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Notes to Accounts of Tamilnadu Petroproducts Ltd.

Mar 31, 2015

1. Corporate information

Tamilnadu Petroproducts Limited (TPL) was incorporated in 1984 as a public limited Company and is jointly promoted by Southern Petrochemicals Industries Corporation Limited (SPIC) and Tamilnadu Industrial Development Corporation Limited (TIDCO). Its shares are listed on two stock exchanges in India, viz. National Stock Exchange of India and Bombay Stock Exchange Ltd. The Company is currently engaged in the manufacturing and selling of petrochemical products namely Linear Alkyl Benzene (LAB) and Caustic Soda from the manufacturing facilities situated at Manali, near Chennai

2 Related Party Disclosure under Accounting Standard -18

i) The list of related parties as identified by the management and relied upon by the auditors are as under

A) Promoters

1 .Southern Petrochemical Industries Corporation Limited (SPIC)

2.Tamilnadu Industrial Development Corporation Limited (TIDCO)

B) Associates

1. Petro Araldite Private Limited (PAPL)

2. Manali Petrochemicals Limited (MPL)

(Company in which the KMP can exercise significant influence)

C) Subsidiaries

1 .Certus Investment and Trading Limited (CITL), Mauritius

2.Certus Investment and Trading (S) Private Limited

3. Proteus Petrochemicals Private Limited (formerly TPL India Singapore Private Limited).

D) Key management personnel Muthukrishnan Ravi, Managing Director

3. Based on, and to the extent of information received from the suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 there are no overdue amounts payable to them. Such parties are as identified by the management and relied upon by the auditors. Further, no interest during the year has been paid or payable under the terms of the Act.

4. The Company suspended the operations of Epichlorohydrin plant from April 2013 owing to continuous losses. Availability of cheaper imports led to lower price realization and lower demand for this product. The Management has been exploring the possibility of using this plant for manufacture of an alternate product. Pursuant to this, an Associate Company has shown interest in utilizing this plant facility with suitable modifications to manufacture one of their raw materials and detailed engineering study in this regard is in progress. The Company has been granted Environmental Clearance by the MoEF(Ministry of Environment and Forests and Climate change) vide letter dated 15th May, 2015 and actions taken for other clearances. Production of the alternate product is expected to be commenced within 18 months after obtaining the necessary clearances Based on the estimated future revenues that would be generated by the plant with the production of the alternate product, the management is of the view that the recoverable value of the plant will be higher than the carrying value of Rs.1,224 lakhs as on the balance sheet date and hence no provision for impairment is considered necessary.

5. During the year, pursuant to the notification of Schedule II to the Companies Act, 2013 with effect from April 1, 2014 the Company has revised the estimated useful life of some of its assets to align the useful life with those specified in Schedule II. The details of previously applied depreciation method, rates / useful likfe are as follows:

Pursuant to the transition provisions prescribed in Schedule II to the Companies Act, 2013, the Company has fully depreciated the carrying value of assets (determined after considering the revised useful life as prescribed by Schedule II), net of residual value, where the remaining useful life of the asset was determined to be nil as on April 1, 2014, and has adjusted an amount of Rs.1410.69 lakhs (Rs. 2041.53 net of deferred tax of Rs.630.84 lakhs ) against the opening Surplus balance in the Statement of Profit and Loss under Reserves and Surplus.

The depreciation expense in the Statement of Profit and Loss for the year is lower by Rs. 983.21 lakhs consequent to the adoption of revised useful life as prescribed by Schedule II of the Companies act, 2013.

6. During the financial year 2013-14, the Company has entered in to an agreement for sale of one of its immovable properties and received an advance. This transaction is expected to be completed by June 2015.

7. Other payable represent amount received in advance towards sale of 100000 equity shares in SEPC Power (Private) Limited during Financial year 2012-13. The same will get adjusted against Investment held, on successful implementation of the power project by SEPC Power (Private) Limited.

8. Employee Defined Benefit Plans

The Company offers Gratuity benefits to its employees which are funded with Life Insurance Corporation of India.

9. The Company operates in only one segment, namely, Industrial Intermediate Chemicals. Details of secondary segment information are disclosed in the consolidated financial statements.

