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Notes to Accounts of Khaitan Chemicals & Fertilizers Ltd.

Mar 31, 2019

1. Corporate Information

Khaitan Chemicals and Fertilizers Limited (the Company) is engaged in the manufacturing of Single Super Phosphate Fertilisers (Plain, Zincated and Boronated in powder form and granulated form), Sulphuric Acid and its variants, Trading of NPK Fertilisers, Processing of Oil Seed (mainly Soybean) and crude edible oil, selling of De-Oiled Cake and Crude/Refined Oil & Generation and selling of Wind Power. The Company is a public limited company incorporated and domiciled in India under the provisions of Companies Act, 2013. Its shares are listed on the Bombay Stock Exchange Limited, Mumbai (BSE).

These financial statements were approved and adopted by the Board of Directors of the Company in their meeting held on May 09, 2019.

2. Basis of Preparation of Financial Statements

a) Statement of compliance

The Financial Statements have been prepared in accordance with Indian Accounting Standards (IND AS) as prescribed under Section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules, 2015 and the relevant amendment rules issued thereafter.

b) Basis of preparation of financial statements

Effective April 1, 2017 the company has adopted all the Ind AS standards and adoption was carried out in accordance with Ind AS 101, âFirst time adoption of Indian Accounting Standardâ, with April 1, 2016 as the transition date. The transition was carried out from the Indian Accounting Principles Generally Accepted in India as prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (IGAAP), which was the previous GAAP. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. The financial statements are presented in INR and all values are rounded to the nearest INR Lakh (100 Thousand), except when otherwise indicated.

c) Use of Estimates

The preparation of the financial statements in conformity with IND AS requires management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. Application of accounting policies that require critical accounting estimates involving complex and subjective judgments and the use of assumptions in these financial statements have been disclosed in Notes.

Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.

d) Classification of Assets and Liabilities as Current and Non-Current

All Assets and Liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of product & activities of the Company and their realisation in cash and cash equivalent, the Company has determined its operating cycle as twelve months for the purpose of current and non-current classification of assets and liabilities. Deferred tax assets and liabilities are classified as non-current assets and liabilities.

Note

a) The Company has only one class of equity shares having a par value of Re.1/- 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 shareholder in the ensuing annual general meeting. In the event of liquidation, the equity shareholder are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

b) The Company has not allotted any equity shares for consideration other than cash, bonus shares, nor have any shares been bought back during the period of five years immediately preceding the balance sheet date.

c) Reconciliation of the shares outstanding at the beginning and at the end of the reporting year.

i) Rupee Term Loan of Rs.432.31 Lakhs (Previous Year 594.68 Lakhs), (Sanctioned Rs.695.80.00 Lakhs in FY 2016-17) from State Bank of India, is primarily secured by way of first charge on entire immovable assets and moveable fixed assets of the Company, both present and future on pari- passu basis with existing charge holders and repayable in 17 instalments comprising of 16 instalments of Rs 43.00 Lakhs each and balance in last instalments ending on 31st December , 2021.

ii) Rupee Term Loan of Rs. 1594.87 Lakhs (Previous Year 148.80 Lakhs) and Foreign Currency Term Loan of Rs Nil (Previous Year 2081.41 Lakhs) (Sanctioned Rs.3,000.00 Lakhs) from State Bank of India is primarily secured by way of first charge on entire immovable assets and moveable fixed assets of the Company, both present and future on pari- passu basis with existing charge holders and repayable in 22 quarterly instalments comprising of 2 Instalment of Rs.50.00 Lakhs each , 4 Instalments of Rs. 75.00 Laths each , 4 Instalments of Rs 100.00 Lakhs each, 4 Instalments of Rs 150.00 Lakhs each, 4 Instalments of Rs 175.00 Lakhs each, 2 Instalments of Rs. 200.00 Lakhs each, 1 Instalment of Rs. 250.00 Lakhs and balance in last instalment ending on 31.03.2021.

iii) Rupee Term Loan of Rs.425.43 Lakhs (Previous Year 565.97 Lakhs), (Sanctioned Rs.1,000.00 Lakhs ) by IDBI Bank Ltd., is primarily to be secured by way of first charge on entire immovable assets and movable fixed assets of the Company both present and future on pari-passu with existing charge holder and repayable in 28 equal quarterly instalment of Rs.35.71 Lakhs each ending on 1st January, 2022.

iv) All the above loans are collaterally secured through second charge by way of hypothecation on the entire current assets of the company on pari-passu basis with existing charge holder. These loans are irrevocably and unconditionally guaranteed by Chairman & Managing Director, Shri Shailesh Khaitan. Loan of Rs.1,000.00 Lakhs sanctioned in FY 2014-15 by IDBI Bank is collaterally secured by mortgage of two properties of Shradha projects Ltd., situated at Indore and pledge of 12 Lakhs equity shares of the Company . Fresh Corporate loan of Rs 3,000.00 Lakhs sanctioned by State Bank of India in FY 2015-16 is collaterally secured by pledge of 2,82,96,760 fully paid up equity shares of the Company .

v) Rupee Term Loan of Rs 102.71 Lakhs (Previous Year 138.01 Lakhs), (sanctioned Rs 185.98 Lakhs in 2016-17) have been availed from Axis Bank with tenure of 60 months ending 15th Sept , 2021. The Loan is secured by the hypothecation of the car.

vi) Rupee Term Loan of Rs 14.59 Lakhs (Previous Year 24.84 Lakhs),(sanctioned Rs 49.50 Lakhs) have been availed from BMW Financial Services with tenure of 60 months ending 1st June , 2020. The Loan is secured by the hypothecation of the car.

vii) Rupee Term Loan of Rs 13.15 Lakhs (Previous Year Nil) (sanctioned Rs 14.67 Lakhs in 2018-19) have been availed from Yes bank with tenure of 60 months ending 2nd August 2023. The Loan is secured by the hypothecation of the car.

viii) Unsecured Loan & Advances of Rs 1621.00 Lakhs has been procured from related party viz Shradha Projects Ltd , Arati Marketing Private Limited, Accord Infra Properties Private Ltd, Lilac Properties Private Ltd & Shradha Technopack Private Ltd as promoter fund infusion towards SBI Loan . Rs 1621.00 Lakhs are repayable after the maturity of the Loan.

Note:

ii) Cash Credit/Working Capital demand loans & Buyerâs Credit from Banks are secured by first hypothecation charge on the Companyâs entire stocks comprising raw materials, stocks in transit, stocks in process, finished goods, consumable stores & spares and receivable on pari-passu basis among consortium bankers. Borrowings are further secured by pledge of 8 lakhs equity shares of the Company with face value of Re. 1/per share held by Chairman & Managing Director, Shri Shailesh Khaitan in favour of all consortium Bankers & 96,98,920 shares of the Company with face value of Re 1/- per share held by M/s. Shradha Project Ltd exclusively in favour of State Bank of India All short term bank borrowings are personally guaranteed by Chairman & Managing Director, Shri Shailesh Khaitan ii) IDBI Vendor Finance loan in the nature of Discounting of Bill of Exchange drawn/accepted by the Corporate of Rs. Nil lakhs (previous year 416.26 lakhs )(sanctioned Rs.500.00 lakhs).

3 The Company is in the process of obtaining confirmations and reconciliation with its trade receivables, trade payables and other dues receivables. The confirmations to the extent received have been reconciled and adjustments, if any, have been made. The others are pending for confirmations, reconciliations and adjustments, if any. However, the management does not expect any significant variations in the existing status.

4 Post the applicability of Goods and Service Tax (GST) with effect from July 01, 2017, revenue from operations are disclosed net of GST. Accordingly, the revenue from operation and excise duty expense for the year ended March 31, 2019 are not comparable with the previous year figures.

5 The Company has not provided for Moping up of subsidy on raw materials of fertilizer as on March 31, 2011 in terms of Office Memorandum No. 23011/1/2010-MPR dated July 11, 2011 issued by the Ministry of Chemicals & Fertilizers, Govt. of India, being reconsidered vide their letter No 23011/1/2010-MPR(Pt) dated August 22, 2012 and decided not to effect recovery till a policy in this regard is formulated. This has strengthened the managementâs view for not providing the above liability.

6 THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT (MSMED) ACT

Based on the information available, there are certain vendors who have confirmed that they are covered under the Micro, Small and Medium Enterprises Development Act, 2006. Disclosures as required by section 22 of âThe Micro, Small and Medium Enterprises Development Act, 2006, are given below:

7 Leases

a. Operating lease

The Company has entered into certain operating lease agreements and an amount of 55.04 lakhs (2018: 54.55 lakhs) paid under such agreements has been charged to the Statement of Profit and Loss. These leases are generally not non-cancellable and are renewable by mutual consent on mutually agreed terms. There are no restrictions imposed by such agreements.

8 Employee benefits

The Company participates in defined contribution and benefit schemes, the assets of which are held (where funded) in separately administered funds. For defined contribution schemes the amount charged to the statements of profit or loss is the total of contributions payable in the year.

a) Defined Contribution Plans-charge to the Profit and Loss Account based on contribution

b) Other long-term benefits

Amount recognized as an expense and included in Note 33 Item âProvision for employee related expenses Rs. 2.28 lakhs (Previous year Rs. 22.18 lakhs) for long term compensated Absences.

c) Defined benefits plans

i) Amount recognized as an expense and included in Note 33 âContribution to Provident and Other Fundsâ Rs. 107.44 lakhs (Previous year Rs. 102.13 lakhs) for Provident and other fund

ii) Gratuity Expense Rs. 70.71 lakhs (Previous year Rs.20.64 lakhs) has been recognized in âProvision for employee related expensesâ under Note 33. as per Actuarial Valuation

9 Related party disclosures as required by ind AS - 24 (As certified by the management) a. List of Related Parties

i. Entities with joint control of, or significant influence over, the entity

Names Relationship

Shradha Project Limited Significant influence (with 47.18 % holding)

II. Key Management Person Executive directors and their relatives

Names Relationship

i) Shri Shailesh Khaitan Chairman & Managing Director

ii) Smt Swapna Khaitan Managing Director and wife of Chairman

iii) Shri Utsav Khaitan Whole Time Director (Son of Chairman & Managing Director)

iv) Shri Jagdish Lal Jajoo Whole Time Director

v) Shri Harsh Vardhan Agnihotri President & Chief Financial Officer

vi) Shri Kamlesh Joshi Company Secretary & General Manager

vii) Shri Vijay Gupta Non executive/ Independent directors

viii) Shri Balmukund Dakhera Non executive/ Independent directors

ix) Ms. Veena Chadha Non executive/ Independent directors

III. Other related parties

Enterprises which is under significant influence of KMP and / or their Relatives(with whom transaction have taken place)

i) The Majestic Packaging Co Pvt Ltd

ii) Tri-bhuvan Properties Ltd.

