Notes to Accounts of Andhra Petrochemicals Ltd.

Mar 31, 2019

Terms/ rights attached to equity shares

Equity shares have a par value of INR 10 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The 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.

c. In respect of the year ended 31^st March, 2019, the Board of Directors has proposed a dividend of Rs.1.50 (15 percent) per Equity Share, subject to approval by the shareholders at the ensuing Annual General Meeting after which dividend would be accounted and paid out of the retained earnings available for distribution in accordance with the provisions of the Act.

Nature of reserves:

a) Capital Reserve : Capital reserve represents incentives given by the FFIs for onetime settlement of the foreign currency loan.

b) Securities Premium : Securities premium represents premium received on issue of shares. The reserve is utilised in accordance with the provisions of Companies Act, 2013.

c) General Reserve : The general reserve is created by way of transfer of part of the profits before declaring dividend pursuant to the provisions of Companies Act, 1956. Mandatory transfer to general reserve is not required under the Companies Act, 2013.

d) Retained Earnings : Retained earnings generally represents the undistributed profit amount of accumulated earnings of the company.

e) Other Comprehensive Income:

Other Comprehensive Income (OCI) represents the balance in equity for items to be accounted under OCI and comprises of: items that will not be reclassified to profit and loss

i. The Company has made an irrevocable election to present the subsequent fair value changes of investments in OCI. This reserve represents the cumulative gains and losses arising on the revaluation of equity instruments measured at fair value including tax effects. The company transfers restated fair value amounts from this reserve to retained earnings when the relevant financial instruments are disposed.

ii. The actuarial gains and losses along with tax effects arising on defined benefit obligations are recognised in OCI.

Effective April 1, 2018, the Company has applied Ind AS 115 which establishes a comprehensive framework for determining whether, how much and when revenue is to be recognized. Ind AS 115 replaces Ind AS 18 Revenue and Ind AS 11 Construction Contracts. The Company has adopted Ind AS 115 using the cumulative effect method. The impact of the adoption of the standard on the financial statements of the Company is insignificant. However, various disclosures prescribed under Ind As 115 are given below:

Defined Benefit Plans:

A. The company provides for gratuity to the employees as per Payment of Gratuity Act,1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity is payable on retirement/resignation. The gartuity plan is a funded plan and the company makes contributions to recognised funds in India.

The Company has a policy on compensated absences which are both accumulating and non-accumulating in nature. The expected cost of accumulating compensated absences is determined by actuarial valuation performed by an independent actuary at each balance sheet date using “Projected Unit Credit Method’’ on the additional amount expected to be paid/availed as a result of the unused entitlement that has accumulated at the balance sheet date. Expense on non-accumulating compensated absences is recognized in the period in which the absences occur.

B. The employees’ gratuity fund scheme managed by a Trust is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the “Projected Unit Credit Method” which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for compensated absences is recognized in the same manner as gratuity.

The unused tax credits represents the MAT credit entitlements and the same can be carried forward upto 15^th assessment year, immediately succeeding the assessment years in which such tax credit becomes allowable.

The Company’s future profitability depends on the external factors like international supply and demand for its products, crude prices, exchange fluctuations, dumping from sources other than that covered by Anti dumping duty. The company has made profits during the current financial year as the aforesaid factors are favourable to the company.

Provision for decommissioning liability:

Decommissioning Liability: This provision has been created for estimated costs of dismantling and removing the item and restoring the site in respect of leased premises on which the plant is super structured. The lease agreement is for a period of 30 years which is valid upto 26^th June, 2019. The company has initiated the process to extend the same for a further period of 30 years, i.e., upto 26^th June, 2049.

Note 1.1: Segment information

The Company operates only in one business segment being the manufacture of Oxo-Alcohols and there are no geographical segments to be reported.

Note 1.2: As per Indian Accounting Standard 24 “Related parties disclosure” the disclosure of Related parties as defined in the Standard are given hereunder:

* The weighted average number of shares takes into account the weighted average effect of changes in treasury share transactions during the year. There have been no other transactions involving Equity Shares or potential Equity Shares between the reporting date and the date of authorisation of these financial statements.

