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Notes to Accounts of Vikas WSP Ltd.

Mar 31, 2016

Disclosure of payable lo vendors as defined under the “Micro, Small and Medium Enterprise Development Act, 2006” is based on the infonnaliun available with the Company regarding lie status of registration of sully vendors under the said Act. as per the intimation received from them on requests made by the Company. There are no overdue Principal amounts interest payable

amounts for delayed payments to such vendors at the Balance Sheet date- There are no delays in payment made to such suppliers during the year or for any earlier years and accordingly, there is no interest paid or outstanding interest in this regard in respect of payments made during the year or brought forward from previous years.

The above amounts includes demand from tax authorities for various matters, The Company has preferred appeals on these matters and the same are pending with appellate authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required. Considering the facts of the all above matters, no further provision is considered necessary by management.

6(a) (i) The rate of interest on the working capital loans from banks ranges between 11% p.a. to 13% p.a. depending upon the prime lending rate of the banks, wherever applicable, and the interest rate spread agreed with the banks.

6(a) (ii) Nature of security and terms of repayment for secured borings

Further, Directors of the Company have pledged his 171,08,000 shares of the Company with Punjab National Bank, leader bank for loans taken by the Company.

1. Segment information

As per Accounting Standard 17 "Segment Reporting" , the primary segment reporting i.e. business segments is not applicable since the Company primarily operates within single primary segment of manufacture and export of guar gum powder. Accordingly, primary segmental reporting is performed on the basis of geographical location of customer. Geographical segments at the company primarily comprise customers located in US, Europe, India (Domestic) and others. Income in relation to segments is categorized based on items that are individually identified to those segments. It is not practical to identify the expenses, fixed assets used in the company''s business or liabilities contracted, to any of the reportable segments, as the expenses, assets and liabilities are used interchangeably between segments. Accordingly, no disclosure relating to total segment results, total segment assets and liabilities have been made.

2. Related party disclosure

a. Transactions with related parties are summarized below :

Related party and nature of related party with whom transactions have taken place during the year

3) Key management personnel and their relatives (KMP)

Mr. B. D. Agarwal - Managing Director

Ms. Kamini Jindal - Director

Mrs. Bimla Devi Jindal - Director

Mr. Ravinder K. Gupta - Company Secretary

4) Entities controlled by KMPs Vikas Granaries Limited

Vikas Dall and General Mills (Partnership firm)

Vikas Chemi Gums India Limited$

Vegan Colloids Limited $

Shree GRG Home Developers Private Limited #

Kuber Warehousing Private Limited &

$ Entities became related party with effect from 31 July 2015, hence the disclosure have been made for the current year.

# Entities ceases to be related party with effect from 3 February 2016.

& Entities ceases to be related party with effect from 3 December 2015.

* The aforesaid director of the Company have pledged his 171,08,000 shares of the Company with Punjab Nationa Bank, leader bank for loan taken by the Company.

5. Operating leases

a. The Company has taken certain Assets like Plant & Machinery & Factory building on an operating lease basis. The lease rentals are payable by the company on a monthly basis.

b. Future minimum lease rentals payable as at 31 March 2016, as per the lease agreements:

c. Lease payments recognized in the Statement of Profit & Loss for the year are Rs. 2.40 (Previous year Rs. 2.40)

6. Settlement claim

"The Company had filed a legal suit in US Court of law against M/s Economy Polymers and Chemicals, USA (""Economy Polymers'') in the month of November 2013 for non performance of purchase orders issued by Economy Polymers. During the year 2014-15, the Company had entered into a settlement for USD 80 Million, Equivalent INR 494,82.62 lacs with Economy Polymers against their claim for compensation. The Company had recognized Rs. 474,46.08 lacs in the Statement profit and loss and balance of Rs. 2036.54 lacs has been adjusted against outstanding receivable for seed distribution from Economy Polymers as per the settlement agreement. In turn, to discharge to the Company’s liability towards non-performance of agreements for purchase of material for Economy Polymers, the Company had settled with suppliers for Rs.385,00.00 lacs. The same had been recognized in the statement of profit and loss during the financial year 2014-15 on accrual basis. However, subsequent to payment of USD 40 million (Equivalent INR 24965.80 lacs, in July 2015 Economy Polymers stopped paying the balance installments due as per the aforesaid settlement agreement . Consequently, due to non recovery of the said dues to the extent of USD 40 million approximately INR 26533.16 lacs, the Company has filed a court case against Economy Polymers in United States District court for the Southern District of Texas Houston Division, for recovery of balance USD 40 million (Equivalent INR 26533.16 lacs) . Considering the ongoing litigation the receivable has been classified under other non-current assets."

