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Notes to Accounts of Southern Petrochemicals Industries Corporation Ltd.

Mar 31, 2015

Note 1 CORPORATE INFORMATION

Southern Petrochemical Industries Corporation Limited ('the Company'/ 'SPIC'), having its registered office at Chennai is a Public Limited Company, incorporated under the provisions of the Companies Act, 1956. Its shares are listed on National Stock Exchange of India. The Company is manufacturing and selling Urea, a Nitrogenous chemical fertilizer and has its manufacturing facility at Tuticorin.

2 (i) Equity shares include :

(a) 1,66,66,666 shares of Rs.10 each fully paid up, issued in the year 2009-10 to Asset Reconstruction Company (India) Ltd., (ARCIL) at an issue price of Rs.18 per share inclusive of a premium of Rs.8 per share in accordance with Issue of Capital and Disclosure Requirements Regulations, 2009 ("SEBI ICDR Regulations") by conversion of secured debts of a sum of Rs. 3000 lac in to equity at the meeting of the Board of Directors held on 30 March 2010.

(b) 32,14,734 shares of Rs 10 each fully paid up, at an issue price of Rs.19 per share inclusive of premium of Rs. 9 per share in accordance with SEBI ICDR Regulations,2009 alloted to secured lenders on conversion of secured debts of Rs. 610.80 lac at the meeting of the Board of Directors held on 8 November 2010. The above allotment is in pursuant to the approval of the Board at its meeting held on 6 August 2010 and the shareholders at the AGM held on 21 September 2010.

(c) 1,06,71,001 shares of Rs.10 each fully paid up, at an issue price of Rs. 20 per share inclusive of premium of Rs.10 per share in accordance with SEBI ICDR Regulations, 2009 alloted to ARCIL on conversion of secured debts of Rs. 2134.20 lac at the meeting of the Board of Directors held on 8 December 2010. The above allotment is in pursuant to the approval of the Board at its meeting held on 28 October 2010 and the shareholders at the EGM held on 29 November 2010.

(d) 12,631 equity shares of Rs.10 each fully paid up issued to Industrial Investment Bank of India, on preferential basis, at an issue price of Rs.19 per share, which includes a premium of Rs.9 per share by way of conversion of secured debt of Rs 2.40 lac, at the meeting of the Shareholders' / Investor's Grievance Committe held on 27 April 2012.

(e) 72,631 equity shares of Rs.10 each fully paid up issued to United India Insurance Company Ltd., on preferential basis, at an issue price of Rs.19 per share, which includes a premium of Rs.9 per share by way of conversion of secured debt of Rs.13.80 lac, at the meeting of the Shareholders' / Investor's Grievance Committe held on 9 November 2012.

(f) 3,72,76,700 equity shares of Rs.10 each fully paid up were issued to AMI Holdings Pvt Ltd, a company belonging to promoter group, on preferential basis, at an issue price of Rs.17.50 per share, which included a premium of Rs. 7.50 per share by way of conversion of 3,72,76,700 warrants, at the meeting of Shareholders' / Investor's Grievance Committe held on 10 January 2013 and 13 March 2013.

(g) 1,70,66,800 equity shares were issued against the Global Depository Receipts (GDRs) and is held by The Bank of New York, Mellon, as depository for the GDRs.

Terms / rights attached to Equity Shares:

The company has only one class of equity shares having a par value of Rs.10 per share. All these shares have the same rights and preferences with respect to payment of dividend, repayment of capital and voting.

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

3 (i) Preference shares:

(a) 14.50% Redeemable cumulative non-convertible preference shares of Rs.300 lac issued on private placement basis, redeemable at par after the expiry of 60 months from the date (s) of allotment, have fallen due for redemption during the year 2001-02.

(b) 11.50% Redeemable cumulative non-convertible preference shares of Rs.850 lac issued on private placement basis, redeemable at par after the expiry of 36 months from the date (s) of allotment, have fallen due for redemption during the year 2002- 03.

(c) 10.00% Redeemable cumulative non-convertible preference shares of Rs.100 lac issued on private placement basis, redeemable at par after the expiry of 36 months from the date (s) of allotment, have fallen due for redemption during the year 2003- 04.

Terms / rights attached to Preference Shares

In the event of non-declaration of dividend in respect of any financial year, arrears of dividend will be declared in the subsequent financial years subject to the provisions of the Companies Act and / or any statutory modifications thereto, or re-enactments thereof as may be in force from time to time, prior to payment of dividend on equity shares.

4(i) The prospects for Tissue Culture business has shown significant improvement recently and the Company has decided to focus on the agri divisions operations which has necessitated taking repossession of the related land and building handed over in 2011-12, from the purchaser.

(ii) Depreciation

During the year, pursuant to the notification of Schedule II to the Companies Act, 2013 with effect from 1 April 2014, the Company also revised the estimated useful life of some of its assets to align the useful life with those specified in Schedule II other than the assets pertaining to Tuticorin manufacturing plant for which depreciation has been provided based on the useful life of assets determined by a technical evaluation. Management believes that the revised useful life of the assets reflect the period over which these assets are to be used. Further, assets individually costing Rs. 5000/- or less that were depreciated fully in the year of purchase are now depreciated based on the useful life for the respective category of assets.

5 (i) The Company's investments included Rs.18453.62 lac (Previous year Rs.18453.62 lac) in equity share capital of SPIC Fertilizer and Chemicals Limited, Mauritius (SFCL, Mauritius), which had invested in a wholly owned subsidiary company, viz. SPIC Fertilizers and Chemicals FZE, Dubai (SFC FZE, Dubai) in the earlier years, whose objective was production of ammonia and urea in Jebel Ali Free Zone, Dubai. Since the project did not materialize due to non allocation of gas, the said subsidiary company had commenced activities for dismantling the existing plant and machinery at the project site with a view to relocate the same where assured gas supply could be obtained.

As Jebel Ali Free Zone Authorities (JAFZA) had taken over the assets of SPIC Fertilizers and Chemicals (SFC) FZE, Dubai, the holding company SFCL Mauritius lost control over the subsidiary. Full provision has been made for these investments in earlier years. The Company is considering writing off the investments in SFCL Mauritius and is in the process of getting the approval of the concerned Regulatory Authorities to write off the aforesaid investment in the books of account.

6(i) The Company has given an undertaking to the lenders of Tuticorin Alkali Chemicals and Fertilisers Limited for non disposal of its shareholdings in the said Company without their prior approval.

(ii) Consequent to the Scheme of Arrangement (Demerger) between SICAL Logistics Limited and SICAGEN India Limited, sanctioned by the Hon'ble High Court of Madras, by its order dated 20 December 2007, the Company was allotted 5,77,681 Equity Shares of the face value of Rs.10 each in SICAGEN India Limited.

(iii) The Company promoted SPIC Petrochemicals Limited (SPIC Petro) in 1994-95 for the manufacture of Polyester Filament Yarn and Purified Terepthalic Acid. The Company had invested Rs.25375.00 lac in the equity share capital, Rs.5.00 lac in 8% redeemable cumulative non convertible preference share capital, Rs.30609.63 lac in Unsecured Zero Interest Bonds redeemable after 12 years from the date of commencement of commercial production. Consequent to the litigation between Chennai Petroleum Corporation Limited (CPCL) and the Company and winding up petitions filed by certain unsecured creditors, the Hon'ble Madras High Court ordered the winding up of the Company on 17 April 2009.

Against the above winding up order, SPIC Petro filed an appeal before the Division Bench of the Hon'ble Madras High Court. The Division Bench of the Hon'ble Madras High Court, dismissed the appeal on 26 April 2010. Meanwhile, ARCIL issued a notice on 19 March 2009, u/s 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), directing SPIC Petro to make payment of the dues to ARCIL within sixty days from the date of the notice. As SPIC Petro could not make the payment, ARCIL took over the possession of the assets of SPIC Petro, under SARFAESI Act on 13 May 2010. Consequent to the above, the nominee directors of SPIC Limited have ceased to be directors of SPIC Petro with effect from 14 May 2010. Hence the Company had lost its control over SPIC Petro and full provision had already been made in the earlier years for the carrying value of investments and also for all other dues from this Company.