Note 1.3: Operating Lease

The Company’s plant is super structured on leased premises. The term of the lease arrangement is 30 years which is valid upto 26^th June, 2019. The leases have escalation clauses of (annual rentals fixed by the Port Trust Board on the valuation made by the District Revenue Authorities on quinqennium basis) and renewal rights. The Company has initiated the process to renew the lease agreement for a further period of 30 years and the terms of the leases are under negotiation.

Note 1.4: Impairment of Assets

According to an internal technical assessment carried out by the Company, there is no impairment in the carrying cost of cash generating units of the Company in terms of Indian Accounting Standard 36 ‘Impairment of Assets’

Note: Previous year’s figures have been regrouped and rearranged wherever necessary to make them comparable with the current year figures.

a) Credit risk:

i) Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables), from cash and cash equivalents, deposits with banks. The management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis

ii) Financial assets that are neither past due nor impaired

Cash and cash equivalents, deposits with banks, security deposits, investments in securities & mutual funds are neither past due nor impaired. Cash and cash equivalents, deposits are held with banks which are reputed and credit worthy banking institutions. Hence the expected credit loss is negligible. Investments in securities & mutual funds are actively traded in the stock markets and there is no collateral held against these because the counterparties are entities with high credit ratings assigned by the various credit rating agencies. Hence the expected credit loss is negligible.

iii) Financial assets that are past due but not impaired

Credit risk arising from trade receivables is managed in accordance with the Company’s established policy, procedures and control relating to customer credit risk management. The average credit period on sales of products is less than 45 days. All trade receivables are reviewed and assessed for default on a quarterly basis. For trade receivables, as a practical expedient, the Company computes credit loss allowance based on a provision matrix. 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. The provision matrix at the end of the reporting period is as follows:

b) Liquidity risk:

i) Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Company’s objective is to maintain optimum level of liquidity to meet it’s cash and collateral requirements at all times. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit line to meet obligations. Due to the dynamic nature of underlying bussiness, company maintains flexibility in funding by maintaining availability under committed credit lines.

ii) Maturities of financial liabilities

The table below analyse the company’s financial liabilities into relevant maturity groupings based on their contractual maturities for all non-derivative financial liabilities:

2.1 Capital management

The company’s objectives when managing capital is to safeguard their ability to continue as a going concern, maintain a strong credit rating and healthy capital ratios in order to support its business and provide adequate return to shareholders through continuing growth and maximise the shareholders value. The company sets the amount of capital required on the basis of annual business and long term operating plans which include capital and other strategic investments. The funding requirements are met through a mixture of equity, internal fund generation and borrowed funds. The company tries to maintain an optimal capital structure to reduce cost of capital and monitors capital on the basis of debt-equity ratio.

Note. 3. Significant accounting estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the company. Such changes are reflected in the assumptions when they occur.

4.1 Property, Plant and 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 and the expected residual value at the end of its life. The useful lives and residual values of company’s assets are determined by 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 technology.

4.2 Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the company is not yet committed to or significant future investments that will enhance the asset’s performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes.

4.3 Impairment of Financial assets

The impairment provisions for financial assets are based on assumptions about risk of default and expected loss rates. The company uses judgement in making these assumptions and selecting the inputs to the impairment calculation based on the company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

4.4 Operating Lease

The Company has taken on lease a commercial property for its business operations and the lease rentals for the property are subject to escalations during the tenure of lease. However, as these escalations were in the nature of general inflation to compensate for the lessor’s expected inflationary cost increase, the company is directly charging the lease payments to the statement of profit and loss instead of following straight line method of charging lease payments.

4.5 Taxes

Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

4.6 Employee benefits (gratuity and compensated absences)

The cost of the defined benefit plans and the present value of the gratuity/compensated absences obligation are determined using actuarial valuations. 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.

The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds. The mortality rate is based on publicly available mortality tables for the specific countries. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates.

4.7 Fair value measurement of financial instruments

When the fair values of financial 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 DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

4.8 Provision for decommissioning

The company has recognised a provision for decommissioning obligations associated with the leased premises on which the plant is super structured. In determining the fair value of the provision, assumptions and estimates are made in relation to discount rates, the expected cost to dismantle and remove the plant from the site and the expected timing of those costs.

