Notes to Accounts of Indian Acrylics Ltd.

Mar 31, 2018

1. LEASES:

The company has leased facilities under cancellable and non-cancellable operating leases arrangements with a lease term ranging from one to five years, which are subject to renewal at mutual consent thereafter. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expenses recognized during the year amounts to Rs.290.73 lakhs (previous year Rs.227.52 lakhs). The future minimum lease payments in respect of the non-cancellable operating leases as at 31^st March 2018 are:

2. Out of Inter Corporate Loans an amount of Rs.6267.00 Lakhs being interest free loans have been Discounted as per effective rate of Interest during the year and has been shown at present value of Rs.4999.85 Lakhs and Corresponding Balance effect has been treated under Other Equity amt Rs.1267.15 Lakhs as per IND AS-109.

3. Following the order of Hon’ble High Court dated 30.08.2012, company has filed a Execution Petition before the court on 14.01.2013 praying therein for attachment of bank account and other assets of M/s E.I.Dupont of USA to realize its claim of US$ 5 lakhs plus interest thereon amounting to US$ 9.75 lakhs from the date of award (16.03.2002) till the date of petition (14.01.2013). The total amount of company claim as already decreed by the court under the arbitration and Conciliation Act 1996 comes to Rs.814.49 lakhs and same has been treated as Income in the year 2012-13. The management of the company is confident of recovery of these claims.

4. Financial risk management objectives and policies

The Company’s principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company’s operations and to support its operations. The Company’s financial assets include loans, trade and other receivables, and cash & cash equivalents that derive directly from its operations.

The Company is exposed to market risk, credit risk and liquidity risk. The company’s senior management oversees the management of these risks. The company’s senior management is supported by a Business Risk Management committee that advises on financial risks and the appropriate financial risk governance framework for the Company. This Business Risk Management committee provides assurance to the Company’s senior management that the Company’s financial risk activities are governed by appropriate policies and procedure and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives. The Board of Directors reviews and agrees policies for managing each risk, which are summarized as below:

Market Risk :-

a) Price Risk

Fluctuation in commodity price in global market affects directly and Indirectly the price of raw material and components used by the Company in its products. The key raw material for the Company’s business is Acrylonitrile.

b) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest relates primarily to the Company’s long term debt obligations with floating interest rates. The Company is carrying its borrowings primarily at variable rate.

c) Interest rate Sensitivity

For the Purpose of computing interest rate sensitivity on the above borrowings, management has estimated a reasonably possible change in interest rate as 50bps based on current as well as expected economic conditions. This analysis is based on Long Term Risk exposures outstanding at the reporting date and assumes that all other variables, in particular foreign currency exchange rates, remains constant. The period and balances are not necessarily representative of the average amounts outstanding during the period.

Mark to Market Losses (Gain) 13.83

e) Credit risk

The 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 towards the Company and arises principally from the Company’s receivables from customers and deposits with banking institutions. The maximum amount of the credit exposure is equal to the carrying amounts of these receivables. The Company has developed guidelines for the management of credit risk from trade receivables.

f) Liquidity risk

The liquidity risk encompasses any risk that the Company cannot fully meet its financial obligations. To manage the liquidity risk, cash flow forecasting is performed in the operating divisions of the Company and aggregated by Company finance. The Company’s finance monitors rolling forecasts of the Company’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities / overdraft facilities at all times so that the Company does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities.

5. These are the Company’s first financial statements prepared in accordance with IND AS.

These financial statements, for the year ended 31 March 2018, 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 accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP). Accordingly, the Company has prepared financial statements which comply with IND AS applicable for periods ending on 31 March 2018, together with the comparative period data as at and for the year ended 31 March 2017, as described in the summary of significant accounting policies. In preparing these financial statements, the Company’s opening balance sheet was prepared as at 1 April 2015, the Company’s date of transition to IND AS. An explanation of how the transition from previous gAaP to IND AS has affected the Company’s financial position, financial performance and cash flows is set out in the following tables and notes.

Exemptions and exceptions availed:

Set out below are the applicable IND AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to IND AS.

A. IND AS Optional exemptions availed.

(a) Deemed Cost

Under IND AS paragraph D7 AA of IND AS 101 permits a first time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognized in the financial statements as at the date of transition to IND AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition. Accordingly, the Company has elected to measures all of its properties, plant and equipment, at their previous GAAP carrying values.

(b) Designation of previously recognized financial instruments

Under IND AS 109, at initial recognition of a financial asset , an entity may make an irrevocable election to present subsequent changes in the fair value of an investment in an equity instrument in other comprehensive income. Paragraph D19B of IND AS 101 allows such designation of previously recognized financial assets as ‘ fair value through comprehensive income’ on the basis of the facts and circumstances that existed at the date of transition to IND AS.

B. IND AS Mandatory exceptions

(a) Estimates

An entity’s estimates in accordance with IND AS at the date of transition to IND AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.

1.) Investment in equity instruments are carried at Cost.

