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Notes to Accounts of Thirumalai Chemicals Ltd.

Mar 31, 2022

e) The Company had forfeited 40,000 equity shares of '' 1 each ( 31 March 2021: 40,000 equity shares of '' 1 each) on which amount originally paid up was '' 22,500.

f) There were no shares issued pursuant to contract without payment being received in cash, allotted as fully paid up by way of bonus issues and there were no buy back of shares during the last 5 years immediately preceding 31 March 2022.

. Capital management policies and procedures

The Company’s capital management objectives are to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value. The Company manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company maintains a mixture of cash and cash equivalents, long-term debt and short-term committed facilities that

are designed to ensure the Company has sufficient available funds for business requirements. There are no imposed capital requirements on the Company, whether statutory or otherwise.

The Company monitors capital using a ratio of ''net debt'' to ''equity''. Net Debt is calculated as total borrowings (shown in note 15), less cash and cash equivalents.

i) (a) The term loan of '' 6,015 Lakhs drawn from IDFC First bank is repayable in 24 equal quarterly instalments of '' 251 Lakhs, starting from 31 October 2020. The outstanding as on 31 March 2022 is ''4,511 Lakhs ( 31 March 2021 ''5,514 Lakhs).

(b) The term loan of '' 1,005 Lakhs drawn from IDFC First bank is repayable in 20 equal quarterly instalments of '' 50 Lakhs, starting from 31 October 2021. The outstanding as on 31 March 2022 is '' 905 Lakhs ( 31 March 2021 '' 1,005 Lakhs).

(c) The term loan of '' 6,930 Lakhs drawn from Axis bank, is repayable in 20 equal quarterly instalments of '' 338 Lakhs starting from 30 November 2020. The outstanding as on 31 March 2022 is '' 4,740 Lakhs( 31 March 2021 '' 6,092 Lakhs).

(d) Current portion due for repayment within one year is '' 2,555 Lakhs (31 March 2021 '' 2,455 Lakhs).

(ii) The above borrowings are secured by way of first charge on both movable and immovable property, plant and

equipment of the Company.

(iii) Reconciliation of movement of liabilities to cash flows arising from financing activities:

Provision for employee benefits i) Gratuity

Gratuity is payable to all the employees at the rate of 15 days salary for each year of service. In accordance with the Payment of Gratuity Act, 1972, the Company provides for gratuity, a defined benefit retirement plan (“the Gratuity Plan”) covering eligible employees. The Gratuity Plan provides for a lump sum payment to vested employees on retirement (subject to completion of five years of continuous employment), death, incapacitation or termination of employment that are based on last drawn salary and tenure of employment. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation on the reporting date.

The estimates of rate of escalation in salary considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary. The 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.

Sensitivity Analysis

The significant actuarial assumptions for the determination of the defined benefit obligation are the attrition rate, discount rate and the long-term rate of compensation increase. The calculation of the net defined benefit liability is sensitive to these assumptions. The following table summarises the effects of changes in these actuarial assumptions on the defined benefit liability.

ii) Compensated absences

The Company permits encashment of compensated absences accumulated by their employees on retirement, separation and during the course of service. The liability in respect of the Company, for outstanding balance of privilege leave at the balance sheet date is determined and provided on the basis of actuarial valuation performed by an independent actuary. The Company does not maintain any plan assets to fund its obligation towards compensated absences.

II. Fair value hierarchy

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows:

• Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities

• Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

• Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

(i) Level 1: level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments that have quoted price. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting period.

(ii) Level 2: level 2 hierarchy includes mutual funds. The mutual funds are valued using the closing NAV provided by the fund management Company at the end of each reporting year.

(iii) Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for:

• Foreign currency options contract - the fair value of options contracts is determined using the Black Scholes valuation model.

(iv) The Company has not disclosed the fair values for loans, cash and bank balances, trade receivables, other financial assets, trade payables, and other financial liabilities because their carrying amounts are a reasonable approximation to the fair value.

(v) There have been no transfers between levels 1 and 2 during the year.

III. Financial risk management

The Company''s activities expose it to market risk, credit risk and liquidity risk. The Company’s risk management strategies focus on the un-predictability of these elements and seek to minimise the potential adverse effects on its financial performance. The Company’s senior management which is supported by a Treasury team manages these risks. The Treasury team advises on financial risks and the appropriate financial risk governance framework in accordance with the Company’s policies and risk objectives. All derivative activities for risk management purposes are carried out by the Treasury Team that have the appropriate skills, experience and supervision. It is the Company''s policy that no trading in derivatives for speculative purposes may be undertaken.

A. Credit risk

Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of account receivables, taking preemptive action on over due receivables.