4.9 Contingencies

Management judgement is required for estimating the possible inflow/ outflow of resources, if any, in respect of contingencies/ claims/ litigations against the Company/ by the Company as it is not possible to predict the outcome of pending matters with accuracy.

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Mar 31, 2018

Note 1: Segment information

The Company operates only in one business segment being the manufacture of Oxo-Alcohols and there are no geographical segments to be reported.

Note 2.37: As per Indian Accounting Standard 24 “Related parties disclosure” the disclosure of Related parties as defined in the Standard are given hereunder:

I. List of Related Parties:

Sl. No. Name of the Related Party Relationship

1. The Andhra Sugars Limited Promoter

2. Andhra Pradesh Industrial Development Corporation Limited Promoter

3. JOCIL Limited A Subsidiary Company of The Andhra Sugars Limited,

Promoter

4. Jayalakshmi Fertilisers,Tanuku (upto 14.02.2018) Firm in which Key Managerial Personnel

(Dr. BB.Ramaiah) is a partner

5. Dr. B.B. Ramaiah (up to 14.02.2018) Managing Director

6. Sri K Narasappa (from 23.05.2017) President

7. Sri P Ratna Rao Key Managerial Personnel

[Senior General Manager (Finance)]

3.2: Fair Valuation Techniques

The fair values of the financial assets and liabilities are included at the amount that would be received on sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

A) The following methods and assumptions were used to estimate the fair values

The fair value of cash and cash equivalents, trade receivables and payables, financial liabilities and assets approximate their carrying amount largely due to the short-term maturities of these instruments. The management considers that the carrying amounts of financial assets and financial liabilities recognized at nominal cost/amortized cost in the financial statements approximate their fair values. The fair value of unquoted equity investments designated and recognized through Other Comprehensive Income has been determined by using the Income approach through the present value techniques.

B) Fair value hierarchy

The fair value of financial instruments as referred to above note have been classified into three categories depending on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active markets for identified assets or liabilities [Level 1 measurements] and lowest priority to unobservable inputs [Level 3 measurements].

The categories used are as follows:

Level 1: Level 1 hierarchy includes inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

Level 2: Inputs that are observable either directly or indirectly for the asset or liability, other than quoted prices included within Level 1.

Level 3: Inputs for the asset or liability which are not based on observable market data (unobservable inputs).

During the year ended 31st March 2018, the company transferred the unquoted equity instruments from Level 2 into Level 3 due to non-availability of

-quoted price for similar or identical assets in the markets that are not active to the nearest date to the reporting date or -inputs other than quoted prices that are observable for the asset.

Under the terms of supply agreements the sales were made against LC . Bills discounted with banks were being offsite against trade receivables while presenting in the balance sheet.

3.4: Financial risk management framework

A) The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Company’s risk management policies are established to identify and analyses the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Board of Directors monitors the compliance with the Company’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.

The risk management framework aims at,

i) Improve financial risk awareness and risk transparency

ii) Identify, control and monitor key risks

iii) Identify risk accumulations

iv) Provide management with reliable information on the Company’s risk situation

v) Improve financial returns

B) The company''s activities expose it to market risk, liquidity risk and credit risk. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk.

a) Credit risk:

i) Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables), from cash and cash equivalents, deposits with banks. The management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis

ii) Financial assets that are neither past due nor impaired

Cash and cash equivalents, deposits with banks, security deposits, investments in securities & mutual funds are neither past due nor impaired.

Cash and cash equivalents, deposits are held with banks which are reputed and credit worthy banking institutions. Hence the expected credit loss is negligible.

Investments in securities & mutual funds are actively traded in the stock markets and there is no collateral held against these because the counterparties are entities with high credit ratings assigned by the various credit rating agencies. Hence the expected credit loss is negligible.

b) Liquidity risk:

i) Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Company''s objective is to maintain optimum level of liquidity to meet it''s cash and collateral requirements at all times. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit line to meet obligations. Due to the dynamic nature of underlying business, company maintains flexibility in funding by maintaining availability under committed credit lines.

ii) Maturities of financial liabilities

The table below analyses the company''s financial liabilities into relevant maturity groupings based on their contractual maturities for all non-derivative financial liabilities:

3.5: Capital management

The company''s objectives when managing capital is to safeguard their ability to continue as a going concern, maintain a strong credit rating and healthy capital ratios in order to support its business and provide adequate return to shareholders through continuing growth and maximize the shareholders’ value. The company sets the amount of capital required on the basis of annual business and long -term operating plans which include capital and other strategic investments. The funding requirements are met through a mixture of equity, internal fund generation and borrowed funds. The company tries to maintain an optimal capital structure to reduce cost of capital and monitors capital on the basis of debt-equity ratio.

