Notes to Accounts of Lime Chemicals Ltd.

Mar 31, 2014

1. CORPORATE INFORMATION

The Company is engaged in the manufacturing Calcium Carbonate. It is used as input material in various industrial sectors including Tooth Paste, Pharmaceuticals, PVC products, Rubber, Plastic, Polymer, Cable, Leather, Paper and Paints.

2. Foot Note:

*Includes Rs. Nil (P.Y. Rs. 2,098 thousand) from Development Credit Bank Ltd. ( DCB ) secured by way of first charge on pari passu basis on the Company''s immovable properties and movable Plant & Machineries both present & future situated at Roha & Paonta factory and upto Rs.1,48,200 thousand including term loan and demand loans was guaranteed by two Directors of the Company. After loan balance have been settled under OTS, the charge amounting to Rs. 2500 thousand is cancelled from 30th July, 2013 vide MCA Memorandum dated 19th August 2013.

*Includes Rs. Nil (P.Y. Rs. 60,000 thousand) from Axis Bank Ltd secured by way of first charge on pari passu basis on the Company''s immovable properties and movable Plant & Machineries both present & future situated at Roha & Paonta factory and upto Rs. 60,000 thousand was guaranteed by one Director of the Company and one Ex-Director of the Company.

** Rs.253 thousand (P.Y. Rs. 2,298 thousand) from Pegasus Assets Reconstructions P Ltd Secured by Equitable Mortgage of Company Office Premises at New Delhi and upto Rs. 13,500 thousand is guaranteed by one Ex-Director of the Company .

As at As at 31st March, 31st March, 2014 2013 3. Contingent Liabilities Rupees Rupees

Corporate Guarantees issued to Bank U.S. $2.20 Million (P.Y. U.S. 132,219,560 119,526,660 $ 2.20 Million)

Disputed Income Tax Demand 11,411,770 8,896,000

Disputed Sales Tax Demand 9,134,000 9,134,000

Disputed Profession Tax Demand 872,555 -

Total 153,637,885 137,556,660

No provision is presently considered necessary for above mentioned various tax demands which are unde various stages ff appeal as the Company is of the view that the said demands are not sustainable in law.

4. The company is engaged in manufacturing of Calcium Carbonate which is considered the only repc business segment, as per Accounting Standard 17 -''Segment Reporting''; hence segment reporting is not

5. Defined Benefit Plans

The Employee''s Gratuity Fund Scheme managed by a Trust is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes 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 estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and relevant factors including supply and demand in the employment market. The above information is certified by the Actuary.

6. The Company had received the demand notices for A.Y. 2006-07 from the Income Tax authorities for Income tax and fringe benefit tax inclusive of interest for Rs. 52,73,000/- and Rs. 4,54,000/- respectively. Company had Rs. 4,57,000/- net provisions standing in the books against the Mat Liability for AY 2006- 07. Company has filed rectification application to Income Tax Department for non allowance of carry forward losses as it was allowed to the Company vide ITAT order dated 21.11.08 i.r.o. AY 2002-03. Considering the above, the Management is of the opinion that no further provision need to be made in these respect.

7. The balance due to / from parties are subject to confirmation.

8. No provision for Income tax under MAT, for the current year is made as the Company is registered with BIFR as a sick Company.

9. The Company is registered as a sick Industrial Company with the Board for Industrial and Financial Reconstruction (BIFR) under the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). As directed by BIFR, Bank of Baroda, the Operating Agency (O.A.) to submit fully tied up Draft Rehabilitation Scheme (DRS) to BIFR.

10. The company continues to disclose its results on the concept of going concern in spite of the fact of erosion of 100% of its net worth. The Company relies on the possible outcome of the BIFR application and one time settlement reached with lender banks/financial institutions and creditors.

11. In terms of One Time Settlement with DCB Bank Ltd. and Axis Bank Ltd. a sum of Rs. 1,62,25,298/- and Rs.2,55,33,528/- respectively representing the principal amount of Term Loan/Cash Credit has been waived off. The said amounts have been transferred to General Reserve.

12. On the basis of ''No Dues'' letter dated 18th March, 2014 of Axis Bank Ltd. an amount of Rs. 3,40,46,472/- has been recognised in the year under audit as long term borrowings being amount paid by Dr. Akabar Virani to Axis Bank Ltd. till March 2012 towards repayment of loan on behalf of the Company. During the year the Company has accepted deposits amounting to Rs. 6,37,88,477/- (including above amount) in violation of section 58A of Companies Act, 1956.