Trade receivables and loans

In respect of trade receivables, the Company is not exposed to any significant credit risk exposure with any single counterparty or any group of counterparties having similar characteristics other than those disclosed in note 10 and 5. Trade receivables consist of a large number of customers in various geographical areas. Based on historical information about customer default rates management considers the credit quality of trade receivables that are not past due or impaired to be good.

Loss allowance for trade receivables are recognised against trade receivables based on estimated irrecoverable amounts determined by reference to past default experience of the counterparty and an analysis of the counterparty''s current financial position.

Loans represent loans and advances extended to subsidiary Companies.

Cash and bank balances and investments

The credit risk for cash and cash equivalents, fixed deposits and mutual funds are considered negligible, since the counterparties are reputable banks with high quality external credit ratings and the Company is in the process of constatntly evaluating the risks associated with the investment .

Other financial assets

Other financial assets mainly comprises of security deposits which are given to customers or other governmental agencies, receivable from insurance Company & suppliers in relation to contracts executed and are assessed by the Company for credit risk on a continuous basis.

B. Liquidity risk

Liquidity risk is that the Company will not be able to meet its obligations as they become due. The objective of liquidity risk management is to maintain suffcient liquidity and ensure that funds are available for use as and when required. The treasury team''s risk management policy includes an appropriate liquidity risk management framework for the management of the short-term, medium-term and long term funding and cash management requirements, including that which is required for meeting the projects of the Company.The Company manages the liquidity risk by maintaining adequate cash reserves, committed credit facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. The Company invests its surplus funds in bank fixed deposit and liquid schemes of mutual funds, which carry no/negligible mark to market risks.

The Company considers expected cash flows from financial assets in assessing and managing liquidity risk, in particular its cash resources and trade receivables. Cash flows from trade receivables are all contractually due within 60 - 90 days based on the credit period.

C. Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, foreign exchange risk and other price risk, such as equity price risk and commodity risk. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, equity price fluctuations, liquidity and other market changes.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market rates. The Company’s main exposure to interest risk arises from long term borrowings with floating rate.

Interest rate sensitivity analysis

The table below summarises the impact of increase/decrease of the interest rates at the reporting date, on the Company''s equity and profit for the period. The analysis is based on the assumption of /- 1% change.

Foreign exchange risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rate. The Company is exposed to currency risk to the extent that there is a mismatch between the currencies in which revenues and purchases are denominated, and the functional currency of the Company. The functional currency of the Company is the Indian Rupee (''). The currency in which these transactions are primarily denominated are in Indian Rupee (''). Certain transactions are also denominated in US dollars (USD) and Euro (EUR).

Derivative financial instruments

The Company holds foreign currency options / forward contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank. These derivative financial instruments are valued based on black scholes model. Options contracts are mainly entered into for net foreign currency exposures that are not expected to be offset by other same currency transactions.

Sensitivity analysis

A reasonably possible strengthening (weakening) of the Indian Rupee (?) against USDat 31 March would have affected the measurement of financial instruments denominated in such foreign currencies and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant and also assumes a /- 1% change of the INR /USD exchange rate at 31 March 2022 (31 March 2021: 1%). If the INR had strengthened against the USD by 1% during the year ended 31 March 2022 (31 March 2021: 1%) respectively then this would have had the following impact profit before tax and equity before tax:

Price risk

Equity price risk is related to the change in market price of the investments in quoted equity securities. The Company''s exposure to equity security prices arises from investments held by the Company and classified in the balance sheet as FVOCI. In general, these investments are strategic investments and are not held for trading purposes. Reports on the equity portfolio are submitted to the Company’s senior management on a regular basis.

34. Contingent liabilities, commitments and guarantees

As at

As at

31 March 2022

31 March 2021

a) Contingent liabilities

Indirect tax matters under dispute (Refer note (i) below)

150

150

Income tax demand including interest contested in Appeal (Refer note (ii) below)

809

862

b) Commitments

i) Estimated amount of contracts to be executed on capital account

708

1,798

and not provided for

- Against which advances paid

396

339

ii) The Company has various lease contracts that are non cancellable and the future lease payments for these non-

cancellable lease contracts are '' 222 Lakhs within one year. Also refer note 37. c) Guarantees

Corporate guarantee issued by the Company on behalf of its subsidiary

5,777

5,586

Bank Guarantee issued by the Group to various parties for day to day business and

1,542

-

administrative purposes.

(i) The Sales-tax authorities have issued notices to the Company whereby the authorities have disputed the method of availment of deferral sales tax on monthly pro-rata basis for the period April 2000 to April 2006 amounting to '' 84 Lakhs (Previous year '' 84 Lakhs). The Company has filed a writ petition against these notices in the High Court. The Company does not expect any liability to crystallize on this account. Further, no provision has been made in respect of disputed demands from Sales-tax Authorities to the extent of '' 66 Lakhs (Previous Year '' 66 Lakhs) since the Company has reasons to believe that it would get relief at the appellate stage as the said demands are excessive and erroneous. Against the above, the Company has already paid '' 13 Lakhs (Previous year '' 13 Lakhs).