7. Investor Education and Protection Fund

There is no delay in transferring amount, required to be transferred, to Investor Education and Protection Fund by the Company.

8. Long term and Derivative Contracts

The Company has no foreseeable losses, which requires provision under applicable laws or accounting standards on long-term contracts and not dealing into derivative contracts.

9. Corporate Social Responsibility (CSR) Expenditure

Gross amount required to be spent by the Company during the year is Rs. 295.01 lacs (Previous Year Rs. 500.50 lacs) against which the Company has sepnt a sum of Rs. 92.27 lacs (Previous Year Rs. 197.60 lacs)

10. Previous Year''s Figures

The previous year''s figures have been re-grouped/re-arranged wherever considered necessary


Mar 31, 2015

1. Detail of dues to micro and small enterprises defined under the MSMED Act 2006

Disclosure of payable to vendors as defined under the "Micro, Small and Medium Enterprise Development Act, 2006" is based on the information available with the company regarding the status of registration of such vendors under the said Act, as per the intimation received from them on requests made by the company. There are no overdue Principal amounts/interest payable amounts for delayed payments to such vendors at the Balance Sheet date. There are no delays in payment made to such suppliers during the year or for any earlier years and accordingly there is no interest paid or outstanding interest in this regard in respect of payments made during the year or brought forward from previous years.

2. Commitments

a) Capital commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) is Rs. 11.95 lacs (previous year Rs. 63.19 lacs).

b) Other commitments

Pending contracts for guar seeds and splits net of advance and not provided for is Rs. 5092.58 lacs (previous year Rs. 535.53 lacs)

3. Gratuity and other post-employment benefit plans

The Company has a defined benefit gratuity plan. Gratuity is payable to all eligible employees of the company on retirement or separation from the Company.

4. Segment information

As per Accounting Standard 17 "Segment Reporting" , the primary segment reporting i.e. business segments is not applicable since the Company primarily operates within single primary segment of manufacture and export of guar gum powder. Accordingly, primary segmental reporting is performed on the basis of geographical location of customer.

Geographical segments at the company primarily comprise customers located in US, Europe, India (Domestic) and others. Income in relation to segments is categorized based on items that are individually identified to those segments. It is not practical to identify the expenses, fixed assets used in the company's business or liabilities contracted, to any of the reportable segments, as the expenses, assets and liabilities are used interchangeably between segments. Accordingly, no disclosure relating to total segment results, total segment assets and liabilities have been made.

* The aforesaid directors of the Company have pledged their shares of the Company with IFCI Limited for term loan taken by the company with a sanctioned amount of Rs. 8,000 lacs (Previous Year Rs. 8,000 lacs). Outstanding balance of the said loan as on 31st March 2015 is Rs. Nil (Previous Year Rs. 520 lacs)

5. Leases

a. The company has taken certain Assets like Plant & Machinery & Factory building on an operating lease basis. The lease rentals are payable by the company on a monthly basis.

b. Future minimum lease rentals payable as at 31st march 2015, as per the lease agreements:

6. Settlement Claim

The Company had filed a legal suit in US Court of law against M/s Economy Polymers and Chemicals USA in the month of November 2013 for non performance of orders issued by M/s Economy Polymers and Chemicals USA. During the year, the Company has entered into a settlement for USD 80 Mllion, Equivalent INR 49482.62 lacs with M/s Economy Polymers and Chemicals USA against its claim for compensation. The company has recognized Rs. 47446.08 lacs in the profit and loss account and balance of Rs. 2036.54 lacs has been adjusted against outstanding receivable for seed distribution from Economy Polymers and Chemicals USA as per the settlement agreement. In turn, to discharge to the company's liability towards non performance of agreements for purchase of material for M/s Economy Polymers and Chemicals USA, the company has settled with suppliers for Rs.38500.00 lacs. The same has been recognized in the profit and loss account during the current financial year.

