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Notes to Accounts of Gujarat State Fertilizer & Chemicals Ltd.

Mar 31, 2017

Notes

1 The Company has commissioned 15000 MTPA Nylon-6 II plant & 20000 MTPA WSF plant at a cost Rs 131.59 crores and Rs 36.03 crores respectively during 2016-17.

2 Asset acquisition includes R&D assets of Rs 9.09 lakhs (previous year Rs 16.80 lakhs).

3 The Company has acquired land through Government and also through direct negotiations. The entire land is in possession of the Company. In respect of portion of land for which the Company has still not received the award/sale deed, the advance paid to land owners have been treated as land. In respect of other portion of land acquired through direct negotiations, compensation has been paid at the negotiated price. The Company also holds possession of a portion of land for which no amount has been paid in absence of receipt of awards.

4 The Company has leased a portion of its land to Bank of Baroda for bank premises at Fertilizer agar and Sikka and Gas Authority of India Ltd. (GAIL) for establishment of CNG pumping station.

5 Buildings include Rs.0.02 lakh being the value of shares in Co-operative Housing Societies.

6 The Company established Sikka Jetty at its own cost, which is in operation since 1987. After due discussion with Gujarat Maritime Board (GMB), a consensus was arrived at establishing ownership of jetty with the Company. Thereafter, in terms of resolution passed by GMB, the ownership of the jetty at Sikka was transferred to the Company. However, during 1994, GMB has reversed its earlier decision not supported by resolution and contended that the ownership of the jetty rests with GMB. The Company has made representation to the appropriate authority with regards to the ownership of the jetty with the Company.The matter of deciding the status of Jetty was under examination at GMB & Government of Gujarat levels since long back. Various meetings were also held and after due diligence on the matter, it is decided by the Board of GMB supported by a resolution to assign the status of Captive Jetty to sikka jetty and the Company has to sign Captive Jetty Agreement with GMB. The matter is under discussion with GMB authorities. Pending finalization of the Captive Jetty Agreement, no provision is considered necessary in respect of various claims against the Company and counter-claims of the Company (both the amounts not determined). At present the Company is in possession of the Jetty and continues to be the owner of the Jetty pending signing of the Agreement.

7 The company has availed the deemed cost exemption in relation to the Property, Plant & Equipment on the date of transition i.e. 1 April 2015 and hence the net block carrying amount has been considered as the gross block carrying amount on that date.

Refer note below for the gross block value and the accumulated depreciation on April 1, 2015 under the IGAAP.

Notes:

1) The 54,90,306 no of equity shares of Karnalyte Resources Inc., Canada, held by the Company are pledged to secure the Company’s long term borrowings from bank.

2) As a promoter of Bhavnagar Energy Company Limited (BECL), the Company has signed the Sponsors’ Support Agreement (SSA) and as per the said Agreement, the promoters collectively shall not, till the final settlement date (being the date on which all obligations under the SSA have been irrevocably and unconditionally paid and discharged in full to the satisfaction of lenders), dispose-off their shareholdings which would result in dilution of their shareholding below 51%.

3) The equity shares held by the Company in Tunisian Indian Fertilizers S.A., Tunisia (TIFERT) have been pledged to secure the obligations of TIFERT to their lenders. The principal amount Rs 2,555.94 lakhs of the convertible term loan and accrued interest Rs 261.16 lakhs thereon converted into fully paid 8,04,848 no. of equity shares of TND 10 each at par during the year 2015-16.

4) Company has received 93,82,895 nos of shares of Gujarat Gas Ltd in persuant to scheme of amalgamation and arrangement between the GSPC Gas Company Limited and GSPC Distribution Networks Limited pursuant to the Honorable High Court order. Out of the said shares, 39,47,369 nos of shares are lock-in for a period of 3 years from listing date.

5) Investments at fair value through OCI (fully paid) reflect investment in quoted and unquoted equity securities. Refer note 42 for determination of their fair values.

The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as given in the provision matrix. Refer note 42 for the provision matrix at the end of the reporting period, ageing of receivable and movement in the expected credit loss allowance.

The concentration of credit risk is limited due to the fact that the customer base is large and unrelated. Refer note 42 for the credit risk management by the Company.

For balances relating to related party receivables, refer Note 40.

a) Rights, preferences and restrictions attached to shares

Equity shares

The Company has one class of equity shares having a par value of '' 2 each. Each shareholder is eligible for one vote per share held. The dividend proposed by Board of Directors is subject to approval of shareholders in the ensuing Annual General Meeting. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

*The term loan from bank comprise of External Commercial Borrowings (ECB) and are secured by pledge on Shares of Karnalyte Resources Inc, Canada. The principal amount of the loan is repayable over a period of six years in annual installments with the first installment due in March 2015 and the interest on the loan is repayable in quarterly installments over the tenure of the loan. The above loan carries effective interest rates with spread ranging from 175 bps to 190 bps over three months LIBOR. The repayment obligations for these loans have been partially hedged for exchange rate risk and fully hedged for interest rate risk. The loan repayment schedule is as under.

Notes:

a) The company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

b) Deferred tax assets have not been recognized in respect of those losses for which the company may not be used to offset taxable profits elsewhere in the company, they have arisen in fair valuation of investments, and there are no other tax planning opportunities or other evidence of recoverability in the near future. If the company were able to recognize all unrecognized deferred tax assets, the comprehensive income would have been increased by INR 1762.13 lacs for the year ended March 31, 2016.

* The Cash credit facility from consortium of banks is secured by hypothecation of stock of raw materials, finished products, packing materials, general stores, spares, book debts etc. of the Company.

** The Company has availed Inter-Corporate Loan of Rs. 400 crores from Gujarat State Financial Services Limited @ 9% p.a. for 90 days period during financial year 2015-16.

*** The Company has issued commercial paper of Rs.200 crores for 90 days period.

*Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management. This has been relied upon by the auditors.

** includes trade payable to related parties Rs 7579.65 lakhs (Rs 4875.08 lakhs as at 31st March,2016 and Rs 3186.18 lakhs as at 1st April, 2015).

10. Earnings per share ( EPS):

Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the parent by the weighted average number of Equity shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the parent (after adjusting for interest on the convertible preference shares) by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares.

The following reflects the income and share data used in the basic and diluted EPS computations:

Note -11: Employment benefit plans

a) The Company operates post employment and other long term employee benefits defined plans as follows: I. Funded II. Unfunded

i. Gratuity i. Post retirement medical benefit scheme

ii. Pension

Aforesaid post-employment benefit plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

Investment Risk: The present value of the defined benefit liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds.

Interest Risk: A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan''s investments.

Longevity Risk: The present value of the defined benefit liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan''s liability.

Salary Risk: The present value of the defined benefit liability is calculated by reference to the future salaries of plan participants. As such, an increase in salary of the plan participants will increase the plan''s liability.

b) Defined contribution plans:

Amount towards Defined Contribution Plans have been recognized under "Contributions to Provided, Gratuity and Superannuation Fund (pension) Funds (including provisions)” in Note : 34 Rs 2730.07 lakhs for financial year 2016-17 (Rs. 2,521.06 lacs for financial year 2015-16).

c. The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors.

d. The estimate of mortality rate during employment has been considered as per Indian Assured Lives Mortality (2006-08).

e. Provident Fund contributions are made to Trusts administered by the Company. The interest rate payable to the members of the T rusts shall not be lower than the statutory rate of interest declared by the Central Government under the Employees provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made good by the Company. Having regard to the assets of the Fund managed by the Trusts and the return on the investments, the Company does not expect any deficiency in the foreseeable future.

The Company had provided a sponsor guarantee for USD 41.1 million (proportionate to the shareholding of 15%) towards the borrowings of Tunisian Indian Fertilizers S.A. (TIFERT), a company based in Tunisia, manufacturing phosphoric acid. In March 2017, TIFERT has requested reschedulement of installment due to the lenders and delayed the payment. The same was not agreed to by the Lenders and the acceleration notice was served on TIFERT by lenders on 28 March 2017. The loan installment was immediately paid on 31 March 2017 by TIFERT. However, on 4 April 2017 the lenders followed up with call notice on shareholders towards guaranteed amount (GSFC''s share USD 34.38 million outstanding as on date). The Company along with other shareholders of TIFERT are in discussion with the Lenders to resolve the matter with regard to liquidity situation and operational improvements of TIFERT and also to find a solution for meeting the future debt obligations of TIFERT. Based on communication exchanged with Lenders and operational improvement initiatives taken by TIFERT, the Company reasonably considers that TIFERT would be in a position to meet the debt obligations and it is unlikely that such an event of payment under guarantee amount will arise. The Company''s obligation under this financial guarantee if that amount is claimed by the counterparty to the guarantee is subject to a maximum amount as mentioned herein above.

