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Notes to Accounts of Kuantum Papers Ltd.

Mar 31, 2022

Note:

a. Refer note 16 for information on property, plant and equipment pledged as security by the Company.

b. Refer note 37 for disclosure of contractual commitments for the acquisition of property, plant and equipment.

c. Capitalised borrowing costs related to the plant and equipment amounted to Rs. 98.84 (previous year: Rs. 3,248.25).

d. The implementation of capex projects comprising of expansion of Pulp Mill/Production Capacity, Chemical Recovery Plant, Captive Power Plant and Allied Projects was completed in the previous year and the projects were put to commercial use from 25 March, 2021.

e. The company has not revalued/fair valued its property, Plant and Equipments (including Investment Properties) and Intangible Assets during the current and previous year.

f. The title deeds of all the immovable properties held by the Company (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) are held in the name of the Company.

(b). The Company has certain amount due from a customer against which legal proceedings for recovery of the amount were initiated. The Company had obtained a status quo from Honourable Delhi High Court, vide its order dated 18 September 2015, on the customerâs other group holdings through which they own a hotel, the unencumbered value of which has been assessed by the management as sufficient to recover the outstanding amount. Additionally, Honourable High Court, New Delhi vide its order dated 13 December 2018, directed the Prospective buyer of hotel to pay Rs.195.50 lakhs to the Company towards outstanding dues from customer. As the amount remained unpaid, the company filed an application on 7th August 2019 in Honourable High Court for execution of the decree of the order dated 13 December 2018. Trade receivables in relation to this due as at 31 March 2022 is Rs. 97.65 lakhs (31 March 2021: Rs. 97.65 lakhs).

(iii) Rights, preferences and restrictions attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 1 per share. Accordingly, all equity shares rank equally with regard to dividends and share in the Companyâs residual assets on winding up. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders (except for interim dividend) in the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

(iv) Details of Equity shares held by shareholders holding more than 5% of the aggregate equity shares in the Company

(v) Bonus shares, shares buyback and issue of shares for consideration other than in cash during five years immediately preceding 31 March 2022

During the five years immediately preceding 31 March 2022 (''the period''), neither any bonus shares have been issued nor any shares have been bought back. Further, no shares have been issued for consideration other than cash.

15 Other Equity

(also refer to Statement of Changes in Equity)

(i) Capital redemption reserve

Capital redemption reserve have been created in accordance with Companies Act, 2013 at the time of redemption of preference shares by transferring amount equal to nominal value of preference shares so redeemed from surplus balance of profits.

(ii) Debenture Redemption Reserve

Debenture redemption reserve has been created out of the profits prior to redemption of debentures. This reserve is available for distribution towards dividend post redemption of debentures. The amount was transferred back to retained earnings on redemption of the debentures during the year.

(iii) General reserve

The General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the General reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the General reserve will not be reclassified subsequently to the statement of profit and loss.

(iv) Retained earnings

Retained earnings represent the profits that the Company has earned till date less any transfer to general reserve, less any dividends, or other distributions paid to shareholders.

(v) Other comprehensive income(net of tax)

Remeasurements of defined benefit obligation comprise actuarial gains and losses and return on plan assets (excluding interest income).

Note:

16 (a) Term Loan of:

i. Rs. 57,140.12 (31 March 2021 : Rs. 52,505.01) are secured by a first parri passu charge on all the fixed assets (immovable and movable) of the Company, both present and future along with equitable mortgage of factory land and building at Sailakhurd except office premises situated at Industrial Area, Chandigarh which are exclusively mortgaged with HDFC Bank and Housing Development Finance Corporation Limited and second pari passu charge on the current assets. The said loans are also secured by personal guarantees of promoter directors and corporate guarantee of Kapedome Enterprises Limited.

ii. Rs. 1,998.79 (31 March 2021 : Rs. 1,375.76) are secured by a first parri passu charge on all the fixed assets (immovable and movable) of the Company, both present and future along with equitable mortgage of factory land and building at Sailakhurd and charge on property located at plot number 142-A, Industrial Area, Chandigarh and second pari passu charge on the current asset. The said loans are also secured by personal guarantees of promoter directors and corporate guarantee of Kapedome Enterprises Limited.

iii. Rs 544.21 (31 March 2021 : Rs. 760.45) is secured by exclusive charge on the office premises at Industrial Area Chandigarh and is also secured by personal guarantees of promoter directors.

iv. During the current year, the nominal (floating) interest rate was in the range of 7.75% to 11.75% per annum (31 March 2021 : 7.75% to 10.75% per annum).

v. The term loans are repayable in quarterly installments ranging from Rs 10 to Rs 750 till FY 2029-30.

16 (b) Vehicle loans of Rs 119.02 (31 March 2021: 203.29) are secured against hypothecation of the specified vehicles purchased from proceeds of the said loans. The fixed rate of interest is in range from 8.20% to 10.50% per annum (31 March 2021 : 8.20% to 10.50% per annum). The vehicle loans are repayable in monthly unequal installment ranging from Rs 0.08'' to Rs 1.23 till FY2024-25.

16 (c) Public deposits carry interest rate ranging between 8.50 % to 9.75% (31 March 2021: 8.50% to 9.75%) per annum and carry a maturity period from 12 to 36 months from the respective date of deposits.

16 (d) The rate of interest on Loans from Export Development Canada is 6 Month US LIBOR plus 3.90% (31 March 2021: 6 month US LIBOR plus 3.90% per annum). The term loan is repayable in half yearly installments ranging from Rs 219.79 to Rs 439.58 till FY 2023-24.

16 (e) The fixed rate of interest on loans from promoters, directors and relatives in current year is at rate of 9% (31 March 2021:9%)per annum. As per the Company''s arrangements with these parties, the amount has been considered as long term, repayable based on mutually agreed terms.

16 (f) 10% non-cumulative redeemable preference shares of Rs. 10 each, fully paid up

The Company has only one class of preference shares having a par value of Rs. 10 per share. Preference shareholders do not hold any voting rights. The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. The preference shareholders acquire voting rights on par with equity shareholders if dividend on preference shares remain unpaid for a period of not less than 2 years or for any three years during a period of six years ending with financial year preceding the meeting. In the event of liquidation of the Company, the holders of preference shares will be entitled to receive the amount of their preference capital contribution and arrears of dividend, whether declared or not, upto date of commencement of winding up, before distribution of the remaining assets to the equity shareholders. The preference shares are redeemable in 5 equal installments at the end of 16th, 17th, 18th, 19th and 20th year, from the date of allotment, i.e., 13 September 2013.

16 (g) Secured loans - repayable on demand

Working capital loans are secured by hypothecation of all current assets, second charge on the fixed assets of the Company and personal guarantees of promoter directors and corporate guarantee of Kapedome Enterprises Limited. The floating rate of interest on the loans is 8.50% to 10.60% per annum (31 March 2021: 8.00% to 10.60% per annum).

16 (h) Inter corporate deposit from others carry an interest rate of 13% per annum (31 March 2021: 13% per annum) and the same are repayable within twelve months.

The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondences with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect of amounts payable to such enterprises as at the year end has been made in the financial statements based on information available with the Company as under :

The contract assets primarily relate to the Company''s rights to consideration for revenue accrued but not billed at the reporting date. The contract assets are transferred to receivables when the Company issues an invoice to the customer. The contract liabilities relate to the advance received from customers against which revenue is recognized when or as the performance obligation is satisfied.

Note:

Derivatives are carried at fair value at each reporting date. The fair values of the derivative financial instruments has been determined using valuation techniques with market observable inputs. The model incorporates various inputs including credit quality of counter-parties and foreign exchange forward rates. There are no transfers between Level 1, Level 2 and Level 3 during the year ended 31 March 2022 and 31 March 2021.

B. Financial risk management

(i) Risk management framework

The Companyâs board of directors has overall responsibility for the establishment and oversight of the Companyâs risk management framework. The Companyâs risk management policies are established to identify and analyse the risk faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to effect changes in market conditions and Company''s activities. The Company, through its training and management standards and procedures, aims to maintain discipline and constructive control environment in which all employees understand their roles and obligations.

The Companyâs audit committee oversees how management monitors compliance with Companyâs risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to risk faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and adhoc reviews of risk management controls and procedures, the result of which are reported to audit committee.

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

- credit risk (See (ii))

- liquidity risk (See (iii)); and

- market risk (See (iv))

(ii) Credit Risk

Credit risk is the risk of financial loss to the Company if a customer or counter party to a financial instrument fails to meet its contractual obligations. The carrying amount of financial assets represents the maximum credit risk exposure and arises principally from the Company''s receivable from customers and loans. The maximum exposure to credit risks is represented by the total carrying amount of these financial assets in the Balance Sheet:

Trade receivables

The Company has established a credit policy under which each new customer is analysed individually for creditworthiness before the payment and delivery terms and conditions are offered. The Companyâs review includes external ratings, if they are available, financial statements, credit agency information, industry information and business intelligence. The Company evaluates the customer credentials carefully from trade sources before appointment of any distributor and only financially sound parties are appointed as distributors. The Company secures adequate deposits from its distributor and hence risk of bad debt is limited. The credit outstanding is sought to be limited to the sum of advances/deposits and credit limit determined by the company.

