venture FRBL. Consequent to the same the amount given as advances to FRBL has been fully provided for as doubtful. As a part of its additional equity commitment, Company during the year contributed an additional amount of Rs, 2.36 crore which has also been provided for in similar lines as above.

2) Key Management Personnel

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

(ii) Shri CMT Britto, Director (Technical)

(iii) Shri Ashokkumar Ghasghase, Director (Marketing)

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

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

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

(vii) Shri K.C.Prakash, Company Secretary, upto 31st July, 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.

The remuneration to key management personnel does not include the provisions made for gratuity; leave encashment and post-retirement medical benefits as they are determined on an actuarial basis for the Company as a whole.

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

14. Disclosure as per Accounting Standard 29 on “Provisions, Contingent Liabilities and Contingent Assets” as on 31st March 2016.

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 Asset 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.

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.

C) RASHTRIYA COAL GAS FERTILIZERS LIMITED: - A new Joint venture Company with Coal India Limited (CIL), GAIL (India) Limited and Fertilizer Corporation of India Limited (FCIL) was incorporated on 13th November 2015 for revival of the FCIL’s fertilizer unit at Talcher by establishing and operating new coal gasification based fertilizer complex(Ammonia/Urea Complex).

43. Provision / Write off of Investments in Joint Ventures and Subsidiary: A) Provision in Joint Ventures

i) 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 2016 report a loss of Rs, 16.88 crore (P.Y. Rs, 21.94), thus resulting in accumulated loss of Rs, 75.49 crore (P.Y. Rs, 58.61 crore).

FRBL’s performance has marginally improved during the current year and its operations are expected to improve in future. Being a very novel concept acceptance of FRBL’s product in lieu of conventional items is taking time for sales to pick up and for operations completely 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 (P.Y. Rs, 32.87 crore) and also towards the outstanding loans & advances amounting to Rs, 1.85 crore (P.Y. Rs,1.79 crore) as on 31st March, 2016 has been reckoned. As a part of its additional equity commitment, Company during the year contributed additional amount of Rs, 2.36 crore which has also been provided for in similar lines as above.

ii) Urvarak Videsh Ltd.

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) Write off of Subsidiary:

i) Rajasthan Rashtriva Chemicals and Fertilizers Ltd.

Consequent to No objection received from Department of Fertilizers, the said Company’s name has been stricken off in the register of ROC, Rajasthan on 24.11.2015 under fast track mode and the said company stands dissolved. The investment in the same had been written off by the company in the year 2013-14.

15. 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 other current assets amounting to Rs, 0.07 crore in Note No.13 to financial statements.

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,33.35 crore (P.Y. Rs, 30.99 crore) has been charged off 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 to be 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, 2016

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 8.80 %

c) Discount rate 7.56 %

The total plan liabilities under the RCF Ltd. Employees Provident Fund Trust as at 31st March 2016 (as per the unaudited financial statement) is Rs, 972.97 crore (P.Y. Rs, 888.33 crore) as against total plan assets of Rs, 972.97 crore (P.Y. Rs, 888.33 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,3.19 crore (P.Y. Rs,16.15 crore).

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 Sheet date.

The liability for the leave encashment on retirement as at 31st March 2016 is Rs,188.11 crore (P.Y. Rs,178.48 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 agreed upon 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 Government of India guidelines. During the year Company has paid an amount of Rs, 10.81 crore (P.Y. Rs, 10.98 crore) as contribution towards the said scheme.

Gratuity & Post-Retirement Medical Benefits:

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

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, 2.76 crore (P.Y. Rs, 5.72 crore) being the mark to market gains on outstanding derivative contracts as at 31st March 2016.

18. 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 (P.Y.Rs, 3.83 crore) still continues.

19. Disclosure relating to Corporate Social Responsibility “CSR” Activities

Company during the year has incurred an expenditure of Rs, 9.66 crore (P.Y. Rs, 8.30 crore) towards the same which is reported under Note No. 24 “Other Expenses”& Note 24B “Miscellaneous expenses”.

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

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, 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, 2012

1. CONTINGENT LIABILITIES NOT PROVIDED FOR:

1.1 Claims against the Company not acknowledged as debts to the extent ascertainable (Interest can not be estimated reliably) aggregates to Rs..23.81 crore (Previous year Rs..26.56 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..0.21 crore.

c) Claims before arbitrators/courts, are Rs.. 13.79 crore (previous year Rs.. 16.64 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..4.09 crore (Previous year Rs..3.98 crore), disputed by the company.

