Notes to Accounts of KG Petrochem Ltd.

Mar 31, 2018

1. CRITICAL ACCOUNTING ESTIMATES, ASSUMPTIONS AND JUDGEMENTS

- The estimates and judgments used in the preparation of the financial statements are continuously evaluated by the Company and are based on historical experience and various other assumptions and factors (including expectation of future events) that the Company believes to be reasonable under the existing circumstances. Differences between actual results and estimates are recognized in the period in which the results are known/materialized.

- The said estimates are based on the facts and events that existed as at the reporting date, or that which occured after the date but provide additional evidence about the conditions existing at the reporting date.

(a)Property, plant and equipment

- Management assesses the remaining useful lives and residual value of property, plant and equipment. Management believes that the assigned useful lives and residual value are reasonable.

(b)Income taxes

- Management judgment is required for the calculation of provision for income taxes and deferred tax assets and liabilities.

- The Company reviews at each balance sheet date the carrying amount of deferred tax assets. The factors used in estimates may differ from actual outcome which could lead to significant adjustment to the amounts reported in the standalone financial statements.

(c)Contingencies

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

(d)Impairment of accounts receivable and advances

- Trade receivables carry interest and are stated at their fair value as reduced by appropriate allowances for expected credit losses. Individual trade receivables are written off when management deems them not to be collectible. Impairment is recognized for the expected credit losses.

(e)Employee benefit expenses

- Actuarial valuation for gratuity, liability of the Company has been done by LIC on the basis of data provided by the management and assumptions used by the LIC. The data so provided and the assumptions used have been disclosed in the notes to accounts.

(f)Capital spares

- Only those capital spares whose have a useful life of more than one year and their cost exceeds Rs.

25,000 have been considered for the purpose of capitalization under property, plant & equipment in the books of account. Further, all such spares are assumed to have a useful life of 36 months.

(g)Discounting of Security deposit, and other long term liabilities

- For majority of the security deposits received, the timing of outflow, as mentioned in the underlying contracts, is not substantially long enough to discount. The treatment would not provide any meaningful information and would have no material impact on the financial statements.

6 EXEMPTIONS CLAIMED

IND AS 101 “First-time adoption of Indian Accounting Standards” allows first time adopters certain exemptions from the retrospective application of certain IND AS, effective for April 1, 2016 opening balance sheet.

Following mandatory exceptions to the retrospective application of other IND AS as per Appendix B of IND

AS 101 have been used: -

a. Derecognition of financial assets and financial liabilities :As permitted by Ind AS 101, the Company has applied the derecognition requirements of financial assets and liabilities in Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS.

b. Classification and measurement of financial assets :As permitted by Ind AS 101, the Company has applied the Classification and measurement of financial assets criteria as prescribed in Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS.

c. Impairment of financial assets : the company has applied the impairment test on financial assets prospectively

d. Hedge accounting : the company has applied hedge accounting as prescribed in IND AS 109 prospectively

Following exemptions have been availed from other IND AS as per Appendix D of IND AS 101:

a Deemed cost for Property, Plant and Equipment (PPE) - Since there is no change in its functional currency on the date of transition to Ind ASs, the Company has elected to continue with the carrying value for all of its property, plant and equipment as recognized in the Standalone financial statements as at the date of transition to Ind ASs, measured as per the previous GAAP and use that as its deemed cost as at the date of transition.

(a) Rights, Preferences and restrictions attached to Equity Shares

The Company has only one class of shares referred to as equity shares having a par value of Rs. 10 each. Holder of equity shares is entitled to one vote per share and Dividend as and when declared by the Company.

In case of partly paid up share the shareholder shall be entitled to dividend only on the paid up share capital. In case any shareholder makes any default in payment of any call he shall not be entitled to vote in annual general meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts.

Nature of Security and terms of repayment for Long Term secured borrowings:

Nature of Security

Term loan from bank (Term Loan III), balance

Repayable in 26 quarterly installments starting from outstanding amounting to Rs. 428.57 lakhs (March To January, 2013. Last installment due in April, 2019. 31, 2017 : Rs. 772.57 lakhs and April 1, 2016 :Rs Rate of interest 9.65% p.a. as at year end. (March 31, 1116.57 lakhs) is secured by pari passu charge by 2017: 10.80% p.a. and April 1, 2016 : 11.05 %p.a.)* way of equitable mortgage in favour of both banks against all existing and future fixed assets of the Company and further guaranteed by Mr. G. S. Kandoi and Mr. Manish Singhal, Directors of the company in their personal capacity.

ii Term loan from bank (Term Loan IV), balance Repayable in 30 quarterly installments starting from outstanding amounting to Rs. 82.54 lakhs (March December, 2012. Last installment due in March, 2020. 31, 2017 : Rs. 124.54 lakhs and April 1, 2016 :Rs. Rate of interest 9.65% .p.a. as at year end. (March 31, 166.54 lakhs) is secured by pari passu charge by 2017: 10.80% p.a. and April 1, 2016 : 11.05% p.a.)* way of equitable mortgage in favour of both banks against all existing and future fixed assets of the Company and further guaranteed by Mr. G. S. Kandoi and Mr. Manish Singhal, Directors of the company in their personal capacity.

iii Term loan from bank (Term Loan V), balance ^Rep^ay^{able in 32} q^uarterly ^{installments startin}g ^from outstanding amounting to Rs. 212.43 lakhs (March ^June, ²⁰¹⁵. ^{Last installment due in March}, ²⁰²³. ^Rate 31, 2017 : Rs. 265.55 lakhs and April 1, 2016 :Rs. ^{of interest 9}.⁶⁵% ^{as at} y^{ear end}. ^{(March 31},^2017:

10.80% p.a. and April 1, 2016 : 11.05%p.a.)*

Loans payable on demand from SBI is secured by parri passu charge way of hypothecation of stock of Raw Material, Finished goods, Work in process, Store & spares, Book Debts exept receivable of agency division and all current assets of the company.