The following table gives details in respect of percentage of revenues generated from top customer and top five customers:

The Company based on internal assessment which is driven by the historical experience/ current facts available in relation to default and delays in collection thereof, the credit risk for trade receivables is considered low. The Company estimates its allowance for trade receivable using lifetime expected credit loss. Individual receivables which are known to be uncollectible are written off by reducing the carrying amount of trade receivable and the amount of the loss is recognised in the Statement of Profit and Loss within other expenses.

The following table provides information about the exposure to credit risk and expected credit loss for trade receivables.

The loans primarily represents security deposits, inter-company deposits given and loans given to employees. The management believes these to be high quality assets with negligible credit risk. The management believes the parties to which these deposits and loans have been given have strong capacity to meet the obligations and where the risk of default is negligible or nil and accordingly no allowance for expected credit loss has been provided on these financial assets. Credit risk on cash and cash equivalents and bank deposits is limited as the Company generally invests in deposits with banks with high credit ratings assigned by domestic credit rating agencies.

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial assets. The Companyâs approach to manage liquidity is to have sufficient liquidity to meet itâs liabilities when they are due, under both normal and stressed circumstances, without incurring losses or risking damage to the Companyâs reputation.

Management manages the liquidity risk by monitoring cash flow forecasts on a periodic basis and maturity profiles of financial assets and liabilities. This monitoring takes into account the accessibility of cash and cash equivalents and additional undrawn financing facilities.

(iv) Market Risk

(a) Commodity price risk

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 to the extent possible.

(b) Interest rate risk

Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Companyâs exposure to the risk of changes in market interest rates relates primarily to the Companyâs borrowings with floating interest rates.

Exposure to interest rate risk

The Company is exposed to interest rate risk because funds are borrowed at both fixed and floating interest rates. Interest rate risk is measured by using the cash flow sensitivity for changes in variable interest rate. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings. The exposure of the Companyâs borrowing to interest rate changes as reported to the management at the end of the reporting period are as follows:

Foreign currency risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company is exposed to the effects of fluctuation in the prevailing foreign currency exchange rates on its financial position and cash flows. Exposure arises primarily due to exchange rate fluctuations between the functional currency and other currencies from the Companyâs operating, investing and financing activities.

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.

A reasonably possible strengthening (weakening) of the Indian Rupee against below currencies at 31 March 2022 and 31 March 2021 would have impacted the measurement of financial instruments denominated in foreign currency and impacted Statement of Profit and Loss by the amounts shown below. This analysis is performed on foreign currency denominated monetary financial assets and financial liabilities outstanding as at the year end. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases.

36 Capital management Risk management

The Company''s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The management monitors the return on capital. The Company monitors capital using a ratio of ''adjusted net debt'' to ''total equity''. For this purpose, adjusted net debt is defined as total liabilities, net of cash and cash equivalents and other bank balances. Equity comprises all components of equity (as shown in the Balance Sheet).

37	Contingent liabilities and commitments (to the extent not provided for) A (i). Contingent liabilities
	Particulars		As at 31 March 2022	As at 31 March 2021
	(a) Claims against the Company not acknowledged as debts: Income tax matters Excise duty matters Others		1,388.94 512.42 1,813.27	960.19 512.42 291.97
A (ii). Other pending litigations
	Particulars		As at 31 March 2022	As at 31 March 2021
	Excise duty, Central Excise Act, 1944*		52.15	52.15
*Refund case is pending with Commissioner (		Excise), Rs. 52.15 is classified under Note 14, cenvat credit recoverable.

A(iii). The Company has initiated legal proceedings which have arisen in the ordinary course of business. The management does not reasonably expect that these legal actions, when ultimately concluded and determined, will have a material effect on the Company''s results of operations or financial condition. Further, the Company has filed legal cases against certain parties for recoverability of balances due from them. Appropriate provision wherever required, has been created in the financial statements.

B. Commitments
Particulars	As at	As at
	31 March 2022	31 March 2021
(a) Estimated amount of contracts remaining to be executed on capital	2,120.60	640.65
account and not provided for in the books of account (net of advances)

II. Defined contribution plan

The Company''s provident fund scheme and employee''s state insurance (ESI) fund scheme are defined contribution plans. The Company has recorded expenses of Rs. 353.78 (31 March 2021: Rs. 333.54) under provident fund scheme and Rs.55.66 (31 March 2021: Rs. 57.54) under ESI scheme. These have been included in note 28 Employees benefits expenses, in the Statement of Profit and Loss.

III Defined benefit plan Gratuity (funded)

The employees'' gratuity fund scheme managed by Life Insurance Corporation of India is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The Company made annual contributions to the LIC of India.

The above defined benefit plan exposes the Company to following risks:

Interest rate risk:

The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase.

Salary inflation risk:

Higher than expected increase in salary will increase the defined benefit obligation.

Demographic risk:

This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.

The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations. The Company has not changed the processes used to manage its risks from previous periods. The funds are managed by specialised team of Life Insurance Corporation of India.

a) Funding

Gratuity is a funded benefit plan for qualifying employees. 100% of the plan assets are managed by LIC. The assets managed are highly liquid in nature and the Company does not expect any significant liquidity risks.

The expected contribution to defined benefit plan for the next year is Rs. 108.28

The following table sets out the status of the defined benefit plan as required under Ind-AS 19 - Employee Benefits:

The above sensitivity analysis are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same methods (present value of defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

39 Leases:

On 1 April 2019, the Company has adopted Ind AS 116 "Leases", using the modified retrospective approach.

The Company has entered into agreements for leasing office premises on lease and license basis. The leases typically run for a period of 9 years with no restriction placed upon the Company for entering into said lease.

The Company also leases certain premises with contract terms of one to three years. These leases are short-term in nature and the Company has elected not to recognise right-of-use assets and lease liabilities for these leases. Rental expense recorded for short-term leases was Rs. 27.77 lacs for the year ended 31 March 2022. (PY Rs. 21.39 lacs)

E Terms and Conditions

All transactions with related parties are made on terms equivalent to those that prevail in armâs length transactions and within the ordinary course of business. Outstanding balances at the year end are unsecured and settlement occurs in cash. Transactions relating to dividend are on the same terms and conditions that are offered to other shareholders.

41 Segment information

The Company is primarily engaged in the business of manufacture and sales of paper, mainly in the domestic markets. The Board of Directors of the Company, who have been identified as being the chief operating decision maker (CODM), evaluate the Company''s performance and allocate resources based on the analysis of various performance indicators of the Company as a single unit. Accordingly, there is no reportable segment or any entity wide disclosures which are applicable to the Company.

42 The outbreak of Coronavirus (Covid-19) globally and in India has impacted business and economic activities in general. The Company''s sale during the year ended March 2021 was impacted significantly by the pandemic and consequently capacity utilization of the plant was lower and is gradually moving towards normal capacity. As regards the recoverability of assets, the Company expects to fully recover the carrying amounts of the assets. The Company is closely monitoring any material changes to future economic conditions.

45 As per guidelines in RBI circular dated 6th August 2020 "Resolution Framework for Covid-19 related Stress" , the company approached the Lenders for a Resolution Plan to the term debt obligations of the company. All the Lenders have approved and implemented the Resolution Plan on 19th June 2021 which inter alia provided for converting the interest on term loans for one year from 1st september 2020 into Funded interest Term Loan (FITL) with extension of two years moratorium in the payment of principal of term loans.

46 Previous Year''s figures have been regrouped/ reclassified wherever considered necessary to make them comparable with the current year''s classification/ disclosure.

Mar 31, 2018

1. Reporting entity

Kuantum Papers Limited (the ''Company'') is a public company incorporated under the provisions of the Companies Act, 1956 having its registered office at Papers Mill, Saila Khurd, District Hoshiarpur, Punjab -144529, India. The equity shares of the company are listed on BSE.

The Company''s business primarily consists of manufacture and sales of paper, mainly in the domestic markets. The manufacturing facilities and registered office of the Company are situated in Saila Khurd, District Hoshiarpur in the State of Punjab, with corporate office in Chandigarh.

a. Refer note 17 for information on property, plant and equipment pledged as security by the Company.

b. Refer note 39 for disclosure of contractual commitments for the acquisition of property, plant and equipment.

c. Refer note 35 for a reconciliation of deemed costas considered by the Company pursuant to transition provision under Ind AS 101.

d. The related finance lease obligations in respect to plant and equipment acquired under finance lease arrangements have been disclosed in note no. 17(c)

e. At 31 March 2018, capitalised borrowing costs related to the plant and equipment amounted to Rs. 607.53 (previous year: Rs. 601.23).

# Represents capital-work-in-progress capitalized during the year.

(b) Includes restricted deposits of Rs. 25.15 (31 March 2017: Rs. 60.66; 1 April 2016: Rs. 10.00) as deposits pledged as security for letter of credit, bank guarantee and margin money.