7. Investor Education and Protection Fund

There is no delay in transferring amount, required to be transferred, to Investor Education and Protection Fund by the company.

8. Long term and Derivative Contracts

The Company has no foreseeable losses, which requires provision under applicable laws or accounting standards on long- term contracts and not dealing into derivative contracts.

9. Corporate Social Responsibility (CSR) Expenditure

Gross amount required to be spent by the company during the year is Rs. 500.50 lacs against which the company has spent a sum of Rs. 197.60 lacs

10. Previous Year's Figures

The pervious year's figures have been re-grouped/re-arranged wherever considered necessary.


Mar 31, 2013

1. Detail of dues to micro and small enterprises defined under the MSMED Act 2006

The management has initiated the process of identifying enterprises which have provided goods and services to the Company and which qualify under the definition of micro and small enterprises, as defined under Micro, Small and Medium Enterprises Development Act, 2006. The Ministry of Micro, Small and Medium enterprises has issued an office memorandum dated 26 August 2008 which recommends that the Micro and Small enterprises should mention in their correspondence with its customers the entrepreneur''s Memorandum number as allocated after filling of the Memorandum. The Company has not received any claim for interest from any supplier under the said Act.

2. Commitments and contingent liabilities

a) Firm capital commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) is Rs. 78.18 (previous year Rs. 371.02).

b) Other commitments

Pending contracts for guar seeds and splits net of advance and not provided for is Rs. 2187.84 (previous year Rs. 6,922.54)

c) Corporate guarantees provided

The Company has given corporate guarantees aggregating Rs. 3,500 (previous year Rs.3,500) to banks on behalf of others.

d) Claims against the Company not acknowledged as debts in respect of Income tax matters, under dispute

The Additional Commissioner of Income Tax, Bhiwani (the Assessing Officer) has raised an additional demand of Rs. 8.49 for the Assessment Year 1995-96 and interest thereon Rs. 22.23. The Company filed an appeal against the order passed by the Assessing Officer with the Commissioner of Income Tax (Appeals), Karnal. The Commissioner of Income Tax (Appeals) decided the matter in favour of the Company by setting aside the order passed by the Assessing Officer. Subsequently the Income tax department filed an appeal against the order of CIT (Appeals) in the Income Tax Appellate Tribunal (''the ITAT''), New Delhi which was accepted by the ITAT. Aggrieved by the order of ITAT, the Company has filed an appeal with the ''Hon''ble High Court of Punjab & Haryana (''the Hon''ble High Court''). The matter is currently pending before the Hon''ble High Court.

e) Claims against the Company not acknowledged as debts in respect of Service tax matters, under dispute

The Commissioner of Central Excise, Jaipur (the Assessing Officer) has raised a demand of Rs. 490.00 for the period 2006- 07 to 2010-11. The Company filed an appeal against the order passed by the Assessing Officer with the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Dehi and have deposited the amount of Rs. 490.00. The matter is currently pending before CESTAT.

3. Gratuity and other post-employment benefit plans

The Company has a defined benefit gratuity plan. Gratuity is payable to all eligible employees of the company on retirement or separation from the Company.

4. Segment information

As per Accounting Standard 17 "Segment Reporting" as specified in Rule 3 of Companies (Accounting standard) Rules, 2006, the primary segment reporting i.e. business segments is not applicable since the Company primarily operates within single primary segment of manufacture and export of guar gum powder.Accordingly, primary segmental reporting is performed on the basis of geographical location of customer.

Geographical segments at the company primarily comprise customers located in US, Europe, India (Domestic) and others. Income in relation to segments is categorized based on items that are individually identified to those segments. It is not practical to identify the expenses, fixed assets used in the company''s business or liabilities contracted, to any of the reportable segments, as the expenses, assets and liabilities are used interchangeably between segments. Accordingly, no disclosure relating to total segment results, total segment assets and liabilities have been made.

