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Notes to Accounts of Tanfac Industries Ltd.

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

 
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