Note - 12 Related party transactions

The company is controlled by Government of Gujarat and Gujarat state Investment Limited and hence, the Company is Government related entity as per Ind AS 24 “Related Party Disclosures”.

Terms and conditions of transactions with related parties:

The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31 March 2017, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (31st March,2016: Nil & 1 April 2015: Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

Note - 13. Segment information

For management purposes, the company is organized into business units based on its products and has two reportable segments, as follows:

1. Fertilizer products comprising of Urea, Ammonium Sulphate, Di-ammonium Phosphate, Ammonium Phosphate Sulphate, NPK (12:32:16), (10:26:26), traded fertilizer products etc.

2. Industrial products comprising of Caprolactam, Nylon-6, Nylon Filament Yarn, Nylon Chips, Melamine, Methanol, Polymer products, traded industrial products etc.

The Chief Operating Decision Maker (“CODM”) evaluates the Company''s performance and allocates resources based on an analysis of various performance indicators by the two operating segments. The CODM reviews revenue and gross profit as the performance indicator for both operating segments.

Note 1: The Company has invested in the equity instruments of various companies. However, the percentage of shareholding of the Company in such investee companies is very low and hence, it has not been provided with future projections including projected profit and loss account by those investee companies. Hence, the independent valuer appointed by the Company has estimated fair value based on available historical Annual Reports of such companies and other information as available in the public domain. Since the future projections are not available, discounted cash flow approach for fair value determination has not been followed.

Note 2: In case of some companies, there are no comparable companies valuations available and some are recent startup companies. In light of no information available for future projections, capacity utilization, commencement of operations, etc., the valuation is based on cost approach.

ii) Transfers between Levels 1 and 2

There have been no transfers between Level 1 and Level 2 during 2016-17 and 2015-16

iii) Level 3 fair values Reconciliation of Level 3 fair values

The following table shows a reconciliation from the opening balances to the closing balances for Level 3 fair values.

During 2015-16, the Company received 93,82,895 nos. of shares of Gujarat Gas Ltd (quoted) in lieu of shares held in GSPC Gas Company Ltd and GSPC Distribution Networks Ltd.

Transfer out of Level 3

There were no movement in level 3 in either directions during the year 2016-17 and 2015-16.

C. Financial risk management

The Company has exposure to the following risks arising from financial instruments:

- Credit risk ;

- Liquidity risk ; and

- Market risk

i. Risk management framework

The Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. The Company manages market risk through a Financial risk management committee, which evaluates and exercises independent control over the entire process of market risk management. The treasury department recommends risk management objectives and policies, which are approved by Audit cum finance committee and Board of Directors. The activities of this department include management of cash resources, implementing hedging strategies for foreign currency exposures, borrowing strategies, and ensuring compliance with market risk limits and policies.

The Company''s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company''s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

The audit cum finance committee oversees how management monitors compliance with the company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee.

ii. Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers.

The carrying amount of following financial assets represents the maximum credit exposure:

Trade and other receivables

The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate.

The Revenue department has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company''s standard payment and delivery terms and conditions are offered. The Company''s review includes external ratings, if they are available, and in some cases bank references. Sale limits are established for each customer and reviewed quarterly. Any sales exceeding those limits require approval from the Board of Directors.

Goods are sold subject to retention of title clauses, so that in the event of non-payment the Company may have a secured claim. The Company does not otherwise require collateral in respect of trade and other receivables.

Management believes that the unimpaired amounts that are past due by more than 30 days are still collectible in full, based on historical payment behavior and extensive analysis of customer credit risk, including underlying customers'' credit ratings if they are available.

During the year 2016-17 and 2015-16, an impairment provision of INR 3,640.66 and INR 1,774.58 was created respectively .

Cash and cash equivalents

The Company held cash and cash equivalents of INR 4357.87 at March 31, 2017, INR 3,086.41 Lacs at March 31, 2016 (April 1, 2015: INR 3269.87 lacs). The cash and cash equivalents are held with approved scheduled banks.

Derivatives

The derivatives deals are done with AD category banks in OTC market and registered brokers in ETCD market.

The gross inflows/(outflows) disclosed in the above table represent the contractual undiscounted cash flows relating to derivative financial liabilities held for risk management purposes and which are not usually closed out before contractual maturity. The disclosure shows net cash flow amounts for derivatives that are net cash-settled and gross cash inflow and outflow amounts for derivatives that have simultaneous gross cash settlement.

iv. Market risk

Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company''s income or the value of its holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables and long term debt. The company is exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and the market value of company''s investments. Thus, company''s exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currency. The objective of market risk management is to control the financial risks associated with the Foreign Exchange/Currency rate movements through a sophisticated Foreign Exchange Risk Management System. Currency risk

The Company is exposed to currency risk on account of its import payables and borrowings in foreign currency. The functional currency of the Company is Indian Rupee. The Company uses forward exchange contracts, Options and futures to hedge its currency risk, most with a maturity of less than one year from the reporting date. The company is using derivative instruments which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

Capital Management

The Company manages its capital to ensure that it will be able to continue as a Going Concern while maximizing the return to stakeholders through optimization of the Debt and Equity Balance.

The Company is subject to externally imposed capital requirements as part of its debt covenants such as maintaining an interest coverage ratio of 4 times, a Debt Service Coverage ratio of 1.75 times, Net external debt to EBDITA ratio of 2.75 times, Total leverage ratio of 1.5 times and an external gearing ratio of 1 time.

The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and the requirements of the financial covenants. The Company monitors capital by computing the above ratios on an annual basis and ensuring that the same is in Compliance with the requirements of the Financial Covenants.

*The above amount includes outstanding subsidy on Ammonium Sulphate fertilizer Rs 98656 lakhs (previous year Rs 84375 lakhs), pending finality of matter in the court.

In March, 2013, the Department of Fertilizers (DoF) had sought to recover subsidy on Ammonium Sulphate (AS subsidy) under the Nutrient Based Subsidy Scheme (NBS Scheme) and stopped further disbursal of the AS subsidy to the Company, against which the Company had filed a writ petition in the Honorable Delhi High Court. However, The company was also in dialogue with DoF and took various steps for resolution of the matter. The matter progressed well during the year and finally in March 17, Government accepted the claim of the Company favorably. Consequently, company has withdrawn the writ petition. The DoF has agreed to release the Company''s withheld AS subsidy of Rs. 28,837 lacs for the period from 1st April 2010 to 17th March 2013 (after adjusting Rs. 3,378 lacs). Further, the DoF, vide its Office Memorandum dated 15th March, 2017, has allowed AS produced by the Company to be included in the NBS Scheme effective from 6th March 2017. As regards, the Company''s AS subsidy claims for the period from 18th March 2013 to 5th March 2017 of Rs. 66,287 lacs, the DoF, in coordination with Fertilizer Industry Coordination Committee (FICC) has agreed to examine the eligibility of the claims based on the cost data provided by the Company. In April / May, 2017, the Company has submitted the cost data and is reasonably certain that its AS subsidy claims for the staid period, which claims are in line with the claims recently agreed for period from 1st April 2010 to 17th March 2013, will be agreed by the DoF. The outstanding receivable on account of the AS subsidy was Rs. 98,656 lacs, Rs. 84,083 lacs and Rs. 65,247 lacs as on 31st March 2017, 31st March 2016 and 1st April 2015, respectively.

(b) Interest rate swaps to hedge against fluctuations in interest rate changes: No. of contracts:"!, Amount: USD 16.00 Mn Principal (As at 31 March, 2016: No. of contracts:2, Amount: USD 30.67 Mn Principal)

(c) Currency Futures (other than forward exchange contracts stated above) which are not intended for trading or speculative purposes but for hedge purposes to hedge against fluctuations in changes in exchange rate.

