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Notes to Accounts of Styrenix Performance Materials Ltd.

Mar 31, 2022

1) On March 25,2022, there was a fire in a section of the Company''s plant located at Nandesari. The fire was extinguished internally and the plant was brought to safe mode. All operations were discontinued at the Nandesari plant for carrying out necessary repairs. The plant has resumed opreration from May 12,2022 after completion of repairs and receipt of all statutory and regularory clearances. Adjustment under plant & machinery having net block of INR 3.73 lakhs (Gross Block of INR 8.00 lakhs) relates to assets to be discarded on account of fire.

(March 31,2021 : Adjustments under freehold land having net block of INR 24.92 Lakhs (Gross block of INR 24.92 Lakhs), under Building having net block of INR Nil (Gross Block of INR 238.83 lakhs), under Plant & Machinery having net block of INR Nil (Gross block of INR 300.48 Lakhs), under Furniture & Fixture having net block of INR Nil (Gross Block of INR 19.47 Lakhs), under Vehicles having net block of INR Nil (Gross block of INR 0.28 Lakhs) relates to classification of various assets to Asset held for sale (Refer Note 14)).

2) In earlier years, the Company had incurred certain expenses aggregating to Rs. 2,820.34 lakhs (including applicable taxes) towards engineering studies and other directly and indirectly attributable costs for project expansion and included in capital work in progress as at 31st March 2021. During the year, considering the existing available production capacity, business priorities and the continuing effects of COVID-19 pandemic the continuation of the said project is uncertain hence, the Company has written off capital work in progress of the said project and disclosed the same as Deduction/ Adjustments under CWIP.

3) Refer Note 38 for disclosure of contractual commitments for the acquisition of property, plant and equipment.

4) Capital work-in-progress mainly comprises of cost of engineering services, new plant and machinery and building.

The total cash outflow including interest for leases for the year ended March 31,2022 was INR 1,239.93 Lakhs. (March 31, 2021 - INR 1,289.96 Lakhs)

(iii) Extension and termination options in Lease Contracts

These options are used to maximise operational flexibility in terms of managing the assets used in the Company''s operations. Extension and termination options are included in the lease term, only if the Company has the right to excercise these options and reasonably certain to excercise the right.

During the current financial year, the Company has exercised extension and termination option in case of some leases which has resulted into a net increase in recognized lease liabilities of INR 103.99 Lakhs and right-of-use assets of INR 113.96 Lakhs (March 31,2021, net decrease in recognized lease liabilities of INR 64.54 Lakhs and right-of-use assets of INR 46.65 Lakhs)

b) Rights, preferences and restrictions attached to shares Equity Shares

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

*On April 18,2022, INEOS Styrolution APAC Pte Ltd. (Promoter) proposed, through an Offer for Sale ("OFS") to dispose of up to 25,32,330 Equity Shares of the Company, of face Value of Rs.10 each, representing 14.40% of the total paid up equity share capital of the Company, with an option to additionally sell 16,88,220 Equity Shares representing 9.60% of the total paid up equity share capital of the Company. Pursuant to the said OFS, Promoter on April 19, 2022 and April 20, 2022, sold in aggregate, 24,28,040 Equity Shares representing 13.81% of the total paid up equity share capital of the Company.

e) Information on equity shares allotted without receipt of cash or allotted as bonus shares or shares bought back during five years immediately preceding March 31,2022.

No shares are allotted as bonus or allotted without receipt of cash and there has been no buy back of shares during the past five years.

Nature and purpose of reserves Capital reserve

Capital reserve is on account of profit on re-issue of forfeited Shares Securities premium

Securities premium represents the premium on issue of shares. The reserve is available for utilisation in accordance with the provisions of the Act.

Surplus on capital reduction

Surplus on capital reduction is created as per order no. 0/14505/2004 dated June 24, 2004 passed by the Honourable High Court of Gujarat in Company Petition No. 60 of 2004.

General reserve

General reserve represents amounts appropriated out of retained earnings in accordance with the provisions of the Act.

1) External Commercial Borrowing (ECB) loan is availed from a related party at a fixed interest rate of 7.60% which is repayable on August 31,2026 (revised from 8.90% to 7.60% w.e.f. July 1,2020).

2) Secured credit facility limits amounting to INR 25,650 Lakhs (March 31,2021 - INR 43,240 Lakhs) availed from banks are secured by first charge on inventories and trade receivables and quarterly statements of net working capital filed by the Company with banks are in agreement with books of accounts. The Company has utilised INR 10,457 Lakhs (March 31,2021 - INR 11,280 Lakhs) for non-fund based facility.

3) Current borrowing includes interest accrued but not due amounting to INR 19.00 (March 31,2021 - INR 102.60 Lakhs).

3. The Company had installed Wind Turbine Generators (WTG) at Lamba, Dhank and Pransla in Gujarat. The Local Power Station of the Madhya Gujarat Vij Company Limited (MGVCL) grants credit for the power units generated by the WTG. Accordingly, the amount of Power and Fuel consumption disclosed is net of such credit given by MGVCL aggregating to INR Nil (March 31, 2021: INR 198.29 Lakhs). The said windmills were sold by the Company during previous year.

i) Valuation techniques and significant unobservable inputs

The carrying amounts of financial assets and liabilities other than those valued at Level 1 and Level 2 are considered to be the same as their fair values due to the current and short term nature of such balances and no material differences in the values. Difference between fair value of non-current borrowings carried at amortised cost and the carrying value is not considered to be material to the financial statement.

ii) Levels 1,2 and 3

Level 1 : This includes listed equity instruments that have a quoted price. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting period.

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

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.

Specific valuation techniques used to value financial instruments include:

â¢ the use of quoted market prices or dealer quotes for similar instruments.

â¢ the fair value of forward foreign exchange contracts are determined using forward exchange rates at the Balance Sheet date.

All of the resulting fair value estimates are included in level 1 and 2.

Note - 35

Financial risk management Risk management framework

Financial Risk Evaluation and Management is an ongoing process within the Organisation. The Company has a robust risk management framework to identify, monitor and minimize risks. As a process, the risk associated with each area are identified and prioritized based on severity, likelihood and effectiveness. Process owners are identified for each risk and metrics are developed for monitoring and reviewing the risk mitigation controls. Risk evaluation and assessments are reviewed by the Chief Financial Officer (CFO) and Managing Director on a quarterly basis. This is constantly monitored by the Board.

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

i) Credit risk

ii) Liquidity risk

iii) Market risk

This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the impact on the financial statements.

i) Credit risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument leading to a financial loss. The Company is exposed to credit risk from its operating activities, primarily trade receivables and from its financing activities, including deposits with banks and other financial instruments.

The carrying amount of financial assets represents the maximum credit exposure, being the total of the carrying amount of balances with banks, short term deposits with banks, trade receivables and other financial assets excluding equity investments.

Trade receivables

Trade receivables of the Company are typically unsecured and derived from sales made to a large number of independent customers. Customer credit risk is managed by the Company based on established policies, procedures and control relating to customer credit risk management. Before accepting any new customer, the Company has appropriate level of control procedures to assess the potential customerâs credit quality. The credit-worthiness of its customers are reviewed based on their financial position, past experience and other relevant factors. Outstanding customer receivables are reviewed periodically. The credit period provided by the Company to its customers generally ranges from 0-60 days.

The Company uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account available external and internal credit risk factors, the Company''s historical experience for customers and forward looking information. Based on the industry practices and the business environment in which the entity operates, management considers that the trade receivables are credit impaired if the payments are more than 180 days past due.

Other financial assets

The Company has mainly cash and cash equivalents, deposits with banks (PSU and high rated private banks) and government authorities, and security deposits for utilities with government bodies and reputed corporate entities, and for leasehold premises. These are periodically confirmed by respective parties.

ii) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Companyâs cash flow management system ensures, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Companyâs reputation.

Exposure to liquidity risk

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include estimated interest payments.

The gross outflows of the contractual undiscounted cash flows relating to derivative financial liabilities disclosed in the above table are held for risk management purposes and are not usually settled before contractual maturity.

Financial instruments -Fair values and risk managementiii) Market risk

Market risk is mainly driven by changes in economic and political environment across globe, fluctuation in foreign exchange rates and interest rates movement, which affect the Companyâs 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, payables and current borrowings. The objective of market risk management is to avoid excessive exposure in foreign currency revenues and costs.

1. Currency risk

The functional currency of the Company is Indian Rupee. The Company is exposed to currency risk on account of payables and receivables in foreign currency. Since there is no material export sales, this is not perceived to be a major risk. Raw materials are mostly imported. The company has a policy to mitigate this risk by taking derivative contracts to protect against any adverse exchange rate fluctuation. This policy is reviewed on a periodic basis.

Company does not use derivative financial instruments for trading or speculative purposes.