(ii) No provision has been made in respect of disputed demands from Income-tax Authorities to the extent of '' 809 Lakhs (Previous Year '' 862 Lakhs) since the Company has reasons to believe that it would get relief at the appellate stage as the said demands are excessive and erroneous. Against the above, the Company has already paid '' 346 Lakhs (Previous year '' 495 Lakhs).

i) The Company has entered into lease arrangements for building that are renewable on a periodic basis with approval of both lessor and lessee.

ii) The Company does not have any lease commitments towards variable rent as per the contract.

In accordance with Ind AS 108, Operating Segments, the Company has identified manufacture and sale of organic chemicals as the only reportable segment. Power Generation (previously reported segment), Engineering services (new segment established during the previous year), has been assessed to be very insignificant resulting in its operations and results are not being actively reviewed by decision makers of Company. Accordingly, the Company has a single reportable segment. Within the single reportable segment of sale of organic chemicals, a single customer contributes to 11% (31 March 2021 13%) of the Company''s revenue from operations, amounting to '' 16,115 Lakhs (31 March 2021 '' 11,945 Lakhs).

38. Transfer pricing

As per the Transfer pricing norms introduced in India with effect from 1 April 2001, the Company is required to use certain specific methods in computing arm’s length price of international transactions between the associated enterprises and maintain prescribed information and documents relating to such transactions. The appropriate method to be adopted will depend on the nature of transactions/class of transactions, class of associated persons, functions performed and other factors, which have been prescribed. The Transfer pricing study for the financial year ended 31 March 2022 is in progress and accordingly, the contracts may be amended subsequently and related adjustment, if any, will be quantified upon completion of this study. However, in the opinion of the Management, the outcome of the study will not have material impact on the Company’s results.

39. Events after the reporting period

No adjusting or significant non-adjusting events have occurred between the reporting date (31 March 2022) and the date of approval of these financial statements (26 May 2022) except for proposed dividend as disclosed in note 12.


Mar 31, 2019

1.Related parties

a) Names of related parties and nature of relationship:

Nature of relationship Name of related party

Subsidiary companies Cheminvest Pte Limited (Subsidiary Company) (CPL)

Optimistic Organic Sdn Bhd (Step down subsidiary)(OOSB) Lapiz Europe Limited

Key Management Personnel Mr. R.Parthasarathy (Managing Director)

Mrs. Ramya Bharathram

(Deputy Managing Director and Chief Financial Officer)

Mr. C.G Sethuraman (Chief Executive Officer)

Mr. P Mohana Chandran Nair (Executive Director)

Mr. T Rajagopalan (Company Secretary)

Mr. Arun Ramanathan (Independent Director)

Mr. Neelakantan Subramanian (Independent Director)

Mr. Raj Kataria (Independent Director)

Mr. R. Ravi Shankar (Independent Director)

Mr. Dhruv Moondhra (Independent Director)

Mr. R. Sampath (Non - Executive Director)

Mr. Rajeev M Pandia (Additional Director)

(Appointed with effect from 01 August 2018)

Enterprise over which the Key Managerial Personnel and Ultramarine and Pigments Limited (UPL) their relatives are able to exercise significant influence Thirumalai Charity Trust (TCT)

(i) The Sales-tax authorities have issued notices to the Company whereby the authorities have disputed the method of ailment of deferral sales tax on monthly pro-rata basis for the period April 2000 to April 2006 amounting to '' 84 Lakhs (Previous year '' 84 Lakhs). The Company has filed a writ petition against these notices in the High Court. The Company does not expect any liability to crystallize on this account. Further, no provision has been made in respect of disputed demands from Sales-tax Authorities to the extent of '' 91 Lakhs (Previous Year '' 75 lakhs) since the Company has reasons to believe that it would get relief at the appellate stage as the said demands are excessive and erroneous. Against the above, the Company has already paid '' 19 Lakhs (Previous year '' 19 lakhs).

(ii) No provision has been made in respect of disputed demands from Income-tax Authorities to the extent of '' 565 Lakhs (Previous Year '' 462 Lakhs) since the Company has reasons to believe that it would get relief at the appellate stage as the said demands are excessive and erroneous. Against the above, the Company has already paid '' 454 Lakhs (Previous year '' 281 Lakhs).

2. Segment reporting

In accordance with IND AS 108, Operating Segments, the Company has identified manufacture and sale of organic chemicals as the only reportable segment. Power Generation, which was a previously reported segment, has been assessed to be very insignificant resulting in its operations and results are not being actively reviewed by decision makers of Company. Accordingly, the company has a single reportable segment. Within the single reportable segment of sale of organic chemicals, a single customer contributes to 16% of the Company''s revenue from operations, amounting to '' 15,757 Lakhs.

