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Notes to Accounts of Tanfac Industries Ltd.

Mar 31, 2016

1. Defined Contribution Plan:

Employee benefits in the form of contribution to superannuation fund, provident fund managed by Government authorities, Employee state Insurance Corporation and Labour Welfare Fund are considered as defined contribution plan and the same is charged to Statement of Profit or Loss for the year when the contributions to the respective funds are due.

2. Defined Benefit Plan :

Retirement benefits in the form of gratuity are considered as defined benefit obligations and are provided for on the basis of Actuarial Valuation, using the projected unit credit method, as at the date of balance sheet. Actuarial gains and losses are immediately recognized in the statement of profit or loss.

3. Other Long Term Benefits:

The Company has a scheme for leave encashment for employee, the liability for which is determined on the basis of an actuarial valuation carried out at the end of the year using Projected Unit Credit method.

m. Revenue recognition:

"Revenue is recognized to the extent it is probable that the economic benefits will flow to the company and revenue can be reliably measured."

Revenue is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer. Sales are disclosed net of Sales tax/Value added Tax, discounts and Sales return.

Interest Income is recognized on a time proportion basis taking into account the amount outstanding and the interest rate applicable.

Export Incentives are accounted for to the extent considered recoverable by the Management.

n. Research and Development Expenses:

Research and Development expenditure of revenue nature are charged to Profit & Loss Account, while Capital Expenditure are added to the cost of Fixed Assets in the year in which these are incurred.

o. Taxes on Income:

Tax expense comprises of current tax and deferred tax. Current Tax is provided as per the provisions of the Income Tax Act 1961 and other applicable laws. Deferred Tax is recognized on account of timing differences, being the differences between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods, are recognized at the rate of income tax prevailing or substantively enacted tax rate at the reporting date.

Deferred Tax Assets are recognized for timing difference of items to the extent that reasonable certainty exists that sufficient future taxable income will be available against which such deferred tax asset can be realized.

Deferred Tax Liabilities are recognized for all timing differences. Deferred Tax Assets and Liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the company has a legally enforceable right for such set off. Deferred Tax Assets are reviewed at each Balance Sheet date for their reliability.

Deferred Tax relating to items directly recognized in Reserves are recognized in Reserves and not in the Statement of Profit and Loss.

p. Provisions, Contingent Liabilities and Contingent Assets:

A provision is recognized when there is a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made.

Contingent Liabilities are not recognized but are disclosed in the Notes to the accounts. Contingent Assets are neither recognized nor disclosed in the financial statements.

6.1 Secured Loan - Working Capital Loans from Bank Nature of Security

Paripassu first charge in favour of consortium banks on entire Immovable and Movable goods and other assets present and future and further secured by deposit of Title Deed of the existing Immovable properties of the Company excluding Land and Building of Residential Staff Quarters and 2.3 MW Captive Power Plant located in the existing Factory Building.

6.2 Short Term Borrowings - Unsecured Loan

Unsecured working capital loan including Import Finance Loan taken in Foreign Currency (US $) for payment of imported Raw Materials. The currency risk is partly hedged. Interest is charged at LIBOR Plus spread. Applicable interest amount is payable along with principal amount. Due date for repayment of these loans is between 90 to 180 days from the date of availment. Details of loan are given below:

Disclosure under Sec. 22 of MSMED Act, 2006

(Chapter V - Delayed Payment to Micro and Small Enterprises)

Information in respect of Micro, Small and Medium Enterprises Development Act, 2006; based on the information available with the company. The required disclosures are given below:

b) The company has process of evaluating financial impact of pending litigation on Financial Statement and making necessary provision in terms of prevailing accounting practices.

c) The Company has a process whereby periodically all long term contracts are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision as required under any law / accounting standards for material foreseeable losses on such long term contracts has been made in the books of account. The Company did not have any derivative contracts as at balance sheet date.