Note: Figures in brackets relate to the previous year (II) The year-end foreign currency exposures that have not been hedged by a derivative instrument or otherwise, represented in equivalent USD: USD 0.73 Mn (As at March 31, 2016: USD 6.06 Mn)

Note - 48 Transition to Ind AS:

These financial statements, for the year ended 31 March 2017, are the first the company has prepared in accordance with Ind-AS. For periods up to and including the year ended 31 March 2016, the company prepared its financial statements in accordance with Indian GAAP, including accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended).

The accounting policies set out in note 3 have been applied in preparing the financial statements for the year ended 31 March 2017, the comparative information presented in these financial statements for the year ended 31 March 2016 and in the preparation of an opening Ind AS balance sheet at 1 April 2015 (the “transition date”).

In preparing our opening Ind AS balance sheet, we have adjusted amounts reported in financial statements prepared in accordance with IGAAP. An explanation of how the transition from IGAAP to Ind AS has affected our financial performance, cash flows and financial position is set out in the following tables and the notes that accompany the tables. On transition, we did not revise estimates previously made under IGAAP except where required by Ind AS.

I. First time adoption of Ind AS

The Standalone financial statements for the year ended March 31, 2017 and year ended March 31, 2016 have been prepared in accordance with Ind AS as issued and effective as at March 31, 2017 and March 31, 2016 respectively. The Company''s opening Ind AS balance sheet was prepared as at 1 April 2015, the Company''s date of transition to Ind AS. In preparing the opening balance sheet, the Company has applied the mandatory exceptions and certain optional exemptions from full retrospective application of Ind AS in accordance with the guidance in Ind AS 101 - ''First Time Adoption of Indian Accounting Standards''.

This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements to Ind AS, in the opening balance sheet as at April 1, 2015 and in the financial statements as at and for the year ended 31 March 2016 and as at and for the period ended March 31, 2017.

II. Exemptions from retrospective application

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:

(a) Deemed cost for Property, Plant and Equipment (PPE) and Intangible assets The Company has elected to measure all the items of PPE and intangible assets at its previous GAAP carrying values which shall be the deemed cost as at the date of transition. As per FAQs issued by Accounting Standards Board (ASB) by Ind AS Transition Facilitation Group of IndAS (IFRS) Implementation Committee of ICAI, deemed cost, is the amount used as a surrogate for the cost or depreciated cost and for the purpose of subsequent depreciation or amortisation, deemed cost becomes the cost as the starting point. Information regarding gross block of assets, accumulated depreciation and provision for impairment under Previous GAAP has been disclosed by way of a note forming part of the financial statements. (Refer Note 5)

(b) Deemed cost for Investments in subsidiaries and jointly controlled entities The Company has elected to measure its investments in subsidiaries and joint ventures at its previous GAAP carrying values which shall be the deemed cost as at the date of transition.

(c) Determining whether an arrangement contains a lease The Company has applied Appendix C of Ind AS 17 Determining whether an arrangement contains a lease, to determine whether an arrangement existing at the transition date contains a lease on the basis of facts and circumstances existing at that date.

The remaining voluntary exemptions as per Ind AS 101-First time adoption either do not apply or are not relevant to the Company.

III. Exceptions from full retrospective application:

The Company has applied the following mandatory exceptions from retrospective application.

Estimates -On an assessment of the estimates made under Indian GAAP the Company has concluded that there was no necessity to revise the estimates under Ind AS except where estimates were required by Ind AS and not required by Previous GAAP or the basis of measurement were different. The remaining mandatory exceptions either do not apply or are not relevant to the Company.

(e) Thre were no significant reconciliation items between cash flows prepared under India GAAP and those prepared under Ind AS.

Notes to the reconciliation:

1 Deferred tax assets (net) :

Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind-AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind-AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP.

2 FVTOCI financial assets: Under Indian GAAP, long term investments were measured at cost less diminution in value which is other than temporaray. Under Ind AS, these financial assets have been classified as FVTOCI. On the date of transition to Ind AS, these financial assets have been measured at their fair value and the restatement gain / (loss) has been taken to Other Comprehensive Income (OCI).

3 Employee benefits : Both under Indian GAAP and Ind-AS, the company recognized costs related to its post-employment defined benefit plan on an actuarial basis. Under Indian GAAP, the entire cost, including actuarial gains and losses, are charged to profit or loss. Under Ind-AS, remeasurements [comprising of actuarial gains and losses excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability] are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI. Further, under Ind AS, past service cost is recognized as expense when the plan amendment occures while under previous GAAP, the same was recognized as expense on a straight-line basis over the average period until the benefits become vested.

4 Proposed dividend: Under Indian GAAP, dividends on equity shares recommended by the Board of Directors after the end of the reporting period but before the financial statements were approved for issue were recognized in the financial statements as a liability. Under Ind AS, such dividends are recognized when declared by the members in a General Meeting.

5 Loans and borrowings: Under Indian GAAP, transaction costs incurred in connection with interest bearing loans and borrowings are amortized upfront and charged to profit or loss for the period. Under Ind-AS, transaction costs are included in the initial recognition amount of financial liability and charged to profit or loss using the effective interest method. All borrowings are subsequently measured at amortized cost.

6 Fair valuation of derivatives: Under Indian GAAP, accounting for derivative contracts was done per AS-

11. Accounting for derivative contracts, other than those covered under AS-11, are marked to market on a portfolio basis, and the net loss after considering the offsetting effect on the underlying hedge item is charged to the Income Statement. Net gains on derivative transactions are ignored. Under Ind AS, the open derivative contracts have been fair valued as on the date of transition and subsequently as at 31 March 2016 and as at 31 March 2017 as per the provisions of Ind AS 109.

7 Lease: Under Indian GAAP, upfront amount paid for interests in land was recorded as lease hold land under Property Plant and Equipments, whereas under Ind AS, it is classified as an operating lease and prepayment for the operating lease is recognized as non-current asset and amortized over the period of lease.

8 Asset Retirement Obligation: Under Ind AS, the initial estimates of the costs of dismantling and of removing the item of Property, Plant and Equipment and restoring the site on which it is located is required to be included in the cost of the respective item of property, plant and equipment. Under previous GAAP, there was no such requirement and cost incurred as and when was charged to Statement of profit and loss.

9 Machinery Spares: The adjustments relates to recognition of spare parts in accordance with Ind AS 16 when they meet the definition of property, plant and equipment. Under previous GAAP, these items were carried as inventory. The adjustment is on account of depreciation on classifying the same as property, plant and equipment from the date they are available for use.

10 Allowance for Doubtful Debt: Under Ind AS, expected life time credit provision is made on trade receivables. Under previous GAAP, the provision for doubtful debts was made using ageing analysis and an individual assessment of recoverability.

11 Interest free deposits: Under Indian GAAP, interest free security deposits (that are refundable on completion of the contract) are recorded at their transaction value. Under Ind AS, all financial assets are to be recorded at fair value. Accordingly, the company has fair valued these security deposits under Ind AS. Difference between the fair value and the transaction value of the security deposits has been recognized in prepaid expenses.

12 Current tax assets and liabilities: Taxation recoverable and taxation liabilities grouped under Long term loans and advances and Short term provision respectively in Indian GAAP has been shown separately on the face of Balance Sheet in Ind AS.

13 Sale of goods

(i) Excise duty:

Under Indian GAAP, sale of goods was presented as net of excise duty. However, under Ind AS, sale of goods includes excise duty. Excise duty on sale of goods is separately presented on the face of statement of profit and loss.

(ii) Cash discounts to customers:

Under Indian GAAP, cash discounts given to customers were presented as part of other expenses. Under Ind AS, the same has been netted off from revenue.

(iii) Swap of similar goods:

Under Indian GAAP, the goods exchanged or swapped which are of similar in nature and in value terms were recorded as Revenue and Purchases respectively. Under Ind AS, When goods or services are exchanged or swapped for goods or services which are of a similar nature and value, the exchange is not regarded as a transaction which generates revenue, and hence such transactions has been set off against each other which has no impact on statement of profit and loss.

14 Fair valuation of guarantee given: The adjustment relates to the fair value of the guarantee given by the Company based on the fee that it would be required to pay to a market participant, i.e. a bank to provide a similar guarantee.