(b) Classification and measurement of financial assets

As required under IND AS 101 the company has assessed the classification and measurement of financial assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to IND AS.

C. Transition to IND AS - Reconciliations

The following reconciliations provide a quantification of the effect of significant differences arising from the transition from previous GAAP to IND AS as required under IND AS 101:

1) Reconciliation of Balance sheet as at 1st April, 2016 (Transition Date)

2) (a) Reconciliation of Balance sheet as at 31st March, 2017.

(b) Reconciliation of Total Comprehensive Income for the year ended 31st March, 2017.

3) Reconciliation of Equity as at 1st April, 2016 and as at 31st March, 2017.

4) Reconciliation of Income statement as at 31st March, 2017.

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Mar 31, 2016

*There was an Arbitration award dated 16.03.2002 of US$ 10.22 Lacs, approx Rs.677 lacs, (Previous Year Rs.639 lacs) and interest against the company awarded by Arbitration Panel in the favour of E.I. Dupont (USA). This arbitration award has been dismissed during the year by the Hon''ble High Court. E.I.Dupont (USA) has filed an appeal against this decision. The case has not yet reached its finality and the matter is now Sub-Judice. On the basis of legal advise the management is of the opinion that no liability against the company has yet arisen. Accordingly, the awarded amount is not considered as a liability. As such, no provision for the same has been made in the books.

1. a) Previous year figures have been regrouped and rearranged, wherever considered necessary, to make them comparable with those of current year.

b) Figures have been rounded off to the nearest rupee in lacs.

2. In the opinion of the Board, the current assets, loans and advances are approximately of the value stated, if realized in the ordinary course of business, unless stated otherwise. The provision for all the known liabilities is adequate and not in excess of amount considered reasonably necessary.

3. Note No. 1 to 25 form an integral part of the accounts of the Company.

4. No provision for income tax or MAT has been made in the books of accounts as there are no taxable profits for the year under consideration, under the provisions of the Income Tax Act.

5. A) PRIMARY SEGMENT (BUSINESS SEGMENT)

A business segment is a distinguishable component of an enterprises that is engaged in providing an individual product or service or a group of related products or services and that is subject to risk and returns that are different from those of other business segments. The Company’s Operation predominately comprise of only one segment i.e Manufacture and Sale / Trading of Acrylic Fibre / Yarn and operating from one location. In view of the same, separate segmental information is not required to be given as per the requirements of Accounting Standard 17.

B) SECONDARY SEGMENT (GEOGRAPHICAL SEGMENT)

The analysis of geographical segment is based on the geographical location of the Customers. The company operates primarily in India and has presence in International markets as well. Its business is accordingly aligned geographically, catering to two markets. The Company has considered domestic and export markets as geographical segments and accordingly disclosed these as separate segments.

6. Managerial remuneration does not include contribution to Gratuity provision as separate figures are not available. Computation of net profit in accordance with section 198 of the Companies Act, 2013 has not been enumerated, as no commission is payable and remuneration has been paid as per provisions of schedule V of the Companies Act, 2013.

7. Enterprises over which Key Management personnel (KMP) are able to exercise significant control and with whom transactions have taken place during the year:

1) SAB Industries Ltd. 2) Steel Strips Ltd. 3) Steel Strips Wheels Ltd

8. Relatives of the Key Management Personnel (with whom transactions have taken place):- Mr. Suresh Aggarwal is related to Mr. H.K. Singhal (brother of Mr. H. K. Singhal) and employed with the company. Mr.Dheeraj Garg (son of Sh.R.K.Garg, Managing Director) is Additional Managing Director on board.

9. The company has taken the Group Gratuity and Group Leave encashment policies from LIC/Birla Sunlife and entire premiums demanded by them for the year 2015-16 have been paid / provided for as per the requirements of revised AS-15.

10. Leases:

The company has leased facilities under cancellable and non-cancellable operating leases arrangements with a lease term ranging from one to five years, which are subject to renewal at mutual consent thereafter. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expenses recognized during the year amounts to Rs.169.88 lacs (previous year Rs.161.05 lacs). The future minimum lease payments in respect of the non-cancellable operating leases as at 31st March 2016 are:

11. Following the order of Hon''ble High Court dated 30.08.2012, company has filed a Execution Petition before the court on 14.01.2013 praying therein for attachment of bank account and other assets of M/s E.I.Dupont of USA to realize its claim of US$ 5 lacs plus interest thereon amounting to US$ 9.75 lacs from the date of award (16.03.2002) till the date of petition (14.01.2013). The total amount of company claim as already decreed by the court under the arbitration and Conciliation Act 1996 comes to Rs.814.49 lacs and same has been treated as Income in the year 2012-13. The management of the company is confident of recovery of these claims.

We have received term loan of Rs.549 lacs during the year against expansion mentioned at Sr. No.1(a) above. Further capital expenditure of Rs. 7463 lacs is proposed to be financed by term loan of Rs. 5224 lacs and promoter assisted unsecured loans of Rs. 2239 lacs. Company has applied for term loans and these are under consideration of the banks.