3. Events after the reporting period

No adjusting or significant non-adjusting events have occurred between the reporting date (31 March 2019) and the report release date (06 May 2019) except for proposed dividend as disclosed in note 12.


Mar 31, 2018

1 General Information

Thirumalai Chemicals Limited is a public limited company domiciled in India incorporated under the provisions of the Companies Act ( ‘the Company’). The Company’s principal activities are manufacturing and selling chemicals. The shares of the Company are listed on stock exchanges in India.

a. In accordance with the option available under IND AS 101 - ‘First-time adoption of Indian Accounting Standards’ , the Company has adopted to fair value the freehold land located in Ranipet. Based on the valuation report obtained from an external valuer, the fair value of the 44.97 Acres land amounted to Rs. 6828 Lakhs (Cost : Rs. 27 Lakhs) as at 1 April 2016. The Company considered the fair value as deemed cost for this item of Property, Plant and Equipment. The Company has elected to measure other items of property, plant and equipement at the previous GAAP carrying amount i.e 31st March 2016 as its deemed cost on the date of transition to Ind AS i.e 1st April 2016. The Company has adopted cost model as their accounting policy for subsequent measurement and recognition of Property, plant and equipment.

b. For contractual commitment with respect to Freehold land & Property, plant and equipment refer Note 40 a

During the year, pursuant to a group restructuring, the company’s subsidiary Tarderiv International Pte Ltd, Singapore and its step down subsidiary Cheminvest Pte Ltd, Singapore amalgamated and formed Cheminvest Pte Ltd with effect from 01 July 2017. The change has resulted in a change in ownership of the step down subsidiary Lapiz Europe Limited, which was held by Tarderiv Pte Ltd before the change in group structure, and is now solely held by Cheminvest Pte Ltd. The restructuring also resulted in the transfer of 5,500,000, 5% Non Cumulative Non Convertible preference share held by the Company in Tarderiv International Pte. Limited to Cheminvest Pte Limited. On 30 March 2018, Cheminvest Pte. Ltd converted these preference shares to Ordinary shares at USD 1 $ per share.

During the year, the outstanding loan balance due from Optimistic Organic Sdn Bhd. (OOSB) were converted into equity share capital. Refer note 5.

The Company has made an irrevocable election of accounting policy as at the adoption date 01 April 2016 to fair value investment in equity instrument through Other Comprehensive Income (‘OCI’). Investments at fair value through OCI reflect investment in quoted equity securities. Refer note 36 for determination of their fair values and also note 37 for market risk and credit risk of investments.

There are no financial assets due from directors or other officers of the Company. The carrying amount of the cumulative other financial assets are considered as a reasonable approximation of fair value. There were no movement in the allowances for expected credit losses.

A description of the Company’s financial instrument risks, including risk management objectives and policies are given in Note 37.

Tax reconciliation:

The major components of tax expense and the reconciliation of the expected tax expense based on the domestic effective tax rate of the Company at 34.608% (2016-17: 34.608%) and the reported tax expense in the statement of profit and loss are as follows:

All of the Company’s other current and non current assets have been reviewed for indicators of impairment. There were allowances for doubtful advances in supplier advances during the year 2017-18 to the extent of Rs. 112 lakhs (31 March 2017 : Nil , 01 April 2016 : Nil) which was identified on a case to case basis from the advances given to the suppliers.

The carrying amount of the current trade receivable is considered a reasonable approximation of fair value as it is expected to be collected within twelve months.

Allowances for doubtful debts are recognised against trade receivables based on estimated irrecoverable amounts determined by reference to past default experience of the counterparty and an analysis of the counterparty’s current financial position.

Trade receivables are non-interest bearing and are generally on terms of 30 to 60 days.

Customer credit risk is managed based on the Company’s established policy, procedures and control relating to customer credit risk management, pursuant to which outstanding customer receivables are regularly monitored by the management.

* The amount paid up on forfeited shares is Rs. 22,500 (31 March 2017 : Rs. 22,500; 01 April 2016 : Rs. 22,500) is below the rounding off threshold followed by the Company.

a) There is no change in issued and subscribed share capital during the year.

b) Terms/ rights attached to equity shares

The Company has equity shares having a par value of Rs. 10. The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors, if any, is subject to the approval of the shareholders in the ensuing Annual General Meeting, except interim dividend, which is approved by the Board of Directors. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be proportional to the number of equity shares held by the shareholders.

d) The Company had forfeited 4,000 equity shares on which amount originally paid up was Rs. 22,500.

e) There were no shares issued pursuant to contract without payment being received in cash, allotted as fully paid up by way of bonus issues and there were no buy back of shares during the last 5 years immediately preceding 31 March 2018.

f) The Board of Directors in its meeting on 03 May 2018 has recommended a final dividend of Rs. 20 per equity share for the financial year ended 31 March 2018. The recommendation is subject to the approval of shareholders at the annual general meeting and if approved would result in a cash outflow of approximately Rs. 2,469 lakhs including corporate dividend tax.

g) The Board of Directors in its meeting on 03 May 2018 has recommended for splitting of 1,50,00,000 Equity Shares of Rs. 10/- each in the Authorized Share Capital of the Company into 15,00,00,000 Equity Shares of Re.1/- each. The same recommendation is subject to approval of shareholders at the annual general meeting.

h) Capital management policies and procedures

For the purpose of the Company’s capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders plus its borrowings and cash credit facility, if any, less cash and cash equivalents as presented on the face of the balance sheet.