10 Exceptional item represent provision towards diminution in the value of investment in an Associate Company ( Petro Araldite Private Limited).

11. Employee benefits expense for the year includes an amount of Rs.344.27 lakhs towards compensation to the employees who had opted for early retirement from service (ERS) during the year.

12. The performance of Chlor Alkali Division (CAD) tapered considerably due to various extraneous factors since 2012. Though the demand for Caustic soda, the main product of the division has been constant, the profitability was greatly affected consequent to high cost of captive power consumption in view of severe power cuts imposed in the State. The management has been taking necessary steps to reduce the high cost of power. Based on the estimated future revenues that would be generated by the CAD and also based on valuation of the Plant by an Independent Chartered Engineers, the management has assessed and concluded that the recoverable value, as defined in the Accounting Standard 28, of the Plant is higher than the carrying value of Rs.5,550.51 lakhs (excluding land cost) as on the balance sheet date and hence no provision for impairment is considered necessary.

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


Mar 31, 2014

1. Corporate information

Tamilnadu Petroproducts Limited (TPL) was incorporated in 1984 as a public limited Company and is jointly promoted by Southern Petrochemicals Industries Corporation Limited (SPIC) and Tamilnadu Industrial Development Corporation Limited (TIDCO) . Its shares are listed on two stock exchanges in India. viz. National Stock Exchange of India and Bombay Stock Exchange Ltd. The Company is currently engaged in the manufacturing and selling of petrochemical products namely Linear Alkyl Benzene (LAB) and Caustic Soda from the manufacturing facilities situated at Manali, near Chennai

In December 1993, the company came out with Rights cum Public Issue of Equity Shares. The difference between issued and subscribed capital of 5,425 shares (previous year 5,425 shares) is due to said shares kept in abeyance under Section 206 A of the Companies Act, 1956.

(i) Average rate of interest on Term loan from Bank I is 13.00% p.a (2013:13.03%) and Bank II is13.89 %p.a. (2013:14.02%). The Loans are secured by a fi rst mortgage of all the Company''s immovable properties, both present and future, and second charge on all the movable properties of the Company (except for exclusive charges referred in note (ii) below) by deposit of title deeds, ranking pari passu amongst them.

(ii) Average rate of interest on loan from HDFC Limited is 13.39% p.a (2013: 13.17%). The Loan is secured by an exclusive mortgage of a specifi ed property at Chennai by way of deposit of title deeds and rent receivables on the said property.

Year ended Year ended 31st March 2014 31st March 2013 (Rupees in lakhs) (Rupees in lakhs)

2. Contingent Liabilities and Commitments (to the extent not provided for) A. Contingent liabilities: Disputed Demands

i) Sales Tax 1,728.05 1,728.05

The demands relate to disallowance of claims for exemption of turnover arising on account of stock transfers to branches and genuineness of declarations fi led by certain customers for availing concessional rate of tax.

ii) Excise Duty 168.61 168.61

iii) Service Tax 314.59 314.59

iv) Electricity Tax 1,054.93 1,054.93

The Tamilnadu Government vide Government Order dated 23rd September 1996 exempted specified industries permanently from payment of electricity tax on consumption of self -generated electrical energy under the "Tamilnadu Electricity (Taxation on Consumption) Act, 1962".

The above Act was repealed by the "Tamilnadu Tax on Consumption or Sale of Electricity Act, 2003", withdrawing the exemption granted to specifi ed industries.

The Company''s appeal against the withdrawal of exemption was dismissed by the Madras High Court and the Company fi led a "Special Leave Petition" (SLP) before the Supreme Court. On 15th May 2007 the Supreme Court held that the 2003 Act was not valid in respect of industries which were permanently exempted from payment of tax. Consequent to this decision upholding the exemption, the Company, in June 2007 reversed the provision for electricity tax amounting to Rs. 878.77 lacs made in books since 2003-04.

In November 2007, the Government of Tamilnadu passed "the Tamilnadu Tax on Consumption or Sale of Electricity Amendment Act" amending the 2003 Act to invalidate the exemption granted with retrospective effect. The writ petitions fi led before the division bench of the High Court against this amendment were dismissed by its Order dated 15.06.2012.