d) SIPCOT has raised a demand of Rs. 12.00 lacs for payment of additional cost for the land at Cuddalore taken on long-term lease together with interest @ 16.5%p.a. The Company has paid an initial amount of Rs. 6.00 lacs in 1995 and additional amount of Rs. 6.00 lacs in 2001, as per the directions of the Honourable High Court of Madras. However, SIPCOT has preferred an appeal against the order of the High Court challenging the waiver of interest. Matter is pending at High court of Madras.

e) Renewable Power Obligation (RPO): The Company had filed a petition with Hon’ble Tamil Nadu Electricity Regulatory Commission (TNERC) to declare its 2.3 MW cogeneration plant exempt from RPO obligation. The said petition was dismissed by Hon’ble TNERC on 13th November 2015 relying on an order passed by Hon’ble Appellate Tribunal for Electricity (APTEL) in a different petition which the company believes the facts of the case has no applicability to the factors of its petition and also based on erroneous premise that the Company’s plant is a fossil-fuel based cogeneration plant. Aggrieved by the order the company filed an appeal with Hon’ble APTEL which has been admitted. The company believes, based on the legal advice, that its appeal would be favorably considered by APTEL and accordingly has not made any provision towards RPO from Financial year 2012-13 to 2015-16 currently estimated at Rs. 159.91 lakhs.

4. Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of advances) - Rs. Nil lacs (Previous Year Rs. NIL lacs)

5. During the Financial Year 1991 - 92 the Company has received a notice from the Tamilnadu Sales Tax authorities towards levy of tax etc. on sales effected from Pondicherry Depot during 1989-90 and 1990-91. Based on the directions of the Honorable High Court of Madras, the Appellate Assistant Commissioner, Commercial Taxes, Chennai passed the order in favour of the company thereby reducing the demand to Rs. 52.77 lacs. The amount has since been paid under protest. The company has also filed a writ petition before Honorable High Court of Madras, for granting refund of tax paid earlier to Pondicherry Government. As a matter of abundant caution, provision has been made in these accounts for the disputed amount of Rs. 52.77 lacs.

6. The Company had implemented Isobutyl Acetophenone (IBAP) project during 2010-11 with a capital outlay of Rs.1477.27 lacs and has made some modifications during 2011-12, 2012-13 and 2015-16 with additional capex amounting to Rs. 85.66 lacs to resolve technical issues faced. The company had signed a Memorandum of Understanding (MOU) with an interested party for transfer of machinery and technology at an agreed value subject to certain conditions in 201213 and had recognized impairment provision of Rs. 277.96 lacs during that year based on the said MOU. In the opinion of the management there would be no further impairment in the said project

7. Earnings per share is calculated by dividing the profit attributable to the Equity shareholders by the weighted average number of Equity shares outstanding during the year, details whereof are as under:

B. Leave Encashment

The provision for leave encashment is made based on actuarial valuations using same estimates as used for gratuity as above

8. RELATED PARTY DISCLOSURES A. Relationships

Promoters of the Company 26.02% Equity shares of the Company are held by Tamil Nadu Industrial Development Corporation Limited 19.96% Equity shares of the Company are held by T.G.S Investment & Trade Private Limited since 03.02.2006 4.99% Equity shares of the Company are held by Pilani Investment & Industries Corporation Limited

JOINT VENTURE

Holding 13.05% Equity shares of Cuddalore Sipcot Industries Common Utilities Limited KEY MANAGERIAL PERSONNEL

Shri Lalit Naik - Manager and Director

The particulars given above have been identified on the basis of information available with the company.

9. The company operates in single segment i.e, Fluro- Chemicals in India and all other activities evolve around the same. Hence, there is no reportable primary/secondary segment

10. Despite losses and reducing net worth, the financial statements of the Company have been prepared on ''going concern'' basis having regard to business plans of the Company and continued financial support from a promoter

11. The figures of previous year have been reclassified and / or regrouped wherever necessary to confirm to current year classification or grouping

:


Mar 31, 2014

1.1 The Company has issued only one class of Equity Shares having face value of Rs. 10 each carrying equal rights.

1.2 i Shares issued for considertation other than cash in last 5 financial years Nil

ii Shares issued by way of bonus in last 5 financial years Nil

iii Shares bought back in last 5 financial years Nil

2.1 Secured Long Term Borrowings:

Term Loan from Banks

The company has availed Term Loan I of Rs. 2172 lacs and Term Loan II of Rs. 1500 lacs from a bank which are secured by way of Pari Passu first charge on all Fixed Assets of the company, both present and future, excluding Factory Land and Building.

