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Notes to Accounts of Tanfac Industries Ltd.

Mar 31, 2023

PROVISIO & CONTIGENT LIABILITIES

Provisions are recognized when the Company has a present
obligation (legal or constructive) as a result of a past event, it
is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable
estimate can be made on the amount of the obligation.

If the effect of the time value of money is material, provisions
are discounted using a current pre-tax rate that reflects
current market assessment of time value of money and, where
appropriate, the risks specific to the liability. Unwinding of the
discount is recognized in the Statement of Profit and Loss as
a finance cost. Provisions are reviewed at each reporting date
and are adjusted to reflect the current best estimate.

Contingent liabilities are also disclosed when there is a possible
obligation arising from past events, the existence of which will
be confirmed only by the occurrence or non -occurrence of one
or more uncertain future events not wholly within the control
of the Company. Claims against the Company where the
possibility of any outflow of resources in settlement is remote,
are not disclosed as contingent liabilities.

Contingent assets are not recognized in financial statements
since this may result in the recognition of income that may
never be realized. However, when the realization of income
is virtually certain, then the related asset is not a contingent
asset and is recognized.

m. Revenue Recognition:

Revenue is recognized on the basis of approved contracts
regarding the transfer of goods or services to a customer for
an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services.

Revenue is recognized upon transfer of control of promised
products to customers. Revenue towards satisfaction of
a performance obligation is measured at the amount of
transaction price (net of variable consideration) allocated to
that performance obligation, in accordance with Ind AS115 “
Revenue from contract with customers”. Amounts disclosed
as revenue are net of sales returns and allowances, trade
discounts and Goods and service tax.

Interest Income is recognised 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.

Rental income on assets given under operating lease
arrangements is recognized on a straight-line basis over
the period of the lease unless the receipts are structured to
increase in line with expected general inflation to compensate
for the Company’s expected inflationary cost increases.

n. Lease:

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

The arrangement conveys the right to control the use of an
identified asset, if it involves the use of an identified asset
and the Company has substantially all of the economic
benefits from use of the asset and has right to direct the use
of the identified asset. The cost of the right-of-use asset shall
comprise of the amount of the initial measurement of the lease
liability adjusted for any lease payments made at or before the
commencement date plus any initial direct costs incurred. The
right-of-use assets is subsequently measured at cost less any
accumulated depreciation, accumulated impairment losses, if
any and adjusted for any remeasurement of the lease liability.
The right-of-use assets is depreciated using the straight-line
method from the commencement date over the shorter of
lease term or useful life of right-of-use asset.

The Company measures the lease liability at the present value
of the lease payments that are not paid at the commencement
date of the lease. The lease payments are discounted using
the interest rate implicit in the lease, if that rate can be readily
determined. If that rate cannot be readily determined, the
Company uses incremental borrowing rate.

For short-term and low value leases, the Company recognises
the lease payments as an operating expense on a straight-line
basis over the lease term.

o. Employee Benefit Expense:

Defined benefit plan:

The Company pays gratuity to the employees whoever has
completed five years of service with the Company at the time
of resignation/superannuation. The gratuity liability amount is
contributed to the approved gratuity fund formed exclusively
for gratuity payment to the employees.

The liability in respect of gratuity and other post-employment
benefits is calculated using the Projected Unit Credit Method
and spread over the period during which the benefit is
expected to be derived from employees’ services.

Re-measurement of defined benefit plans in respect of post¬
employment are charged to the Other Comprehensive Income.
Re-measurement recognised in Other Comprehensive Income
(‘OCI’) is reflected immediately in retained earnings and will
not be reclassified to Statement of Profit and Loss.

The present value of the defined benefit plan liability is
calculated using a discount rate which is determined by
reference to market yields at the end of the reporting period
on government bonds.

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

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.

Other long-term employee 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.

Short Term Employee Benefits:

Short-term employee benefits are recognised as an expense on
accrual basis.

p. Income Taxes:

The tax expense for the period comprises current and deferred
tax. Tax is recognized in Statement of Profit and Loss, except
to the extent that it relates to items recognized in the OCI or in
equity. In which case, the tax is also recognized in OCI or equity.

Current Tax:

Current tax assets and liabilities are measured at the amount
expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the
amount are those that are enacted or substantively enacted,
at the reporting date in the countries where the Company
operates and generates taxable income.

The management periodically evaluates positions taken in
the tax returns with respect to situations in which applicable

Provisions are recognized when the Company has a present
obligation (legal or constructive) as a result of a past event, it
is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable
estimate can be made on the amount of the obligation.