The loans are further personal guaranteed of Mr. G. S. Kandoi and Mr. Manish Singhal Directors of the company .

Cash Credit Limits with State Bank of India (SBI) is secured by Hypothecation of receivables of Agency Division under Electronic dealer Finance Scheme (e-dfs).

HDFC CC - The company had taken CC limit from HDFC bank. This CC limit is secured by First Parri Pasu charge on entire Current Assets with SBI and Second Parri Passu charge on entire Fixed Assets of the company with SBI further personal gurantee of Mr. GS Kandoi, Mr Manish Singhal and Prity Singhal, the directors of the company.

*The Company has not received any intimation from any of its suppliers about their having filed a memorandum in persuance of Micro, Small and Medium Enterprises Development Act, 2006. Hence, the disclosure requirement u/s 22 of MSMED Act, 2006 is not applicable to the Company.

36 FINANCIAL RISK MANAGEMENT

36.1 Financial risk management objectives and policies

! The Company''s financial risk management is an integral part of how to plan and execute its business strategies. The Company''s financial risk management policy is set by the Managing Board.

36.2 Financial risk factors

The Company''s principal financial liabilities comprise of trade payables, borrowings and other liabilities. The main purpose of these financial liabilities is to manage finances for the Company''s operations and also for purchase of capital assets and for safeguarding its interests under contracts.

The Company has trade and other receivables and cash and cash equivalents that arise directly from its operations as a part of its financial assets.

The Company''s activities expose it to a variety of financial risks:

a. Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices/market interest rates.

(i) Interest rate risks:

Interest rate risk is the risk that the fair value of future cash flows of the financial instruments will fluctuate because of changes in market interest rates. According to the Company interest rate risk exposure is only for floating rate borrowings which it had taken from HDFC bank rest of the borrowing of the company are fixed rate borrowing which are not subject to market risk.

(ii) Foreign currency risk:

The Company operates internationally and portion of the business is transacted in several currencies and consequently the Company is exposed to foreign exchange risk through its sales and services in overseas and purchases from overseas suppliers in various foreign currencies. Foreign currency exchange rate exposure is partly balanced by purchasing of goods, commodities and services in the respective currencies.

b. Credit risk

Credit risk is the risk that a counter party will not meet its obligations under a financial instrument or customer contract, leading to a financial loss.

To manage this, the Company periodically assesses financial reliability of customers and other counter parties, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of financial assets.

The Company makes major of its export sales, against a security in the nature of Letter of Credit , and hence the credit risk is minimal with regard to export debtors. However the company makes local sales and it is subject to credit risk the company manages this risk by recognizing 100 % expected credit loss on debtors outstanding for more than 36 months.

c. Liquidity risk

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

The Company’s objective is to at all times maintain optimum levels of liquidity to meet its cash requirements. The Company monitors rolling forecasts of its liquidity requirements to ensure it has sufficient cash to meet operational needs.

37 Fair Value Measurement

Financial Instrument by category and hierarchy

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

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

1. Fair value of cash and short-term deposits, trade and other short term receivables, trade payables, other current liabilities, short term loans from banks and other financial institutions approximate their carrying amounts largely due to short term maturities of these instruments.

2. IND AS 101 allows Company to fair value its property, plant and machinery on transition to IND AS, the Company has fair valued property, plant and equipment, and the fair valuation is based on deemed cost approach where the existing carrying amounts are treated as fair values.

The fair values for loans and security deposits were calculated based on cash flows discounted using a current lending rate.

In case of security deposits, Company has used the fixed deposit rate of the year of making advance.

They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counter party credit risk.

The fair values of non-current borrowings are based on discounted cash flows using a current borrowing rate. They are classified as level 3 fair values in the fair value hierarchy due to the use of unobservable inputs, including own credit risk.

For other financial assets and liabilities that are measured at amortized cost, the carrying amounts are equal to the fair values.

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: Quoted prices / published NVA (unadjusted) in active markets for identical assets or liabilities. It includes fair value of financial instruments traded in active markets and are based on quoted market prices at the balance sheet date and financial instruments like mutual funds for which net assets value (NAV) is published mutual fund operators at the balance sheet date.

Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). It includes fair value of the financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on the company specific estimates. If all significant inputs required to fair value an instrument are observable then instrument is included in level 2.

Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs). If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

3. FAIR VALUE HEIRARCHY

The following table provides the fair value measurement hierarchy of Company''s asset and liabilities, grouped into Level 1 to Level 3 as described below: a Quoted prices/published NAV (unadjusted) in active markets for identical assets or liabilities (level 1). It includes fair value of financial instruments traded in active markets and are based on quoted market prices at the balance sheet date. b Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2). It includes fair value of the financial instruments that are not traded in an active market (for example, interest free security deposits) is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on the company specific estimates. If all significant inputs required to fair value an instrument are observable then instrument is included in level 2.

c Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3). If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

4. CAPITAL RISK MANAGEMENT Objective

The primary objective of the Company''s capital management is to maximize the shareholder value. i.e. to provide maximum returns to the shareholders. The Company''s primary objective when managing capital is to ensure that it maintains an efficient capital structure and healthy capital ratios and safeguard the Company''s ability to continue as a going concern in order to support its business and provide maximum returns to the shareholders. The Company also proposes to maintain an optimal capital structure to reduce the cost of capital. No changes were made in the objectives, policies or processes during the year ended March 31, 2018 and March 31, 2017.

Policy

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the rules and regulations framed by the Government.