The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. The amounts managed as capital by the Company for the reporting periods under review are summarized as follows:

The Company does not have any long term borrowings and uses cash credit facilities to meet its working capital needs.

In assessing the recoverability of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. The amount of the deferred income tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced. All deferred tax assets have been recognized in the balance sheet.

a) Provision for employee benefits

i) Gratuity

Gratuity is payable to all the members at the rate of 15 days salary for each year of service. In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (“the Gratuity Plan”) covering eligible employees. The Gratuity Plan provides for a lump sum payment to vested employees on retirement (subject to completion of five years of continuous employment), death, incapacitation or termination of employment that are based on last drawn salary and tenure of employment. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation on the reporting date.

The following table sets out the status of the Gratuity Plan and the amounts recognized in the financial statement :

The estimates of rate of escalation in salary considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary. The 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 significant actuarial assumptions for the determination of the defined benefit obligation are the attrition rate, discount rate and the long-term rate of compensation increase. The calculation of the net defined benefit liability is sensitive to these assumptions. The following table summarises the effects of changes in these actuarial assumptions on the defined benefit liability.

b) Compensated absences

The Company permits encashment of compensated absences accumulated by their employees on retirement, separation and during the course of service. The liability in respect of the Company, for outstanding balance of privilege leave at the balance sheet date is determined and provided on the basis of actuarial valuation performed by an independent actuary. The Company does not maintain any plan assets to fund its obligation towards compensated absences.

Note:

Unpaid dividend included above represent amounts to be credited to the Investors Education and Protection Fund as and when they become due. There are no delays in transferring the amounts due for payment to the Investors Education and Protection Fund under Section 125 of the Companies Act, 2013 as at the balance sheet date.

Unpaid Interest on matured deposits included in other payables is Rs. 14 lakhs. (31 March 2017 : Rs. 15 lakhs, 1 April 2016 : Rs. 19 lakhs)

Note:

Unpaid dividend, unpaid matured deposits and interest accrued thereon included above represent amounts to be credited to the Investors Education and Protection Fund as and when they become due. There are no delays in transferring the amounts due for payment to the Investor education and protection fund under Section 125 of the Companies Act, 2013 as at the balance sheet date.

2 Fair value measurement

Fair value measurement hierarchy

The Company records certain financial assets and financial liabilities at fair value on a recurring basis. The Company determines fair values based on the price it would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability.

The Company holds certain fixed income investments and other financial assets, which must be measured using the fair value hierarchy and related valuation methodologies. The guidance specifies a hierarchy of valuation techniques based on whether the inputs to each measurement are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s assumptions about current market conditions. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Financial assets and Financial liabilities measured at fair value in the balance sheet are grouped into three Levels of fair value hierarchy. These levels are based on the observability of significant inputs to the measurement, as follows:

- Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities

- Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

- Level 3: Unobservable inputs for the asset or liability.

The following table shows the Levels within the hierarchy of financial and non-financial assets and liabilities measured at fair value on a recurring basis at 31 March 2018, 31 March 2017, and 01 April 2016:

Investment in mutual funds are valued based on the Net Asset Value (NAV) of the funds as at the year end. The NAV of the funds are provided by the fund management company at the end of each reporting year.

Loans, cash and bank balances, trade receivables, other financial assets, trade payables, and other financial liabilities have fair values that approximate to their carrying amounts due to their short-term nature

The Company has fair valued freehold land as at 01 April 2016 and considered the same as deemed cost as per the option given under first time adoption of IND AS as at transition date. The Company has adopted the policy for subsequent measurement and recognition under the cost model. The non recurring fair value measurement has been considered under level 2, by involving an independent valuer who valued based on the value defined by the municipal corporation for that particular land.

3 Nature and extent of risks arising from financial instruments and respective financial risk management objectives and policies

The Company’s principal financial liabilities comprise of loans and borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Company’s operations and to provide guarantees to support its and group companies operations. The Company’s principal financial assets include loans, trade and other receivables, investments, cash and short-term deposits that derive directly from its operations. The Company also enters into derivative transactions to hedge and holds short term investments.