Iii) Arati Marketing Private Limited

iv) B O Constructions Private Limited

v) Accord Infra Properties Private Limited

vi) Lilac Properties Private Limited

vii) Shradha Technopack Private Limited

viii) Khaitan Paper & Packaging Pvt Ltd

10 Segment information

The information reported to the Chief Operating Decision Maker (CODM) for the purpose of resource allocation and assessment of segment performance is based on types of goods and services. Accordingly, the Companyâs reportable segments under Ind AS 108 are as follows:

I) Fertilizers and Chemicals

ii) Soya / Agro

iii) Others

11 Financial Risk Management objectives and Policies a. Financial risk factors

The Companyâs operational activities expose to various financial risks i.e. market risk, credit risk and risk of liquidity. The Company realizes that risks are inherent and integral aspect of any business. The primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The primary market risk to the Company is foreign exchange risk & interest rate risk. The Company calculates and compares the alternative sources of funding by including cost of currency cover also. Whenever, the currency cover costs are such as to neutralize the advantage in foreign currency, loans are hedged so as to not to lose advantage. The Company uses derivative financial instruments to reduce foreign exchange risk exposures.

This note explain the sources of risk which the entity is exposed to and how the entity manages the risk :

i) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of fluctuation in market prices. These comprise three types of risk i.e. currency rate , interest rate and other price related risks. Financial instruments affected by market risk include loans and borrowings, deposits, investments, and derivative financial instruments. Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Regular interaction with bankers, intermediaries and the market participants help us to mitigate such risk.

Foreign Currency Risk and sensitivity

The primary market risk to the Company is foreign exchange risk. The Company uses derivative financial instruments to reduce foreign exchange risk exposures and follows its risk management policies to mitigate the same. After taking cognisance of the natural hedge, the company takes appropriate hedges to mitigate its risk resulting from fluctuations in foreign currency exchange rate(s).

Interest Rate Risk and Sensitivity

The Companyâs exposure to the risk of changes in market interest rates relates primarily to long term debt. The Company has entered into various interest rate swap contracts, in which it agrees to exchange, at specific intervals, the difference between fixed and variable interest amounts calculated by reference to an agreed upon principal amount. Borrowings at variable rates expose the Company to cash flow interest rate risk. With all other variables held constant, the following table demonstrates composition of fixed and floating rate borrowing of the company and impact of floating rate borrowings on companyâs profitability.

c. Commodity price risk and sensitivity

The Company is exposed to the movement in price of key raw materials in domestic and international markets. The Company has in place policies to manage exposure to fluctuations in the prices of the key raw materials used in operations. The Company manages fluctuations in raw material price through hedging in the form of advance procurement when the prices are perceived to be low and also enters into advance buying contracts as strategic sourcing initiative in order to keep raw material and prices under check cost of material hedged to the extent possible.

II. Credit risk

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to Rs. 6100.28 lakhs and Rs. 9980.76 lakhs as of March 31, 2019 and March 31, 2018, respectively. Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in India. Credit risk has always been managed by the company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. On account of adoption of Ind AS 109, the company uses expected credit loss model to assess the impairment loss or gain. The Company uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account as per the Companyâs historical experience for customers.

Liquidity risk

Liquidity risk arises when the Company will not be able to meet its present and future cash and collateral obligations. The risk management action focuses on the unpredictability of financial markets and tries to minimise adverse effects. The Company uses derivative financial instruments to hedge risk exposures. Risk management is carried out by the Finance department under Forex Policies as adopted and duly approved by the Board. The Companyâs approach is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due and company monitors rolling forecasts of its liquidity requirements.

Competition and Price risk

The Company faces competition from local and foreign competitors. Nevertheless, it believes that it has competitive advantage in terms of high quality products and by continuously upgrading its expertise and range of products to meet the needs of its customers.

Capital Risk Management

The Companyâs policy is to maintain an adequate capital base so as to maintain creditor and market confidence and to sustain future development. Capital includes issued capital, share premium and all other equity reserves attributable to equity holders. In order to strengthen the capital base, the company may use appropriate means to enhance or reduce capital, as the case may be

12 Fair Value Measurement

I) Some of the financial assets and financial liabilities are measured at fair value at the end of the reporting period. The following table gives information about how the fair values of these financial assets and financial liabilities are determined (in particular, the valuation techniques and inputs used):

13 Derivative financial instruments

The Company holds derivative financial instruments such as foreign currency forward contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank or a financial institution. These derivative financial instruments are valued based on quoted prices for similar assets and liabilities in active markets or inputs that are directly or indirectly observable in the marketplace.

14. Previous year figures have been re-arranged and/or regrouped wherever considered necessary, to confirm current year classification.

15. The financial statements are presented in INR and all value are rounded to the nearest INR lakhs, except when otherwise indicated.

Mar 31, 2018

1. Corporate Information

2. Basis of Preparation of Financial Statements

a) Statement of compliance

b) Basis of preparation of financial statements

These financial statements have been prepared in accordance with IND AS 101, âFirst Time Adoption of IND ASâ, as these are the Companyâs first IND AS compliant Financial Statements for the year ended 31^st March, 2018.

The Financial Statements correspond to the classification provisions contained in IND AS-1 (Presentation of Financial Statements). The transition to IND AS has been carried out from the Accounting Principles generally accepted in India (Indian GAAP), which is considered as the "Previous GAAPâ, for purposes of IND AS -1.

The preparation of these Financial Statements resulted in changes to the Companyâs Accounting Policies as compared to the most recent Annual Financial Statements prepared under Previous GAAP, wherever necessary. All Accounting Policies and applicable IND AS have been applied consistently and retrospectively to all periods, including the previous financial year presented and the IND AS opening balance sheet as at 1st April, 2016 (Transition Date). The resulting difference between the carrying amounts under IND AS and Previous GAAP as on the Transition Date has been recognised directly in Equity. An explanation of the effect of the transition from Previous GAAP to Ind AS on the Company''s equity and profit is provided in Note 53.

Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. The financial statements are presented in I NR and all values are rounded to the nearest IN R Lakh (100 Thousand), except when otherwise indicated.

Business Combinations: The Company has opted to apply IND AS 103 prospectively from the date of transition to IND AS, i.e. 1^st April 2016 onwards. However, previous GAAP balances relating to assets and liabilities acquired under business combinations entered into before transition date, have been carried forward without any adjustments.

c) Use of Estimates

d) Classification of Assets and Liabilities as Current and Non-Current

All Assets and Liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of product & activities of the Company and their realisation in cash and cash equivalent, the Company has determined its operating cycle as twelve months for the purpose of current and non-current classification of assets and liabilities. Deferred tax assets and liabilities are classified as non-current assets and liabilities.

NOTES:

(a) Vehicles include motorcars taken on hire purchase of Rs. Nil lakhs (previous year Rs. 214.69 lakhs, previous year57.95 Lakhs).

(b) Freehold Land measuring 1,76,460 Sq. Meter amounting to Rs.57.47 Lakhs is yet to be transferred in the name of the Company. These lands were acquired in pursuance of scheme of amalgamation/merger sanctioned Honâble High Courts.

Â© Lease agreement of Leasehold Land of Malwan unit measuring 151650.72 Sq. Meter amounting to Rs.24.86 lakhs (Net Block Rs.16.22 lakhs) acquired by virtue of amalgamation sanctioned by BIFR order dated 12th April 2006, is yet to be transferred in the name of the Company

(d) Refernote no. 20 for charges on property plant and equipmentâs.

Note -a) Margin Money Deposits are subject to first charge to secure the Companyâs Buyersâ credit & Bank Guarantees.

b) Unclaimed dividend account if the dividend has not been claimed within 30 days from the date of its declaration, the Company is required to transfer the total amount of the dividend which remains unpaid or unclaimed, to a special account to be opened by the Company in a scheduled bank to be called âUnpaid Dividend Accountâ. The unclaimed dividend lying in such account is required to be transferred to the Investor Education and Protection Fund (IEPF), administered by the Central Government after a period of seven years from the date of declaration.

