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Notes to Accounts of Ballarpur Industries Ltd.

Mar 31, 2018

1. EXCEPTIONAL ITEMS

Exceptional items for the financial year 2017-18 includes exceptional gain of Rs, 109,000 Lakhs (previous year Rs, Nil) and exceptional loss of Rs, 125,929 Lakhs (Previous year Rs, 25,149 Lakhs). Exceptional gain include waiver of dues to related parties amounting to Rs, 109,000 Lakhs (Refer note 45(d)). Exceptional loss represents impairment of intangible assets of Rs, 3,144 Lakhs, impairment of inventory amounting to Rs, 24,058 Lakhs and write off of other receivables amounting to Rs, 98,727 Lakhs . Exceptional items for the year 2016-17 represents impairment of property plant and equipment amounting to Rs, 20,100 Lakhs, impairment of inventory amounting to Rs, 4,771 Lakhs and write off of advances to suppliers amounting to Rs, 278 Lakhs.

2. RESTATEMENT OF PRIOR YEAR FINANCIAL STATEMENTS

During the year the Company had identified certain receivables which were not classified as financial asset for the purpose of impairment assessment under Ind AS 109. The management has applied their impairment policy and recognized impairment loss of Rs, 92,422 Lakhs upto 31 March 2016 and Rs, 20,930 Lakhs for the financial year 2016-17 and accordingly restated the prior year financial statements (financial year 2016-17) and the opening balance of assets, liabilities and equity as at 1 April 2016. The restatement has resulted in an increase in the other financial liabilities reported in Note 23 and a decrease in the retained earnings as at 31 March 2017 and 1 April 2016 by Rs, 113,352 Lakhs and Rs, 92,422 Lakhs respectively, an increase in the other expenses for the year 2016-17 by Rs, 20,930 Lakhs and a decrease in the basic and diluted earnings per share by Rs, 3.19 per share (loss) (Refer note 46). The said financial assets of Rs, 98,820 Lakhs (net of provision of Rs, 113,352 Lakhs) as at 31 March 2017 and Rs, 121,210 Lakhs (net of provision of Rs, 92,422 Lakhs) as at 1 April 2016 have been netted off against the financial liability in Note 23.

Further as required by Ind AS 1, consequently to retrospective restatement of items in the financial statements, the Company has presented balance sheet as at 01 April 2016.

3. STRATEGIC DEBT RESTRUCTURING

The Company had defaulted in repayment of borrowings and payment of interest to the lenders on account of which a ''Joint Lenders Forum'' (JLF) was formed. In the JLF meeting held on 28 December 2016 the lenders invoked the ''Strategic Debt Restructuring Scheme'' (SDR) dated 8 June 2015, as amended, issued by the Reserve Bank of India

Further in the JLF meeting held on 5 May 2017, the lenders agreed for conversion of portion of the borrowings, including interest, into equity. Accordingly, borrowings and interest totaling to Rs, 100,985 Lakhs was converted into equity and the Company issued 637,931,917 equity shares to the lenders at a price of Rs, 15.83 per share (face value Rs, 2/- per share) on a preferential basis in compliance with the provisions of Companies Act 2013 and other statutory requirements, as applicable.

Post implementation of the SDR, the equity share capital of the Company is Rs, 25,871 Lakhs which comprises 1,293,455,756 equity shares of Rs, 2/- each.

4. PUT OPTIONS

The Company has given certain Put Options to the Private Equity (PE) Investors of its stepdown subsidiary, BILT Paper BV. The Company is not in a position to quantify the liability towards put options due to the ongoing financial restructuring with lenders.

5. GOING CONCERN

The Company''s operations was significantly affected during previous year due to lack of adequate working capital. The lenders of the Company had invoked standstill provision due to delays in repayment of debts and payment of interest. The Company has been in discussion with the lenders to ease of the financial stress and regulate the operations of the Company. During the year the Company has also implemented a Strategic debt restructuring scheme (Refer Note 39) Subsequent to SDR the company was able to run the manufacturing facility at Yamunanagar (Shree Gopal Unit) without major shutdowns. Further the Company has taken various initiatives to recommence operations of its manufacturing facility at Kamalapuram and is confident of recommencing operations during FY 2018-19.

The management has carried out an internal assessment of the future operating cash flows of the Company and is confident that the company has the ability to continue as a going concern in spite of the significant cash losses incurred in previous year and current year, considering the better capacity utilization and improved financial position of the Company.

(i) The Company has granted to the lender a corporate guarantee of USD 97.75 million ['' 63,609 Lakhs] (previous year - USD 97.75 million ['' 63,421 Lakhs]) in respect of loan availed by Ballarpur International Holdings B.V, a wholly owned subsidiary of the Company. The Company has also executed an indemnity and undertaking for stand-by Letter of credit facility of USD 55 million ['' 35,790 Lakhs] (previous year - USD 55 million ['' 35,684 Lakhs] ) in respect of the subsidiary.

(ii) As at 31 March 2017, the Compnay had granted to the lender a corporate guarantee of '' 51,000 Lakhs in respect of loan availed by BILT Graphic Paper Product Limited (BGPPL), a step-down subsidiary of the Company. During the year, BGPPL has executed a ''Master Restructuring Agreement'' (MRA) its lender and inaccordance with the terms of the MRA the corporate guarantee stands resolved. However the execution of the MRA has been contested by one of the non-assenting lender and the case is pending at High Court, Delhi, as at 31 March 2018. The management is confident that BGPPL will be able to get a favorable Order in this respect and hence the said guarantee is not reported as a contingent liability as at 31 March 2018.

(iii) As at 31 March 2017, the Compnay had provided a Put Option to the lender, Yes Bank Limited of '' 6500 Lakhs against financing facilities provided to Avantha Agritech Limited, a subsidiary of the Company. The Option does not exist as at 31 March 2018.

It is not possible to predict the outcome of the pending litigations with accuracy, the Company believes, based on legal opinions received, that it has meritorious defences to the claims. The management believe the pending actions will not require outflow of resources embodying economic benefits and will not have a material adverse effect upon the results of the operations, cash flows or financial condition of the Company.

(b) Defined benefit plan

i) Nature of the benefit

Gratuity: In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit plan, covering eligible employees. This Plan provides for a lump sum payment to vested employees on retirement, death, incapacity or termination of employment of amounts that are based on salary and tenure of employment. Liability with regard to this plan are determined by actuarial valuation.

viii) Major risks to the plan

Actuarial valuations are performed on certain basic set of pre-determined assumptions and other regulatory framework which may vary overtime. Thus, the Company is exposed to various risks in provision the gratuity benefit which are as follows

1) Interest rate risk

The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability.

2) Liquidity risk

This is the risk that the Company is not able to meet the short-term gratuity payouts. This may arise due to no availability of enough cash / cash equivalent to meet the liabilities or holding of non-liquid assets not being sold in time.

3) Salary escalation risk

The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan''s liabilty.

4) Demographic risk

The Company has used certain mortality and attrition assumptions in valuation of the liability. The Company is exposed to the risk of actual experience turning out to be worse compared to the assumption.

5) Regulatory risk

Gratuity benefit is paid in accordance with the requirements of the Payment of Gratuity Act, 1972 (as amended from time to time). There is a risk of change in regulations requiring higher gratuity payouts.

45 DISCLOSURE OF RELATED PARTIES / RELATED PARTY TRANSACTIONS PURSUANT TO IND AS 24 ''RELATED PARTY DISCLOSURES''

(a) Enterprises where control exist

(i) Subsidiary - Avantha Agritech Limited (Formely known as BILT

Tree Tech Limited)

- Ballarpur International Holdings B.V

- Ballarpur Speciality Paper Holdings B.V.

- Premier Tissues (India) Limited

(ii) Step down subsidiary - BILT Paper B.V. (Subsdiary of Ballarpur International

Holdings B.V)

- Ballarpur Paper Holdings B.V. (Sudsidiary of BILT Paper B.V.)

- BILT Graphic Paper Products Limited (Sudsidiary of Ballarpur Paper Holdings B.V.)

- Sabah Forest Industries Sdn. Bhd. (Sudsidiary of Ballarpur Paper Holdings B.V.)

- BILT General Trading FZE (Sudsidiary of Ballarpur Speciality Paper Holdings B.V.)

(b) Key Management Personnel (KMP)

(i) Mr. B. Hariharan

(ii) Mr. Gautam Thapar

(i) Subsidiaries (including step down subsidiaries)

1) Avantha Agritech Limited - Subsidiary

2) Ballarpur International Holdings B.V - Subsidiary

3) Ballarpur Speciality Paper Holdings B.V. - Subsidiary

4) Premier Tissues India Limited - Subsidiary

5) BILT Paper B.V. - Step-down subsidiary

6) Ballarpur Paper Holdings B.V. - Step-down subsidiary

7) BILT Graphic Paper Products Limited - Step-down subsidiary

8) Sabah Forest Industries Sdn. Bhd. - Step-down subsidiary

9) BILT General Trading FZE - Step-down subsidiary

(ii) Enterprise over which KMP is able to exercise control

1) Saraswati Travels Private Limted - Other related parties

2) SMI New Quest India Private Limited - Other related parties

3) Biltech Building Elements Limited - Other related parties

4) CG Power and Industrial Solutions Limited - Other related parties (formerly known as Crompton Greaves Limited)

5) Avantha Holdings Limited - Other related parties

6) Imerys Newquest (India) Private Limited - Other related parties

7) Avantha Realty Limited - Other related parties

8) Mirabelle Trading Pte. Ltd. - Other related parties

9) Varun Prakashan Private Limited - Other related parties

10) BILT Industrial Packaging Company Limited - Other related parties

11) Solaris Chemtech Industries Limited - Other related parties

12) Karam Chand Thapar & Bros. Ltd-PF Trust - Other related parties

13) Arizona Printers & Packers Private Limited - Other related parties

14) Avantha Power and Infrastructure Limited - Other related parties

15) Korba West Power Company Limited - Other related parties

16) Avantha Technologies Limited - Other related parties

17) Global Green Company Limited - Other related parties

18) UHL Power Company Limited - Other related parties

"0"represent amount below Rs, 50,000/-

(g) Terms and conditions of transactions with related parties

(i) All the transactions with related parties entered during the year were in the ordinary course of business.

(ii) Balances due to and due from related parties, other than interest bearing loans, are unsecured, interest free and will be settled in cash.

(iii) There have been no write back of dues to related parties during the year (2016-17 - Rs, Nil) other than the waiver as reported in the related party transactions.

(iv) There have been no write off of dues from related parties during the year (2016-17 - Rs, Nil).

(v) For the year ended 31 March 2018, the Company has not recognized any impairment of receivables relating to amounts due from related parties (2016-17 - Rs, Nil). This assessment is undertaken each financial year examining the financial position of the related party and the market in which the related party operates.

47 DISCLOSURE PURSUANT TO IND AS 108 ''OPERATING SEGMENTS''

(a) Factors used in identifying segments

The Company''s operating segments are established on the basis of those components of the company that are evaluated regularly by the Chief Operating Officer (COO) of the Company (the âChief Operating Decision Maker'' as defined in Ind AS 108 - âOperating Segments''), in deciding how to allocate resources and in assessing performance. These have been identified taking into account nature of products and services, the differing risks and returns and the internal business reporting systems.

The Company had reported ''Paper'' and ''Paper products & office supplies'' as two operating segments under Ind AS 108 upto financial year 2016-17. On account of discontinuation of the ''Paper products & office supplies'' segment and recent changes in the operations, the manner in which the COO reviews the operations of the Company has changed. At present the COO reviews the operations as âcoated paper'' and âuncoated paper'', identified in the manner stated above. The segment disclosures for the year 2017-18 has been made in line with the revised operating segments and the comparatives for the year 2016-17 has been restated to align with the revised operating segments.

The accounting policies adopted for segment reporting are in line with the accounting policy of the Company.

(i) Revenue and Expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Revenue and Expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as "Unallocable".