Note. 2: Significant accounting estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below.

The company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the company. Such changes are reflected in the assumptions when they occur.

4.1: Property, Plant and 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 and the expected residual value at the end of its life. The useful lives and residual values of company''s assets are determined by 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 technology.

4.2: Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm''s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the company is not yet committed to or significant future investments that will enhance the asset''s performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes.

4.3: Impairment of Financial assets

The impairment provisions for financial assets are based on assumptions about risk of default and expected loss rates. The company uses judgment in making these assumptions and selecting the inputs to the impairment calculation based on the company''s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

4.4: Operating Lease

The Company has taken on lease a commercial property for its business operations and the lease rentals for the property are subject to escalations during the tenure of lease. However, as these escalations were in the nature of general inflation to compensate for the lessor''s expected inflationary cost increase, the company is directly charging the lease payments to the statement of profit and loss instead of following straight line method of charging lease payments.

4.5: Taxes

Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

4.6: Employee benefits (gratuity and compensated absences)

The cost of the defined benefit plans and the present value of the gratuity/compensated absences obligation are determined using actuarial valuations. 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. The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds. The mortality rate is based on publicly available mortality tables for the specific countries.

The Andhra Petrochemicals Limited

Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates.

4.7: Fair value measurement of financial instruments

When the fair values of financial 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 DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

4.8: Provision for decommissioning

The company has recognized a provision for decommissioning obligations associated with the leased premises on which the plant is super structured. In determining the fair value of the provision, assumptions and estimates are made in relation to discount rates, the expected cost to dismantle and remove the plant from the site and the expected timing of those costs.

4.9: Contingencies

Management judgment is required for estimating the possible inflow/ outflow of resources, if any, in respect of contingencies/ claims/ litigations against the Company/ by the Company as it is not possible to predict the outcome of pending matters with accuracy.

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Mar 31, 2016

1. Employee Benefit Plans :

As per Accounting Standard 15 “Employees Benefits” the disclosure of Employee Benefits as defined in the Accounting Standard are given hereunder:

Defined Contributions Plans:

Contributions to Defined Contribution plans, recognized as expense for the year, are as under:

Defined Benefit Plans:

The employees’ gratuity fund scheme managed by a Trust is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for compensated absences is recognized in the same manner as gratuity.

As per the enterprise’s accounting policy actuarial gains and losses are recognized immediately during the same year itself. The above information is certified by the Actuary.

2. Segment Information:

The Company operates only in one business segment being the manufacture of Oxo-Alcohols and there are no geographical segments to be reported.

3. Disclosure in respect of Related Party transactions as per AS-18 issued by Companies (Accounting Standards) Rules, 2006 (amended):

I. List of Related Parties:

4. According to an internal technical assessment carried out by the Company, there is no impairment in the carrying cost of cash generating units of the Company in terms of AS-28, issued by Companies (Accounting Standards) Rules, 2006 (amended).

5 Previous year’s figures have been regrouped and rearranged wherever necessary to make them comparable with the current year figures.

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Mar 31, 2015

Note 1.

Consequent to schedule II of the Companies Act, 2013 becoming applicable w. e. f., 1.4.2014, depreciation for the year ended 31st March, 2015 has been provided on the basis of the useful life of all the assets as prescribed under Schedule II of the Act. Accordingly the depreciation charge for the year is lower by Rs.407.30 lakhs, when compared to previous year. Further in respect of the assets whose revised useful life has exhausted before 1.4.2014, the carrying amount of the said assets of Rs.211.39 lakhs net of deferred tax of Rs.101.53 lakhs has been adjusted to the retained earnings.

Note 2.