Mar 31, 2016

1. Employees Benefits

a) The Company operates post employment and other long term employee benefits defined plans as follows:

I Funded II Unfunded

i. Gratuity i. Leave Encashment Benefit

ii. Pension ii. Post Retirement Medical Benefit Scheme (PRMBS)

b) Defined contribution plans:

Amount towards Defined Contribution Plans have been recognised under ''''Contributions to Providend, Gratuity and Superannuation Fund (pension) Funds (including provisions)'''' in Note:25 Rs 2521.06 lakhs (2014-1 5 Rs 1873.98 lakhs)

2. Related Party Transactions

Related Party Disclosures as required by AS-18 "Related Party Disclosures" are given below :

1. Relationship :

(a) Subsidiary Company : GSFC Agrotech Ltd.

(b) Associate Company :

(i) Vadodara Enviro Channel Ltd.

(Erstwhile Effluent Channel Project Ltd.)

(ii) Gujarat Green Revolution Company Ltd.

(iii) Gujarat Data Electronics Ltd.

(c) Key Managerial Personnel and their relatives:

(i) Dr. S K Nanda - Chairman cum Managing Director upto 31/01/2016

(ii) Shri. AMTiwari -Managing Director w.e.f. 01/02/2016

(iii) Shri V D Nanavaty - Sr VP (Finance) & CFO

(iv) Shri V V Vachharajani- Company Secretary & VP (Legal)

(d) Others : GSFC Education Society

2. Details of transactions with related parties :

3. Details on derivative instruments and unhedged

I. foreign currency exposures

(a) Forward exchange contracts and options (being derivative instruments), which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

(i) Outstanding forward exchange contracts entered into by the Company as on 31 March, 2016

(b) Interest rate swaps to hedge against fluctuations in interest rate changes: No. of contracts:2, Amount: 30.67 Mn USD Principal (As at 31 March, 2015 :No of contracts 2, Amount :37.33 Mn USD Principal)

(c) Currency Futures (other than forward exchange contracts stated above) which are not intended for trading or speculative purposes but for hedge purposes to hedge against fluctuations in changes in exchange rate.

II. The year-end foreign currency exposures that have not been hedged by a derivative instrument or otherwise, represented in equivalent USD: USD 8.62 Mn (As at March 31, 2015: : USD 7.08 Mn)

4. Subsidy on Ammonium Sulphate:

Department of Fertilizers (DoF) vide Office Memorandum dated 18th March, 2013 had sought to recover subsidy on Ammonium Sulphate fertilizer produced by the Company, under the Nutrient Based Subsidy scheme of Govt. of India w.e.f. April 1, 2010, and also to stop further disbursal of subsidy on said fertilizer.

The management believes that since its Ammonium Sulphate (AS), is specifically covered in the Nutrient Based Subsidy (NBS) Policy right from inception of the scheme w.e.f.1-4-2010, it has been allowed to upload various data on Fertilizers Monitoring System website of DoF.

The Company filed a writ petition in the Honourable Delhi High Court and obtained a stay. The company is trying to resolve matter with Government of India. DoF has also presented its view in the Honourable Delhi high Court about amicable settlement in the matter. The Company has already made representation to DoF for releasing interim subsidy and as per the last order of the court dated 11th May 2016, DoF has confirmed to a decision for disposing of the representation within a period of six weeks and has adjourned the date of next hearing to July 18, 2016.

Following amounts already have been recognised in the books of accounts for respective years/periods and the management strongly believes that amounts mentioned below are recoverable or not required to be paid back to government in case already received.

Such subsidy received from the Department of Fertilizers amounting to Rs. 26,866 lakhs for the period from April 1, 2010 to November 30, 2011 has been accounted for as Net sales/ Income from operations in the respective accounting periods.

Net sales/ Income from operations and trade receivables in the financial statements include amounts of such subsidy as under:

Based on the given scenario, management of the Company believes that there is no ground for removing AS from NBS and has been done in arbitrary and discriminatory manner and amount accounted as above is recoverable from the DoF.

5. Previous Year''s Figures

Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification/disclosures.


Mar 31, 2015

Note 1:

Rights, preferences and restrictions attached to shares

Equity shares

The Company has one class of equity shares having a par value of Rs. 2/- each. Each shareholder is eligible for one vote per share held. The dividend proposed by Board of Directors is subject to approval of shareholders in the ensuing Annual General Meeting. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

During the year ended 31st March, 2015, the amount of per share dividend recognized as distributions to equity shareholders was Rs. 2.20 (31st March, 2014: Rs. 2/-) per equity share of face value of Rs. 2 each.

Note 2:

The Company has acquired land through Government and also through direct negotiations. The entire land is in possession of the Company. In respect of portion of land for which the Company has still not received the award/sale deed, the advance paid to land owners have been treated as land. In respect of other portion of land acquired through direct negotiations, compensation has been paid at the negotiated price. The Company also holds possession of a portion of land for which no amount has been paid in absence of receipt of awards.

b) The Company has leased a portion of its land to Bank of Baroda for bank premises at Fertilizernagar and Sikka and Gas Authority of India Ltd. (GAIL) for establishment of CNG pumping station.

c) Buildings include Rs.0.02 lakh being the value of shares in Co-operative Housing Societies.

d) The Company established Sikka Jetty at its own cost, which is in operation since 1987. After due discussion with Gujarat Maritime Board (GMB), a consensus was arrived at establishing ownership of jetty with the Company. Thereafter, in terms of resolution passed by GMB, the onwership of the jetty at Sikka was transferred to the Company. However, during 1994, GMB has reversed its earlier decision not supported by resolution and contended that the ownership of the jetty rests with GMB. The Company has made representation to the appropriate authority with regards to the ownership of the jetty with the Company.

The matter of deciding the status of Jetty was under examination at GMB & Government of Gujarat levels since long back. Various meetings were also held and after due diligence on the matter, it is decided by the Board of GMB supported by a resolution to assign the status of Captive Jetty to sikka jetty and the Company has to sign Captive Jetty Agreement with GMB. The matter is under discussion with GMB authorities. Pending finalization of the Captive Jetty Agreemnt, no provision is considered necessary in respect of various claims against the Company and counter-claims of the Company (both the amounts not determined). At present the Company is in possession of the Jetty and continues to be the onwer of the Jetty pending signing of the Agreement.

e) Consequent upon enactment of Schedule-II of the New Company''s Act,2013, the Fixed Assets have been reclassified. In the respect of the fixed assets having completed their useful life, an amount of Rs.2133.29 Lakhs has been adjusted against the opening balance of retained earnings.

Note 3:

a) As one of the promoters of the Gujarat Chemical Port Terminal Company Limited (GCPTCL), the Company has given undertaking to ICICI Bank for not to transfer, assign, dispose off, pledge, charge or create any lien or in any way encumber Company''s existing or future shareholding in the GCPTCL in favour of any person so long as money remains due by GCPTCL to ICICI Bank or till the project is duly completed, whichever is later.

b) The equity shares held by the Company in Tunisian Indian Fertilizers S.A., Tunisia (TIFERT) have been pledged to secure the obligations of TIFERT to their lenders. During the year, TIFERT has commissioned the phosphoric acid plant and has commenced production. Pursuant to the shareholders'' agreement in this respect, the day to day operations have been assumed by the Tunisian partners and the Company has accordingly discontinued the same as Joint venture, and accordingly treating its investments in TIFERT under other Investments as per AS-13 - "Accounting for Investments".

c) The Company has consented for the proposed scheme of amalgamation and arrangement between the GSPC Gas Company Limited and GSPC Distribution Networks Limited.

d) As a promoter of Bhavnagar Energy Company Limited (BECL), the Company has signed the Sponsors'' Support Agreement (SSA) and as per the said Agreement, the promoters collectively shall not, till the final settlement date (being the date on which all obligations under the SSA have been irrevocably and unconditionally paid and discharged in full to the satisfaction of lenders), dispose-off their shareholdings which would result in dilution of their shareholding below 51 %.

e) The equity shares of Karnalyte Resources Inc., Canada, held by the Company are pledged to secure the Company''s long term borrowings from bank.

f) For basis of valuation refer Note 1 - Significant accounting policies

Note 4:

Contingent Liabilities

(Rs. in lakhs)

Particulars As at 31st March

2015 2014

Claims against the Company not acknowledgement as debt

(i) Excise Duty 4,404 4,454

(ii) Central Sales Tax and Value Added Tax 4,309 3,076

(iii) Income Tax 2,904 3,965

(iv) Other Claims by :

- Statutory Corporations 1,122 3,826

- Department of Fertilizers, total Refer note Refer amount not quantifiable, no.36 note demands stayed, matter pending no.36 with High Courts

- Employees/ex-employees, contractual labour - pending before courts Not Not ascert ascert ainable ainable

It is not practicable for the Company to estimate the timings of cash flow, if any, in respect of the above.