(ii) Segment Assets and Segment Liabilities represent Assets and Liabilities in respective segments. Investments, tax related assets and other assets and liabilities that cannot be allocated to a segment on reasonable basis have been disclosed as "Unallocable".

(b) The Company does not have total taxable income under the provisions of Income Tax Act 1961 during the current and previous financial year and hence no provision for current tax is recognized. Accordingly calculation of effective tax rate and reconciliation of income tax expense to the accounting profit are not applicable.

6. DISCLOSURES PURSUANT TO IND AS 17 LEASES:

(a) Where the Company is a lessee

(i) Operating leases:

1) Property, plant and equipment acquired on non-cancellable operating lease comprises Buildings, the future minimum lease payments in respect of these non-cancellable operating leases are as follows:

2) Lease rental expense recognized in the Statement of Profit and Loss for the year is Rs, 447 Lakhs (previous year: Rs, 2,080 lakhs) including contingent rent of Rs, Nil (Previous year Rs, Nil)

3) Significant lease agreements can be renewed on mutual consent of the parties and are normally renewed on expiry.

4) There are no exceptional / restrictive covenants imposed in these lease agreements.

(b) Where the Company is a lessor

(i) Operating leases:

The Company has given a property (Building) under cancellable operating leases. These lease agreements are normally renewed on expiry. There are no exceptional / restrictive covenants in these lease agreements.

Lease income recognized in the statement of profit and loss for the year is Rs, 23 lakhs (Previous year Rs, 23 lakhs) including contingent rent/sublease receipt of Rs, Nil (Previous year Rs, Nil).

7. FINANCIAL INSTRUMENTS (a) Capital management

The company manages its capital to ensure the Company will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balances.

The company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirement of the financial covenants. The funding requirement is met through a mixture of equity, internal accrual, long term borrowings and short term borrowings. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt.

The operations of the Company are subject to a variety of financial risks, including market risk, foreign currency risk, credit risk, interest rate risk and liquidity risk. The Company has formulated a financial risk management framework whose principle objective is to minimize the Company''s exposure to risks and/or costs associated with the financing, investing and operating activities of the Company.

Various risk management policies are approved by the Board for monitoring on the day-to-day operations for the control and management of the risks associated with financial instruments.

(i) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument may fluctuate because of changes in market prices. Market prices comprise three types of risk: currency rate risk, interest rate risk and other price risks, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, deposits, investments, and derivative financial instruments.

1) Foreign exchange risk and sensitivity

The Company transacts business primarily in Indian Rupee, USD, Euro, GBP and JPY and other foreign currency. The Company has obtained foreign currency loans and has foreign currency trade payables and receivables and is therefore, exposed to foreign exchange risk. Certain transactions of the Company act as a natural hedge as a portion of both assets and liabilities are denominated in similar foreign currencies. For the remaining exposure to foreign exchange risk, the Company adopts a policy of selective hedging based on risk perception of the management. Foreign exchange hedging contracts are carried at fair value.

2) Interest rate risk and sensitivity

Interest rate risk is the risk that the fair value of future cash flows of the Company''s financial instruments will fluctuate because of changes in market interest rates. The Company''s exposure to interest rate risk arises primarily because of the bank borrowings comprising term loans, loans against import and revolving credits which are at the aggregate of Base rate / MCLR and the applicable margin. The interest rates for the said bank borrowings are disclosed in Note No. 22.

The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment.

3) Commodity price risk and sensitivity

The Company has in place policies to manage the Company''s exposure to fluctuation in the prices of the key materials and commodities used in the operations. Nevertheless, it believes that it has competitive advantage in terms of high quality products and by continually upgrading its expertise and range of products to meet the needs of its customers. The company enters into fixed price contracts to establish determinable prices for raw materials and consumables used. The management does not consider the Company''s exposure to market risk significant as on 31 March 2018. Therefore, sensitivity analysis for market risk is not disclosed.

(ii) Credit risk

Credit risk arises from the possibility that counter party may not be able to settle their obligation as agreed.

Banks and other financial institutions: Th

The Company considers factors such as track record, size of the institution, market reputation and service standards to select the banks with which balances and deposits are maintained. The Company does not maintain significant cash and deposit balances other than those required for its day to day operations.

(ii) Liquidity risk

Liquidity risk is defined as the risk that the company will not be able to settle or meet its obligation on time or at reasonable price. The company has taken steps to reduce the financial burden by restructuring its financial liabilities (Refer Note 39) and is in the process of further negotiating with the lenders for the second phase of restructuring as per its revival plan & also exploring various other options like renegotiation of the terms of borrowings, sale of non-core assets, etc., to further ease out the financial burden. The Company has also improved its operational efficiency during the current financial year and is actively considering new initiatives to improve the contribution from operations. The Company also expects the improving market conditions to sustain in the near future. Considering the above, company is confident of the positive outcome of the above assumptions and developments and has relies on mix of borrowings, capital infusion and excess operating cash flows from operations to meet its obligations.

Maturity profile of financial liabilities

The table below provides regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments.

8. DISCLOSURES PURSUANT TO IND AS 10, ''EVENTS AFTER THE REPORTING PERIOD''

(a) Fire incident

On 23 April 2018, inventories valuing '' 272 lakhs and plant and equipment with carrying value of '' 8 lakhs were damaged by a fire incident that broke out in one of the Units of the Company. The salvage value, if any, has not been determined as on date and will be determined upon completion of survey and insurance process. It is expected that the insurance proceeds will be sufficient for rebuilding the loss of inventories and plant and equipment. This event occurred after the balance sheet date do not affect the figures stated in the financial statements and thus requires no adjustment.

9. FAIR VALUE MEASUREMENT

(a) Fair value technique and hierarchy

The Company maintains policies and procedures to value financial assets and financial liabilities using the best and most relevant data available. The fair values of the financial assets and liabilities are included at the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

i) Level 1 hierarchy includes financial instruments measured using quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

ii) The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.

iii) If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3. This is the case for unlisted equity securities, contingent consideration and indemnification asset included in Level 3.

(e) Other assumptions used in the estimation of fair values

(i) The fair value of trade receivables, cash and cash equivalents, other bank balances and other current financial assets approximate their carrying amount due to the short-term nature of these instruments.

(ii) The fair value of trade payables and other current financial liabilities approximate their carrying amount due to the short-term nature of these instruments.

(iii) The fair value of borrowings with floating rate of interest are considered to be close to their carrying amount.

10. Previous year figures have been regrouped / reclassified wherever necessary to conform to current year grouping / classification.

Mar 31, 2017

36 financial instruments

a) capital Risk Management

The company manages its capital to ensure the Company will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balances.

c) Financial Risk Management Objectives and Policies

The operations of the Company are subject to a variety of financial risks, including market risk, foreign currency risk, credit risk, interest rate risk and liquidity risk. The Company has formulated a financial risk management framework whose principal objective is to minimise the Company''s exposure to risks and/or costs associated with the financing, investing and operating activities of the Company.

Various risk management policies are approved by the Board for monitoring on the day-to-day operations for the control and management of the risks associated with financial instruments.

i) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk: currency rate risk, interest rate risk and other price risks, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, deposits, investments, and derivative financial instruments.

(a) Foreign exchange risk and sensitivity

The Company transacts business primarily in Indian Rupee and no material transactions have been done in foreign currency, accordingly the company is not exposed to any material foreign exchange risk.

(b) Interest rate risk and sensitivity

Interest rate risk is the risk that the fair value of future cash flows of the Company''s financial instruments will fluctuate because of changes in market interest rates.

The Company''s exposure to interest rate risk arises primarily because of the bank borrowings comprising term loans, loans against import and revolving credits which are at the aggregate of Base rate / MCLR and the apprlicable margin. The interest rates for the said bank borrowings are disclosed in Note No. 20.

The sensitivity analyses below have been determined based on the exposure to interest rates for non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was oustanding for the whole year. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management''s assessment of the reasonably possible change in interest rates.

The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment.

(c) commodity price risk and sensitivity

The Company has in place policies to manage the Company''s exposure to fluctuation in the prices of the key materials and commodities used in the operations. Nevertheless, it believes that it has competitive advantage in terms of high quality products and by continually upgrading its expertise and range of products to meet the needs of its customers. The company enters into fixed price contracts to establish determinable prices for raw materials and consumables used. The management does not consider the Company''s exposure to market risk significant as on March 31, 2017. Therefore, sensitivity analysis for market risk is not disclosed.

credit risk

Credit risk arises from the possibility that counter party may not be able to settle their obligation as agreed. To manage this, Group periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of accounts receivable, individual risk limits are set accordingly. The company does not hold any collateral on the balance outstanding.

Financial instruments and cash deposits

The Company considers factors such as track record, size of the institution, market reputation and service standards to select the banks with which balances and deposits are maintained. Generally, the balances are maintained with the institutions with which the Company has also availed borrowings. The Company does not maintain significant cash and deposit balances other than those required for its day to day operations.

Liquidity risk

Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses.

The results of the Company for the current year have been impacted due to lack of adequate working capital. The lenders of the company have invoked standstill provision due to delay in repayments of debts and payment of interest. The company is in discussions with banks to finalise & implement SDF / Other restructuring packages.

The Company is required to maintain ratios (including total debt to net worth, EBITDA to gross interest, debt service coverage ratio and secured coverage ratio) as mentioned in the loan agreements at specified levels. In the event of failure to meet any of these ratios these loans become callable at the option of lenders, except where exemption is provided by lender.

Maturity profile of financial liabilities

The table below provides regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments.

1. SEGMENT REPORTING

Segments have been identified taking into account nature of product and differential risk and returns of the segment. These business segments are reviewed by the Chief Operating Officer of the Company (Chief operating decision maker).

The Expenses, which are not directly identifiable to a specific business segment are clubbed under "Unallocated Corporate Expenses" and similarly, the common assets and liabilities, which are not identifiable to a specific segment are clubbed under "Unallocated Corporate Assets/ Liabilities" on the basis of reasonable estimates.

* Includes charged to other accounts Defined Benefit Plan

a) Gratuity

In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit plan, covering eligible employees. This Plan provides for a lump sum payment to vested employees on retirement, death, incapacity or termination of employment of amounts that are based on salary and tenure of employment. Liability with regard to this plan are determined by actuarial valuation.

b) Leave Encashment

The Company permits encashment of leave accumulated by their employees on retirement, separation and during the course of service. The liability for encashment of leave is determined and provided on the basis of actuarial valuation performed by an independent actuary at each balance sheet date. This Plan is completely un-fuded

3) In respect of loan availed by its foreign wholly owned subsidiary, Ballarpur International Holding B.V

i) The Company has granted to the lender a corporate guarantee of USD 97.75 Million.

ii) The Company has executed an indemnity and undertaking for stand-by Letter of credit facility of USD 55 Million.

4) In respect of loan availed by its stepdown subsidiary, Bilt Graphic Paper Product Limited i) The Company has granted to the lender a corporate guarantee of Rs. 510 Crore.

5) In respect of loan availed by its subsidiary, Avantha Agritech Limited

i) The Company has provided a Put Option to the lendor, Yes Bank Limited of Rs. 65 Crore against his facility provide to borrower Avanth Agritech Limited.

Note:- It is not possible to predict the outcome of the pending litigations with accuracy, the Company believes, based on legal opinions received, that it has meritorious defences to the claims. The management believe the pending actions will not require outflow of resources embodying economic benefits and will not have a material adverse effect upon the results of the operations, cash flows or financial condition of the Company.

2.RELATED PARTY TRANSACTIONS

In accordance with the requirements of IND AS 24, on related party disclosures, name of the related party, related party relationships, transactions and outstanding balances including commitments where control exits and with whom transactions have taken place during reported year are:

a) List of Related Parties over which control exists Subsidiary companies (Including Step Down Subsidiaries)

Ballarpur International Holdings B.V.

BILT Paper B.V.(Previously known as BILT Graphic Paper Holdings B.V.)