Consequent to the fire accident occurred in Hindustan Petroleum Corporation Ltd. (HPCL), Refinery at Visakhapatnam on 23rd August, 2013, the Company's claim under "Loss of Profits Insurance Policy with extended fire risk coverage at Supplier Premises" is under process with the insurers. Pending admittance of Company's claim by its insurer, the said claim has not been recognized in the books of account for the year under report.

Note 3. Employee benefit plans :

As per Accounting Standard 15 "Employees Benefits" the disclosure of Employee Benefits as defined in the Accounting Standard are given hereunder:

Defined Benefit Plans:

The employees' gratuity fund scheme managed by a Trust is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for compensated absences is recognized in the same manner as gratuity.

Note 4. Segment information:

The Company operates only in one business segment being the manufacture of Oxo-Alcohols and there are no geographical segments to be reported.

Note 5. According to an internal technical assessment carried out by the Company, there is no impairment in the carrying cost of cash gener- ating units of the Company in terms of AS – 28 issued by Companies (Accounting Standards) Rules, 2006 (amended).

Note 6. Previous year's figures have been regrouped and rearranged wherever necessary to make them comparable with the current year figures.

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Mar 31, 2014

Rs. in lakhs Particulars This Year Previous Year

Note 1.1: Contingent Liabilities and Commitments: (i) ContingentLiabilities

(a) Claims against the Company not acknowledged as debt 12.00 12.00

(b) Amounts shown by HPCL as dues as per their statements of account contested by the Company 52.91 52.91

(c) Outstanding Guarantees to Banks ncluding Letters of Credit opened with Banks for supplier payments 10.00 10.00

(d) Various Claims made by EPDC of A.P.Ltd. , which are contested by Company i) Grid Support charges 115.97 115.97

ii) Electricity duty demand on captive power generation 115.50 115.48

iii) Disputed demand charges against APGPCL Demand allocation 10.47 10.47

iv) Demand against excess incentive recovery 13.19 13.19

e) Disputed Income Tax demands for the Asst. Years 2006-07, 2008-09 and 2009-10 22.49 24.71

f) Disputed Input Tax Credit Accounting Year 2009-10 (Rs.1.49 lakhs paid under protest - grouped under Short-term Loans & Advances 11.94 --

(ii) Commitments

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for -- 1.96

(b) Bills discounted -- 2346.40

Note 1.2:

Hindustan Petroleum Corporation Ltd., (HPCL), suspended during most part of the year, the supply of "Propylene", the main raw material for production of "Oxo- alcohols", due to a fire accident occurred in a cooling tower of its refinery on 23rd August, 2013, which resulted in suspension of production activities by the Company for a total number of 154 days during the year. Pending admittance of Company''s claim by its insurer under "Loss of Profits insurance policy with extended fire risk coverage at Supplier Premises", the said claim has not been recognised in the books of account for the year under report.

Note 1.3: Employee benefit plans :

As per Accounting Standard 15 "Employees Benefits" the disclosure of Employee Benefits as defined in the Account- ing Standard are given hereunder:

Defined Benefit Plans:

The employees'' gratuity fund scheme managed by a Trust is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for compensated absences is recognised in the same manner as gratuity.

Note 1.4: Segment information:

The Company operates only in one business segment being the manufacture of Oxo-Alcohols and there are no geographical segments to be reported.

Note 1.5: According to an internal technical assessment carried out by the Company, there is no impairment in the carrying cost of cash generating units of the Company in terms of AS – 28 issued by Companies (Accounting Standards) Rules, 2006 (amended).

Note 1.6: Previous year''s figures have been regrouped and rearranged wherever necessary to make them comparable with the current year figures.