Note

a) The Company has only one class of equity shares having a par value of Re. 1 /- per share. Each shareholder is eligible far one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholder in the ensuing annual general meeting. In the event of liquidation, the equity shareholder are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

I) Rupee Term Loan of Rs.594.68 Lakhs (Sanctioned Rs.695.80.00 Lakhs in FY 2016-17) from State Bank of India, is primarily secured by way of first charge on entire immovable assets and moveable fixed assets of the Company, both present and future on pari- passu basis with existing charge holders and repayable in 17 installments comprising of 16 installments of Rs.43.00 Lakhs each and balance in last installments ending on 31st December, 2021.

ii) Rupee Term LoanofRs.148.80 Lakhs and Foreign Currency Term Loan of Rs.2081.41 Lakhs (Sanctioned Rs.3,000.00 Lakhs) from State Bankof India isprimarily secured by way of first charge on entire immovable assets and moveable fixed assets of the Company, bath present and future on pari- passu basis with existing charge holders and repayable in 22 quarterly installments comprising of 2 Installment of Rs.50.00 Lakhs each , 4 Installments of Rs.75.00 Laths each , 4 Installments of Rs.100.00 Lakhs each, 4 Instalments of Rs.150.00 Lakhs each, 4 Installments of Rs.175.00 Lakhs each, 2 Installments of Rs.200.00 Lakhs each, 1 Installment of Rs.250.00 Lakhs and balance in last installment ending an 31.03.2021.

iii) Rupee Term Loan of Rs,565.97 Lakhs (Sanctioned Rs. 1,000,00 Lakhs) by IDBI Bank Ltd., is primarily to be secured by way of first charge on entire immovable assets and movable fixed assets of the Company both present and future on pari-passu with existing charge holder and repayable in 28 equal quarterly installment of Rs.35.71 Lakhs each ending on 1st January, 2022.

iv) All the above loans are collaterally secured through second charge by way of hypothecation on the entire current assets of the company on pari-passu basis with existing charge holder. These loans are irrevocably and unconditionally guaranteed by Chairman & Managing Director, ShriShaileshKhaitan. Loan of Rs. 1,000.00 Lakhs sanctioned in FY 2014-15 by IDBI Bank is collaterally secured by mortgage of two properties of Shradha projects Ltd., situated at Indore and pledge of 12 Lakhs equity shares of the Company. Fresh Corporate loan of Rs.3,000.00 Lakhs sanctioned by State Bankof India in FY 2015-16 is collaterally secured by pledge of 2,82,96,760 fully paid up equity shares of the Company.

v) Rupee Term Loan of Rs.138.01 Lakhs (sanctioned Rs.185.98 Lakhs in 2016-17) have been availed from Axis Bank with tenure of 60 months ending 15th Sept ,2021. The Loan is secured by the hypothecation of the car.

vi) Rupee Term Loan of Rs.24.84 Lakhs (sanctioned Rs.49.50 Lakhs) have been availed from BMW Financial Services with tenure of 60 months ending 1st June, 2020. The Loan is secured by the hypothecation of the car.

vii) Unsecured Loan & Advances of Rs.1621.00 Lakhs has been procured from various parties including related party vizShradha Projects Ltd & Arati Marketing Private Limited as promoter fund infusion towards SBI Loan. Rs.1621.00 Lakhs are repayable after the maturity of the Loan.

viii) The period and amount of default as on March 31,2018 are as under:

Note:

I) Cash Credit/Working Capital demand loans & Buyerâs Credit from Banks are secured by first hypothecation charge on the Companyâs entire stocks comprising raw materials, stocks in transit, stocks in process, finished goods, consumable stores & spares and receivable on pari-passu basis among consortium bankers. Borrowings are further secured by pledge of 8 lakhs equity shares of the Company with face value of Re. 1/per share held by Chairman & Managing Director, ShriShaileshKhaitan in favour of all consortium Bankers & 96,98,920 shares of the Company with face value of Rs 1/-per share held by M/s. Shradha Project Ltd exclusively in favour of State Bankof India All short term bank borrowings are personally guaranteed by Chairman & Managing Director, ShriShaileshKhaitan ii) IDBI Vendor Finance loan in the nature of Discounting of Bill of Exchange drawn/accepted by the Corporate of Rs. 416.26 lakhs (sanctioned Rs.500.00 lakhs).

3. Several High Courts have stayed the retrospective nature of amendment in the Payment of Bonus Act (Amendment), 2015 with effect from April 1, 2014. The Company has consequently not made any provision for Bonus for the year 2014-15 (Rs.9.93 Lakhs).

4. The Company is in the process of obtaining confirmations and reconciliation with its debtors, creditors and other dues receivables. The confirmations to the extent received have been reconciled and adjustments, if any, have been made. The others are pending for confirmations, reconciliations and adjustments, if any. However, the management does not expect any significant variations in the existing status.

5. Post the applicability of Goods and Service Tax {GST} with effect from July 01, 2017, revenue from operations are disclosed net of GST. Accordingly, the revenue from operations and excise duty expenses for the quarter and year ended March 31,2018 are not comparable with the previous periods presented in the results.

6. The Company has not provided for Moping up of subsidy on raw materials of fertilizer as on March 31, 2011 in terms of Office Memorandum No. 23011/1/2010-MPR dated July 11, 2011 issued by the Ministry of Chemicals & Fertilizers, Govt, of India, being reconsidered vide their letter No 23011/1/2010-MPR(Pt) dated August 22, 2012 and decided not to effect recovery till a policy in this regard is formulated. This has strengthened the managementâs view for not providing the above liability.

7. Leases

a. Operating lease

The Company has entered into certain operating lease agreements and an amount of 54.55 lakhs (2017: 62.67 lakhs) paid under such agreements has been charged to the Statement of Profit and Loss. These leases are generally not nan-cancellable and are renewable by mutual consent on mutually agreed terms. There are no restrictions imposed by such agreements.

8. Employee benefits

b) Other long-term benefits

Amount recognized as an expense and included in Note 33 Item âSalaries, Wages, Allowances etc. Rs. 22.18 lakhs (Previous year Rs.18.21 lakhs) for long term compensated Absences.

c) Defined benefits plans

I) Amount recognized as an expense and included in Note 33 âContribution to Provident and Other Funds" Rs. 102.13 lakhs (Previous year Rs.90.37 lakhs) for Provident and other fund

ii) Gratuity Expense Rs. 20.64 lakhs (Previous year Rs.59.82 lakhs) has been recognized in âContribution to Provident and Other Funds" under Note 33. as perActuarial Valuation

9. Segment information

I) Fertilizers and Chemicals

ii) Soya / Agra

iii) Others

10. Financial Risk Management objectives and Policies

a. Financial risk factors

i) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because af fluctuation in market prices. These comprise three types of risk i.e. currency rate , interest rate and other price related risks. Financial instruments affected by market risk include loans and borrowings, deposits, investments, and derivative financial instruments. Foreign currency risk is the risk that the fair value or future cashflows of a financial instrument will fluctuate because of changes in foreign exchange rates. Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Regular interaction with bankers, intermediaries and the market participants help us to mitigate such risk.

Foreign Currency Risk and sensitivity

Foreign Currency Sensitivity

Sensitivity analysis is computed based on the changes in the income end expenses in foreign currency upon conversion into functional currency, due to exchange ratefluctuations between the previous reporting period end the current reporting period.

0.25% Increase and decrease in foreign exchanges rates will have the following impact on profit before tax

Interest Rate Risk and Sensitivity

c. Commodity price risk and sensitivity

ii) Credit risk

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to Rs.9956.36 lakhs and Rs.9203.61 lakhs as of March 31,2018 and March 31, 2017, respectively. Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in India. Credit risk has always been managed by the company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. On account of adoption of Ind AS 109, the company uses expected credit loss model to assess the impairment loss or gain. The Company uses a provision matrix to compute the expected credit loss allowance fortrade receivables The provision matrix takes into account as perthe Companyâs historical experience forcustomers.

iii) Liquidity risk

Liquidity risk arises when the Companywill not be able to meet its present and future cash and collateral obligations. The risk management action focuses on the unpredictability of financial markets and tries to minimise adverse effects. The Company uses derivative financial instruments to hedge risk exposures. Risk management is carried out by the Finance department under Forex Policies as adapted and duly approved by the Board. The Companyâs approach is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due and company monitors rolling forecasts of its liquidity requirements.

Competition and Price risk

Capital Risk Management

11. Fair Value Measurement

i) Some of the financial assets and financial liabilities are measured at fair value at the end of the reporting period. The following table gives information about how the fair values of these financial assets and financial liabilities are determined (in particular, the valuation techniques and inputs used):

Notes:

1. There were no level 1 financial instruments during the period.

2. There were no transfers between the Levels for the purpose of fair valuation.

3. The following table shows the valuation technique and key input used for Level 2:

12 Derivative financial instruments

13. First time adoption of Ind AS

These financial statements of Khaitan Chemicals and Fertilizers Limited for the year ended March 31,2018 have been prepared in accordance with Ind AS. For the purposes of transition to Ind AS, the Company has followed the guidance prescribed in Ind AS 101, First-Time Adoption of Indian Accounting Standards, with April 01,2016 as the transition date and IGAAP as the previous GAAP.

The transition to Ind AS has resulted in changes in the presentation of the financial statements, disclosures in the notes thereto and accounting policies and principles. The accounting policies set out in Note 1 have been applied in preparing the standalone financial statements forthe yearended March 31,2018and the comparative information. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at April 01,2016 and the financial statements as at and forthe year ended March 31,2018.

i) Reconciliations

The following reconciliations provide the effect of transition to Ind AS from previous GAAP in accordance with Ind AS 101

a. Balance Sheet as at April 01,2016 and March 31,2017

b. Statement of Profit and loss for the year ended March 31,2017

c. Equity as at April 01,2016 and March 31,2017

d. There is no significant reconciliation items between cash flow prepared under Previous GAAP and prepared under Ind AS.

There is no significant reconciliation items between cash flow prepared under Previous GAAP and prepared under Ind AS.

ii) Exemptions availed onfirst-time adoption of Ind AS 101

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

A) Optional Exemptions

a) Deemed Cost

The company has elected to avail the exemption in para D7AA, Ind AS 101 and has continued with the carrying value for all of its property, plant and equipment as recognised in the financial statements as atthe date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments

b)Leases

Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. However, the Company has done the assessment of lease in contracts based on conditions in prevailing as at the date of transition.

c) Designation of previously recognised financial instruments

Linder Ind AS 109, at initial recognition of a financial asset, an entity may make an irrevocable election to present subsequent changes in the fair value of an investment in an equity instrument in other comprehensive income. Ind AS 101 allows such designation of previously recognized financial assets, as âfair value through othercomprehensive income¹ on the basis of the facts and circumstances that existed at the date of transition to Ind AS.