13. In the opinion of Board of Directors all assets other than non-current investments, have a realisable value in the ordinary course of business which is not different from the amount at which it is stated and the provisions for all known liabilities are adequate and not in excess of the amounts reasonably necessary.

14. No personal expenses have been debited to Profit and Loss Account except those payable under contractual obligation or normal business practices.

15. Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.

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Mar 31, 2013

1. Contingent Liability not provided for in respect of :

(i) Uncalled liability on shares of Rs.1,50,000 (Previous year Rs.1,50,000)

(ii) Income Tax demand for AY 1994-95 and AY 1997-98 Rs. 24,86,000 (Previous year Rs.24,86,000) is disputed and appeal fled in High Court.

(iii) Income Tax Demand for A.Y. 2005-06 of Rs. 64,10,000 (Previous year Rs. 64,10,000) is disputed and appeal fled in Tribunal.

(iv) Corporate Guarantee given to ICICI Bank on behalf of Himachal Polylefns Ltd. US $ 2.20 million equivalent to approx Rs.11,95,26,660 (Previous year Rs.11,25,30,000).

(v) Bombay Sales Tax and Central Sales Tax Demand for F.Y. 2004-05 of Rs.91,34,000 (Previous year Rs.91,34,000) is disputed and appeal fled in Tribunal.

2. The company is engaged in manufacturing of Calcium Carbonate which is considered the only reportable business segment, as per Accounting Standard 17 -‘Segment Reporting''; hence segment reporting is not given.

3. Related party disclosure as required by Accounting Standard 18 "Related Party Disclosures” are given below: a) Name of related parties and description of relationship:

1) Associates:

SilvoLiacal Chemicals Limited

Diamond Jubilee Stores

Pearl Enterprises

Himachal Polylefns Ltd.

Sahid Investment & Trading Company Pvt Ltd

2) Key Managerial Personnel: Shri.H.I.Dawoodani Shri.A.H.Dawoodani

3) Relative of Key Managerial Personnel:

Smt. S. A. Dawoodani (Wife of Shri A. H. Dawoodani ) Shri Rahim A. Dawoodani (Son of Shri A.H. Dawoodani) Miss. Zahara A. Dawoodani (Daughter of Shri A.H. Dawoodani)

4. Defned Beneft Plans

The Employee''s Gratuity Fund Scheme managed by a Trust is a defned beneft plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee beneft entitlement and measures each unit separately to build up the fnal obligation.

Liability for Leave Encashment is made also based on the Actuarial Valuation using the above method. Company has obtained actuarial services for computing Leave Encashment liability frst time during this year.

5. The Company has received the demand notices for A.Y. 2006-07 from the Income Tax authorities for Income tax and fringe beneft tax inclusive of interest for Rs.5,273,000 and Rs. 454,000 respectively. Company had Rs. 457,000net provisions standing in the books against the Mat Liability for AY 2006-07. Company has fled rectifcation application to Income Tax Department for non allowance of carry forward losses as it was allowed to the Company vide ITAT order dated 21.11.08 i.r.o. AY 2002-03. Considering the above, the Management is of the opinion that no further provision need to be made in these respect.

6. The Balances of Trade Receivables Rs.5,57,93,519 , Trade Payables Rs.13,06,33,963, Long Term Loans and Advances Rs.1,07,72,064 Short Term Loans and Advances Rs.25,29,929 ,Long Term Borrowings Rs.24,81,00,857, Short Term Borrowing Rs. 4,59,16,190, Other Long Term Liabilities Rs. 4,00,000 , and Other Current Liabilities Rs. 23,65,46,239, are subject to confrmation, reconciliation and adjustment, if any. The Management is of the opinion that any adjustment on the above may not have a material effect on the account.

7. No provision for Income tax for the current year is made considering the accumulated losses of the Company and also, it is being registered with BIFR as a sick Company.

8. Deposits u/s 58A outstanding as on 31.3.2013 are Rs.1,28,03,988 of which Rs. 1,04,58,950 are due within one year.

9. Considering the provisions of the Companies Act 1956, and Schedule XIII thereto, Managing Directors/ Managers of the Company are not eligible for any remuneration as the Company has not complied with the proviso to clause C of section II of Part II to the Schedule XIII to the Companies Act 1956 for payment of Minimum Remuneration to the Managing Directors. Total remuneration paid during the year Rs.11,25,000 (PY Rs. 32,68,056 )

10. As on 31.3.2013, Mr Husain I Dawoodani (Director) and Mr Ahmed H Dawoodani (Managing Director) is disqualifed to be appointed as a director of the Company in terms of provision of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956. Further, both directors are disqualifed to be appointed as a director of any other Public Company in terms of provision of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956 for a period of 5 years from the date of disqualifcation.

