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Notes to Accounts of Vinati Organics Ltd.

Mar 31, 2016

1 SEGMENT INFORMATION- (AS-17)

The Company is engaged in manufacturing of Chemicals, which as per AS-17 is considered as the only reportable business segment.

2 LEASES (AS-19)

Operating Lease: Company as Lessee

The company has entered into operating lease on Tankers and staff residences which normally have an life of 12 months and renewable every year at the option of the lessor and/or the lesseee. There is no contingent rent. The lease rental charged to statement of Profit and loss during the year is Rs.53.24 lacs (Previous Year - Rs.49.86 lacs).

3 IMPAIRMENT OF ASSETS (AS-28)

Based on exercise of impairment of assets undertaken by the management in due cognizance of paragraphs 5 to 13 of Accounting standard -28, the Company has concluded that no impairment loss is required to be booked.

4 CONTINGENT LIABILITIES

Contingent Liabilities not provided for in respect of:

(a) Counter Guarantees given by the Company in respect of guarantees issued / Letter of Credit established by banks on behalf of the company Rs. 3653.71 Lacs (Previous Year Rs.3307.13 Lacs).

(b) Disputed Excise duty demands of Rs. 113.49 (Previous Year Rs.198.18 Lacs) pertaining to various financial years for which company has gone in the appeal. Company has been legally advised that the demand is likely to be either deleted or substantially reduced and accordingly no provision has been made.

(c) Disputed Income tax demands of Rs.51.43 Lacs (Previous Year Rs.51.43 Lacs) pertaining to various assessment years against which nothing paid. Based on judicial decisions and interpretations of other relevant provisions of the statute, the Company is hopeful of the demand likely to be either deleted or substantially reduced and accordingly no provision has been made.

(d) Disputed demand by The Tahasildar, Mahad for Royalty and Penalty on Sand/Metal of Rs.21.23 Lacs (Previous Year Rs. NIL). The Company had fled the Appeal to The Collector of Raigad, Alibag, and hopeful for the demand likely to be waived off, hence no provision has been made.

5 CAPITALIZATION OF EXPENDITURE

During the year, the company has capitalized the following expenses of revenue nature to the cost of fixed asset/capital work-in-progress (CWIP), Consequently, expenses disclosed under the respective notes are net of amounts capitalized by the company.

6 In the opinion of the Board of Directors, the Current Assets, Loans and Advances have value on realisation in the ordinary course of business, at least equal to the amount at which they are stated in the foregoing Balance Sheet and adequate provision for all known liabilities on the Company has been made.

7 PREVIOUS YEAR FIGURES

Figures of previous year have been reworked/regrouped/reclassified wherever necessary.


Mar 31, 2013

1 SEGMENT INFORMATION- (AS-17)

The Company is engaged in manufacturing of Chemicals, which as per AS-17 is considered as the only reportable business segment.

2 LEASES (AS-19)

Operating Lease: Company as Lessee

The company has entered into operating lease on Tankers, certain office premises and staff residences which normally have an life of 12 months and renewable every year at the option of the lessor and/or the lessee. There is no contingent rent. The lease rental charged to Statement of Profit & Loss during the year is Rs.60.19 lacs. (Previous year Rs. 17.27 lacs)

3 IMPAIRMENT OF ASSETS- (AS-28)

Based on exercise of impairment of assets undertaken by the management in due cognizance of paragraphs 5 to 13 of AS-28, the Company has concluded that no impairment loss is required to be booked.

4 CONTINGENT LIABILITIES

Contingent Liabilities not provided for in respect of:

(a) Counter Guarantees given by the Company in respect of guarantees issued / Letter of Credit established by banks on behalf of the company Rs. 891.93 Lacs (Previous Year Rs.669.07 Lacs).

(b) Disputed Excise duty demands of Rs. 42.12 (Previous Year Rs.42.12 Lacs) for which company has gone in the appeal and paid Rs. 11.85 lacs. Company has been legally advised that the demand is likely to be either deleted or substantially reduced and accordingly no provision has been made.

(c) Disputed Income tax demands of Rs.41.18 Lacs pertaining to various assessment years against which a sum of Rs.33.72 Lacs has been paid (Previous Year Rs.37.02 Lacs and paid Rs.10 Lacs) Based on judicial decisions and interpretations of other relevant provisions of the statute, the Company is hopeful of the demand likely to be either deleted or substantially reduced and accordingly no provision has been made.