5. Related party disclosure

a. Transactions with related parties are summarised below :

Related party and nature of related party with whom transactions have taken place during the year

1) Key management personnel and their relatives (KMP)

Mr. B. D. Agarwal - Managing Director

Mr. Megh Raj Jindal - Director (till July 2012)

Ms. Kamini Jindal - Director

Mrs. Bimla Devi Jindal - Director

2) Entities controlled by KMPs Vikas Granaries Limited

Vikas Chemi Gums (India) Limited #

Vikas Dall and General Mills (Partnership firm)

Shree GRG Home Developers Private Limited Kuber Warehousing Private Limited

3) Entities over which significant influence is exercised by the KMPs Vegan Colloids Limited #

# Entities ceases to be related party will effect from 1st April 2012, hence no disclosure have been made for the current year.

6. Leases

a. The company has taken certain Assets like Plant & Machinery & Factory building on an operating lease basis. The lease rentals are payable by the company on a monthly basis.

b. Future minimum lease rentals payable as at 31st march 2013, as per the lease agreements:

c. Lease payments recognised in the Statement of Profit & Loss for the period are Rs. 2.40. (Previous year Rs. 2.40)

7. Previous Year''s Figures

The pervious year''s figures have been re-grouped/re-arranged wherever considered necessary.


Mar 31, 2012

1. Particulars of raw material consumed, sales and stock of fnished goods

Pursuant to Press Note No. 2/2011 dated 8 February 2011, issued by the Ministry of Corporate Affairs, disclosures required by Para II, para 3(i) (a), 3(ii)(a) and 3(ii)(b) and 3(ii)(d) of Schedule VI to the Companies Act, 1956 are not required to be disclosed.

2. Earning in foreign currency (accrual basis)

3. Detail of dues to micro and small enterprises defined under the MSMED Act 2006

The management has initiated the process of identifying enterprises which have provided goods and services to the Company and which qualify under the definition of micro and small enterprises, as defined under Micro, Small and Medium Enterprises Development Act, 2006. The Ministry of Micro, Small and Medium enterprises has issued an office memorandum dated 26 August 2008 which recommends that the Micro and Small enterprises should mention in their correspondence with its customers the entrepreneur's Memorandum number as allocated after filling of the Memorandum. The Company has not received any claim for interest from any supplier under the said Act.

4. Commitments and contingent liabilities

a) Firm capital commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) is Rs. 371.02 (previous year Rs. 283.60).

b) Other commitments

Pending contracts for guar seeds and splits net of advance and not provided for is Rs. 6,922.54 (previous year Rs. Nil)

c) Corporate guarantees provided

The Company has given corporate guarantees aggregating Rs. 3,500 (previous year Rs. 3,000) to banks on behalf of others.

d) Claims against the Company not acknowledged as debts in respect of Income tax matters, under dispute

The Additional Commissioner of Income Tax, Bhiwani (the Assessing Officer) has raised an additional demand of Rs. 8.49 for the Assessment Year 1995-96 and interest thereon Rs. 22.23. The Company filed an appeal against the order passed by the Assessing Officer with the Commissioner of Income Tax (Appeals), Karnal. The Commissioner of Income Tax (Appeals) decided the matter in favour of the Company by setting aside the order passed by the Assessing Officer. Subsequently the Income tax department filed an appeal against the order of CIT (Appeals) in the Income Tax Appellate Tribunal (‘the ITAT'), New Delhi which was accepted by the ITAT. Aggrieved by the order of ITAT, the Company has filed an appeal with the ‘Hon'ble High Court of Punjab & Haryana (‘the Hon'ble High Court'). The matter is currently pending before the Hon'ble High Court.

5. Gratuity and other post-employment benefit plans

The Company has a defined benefit gratuity plan. Gratuity is payable to all eligible employees of the company on retirement or separation from the Company.

6. Segment information

As per Accounting Standard 17 Segment Reporting as specified in Rule 3 of Companies (Accounting standard) Rules, 2006, the the primary segment reporting i.e. business segments is not applicable since the Company primarily operates within single primary segment of manufacture and export of guar gum powder.Accordingly, primary segmental reporting is performed on the basis of geographical location of customer.

The accounting principles consistently used in the preparation of the financial statements are also consistently applied to record income in individual segments. These are set out in the note on significant accounting policies.