Certified in terms of our separate report of even date annexed.

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Mar 31, 2015

1. The Term Loans from banks amounting to '. Nil lacs (Previous Year Rs. 432.76 Lacs) are secured by mortgage created on all the immovable assets of the Company, hypothecation of all the moveable assets including moveable machinery, machinery parts, tools and accessories and other moveables, (save and except book debts), subject to charges created or to be created in favour of the Company's Bankers for securing working capital limits. These Loans are further guaranteed by Sh.R.K.Garg, Managing Director, Sh. Dheeraj Garg, Additional Managing Director and Mrs. Sunena Garg.

2. Cash Credit / Working capital borrowings are secured by hypothecation of book debts, raw-material, finished goods, semi-finished goods, consumable stores and spares including stocks in transit of the Company and also by a second charge on the fixed assets of the Company and further guaranteed by Sh.R.K.Garg, Managing Director, Sh.Dheeraj Garg, Additional Managing Director and Mrs. Sunena Garg and also by Indlon Chemicals Limited.

# Include a sum of Rs. 0.38 Lacs (Previous Year '. 1.13 Lacs) outstanding for more than 45 days over the due date, determined to the extent the parties have been identified on the basis of information with the Company.

1 Raw Materials Stores and Spares at weighted average cost plus direct expenses.

2 Work in Process at raw material cost plus conversion expenses depending upon stage of completion.

3 Finished Goods at Raw Materials cost plus conversion cost, Packing cost, Excise duty and other overheads to bring the goods to present condition and location.

4 Raw material and other stocks lying at port pending clearance at cost inclusive of custom duty actually paid. The custom duty payable on material lying into bond is accounted on clearance for home consumption.

3. The Company has a defined benefit gratuity and Earned Leave plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service subject to maximum of Rs.10 Lacs. And accumulation of EL is upto 60 days.

4. The following tables summarize the components of net benefit expense recognised in the statement of Profit and Loss and the amounts recognised in the balance sheet.

5. The Employee's gratuity fund scheme managed by a Trust (Life insurance corporation of India) is defined benefit plan. The present Value of obligation is determined based on acturial valuation using the projected unit credit method which recognises each period of service as giving rise to additional unit of employee benefits entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognised in the same manner as gratuity.

Net employee benefit expenses (recognised in Employee Cost)

6. Exceptional items includes a sum of '. 2,63,30,440/- (Two crore sixty three lacs thirty thousand four hundred forty only) on account of claim awarded to the Company for the 1.34 acre land acquired by the government for national highway. And other receivable includes the total amount of award of Rs. 2,64,34,076/-(Two Crore sixty four lacs thiry four thousand and seventy six only ) receivable from government. Company has disputed the award amount and lodged its claim for higher compensation in the court of law. Higher compensation will be accounted as and when the matter is decided in the favor of the Company by court/ appellate authority.

7. Contingent Liabilities, alongwith there nature and description in brief as required under AS -29, not provided for in the books of accounts, are as under :

As at As at 31.03.2015 31.03.2014 (Rs.in Lacs) (Rs.in Lacs)

a) Letters of Credit outstanding for Import of 453.33 122.90 Raw materials / Spares

b) Claims against the Company / disputed liabilities not acknowledged as debts:

i. In respect of Sales Tax Surcharge on exempted sales 78.68 78.68

ii. In respect of Excise Duty demand on account of 430.88 429.63 valuations & cenvat credit disputes.

iii. In respect ofcustom duty on account of cancellation of 47.15 47.15 DEPB scrips validly purchased by us from the market, uty demand on goods lost in high seas.

iv. Others * 639.00 613.00

* There was an Arbitration award dated 16.03.2002 of US$ 10.22 Lacs, approx Rs. 639 lacs, (Previous Year Rs. 613 lacs) and interest against the Company awarded by Arbitration Panel in the favour of E.I. Dupont (USA). This arbitration award has been dismissed during the year by the Hon'ble High Court. E.I.Dupont (USA) has filed an appeal against this decision. The case has not yet reached its finality and the matter is now Sub-Judice. In the opinion of the management and as per the legal advice received by the Company, no liability against the Company has yet arisen. Accordingly, the awarded amount is not considered as a liability. As such, no provision for the same has been made in the books.

8. a) Previous year figures have been regrouped and rearranged, wherever considered necessary, to make them

comparable with those of current year. b) Figures have been rounded off to the nearest rupee in lacs.

9. In the opinion of the Board, the current assets, loans and advances are approximately of the value stated, if realised in the ordinary course of business, unless stated otherwise. The provision for all the known liabilities is adequate and not in excess of amount considered reasonably necessary.

10. Note No. 1 to 22 form an integral part of the accounts of the Company.

11 No provision for income tax or MAT has been made in the books of accounts as there are no taxable profits for the year under consideration, under the provisions of the Income Tax Act.