2. Interest rate risk

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of variable interest bearing liabilities because of fluctuations in the interest rates. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing liabilities will fluctuate because of fluctuations in the interest rates. The Company does not have variable interest rate borrowing.

The Company''s fixed rate borrowings were carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

Note - 36

Capital Management

The primary objective of the Companyâs capital management is to maximise shareholder''s value. The Company monitors capital using Debt-Equity ratio, which is total debt divided by total equity.

For the purposes of the Companyâs capital management, the Company considers the following components of its balance sheet to be managed as capital:

Total equity as shown in the Balance Sheet includes Share capital, General reserve, Retained earnings, Securities premium and Capital reserve. Total debt includes current debt plus non-current debt (including current maturities of long term debt and lease liabilities).

The above matters are under adjudication and the Company expects the judgment will be in its favor and has therefore, not recognised the provision in relation to these claims. Future cash outflow in respect of above will be determined only on receipt of judgement/decision. The potential undiscounted amount of total payments that the Company could be required to make if there was an adverse decision related to above matters as of the date reporting period ends are disclosed above.

Income tax

The Company has ongoing disputes with income tax authorities relating to various previous years. These disputes mainly includes disallowance of expenses, transfer pricing adjustments and withholding tax matters. The matters are pending with various forums.

Excise duty and service tax (including DEPB matter)DEPB Matter

In respect of imports of raw materials during the period January 2005 to December 2011 for consumption at one of its plant, the Company paid CVD and SAD through DEPB and availed CENVAT credit of the same. In respect of said imports, credit is available only if payments are made through DEPB scrips issued under Exim Policy 2004-09 and not for DEPB scrips issued under Exim Policy 2002-07. The department had contended that the Company had made payments through DEPB scrips issued under Exim Policy 2002-07 and not for DEPB scrips issued under Exim Policy 2004-09, and issued SCNs. The Company on its part has contended that the payment has been made through DEPB scrips issued under Exim Policy 2004-09 in respect of said imports. While the Company is not in a position to present the DEPB scrips, it maintains that the Bill of Entries have been finally assessed by Customs at the Port of Import and they indicated the applicable notification therein.

The Principal Commissioner of Central Excise, Customs and Service Tax adjudicated the matter and disallowed the credit, and imposed interest and penalties. In this respect, the Company had filed a petition in High Court for which the Company received an order in November 2017, whereby the cases was remitted back to the Principal Commissioner. The matter was heard afresh by the Principal Commissioner, and passed an order disallowing credit of INR 1,247.63 lakhs (being amount for which the Company could not present DEPB scrips and was not certain whether the scrips were issued under Exim Policy 2004-09 or not) from total contested amount of INR 7,990.97 lakhs in May 2018. Penalty amounting to INR 124.76 lakhs was imposed by the adjudicating authority. Against this the Company has made appeal to CESTAT. The department has filed an appeal against the order of the Principal Commissioner allowing credit of INR 6,743.35 lakhs (being amount for which Bill of Entries were available / SCN related to period of purchase of raw material after April 1, 2007) to the Company.

Management believes that their contention has strong merits and in its judgement, the outcome of the matter is probable. The Management has accordingly disclosed the amount as a contingent liability.

Service Tax Matter

The Company has ongoing disputes with respect to admissibility of input tax credit claimed by the Company for various previous years and the matters are pending with various forums.

Impact of Judgement on Provident Fund

With reference to the Supreme Court Judgment in case of "Vivekananda Vidyamandir And Others Vs The Regional Provident Fund Commissioner (II) West Bengal" and the related circular (Circular No. C-I/1(33)2019/Vivekananda Vidya Mandir/284) dated March 20, 2019 issued by the Employeesâ Provident Fund Organisation in relation to non-exclusion of certain allowances from the definition of "basic wages" of the relevant employees for the purposes of determining contribution to provident fund under the Employees'' Provident Funds & Miscellaneous Provisions Act, 1952, the aforesaid matter is not likely to have a significant impact as per the assessment by management and accordingly, no provision has been made in these Financial Statements.

Note - 39

Employee benefit obligations

I Defined Contribution plan

The defined contribution plans operated by the Company are as below :

Provident Fund

Contributions are made to employees provident fund organization in India for employees at the rate of 12% of basic salary as per regulations. The contributions are made to registered provident fund administered by the government. The obligation of the Company is limited to the amount contributed and it has no further contractual or any constructive obligation.

Superannuation Fund

Contributions are made to Life Insurance Corporation of India for eligible employees at the rate of 15% of basic salary as per superannuation scheme of the Company.

NPS Fund

Contributions are made to NPS trust for eligible employees who have opted for the same at the rate of 10% of basic salary as per NPS scheme of the Company.

Employee''s State Insurance

Contributions are made to ESI Corporation for all eligible employees at rate of 4.75% of ESI wage as per the definition under the ESI Act.

The contributions recognised as an expense in the statement of profit and loss during the year on account of the above defined contribution plans amounted to INR 294.98 Lakhs (March 31,2021 : INR 315.59 Lakhs).

II Defined benefit plan (i) Funded Gratuity

The employeeâs gratuity fund schemes managed by Trusts are defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service to build up the final obligation. The obligation for leave encashment is recognised in the same manner as for gratuity.

The expected rate of return on plan assets is determined considering several applicable factors, mainly the composition of plan assets held, assessed risks and historical results of return on plan assets.

Risk exposure

Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below:

i) Asset volatility

The plan liabilities are calculated using a discount rate set with reference to bond yields; if plan assets underperform this yield, this will create a deficit. The plan assets are managed by LIC and are subject to market risk. Any shortfall is contributed to the fund by the Company. The Company intends to maintain the above investment in the continuing years.

ii) Changes in bond yields

A decrease in bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plansâ bond holdings.

The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations. The Company has not changed the processes used to manage its risks from previous periods. Investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets.

Expected contributions to post-employment benefit plans for the year ending March 31,2022 are INR 44.13 Lakhs.(March 31,2021: INR 158.21 Lakhs).

1 All transactions entered into with related parties as defined under the Companies Act, 2013 and regulation 23 of the Listing Obligation and Disclosure Requirement Regulations 2015, during the financial year were in the ordinary course of business and at contractually agreed transaction prices.

2 Transactions relating to dividends were on the same terms and conditions that applied to other shareholders.

3 All outstanding balances are unsecured and are repayable in cash.

4 Includes interest accrued of INR 19 Lakhs (March 31,2021: INR 102.6 Lakhs) (Refer Note 19).

5 There are no allowances on account for impaired receivables in relation to any outstanding balances, and no expense have been recognised in respect of impaired receivables due from related parties.

(d) Information about geographical areas

The Company does not have geographical distribution of revenue hence secondary segmental reporting based on geographical locations of its customers is not applicable to the Company.

(e) Information about major customers

None of the entity''s external customers account for 10 per cent or more of the Companyâs revenue.

Note - 42Movement in Provisions

Provision for contingencies represents estimates made mainly for probable claims arising out of litigations / disputes in respect of certain matters like VAT, Contractual disputes, etc. This includes positions taken on matters under dispute involving judgements and assumptions to determine the possible outcome. The probability and the timing of the outflow with regard to these matters depend on the ultimate settlement /conclusion with the relevant authorities.

Note - 44

Registration of charges or satisfaction with Registrar of Companies (ROC)

The Company had repaid certain loans which were taken against pledge of movable properties on due dates as per the agreed terms in past. The Company had also filed manual forms for satisfaction of these charges as per requirement with ROC-Ahmedabad. However, the satisfaction of the charges has not been updated by MCA while digitizing the manual records. The Company is in process to obtain fresh âNo duesâ certificates from respective lending institutions to re file the satisfaction of charges with MCA.

Note - 45

Events occurring after the reporting period

The Board of Directors had declared 2nd interim dividend of INR 105 [ @ 1050 %] per equity share of INR 10 each at its meeting held on Oct 26,2022.

Mar 31, 2018

Note: There were no transfers between Level 1, Level 2 and Level 3 during the year.

B. Measurement of fair values

i) Valuation techniques and significant unobservable inputs

The carrying amounts of financial assets and liabilities other than those valued at Level 1 and Level 2 are considered to be the same as their fair values due to the current and short term nature of such balances and no material differences in the values. Non-current security deposits are interest free deposits repayable on demand. Accordingly, the carrying value of the same has been considered as fair value. Difference between fair value of non-current borrowings carried at recognized cost and the carrying value is not considered to be material to the financial statement.

ii) Levels 1, 2 and 3

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

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.

iii) Valuation technique used to determine fair value

Specific valuation techniques used to value financial instruments include:

- the use of quoted market prices or dealer quotes for similar instruments.

- the fair value of forward foreign exchange contracts are determined using forward exchange rates at the Balance Sheet date. All of the resulting fair value estimates are included in level 1 and 2.