1.4 Demand raised by Excise Authorities (other than as mentioned in Para 26.3) and other authorities aggregating to Rs..20.90 crore (Previous yearRs..20.35 crore), disputed by the company.

1.5 a) Demands raised by Income Tax Authorities, disputed by the company aggregating to Rs..316.85 crore (Previous year Rs..5.61 crore), against which the amount of Rs..4.05 crore has been deposited with Tax authorities.

b) Demands raised by Sales Tax Authority, disputed by the company aggregating to Rs..3.57 crore (previous year Rs..3.5 7 crore)

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

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

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

1.7 In case of use of Naphtha purchased by the company at confessional rate of excise duty for the purposes other than mentioned in the exemption notification for the period from November 96 to Feb.2005, the Commissioner of Excise has passed an order for payment of excise duty of Rs..9.66 crore and penalty of Rs..9.66 crore plus interest at appropriate rate. The Company filed an appeal in CESTAT. CESTAT passed order No.A/270- 271/12/EB/C-ll Dated 27.03.2012 and confirmed the Demand of Rs..9.66 crore & penalty of Rs..4.67 crore. The company is in the process of filing an appeal against this order with appropriate adjudicating authority.

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

In case of Naphtha purchased by the Company at confessionals 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.

For the period April 2008 to August 2009 show cause notice is served for Rs.. 11.77 crore (PY.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.

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 Schedule K) 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.

1.9 The Company had entered into a lump sum 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.

Estimated amount of contracts remaining to be executed on capital account and not provided for aggregates to Rs..96.70 crore (Previous year Rs..294.16 crore) net of advances.

The Company has acquired entire wagons (416 wagons) originally under lease from SBI Leasing Group. Lease rent paid during the year Rs.. Nil. (previous year Rs.0.04 crore) The future minimum lease payments in respect of non- cancellable operating lease as at the balance sheet date are 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..5.65 crore (Previous year Rs.6.35 crore).Period wise classification of which is as below.

2. 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 ofproperty cards for a total area of3095022 sq. mts, property cards for 465340 sq. mts (P.Y.1659352) are yet to be transferred in the name of the Company.

3. 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.

4. 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.

5. Inventory includes stores and spares costing Rs..5.37 crore (previous year Rs..9.92 crore) declared as surplus. The amount includes stores/spares valued at Rs..2.76 crore (Previous year Rs..8.44 crore) identified as disposable surplus and which on disposal may not fetch full book value and accordingly, provision of Rs..2.60 crore (previous year Rs..7.99 crore) has been made on account of estimated loss on disposal thereof.

6. 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.

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.

7. 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 as follows:

8. 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. (FRBL)

B) Urvarak Videsh Ltd. (UVL)

C) RCF-HM Construction Solutions Pvt. Ltd. (RCF-HM)

2) Key Management Personnel Whole time Directors:-

(i) ShrLR.G.Rajan, Chairman & Managing Director

(ii) Shri.Gautam Sen Director (Finance)

(iii) Shri. Manoj Priya, Director (Technical) up to 30Ih September,2011

The above amount includes salaries & allowance, Leave encashment, & contribution to Provident fund and exclude 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 Medic aim Policy taken by the company for all the employees and their eligible dependents.

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.

9. 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 since the expected value in use as arrived at, is lower than its carrying amount. A provision of Rs.. 13.80 crore net of deferred tax asset of Rs.6.63 crore has been made towards impairment.

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 ofRs..0.17 crore (Previous year Rs..2.31 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.

* These balances are not available for use by the Company as they represent corresponding unpaid dividend liability.

10. 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) 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.

C) RCF-HM CONSTRUCTION SOLUTIONS PVT. LTD.:-A Joint venture with First Future Properties Pvt. Ltd. (a consortium of M/s. Mahimtura Consultants Pvt. Ltd. and M/s. Hiranandani Constructions Ltd.) for marketing of rapid wall manufactured by RCF and its nominees.

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 these joint ventures are as follows:-

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.

11. Consequent upon communication received from Government of India for the buyback of Fertilizer bonds, the company has disposed off the balance 50% of the value of bonds amounting to Rs..348.72 crore during the year. An additional loss ofRs..8.17 crore on such disposal during the year has been recognized. During the year, Government of India has settled the compensation of loss on buy back of such bonds including bonds sold under the scheme in the previous year. An amount of Rs.. 19.20 crore has been recognized as net income consequent to full and final settlement of loss on buyback during the year.