12. A) PRIMARY SEGMENT (BUSINESS SEGMENT)

A business segment is a distinguishable component of an enterprises that is engaged in providing an individual product or service or a group of related products or services and that is subject to risk and returns that are different from those of other business segments. The Company's Operation predominately comprise of only one segment i.e Manufacture and Sale / Trading of Acrylic Fibre / Yarn and operating from one location. In view of the same, separate segmental information is not required to be given as per the requirements of Accounting Standard 17.

B) SECONDARY SEGMENT (GEOGRAPHICAL SEGMENT)

The analysis of geographical segment is based on the geographical location of the Customers. The Company operates primarily in India and has presence in International markets as well. Its business is accordingly aligned geographically, catering to two markets. The Company has considered domestic and export markets as geographical segments and accordingly disclosed these as separate segments.

13. Managerial remuneration does not include contribution to Gratuity provision as separate figures are not available. Computation of net profit in accordance with section 198 of the Companies Act, 2013 has not been enumerated, as no commission is payable and remuneration has been paid as per provisions of schedule V of the Companies Act, 2013.

14. Following the order of Hon'ble High Court dated 30.08.2012, Company has filed a Execution Petition before the court on 14.01.2013 praying therein for attachment of bank account and other assets of M/s E.I.Dupont of USA to realize its claim of US$ 5 lacs plus interest thereon amounting to US$ 9.75 lacs from the date of award (16.03.2002) till the date of petition (14.01.2013). The total amount of Company claim as already decreed by the court under the arbitration and Conciliation Act 1996 comes to '. 814.49 lacs and same has been treated as Income in the year 2012-13. The management of the Company is confident of recovery of these claims.

15. Company has applied for reimbursement of Rs. 18.11 Crore to its bank against Term Loan of Rs. 23.60 Crore for funding the Spinning Mill Capital Expenditure. This Loan has been sanctioned by banks & they have disbursed Rs.18.11 Crore in the month of April 2015. Company has made its own arrangements to meet this gap during the year and accordingly raised Rs. 18.78 Crore from the short term sources / customers. These funds are included in Note No.6 as other Current Liabilities / payables and have been repaid / adjusted on disbursement of Term Loans subsequently.

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Mar 31, 2014

1. The Term Loans from banks are secured by mortgage created on all the immovable assets of the Company, hypothecation of all the moveable assets including movable machinery, machinery parts, tools and accessories and other movables, (save and except book debts), subject to charges created or to be created in favour of the Company''s Bankers for securing working capital limits. These Loans are further guaranteed by Sh.R.K.Garg, Managing Director, Sh.Dheeraj Garg, Additional Managing Director and Mrs. Sunena Garg.

Cash Credit / Working capital borrowings are secured by hypothecation of book debts, raw-material, finished goods , semi-finished goods, consumable stores and spares including stocks in transit of the company and also by a second charge on the fixed assets of the company and further guaranteed by Sh.R.K.Garg, Managing Director, Sh.Dheeraj Garg, Additional Managing Director and Mrs. Sunena Garg and also by Indlon Chemicals Limited.

# Include a sum of Rs. 1.13 Lacs (Previous Year Rs. Nil) outstanding for more than 45 days over the due date, determined to the extent the parties have been identified on the basis of information with the company.

1. Raw Materials Stores and Spares at weighted average cost plus direct expenses.

2. Work in Process at raw material cost plus conversion expenses depending upon stage of completion.

3. Finished Goods at Raw Materials cost plus conversion cost, Packing cost, Excise duty and other overheads to bring the goods to present condition and location.

4. Raw material and other stocks lying at port pending clearance at cost inclusive of custom duty actually paid. The custom duty payable on material lying into bond is accounted on clearance for home consumption.

Trade receivable include a sum of Rs. 2.43 Lacs (Previous year Rs. 2.31 lacs), maximum during the year Rs. 2.43 lacs (Previous year Rs. 2.57 lacs) receivable from Indlon Chemicals Ltd., an associate company.

* Certified Emission Carbon Credits issued & pending for sales are 36723 CER (Previous Year 36723 CER). These will be taken as Income in Profit & Loss Account as and when sold.

The Company has a defined benefit gratuity and Earned Leave plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. And cumulation of EL is upto 60 days.

The following tables summarize the components of net benefit expense recognised in the Profit and Loss Account and the amounts recognised in the balance sheet.

The Employee''s gratuity fund scheme managed by a Trust (Life insurance corporation of India) is defined benefit plan. The Present Value of obligation is determined based on acturial valuation using the projected unit credit method which recognises each period of service as giving rise to additional unit of employee benefits entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognised in the same manner as gratuity.

Note: The retirement age has been uniformly taken as 58 for worker and 60 years for other staff.The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. The discount rates have been determined by reference to market yields as on 31st March 2014 on CG-Secs of currency and term consistent with those of liability obligations.