Process

The Company manage its capital by maintaining sound/optimal capital structure financial ratios, such as net debt-to-equity ratio on a monthly basis and implements capital structure improvement plan when necessary. Debt-to-equity ratio as of March 31, 2018, March 31, 2017 and April 1, 2016 is as follows:

5. Related Party Transactions

In accordance with the requirements of IND AS 24, name of the related party, related party relationship, transactions and outstanding balances including commitments where control exits and with whom transactions have taken place during reported periods, are reported as under:

(i) Related party name and relationship (a) Executive Directors:

Particulars Designation

Shri Ramesh Chand Maheshwari Executive Director

Shri G S Kandoi Chairman & Managing Director

Shri Manish Singhal Executive Director

(b) Relatives of Key Managerial Persons with whom transactions have taken place:

Particulars Relation

Smt. Savitri Kandoi Wife of Shri G.S.Kandoi

Shri Vivek Singhal Son of shri G.S. Kandoi

(c) Non Excecutive Directors, KMP and Enterprises Over which they are able to exercise significant influence (With whom transaction have taken place):

Particulars Designation

Shri Rameshwar Pareek Non Executive Director

Shri Kamlesh Sharma Non Executive Director

Shri Radhey Shyam Gemini Non Executive Director

Shri Raj Kumar Agarwal Non Executive Director

Smt. Prity Singhal Non Executive Director

Shiv Ratan Sharma Chief Financial Officer

M/s B I Enterprises Pvt. Ltd. Related Concern

M/s Chrome International Co. Ltd. Related Concern

6. SHORT - TERM EMPLOYEE BENEFITS:-

All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits and they are recognized in the period in which the employee renders the related services

The Company recognizes the undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered as a liability after deducting any amount already paid.

POST RETIREMENT BENEFIT PLANS Defined Contribution Plan:

Contribution to superannuation fund is recognized as an expense in the Statement of Profit & Loss as it is incurred. There are no other obligations other than the contribution payable to the respective trust. Eligible employees receive benefits from a provident fund which is a defined contribution plan. Both the eligible employee and the Company make monthly contributions to the provident fund plan equal to a specified percentage of the covered employee''s salary.

Defined Benefits Plan

(i) Gratuity

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees

who are in continuous service for a period of 5 years are eligible for gratuity. The amount of

46Disclosures required under Ind AS 108

In accordance with Accounting Standard Ind AS 108 ''Operating Segment '', segment information has been given as follows:

Operating Segments:

(i) Textile Division :-Manufacturing and marketing of terry towels, made-ups, readymade garment like

bathrobes, babyhood towels, pillows etc. in the domestic and inter- national market.

(ii) Agency Division : Consigment Stockiest of GAIL (India) Ltd. for marketing and distribution of polymers in Rajasthan and

(iii) Technichal Textile Division : Manufacturing of artificial leather through technical textile

Identification of Segments:

The Managing board monitors the operating results of its Business segment separately for the purpose of making decision about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements, Operating segment have been identified on the basis of nature of products and other quantitative criteria specified in the Ind AS 108.

Segment revenue and results:

The expenses and income which are not directly attributable to any business segment are shown as others

Segment assets and Liabilities:

Segment assets include all operating assets used by the operating segment and mainly consist of property, plant and equipment, trade receivables, Inventory and other operating assets. Segment liabilities primarily includes trade payable and other liabilities. Common assets and liabilities which cannot be allocated to any of the business segment are shown as others

The number of shares used in computing basic EPS is the weighted average number of shares outstanding during the year.

The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effects of potential dilutive equity.

7. INVESTMENT PROPERTY

*The company has given on rent a portion of its factory building situated at_C-171, Road No. 9J, VKI however the portion given on rent is insignificant and major portion of the factory is used in manufacturing activities hence the company has not recognized sepretly such poriton as an investment property by taking of the view given in para 10 of IND AS 37 "Investment Property"

8. Financial and Derivatives Instruments

The company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments on forecasted as transactions as approved by Board of Directors. The company does not use forward contracts for speculation purpose.

9. Notes to reconciliation A Property, Plant and Equipment

(i) Amortization of lease hold and

Under previous GAAP, Leasehold land was recorded and classified as fixed assets and amortized over the lease period. However, under Ind AS, Leasehold land is governed by IND AS 17 leases. In accordance with IND AS 17 the company has recognized its lease hold land as Finance lease and shown Land under the head of Property Plant and equipment. Also the amount of land is amortized during the lease period. The net effect of this change is decrease in property, plant & equipment by 6,18,448.53 as at March 31, 2017, Nil as at April 1, 2016, and increase of amortization expense by 6,18,448.53 as at March 31, 2017.

(ii) Capitalization of spares

Under previous GAAP, the Company has recognized the capital spares under Inventory. However Under Ind AS, capital spares that qualifies the criteria of property, plant and equipment are recognized as PPE. Accordingly the company has capitalized spares having useful life of more than 12 months and corresponding depreciation is charged on them. The net effect of this change is increase in Property, plant and equipment by NN as at March 31, 2017 (64,14,434 as at April 1, 2016) and decrease in Inventories by Nil as at March 31, 2017 (64,14,434 as at April 1, 2016) and decrease in total equity by NN as at April, 2017.

(iii) Government grant

Under previous GAAP, grant related to fixed assets were adjusted in the cost of fixed asset. As per Ind AS

20, grant related to property, plant and equipment is required to be shown in balance sheet by setting up the grant as deferred income and not by deducting from the value of asset and the same is required to be transfer to profit and loss account on systematic basis. The effect of this change results in increase in property, plant & equipment by 17,54,318.54 as at March 31, 2017 (14,82,455.00 as at April 1, 2016), decrease in total equity by NN as at March 31, 2017 (Nil as at April 1, 2016), increase in non-current liabilities by 17,54,318.54 as at March 31, 2017 (14,82,455.00 as at April 1, 2016) and increase in other current liabilities by NN as at March 31, 2017 (NN as at April 1, 2016)

(B) Financial Instrument

(i) Discounting of security deposits

Under previous GAAP, security deposits are carried at cost. As per Ind AS 109, security deposits (debt instruments) are required to be carried at amortized cost i.e. at present value of future cash flows. In accordance with the requirement of IND AS 109 the company has discounted the security deposits where ever the effect of time value of money is material and there is a contractual period. The effect of this change is decrease in other financial assets by 3,01,902.83 as at March 31, 2017 (3,39,357.45 as at April 1, 2016) and increase in other current assets by 3,01,902.83 as at March 31, 2017 (3,01,902.83 as at April 1, 2016). There had been increase in other income by 37,454.62 and other expenses by 37,454.62 for the year ended March 31, 2017 and decrease in retained earnings by 37,454.62 as at April 1, 2016.