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Mar 31, 2013

Rs. in lakhs Particulars This Year Previous Year

Note 1.1: Contingent Liabilities and Commitments: (i) Contingent Liabilities

(a) Claims against the company not acknowledged as debt 12.00 12.00

(b) Amounts shown by HPCL as dues as per their statements of account contested by the Company 52.91

(c) Outstanding Guarantees to Banks including Letters of Credit opened with Banks for supplier 10.00 34.81 payments

(d) Various Claims made by EPDC of A.P.Ltd., which are contested by Company

i) Grid Support charges 115.97 115.97

ii) Electricity duty demand on captive power generation 115.48 113.20

iii) Disputed demand charges against APGPCL 10.47 10.47 Demand allocation

iv) Fuel Surcharge Adjustment charges 78.94

v) Demand against excess incentive recovery 13.19 13.19

vi) Disputed Income Tax demand for the Asst. Year 2010-11 24.71

(ii) Commitments

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for 1.96

(b) Bills discounted 2346.40 1038.28

Note 1.2: Employee benefit plans:

As per Accounting Standard-15 "Employees Benefits" the disclosure of Employee Benefits as defined in the Account- ing Standard are given hereunder: Defined Contributions Plans: Contributions to Defined Contribution Plans, recognised as expense for the year, are as under:

Defined Benefit Plans:

The employees'' Gratuity Fund Scheme managed by a Trust is a Defined Benefit Plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for compensated absences is recognised in the same manner as Gratuity.

I. Reconciliation of opening and closing balances of Defined Benefit obligations

Note 1.3: According to an internal technical assessment carried out by the Company, there is no impairment in the carrying cost of cash generating units of the Company in terms of Accounting Standard – 28 (AS – 28), issued by Companies (Accounting Standards) Rules, 2006 (amended).

Note 1.4: Previous year''s figures have been regrouped and rearranged wherever necessary to make them comparable with the current year figures.

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Mar 31, 2012

Note 1.1: Contingent Liabilities and Commitments:

(i) Contingent Liabilities

(a) Claims against the Company not acknowledged as debt 12.00 12.00

(b) Outstanding Guarantees to Banks including

Letter of Credit opened with Banks for supplier payments 34.81 --

(c) Various claims made by EPDC of A.PLtd. which are contested by Company:

i) Grid Support charges 115.97 115.97

ii) Electricity duty demand on captive power generation 113.20 110.00

iii) Disputed demand charges against APGPCL demand allocation 10.47 7.78

iv) Fuel Surcharge adjustment charges 78.94 78.94

v) Demand against excess incentive recovery 13.19 --

(ii) Commitments

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for -- 4.78

(b) Bills discounted 1038.28 --

1.2: Employee benefit plans:

As per Accounting Standard-15 "Employees Benefits" the disclosure of Employee Benefits as defined in the Accounting Standard are given hereunder:

Defined Contributions Plans:

Contributions to Defined Contribution Plans, recognised as expense for the year, are as under:

Defined Benefit Plans:

The Employees' Gratuity Fund scheme managed by a Trust is a Defined Benefit Plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for compensated absences is recognised in the same manner as Gratuity.

I. Reconciliation of opening and closing balances of Defined Benefit obligations

As per the enterprise's accounting policy actuarial gains and losses are recognised immediately during the same year itself. The above information is certified by Actuary.

1.3: Segment information:

The Company operates only in one business segment being the manufacture of Oxo-Alcohols and there are no geographical segments to be reported.

1.4: Related Party disclosures

Details of Related Party transactions as per AS-18 issued by Companies (Accounting Standards) Rules, 2006 (amended): I. List of related parties:

A. Investing party in respect of which The Andhra Petrochemicals Ltd., is an associate:

The Andhra Sugars Limited

B. Key Management Personnel:

Dr.Mullapudi Harischandra Prasad, Managing Director (upto 3.9.2011)

Dr.B B Ramaiah, Managing Director (from 12.11.2011)

C. Enterprises on which Key Management Personnel exercise significant influence (upto 3.9.2011):

1. Sree Akkamamba Textiles Ltd.

2. The Andhra Farm Chemicals Corporation Ltd.

3. Royal Printing Works (upto 3.9.2011)

1.5: According to an internal technical assessment carried out by the Company, there is no impairment in the carrying cost of cash generating units of the Company in terms of Accounting Standard - 28 (AS - 28), issued by Companies (Accounting Standards) Rules, 2006 (amended).

1.6: Previous year's figures have been regrouped and rearranged wherever necessary to make them comparable with the current year figures.