If the effect of the time value of money is material, provisions
are discounted using a current pre-tax rate that reflects
current market assessment of time value of money and, where
appropriate, the risks specific to the liability. Unwinding of the
discount is recognized in the Statement of Profit and Loss as
a finance cost. Provisions are reviewed at each reporting date
and are adjusted to reflect the current best estimate.

Contingent liabilities are also disclosed when there is a possible
obligation arising from past events, the existence of which will
be confirmed only by the occurrence or non -occurrence of one
or more uncertain future events not wholly within the control
of the Company. Claims against the Company where the
possibility of any outflow of resources in settlement is remote,
are not disclosed as contingent liabilities.

Contingent assets are not recognized in financial statements
since this may result in the recognition of income that may
never be realized. However, when the realization of income
is virtually certain, then the related asset is not a contingent
asset and is recognized.

m. Revenue Recognition:

Revenue is recognized on the basis of approved contracts
regarding the transfer of goods or services to a customer for
an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services.

Revenue is recognized upon transfer of control of promised
products to customers. Revenue towards satisfaction of
a performance obligation is measured at the amount of
transaction price (net of variable consideration) allocated to
that performance obligation, in accordance with Ind AS115 “
Revenue from contract with customers”. Amounts disclosed
as revenue are net of sales returns and allowances, trade
discounts and Goods and service tax.

Interest Income is recognised 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.

Rental income on assets given under operating lease
arrangements is recognized on a straight-line basis over
the period of the lease unless the receipts are structured to
increase in line with expected general inflation to compensate
for the Company’s expected inflationary cost increases.

n. Lease:

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

The arrangement conveys the right to control the use of an
identified asset, if it involves the use of an identified asset
and the Company has substantially all of the economic
benefits from use of the asset and has right to direct the use
of the identified asset. The cost of the right-of-use asset shall
comprise of the amount of the initial measurement of the lease
liability adjusted for any lease payments made at or before the
commencement date plus any initial direct costs incurred. The
right-of-use assets is subsequently measured at cost less any
accumulated depreciation, accumulated impairment losses, if
any and adjusted for any remeasurement of the lease liability.
The right-of-use assets is depreciated using the straight-line
method from the commencement date over the shorter of
lease term or useful life of right-of-use asset.

The Company measures the lease liability at the present value
of the lease payments that are not paid at the commencement
date of the lease. The lease payments are discounted using
the interest rate implicit in the lease, if that rate can be readily
determined. If that rate cannot be readily determined, the
Company uses incremental borrowing rate.

For short-term and low value leases, the Company recognises
the lease payments as an operating expense on a straight-line
basis over the lease term.

o. Employee Benefit Expense:

Defined benefit plan:

The Company pays gratuity to the employees whoever has
completed five years of service with the Company at the time
of resignation/superannuation. The gratuity liability amount is
contributed to the approved gratuity fund formed exclusively
for gratuity payment to the employees.

The liability in respect of gratuity and other post-employment
benefits is calculated using the Projected Unit Credit Method
and spread over the period during which the benefit is
expected to be derived from employees’ services.

Re-measurement of defined benefit plans in respect of post¬
employment are charged to the Other Comprehensive Income.
Re-measurement recognised in Other Comprehensive Income
(‘OCI’) is reflected immediately in retained earnings and will
not be reclassified to Statement of Profit and Loss.

The present value of the defined benefit plan liability is
calculated using a discount rate which is determined by
reference to market yields at the end of the reporting period
on government bonds.

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

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.

Other long-term employee 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.

Short Term Employee Benefits:

Short-term employee benefits are recognised as an expense on
accrual basis.

p. Income Taxes:

The tax expense for the period comprises current and deferred
tax. Tax is recognized in Statement of Profit and Loss, except
to the extent that it relates to items recognized in the OCI or in
equity. In which case, the tax is also recognized in OCI or equity.

Current Tax:

Current tax assets and liabilities are measured at the amount
expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the
amount are those that are enacted or substantively enacted,
at the reporting date in the countries where the Company
operates and generates taxable income.

The management periodically evaluates positions taken in
the tax returns with respect to situations in which applicable

Deferred Tax:

Deferred tax is recognized on temporary differences between
the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the
computation of taxable profit.

Deferred tax liabilities and assets are measured at the tax rates
that are expected to apply in the period in which the liability is
settled or the asset realised, based on tax rates (and tax laws)
that have been enacted or substantively enacted by the end of
the reporting period.