The Company has fi led a SLP before the Supreme Court in October 2012 challenging the High Court Order and is hopeful of a favorable decision by Supreme Court especially on invalidation of the exemption granted with retrospective effect. Accordingly, no provision is considered necessary for the electricity tax relating to the period from 2003 to 2008 aggregating to Rs.1054.93 lakhs. However, provision has been made for this liability for subsequent periods excluding the periods for which specifi c exemption were granted through notifi cations.

v) Renewable Energy Purchase Obligation (RPO) 412.55 301.37

The Company has disputed the obligation under the "Tamil Nadu Electricity Regulatory Commission (Renewable Energy Purchase Obligation) (Amendment) Regulations, 2011" under Gazette notifi cation TNERC/RPO/19/2 dated 29th July 2011 and fi led a Writ Petition in March 2012 before the Honorable Madras High Court. On 26th March 2012, an interim stay was granted by the Honorable Madras High Court on the operation of the Regulations. The Company is hopeful of successful outcome of the writ petition fi led before the Honorable Madras High Court and hence no provision is considered necessary in this regard.

Demands disputed by the Company and appeals fi led against these disputed demands are pending before respective appellate authorities. Outfl ows, if any, arising out of these claims would depend on the outcome of the decision of the appellate authorities and the Company''s rights for future appeals. No reimbursements are expected.

B Commitments

Capital commitments 155.20 56.65

Confirmed purchase commitments to be fulfilled within one year 61,500.00 49,241.75

Confirmed sales commitments to be fulfilled within one year 28,292.80 22,643.79

3. Related Party Disclosure under Accounting Standard -18

i) The list of related parties as identifi ed by the Management and relied upon by the Auditors are as under

A) Promoters

1. Southern Petrochemical Industries Corporation Limited (SPIC)

2. Tamilnadu Industrial Development Corporation Limited (TIDCO)

B) Associates

1. Petro Araldite Private Limited (PAPL)

2. Manali Petrochemicals Limited (MPL) (Company in which the KMP can exercise signifi cant infl uence)

C) Subsidiaries

1. Certus Investment and Trading Limited (CITL), Mauritius

2. Certus Investment and Trading (S) Private Limited

3. Proteus Petrochemicals Private Limited (formerly TPL India Singapore Private Limited).

D) Joint Venture

Gulf Petroproduct Company E.C. (upto 19th August 2013)

E) Key Management Personnel

1. Mr. Muthukrishnan Ravi, Managing Director

4. Based on, and to the extent of information received from the suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 there are no overdue amounts payable to them. Such parties are as identifi ed by the management and relied upon by the auditors. Further, no interest during the year has been paid or payable under the terms of the Act.

5. The Company suspended the operations of Epichlorohydrin plant from April 2013 owing to continuous losses. Availability of cheaper imports led to lower price realization and lower demand for this product. The management has been exploring the possibility of using this plant for manufacture of an alternate product. Pursuant to this, an Associate company has shown interest in utilizing this plant facility with suitable modifi cations to manufacture one of their raw materials and has initiated detailed engineering study in this regard. Based on Preliminary feasibility study, the Company has applied for obtaining environmental and other clearances for manufacture of the said product and the same is pending before the relevant authorities. Based on the estimated future revenues that would be generated by the plant with the production of the alternate product, the management is of the view that the recoverable value of the plant will be higher than the carrying value of Rs.1,340 lakhs as on the balance sheet date and hence no provision for impairment is considered necessary.

6. The Company has been depreciating two of the assets in the processing plant over 4.5 years i.e. @ 22%. These assets are the proprietary products of an overseas vendor and based on their guaranteed useful life and technical re-evaluation carried out, the Company has revised the useful life of these assets to 8 and 15 years. Accordingly, the net book value of these assets as at the beginning of the year is depreciated over the remaining revised useful life. Consequently, the depreciation charge and loss for the year is lower by Rs. 682.44 lakhs.

7. During the year, the Company has entered in to an agreement for sale of one of its immovable properties and received an advance. This transaction is expected to be completed by June 2015.

8. Other payable represent amount received in advance towards sale of 100000 equity shares in SPIC Electric Power Corporation (Private) Limited during Financial year 2012-13. The same will get adjusted against Investment held, on successful implementation of the power project by SEPC Power (Private) Limited.