Ballarpur Paper Holdings B.V.

Ballarpur Speciality Paper Holdings B.V.

BILT Graphic Paper Products Limited

Avantha Agritech Ltd (BILT Tree Tech Limited name change w.e.f. 30-07-2016)

Sabah Forest Industries Sdn. Bhd.

Premier Tissues (India) Limited

BILT General Trading (FZE)- UAE (w.e.f 14-06-2016)

b) Key Management Personnel Mr. Gautam Thapar

Mr. B Hariharan

Mr Anup Kansal (upto 14-10-2015)

c) Name of the Related Parties with whom transactions were carried out during the period and nature of Relationship

Name of the Related Party Nature of relationship

Ballarpur International Holdings B.V. Subsidiary Avantha Agritech ltd (BILT Tree Tech Limited name change w.e.f. 30-07- Subsidiary 2016)

Premier Tissues (India) Limited Subsidiary

Ballarpur Paper Holdings B.V. Step Down Subsidiary

BILT Graphic Paper Products Limited Step Down Subsidiary

Sabah Forest Industries Sdn. Bhd. Step Down Subsidiary

Arizona Printers & Packers Private Limited Other Related Parties

Avantha Holdings Limited Other Related Parties

Avantha Power & Infrastructure Limited Other Related Parties

Avantha Realty Limited Other Related Parties

BILT Industrial Packaging Company Limited Other Related Parties

Biltech Building Elements Limited Other Related Parties CG Power and Industrial Solutions Limited (formerly) Crompton Greaves Other Related Parties Limited, Name

Global Green Company Limited Other Related Parties

Jhabua Power Limited Other Related Parties

Korba West Power Company Limited Other Related Parties

Mirabelle Trading Pte. Limited Other Related Parties

Saraswati Travels (P) Limited Other Related Parties

Avantha Business Solutions Ltd Other Related Parties

Solaris Chemtech Industries Limited Other Related Parties

UHL Power Company Ltd. Other Related Parties

Avantha Technologies Ltd Other Related Parties Key Management Personnel Mr. Gautam Thapar Mr. B Hariharan

Mr Anup Kansal (upto 14-10-2015)

* For the purposes of this clause, the term âSpecified Bank Notes'' shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated the 8th November, 2016.

3. The liability of the put option of subsidiaries, if any shall be determined and provided on settlement in view of on-going discussions with banks.

4. The results of the company for the current year have been impacted due to lack of adequate working capital. The lenders of the company have invoked standstill provision due to delays in repayment of debts & payment of interest. The company is in discussions with banks to finalise & implement SDR/Other restructuring packages.

5. TRANSITION TO IND AS Basis of preparation

For all period up to and including the year ended March 31, 2016, the Company has prepared its financial statements in accordance with generally accepted accounting principles in India (Indian GAAP). These financial statements for the year ended March 31, 2017 are the Company''s first annual IND AS financial statements and have been prepared in accordance with IND AS.

Accordingly, the Company has prepared financial statements which comply with IND AS applicable for periods beginning on or after April 1, 2015 as described in the accounting policies. In preparing these financial statements, the Company''s opening Balance Sheet was prepared as at April 1, 2015 the Company''s date of transition to IND AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP Balance Sheet as at April 1, 2015 and its previously published Indian GAAP financial statements for the year ended March 31, 2016.

Exemptions

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:

- to measure an item of property, plant and equipment at the date of transition to Ind AS at its fair value and use that fair value as its deemed cost at that date.

- to apply previous GAAP carrying amount of its investment in subsidiaries, associates and Joint venture as deemed cost as on the date of transition to Ind AS.

- continue the policy adopted for accounting for exchange differences arising from translation of long-term foreign currency monetary items recognised in the financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period as per the previous GAAP.

Exceptions

The following mandatory exceptions have been applied in accordance with Ind AS 101 in preparing the financial statements.

(a) Estimates

The estimates at 1st April 2015 and 31st March 2016 are consistent with those made for the same dates in accordance with India GAAP (after adjustments to reflect any difference if any, in accounting policies) apart from the following items where application of Indian GAAP did not require estimation:

-Impairment of financial assets based on expected credit loss model

The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions as at the transition date and as of 31st March 2016.

(b) Derecognition of financial assets and financial liabilities

The company has elected to apply the derecognition requirements for financial assets and financial liabilities in Ind AS 109 prospectively for transactions occurring on or after the date of transition of Ind AS.

(c) Classification and measurement of financial assets

The Company has classified the financial assets in accordance with Ind AS 109 on the basis of facts and circumstances that exist at the date of transition to Ind AS.

The following reconciliations and explanatory notes thereto describe the effects of the transition on the Ind AS Opening statement of financial position as at April 1, 2015. All explanations should be read in conjunction with the accounting policies of the company as disclosed in the Notes to the Accounts.

III. Notes to the Reconciliation

a. The Company has as at the date of transition elected to measure Plant and Equipments under Property, Plant and equipment at fair value as deemed cost.

On adoption of Ind-AS, the Company undertook a detailed evaluation of its financial assets & financial liabilities as at the date of transition i.e. April 1, 2015. These assets & liabilities were assessed for future economic benefits expected to flow to the Company or collection in accordance with Ind-AS 109. Ind- AS 109 requires measurement of provision for bad and doubtful debts to be determined with reference to the expected credit loss model. Such assets , based on evaluation, have been measured at the present value discounted at effective interest rate and adjusted to other reserve as at transition date.

b. Under Previous GAAP, Costs incurred in raising funds are amortised over the period for which the funds have been obtained, using time proportionate basis. However, as per Ind AS, the transaction costs are accounted using Effective Interest Rate Method.

c. Under Previous GAAP, proposed dividend including dividend distribution tax (DDT), are recognised as liability in the period to which they relate, irrespective of when they are declared. Under Ind AS, proposed dividend is recognised as a liability in the period in which it is declared by the Company, usually when approved by shareholders in the general meeting, or paid.

d. Under Previous GAAP, Remeasurement benefits of defined plans (gratuity), arising primarly due to change in acturial assumptions was recognized as employee benefit expenses in the statement of Profit & Losss Account.Under Ind AS, such remeasurement benefits relating to defined benefit plans is recognized in OCI as per the requirements of Ind AS 19- Employee benefits. Consequently, the related tax effect of the same has also been recognized in OCI.

6. Previous Year Figures have been regrouped/reclassified wherever necessary to correspond with the current year''s classification/ disclosure.

Mar 31, 2016

Note:-

1) Includes stores & spares-in-transit of Rs, 8 Lacs (Previous Year Rs, 5 Lacs)

2) Includes Chemicals-in-transit of Rs, 23 Lacs (Previous Year Rs, 299 Lacs)

3) Includes packing material-in-transit of Rs, NIL Lacs (Previous Year Rs, 36 Lacs)

Rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.

B-4 Segment Reporting:

The Company has identified business segment as the primary segment after considering all the relevant factors. The company''s manufactured products are sold primarily within India and as such there are no reportable geographical segment.

B-5 Information on Related Parties as required by Accounting Standard-AS 18 "Related Party Disclosures":

a) List of Related Parties over which control exists Subsidiary Companies (Including Step Down Subsidiaries)

Ballarpur International Holdings B.V.

BILT Paper B.V. (Previously known as BILT Graphic Paper Holdings B.V.)

Ballarpur Paper Holdings B.V.

Ballarpur Speciality Paper Holdings B.V.

BILT Graphic Paper Products Limited

BILT Tree Tech Limited

Sabah Forest Industries Sdn. Bhd.

Premier Tissues (India) Limited

b) Name of the Related Parties with whom transactions were carried out during the period and nature of Relationship Name of Related Party Nature of Relationship

Ballarpur International Holdings B.V. Subsidiary

BILT Tree Tech Limited Subsidiary

Premier Tissues (India) Limited Subsidiary

Ballarpur Paper Holdings B.V. Step Down Subsidiary

BILT Graphic Paper Products Limited Step Down Subsidiary

Sabah Forest Industries Sdn. Bhd. Step Down Subsidiary

Arizona Printers & Packers Private Limited Other Related Parties

Avantha Holdings Limited Other Related Parties

Avantha Power & Infrastructure Limited Other Related Parties

Avantha Realty Limited Other Related Parties

BILT Industrial Packaging Company Limited Other Related Parties

Biltech Building Elements Limited Other Related Parties

Crompton Greaves Limited Other Related Parties

Global Green Company Limited Other Related Parties

Imerys NewQuest(India) Pivate Limited Other Related Parties

Jhabua Power Limited Other Related Parties

Korba West Power Company Limited Other Related Parties

Krebs & Cie (India) Limited Other Related Parties

Leading Line Merchant Traders (P) Limited Other Related Parties

Mirabelle Trading Pte. Limited Other Related Parties

Prestige Wines & Spirits Private Limited Other Related Parties

Saraswati Travels (P) Limited Other Related Parties

Avantha Business Solutions Ltd Other Related Parties

Solaris Chemtech Industries Limited Other Related Parties

UHL Power Company Ltd. Other Related Parties

Avantha Technologies Ltd Other Related Parties

Key Management Personnel

Mr. Gautam Thapar Mr. B Hariharan

Mr. Anup Kansal (up to 14-10-2015)

B-6 Kamlapuram Unit has discontinued its manufacturing activity since 06 th April, 2014 in view of continuing adverse market conditions and continuous losses being incurred. During the year the unit incurred loss of '' 55,24,89,453/- (previous year '' 46,03,74,912/-). The unit has not paid salaries since June- 2015 due to non generation of revenue at unit level. The company has given representation to the Government of Telangana for certain subsidies on inputs and power for restarting the manufacturing activity. In continuation to the representation given to the Government of Telangana, they have agreed to extend the following incentives for restarting the unit.

- Subsidy of up to Rs, 9.00 crores p.a. on supply of power; and

- Subsidy of up to Rs, 21.00 crores p.a. on supply of pulp wood

The aforesaid subsidies are subject to completion of certain formalities and conditions and shall be available to the company for a period of 7 years. The accounts of the Unit for the year ended 31st March, 2016 have been prepared on the "Going Concern" basis as the unit is confident of restarting the operations in foreseeable future.

B-7 In the opinion of the board of Directors, all assets other than fixed assets and non-current investments are realisable in the ordinary course of business at the value at which they are stated in the Financial Statements.

B-38 Accounts with certain financial institutions, banks and companies are subject to reconciliation, however in the opinion of management, these will not have any sinificant impact on the profit for the period/year and the net worth of the Company as on Balance Sheet date.

B-9 The financial statements are for a period of 12 months i.e. from 1st April, 2015 to 31st March, 2016 as against 9 months of the previous year i.e. from 1st July 2014 to 31st March 2015, therefore the figures of the current period are not comparable with those of the previous Year.

B-10 Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current period''s classification/ disclosure.

ommittees included are Audit and Stakeholders Relationship Committee.

# 70th Annual General Meeting held on 30 September, 2015.

@ Ceased to be a nominee director of LIC w.e.f. 25 June, 2015; and appointed as an additional Independent Director by the Board on 10 July, 2015 & appointed by Shareholders as an Independent Director at the AGM held on 30 September, 2015.

$ confirmed as a nominee director of LIC w.e.f 10 July, 2015.

Mar 31, 2015

1. CONTINGENT LIABILITIES AND COMMITMENTS:

31.03.2015 30.06.2014

(to the extent not provided for)

1) Contingent Liabilities:

Claims against the Company not acknowledged as debts 18,263 12,080

Guarantees 1,828 2,101

TOTAL (A) 20,091 14,181

2) Commitments:

Estimated amount of contracts remaining to be executed on capital account and not 171 89 provided for (net of advances)

TOTAL (B) 171 89

TOTAL (A B) 20,262 14,270

2. segment reporting:

The Company has identified business segment as the primary segment after considering all the relevant factors. The company''s manufactured products are sold primarily within India and as such there are no reportable geographical segment. The Expenses, which are not directly identifiable to a specific business segment are clubbed under "Unallocated Corporate Expenses" and similarly, the common assets and liabilities, which are not identifiable to a specific segment are clubbed under "Unallocated Corporate Assets/ Liabilities" on the basis of reasonable estimates.