2.2 The instalments due within 12 months from the date of Balance Sheet have been grouped under Other Current Liabilities as ''Current Maturities of Long Term Borrowings'' (Refer Note 8).

3.1 Secured Loan - Working Capital Loans from Bank

Nature of Security

Paripassu first charge in favour of consortium banks on entire Immovable and Movable goods and other assets present and future and further secured by deposit of Title Deed of the existing Immovable properties of the company excluding Land and Building of Residential Staff Quarters and 2.3 MW Captive Power Plant located in the existing Factory Building.

4 B. Other Notes on Financial Statements

4 B.1 a) Contingent Liabilities not provided for:

As at As at Particulars 31st March 2014 31st March 2013 (Rs. In Lakhs) (Rs. In Lakhs)

Claims against the Company not acknowledged as debts

i) Custom Duty 10.79 10.79

ii) Excise Duty 75.31 75.31

iii) Service Tax 46.20 45.56

b) SIPCOT has raised a demand of Rs. 12.00 lacs for payment of additional cost for the land at Cuddalore taken on long-term lease together with interest @ 16.5%p.a. The Company has paid an initial amount of Rs. 6.00 lacs in 1995 and additional amount of Rs. 6.00 lacs in 2001, as per the directions of the Honourable High Court of Madras. However, SIPCOT has preferred an appeal against the order of the High Court challenging the waiver of interest. Matter is pending at High Court of Madras.

4.B.2 Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of advances) - Rs. NIL lacs (Previous Year Rs. NIL lacs).

4.B.3 During the Financial Year 1991-92 the Company has received a notice from the Tamilnadu Sales Tax authorities towards levy of tax etc. on sales effected from Pondicherry Depot during 1989-90 and 1990-91. Based on the directions of the Honourable High Court of Madras, the Appellate Assistant Commissioner, Commercial Taxes, Chennai passed the order in favour of the company thereby reducing the demand to Rs. 52.77 lacs. The amount has since been paid under protest. The company has also filed a writ petition before Honourable High Court of Madras, for granting refund of tax paid earlier to Pondicherry Government. As a matter of abundant caution, provision has been made in these accounts for the disputed amount of Rs. 52.77 lacs.

4.B.4 The Company had implemented Isobutyl Acetophenone (IBAP) project during 2010-11 with a capital outlay of Rs. 1477.27 lacs and has made some modifications during 2011-12 and 2012-13 with additional capex amounting to Rs. 35.20 lacs to resolve technical issues faced. The company had signed a Memorandum of Understanding (MOU) with an interested party for transfer of machinery and technology at an agreed value subject to certain conditions in 2012-13 and had recognized impairment provision of Rs. 277.96 lacs during that year based on the said MOU. The discussion/negotiations for conversion charges for proposed minimum level of production are currently in progress. The management does not expect any further impairment provision for the said project based on rates/quantity being negotiated.

4.B.5 RELATED PARTY DISCLOSURES A. Relationships

Promoters of the Company:

26.02% Equity shares of the Company are held by Tamil Nadu Industrial Development Corporation Limited

19.96% Equity shares of the Company are held by T.G.S Investment & Trade Private Limited since 03.02.2006

4.99% Equity shares of the Company are held by Pilani Investment & Industries Corporation Limited

Joint Venture:

Holding 13.05% Equity shares of Cuddalore Sipcot Industries Common Utilities Limited

Key Management Personnel:

Shri Lalit Naik - Manager and Director

The particulars given above have been identified on the basis of information available with the company.