9)a) Estimates of future salary increases considered in actuarial valuation take account of infl ation, seniority, promotions and other factors.

b) In the absence of relevant information from the actuary, the above details do not include the experience adjustment in respect of actuarial losses/gains. 47. The Company operates in only one segment, namely, Industrial Intermediate Chemicals. Details of secondary segment information are disclosed in the consolidated financial statements.

10)The Company operates is only one segment, namely, Industrial Intermediate Chemicals. Details of secondary segment information are disclosed in the consolidated financial statements.

11) Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classifi -cation / disclosure.


Mar 31, 2013

As at As at 31st March, 2013 31st March, 2012 (Rupees in lakhs) (Rupees in lakhs)

A. Contingent liabilities Disputed Demands

(i) Sales Tax 1,728.05 1,728.05

The demands relate to disallowance of claims for exemption of turnover arising on account of stock transfers to branches and genuineness of declarations filed by certain customers for availing concessional rate of tax.

(ii) Excise Duty 168.61 168.61

(iii) Service Tax 314.59 314.59

The above demands are disputed by the Company and appeals filed against these disputed demands are pending before respective appellate authorities. Outflows, if any, arising out of these claims would depend on the outcome of the decision of the appellate authorities and the Company''s rights for future appeals. No reimbursements are expected.

(iv) Electricity Tax 1,054.93 1,231.42

The Tamilnadu Government vide Government Order dated 23rd September 1996 exempted specified industries permanently from payment of electricity tax on consumption of self-generated electrical energy under the "Tamilnadu Electricity (Taxation on Consumption) Act, 1962".

(v) 1. Related Party Disclosure under Accounting Standard -18

i) The list of related parties as identified by the management and relied upon by the auditors are as under

A) Promoters 1. Southern Petrochemical Industries Corporation Limited

2. Tamilnadu Industrial Development Corporation Limited

B) Associates 1. Petro Araldite Private Limited

2. Manali Petrochemicals Limited (Company in which the KMP can exercise significant influence)

C) Subsidiaries 1. Certus Investment and Trading Limited (CITL), Mauritius

2. Certus Investment and Trading (S) Private Limited

3. Proteus Petrochemicals Private Limited (formerly TPL India Singapore Private Limited).

4. SPIC Electric Power Corporation (Private) Limited (upto June 29, 2012)

D) Joint Venture Gulf Petroproduct Company E.C.

E) Key Management 1. Thiru RM. Muthukaruppan, Managing Director (till February 3, 2013)

Personnel 2. Thiru V. Ramani, Director & Chief Financial Officer (till February 3, 2013)

3. Thiru Muthukrishnan Ravi, Managing Director (from February 4, 2013)

(vi) 2. The Company operates in only one segment, namely, Industrial Intermediate Chemicals. Details relating to segments are disclosed in the Consolidated Financial Statements.


Mar 31, 2012

1. Corporate information

Tamilnadu Petroproducts Limited (TPL) was incorporated in 1984 as a public limited Company and is jointly promoted by Southern Petrochemicals Industries Corporation Limited (SPIC) and Tamilnadu Industrial Development Corporation Limited (TIDCO). Its shares are listed on two stock exchange in India. viz. National Stock Exchange of India Limited and Bombay Stock Exchange Ltd. The Company is currently engaged in the manufacturing and selling of petrochemical products namely Linear Alkyl Benzene (LAB), Epichlorohydrin (ECH) and Caustic Soda from the manufacturing facilities situated at Manali, near Chennai

There has been no movement in equity share capital during the year.

The Company has only one class of equity shares having a par value of Rs.10/-. Each holder is entitled to one vote per equity share. Dividend proposed by the Board of Directors is subject to the approval of the shareholders at the Annual General Meeting. The amount of dividend proposed to be distributed to equity shareholders is Rs. 449.86 lacs and the related amount per equity shares is Rs. 0.50.

(i) Average rate of interest on Term loan from Bank I is 13.68% p.a (2011:13.00%) and Bank II is 15.72% p.a. (2011:13.67%). The Loans are secured by a first mortgage of all the company's immovable properties, both present and future, and second charge on all the movable properties of the company (except for exclusive charges referred in note (ii) below) by deposit of title deeds, ranking pari passu amongst them.