Accordingly, the Company has designated its investments in certain equity instruments at fair value through other comprehensive income on the basis of the facts and circumstances that existed atthe date of transition to Ind AS.

d) Fair value measurement of financial assets and liabilities at initial recognition

Ind AS 109 requires to initially recognised financial assets and liabilities atfair value. And if the fair value differ from transaction price, the difference is recognised as gain or loss. An entity can apply these requirement of initially recognition prospectively to transaction entered on or after the date of transition.

B) Mandatory Exceptions

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

a) Estimates

Entityâs estimate in Ind AS on date of transition shall be consistent with estimate made under previous GAAP, unless there is objective evidence that those estimates were in error. Any new information shall be accounted as non-adjusting event in accordance with Ind AS 10.

b) Derecognition of financial assets and financial liabilities

The Company has elected to apply the derecognition requirements for financial assets and financial liabilities in Ind AS 109 prospectively for transitions occurring on or after the date of transition to Ind AS. The Company has classified the financial assets in accordance with Ind AS 109 on the basis of facts and circumstances that exist at the date of transition to Ind AS. An entity can apply the de-recognition requirements in Ind AS 109 retrospectively from a date of the entityâs choosing, provided that the information needed to apply Ind AS 109 as a result of past transactions was obtained at the time of initially accounting forthose transactions,

c) Classification and measurement of financial assets

An entity shall measure its financial assets either at amortized cost or at FVTOCI or FVTPL by assessing its contractual cash flow characteristics only on the basis of facts and circumstances existing on transition date. If it is impracticable for an entity to apply effective interest method retrospectively then fair value of financial instrument shall be new gross carrying amount of financial assets or the new amortised cost of financial liability.

Notes to the reconciliation of equity as at 1st April, 2016 and 31st March, 2017 and total comprehensive income for the year ended 31^st March, 2017

A. Property, plant and equipment -Standby stores

The company has capitalised material standby spares which were earlier carried in inventories. The capitalised stores are depreciated over the remaining life of the machinery / equipment to which it relates from the date of purchase of such spare.

B. Investments (Non - Current & Current)

For investment in Quoted Instrument, Company has elected to fair value through OCI.(FVTOCI)

C. Financial instruments

1 .Derivative financial instruments

Under Indian GAAP, derivative contracts are restated at each balance sheet date, to the extent of any reduction in value is recognised in Statement of Profit and Loss. A gain on valuation is only recognised by the Company if it represents the subsequent reversal of an earlier loss. Also under IGAAP premium on forward contract is amortised over the contract period and value was calculated excluding the premium.Under IND AS, both reductions and increases to the fairvalues of derivative contracts are recognised in profit & loss. Premium is not separately accounted and amortised.

Under Ind AS, the derivative contracts are marked to market and both reduction and increase are recognised to profit and loss. Premium is not separately accounted and amortised.

2. Borrowings

Borrowing designated and carried at amortised cost are accounted on EIR method. The upfront fee or cost of borrowing incurred is deferred and accounted on EIR basis. Borrowings are shown as net of unamortised amount of upfront fee incurred.

D. Proposed Dividend

Under Indian GAAP, proposed dividends are recognised as liability in the period to which they relate irrespective of the approval by shareholders. Under IND AS a proposed dividend is recognised as liability in the period in which it is declared (on approval of shareholders in a general meeting) or paid. Therefore the proposed dividend and dividend distribution tax for the F.Y. 2015-16 has been derecognised on the date of transition and recognised during 2016-17 when it was approved by shareholders in general meeting.

E. Allowance for Expected Credit Loss

The company has assesses the expected credit loss on trede receivables in accordance with Ind AS 109 and has provided for an allowance on the basis above assessment. The effect has been shown as reconciliation item in equity reconciliation.

F. Provision for Non-Moving stores and spares

The company has re-assessed the non-moving stores and has provided an allowance on such items on e rational basis.

G. Deferred Tax

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

(ii) In addition, the various transitional adjustments lead to different temporary differences resulting in recognition of deferred tax. Such deferred tax asset has been recognized in retained earnings.

H. Excise Duty

Paragraph 8 of Ind AS 18, Revenue states that âRevenue includes only the gross inflows of economic benefits received and receivable by the entity on its own account. Amounts collected on behalf of third parties such as sales taxes, goods and services taxes and value added taxes are not having any economic benefits which flow to the entity and do not result in increases in equity. Therefore, they are excluded from revenue and shown separately.

I. Re-measurement of post-employment benefit obligations

Under Ind AS, Re-measurement 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 recognised in other comprehensive income instead of profit or loss. Under the previous GAAP, these Re-measurement were forming part of the profit or loss for the year.

14. Previous year figures have been re-arranged and/or regrouped wherever considered necessary, to confirm current year classification.

15. The financial statements are presented in IN R and all value are rounded to the nearest INR lakhs, except when otherwise indicated.

Mar 31, 2017

Equity Shares

c) Reconciliation of the shares outstanding at the beginning and at the end of reporting period.

(i) Rupee Term Loan of Rs.600.00 Lacs (Sanctioned Rs.1000.00 Lacs in FY 2016-17) from State Bank of India, is primarily secured by way of first charge on entire immovable assets and moveable fixed assets of the Company, both present and future on pari- passu basis with existing charge holders and repayable in 24 installments comprising of 23 installments of Rs43.00 Lacs each and balance in last installments ending on 30th September, 2023.

(ii)Rupee Term Loan of Rs.117.62 Lacs and Foreign Currency Term Loan of Rs 2399.02 (Sanctioned Rs.3,000.00Lacs) from State Bank of India is primarily secured by way of first charge on entire immovable assets and moveable fixed assets of the Company, both present and future on pari- passu basis with existing charge holders and repayable in 22 quarterly installments comprising of 2 Installment of Rs.50.00 Lacs each , 4 Installments of Rs. 75.00 Lacs each, 4 Installments of Rs100.00 Lacs each,4 installments of Rs150.00 Lacs each,4 installments of Rs175.00 Lacs each,2 Installments of Rs.200.00 Lacs each, 1 Installment of Rs. 250.00 Lacs and balance in last installment ending on 31.03.2021.

(iii) Rupee Term Loan ofRs.714.28 Lacs (Sanctioned Rs.1,000.00 Lacs) by IDBI Bank Ltd., is primarily to be secured byway of first charge on entire immovable assets and movable fixed assets of the Company both present and future on pari-passu with existing charge holder and repayable in 28 equal quarterly installment of Rs.35.71 Lacs each ending on 1^st January,2022.

All the above loans are collaterally secured through second charge byway of hypothecation on the entire current assets of the company on pari-passu basis with existing charge holder. These loans are irrevocably and unconditionally guaranteed by Chairman & Managing Director, Shri Shailesh Khaitan. Loan of Rs.1,000.00 Lacs sanctioned in FY2014-15 by IDBI Bank is collaterally secured by mortgage of two properties of Shradha projects Ltd., situated at Indore and pledge of 12 lacs equity shares of the Company. Fresh Corporate loan of Rs3,000.00Lacs sanctioned by State Bank of India in FY 2015-16 is collaterally secured by pledge of 2,82,96,760 fully paid up equity shares of the Company.

(iv) Rupee Term Loan of Rs 170.20 Lacs (sanctioned Rs 185.98 Lacs in 2016-17) have been availed from Axis Bank with tenure of 60 months ending 15th Sept, 2021. The Loan is secured by the hypothecation of the car

.(v) Rupee Term Loan of Rs34.69 Lacs (sanctioned Rs 49.50 Lacs)have been availed from BMW Financial Services with tenure of 60 month sending 1st June, 2020. The Loan is secured by the hypothecation of the car.

(vi) Unsecured Loan & Advances of Rs 1621.00 Lacs has been procured from various parties including related party viz Shradha Projects Ltd & Arati Marketing Private Limited as promoter fund infusion towards SBI Loan. Rs1621.00 Lakhs are repayable after the maturity of the Loan.

There is no continuing default as on the balance sheet date in repayment of above loans and interest.

Net Deferred Tax Liabilities NOTE:

i The net (increase)/decrease during the year in the deferred tax liability (DTL) of Rs. (11.03) lacs, previous year decrease Rs.( 93.66) lacs has been (debited)/credited to Statement of Profit & Loss.

ii Considering the past performance and business plans of future years, Company expects that the sufficient taxable income will be available against which deferred tax assets can be realized.

* Cash Credit/Working Capital demand loans & Buyer''s Credit from Banks are secured by first hypothecation charge on the Company''s entire stocks comprising raw materials, stocks in transit, stocks in process, finished goods, consumable stores& spares and receivable on pari-passu basis among consortium bankers. Borrowings are further secured by pledge of 8 lacs equity shares of the Company with face value of Re. 1/- per share held by Chairman & Managing Director, Shri Shailesh Khaitan.All short-term bank borrowings are personally guaranteed by Chairman & Managing Director, Shri Shailesh Khaitan.

# IDBI Vendor Finance loan in the nature of Discounting of Bill of Exchange drawn/accepted by the Corporate of Rs. 495.16 Lacs (sanctioned Rs.500.00 Lacs).

NOTES:

(a) Vehicles include motor cars taken on hire purchase of Rs 214.69 Lacs (previous year Rs 57.95 Lacs).

(b) Freehold Land measuring 1,76,460 Sq Meter amounting to Rs 57.47 Lacs is yet to be transferred in the name of the Company. These lands were acquired in pursuance of scheme of amalgamation/merger sanctioned Hon''ble High Courts.

(c) Lease agreement of Leasehold Land of Malwan unit measuring 151650.72 Sq Meter amounting to Rs 24.86 lacs (Net Block Rs 16.49 lacs) acquired by virtue of amalagation sanctioned by BIFR order dated 12th April 2006, is yet to be transferred in the name of the Company.

1 Segment Information for the year ended March 31,2017 as required by Accounting Standard-17 Segment Reporting

(a) The Company is organized into three primary business segments mainly:

i. Fertilizers and Chemicals

ii. Soya/Agri

iii. Others

(b) Segments have been identified and reported taking into account the nature of products and services, returns, and the internal reporting system

2 Several High Courts have stayed the retrospective nature of amendment in the Payment of Bonus Act (Amendment), 2015 with effect from April 1, 2014.The Company has consequently not made any provision for Bonus for the year 2014-15 (Rs 9.93 lacs).