Deferred tax assets and liabilities are offset if there is a legally
enforceable right to offset current tax liabilities and assets, and
they relate to income taxes levied by the same tax authority,
but they intend to settle current tax liabilities and assets on
a net basis or their tax assets and liabilities will be realized
simultaneously.

A deferred tax asset is recognized only to the extent that it is
probable that future taxable profits will be available against
which the temporary difference can be utilised. Deferred tax
assets are reviewed at each reporting date and are reduced to
the extent that it is no longer probable

q. Foreign Currency Transactions:

Transactions denominated in foreign currencies are recorded
at the exchange rates prevailing on the date of the transaction.
As at balance sheet date, foreign currency monetary items are
translated at closing exchange rate. Foreign currency non¬
monetary items carried at fair value are translated at the rates
prevailing at the date when the fair value was determined.
Foreign currency non-monetary items measured in terms of
historical cost are translated using the exchange rate as at the
date of initial transactions.

Exchange difference arising on settlement or translation of
foreign currency monetary items are recognized as income
or expense in the year in which they arise except to the
extent exchange differences are regarded as an adjustment to
interest cost on those foreign currency borrowings relating to
assets under construction for future productive use, which are
included in the cost of those assets when they are regarded
as an adjustment to interest costs on those foreign currency
borrowings

r. Earnings Per Share:

The basic Earnings Per Share (“EPS”) is computed by dividing
the net profit/(loss) after tax for the year attributable to the
equity shareholders by the weighted average number of equity
shares outstanding during the year. The weighted average
number of equity shares outstanding during the period is
adjusted for events of bonus issue and share split, if any that
have changed the number of equity shares outstanding,
without a corresponding change in resources.

For the purpose of calculating diluted EPS, net profit/(loss) after
tax for the year attributable to the equity shareholders and the
weighted average number of equity shares outstanding during
the year are adjusted for the effects of all dilutive potential
equity shares.

s. Financial Instruments:

A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument of another entity. Financial Assets & Financial
Liabilities are recognized when the Company becomes party
to contractual provisions of the relevant instrument.

Initial Measurement:

At initial recognition, the Company measures a financial asset
and financial liabilities at its fair value. Transaction costs that
are directly attributable to the acquisition or issue of financial
assets and financial liabilities (other than financial assets
and financial liabilities at fair value through profit or loss and
ancillary costs related to borrowings) are added to or deducted
from the fair value of the financial assets or financial liabilities,
as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial
liabilities at fair value through profit or loss are recognised
immediately in Statement of Profit and Loss.

Classification and Subsequent Measurement: Financial Assets

The Company classifies financial assets as subsequently
measured at amortised cost, fair value through other
comprehensive income (“FVOCI”) or fair value through profit
or loss (“FVTPL”) on the basis of following:

• The entity’s business model for managing the financial
assets; and

• The contractual cash flow characteristics of the
financial asset.

Amortised Cost:

A financial asset shall be classified and measured at amortised
cost if both of the following conditions are met:

• The financial asset is held within a business model whose
objective is to hold financial assets in order to collect
contractual cash flows; and

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

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

Fair Value through Other Comprehensive Income (‘FVOCI’):

A financial asset shall be classified and measured at FVOCI if
both of the following conditions are met:

• The financial asset is held within a business model whose
objective is achieved by both collecting contractual cash
flows and selling financial assets; and

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

Deferred Tax:

Deferred tax is recognized on temporary differences between
the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the
computation of taxable profit.

Deferred tax liabilities and assets are measured at the tax rates
that are expected to apply in the period in which the liability is
settled or the asset realised, based on tax rates (and tax laws)
that have been enacted or substantively enacted by the end of
the reporting period.

Deferred tax assets and liabilities are offset if there is a legally
enforceable right to offset current tax liabilities and assets, and
they relate to income taxes levied by the same tax authority,
but they intend to settle current tax liabilities and assets on
a net basis or their tax assets and liabilities will be realized
simultaneously.

A deferred tax asset is recognized only to the extent that it is
probable that future taxable profits will be available against
which the temporary difference can be utilised. Deferred tax
assets are reviewed at each reporting date and are reduced to
the extent that it is no longer probable

q. Foreign Currency Transactions:

Transactions denominated in foreign currencies are recorded
at the exchange rates prevailing on the date of the transaction.
As at balance sheet date, foreign currency monetary items are
translated at closing exchange rate. Foreign currency non¬
monetary items carried at fair value are translated at the rates
prevailing at the date when the fair value was determined.
Foreign currency non-monetary items measured in terms of
historical cost are translated using the exchange rate as at the
date of initial transactions.