(c) Includes restricted deposits of Rs. 50.00 (31 March 2017: Rs. 126.00; 1 April 2016: Rs. 70.50) as deposits pledged as security for deposit from shareholders, letter of credit and bank guarantee.

d. The amount of Rs.292.60 (31 March 2017: Rs. 292.60,1 April 2016: Rs. 727.05) represents dues from a customer against which legal proceedings for recovery of the amount were initiated. The Company has also obtained a status quo from Honorable High Court vide its order dated 18 September 2015, on the partyâs other group holdings through which they own a hotel, the unencumbered value of which has been assessed by the management as sufficient to recover the outstanding amount. The management is hopeful of recovering the entire amount including adequate amount to compensate time value of loss. In view of the favorable injunction and related value of the property, the management believes that there is no expected credit loss allowance required to be recognised.

(a) Includes Rs.1,443.92 (31 March 2017: Rs.2,818.07,1 April 2016: Rs. Nil) being the amount unutilized out of term loan for Rs.1,791.96 and will be utilized in year ending March 2019.

(b) These deposits include restricted bank deposits pledged as security for deposits from shareholders, letters of credit and bank guarantees amounting to Rs.1945.59 (31 March 2017: Rs. 537.98; 1 April 2016: Rs. 403.58).

(iii) Rights, preferences and restrictions attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 10 per share. Accordingly, all equity shares rank equally with regard to dividends and share in the Companyâs residual assets on winding up. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders (except for interim dividend) in the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

(v) Bonus shares, shares buyback and issue of shares for consideration other than in cash during five years immediately preceding 31 March 2018

During the five years immediately preceding 31 March 2018 (''the period¹), neither any bonus shares have been issued nor any shares have been bought back. Further, no shares have been issued for consideration other than cash.

2. Other Equity

(also refer to Statement of Changes in Equity)

(i) Capital redemption reserve

(ii) General reserve

(iii) Retained earnings

Retained earnings represents the profits that the Company has earned till date less any transfer to general reserve, less any dividends, or other distributions paid to shareholders.

(iv) Other comprehensive income(net of tax)

Remeasurements of defined benefit obligation comprises actuarial gains and losses and return on plan assets (excluding interest income).

Note:

17 (a) Term Loan of:

I. Rs. 18,262.66 (31 March 2017: Rs. 13,253.29; 1 April 2016: Rs. 10,718.24) are secured by a first parri passu charge on all the fixed assets (immovable and movable) of the Company, both present and future along with equitable mortgage of factory land and building at Sailakhurd except office premises situated at Industrial Area, Chandigarh which are exclusively mortgaged with HDFC bank and HDFC limited respectively and second charge on the current assets. The said loans are also secured by personal guarantees of directors. In addition, Term loan of Nil (31 March 2017: Rs. 899.34; 1 April 2016: Rs. 1,799.34) is also secured by pledge of 10,00,000 equity shares of the Company by the holding company.

ii. 1058.26 (31 March 2017 : Rs. 1,178.26; 1 April 2016 : Rs. 988.96) is secured by exclusive charge on the office premises at Industrial Area Chandigarh and is also secured by personal guarantees of directors.

iii. During the current year, the nominal (floating) interest rate was in the range of 8.65% to 11.75% per annum (31 March 2017 : 8.65% to 14.10% per annum; 1 April 2016:11.50% to 14.00% per annum).

iv. The term loan is repayable in quarterly installments ranging from INR 10 to INR 375 till FY2023-24.

17 (b) Vehicle loans are secured against hypothecation of the specified vehicles purchased from proceeds of the said loans. The fixed rate of interest is in range from 8.00% to 10.74% (31 March 2017 : 9.20% to 12.60% per annum; 9.20% to 12.60% per annum). The vehicle loan is repayable in monthly unequal installment ranging from INR 0.11 to INR 1.21 till FY2021-22.

17 (c) (i) Assets under finance lease arrangement are secured against assets taken on finance lease. The implied rate of interest on the finance lease is in range from 12.67% to 13.20% (31 March 2017 : 12.67% to 13.20% per annum; 12.67% to 13.20% per annum).

17 (d) Public deposits carry interest rate ranging between 8.5% to 12% (31 March 2017: 9.50% to 12%; 01 April 2016:10.50% to 12%) per annum and carries a maturity period from 12 to 36 months from the respective date of deposits.

17 (e) Inter corporate deposit from others carry an interest rate ranging between 8% to 13% (31 March 2017:10% per annum; 01 April 2016: 10% to 12.00% per annum) and the same are repayable as per the repayment schedule within twenty four months.

17 (f) The rate of interest on Loans from Export Development Canada is in the range of 6 Month US LIBOR plus 3.9% (31 March 2017: US libor plus 3.20% to 3.90% per annum; 01 April 2016: US libor plus 3.20% per annum). The term loan is repayable in half yearly installment ranging from INR47 to INR 381.72 till FY 2023-24.

17 (g) The fixed rate of interest on loans from directors and relatives in current and previous year is at rate of 8% per annum. As per the Company''s arrangements with these parties, the amount has been considered as long term, repayable based on mutually agreed terms.

17 (h) 10% cumulative redeemable preference shares of Rs. 10 each, fully paid up

The Company has only one class of preference shares having a par value of Rs. 10 per share. Preference shareholders do not hold any voting rights. The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. The preference shareholders acquire voting rights on par with equity shareholders if dividend on preference shares remain unpaid fora period of not less then 2 years or for any three years during a period of six years ending with financial year preceding the meeting. In the event of liquidation of the Company, the holders of preference shares will be entitled to receive the amount of their preference capital contribution before distribution of the remaining assets to the equity shareholders. The preference shares are redeemable in 5 equal installments at the end of 16th, 17th, 18th, 19th and 20th year, from the date of allotment, i.e., 13 September 2013.

17 (i) Secured loans - repayable on demand

Working capital loans are secured by hypothecation of all current assets, second charge on the fixed assets of the Company and personal guarantees of directors. The floating rate of interest on the loans is 9% to 10.90% per annum (31 March 2017: 10.50% to 11.45% per annum; 01 April 2016:10.70% to 13.00% per annum).

The Company has been sanctioned government grant for putting up ethanol pilot plant. Total amount received as on date is Rs.446.17. The plant is now operative and accordingly deferred income is being amortized over the useful life of the plant in the same proportion in which the related depreciation expense is recognised.

3. Explanation of transition to Ind AS

As stated in note 2 (a)(i), these are the Company''s first financial statements prepared in accordance with Ind AS. For the year ended 31 March 2017, the Company had prepared its financial statements in accordance with Companies (Accounting Standards) Rules, 2006 notified under section 133 of the Act and other relevant provisions of the Act (''previous GAAP'').

The accounting policies set out in Note 2 have been applied in preparing these financial statements for the year ended 31 March 2018 including the comparative information for the year ended 31 March 2017 and the opening Ind AS balance sheet on the date of transition i.e. 01 April 2016.

In preparing its Ind AS balance sheet as at 01 April 2016 and in presenting the comparative information for the year ended 31 March 2017, the Company has adjusted amounts reported previously in financial statements prepared in accordance with previous GAAP. This note explains the principal adjustments made by the Company in restating its financial statements prepared in accordance with previous GAAP, and how the transition from previous GAAP to Ind AS has impacted the Company''s financial position, financial performance and cash flows.

A. Optional exemptions availed

(i) Deemed cost for property, plant and equipment and intangible assets

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets.

Accordingly, the Company has adopted to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value. Information relating to gross carrying amount of assets and accumulated depreciation as on the transition date as per previous GAAP is as follows:

(ii) Determining whether an arrangement contains a lease

Ind AS 101 includes an optional exemption that permits an entity to apply the relevant requirements in Appendix Coflnd AS 17 for determining whether an arrangement existing at the date of transition contains a lease by considering the facts and circumstances existing at the date of transition (rather than at the inception of the arrangement). The Company has adopted to avail of the above exemption.

B. Mandatory exceptions

(i) Estimates

As per Ind AS 101, an entity''s estimates in accordance with Ind AS at the date of transition to Ind AS (i.e. 1 April 2016) or at the end of the comparative information period presented in the entity''s first Ind AS financial statements (i.e. 31 March 2017), shall be consistent with estimates made forthe same date in accordance with previous GAAP unless there is objective evidence that those estimates were in error. However, the estimates should be adjusted to reflect any difference in accounting policies. An entityâs estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.

As per Ind AS 101, where application of Ind AS requires an entity to make certain estimates that were not required under previous GAAP, those estimates should be made to reflect conditions that exist at the transition date or at the end of the comparative period. The Company''s estimates under Ind AS are consistent with the above requirement. The key estimates considered in preparation of financial statements that was not required under previous GAAP are listed below:

- Fair valuation of financial instruments carried at FVTPL

- Determination of the discounted value for financial instruments carried at amortised cost

- Impairment of financial assets based on expected credit loss model

(ii) Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification of financial assets on the basis of facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortised cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable. Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Measurement of financial assets accounted at amortised cost has been done retrospectively except where the same is impracticable.