7 (i) Trade receivables of Rs.1,494.42 lac and Short term loans and advances of Rs.54.64 lac (net of provision of Rs.702.45 lac created in earlier years) represent dues receivable from an associate company. The Company is pursuing the settlement of dues and a Memorandum of Understanding has been executed with the associate company.

Note 8 Plant Operation

(i) Under the Modified New Pricing Scheme III the Department of Fertilizers had issued a directive mandating the Naphtha based fertilizer plants to switch over to gas based operations and that the Naphtha based plants, would be eligible for subsidy only upto 30 September 2014. In view of the above, the Ammonia and Urea Plants were stopped on 1 October 2014 and critical repair works were carried out and completed.

Government of India vide its notification dated 7 January 2015 had permitted the Company to produce Urea using Naphtha as feedstock for a period of 100 days from the date of notification i.e. upto 16 April 2015 and that the subsidy would be paid based on the Retention Price computed on the lower of naphtha or RLNG price. The Ammonia and Urea Plants recommenced operations from 7 January 2015. The Company has since shut down the plant on 17 April 2015 for carrying out maintenance work as may be required during the period of non-operation of the Urea plant.

The Company had filed a writ petition with the Hon'ble Delhi High Court on 20 April 2015. The Company has obtained an Order of the Hon'ble Delhi High Court dated 24 April 2015 which permits the Company to continue to get the subsidy till further orders are passed by the Cabinet Committee of Economic Affairs on the proposal made by the Ministry of Chemicals and Fertilizers recommending payment of subsidy till gas connectivity is established. The company has commenced the urea production on 20 May 2015.

(ii) Subsidy for the period January 2015 to March 2015 of Rs. 36883.95 lac has been accounted based on the provisional Retention Price (RP) computed in line with the Government's policy dated 7 January 2015, as the final retention price has not been announced by the Department of Fertilizers. The necessary adjustments, if any, will be made when the final retention price is notified by the Department of Fertilizers.

Note 9 Commitments

Capital Commitments:

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 1507.02 lac (Previous year Rs. 1029.66 lac).

Note 10 Contingent Liabilities

(a) Claims not acknowledged as debts

(i) The District Collector, Tuticorin vide his letter dated, 21 August 2009 had demanded Rs. 16873.97 lac (Previous year Rs.16873.97 lac) towards lease rent for the utilization of 415.19 acres of sand quarry poramboke lands by the Company for its effluent treatment and storage of Gypsum for the period from 1975 to 2008. While raising this demand, the District Collector had ignored the proposal submitted by the Company during 1975 to the State Government seeking assignment of the said land which is still pending. The Company had filed a writ petition challenging the demand before the Hon'ble Madras High Court and the court granted interim stay vide its order dated 21 April 2010 on further proceedings. During November 2010 the District Collector, Tuticorin has filed a counter before Hon'ble Madras High Court praying for the vacation of interim stay and the case is still pending.

(ii) Tamilnadu Water Supply And Drainage Board (TWAD) has claimed payments for the period during which the Nitrogenous plants were not in operation, on the basis of 50% allotted quantity of water. The Company alongwith other beneficiaries has been enjoying this facility since inception of the 20 MGD Scheme for the last 39 years. Water Charges were paid to TWAD on the basis of actual receipt by individual industries. The claims including interest made by TWAD for Rs.2272.22 lac (Previous year Rs.1983.91 lac) is not acknowledged as debt, as this differential value from April 2009 to March 2015 is not supported by any Government Order and also the other beneficiaries are objecting to such claims of TWAD.

(iii) The Company has received a demand from VOC Port Trust towards increase in rental charges from 1 July 2007 onwards. The amount payable as on 31.03.2015 is Rs.606.16 lac (from 01.07.2007 to 31.03.2015). The Company obtained an injunction from the Madurai Bench of the Hon'ble Madras High Court against the claim made by the VOCPT and the stay has been granted till 10 June 2015.

(iv) The Superintending Engineer, Tamilnadu Generation and Distribution Corporation Limited (TANGEDCO), Cuddalore, vide letter dated 19 April 2012 has claimed Rs. 155.48 lac (Previous year Rs. 155.48 lac) towards outstanding dues relating to the erstwhile Pen-G unit of the Pharmaceutical Division at Cuddalore. The Company has requested TANGEDCO authorities to inform the basis of the above claim for taking further action.

(v) Other claims against the Company, which are being disputed / challenged before the Courts - Rs. 3132.08 lac (Previous year Rs. 3132.08 lac). In respect of the above claims, the Company is of the view that there are reasonable chances of successful outcome of the Appeals / Petitions filed before the Hon'ble Madras High Court / Government Authorities and accordingly no further provision is considered necessary.

(b) Guarantees / Security given to Banks / Financial Institutions on behalf of other companies Rs. 4500 lac (Previous year Rs.4500 lac)

(c) Other Bank Guarantees outstanding Rs. 31.78 lac (Previous year Rs. 31.78 lac).

(d) Cumulative amount of Preference Dividend and Dividend Tax thereon not provided for the period from 1 April 2001 to 31 March 2015 is Rs. 2824.03 lac (Previous year Rs. 2641.99 lac)

* Includes disputes relating to the period 1977 to 1992 decided by the ESI Court in favour of the Company against which the Employees State Insurance Corporation has gone on an appeal before the Hon'ble Madras High Court.

Out of the above demand of Rs.17993.16 lac (Previous year Rs.14653.82 lac), an amount of Rs.918.63 lac (Previous year Rs.902.43 lac) has been deposited under protest / adjusted by relevant authorities.

Note 11 Employee benefit plans i) Defined contribution plans

The Company makes Provident Fund, Superannuation Fund and Employee State Insurance Scheme contributions which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. During the year the Company recognized Rs.178.16 lac (Previous year Rs.174.92 lac) for Provident Fund contributions, Rs. 117.25 lac (Previous year Rs.66.67 lac) for Superannuation Fund contributions and Rs.3.44 lac (Previous year Rs. 4.08 lac) for Employee State Insurance Scheme contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

The discount rate is based on the prevailing market yield of Government of India securities as at the balance sheet date for the estimated term of the obligation.

In the absence of detailed information regarding plan assets which is funded with Life Insurance Corporation of India, the compo- sition of each major category of plan assets, the percentage or amount for each category to the fair value of plan assets has not been disclosed.

Estimate of amount of contribution in the immediate next year is Rs. 42 lac (Previous year is Rs. 56.40 lac)

Note 32 The deferred tax asset arising out of disallowances under section 43B of Income Tax Act 1961 amounting to Rs. 31.71 lac (Previous year Rs. 645.16 lac), de-escalation of subsidy amounting to Rs.7819.92 lac (Previous year Rs.Nil) and VRS compensation amounting to Rs. 81.63 lac (Previous year - Rs.160.34 lac) have not been recognized as a matter of prudence.

The carry forward loss / unabsorbed depreciation for the year has given rise to net deferred tax asset of Rs. 23950.39 lac (Previous year Rs. 30094.15 lac). However, in the absence of virtual certainty that sufficient future taxable income will be available, the said deferred tax asset that can be recognised is restricted to the deferred tax liability of Rs.1546.25 lac (Previous year Rs. 2423.91 lac) as given below. Accordingly, there is no net deferred tax asset or liability as at 31 March 2015 to be accounted for.

Note 12 There is no provision for tax in view of the brought forward losses / unabsorbed depreciation relating to earlier years available for set off while computing income both under the provisions of Sec 115-JB and those other than Sec 115-JB of the Income Tax Act, 1961.

Previous year figures are given in brackets.

NOTES

(a) Business segments

The business segment has been considered as the primary segment for disclosure. The products included in each of the business segments are as follows:

(i) Agro inputs - Urea Operations

(ii) Others - Tissue culture and Seeds

(b) Geographical segments

The geographical segments considered for disclosure are as follows:

- Sales within India include Sales to customers located within India

- Sales outside India include Sales to customers located outside India.