Note - 1

Financial risk management Risk management framework

Financial Risk Evaluation and Management is an ongoing process within the Organization. The Company has a robust risk management framework to identify, monitor and minimize risks. As a process, the risk associated with each area are identified and prioritized based on severity, likelihood and effectiveness of current detection. Process owners are identified for each risk and metrics are developed for monitoring and reviewing the risk mitigation. Risk evaluation & assessments are reviewed by the CFO & Managing Director on a quarterly basis. This is constantly monitored by the Board.

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

i) Credit risk

ii) Liquidity risk

iii) Market risk

This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the impact on the financial statements.

i) Credit risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities, primarily trade receivables and from its financing activities, including deposits with banks and other financial instruments.

Trade receivables

Trade receivables of the Company are typically unsecured and derived from sales made to a large number of independent customers. Customer credit risk is managed by the Company based on established policies, procedures and control relating to customer credit risk management. Before accepting any new customer, the Company has appropriate level of control procedures to assess the potential customer''s credit quality. The credit-worthiness of its customers are reviewed based on their financial position, past experience and other relevant factors. Outstanding customer receivables are reviewed periodically.

The Company uses Expected Credit Loss (ECL) model to assess the impairment loss. The Company uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account available external and internal credit risk factors, the Company''s historical experience for customers and forward looking information.

Other financial assets

ii) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s cash flow management system ensures, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation.

The gross outflows of the contractual undiscounted cash flows relating to derivative financial liabilities disclosed in the above table are held for risk management purposes and which are not usually closed out before contractual maturity.

iii) Market risk

Market risk is mainly driven by changes in economic and political environment across globe, fluctuation in foreign exchange rates and interest rates movement, which 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, payables and current borrowings. The objective of market risk management is to avoid excessive exposure in foreign currency revenues and costs.

1. Currency risk

Company does not use derivative financial instruments for trading or speculative purposes.

* Holding all other variables constant

2. Interest rate risk

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of variable interest bearing liabilities because of fluctuations in the interest rates. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing liabilities will fluctuate because of fluctuations in the interest rates. Current borrowing comprise of working capital loans for an average tenure of 1 to 90 days, and buyers credit for an average tenure of 60-90 days.

The Company''s fixed rate borrowings are carried at recognized cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

Note - 2

Capital Management

The primary objective of the Company''s capital management is to maximize shareholder''s value. The Company monitors capital using Debt-Equity ratio, which is total debt divided by total equity.

For the purposes of the Company''s capital management, the Company considers the following components of its balance sheet to be managed as capital: Total equity as shown in the Balance Sheet includes General reserve, Retained earnings, Share capital, Securities premium reserve and Capital reserve. Total debt includes current debt plus non-current debt.

The Company''s adjusted net debt to equity ratio at March 31, 2018 and March 31, 2017 are as follows.

The above matters are currently being considered by the tax authorities and the Company expects the judgment will be in its favor and has therefore, not recognized the provision in relation to these claims. Future cash outflow in respect of above will be determined only on receipt of judgment/decision pending with tax authorities. The potential undiscounted amount of total payments for taxes that the Company could be required to make if there was an adverse decision related to these disputed demands of regulators as of the date reporting period ends are as illustrated above.

Provident fund

Superannuation fund

Contributions are made to Life Insurance Corporation of India for eligible employees at the rate of 15% of basic salary as per superannuation scheme of the Company.

Employee''s state insurance

Contributions are made to ESI Corporation for all eligible employees at rate of 4.75% of ESI wage as per the definition under the ESI Act.

Risk exposure

Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below:

i) Asset volatility

The plan liabilities are calculated using a discount rate set with reference to bond yields; if plan assets underperform this yield, this will create a deficit. The plan asset is investment in LIC group gratuity plan where income from plan is managed by fund manager of LIC and is subject to market risk. Any shortfall is contributed to the fund by the Company. The Company intends to maintain the above investment in the continuing years.

ii) Changes in bond yields

A decrease in bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans'' bond holdings.

Expected contributions to post-employment benefit plans for the year ending March 31, 2018 are INR 128.32 Lakhs.

(ii) Unfunded Compensated absences

The Actuarial liability for compensated absences as at year end is INR 418.68 Lakhs (INR 356.08 Lakhs as at March 31, 2017). Current year charge is included in Employee benefit expense (Refer Note 29).

Note - 3

Related party transactions

The names of related parties with relationship and transactions with them:

A Relationship:

I Shareholders where control exists:

Ultimate Holding Company INEOS Limited *

Isle of Man

Holding Company INEOS Styrolution APAC Pte Ltd.

holds 75.00% of the equity share capital Singapore

(also refer Note 14(a))

INEOS AG* (up to December 31,2016)

Switzerland

II Where transactions have taken place

Fellow subsidiaries INEOS Styrolution Korea Ltd

Korea

INEOS Styrolution (Thailand) Co., Ltd.

Thailand

INEOS Styrolution Group GmbH

Germany

INEOS Styrolution Europe GmbH

Frankfurt am Main, Germany

INEOS Styrolution Mexicana S.A de

Napoles, Mexico

INEOS Sales U.K. LIMITED

Great Britain

INEOS Europe AG

Switzerland

* No transactions during the year.

III Key management personnel:

Particulars Designation

Mr. Stephen Mark Harrington * Chairman

Mr. Sanjiv Vasudeva Managing Director

Mr. Nitan Duggal Whole Time Director (w.e.f. August 31, 2017)

Mr. Bhupesh P. Porwal Whole Time Director and CFO (up to August 31, 2017)

Mr. Sanjeev Madan Chief Financial Officer (w.e.f. January 29, 2018)

Mr. Jal R. Patel Independent Director

Mr. Anil Shankar Independent Director (w.e.f. August 12, 2016)

Ms. Ryna Karani Independent Director (w.e.f. May 16, 2016)

Mr. Sharad M. Kulkarni Independent Director (up to August 11,2016)

Mr. Rabindra Kulkarni Independent Director (up to May 15,2016)

* No transactions during the year.

Note - 4

Segment information

(a) Description of segments and principal activities

Segment Reporting in financial results: Based on the âmanagement approachâ as defined in Ind AS 108 - ''Operating Segments'', the Chief Operating Decision Maker (CODM), as represented by Chairman, Managing Director and CFO, evaluates the Company''s performance and allocates resources based on an analysis of various performance indicators by business segments. The accounting principles used in the preparation of these financial results are consistently applied to record revenue and expenditure in individual segment.

The Company manufactures and sells ABS, SAN and Polystyrene i.e. âEngineering Thermoplasticsâ. These products have the same risks and returns, which are predominantly governed by market conditions, namely demand and supply position. Based on the CODM, segments are bifurcated into Specialties and Polystyrene. Specialties include ABS and SAN.

(d) Information about geographical areas

The Company does not have geographical distribution of revenue hence secondary segmental reporting based on geographical locations of its customers is not applicable to the Company.

(e) Information about major customers

None of the entity''s external customers account for 10 per cent or more of the Company''s revenue.

Note - 5

Events occurring after the reporting period

The proposed dividend on Equity shares at INR 4 per share is recommended by the directors which is subject to the approval of shareholders in the ensuing annual general meeting.

* Including amounts given as imprest and advances.

Note -6

Previous year figures

The previous year figures have been re-grouped and re-arranged wherever necessary to conform with current years'' classification.

Mar 31, 2017

III, unless otherwise stated.

Notes

1. Buildings include office premises at Mumbai amounting to INR 3.75 Lakhs (Previous Year INR 3.75 Lakhs) the title whereof are not yet clear. The Company has filed a Civil suit against the vendor for title.

2. Plant and Machinery includes gross carrying amount of INR 16.84 Lakhs being the Companyâs share of an asset jointly owned with another company.

3. Refer to note 36 for disclosure of contractual commitments for the acquisition of property, plant and equipment.

4. Capital work-in-progress mainly comprises of new plant and machinery under installation at Nandesari and Moxi sites.

5. With effect from April 1, 2015, considering the requirements of Schedule II of the Act, the management has reassessed the remaining useful life of its fixed assets based on an internal technical evaluation. Accordingly, INR 119.13 Lakhs has been adjusted in the opening reserves of the Company in respect of such assets whose useful life had become Nil as at that date (also deferred tax credit amounting to INR 41.23 Lakhs on those assets has been adjusted to opening reserves) and the additional depreciation for the year ended March 31, 2016 on assets whose useful life has been reassessed is INR 112.25 Lakhs.

b) Rights, preferences and restrictions attached to shares Equity Shares

d) Information on equity shares allotted without receipt of cash or allotted as bonus shares or shares bought back during five years immediately preceding March 31, 2017.