11. Vide order issued by the Board for Industrial and Financial Reconstruction (BIFR) on 23.03.2010 the company has been declared a sick industrial company. As directed by BIFR the company is in the process of framing fully tied up Draft Rehabilitation Scheme (DRS) for submission to Bank of Baroda, the Operating Agency (O.A.) appointed by BIFR in this regard.

12. The Company has not appointed full time Company Secretary during the year. Consequent to above accounts are not signed by Company Secretary.

13. During the year under report, a sum of Rs.2,53,35,636 representing the principal outstanding balance waived in the cash credit facility enjoyed with Bank of Baroda and Rs. 70,42,944 representing the balance outstanding waived in term loan account with Bank of Baroda have been transferred to General Reserve. In the opinion of the management, the company stands absolved of the above liability pursuant to the repayment of principal amount due and payable in terms of one time settlement entered into with the bank. However no dues certifcate in respect of the said accounts settled with the bank is yet to be obtained by the company.

14. Previous year''s fgures have been regrouped, rearranged and/or recasted wherever necessary to correspond to the fgures of current year and are in line with Revised Schedule VI.

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Mar 31, 2011

1. a) Contingent Liability not provided for in respect of :

(i) Uncalled liability on shares of Rs.150 thousand (Previous year Rs.150 thousand )

(ii) Income Tax demand for AY 1994-95 and AY 1997-98 Rs. 2486 thousand (Previous year Rs. 2486 thousand) is disputed and appeal filed in High Court.

(iii) Income Tax Demand For A.Y. 2005-06 of Rs. 6410 thousand (Previous year Rs. 6410 thousand) is disputed and appeal filed in Tribunal.

(iv) Corporate Guarantee given to ICICI Bank on behalf of Himachal Polylefins Ltd. US $ 2.20 million equivalent to approx Rs 98230 thousand (Previous year Rs. 102000 thousand).

(v) Bombay Sales Tax and Central Sales Tax Demand for F.Y. 2004-05 of Rs. 9134 thousand (Previous year Rs. NIL thousand) is disputed and appeal filed in Tribunal.

2. (A) The Company has an investment of 839,700 shares of Regent Chemicals Ltd. (RCL) of Rs. 10/- each acquired at a aggregate cost of Rs.8280 thousand ( market value Rs. 1679 thousand as at 15.09.2004 being the last traded date) .RCL has incurred substantial losses as of the balance Sheet date i.e. 31st March, 2011, as compared to its paid up Capital and Reserves. RCL has shut down its manufacturing operation in May 1993. In view of the above, the said investment has been write off from the books of accounts during the current year and shown at the nominal cost of Re1/- as on 31st March,2011.

(B) In respect of Investment in M/s Lloyd Finance Limited – Rs 260 thousand (6300 equity shares of Rs. 10/ each), the provision has been made in the books towards diminution in the value of investment of Rs. 254 thousand and the investment is valued at Rs 6.3 thousand as on 31st March, 2011. (C) The company has an investment in M/s Gold Crest finance limited Rs 50 thousand ( 5000 equity shares of Rs 10/- each, partially paid Rs 5/- per shares).Since long time, the said investment remained to be partially paid till date, in spite of the fact that the balance amount of Rs 5/- per share had been called by the said Company and as such , the investment might have been forfeited by the said company. In line with the same the diminution in the said Investment to the tune of Rs 49.9 thousand has been made in the books of accounts and shown at the nominal cost of Re1/- as on 31st March, 2011.

D) The Company has an investment of 3, 14,750 shares of Silvo Lical Chemicals Ltd. (SLCL) of Rs. 10/- each acquired at a aggregate cost of Rs. 3006 thousand .These shares pertains to one of the group Companies and the said Company (SLCL) has incurred substantial losses as of the balance Sheet date i.e 31st March, 2011, as compared to its paid up Capital and Reserves. In view of the above a provision for diminution in the value of the said investment has been made in the books of accounts during this year of Rs 3006 thousand and shown at the nominal cost of Re1/- as on 31st March, 2011. None of the above investments are available for physical verification.

3. Sundry Debtors considered good include Rs.10121 thousand (Previous year Rs. 5917 thousand) which is outstanding for more than 3 years. In some of the cases some recoveries have been made during the year ; the company is following up and expects to recover the balance.