Note 13

(a) Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.

(b) The Board of Directors has reviewed the realizable value of all current assets of the Company and has confirmed that all the value of such assets in the ordinary course of business will not be less than the value at which these are recognized in the financial statements. Further, the board, duly taking into account all relevant disclosures made, has approved these financial statements for the year ended 31 March 2015 in its meeting held on 21 May 2015.


Mar 31, 2014

1 Corporate Information

Southern Petrochemical Industries Corporation Limited (the Company), having its registered Office at Chennai is a Public Limited Company, incorporated under the provisions of the Companies Act, 1956. Its shares are listed on National Stock Exchange of India. The Company is manufacturing and selling Urea, a Nitrogenous chemical fertilizer and has its manufacturing facility at Tuticorin.

2. Basis of preparation

The abridged financial statements have been prepared, on the basis of the complete set of audited standalone financial statements for the year ended 31 March 2014, (hereinafter referred to as ''Annual Standalone Financial Statements''), in accordance with the requirements of Rule 7A of the Companies (Central Government''s) General Rules and Forms, 1956.

3 Contingent Liabilities

(Refer Note 31 of the Annual Standalone Financial Statements) (a) Claims not acknowledged as debts

(Rupees in lac)

As at As at S. No. Particulars 31 March, 2014 31 March, 2013

1 Tuticorin Lease Rent for 415.19 acre 16873.97 16873.97

2 TWAD Claim 1983.91 1633.70

3 TANGEDCO, Cuddalore 155.48 155.48

4 Other claims – challenged before various Courts 3132.08 4379.04

5 Taxes, Duties and other demands (under various stages of appeal) 14653.82 14174.76

In respect of the above claims, the Company is of the view that there are reasonable chances of successful outcome of the Appeals / Petitions fi led before the Hon''ble Madras High Court / Government / Statutory Authorities and accordingly no further provision is considered necessary.

(b) Guarantees/Security given to Banks/Financial Institutions on behalf of other companies Rs.4500 lac (Previous year Rs.4500 lac)

(c) Other Bank Guarantees outstanding Rs.31.78 lac (Previous year Rs. 781.78 lac).

(d) Cumulative amount of Preference Dividend and Dividend Tax thereon not provided for the period from 1 April 2001 to 31 March 2014 is Rs.2641.99 lac (Previous year Rs. 2465.04 lac)

4. Taxation

(Refer Note 34 and 35 of the Annual Standalone Financial Statements)

(a) The Company has reviewed its deferred tax assets and liabilities as at 31 March 2014. The Company has carry forward losses and unabsorbed depreciation, which give rise to deferred tax asset of Rs. 30094.15 lac (Previous year Rs. 30068.10 lac) . However in the absence of virtual certainty supported by convincing evidence that suffi cient future taxable income will be available against which such deferred tax assets can be realized, the said deferred tax asset that can be recognized is restricted to the net deferred tax liability of Rs. 1618.41 lac (Previous year Rs. 1848.15 lac) as given below. Accordingly, there is no net deferred tax asset or liability as at 31 March 2014 to be accounted for.

NOTES

(a) Business segments

The business segment has been considered as the primary segment for disclosure. The products included in each of the business segments are as follows:

Continuing

(i) Agro inputs - Urea Operations

(ii) Others - Tissue culture and Seeds

Discontinuing

(i) Bulk drugs and formulations - includes Penicillin - G and formulations

(ii) Others - Enzymes

Revenue and expenses, which relates to the enterprise as a whole and are not allocable to segments on a reasonable basis, have been included under "Unallocated expenditure net of unallocated income."

Unallocated corporate assets and unallocated corporate liabilities include the assets and liabilities which are not directly attributable to segments.

(b) Geographical segments

The geographical segments considered for disclosure are as follows:

- Sales within India include Sales to customers located within India

- Sales outside India include sales to customers located outside India.

5 (i) Related party disclosures under Accounting Standard - 18

(Refer Note 37 of the Annual Standalone Financial Statements)

The list of related parties as identifi ed by the management are as under:

Nature

Parties

Subsidiaries

1 SPIC Fertilizers and Chemicals Limited, Mauritius

2 SPIC Fertilizers and Chemicals FZE, Dubai

3 SPEL Semiconductor Limited*

4 SPEL America Inc., USA*

Associates

1 Tuticorin Alkali Chemicals and Fertilisers Limited

2 Gold Nest Trading Company Limited

Jointly controlled entities

1 Tamilnadu Petroproducts Limited

2 National Aromatics and Petrochemicals Corporation Limited

Key management personnel of the Company

1 Thiru Ashwin C Muthiah

2 Thiru K K Rajagopalan

Enterprises owned by / over which Key Management Personnel is able to exercise signifi cant infl uence

1 Wilson International Trading Pte Ltd, Singapore

2 Wilson International Trading India Private Limited

3 Manali Petrochemicals Limited

4 Greenstar Fertilizers Limited

5 AMI Holdings Private Limited

6 Bengal Auto Parts Private Limited

7 Sicagen India Limited

8 Wilson Cables Private Limited, Singapore

* Ceased to be subsidiary with effect from 24th March 2014.

6 (a) The operations of the Formulations Industrial Unit at Maraimalai Nagar and Enzyme unit of Pharmaceutical division were discontinued in the previous year, in view of low demand for their products / uneconomical business size and paucity of working capital.

7 (Refer Note 41 of the Annual Standalone Financial Statements)

(a) Previous year''s figures have been regrouped / reclassifi ed wherever necessary to correspond with the current year''s classifi cation / disclosure.

(b) Previous year figures are given in brackets.

(c) The Board of Directors has reviewed the realizable value of all current assets of the Company and has confi rmed that all the value of such assets in the ordinary course of business will not be less than the value at which these are recognized in the financial statements. Further, the board, duly taking into account all relevant disclosures made, has approved these financial statement for the year ended 31 March 2014 in its meeting held on 28 May 2014

(d) Since, the Formulations and Enzymes units were discontinued during 2012 - 13 the figures for the year ended 31 March, 2014 are not comparable with the previous year ended 31 March, 2013.


Mar 31, 2013

1. Corporate Information

Southern Petrochemical Industries Corporation Limited (the Company), having its registered office at Chennai is a Public Limited Company, incorporated under the provisions of trie Companies Act, 1956. Its shares are listed on National Stock Exchange of India. The Company is manufacturing and selling Urea, a Nitrogenous chemical fertilizer and has its manufacturing facility at Tuticorin.

2. Basis of preparation

The abridged financial statements have been prepared, on the basis of the complete set of audited standalone financial statements for the year ended March 31 2013, (hereinafter referred to as ''Annual Standalone Financial Statements''), in accordance with the requirements of Rule 7A of the Companies (Central Government''s) General Rules and Forms, 1956.

3. Significant Accounting Policies

(Refer Note 2 of the Annual Standalone Financial Statements)

4. Increase in Equity Share Capital

(Refer Note 3 of the Annual Standalone Financial Statements)

a) 12,631 equity shares of Rs.10 each fully paid up issued to Industrial Investment Bank of India, on preferential basis, at an issue price of Rs 19 per share, which includes a premium of Rs.9 per share by way of conversion of secured debt of Rs 2.40 lac, at the meeting of the Shareholders'' / Investor''s Grievance Committe held on 27 April 2012.

b) 72,631 equity shares of Rs.10 each fully paid up issued to United India Insurance Company Ltd., on preferential basis, at an issue price of Rs 19 per share, which includes a premium of Rs.9 per share by way of conversion of secured debt of Rs 13.80 lac, at the meeting of the Shareholders'' / Investor''s Grievance Committe held on 9 November 2012.

c) 3,72,76,700 equity shares of Rs.10 each fully paid up issued to AMI Holdings Pvt Ltd, a company belonging to promoter group, on preferential basis, at an issue price of Rs.17.50 per share, which includes a premium of Rs.7.50 per share by way of conversion of 3,72,76,700 warrants (which were issued during the current financial year), at the meetings of Shareholders'' / Investor''s Grievance Committe held on 10 January 2013 and 13 March 2013.