(ii) Average rate of interest on loan from Financial Institution is 13.71% p.a (2011:13.36%). The Loan is secured by an exclusive mortgage of a specified property at Chennai by way of deposit of title deeds and rent receivables on the said property,

Loans are secured by hypothecation by way of charge on inventories both on hand and in transit, book debts and other receivables, both present and future and further secured by way of mortgage by deposit of title deeds of immovable properties, both present and future, (except for exclusive charges stated in note 5 (ii) above) on second charge basis ranking pari passu amongst them.

2. During the year 2004, the company had acquired assets in the form of equipments and drawings amounting to Rs 2123.63 lacs for revamp of Normal Paraffin(NP) capacity at the existing plant in Manali. However due to change in Global market conditions resulting in availability of NP at competitive prices, the Company decided not to proceed with the revamp. During the same period, the Company proposed to set up a Greenfield NP Project at Singapore. It was then decided that the assets would be utilized in the Singapore NP Project and transferred to them at not less than cost. During early 2012, the availability of NP became scarce globally and the Company considered it prudent to utilize these assets to augment captive production of NP as it was cost advantageous compared to the price of imported NP Further, the Singapore project was getting delayed due to issues with raw material supplies. The company has obtained a report from an independent consultant confirming that the assets are in good condition and usable in the current expansion and there is no impairment. The installation of these assets is in progress. Consequently amounts lying under 'Assets held for transfer' have been transferred to capital work in progress and will be capitalized on commissioning.

Note (i):

As at 31st March 2012, the Company has investments of Rs.2764.50 lacs in SPIC Electric Power Corporation (Private) Ltd., (SEPC) for setting up a 525 MW coal based power project (power project) made during the period 1995-2003 and advance against equity of Rs.33.91 lacs made during the period 2006-2008. The Company signed a Memorandum of Understanding (MoU) with Tamilnadu Electricity Board (TNEB) in February 1995 for setting up the power project at Tuticorin, Tamilnadu. As per the Power Purchase Agreement (PPA), TNEB had committed to provide Escrow. However, as there was a delay in allocation of Escrow by TNEB, SEPC filed a Writ Petition in the Hon'ble High Court of Madras seeking a direction for allocation of Escrow. The Company is awaiting the outcome of the case.

The Company, SEPC and an investor company executed on 28th May 2009, a Shareholders & Share Subscription Agreement (SSA) broadly underlining the obligations of the Shareholders with regard to the power project. The investor company has agreed to bring in 74% of the equity for the power project. They have been meeting all the expenses of SEPC since August 2007 and have so far contributed a sum of Rs. 2968.45 lacs upto 31st March 2012. Against this amount, 1,54,14,550 equity shares of Rs. 10/- each for cash at par have been allotted to them and the balance is shown under 'Advance towards share capital' in the books of SEPC.

Due to non payment of lease rentals, Tuticorin Port Trust, presently known as VO. Chidambaranar Port Trust (VOCPT) sought to repossess the land allotted to SEPC for the power project. SEPC approached the Hon'ble High Court of Madras for appointment of an Arbitrator and the High Court by their Order dated 18th July 2008 a sole arbitrator was appointed to settle the dispute between SEPC and VOCPT . SEPC also filed an appeal before the Division Bench of the High Court of Madras seeking an interim injunction restraining TPT from transferring the land by way of lease or otherwise to any other party. The Division Bench by its order dated 4th September 2008 stated that SEPC is at liberty to approach the arbitrator for seeking appropriate interim measure. The arbitrator in his proceedings dated 13th February 2009 observed that the rights of VOCPT and SEPC will be subject to the outcome of the arbitration proceedings in so far as the disputed site is concerned. Subsequently it was agreed between VOCPT and SEPC to defer the arbitration proceedings on the understanding that the issue would be amicably settled.