3. The manufacturing activity at Kamlapuram Unit of the Company has been temporarily suspended in view of continuing adverse market conditions and continuous losses being incurred. During the current period, the unit has incurred loss of Rs. 46,03,74,912/-. and The accounts of the Unit for the period ended 31st March, 2015 have been prepared on the "Going Concern" basis. Further,

1. The Unit has given representation to the Telangana State Government for certain subsidies on inputs and Power for re-starting the manufacturing activity. The said representation is understood to be under active consideration of the State Government.

2. State Government of Andhra Pradesh has also issued notification bearing no. G.O.Ms.No.158 Dt.11-05-2015 shifting VAT on wood from 14.50% to 5% on the basis of representations made by the Unit and Telangana state Government.

The above positive developments will enable the Unit to revive its operations with the improvement in profitability. b-37 In the opinion of the board of Directors, all assets other than fixed assets and non-current investments are realisable in the ordinary course of business at the value at which they are stated in the Financial Statements. b-38 Accounts with certain financial institutions, banks and companies are subject to reconciliation, however in the opinion of management, these will not have any significant impact on the profit for the period/year and the net worth of the Company as on Balance Sheet date. b-39 The financial statements are for a period of 9 months i.e. from 1st July, 2014 to 31st March, 2015, therefore the figures of the current period are not comparable with those of the previous year. b-40 Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification/ disclosure.

Jun 30, 2014

Company overview

Ballarpur Industries limited (''BIlt'' or the company), a public limited company is engaged primarily in the business of manufacturing of writing and printing (W&p) paper, pulp and paper products.

A-1 Contingent liabilities and Commitments:

30.06.2014 30.06.2013 (to the extent not provided for)

1) Contingent liabilities:

(a) Claims against the Company not acknowledged as debts 12,080 10,831

(b) Guarantees 2,101 1,856

total (a) 14,181 12,687

2) Commitments:

estimated amount of contracts remaining to be executed on capital account and not provided 89 161 for (net of advances) total (B) 89 161

Total (a B) 14,270 12,848

3) In respect of loan availed by its foreign wholly owned subsidiary, Ballarpur International holdings B.V:

i) the Company has granted to the lender an irrevocable and unconditional right to require it to purchase loan wholly or in part(s), as may be required by lender through exercise of put option given to lender subject to a maximum limit of uSD 70 Million. ii) the Company has granted to the lender a corporate guarantee of uSD 35.10 Million. iii) the Company has executed an "indemnity and undertaking" for stand by letter of credit facility of uSD 30 Million.

B-2 Segment reporting:

the Company has identified business segment as the primary segment after considering all the relevant factors. the Company''s manufactured products are sold primarily within India and as such there are no reportable geographical segment.

The expenses, which are not directly identifiable to a specific business segment are clubbed under "unallocated Corporate expenses" and similarly, the common assets and liabilities, which are not identifiable to a specific segment are clubbed under "unallocated Corporate Assets/ liabilities" on the basis of reasonable estimates.

B-3 Information on related parties as required by accounting standard-as 18 "related party disclosures":

a) list of related parties over which control exists subsidiary Companies (Including step down subsidiaries)

Ballarpur International Holdings B.V.

Ballarpur International Graphic paper Holdings B.V. (now known as BIlt paper B.V.)

Ballarpur paper Holdings B.V.

Ballarpur Speciality paper Holdings B.V.

BIlt Graphic paper products limited

BIlt tree tech limited

Sabah Forest Industries Sdn. Bhd.

premier tissues (India) limited

b) name of the related parties with whom transactions were carried out during the year and nature of relationship name of related party nature of relationship

Ballarpur International Holdings B.V. Subsidiary

BIlt tree tech limited Subsidiary

premier tissues (India) limited Subsidiary

Ballarpur paper Holdings B.V. Step Down Subsidiary

BIlt Graphic paper products limited Step Down Subsidiary

Sabah Forest Industries Sdn. Bhd. Step Down Subsidiary

Arizona printers & packers private limited other Related parties

Avantha Holdings limited other Related parties

Avantha power & Infrastructure limited other Related parties

Avantha Realty limited other Related parties

BIlt Industrial packaging Company limited other Related parties

Biltech Building elements limited other Related parties

Crompton Greaves limited other Related parties

Global Green Company limited other Related parties

Jhabua power limited other Related parties

Korba West power Company limited other Related parties

Krebs & Cie (India) limited other Related parties

leading line Merchant traders (p) limited other Related parties

Mirabelle trading pte. limited other Related parties

prestige Wines & Spirits private limited other Related parties

Saraswati travels (p) limited other Related parties

Solaris Chemtech Industries limited other Related parties

uHl power Company limited other Related parties

Key management personnel

Mr. Gautam thapar Mr. R R Vederah Mr. B Hariharan

c) details of transactions with related parties:

(Financial transactions have been carried out in the ordinary course of business and/or in discharge of contract obligation)

B-4 the Company has operating leases for various premises and for other assets, which was renewable on a periodic basis and are cancellable. Rental expenses for operating lease charged to Statement of profit and loss for the year are Rs.13 lacs (30th June,2013 Rs. 3 lacs).

B-5 In the opinion of the Board of Directors, all assets other than fixed assets and non-current investment are realisable in the ordinary course of business at the value at which they are stated in the Financial Statements.

B-6 Accounts with certain financial institutions, banks and companies are subject to reconciliation, however in the opinion of management, these will not have any significant impact on the profit for the year and the net worth of the Company as on the Balance Sheet date.

B-7 Business transfer agreement and slump exchange agreement

A. During the previous year, the Company has entered into an agreement for purchase of Captive power plant (Cpp) along with related moveable assets, net current assets, agreements, licenses and permits, approvals, employees, business and commercial rights, etc. by way of slump sale from Avantha power & Infrastructure limited(ApIl) on a going concern basis. pursuant to Business transfer Agreement, all the assets and liabilities of Cpp were transferred to the Company subject to pending certain formalities. However, pending certain clearances/ approval, ApIl had continued to perform obligation/operate Cpp unit in trust for and on behalf of the Company.

B) During the previous year, with effective from 1st July 2012, pursuant to slump exchange agreement between the Company and Bilt Graphic paper products limited(BGppl), the business undertaking of the Company situated at units Sewa and Ashti engaged in the business of manufacturing of Copier paper have been transferred to BGppl by way of slump exchange on a going concern, with then business undertaking of BGppl situated at unit Kamlapuram engaged in the business of manufacture of Rayon Grade pulp.

B-8 previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification/disclosure.

Mar 31, 2014

1 EXCEPTIONAL ITEMS

Exceptional items relates to expenses incurred on settlement of workers/ staff amounting to Rs. Nil (2012-13: Rs. 1,29,12,715) arising from closure of Kollam Unit of the Company.

2 LEASE COMMITMENTS:

The Company has entered into leasing arrangements for office buildings and godown for storage of inventory that are cancellable at the option of the Company. Rent expense on account of cancellable leases for the year ended March 31, 2014 amounts to Rs. 2,36,52,884 (2012-13 : Rs. 2,19,13,800).

3 SEGMENT INFORMATION

A. Primary segment reporting (by business segments)

i. Composition of business segments

The Company''s business segments are organised as under:

Clay products: Segment manufactures and supplies the clay products to various industries like paper, paint, rubber and fiberglass etc.

Starch products: Segment comprising starch/specialty starch, syrups and modified starch, manufactures and supplies the starch products to various industries like paper, textile, food and pharma, etc.

4 In accordance with the required Accounting Standard (AS-18) on related party disclosures where control exist and where transactions have taken place and description of the relationship as identified and certified by management are as follows:

A. Holding Company

DBH International Private Limited

B. Associates

Enterprises which have significant influence over the Company: Karun Carpets Private Limited

C. Enterprises over which substantial shareholders of the Company and their relatives have significant influence:

Greaves Cotton Limited

Premium Transmission Limited

Pembrill Industrial & Engineering Co. Limited

Greaves Leasing Finance Limited

Dee Greaves Limited

Bharat Starch Products Limited

Aravali Sports & Cultural Foundation

DBH Consulting Limited

DBH Investments Pvt. Limited

Greaves Auto Limited

D. Key management personnel and their relatives

Mr. Karan Thapar Â Chairman

Ms. Devika Thapar (Daughter of Mr. Karan Thapar)

Mr. Karam Thapar (Son of Mr. Karan Thapar)

Mr. B. M. Thapar (Father of Mr. Karan Thapar)

Dr. Venkatesh Padmanabhan (Managing Director and Chief Executive Officer)

Mr. Rahul Gupta (Executive Director) (up to December 31, 2012)

Mr. S.K. Jain (Sr. Vice President Corporate Finance, Accounts and Administration)

Mr. P.S. Saini (Company Secretary and Head Corporate Legal)

5. CONTINGENT LIABILITIES AND COMMITMENTS

1) Contingent liabilities

Particulars As at March 31, 2014 As at March 31, 2013 Rs. Rs.

a) Outstanding bank guarantees and letter of credits 1,99,74,041 4,16,49,453

b) Excise and sales tax matters:

i) Demand received from Commissioner of Central Excise, Panchkula 6,34,94,596 6,34,94,596

on account of misclassification of plain maize starch against which stay has been granted by CESTAT, New Delhi (including penalty of Rs. 3,17,47,298; (2012-13: Rs. 3,17,47,298) against which an amount of Rs. 5,07,000 (2012-13 : Rs. 5,07,000) deposited under protest (note 3).

ii) Haryana local area development tax levied by the State Government - 32,16,191 on the goods received from other state, pending before Supreme Court of India against which an amount of Rs. 32,16,191 (2012-13: Rs. 32,16,191) deposited under protest and the same has been provided in the books during the year.

iii) Entry tax levied by the Government of Kerala on Special Kerosene Oil 1,51,33,588 1,51,33,588 (SKO), pending before Hon''ble Supreme Court of India against which an amount of Rs. 1,51,33,588 (2012-13 : Rs. 1,51,33,588) deposited under protest.

c) Income tax matters 14,00,52,056 7,42,03,748

2) Estimated amounts of contracts remaining to be executed on capital account (net of advances) Rs. 2,38,80,226 (2012-13 : Rs. 1,82,68,305).

3) a) Contingent liabilities with respect to excise and sales tax matters referred in paragraph 1 (b) above exclude demands aggregating Rs. 107,369,734 for the years 2000 to 2004 relating to inputs used in manufacture of excisable as well as exempted goods and convert credit of service tax, pending with Central Excise and Service Tax Appellate Tribunal (CESTAT), which were set aside by CESTAT and remanded back to the relevant authorities for a fresh decision and revision to the demand. Consequently amount deposited under protest amounting to Rs. 12,41,379 have been considered good and recoverable and no provision for the same has been considered necessary.

b) Contingent liabilities with respect to income tax matters referred in paragraph 1(c) above includes :

i) in respect of demand aggregating to Rs. 5,24,38,648 for the assessment year 1997-98,1999-2000, 2000-01 and 2001-02 raised by the assessing officer in view of order of Hon''ble High Court of Kerala disallowing certain expenses to verify the facts, an appeal was filed with the CIT(Appeals).

ii) in respect of demand aggregating to Rs. 5,61,53,668 for the assessment year 1995-96 raised by the assessing officer in view of order of Hon''ble High Court of Kerala disallowing certain expenses to verify the facts, an appeal was filed with the CIT (Appeals).

iii) in respect of demand aggregating to Rs. 2,17,65,100 for the assessment year 2010-11 raised by assessing officer in view of the order of CIT (Appeals) dismissing the appeal filed by the Company with respect to contribution made to gratuity fund, against which the Company has fled an appeal with Income-tax Appellate Tribunal.

iv) in respect of demand aggregating to Rs. 43,34,460 for the assessment year 2007-08 raised by the Assessing Officer in view of the order of ITAT to verify the facts with respect to disallowance of certain expenditure, the Company has filed an appeal with CIT (Appeals).

v) in respect of demand aggregating to 53,60,180 for the assessment year 2008-09 raised by the Assessing Officer disallowing certain expenses u/s 148, against which the Company has filed an appeal with CIT (Appeals).