5. Settlement of dues to Creditors

(Refer Note 5 of the Annual Standalone Financial Statements)

a) As the Corporate Debt Restructuring (CDR) Package dated 19 March 2003 did not yield the desired results, secured lenders who held approximately 85.56% in value, assigned the financial assistance granted by them along with the attendant security interests in favour of Asset Reconstruction Company (India) Limited (ARCIL) under the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).

ARCIL and other Financial Institutions have approved the rework package dated 13 March 2010 through Corporate Debt Restructuring (CDR) mechanism (read with Term Sheet of ARCIL dated -28 March 2010 arid Addendum dated 29 June 2011 to the Term Sheet). As the Company could not meet certain repayment obligations as per the rework package, the Corporate Debt Restructuring Empowered Group (CDREG) vide its letters dated 26 July 2011 and 5 September 2011 approved modifications and revised the rework package, stipulating certain changes in the repayment schedule. The total payment to ARCIL and other secured lenders as per total revised working upto 31 March 2013 amounted to Rs.130007.17 lac (Previous year Rs.126377.17 lac) including a sum of Rs.3630 lac (Previous Year Rs.43822.02 lac) paid during the year. ARCIL and certain other secured lenders have converted upto 31 March 2013 part of the debts amounting to Rs.5761.20 lac (Previous year Rs.5745 lac) into equity as stipulated in the CDR rework package, including Rs.16.20 lac (Previous year Rs. NIL) converted during the year. They have also converted part of the debt amounting to Rs. Nil (Previous year Rs.203.18 lac) into non-convertible debentures, out of which debentures amounting to Rs.145.13 lac (Previous year Rs.29.03 lac) have been redeemed including a sum of Rs.116.10 lac (Previous year Rs.29.03 lac) redeemed during the year.

b) The Company filed a Scheme of Compromise and Arrangement with certain creditors under Section 391 and other relevant provisions of the Companies Act, 1956, before the Hon''ble Madras High Court on 14 December 2011 for settlement of their dues. Pursuant to the directions of the Hon''ble Court, the meeting of the creditors of the Company was held on 24 February 2012 at Chennai. The Scheme was approved by the requisite majority and thereafter sanctioned by the Hon''ble Court vide its Order dated 16 August 2012. The effective date of the Scheme was 28 September 2012, being the date on which the Court Order was filed with the Registrar of Companies, Tamilnadu at Chennai.

As per the Court sanctioned Scheme, the Company offered the following settlement Options to its creditors and the settlements were to be made after the Option expiry date :

Option 1 : 60% of settlement liability payable in 46 quarterly instalments.

Option 2 : 22% of the settlement liability payable within 3 years.

Option 3 : An one time settlement equivalent to 18.15% of the settlement liability payable within 45 days. The creditor shall be entitled to pro-rata payment of an additional 1.5% per annum of the settlement liability calculated in days if the settlement liability is credited to the creditor account after 30 June 2012.

While 23% of the creditors had opted for Option 1, 77% of the creditors opted for Option 3. Based on the Options exercised, the first instalment and the final payment to those creditors who had exercised Option 1 and 3 respectively amounting to Rs.13276.01 lac were paid before the due date for payment (i.e.) 6 January 2013. On account of the above settlements/ payments, the excess liability of Rs.115775 lac including interest has been written back as an Exceptional Item during the year.

The creditor balances other than term loan are reflected under long term liabilities and trade payables based on repayment schedule specified in the scheme.

6 Investment

(Refer Note 12 of the Annual Standalone Financial Statements)

The Company had paid a capital advance of Rs.2091.04 lac (Previous year Rs.2091.04 lac) to MCC Finance Limited (now known as Mercantile Ventures Limited) in the earlier years, for purchase of certain immovable properties. Consequent to the withdrawal of the pending litigation before the Hon''ble Madras High Court, full provision was made in the accounts during the 1st quarter of the previous year. MCC Finance Ltd., filed a Scheme of Arrangement with its creditors under section 391 and other relevant provisions of the Companies Act, 1956 before the Hon''ble Madras High Court which was sanctioned by the Hon''ble Court vide its Order dt. 18 October 2012.

As per the sanctioned Scheme and the option exercised by the Company, MCC Finance Ltd., has allotted equity shares for a value of Rs.922 lac (92,20,000 equity shares with a face value of Rs.10 each with a premium of Rs.15/-) to the Company against the outstanding capital advance of Rs.2091.04 lac and the balance of Rs. 1169.04 lac was charged off to the Statement of Profit and Loss. Consequently provision of Rs. 922 lac already made has been written back during the year.

7 Discontinuing Operations -

(Refer Note 28 of the Annual Standalone Financial Statements)

a) The operations of the Formulations Industrial Unit at Maraimalai Nagar were discontinued with effect from 2 April 2012 due to low demand for its products in the domestic and export markets and uncertain power situation. Certain assets relating to the above unit were disposed off during the year and the loss of Rs. 11.28 lac has been included in "(Loss)/Gain on disposal of assets".

b) The operations of Enzyme Unit of the Pharmaceutical Division were discontinued during the year in view of its uneconomical business size, constraints in fund infusion/restart-up of the operations after being relocated from various places and paucity of working capital. Certain assets of the above unit were sold on 18 December 2012 based on an Asset Sale Agreement and the loss arising out of such sale amounting to Rs.87.40 lac is included in "(Loss)/Gain on disposal of assets".

8. Plant Operation

(Refer Note 29 of the Annual Standalone Financial Statements)

a) Due to failure of Southwest monsoon, there was an acute water scarcity in the Southern parts of Tamilnadu. Tamilnadu Water Supply and Drainage Board (TWAD) had discontinued supply of water to the Tuticorin Plant due to which production of Urea was stopped effective 12 August 2012. The production was resumed on 4 October 2012 after commencement of partial supplies by TWAD.

b) There has been delay in the disbursement of fertilizer subsidy by the Department of Fertilizers, Government of India, during February and March 2013, due to which the payments to Indian Oil Corporation (IOC) for raw material supplies could not be made before the stipulated due dates, resulting in shutdown of the Nitrogenous plants with effect from 2 March 2013 to till date. The Company is in discussion with the Dept. of Fertilizers, Govt, of India, for the renewal of fertilizer subsidy on a priority basis and also renegotiating with IOC for better credit terms for raw material supplies. The Company is hopeful of recommencing the operations of the Nitrogenous plants at Tuticorin after the resumption of raw material supplies by IOC.

9 Capital Commitments

(Refer Note 30 of the Annual Standalone Financial Statements)

a) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 1544.20 lac (Previous year Rs. 362.90 lac).

b) Confirmed sales commitments to be fulfilled within one year as on 31 March 2013 is Rs. Nil (Previous year Rs.1800 lac).

10 Contingent Liabilities

(Refer Note 31 of the Annual Standalone Financial Statements)

(a) Claims not acknowledged as debts: (Rupees in lac)

As at As at S. No.Particulars 31 March 2013 31 March 2012

1 Tuticorin Lease Rent for 415.19 acre 16873.97 16873.97

2 TWAD claim 1633.70 1242.70

3 TANGEDCO, Cuddalore 155.48 155.48

4 Other claims - challenged before various Courts 4379.04 4304.95

5 Taxes, Duties and other demands (under various stages of appeal) 14174.76 13448.19

In respect of the above claims, the Company is of the view that there are reasonable chances of successful outcome of the Appeals / Petitions filed before the Hon''ble Madras High Court/Government/Statutory Authorities and accordingly no further provision is considered necessary.

(b) Guarantees/Security given to Banks/Financial Institutions on behalf of other companies Rs. 4500 lac (Previous year Rs. 4500 lac)

(c) Other Bank Guarantees outstanding Rs.781.78 lac (Previous year Rs. 781.78 lac).