Arising out of this, a joint committee consisting of representatives from Central Electricity Authority (CEA)/TNEB/VOCPT was constituted. The committee recommended an alternate site for locating the power project. SEPC after making preliminary investigations found the alternate site suitable. Ministry of shipping, Government of India during February 2010 approved the proposal for allocation of alternate site to SEPC and VOCPT communicated their willingness to enter into a long term lease. The Ministry of Environment and Forests (MoEF) had accorded clearance for the project on November 03, 2010. SEPC has paid lease rentals to VOCPT by calculating penal interest @ 15% amounting to Rs.830 lacs as against 18% proposed by VOCPT. A representation from SEPC for charging 15% interest is under consideration by VOCPT.

Pending permission to take physical possession of the alternate land, VOCPT had permitted SEPC to enter upon the said land for starting the project work as SEPC already paid the Lease Rent due and also obtained Environmental Clearance. In continuation, SEPC has commenced the various site development works such as Joint Physical Survey, Corner stone laying work, Name Board installation and site leveling work. With regard to the allocations / permissions for the Fore Shore facilities comprising of Coal jetty, Conveyor routing and Pump-house, SEPC held discussions with VOCPT and the allocations are being considered by VOCPT favourably for which a detailed report was also submitted by SEPC.

SEPC approached the Tamilnadu Pollution Control Board for grant of Consent to Establish the Project and the same is in the advanced stage of issuance. Further, SEPC is continuing the process of finalization of the EPC Contract as per the directions of Hon'ble TNERC. With regard to the fuel supply contracts for supply of Coal and Fuel Oil, discussions are underway with the suppliers.

The Company filed a Misc. Petition dated 14th April 2010 with Hon'ble TNERC seeking its direction to pass orders directing the respondent TNEB Board to act in accordance with the terms contained in the concluded PPA between SEPC and TNEB. During the course of hearing of the petition, TNEB filed an affidavit conveying its acceptance of the terms conveyed in the PPA and also stated that the PPA was valid and that it would stand by the said PPA. The Hon'ble TNERC passed the final orders on 9.5.2011 for implementation of the project including directing certain changes to the PPA in line with the TNERC Tariff Regulations of 2005. Accordingly, SEPC and TANGEDCO (formerly TNEB) signed the amendments to the PPA on 10.1.2012 with the approval of the Board of TANGEDCO and the amended PPA was submitted to Hon'ble TNERC on 13.1.2012.

The detailed project report with revised project cost for the power plant has been finalized. SEPC's application for financial assistance is being processed by the Financial Institutions. Since substantial progress has been achieved as mentioned above in implementation including commencement of physical activities in the alternate land, the Company is hopeful that the project will be set up soon.

3. Contingent Liabilities and commitments (to the extent not provided for)

(Rupees in lakhs)

Year ended Year ended Particulars 31st March, 31st March, 2012 2011

A. Contingent liabilities:

i) Sales Tax 1728.05 1728.05

The demands relate to disallowance of claims for exemption of turnover arising on account of stock transfers to branches and genuineness of declarations filed by certain customers for availing concessional rate of tax.

ii) Excise Duty 168.61 168.61

iii) Service Tax 314.59 67.85

4. Related Party Disclosure under Accounting Standard -18

i) The list of related parties as identified by the management and relied upon by the auditors are as under

A) Promoters 1.Southern Petrochemical Industries Corporation Limited (SPIC)

2.Tamilnadu Industrial Development Corporation Limited (TIDCO)

B) Associate Petro Araldite Private Limited

C) Subsidiaries 1.Certus Investment and Trading Limited (CITL), Mauritius

2.Certus Investment and Trading (S) Private Limited

3. Proteus Petrochemicals Private Limited (formerly TPL India Singapore Private Limited).

4. SPIC Electric Power Corporation (Private) Limited.

D) Joint Venture Gulf Petroproduct Company E.C.

5. Based on, and to the extent of information received from the suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 there are no overdue amounts payable to them. Such parties are as identified by the management and relied upon by the auditors. Further, no interest during the year has been paid or payable under the terms of the Act.

6. Pursuant to the notification dated December 29, 2011 issued by the Ministry of Corporate Affairs amending Accounting Standard 11, the Company has exercised the option available in Para 46A of the Standard introduced by this amendment, for all long term monetary assets and liabilities. Accordingly, the exchange differences on foreign currency monetary liabilities has been accounted by adjustment to the cost of the assets so far it relates to depreciable capital assets. Consequently an amount of Rs. 43.42 lakhs has been capitalised as at 31st March 2012, and the balance to be amortised is Rs. 41.89 lakhs.