Guarantees

The Company has provided sponsor''s Guarantee towards the borrowing of Tunisian Indian Fertilizers S.A., Tunisia (TIFERT) upto 15% of the amount due and outstanding 32,391 31,102

Note 5:

Employees Benefits

a) The Company operates post employment and other long term employee benefits defined plans as follows:

I Funded II Unfunded

i. Gratuity i. Leave Encashment Benefit

ii. Pension ii. Post Retirement Medical Benefit Scheme (PRMBS)

b) Defined contribution plans:

Amount towards Defined Contribution Plans have been recognised under "Contributions to Providend, Gratuity and Superannuation Fund (pension) Funds (including provisions)'''' in Note:25 Rs 1873.98 lakhs (2013-14 Rs 1751.76 lakhs)

Note 6:

Related Party Transactions

Related Party Disclosures as required by AS-18 "Related Party Disclosures" are given below :

1. Relationship :

(a) Subsidiary Company : GSFC Agrotech Ltd.

(b) Associate Company :

(i) Vadodara Enviro Channel Ltd. (Erstwhile Effluent Channel Project Ltd.)

(ii) Gujarat Green Revolution Company Ltd.

(c) Key Managerial Personnel and their relatives:

(i) Shri Atanu Chakraborty - Managing Director up to 31/10/2014

(ii) Dr. S K Nanda - Chairman cum Managing Director w.e.f. 01/11/2014

(iii) Shri V D Nanavaty - Sr VP (Finance) & CFO

(iv) Shri V V Vachharajani- Company Secretary & VP (Legal)

(d) Others : GSFC Education Society

Note 6:

Details on derivative instruments and unhedged I. foreign currency exposures

(a) Forward exchange contracts and options (being derivative instruments), which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

(b) Interest rate swaps to hedge against fluctuations in interest rate changes: No. of contracts:2, Amount: 37.33 Mn USD Principal (As at 31 March, 2014 :No of contracts 2, Amount :44 Mn USD Principal)

(c) Currency Futures (other than forward exchange contracts stated above) which are not intended for trading or speculative purposes but for hedge purposes to hedge against fluctuations in changes in exchange rate.

II. The year-end foreign currency exposures that have not been hedged by a derivative instrument or otherwise, represented in equivalent USD: USD 7.08 Mn (As at March 31,2014: : USD 4.87 Mn)

Note 7:

Previous Year''s Figures

Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification


Mar 31, 2014

1. Contingent Liabilities

(Rs. in lakhs)

As At 31st March 2014 2013

Claims against the Company not acknowledgement as debt

(i) Excise and Customs Duty 4,454 4,659

(ii) Sales Tax, Interest on Turnover Tax and Purchase Tax 3,076 3,233

(iii) Income Tax 3,965 4,013

(iv) Other Claims by :

- Statutory Corporations 3,826 4,097

- Department of Fertilizers, total amount not quantifiable, demands stayed, matter pending with High Courts

- Employees/ex-employees, contractual labour - pending before courts Not ascer -tainable Not ascerta -inable

- Third party claims relating to disputes from contracts 752 752

It is not practicable for the Company to estimate the timings of cash flow, if any, in respect of the above.

Guarantees

The Company has provided sponsor''s Guarantee towards the Borrowing of the Joint Venture Company, Tunisian Indian Fertilizers S.A., Tunisia (TIFERT) upto 15% of the amount due and outstanding 31,102 28,146

2. Employees Benefits

(a) The Company operates post employment and other long term employee benefits defined plans as follows:

I Funded II Unfunded

i. Gratuity i. Leave Encashment Benefit

ii. Pension ii. Post Retirement Medical Benefit Scheme (PRMBS)

3. Assumptions :

a. Discount Rate (per annum)

b. Estimated Rate of return on Plan Assets (per annum)

c. The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors.

d. Provident Fund contributions are made to Trusts administered by the Company. The interest rate payable to the members of the Trusts shall not be lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made good by the Company. Having regard to the assets of the Fund managed by the Trusts and the return on the investments, the Company does not expect any deficiency in the foreseeable future.

i) SECONDARY SEGMENT INFORMATION :

The Company operates mainly in Indian market and there are no reportable geographical segments.

ii) OTHER DISCLOSURES :

1. The Products and Services covered under each business segment are as under :

Fertilizer Products :

Urea, Ammonium Sulphate, Di-ammonium Phosphate, Ammonium Phosphate Sulphate, NPK (12:32:16)(10:26:26), traded fertilizer products etc.

Industrial Products :

Caprolactam, Nylon-6, Nylon Filament Yarn, Nylon Chips, Melamine, Methanol, Polymer products, traded industrial products etc.

2. Segment revenue, results, assets and liabilities include the respective amounts identifiable to each of the segment and amounts allocated on reasonable basis.

4. Related Party Transactions

Related Party Disclosures as required by AS-18 "Related Party Disclosures" are given below :

1. Relationship :

(a) Subsidiary Company : GSFC Agrotech Ltd. (Incorporated on 02.04.2012)

(b) Associate Company :

(i) Vadodara Enviro Channel Ltd.

(Erstwhile Effluent Channel Project Ltd.) (ii) Gujarat Green Revolution Company Ltd.

(c) Directors and their relatives :

Shri Atanu Chakraborty - Managing Director

(d) Others :

GSFC Education Society

2. Details of transactions with related parties :

5. Interest in Subsidiary and Joint Venture

The Company incorporated a wholly owned subsidiary - GSFC Agrotech Limited (GATL) during the year ended 31 March 2013 for undertaking investment in new schemes. The Company considers the subsidiary to be not material in terms of its investment and the level of operations as at 31 March 2014 and hence consolidated financial statements are not prepared.

Value of Imported and Indigenous Raw Materials and Spare Parts consumed and percentage thereof to total consumption:

Balance of certain creditors and debtors/advances are subject to confirmation/reconciliation and consequential adjustments, if any.

6. Details on derivative instruments and unhedged foreign currency exposures

I.(a)Forward exchange contracts and options (being derivative instruments), which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

(i) Outstanding forward exchange contracts entered into by the Company as on 31st March, 2014 :

(b) Interest rate swaps to hedge against fluctuations in interest rate changes:

No. of contracts: 2, Amount: 44Mn USD Principal (As at 31st March, 2013: No. of contracts: 2, Amount: 44Mn USD Principal)

(c) Currency Futures (other than forward exchange contracts stated above) which are not intended for trading or speculative purposes but for hedge purposes to hedge against fluctuations in changes in exchange rate :

II. The year-end foreign currency exposures that have not been hedged by a derivative instrument or otherwise, represented in equivalent USD : USD 4.87 Mn. (As at March 31, 2013: NIL)

7. Previous Year''s Figures

Previous year''s figures have been regrouped/reclass- ified wherever necessary to correspond with the current year''s classification/disclosures.


Mar 31, 2013

1. Related Party Transactions

Related Party Disclosures as required by AS-18 "Related Party Disclosures" are given below :

1. Relationship :

(a) Subsidiary Company :

GSFC Agrotech Ltd.

(Incorporated on 02.04.2012)

(b) Associate Company :

(i) Vadodara Enviro Channel Ltd.

(Erstwhile Effluent Channel Project Ltd.)

(ii) Gujarat Green Revolution Company

(c) Joint Venture :

Tunisian Indian Fertilizers, S.A. (TIFERT)

(d) Directors and their relatives :

Shri Atanu Chakraborty - Managing Director

(e) Others :

GSFC Education Society

2. Interest in subsidiary and Joint Venture

The Company has incorporated a wholly owned subsidiary - GSFC Agrotech Limited (GATL) during the year ended 31 March 2013 for undertaking investment in new schemes. GATL''s business blue print was under consideration and no commercial operations has commenced during the year. The Company considers the subsidiary to be not material in terms of its investment and the level of operations as at 31 March 2013 and hence consolidated financial statements are not prepared.