No shares are allotted as bonus or allotted without receipt of cash during past five years and there has been no buy back of shares.

e) Pursuant to the Open Offer of Styrolution South East Asia Pte Ltd, Singapore (''SSE'') which closed on March 3, 2015, SSE received 300 shares from the public. As a result thereof, the total shareholding of SSE as on March 31, 2015 was increased to 13,189,518 equity shares (75.002%). SSE needed to divest 0.002% (300 shares only) of the Company''s equity share capital by March 12, 2016 through various methods allowed by SEBI. In order to raise the public shareholding to 25%, Company had applied to SEBI for granting approval for sale of 300 shares by the SSE, through one or multiple transactions on the floor of the stock exchanges in the normal window to meet minimum public shareholding norms which was approved by SEBI vide its letter dated April 20, 2015. In compliance with SEBI guidelines, SSE has sold off these 300 shares on June 9, 2015, thereby bringing its holding back to 75%.

Nature and purpose of reserves Securities premium reserve

Securities premium reserve is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions of the Act.

Surplus on capital reduction

Surplus on capital reduction is created as per order no. O/14505/2004 dated 24 June 2004 passed by the Honourable High Court of Gujarat in Company Petition No. 60 of 2004.

Notes:

1) Cash credit facility is availed in a range of 8.45% to 9.75%.

2) Buyers credit facility is taken towards purchase of raw material which has been covered under letter of credit limit and carries interest rate of 0.60% to 1.22% (March 31, 2016: 0.56% to 1.00%; April 1, 2015: 1.25% to 2.00%) and is generally repayable within 30 - 90 days (March 31, 2016: 30 - 120 days; April 1, 2015: 60 days) from the date of extending credit.

3) Working capital loans are repayable with an average tenure of 2 - 18 days. Interest is payable at 9.01% - 9.70% (March 31, 2016 : 9.53% - 9.90%; April 1, 2015 : 9.76% - 9.87%)

4) Unsecured borrowing facilities are guaranteed by INEOS Styrolution Group GmbH.

5) Secured borrowings from banks are secured by first charge on inventories and trade receivables.

(e) Further interest remaining due and payable for earlier years - - -

The above information regarding Micro and Small Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the Auditors.

*There are no amounts due for payment to the Investor Education and Protection Fund under Section 125 of the Companies Act, 2013 as at the year end.

1 As per Section 135 of the Companies Act, 2013, the Company was required to spend INR 124.40 Lakhs (Previous year: INR 148.68 Lakhs) towards corporate social responsibility activities. The Company has spent INR 124.27 Lakhs (Previous year: INR 85.43 lakhs) during the current financial year. The Company has spent following amounts during the year :

Notes:

(1) Investment amounting INR 0.25 lakhs has not been fair valued as the same is immaterial as compared to total investments.

(2) There were no transfers during the year.

B. Measurement of fair values

i) Valuation techniques and significant unobservable inputs

On account of materiality and in absence of sufficient information for determination of fair value of investments in equity shares of INR 0.25 lakhs, the Company has not fair valued the same.

ii) Levels 1, 2 and 3

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

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument included in Level 3.

iii) Valuation technique used to determine fair value

Specific valuation techniques used to value financial instruments include:

- the use of quoted market prices or dealer quotes for similar instruments.

- the fair value of forward foreign exchange contracts are determined using forward exchange rates at the Balance Sheet date. All of the resulting fair value estimates are included in level 1 and 2.

Note - 2

Financial risk management Risk management framework

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

i) Credit risk

ii) Liquidity risk

iii) Market risk

In order to minimize any adverse effects of these on the financial performance of the Company, derivative financial instruments, such as foreign exchange forward contracts are entered to hedge certain foreign currency risk exposures. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the impact on the financial statements.

i) 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 and investments in debt securities. The carrying amount of following financial assets represents the maximum credit exposure:

Trade receivables

Trade receivables of the Company are generally unsecured. The Company performs ongoing credit evaluations of its customers'' financial conditions and monitors the creditworthiness of its customers to which it grants credit terms in the normal course of business through internal evaluation. The allowance for impairment of trade receivables is created to the extent and as and when required, based upon the expected collectability of accounts receivables. The Company has no concentration of credit risk as the customer base is geographically distributed in India.

Other financial assets

The Company has mainly cash and cash equivalents, deposits with banks (PSU and high rated private banks) and government authorities as other financial assets. These are having periodically confirmed from respective parties.

Note - 3

Financial risk management

ii) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s cash flow management system ensures, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation.

Exposure to liquidity risk

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include estimated interest payments and exclude the impact of netting agreements.

The gross outflows of the contractual undiscounted cash flows relating to derivative financial liabilities disclosed in the above table are held for risk management purposes and which are not usually closed out before contractual maturity.

Note - 4

Financial instruments - Fair values and risk management

iii) Market risk

Market risk is mainly driven by changes in economic and political environment across globe, fluctuation in foreign exchange rates and interest rates movement, which 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, payables and current borrowings. The objective of market risk management is to avoid excessive exposure in foreign currency revenues and costs.

1. Currency risk

Company does not use derivative financial instruments for trading or speculative purposes.

Provident fund

Superannuation fund

Contributions are made to Life Insurance Corporation of India for eligible employees at the rate of 15% of basic salary as per superannuation scheme of the Company.

Employee''s state insurance

Contributions are made to ESI Corporation to all eligible employees at rate of 4.75% of ESI wage as per the definition under the ESI Act.

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary. The expected rate of return on plan assets is determined considering several applicable factors, mainly the composition of plan assets held, assessed risks and historical results of return on plan assets.

Risk exposure

Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below:

i) Asset volatility

ii) Changes in bond yields

A decrease in bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans'' bond holdings.

A large portion of assets in 2017 consists of insurance funds, although the Company also invests in corporate bonds and special deposit scheme. The plan asset mix is in compliance with the requirements of the respective local regulations.

Expected contributions to post-employment benefit plans for the year ending March 31, 2018 are INR 152.19 Lakhs.

(ii) Unfunded Compensated absences

The Actuarial liability for compensated absences as at year end is INR 356.08 Lakhs (INR 315.84 Lakhs as at March 31, 2016; INR 310.59 Lakhs as at April 1, 2015). Current year charge is included in Employee benefit expense (Refer Note 28).

Note - 5

Related party transactions

The names of related parties with relationship and transactions with them:

A Relationship:

I Shareholders where control exists:

Ultimate Holding Company INEOS Limited ¹

Isle of Man

INEOS AG * (up to December 31, 2016)

Switzerland

Holding Company INEOS Styrolution APAC Pte Ltd.

holds 75.00% of the equity share capital Singapore

(also refer Note 3(a))

II Where transactions have taken place

Fellow subsidiaries INEOS Styrolution Korea Ltd

Korea

INEOS Styrolution (Thailand) Co., Ltd.

Thailand

INEOS Styrolution Group GmbH

Germany

INEOS Styrolution Europe GmbH

Frankfurt am Main, Germany

INEOS Styrolution Mexicana S.A de

Napoles, Mexico

INEOS SALES U.K. LIMITED

Great Britain

INEOS EUROPE AG

Switzerland

III Key management personnel:

Particulars Designation

Mr. Stephen Mark Harrington * Chairman (w.e.f. May 18, 2015)

Mr. Hyung Tae Chang * Chairman (up to May 17, 2015)

Mr. Sanjiv Vasudeva Managing Director (w.e.f. March 1, 2016)

Mr. Myung Suk Chi Managing Director (up to February 29, 2016)

Mr. Bhupesh P. Porwal Whole Time Director (w.e.f. May 16, 2016) and CFO

Mr. Jal R. Patel Independent Director

Mr. Anil Shankar Independent Director (w.e.f. August 12, 2016)

Ms. Ryna Karani Independent Director (w.e.f. May 16, 2016)

Mr. Sharad M. Kulkarni Independent Director (up to August 11, 2016)

Mr. Ravindra Kulkarni Independent Director (up to May 15, 2016)

* No transactions during the periods.

2 Transactions relating to dividends were on the same terms and conditions that applied to other shareholders.

3 All outstanding balances are unsecured and are repayable in cash.

Note - 6

Segment information

(a) Description of segments and principal activities

Note - 7

Note - Transition to Ind AS:

These are the Company''s first financial statements prepared in accordance with Ind AS.

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

In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards as per Section 133 of the Companies Act 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014.

An explanation of how the transition from IGAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows is set out in the following tables and notes.

A. Exemptions and exceptions availed Deemed cost

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 IGAAP and use that as its deemed cost as at the date of transition Accordingly, the Company has elected to measure all of its property, plant and equipment (including capital work-in-progress) at their IGAAP carrying value.