(d) During the year 2011-2012, Company has issued Foreign Currency Convertible Bond(FCCB) of Rs. 22.02 crores (USD5 Mn) which are Convertible in equity share at Rs. 100 each during any period starting from the Date of subscription i.e. 28th July 2011 and ending 5 years. If the option is not exercised, then interest is payable @ 3.5% compounded semi annually as accumulated arrears on the final redemption date. Contingent liability towards arrears of interest as on 31/03/2013 is Rs. 165.52 lacs (previous year Rs. 53.41 Lacs)

5 DETAILS OF DUES TO MICRO AND SMALL ENTERPRISES AS DEFINED UNDER THE MSMED ACT, 2006

The Company has sought the confirmation from suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act 2006. Based on the confirmations received from the some of the suppliers:

6 CAPITALIZATION OF EXPENDITURE

During the year, the company has capitalized the following expenses of revenue nature to the cost of fixed asset/capital work-in- progress (CWIP), Consequently, expenses disclosed under the respective notes are net of amounts capitalized by the company.

7 From the previous financial year the company has changed its policy of capitalising exchange gain/loss on foreign currency loan before the same has been put to use. Such gain/losses which were hitherto capitalised to the cost of the fixed assets has been charged to Statement of Profit and Loss in accordance with the requirement of Accounting Standard 11 - '' Effects of changes in foreign exchange rates.

8 In the opinion of the Board of Directors, the Current Assets, Loans and Advances have value on realisation in the ordinary course of business, at least equal to the amount at which they are stated in the foregoing Balance Sheet and adequate provision for all known liabilities on the Company has been made.

9 Previous year figures

Figures of previous year have been reworked/regrouped/reclassified wherever necessary.


Mar 31, 2012

A) Terms/Rights attached to equity shares:

The Company has only one class of equity share having a par value of Rs. 2 per share. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. The dividend except interim dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Note 1(a):

(a) Nature of Security for Secured Loan from:

Banks:

(i) Term Loan from Axis Bank are secured by first pari passu charge on all the fixed assets (present and future) of Lote Works, and second pari passu charge on all the fixed assets (present and future) at Mahad Works; Second pari passu charge on entire current assets of the Company (present and future) and also by personal irrevocable guarantee of Managing Director, Mr. Vinod Saraf.

(ii) Term Loan from Barclays Bank is secured by first pari passu charge on all the fixed assets (present and future) of Lote Works. Second pari passu charge on entire Current Assets of the Company (present and future) and also by personal irrevocable guarantee of Managing Director, Mr. Vinod Saraf.

IFC:

Term Loan from International Finance Corporation (IFC) is secured by first pari passu charge on all fixed assets of the Company -immovable and movable (present and future) and second pari passu charge on all the current assets and unconditional and irrevocable personal guarantee of Managing Director, Mr. Vinod Saraf.

(b) Rate of Interest:

(i) Axis Bank

Foreign Currency loan carries interest ranging from six months libor 400 to 800 bps.

(ii) Barclays Bank:

Foreign Currency loan carries interest ranging from six months libor 550 to 600 bps.

(iii) IFC:

ECB: Foreign Currency loan carries interest six months libor 240 bps.

(iv) FCCB: Fixed Coupon Rate of @ 0.55%.per annum and accumulated arrears of interest @ 3.5% compounded half-yearly, if the bonds are redeemed on the redemption date and option of conversion into equity shares is not exercised.

(c) Terms of Repayment:

(i) Axis Bank

Loan of Rs.5.36 Crores - Repayble in 13 quarterly equal installments starting from 31st March, 2010 and ending on 31st March, 2013.

Loan of Rs.28.30 Crores repayable in 18 quarterly equal installments starting from 31st March, 2011 and ending on 30th June, 2015.

(ii) Barclays Bank:

Loan of Rs. 23 crores repayable in 16 quarterly equal installments starting from 1st Ferbuary 2009 and ending on 1st November, 2013.

(iii) ECB:

Loan of USD 11 Million - Repayable in 10 half yearly equal installments starting from 15th December, 2012 and ending on 15th June, 2017.