Geographical segments at the company primarily comprise customers located in US, Europe and others. Income in relation to segments is categorized based on items that are individually identified to those segments while expenditure is categorized in relation to associated turnover of the segment. Expenses are not specifically allocable to specific segments as the underlying services are used interchangeably. These expenses are separately disclosed as unallocated and adjusted only against the total income of the company. Fixed assets or liabilities have not been identified to any reportable segments, as these are used interchangeably between segments.

All direct cost are identified to its respective geographies on the basis of revenue from respective geographies.

7. Related party disclosure

a. Transactions with related parties are summarised below :

Related party and nature of related party with whom transactions have taken place during the year 1) Key management persnnel and their relatives (KMP)

Mr. B. D. Agarwal - Managing Direcor

Mr. Megh Raj Jindal - Director

Mrs. Bimla Devi Jindal - Director

2) Entities controlled by KMPs Vikas Granaries Limited Vikas Chemi Gums (India) Limited Vikas Dall and General Mills (Partnership firm)

8. Change in Accounting Policy

During the year, the company changed its accounting policy of determining the cost of inventory from yearly weighted average method to quarterly weighted average method. Management considers that due to huge demand, the prices of guar increased abruptly, hence the change would result in a more appropriate preperation and presentation of the finanancial statements of the company. Had the company continued to use the earlier basis of determining cost of inventory, the statement of profit and loss for the current period would have been lower by Rs 6,636.06 and correspondingly, the closing inventory would have been valued lower by that amount.

9. Contract Farming

The company have entered into contract farming agreement with farmers in 2010-11 for purchase of guar seed and had made advance payment of Rs. 1,656.00 through bank. During the current year, company has received guar seed worth Rs. 1,681.58 from the farmers, the balance payment of Rs. 25.58 due to farmers were paid in cash.

10. Crop Loan

The Company has given a corporate guarantee in respect of loans aggregating Rs Nil (previous year Rs.1,000.00) disbursed by public sector bank as per the scheme of crop loan under tie up arrangement with the Company. The Company acts as business facilitator in disbursement of the credit facilities sanctioned to the farmers so that it is able to procure and purchase organic guar from such farmers

Under this scheme, the Company is required to identify eligible farmers, who are represented collectively in groups designated as joint liability group (JLG). JLGs receive the loan amount from bank which is transferred to an escrow account of the Company maintained with the bank for further disbursal to the farmers.

During the year, funds aggregating to Rs. Nil (previous year Rs. 995.20), obtained under the said scheme were transferred to the Company's account. These funds, during the year itself, were subsequently paid to the JLG's accounts.

11. Income Tax

During the year, company has made provision for income tax of Rs. 6910.77 as per provision of Income tax act, 1961, whereas till last year company was eligible for deduction under section 10(B) of the Income tax act,1961, and has paid minimum alternate tax in accordance with section 115JB of the Income tax act.

12. Previous year fnancial statements were audited by another firm of Chartered Accountants.

13. Previous Year's Figures

The pervious year's figures have been re-grouped/re-classified to conform to this year's classification which is as per Revised Schedule VI. This adoption does not impact recognition and measurement principles followed for preperation of financial statements as at 31st March 2012.


Mar 31, 2010

1. Background:

Vikas WSP Limited was promoted in the year 1988 under the name and style of Vikas Gum Mills Private Limited and subsequently the name was changed to Vikas WSP Limited in the year 1992. The Company is an agro based Company registered as 100% Export Oriented Unit with Secretariat of Industrial Approval, Ministry of Commerce and Industry, Government of India, for the manufacture of Guar Gum (pulverized) and its derivatives.

2. Segment reporting disclosure per Accounting Standard 17 "Segment Reporting" as specified in rule 3 of Companies (Accounting Standard) Rules, 2006, is not applicable since the Company primarily operates within single primary segment of manufacture of guar gum powder and a single geographical segment.