The proportionate share of assets, liabilities, income and expenditure of subsidiary-GSFC Agrotech Limited and Jointly Controlled Entity- Tunisian Indian Fertilizers, S.A. (TIFERT) are given below :-

3. Details on derivative instruments and unhedged foreign currency exposures

I. (a) Forward exchange contracts and options (being derivative instruments), which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

(i) Outstanding forward exchange contracts entered into by the Company as on 31 March, 2013 :

4. Previous Years Figures

Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification/disclosures.


Mar 31, 2012

A) Rights, preferences and restrictions attached to shares

Equity shares

The Company has one class of equity shares having a par value of Rs. 10/- each. Each shareholder is eligible for one vote per share held. The dividend proposed by Board of Directors is subject to approval of shareholders in the ensuing Annual General Meeting. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

During the year ended 31st March, 2012, the amount of per share dividend recognized as distributions to equity shareholders was Rs. 7.50 (31st March, 2011: Rs. 7/- per equity share).

Notes :

a) The Company has acquired land through Government and also through direct negotiations. The entire land is in possession of the Company. In respect of portion of land for which the Company has still not received the award/sale deed, the advance paid to land owners have been treated as land. In respect of other portion of land acquired through direct negotiations, compensation has been paid at the negotiated price. The Company also holds possession of a portion of land for which no amount has been paid in absence of receipt of awards.

b) The Company has leased a portion of its land to Bank of Baroda for bank premises at Fertilizer agar and Sikka and Gas Authority of India Ltd. (GAIL) for establishment of CNG pumping station.

c) Buildings include Rs.0.02 lakh being the value of shares in Co-operative Housing Societies.

d) The addition in Leasehold Land of Rs.528 lakhs (Previous year Rs.441 lakhs) is for Wind Mill Project taken on lease for a period of 20 years.

e) The Company established Sikka Jetty at its own cost, which is in operation since 1987. After due discussion with Gujarat Maritime Board (GMB), a consensus was arrived at establishing ownership of jetty with GSFC. Thereafter, in terms of resolution passed by GMB, the ownership of the jetty at Sikka was transferred to the Company. However, during 1994, GMB has reversed its earlier decision not supported by resolution and contended that the ownership of the jetty rests with GMB. The Company has made representation to the appropriate authority with regards to the ownership of the jetty with the Company.

The matter of deciding the status of Jetty was under examination at GMB & Government of Gujarat levels since long back. Various meetings were also held and after due diligence on the matter, it is decided by the Board of GMB supported by a resolution to assign the status of Captive Jetty to sikka jetty and the Company has to sign Captive Jetty Agreement with GMB. The matter is under discussion with GMB authorities. Pending finalization of the Captive Jetty Agreement, no provision is considered necessary in respect of various claims against the Company and counter-claims of the Company (both the amounts not determined). At present the Company is in possession of the Jetty and continues to be the owner of the Jetty till the Captive Jetty Agreement is signed.

Notes :

a) As one of the promoters of the Gujarat Industries Power Company Ltd. (GIPCL), the Company has given undertaking to Industrial Development Bank of India (IDBI), Power Finance Corporation Ltd. (PFC) and Gujarat Industrial Investment Corporation Ltd. (GIIC) for non disposal of and non creation of a charge against the Company's investment in the shares of the said company during the pendency of loans given to GIPCL by IDBI, PFC and GIIC.

b) As one of the promoters of the Gujarat Chemical Port Terminal Company Limited (GCPTCL), the Company has given undertaking to ICICI Bank for not to transfer, assign, dispose off, pledge, charge or create any lien or in any way encumber company's existing or future shareholding in the GCPTCL in favour of any person so long as money remains due by GCPTCL to ICICI Bank or till the project is duly completed, whichever is later.

c) The ordinary shares of Tunisian Indian Fertilizers S.A., Tunisia (TIFERT) held by the Company and included under Investment have been pledged to secure the obligations of TIFERT to their lenders.

d) As per the Security and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulation 2009 ("ICDR Regulations"), the Company has given consent for lock-in of its shareholding of equity shares in Gujarat State Petroleum Corporation Ltd. for a period of one year or for such other time as may be required from the date of allotment of Public issue.

e) As a promoter of Bhavnagar Energy Company Limited (BECL), the Company has signed the Sponsors' Support Agreement (SSA) and as per the said Agreement, the promoters collectively shall not, till the final settlement date (being the date on which all obligations under the SSA have been irrevocably and unconditionally paid and discharged in full to the satisfaction of lenders), dispose-off their shareholdings which would result in dilution of their shareholding below 51 %.

For basis of valuation refer Note 1 - Significant Accounting Policies.

1. Contingent Liabilities

(Rs.in lakhs)

2011-12 2010-11

Claims against the Company not acknowledgement as debt

Disputed Excise and Customs Duty (net of provision) 5,326 4,516

Disputed demand of Sales Tax, Interest on Turnover Tax &

Purchase Tax against which the Company has preferred appeals 3,556 462

Claims by Statutory Corporations and others not acknowledged as debt 4,264 4,111

Disputed gas price/royalty on gas with ONGC 752 752

Claims by employees/ex- employees pending before courts Not ascertainable Not ascertainable

The Industrial Tribunal, Vadodara vide its award dated 27/01/2009 in reference (IT) No.88/1999 directed the Company to pay to the concerned employees 50% of the amount calculated by working out double the amount qua the extra hours relating to the overtime done by concerned employees i.e. Supervisors and Sr. Supervisors during the period from 01/01/2001 to 31/03/2009. It has further been directed that the aforesaid would be effective upto March-2009 and thereafter if the concerned employees i.e. Supervisors and Sr. Supervisors are made to work overtime then in that situation such overtime wages would have to be paid at double the rate. The Industrial Tribunal's award has been challenged by the Company in the Hon'ble High Court of Gujarat and the Hon'ble High Court has granted Ad-interim relief thereby stayed the implementation, operations and execution of the award dated 27/01/2009. Vide an order dated 11/03/2010, the Hon'ble High Court has confirmed the interim relief granted earlier till final disposal of the petition.

Aggrieved by the said order, the Grade-II Employees' Union filed the Letters Patent Appeal before the Division Bench of the High Court, which has been dismissed by the Div. Bench.

The Company has not provided liability at this juncture as the matter can be proceeded if required, on merit at both the High

Court and Supreme Court stages 839 839

Guarantees

The Company has provided sponsor's Guarantee towards the borrowing of the joint venture company, Tunisian Indian Fertilizers S.A., Tunisia (TIFERT) upto 15% of the amount due and outstanding 26,473 18,237

ii) SECONDARY SEGMENT INFORMATION :

The Company operates mainly in Indian market and there are no reportable geographical segments.

iii) OTHER DISCLOSURES :

1. The Products and Services covered under each business segment is as under :

Fertilizer Products :

Urea, Ammonium Sulphate, Di-ammonium Phosphate, Ammonium Phosphate Sulphate, NPK (12:32:16X10:26:26), traded fertilizer products etc.

Industrial Products :

Caprolactam, Nylon-6, Nylon Filament Yarn, Nylon Chips, Melamine, Polymer products, traded industrial products etc.

2. Segment revenue, results, assets and liabilities include the respective amounts identifiable to each of the segment and amounts allocated on reasonable basis.

2. Related Party Transactions

Related Party Disclosures as required by AS-18 "Relatec Party Disclosures are given below :

1. Relationship :

(a) Associate Company :

Vadodara Enviro Channel Ltd.

(Erstwhile Effluent Channel Project Ltd.)

(b) Joint Venture :

Tunisian Indian Fertilizers, S.A. (TIFERT)

(c) Directors and their relatives :

Shri H. V. Patel

- Managing Director upto 13-07-11

Shri Atanu Chakraborty

- Managing Director w.e.f. 13-07-11

3. Joint Ventures

As on 31st March, 2012, the Company is holding 15% shares in a Joint Venture Company, Tunisian Indian Fertilizers, S.A. (TIFERT), incorporated in Tunisia and the proportionate share in the Assets, Liabilities, Income and Expenditure as per their Financial Year ending on 31st December 2011 are given below :

Balance of certain creditors and debtors/advances are subject to confirmation/reconciliation and consequential adjustments, if any.

4. Previous Years Figures

The Revised Schedule VI has become effective from 1st 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. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.