(iv) FCCB:

Loan of USD 5 Million - Convertible at the option of the lender into equity shares of Rs.100 each during any time starting from the date of subscription i.e. 28th July, 2011 and ending 5 years. If the option is not exercised , then it is to be redeemed on the final redemption date alongwith accumulated arrears of interest on pro-rata basis @ 3.5% per annum compounded semi annually.

Note 2(a):

(a) Nature of Security for Secured Loan from:

Banks:

Hypothecation of inventories, all the present and future book debts and other receivables, first charge on all present and future fixed assets situated at Mahad Works and residential building at Mahad and second charge on all fixed assets situated at Lote Works and personal guarantee of Managing Director, Mr. Vinod Saraf.

(b) Rate of interest:

(i) Working Capital Advances From Banks

Foreign Currency loan carries interest ranging from six months libor 200 bps to 400 bps. Rupee Loan carries interest ranging from 13.25% to 14%.

(ii) Unsecured Loan

Foreign Currency loan carries interest ranging from three to six months libor 400 bps to 450 bps.

1 NOTES DETAILS OF UNHEDGED FOREIGN CURRENCY AMOUNT

Unhedged foreign currency

Disclosure in accordance with announcement dated 2nd December, 2005 issued by the Council of the Institute of Chartered Accountants of India(ICAI) with respect to details of foreign currency balance not hedged:

2 NOTES SEGMENT INFORMATION- (AS-17)

The Company is engaged in manufacturing of Chemicals, which as per AS-17 is considered as the only reportable business segment.

3 NOTES LEASES (AS-19)

Operating Lease: Company as Lessee

The Company has entered into operating lease on certain office premises and staff residences on leave and licence basis which normally have an life of 12 months and renewable every year at the option of the lessor and/or the lessee. There is no contingent rent. The lease rental charged to statement of Profit & Loss during the year is Rs. 17.27 lacs. (Previous year Rs. 15.54 lacs)

4 NOTES IMPAIRMENT OF ASSETS- (AS-28)

Based on exercise of impairment of assets undertaken by the management in due cognizance of paragraphs 5 to 13 of AS-28 issued by ICAI, the Company has concluded that no impairment loss is required to be booked.

5 NOTES contingent liabilities

Contingent Liabilities not provided for in respect of:

(a) Counter Guarantees given by the Company in respect of guarantees issued / Letter of Credit established by banks on behalf of the Company Rs.1,813.00 Lacs (Previous Year Rs.1,743.64 Lacs).

(b) Disputed Excise duty demands of Rs. 42.12 Lacs (Previous Year Rs.67.94 Lacs) for which Company has gone in appeal. The Company has been legally advised that the demand is likely to be either deleted or substantially reduced and accordingly no provision has been made.

(c) Disputed Income tax demands of Rs.37.02 Lacs pertaining to various assessment years against which a sum of Rs.59.41 Lacs has been paid (Previous Year Rs.160.10 Lacs and paid Rs.67.34 Lacs) Based on judicial decisions and interpretations of other relevant provisions of the statute, the Company is hopeful of the demand likely to be either deleted or substantially reduced and accordingly no provision has been made.

(d) During the year Company has issued Foreign Currency Convertible Bond(FCCB) of Rs.2202 Lacs (USD5 Million) which are convertible in equity share of Rs.100 each during any period starting from the Date of subscription i.e. 28th July, 2011 and ending 5 years. If the option is not exercised, then interest is payable @ 3.5% compounded semi annually as accumulated arrears on the final redemption date.Contingent liability toward arrears of interest as on 31/03/2012 is Rs. 53.41 lacs.

6 NOTES CAPITALIZATION OF EXPENDITURE

During the year, the Company has capitalized the following expenses of revenue nature to the cost of fixed asset/capital work-in- progress (CWIP), Consequently, expenses disclosed under the respective notes are net of amounts capitalized by the company.

7 NOTES

In the opinion of the Board of Directors, the Current Assets, Loans and Advances have value on realisation in the ordinary course of business, at least equal to the amount at which they are stated in the foregoing Balance Sheet and adequate provision for all known liabilities on the Company has been made.