B. Mandatory exceptions

Below are the key mandatory exceptions used in preparation of these financial statements:

I Estimates

Under Ind AS 101, an entity''s estimates in accordance with Ind AS at ''the date of transition to Ind AS'' or ''the end of the comparative period presented in the entity''s first Ind AS financial statements'', as the case may be, should be consistent with estimates made for the same date in accordance with IGAAP unless there is objective evidence that those estimates were in error. However, the estimates should be adjusted to reflect any differences in accounting policies. The Company''s Ind AS estimates as on the transition date are consistent with the estimates made under IGAAP as on this date. Key estimates considered in preparation of these financial statements that were not required under the IGAAP is listed below:

- Fair valuation of financial instruments carried at FVTPL.

- Fair valuation of derivative contracts

II Classification and measurement of financial assets

Ind AS 101 provides exemptions to certain classification and measurement requirements of financial assets under Ind AS 109, where these are impracticable to implement and hence, classification and measurement needs to be done on the basis of facts and circumstances existing as on the transition date. Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the transition date.

Notes to the reconciliation:

(i) Amalgamation of SIPL with SAI

Styrolution India Private Limited (SIPL), a wholly owned subsidiary of the Company, incorporated with the main object to manufacture Polystyrene, was amalgamated into the Company pursuant to the Scheme of Amalgamation (hereinafter referred to as âSchemeâ), as on and from April 1, 2015 being the appointed date pursuant to the approval of Board of Directors and shareholders of the Company and sanctioned by the Honorable High Court of Gujarat vide its order dated February 26, 2016, which was filed with Registrar of Companies on March 31, 2016.

The Company has followed the pooling of interest method as provided in the scheme. As provided in the scheme, accounting has been done from the appointed date. Assets aggregating to Rs. 27,826.67 Lakhs, liabilities aggregating to Rs. 21,649.92 Lakhs, surplus on capital reduction of Rs. 134.39 Lakhs and deficit of Rs. 112.10 Lakhs were taken over at their respective book values. On cancellation of investments made by the Company in Styrolution India Private Limited against its share capital as on the appointed date, the resultant deficit of Rs. 3,945.02 Lakhs has been debited to General Reserve.

(ii) Proposed dividend and tax thereon

Under IGAAP, dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was recognized as a liability. Under Ind AS, such dividends are recognized when the same is approved by the shareholders in the general meeting. Accordingly the liability for proposed dividend of INR 846.63 Lakhs as at March 31, 2016 and on the transition date included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity increased by an equivalent amount.

(iii) FVTPL financial assets

Under IGAAP, the Company accounted for long term investments in unquoted and quoted equity shares as investment measured at cost less provision for other than temporary diminution in the value of investments. Under Ind AS, the Company has designated such investments as FVTPL investments. At the transition date, difference between the fair value and IGAAP carrying amount has been recognized in Statement of profit and loss.

(iv) Accounting for excise duty on sale of goods

Under IGAAP, sale of goods was presented as net of excise duty. However, under Ind AS, sale of goods includes excise duty which is considered as an expense. Thus sale of goods for the financial year 2015-16 under Ind AS has increased by INR 19,143.55 with a corresponding increase in other expense. This adjustment has no impact on the total equity on the transition date as well as March 31, 2016.

(v) Accounting for forward contracts

Under IGAAP, the Company accounted for the forward contracts on imports based on AS 11. The premium paid was amortized over the life of the contract. At each reporting date, the difference between the spot rates was accounted through the statement of profit and loss. Under Ind AS 21, the forward contracts have been designated as FVTPL. Premium paid has been expensed.

(vi) Actuarial gains and losses on post employment retirement benefits

Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognized in other comprehensive income instead of profit or loss. Under IGAAP, these remeasurements were forming part of the profit or loss for the year. This adjustment has no impact on the total equity on the transition date as well as March 31, 2016.

(vii) Deferred tax

Adjustments routed through OCI or adjusted in reserves has been appropriately done with deferred tax impact, as applicable.

Mar 31, 2016

b. Rights, preferences and restrictions attached to the shares

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

e. Information on equity shares allotted without receipt of cash or allotted as bonus shares or shares bought back during five years immediately proceeding March 31, 2016.

No shares are allotted as bonus or allotted without receipt of cash during past five years and there has been no buy back of shares.

f. Pursuant to the Open Offer of Styrolution South East Asia Pte Ltd, Singapore (âSSE'') which closed on 3 March 2015, SSE received 300 shares from the public. As a result thereof, the total shareholding of SSE as on 31 March 2015 was increased to 13,189,518 equity shares (75.002%). SSE needed to divest 0.002% (300 shares only) of the Companyâs equity share capital by 12 March 2016 through various methods allowed by SEBI. In order to raise the public shareholding to 25%, Company had applied to SEBI for granting approval for sale of 300 shares by the SSE, through one or multiple transactions on the floor of the stock exchanges in the normal window to meet minimum public shareholding norms which was approved by SEBI vide its letter dated 20 April 2015. In compliance with SEBI guidelines, SSE has sold off these 300 shares on 9 June 2015, thereby bringing its holding back to 75%.

* City Bank: Repayable with an average tenure of 10 days. Interest is payable @ 9.53% (average rate).

HSBC Bank: Repayable with an average tenure of 3 days. Interest is payable @ 9.90% (average rate).

** Buyers credit facility is taken towards purchase of raw-material which has been covered under letter of credit limit and carries interest rate of 0.56% to 1.00% and is generally repayable within 30 - 120 days from the date of extending credit.

Borrowing facility from HSBC & City Bank is secured by group corporate guarantee amounting to Rs. 30,801.18 Lakhs.

NOTES:

1. Buildings include cost of shares of the face value of One thousand Rupees.

2. Buildings include office premises at Mumbai amounting to Rs.3.75 (Lakhs) (Previous Year Rs.3.75 (Lakhs)) the title whereof are not yet clear. The Company has filed a civil suit against the vendor for title.

3. * Plant and Machinery includes Gross Block Rs 200.50 Lakhs, Accumulated Depreciation Rs 173.08 Lakhs and Net Block Rs. 27.42 Lakhs being the Company''s share of an asset jointly owned with another company.

4. With effect from 1 April 2015, considering the requirements of Schedule II of the Act, the management has reassessed the remaining useful life of its fixed assets based on an internal technical evaluation. Accordingly, Rs. 119.13 Lakhs has been adjusted in the opening reserves of the Company in respect of such assets whose useful life had become Nil as at that date (also deferred tax credit amounting to

Rs. 41.23 Lakhs on those assets has been adjusted to opening reserves) and the additional depreciation for the year ended 31 March 2016 on assets whose useful life has been reassessed is Rs. 112.25 Lakhs.

5. Figures in brackets pertain to previous year.

31. The Company manufactures and sells ABS, SAN and POLYSTYRENE i.e. "Highly Specialized Engineering Thermoplastics". These products have the same risks and returns, which are predominantly governed by market conditions, namely demand and supply position. The Company sells these products within the country and hence the segment based on geographical risk factors which may be present in different countries is not applicable. Thus, in the context of Accounting Standard 17 ''''Segment Reporting'''', notified under section 133 of the Act read together with rule 7 of The Companies (Accounts) rules, 2014 to the extent applicable, there is only one identified primary and secondary segment. As the Company business activity falls within a single primary business segment and single geographical segment, the financial statements are reflective of the information required by Accounting Standard 17 on Segment Reporting.

6. Disclosure of the relationship and transactions with the related parties as defined in Accounting Standard 18 ''''Related Party Disclosures'''', notified under section 133 of the Act read together with rule 7 of The Companies (Accounts) Rules, 2014 to the extent applicable is as follows:

RELATED PARTY TRANSACTIONS:

A. List of Related Parties with whom transactions have taken place (as identified and certified by the management)

1. Where control exists

Ultimate Holding Company Styrolution Holding GmbH

Germany (from October 1, 2011 to November 16, 2014)

INEOS AG

Switzerland (from November 17, 2014)

Holding Company Styrolution (Jersey) Limited

holds 75.00% of the equity share capital Channel Islands (up to January 27, 2014)

(also refer Note 3(a)) INEOS Styrolution APAC Pte Ltd.

(Formerly: Styrolution South East Asia Pte Ltd.)

Singapore (w.e.f January 28, 2014)

Wholly owned Subsidiary Styrolution India Private Limited

(from March 1, 2014 to March 31, 2015) Gujarat

2. Where transactions have taken place INEOS Styrolution Korea Ltd.

Fellow subsidiaries (Formerly : Styrolution Korea Ltd)

Korea

INEOS Styrolution (Thailand) Co., Ltd.

(Formerly: Styrolution Thailand Co., Ltd.)