3. Debts due from a company under the same management within the meaning of Section 370(1B) of the Companies Act, 1956:

4. Related party disclosures

Related party and nature of related party with whom transactions have taken place during the year

i) Key management personnel (KMP)

Mr. B. D. Agarwal - Managing Director Mr. Megh Raj Jindal - Director Mrs. Bimla Devi Jindal - Director

ii) Entities controlled by KMPs

Vikas Granaries Limited

Vikas Chemi Gums (India) Limited

Vikas Dall and General Mills (Partnership firm)

iii) Entities over which significant influence is exercised by the KMPs

Vegan Colloids Limited

5. Charges on the secured loan:

a) During the previous year, the Company had obtained a packing credit limit, working capital demand loan and foreign documentary bill purchase/discounting facility of Rs. 65,000 thousand, Rs. 340,000 thousand and Rs. 66,500 thousand respectively from State Bank of Bikaner and Jaipur secured by hypothecation of inventory, inward railway receipt/ motor transport receipts, bill of lading, airway bills, letter of credit, Export Credit Guarantee Cover, exclusive charge and mortgage on all the moveable and immoveable fixed assets of the Company at RIICO Industrial Area, Sri Ganga Nagar, exclusive charge and mortgage on all immoveable fixed assets of the Company located at Siwani, other documents to the title of goods and personal guarantee of Mr. Meghraj Jindal, Mrs. Bimla Devi Jindal and Mr. B.D.Agarwal, the promoters and Directors of the Company.

b) During the current year, Company has obtained secured loan for general corporate purposes including capital expenditure for expansion projects and augmentation of long term working capital of Rs. 800,000 thousands from IFCI Limited secured by exclusive charge and mortgage on all moveable and immoveable fixed assets of the Company situated at Plot no. E-255 to 257 in RIICO Industrial Area and Plot no. F-92 in Udyog Vihar, Sri Ganga Nagar.

Mr. B.D. Agarwal, Mrs. Bimla Devi Jindal and Mr. Megh Raj Jindal, the promoters and directors of the Company have pledged their entire shareholding aggregating to 20,346 thousand shares and have also provided their personal guarantees.

All the promoters and their relatives have pledged their entire shareholding in Vikas Granaries Limited (Companies under the same management) aggregating 12,340 thousand shares.

Out of the above, the Company during the year has obtained loan aggregating to Rs. 725,000 thousands.

c) During the current year, Company has obtained packing credit limit loan of Rs. 150,000 thousand from IFCI Factors limited secured by exclusive charge and mortgage on all moveable and immoveable fixed assets situated at Plot No 229 in Chandisar Industrial Estate, Palanpur, Dist. Banaskantha, Gujarat.

d) The demand loan of Rs 9,138 thousand obtained from Union Bank of India is secured against the fixed deposits (pledged) with the bank.

6. Commitments and contingent liabilities

a) Firm capital commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) is Rs. Nil (Previous year Rs 90,749 thousands).

b) Claims against the Company not acknowledged as debts in respect of:

Income tax matters, under dispute

The Additional Commissioner of Income Tax, Bhiwani (the Assessing Officer) had raised an additional demand of Rs. 849 thousand for the Assessment Year 1995-96 and interest thereon of Rs. 2,223 thousand. The Company filed an appeal against the order passed by the Assessing Officer with the Commissioner of Income Tax (Appeals), Karnal. The Commissioner of Income Tax (Appeals) decided the matter in favour of the Company by setting aside the order passed by the Assessing Officer. Subsequently the Income Tax Department filed an appeal against the order of CIT (Appeals) in the Income Tax Appellate Tribunal (the ITAT), New Delhi which was accepted by the ITAT. Aggrieved by the order of ITAT, the Company has filed an appeal with the Honble High Court of Punjab & Haryana (the Honble High Court). The matter is currently pending before the Honble High Court.

7. Share based compensation

In accordance with the Securities and Exchange Board of India (Employee Stock Options Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the guidance note 18- "Employee share base payment" issued by the Institute of Chartered Accountants of India the following information relates to the stock option granted by the company in the previous year and exercised in the current year.

The Companys Employee Stock Option Schemes known as "VESOP" - Vikas Employees Stock Option Plan - 2007 (the scheme) provides for the grant of stock options (the Options) to eligible employees and independent directors of the Company. The scheme is administered by the Compensation Committee (the Committee) of the Board of Directors of the Company. The options are granted on the basis of performance and the grade of the employee. The options are granted at the discretion of the committee to select employees depending upon certain criterion.