4. The Company has identified Micro, Small and Medium undertakings on the basis of information available. As at 31st March,2011 there are no dues outstanding for more than 45 days and exceeding Rs.100,000/- to Micro, Small and Medium Enterprises that are reportable under Micro, Small and Medium Enterprises Development Act, 2006. Sundry Creditors include Rs. 10498 thousand (Previous year Rs. 14150 thousand) due to small scale undertakings.

5. (a) Depreciation in respect of fixed assets is provided on written down value basis and on straight line basis as per provisions under Section 205(2) of the Companies Act, 1956 at the rates specified in the Schedule XIV of the said Act.

(b) Depreciation in respect of assets acquired / purchased during the year has been provided on prorate basis according to the period such asset was put to use.

6. Company has the accumulated losses and unabsorbed depreciation as on 31-3-2011. Also, the Company has registered itself under BIFR. Considering the same and in the absence of Virtual certainty about future profit earning, no provision for Deferred tax asset is made in the books as per AS 22- 'Taxes on Income'. No provision for Income tax is made because of losses and Company being registered with BIFR as a sick Company.

7. The company is engaged in manufacturing of Calcium Carbonate which is considered the only reportable business segment, as per Accounting Standard 17 on Segment Reporting issued by the Institute of Chartered Accountants of India hence segment reporting is not given.

8. Related party disclosure as required by Accounting Standard 18 "Related Party Disclosures" are given below:

9. Defined Benefit Plans

The employee's Gratuity fund scheme managed by a Trust is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes 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.

10. The Company has received the demand notices for A.Y. 2006-07 from the Income Tax authorities for Income tax and fringe benefit tax inclusive of interest for Rs.5273 thousand and Rs.454 thousand respectively. Company had Rs 457 thousand net provisions standing in the books against the Mat Liability for AY 2006-07. Company has filed rectification application to Income Tax Department for non allowance of carry forward losses as it was allowed to the Company vide ITAT order dated 21.11.08 i.r.o. AY 2002-03. Considering the above, the Management is of the opinion that no further provision need to be made in these respect.

11. As on 31.3.2011, Mr Husain I Dawoodani (Chairman) is disqualified to be appointed as a director of the Company in terms of provision of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956. Further, Mr Ahmed H Dawoodani (Managing Director) is disqualified to be appointed as a director of any other Company in terms of provision of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

12. During the year, Company has written off entire deferred revenue expenditure amounting to Rs 9436 thousand which includes Preference share issue expenses Rs 746 thousand and voluntary retirement scheme expenses Rs 8690 thousand as required under Accounting Standard 26 'Intangible Asset' issued by the Institute of Chartered Accountants of India.

13. The Balances of Sundry Debtors, Loans and Advances, Secured Loan, Unsecured Loan, Current Liabilities and Provisions are subject to confirmation, reconciliation & adjustment if any .The Management is of the opinion that such adjustment will not have a material effect in the account.

14. Calls in Arrears of Rs.337255/- under the head Share Capital of Schedule 1 pertains to financial year 2004-05

15. Deposits u/s 58A outstanding as on 31.3.2011 are Rs 13669 thousand, of which Rs 7899 thousand are due within one year.

16. Vide order issued by the Board for Industrial and Financial Reconstruction (BIFR) on 23.03.2010 the company has been declared a sick industrial company. As directed by BIFR the company is in the process of framing fully tied up Draft Rehabilitation Scheme (DRS) for submission to Bank of Baroda, the Operating Agency (O.A.) appointed by BIFR in this regard.

17. The Company has not appointed full time Company Secretary during the year. Consequent to above accounts are not signed by Company Secretary.

18. Previous year's figures have been regrouped wherever necessary to correspond to the figures of current year.

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Mar 31, 2010

1. a) Contingent Liability not provided for in respect of:

(i) Uncalled liability on shares of Rs. 150 thousand (Previous year Rs. 150 thousand)

(ii) Income Tax demand disputed in appeal Rs. 2486 thousand (Previous year Rs. 2486 thousand)

(iii) Income Tax Demand For A.Y. 2005-06 of Rs.6410841/- is disputed and appeal field in CIT.