The Company is exposed to market risk, credit risk and liquidity risk. The Company’s senior management oversees the management of these risks. The Company’s senior management is supported by the Group Treasury Team that advises on financial risks and the appropriate financial risk governance framework in accordance with the Company’s policies and risk objectives. All derivative activities for risk management purposes are carried out by Group Treasury Team that have the appropriate skills, experience and supervision. It is the Group’s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors review and agree on policies for managing each of these risks, which are summarised below.

a) Market risk

The Company is exposed to market risk through its use of financial instruments and specifically to currency risk, interest rate risk and certain other price risks, which result from both its operating and investing activities.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates are managed by borrowing at fixed interest rates. During the year Company did not have any floating rate borrowings.

Foreign currency risk

Most of the Company’s transactions are carried out in Indian rupees. Exposures to currency exchange rates arise from the Company’s overseas sales and purchases, which are primarily denominated in US dollars (USD) and Euro (EUR).

To mitigate the Company’s exposure to foreign currency risk, cash flows are monitored and forward exchange contracts are entered into in accordance with the Company’s risk management policies. Where the amounts to be paid and received in a specific currency are expected to largely offset one another, no further hedging activity is undertaken. Forward exchange contracts are mainly entered into for net foreign currency exposures that are not expected to be offset by other same currency transactions.

The Company manages its foreign currency risk by hedging transactions that are expected to occur within a maximum 12-month period for hedges of forecasted sales and purchases. For hedges of forecast transactions the derivatives cover the period of exposure from the point the cash flows of the transactions are forecasted up to the point of settlement of the resulting receivable or payable that is denominated in the foreign currency.

Foreign currency denominated financial assets and financial liabilities which expose the Company to currency risk are disclosed below. The amounts shown are those reported to key management translated at the closing rate:-

Currency risk (or foreign exchange risk) arises on financial instruments that are denominated in a foreign currency, i.e. in a currency other than the functional currency in which they are measured. For the purpose of this disclosure, currency risk does not arise from financial instruments that are non-monetary items or from financial instruments denominated in the functional currency.

The following table illustrates the sensitivity of profit and equity in regards to the Company’s financial assets and financial liabilities and the USD/INR exchange rate and EUR/INR exchange rate ‘all other things being equal’. It assumes a /- 1% change of the INR /USD exchange rate for the year ended at 31 March 2018 (31 March 2017: 1%). A /- 1% change is considered for the INR /EUR exchange rate for the year ended at 31 March 2018 (31 March 2017: 1%).

If the INR had strengthened against the USD by 1% during the year ended 31 March 2018 (31 March 2017: 1% ) and EUR by 1% during the year ended 31 March 2018 (31 March 2017: 1%) respectively then this would have had the following impact profit before tax and equity before tax:

If the INR had weakened against the USD by 1% during the year ended 31 March 2018 (31 March 2017: 1%) and EUR by 1% during the year ended 31 March 2018 (31 March 2017: 1% ) respectively then this would have had the following impact:

b) Credit risk

Credit risk is the risk that a counterparty fails to discharge an obligation to the Company. The Company is exposed to this risk for various financial instruments, for example trade receivables, investment in mutual funds etc. the Company’s maximum exposure to credit risk is limited to the carrying amount of financial assets recognised at reporting period, as summarised below:

The Company continuously monitors defaults of customers and other counterparties, identified either individually or by the Company, and incorporates this information into its credit risk controls. The Company’s policy is to transact only with counterparties who are highly creditworthy which are assessed based on internal due diligence parameters.

In respect of trade receivables, the Company is not exposed to any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. Trade receivables consist of a large number of customers in various geographical areas. Based on historical information about customer default rates management consider the credit quality of trade receivables that are not past due or impaired to be good.

The credit risk for cash and cash equivalents, fixed deposits and mutual funds are considered negligible, since the counterparties are reputable banks with high quality external credit ratings.

Other financial assets mainly comprises of tender deposits and security deposits which are given to customers or other governmental agencies in relation to contracts executed and are assessed by the Company for credit risk on a continous basis.

c) Liquidity risk

Liquidity risk is that the Company might be unable to meet its obligations. The Company manages its liquidity needs by monitoring scheduled debt servicing payments for long-term financial liabilities as well as forecast cash inflows and outflows due in day-to-day business. The data used for analysing these cash flows is consistent with that used in the contractual maturity analysis below. Liquidity needs are monitored in various time bands, on a day-to-day and week-to-week basis, as well as on a monthly, quarterly, and yearly basis depending on the business needs. Net cash requirements are compared to available borrowing facilities in order to determine headroom or any shortfalls. This analysis shows that available borrowing facilities are expected to be sufficient over the lookout period.

The Company’s objective is to maintain cash and marketable securities to meet its liquidity requirements for 30-day periods at a minimum. This objective was met for the reporting periods. Funding for long-term liquidity needs is additionally secured by an adequate amount of committed credit facilities.