Exchange difference arising on settlement or translation of
foreign currency monetary items are recognized as income
or expense in the year in which they arise except to the
extent exchange differences are regarded as an adjustment to
interest cost on those foreign currency borrowings relating to
assets under construction for future productive use, which are
included in the cost of those assets when they are regarded
as an adjustment to interest costs on those foreign currency
borrowings

r. Earnings Per Share:

The basic Earnings Per Share (“EPS”) is computed by dividing
the net profit/(loss) after tax for the year attributable to the
equity shareholders by the weighted average number of equity
shares outstanding during the year. The weighted average
number of equity shares outstanding during the period is
adjusted for events of bonus issue and share split, if any that
have changed the number of equity shares outstanding,
without a corresponding change in resources.

For the purpose of calculating diluted EPS, net profit/(loss) after
tax for the year attributable to the equity shareholders and the
weighted average number of equity shares outstanding during
the year are adjusted for the effects of all dilutive potential
equity shares.

s. Financial Instruments:

A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument of another entity. Financial Assets & Financial
Liabilities are recognized when the Company becomes party
to contractual provisions of the relevant instrument.

Initial Measurement:

At initial recognition, the Company measures a financial asset
and financial liabilities at its fair value. Transaction costs that
are directly attributable to the acquisition or issue of financial
assets and financial liabilities (other than financial assets
and financial liabilities at fair value through profit or loss and
ancillary costs related to borrowings) are added to or deducted
from the fair value of the financial assets or financial liabilities,
as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial
liabilities at fair value through profit or loss are recognised
immediately in Statement of Profit and Loss.

Classification and Subsequent Measurement: Financial Assets

The Company classifies financial assets as subsequently
measured at amortised cost, fair value through other
comprehensive income (“FVOCI”) or fair value through profit
or loss (“FVTPL”) on the basis of following:

• The entity’s business model for managing the financial
assets; and

• The contractual cash flow characteristics of the
financial asset.

Amortised Cost:

A financial asset shall be classified and measured at amortised
cost if both of the following conditions are met:

• The financial asset is held within a business model whose
objective is to hold financial assets in order to collect
contractual cash flows; and

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

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

Fair Value through Other Comprehensive Income (‘FVOCI’):

A financial asset shall be classified and measured at FVOCI if
both of the following conditions are met:

• The financial asset is held within a business model whose
objective is achieved by both collecting contractual cash
flows and selling financial assets; and

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

Financial Asset included within the FVOCI category are
measured initially as well as at each reporting date at fair
value. Fair value movements are recognised in the Other
Comprehensive Income (OCI). However, the Company
recognizes interest income, impairment losses & reversals and
foreign exchange gain or loss in the Statement of Profit and
Loss. On de-recognition of the asset, cumulative gain or loss
previously recognised in OCI is re-classified from the equity to
Statement of Profit and Loss. Interest earned whilst holding
FVTOCI debt instrument is reported as interest income using
the EIR method.

Fair Value through Profit or Loss (‘FVTPL’):

FVTPL is a residual category for Financial Asset. Any debt
instrument, which does not meet the criteria for categorization
as at amortised cost or as FVOCI, is classified as at FVTPL.

Financial Assets included within the FVTPL category are
measured at fair value with all changes recognized in the
Statement of Profit and Loss.

All recognised financial assets are subsequently measured in
their entirety at either amortised cost or fair value, depending
on the classification of the financial assets.

Equity instruments:

All equity investments in scope of Ind AS 109 are measured at fair
value. Equity instruments which are held for trading are classified
as at FVTPL. For all other equity instruments, the Company
decides to classify the same either as at FVTOCI or FVTPL. The
Company makes such election on an instrument-by-instrument
basis. Where the Company’s management has elected to present
fair value gains and losses on equity investments in other
comprehensive income, there is no subsequent reclassification
of fair value gains and losses to the Statement of Profit and Loss.
Dividends from such investments are recognized in the Statement
of Profit and Loss as other income when the Company’s right to
receive payments is established.

Impairment of financial assets:

The Company assesses on a forward looking basis the expected
credit losses associated with its assets. The impairment
methodology applied depends on whether there has been a
significant increase in credit risk.