(d) Cumulative amount of Preference Dividend and Dividend Tax thereon not provided for the period from 1 April 2001 to 31 March 2013 is Rs.2465.04 lac (Previous year Rs. 2288.09 lac)

11 Taxation

(Refer Note 34 and 35 of the Annual Standalone Financial Statements)

a) The Company has reviewed its deferred tax assets and liabilities as at 31 March 2013. The Company has carry forward losses and unabsorbed depreciation, which give rise to deferred tax asset of Rs.30068.10 lac (Previous Year Rs.28458.84 lac). However in the absence of virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized, the said deferred tax asset that can be recognized is restricted to the net deferred tax liability of Rs. 1848.15 lac (Previous Year Rs. 615.57 lac) as given below. Accordingly, there is no net deferred tax asset or liability as at 31 March 2013 to be accounted for.

NOTES

(a) Business segments

The business segment has been considered as the primary segment for disclosure. The products included in each of the business segments are as follows:

Continuing

(i) Agro inputs - Urea Operations (ii) Others - Tissue culture and Seeds

Discontinuing

(i) Bulk drugs and formulations - includes Penicillin - G and formulations (ii) Others - Enzymes

Revenue and expenses, which relates to the enterprise as a whole and are not allocable to segments on a reasonable basis, have been included under "Unallocated expenditure net of unallocated income."

Unallocated corporate assets and unallocated corporate liabilities include the assets and liabilities which are not directly attributable to segments.

(b) Geographical segments

The geographical segments considered for disclosure are as follows:

- Sales within India include sales to customers located within India

- Sales outside India include sales to customers located outside India.

12 (i) Related party disclosures under Accounting Standard -18

(Refer Note 37 of the Annual Standalone Financial Statements)


Mar 31, 2012

Note 1 CORPORATE INFORMATION

Southern Petrochemical Industries Corporation Limited (the Company), having its registered office at Chennai is a Public Limited Company, incorporated under the provisions of Companies Act, 1956. Its shares are listed on National Stock Exchange of India. The Company is manufacturing and selling Urea, a Nitrogenous chemical fertiliser and has its manufacturing facility at Tuticorin.

2 (i) Equity shares include

(a) 1,66,66,666 shares of Rs.10 each fully paid up, issued in the year 2009-10 to Asset Reconstruction Company (India) Ltd., (ARCIL) at an issue price of Rs.18 per share inclusive of a premium of Rs.8 per share in accordance with SEBI ICDR Regulations, 2009 by conversion of secured debts of a sum of Rs. 3000 lac in to equity at the meeting of the Board of Directors held on 30 March 2010.

(b) 65,58,676 shares issued in the year 2009-10 on conversion of same number of Fully Compulsorily Convertible Preference (FCCP) shares of the face value of Rs.10 each fully paid up at a premium of Rs.8 per share at the meeting of the Board of Directors held on 31 March 2010. The equity shares acquired by conversion shall be locked-in for a period of 3 years from the date of allotment, reduced to the extent of the holding period of Preferential Shares.

(c) 2,12,19,101 shares issued in the year 2010-11 on conversion of same number of FCCP shares of the face value of Rs.10 each fully paid up at a premium of Rs. 8 per share at the meeting of the Board of Directors held on 12 October 2010 after obtaining the exemption from SEBI under SEBI Takeover Code, vide its order dated 28 September 2010, from the requirement of making of a public announcement. The equity shares acquired by conversion shall be locked-in for a period of 3 years from the date of allotment, reduced to the extent of the holding period of Preferential Shares.

(d) 32,14,734 shares of Rs 10 each fully paid up, at an issue price of Rs 19 per share inclusive of premium of Rs 9 per share in accordance with SEBI ICDR Regulations,2009 alloted to secured lenders on conversion of secured debts of Rs. 610.80 lac at the meeting of the Board of Directors held on 8 November 2010. The above allotment is in pursuant to the approval of the Board at its meeting held on 6 August 2010 and the shareholders at the AGM held on 21 September 2010.

(e) 1,06,71,001 shares of Rs 10 each fully paid up, at an issue price of Rs 20 per share inclusive of premium of Rs 10 per share in accordance with SEBI ICDR Regulations, 2009 alloted to ARCIL on conversion of secured debts of Rs. 2134.20 lac at the meeting of the Board of Directors held on 8 December 2010. The above allotment is in pursuant to the approval of the Board at its meeting held on 28 October 2010 and the shareholders at the EGM held on 29 November 2010.

(f) The Company, at the meeting of the Committee of the Board of Directors held on 27 April 2012, has allotted 12,631 equity shares of Rs 10 each to Industrial Investment Bank of India at an issue price of Rs 19 per share, which includes a premium of Rs.9 per share, by way of conversion of secured debt of a sum of Rs 2.40 lac. This is further to the approval of the Members at the Annual General Meeting held on 16 November 2011 for allotment and issue of the said shares and on obtaining 'in-principle' approval from National Stock Exchange of India on 25 April 2012.

(g) 1,71,83,850 equity shares were issued against the Global Depository Receipts (GDRs) and is held by The Bank of New York, Mellon, as depository for the GDRs.

Terms/rights attached to Equity Shares:

The company has only one class of equity shares having a par value of Rs. 10 per share. All these shares have the same rights and preferences with respect to payment of dividend, repayment of capital and voting.

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

2 (ii) Preference shares:

(a) 14.50% Redeemable cumulative non-convertible preference shares of Rs.300 lac issued on private placement basis, redeemable at par after the expiry of 60 months from the date (s) of allotment, have fallen due for redemption during the year 2001-02.

(b) 11.50% Redeemable cumulative non-convertible preference shares of Rs.850 lac issued on private placement basis, redeemable at par after the expiry of 36 months from the date (s) of allotment, have fallen due for redemption during the year 2002-03.

(c) 10.00% Redeemable cumulative non-convertible preference shares of Rs.100 lac issued on private placement basis, redeemable at par after the expiry of 36 months from the date (s) of allotment, have fallen due for redemption during the year 2003-04.

(d) Pursuant to the approval of the Board at its meeting held on 25 January 2010 and the shareholders at the EGM held on 22 February 2010, M/s.FICON Holdings Ltd., Mauritius (FICON) a promoter group entity remitted Rs.5000 lac and was allotted 2,77,77,777 FCCP shares of Rs.18 each with each FCCP share compulsorily and mandatorily convertible in multiple tranche to one equity share of Rs.10 each, fully paid up at an issue price of Rs.18 which is inclusive of a premium of Rs.8 per share, in accordance with the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 ("SEBI ICDR Regulations"). Out of this 65,58,676 FCCP shares were converted in to Equity shares of face value Rs. 10 each fully paid up at a premium of Rs. 8 per share on 31 March 2010. During 2010-11, the balance of 2,12,19,101 FCCP shares were converted into equity shares of Rs. 10 each at a premium of Rs. 8 per share. (Refer note 3(iii)(b) and 3(iii)(c) above)

(e) In the event of non-declaration of dividend in respect of any fi nancial year, arrears of dividend will be declared in the subsequent financial years subject to the provisions of the Companies Act, 1956 and / or any statutory modifications thereto, or re-enactments thereof as may be in force from time to time, prior to payment of dividend on equity shares.

3.(i) In view of the loss for the year, the Company has not created the Debenture Redemption Reserve of Rs 50.79 lac (Previous year Rs. Nil) as required under section 117C of the Companies Act, 1956, read with General Circular No: 9/2002 dated 18 April 2002 issued by the Department of Corporate Affairs. The Company will create the Debenture Redemption Reserve, out of profits, in the future years.

* Includes debentures assigned to Asset Reconstruction Company (India) Limited (ARCIL) Rs. 5265.96 lac (Previous year Rs. 15567.00 lac)

** Includes term loans assigned to ARCIL Rs. 50317.38 lac (Previous year Rs. 47391.32 lac)

4 (i) Security

The secured long term borrowings as above are secured by a pari-passu charge, by way of joint equitable mortgage, on immovable and movable properties of the Company, both present and future, hypothecation of inventories and all present and future book debts of the Company including Government subsidies, pledge of Company's investments in equity of other company identified for divestment, Personal Guarantee of a Director and a former Director and by pledge of shareholding of the private promoters in the Company.