3 The Company is in the process of obtaining confirmations and reconciliation with its debtors, creditors and other dues receivables. The confirmations to the extent received have been reconciled and adjustments, if any, have been made. The others are pending for confirmations, reconciliations and adjustments, if any. However, the management does not expect any significant variations in the existing status.

4 In opinion of the Board and to the best of their knowledge and belief, value on realization of loans, advances and current assets in the ordinary course of business will not be less than the amount at which they are stated in the Balance Sheet.

5 Other Current Assets include claims filed under Rajasthan Investment Promotion Scheme (RIPS), 2003 of Rs.6.27 Lacs (Previous year: Rs.6.27 Lacs) pertaining to 2006-07 and 2007-08, which were refused by the appropriate authorities in view of introduction of Rajasthan Value Added Tax w.e.f. 1^st April, 2006. But the Company has considered the amount as recoverable and filed an appeal with the Tax Board, Ajmer (Rajasthan).

6 The Company has not provided for Moping up of subsidy on raw materials of fertilizer as on 31.03.2011 in terms of Office Memorandum No. 23011/1/2010-MPR dated 11-07-2011 issued by the Ministry of Chemicals & Fertilizers, Govt. of India, being reconsidered vide their letter No 23011/1/2010-MPR(Pt) dated 22.08.2012 and decided not to effect recovery till a policy in this regard is formulated. This has strengthened the managementâs view for not providing the above liability.

7 (a) Imported and Indigenous raw material, Components, Stores & Spares parts consumed

8 Previous year figures have been re-arranged and/or regrouped wherever considered necessary, to confirm current year classification.

9 The financial statements are presented in INR and all value are rounded to the nearest INR lacs, except when otherwise indicated.

Mar 31, 2016

NOTE:

i The net (increase)/decrease during the year in the deferred tax liability (DTL) of Rs. (93.66) lacs, previous year decrease Rs. 521.51 lacs has been (debited)/credited to Statement of Profit & Loss.

ii Considering the past performance and business plans of future years, Company expects that the sufficient taxable income will be available

(I) Rupee Term Loan of Rs. 438.94 Lacs (Sanctioned Rs. 2,250.00 Lacs) from State Bank of India, is primarily secured by way of first charge on entire immovable assets and moveable fixed assets of the Company, both present and future on pari- passu basis with existing charge holders and repayable in16 installmentscomprisingof11 installments of Rs. 150Lacseachand4installmentsofRs.100Lacseachandbalanceinlastinstallment endingon30^thJune,2017.

(ii) Rupee Term Loan of Rs.124.81 Lacs and Foreign Currency Term Loan of Rs. 2918.65 (Sanctioned Rs. 3,000.00 Lacs) from State Bank of India is primarily secured by way of first charge on entire immovable assets and moveable fixed assets of the Company, both present and future on pari- passu basis with existing charge holders and repayable in 22 quarterly installments comprising of2 InstallmentofRs.50.00 Lacs each, 4 Installments of Rs. 75.00 Lakhs each, 4 Installments of Rs. 100.00 Lakhs each, 4 Installments of Rs. 150 Lakhs each, 4 Installments of Rs. 175 Lakhs each, 2 Installments of Rs. 200 Lakhseach,1 Installment of Rs.250Lakhsandbalanceinlastinstallmentending on31.03.2021.

(iii) Rupee Term Loan of Rs. 857.14 Lacs (Sanctioned Rs. 1,000.00 Lacs) by IDBI Bank Ltd., is primarily to be secured by way of first charge on entire immovable assets and movable fixed assets of the Company both present and future on pari-passu with existing charge holder and repayable in 28 equal quarterly installment of Rs. 35.71 Lacseachendingon1^stJanuary, 2022.

All the above loans are collaterally secured through second charge by way of hypo the action on the entire current assets of the company on pari-passu basis with existing charge holder. These loans are irrevocably and unconditionally guaranteed by Chairman & Managing Director, Shri Shailesh Khaitan. Loan of Rs. 1,000LacssanctionedinFY2014-15 byIDBIBankiscollaterallysecuredbymortgageoftwopropertiesofShradhaProjectsLtd.,situatedatIndoreand pledgeof12lacsequityshares of the Company. Fresh Corporate loan of Rs. 3,000 Lacs sanctioned by State Bank of India in2015-16iscollaterallysecured by pledge of2,82,96,760 fully paid up equity shares of the company.

(iv) Rupee Term Loan of Rs. 0.76 Lacs (sanctioned Rs. 18 Lacs) have been availed from HDFC Bank with tenure of60 months ending 7^th May, 2016. The Loan is secured by the hypothecation of the car.

(v) Rupee Term Loan of Rs. 43.45 Lacs (sanctioned Rs. 49.50 Lacs) have been availed from BMW Financial Services with tenure of60 month sending 1^sl June, 2020. The Loan is secured by the hypothecation of the car.

(vi) Unsecured Loan &Advances of Rs. 1621.00 Lacs has been procured from various parties including related party viz Shradha Projects Ltd. & Arati Marketing Pvt. Ltd. as promoter fund infusion towards SBI Loan Rs. 1621.00 Lakhs are repayable after the maturity of the Loan.

There is no continuing default as on the balance sheet date in repayment of above loan sand interest.

I. Cash Credit/Working Capital demand loans & Buyer''s Credit from Banks are secured by first hypothecation charge on the Company''s entire stocks comprising raw materials, stocks in transit, stocks in process, finished goods, consumable stores & spares and receivable on pari-passu basis among consortium bankers. Borrowings are further secured by pledge of 8 lacs equity shares of the Company with face value of Re. 1/per share held by Chairman & Managing Director, Shri Shailesh Khaitan.

ii. All short term bank borrowings are personally guaranteed by Chairman & Managing Director, Shri Shailesh Khaitan.

iii. IDBI Vendor Finance loan in the nature of Discounting of Bill of Exchange drawn/accepted by the Corporatism of Rs. 374.76 Lacs (sanctioned Rs.500.00 Lacs). Loan is secured primarily by accepted bills of exchange.

Rr. in are?

Note:

Disclosures required under the Micro, Small and Medium Enterprises Development Act, 2006 (the Act):

A. Trade payable includes (i) Rs. Nil lacs (previous year Rs. 23.99 lacs) due to micro and small enterprises registered under the Micro, Small and Medium Enterprises Development Act, 2006 (MSME)and (ii) Rs. 2385.85 lacs (previous year Rs. 2847.06 lacs) due to other parties.

B. No interests paid/payable during the year to any enterprise registered under the MSME.

C. The above information has been determined to the extent such parties could be identified on the basis of the information available with the Company regarding the status of supplies under the MSME.

NOTES:

1 (a) Vehicles include motorcars taken on hire purchase of Rs. 57.95 Lacs (previous year Rs. Nil Lacs).

2. (b) Freehold Land measuring 1,76,460 Sq. Meter amounting to Rs. 57.47 Lacs is yet to be transferred in the name of the Company. These lands were acquired in pursuance of scheme of amalgamation/merger sanctioned Hon''ble High Courts.

3. (c) Lease agreement of Leasehold Land of Malwan unit measuring 151650.72 Sq. Meter amounting to Rs. 24.86 lacs (Net Block Rs. 16.77 lacs) acquired by virtue of amalgamations sanctioned by BIFR order dated 12^th April 2006, is yet to be transferred in the name of the Company.

Other Assumptions:

a) Future salary increases considered in actuarial valuation take in to account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

b) Expected Return on Plan asses is based on market expectations, at the beginning of the year, for returns over the entire life of the related Obligations.

c) Gratuity is payable to all employees at the rate of15 days salary for each completed years of service. In respect of employees covered by the PaymentofGratuityAct,1965, the same is subject to a maximum ofRs.10lacs.

ii) Defined Contribution Plans-charge tithe Profit and Loss Account based on contribution.

4. Disclosure as per Accounting Standard - 18 on ''Related Party Disclosures''

Relationship:

(a) Related Party where control exists :

Shradha Projects Limited

(b) Key Management Person and their Relatives :

(i) Shri Shailesh Khaitan Chairman & Managing Director

(ii) Smt. Swapna Khaitan Wife of Chairman & Managing Director

(iii) Shri J.L. Jajoo Whole Time Director

(iv) Shri Utsav Khaitan Whole Time Director

(Son of Chairman & Managing Director)

(v) Shri H.V. Agnihotri President & Chief Financial Officer(from 05.08.2015)

(vi) Shri R.S. Vijayvargiya President & Chief Financial Officer(till 05.08.2015)

(vii) Shri Kamlesh Joshi Company Secretary & General Manager

(viii) Ms. Monica Vijayvargiya Daughter of Shri R.S. Vijayvargiaya

(i) The Majestic Packaging Company Private Limited

(ii) Tribhuvan Properties Limited

(iii) Arati Marketing Private Limited

(iv) B.O. Construction Pvt. Ltd.

6. Several Honourable High Courts have stayed the retrospective nature of amendment in the Payment of Bonus Act(Amendment),2015 with effect from 1^stApril, 2014. The Company has consequently not made any provision for Bonusfortheyear2014-15(Rs. 9.93 lacs) in the current financial year.

7. The Company is in the process of obtaining confirmations and reconciliation with its debtors, creditors and other dues receivables. The confirmations to the extent received have been reconciled and adjustments, if any, have been made. The others are pending for confirmations, reconciliations and adjustments, if any. However, the management does not expectancy significant variations in the existing status.

8. In opinion of the Board and to the best of their knowledge and belief, value on realization of loans, advances and current assets in the ordinary course of business will not be less than the amount at which they restated in the Balance Sheet.

9. Other Current Assets include claims filed under Rajasthan Investment Promotion Scheme (RIPS), 2003 of Rs.6.27 Lacs (Previous year: Rs.