(ii) Amortization of transaction fees

Under previous GAAP, processing fees related to borrowings were transferred in statement of profit and loss in the year of loan taken. As per Ind AS 109, borrowings are required to be recognized at amortized cost using effective interest rate method. The net effect of change is increase in other current assets by 3,59,751.56 as at March 31, 2017 (3,59,751.56 as at April 1, 2016), increase in non-current asset by

15.08.656.65 as at March 31, 2017 (18,68,407.65 as at March 31, 2016) and increase in total equity by 18.68.407.65 as at March 31, 2017 (22,28,159.00 as at March 31, 2016). There had been increase in finance cost by 3,59,752.00 as at March 31, 2017.

(iii) Exchange gain /loss on trade receivables and DE recognition of forward contract

Under previous GAAP, Trade Receivables on which forward contracts had been taken were restated at each reporting date using forward rate. Further, corresponding Forward Contract receivable and payable was recognized in books of account. Under IND AS 109, Trade Receivables on which forward contracts has been taken are required to be restated at each reporting date by using spot rate and exchange rate difference was booked. Further forward contract are not recognized in books of account however gain/loss on year end on forward contract is recognized in books of account.

C Employee benefits

(i) Under Indian GAAP, Amount invested by the company in gratuity fund of employee''s is shown under current/non-current asset head and corresponding provision for gratuity is shown under the head of other current/non-current provision head. Under IND AS the company is required to net off the amount of gratuity fund with the gratuity liability and remaining asset/ liability (as the case may be) is required to be shown in financial statements in appropriate head. Due to this change the company has netted off the amount deposited in gratuity fund of Rs. 80.43 lacs with the provision for gratuity of Rs. 91.11 lac and shown the remaining liability of Rs. 10.68 in the provision head.

D. Deferred Tax

The Company has accounted for deferred tax on the various adjustments between Indian GAAP and IND AS at their effective tax rate. The net effect of this IND AS adjustment is Increase in DTL by 112.79 laks ( increase in DTL by 218.45 lakhs ) and Increase in other equity by 112.79 lakhs as at 31st March 2017 ( Decrease in other equity by 218.45 lakhs )

E Revenue

As per the Indian GAAP, revenue from sale of products was presented as net of excise duty. Under IND AS, taxes collected by the entity on its own account are required to be included in the revenue. To comply with this requirement the company has shown revenue inclusive of exicse duty since the excise duty flows to the entity on its own account. Due to this change the total revenue of the entity has been increase by 3.73 lacs in F.Y. 2016-17 and cost of material consumption is also increased by same amount.

F Finance cost element

Under existing GAAP there was no guidance regarding finance element included in purchased cost of inventory hence the same was shown as a part of purchased cost however under IND AS finance element included in purchased cost of inventory is required to be separately recognized as an element of finance cost instead of purchased cost. The net impact of this change is decrease in Cost of material consumed by 26.66 lakhs during F.Y. 2016-17 and increase in finance cost by 26.66 lakhs by 26.66 lakhs during F.Y. 2016 17.

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Mar 31, 2016

OVERVIEW

The Company was originally incorporated on 29.2.1980 under Companies Act, 1956 as KG Petrochem Private Limited .The name of the company changed to KG Petrochem Limited as per fresh Certificate of Incorporation dated 24.8.1995 issued by Registrar of Companies, Rajasthan, Jaipur.

Presently the Company is engaged in the business of manufacturing and services as under:-

1. Textile Division:-Manufacturing and marketing of terry towels, made-ups etc. in the domestic and inter-national market.

2. Agency Division : Consignment Stockiest of GAIL (India) Ltd. for marketing and distribution of polymers in Rajasthan and

3. Garment Division : Manufacturing & marketing of readymade garment like bathrobes, babyhood towels, pillows etc.

4. Notes On Accounts

The previous year figures have been reworked, regrouped, rearranged and reclassified wherever necessary. Accordingly amounts and other disclosure for the preceding years are included as an integral part of the current year financial statement and are to be read in relation to the amounts and other disclosure relating to the current year.

The Company has only one class of shares referred to as equity shares having a par value of Rs. 10 each. Holder of equity shares is entitled to one vote per share and Dividend as and when declared by the Company.

In case of partly paid up share the shareholder shall be entitled to dividend only on the paid up share capital.

In case any shareholder makes any default in payment of any call he shall not be entitled to vote in annual general meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts.

5. The receipt of capital subsidy is for the processing machinery under the Technology Up gradation Fund Scheme (TUFS) circular no. 2 (2005-06 series) of Govt. of India Ministry of Textiles, office of the Textile commissioner, Mumbai. It is credited to Capital Subsidy under the head Reserve & Surplus subject to fulfillment of conditions.

6. As mentioned above the Company has availed Capital Subsidy forming part of cost of process Machinery. Proportionate amount of such capital subsidy is being withdraw from Capital Reserve (Capital Subsidy) equal to relative depreciation. During the year Rs. 19,19,992.00 (Previous year Rs.19,82,808.00 ) has been withdrawn from Capital Subsidy.