(iii) De-recognition of financial assets and liabilities

Ind AS 101 requires a first-time adopter to apply the de-recognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transaction to Ind AS. However, Ind AS 101 allows a first time adopter to apply the derecognition requirements in Ind AS 109 retrospectively from the date of the entityâs choosing, provided that the information needed to apply Ind AS 109 to financials assets and liabilities derecognised as a result of past transaction was obtained at the time of initially accounting for those transactions.

As permitted by Ind AS 101, the Company has adopted to apply the de-recognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS.

* Previous GAAP figures have been reclassified to conform to Ind AS presentation requirements for the purpose of this note.

(iii) Adjustments to Cash Flow Statement

Other than effect of certain reclassifications due to difference in presentation, there was no other material effect of cash flow from operating, financing, investing activities for all periods presented.

Notes to reconciliation:

(a) Government grants

i. Under the previous GAAP, government grant received with respect to property, plant and equipment was reduced from the cost of the respective project. However as per Ind AS 20, the government grant related to property, plant and equipment is treated as deferred income and will be recognised in statement of profit or loss on a systematic basis over the useful life of the asset.

(b) Incremental capitalization of finance costs

Under the previous GAAP, capitalization of finance cost by applying avoidable interest cost method on certain specific borrowings was not permitted. Under Ind AS, the same is eligible for capitalization. The resulting capitalization of interest in property, plant and equipment and capital work-in-progress have been recognized in the Statement of Profit and Loss for the year ended 31 March 2017.

Ind AS 109 requires transaction costs incurred towards origination of borrowings to be deducted from the carrying amount of borrowings on initial recognition. These costs are recognised in the profit or loss over the tenure of the borrowing as part of the interest expense by applying the effective interest rate method.

(d) Deferred taxes

Previous 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.

(e) Dividend on preference shares

The Company had issued cumulative redeemable 10% preference shares of INR 3,000. Under previous GAAP, the preference shares were classified as equity and dividend payable thereon was treated as distribution of profit. As per Ind AS 109, preference shares are classified as liability based on the terms of the contract. Therefore, preference dividend is to be treated as finance cost and is provided for on accrual basis before declaring the same in annual general meeting.

(f) Proposed dividend

Under the previous GAAP, dividends proposed by the board of directors after the Balance Sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was recognised as a liability. Under Ind AS, such dividends are recognised when the same is approved by the shareholders in the general meeting.

(g) Remeasurement of post-employment benefit obligations

Under Ind AS, re-measurements i.e. actuarial gains and losses and the return on plan assets on the net defined benefit obligation are recognised in other comprehensive income instead of profit or loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year. As a result of this change, actuarial loss amounting to Rs. 61.14 has been recognised in other comprehensive income instead of profit or loss. There is no impact on the total equity as at 01 April 2016 and 31 March 2017.

(h) Excise duty

Under previous GAAP, revenue form sale of goods was presented net of excise duty on sales. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty.

B. Financial risk management

(i) Risk management framework

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

- credit risk (See (ii))

- liquidity risk (See (iii)); and

- market risk (See (iv))

(ii) Credit Risk

Trade receivables

(iii) Liquidity Risk

(iv) Market Risk

(a) Commodity price risk

(b) Interest rate risk

Exposure to interest rate risk

Interest rate sensitivity analysis

A reasonably possible change of 0.50 % in interest rates at the reporting date would have impacted the profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.

(ii) Sensitivity analysis

A reasonably possible strengthening (weakening) of the Indian Rupee against below currencies at 31 March 2018 and 31 March 2017 would have impacted the measurement of financial instruments denominated in foreign currency and impacted Statement of Profit and Loss by the amounts shown below. This analysis is performed on foreign currency denominated monetary financial assets and financial liabilities outstanding as at the year end. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases.

Fair value hierarchy

The fair value of investment property has been determined by external property valuers, having appropriate recognised professional qualifications and recent experience in the location and category of the property being valued.

The fair value measurement for the investment property has been categorised as a Level 3 fair value based on the inputs to the valuation technique used.

Valuation technique

The Company follows discounted cash flows technique. The valuation model considers the present value of net cash flows to be generated from the property, taking into account the expected rental growth rate, vacant periods, occupancy rate, lease incentive costs such as rent-free periods and other costs not paid by tenants. The expected net cash flows are discounted using risk-adjusted discount rates. Among other factors, the discount rate estimation considers the quality of a building and its location (prime vs secondary), tenant credit quality and lease terms.

Investment property comprise of a commercial property that is leased to third party. Subsequent renewals are negotiated with the lessee. No contingent rents are charged.

4 (a) Capital management

Risk management

A (iii). The Company has initiated legal proceedings which have arisen in the ordinary course of business. The management does not reasonably expect that these legal actions, when ultimately concluded and determined, will have a material effect on the Company''s results of operations or financial condition. Further, the Company has filed legal cases against certain parties for recoverability of balances due from them. Appropriate provision wherever required, has been created in the financial statements.

II. Defined contribution plan

The Companyâs provident fund scheme and employeeâs state insurance (ESI) fund scheme are defined contribution plans. The Company has recorded expenses of Rs. 208.42 (31 March 2017: Rs. 176.20, 31 March 2016: Rs. 170.46) under provident fund scheme and Rs.73.67 (31 March 2017: Rs. 57.77, 31 March 2016: Rs. 53.40) under ESI scheme. These have been included in note 29 Employees benefits expenses, in the Statement of Profit and Loss.

Ill Defined benefit plan

Gratuity (funded)

The employeesâ gratuity fund scheme managed by Life Insurance Corporation of India is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The Company made annual contributions to the LIC of India.

The above defined benefit plan exposes the Company to following risks:

Interest rate risk:

The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase.

Salary inflation risk:

Higher than expected increase in salary will increase the defined benefit obligation.

Demographic risk:

This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straightforward and depends upon the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.

a)Funding

The expected contribution to defined benefit plan for the next year is Rs. 79.04.

The following table sets out the status of the defined benefit plan as required under Ind-AS 19 - Employee Benefits:

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

5. Leases

A. Leases as lessee

Operating leases:

The Company has taken office and residential premises under cancellable operating lease agreements. Lease payments charged during the year in Statement of Profit and Loss aggregate Rs. 57.45 (31 March 2017: Rs. 67.01, 31 March 2016: Rs. 62.93).

B. Leases as lessor

Operating leases:

The Company has leased out its investment property on operating lease basis.

The secured borrowing facilities of the Company are secured by way of personal guarantees of Chairman and Managing Director in favour of lenders.

E. Terms and Conditions

6. Segment information

The Company is primarily engaged in the business of manufacture and sales of paper, mainly in the domestic markets.

The Board of Directors of the Company, who have been identified as being the chief operating decision maker (CODM), evaluate the Company''s performance and allocate resources based on the analysis of various performance indicators of the Company as a single unit. Accordingly, there is no reportable segment or any entity wide disclosures which are applicable to the Company.

7. The specified bank notes (SBN) as defined under the notification issued by the Ministry of Finance, Department of Economic Affairs, dated 08 November, 2016 are no longer in existence. Hence the Company has not provided the corresponding disclosures as prescribed in Schedule III to the Companies Act, 2016. The disclosure of SBN made in the financial statements for 31 March 2017 is as follows:

A ''dividend ''of Rs.1.00 per redeemable cumulative preference shares (31 March 2017: Rs.1.00 redeemable cumulative preference shares) (excluding dividend distribution tax) has been proposed by the directors subject to the approval at the time of annual general meeting. Since the aforesaid preference shares have been classified as ''financial liability'', the aforesaid amount has been shown as the part of finance cost on accrual basis.

8. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961. Since the law requires such information and documentation to be contemporaneous in nature, the Company is in the process of updating the documentation of transactions with associated enterprises during the financial year and expects such records to be in existence latest by the due date as required under that law. The management is of the opinion that the above transactions are at armâs length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

Mar 31, 2016

d) Further, the Company has filed legal cases against certain parties for recoverability of balances due from them. Appropriate, provision wherever required has been created in the financial statements.

1. Borrowing cost relating to qualifying assets which has been considered as cost of fixed assets is amounting to Rs. 306.66 (previous year Rs. 143.71)

The secured borrowing facilities of the Company are secured by way of personal guarantees of Chairman and Managing Director in favour of lenders.

Further term loan of Rs. 1,799.34 (previous year Rs. 2,700.00) is secured by pledge of 10,00,000 equity shares of the Company by an Associate Company.

2. Segment information

The Company is engaged in the business of manufacture and sale of paper, primarily in India and nearby markets, which is a primary segment for the Company and constitutes a single business segment. Accordingly, disclosure requirements of Accounting Standard 17 "Segment Reporting", prescribed by the Companies (Accounts) Rules, 2014 in relation to segment reporting is not given.

3. Leases As lessee:

Operating leases

Finance leases

The Company acquires certain computer and IT equipment under finance lease which had been capitalized as a part of computers under fixed assets. At the end of lease period, the Company has the option either to terminate the lease and return the asset or renew the lease.