2. Contingent Liabilities, alongwith there nature and description in brief as required under AS-29, not provided for in the books of accounts, are as under :

As at As at 31.03.2014 31.03.2013 (Rs. in Lacs) (Rs. in Lacs)

a) Letters of Credit outstanding 122.90 Nil for Import of Raw materials / Spares

b) Claims against the company / disputed liabilities not acknowledged as debts:

i.In respect of Sales Tax Surcharge 78.68 78.68 on exempted sales

ii.In respect of Excise Duty demand 429.63 437.38 on account of valuations & cenvat credit disputes.

iii.In respect of custom duty on account 47.15 47.15 of cancellation of

DEPB scrips validly purchased by us from the market, duty demand on goods lost in high seas.

iv. Others * 614.00 557.00

* There was an Arbitration award dated 16.03.2002 of US$ 10.22 Lacs, approx Rs. 613 lacs,(Previous Year Rs. 557 lacs) and interest against the company awarded by Arbitration Panel in the favour of E.I. Dupont (USA). This arbitration award has been dismissed during the year by the Hon''ble High Court. E.I.Dupont (USA) has filed an appeal against this decision. The case has not yet reached its finality and the matter is now Sub-Judice. In the opinion of the management and as per the legal advice received by the company, no liability against the company has yet arisen. Accordingly, the awarded amount is not considered as a liability. As such, no provision for the same has been made in the books.

3. a) Previous year figures have been regrouped and rearranged, wherever considered necessary, to make them comparable with those of current year

b) Figures have been rounded off to the nearest rupee in lacs.

4. In the opinion of the Board, the current assets, loans and advances are approximately of the value stated, if realised in the ordinary course of business, unless stated otherwise. The provision for all the known liabilities is adequate and not in excess of amount considered reasonably necessary.

5. Note No. 1 to 22 form an integral part of the accounts of the Company.

6. No provision for income tax or MAT has been made in the books of accounts as there are no taxable profits for the year under consideration, under the provisions of the Income Tax Act.

7. The debit and credit balances in the accounts of a few suppliers, customers and others are subject to confirmation and reconciliation.

8. The company is mainly in one business segment viz Manufacture and Sale / Trading of Acrylic Fibre / Yarn and operates from one geographical segment only There is no other reportable segment in accordance with Accounting Standard (AS-17) dealing with the segment reporting.

9. As per restructuring package approved under the corporate debt restructuring (CDR) system in Jan''03, NPV of interest losses shall be converted to Zero Rate Interest Loan to be recovered after 2014-15 after a review to be made after 10 years. No provision for the same has been made in the books of accounts, as the amount is unascertainable at this stage.

10. Managerial remuneration does not include contribution to Gratuity provision as separate figures are not available. Computation of net profit in accordance with section 349 of the Companies Act, 1956 has not been enumerated, as no commission is payable and remuneration has been paid as per provisions of schedule XIII of the Companies Act, 1956

11. The company has taken the Group Gratuity and Group Leave encashment policies from LIC and entire premiums demanded by them for the year 2013-14 have been paid / provided for as per the requirements of revised AS-15.

12. Following the order of Hon''ble High Court dated 30.08.2012, company has filed a Execution Petition before the court on 14.01.2013 praying therein for attachment of bank account and other assets of M/s E.I.Dupont of USA to realize its claim of US$ 5 lacs plus interest thereon amounting to US$ 9.75 lacs from the date of award (16.03.2002) till the date of petition (14.01.2013). The total amount of company claim as already decreed by the court under the arbitration and Conciliation Act 1996 comes to Rs. 814.49 lacs and same has been treated as Income the year 2012-13. The management of the company is confident of recovery of these claims.

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Mar 31, 2013

1. Contingent Liabilities, alongwith there nature and description in brief as required under AS -29, not provided for in the books of accounts, are as under :

As at 31.03.2013 As at 31.03.2012 (Rs..in Lacs) (Rs..in Lacs) a) Letters of Credit outstanding for Import of Nil 42.86 Raw materials / Spares

b) Claims against the company / disputed liabilities not cknowledged as debts:

i) In respect of Sales Tax Surcharge on exempted sales 78.68 78.68

ii) In respect of Excise Duty demand on account 437.38 463.20 of valuations & cenvat credit disputes.

iii) In respect of custom duty on account of cancellation of DEPB scrips 47.15 47.15 validly purchased by us from the market, duty demand on goods lost in high seas.

iv) Others * 557.00 511.00

* There was an Arbitration award dated 16.03.2002 of US$ 10.22 Lacs, approx Rs..557 lacs,(Previous Year Rs..511

lacs) and interest against the company awarded by Arbitration Panel in the favour of E.I. Dupont (USA). This arbitration award has been dismissed during the year by the HonRs.ble High Court. E.I.Dupont (USA) has filed an appeal against this decision. The case has not yet reached its finality and the matter is now Sub-Judice. In the opinion of the management and as per the legal advice received by the company, no liability against the company has yet arisen. Accordingly, the awarded amount is not considered as a liability. As such, no provision for the same has been made in the books.

c) Estimated amount of contracts remaining to be executed on Rs..1598.74 lacs Rs.. 281.87 lacs capital account and not provided for in the Books of Accounts

(Net of Advance).