Based on above, the management is of the opinion that the appeals will be allowed in favor of the Company and hence no provision is required for the above.

6 DELISTING OF SHARES

The equity shares of the Company are in the process of being de-listed from the Bombay Stock Exchange and Calcutta Stock Exchange. The acquirer (Promoter) has accepted an exit price of Rs. 48 per equity share as derived under Reverse Book Building process enunciated in the delisting guidelines of Securities and Exchange Board of India.

43 CHANGE OF NAME

With effect from June 27, 2012, the name of the Company was changed from English Indian Clays limited to EICL Limited.

44 PREVIOUS YEAR FIGURES

Previous year figures have been re-grouped/recast, wherever necessary to conform the current year classification.

Jun 30, 2013

CompanY overvIew

Ballarpur Industries Limited (ÂBILt'' or the company), a public limited company is engaged primarily in the business of manufacturing of writing and printing (W&P) paper, pulp and paper products.

A-1 In the opinion of the Board of Directors, all assets other than fxed assets and non-current investments are realisable in the ordinary course of business at the value at which they are stated in the Financial statements. B-38 Accounts with certain fnancial institutions, banks and companies are subject to reconciliation, however in the opinion of management,

these will not have any signifcant impact on the proft for the year and the net worth of the Company as on the Balance sheet date. B-39 Depreciation charged for the year and debited to the statement of Proft and Loss includes ` nil (Previous year ` 135 Lacs) being depreciation

on the revalued portion of fxed assets, since the revaluation reserve stood exhausted in the earlier years. B-40 Business transfer agreement and slump exchange agreement

A. During the year, the Company has entered into an agreement for purchase of Captive Power Plant (CPP) along with related moveable assets, net current assets, agreements, licenses and permits, approvals, employees, business and commercial rights, etc. by way of slump sale from Avantha Power & Infrastructure Limited(APIL) on a going concern basis. Pursuant to Business transfer Agreement, all the assets and liabilities of CPP were transferred to the Company subject to pending certain formalities. however, pending certain clearances/ approval, APIL had continued to perform obligation/operate CPP unit in trust for and on behalf of the Company.

B. During the year, with effective from 1st july 2012, pursuant to slump exchange agreement between the Company and Bilt Graphic Paper Products Limited(BGPPL), then business undertaking of the Company situated at units sewa and Ashti engaged in the business of manufacturing of copier paper have been transferred to BGPPL by way of slump exchange on a going concern, with the then business undertaking of BGPPL situated at unit Kamlapuram engaged in the business of manufacture of rayon grade pulp.

A-2 Previous year''s fgures have been regrouped / reclassifed wherever necessary to correspond with the current year''s classifcation/ disclosure and due to purchase of captive power plant and slump exchange of unit KPM with unit sewa and unit Ashti, the same are not comparable with current year fgures.

Mar 31, 2013

A) Terms and rights attached to preference shares

Preference shares carry a cumulative dividend of 11% p.a. Each holder of preference share is entitled to one vote per share only on resolutions placed before the Company which directly affect the rights attached to the cumulative preference shares. The Company declares and pays dividend in Indian Rupees.

During the year ended March 31, 2013, the amount of per share dividend recognised as distributions to preference shareholders was Rs. 11.00 (2011-12 : Rs. 11.00 per share) of which dividend proposed by the Board of Directors subject to the approval ofthe shareholders is Rs. 5.50 per share (2011-12 : Rs. 5.50 per share).

11% Cumulative redeemable preference shares are redeemable at par at the option of the Company not earlier than 18 months but not later than 5 years from the date of allotment/renewal September 04, 2011 and October 01, 2009 for Rs. 200,000,000 and Rs. 100,000,000 respectively, i.e. between March 04, 2013 to September 04, 2016 and March 31, 2011 to September 30, 2014 respectively.

Notes:

a) Rupee term loan from banks comprises of:

(i) Loan of Rs. 250,000,000 taken from Axis Bank during the financial year 2010-11 and carries interest @ base rate 2.50% p.a. The loan is repayable in 16 equal quarterly installments starting from September 27, 2011.

(ii) Loan ofRs. 250,000,000 taken from State Bank of India during the financial year 2010-11 and carries interest @ base rate 2.25% p.a. The loan is repayable in 16 equal quarterly installments starting from October 28, 2011.

(iii) Loan of Rs. 200,000,000 taken from IndusInd Bank during the financial year 2011-12 and carries interest @ base rate 2.00% p.a. The loan is repayable in 12 equal quarterly installments starting from September 30, 2012.

(iv) Loan of Rs. 275,000,000 (including ECB of US$ 1,500,000) sanctioned by ICICI Bank of which loan of Rs. 100,000,000 taken from ICICI Bank during the financial year 2012-13 and carries interest @ base rate 2.75% p.a. The loan is repayable in 24 equal quarterly installments starting from February 14, 2014.

b) Loan of Rs. 275,000,000 (including ECB of US$ 1,500,000) sanctioned by ICICI Bank of which US$ 1,500,000 taken from ICICI Bank during the financial year 2011-12 and carries interest @ Libor 4.65% p.a. The loan is repayable in 28 quarterly installments starting from March 08, 2012.

c) All term loans from banks are secured by an equitable charge on all immovable properties of the Company, both present and future and are also secured by way of hypothecation of the Company''s movable properties including movable plant and machinery, machinery spares, tools and accessories and other movables both present and future (save and except book debts) subject to prior charges created in favour of the Company''s bankers on stocks of raw materials, consumable stores, finished goods, etc. for working capital facilities. The above charges rank pari-passu with charges created/to be created by the Company in favour of other term lending banks.

d) Deposits from public carry interest rate ranging from 9.00% to 10.50% p.a. and the same is repayble within a period of 1 to 3 years from the date of deposit as per the scheme opted by the deposit holder.

e) Current maturities of long term borrowings are disclosed under the head other current liabilities in note 10.

Notes:

a) Cash credit and working capital demand loans along with guarantees and letters of credit facilities given by the banks are secured by hypothecation of finished goods, semi-finished goods, consumable stores and spares, raw material and book debts at Yamunanagar, Thiruvananthapuram and Shimoga factories and second pari passu charge on block of fixed assets ofthe Company.

b) Cash credit and working capital demand loans from banks comprises ofthe following:

(i) Cash credit of Rs. 300,000,000 sanctioned by Axis Bank is repayable on demand and carries interest rate at base rate 2.50% p.a. (including a sub-limit ofRs. 300,000,000 as working capital demand loan at base rate 1.25% p.a.).

(ii) Cash credit/working capital demand loan of Rs. 200,000,000 from State Bank of India is repayable on demand and carries interest rate at base rate 0.50% p.a. Working capital demand loan of Rs. 100,000,000 is availed at 10.75% p.a.

(iii) Cash credit/working capital demand loan of Rs. 100,000,000 from Yes Bank is repayable on demand and carries interest rate at base rate 2.25% p.a.

(iv) Cash credit/working capital demand loan of Rs. 150,000,000 from IndusInd Bank is repayable on demand and carries interest rate at base rate 2.25% p.a. Working capital demand loan ofRs.125,000,000 is availed at 11.25% p.a.

(v) Cash credit/working capital demand loan of Rs. 100,000,000 sanctioned by ICICI Bank during the financial year 2012-13 is repayable on demand and carries interest @ base rate 2.75% p.a. Working capital demand loan of Rs. 55,000,000 is availed at @ base rate 2.35% p.a."

*The management has identified 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 (MSMEDA). Accordingly, the disclosure in respect of the amounts payable to such enterprises as at March 31, 2013 has been made in the financial statements based on information received and available with the Company. (Further in the view of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the MSMEDA is not expected to be material).

Notes:

a) Fixed assets held for sale represent land and buildings of gross book value Rs. 15,053,397 (2011-12 : Rs. 15,053,397) and net book value Rs. 14,737,209 (2011-12 : Rs. 14,813,599) located at Kollam unit, which management intends to divest within the next 12 months at amounts equal to or exceeding the asset carrying values at the respective Balance Sheet dates.

b) Previous year fixed assets held for sale represent land and buildings of gross book value Rs. 45,092,126 (net book value Rs. 37,714,290) located at Puducherry unit.

1 EXCEPTIONAL ITEMS

Exceptional items pertains to expenses incurred on settlement of workers/ staff amounting to Rs. 12,912,715 related to Kollam unit of the Company (2011-12: Rs. 22,169,932) arising from the closure of Puducherry operations w.e.f October 10, 2011.

2 LEASE COMMITMENTS:

The Company has entered into leasing arrangements for office buildings and godown for storage of inventory that are cancelable at the option of the Company. Rent expense on account of cancelable leases for the year ended March 31, 2013 amounts to Rs. 21,913,800 (2011-12 : Rs. 19,007,150).

3 SEGMENT INFORMATION

A. Primary segment reporting (by business segments)

i. Composition of business segments

The Company''s business segments are organised as under:

Clay products: Segment manufactures and supplies the clay products to various industries like paper, paint, rubber and fiberglass etc.

Starch products: Segment comprising starch/specialty starch, syrups and modified starch, manufactures and supplies the starch products to various industries like paper, textile, food and pharma, etc.

4. In accordance with the required Accounting Standard (AS-18) on related party disclosures where control exist and where transactions have taken place and description ofthe relationship as identified and certified by management are as follows:

A. Holding Company

DBH International Private Limited

B. Associates

Enterprises which have significant influence over the Company:

Karun Carpets Private Limited

C. Enterprises over which substantial shareholders of the Company and their relatives, have significant influence:

Greaves Cotton Limited

Premium Transmission Limited

Pembril Industrial & Engineering Co. Private Limited

Greaves Leasing Finance Limited

Dee Greaves Limited

Bharat Starch Products Limited

Aravali Sports & Cultural Foundation

DBH Consulting Limited

DBH Investments Private Limited

Greaves Farymann Diesel GmbH

Greaves Auto Limited

Greaves Cotton Netherlands B.V

D. Key management personnel & their relatives

Mr. Karan Thapar - Chairman

Ms. Devika Thapar (Daughter of Mr. Karan Thapar)

Mr. Karam Thapar (Son of Mr. Karan Thapar)

Mr. B M Thapar (Father of Mr. Karan Thapar)

Ms. Sulochna Thapar (Mother of Mr. Karan Thapar)

Dr. Venkatesh Padmanabhan (Managing Director and Chief Executive Officer)

Mr. Rahul Gupta (Executive Director) (upto December 31, 2012)

Mr. S.K. Jain (Sr. Vice President Corporate Finance, Accounts & Administration)

Mr. P.S. Saini (Company Secretary & Head Corporate Legal)

Based on the above, the management is of the opinion that the appeals will be allowed in favour of the Company and hence no provision is required for the above.

2) Estimated amounts of contracts remaining to be executed on capital account (net of advances) Rs. 18,268,305 (2011-12: Rs. 54, 185,183).

3) Contingent liabilities with respect to excise and sales tax matters referred in paragraph 1 (c) above excludes demands aggregating Rs. 107,369,734 for the year 2000 to 2004 relating to inputs used in manufacturing of excisable and as well as exempted goods and cenvat credit of service tax, pending with Central Excise and Service Tax Appellate Tribunal (CESTAT) were set aside and remitted to the relevant authorities for a fresh decision and revision in demand. Consequently amount deposited under protest amounting to Rs. 1,241,379 have been considered good and recoverable and no provision for the same has been considered necessary. Further, till the time demands are received by the Company amounts of contingent liabilities, if any, is not ascertainable.