4. Disclosures pursuant to Accounting Standard 15 on âEmployee Benefitsâ:

Defined contribution plans

The Company''s provident fund scheme and employee''s state insurance (ESI) fund scheme are defined contribution plans. The Company has recorded expenses of Rs.170.46 (previous year Rs. 159.67 ) under provident fund scheme and Rs. 53.40 (previous year Rs. 54.64) under ESI scheme. These have been included in note 2.5 Employees benefits expenses, in the Statement of Profit and Loss.

Defined benefit plans

Gratuity (funded)

Gratuity is payable to all eligible employees of the Company on superannuation, death or permanent disablement, in terms of the provisions of the Payment of Gratuity Act or as per the Company''s Scheme, whichever is more beneficial.

The discount rate is based on the prevailing market yields of Indian government securities as at the balance sheet date for the estimated term of the obligations.

The salary escalation rate is based on estimates of salary increases, which take into account inflation, promotion and other relevant factors.

*The Company is not informed by the insurer (Life Insurance Corporation of India) of the investment made by it or the break -down of plan assets by investment type.

5. As per requirement of sub section (5) of section 135 of the Companies Act 2013, the Company was required to spend at least two percent of its average net profit for the three immediately preceding financial year, in pursuance of its Corporate Social Responsibility (CSR) Policy. Till 31 March 2016, the Company has spent Rs. 63.95 towards CSR activities.

6. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961. Since the law requires such information and documentation to be contemporaneous in nature, the Company is in the process of updating the documentation of transactions with associated enterprises during the financial year and expects such records to be in existence latest by the due date as required under that law. The management is of the opinion that the above transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

7. Previous year figures have been regrouped / reclassified wherever considered necessary.

Mar 31, 2015

1.1.1 Rights, preferences and restrictions attached to each class of shares

a) Equity shares of Rs. 10 each, fully paid up

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share.

The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders (except for interim dividend) in the ensuing Annual General Meeting.

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

b) 10% non-cumulative redeemable preference shares of Rs. 10 each, fully paid up

The Company has only one class of preference shares having a par value of Rs. 10 per share. Preference shareholders do not hold any voting rights.

The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

The preference shareholder acquire voting right on par with equity shareholders if dividend on preference shares remain unpaid for a period of not less then 2 years or for any three years during a period of six years ending with financial year preceding the meeting. In the event of liquidation of the Company, the holders of preference shares will be entitled to receive the amount of their preference capital contribution before distribution of the remaining assets to the equity shareholders.

The preference shares are redeemable in 5 equal instalments of Rs. 600 lacs each at the end of 16th, 17th, 18th, 19th and 20th year, from the date of allotment, i.e., 13 September 2013 instead of earlier redemption at the end of 8th, 9th, 10th, 11th and 12th year.

Footnotes:

[1] Term Loan of:

a. Rs. 7,065.00 (previous year Rs. 3,339.12) are secured by a first parri passu charge on all the fixed assets (immovable and movable) of the Company, both present and future alongwith equitable mortgage of factory land and building at Sailakhurd and second charge on the current assets. The said loans are also secured by personal guarantees of directors.

b. Rs. 2,700.00 (previous year Rs. 3,450.00) is secured by a first parri passu charge on fixed assets (immovable and movable) of the Company, both present and future, alongwith equitable mortgage of factory land and building at Sailakhurd and second charge on the current assets. The said loans are also secured by personal guarantees of directors. The term loan is also secured by pledge of 10,00,000 equity shares of the Company by an associate company.

c. Rs. 285.37 (previous year Rs. 1,135.75) is secured by a first parri passu charge on all the fixed assets (immovable and movable) of the Company, both present and future, alongwith equitable mortgage of factory land and building at Sailakhurd . The said loans are also secured by personal guarantees of directors.

d. Rs. 510.71 (previous year Rs. Nil) Lakhs is secured by exclusive charge on the building at Industrial Area Chandigarh and is also secured by personal guarantees of directors.

e. During the current year, floating interest rate was in the range of 12.40% to 14% per annum (previous year 13.30% to 14% per annum).

During the year ended 31 March 2013 while filing its income tax return for the financial year 2011-12, the Company had exercised its option to claim tax holiday exemption for ten years in relation to its certain activities. However, inadvertently, the computation of deferred taxation for the previous year did not consider the consequential impact thereof. In the previous year, deferred tax was corrected and consequential adjustment in the form of deferred tax credit of Rs. 436.27 was recorded. As a result, profit for the previous year after tax was higher by Rs. 436.27.

#During the year, the Company has revalued freehold land as on 31 March 2015, at the fair values determined by an independent external valuer. The valuer determined the fair value by reference to market based evidence. Valuations performed by the valuer were based on active market prices, adjusted for any difference in the nature, location or condition of the specific property. The historical cost of freehold land was Rs. 77.67 lacs and the fair value was Rs. 41,372 lacs. Hence, the revaluation resulted in an increase in the book value of freehold land by Rs. 41,294.33 lacs which has been credited to revaluation reserve.

2.1 Background

Kuantum Papers Limited(''The Company") is a Company incorporated under the provisions of the Companies Act, 1956.

The Company is listed on Bombay Stock Exchange.The Company's business primarily consists of manufacture and sales of paper, mainly in the domestic markets. The manufacturing facilities and registered office of the Company are situated in SailaKhurd, District Hoshiarpur in the State of Punjab, with corporate office in Chandigarh.

3.1 Contingent liabilities, commitments and other litigation rs Lacs

Particulars As at As at 31 March 2015 31 March 2014

a) Claims against the Company not acknowledged as debts

- Income tax matters 529.90 394.73

- Excise duty matters 598.54 1,303.73*

b) Capital commitments

Estimated amount of contracts remaining to be executed on 1,887.64 176.73 capital account and not provided for (net of advances)

* Includes Rs. 549.28 in previous year which has been vacated vide order of Commissioner dated 3 April 2014.

{I} Refund case is pending with Commissioner (Excise), Rs. 52.15 is classified under Note 1.11(c), cenvat credit recoverable.

{ii} Appeal is pending with Chairman, Appellate Committee, Punjab Pollution Control Board, Patiala. Provision created amounting to Rs. 117 and advances deposited Rs. 62.40 therefore balance Rs. 54.60 is classified under Note 1.9 (e), statutory dues.

(d) Further, the Company has filed legal cases against certain parties for recoverability of balances due from them. Appropriate, provision wherever required has been created in the financial statements.

3.2 Borrowing cost relating to qualifying assets which has been considered as cost of fixed assets is amounting to Rs. 143.71 (previous year Rs. 248.30)

3.3 The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Based on the information presently available with the management, there are no dues outstanding to micro and small enterprises covered under the Micro, Small and Medium Enterprises Development Act, 2006. Further, the Company has not received any claim for interest from any suppliers under the said Act.

The secured borrowing facilities of the Company are secured by way of personal guarantees of Chairman, and the Managing Director in favour of lenders.

3.4 Segment information

The Company is engaged in the business of manufacture and sale of paper, primarily in India and nearby markets, which is a primary segment for the Company and constitutes a single business segment. Accordingly, disclosure requirements of Accounting Standard 17 "Segment Reporting", prescribed by the Companies (Accounts) Rules, 2014 in relation to segment reporting is not given.

3.5 Leases Operating leases

The Company has taken office and residential premises under cancellable operating lease agreements.

Lease payments charged during the year in Statement of Profit and Loss aggregate Rs. 48.62 (previous year Rs. 44.91). Finance leases

The Company acquires certain computer and IT equipment under finance lease which had been capitalized/capital work in progress as a part of computers under fixed assets. At the end of lease period, the Company has the option either to terminate the lease and return the asset or renew the lease.

3.6 Disclosures pursuant to Accounting Standard 15 on "Employee Benefits":

Defined contribution plans

The Company's provident fund scheme and employee's state insurance (ESI) fund scheme are defined contribution plans. The Company has recorded expenses of Rs. 159.67 (previous year Rs. 155.68) under provident fund scheme and Rs.54.64 (previous year Rs. 53.91) under ESI scheme. These have been included in note 2.5 Employees benefits expenses, in the Statement of Profit and Loss.

Defined benefit plans

Gratuity (funded)

Gratuity is payable to all eligible employees of the Company on superannuation, death or permanent disablement, in terms of the provisions of the Payment of Gratuity Act or as per the Company's Scheme, whichever is more beneficial.

3.7 As per requirement of sub section (5) of section 135 of the Companies Act 2013, the Company was required to spend at least two percent of its average net profit for the three immediately preceding financial year, in pursuance of its Corporate Social Responsibilities (CSR) Policy. Till 31 March 2015, the Company has spent Rs. 31.95 towards CSR activities.

3.8 The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961. Since the law requires such information and documentation to be contemporaneous in nature, the Company is in the process of updating the documentation of transactions with associated enterprises during the financial year and expects such records to be in existence latest by the due date as required under that law. The management is of the opinion that the above transactions are at arm's length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

3.9 Previous year figures have been regrouped / reclassified wherever considered necessary.

Mar 31, 2014

1. Background

Kuantum Papers Limited("the Company") is a Company incorporated under the provisions of the Companies Act, 1956.