For Financial Assets, the Company applies ‘simplified approach’
as specified under Ind AS 109, which requires expected
lifetime losses to be recognised from initial recognition of
the receivables. The application of simplified approach does
not require the Company to track changes in credit risk. The
provision matrix is prepared based on historically observed
default rates over the expected life of trade receivables and
is adjusted for forward-looking estimates. At each reporting
date, the historically observed default rates and changes in the
forward-looking estimates are updated.

Derecognition of Financial Instruments:

The Company derecognises a financial asset when the
contractual rights to the cash flows from the asset expire, or
when it transfers the financial asset and substantially all the
risks and rewards of ownership of the asset to another party.
If the Company neither transfers nor retains substantially all
the risks and rewards of ownership and continues to control
the transferred asset, the Company recognises its retained
interest in the asset and an associated liability for amounts it
may have to pay. If the Company retains substantially all the
risks and rewards of ownership of a transferred financial asset,
the Company continues to recognise the financial asset and also
recognises a collateralised borrowing for the proceeds received.

On derecognition of a financial asset in its entirety, the
difference between the asset’s carrying amount and the sum of
the consideration received and receivable and the cumulative
gain or loss that had been recognised in other comprehensive
income and accumulated in equity is recognised in statement
of profit or loss if such gain or loss would have otherwise been
recognised in statement of profit or loss on disposal of that
financial asset.

On derecognition of a financial asset other than in its entirety
(e.g. when the Company retains an option to repurchase part
of a transferred asset), the Company allocates the previous
carrying amount of the financial asset between the part
it continues to recognise under continuing involvement,
and the part it no longer recognises on the basis of the
relative fair values of those parts on the date of the transfer.
The difference between the carrying amount allocated to
the part that is no longer recognised and the sum of the
consideration received for the part no longer recognised
and any cumulative gain or loss allocated to it that had been
recognised in other comprehensive income is recognised in
statement of profit or loss if such gain or loss would have
otherwise been recognised in statement of profit or loss on
disposal of that financial asset. A cumulative gain or loss
that had been recognised in other comprehensive income is
allocated between the part that continues to be recognised
and the part that is no longer recognised on the basis of the
relative fair values of those parts.

Classification and Subsequent Measurement: Financial
Liabilities

Fair Value Measurement:

The Company measures financial instruments, such as
investments (other than equity investments in Subsidiaries,
Joint Ventures and Associates) and derivatives at fair values at
each Balance Sheet date.

Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value
measurement is based on the presumption that the transaction
to sell the asset or transfer the liability takes place either. In the
principal market for the asset or liability, or In the absence of
a principal market, in the most advantageous market for the
asset or liability.

The fair value of an asset or a liability is measured using the
assumptions that market participants would use when pricing
the asset or liability, assuming that market participants act in
their economic best interest.

A fair value measurement of a non-financial asset takes into
account a market participant’s ability to generate economic
benefits by using the asset in its highest and best use or by
selling it to another market participant that would use the
asset in its highest and best use.

The Company uses valuation techniques that are appropriate in
the circumstances and for which sufficient data are available to
measure fair value, maximising the use of relevant observable
inputs and minimising the use of unobservable inputs.

All assets and liabilities (for which fair value is measured
or disclosed in the financial statements) are categorised
within the fair value hierarchy, described as follows, based
on the lowest level input that is significant to the fair value
measurement as a whole:

Level 1 - Quoted (unadjusted) market prices in active markets
for identical assets or liabilities.

Level 2 - Valuation techniques for which the lowest level input
that is significant to the fair value measurement is directly or
indirectly observable other than quoted prices included in
level 1.

Level 3 - Valuation techniques for which the lowest level
input that is significant to the fair value measurement is
unobservable.

For assets and liabilities that are recognised in the financial
statements on a recurring basis, the Group determines whether
transfers have occurred between levels in the hierarchy by re¬
assessing categorisation (based on the lowest level input that
is significant to the fair value measurement as a whole) at the
end of each reporting period.

The Management determines the policies and procedures
for both recurring fair value measurement, such as derivative
instruments and unquoted financial assets measured at fair
value, and for non-recurring measurement, such as assets held
for disposal in discontinued operations.

At each reporting date, Management analyses the movements
in the values of assets and liabilities, which are required to
be remeasured or re-assessed as per the Group’s accounting
policies. For this analysis, the Management verifies the
major inputs applied in the latest valuation by agreeing the
information in the valuation computation to contracts and
other relevant documents.