2. a) Previous year figures have been regrouped and rearranged, wherever considered necessary, to make them comparable with those of current year. b) Figures have been rounded off to the nearest rupee in lacs.

3. In the opinion of the Board, the current assets, loans and advances are approximately of the value stated, if realized in the ordinary course of business, unless stated otherwise. The provision for all the known liabilities is adequate and not in excess of amount considered reasonably necessary.

4. Note No. 1 to 16 form an integral part of the accounts of the Company.

5. No provision for income tax or MAT has been made in the books of accounts as there are no taxable profits for the year under consideration, under the provisions of the Income Tax Act.

6. The debit and credit balances in the accounts of a few suppliers, customers and others are subject to confirmation and reconciliation.

7. The company is mainly in one business segment viz Manufacture and Sale / Trading of Acrylic Fibre / Yarn. There is no other reportable segment in accordance with Accounting Standard (AS-17) issued by the Institute of Chartered Accountants of India dealing with the segment reporting.

8. The Net Deferred Tax asset of Rs.. 2241.65 lacs as at 31.03.2013 (including Rs.. 2123.06 lacs upto 31.03.2012) has not been recognized in view of uncertainity of its realisation, as recommended under Accounting Standard AS-22 on "Deferred Taxation” issued by The Institute of Chartered Accountants of India. The details of deferred tax assets are as under:-

9. As per restructuring package approved under the corporate debt restructuring (CDR) system in Jan''03, NPV of interest losses shall be converted to Zero Rate Interest Loan to be recovered after 2014-15 after a review to be made after 10 years. No provision for the same has been made in the books of accounts, as the amount is unascertainable at this stage.

10. Managerial remuneration does not include contribution to Gratuity provision as separate figures are not available. Computation of net profit in accordance with section 349 of the Companies Act, 1956 has not been enumerated, as no commission is payable and remuneration has been paid as per provisions of schedule XIII of theCompanies Act, 1956.

11. RELATED PARTY DISCLOSURES:

Detail of transaction entered into with related parties during the year as required by Accounting Standard–18 on "Related party disclosures” issued by the Institute of Chartered Accountants of India are as under:-

12. The company has taken the Group Gratuity and Group Leave encashment policies from LIC and entire premiums demanded by them for the year 2012-13 have been paid / provided for as per the requirements of revised AS-15.

13. Leases: The company has leased facilities under cancellable and non-cancellable operating leases arrangements with a lease term ranging from one to five years, which are subject to renewal at mutual consent thereafter. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expenses recognized during the year amounts to Rs.. 35.28 lacs (previous year Rs.. 127.39 lacs). The future minimum lease payments in respect of the non-cancellable operating leases as at 31st March 2013 are:

14. Following the order of HonRs.ble High Court dated 30.08.2012, company has filed a Execution Petition before the court on 14.01.2013 praying therein for attachment of bank account and other assets of M/s E.I.Dupont of USA to realize its claim of US$ 5 lacs plus interest thereon amounting to US$ 9.75 lacs from the date of award (16.03.2002) till the date of petition (14.01.2013). The total amount of company claim as already decreed by t h e court under the arbitration and Conciliation Act 1996 comes to Rs..814.49 lacs. The management of the company confident of recovery of these claims, so the same has been considered as Extra Ordinary item of Income in the Profit & Loss Account for the current year.

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Mar 31, 2012

I) The Term Loans / working capital term loan from Financial Institutions / banks are secured by mortgage created or to be created on all the immovable assets of the Company, both present and future, hypothecation of all the moveable assets including movable machinery, machinery parts, tools and accessories and other movables, both present and future (save and except book debts), subject to charges created or to be created in favour of the Company's Bankers for securing working capital limits. These Loans are further guaranteed by the managing director besides two directors.

ii) Following settlement of Term Loans dues under OTS with IDBI, excess amount of interest provision has been credited to profit & loss account amounting to Rs.786.07 lacs, while remaining amount of Term Loan amounting to Rs.2171.19 lacs has been transferred to Capital Reserve account.

Cash Credit / Working capital borrowings are secured by hypothecation of book debts, raw-material, finished goods , semi-finished goods, consumable stores and spares including stocks in transit of the company as well as of Indlon Chemicals Ltd. and also by a second charge on the fixed assets of the company and further guaranteed by the managing director besides two directors and Indlon Chemicals Limited.