10. Lacs) pertaining to 2006-07 and 2007-08, which were refused by the appropriate authorities in view of introduction of Rajasthan Value Added Tax w.e.f. 1^st April, 2006. But the Company has considered the amount as recoverable and filed an appeal with the Tax Board, Ajmer (Rajasthan).

11. The Company has not provided for Moping up of subsidy on raw materials of fertilizer as on 31.03.2011 in terms of Office Memorandum No. 23011/1/2010-MPRdated 11-07-2011 issued by the Ministry of Chemicals & Fertilizers, Govt. of India, being reconsidered vide their letter No 23011/1/2010-MPR(Pt) dated 22.08.2012and decided not to effect recovery till a policy in this regard is formulated. This has strengthened the managementâs view for not providing the above liability.

12. Previous year figures have been re-arranged and/or regrouped wherever considered necessary

13. The financial statements are presented Rs. in lacs except EPS and the share data.

Mar 31, 2015

1. Corporate Information

Khaitan Chemicals & Fertilizers Ltd. (the Company) is engaged in the manufacturing of Single Super Phosphate Fertilizers (Powder & Granulated) and Sulphuric Acid and its variants, Processing of Oil Seed (mainly Soybean) and crude edible oil, selling of De-oiled Cake and Crude/Refined Oil & Generation and selling of Wind Power.

The Company is a public limited company incorporated and domiciled in India under the provisions of Companies Act, 2013. Its shares are listed on the Bombay Stock Exchange Limited, Mumbai (BSE).

2. Segment Information for the year ended 31st March, 2015 as required by Accounting Standard-17 Segment Reporting

(a) The Company is organized into three primary business segments mainly :

i. Fertilizers and Chemicals

ii. Soya

iii. Others

3. Contigent Liabilitie not provided for : Rs. in Lacs Year ended Year ended 31.03.2015 31.03.2014 S.No. Particulars

a Sales Tax Demand (under appeal) 0.48 0.48

b Purchase Tax (under appeal) 63.38 63.38

c Royalty on Rock Phosphate claimed by RSMM 158.38 158.36

d Entry Tax 28.38 28.38

e Sales Trade Tax 1.00 1.00

f Excise Duty 34.64 17.79

g Income-Tax 1.52 139.09

I Vat Tax (09-10) - 18.72

Estimated amount of Capital Commitments (net of advances) not provided for 20.95 26.27

4 The Company is in the process of obtaining confirmations and reconciliation with its debtors, creditors and other dues receivables. The confirmations to the extent received have been reconciled and adjustments, if any, have been made. The others are pending for confirmations, reconciliations and adjustments, if any. However, the management does not expect any significant variations in the existing status.

5 In opinion of the Board and to the best of their knowledge and belief, value on realisation of loans, advances and current assets in the ordinary course of business will not be less than the amount at which they are stated in the Balance Sheet.

6 Other Current Assets include claims filed under Rajasthan Investment Promotion Scheme (RIPS), 2003 of Rs.6.27 Lacs (Previous year: Rs.6.27 Lacs) pertaining to 2006-07 and 2007-08, which were refused by the appropriate authorities in view of introduction of Rajasthan Value Added Tax w.e.f. 1st April, 2006. But the Company has considered the amount as recoverable and filed an appeal with the Tax Board, Ajmer (Rajasthan).

7 The Company has not provided for Moping up of subsidy on raw materials of fertilizer as on 31.03.2011 in terms of Office Memorandum No. 23011/1/2010-MPR dated 11-07-2011 issued by the Ministry of Chemicals & Fertilizers, Govt, of India, being reconsidered vide their letter No 23011/1/2010-MPR(Pt) dated 22.08.2012 and decided not to effect recovery till a policy in this regard is formulated. This has strengthened the management's viewfor not providing the above liability.

8. Previous year figures have been re-arranged and/or regrouped wherever considered necessary

9. The financial statements are presented Rs. in lacs except EPS and the share data.

Mar 31, 2014

1. Contingent Liabilities not provided for :

Rs.in Lacs S. No. Particulars 31.03.2014 31.03.2013

a Sales Tax Demand (under appeal) 0.48 0.48

b Purchase Tax (under appeal) 63.38 63.38

c Royalty on Rock Phosphate claimed by RSMM 158.36 158.36

d Entry Tax 28.38 28.38

e Sales Trade Tax 1.00 1.00

f Excise Duty 17.79 21.87

g Income-Tax 139.09 19.34 h Cess on Rock Phosphate - 409.78

I Vat Tax (09-10) 18.72

2. Estimated amount of Capital Commitments (net of advances) not provided for 26.27 1191.80

3. The Company is in the process of obtaining confirmations and reconciliation with its debtors, creditors and other dues receivables. The confirmations to the extent received have been reconciled and adjustments, if any, have been made. The others are pending for confirmations, reconciliations and adjustments, if any. However, the management does not expect any significant variations in the existing status.

4. In opinion of the Board and to the best of their knowledge and belief, value on realisation of loans, advances and current assets in the ordinary course of business will not be less than the amount at which they are stated in the Balance Sheet.

5. Other Current Assets include claims filed under Rajasthan Investment Promotion Scheme (RIPS), 2003 of Rs. 6.27 Lacs (Previous year: Rs.6.27 Lacs) pertaining to 2006-07 and 2007-08, which were refused by the appropriate authorities in view of introduction of Rajasthan Value Added Tax w.e.f. 1 st April, 2006. But the Company has considered the amount as recoverable and filed an appeal with the Tax Board, Ajmer (Rajasthan).

6. The Company has not provided for Moping up of subsidy on raw materials of fertilizer as on 31.03.2011 in terms of Office Memorandum No. 23011/1/2010-MPR dated 11-07-2011 issued by the Ministry of Chemicals & Fertilizers, Govt, of India, being reconsidered vide their letter No 23011/1/2010-MPR(Pt) dated 22.08.2012 and decided not to effect recovery till a policy in this regard is formulated. This has strengthened the management''s view for not providing the above liability.

7. Previous year figures have been re-arranged and/or regrouped wherever considered necessary

8. The financial statements are presented Rs. in lacs except EPS and the share data.

Mar 31, 2013

1. Corporate Information

Khaitan Chemicals & Fertilizers Ltd. (the Company) is a public Company domicile in India and incorporated under the provisions of Companies Act, 19S6. Its shares are listed on the Bombay Stock Exchange Ltd. (BSE], Mumbai. The Company is engaged in the manufacturing and selling of Single Super Phosphate and Sulphuric Acid, Processing of Oil Seed (mainly Soybean] and crude edible oil, selling of De-oiled Cake and Crude/Refined Oil & Generation and selling of Wind Power.

2. Basis of preparation of financial statements

The financial statements of the Company have been prepared to comply in all material respects with the notified accounting standards by the Companies (Accounting Standard] Rule, 2006 and relevant provisions of the Companies Act, 19S6. The financial statements are prepared on historical cost convention on an accrual basis. The Accounting Policies have been consistently applied by the Company.

3 Segment Information for the year ended 31s1 March, 2013 as required by Accounting Standard -17 Segment Reporting (a) The Company is organized into three primary business segments mainly: i. Fertilizers and Chemicals ii. Soya iii. Others

4 Disclosure as per Accounting Standard -18 on Related Party Disclosures Relationship:

(a) Related Party where control exists :

Shradha Project Limited

(b) Key Management Person and their Relatives :

(i) Shri Shailesh Khaitan Chairman & Managing Director

(ii) Smt Swapna Khaitan Wife af Chairman & Managing Director

(iii) Shri J.L. Jajaa Whale Time Director

(iv) Shri R.S. Vijayvargiya President & Secretary

(v) Ms. Monica Vijayvargiya Daughter of President & Secretary

(c) Related party which is under significant influence of KMP and / or their Relatives: (i) The Majestic Packaging Company Private Limited

(ii) Tribhuvan Properties Limited

(iii) Aarti Marketing Private Limited

(iv) Shobhan Enterprises Private Limited

5 Contingent Liabilities not provided for:

S. NoParticulars 31.03.2013 31.03.2012

a Sales Tax Demand (under appeal) 0.48 0.48

b Purchase Tax (under appeal) 63.38 63.38

c Royalty on Rock Phosphate claimed by RSMM 158.36 158.36

d Entry Tax 28.38 28.38

e Sales Trade Tax 1.00 1.00

f Excise Duty 21.87 17.79

g Income-Tax 19.34 7.58

h Cess on Rock Phosphate 409.78

6 Estimated amount of Capital Commitments (net of advances) not provided for 1191.80 1031.34

7 The Company is in the process of obtaining confirmations and reconciliation with its debtors, creditors and other dues receivables. The confirmations to the extent received have been reconciled and adjustments, if any, have been made. The others are pending for confirmations, reconciliations and adjustments, if any. However, the management does not expect any significant variations in the existing status.

8 In opinion of the Board and to the best of their knowledge and belief, value on realisation of loans, advances and current assets in the ordinary course of business will not be less than the amount at which they are stated in the Balance Sheet.

9 Other Current Assets include claims filed under Rajasthan Investment Promotion Scheme (RIPS), 2003 of Rs. 6.27 Lacs (Previous year: Rs.21.82 Lacs) pertaining to 2006-07 and 2007-08, which were refused by the appropriate authorities in view of introduction of Rajasthan Value Added Tax w.e.f. 1st April, 2006. But the Company has considered the amount as recoverable and filed an appeal with the Tax Board, Ajmer (Rajasthan).

10 The Company has not provided for Moping up of subsidy on raw materials of fertilizer as on 31.03.2011 in terms of Office Memorandum No. 23011/1/2010-MPR dated 11-07-2011 issued by the Ministry of Chemicals & Fertilizers, Govt, of India, being reconsidered vide their letter No 23011/1/2010-MPR(Pt) dated 22.08.2012 and decided not to effect recovery till a policy in this regard is formulated. This has strengthen the managements view for not providing the above liability.