Financial Liabilities:

Financial liabilities are classified, at initial recognition as fair
value through profit or loss:

• Loans and borrowings;

• Payables; or

• As derivatives designated as hedging instruments in an

effective hedge, as appropriate.

All financial liabilities are recognised initially at fair value,
and in the case of loans and borrowings and payables are
recognised net of directly attributable transaction costs. The
Group’s financial liabilities include trade and other payables,
loans and borrowings, including bank overdrafts, financial
guarantee contracts and derivative financial instruments.

Subsequent Measurement:

The measurement of financial liabilities depends on their
classification, as described below:

Financial Liabilities at FVTPL:

Financial liabilities at FVTPL include financial liabilities held
for trading and financial liabilities designated upon initial
recognition as at FVTPL. Financial liabilities are classified
as held for trading, if they are incurred for the purpose of

repurchasing in the near term. This category also includes
derivative financial instruments entered into by the Group,
that are not designated as hedging instruments in hedge
relationships as defined by Ind AS 109. Separated embedded
derivatives are also classified as held for trading, unless they
are designated as effective hedging instruments.

Gains or losses on liabilities held for trading are recognised
in the Statement of Profit and Loss. Financial liabilities,
designated upon initial recognition at FVTPL, are designated
as such at the initial date of recognition, and only if the criteria
in Ind AS 109 are satisfied.

Loans and Borrowings:

After initial recognition, interest-bearing loans and borrowings
are subsequently measured at amortised cost using the
Effective Interest Rate (EIR) method. Gains and losses
are recognised in the Statement of Profit and Loss, when
the liabilities are derecognised as well as through the EIR
amortisation process.

Amortised cost is calculated by taking into account any
discount or premium on acquisition and fees or costs that are
an integral part of the EIR. The EIR amortisation is included as
finance costs in the Statement of Profit and Loss.

De-recognition of Financial Liabilities:

The Group de-recognises financial liabilities when and only
when, the Group’s obligations are discharged, cancelled or
have expired. The difference between the carrying amount of
the financial liability de-recognised and the consideration paid
and payable is recognised in Statement of Profit and Loss.

t. Cash and cash equivalent

Cash and cash equivalents in the Balance Sheet comprise
cash at bank and in hand, including fixed deposit with original
maturity period of three months or less and short-term highly
liquid investments with an original maturity of three months
or less, that are readily convertible into cash which are subject
to insignificant risk of changes in value and are held for the
purpose of meeting short-term cash commitments.

u. Cash Flow Statement:

Cash flows are reported using the indirect method, whereby the
net profit before tax is adjusted for the effects of transactions
of a non-cash nature, any deferrals or accruals of past or future
operating cash receipts or payments and item of income or
expenses associated with investing or financing cash flows. The
cash flows from operating, investing and financing activities of
the Company are segregated.

v. Derivative Financial Instruments and Hedge Accounting:

The Company enters into derivative financial instruments viz.
foreign exchange forward contracts to manage its exposure
foreign exchange rate risks. The Company formally establishes
a hedge relationship between such forward currency contracts
(‘hedging instrument’) and recognized financial liabilities
(‘hedged item’) through a formal documentation at the
inception of the hedge relationship in line with the Company’s
Risk Management objective and strategy. The Company does not
hold derivative financial instruments for speculative purposes.

Derivatives are initially recognized at fair value at the date the
derivative contracts are entered into and are subsequently
remeasured to their fair value at the end of each reporting
period. The resulting gain or loss is recognized in statement of
profit or loss immediately excluding derivatives designated as
cash flow hedge.

Recognition and measurement of fair value hedge:

Hedging instrument is initially recognized at fair value on the date
on which a derivative contract is entered into and is subsequently
measured at fair value at each reporting date. Gain or loss arising
from changes in the fair value of hedging instrument is recognized
in the Statement of Profit and Loss. Hedging instrument is
recognized as a financial asset in the Balance Sheet if its fair value
as at reporting date is positive as compared to carrying value and
as a financial liability if its fair value as at reporting date is negative
as compared to carrying value.

Hedged item (recognized financial liability) is initially
recognized at fair value on the date of entering into contractual
obligation and is subsequently measured at amortized cost.
The hedging gain or loss on the hedged item is adjusted to the
carrying value of the hedged item as per the effective interest
method and the corresponding effect is recognized in the
Statement of Profit and Loss.