1. Contingent Liabilities, along with there nature and description in brief as required under AS -29, not provided for in the books of accounts, are as under :

As at As at 31.03.2012 31.03.2011 (Rs.in Lacs) (Rs.in Lacs)

a) Letters of Credit outstanding for Import of Raw materials / Spares 42.86 31.14

b) Claims against the company / disputed liabilities not acknowledged as debts:

i) In respect of Sales Tax Surcharge on exempted sales 78.68 78.68

ii) In respect of Excise Duty demand on account of 463.20 609.55

valuations & cenvat credit disputes.

iii) In respect of custom duty on account of cancellation of DEPB scrips validly purchased by us from the market, duty demand on goods lost in high seas. 47.15 47.15

iv) Others * 511.00 460.00

* There is an Arbitration award dated 16.03.2002 of US$ 10.22 Lacs, approx Rs.511 lacs,(Previous Year Rs.460 lacsd) and interest against the company awarded by Arbitration Panel in the favour of E.I. Dupont (USA). The award has not reached its finality as company has filed objections on 29.06.2002 in the hon'ble High Court and the matter is now Sub-Judice. In the opinion of the management and as per the legal advice received by the company, no liability against the company has yet arisen. Accordingly, the awarded amount is not considered as a liability. As such, no provision for the same has been made in the books.

c) Estimated amount of contracts remaining to be executed on Rs.281.87 lacs Rs.291.03 lacs capital account and not provided for in the Books of Accounts (Net of Advance).

2. a) Previous year figures have been regrouped and rearranged, wherever considered necessary, to make them comparable with those of current year.

b) Figures have been rounded off to the nearest rupee in lacs.

3. In the opinion of the Board, the current assets, loans and advances are approximately of the value stated, if realised in the ordinary course of business, unless stated otherwise. The provision for all the known liabilities is adequate and not in excess of amount considered reasonably necessary.

4. Note No. 1 to 16 form an integral part of the accounts of the Company.

5. No provision for income tax or MAT has been made in the books of accounts as there are no taxable profits for the year under consideration, under the provisions of the Income Tax Act.

6. The debit and credit balances in the accounts of a few suppliers, customers and others are subject to confirmation and reconciliation.

7. The company is mainly in one business segment viz Manufacture and Sale / Trading of Acrylic Fibre / Yarn. There is no other reportable segment in accordance with Accounting Standard (AS- 17) issued by the Institute of Chartered Accountants of India dealing with the segment reporting.

8. The Net Deferred Tax asset of Rs.2123.06 lacs as at 31.03.2012 (including Rs. 2014.17 lacs upto 31.03.2011) has not been recognized in view of uncertainity of its realisation, as recommended under Accounting Standard AS-22 on "Deferred Taxation" issued by The Institute of Chartered Accountants of India. The details of deferred tax assets are as under:-

9. As per restructuring package approved under the corporate debt restructuring (CDR) system in Jan'03, NPV of interest losses shall be converted to Zero Rate Interest Loan to be recovered after 2014-15 after a review to be made after 10 years. No provision for the same has been made in the books of accounts, as the amount is unascertainable at this stage.

10. Managerial remuneration does not include contribution to Gratuity provision as separate figures are not available. Computation of net profit in accordance with section 349 of the Companies Act, 1956 has not been enumerated, as no commission is payable and remuneration has been paid as per provisions of schedule XIII of the Companies Act, 1956.

11. RELATED PARTY DISCLOSURES:

Detail of transaction entered into with related parties during the year as required by Accounting Standard-18 on "Related party disclosures" issued by the Institute of Chartered Accountants of India are as under:-

12. The company has taken the Group Gratuity and Group Leave encashment policies from LIC and entire premiums demanded by them for the year 2011-12 have been paid / provided for as per the requirements of revised AS-15.

13. Leases:

The company has leased facilities under cancellable and non-cancellable operating leases arrangements with a lease term ranging from one to five years, which are subject to renewal at mutual consent thereafter. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expenses recognized during the year amounts to Rs.127.39 lacs (previous year Rs.109.90 lacs). The future minimum lease payments in respect of the non-cancellable operating leases as at 31st March 2012 are:

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Mar 31, 2010

1. a) Previous year figures have been regrouped and rearranged, wherever considered necessary, to make them comparable with those of current year.

b) Figures have been rounded off to the nearest rupee in lacs.

2. In the opinion oLthe Board, the current assets, loans and advances are approximately of the value stated, if realised in the ordinary course of business, unless stated otherwise. The Provision for all the known liabilities is adequate and not in excess of amount considered reasonably necessary.

3 Schedule 1 to 16 form an integral part of the accounts of the Company.

4. No provision for income tax has been made in the books of accounts as there are no taxable profits for the year under consideration, under the provisions of the Income Tax Act. However, Provision of MAT has been made in the financial year

5. The debit and credit balances in the accounts of a few suppliers, customers and others are subject to confirmation and reconciliation.

6. Debtors include a sum of Rs.1,13 Lacs (Previous year Rs.11.96 lacs), maximum during the year Rs.13.46 lacs (Previous year Rs.13.55 lacs) receivable from Indlon Chemicals Ltd., a subsidiary company under the provisions of section 4(1)(a) of the Companies Act, 1956.