12. The position of (Net) Certified Emission Reductions (CER's) or Carbon Credits allotted and held by the company is as under:-

13. During the year company has handed over possession of land measuring 47477 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.

14. 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.

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. 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 21s' 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 interest payable to employees. During the year an amount of Rs.25.60 crore has been charged of to statement of Profit & loss towards contribution by the Company.

The total plan liabilities under the RCF Ltd. Employees Provident Fund Trust as at 31st March 2012 as per the unaudited financial statement for the year then ended is f .637.97 crore (P.Y. Rs..584.43 crore) as against total plan assets ofRs..637.97Crore (P.Y.Rs..584.43 crore). The funds of the trust have been invested under various securities as prescribed under the rules of the trust.

2) Gratuitv:-

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.

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 2012 isRs..153.37 crore (P.Y.Rs.. 141.02 crore)

4) Post Retirement Medical Benefits:-

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: -

Company has introduced during the year a pension scheme in accordance with Govt, of India guideline. 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.2.84 crore as contribution towards the said scheme.

Experience adjustments on Plan Liabilities - Not available * Experience adjustments on Plan Assets -Not available *

* The Management has relied on the overall actuarial

valuation conducted by the actuary. However experience adjustments on Plan liabilities and assets are not readily available and hence not disclosed.

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. Employee Benefits Expense includes Rs.. 11.91 crore (Previous Year Nil) being tax borne by the Company on deemed perquisite value of accommodation provided to employees for the period from 1.4.2007 to 31.3.2012 which is allowed under Section 10(10CC) of Income Tax Act 1961. The Company has been advised that bearing of tax liability of such nature does not contravene provisions of Section 200 of the Act.

17. Change in Accounting Policy

Exchange differences:

Monetary assets and liabilities in foreign currency, which were out standing as at the year end were translated at the year end at the closing exchange rate and the resultant exchange differences were recognized in the statement of profit & loss up to 31st March,2011. Pursuant to paragraph 46A of AS 11: The Effects of Changes in Foreign Exchange Rates, inserted vide Notification No.GSR 914 (E) dated December 29, 2011 the company has, during the year, exercised the option of adding or deducting such exchange difference to the cost of asset in respect of long term foreign currency monetary items.

As a result, exchange differences aggregating to Rs. 11.46 crore relating to the acquisition of depreciable capital asset have been adjusted with the cost of such asset and would be depreciated over the balance life of the asset.

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. 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:

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, 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.


Mar 31, 2010

1 CONTINGENT LIABILITIES NOT PROVIDED FOR:

1.1 Claims against the Company not acknowledged as debts to the extent ascertainable (interest can not be estimated reliably) aggregates to Rs.23.81 crore (Previous year Rs.17.47 crore). Of this, claims before arbitrators/courts, are Rs.17.44 crore (previous year Rs.15.93crore).

1.2 Guarantees issued by Bank in favour of Excise authorities, Customs authorities etc. aggregates to Rs. 190.96 crore (Previous year Rs. 127.61 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 year Rs.17.50 crore).

1.3 Show cause notices issued by Excise Authorities aggregates to Rs.0.79 crore (Previous year Rs.0.75 crore).

1.4 A) Demands raised by Income Tax Authorities,

disputed by the company aggregating to Rs.4.43 crore (Previous year Rs.4.06 crore), against which the entire amount has been deposited with Tax Authorities.

B) Demands raised by Excise (otherthan as mentioned in para 1.7) and other authorities, disputed by the company aggregating to Rs. 19.85crore (Previous year Rs.19.42 crore).

C) Demands raised by Sales Tax Authority, disputed by the company aggregating to Rs. 3.66 crore (Previous year Rs.4.31 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 use of Naphtha purchased by the Company at concessional rates of excise duty for the purpose other than mentioned in the exemption notification for the period from November 1996 to March 2001, the Commissioner of Excise (Adj.) has passed an order for payment of excise duty of Rs.4.67 crore and penalty of Rs.4.77 crore plus interest at appropriate rate. The Company has filed an appeal in CESTAT and for the period April 2001 to February 2005 the Commissioner of Excise has passed an order for payment of excise duty of Rs.4.99 crore and penalty of Rs.4.99 crore plus interest at appropriate rate. The company is in the process of filing an appeal before CESTAT.