(iv) Water charges at MIDC (Roha) Rs. Nil (Previous year Rs. 1771 thousand)

(v) Guarantee given to ICICI Bank on behalf of Himachal Polylefins Ltd. US $ 2.20 million eqalling to approx.Rs. 102000 Thousand

2. The Company has an investment of 839,700 shares of Regent Chemicals Ltd. (RCL) of Rs. 10/- each acquired at a aggregate cost of Rs. 8280 thousand (market value Rs. 1679 thousand as at 15.09.2004 being the last traded date) .RCL has substantial losses as compared to its paid up Capital and Reserves. RCL has shut down its manufacturing operation in May 1993. The realisibility of the investment is dependent upon the future course of action adopted by RCL and hence no provision for dimunition in value of the investment has been made in the accounts.

3. Sundry Debtors considered good include Rs.5917 thousand (Previous year Rs. 6554 thousand) which is outstanding for more than 3 years. In some of the cases some recoveries have been made during the year; the company is following up and expects to recover the balance

4. The company has not ascertained and provided for the liability in respect of gratuity payable.

5. (a) Sundry Creditors include Rs. 14150/- thousand (Previous year Rs. 5912 thousand) due to small scale undertakings.

(b) The names of Small Scale Industries to whom the company owes any sum together with interest outstanding for more than thirty days are as follows:

Sr.No. Name

1 Mayura Marketing Agencies.

2 Siri Ram Filteration & Engg.

3 Shamco Plastics Pvt. Ltd.

4 Elson Packaginhg Industries

5 Coatwell Paints

6 Aristuio Chemicals

7 Newage Lamination P. Ltd.

8 Davis Chemicals P. Ltd., Delhi

9 Kamal Bearing P. Ltd.

10 Punjab Acid Chem P.Ltd.

11 Sellon Dynamice Pvt. Ltd.

12 Morwal Fabrics P Ltd.

13 Mico Minerals Product

14 Kandpi Fabrics P Ltd.

15 Laxmi Minerals

16 Kandoi Polytex

17 Pooja Minerals

18 Shreenivas Chemicals Industries

6. (a) Depreciation in respect of fixed assets is provided on written down value basis and on straight line basis as per provisions under Section 205(2) of the Companies Act, 1956 at the rates specified in the Schedule XIV of the said Act.

(b) Depreciation in respect of assets acquired / purchased during the year has been provided on pro-rata basis according to the period such assetwas putto use.

7. Deferred Tax

In view of the Loss incurred during the period and accumulated Loss in the Proceeding year, the Management is not correctly able to estimate the deferred tax Assets/Liability. Provision for deferred tax has not been made in absence of reasonable/virtual certainty of future taxable income.

8. The company is engaged in manufacturing of Calcium Carbonate which is considered the only reportable business segment, as per Accounting Standard 17 on Segment Reporting issued by the Institute of Chartered Accountants of India.

9. Related party disclosure as required by Accounting Standard 18

"Related Party Disclosures* are given below:

Name of related partys and description of relationship:

1) Associates:

Silvo Liacal Chemicals

Diamond Jubilee Stores

Pearl Enterprises

Himachal Polylefins Ltd.

Sahid Investment & Trading Co. Pvt. Ltd.

2) Key Managerial Personnel:

Shri. H.I.Dawoodani

Shri. A.H. Dawoodani

3) Relative of Key Managerial Personnel:

Smt. S. A. Dawoodani (Wife of Shri A. H. Dawoodani)

Shri Rahim A. Dawoodani (Son of Shri A.H. Dawoodani)

Miss. ZaharaA. Dawoodani (Daughter of Shri A.H. Dawoodani)

10. Computation of net profit under Section 349 of Companies Act, 1956 is not furnished as no commission is payable to the Managing Director.

11. According to information and explanation given to us a fraud of Rs. 22,88,152/- committed by an employee was noticed and reported during the Financial year 2006-07. The Company is taking proper step for recovery of the said amount.

12. The Company has received the demand notices for A.Y. 2006-07 from the Income Tax authorities for Income tax and fringe benefit tax inclusive of interest for Rs.5273073/- & Rs.454280/- respectively. A. Y.2007-08 No Provision has been made in respect of these liabilities.

13. Previous years figures have been regrouped wherever necessary to correspond to the figures of current year

14. The Balances of Sundry Debtors and Sundry Creditors are subject to confirmation reconciliation & adjustment if any. The Management is of the opinion that such adjustment will not have a material effect in the account.

15. Vide order issued by the Board for lndustrial and Financia1 Reconstruction (BIFR)on 23.03.2010 the company has been declared a sick industrial company. In spite of being sick, the companys both the plant are in operation and it has carried on the business operations. As directed by BIFR the company is in the process of framing fully tied up Draft Rehabilitation Scheme (DRS) for submission to Bank of Baroda, the Operating Agency (O.A.) appointed by BIFR in this regard.