B. RELATED PARTY DISCLOSURES

Name of the related party Nature of relationship

Cuddalore Sipcot Industries Common Utilities Limited Joint Venture for common Effluent Utilities

Aditya Birla Chemicals (India) Key Management Personnel Limited

Aditya Birla Chemicals (Thailand) Key Management Personnel Ltd

Aditya Birla Epoxy (India) Ltd Key Management Personnel

4.B.12 The company operates in single segment i.e, Fluro-Chemicals in India and all other activities evolve around the same. Hence, there is no reportable primary/secondary segment.

4.B.13 Despite losses and reducing net worth, the financial statements of the company have been prepared on ''Going Concern'' basis having regard to business plans of the Company and continued Financial support from a promoter.

4.B.14 The figures of previous year have been reclassified and/or regrouped wherever necessary to confirm to current year classification or grouping.


Mar 31, 2013

1A.1 a) Contingent Liabilities not provided for:

As at As at Particulars 31st March 2013 31st March 2012 (Rs. In Lakhs) (Rs. In Lakhs)

Claims against the Company not acknowledged as debts

i) Custom Duty 10.79 10.79

ii) Excise Duty 75.31 76.05

iii) Service Tax 45.56 32.40

b) SIPCOT has raised a demand of Rs. 12.00 lacs for payment of additional cost for the land at Cuddalore taken on long-term lease together with interest @ 16.5%p.a. The Company has paid an initial amount of Rs. 6.00 lacs in 1995 and additional amount of Rs. 6.00 lacs in 2001, as per the directions of the Honourable High Court of Madras. However, SIPCOT has preferred an appeal against the order of the High Court challenging the waiver of interest. Matter is pending at High Court of Madras.

1.A.2 Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of advances) - Rs. Nil lacs (Previous Year Rs. 5.38 lacs)

1.A.3 During the Financial Year 1991-92 the Company has received a notice from the Tamilnadu Sales Tax authorities towards levy of tax etc. on sales effected from Pondicherry Depot during 1989-90 and 1990-91. Based on the directions of the Honourable High Court of Madras, the Appellate Assistant Commissioner, Commercial Taxes, Chennai passed the order in favour of the company thereby reducing the demand to Rs. 52.77 lacs. The amount has since been paid under protest. The company has also filed a writ petition before Honourable High Court of Madras, for granting refund of tax paid earlier to Pondicherry Government. As a matter of abundant caution, provision has been made in these accounts for the disputed amount of Rs. 52.77 lacs.

1.A.4 The Company had implemented IsoButyl AcetoPhenone (IBAP) project during 2010-11 with a capital outlay of Rs.1477.27 lacs and has made some modifications during 2011-12 & 2012-13 with additional capex amounting to Rs. 35.20 lacs to resolve technical issues faced. The company has signed a Memorandum Of Understanding (MOU) with an interested party for transfer of machinery and technology at an agreed value subject to certain conditions. The Company has recognized impairment provision of Rs. 277.96 lacs during the current year based on the aforesaid MOU (Refer Note 10). Company has completed trial production as per MOU and achieved the desired yields. Discussions for a definitive agreement for transfer of Machinery and Technology as well as long term supply as per MOU are currently in progress. The management hopes to conclude the definitive agreement during 2013-14. The management does not expect any further impairment provision for the said project based on success achieved during 2012-13.

1.A.5 RELATED PARTY DISCLOSURES A. Relationships

Promoters of the Company:

26.02% Equity shares of the Company are held by Tamil Nadu Industrial Development Corporation Limited

19.96% Equity shares of the Company are held by T.G.S Investment & Trade Private Limited since 03.02.2006

4.99% Equity shares of the Company are held by Pilani Investment & Industries Corporation Limited Joint Venture:

Holding 13.05% Equity shares of Cuddalore Sipcot Industries Common Utilities Limited

Key Management Personnel:

Shri Lalit Naik - Manager and Director

The particulars given above have been identified on the basis of information available with the company.

1.A.6 The company operates in single segment i.e, Fluro-Chemicals in India and all other activities evolve around the same. Hence, there is no reportable primary/secondary segment.