Mar 31, 2011

1. Contingent Liabilities not provided for :

2010-11 2009-10

Rs. in lakhs

(a) Disputed Excise Duty and Customs Duty (net of provision). 626 487

(b) Disputed demand of Sales Tax and Interest on Turnover Tax & Purchase Tax against which the Company has preferred appeals. 462 1580

(c) Claims by Statutory Corporations and others disputed and not acknowledged as debt. 4111 4208

(d) Disputed gas price/royalty on gas with ONGC. 752 752

(e) Claims by employees/ex- employees pending before courts. Not ascertainable

(f) The Industrial Tribunal, Vadodara vide its award dated 27/01/2009 in reference (IT) No. 88/1999 directed the Company to pay to the concerned employees 50% of the amount calculated by working out double the amount qua the extra hours relating to the overtime done by concerned employees i.e. Supervisors and Sr. Supervisors during the period from 01/01/ 2001 to 31/03/2009. It has further been directed that the aforesaid would be effective upto March-2009 and thereafter if the concerned employees i.e. Supervisors and Sr. Supervisors are made to work overtime then in that situation such overtime wages would have to be paid at double the rate. The Industrial Tribunal's award has been challenged by the Company in the Hon'ble High Court of Gujarat and the Hon'ble High Court has granted Ad-interim relief there by stayed the implementation, operations and execution of the award dated 27/01/2009. Vide an order dated 11/03/2010, the Hon'ble High Court has confirmed the interim relief granted earlier till final disposal of the petition. Aggrieved by the said order, the Grade-II Employees' Union filed the Letters Patent Appeal before the Division Bench of the High Court, which has been dismissed by the Div. Bench. The Company has not provided liability at this juncture as the matter can be proceeded, if required, on merit at both the High Court and Supreme Court stages. 839 839

(g) The Company has provided sponsor's Guarantee towards the borrowing of the joint venture company, Tunisian Indian Fertilizers S.A., Tunisia (TIFERT) upto 15% of the amount due and outstanding. 18237 9256

2. Estimated amount of contracts remaining to be executed on capital accounts, net of advances. 9831 12063

3. In respect of LSHS consumed for production of Steam, which is used for manufacturing fully exempted fertilizers, Central Excise authorities had issued various Show- Cause Notices (SCNs) denying MODVAT Credit availed by the Company from 1997 till 2001. The Company litigated against such denial and the Hon. Supreme Court gave favourable order against one of the SCNs in July 2008 upholding the MODVAT credit eligibility of the Company. Thereafter, the Company requested Excise authorities to adjudicate pending the Show Cause Notices on the basis of Supreme Court order. However, Commissioner, Central Excise & Customs, Vadodara adjudicated the matter in November 2010, against the Company on various grounds and ordered the Company to pay Rs. 3436.60 Lacs for Cenvet availed on LSHS and interest on the same of Rs. 453.78 Lacs. The Company has appealed to the CESTAT against this order. The Company has not provided liability at this juncture.

4. (a) As one of the promoters of the Gujarat Industries Power Company Ltd.(GIPCL), the Company has given undertaking to Industrial Development Bank of India (IDBI), Power Finance Corporation Ltd. (PFC) and Gujarat Industrial Investment Corporation Ltd. (GIIC) for non disposal of and non creation of a charge against the Company's investment in the shares of the said company during the pendency of loans given to GIPCL by IDBI, PFC and GIIC.

(b) As one of the promoters of the Gujarat Chemical Port Terminal Company Limited (GCPTCL), the Company has given undertaking to ICICI Bank for not to transfer, assign, dispose off, pledge, charge or create any lien or in any way encumber Company's existing or future shareholding in the GCPTCL in favour of any person so long as money remains due by GCPTCL to ICICI Bank or till the project is duly completed, whichever is later.

(c) The ordinary shares of Tunisian Indian Fertilizers S.A., Tunisia (TIFERT) held by the Company and included under Investment (Schedule-6) have been pledged to secure the obligations of TIFERT to their lenders.

(d) As per the Security and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulation 2009 ("ICDR Regulations"), the Company has given consent for lock-in of its shareholding of equity shares in Gujarat State Petroleum Corporation Ltd. for a period of one year or for such other time as may be required from the date of allotment of Public Issue.

5. The Sundry Creditors in Schedule-11 includes Rs. 60.05 lakhs (previous year Rs. 184.49 lakhs) due to Micro, Small and Medium Enterprises and Rs. 46443.09 lakhs due to other creditors. As per the provisions of "The Micro, Small and Medium Enterprises Development Act, 2006", the principal amount payable to Micro, Small and Medium Enterprises is Rs. 60.05 lakhs and no interest due thereon is remaining unpaid as on 31st March, 2011. This information has been determined to the extent such parties have been identified on the basis of information available with the Company.

6. (a) No provision has been considered necessary towards the income tax demand of Rs. 5719 lakhs for the assessment years 1987-88, 1992-93, 1997-98, 1999-2000, 2004-05, 2005-06, 2006-07 and 2008-09 as the same is disputed in appeals and the Company is hopeful of succeeding in the said appeals.

7. The Company established Sikka Jetty at its own cost, which is in operation since 1987. After due discussion with Gujarat Maritime Board (GMB), a consensus was arrived at establishing ownership of jetty with GSFC. Thereafter, in terms of resolution passed by GMB, the ownership of the jetty at Sikka was transferred to the Company. However, during 1994, GMB has reversed its earlier decision not supported by resolution and contended that the ownership of the jetty rests with GMB. The Company has made representation to the appropriate authority with regard to the ownership of the jetty with the Company.

The matter of deciding the status of Jetty was under examination at GMB & Government of Gujarat levels since long back. Various meetings were also held and after due diligence on the matter, it is decided by the Board of GMB supported by a resolution to assign the status of Captive Jetty to Sikka Jetty and the Company has to sign Captive Jetty Agreement with GMB. The matter is under discussion with GMB authorities. Pending finalization of the Captive Jetty Agreement, no provision is considered necessary in respect of various claims against the Company and counter-claims of the Company (both the amounts not determined).

At present the Company is in possession of the Jetty and continues to be the owner of the Jetty till the Captive Jetty Agreement is signed.

8. During the year, based on a favourable decision of the Court, pertaining to the year 1997-98, the Company has accounted subsidy on DAP amounting to Rs. 761.87 lakhs in Sales and interest thereon amounting to Rs. 688.33 lakhs in Other Income.

9. Disclosures pursuant to Accounting Standard - 15 (Revised) "Employee Benefits" :

(a) The Company operates post employment and other long term employee benefits defined plans as follows:

I Funded

i. Gratuity

ii. Pension

II Unfunded

i. Leave Encashment Benefit

ii. Post Retirement Medical Benefit Scheme (PRMBS)

(c) The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors.

(d) Provident Fund contributions are made to Trusts administered by the Company. The interest rate payable to the members of the Trusts shall not be lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made good by the Company. Having regard to the assets of the Fund managed by the Trusts and the return on the investments, the Company does not expect any deficiency in the foreseeable future.

10. Long term wage settlement at Baroda unit of the Company has expired in December 2010. Pending negotiation for wage settlement, no provision has been made for the period January to March 2011.

11. Related Party Disclosures :

Related Party Disclosures as required by AS-18 "Related Party Disclosures" are given below :

1. Relationship :

(a) Associate Company :

Effluent Channel Project Ltd.

(b) Joint Venture :

Tunisian Indian Fertilizers, S.A. (TIFERT)

(c) Directors and their relatives :

Shri H. V. Patel - Managing Director

15. Balance of certain creditors and debtors/advances are subject to confirmation/reconciliation and consequential adjustments, if any.

ii) SECONDARY SEGMENT INFORMATION :

The Company operates mainly in Indian market and there are no reportable geographical segments.

iii) OTHER DISCLOSURES :

1. The Products and Services covered under each business segment is as under :

Fertilizer Products :

Urea, Ammonium Sulphate, Di-ammonium Phosphate, Ammonium Phosphate Sulphate, NPK (12:32:16)(10:26:26), traded fertilizer products etc.

Industrial Products :

Caprolactam, Nylon-6, Nylon Filament Yarn, Nylon Chips, Melamine, Polymer products, traded industrial products etc.

2. Segment revenue, results, assets and liabilities include the respective amounts identifiable to each of the segment and amounts allocated on reasonable basis.