8 NOTES

From the current financial year the company has changed its policy of capitalising exchange gain/loss on foreign currency loan before the same has been put to use. Such gain/losses which were hitherto capitalised to the cost of the fixed assets has been charged to Statement of Profit and Loss in accordance with the requirement of Accounting Standard 11 - ' Effects of changes in foreign exchange rates. Accordingly Rs. 206.21 lacs has been charged to Statement of Profit & Loss which otherwise would have been capitalised to cost of fixed assets had the earlier policy were followed. In view of the above the Profit for the period is lower by Rs. 169.97 lacs including effect of deferred tax of Rs. 36.24 lacs.

9 NOTES PREVIOUS YEAR FIGURES

Till the year ended 31st March, 2011, the company was using pre-revised Schedule VI to the Companies Act, 1956, for preparation and presentation of its financial statements. During the year ended 31st March, 2012 the revised Schedule VI notified under the Companies Act, 1956, has become applicable to the company. The company has reclassified previous year figures to conform to this year's classification. Except accounting for dividend on investments in subsidiaries, the adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it significantly impacts presentation and disclosures made in the financial statements, particularly presentation of balance sheet.


Mar 31, 2011

1 Contingent Liabilities not provided for in respect of

a) Counter Guarantees given by the Company in respect of guarantees issued / Letter of Credit established by banks on behalf of the company Rs. 1,743.64 Lacs (Previous Year Rs. 1,204.43 Lacs]

b) Estimated amount of contracts remaining to be executed on Capital Account (Net of Advance] Rs.2655.77 Lacs (Previous Year Rs.956.88 Lacs).

c) Disputed Excise duty demands of Rs.67.94 Lacs (Previous Year Rs.38.78 Lacs) for which company has gone in appeal. The Company has been legally advised that the demand is likely to be either deleted or substantially reduced and accordingly no provision has been made.

d) Disputed Income tax demands of Rs.160.10 Lacs pertaining to various assessment years against which a sum of Rs.67.34 Lacs has been paid (Previous Year Rs.266.00 Lacs and paid Rs.67.34 Lacs) Based on judicial decisions and interpretations of other relevant provisions of the statute, the Company is hopeful of the demand likely to be either deleted or substantially reduced and accordingly no provision has been made.

3 The Company has sought the confirmation from suppliers regarding their status under the Micro, Smalt and Medium Enterprises Development Act 2006. Based on the confirmations received from the some of the suppliers.

a) No principal amount and the interest due thereon are outstanding at on 31st March 2011 Nil

b) The amount of interest paid by the Company along with the amount of the payment made to : Nil the supplier beyond the appointed day for the year ending 31st March 2011.

c) The amount of interest due and payable for the period of delay in making payment (beyond Nil the appointed day during the year)

d) The amount of interest accrued and remaining unpaid for the year ending 31st March 2011 Nil

e) The amount of further interest remaining due and payable for the earlier years. Nil

4 The balance of Debtors, Creditors are subject to confirmation & reconciliation.

7 Related parties Disclosures (AS-18) (as certified by the management)

a. Information about related parties:

Sr. No. Particulars Name of Related Party,

1 Key Management Personnel i) Mr. Vinod Saraf - Managing Director

ii) Ms. Vinati Saraf Mutreja - Executive Director

iii) Mr. Mohit Mutreja - Director (Finance)

iv) Ms. Viral Saraf Mittal - Director [Corporate Strategy]

2 Relatives of Key Management Personnel i] Mr. Sunil Saraf

ii] Mr. Anandkumar Tibrewala (Resigned as Non- Executive Director on 24th Jan 2011)

3 Enterprises owned or significantly 1) Viral Alkalis Limited influenced by any management 2] Vinati Wax Industries Pvt. Ltd. personnel or their relatives. 3) Shilpa Pharma Pvt. Ltd.

4) Mithali Chemicals Pvt. Ltd.

5) Viral Chemicals Pvt. Ltd.

6) Viral Pharma Pvt. Ltd.

7) Suchir Chemicals Pvt. Ltd.

8) Suchir Investment & Finance Pvt. Ltd.

9) Manan Pharma Pvt. Ltd.

10) Nishit Pharma Chem Pvt. Ltd.

11) Kavita Organics Pvt. Ltd.

12) Pluspoint Securities Pvt. Ltd.