The Company considers expected cash flows from financial assets in assessing and managing liquidity risk, in particular its cash resources and trade receivables. The Company’s existing cash resources and trade receivables significantly exceed the current cash outflow requirements. Cash flows from trade receivables are all contractually due within 60 - 90 days based on the credit period.

The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, and short-term borrowings. The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. The Company has access to a sufficient variety of sources of funding.

The Company’s non-derivative financial liabilities have contractual maturities as summarised below:

4 First-time adoption of Ind AS

These are the Company’s first financial statements prepared in accordance with Ind AS. For periods up to and including the year ended 31 March 2017, the Company prepared its financial statements in accordance with Companies (Accounting Standard) Rules, 2006, notified under section 133 of the Act and other relevant provisions of the Act (Previous GAAP). Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on or after 31 March 2018, together with the comparative period data as at and for the year ended 31 March 2017. This note explains the principal adjustments made by the Company in restating its statement of financial position as at 1 April 2016 and its previously published financial statements as at and for the year ended 31 March 2016 under previous GAAP.

a) First time adoption exemptions applied

Upon transition, Ind AS 101 permits certain exemptions from full retrospective application of Ind AS. The Company has applied the mandatory exceptions and certain optional exemptions, as set out below:

Mandatory exceptions adopted by the Company

(i) De-recognition of financial assets and liabilities

The de-recognition criteria of Ind AS 109 Financial Instruments has been applied prospectively for transactions occurring on or after the date of transition to Ind AS. Non-derivative financial assets and non-derivative financial liabilities derecognized before date of transition under previous GAAP are not recognized on the opening Ind AS balance sheet.

(ii) Estimates

Hindsight is not used to create or revise estimates. The estimates made by the Company under previous GAAP were not revised for the application of Ind AS except where necessary to reflect any differences in accounting policies or errors.

Optional exemptions availed by the Company

(i) Property, Plant and Equipment

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 or fair value them as at transition date and use that as its deemed cost as at the date of transition. The Company has elected to use carrying value under previous GAAP as the deemed cost on the date of transition to Ind AS for all property, plant and equipment, except a freehold land from the block has been identified and fair valued as at 01 April 2018. The Company has adopted cost model for subsequent measurement and recognition of items in property,plant and equipment.

(ii) Investment in subsidiaries

Investment in subsidiaries, joint ventures and associates are measured at the carrying value under previous GAAP on the date of transition to Ind AS. These carrying value under previous GAAP are considered to be the deemed cost as at the date of transition.

(iii) Classification and measurement of financial assets

Ind AS 101 requires an entity to assess the classification and measurement of financial assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS. The Company has elected to apply this exemption to its financial assets.

(iv) Leases

Appendix C to Ind AS 17, Leases, requires an entity to assess whether a contract or arrangement contains a lease. As per Ind AS 17, this assessment should be carried out at inception of the contract or arrangement. However, the Company has used Ind AS 101 exemption and assessed all arrangements based for embedded leases based on conditions in place as at the date of transition.

considered as an asset which has indefinite lifetime and needs to be classified under operating lease.

Deemed cost of free hold land

Under the previous GAAP, freehold land were valued at historic cost, whereas the same has been fair valued as at 01 April 2016 and considered the same to be deemed cost as at the date of transition for accounting. Gain on revaluation has been recognised in other comprehensive income(net of deferred tax liability).

2) Fair valuation of investments

Under the previous GAAP, investments in equity (other than subsidiaries) and mutual funds were classified as longterm investments or current investments based on intended holding period or realisability and were accounted at cost less provision for diminution in value of investments. Under Ind AS, these investments are required to be measured at fair value. The Company has designated these investements as classified at fair value through other comprehensive income and through profit or loss account respectively. The resulting fair value changes of these investments have been recognised in other equity as at the date of transition and subsequently in the other comprehensive income for the year ended 31 March 2017.

3) Defined benefit obligation

Both under previous GAAP and Ind AS, the Company recognised costs related to its post-employment defined benefit plan on an actuarial basis. Under previous GAAP, the entire cost, including actuarial gains and losses, are charged to statement of profit and loss. Under Ind-AS, remeasurements [comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability] are recognised immediately in the balance sheet with a corresponding debit or credit to other equity through other comprehensive income.

4) Other comprehensive income

Under Ind AS, all items of income and expense recognised in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognised in profit or loss but are shown in the statement of profit and loss as ‘other comprehensive income’ includes remeasurements of defined benefit plans, foreign exchange differences arising on translation of foreign operations and fair value gains or (losses) on FVOCI equity instruments. The concept of other comprehensive income did not exist under previous GAAP.