7.The term loan from State Bank of Bikaner & Jaipur (SBBJ) & State Bank of India (SBI) are secured by pari-pasu charge by way of equitable mortgage in favour of both banks against all existing and future fixed assets of the Company and further guaranteed by Mr. G. S. Kandoi and Mr. Manish Singhal, Directors of the company in their personal capacity.

8. All installments are paid on due date, hence there exists no failure at the end of the year.

CONTINGENT LIABILITIES (AS-29)

Contingent liabilities not provided in respect of :

Guarantees given by the bank amounting to Rs. 3,70,00,000 ( Previous year Rs. 4,00,00,000) for which Company has provided Counter Guarantee to bank and also secured by the securities as mentioned in Note No. 2.3 Long Term Borrowings.

Disputed Service Tax of Rs. 3,375,730 (Previous year Rs. 3,375,730) for the year 2005-06 to 2008-09 for which appeal is pending before CESTAT.

9. OTHER NOTES

10.1 Related party Disclosure (AS-18)

The company has identified all the related parties as per details given below. Relationship:

11. Key Management Personnel and their enterprises

Shri G.S Kandoi Shri Manish Singhal Shri Ramesh Chand Maheshwari Smt. Savitri Kandoi Miss Navita Khunteta Shri Shiv Ratan Sharma Shri R.S. Gemini (W.e.f. 9.11.2015) a) Tirupati Plastomatics Pvt. Ltd

12. Relative of Key Management Personnel and their enterprises

13. Shri Vivek Singhal

14. Chrome International Co Ltd

15. B I Enterprises Pvt Ltd

16. Vivek Singhal- HUF

17.. Shri Baldev das Gauri Shanker HUF

18. Smt. Prity Singhal

19. Export obligation against EPCG License R s .4 , 50, 00,000 (Previous year Rs 6, 1 6, 70, 064) is outstanding as on 3 1 .3 . 2016.

The company is engaged mainly in textile business a n d it h as following Business Segments in terms of As- 1 7 , which a se not reportable segments and hence, no reporting is done:-

20 Textile & Garment

21. Agency Division.

22. Accounting Standard 28- “Impairment of Assets”-

The company assessed potential generation of economic benefits from its business u n its and is of the view t hat assets employed in continuing businesses are capable of generating adequate returns over their useful lives in the usual course of business, there is no indication to the contrary and accordingly the management is of the view that no impairment provision is called for in these accounts.

23. Financial and Derivatives Instruments

Company has entered into following foreign exchange financial instruments

24. The company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments on forecasted as transactions as approved by Board of Directors. The company does not use forward contracts for speculation Outstanding forward exchange financial instruments entered into by the company as on 31.3.2016 is as under:

25. All assets and liabilities are classified as Current and Noncurrent as per the criteria laid in t he Schedule III of The Companies Act 2013. Based on the nature of products and the time between the acquisition of assets for processing and t heir realization, the company has ascertained its operating cycle less than 12 months, accordingly 12 months period has been considered for the purpose of Current/ Noncurrent classification of assets and liabilities.

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Mar 31, 2014

1. OVERVIEW

The Company was originally incorporated on 29.2.1980 under Companies Act, 1956 as KG Petrochem Private Limited .The name of the company changed to KG Petrochem Limited as per fresh Certificate of Incoporation dated 24.8.1995 issued by Registrar of Compaies, Rajasthan, Jaipur.

Presently the Company is engaged in the business of manufacutuing and services as under:-

(i) Textile Division:- Manufactuiring and marketing of terry towels, made-ups etc. in the domestic and inter-national market.

(ii) Agency Division : Consigment Stockiest of GAIL (India) Ltd. for marketing and distribution of polymers in Rajasthan and

(iii) Garment Division : Manufacturing & marketing of readymade garment like bathrobes, babyhood towels, pillows etc.

2. The previous year figures have been reworked, regrouped, rearranged and reclassified wherever necessary. Accordingly amounts and other disclosure for the preceding years are included as an integral part of the current year financial statement and are to be read in relation to the amounts and other disclosure relating to the current year.

3. Accounting Standard :- "Provisions , Contingent Liabilities and Contingent Assets" : Movement of Provisions:

Provision Provision made Short Provision outstanding at during the year charged to Nature of Provision the beginning Statement of of the year Profit and Loss

Provision for Taxation 17,348.51 27,946.58 581.61

Provision utilized Provision during the year outstanding at the Nature of Provision end of the year of the year

Provision for Taxation 17,930.13 27,946.58

NOTE NO. 4 : CONTINGENT LIABILITIES (AS-29)

Contingent liabilities not provided in respect of:

Gaurantees given by the bank Rs.28000.00 (Previous year Rs. 30000.00) for which Company has provided Counter Gaurantee to bank and also secured by the securities as mentioned in Note No. 2.3 Long Term Borrowings.

Disputed excise duty of Rs. 243.19 (Previous year Rs. 243.19) for the period F.Y. 2001-02 to 2004-05 (Upto Feb.05) for which appeal is pending before CESTAT

Disputed Service Tax of Rs. 3375.73 (Previous year Rs. 3375.73) for the year 2005-06 to 2008-09 for which appeal is pending before CESTAT.

Estimated cost of contract remaining to be executed on capital account Rs. 290693.62 (Previous year nil).

5. As per Accounting Standard 15 - "Employee Benefits", the disclosure of Employee Benefits as defined in the accounting standard are given below:

a) Defined Contribution Plan : Employer''s contribution to provident fund provided Rs. 556.72 (Previous year Rs. 439.07) has been recognized as expenses for the year.

b) Defined Benefit Plan : Present value of grutuity is determined based on actuarial valuation using the projected unit credit method.

6. Related party Disclosure (AS-18)

The company has identified all the related parties as per details given below.