Thailand

INEOS Styrolution Group GmbH

(Formerly : Styrolution Group GmbH)

Germany

INEOS Styrolution Ludwigshafen GmbH

(Formerly : Styrolution Ludwigshafen GmbH)

Frankfurt am Main

INEOS Styrolution Europe GmbH

(Formerly : Styrolution Europe GmbH)

Frankfurt am Main

INEOS Styrolution Mexicana S.A de

Napoles

2. Where transactions have taken place INEOS SALES U.K. LIMITED

Fellow subsidiaries Great Britain (from November 17, 2014)

INEOS EUROPE AG

Switzerland (from November 17, 2014)

Key Managerial Personnel Mr. Myung Suk Chi

Managing Director (up to 1st March 2016)

Mr. Sanjiv Vasudeva

Managing Director & CEO (w.e.f 1st March 2016)

7. The Companyâs significant leasing arrangements are mainly in respect of residential and office premises. The aggregate lease rentals payable on these leasing arrangements are charged as Rent under âOther Expensesâ in Note 27. These leasing arrangements are for a period not exceeding three years and are in most cases renewable by mutual consent, on mutually agreeable terms. Future lease rentals payable in respect of residential and office premises on non-cancellable lease:

8. The Company has undertaken necessary steps to comply with the Transfer Pricing regulations. The Company''s international transactions with associated enterprises are at arm''s length as per independent accountant''s report for the year ended 31 March 2015. The Management is of the opinion that the international and domestic transactions post 31 March 2015 continue to be at armâs length and hence the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

9. Employee benefits

The Company has classified the various benefits provided to employees as under

1. Defined contribution plans

a. Provident Fund

b. Superannuation Fund

c. State defined contribution plan

i. Employer''s contribution to Employee''s state insurance

The Company has no further obligation beyond making contribution to the respective fund.

3 The estimates of future salary increase, considered in actuarial valuation, takes account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The expected rate of return on plan assets is based on market expectations at the beginning of the year. The rate of return on long-term government bonds is taken as reference for this purpose.

The Actuarial liability for compensated absences as at year end is Rs. 315.84 (Lakhs) (Previous Year Rs. 176.53 (Lakhs). Current year charge is included in Employee benefit expense (Refer Note 25).

10. Amalgamation of Styrolution India Private Limited with the Company

Scheme of Arrangement between Styrolution India Private Limited and the Company:

During the year, Styrolution India Private Limited, a wholly owned subsidiary of the Company, i incorporated with the main object to manufacture Polystyrene, was amalgamated into the Company pursuant to the Scheme of Amalgamation (hereinafter referred to as âSchemeâ), as on and from 1

April 2015 being the appointed date pursuant to the approval of Board of Directors and shareholders of the Company and sanctioned by the Honorable High Court of Bombay vide its order dated 26 February 2016, which was filed with Registrar of Companies on 31 March 2016.

The Company has carried out the accounting prescribed in the Scheme and made the required disclosure for Amalgamations in the nature of merger, as required under Accounting Standard 14 (AS 14) âAccounting for Amalgamations" notified under the Companies (Accounts) Rules 2014.

Hence, in accordance with the Scheme:

i The Company has taken over all the following assets aggregating to Rs. 27,907.36 Lakhs, liabilities aggregating to Rs.21,730.61 Lakhs, surplus on capital reduction of Rs. 134.39 Lakhs and deficit of Rs. 112.10 Lakhs at their respective book values. On cancellation of investments made by the Company in Styrolution India Pvt. Ltd. against its share capital as on the appointed date, the resultant deficit of Rs. 3,945.02 Lakhs has been debited to General Reserve.

Represents estimates made for probable liabilities arising out of commercial transactions with parties and pending settlement of duties/levies with various government authorities. The information usually required by Accounting Standard 29 "Provisions, Contingent Liabilities and Contingent Assets" notified under section 133 of the Act is not disclosed on the grounds that it can be expected to prejudice the interest of the Company. The timing of the outflow with regard to the said matters depends on exhaustion of remedies available to the Company under the Law and hence the Company is not able to reasonably ascertain the timing of the outflow.

11. Earnings per equity share (EPS)

EPS is calculated by dividing the profit attributable to the equity shareholders by average number of equity shares outstanding during the year. Numbers used in calculating basic and diluted earnings per equity shares are as stated below:

12. Corporate Social Responsibility

As per Section 135 of the Companies Act, 2013, As per the provisions of the Act the Company was required to spend Rs. 148.68 lakhs, however, the Company has spent Rs. 85.43 lakhs during the current financial year. The company has spent following amounts during the year:

13. Previous period financial statements are of the Company for 15 months on standalone basis. Figures for the current year ended March 31, 2016 include 12 months figures of Styrolution India Pvt. Ltd. on account of amalgamation and accordingly the financials for the year ended 31 March 2016 are strictly not comparable to the financials of the corresponding previous periods. Also, refer note 44 (iii).

Mar 31, 2015

1. Company information

STYROLUTION ABS (INDIA) LIMITED (the 'Company') is a public limited Company domiciled in India and is listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). The Company is engaged in the "Engineering Thermoplastics". The Company has manufacturing facilities at Nandesari, Moxi and Katol and Research and Development centre at Moxi .

2. Rights, preferences and restrictions attached to the shares

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

3. Information on equity shares allotted without receipt of cash or allotted as bonus shares or shares bought back during five years immediately preceding March 31,2015.

No shares are allotted as bonus or allotted without receipt of cash during past five years and there has been no buy back of shares.

4. Pursuant to the Open Offer of Styrolution South East Asia Pte Ltd, Singapore ('SSE) which closed on 3 March 2015, SSE received 300 shares from the public. As a result thereof, the total shareholding of SSE as on 31 March 2015 was increased to 13,189,518 equity shares (75.002%). SSE needs to divest 0.002% (300 shares only) of the Company's equity share capital by 12 March 2016 through various methods allowed by SEBI. In order to raise the public shareholding to 25%, Company had applied to SEBI for granting approval for sale of 300 shares by the SSE, through one or multiple transactions on the floor of the stock exchanges in the normal window to meet minimum public shareholding norms which was approved by SEBI vide its letter dated 20 April 2015.

5. Contingent liabilities and commitments

I) Contingent liabilities

a) Income tax 292.94 264.89

b) Excise duty 80.56 55.87

c) Sales tax 72.62 72.62

d) Bank guarantees - 20.00

e) Claims against the Company not acknowledged as debt 76.81 76.89

f) Letter of credit pending shipment - 52.33

Note: Future cash outflows in respect of (a), (b) and (c) above are determinable only on receipt of judgements/ decisions pending with various forums/ authorities.

II) Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for ( Net of capital advance) 77.72 1001.57

Other commitments

The Company has entered into firm commitments for purchase of 40,000 MT of Styrene monomer during the period January 15 to December 15 out of which the company has procured 6,731 MT up to March 15.

6. The Company has installed Wind Turbine Generators (WTG) at Lamba, Dhank and Pransla in Gujarat. The Local Power Station of the Madhya Gujarat Vij Company Limited (MGVCL) grants credit for the power units generated by the WTG. Accordingly, the amount of Power and Fuel consumption disclosed is net of such credit given by MGVCL aggregating to Rs.486.33 (Lakhs) (Previous Year Rs. 427.17 (Lakhs)).

7. The Company manufactures and sells ABS and SAN i.e. "Highly Specialized Engineering Thermoplastics". These products have the same risks and returns, which are predominantly governed by market conditions, namely demand and supply position. The Company sells both the products within the country and hence the segment based on geographical risk factors which may be present in different countries is not applicable. Thus, in the context of Accounting Standard 17 "Segment Reporting", notified under Section 211 (3C) [Companies (Accounting Standards) Rule, 2006, as amended] and other relevant provisions of the Companies Act, 1956, there is only one identified primary and secondary segment. As the Company's business activity falls within a single primary business segment and single geographical segment, the financial statements are reflective of the information required by Accounting Standard 17 on Segment Reporting.

8. Disclosure of the relationship and transactions with the related parties as defined in Accounting Standard 18 "Related Party Disclosures", notified under Section 211 (3C) [Companies (Accounting Standards) Rule, 2006, as amended] and other relevant provisions of the Companies Act, 1956 is as follows:

RELATED PARTY TRANSACTIONS:

A. List of Related Parties with whom transactions have taken place (as identified and certified by the management)

1. Where control exists Ultimate Holding Company

Styrolution Holding GmbH Germany (from October 1, 2011 to November 16, 2014) INEOS AG Switzerland (from November 17, 2014)

Holding Company holds 75.00% of the equity share capital (also refer Note 3(a))

Wholly owned Subsidiary (w.e.f. March 1, 2014)

Styrolution (Jersey) Limited Channel Islands (upto January 27, 2014) Styrolution South East Asia Pte. Ltd. Singapore (w.e.f January 28, 2014) Styrolution India Private Limited Mumbai

2. Where transactions have taken place Fellow subsidiaries

Styrolution Korea Ltd Korea Styrolution (Jersey) Limited Channel Islands (w.e.f January 28, 2014) Styrolution South East Asia Pte. Ltd. Singapore (upto January 27, 2014) Styrolution Thailand Co., Ltd. Thailand

Styrolution Group GmbH Germany Styrolution Ludwigshafen GmbH (formerly known as Styrolution GmbH) Frankfurt am Main Styrolution Europe GmbH Frankfurt am Main Styrolution Holding Company Mauritius

INEOS SALES U.K. LIMITED Great Britain (from November 17, 2014)

INEOS EUROPE AG Switzerland (from November 17, 2014)

Key Managerial Personnel Mr. Myung Suk Chi Managing Director

9. The Company's significant leasing arrangements are mainly in respect of residential and office premises. The aggregate lease rentals payable on these leasing arrangements are charged as Rent under "Other Expenses" in Note 28. These leasing arrangements are for a period not exceeding three years and are in most cases renewable by mutual consent, on mutually agreeable terms.