On Derecognition of the hedged item, the unamortized fair
value of the hedging instrument is recognized in the Statement
of Profit and Loss

w. Segment Reporting
Identification of Segments:

An operating segment is a component of the Company that
engages in business activities from which it may earn revenues
and incur expenses, whose operating results are regularly
reviewed by the Company’s management to make decisions
for which discrete financial information is available. Operating
Segments are identified based on monitoring of operating
results by the chief operating decision maker (CODM)
separately for the purpose of making decision about resource
allocation and performance assessment.

Operating Segment is identified based on the nature of
products and services, the different risks and returns, and the
Internal Business Reporting System.

Based on the management approach as defined in Ind AS 108,
the management evaluates the Company’s performance and
allocates resources based on an analysis of various performance
indicators by business segments and geographic segments.

x. Cash Dividend to Equity Holders of the Company:

The Company recognises a liability to make cash distributions
to equity holders of the Company when the distribution is
authorised and the distribution is no longer at the discretion of
the Company. As per the corporate laws in India, a distribution
is authorised when it is approved by the shareholders. A
corresponding amount is recognised directly in other equity.

NOTE - 1(B) SIGNIFICANT ACCOUNTING
JUDGEMENTS AND ESTIMATES

The preparation of the financial statements in conformity with
Ind AS requires management to make judgments, estimates
and assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities, income
and expenses. Uncertainty about these assumptions and
estimates could result in outcomes that require a material
adjustment to the carrying amount of assets or liabilities
affected in future periods.

Estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are
recognized in the period in which the estimates are revised and
in any future periods affected.

In particular, information about significant areas of estimation,
uncertainty and critical judgments in applying accounting
policies that have the most significant effect on the amounts
recognized in the financial statements are included in the
following notes:

(i) Useful Lives of Property, Plant & Equipment:

Property, Plant and Equipment represent a significant
proportion of the asset base of the Company. The charge in
respect of periodic depreciation is derived after determining
an estimate of an asset’s expected useful life. The useful lives
of the Company’s assets are determined by the management
at the time the asset is acquired and reviewed periodically,
including at each financial year end. The lives are based on
historical experience with similar assets as well as anticipation
of future events, which may impact their life, such as changes
in technical or commercial obsolescence arising from changes
or improvements in production or from a change in market
demand of the product or service output of the asset.

(ii) Defined Benefit Plans and Compensated Absences:

The cost of the defined benefit plans, compensated absences
and the present value of the defined benefit obligation are
based on actuarial valuation using the projected unit credit
method. An actuarial valuation involves making various
assumptions that may differ from actual developments in the
future. These include the determination of the discount rate,
future salary increases and mortality rates.

Due to the complexities involved in the valuation and its long¬
term nature, a defined benefit obligation is highly sensitive to
changes in these assumptions. All assumptions are reviewed at
each reporting date.

(iii) Expected Credit Losses on Financial Assets:

The impairment provisions of financial assets are based on
assumptions about risk of default and expected timing of
collection. The Company uses judgment in making these
assumptions and selecting the inputs to the impairment
calculation, based on the Company’s past history, customer’s
credit worthiness, existing market conditions as well as
forward looking estimates at the end of each reporting period.

(iv) Fair Value measurement of Financial Instruments:

When the fair values of financials assets and financial liabilities
recorded in the Balance Sheet cannot be measured based on
quoted prices in active markets, their fair value is measured
using valuation techniques, including the discounted cash flow
model, which involve various judgements and assumptions.

NOTE - 1(C) STANDARDS ISSUED BUT NOT YET
EFFECTIVE

Ministry of Corporate Affairs (“MCA”) notifies new standard
or amendments to the existing standards under Companies
(Indian Accounting Standards) Rules as issued from time to
time. On 31st March, 2023, MCA notified the Companies (Indian
Accounting Standards) Amendment Rules, 2022, applicable
from 1st April, 2023, as below:

I. Ind AS 1 - Presentation of Financial Statements - This
amendment requires the entities to disclose their material
accounting policies rather than their significant accounting
policies. The effective date for adoption of this amendment
is annual periods beginning on or after 1st April, 2023. The
Company has evaluated the amendment and the impact of
the amendment is insignificant in the standalone financial
statements.

II. Ind AS 8 - Accounting Policies, Changes in Accounting
Estimates and Errors -
This amendment has introduced
a definition of ‘accounting estimates’ and included
amendments to Ind AS 8 to help entities distinguish changes
in accounting policies from changes in accounting estimates.

The effective date for adoption of this amendment is annual
periods beginning on or after 1st April, 2023. The Company
has evaluated the amendment and there is no impact on its
standalone financial statements.