Relationship:

a) Key Management Personnel and their enterprises

Shri G.S Kandoi

Shri Manish Singhal

Shri Ramesh Chand Maheshwari

b) Relative of Key Management Personnel and their enterprises

1. Shri Vivek Singhal

a) Chrome International Co Ltd

b) Bhavish Infravest & Devlopers Pvt Ltd

2. Shri Baldevdas Gauri Shanker HUF

3. Smt. Savitri Kandoi

4. Smt. Prity Singhal

5. Shri Manish Singhal HUF

7. Export obligation against EPCG License Rs.552694.72 (Previous year Rs 68260.82) is outstanding as on 31.3.2014.

8. The company is engaged mainly in textile business and it has no Geographical Segment. Thus disclosure under As-17 segment reporting is not required.

9. Accounting Standard 28- "Impairment of Assets"-

The company assessed potential generation of economic benefits from its business units and is of the view that assets employed in continuing businesses are capable of generating adequate returns over their useful lives in the usual course of business, there is no indication to the contrary and accordingly the management is of the view that no impairment provision is called for in these accounts.

10. Financial and Derivatives Instruments

Company has entered into following foreign exchange financial instruments

a) The company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments on forecasted as transactions as approved by Board of Directors. The company does not use forward contracts for speculation purpose.

11. All assets and liabilities are presented as Current and Non current as per the criteria set out in the Revised Schedule VI of The Companies Act 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realisation, the company has ascertained its operating cycle less than 12 months, accordingly 12 months period has been considered for the purpose of Current/ Non-current classification of assets and liabilities.

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Mar 31, 2013

OVERVIEW

The Company was originally incorporated on 29.2.1980 under Companies Act, 1956 as KG Petrochem Private Limited The name of the company changed to KG Petrochem Limited as per fresh Certificate of Incoporation dated 24.8.1995 issued by Registrar of Compaies, Rajasthan, Jaipur.

"Presently the Company is engaged in the business of manufacutuing and services as under:- (i) Textile Division:- Manufactuiring and marketing of terry towels, made-ups etc. in the domestic and inter-national market, (ii) Agency Division : Consignment Stockiest of GAIL (India) Ltd. for marketing and distribution of polymers in Rajasthan.(iii) Woven Sack Division : Manufacturing and marketing of PP/HDPE Woven Sacks till 30.4.2012 and (iv) Garment Division : Manufacturings marketing of readymade garment like bathrobes, babyhood towels, pillows etc."

"The previous year figures have been reworked, regrouped, rearranged and reclassified wherever necessary. Accordingly amounts and other disclosure for the preceding years are included as an integral part of the current year financial statement and are to be read in relation to the amounts and other disclosure relating to the current year."

NOTE NO. 1.1: CONTINGENT LIABILITIES (AS-29)

Contingent liabilities not provided in respect of:

Gaurantees given by the bank Rs.300,00,000 ( Previous year Rs. 230,00,000) for which Company has provided Counter Gaurantee to bank and also secured by the securities as mentioned in Note No. 2.3 Long Term Borrowings.

Disputed excise duty of Rs. 243,190 (Previous year Rs. 243,190) for the period F.Y. 2001-02 to 2004-05 (UptoFeb.05)for which appeal is pending before CESTAT

Disputed Service Tax of Rs. 3,375,730 (Previous year Rs. 3,375,730) for the year 2005-06 to 2008-09 for which appeal is pending before CESTAT.

2.1 Related party Disclosure (AS-18)

The company has identified all the related parties as per details given below. Relationship:

a) Key Management Personnel and their enterprises Shri G.S Kandoi

Shri Manish Singhal

Shri Ramesh Chand Maheshwari

b) Relative of Key Management Personnel and their enterprises Shri Vivek Singhal

Shri BaldevdasGauri Shanker HUF

Smt. Savitri Kandoi

Smt. Prity Singhal

Shri Manish Singhal HUF

2.2 Export obligation against EPCG License Rs. 6,82,60,824 (Previous year Rs 2,47,51,999)

2.3 Segment Information Information About Business Segment

As required by Accounting Standard-17 on segment reporting

a) The company is collectively organized into two major business segments namely Textile Division

Woven Sacks Division

Segments have been identified and reported taking into account the nature of the product and services, the organization structure and internal financial reporting system.

b) Information based on primary segment (Business Segment)

2.4 Accounting Standard 28- "Impairment of Assets"-

The company assessed potential generation of economic benefits from its business units and is of the view that assets employed in continuing businesses are capable of generating adequate returns over their useful lives in the usual course of business, there is no indication to the contrary and accordingly the management is of the view that no impairment provision is called for in these accounts.

2.5 Financial and Derivatives Instruments

Company has entered into following foreign exchange financial instruments

a) The company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments on forecasted as transactions as approved by Board of Directors. The company does not use forward contracts for speculation purpose.

Outstanding forward exchange financial instruments entered into by the company.

2.6 All assets and liabilities are presented as Current and Non current as per the criteria set out in the Revised Schedule VI of The Companies Act 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realisation, the company has ascertained its operating cycle less than 12 months, accordingly 12 months period has been considered for the purpose of Current/ Non-current classification of assets and liabilities.

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Mar 31, 2012

OVERVIEW

The company was originally incorporated on 29.2.1980 under Companies Act, 1956 as KG Petrochem Private Limited .The name of the company changed to KG Petrochem Limited as per fresh Certificate of Incoporation dated 24.8.1995 issued by RegistrarofCompaies, Rajasthan, Jaipur.

"Presently the company is engaged in the business of manufacutuing and services as Under:- (i) Textile Division:- Manufactuiringand marketing of terry towels, made-ups etc. in the domestic and inter-national market, (ii) Woven Sack Division : Manufacturing and marketing of PP/HDPE Woven Sacks and (iii) Agency Division : Consigment Stockiest of GAIL (India) Ltd. for marketing and distribution of polymers in Rajasthan."

"The previous year figures have been reworked, regrouped, rearranged and reclassified wherever necessary. Accordingly amounts and other disclosure for the preceding years are included as an integral part of the current year financial statement and are to be read in relation to the amounts and other disclosure relating to the current year."