10. The Company has undertaken necessary steps to comply with the Transfer Pricing regulations. The Company's international transactions with associated enterprises are at arm's length as per independent accountant's report for the year ended 31 March 2014. The Management is of the opinion that the international and domestic transactions post 31 March 2014 continue to be at arm's length and hence the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

11. Provision for contingencies

Represents estimates made for probable liabilities arising out of commercial transactions with parties and pending settlement of duties/levies with various government authorities. The information usually required by Accounting Standard 29 "Provisions, Contingent Liabilities and Contingent Assets" notified under section 211 (3C) of the Companies Act 1956, is not disclosed on the grounds that it can be expected to prejudice the interest of the Company. The timing of the outflow with regard to the said matters depends on exhaustion of remedies available to the Company under the Law and hence the Company is not able to reasonably ascertain the timing of the outflow.

12. Current tax expense for the period comprises of charge for the period 1 April 2014 to March 2015 and reversal of tax expense for Jan 14 - March 14 on actualization of the tax expense for year ended 31 March 2014 based on the return of income filed. This has resulted in lower current tax charge for the period ended March 31, 2015. Increase in net deferred tax liability as at 31 March 2015 on account of depreciation and a reduction in deferred tax assets as on March 31, 2015 as compared to December 31, 2013 has resulted in higher deferred tax expense for the period ended March 31, 2015.

13. Current period financial statements are for 15 months and accordingly not comparable to previous year.

Dec 31, 2013

1. Company information

STYROLUTION ABS (INDIA) LIMITED (the ''Company'') is a public limited Company domiciled in India and is listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). The Company is a market leader in the "Engineering Thermoplastics". The Company has manufacturing facilities at Nandesari, Moxi and Katol and Research and Development centre at Moxi .

2. The Company has installed Wind Turbine Generators (WTG) at Lamba, Dhank and Pransla in Gujarat. The Local Power Station of the Madhya Gujarat Vij Company Limited (MGVCL) grants credit for the power units generated by the WTG. Accordingly, the amount of Power and Fuel consumption disclosed is net of such credit given by MGVCL aggregating to Rs. 427.17 (Lakhs) (Previous Year Rs. 491.02 (Lakhs)).

3. The Company manufactures and sells ABS and SAN i.e. "Highly Specialized Engineering Thermoplastics". These products have the same risks and returns, which are predominantly governed by market conditions, namely demand and supply position. The Company basically sells both the products within the country and hence the segment based on geographical risk factors which may be present in different countries is not applicable. Thus, in the context of Accounting Standard 17 ''''Segment Reporting'''', notified under Section 211 (3C) [Companies (Accounting Standards) Rule, 2006, as amended] and other relevant provisions of the Companies Act, 1956, there is only one identified reportable segment. As the Company''s business activity falls within a single primary business segment and single reportable geographical segment, the financial statements are reflective of the information required by Accounting Standard 17 on Segment Reporting.

4. Disclosure of the relationship and transactions with the related parties as defined in Accounting Standard 18 ''''Related Party Disclosures'''', notified under Section 211 (3C) [Companies (Accounting Standards) Rule, 2006, as amended] and other relevant provisions of the Companies Act, 1956 is as follows:

5. The Company''s significant leasing arrangements are mainly in respect of residential and office premises. The aggregate lease rentals payable on these leasing arrangements are charged as Rent under "Other Expenses" in Note 28. These leasing arrangements are for a period not exceeding three years and are in most cases renewable by mutual consent, on mutually agreeable terms.

The above information regarding Micro and Small Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the Auditors.

6. The Company has undertaken necessary steps to comply with the Transfer Pricing regulations. The Company''s international transactions with associated enterprises are at arm''s length as per independent accountant''s report for the year ended 31 March 2013. The Management is of the opinion that the international transactions post 31 March 2013 continue to be at arm''s length and hence the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

7. Employee benefits

The Company has classified the various benefits provided to employees as under

1 Defined contribution plans

a. Provident Fund

b. Superannuation Fund

c. State defined contribution plan

i. Employer''s contribution to Employee''s state insurance

The Company has no further obligation beyond making contribution to the respective fund.

8. Provision for current tax is based on the results for the year ended 31 December 2013, in accordance with the provisions of the Income Tax Act, 1961. The final tax liability will be determined on the basis of the operations for the year 1 April 2013 to 31 March 2014, being the tax year of the Company.

9. The Board of Directors of the company at their meeting held on November 20, 2013 approved the proposal of making Styrolution India Private Limited its Wholly Owned Subsidiary by acquiring 100% of its equity shares, subject to any mandatory approvals, which the Company is in the process of obtaining.

10. Figures for the previous year have been regrouped and reclassified wherever necessary, to conform to the current year''s classification.

Dec 31, 2012

1. Company information

Styrolution ABS (India) Limited (Formerly known as INEOS ABS (India) Limited) (the ''Company'') is a public limited Company domiciled in India and is listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). The Company is a market leader in the "Engineering Thermoplastics". The Company has manufacturing facilities at Nandesari, Moxi and Katol and Research and Development centre at Moxi.

a. Rights, preferences and restrictions attached to the shares

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

b. Information on equity shares allotted without receipt of cash or allotted as bonus shares or shares bought back during five years immediately preceding December 31,2012.

No shares are allotted as bonus or allotted without receipt of cash during past five years and there has been no buy back of shares.

2. Contingent liabilities and commitments

I) Contingent liabilities

a) Income tax 243.85 257.59

b) Excise duty 73.63 69.44

c) Sales tax 72.62 72.62

d) Bank guarantees 13.80 13.80

e) Claims against the Company not acknowledged as debt 76.83 76.83

f) Letter of credit pending shipment 2,393.84 2,227.49

Note:

Future cash outflows in respect of (a), (b) and (c) above are determinable on receipt of judgements/ decisions pending with various forums/ authorities.

3. The Company has installed Wind Turbine Generators (WTG) at Lamba, Dhank and Pransla in Gujarat. The Local Power Station of the Madhya Gujarat Vij Company Limited (MGVCL) grants credit for the power units generated by the WTG. Accordingly, the amount of Power and Fuel consumption disclosed is net of such credit given by MGVCL aggregating to Rs. 491.02 (Lakhs) (Previous Year Rs. 389.56 (Lakhs)).

4. The Company manufactures and sells ABS and SAN i.e. "Highly Specialized Engineering Thermoplastics". These products have the same risks and returns, which are predominantly governed by market conditions, namely demand and supply position. The Company basically sells both the products within the country and hence the segment based on geographical risk factors which may be present in different countries is not applicable. Thus, in the context of Accounting Standard 17 "Segment Reporting", notified under Section 211 (3C) [Companies (Accounting Standards) Rule, 2006, as amended] and other relevant provisions of the Companies Act, 1956, there is only one identified reportable segment. As the Company''s business activity falls within a single primary business segment and single reportable geographical segment, the financial statements are reflective of the information required by Accounting Standard 17 on Segment Reporting.

5. As on 31 December 2012, the Company has 5 forward contracts totaling to USD 98.48 Lakhs (Rs. 5,409.96 Lakhs) for the purposes of hedging its foreign currency exposure. The unamortized premium of Rs. 28.77 Lakhs pertaining to the same will be recognized subsequently. Foreign currency exposure that is not hedged as at 31 December 2012 is as follows:-

6. The Company''s significant leasing arrangements are mainly in respect of residential and office premises. The aggregate lease rentals payable on these leasing arrangements are charged as Rent under "Other Expenses" in Note 27.

These leasing arrangements are for a period not exceeding three years and are in most cases renewable by mutual consent, on mutually agreeable terms.

7. The Company has undertaken necessary steps to comply with the Transfer Pricing regulations. The Management is of the opinion that the international transactions are at arm''s length and hence the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

The estimates of future salary increase, considered in actuarial valuation, takes account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

1. The expected rate of return on plan assets is based on market expectations at the beginning of the year. The rate of return on long-term government bonds is taken as reference for this purpose.