7. Details relating to segments are disclosed in the Consolidated Financial Statements.

8. The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure


Mar 31, 2010

1. In December 1993, the company came out with Rights cum Public Issue of Equity Shares. The difference between issued and subscribed capital of 5,425 shares (previous year 5,425 shares) is due to said shares kept in abeyance under Section 206 A of the Companies Act, 1956.

2. Research and development expenses incurred on revenue account is Rs.34.16 lacs (Previous year Rs.34.13 lacs).

3. The depreciation charge for the year shown in the profit and loss account is after deducting an amount of Rs. 20.11 lacs (previous year Rs.20.11 lacs) representing additional depreciation arising on revaluation of fixed assets withdrawn from revaluation reserve.

4. As at 31st March 2010 the Company has investments of Rs.2764.50 lacs in SPIC Electric Power Corporation (Private) Ltd., (SEPC) for setting up a 525 MW coal based power project (power project) made during the period 1995-2003 and advances against equity of Rs.33.91 lacs made during the period 2006-2008. The Company signed a Memorandum of Understanding (MoU) with Tamilnadu Electricity Board (TNEB) in February 1995 for setting up the power project at Tuticorin, Tamilnadu. As per the Power Purchase Agreement (PPA), TNEB had committed to provide Escrow. However, as there was a delay in allocation of Escrow by TNEB, SEPC filed a Writ Petition in the Honble High Court seeking a direction for allocation of Escrow. The Company is awaiting the outcome of the case.

The Company, SEPC and an investor company executed on 28th May 2009, a Shareholders & Share Subscription Agreement (SSA) broadly underlining the obligations of the Shareholders with regard to the power project. The investor company has agreed to bring in 74% of the equity for the power project. They have been meeting all the expenses of SEPC since August 2007 and have so far contributed a sum of Rs151.45lacs upto 31st March 2010.

Due to non payment of lease rentals, Tuticorin Port Trust (TPT) sought to repossess the land allotted to SEPC for the power project. SEPC approached the Honble High Court of Madras for appointment of an Arbitrator and by orders dated 18th July 2008 a sole arbitrator was appointed to settle the dispute between SEPC and TPT. SEPC also filed an appeal before the Division Bench of the High Court seeking an interim injunction restraining TPT from transferring the land by way of lease or otherwise to any other party. The Division Bench by its order dated 4th September 2008 stated that SEPC is at liberty to approach the arbitrator for seeking appropriate interim measure. Thereafter, the arbitrator in his proceedings dated 13th February 2009 observed that the rights of TPT and SEPC will be subject to the outcome of the arbitration proceedings in so far as the disputed site is concerned.

A joint committee consisting of representative from Central Electricity Authority (CEA)/TNEB/TPT recommended an alternative site for locating the power project. SEPC after making preliminary investigations has found the land suitable. Thereafter the alternate site has been approved by TNEB/TPT/CEA. The arbitration proceedings between SEPC and TPT have therefore been kept in abeyance.

The process of obtaining environmental clearance from Ministry of Environmental and Forests (MoEF) is at an advanced stage. Demarcation under the Coastal Zone Regulation, Contour Survey and Preliminary soil investigations have been completed. The detailed project report with a revised project cost is under consideration. SEPC will pay the arrears of lease rentals on taking possession of the land.

The Ministry of Power, Government of India has clarified by a letter dated 24th February 2010 that the change to an alternate site would not alter the legal enforceability of the already concluded PPA between SEPC and TNEB. SEPC has filed a petition dated 14th April 2010 with Tamilnadu Electricity Regulatory Committee (TNERC) to direct TNEB to act in accordance with the terms and conditions in the concluded PPA.

In view of the substantial progress achieved, the Company is confident that the power project would be implemented.

5 During the year 2004, due to change in global market conditions for Normal Paraffin, the company decided not to proceed with the expansion of Normal paraffin capacity. The equipments and drawings pertaining to this project amounting to Rs.2,123.63 lacs is expected to be transferred at not less than cost to its proposed overseas project at Singapore during 2011.

 
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