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Mar 31, 2011

1. Contingent liabilities not provided for: (Rs. in lakhs) i. Outstanding Guarantees to Banks including Letters of Credit opened with Banks for capital payments - 962.89

ii. Various Claims made by EPDC of A.P. Ltd., which are contested by Company :

a) Grid Support charges 115.97 115.97

b) Electricity duty demand on captive power generation 110.00 -

c) Disputed demand charges against APGPCL Demand allocation 7.78 -

d) Fuel Surchage adjustment charges 78.94 -

iii. Claims against the Company by contractors not acknowledged as debts 12.00 12.00

2. Secured Loans:

A. Term Loans for Optimisation and Modernisation Project:

All the term loans are secured by pari passu charge, by mortgage of the Company's immovable properties and hypoth- ecation of movable assets including movable machinery, present and future. The loans are further secured by a Second Charge on all the remaining movable assets, subject to Charge in favour of Company's bankers on specified movables, towards working capital facilities.

B. Working Capital Loans from Banks: Secured by the hypothecation of raw materials, semi-finished goods, finished goods, stores and spares and book debts and collaterally secured by Second Charge on the fixed assets, both present and future, of the Company.

3. The Company operates only in one business segment being the manufacture of Oxo-Alcohols and there are no geographical segments to be reported.

4. Details of Related Party Transactions as per AS-18 issued by the Institute of Chartered Accountants of India:

I. List of Related Parties:

A. Investing party in respect of which The Andhra Petrochemicals Ltd., is an associate: The Andhra Sugars Limited

B. Key Management Personnel:

Dr. Mullapudi Harischandra Prasad, Managing Director

C. Enterprises on which Key Management Personnel exercise significant influence:

1. Sree Akkamamba Textiles Ltd.,

2. The Andhra Farm Chemicals Corporation Ltd.,

3. Royal Printing Works

5. According to an internal technical assessment carried out by the Company, there is no impairment in the carrying cost of cash generating units of the Company in terms of Accounting Standard – 28 (AS – 28) issued by the Institute of Chartered Accountants of India.

6. Figures have been rounded off to the nearest thousand. Previous year's figures have been regrouped and rearranged wherever necessary.

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Mar 31, 2010

1. Estimated amount of contracts remaining This Year Previous Year to be executed on Capital Account and not provided for (net of advances & 229.76 10034.35 letters of credits opened) 229.76 10034.35

2. Contingent liabilities not provided for:

i. Outstanding Guarantees to Banks including Letter of Credit opened with Banks for capital payments 962.89 982.39

ii. Grid support charges claimed by A.P.Transco - disputed by

the Company 115.97 115.97

iii. Demand by EPDC of Ltd., towards differential electrical charges - contested by the Company 573.84 573.84

iv. Claims against the company by contractors not acknowledged as debts 12.00 12.00

Secured Loans:

A. Term Loans for Optimisation and Modernisation Project:

All the term loans are secured by pari passu charge, by mortgage of the Companys immovable properties and hypothecation of movable assets including movable machinery, present and future. The loans are further secured by a second charge on all the remaining movable assets, subject to charge in favour of Companys bankers on specified movables towards working capital facilities.

B. Working Capital Loans from Banks:

Secured by the hypothecation of raw materials, semi-finished goods, finished goods, stores and spares and book debts and also collaterally secured by second charge on the fixed assets, both present and future of the company.

As per Accounting Standard 15 “Employees Benefits” the disclosure of Employee Benefits as defined in the Accounting Standard are given hereunder:

Defined Benefit Plans:

The employees gratuity fund scheme managed by a Trust is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for compensated ab- sences is recognised in the same manner as gratuity.

As per the enterprises accounting policy actuarial gains and losses are recognised immediately during the same year itself.

The above information is certified by the Actuary.

2. The Company operates only in one business segment being the manufacture of Oxo-Alcohols and there are no geographical segments to be reported.

3. Details of Related Party transactions as per AS-18 issued by the Institute of Chartered Accountants of India:

I. List of Related Parties:

A. Investing party in respect of which The Andhra Petrochemicals Ltd., is an associate: The Andhra Sugars Limited

B. Key Management Personnel:

Dr. Mullapudi Harischandra Prasad, Managing Director

C. Enterprises on which Key Management Personnel exercise significant influence:

1. Sree Akkamamba Textiles Ltd.,

2. The Andhra Farm Chemicals Corporation Ltd.,

3. Royal Printing Works