4 (ii) Details of Term loans

As per the rework package of CDR dated 13 March 2010 and modifications through letters dated 26 July 2011 and 5 September 2011 (read with Term Sheet of ARCIL dated 28 March 2010 and addendum to Term sheet of ARCIL dated 29 June 2011) the repayment schedule is for the total secured loans including Series VII and Series XIII debentures and accordingly these debentures do not have a separate redemption schedule. Series XIV, XV and XVI privately placed non-convertible debentures are to be redeemed in seven equal quarterly instalments commencing from 31 March 2012. Of these the first instalment had been redeemed by 31 March 2012.

4 (iii) Consequent to the implementation of Corporate Debt Restructuring (CDR) Package dated 19 March 2003, the Company had availed interest relief from various banks and financial institutions amounting to Rs. 4110.36 lac (Previous year Rs. 4110.36 lac) for the year 2002-03 and therefore accrued the interest liability at the reduced rates in the subsequent years up to 31 March 2008.

4.(iv) As the Corporate Debt Restructuring (CDR) Package referred above did not yield the desired results, the secured lenders preferred to assign their debts in favour of Asset Reconstruction Company (India) Limited (ARCIL). As on 31 March 2012, secured lenders who held approximately 85.56% in value, assigned the financial assistance granted by them along with the attendant security interests in favour of ARCIL under the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).

ARCIL and other financial institutions have approved the rework package dated 13 March 2010 through Corporate Debt Restructuring (CDR) mechanism (read with Term Sheet of ARCIL dated 28 March 2010 and Addendum dated 29 June 2011 to the Term Sheet) on successful implementation of which the Company would be eligible for substantial reduction in debts and interest accrued thereon. As the Company could not meet certain repayment obligations as per the rework package, the Corporate Debt Restructuring Empowered Group (CDREG) vide its letters dated 26 July 2011 and 5 September 2011 approved modifications and revised the rework package, stipulating certain changes in the repayment schedule. The total payment to ARCIL and other secured lenders upto 31 March 2012 amounted to Rs.126377.17 lac (Previous year Rs. 82555.15 lac) including a sum of Rs.43822.02 lac (Previous year Rs.46555.68 lac) paid during the year. ARCIL and certain other secured lenders have converted upto 31 March 2012, part of the debts amounting to Rs.5745 lac (Previous year Rs. 5745 lac) into equity as stipulated in the CDR rework package, including Rs.Nil (Previous year Rs. 2745 lac) converted during the year. They have also converted part of the debt amounting to Rs 203.18 lac (Previous year Rs. Nil) into non-convertible debentures, out of which debentures amounting to Rs. 29.03 lac have been redeemed during the year.

In line with the terms of the revised rework package, the Company monetized certain other assets and the proceeds alongwith internal accruals were utilized for repayment of its dues to ARCIL and other secured lenders. The Company has paid interest of Rs 3446.15 lac (Previous year Rs. Nil) on account of delay in settlement of dues to ARCIL and other secured lenders. As per the terms of the rework package, in the event, the Company is unable to meet the payment terms, the package shall be withdrawn. Pending settlement of the balance dues, no credit has been taken for expected relief in loan/interest liabilities.

4.(vi) During November 2011, the Financial Institution which had extended assistance against the land and building of Agribusiness Division exercised its right towards settlement of the loan. Consequently the Company executed a Power of Attorney (POA), in favour of the lender, duly registered, for disposal of the aforesaid assets against which the lender has issued a No Due Certificate. Hence the loan liability net of carrying value of the assets taken over is written back and disclosed as an exceptional item. The said institution is not a party to the CDR rework package dated 13 March 2010.

Notes:

# Includes Rs. Nil (Previous year Rs. 756.56 lac) being the cost of building on lease hold land.

$ Includes R & D Assets Nil (Previous year Rs. 339.03 lac).

* In pursuance of Accounting Standard 28 - Impairment of Assets (AS - 28) notified by the Central Government of India under the Companies (Accounting Standards) Rules, 2006 and with the relevant provisions of the Companies Act, 1956, the Company has reviewed its carrying cost of assets viz., buildings, plant and machinery, furniture and fittings and vehicles relating to the Formulation and Enzyme Units of the Pharmaceutical Division and has provided for impairment loss estimated at Rs.308.93 lac which is disclosed in Note 29(v).

The impairment to the tune of Rs. 920.02 lac as on 31 March 2011 provided on Pen-G assets at Cuddalore has been reversed during the current year consequent to the sale of those assets by ARCIL.

Capital Work-in-progress of Rs. 122.77 lac is net of provision of Rs.95.60 lac as disclosed in Note 29 (v).

5.(i) The Company's investments included Rs. 18453.62 lac (Previous year Rs.18453.62 lac) in equity share capital of SPIC Fertilizers and Chemicals Limited, Mauritius, which has invested in a wholly owned subsidiary company, viz. SPIC Fertilizers and Chemicals FZE, Dubai(SFC FZE, Dubai) in the earlier years, whose objective was production of ammonia and urea in Jebel Ali Free Zone, Dubai. Since the project did not materialize due to non allocation of gas, the said subsidiary company had commenced activities for dismantling the existing plant and machinery at the project site with a view to relocate the same where assured gas supply could be obtained.

Meanwhile, the Jebel Ali Free Zone Authorities (JAFZA), Dubai had issued a notice on 24 March 2010 to SFC FZE, Dubai, for vacation of site and surrender of materials and machineries on site to JAFZA towards land lease arrears amounting to Rs.2483.50 lac (equivalent to 20334918.75 AED) due to them failing which they will initiate legal action against the said company. SFC FZE, Dubai, has conveyed its consent to the above authorities to avoid proposed legal action and consequent damages. As the project remained a non-starter, full provision has already been made by the Company for the carrying value of investment in SPIC Fertilizers and Chemicals Limited, Mauritius, along with other dues from it. The Company is in the process of getting the approval of the concerned Regulatory Authorities to write off the aforesaid investment in the books of account.

5.(ii) The Company has given an undertaking to the lenders of Tuticorin Alkali Chemicals and Fertilisers Limited for non disposal of its shareholdings in the said Company without their prior approval.

5.(iii) Consequent to the Scheme of Arrangement (Demerger) between SICAL Logistics Limited and SICAGEN India Limited, sanctioned by the Hon'ble High Court of Madras, by its order dated 20 December 2007, the Company was alloted 5,77,681 Equity Shares of the face value of Rs. 10 each in SICAGEN India Limited.

5.(iv) The Company promoted SPIC Petrochemicals Limited (SPIC Petro) in 1994-95 for the manufacture of Polyester Filament Yarn (Capacity: 80000 TPA) and Purified Terepthalic Acid (Capacity: 315000 TPA). The Company had invested Rs.25375.00 lac in the equity share capital, Rs.5.00 lac in 8% redeemable cumulative non convertible preference share capital, Rs.30609.63 lac in Unsecured Zero Interest Bonds redeemable after 12 years from the date of commencement of commercial production or repayment of all the term loans to the lenders, whichever is earlier. In view of the pending litigation between Chennai Petroleum Corporation Limited (CPCL) and the Company and the consequent interim injunction granted by the Hon'ble Madras High Court in 1997 to stop implementation of activities, there has been a suspension of activities.

While SPIC Petro was pursuing its revival efforts, the Hon'ble Single Judge of the Hon'ble Madras High Court ordered the winding up of the company on 17 April 2009 and appointed the Official Liquidator to take charge of all the properties and effects of the company, at the time of disposing the winding up petitions filed by certain unsecured creditors.

Against the above winding up order, SPIC Petro filed an appeal and obtained an interim stay from the Division Bench of the Hon'ble Madras High Court on 5 May 2009. After several hearings, the Division Bench vide its order dated 16 December 2009 directed SPIC Petro to pay an amount of Rs.110 lac as part-payment to certain unsecured creditors who have initiated the winding up proceedings before the court, on or before 31 March 2010. Since SPIC Petro was unable to make the above payment on or before 31 March 2010, the Division Bench of the Hon'ble Madras High Court, dismissed the appeal on 26 April 2010. Meanwhile, ARCIL issued a notice on 19 March 2009, u/s 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), directing SPIC Petro to make payment of the dues to ARCIL within sixty days from the date of the notice. As SPIC Petro could not make the payment, ARCIL took over the possession of the assets of SPIC Petro, under SARFAESI Act on 13 May 2010.