5 CHANGE OF NAME

With effect from June 27, 2012, the name of the Company, was changed from English Indian Clays Limited to EICL Limited

6 Previous year figures

Previous year figures have been re-grouped/recast, wherever necessary to confirm the current year classification.

Jun 30, 2012

COMPANY OVERVIEW

Ballarpur Industries Limited ('BILT' or the company), a public limited company is engaged primarily in the business of manufacturing of writing and printing (W&P) paper and paper products.

1.1 Rights, preferences and restrictions attached to shares:

The company has one class of equity shares having a par value of Rs. 2 per share. Each shareholder is eligible for one vote per share held. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the company, after distribution of all preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

Note:-

2.1 Includes raw material-in-transit of Rs. NIL (Previous Year Rs. 614 Lacs)

2.2 Includes stores & spares-in-transit of Rs. 1 Lacs (Previous Year Rs. 11 Lacs)

2.3 Includes chemicals-in-transit of Rs. 96 Lacs (Previous Year Rs. 42 Lacs)

2.4 Includes packing material-in-transit of Rs. NIL (Previous Year Rs. 21 Lacs)

Rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.

IN LACS

30.06.2012 30.06.2011

(to the extent not provided for)

Contingent liabilities:

(a) Claims against the company not acknowledged as debts 10,210 10,181

(b) Guarantees 1,379 1,218

Total (A) 11,589 11,399

COMMITMENTS

Estimated amount of contracts remaining to be executed on capital account and not provided 569 785 for (net of advances)

Total (B) 569 785

Total (A B) 12,158 12,184

3. Segment Reporting

The Company has identified business segment as the primary segment after considering all the relevant factors. the Company's manufactured products are sold primarily within India and as such there are no reportable geographical segment.

The Expenses, which are not directly identifiable to a specific business segment are clubbed under "Unallocated Corporate Expenses" and similarly, the common assets and liabilities, which are not identifiable to a specific segment are clubbed under "Unallocated Corporate Assets/ Liabilities" on the basis of reasonable estimates.

a) List of Related Parties over which control exists

Subsidiary Companies

Ballarpur International Holdings B.V.

Ballarpur Paper Holdings B.V.*

Sabah Forest Industries Sdn. Bhd.*

BILT Tree Tech Limited

BILT Graphic Paper Products Limited*

Ballarpur International Graphic Paper Holdings B.V.*

Ballarpur Speciality Paper Holdings B.V Ballarpur Packaging Holdings B.V,

Ballarpur International Packaging Holdings B.V. (merged with Ballarpur Packaging Holdings w.e.f. 29.12.2011) Premier Tissues (India) Limited

Bilt Paper Limited (voluntary dissolution w.e.f 21.02.2012)

* Step down subsidiary

4 Unit Ashti has imported certain plant and machinery at concessional rate of custom duty under 5% Export Promotion Capital Goods (EPCG) scheme. the Unit has been granted two licenses, accordingly the unit is obliged to export goods amounting UsD 9.17 million, which is equivalent to eight and half times the duty saved on import of machinery. the unit is required to meet this export obligation over a period of eight years starting from 17th March 2005The unit has achieved total export of UsD 12.91 million as on 30.06.11.the management is in the process of submitting the required documents for the issuance of export obligation discharge certificate from the Director General of Foreign trade.

5 In the opinion of the board, all assets other than fixed assets and non-current investments are realisable in the ordinary course of business at the value at which they are stated in the Financial statements.

6 The Company has entered into a Power Purchase Agreement with Avantha Power & Infrastructure Limited and the rates of purchase of power and steam have been agreed periodically as per the terms of the agreement.

7 Accounts with certain financial institutions, banks and companies are subject to reconciliation, however in the opinion of management, these will not have any significant impact on the profit for the year and on the net worth of the Company as on the Balance sheet date.

8 Depreciation charged for the year and debited to the statement of profit and loss includes Rs. 135 Lacs (Previous Year Rs. 214 Lacs) being depreciation on the revalued portion of fixed assets, since the revaluation reserve stood exhausted in the earlier years.

9 significant Event Occuring After Balance sheet Date

a) On 24th August, 2012, the Members of the Company and BILT Graphic Paper Products Limited (BGPPL, step down subsidiary of the Company) have approved transfer, by way of slump exchange basis as a going concern with effect from 1st July 2012, the business undertakings of the Company situated at Units sewa and Ashti engaged in the business of manufacture of Copier Paper, with business undertaking of BGPPL, situated at Unit Kamalapuram engaged in the business of manufacture of Rayon Grade Pulp, for a net outflow of Rs.115 Crores to be paid by the Company to BGPPL towards difference in value of exchange of the aforesaid business undertakings, subject to pending requisite approvals.

b) The Board of Directors of the Company have approved purchase by way of slump sale basis as a going concern, with effect from 1st July 2012, the Captive Power Plant of M/s Avantha Power & Infrastructure Limited (APIL) situated at Unit shree Gopal subject to pending requisite approvals.

10 The Revised schedule VI has become effective from 1 April, 2011 for the preparation of Financial statements. this has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.

Mar 31, 2012

Notes:

a) Rupee term loan from banks comprises of:

(i) Loan of Rs.200,000,000 taken from Axis Bank during the financial year 2007-08 and carries interest @ base rate 2.50% p.a. The loan is repayable in 16 equal quarterly installments starting from September 28,2008.

(ii) Loan of Rs.250,000,000 taken from Axis Bank during the financial year 2010-1 land carries interest @ base rate 2.50% p.a. The loan is repayable in 16 equal quarterly installments starting from September 27,2011.

(iii) Loan of Rs. 200,000,000 taken from State Bank of India during the financial year 2008-09 and carries interest @ base rate 3.50%p.a.The loan is repayable in 16 quarterly installments starting from June 30, 2009. It includes Rs. 40,000,000 (2010-11: Rs.120,000,000) borrowed from a bank and is convertible into equity shares in case of*default.

(iv) Loan of Rs. 250,000,000 taken from State Bank of India during the financial year 2010-11 and carries interest @ base rate 3.25% p.a. The loan is repayable in 16 equal quarterly installments starting from October 28,2011.

(v) Loan of Rs.200,000,000 taken from Yes Bank during the financial year 2009-10 and carries interest @ base rate 2.80% p.a. The loan is repayable in 8 equal quarterly installments starting from December 24,2010.

(vi) Loan of Rs. 200,000,000 taken from Induslnd Bank during the financial year 2011-12 and carries interest @ base rate 2.00% p.a. The loan is repayable in 12 equal quarterly installments starting from September 30,2012.

b) Loan of Rs.275,000,000 (including ECB of USD5,000,000) sanctioned by ICICI Bank of which USD 1,500,000 taken from ICICI Bank during the financial year 2011-12 and carries interest @ Libor 4.65%p.a.The loan is repayable in 56 quarterly installments starting from March 8,2012.

c) All term loans from banks are secured by an equitable charge of* all immovable properties of the Company, both present and future and are also secured by way of hypothecation of the Company's movable properties including movable plant and machinery, machinery spares, tools and accessories and other movables both present and future (save and except book debts) subject to prior charges created in favour of the Company's bankers on stocks of raw materials, consumable stores, finished goods etc. For working capital facilities. The above charges rank pari-passu with charges created/to be created by the Company in favour of*other term lending banks.

d) Deposits from public

Deposits from public carry interest rate ranging from 9.00% tol0.50% p.a. and the same is repayble within a period of 1 to 3 years from the date of deposit as per the scheme opted by the deposit holder.

e) Other loans and advances

Intercorporate deposits includes loan taken from Sewastuti Finance Pvt. Ltd. @10.00% and is repayable within 1 year from the date of* deposit.

f) Current maturities of long term liabilities are disclosed under the head other current liabilities.

Notes:

a) Cash credit and working capital demand loans along with guarantees and letters of credit facilities given by the banks are secured by hypothecation of finished goods, semi-finished goods, consumable stores and spares, raw material and book debts at Yamunanagar, Puducherry, Thiruvananthapuram and Shimoga factories and second pari passu charge on block of fixed assets of the Company.

b) Cash credit and working capital demand loans from the bank comprises of the following :

(i) Cash credit ofRs. 300,000,000 sanctioned by Axis Bank is repayable on demand and carries interest rate at base rate 2.50% p.a. (Including a sub-limit ofRs. 300,000,000 as working capital demand loan at base rate 2.00% p.a.).

(ii) Cash credit / working capital demand loan of Rs. 200,000,000 from State Bank of India is repayable on demand and carries interest rate at base rate 3.25% p.a. Working capital demand loan of Rs.100,000,000 is availed at 11.25% p.a.

(iii) Cash credit /working capital demand of Rs.100,000,000 from Yes Bank is repayable on demand and carries interest rate at base rate 2.25%p.a.

(iv) Cash credit / working capital demand loan of Rs.150,000,000 from Induslnd Bank is repayable on demand and carries interest rate at base rate 2.25% p.a. Working capital demand loan of Rs.150,000,000 is availed at 11.55 % p.a.

Notes:

a) Additions to Plant and Machinery include additions to research and development assets amounting to Rs.4,104,099 (2010-11: Rs.5,432,014) and depreciation charge for the year includes 12,209,729 (2010-11: Rs.1,943,239) on account of research and development assets.

b) Pursuant to the sale cum lease agreement dated May 22,2008, the Company has acquired land for the purpose of setting up a starch manufacturing plant at Shimoga, Karnataka. The Company has paid an amount of t 53,130,000 as allotment consideration and the land shall be transferred in the name of the Company on a freehold basis at end of 10 years, payment of registration charges, stamp duty at prevailing price upon fulfillment of certain conditions. As per agreement the land has been transferred on lease basis to Company for the period of 10 years and Company is required to pay lease rent of t68,410 and maintenance charges of Rs. 99,600 per annum.

c) Capital work in progress include borrowing cost of Rs.331,383 (2010-114,914,461)

d) Adjustments include fixed assets held for sale which represent land and buildings of gross book value Rs.45,092,126 (2010-11:Rs.45,132,426), net book value 137,714,290 (2010-11 : Rs.38,632,678) located at Puducherry unit, which management intends to divest within the next 12 months at amounts equal to or exceeding the asset carrying values at the respective balance sheet dates.

Note:

a) Out of this f 2,500,000 (total provision Rs. 3,209,882) have been recovered during the current year and therefore the provision has been written back.

Note:

a) Fixed assets held for sale represent land and buildings of gross book value Rs.45,092,126 (2010-11 : Rs. 45,132,426), net book value Rs. 37,714,290 (2010-11: Rs. 38,632,678) located at Puducherry unit, which management intends to divest within the next 12 months at amounts equal to or exceeding the asset carrying values at the respective balance sheet dates.

Notes:

a) Net of amount receivable from related parties Rs. 113,772.

b) Employee benefit expenses includes research and development expenses (note 41).

1 Exceptional items

Exceptional items relates to expenses incurred on settlement of workers/ staff amounting to Rs. 22,169,932 arising from the closure of Puducherry operations w.e.f October 10,2011.

2 Lease commitments:

The Company has entered into leasing arrangements for office buildings and godown for storage of inventory that are cancelable at the option of the Company. Rent expense on account of cancelable leases for the year ended March 31,2012 amounts to Rs.19,007,150 (2010-11: Rs. 17,133,063).

3 Segment information

A. Primary segment reporting (by business segments)

i. Composition of business segments

The Company's business segments are organised as under:

Clay products: Segment manufactures and supplies the clay products to various industries like paper, paint, rubber and fiberglass etc.

Starch products: Segment comprising starch/specialty starch, syrups and modified starch, manufactures and supplies the starch products to various industries like paper, textile, food and pharma, etc.

4. In accordance with the required Accounting Standard (AS-18) on related party disclosures where control exist and where transactions have taken place and description of the relationship as identified and certified by management are as follows:

A. Holding Company DBH International Private Limited

B. Associates Enterprises which have significant influence over the Company: Karun Carpets Private Limited

C. Enterprises over which substantial shareholders of the Company and their relatives, have significant influence:

Greaves Cotton Ltd.