The Company has only one class of shares referred to as equity shares having a par value of Rs. 10 each. Holder of equity shares is entitled to one vote per share and Dividend as and when declared by the Company.

In case of partly paid up share the shareholder shall be entitled to dividend only on the paid up share capital.

In case any shareholder makes any default in payment of any call he shall notbe entitled to vote in annual general meeting.

In the event of liquidation of the company, the holders of equity shares will be entitled to receive any of the remaining assets of the company, after distribution of all preferential amounts.

i) The receipt of capital subsidy is for the processing machinery under the Technology Up gradation Fund Scheme (TUFS) circular no. 2 (2005-06 series) of Govt, of India Ministry of Textiles, office of the Textile commissioner, Mumbai.lt is credited to Capital Subsidy under the head Reserve & Surplus subject to fulfillment of conditions.

ii) As mentioned above the Company has availed Capital Subsidy forming part of cost of process Machinery.

Proportionate amount of such capital subsidy is being withdraw from Capital Reserve (Capital Subsidy) equal to relative depreciation. During the year Rs.1,502,031 (Previous year Rs.960,633) has been withdrawn from Capital Subsidy and for the prior period relevant amount of Rs NIL (Previous year Rs.3,233,676) of such capital subsidy is being withdrawn from Capital Reserve.

1. The term loan of Rs.336,434,950 from Bank of Baroda is secured by way of equitable mortgage in favour of bank against all existing and future assets of the Company's textile division named as Bhavik Terryfab and further guaranteed by Mr. G. S. Kandoi and Mr. Manish Singhal, Directors of the company in their personal capacity.

2. Car Loan from HDFC Bank Ltd is secured by way of hypothecation of vehicle financed by HDFC Bank.

Net current deferred tax liability of Rs. 9,547,658 (Previous year Rs. 6,110,185) has been charged to Statement of Profit & Loss besides current tax of Rs.7,402,418 (Previous year Rs. 2,356,580) as per Income Tax Act, 1961.

"Loans payable on demand from Bank of Baroda are secured by way of hypothecation of stock of Raw Material, Finished goods,Work in process,Store & spares, Book Debts and First charge on Fixed assets of the company. The loan is further personal guaranteed of Mr. G. S. Kandoi and Mr. Manish Singhal Directors of the company .Overdraft Limit from State Bank of Bikaner & Jaipur is secured by pledge of FDR of Rs.100,000 and Bill purchased limit is secured against Letter of Credit."

"Margin against Bank Guarantee of Rs.23,000,000 (Previous year Rs 20,000,000) issued by Bank of Baroda and overdrat limit of Rs 85,000 with SBBJ (Previous year NIL)

"Deposit account with more than 12 months maturity Rs.100,000 (Previous year NIL)

-Balance with bank held as margin money Rs.1,180,631 (Previous year Rs. 902,101)

NOTE NO. 3.1: CONTINGENT LIABILITIES (AS-29J

Contingent liabilities not provided in respect of:

Gaurantees given by the bank Rs.230,00,000 ( Previous year Rs. 200,00,000) for which Company has provided Counter Gaurantee to bank and also secured by the securities as mentioned in Note No. 2.3 Long Term Borrowings.

Disputed excise duty of Rs. 243,190 (Previous year Rs. 243,190) for the period F.Y. 2001-02 to 2004-05 (Upto Feb.05) for which appeal is pending before CESTAT

Disputed Service Tax of Rs. 3,375,730 (Previous year NIL) for the year 2005-06 to 2008-09 for which appeal is pending before CESTAT.

As per Accounting Standard 15 - "Employee Benefits", the disclosure of Employee Benefits as defined in the accounting standard are given below:

a) Defined Contribution Plan : Employer's contribution to provident fund provided Rs. 752,964 (Previous year Rs. 1,478,532) has been recognized as expenses for the year.

b) Defined Benefit Plan : No employees has rendered a service for a period of 5 years. No provision is required under Payment of Gratuity Act, 1972. Company has not made any rules for gratuity payable to employees other then covered by Payment of Gratuity Act 1972.

4) OTHER NOTES

4.1 Related party Disclosure (AS-18)

The company has identified all the related parties as per details given below. Relationship:

a) Key Management Personnel and their enterprises

Shri G.S Kandoi

Shri Manish Singhal

Shri Ramesh Chand Maheshwari

b) Relative of Key Management Personnel and their enterprises

Shri Vivek Singhal

Shri Baldevdas Gauri Shanker HUF

Smt. Savitri Kandoi

Smt. Preety Singhal

Shri Manish Singhal HUF

Miss Mantika Singhal

4.2 Export obligation against EPCG License Rs. 24,751,999 (Previous year Rs 8,63,84,391)

4.3 Segment Information Information About Business Segment

As required by Accounting Standard-17 on segment reporting

a) The company is collectively organized into two major business segments namely Textile Division

Woven Sacks Division

Segments have been identified and reported taking into account the nature of the product and services, the organization structure and internal financial reporting system.

b) Information based on primary segment (Business Segment)

Note:-The Company's manufacturing operation are only in india. Hence there is no geographical segment.

4.4 Accounting Standard 28- "Impairment of Assets"-

The company assessed potential generation of economic benefits from its business units and is of the view that assets employed in continuing businesses are capable of generating adequate returns over their useful lives in the usual course of business, there is no indication to the contrary and accordingly the management is of the view that no impairment provision is called for in these accounts.

4.5 Financial and Derivatives Instruments

Company has entered into following foreign exchange financial instruments

a) The company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments on forecasted as transactions as approved by Board of Directors. The company does not use forward contracts for speculation purpose. Outstanding forward exchange financial instruments entered into by the company.