However, the Off cial Liquidator appointed by the Hon'ble Madras High Court has taken over possession of the assets and effects of SPIC Petro on 14 May 2010, in accordance with the order issued by the Division Bench of the Hon'ble Madras High Court on 26 April 2010. Consequent to the above, the nominee directors of SPIC Limited have ceased to be directors of SPIC Petro with effect from 14 May 2010. On an appeal preferred by ARCIL, the Hon'ble Madras High Court vide its order dated 20 December 2010 directed the Official Liquidator to hand back the possession of the above mentioned assets to ARCIL, pursuant to which ARCIL took repossession of the same on 4 January 2011.

In view of the above developments, the Company had lost its control over SPIC Petro and hence it ceased to be a subsidiary of the Company. However, full provision has already been made in the earlier years for the carrying value of investments and also for all other dues from this company.

6 (i) Capital advances include a sum of Rs.2091.04 lac (Previous year Rs.2091.04 lac) being advances paid to MCC Finance Limited for purchase of certain immovable properties. The Company entered into sale agreements for these properties with MCC Finance Limited and the execution and registration of sale deeds are pending. The Administrator/Provisional Liquidator of MCC Finance Limited has filed a Petition before the Company Court at Chennai seeking a direction that the sale agreements entered into between the Company and MCC Finance Limited be declared null and void. The said Petition was allowed by the Single Judge on 18 June 2003. The Company fi led an appeal against the Order before the Division Bench of the Hon'ble Madras High Court. The Division Bench admitted the appeal and ordered status quo be maintained, pending disposal of the appeal. However full provision was made in the accounts during 1st quarter of the current year and the pending appeal was withdrawn by the Company during September 2011. MCC Finance Limited has since filed a Scheme of Arrangement with its creditors under section 391 of the Companies Act, 1956 before the Hon'ble Madras High Court which is pending approval.

6 (ii) The loans & advances include certain overdue and unconfirmed balances. However, in the opinion of the Management these current assets would in the ordinary course of business realize the value as stated in the accounts.

7 (i) In view of the Company's inability to restart the Pen-G operation due to unremunerative market on account of Chinese imports and also considering the non-viability of operations relating to R&D and Active Pharmaceutical Ingredients (API) of the Pharma unit, Asset Reconstruction Company (India) Ltd., (ARCIL) vide notice dated 17 May 2011 intimated that they had taken over the possession of immovable properties of the Pen-G unit at Cuddalore. Consequently the operations of Pen-G, R&D and API of the Pharma unit were closed by the Company. ARCIL sold the assets relating to Pen-G unit during October 2011 and appropriated the sale proceeds against the outstanding dues payable by the Company to ARCIL and other secured lenders.

7 (ii) Pursuant to the approval of CDR Empowered Group and the consent of the Shareholders obtained through postal ballot, the SPIC Maintenance Organisation (SMO) Division and Phosphatics Business of the Company were sold as going concern on a slump sale basis during September 2011 and October 2011 respectively. Pending completion of the statutory formalities, production and sale of Phosphatic fertilisers were carried out by the Company on behalf of the buyer for the period from 19 to 24 October 2011. Consequently, the sale of Rs. 1355.28 lac is included in the net sales / income from operations of the current year and the resultant excess of sale proceeds over the expenses has been transferred to the buyer. Claims, if any, which are non current in nature arising out of the aforesaid discontinued business operations prior to the date of their transfer will be discharged by the Company as per the terms of the Business Transfer Agreements executed with the buyers.

7 (iii) The operations of the Formulations Industrial Unit at Maraimalai Nagar were discontinued with effect from 2 April 2012 due to low demand for its products in the domestic and export markets and uncertain power situation.

7 (iv) The operations of Enzyme Unit of the Pharmaceutical Division are being discontinued by the Company in view of its uneconomical business size, constraints in fund infusion/restart-up of the operations after being relocated from various places and paucity of working capital.

7 (v) In pursuance of Accounting Standard 28 - Impairment of Assets (AS - 28) notified by the Central Government of India under the Companies (Accounting Standards) Rules, 2006 and with the relevant provisions of the Companies Act, 1956, the Company has reviewed its carrying cost of assets viz., buildings, plant and machinery, furniture and fittings, and vehicles including Capital Work-in-Progress of Rs. 95.60 lac relating to the Formulation and Enzyme Units of the Pharmaceutical Division and has provided for impairment loss estimated at Rs.404.53 lac which is included in "Exceptional Item".

7 (vi) The Government of India introduced Nutrient Based Subsidy Scheme (NBS) effective from 1 April 2010 for Phosphatic Fertilizers and as per this policy, the concession payable is fixed for the entire financial year with open Maximum Retail Price. Concession income has been recognised in the books of account based on the applicable guidelines under NBS for the current year till the date of disposal of the Phosphatics Business.

7 (v) (a) Information in accordance with the requirements of the revised Accounting Standard - 7 on Construction Contracts notified by the Central Government of India under Companies (Accounting Standard) Rules, 2006 and with the relevant provisions of the Companies Act, 1956 is as below:

*Refer Note 29 (ii).

(b) Research and Development expenses incurred on revenue account is Rs.Nil (Previous year Rs. 123.94 lac)

Note 8 Going Concern

In spite of erosion of net-worth and discontinuation of certain operations as referred in Note 29, the financial statements of the Company have been prepared on a going concern basis, in view of the following:

8(i) The Company recommenced the manufacturing operations of Urea, being its core business, from 9 October 2010 and produced 297650 MT of Urea for the year 2010-11. The Company has also continuously operated its Urea plant at 100% reassessed capacity level and achieved a production of 620407 MT for the current year, which has resulted in significant improvement in the profi tability. Considering the Supply Agreement dated 24 April 2010 with Indian Oil Corporation Limited (IOCL) for the supply of raw materials, the Company is confident of sustaining the present level of Urea operations in future.

8(ii) The revised rework package approved under Corporate Debt Restructuring (CDR) mechanism, as referred in Note 5 (v) envisages bringing down the debts and consequently improving the net-worth.

8(iii) The Company has discontinued certain business operations with an objective to monetize the underlying assets of such business units as referred in Note 29 and the proceeds alongwith internal accruals were utilized for repayment of dues to ARCIL and other secured lenders, which has resulted in substantial reduction of debt level.

8(iv) The Company has filed a Scheme of Arrangement with certain creditors under section 391 of the Companies Act, 1956 on 14 December 2011 before the Hon'ble Madras High Court and pursuant to the directions of the Hon'ble Court, the meeting of the creditors of the Company was held on 24 February 2012 at Chennai. The Scheme was approved by the requisite majority and thereafter the Company has fi led a Company Petition before the Hon'ble Madras High Court for the sanction of the Scheme which is pending.

Note 9 Commitments

(a) Capital Commitments:

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 362.90 lac (Previous year Rs. 84.50 lac).

(b) Confirmed sales commitments to be fulfilled within one year as on 31 March 2012 is Rs.1800 lac (Previous year Nil).

Note 10 Contingent Liabilities

(a) Claims not acknowledged as debts :

(i) The District Collector, Tuticorin vide his letter dated, 21 August 2009 had demanded Rs. 16873.97 lac (Previous year Rs.16873.97 lac) towards lease rent for the utilization of 415.19 acres of sand quarry poramboke lands by the Company for its effluent treatment and storage of Gypsum for the period from 1975 to 2008. While raising this demand, the District Collector had ignored the proposal submitted by the Company during 1975 to the State Government seeking assignment of the said land which is still pending. The Company had fi led a writ petition challenging the demand before the Hon'ble Madras High Court and the court granted interim stay vide its order dated 21 April 2010 on further proceedings. During November 2010 the District Collector, Tuticorin has fi led a counter before Hon'ble Madras High Court praying for the vacation of interim stay and the case is still pending.