Premium Transmission Ltd.

Pembril Industrial & Engineering Co. Pvt. Ltd.

Greaves Leasing Finance Ltd.

Dee Greaves Ltd.

Bharat Starch Products Ltd.

Aravali Sports & Cultural Foundation DBH Consulting Limited DBH

Investments Pvt. Ltd.

Greaves Farymann Diesel GmbH Greaves Auto Ltd.

Greaves Cotton Nether lands B.V.

D. Key management personnel & their relatives Mr. Karan Thapar - Chairman Ms. Devika Thapar (Daughter of Mr. Karan Thapar) Mr. Karam Thapar (Son of Mr. Karan Thapar) Mr. B M Thapar (Father of Mr. Karan Thapar) Ms. Sulochna Thapar (Mother of Mr. Karan Thapar) Mr. Rahul Gupta (Executive Director) Mr. S.K. Jain (Sr. Vice President Corporate Finance, Accounts & Administration) Mr. P.S. Saini (Company Secretary & Head Corporate Legal)

1) a) In respect of demand aggregating to Rs.38,171,395 (including demand raised towards penalty of Rs. 24,853,455) for the assessment year 1996-97 raised by the assessing officer in view of order of Hon'ble High Court of Kerala disallowing certain expenses, a revised petition was filed by the Company with the Hon'ble High Court of Kerala for re-hearing the facts of the case and an appeal was filed with the CIT(Appeals) against the demand raised towards penalty of Rs. 24,853,455. The same has been decided in favour of the Company and the penalty levied in the case has been accordingly cancelled.

b) In respect of demands aggregating to Rs. 733,590, Rs. 668,551 and Rs. 701,603 for the assessment years 2004-05, 2005-06 and 2006-07 respectively raised by the assessing officer (International Tax), the Company has filed appeals with the CIT (Appeals).

Based on the above, the management is of the opinion that the appeals will be allowed in favour of the Company and hence no provision is required for the above.

2) Estimated amounts of contracts remaining to be executed on capital account (net of advances) Rs. 54,185,183 (2010-11: Rs.83,446,000).

4) Contingent liabilities with respect to excise and sales tax matters referred in paragraph 1 (d) above excludes demands aggregating Rs. 107,369,734 for the year 2000 to 2004 relating to inputs used in manufacturing of excisable and as well as exempted goods and cenvat credit of service tax, pending with Central Excise and Service Tax Appellate Tribunal (CESTAT) were set aside and remitted to the relevant authorities for a fresh decision and revision in demand. Consequently amount deposited under protest amounting to Rs. 1,241,379 have been considered good and recoverable and no provision for the same has been considered necessary. Further, till the time demands are received by the Company amounts of contingent liabilities, if any, is not ascertainable.

5 Previous year figures

Till the year ended March 31, 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 March 31,2012 the revised schedule VI notified under the Companies Act, 1956, has become applicable to the Company. The Company has reclassified previous year figures to confirm to this year's classification. 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 disclosure made in the financial statements, particularly presentation of balance sheet.

Mar 31, 2011

1) Contingent liabilities As at As at March 31, 2011 March 31,2010 Rs. Rs.

a) Outstanding bank guarantees and letter of credits 35,724,935 23,117,579

b) Bills and cheques discounted 92,438,167 115,617,470

c) Indemnity bond countersigned by the Company and 24,984,972 24,984,972 given to bank with respect to release of interest on deposit received by group companies

d) Excise & Sales-tax matters:

i) Demand received from Commissioner of Central Excise, 63,494,596 63,494,596

Panchkula on account of misclassification of plain maize starch against which stay has been granted by CESTAT, New Delhi (including penalty of Rs.31,747,298; (2009-10: Rs. 31,747,298) against which an amount of Rs. 507,000 (2009-10: Rs. 507,000) deposited under protest. (Refer Note 4 below)

ii) Haryana Local Area Development Tax levied by the 3,216,191 3,216,191

State Government on the goods received from other state, pending before Supreme Court of India against which an amount of Rs. 3,216,191 (2009-10: Rs. 3,216,191) deposited under protest.

iii)Entry tax levied by the Government of Kerala on 15,133,588 15,133,588

Special Kerosene Oil (SKO), pending before Supreme Court of India against which an amount of Rs. 15,133,588 (2009-10: Rs. 15,133,588) deposited under protest.

e) Income tax matters (Refer Note 3 (c) & (d) below) 40,275,139 106,202,437

f) Claims against the Company not acknowledged as debts (amount to the extent ascertainable) amounts to :

i) Rs. 5,082,186 (2009-10: Rs. 5,058,411) in respect of lease rent on lands acquired on lease for which the case is pending before the Honble High Court of Kerala.

2) Estimated amounts of contracts remaining to be executed on Capital Account (Net of advances) Rs. 83,446,000 (2009-10:^243,780,768).

3) a) Pursuant to an appeal filed with the Commissioner of Income Tax (Appeals), the Company received a favorable order allowing brought forward losses ofRs. 128,079,580 relating to erstwhile Bharat Starch Industries Limited (BSIL) (since merged with the Company w.e.f. 01.04.2001) for the assessment year 1998-99 from the Appellate authorities against which department had filed an appeal and the same has been sent back to the Department for re-assessment.

b) In respect of demand aggregating to Rs. 2,563,710 for the Assessment year 2007-08, raised by the Assesing Officer disallowing certain expenses, the appeal filed before the Commissioner (Appeals), Thiruvanathapuram (Kerala) by the Company has been decided in favour of the Company, though the department has filed an appeal with Income tax appellate tribunal. Hence, no demand exists on date.

c) In respect of demand aggregating to Rs. 38,171,395 (including demand raised towards penalty of Rs. 24,853,455) for the Assessment year 1996-97 raised by the Assessing officer in view of order of Honble High Court of Kerala disallowing certain expenses, a revised petition has been filed by the company with the Honble High Court of Kerala for re-hearing the facts of the case.

d) In respect of demands aggregating to Rs. 733,590, Rs. 668,551 and Rs. 701,603 for the Assessment years 2004-05, 2005-06 and 2006-07 respectively raised by the Assessing officer (International Tax), the Company has filed appeals with the CIT (Appeals).

Based on the above, the management is of the opinion that the appeals will be allowed in favour of the Company and hence no provision is required for the above.

4) Contingent liabilities with respect to excise and sales tax matters referred in Paragraph 1 (d) above excludes demands aggregating Rs. 107,369,734 for the year 2000 to 2004 relating to inputs used in manufacturing of excisable and as well as exempted goods and cenvat credit of service tax, pending with Central Excise and Service Tax Appellate Tribunal (CESTAT) were set aside and remitted to the relevant authorities for a fresh decision and revision in demand. Consequently amount deposited under protest amounting to Rs. 1,241,379 have been considered good and recoverable and no provision for the same has been considered necessary till the time demands are received by the Company amounts of contingent liabilities, if any, is presently not ascertainable.

5) i) Pursuant to the sale cum lease agreement dated 22.05.2008 the Company has acquired land for the purpose of setting up a starch manufacturing plant at Shimoga, Karnataka. The Company has paid an amount of Rs. 53,130,000 as allotment consideration and the land shall be transferred in the name of the Company on a freehold basis at end of 10 years, payment of registration charges, stamp duty at prevailing price upon fulfillment of certain conditions. As per agreement the Land has been transferred on lease basis to Company for the period of 10 years and Company is required to pay lease rent of Rs. 68,410 and maintenance charges of Rs. 99,600 per annum.

6) Segment Information

A. Primary segment reporting (by business segments)

i. Composition of business segments

The Companys business segments are organised as under:

Clay products: Segment manufactures and supplies the clay products to various industries like paper, paint, rubber and fibreglass etc.

Starch products: Segment comprising starches/specialty starches, syrups and modified starches, manufactures and supplies the starch products to various industries like paper, textile, food and pharma etc.

7) Lease Commitments:

The Company has entered into leasing arrangements for office buildings and godown for storage of inventory that are cancelable at the option of the Company. Rent expense on account of cancelable leases for the year ended March 31, 2011 amounts to Rs. 17,133,063 (2009-10; Rs. 15,864,746).

8) Related Party Disclosures

In accordance with the required Accounting Standard (AS-18) on related party disclosures where control exist and where transactions have taken place and description of the relationship as identified and certified by management are as follows:

A. Associates

Enterprises which have significant influence over the Company:

DBH International Private Limited; and Karun Carpets Private Limited

B. Enterprises over which substantial shareholders of the Company and their relatives, have significant influence:

Greaves Cotton Ltd,Premium Transmission Ltd,

Pembrill Industrial & Engineering Co. Ltd,

Greaves Leasing Finance Ltd,

Bharat Projects Pvt Ltd,

Dee Greaves Ltd, Standard Refinery & Distillery Ltd,

Bharat Starch Products Ltd,

Aravali Sports & Cultural Foundation,

DBH Consulting Limited,

DBH Investments Pvt. Ltd.,

Greaves Farymann Diesel GmbH,

Greaves Auto Ltd. And

Greaves Cotton Netherlands B.V.

C. Key Management Personnel & their relatives

Mr. Karan Thapar - Chairman,

Ms. Devika Thapar (Daughter of Mr. Karan Thapar),

Mr. Karam Thapar (Son of Mr. Karan Thapar),

Mr. B M Thapar, Ms. Sulochana Thapar,

Mr. D. Kohli (upto March 31, 2010) ,

Ms. Amita Kohli (Wife of Mr. D. Kohli) (upto March 31, 2010),

Mr. Vikramaditya Kohli (Son of Mr. D. Kohli) (upto March 31, 2010),

Ms. Jasbir Kohli (Mother of Mr. D. Kohli) (upto March 31, 2010),

Mr. Rahul Gupta (Executive Director).

Mr. S.K. Jain (Sr. Vice President Corporate Finance, Accounts & Administration),

Mr. P.S. Saini (Company Secretary & Head Corporate Legal),

9) The Company has dispatched requests to its vendors seeking confirmation under the Micro, Small and Medium Enterprises Act, 2006. However, only few responses have been received so far. Accordingly, information required to be disclosed under the Micro, Small and Medium enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company. As represented by the management there are no Micro, Small and Medium enterprises to whom the Company owes dues, which are outstanding for more than 45 days as at March 31, 2011. Listed below are the details of interest due on delayed payments during the year:

I Delayed payments due as at the year end on account of Principal - Rs. Nil (2009-10 - Rs. Nil) and Interest due thereon - Rs. Nil (2009-10 - Rs. Nil)

II Total interest paid on all delayed payments during the year under the provisions of the Act -Rs. Nil (2009-10 -Rs. Nil)

III Interest due on principal amounts paid beyond the due date during the year but without the interest amounts under this Act - * Nil (2009-10 - Rs. 22,244)

IV Interest accrued but not due- Rs. Nil (2009-10 - Rs. Nil)

V Total Interest Due but not paid - Rs. Nil (2009-10 - Rs. 22,244)

10) Previous year figures have been re-grouped/recast, wherever necessary to confirm to the current year classification.

Jun 30, 2010

1. CONTINGENT LIABILITIES

a) Rs 9618 Lacs being claims (30th June 2009 Rs. 8254 Lacs) approximately against the company not acknowledge as debts.

b) the details of disputed dues as per clause 9(b) of Section 227(4A) of the companies Act, 1956 are as follows:

Name of Statute Nature of dues Amount Forum where dispute is pending (Rs.in Lacs)

Central excise & tariff Act,1985 Excise duty 861 Assessing Authority 1123 Appellate Authority 372 High court

Central Sales tax Act , 1956 Sales tax 1573 Assessing Authority and Sales tax Act of Various States

664 Appellate Authority

5 High court

Custom Act, 1961 Custom Duty 7 Custom commissioner

Water (prevention and control of pollution) Charges 8 Honble high court of Orissa

Cess (Amendment) Act 2003

1 State pollution control Board of India

Income tax Act,1961 income tax * 3147 Honble high court Nagpur Bench

Total 7761

* Appeals preferred by the department against appellate authoritys order

c) the future obligation for the rentals under a Financial Lease Agreement entered into, by the company for certain assets taken on lease by another company amounts to Rs. 2.07 Lacs (30th June, 2009 Rs. 6 Lacs).