Foreign currencies exposure that are not hedged by financial instruments or forward contracts as at 31st March,2012 amounting to NIL (Previous Year Japanees Yen 160,00,000 equivalent to Rs. 89,33,000 and USD 6,29,000 equivalent to Rs 2,79,26,000 for import of machinery).

Company has also converted its CC limit into FCNR loan, in this arrangement company have to pay NIL (Previous year $657,606.31.)

4.6 All assets and liabilities are presented as Current and Non current as per the criteria set out in the Revised Schedule VI of The Companies Act 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realisation, the company has ascertained its operating cycle less than 12 months, accordingly 12 months period has been considered for the purpose of Current/ Non-current classification of assets and liabilities.

4.7 The Revised Schedule VI became effective from April 1, 2011 for the preparation of Financial Statements. Hence, current year Financial Statements are prepared in accordance with Revised Schedule VI. Since previous year presentation was made as per Old Schedule VI, the previous year figures have been regrouped/reclassified wherever neccessary to correspond with the current year,s classification/disclosure.

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Mar 31, 2010

1) Contingent liabilities not provided in respect of:

a) Outstanding Bank Guarantee of Rs. 100.00 lacs (Previous year Rs. 105.84 lacs) There is no reimbursement possible on account of contingent liabilities.

b) Disputed income tax demand of Rs. 2,05,340/- on a/c of penalties levies u/s 271 (1) (c) of Income Tax Act, 1961 forA.Y 99-00 & 03-04 for which appeals are pending before CommissionAppeals.

c) Disputed excise duty of Rs. 2,43,190/- forthe period FY. 2001-02 to 2004-05 (Upto Feb. 05) forwhich appeal is pending before CESTAT.

2) Export obligation against EPCG License Rs. 2379.84 lacs (Previous year Rs 160.23 lacs)

3) In terms of accounting policy no. 2 Borrowing cost Rs 41,41,986/- (Previous year Rs. NIL) and Salary and wages Rs. 17,60,328/- (Previous year Rs. NIL) incurred during the construction / installation of fixed assets have been capitalized.

4) Excise duty shown under the head expenditure represents the provision made for excise duty on closing stock of finished goods.

5) The receipt of capital subsidy for the processing machinery under the Technology Up gradation Fund Scheme (TUFS) is treated as promoters contribution vide circular no. 2 (2005-06 series) of Govt, of India Ministry of Textiles, office of the Textile commissioner, Mumbai and credited to Capital Subsidy Account underthe head Reserve & Surplus subjectto fulfillment of conditions.

6) Disclosure as required by Accounting Standards:-

A. Accounting Standard 15 "Employee Benefits", the disclosure of Employee Benefits as defined in the accounting standard are given below:

a) Defined Contribution Plan

Employers contribution to provident fund provided Rs. 8,32,016/- (Previous year 6,47,050/-) has been recognized as expenses for the year.

b) Defined Benefit Plan

No employees has rendered a service for a period of 5 years. No provision is required under Payment of Gratuity Act, 1972. Company has not made any rules for gratuity payable to employees other then covered by Payment of Gratuity Act 1972.

B. Segment Information

Information About Business Segment As required by Accounting Standard-17 on segment reporting

1. The company is collectively organized into two major business segments namely Terry Towel Division Woven Sacks Division

Segments have been identified and reported taking into account the nature of the product and services, the organization structure and internal financial reporting system.

2. Information based on primary segment (Business segment)

C. Accounting Standard 18 -"Related party Disclosure"

The company has identified all the related parties as per details given below. 1. Relationship:

a) Associate Concerns

Chrome International Co. Ltd.(Relationship Ceased on 11.07.2009)

b) Key management Personnel and their enterprises

ShriG.S.Kandoi

Shri Manish Singhal

c) Relative of key Management Personnel and their enterprises where transaction have taken Place

Shri Vivek Singhal

Shri Vivek Singhal HUF

Shri Baldevdas Gauri Shanker HUF

Smt. Savitri Kandoi

Smt.Ritu Singhal

Smt. Preety Singhal

Shri Bhavik Singhal

Shri Manish Singha lHUF

Miss Mantika Singhal

Chrome International Co. Ltd. (From 12.07.2009)

Note: Related party relationship is as identified by the company and relied upon by the Auditors

E. Accounting Standard 22 " Taxes on Income"

Considering accounting procedure prescribed by the standard, the following amounts have been worked out and provided in books:

Major components of deferred tax balances

Particulars (Rs. In Lacs)

Deferred tax liabilities 31st March, 2010 31st March, 2009

Difference between

accounting and tax WDV 806.47 710.97

Net current deferred tax liability of Rs 34,71,884/- has been charged to Profit and Loss Account besides current tax Rs 19,47,171/- as per Income Tax Act, 1961.

G. Accounting Standard 28- "Impairment of Assets"-

The company assessed potential generation of economic benefits from its business units and is of the view that assets employed in continuing businesses are capable of generating adequate returns over their useful lives in the usual course of business, there is no indication to the contrary and accordingly the management is of the view that no impairment provision is called for in these accounts.

7 Financial and Derivatives Instruments

Company has entered into following foreign exchange financial instruments

a) The company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments on forecasted as transactions as approved by Board of Directors. The company does not use forward contracts for speculation purpose. Outstanding forward exchange financial instruments entered into by the company.

b) During the year company has incurred a loss of Rs 1,26,00,000/- in a foreign exchange it derivatives transaction .This item has been shown as Extraordinary item.

8) Advance includes due from directors Rs. Nil (Previous Year Rs. Nil) with maximum debit balance Rs. 8,63,556/-(Previous year Rs. Nil) to Chairman & Managing Director and Whole Time Director.

9) Fixed monthly remuneration to the Chairman & Managing Directors has been paid within the limits specified in schedule XIII of the companies Act, 1956 Rs. 10.84 Lacs (previous year Rs. 8.40 Lacs).