11 Previous year figures have been re-arranged and/or regrouped wherever considered necessary

12 The financial statements are presented Rs. in lacs except EPS and the share data.

Mar 31, 2012

Equity Shares

a) Reconciliation of the shares outstanding at the beginning and at the end of reporting period. During the year share of Rs. 10/- each has bean split tad into Re. 1/- each and therefore Na. of shares increased to 9,69,89,200 from 96,98,920.

b) Terms/rights attached to equity shares:

The Company has only one class of equity shares having a par value of Re. 1 per share. Each holder of equity share is entitled to 1 vote per share. The Company declares and pays dividend in Indian rupee. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended 31st March, 2012, the amount of par share dividend recognized as distributions to equity shareholders was Ra.0.24 per share (31st March, 2011 Re.0.24 per share (adjusted for sub-division of equity shares).

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amount. The distribution will be in proportion to the number of equity shares held by the shareholders.

(i) Rupee Term Loan of Rs 344.94 lacs {sanctioned Rs.525 lacs) from Bank (SBI) is primarily secured by way of first charge on entire Current & Future Fixed assets of the company on pari-passu basis with other Term Lenders and collaterally secured by second charge on entire current & future current assets of the Company on pari-passu basis and through first exclusive charge over entire Fixed Assets of Shobhan Enterprises Pvt. Ltd. This loan is guaranteed by Chairman & Managing Director Mr. Shailesh Khaitan and through Corporate Guarantee of Shobhan Enterprises Pvt. Ltd. This loan sanctioned in 2007-08 presently carries interest at the rate BR 4.25% which ranged from 12.50% to 14.25% p.a. during the current year and repayable in 8 Quarterly Installments of Rs 5 Lacs each, 4 Quarterly Installment of Rs 10 lacs each, 4 Quarterly Installment of Rs 25 lacs each and 2 Q ua rterly I nsta 11 ment of Rs 172.50 lacs each.

(ii) Rupee Term Loan of Rs 800 lacs {sanctioned Rs.1000 lacs) from Bank (IDBI Bank Ltd.) is primarily secured by way of first charge on entire immovable assets and moveable fixed assets of the company, both present and future on pari-passu basis with existing charge holders and collaterally secured holders. This loan in irrevocably and unconditionally guaranteed by Chairman & Managing Director, through second charge by way of hypothecation an the entire current assets of the company on pari-passu basis with existing charge Chairman & Managing Director Mr. Shailesh Khaitan. This loan sanctioned in 2010-11 presently carries interest at the rate BR 3.50%, which ranged from 13.50% to 14.25% p.a. and repayable in 20 Quarterly Installments equal Quarterly Installment of Rs 50 lacs each ending on 1st Jan.'2016.

(iii) Rupee Term Loan of Rs 1100 lacs (sanctioned Rs.1200 lacs) from Bank ( IDBI Bank Ltd.) is primarily secured by way of first charge on entire immovable assets and moveable fixed assets of the company, both present and future on pari-passu basis with existing charge holders and collaterally secured by through second charge by way of hypothecation on the entire current assets of the company on pari passu basis with existing charge holders. This loan in irrevocably and unconditionally guaranteed by Chairman & Managing Director Mr. Shailesh Khaitan. This loan sanctioned in 2011-12 presently carries interest at the rate BR 3.50% .which ranged from 14.25% to 15.25% P.A. during the current year and repayable in 12 Quarterly Installments of Rs 100 lacs each ending on 1st Oct'15.

(iv) Rupee Term Loan of Rs 800 lacs {sanctioned Rs.800 lacs) from Bank (Axis Bank Ltd. ) is primarily secured by way of first charge on the entire fixed assets to the company, both present and future on pari passu basis with existing charge holders and collaterally secured by through second charge by way of hypothecation on the entire current assets of the company both present and future on pari-passu basis with existing charge holders. This loan is personally guaranteed by Chairman & Managing Director Mr. Shailesh Khaitan. This loan sanctioned in 2011-12 carries interest at the rate BR 3.50%, being at 13.50% p.a. during the year and repayable in 12 Quarterly Installments of Rs 66.67 lacs each ending on 30th March'15.

(v) Rupee Term Loan of Rs. 62.82 lacs (sanctioned Rs. 115.596 lacs) had been taken from Kotak Mahindra Bank for acquiring Audi Car I-6 & I 8, at the rate of 8.595% P.A. with a tenure of 59 months ending on 1st August '14. This loan was sanctioned in 2009-10 & there is no continuing default as on the balance sheet date in repayment of loan and interest. The Loan is secured by the hypothecation of the car.

(vi) Rupee Term Loan of Rs.15.50 lacs (sanctioned Rs 18.00 lacs) has been availed from HDFC Bank in 2011-12 for acquiring Skoda Car, at the rate of 11.16% p.a. with a tenure of 60 months ending on 7th May'16. There is no continuing default as on the balance sheet date in repayment of loan and interest. The Loan is secured by the hypothecation of the car.

(vii) Rs.400 lacs Unsecured Loan & advances has been procured from related party viz. Aarti Marketing Pvt. Ltd. as promoters fund infusion towards Rajnandgaon project @ 12% PA. repayable on or after 01.01.2016.

(viii) Rs.100 lacs Unsecured Loan & advances has been procured from related party viz. Shradha Projects Pvt. Ltd. as promoters fund infusion towards Rajnandgaon projectÃÂ© 12% P.A. repayable on or after 01.01.2016.

There is no continuing default as on the balance sheet date in repayment of above loans and interest.

i) Cash Credit/Working Capital Demand Loan & Buyer's Credit from Banks is secured by First Hypothecation charge on the company's entire stocks comprising raw materials, stocks in transit stocks in process, finished goods, consumable stores & spares and receivables on pari passu basis among consortium bankers and secured by second charge over the entire fixed assets of the Company on pari-passu basis among consortium bankers. Borrowings are further secured by pledge of 8 lacs shares of the Company with face value of Re 1/- per share held by Chairman and Managing Director Mr. Shailesh Khaitan.

ii) Buyers' credit from bank is secured against margin money deposit & carries interest rate ranging from 1.66 % to 3.75%.

iii) All short term Bank Borrowings are personally guaranteed by Mr. Shailesh Khaitan.

iv) Cash Credit carries interest rate ranging from 11.50% -15.00% during the year. There is no continuing default as on the balance sheet date in re payment of loan and interest.

NOTES:

a) Depreciation has been provided on SLM rates after taking into consideration the revised rates of depreciation vide Circular No.14/93-1/12/92 CL-V dated 20.12.93 issued by Ministry of Law, Justice and Company Affairs, Department of Company Affairs. Further, while applying the new rates of depreciation, the Company has adopted the option of applying the new rates on the original cost of the assets in accordance with the above Circular.

b) The Company has treated its Sulphuric Acid Plant, Soya Oil Plant and Turbo Generator as continuous process plant and depreciation charged accordingly.

c) Vehicles includes one car purchased for Rs.100.65 lacs for which registration in the name of the Company is still pending.

d) Vehicles includes motorcars taken on hire purchase of Rs 22.54 lacs (previous year Rs.Nil).

e) Amortization of Leasehold Land includes Rs 3.82 Lacs (Previous year Rs.3.82 lacs), included in capital work in progress as pre-operative expenses in respect of Dahej Project.

f) Lease hold Land includes Rs 377.50 Lacs (Previous year Rs 377.50 lacs) in respect of which lease deeds are pending execution.

Other Assumptions:

a) Future salary increases considered in actuarial valuation take in to account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market

b) Expected Return on Plan asses is based on market expectations, at the beginning of the year, for retunes over the entire life of the related Obligations.

c) Gratuity is payable to all employees at the rate of 15 days salary for each completed years of service. In respect of employees covered by the Payment of Gratuity Act, 1965. the same is subject to a maximum of Rs 10 lacs.

ii) Defined Contribution Plans -charge to the Profit and Loss Account based on contribution.

1. Segment Information for the year ended 31st March, 2012 as required by Accounting Standard -17 Segment Reporting

(a) The Company is organized into three primary business segments mainly :

i.) Fertilizers and Chemicals

ii.) Soya

iii.) Others

(b) Segments have been identified and reported taking in to account the nature of products and services, the differing risk and returns, and the internal reporting system

2 Contingent Liabilities not provided for: Rs in Lacs

a Sales Tax Demand (under appeal) 0.48 0.48

b Purchase Tax (under appeal) 63.38 63.38

c Royalty on Rock Phosphate claimed by RSMM 158.36 158.36

d Entry Tax 28.38 40.03

e Sales Trade Tax 1.00 1.49

f Excise Duty 17.79 17.79

g Income-Tax 7.58 43.49

h Madhya Pradesh Industrial Relation Act - 61.74

3. Estimated amount of Capital Commitments (net of advances) not provided for 1031.34 1022.36

4 The Company is in the process of obtaining confirmations and reconciliation with its debtors, creditors and other dues receivables. The confirmations to the extent received have been reconciled and adjustments, if any, have been made. The others are pending for confirmations, reconciliations and adjustments, if any. However, the management does not expect any significant variations in the existing status.

5 In opinion of the Board and to the best of their knowledge and belief, value on realization of loans, advances and current assets in the ordinary course of business will not be less than the amount at which they are stated in the Balance Sheet.

6 Other Current Assets include claims filed under Rajasthan Investment Promotion Scheme (RIPS), 2003 of Rs. 6.27 Lacs (Previous year: Rs.21.82 Lacs) pertaining to 2006-07 and 2007-08, which were refused by the appropriate authorities in view of introduction of Rajasthan Value Added Tax w.e.f. 1st April, 2006. But the Company has considered the amount as recoverable and filed an appeal with the Tax Board, Ajmer (Rajasthan).

Previous year figures

Till the year ended 31stMarch 2011, the company was using pre-revised schedule VI to the Companies Act 1956, for preparation and presentation of its financial statements. During the year ended 31st March 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the company. The Company has reclassified previous year figures to conform to this year's classification.

The financial statements are presented Rs. in lacs except EPS and the share data.