2. Guarantees given by bankers on behalf of the company remaining outstanding and Bills Discounted with Banks remaining outstanding amount to Rs. 943.24 Lacs (30th June, 2009 Rs. 935.10 Lacs).

3. Estimated amount of contracts remaining to be executed on capital Account Rs. 504.98 Lacs (Net of Advances) (30th June, 2009 Rs. 831.19 Lacs).

4. The company has operating leases for various premises and for other assets, which are renewable on a periodic basis and cancellable at its option. Rental expenses for operating leases charged to profit & Loss Account for the year are Rs. 43.17 Lacs (previous Year Rs. 38.49 Lacs). As of 30th June, 2010, the future minimum lease payments for nonÃcancellable operating leases are as below :Ã

Ã Not later than one year from 30th June, 2010 Rs. 17.58 Lacs

Ã Later than one year and not later than five years Nil

5. unit Ashti has imported certain plant and Machinery at concessional rate of custom duty under 5% export promotion capital Goods (epcG) scheme. the unit has been granted two licenses, accordingly the unit is obliged to export goods amounting uSD$ 9.17 million, which is equivalent to eight and half times the duty saved on import of machinery. the unit is required to meet this export obligation over a period of eight years starting 17th March 2005. the unit has achieved total export of uSD 8.68 million as on 30.06.10. As such the liability that may arise for nonÃfulfillment of export obligation is currently nonÃascertainable.

6. Disclosures required under the Micro, Small and Medium enterprises Development Act,2006 ("the Development Act")Ãdelayed payments due as at the end of the year on account of principal Ã Rs.128.27 (previous Year Rs. NiL) and interest due thereon 3 Lacs (previous Year Rs. NiL).

7. MISCELLANEOUS EXPENDITURE Ã DEFERRED REVENUE EXPENDITURE

Compensation paid under the Approved Voluntary Retirement Scheme for its employees have been treated as Deferred Revenue expenditure, which was being written off over a period of five years or up to 31st March 2010, whichever is earlier.

8. Construction and installation in progress and Advances against capital Assets include expenses and interest related to ongoing projects at various units of the company.

9. The company has entered into a power purchase Agreement with Avantha power & infrastructure Limited and the rates of purchase of power and steam have been agreed periodically as per the terms of the agreement.

10. Accounts with certain Financial institutions, Banks and companies are subject to reconciliation; however these will not have any significant impact on the profit for the year and on the net worth of the company as on the Balance Sheet date.

11. Figures for the previous year have been rearranged and regrouped, wherever necessary to conform to current years classification.

Mar 31, 2010

1) Contingent Liabilities As at As at March 31,2010 March 31,2009 Rs. Rs. a) Outstanding bank guarantees 21,905,159 20,829,249 b) Bills and cheques discounted 115,617,470 74,892,642 c) Indemnity bond countersigned by the Company and 24,984,972 24,984,972 given to bank with respect to release of interest on deposit received by group companies

d) Excise & Sales-tax matters: i) Demand received from Commissioner of Central Excise, 63,494,596 63,494,596 Panchkula on account of misclassification of plain maize starch against which stay has been granted by CESTAT, New Delhi (including penalty of Rs 31,747,298; (2008-09: Rs. 31,747,298) against which an amount of Rs.507,000 (2008-09; Rs. 507,000) deposited under protest. (Refer Note 4 below)

ii) Haryana Local Area Development Tax levied by the 3,216,191 3,216,191 State Government on the goods received from other state ,pending before Supreme Court of India against which an amount of Rs. 3,216,191 (2008-09: Rs. 3,216,191) deposited under protest.

iii) Entry tax levied by the Government of Kerala on 15,133,588 15,133,588 Special Kerosene Oil (SKO), pending before Supreme Court of India against which an amount of Rs. 15,133,588 (2008-09: Rs. 15,133,588) deposited under protest.

e) Income tax matters (Refer Note 3 (d) & (e) below) 106,202,437 103,638,727 f) Claims against the Company not acknowledged as debts amount to the extent ascertainable amounts to :

i) Rs. 5,058,411 (2008-09: Rs 5,010,861) in respect of lease rent on lands acquired on lease for which the case is pending before the Honble High Court of Kerala.

2) Estimated amounts of contracts remaining to be executed on Capital Account (Net of advances) Rs. 243,780,768 (2008-09: Rs. 245,142,155).

3) a) Pursuant to an appeal filed with the Commissioner of Income Tax (Appeals), the Company received a favorable order allowing brought forward losses of Rs. 128,079,580 relating to erstwhile Bharat Starch Industries Limited (BSIL) (since merged with the Company w.e.f. 01.04.2001) for the assessment year 1998-99 from the Appellate authorities against which department had filed an appeal and the same has been sent back to the Department for reassessment.

b) In respect of the claim of loss of Rs. 139,842,989/- of BSIL for the assessment year 2001 -02, Miscellaneous Petition was pending before the Income Tax Appellate Tribunal. During the previous year, the company received a favourable order allowing claim of the said losses.

c) In respect of demands aggregating to Rs. 48,420,562 and Rs. 19,834,560 for the Assessment year 2003-04 and 2005-06 respectively raised by the Assessing officer due to pending assessment of losses of amalgamating company erstwhile BSIL, the CIT (Appeals) has directed the Assessing officer to re-decide in view of availability of assessed losses of amalgamating company erstwhile BSIL. In view of availability of losses of BSIL as per (a) and (b) above the demand does not exist against the Company. The Company has deposited under protest Rs. 48,420,562 and Rs. 2,000,000 for the Assesment year 2003-04 and 2005-06 respectively.

d) In respect of demands aggregating to Rs. 103,638,727 for the Assessment years 2002-03, 2004-05 and 2006-07 raised by the Assessing officer disallowing the losses of amalgamating company erstwhile BSIL, the appeals have been filed before the Commissioner (Appeals) , Thiruvananthapuram (Kerala).

e) In respect of demands aggregating Rs. 2,563,710 for the Assessment year 2007-08 raised by the Assessing officer disallowing certain expenses, the appeals have been filed before the Commissioner (Appeals), Thiruvananthapuram (Kerala).

Based on the opinion obtained by the Company from its tax advisor, the appeals will be allowed in favour of the Company and hence no provision is required for the above.

4) Contingent liabilities with respect to Excise and Sales Tax matters for the year 2008-09 referred in Paragraph 1 (d) above excludes demands aggregating Rs. 107,369,734 relating to inputs used in manufacturing of excisable and as well as exempted goods and Cenvat Credit of Service Tax, pending with Central Excise and Service Tax Appellate Tribunal (CESTAT) were set aside and remitted to the relevant authorities for a fresh decision and revision in demand. Consequently amount deposited under protest amounting to Rs. 1,241,379 have been considered good and recoverable and no provision for the same has been considered necessary till the time demands are received by the Company amounts of contingent liabilities, if any, is presently not ascertainable.

5) i) Pursuant to the Sale cum Lease agreement dated 22.05.2008 the Company has acquired land for the purpose of setting up a Starch manufacturing plant at Shimoga, Karnataka with an installed capacity of 500 TPD. The Company has paid an amount of Rs. 531 lacs as allotment consideration and the land shall be transferred in the name of the Company on a freehold basis at end of 10 years, payment of registration charges, stamp duty at prevailing price upon fulfillment of certain conditions. As per agreement the Land has been transferred on lease basis to Company for the period of 10 years and Company is required to pay lease rent of Rs. 68,410 and maintenance charges of Rs. 99,600 per annum.

iii) This project was put on hold due to economic slowdown during the year 2008-09 and is under continuous review of the Company and may be reviewed during the next financial year in view of improved economic conditions.

6) Segment Information

A. Primary Segment Reporting (by Business Segments)

i. Composition of Business Segments

The Companys business segments are organised as under:

Clay Products: Segment manufactures and supplies the clay products to various industries like paper, paint, rubber and fibreglass etc.

Starch Products : Segment comprising starches/specialty starches, syrups and modified starches, manufactures and supplies the starch products to various industries like paper, textile, food and pharma etc.

7) Lease Commitments:

The Company has entered into leasing arrangements for office buildings and godown for storage of inventory that are cancelable at the option of the company. Rent expense on account of cancelable leases for the year ended March 31, 2010 amount to Rs. 15,864,746 (2008-09; Rs. 16,489,965).

8) Related Party Disclosures

In accordance with the required Accounting Standard (AS-18) on related party disclosures where control exist and where transactions have taken place and description of the relationship as identified and certified by management are as follows:

A. Associates

Enterprises which have significant influence over the Company:

DBH International Private Limited and Karun Carpets Private Limited

B. Enterprises over which substantial shareholders of the Company and their relatives, have significant influence:

Greaves Cotton Ltd, Crompton Greaves Limited (upto March 31, 2009), Premium Energy & Transmission Ltd, Solaris Holdings Ltd. (upto March 31, 2009), Solaris Bio-chemicals Ltd. (upto March 31, 2009), Pembrill Industrial & Engineering Co. Ltd, Greaves Leasing Finance Ltd, Bharat Projects Pvt Ltd, Dee Greaves Ltd, KCT Chemicals & Electricals Ltd. (upto March 31, 2009), Standard Refinery & Distillery Ltd, Bharat Starch Products Ltd, Aravali Sports & Cultural Foundation, Karam Chand Thapar & Bros. Ltd. (upto March 31, 2009), DBH Consulting Limited, DBH Investments Pvt. Ltd., Greaves Farymann Diesel GmbH, Greaves Auto Limited and Greaves Cotton Netherlands B.V.

C. Key Management Personnel & their relatives

Mr Karan Thapar - Chairman, Ms Devika Thapar (Daughter of Mr Karan Thapar), Mr Karam Thapar (Son of Mr Karan Thapar), Mr. B M Thapar, Ms. Sulochna Thapar, Mr D Kohli, Ms. Amita Kohli (Wife of Mr D Kohli), Mr Vikramaditya Kohli (Son of Mr D Kohli), Ms. Jasbir Kohli (Mother of Mr D Kohli), Mr S K Jain, (Vice President Corporate Finance, Accounts and Administration), Mr P S Saini, (Company Secretary and Head Corporate Legal) Mr. Rahul Gupta, (Executive Director), Mr. G. S. Nair (up to March 31, 2009).

9) Employee benefits

During the year, the Company has recognized the following amounts in the Profit and Loss Account.

Defined Benefit Plans

Company has defined benefit plan in terms of gratuity

Other long term Employee Benefits Compensated Absences

During the year the company has recognised a charge of Rs. 638,507 (2008-09 - Rs. 4,883,541)

10) The Company has dispatched requests to its Vendors seeking confirmation under the Micro, Small and Medium Enterprises Act, 2006. However, only few responses have been received so far. Accordingly, information required to be disclosed under the Micro, Small and Medium enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company. As represented by the management there are no Micro, Small and Medium enterprises to whom the Company owes dues, which are outstanding for more than 45 days as at March 31,2010. Listed below are the details of interest due on delayed payments during the year:

I Delayed payments due as at the year end on account of Principal - Rs. Nil (2008 - 09 - Rs. Nil) and Interest due thereon - Rs. Nil (2008-09 Rs. Nil)

II Total interest paid on all delayed payments during the year under the provisions of the Act - Rs. Nil (2008-09 Rs. Nil)

III Interest due on principal amounts paid beyond the due date during the year but without the interest amounts under this Act - Rs. 22, 244 (2008-09 - Rs. Nil)

IV Interest accrued but not due- Rs. Nil (2008-09 - Rs. Nil)

V Total Interest Due but not paid - Rs. 22,244 (2008-09 - Rs.Nil)

11) Previous year figures have been re-grouped/recast, wherever necessary to confirm to the current year classification.

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