1.A.7 Despite losses and reducing net worth, the financial statements of the company have been prepared on ''Going Concern'' basis having regard to business plans of the Company and continued Financial support from a promoter.

1.A.8 The figures of previous year have been reclassified and/or regrouped wherever necessary to confirm to current year classification or grouping.


Mar 31, 2012

1.1 The Company has issued only one class of Equity Shares having face value of Rs.10 each carrying equal rights.

2.1 Secured Long Term Borrowings:

Term Loan from Banks

The company has availed Term Loan I of Rs 2172 lacs and Term Loan II of Rs 1500 lacs from a bank which are secured by way of Pari Passu first charge on all Fixed Assets of the company, both present and future, excluding Factory Land and Building.

2.2 The installments due within 12 months from the date of Balance Sheet have been grouped under Other Current Liabilities as 'Current Maturities of Long Term Borrowings' (Refer Note No.8).

3.1 Secured Loan - working Capital Loans from Bank Nature of Security

Paripassu first charge in favour of consortium banks on entire Immovable and Movable goods and other assets present and future and further secured by deposit of Title Deed of the existing Immovable properties of the company excluding Land and Building of Residential Staff Quarters and 2.3 MW Captive Power Plant located in the existing Factory Building.

3.2 Short Term Borrowings - Unsecured Loan

Unsecured working capital loan including Import Finance Loan taken in Foreign Currency (US $) for payment of imported Raw Materials. The currency risk is partly hedged. Interest is charged at LIBOR Plus spread. Applicable interest amount is payable along with principle amount. Due date for repayment of these loans is between 90 to 180 days from the date of availment. Details of loan are given below:

3.3 The following Forward Contracts are booked for purchase of Foreign Currency against Buyer's Credit loan taken by the company for Raw Material import payment obligation and future forecasted import of Raw Material. The Exchange Risk is attempted to be mitigated through Forward Cover booking.

The Company had implemented the Multi-purpose Plant Project to manufacture 3 Phenoxy & other products with a total capital outlay of Rs1024.19 lacs. The plant was ready to commence commercial production in January 2009 and was accordingly capitalized. However, the company faced serious technical issues in the processing of the Raw Materials which leads to significant losses of Raw Materials giving very low yields and also final product was not meeting the quality parameters of the customers. Hence based on advise of technical experts, further modification works were carried out over the period. The trial run was once again taken up in April'10 and the results are satisfactory. Based on expert opinion, the management has decided to treat the expenses incurred by the company to the tune of Rs 547.30 lacs (including Raw Materials Costs, Power Cost, etc.,) during the intervening period between the date, the project was ready to commence Commercial Production and the date at which commercial production actually began as Deferred Revenue Expenditure to be written off equally over a period of five years.

4A. Other Notes on Financial Statements 27B.

1 a) Contingent Liabilities not provided for:

Particulars As at As at 31st March 2012 31st March 2011 (Rs In Lakhs) (Rs In Lakhs)

Claims against the Company not acknowledged as debts

i) Income-tax - 293.04

ii) Custom Duty 10.79 10.79

iii) Excise Duty 76.05 32.03

iv) Sales Tax - 27.00

v) Service Tax 32.40 34.08

b) SIPCOT has raised a demand of Rs 12.00 lacs for payment of additional cost for the land at Cuddalore taken on long-term lease together with interest @ 16.5%p.a. The Company has paid an initial amount of Rs 6.00 lacs in 1995 and additional amount of Rs 6.00 lacs in 2001, as per the directions of the Honourable High Court of Madras. However, SIPCOT has preferred an appeal against the order of the High Court challenging the waiver of interest. Matter is pending at High Court of Madras.

c) Tamilnadu Industrial Development Corporation Limited (TIDCO) has claimed Rs.27.11 lacs as Interest on Bridge Loan which has been fully settled by the Company. Confirmation is awaited from TIDCO.