Mar 31, 2011

(Rs. in lacs) 31.03.2011 31.03.2010 1. Contingent Liabilities not provided for:

a. Outstanding Bank Guarantee 4267.71 949.41

b. Sales Tax Demand (under appeal) 0.48 0.48

c. Purchase Tax (under appeal) 63.38 192.84

d. Royalty on Rock Phosphate claimed by RSMM 158.36 158.36

e. Entry Tax 40.03 0.11

f. SalesTradeTax 1.49 2.96

g. Central sales tax - 1.87 h. Excise Duty 17.79 17.79 i. Income-Tax 43.49 74.52 j. Madhya Pradesh Industrial Relation Act 61.74 63.27 k. Custom duty under protest - 38.89

2. Disclosures required under the Micro, Small and Medium Enterprises Development Act, 2006 (the Act):

Under the Micro, Small and Medium Enterprise Development Act, 2006, the Company is in the process of identifying such parties .In case of the parties already identified, there are no Micro and Small Enterprises, to whom the Company owes, which are outstanding for more than 45 days as at 31 st March, 2011. Further, during the period, no interest has been paid or payable under the terms of the said Act.

3. The Company is in the process of obtaining confirmations and reconciliation with its debtors, creditors and other dues receivables. The confirmations to the extent received have been reconciled and adjustments, if any, have been made. The others are pending for confirmations, reconciliations and adjustments, if any. However, the management does not expect any significant variations in the existing status.

4. In opinion of the Board and to the best of their knowledge and belief, value on realisation of loans, advances and current assets in the ordinary course of business will not be less than the amount at which they are stated in the Balance Sheet.

5. Repairs and maintenance includes consumption of stores and spares of Rs.516.13 lacs (previous year: Rs.305.19 lacs) and provision for non-moving items of Rs. Nil lacs (previous year. Rs.1.00 lacs)

6. Other Current Assets include claims filed under Rajasthan Investment Promotion Scheme (RIPS), 2003 of Rs. 21.82 Lacs (Previous year: Rs.21.82 Lacs) pertaining to 2006-07 and 2007-08, which were refused by the appropriate authorities in view of introduction of Rajasthan Value Added Tax w.e.f. 1" April, 2006 . But the Company has considered the amount as recoverable and filed an appeal with the Tax Board, Ajmer (Rajasthan).

7. During the year, the Company has purchased a manufacturing facility from M/s Jairam Phosphates Limited as a strategic acquisition. Based on valuation report by professional valuer, the cost has been allocated amongst land building, plant and machinery etc.

Other Assumptions:

a) Future salary increases considered in actuarial valuation take in to account Inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

b) Expected Return on Plan assets is based on market expectations, at the beginning of the year for returns over the entire life of the related Obligations,

c) Gratuity is payable to all employees at the rate of 15 days salary for each completed years of service. In respect of employees covered by the Payment of Gratuity Act, 1965, the same is subject to a maximum of Rs. 10.00 lacs.

Note:

During the year, the Company has adopted Accounting Standard -15 Employee Benefits (Revised), in accordance with the transitional Provision of the same, Rs.36.81 lacs (net of deferred tax asset of Rs.7.86 Lacs) being the difference between relevant liability as on 31st March, 2010 and as determined with this accounting standard as on 1st April, 2010, has been adjusted to the opening General Reserve.

Change in Accounting Policy

Since the valuation by the LIC was based on project unit credit method, therefore the valuation of gratuity by independent actuary and LIC is significantly simiiar. However, in respect of Leave encashment had the policy of booking expense on cash basis continued; profit for the year would have been higher by Rs 7.05 lacs & Provision would have been lower by Rs 5.47 lacs.

8. Segment Information for the year ended 31 st March, 2011 as required by Accounting Standard -17 Segment Reporting:

(a) The Company is organized into three primary business segments mainly: i. Fertilizer and Chemicals ii. Soya iii. Others

9. Related Party Disclosures as required by Accounting Standard-18 "Related Party Disclosures" are given below: Relationship:

(a) Related Party where control exists: Shradha Projects Limited

(b) An Associate and with whom the Company has transactions:

Shobhan Enterprises Private Limited (ceases to be an associate w.e.f 15th June, 2010)

(c) Key Management Person and their Relatives:

(i) Shri Shailesh Khaitan : Chairman & Managing Director

(ii) Smt. Swapna Khaitan : Wife of Chairman & Managing Director

(iii) ShriR.S. Vijayvargiya : Presidents Secretary

(d) Related party which is under significant influence of KMP and/or their Relatives: (i) The Majestic Packaging Company Private Limited

(ii) Tribhuvan Properties Limited.

(iii) Arati Marketing Private Limited

(iv) Shobhan Enterprises Private Limited

10) Additional information, wherever applicable, pursuant to paragraph 3 & 4 of Part II of Schedule VI to the Companies Act, 1956. (a) Particulars of Capacities and Production (as certified by the Management)

(Note: Licensed Capacity per annum not indicated due to the abolition of Industrial Licenses as per Notification No.477 (E) dated 25th July, 1991 issued under The Industries (Development and Regulations) Act, 1951.

* Actual Production includes 34505 MT processed through job work basis

** Actual Production includes 10551 MT processed done through job work basis "Actual Production includes 868 MT processed done through job work basis

11. Previous year figures have been re-arranged and/or re-grouped wherever considered necessary.

Mar 31, 2010

(Rs. in lacs)

31.03.2010 31.03.2009

1. Contingent Liabilities not provided for:

a. Outstanding Letter of Credit issued by Bank (Net of liabilities provided) - 1,100.48

b. Outstanding Bank Guarantee 949.41 2,184.15

c. Sales Tax Demand (under appeal) 0.48 0.60

d. Purchase Tax (under appeal) also filed Corporate Guarantee 192.84 203.05

e. Royalty on Rock Phosphate claimed by RSMM 158.36 158.36

f. Entry Tax 0.11 0.11

g. Sales Trade Tax 2.96 -

h. Central sales tax 1.87 -

i. Excise Duty 17.79 -

j. Income-Tax 74.52 -

k. Labour Laws 63.27 53.19

I. Custom duty under protest 38.89 -

2. Sales include /(reduced):

Subsidy (net) 5391.71 10595.54

Sale of power 72.81 106.28

Revenue from NCDEX (net) 22.06 (76.49)

Rebate and Discount (129.19) (383.48)

2. Deferred Taxes

The major components of deferred tax assets and deferred tax liabilities are set out below: Deferred tax liabilities

(a) Depreciation/Amortisation 1523.22 1597.94

(b) Others - 21.27

1523.22 1619.21

Deferred Tax Assets

(a) Provision for doubtful debts/non moving items 2.09 -

(b) Expenses allowed on payment basis 4.14 -

6.23

Deferred Tax Liabilities / (Assets) 1516.99 1619.21

3. Disclosures required under the Micro, Small and Medium Enterprises Development Act, 2006 (the Act):

Under the Micro, Small and Medium Enterprise Development Act, 2006, the Company is in the process of identifying such parties .In case of the parties already identified, there are no Micro and Small Enterprises, to whom the Company owes, which are outstanding for more than 45 days as at 31st March, 2010 . Further, during the period, no interest has been paid or payable under the terms of the said Act.

4. The Company is in the process of obtaining confirmations and reconciliation with its debtors, creditors and other dues receivables. The confirmations to the extent received have been reconciled and adjustments, if any, have been made The others are pending for confirmations, reconciliations and adjustments, if any. However, the management does not expect any significant variations in the existing status.

5. In opinion of the Board and to the best of their knowledge and belief, value on realisation of loans, advances and current assets in the ordinary course of business will not be less than the amount at which they are stated in the Balance Sheet

6. Repairs and maintenance includes consumption of stores and spares of Rs.305.19 lacs (previous year: Rs. 254.52 lacs) and provision for non- moving items of Rs.1.00 lacs (previous year: Rs.Nil lacs)

7. Other Current Assets include claims filed under Rajasthan Investment Promotion Scheme (RIPS), 2003 of Rs. 21.82 Lacs (Previous year: Rs.21.82 Lacs) pertaining to 2006-07 and 2007-08, which were refused by the appropriate authorities in view of introduction of Rajasthan Value Added Tax w.e.f. 1st April, 2006 . However, based on the expert opinion, the amount has been considered good & recoverable by the management and accordingly an appeal has been filed with the Tax Board, Ajmer, Rajasthan.

8. In respect of the liabilities towards gratuity and leave encashment, the management has taken policies with Life Insurance Corporation of India (LIC) and deposited amount with it. However , as required by AS-15 - Employees Benefits, the Company will be getting the actuarial done and in case of any deficiency , the same would be provided in the coming financial year.

9. Disclosures in respect of Derivative Instruments :

The Company uses Forward Exchange Contracts to hedge its exposure in foreign currency. The information on derivative instrument is as follows:

10) Segment Information for the year ended 31st March, 2010 as required by Accounting Standard -17 Segment Reporting:

(a) The Company is organized into two primary business segments mainly:

i. Fertilizer and Chemicals

ii. Soya

(b) Segments have been identified and reported taking into account the nature of products and services, the differing risk and returns, and the internal financial reporting system

11. Related Party Disclosures as required by Accounting Standard -18 "Related Party Disclosures" are given below: Relationship:

(a) Related Party where control exists:

(i) Shradha Projects Limited

(b) An Associate and with whom the Company has transactions: (i) Shobhan Enterprises Private Limited

(c) Key Management Person and their Relatives:

(i) Shri Shailesh Khaitan : Chairman & Managing Director

(ii) Smt. Swapna Khaitan : Wife of Chairman & Managing Director

(iii) Shri R.S. Vijayvargiya : President & Secretary

(iv) Smt. Manju Vijayvargiya : Wife of President

(d) Related party which is under significant influence of KMP and/or their Relatives:

(i) The Majestic Packaging Company Private Limited

(ii) Tribhuvan Properties Limited. (iii) Arati Marketing Private Limited

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