13) llluminati Software Pvt. Ltd.

11 During the year the Company, in accordance with Guidance note No. 22 on Accounting for Credit available in respect of Minimum Alternative Tax under The Income-Tax Act, 1961 issued by the Institute of Chartered Accountants Of India, has recognised MAT credit entitlement to be availed, of Rs. 490.67 Lacs as an asset in respect of Minimum Alternative Tax paid u/s 115JB of the Income-tax Act, 1961 in the earlier years as a matter of prudence, as in the opinion of the directors of the company, there is reasonable certainty and probability that future economic benefits in respect of MAT Credit will flow to the company by paying normal income-tax from next year onwards.

12 Based on exercise of impairment of assets undertaken by the management in due cognizance of paragraphs 5 to 13 of AS-28 issued by ICAI, the Company has concluded that no impairment loss is required to be booked.

13 In the opinion of the Board of Directors, the Current Assets, Loans and Advances have value on realisation in the ordinary course of business, at least equal to the amount at which they are stated in the foregoing Balance Sheet and adequate provision for all known liabilities on the Company has been made.

14 Lease rent paid for the containers taken on lease and used exclusively for transport of raw material has been considered as part of purchase cost of raw material.

Figures of the previous year have been reworked/regrouped/reclassified wherever necessary.


Mar 31, 2010

1 Contingent Liabilities not provided for in respect of:

a) Counter Guarantees given by the Company in respect of guarantees issued / Letter of Credit established by banks on behalf of the company Rs. 1,204.43 Lacs (Previous Year Rs.1,590.96 Lacs)

b) Estimated amount of contracts remaining to be executed on Capital Account (Net of Advance) Rs.956.88 Lacs (Previous Year Rs.385.62 Lacs).

c) Disputed Excise duty demands of Rs.38.78 Lacs (Previous Year Rs.117.70 Lacs)

d) Disputed Income tax demands of Rs.266.00 Lacs pertaining to various assessment years against which a sum of Rs.67.34 Lacs has been paid (Previous Year Rs.336.43 Lacs and paid Rs.77.34 Lacs).

e) Disputed Custom duty (Anti Dumping Duty) demands of Rs.Nil (Previous Year Rs.1.76 Lacs)

2 During the year the Face Value of One Equity Share of Rs.10/- each was split and sub-divided into 5 Equity Share of Rs.2/- each consequently the number of paid up Equity Shares has increased from 9874500 to 49372500 shares.

3 Related parties Disclosures (AS-18) (as certified by the management) a. Information about related parties;

Sr. No. Particulars Name of Related Party

1 Key Management Personnel

[i) Mr. Vinod Saraf - Managing Director

ii) Mrs. Vinati Saraf Mutreja - Executive Director iii) Ms. Viral Saraf - Director (Corporate Strategy)

2 Relatives of Key Management Personnel

i) Mr. Sunil Saraf

ii) Mr. Anandkumar Tibrewala iii) Mr. Mohit Mutreja

3 Enterprises owned or significantly 1) Viral Alkalis Limited influenced by any management 2) Vinati Wax Industries Pvt. Ltd. personnel or their relatives. 3) Shilpa Pharma Pvt. Ltd. 4) Mithali Chemicals Pvt. Ltd. 5) Viral Chemicals Pvt. Ltd. 6) Viral Pharma Pvt. Ltd. 7) Suchir Chemicals Pvt. Ltd. 8) Suchir Investment & Finance Pvt. Ltd. 9) Manan Pharma Pvt. Ltd.

10) Nishit Pharma Chem Pvt. Ltd. 11) Kavita Organics Pvt. Ltd. 12) Pluspoint Securities Pvt. Ltd.

4 Based on exercise of impairment of assets undertaken by the management in due cognizance of paragraphs 5 to 13 of AS-28 issued by ICAI, the Company has concluded that no impairment loss is required to be booked.

5 In the opinion of the Board of Directors, the Current Assets, Loans and Advances have value on realisation in the ordinary course of business, at least equal to the amount at which they are stated in the foregoing Balance Sheet and adequate provision for all known liabilities on the Company has been made.

6 Lease rent paid for the containers taken on lease and used exclusively for transport of raw material has been considered as part of purchase cost of raw material.



 
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