III. Ind AS 12 - Income Taxes - This amendment has narrowed
the scope of the initial recognition exemption so that it does
not apply to transactions that give rise to equal and offsetting
temporary differences. The effective date for adoption of this
amendment is annual periods beginning on or after 1st April,
2023. The Company has evaluated the amendment and there
is no impact on its standalone financial statement.


Mar 31, 2018

A. Optional Exemptions availed

(i) Deemed Cost

The Company has opted paragraph D7AA and accordingly considered the carrying value of property, plant and equipment and Intangible assets as deemed cost as at the transition date.

(ii) Designation of previously recognized financial instruments

Paragraph D19B of Ind AS 101 gives an option to an entity to designate investments in equity instruments at FVOCI on the basis of the facts and circumstances at the date of transition to Ind AS. The company has opted to apply this exemption for its investment in equity Investments.

B. Applicable Exceptions

(i) Estimates

An entity''s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies).

Ind AS estimates as at 1st April, 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP. The company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:

- Investment in equity instruments carried at FVOCI;

- Impairment of financial assets based on Expected Credit Loss model.

(ii) Classification and measurement of financial assets

As required under Ind AS 101 the company has assessed the classification and measurement of financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

C. Transition to Ind AS - Reconciliations

The following reconciliations provide a quantification of the effect of significant differences arising from the transition from previous GAAP to Ind AS as required under Ind AS 101:

I. Reconciliation of Balance Sheet as at April 1, 2016 (Transition Date)

II. A. Reconciliation of Balance Sheet as at March 31, 2017

B. Reconciliation of Total Comprehensive Income for the year ended March 31, 2017

III. Reconciliation of Equity as at 31st March 2017 and 1st April 2016

The presentation requirements under Previous GAAP differs from Ind AS, and hence, Previous GAAP information has been regrouped for ease of reconciliation with Ind AS. The Regrouped Previous GAAP information is derived from the Financial Statements of the Company prepared in accordance with Previous GAAP.

Footnotes to the reconciliation:

A. Non-Current Investments:

I n the Financial Statements prepared under Previous GAAP, Non-current Investments of the Company were measured at cost less provision for diminution (other than temporary). Under Ind AS, the Company has recognized investments in equity shares of Cuddlier Sipcot Industries Common Utilities Limited at Fair Value through OCI. Ind AS requires FVOCI investments to be measured at fair value. At the date of transition to Ind AS, difference between the fair value of investment and IGAAP carrying amount has been recognized in Retained Earnings.

B. Loans, Other Current Financial & Non-Financial assets: Reclassification effect of Loans into other current financial and non-financial assets.

C. Equity: Under the previous GAAP, Cumulative Redeemable preference shares issued by the Company were considered as Equity. Under Ind AS, such Cumulative Redeemable preference shares are considered as Financial Liability and subsequently classified into amortized costs category. Accordingly, the reclassification effect of Cumulative Redeemable preference shares into Financial liability is disclosed.

D. Other Long-Term Liabilities: Inter-corporate deposits along with related interest accruals were reclassified from Short-term borrowings to financial Liabilities measured at amortized cost. This reclassification did not have any impact on the carrying value of the said liabilities as at April 1, 2016.

E. Revenue: Under the previous GAAP, revenue from sale of goods was presented exclusive of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty is presented on the face of the Statement of Profit and Loss as part of expenses. This change has resulted in an increase in total revenue and total expenses for the year ended 31st March, 2017 by Rs.1230.03 Lakhs. There is no impact in the total equity and profit due to above adjustments.

F. Finance Costs: Since the Cumulative redeemable preference shares issued by the Company is disclosed as Financial Liabilities, it will be subsequently measured at Amortized cost.

G. Re-measurement on defined benefit plans - Under Ind AS, re-measurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognized in Other Comprehensive Income (OCI) instead of

profit or loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year. The concept of Other Comprehensive Income did not exist under previous GAAP. There is no impact on the total equity as at March 31, 2017 due to above adjustment.

H. Effect of Ind AS adoption on Statement of Cash flows for the year ended 31st March 2017 -

The Ind AS adjustments are either non-cash adjustments or are regrouping among the cash flows from operating, investing and financing activities. Consequently, Ind AS adoption has no impact on the net cash flow for the year ended 31st March, 2016 as compared with the previous GAAP.

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

28.11 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.

28.12 Previous year figures are regrouped or rearranged wherever considered necessary.


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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