4.A.1 Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of advances) - Rs 5.38 lacs (Previous Year Rs 62.63 lacs)

4.A.2 During the Financial Year 1991 - 92 the Company has received a notice from the Tamilnadu Sales Tax authorities towards levy of tax etc. on sales effected from Pondicherry Depot during 1989-90 and 1990-91. Based on the directions of the Honourable High Court of Madras, the Appellate Assistant Commissioner, Commercial Taxes, Chennai passed the order in favour of the company thereby reducing the demand to Rs 52.77 lacs.

The amount has since been paid under protest. The company has also filed a writ petition before Honourable High Court of Madras, for granting refund of tax paid earlier to Pondicherry Government. As a matter of abundant caution, provision has been made in these accounts for the disputed amount of Rs 52.77 lacs.

4.A.3 The Company had implemented Isobutyl Acetophenone (IBAP) project during 2010-11 with a capital outlay of Rs 1471.92 lacs. Based on plant trials, company had made some modifications, cost amounting to Rs 19.94 lacs during the current year. The company has initiated joint development / refinement of technology to make the project commercially viable with an interested party. The company has signed Confidentiality Agreement with the said party and a Memorandum of Understanding for such joint efforts and /or transfer of Plant with Technology is being negotiated. The company is also working with Indian Institute of Technology - Madras for resolving the technical issues pertaining to yield of IBAP. The management estimates that the project would become commercially viable through all these efforts during financial year 2013-14.

B. Leave Encashment

The provision for leave encashment is made based on auctuarial valuations using same estimates as used for gratuity as above

4.B.1 RELATED PARTY DISCLOSURES

A. Relationships

Promoters of the Company

26% Equity shares of the Company are held by Tamil Nadu Industrial Development Corporation Limited 19.96% Equity shares of the Company are held by T.G.S Investment & Trade Private Limited - since 03.02.2006 5% Equity shares of the Company are held by Pilani Investment & Industries Corporation Limited

Joint Venture:

Holding 14.13% Equity shares of Cuddalore Sipcot Industries Common Utilities Limited Key Management Personnel:

Shri Lalit Naik - Manager and Director

The particulars given above have been identified on the basis of information available with the company.

4.B.2 The company operates in single segment i.e, Fluro- Chemicals in India and all other activities evolve around the same. Hence, there is no reportable primary/secondary segment

4.B.3 The company is in process of compliance with provision of section 383A of the Companies Act, 1956

4.B.4 Prior year expenses: Prior Year Expenses (Income) (Net) Rs NIL (Previous Year (Net) Debit Rs 3.80 lakhs) stands adjusted to the respective expenses heads.

4.B.5 The figures of previous year have been reclassified and/or regrouped wherever nececessary to confirm to current year classification or groups


Mar 31, 2010

1. The company is principally engaged in the business of Fluorine based Chemicals . Hence there are no additional disclosures to be provided under Accounting Standard 17 "Segmental Reporting" issued by the Institute of Chartered Accountants of India, other than those already provided in the financial statements.

2. Contingent Liabilities not provided for in respect of:

(a) Outstanding Letters of Credit/Bank Guarantees Rs. 1170.92 lacs (Previous Year Rs. 4853.94 lacs).

(b) SIPCOT has raised a demand of Rs. 12.00 lacs for payment of additional cost for the land at Cuddalore taken on long-term lease together with interest @ 16.5% p.a. The Comparly has paid an initial amount of Rs.6.00 lacs in 1995 and Rs.6.00 lacs in 2001, as per the directions of the Honorable High Court of Madras. However, SIPCOT has preferred an appeal against the order of the High Court challenging the waiver of interest. Matter is pending at the High Court of Madras.

(c) Tamilnadu Industrial Development Corporation Limited (TIDCO) has claimed Rs.27.11 lacs as interest on bridge loan which has been fully settled by the Company Confirmation is awaited from TIDCO.