The scheme limits the maximum grant of 52,000 options to an employee in any given year. As per the scheme the grant price or exercise price of options will be the face value of its equity shares at Re.1 each.

The Company had granted 1,450 thousand shares during the previous year. However, 10 thousand shares lapsed during the year since they were not exercised prior to the expiry date which was 6 months from the vesting date in the current year.

8. The Companys shareholders had approved a dividend @ 50% in their meeting dated 30 September 2009. Meanwhile, one of the Companys bankers (SBBJ) raised a claim on the Company in respect of certain Letter of Credit charges along with penal interest. The said LCs were issued by a foreign bank (customers bank) in favour of SBBJ for the year ended 2007-08. As explained to us, there were certain delays in receiving payments against the LC by SBBJ.

The bank filed an application with the Debt Recovery Tribunal claiming the amount in question along with cost and future interest against the Company. Based on the banks application, the DRT Jaipur passed an interlocutory order on 6 October 2009 restricting the payment of dividend declared by the Company on 30 September 2009. Consequently, the Corporate Dividend Tax on the said dividend could not be deposited.

The Company filed an application against the interlocutory order of the DRT claiming relief under the provisions of Union Customs and Practice for Documentary Credits 500. DRT Jaipur disposed of the original application no. 26/2009 and gave its final order in favour of the Company vide order dated 22 July 2010. Further, the Company has been directed to pay the declared dividend to its shareholders within a period of two months. Meanwhile, SBBJ received the entire payment and has issued a No objection certificate on 8 May 2010. Management is in the process of initiating steps for payment of declared dividend and deposit the corporate dividend tax thereon.

9. The Company had established a new Export Oriented Unit III (EOU III) situated at Plot No F90/91, Udyog Vihar, Sri Ganga Nagar, Rajasthan which commenced commercial production effective 28 March 2008. EOU III was set-up to manufacture gelled fast hydrating and chemically modified guar gum polymer for different industries.

The Company obtained approval to set-up EOU III vide Letter of Permission dated 29 August 2003 from the Office of the Development Commissioner, NOIDA Special Economic Zone, Ministry of Commerce and Industry, Department of Commerce, Government of India ("EOU authorities"). On account of technical intricacies, the company could not implement the project and sought extension of the approval from EOU authorities which was permitted for additional 3 year till 31 March 2009.

The Company also sought permission from EOU Authorities for sub-contracting part of the production processes from EOU III to the existing Export Oriented Undertakings ("EOUs") which was granted effective 4 April 2008. Accordingly, EOUIII obtained semi-finished guar gum powder from existing EOUs and carried out further chemical processing thereof in EOUIII to manufacture the guar gum derivative products.

The Company sourced new plant and machinery for carrying out the production activities at EOU III in 2008-09 and had commenced trial run activities for starting commercial production. Since the trial run production carried out with the help of machinery in April - May 2008 were not resulting in desired quality of guar gum derivatives, the production activities was carried on manually during 2008-09 in EOUIII and the final products exported from EOUIII.

With effect from April 2009, the company commissioned the plant and machinery at EOU III and carried out the production activities in EOUIII with the use of machinery to produce and export fast hydrating and chemically modified guar gum derivatives. The Company continues to obtain semi-finished products from existing EOUs in accordance with the sub- contracting arrangement approved by the EOU Authorities.

The Company has claimed deduction under section 10B of the Income-tax Act, 1961 ("the Act") in respect of the profit and gains earned by EOU III amounting to Rs. 974 million for the year ended 31 March 2009 and proposes to claim a deduction of Rs. 999 million for the year ended 31 March 2010. The claim for deduction is based on the provisions of the said section read with various judicial precedents in this regard and the precedents in favor of the company in prior years. Accordingly, the company has paid Minimum Alternate Tax ("MAT") in accordance with section 115JB of the Act for the year ended 31 March 2010.

10. Previous year financial statements were audited by another firm of Chartered Accountants.

11. Previous year figures have been regrouped or rearranged wherever considered necessary to make them comparable with those of the current year.

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