For the period from March 2005 to October 2005, show cause notice is served for Rs.1.77crore for the same reason. Commissioner of Excise passed an order for payment of excise duty of Rs 1.77 crore and penalty of Rs.1.77crore 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 use of Naphtha purchased by the Company at concessional rate of excise duty 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 and for the period April to September 2008 show cause notice is served for Rs.6.89 crore, & also for the period October 08 to August 09 for Rs.4.88 crore. Aforesaid cases are pending before Commissioner of Excise.

1.7 The Capitalization of land at Kurul Township and factory at Thai Unit has been made subject to Arbitration awards/Court decisions in respect of claims of Rs.8.33 crore (net of payment made/ liability provided of Rs.3.95 crore) preferred by local authorities.

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 Schedule K) representing approximately 50% of the disputed demand which would be adjustable against the disputed demand in case the Court rules in favor of BMC. In the opinion of the Company 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 turn key contract with M/s Uhde India Ltd (UDL) for revamp of itsOld 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.25.05 crore against the above matter. Out of this Rs.9.33 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. There is no change in the case as on date. As per the opinion obtained, the demand is not sustainable and no provision is considered necessary.

2. Estimated amount of contracts remaining to be executed on capita! account and not provided for aggregates to Rs. 55.19 crore (Previous year Rs. 112.70 crore) net of advances.

3. The Company has taken 416 Nos. of BCNA Railway Wagons (previous Year 416 Nos)on operating lease from SBI Capital Markets Ltd. and SBI Leasing Group. In case of some of the wagons primary lease period of 10 years is over. During the year, out of 416 wagons, the company has purchased 250 wagons for an amount of Rs. 0.53 crore.

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 the year 1978 are not yet completed. Out of property cards for a total area of 3095022 sq. mts, property cards fori 659352 sq. mts are yet to be transferred in the name ofthe 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 Sundry Debtors, Sundry Creditors, Other 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.

7. Inventory includes stores and spares costing Rs. 9.77 crore (previous year Rs. 11.07crore) declared as surplus. The amount includes stores/spares valued at Rs.8.09 crore (Previous year Rs. 8.18 crore) identified as disposable surplus and which on disposal may not fetch full book value and accordingly, provision of Rs.7.68 crore (previous year Rs.7.99 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, Phosphaticand Potassic Fertilizers (P&K Fertilizers) at the rates notified from time to time.

10. The 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 of the Accounting Standards notified under Companies Accounting Standards Rules, 2006 (herein after referred to as Accounting Standards). The segment wise revenue, expenses and capital employed are enclosed in Annexure-I

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

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) UrvarakVidesh Ltd.

C) RCF-HM Construction Solutions Pvt. Ltd.

2) Key Management Personnel

Whole time directors :

(i) Shri. U. S. Jha, Chairman & Managing Director

(ii) Shri J. Kohareswaran, Director (Marketing)

(iii) Shri.Gautam Sen Director (Finance)

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

12. Consequent to the availability of Reliance Gas from KG Basin the Company has restarted the operations of the Urea V plant of its Trombay Unit. The said plant was tested for impairment and as its expected value in use is higher than the carrying amount the company has reversed the impairment loss provided in earlier years. Similarly, the Formic Acid plant at Thai was tested for impairment and as its expected value in use is higher than its carrying amount the company has reversed the impairment loss provided in earlier years.

13. Change in Accounting Policy:-

Up to 31st March 2009, the Company was charging off the entire cost of catalyst replaced during the year to Profit and Loss ale. As per expert opinion received from the Expert Advisory Committee of the Institute of Chartered Accountants of India, the Company during the year has switched over to the method of charging off the same on systematic basis, based on its useful life as technically assessed. As a result of this change, the value of inventories (manufactured goods) is lower by Rs.0.06 crore and profit before tax for the year has increased by Rs.5.10 crore.

14. Freight and Handling charges include payment of disputed dues for the period from November 2001 to February 2010 aggregating to Rs. 10.75 crore consequent to order passed by Bombay High Court during the year.

15. The dividend paid / proposed by the company is not subject to deduction of Income Tax at source as per Income Tax Act 1961.

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 and shortfall, if any, shall be made good by the company. Pending determination of liability in view of issues in making reasonable actuarial assumptions, effect in this respect has not been ascertained. Accordingly, other related disclosures in this report have not been made and Rs. 20.11 crore is charged to Profit and Loss Account in the current year. During the current year, as at the Balance Sheet date, the investments/income earned by the Trust are sufficient to cover shortfall of interest payable to employees and thus no shortfall on account of the same is provided during the year.

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.

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 Awards :

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.

19. 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.

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.

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