7. Sundry debtors, outstanding for more than six months, include a sum of Rs.81.49 lacs ( Previous year Rs.92.31 lacs) recoverable from a few customers against which the company has filed legal cases. Against this, a provision for doubtful debts has been made in the books to the extent of Rs.81.49 lacs (Previous year Rs.92.31 lacs).

8. The company is mainly in one business segment viz Manufacture and Sale / Trading of Acrylic Fibre / Yarn. There is no other reportable segment in accordance with Accounting Standard (AS-17) issued by the Institute of Chartered Accountants of India dealing with the segment reporting.

9. As per restructuring package approved under the corporate debt restructuring (CDR) system in Jan03, NPV of interest losses shall be converted to Zero Rate Interest Loan to be recovered after 2014-15 after a review to be made after 10 years. No provision for the same has been made in the books of accounts, as the amount is unascertainable at this stage.

10. The company invested a sum of Rs.56.67 lacs in Indilun Acrylics (Shanghai) Co: Ltd a wholly owned subsidiary company in China during the year 2005-06 by way of share capital. The company is privately held and not listed on any stock exchange. There is decline in the carrying amount of this investment and the resultant reduction of 6.58 lacs in the carrying amount is written off to Profit and Loss Account. This subsidiary company has been closed during the year and balance of Rs. 24.74 lacs received back. As such investment at the end of the year is nil.

11. Managerial Remuneration

The remuneration payable to the Managing Director and Finance Director was approved by the shareholders in the AGM held on 29th Sept 2009. The same is Rs.2 lacs per month and annual perquisites upto Rs.24 lacs per annum plus 5% commission on the net profits payable to the Managing Director and Rs.1 lacs per month plus reimbursement of house rent upto 60% of the salary and other perquisites upto maximum Rs.12 lacs per annum to Finance Director. The company applied to Govt., Department of Company Affairs for their approval. The Department of company Affair has approved a remuneration @ Rs.75000/- per month payable to the Managing Director w.e.f. 01-03.2009 and same amount to the Finance Director w.e.f. 01-02-2009 pending further review. Accordingly, the same has been provided for in the books of accounts on the basis of Govt, approval.

12. Amount received from sale of Certified Emission Carbon Credits has been accounted as Income in the"Profit & Loss Account. Company has about 0.19 lacs units of certified Emission Reductions (CERs) accrued upto 31st March 2010 as per the verification report of SGS from the two projects already implemented. Income from the same shall be accounted for as and when realized.

13 Sundry creditors include a sum of Rs.2.18 lacs (Previous Year Rs.1.79 Lacs) due to Micro and Small & Medium Undertakings which are outstanding for more than 45 days as at 31.03.10. This information is required to be disclosed under the Micro, Small and Medium Enterprises development Act 2006, as determined to the extent the parties have been identified on the basis of information with the company.

14. Unpaid interest on term borrowings from IDBI has been provided for in the books at the simple interest rate as fixed in the CDR package. No provision for the Liquidated Damages / Penal Interest has been made as Company has moved for restructuring / settlement with them. The amount is not ascertainable due to non receipt of dues notices from IDBI.

15. Excise Duty balance lying in Cenvat account as at 31st March, 2010 amounted to Rs.1171.09 lacs (Previous year Rs.1926.75 lacs). However, it seems difficult to use the entire amount of cenvat in future due to continuance of inverted duty structure. Therefore, it has been considered prudent to provide for a sum of Rs.963.35 lac, lying unused for more than two years, as doubtful of recovery.This provision was made during the year 2008-09.The company is confident of use of the balance cenvat of Rs. 207.69 lac, and the same has been shown as Current Asset in the schedule of Current Assets, Loan and Other Advances as per Accounting Policy being consistently followed by the company.

16. The company has taken the Group Gratuity and Group Leave encashment policies from LIC and entire premiums demanded by them for the year 2009-10 have been paid / provided for as per the requirements of AS- 15.

17. Phase I of the plant consisting of installed capacity of 12,000 MT per annum was commissioned during the year 1993-94. Depreciation in respect of machinery installed in Piping, Polymer, Solution & Monomer Preparation, Filtration & recovery section, all utilities machinery including power generation & distritution system and wash draw section is being charged on written dwn value method. And depreciation on remaining machines is being charged on straight line method. |n view of technological changes in Acrylic Fibre Industry and obsolescence, the method of depreciation has been changed during this year from straight line method to written down value method in respect of all the remaining items of plant & machinery and electrical installation commssioned in 1993-94.

In compliance with the Accounting Standards (AS6) issued by the institute of Chartered Accountants of India, depreciation has been recomputed from the date of commissioning / capitalization of Plant & Machinery & Electrical Installation at WDV rates applicable to those years. Consequent to this change, there is additional charge during the year of Rs. 471.64 lacs including the effect relating to previous years and the same has been charged to Profit & Loss Account.

Had there been no change in the method of depreciation, the charge would have been lower by above amount and accordingly profit for the current year would have been higher by the same amount.