(ii) The Phosphate Chemical Export Association Inc. USA (Phoschem) filed a suit before the Hon'ble Madras High Court for recovery of US$11.52 million (INR equivalent 5893.23 lac) during March 2006 towards supply of raw material to the Company. The court passed an interim decree in favour of Phoschem for US$8.76 million (INR equivalent 3911.34 lac) on 5 March 2007 against which the Company fi led a Review Petition on 21 March 2007 on the ground that the Hon'ble High Court has not considered the realization of US$6.31 million by Phoschem from the Insurance company. The Review Petition is still pending before the Hon'ble High Court. The Company had already made a provision of Rs.4436.48 lac (Previous year Rs. 3872.20 lac) towards this claim and the balance claim not acknowledged by the Company is Rs.1414.11 lac (Previous year Rs. 1234.25 lac). This claim is restated at the exchange rate as on the Balance Sheet date.

(iii) Groupe Chimique Tunisian SA (GCT) initiated arbitration proceedings against the Company for non payment of US$ 15.02 million together with interest towards supply of Phosphoric Acid in the earlier years against which the Arbitral Tribunal passed an award on 9 September 2009 directing the Company to pay a sum of Rs.7300 lac to GCT towards principal and Rs.2500 lac towards interest. The Company fi led a petition before the Hon'ble Madras High Court on 7 December 2009 for setting aside the award and the Court ordered notice to GCT on 23 December 2009. The matter is pending before the Hon'ble Madras High Court. As the Company had already made a provision of Rs.7522.26 lac (Previous year Rs.6565.52 lac), the remaining claim not acknowledged by the Company on this account is Rs.2277.74 lac (Previous year Rs.3234.48 lac).

(iv) Tamilnadu Water Supply And Drainage Board (TWAD) has claimed payments for the period during which the Nitrogenous plants were not in operation, on the basis of 50% allotted quantity of water. The Company along with other benefi ciaries has been enjoying this facility since inception of the 20 MGD Scheme for the last 36 years. Water Charges were paid to TWAD on the basis of actual receipt by individual industries. The claims made by TWAD for Rs.726.52 lac (Previous year Rs.692.79 lac) is not acknowledged as debt, as this differential value from April 2009 to March 2012 is not supported by any Government Order and also the other beneficiaries are objecting to such claims of TWAD.

(v) The Superintending Engineer, Tamilnadu Generation and Distribution Corporation Limited (TANGEDCO), Cuddalore, vide letter dated 19 April 2012 has claimed Rs. 155.48 lac towards outstanding dues relating to the Pen-G unit of the Pharmaceutical Division at Cuddalore. The Company is in the process of ascertaining the basis of the above claim from the authorities concerned for taking appropriate action.

(vi) Other claims against the Company, which are being disputed/challenged before the Courts - Rs.4304.95 lac (Previous year Rs. 4155.82 lac).

In respect of the above claims, the Company is of the view that there are reasonable chances of successful outcome of the Appeals / Petitions fi led before the Hon'ble Madras High Court/Government Authorities and accordingly no further provision is considered necessary.

(b) Guarantees/Security given to Banks/Financial Institutions on behalf of other companies Rs.4500 lac (Previous year Rs.4500 lac)

(c) Other Bank Guarantees outstanding Rs.781.78 lac (Previous year Rs. 781.78 lac)

(d) Cumulative amount of Preference Dividend and Dividend Tax thereon not provided for the period from 1 April 2001 to 31 March 2012 is Rs.2288.09 lac (Previous year Rs. 2112.30 lac)

(e) No provision has been considered necessary by the Management for the following disputed Income tax, Excise duty, Service tax, Sales Tax, Electricity tax and Employees State Insurance demands which are under various stages of appeal proceedings. The Company has been advised that there are reasonable chances of successful outcome of the appeals and hence no provision is considered necessary for these demands.

*Includes disputes relating to the period 1977 to 1992 decided by the ESI Court in favour of the Company against which the Employees State Insurance Corporation has gone on an appeal before the Hon'ble Madras High Court.

Out of the above demand of Rs.13448.19 lac (Previous year Rs.15422.31 lac), an amount of Rs.864.92 lac (Previous year Rs.3488.11 lac) has been deposited under protest/adjusted by relevant authorities.

(f) Certain unsecured creditors have fi led winding up petitions in the earlier years which are being defended by the Company before the Hon'ble Madras High Court.

Estimates of future salary increase take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

In the absence of relevant information from the actuary, the above details do not include the composition of plan assets.

The details of the experience adjustment arising on account of planned assets and liabilities as required by para 120(n)(ii) of AS15 (Revised) on employee benefits are not available in the valuation report and hence are not furnished.

Due to micro and small enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management. This has been relied upon by the Auditors.

Note 11 The Company has reviewed its deferred tax assets and liabilities as at 31 March 2012. The Company has carry forward losses and unabsorbed depreciation, which give rise to deferred tax asset of Rs.28458.84 lac (Previous Year Rs. 54217.29 lac). However in the absence of virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized, the said deferred tax asset that can be recognized is restricted to the net deferred tax liability of Rs.12991.45 lac (Previous Year Rs. 9138.35 lac) as given below. Accordingly, there is no net deferred tax asset or liability as at 31 March 2012 to be accounted for.

Note 12 There is no provision for tax in view of the carried forward losses / unabsorbed depreciation relating to earlier years available for set off while computing income both under provisions of section 115-JB and those other than section 115-JB of the Income Tax Act, 1961.

NOTES (a) Business segments

The business segment has been considered as the primary segment for disclosure. The products included in each of the business segments are as follows:

Continuing

(i) Agro inputs - Urea Operations

(ii) Others - Tissue culture and Seeds

Discontinuing

(i) Agro inputs - Phosphatic Operations

(ii) Bulk drugs and formulations - includes Penicillin - G and formulations

(iii) SMO - Maintenance Contracts

(iv) Others - Enzymes

Revenue and expenses, which relates to the enterprise as a whole and are not allocable to segments on a reasonable basis, have been included under "Unallocated expenditure net of unallocated income."

Unallocated corporate assets and unallocated corporate liabilities include the assets and liabilities which are not directly attributable to segments.

(b) Geographical segments

The geographical segments considered for disclosure are as follows:

- Sales within India include Sales to customers located within India

- Sales outside India include sales to customers located outside India.

Note 13

(a) Previous year figures have been regrouped / recast, wherever necessary, to conform to the classification of the current period and revised Schedule VI of the Companies Act, 1956.

(b) Assets and Liabilities in the Balance Sheet include figures both for Continuing and Discontinuing Operations.

(c) The Provision for doubtful trade and other receivables, loans and advances, provision for non-moving inventories and earlier provision writeback pertains to both Continuing and Discontinuing operations. These are appropriately shown in the Statement of Profit and Loss under Continuing operations and Discontinuing operations. The Balance Sheet contains provision figures both for Continuing and Discontinuing operations in total.

(d) Previous year figures are given in brackets.

1 SPIC Fertilizers and Chemicals Limited, Mauritius (SFCL) (a wholly owned subsibidiary of the Company) holds 1 equity share of One Million Arab Emirate Dinar each in SPIC Fertilizers and Chemicals FZE,Dubai (SFC,FZE). Hence the combined share of the Company and its subsidiary in SFC FZE Dubai is 83.54%. As assets of SFC,FZE Dubai were taken over by Jebel Ali Free Zone Authorities (JAFZA), Dubai SFCL ,Mauritius ceased to have control over its subsidiary SFC,FZE. Hence the details of SFC,FZE Dubai is not given in the above statement.

2 As Jebel Ali Free Zone Authorities (JAFZA) had taken over the assets of SPIC Fertilizers and Chemicals (SFC, FZE), Dubai, the holding company SFCL Mauritius lost control over the subsidiary. Full provision has been made for these investments in earlier years. The company is considering writing off the investments in SFCL Mauritius and is in the process of getting the approval of the concerned Regulatory Authorities to write off the aforesaid investment in the books of account. Hence the financial statements of the subsidiary company SFCL Mauritius have not been considered for consolidation

 
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