The Company is listed on Bombay Stock Exchange. The Company''s business primarily consists of manufacture and sales of paper, mainly in the domestic markets. The manufacturing facilities and registered office of the Company are situated in Saila Khurd, District Hoshiarpur in the State of Punjab, with corporate office in Chandigarh.

2. Reconciliation of share capital outstanding as at the beginning and at the end of the year

a) During the current year and in the previous year, there has been no movement in the number of equity shares outstanding.

b) 10% redeemable non cumulative preference shares of Rs. 10 each fully paid up

3. Rights, preferences and restrictions attached to each class of shares

a) Equity shares of Rs. 10 each, fully paid up

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share.

The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders (except for interim dividend) in the ensuing Annual General Meeting.

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

b) 10% non-cumulative redeemable preference shares of Rs. 10 each, fully paid up

The Company has only one class of preference shares having a par value of Rs. 10 per share. Preference shareholders do not hold any voting rights.

The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

The preference shareholder acquire voting right on par with equity shareholders if dividend on preference shares remain unpaid for a period of not less then 2 years or for any three years during a period of six years ending with financial year preceding the meeting. In the event of liquidation of the Company, the holders of preference shares will be entitled to receive the amount of their preference capital contribution before distribution of the remaining assets to the equity shareholders.

The preference shares are redeemable in 5 equal instalments of Rs. 600 lacs each at the end of 8th, 9th, 10th, 11th and 12th year, from the date of allotment, i.e., 13 September 2013.

4. Disclosure pursuant to note 6(A)(i) of Part I of Schedule VI to the Companies Act, 1956

Aggregate of bonus shares issued, shares issue for consideration other than cash and shares brought back during the period of five years immediately preceding the reporting date is Nil (previous year Nil).

* During the year, 300 lacs, 10% Redeemable Preference shares, amounting to Rs. 3,000, were issued at a price of Rs. 10 per share to certain existing shareholders belonging to the Promoters group by converting unsecured loans.

Footnotes:1

[1] Term Loan of:

a. Rs. 3,339.12 (previous year Rs. 4,835) are secured by a first parri passu charge on all the fixed assets (immovable and movable) of the Company, both present and future alongwith equitable mortgage of factory land and building at Sailakhurd and second charge on the current assets. The said loans are also secured by personal guarantees of directors.

b. Rs. 3,450 (previous year Rs. 3,850) is secured by a first parri passu charge on fixed assets (immovable and movable) of the Company, both present and future, alongwith equitable mortgage of factory land and building at Sailakhurd and second charge on the current assets. The said loans are also secured by personal guarantees of directors. The term loan is also secured by pledge of 10,00,000 equity shares of the Company by an associate company.

c. Rs. 1,135.75 (previous year Rs. 2,557.41) is secured by a first parri passu charge on all the fixed assets (immovable and movable) of the Company, both present and future, alongwith equitable mortgage of factory land and building at Sailakhurd . The said loans are also secured by personal guarantees of directors.

d. The rate of interest on the loans ranges from 13.30% to 14% per annum.

During the year ended 31 March 2013 while filing its income tax return for the financial year 2011-12, the Company had exercised its option to claim tax holiday exemption for ten years in relation to its certain activities. However, inadvertently, the computation of deferred taxation for the previous year did not consider the consequential impact thereof. In the current year, deferred tax has been corrected and consequential adjustment in the form of deferred tax credit of Rs. 436.27 has been recorded. As a result, profit for the year after tax is higher by Rs. 436.27.

Footnotes:2

[1] Working capital loans are secured by hypothecation of all current assets, second charge on the fixed assets of the Company and personal guarantees of directors. The rate of interest on the loans is 13% per annum. [2] The rate of interest on public deposits for maturity period for one year varies from 10.50% to 11% per annum.

[2] The rate of interest on intercorporate deposits is 12% per annum.

5. Contingent liabilities and commitments

Particulars As at As at 31 March 2014 31 March 2013

a) Claims against the Company not acknowledged as debts

* Income tax matters 394.73 7.57

* Excise duty matters 1,303.73* 1,017.34

b) Capital commitments

Estimated amount of contracts remaining to be executed on 176.73 316.81

capital account and not provided for (net of advances)

* Includes Rs. 549.28 (previous year Rs. 384.05)which has been vacated vide order of Commissioner dated 3 April 2014.

c) During the year2011-12, a search was carried out by the Income tax authorities at various premises of the Company. The assessments are under progress. The management has assessed its position and is of the view that it would not have any impact on the financial statements of the Company as at and for the year ended 31 March 2014.

6. Borrowing costs amounting to Rs. 248.30 (previous year Rs. 381.34included in CWIP) attributable to acquisition and construction of fixed assets have been capitalized during the year.

7. The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Based on the information presently available with the management, there are no dues outstanding to micro and small enterprises covered under the Micro, Small and Medium Enterprises Development Act, 2006. Further, the Company has not received any claim for interest from any suppliers under the said Act.

$ Includes Rs. 1,756 transfer from Ambalica Enterprises Private Limited consequent to merger with Esteem Finventures Limited during the previous year.

# includes public deposits matured and renewed during the year.

8. Segment information

The Company is engaged in the business of manufacture and sale of paper, primarily in India and nearby markets, which is a primary segment for the Company and constitutes a single business segment. Accordingly, disclosure requirements of Accounting Standard 17 "Segment Reporting", prescribed by the Companies (Accounting Standards) Rules, 2006 in relation to segment reporting is not given.

9. Leases

Operating leases

The Company has taken office and residential premises under cancellable operating lease agreements.

Lease payments charged during the year in Statement of Profit and Loss aggregate Rs. 44.91lacs (previous year Rs. 41.83lacs).

Finance leases

The Company acquires certain computer equipment under finance lease which had been capitalized as a part of computers under fixed assets. At the end of lease period, the Company has the option either to terminate the lease and return the asset or renew the lease.

10. Disclosures pursuant to Accounting Standard 15 on "Employee Benefits":

Defined contribution plans

The Company''s provident fund scheme and employee''s state insurance (ESI) fund scheme are defined contribution plans. The Company has recorded expenses of Rs. 155.68 (previous year Rs. 138.42) under provident fund scheme and Rs.53.91 (previous year Rs. 47.23) under ESI scheme. These have been included in note 2.5 Employees benefits expenses, in the Statement of Profit and Loss.

Defined benefit plans

Gratuity (funded)

Gratuity is payable to all eligible employees of the Company on superannuation, death or permanent disablement, in terms of the provisions of the Payment of Gratuity Act or as per the Company''s Scheme, whichever is more beneficial.

The discount rate is based on the prevailing market yields of Indian government securities as at the balance sheet date for the estimated term of the obligations.

The salary escalation rate is based on estimates of salary increases, which take into account inflation, promotion and other relevant factors.

*The Company is not informed by the insurer (Life Insurance Corporation of India) of the investment made by it or the break - down of plan assets by investment type.

* Gratuity and leave encashment have been provided on an actuarial basis for the Company as a whole. Accordingly, separate figures are not available on an individual basis and, thus, not included.

11. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961. Since the law requires such information and documentation to be contemporaneous in nature, the Company is in the process of updating the documentation of transactions with associated enterprises during the financial year and expects such records to be in existence latest by the due date as required under that law. The management is of the opinion that the above transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

12. Previous year figures have been regrouped / reclassified wherever considered necessary.

Mar 31, 2013

1.1 Background

Kuantum Papers Limited (formerly known as ABC Paper Limited) ("The Company" ) is a Company incorporated under the provisions of the Companies Act, 1956.

The Company is listed on Bombay Stock Exchange. The Company''s business primarily consists of manufacture and sales of paper, mainly in the domestic markets. The manufacturing facilities and registered office of the Company are situated in Saila Khurd, District Hoshiarpur in the State of Punjab, with corporate office in Chandigarh.

2.1 Borrowing costs amounting to Rs. Nil (previous year Rs. 24.19 lacs) attributable to acquisition and construction of fixed assets have been capitalized during the year.

2.2 Based on the information presently available, there are no amounts due to any micro or small enterprises under the Micro, Small and Medium Enterprises Development Act, 2006.

2.3 Segment information

The Company is engaged in the business of manufacture and sale of paper, primarily in India and nearby markets, which is a primary segment for the Company and constitutes a single business segment. Accordingly, disclosure requirements of Accounting Standard 17 "Segment Reporting", prescribed by the Companies (Accounting Standards) Rules, 2006 in relation to segment reporting is not given.

2.4 Leases

Operating leases

The Company has taken office and residential premises under cancellable operating lease agreements. Lease payments charged during the year in Statement of Profit and Loss aggregate Rs. 41.83 lacs (previous year Rs. 29.68 lacs).

Finance leases

The Company has, during the previous years, acquired computer equipment under finance lease which had been capitalized as a part of computers under fixed assets. At the end of lease period, the Company has the option either to terminate the lease and return the asset or renew the lease.