2. There is no significant change in the accounting estimates due to applicability of AS-15 (Revised) as the parameters consid- ered in the year 2012 are the same as those considered in the year 2011.

3 The Actuarial liability for leave encashment and compensated absences as at year end is Rs. 108.66 (Lakhs) (Previous Year Rs. 93.15 (Lakhs)). Current year charge is included in Salaries, Wages and Bonus (Refer Note 26).

Represents estimates made for probable liabilities arising out of commercial transactions with parties and pending settlement of duties/levies with various government authorities. The information usually required by Accounting Standard 29 "Provisions, Contingent Liabilities and Contingent Assets" notified under section 211 (3C) of the Companies Act 1956, is not disclosed on the grounds that it can be expected to prejudice the interest of the Company. The timing of the outflow with regard to the said matters depends on exhaustion of remedies available to the Company under the Law and hence the Company is not able to reasonably ascertain the timing of the outflow.

8. Earnings per equity share (EPS)

EPS is calculated by dividing the profit attributable to the equity shareholders by average number of equity shares outstanding during the year. Numbers used in calculating basic and diluted earnings per equity shares are as stated below:

9. Previous year''s financial statements were audited by a firm of Chartered Accountants other than B S R & Co.

10. Figures for the previous year have been regrouped and reclassified wherever necessary, to conform to the current year''s classification.

Dec 31, 2011

1. (Rupees '000) (Rupees '000)

CONTINGENT LIABILITIES

NOT PROVIDED FOR IN RESPECT OF:

a) Income Tax 25,759 12,718

b) Excise Duty 6,944 5,842

c) Sales Tax 7,262 5,739

d) Bank Guarantee 1,380 1,380

e) Claims against the Company not acknowledged as debt 7,683 7,683

f )Letter of Credit pending shipment 222,749 -

Note: Future cash outflows in respect of (a), (b) and (c) above are determinable on receipt of judgments/decisions pending with various forums/authorities.

2. The tax year for the Company is the financial year ending March 31 and the provision for taxation has been calculated for the year ending December 31, 2011. The ultimate tax liability will be determined on the basis of the figures for the period April 1, 2011 to March 31, 2012. The net deferred tax has been provided in Profit and Loss Account as per Accounting Standard 22 - 'Accounting for Taxes on Income' as notified u/s 211(3C) of the Companies Act, 1956, as detailed:

3. The Company has installed Wind Turbine Generators (WTG) at Lamba, Dhank and Pransla in Gujarat. The Local Power Station of the Madhya Gujarat Vij Co. Ltd. (MGVCL) grants credit for the power units generated by the WTG. Accordingly, the amount of Power and fuel consumption disclosed is net of such credit given by MGVCL aggregating to Rs. 38,956 ('000) (Previous Year Rs. 35,688 ('000)).

4. The Company manufactures and sells ABS and SAN and does trading of Polycarbonates which belongs to the same product group i.e. "Highly Specialized Engineering Thermoplastics". The product has the same risks and returns, which are predominantly governed by market conditions, namely demand and supply position. The Company basically sells all the three products within the country and hence the segment based on geographical risk factors which may be present in different countries is not applicable. Thus, in the context of Accounting Standard 17 ''Segment Reporting'', as notified u/s 211(3C) of the Companies Act, 1956, there is only one identified reportable segment.

5. Disclosure of the relationship and transactions with the related parties as defined in Accounting Standard 18 'Related Party Disclosures", as notified u/s 211(3C) of the Companies Act, 1956, are as follows:

6. The Company's significant leasing arrangements are mainly in respect of residential and office premises. The aggregate lease rentals payable on these leasing arrangements are charged as rent under "Manufacturing and Other Expenses" in Schedule 14. These leasing arrangements are for a period not exceeding five years and are in most cases renewable by mutual consent, on mutually agreeable terms.

Notes forming part of the Financial Statements for the year ended December 31, 2011

7. The Company has undertaken necessary steps to comply with the Transfer Pricing regulations. The Management is of the opinion that the international transactions are at arm's length and hence the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

8. Disclosure requirements under Revised Accounting Standard 15 on "Employee Benefits", as notified u/s 211(3C) of the Companies Act, 1956 The Company has classified the various benefits provided to employees Us under The estimates of future salary increase, considered in actuarial valuation, takes account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The expected rate of return on plan assets is based on market expectations at the beginning of the year. The rate of return on long- term government bonds is taken as reference for this purpose.

There is no significant change in the accounting estimates due to applicability of AS-15 (Revised) as the parameters considered in the year 2011 are the same as those considered in the year 2010.

9 The Actuarial liability for leave encashment and compensated absences as at year end is Rs. 9,315 ('000) (Previous Year Rs. 9,906 ('000)). Current year charge is included in Salaries, Wages and Bonus (Refer Schedule 13).

Represents estimates made for probable liabilities arising out of commercial transactions with parties and pending settlement of duties/levies with various government authorities. The information usually required by Accounting Standard 29 "Provisions, Contingent Liabilities and Contingent Assets" notified under section 211 (3C) of the Companies Act 1956, is not disclosed on the grounds that it can be expected to prejudice the interest of the Company. The timing of the outflow with regard to the said matters depends on exhaustion of remedies available to the Company under the Law and hence the Company is not able to reasonably ascertain the timing of the outflow.

10. Consequent upon the formation of 50:50 Global joint venture between INEOS and BASF, bringing together key styrenics business of the two joint venture partners worldwide effective October 1, 2011, M/s Styrolution (Jersey) Limited (Formarly known as INEOS ABS (Jersey) Limited), the acquirer, along with persons acting in concert has in terms of SEBI (SAST) Regulation1997, made a public offer to the shareholders of the company, vide offer document dated January 5, 2012. The cash offer price is Rs.606.81 (Rupees six hundred six and paise eighty one only) for one fully paid up equity share of Rs. 10 each to acquire maximum of 2,931,920 equity share representing balance 16.67% of the capital of the Company.

Dec 31, 2009

2009 2008 (Rupees 000) (Rupees 000)

1. CONTINGENT LIABILITIES NOT PROVIDED FOR IN RESPECT OF:

a) Income Tax 52,068 44,359

b) Excise Duty 1,757 1,969

c) Sales Tax 5,739 5,739

d) Bank Guarantee 1,380 1,000

e) Claims against the Company not acknowledged as debt 7,640 87,224

2. The Company manufactures and sells ABS and SAN and does trading of Polycarbonates which belongs to the same product group i.e. "Highly Specialized Engineering Thermoplastics". The product has the same risks and returns, which are predominantly governed by market conditions, namely demand and supply position. The Company basically sells all the three products within the country and hence the segment based on geographical risk factors which may be present in different countries is not applicable. Thus, in the context of Accounting Standard 17 "Segment Reporting", issued by the Institute of Chartered Accountants of India, there is only one identified reportable segment.

3. Disclosure of the relationship and transactions with the related parties as defined in Accounting Standard 18 "Related Party Disclosures", issued by the Institute of Chartered Accountants of India are as follows:

RELATED PARTY TRANSACTIONS

List of Related Parties with whom transactions have taken place during the year 2009

(as identified and certified by the management)

Holding Company

holds 83.33% of the equity share capital from March 13, 2008 onwards

Ineos ABS (Jersey) Limited

Channel Islands

Lanxess Deutschland Gmbh.

Germany

(upto March 13, 2008)

Other Related parties

Ineos ABS (USA) Corporation

Ohio (USA)

Ineos USA LLC

Texas (USA)

Ineos ABS (Spain) S.L.

Barcelona (Spain)

Shiva Pharmachem Private Limited

Vadodara (India)

Key Managerial Personnel

Managing Director

Mr. R.S. Agrawal

4. The Companys significant leasing arrangements are mainly in respect of residential and office premises. The aggregate lease rentals payable on these leasing arrangements are charged as rent under "Manufacturing and Other Expenses" in Schedule 15.

These leasing arrangements are for a period not exceeding five years and are in most cases renewable by mutual consent, on mutually agreeable terms.

5. The Company has undertaken necessary steps to comply with the Transfer Pricing regulations. The Management is of the opinion that the international transactions are at arms length and hence the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

6. Disclosure requirements under Revised Accounting Standard 15 on "Employee Benefits", issued by the Institute of Chartered Accountants of India

The Company has classified the various benefits provided to employees as under

i. Define contribution plans

a. Provident Fund

b. Superannuation Fund

c. State defined contribution plan

i. Employers contribution to Employees state insurance

The Company has no further obligation beyond making contribution to the respective fund

7. The Company uses foreign exchange currency hedges to manage its risks associated with foreign currency fluctuations relating to certain firm commitments and forecasted transactions. The Company does not use hedges for speculative purposes.

8. Refer Annexure for additional information to part IV of Schedule VI to the Act.

9. Figures for the Previous Year have been regrouped and reclassified wherever necessary, to conform to the current years classification.

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