12. Previous year's figures have been regrouped wherever necessary.


Mar 31, 2010

1. Contingent Liabilities not provided for :

2009-10 2008-09

Rs. in lakhs

(a) Disputed Excise Duty and Customs Duty (net of provision). 487 478

(b) Disputed demand of Sales Tax and Interest on Turnover Tax & Purchase Tax against which the Company has preferred appeals. 1580 1004

(c) Claims by Statutory Corporations and others disputed and not acknowledged as debt. 4208 4666

(d) Claim by ONGC for royalty on gas. 81 81

(e) Claims by employees/ex- employees pending before courts. Not ascertainable

(f) The Industrial Tribunal, Vadodara vide its award dated 27/01/2009 in reference (IT) No.88/1999 directed the Company to pay to the concerned employees 50% of the amount calculated by working out double the amount qua the extra hours relating to the overtime done by concerned employee i.e. Supervisors and Sr. Supervisors during the period from 01/01/2001 to 31/03/2009.

It has further been directed that the aforesaid would be effective upto March-2009 and thereafter if the concerned employees i.e. Supervisors and Sr. Supervisors are made to work overtime then in that situation such overtime wages would have to be paid at double the rate. The Industrial Tribunals award has been challenged by the Company in the Honble High Court of Gujarat and the Honble High Court has granted Ad- interim relief thereby stayed the implementation, operations and execution of the award dated 27/ 01/2009. The Company has not provided liability at this juncture as the matter can be proceeded, if required, on merit at both the High Court and Supreme Court stages. 839 839

(g) The Company has provided sponsors Guarantee towards the borrowing of the joint venture

2009-10 2008-09

Rs. in lakhs

Company, Tunisian Indian Fertilizers S.A., Tunisia (TIFERT) upto 15% of the amount due and outstanding. 9256 Nil

2. Estimated amount of contracts remaining to be executed on capital accounts, net of advances. 12063 5984

3. (a) ONGC had submitted an application in Civil Court before Civil Judge (S.D.) Baroda for the recovery of gas price difference. The Company has challenged the same. However, as per the legal opinion, the aforesaid application for recovery is not tenable in law in the said Civil Misc. Application.

(b) Pending decision of Ministry of Petroleum and Natural Gas and Ministry of Fertilizers with regard to demanded higher price of gas by Oil & Natural Gas Commission (ONGC) for the period from1982 to 29-1-1987, the Company has provided and continued for the liability at the prices notified by Central Government in 1987 (net of amount recoverable through Retention Price Scheme and others). The Company is contingently liable for the price difference of Rs. 671 lakhs (net of amount recoverable) between the demanded higher price and the liability accounted for.

(c) The Company has filed a Petition in the Honble High Court of Gujarat to ensure uninterrupted gas supply from GAIL on which Honble High Court has ordered to maintain status quo for gas supply.

4. (a) As one of the promoters of the Gujarat Industries

Power Company Ltd.(GIPCL), the Company has given undertaking to Industrial Development Bank of India (IDBI), Power Finance Corporation Ltd. (PFC) and Gujarat Industrial Investment Corporation Ltd. (GIIC) for non disposal of and non creation of a charge against the Companys investment in the shares of the said company during the pendency of loans given to GIPCL by IDBI, PFC and GIIC.

(b) As one of the promoters of the Gujarat Chemical Port Terminal Company Limited (GCPTCL), the Company has given undertaking to ICICI Bank for not to transfer, assign, dispose off, pledge, charge or create any lien or in any way encumber Companys existing or future shareholding in the GCPTCL in favour of any person so long as money remains due by GCPTCL to ICICI Bank or till the project is duly completed, whichever is later.

(c) The ordinary shares of Tunisian Indian Fertilizers S.A., Tunisia (TIFERT) held by the Company and included under Investment (Schedule-6) have been pledged to secure the obligations of TIFERT to their lenders.

(d) As per the Security and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulation 2009 ("ICDR Regulations"), the Company has given consent for lock-in of its shareholding of equity shares in Gujarat State Petroleum Corporation Ltd. for a period of one year or for such other time as may be required from the date of allotment of Public Issue.

5. The Sundry Creditors in Schedule-11 includes Rs. 184.49 lakhs (previous year Rs. 207.36 lakhs) due to Micro, Small and Medium Enterprises and Rs.36039.46 lakhs due to other creditors. As per the provisions of "The Micro, Small and Medium Enterprises Development Act, 2006", the principal amount payable to Micro, Small and Medium Enterprises is Rs. 184.49 lakhs and no interest due thereon is remaining unpaid as on 31st March, 2010. This information has been determined to the extent such parties have been identified on the basis of information available with the Company.

6. (a) No provision has been considered necessary towards the income tax demand of Rs. 5387 lakhs for the assessment years 1987-88, 1992-93, 1997-98, 1999-2000, 2004-05, 2005-06 and 2008-09 as the same is disputed in appeals and the Company is hopeful of succeeding in the said appeals.

7. Extra Duty Deposits equivalent to 5% of CIF value levied on consignments of Caprolactam Expansion Project and capitalised is subject to adjustment on final assessment by special valuation branch of Customs Department.

8. The Company established Sikka Jetty at its own cost, which is in operation since 1987. After due discussion with Gujarat Maritime Board (GMB), a consensus was arrived at establishing ownership of jetty with GSFC. Thereafter, in terms of resolution passed by GMB, the ownership of the jetty at Sikka was transferred to the Company. However, during 1994, GMB has reversed its earlier decision not supported by resolution and contended that the ownership of the jetty rests with GMB. The Company has made representation to the appropriate authority with regard to the ownership of the jetty with the Company.

The matter of deciding the status of Jetty was under examination at GMB & Government of Gujarat levels since long back. Various meetings were also held and after due diligence on the matter, it is decided by the Board of GMB supported by a resolution to assign the status of Captive Jetty to Sikka Jetty and the Company has to sign Captive Jetty Agreement with GMB. The matter is under discussion with GMB authorities. Pending finalization of the Captive Jetty Agreement, no provision is considered necessary in respect of various claims against the Company and counter-claims of the Company (both the amounts not determined).

At present the Company is in possession of the Jetty and continues to be the owner of the Jetty till the Captive Jetty Agreement is signed.

9. Pending notification by Government of India of final rates of concession from July 2009 onwards on DAP & Complex Fertilizers, the Company has accounted downward impact of Rs. 5389 lakhs as difference between the estimated final rate of concession and the base rate of concession.

(d) Provident Fund contributions are made to Trusts administered by the Company. The interest rate payable to the members of the Trusts shall not be lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made good by the Company. Having regard to the assets of the Fund managed by the Trusts and the return on the investments, the Company does not expect any deficiency in the foreseeable future.

10. In the matter of Contract labourers, various issues regarding permanency and equal pay for equal work are under litigation and pending before Honble High Court and before the Industrial Tribunal. To amicably resolve these issues, the Company and the Chemical Mazdoor Panchayat Union has executed a Memorandum of Understanding and accordingly has estimated and provided for the liability for Rs. 3736.68 lakhs in the Personnel Expenses Schedule 16.

11. Balance of certain creditors and debtors/advances are subject to confirmation/reconciliation and consequential adjustments, if any.

ii) SECONDARY SEGMENT INFORMATION :

The Company operates mainly in Indian market and there are no reportable geographical segments.

iii) OTHER DISCLOSURES :

1. The Products and Services covered under each business segment is as under :

Fertilizer Products :

Urea, Ammonium Sulphate, Di-ammonium Phosphate, Ammonium Phosphate Sulphate, NPK (12:32:16)(10:26:26), traded fertilizer products etc.

Industrial Products :

Caprolactam, Nylon-6, Nylon Filament Yarn, Nylon Chips, Melamine, Polymer products, traded industrial products etc.

2. Segment revenue, results, assets and liabilities include the respective amounts identifiable to each of the segment and amounts allocated on reasonable basis.

12. Previous years figures have been regrouped wherever necessary.

13. Additional information pursuant to the relevant provisions of paragraphs 3 and 4 of Part-II of Schedule-VI to the Companies Act, 1956 is as per Annexure-I.

14. Balance sheet abstract and companys general business profile in terms of Part-IV of Schedule-VI to the Companies Act, 1956 is as per Annexure-II.

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