2.5 Disclosures pursuant to Accounting Standard 15 on "Employee Benefits"

Defined contribution plans

The Company''s provident fund scheme and employees'' state insurance (ESI) fund scheme are defined contribution plans. The Company has recorded expenses of Rs. 138.42 lacs (previous year Rs. 121.19 lacs) under provident fund scheme and Rs.47.23 lacs (previous year Rs. 44.18 lacs) under ESI scheme. These have been included in note 2.5 Employees benefits expenses, in the Statement of Profit and Loss.

Defined benefit plans

Gratuity

Gratuity is payable to all eligible employees of the Company on superannuation, death or permanent disablement, in terms of the provisions of the Payment of Gratuity Act or as per the Company''s Scheme, whichever is more beneficial.

2.6 The Company''s exposure in respect of foreign currency denominated liabilities not hedged by derivative instruments is as follows

2.7 Previous year figures have been regrouped / reclassified wherever considered necessary.

Mar 31, 2012

1.1 Background

Kuantum Papers Limited (formerly ABC Paper Limited) ("The Company") is a limited Company incorporated under the provisions of the Companies Act, 1956.

The Company is listed on Bombay Stock Exchange.

The Company's business primarily consists of manufacture and sales of paper, mainly in the domestic markets. The Company's name has changed from ABC Paper Limited to Kuantum Papers Limited w.e.f. 30 March 2012.

2.1 Contingent liabilities and commitments

Particulars As at As at 31 March 2012 31 March 2011

a) Claims against the Company not acknowledged as debts

- Income tax matters 7.57 394.73

- Excise duty matters 749.75 749.75

b) Capital commitments

Estimated amount of contracts remaining to be executed on 2266.12 882.39 capital account and not provided for (net of advances)

c) Guarantees given by the Company on behalf of other parties. - 720.00

d) During the year, a search was carried out by the Income tax authorities at various premises of the Company and the assessments are under progress. The management has assessed its position and is of the view that it would not have any impact on the financial statements of the Company as at and for the year ended 31 March 2012.

3.3 Borrowing costs amounting to Rs.24.19 lacs (previous year Rs. 14.25 lacs) attributable to acquisition and construction of fixed assets have been capitalized during the year.

3.4 Based on the information presently available, there are no amounts due to any micro or small enterprises under the Micro, Small and Medium Enterprises Development Act, 2006.

3.5 The Company had a joint venture with Granit Research Development S.A. of Switzerland for treatment of black liquor through a process "Lignin Precipitation System (LPS)" plant in joint venture company (hereinafter referred as JV) under the name of "Greencone Environs Private Limited". The Company had invested a sum of Rs. 129.83 Lacs in equity (49.62%) and had an outstanding unsecured loan of Rs. 600.00 Lacs as on 31 March 2010.

During the previous year, consequent to an arrangement with a party, the investment was sold at par value and the value of investment amounting to Rs. 129.83 lacs earlier provided for, was written back. The Company had also received back the entire unsecured loan of Rs. 600.00 lacs during the previous year.

Pursuant to Accounting Standard (AS) 27 - Financial Reporting on interest in Joint Venture, the disclosures relating to the joint-venture viz., Greencone Environs Private Limited are as follows:

(a) As at 31 March 2012 and 31 March 2011, the Company did not have any interest in Greencone Environs Private Limited.

3.7 Segment information

The Company is engaged in the business of manufacture and sale of paper, primarily in India and nearby markets, which is a primary segment for the Company and constitutes a single business segment. Accordingly, disclosure requirements of Accounting Standard 17 "Segment Reporting", prescribed by the Companies (Accounting Standards) Rules, 2006 in relation to segment reporting is not given.

3.8 Leases

Operating leases

The Company has taken office premises and residential premises under operating lease agreements.

Lease payments charged during the year in Statement of Profit and Loss aggregate Rs. 29.68 lacs (previous year Rs. 28.20 lacs). Finance leases

The Company has, during the previous year, acquired computer equipment under finance lease which had been capitalized as a part of computers under fixed assets. At the end of lease period, the Company has the option either to terminate the lease and return the asset or renew the lease.

3.10 Disclosures pursuant to Accounting Standard 15 on "Employee Benefits"

Defined contribution plans

The Company's provident fund scheme and employee state insurance (ESI) fund scheme are defined contribution plans. The Company has recorded expenses of Rs. 121.19 lacs (previous year Rs. 101.90 lacs) under provident fund scheme and Rs.44.18 lacs (previous year Rs. 36.87 lacs) under ESI scheme. These have been included in note 2.5 Employees benefits expenses, in the Statement of Profit and Loss.

Defined benefit plans

Gratuity

Gratuity is payable to all eligible employees of the Company on superannuation, death or permanent disablement, in terms of the provisions of the Payment of Gratuity Act or as per the Company's Scheme, whichever is more beneficial.

The discount rate is based on the prevailing market yields of Indian government securities as at the balance sheet date for the estimated term of the obligations.

The salary escalation rate is based on estimates of salary increases, which take into account inflation, promotion and other relevant factors.

* Gratuity and leave encashment have been provided on an actuarial basis for the Company as a whole. Accordingly, separate figures are not available on an individual basis and, thus, not included.

The management remuneration paid/accrued during the year is in excess of the prescribed limits, by Rs. 29.06 lacs. The company has initiated an application for the approval with the Central Government, which is expected shortly.

3.23 In respect of major debtors, creditors and others balance confirmations have been received by the auditors from few parties. The balances of other parties have been incorporated in the financial statements at the value as per the books of account. The Company has considered them as good and necessary provisions have been made in respect of debtors/advances where recovery is considered doubtful.

3.24 The financial statement for the year ended 31 March 2011 had been prepared as per the then applicable pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification of the revised schedule VI under the Companies Act, 1956, the financial statement for the year have been prepared as per revised schedule VI. Accordingly, the previous year figures have been classified to conform this year classification. The adoption of revised schedule VI for the previous year figures does not impact the recognition and measurement principles followed for the preparation of the financial statements.

Mar 31, 2011

1. Background

ABC Paper Limited ("the Company"), is a limited Company incorporated under the provisions of the Companies Act, 1956.

The Company is listed on Bombay Stock Exchange. The Company has voluntarily delisted itself from the Kanpur Stock Exchange with effect from 14 March 2011.

The Company's business primarily consists of manufacture and sales of paper, mainly in the domestic markets.

2. Contingent liabilities and capital commitments

As at As at 31 March 31 March 2011 2010

a) Claims against the Company not acknowledged as debts

- Income tax matters 3,94,72,648 7,57,000

- Excise duty matters 7,49,74,923 6,61,78,233

b) Estimated amount of contracts remaining to be executed 8,82,38,626 5,84,42,685 on capital account and not provided for (net of advances)

c) Guarantees given by the 7,20,00,000 7,20,00,000 Company on behalf of other party #

# In the previous years, the Company had given a corporate guarantee of Rs. 7,20,00,000 (previous year Rs.7,20,00,000) in favour of a bank in consideration of their granting credit facilities of Rs.7,20,00,000 to Greencone Environs Private Limited (a joint venture company upto 6 July 2010) for setting up of a Lignin Precipitation System "LPS Project" at Sailakhurd, for which the Company is contingently liable. The outstanding loan as on 31 March 2011 is Rs. 49,24,985 (previous year Rs.1,48,50,000). The Company has received a counter guarantee from one of the present joint venturers in "Greencone Environs Private Limited", in respect of the guarantee given by the Company.

d) Subsequent to the year-end, a search was carried out by the Income tax authorities at various premises of the Company and the assessments are under progress. The management has assessed its position and is of the view that it would not have any impact on the financial statements of the Company as at and for the year ended 31 March 2011.

3. Borrowing costs amounting to Rs. 14,25,220 (previous year Rs. 2,70,60,179) attributable to acquisition and construction of fixed assets have been capitalized during the year.

4. Based on the information presently available, there are no amounts due to any micro or small enterprises under the Micro, Small and Medium Enterprises Development Act, 2006.

5. During the previous year, the Company had received Rs.1,00,14,000 from the Ministry of New and Renewable Energy as Government's contribution towards the capital outlay for installing a 10 MW Bio-mass Cogeneration Plant for the captive use of the Company. The amount was shown as a capital reserve.

6. The Company had a joint venture with Granit Recherche Developpement S.A. of Switzerland for treatment of black liquor through a process "Lignin Precipitation System (LPS)" plant in joint venture company (hereinafter referred as JV) under the name of "Greencone` Environs Private Limited". The Company had invested a sum of Rs. 1,29,83,000 in equity (49.62%) and had an outstanding unsecured loan of Rs. 5,99,99,725 as on 31 March 2010.

During the year, consequent to an arrangement with a party, the investment has been sold at par value and the value of investment amounting to Rs. 1,29,83,000 earlier provided for in the previous year has been written back in the current year. The Company has also received back the entire unsecured loan of Rs. 5,99,99,725 during the year.