(d) i) Disputed Sales Tax Liability Rs.1.68 lacs (net of advance) (Previous year Rs.2.03 lacs ).

ii) Disputed Central Excise/Service Tax Liability Rs 70.72 lacs (net of advance) (Previous year Rs.131.45 lacs).

iii) Disputed Custom Duty Liability Rs. 10.79 lacs (Previous year Rs.19.63 lacs)

iv) Disputed Income Tax liability Rs. 139.10 lacs (Previous year Rs.130.96 lacs)

3. Contracts remaining to be executed on Capital Account not provided for Rs. 61.84 lacs (Net) (Previous year Rs.88.51 lacs(Net))

4. During the Financial Year 1991 -92, the Company had received a notice from the Tamilnadu Sales Tax authorities towards levy of tax etc. on sales effected from Pondicherry Depot during 1989-90 and 1990-91. Based on the directions of the Honourable High Court of Madras, the Appellate Asst. Commissioner, Commercial Taxes, Chennai passed the order in favour of the company, thereby reducing the demand to Rs.52.77 lacs.

The amount has since been paid under protest. The company has also filed a writ petition before Honourable High court of Madras, for granting refund of tax paid earlier to Pondicherry Government. As a matter of abundant caution, provision has been made in these accounts for the disputed amount of Rs.52.77 lacs (net).

5. The company had implemented the 3Phenoxy Project with a total capital outlay of Rs. 1024.19 Lacs. The plant was ready to commence commercial production in January 2009 and was accordingly capitalized. However, the company faced serious technical issues in the processing of the raw material which lead to significant losses of raw materials giving very low yields and also final product was not meeting the quality parameters of the customer. Hence based on advise of technical experts, further modification works were carried out over the period. The trial run was once again taken up in April10 and the results are satisfactory. Based on Expert Opinion, the management has decided to treat the expenditure incurred by the company to the tune of Rs.547.30 Lacs (including Raw Materials cost, Power cost etc) during the intervening period between the date the project was ready to commence commercial production and the date at which commercial production actually began as Deferred Revenue expenditure to be written off equally over a period of 5 years.

6. Employee Benefit: The company has provided for gratuity and long term compensated leave encashment based on actuarial valuation done using the projected unit credit method.

The company has a defined benefit gratuity plan. Every employee who has completed five years of more of service is entitled to gratuity on terms not less favourable than the provisions of the payment of gratuity Act, 1972.

(ix) The estimates of future salary increases, considered in actuarial valuation, take account of inflatior seniority, promotion and other relevant factors such as supply and demand factors in the employmer market is 6%.

(x) The Company expects to contribute Rs. NIL to Gratuity fund in 2.010 - 2011.

7. Micro Small and medium enterprises

Information in respect Micro, Small and Medium Enterprises Development Act, 2006; Company had sought confirmation from the vendors whether they fall in the category of Micro/Smail/Medium Enterprises. Based on the information available, the required disclosures are given below: •

8. Foreign currency exposure in respect of unsecured loans amounting to Rs. NIL (Previous year Rs.6.57 lacs) and sundry debtors amounting to Rs.34.90 lacs (Previous year Rs. 1 55.80 lacs) are not hedged as on the Balance sheet date.

9. In conformity with Accounting Standard 28 "Impairment of assets" issued by the Institute of Chartered Accountants of India, the company has carried the appropriate procedure for ensuring that assets are carried at no more than their recoverable amount.

10. A. Related party disclosures

Related Party disclosures, as required by AS-18, "Related Party Disclosures", are given below: i) Relationships :-

Promoters of the Company :

a) 26% Equity shares of the Company are held by Tamil Nadu Industrial Development Corporation Limited.

b) 19.96% Equity shares of the Company are held by T.G.S Investment & trade Pvt. Ltd. since 03.02.2006

c) 5% Equity shares of the Company are held by Pilani Investment & Industries Corporation Limited. .

ii) Joint Ventures :-

Holding 14.13% Equity shares of Cuddalore Sipcot Industries Common Utilities Limited. iii) Key Management Personnel:-

a) Shri Lalit Naik - Director

b) Shri Suresh Sodani ** - Joint President

c) Shri Vishnu Bhat * - President

The particulars given above have been identified on the basis of information available with the Company.

11. Previous Years figures have been regrouped/rearranged wherever necessary.

Schedules 1 to 21 form an integral part of the Balance Sheet and Profit & Loss Account.

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