Pursuant to Accounting Standard (AS) 27 Ã Financial Reporting on interest in Joint Venture, the disclosures relating to the joint-venture viz., Greencone Environs Private Limited are as follows:

(a) As at 31 March 2011, the Company does not have any interest in Greencone Environs Private Limited. As at 31 March 2010, the proportion of interest of the Company in the JV was by way of equity participation to the extent of 49.62%;

7. Related party transactions

A. Related parties where control exists : None

B. Related parties transactions and nature of related party relationships

Description of relationship Name of the party

Other related parties where transactions have taken place

(a) Key management personnel and Mr. J.K. Khaitan, Chairman individuals owning, directly or and Managing Director * indirectly, an interest in the Mr. Pavan Khaitan, Managing voting power of the reporting Director enterprise that gives them control Mr. N.K.Bajaj** or significant influence over the enterprise

(b) Enterprises over which, Pooja Gases Private Limited** individuals (together with their Pushpak Finvest Private relatives) mentioned in (a) Limited** above have significant influence United Holding Private Limited** Amrit Corp Limited** Amrit Banaspati Company Limited** Combine Overseas Limited

(c) Joint ventures # Greencone Environs Private Limited

(d) Investing party in respect Esteem Finventures Limited of which the company is an associate

* appointed as a Chairman and Managing Director with effect from 17 July 2010

** with effect from 16 July 2010, Mr. N K Bajaj ceased to be the Chairman and Managing Director and, therefore, transactions have been disclosed till 16 July 2010

# upto 6 July 2010, Greencone Environs Private limited was a joint venture company (refer note 8 above).

8. Segment information

The Company is engaged in the business of manufacture and sale of paper, primarily in India and nearby markets, which is a primary segment for the Company and constitutes a single business segment. Accordingly, disclosure requirements of Accounting Standard 17 "Segment Reporting", prescribed by the Companies (Accounting Standards) Rules, 2006 in relation to segment reporting is not given.

9. Leases

Operating leases

The Company has taken office premises and residential premises under operating lease agreements. Lease payments charged during the year to Profit and Loss Account aggregate Rs. 28,20,170 (previous year Rs. 23,23,775).

Finance leases

The Company has, during the year, acquired computer equipment under finance lease which has been capitalized as a part of computers under fixed assets. At the end of lease period, the Company has the option either to terminate the lease and return the asset or renew the lease.

10. Disclosures pursuant to Accounting Standard 15 on "Employee Benefits":

Defined contribution plans

The Company's provident fund scheme and employee state insurance (ESI) fund scheme are defined contribution plans. The company has recorded expenses of Rs. 1,11,28,967 (previous year Rs. 84,90,633) under provident fund scheme and Rs.36,86,695 (previous year Rs.19,76,901) under ESI scheme. These have been included in schedule 12 'Employees' remuneration and benefits', in the Profit and Loss account.

Defined benefit plans

Gratuity

Gratuity is payable to all eligible employees of the Company on superannuation, death or permanent disablement, in terms of the provisions of the Payment of Gratuity Act or as per the Company's Scheme, whichever is more beneficial.

11. The statutory auditors have issued letters of confirmations in duplicate to major debtors, creditors and others for confirming their balances. Balance confirmations have been received from certain parties. The balances of other parties have been incorporated in the financial statements at the value as per the books of account. The Company, to the extent stated, has considered them as good and necessary provisions have been made in respect of debtors/advances where recovery is considered doubtful.

12. Previous year figures have been audited by another firm of Chartered Accountants.

13. Previous year figures have been regrouped/reclassified, wherever necessary, in order to conform to current year's classifications.

Mar 31, 2010

1. Claims/demands against the company not acknowledged as debts and against which no provision has been made aggregate to Rs. 6,69,35,233/- (Previous YearRs. 10,61,41,071).

2. Estimated amount of contracts remaining to be executed on capital account and not provided for as at 31s March, 2010 amounted to Rs.5,84,42,685/- (Previous Year Rs. 9,98,58,972/-).

3. Borrowing costs amounting to Rs, 2,70,60,179/- (Previous Year Rs. 6,62,09,921) attributable to acquisition and construction of fixed assets has been capitalized during the year.

4. The company has given a corporate guarantee of Rs. 720 lacs in favour of the State Bank of India (SBI) in consideration of their granting credit facilities of Rs. 720 lacs (term loan of Rs. 520 lacs and working capital facilities of Rs.200 lacs) to M/s Greencone Environs Pvt. Ltd. for setting up of a Lignin Precipitation System "LPS Project" at Sailakhurd for which the company is contingently liable. The working capital facilities were not availed by the company. The outstanding term loan as on 31.03.10 is Rs. 148.50 lacs.

5. There are no Micro, Small and Medium Enterprises to whom the company owes dues which are outstanding for more than 45 days as on the Balance Sheet date. The information required to be disclosed under the Micro, Small & Medium Enterprises Development Act, 2006, to be determined to the extent such parties have been identified on the basis of information available with the company. Accordingly the information as required under Micro, Small & Medium Enterprises Development Act, 2006 (MSMED) is not required to be provided.

6. The company received Rs. 100 lacs from the Ministry of New and Renewable Energy as Governments contribution against the capital outlay for installing a 10 MW Bio-mass Cogeneration Plant for the captive use of the company. As per Accounting Standard 12 and Accounting Policy followed by the company, the amount has been shown as a capital reserve which will neither be considered as deferred revenue nor will it be available for distribution as dividend.

7. The Auditors have issued letters of confirmation in duplicate to major debtors, creditors, depositors & others for confirming their balances. Balance confirmations have been received from major parties, except some parties whose outstanding are not material and some of whom are in dispute and/or under litigation with the Company. The balances of such parties have been incorporated in the financial statements at the value as per the books of account. The company, to the extent stated, has considered them as good and necessary provisions have been made in respect of debtors/advances under litigation and where recovery is considered doubtful.

8. The company has a joint venture with M/s Granit Recherche Developpement S.A. of Switzerland for treatment of black liquor through a process "Lignin Precipitation System (LPS)" plant in joint venture Company (hereinafter referred as JV) under the name of "M/s Greencone Environs Pvt. Ltd." The company has invested a sum of Rs. 1,29,83,000/- towards equity (49.62%) and given an unsecured loan of Rs 5,99,99,725/- as on 31.03.2010. The net worth of the JV has been eroded; and as an abundant caution, full provision for diminution in the value of investment has been made during the year. Pursuant to AS-27-"Financial Reporting on interest in Joint Venture", the disclosures relating to the joint-venture viz., M/s Greencone environs Pvt. Ltd. are as follows:

(a) The proportion of interest of the Company in the JV is by way of equity participation to the extent of 49.62%;

(c) The companys share of capital commitment in the JV as on 31st March, 2010 is Rs. Nil (previous year Rs. Nil).

(d) The companys share of contingent liabilities of the JV as on 31st March, 2010 is Rs. Nil (previous year Rs. Nil).

(e) There was no contingent liability outstanding as on 31 st March, 2010 in relation to the companys interest in the JValongwith the co-venturer.

9. Related Party Disclosure

A. Related Parties

(i) Key Managerial Personnel *Mr N K Bajaj, Chairman & Managing Director

Mr Pavan Khaitan, Managing Director

(ii) Associate Companies M/s Amrit Corp Ltd (ACL)

M/s Amrit Banaspati Company Ltd (ABCL)

M/s Esteem Finventures Ltd (Esteem)

M/s Greencone Environs Pvt Ltd (Greencone)

(iii) Entities/Parties over which key M/s Pooja Gases Pvt Ltd

managerial personnel are able to M/s Pushpak Finvest Pvt Ltd

exercise significant influence M/s United Holdings Pvt Ltd

* With effect from 16th July 2010, Mr. N. K. Bajaj ceased to be the Chairman & Managing Director.

10. Segment information

The Companys activities are covered in only one business segment i.e. manufacturing and selling of Writing & Printing Paper and therefore no segment information for the year ended 31st March, 2010 is required to be given.

11. Fixed Assets acquired under finance lease

Disclosure in respect of assets taken on lease under Accounting Standard AS-19 "Accounting for Leases" issued by the Institute of Chartered Accountants of India. (1) General description of thefinance lease

The Company has entered into finance lease arrangements for vehicles. Some of the significant terms and conditions of such leases are as follows:

Renewal for a further period on such terms and conditions as may be mutually agreed upon between lesser and the company.

Assets to be purchased by the company or the nominee appointed by the company at the end of the lease term.

Notes:

(a) The estimates of future salary increases, considered in actuarial valuation, takes into account the inflation, seniority, promotion and other relevant factors;

(b) The liability towards the earned leave for the year ended 31 st March, 2010, based on actuarial valuation amounting toRs. 17.09 lacs has been recognized in the profits loss account.

(c) The fair value of plan assets is Rs. 185.31 lacs which have been maintained with LIC policy (Rs. 109.84 lacs) and securities of Rs. 75.85 lacs transferred by the trust hitherto governed by Amrit Corp. Ltd. (Erstwhile Amrit Banaspati Co. Ltd. before scheme of arrangement). The securities will be encashed on maturity dates and funds will be deposited with LIC.

11. The previous years figures have been regrouped/re-arranged, wherever necessary, to make them comparable with the f igures for the current year.`

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