5) Foreign currency translation reserve

The Company had accumulated foreign currency translation reserve under previous GAAP, which as per the option given under the first time adoption of IND AS can be reset to zero as at the transition date. The company has elected to reset the foreign currency translation reserve to zero as at 1 April 2016. Accordingly, translation reserve balance accumulated under the previous GAAP of Rs. 1,390 lakhs on the net investment made by the company in its subsidiaries has been reclassified to retained earnings. There is no impact on total equity as a result of this adjustment.

6) Excise duty

Under the previous GAAP, revenue from sale of products was presented exclusive of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty paid is presented on the face of the statement of profit and loss as part of expenses. This change has resulted in an increase of total revenue and total expenses for the year ended 31 March 2017 by Rs. 8,738 lakhs. There is no impact on the total equity and profit.

7) Cash discount on sale transactions

Under the previous GAAP, the cash discounts provided to the customers were grouped under other expenses. Under IND AS, revenue has to be measured at fair value of consideration received or receivable for the sale transaction effected by the Company. Hence, the same has been reduced from the revenue from operations.

8) Investments in Preference shares

Under the previous GAAP, the investments in preference shares of subsidiary was carried at cost. Under Ind AS, these investments, denominated in US Dollars, are to be classified as financial assets and be translated using the exchange rate at the reporting date with a corresponding debit/credit to the statement of profit and loss.

5 Events after the reporting period

No adjusting or significant non-adjusting events have occurred between the reporting date (31 March 2018) and the report release date (03 May 2018) except for proposed dividend and stock split as disclosed in note 14 .

(i) The Sales-tax authorities have issued notices to the Company whereby the authorities have disputed the method of availment of deferral sales tax on monthly pro-rata basis for the period April 2000 to April 2006 amounting to Rs. 84 Lakhs (Previous year Rs. 84 Lakhs). The Company has filed a writ petition against these notices in the High Court. The Company does not expect any liability to crystallize on this account. Further, no provision has been made in respect of disputed demands from Sales-tax Authorities to the extent of Rs. 75 Lakhs (Previous Year Rs. 80 lakhs) since the Company has reasons to believe that it would get relief at the appellate stage as the said demands are excessive and erroneous. Against the above, the Company has already paid Rs. 19 Lakhs (Previous year Rs. 19 Lakhs).

(ii) No provision has been made in respect of disputed demands from Income-tax Authorities to the extent of Rs. 461 Lakhs (Previous Year Rs. 511 Lakhs) since the Company has reasons to believe that it would get relief at the appellate stage as the said demands are excessive and erroneous. Against the above, the Company has already paid Rs. 281 Lakhs (Previous year Rs. 306 Lakhs).

6 Segment reporting

In accordance with IND AS 108, Operating Segments, the Company has identified manufacture and sale of organic chemicals as the only reportable segment. Power Generation, which was a previously reported segment, has been assessed to be very insignificant resulting in its operations and results are not being actively reviewed by decision makers of Company. Accordingly, the company has a single reportable segment.


Mar 31, 2017

1 General Information

Thirumalai Chemicals Limited is a public limited Company domiciled in India incorporated under the provisions of the Companies Act. Its shares are listed on stock exchanges in India. The Company is engaged in manufacturing and selling chemicals. The Company caters to both domestic and international markets.

All amounts in the standalone financial statements are presented in Rupees except per share data and as otherwise stated. Figures for the previous year have been regrouped / rearranged wherever considered necessary to conform to the figures presented in the current year. The previous year figures have been audited by a firm other than Walker Chandiok & Co LLP.

The requirements under paragraph 5(ii)(c) of Part II of Schedule III to the Companies Act, 2013 are not applicable to the Company for the current year.

2 Transfer pricing

As per the Transfer pricing norms introduced in India with effect from 1 April 2001, the Company is required to use certain specific methods in computing arm’s length price of international transactions between the associated enterprises and maintain prescribed information and documents relating to such transactions. The appropriate method to be adopted will depend on the nature of transactions/class of transactions, class of associated persons, functions performed and other factors, which have been prescribed. The transfer pricing study for the fiscal year ended 31st March 2017 is in progress and accordingly, the contracts may be amended subsequently and related adjustment, if any, will be quantified upon completion of this study. However, in the opinion of the Management, the outcome of the study will not have material impact on the Company’s results.

3 Disclosure on Specified Bank Notes (SBNs)

During the year, the Company had specified bank notes (SBN) or other denomination note as defined in the MCA notification G.S.R.308(E) dated 30th March 2017. The details of SBN held and transacted during the period from 08 November 2016 to 30 December 2016, the denomination wise SBNs and other notes as per the notification are as follows:-

4 Derivative instruments and unhedged foreign currency exposure

The Company does not have any derivative instruments as at 31st March 2017. Particulars of unhedged foreign currency exposure as at the 31st March 2017 is provided below :-

(i) The sales tax authorities have issued notices to the Company whereby the authorities have disputed the method of availment of deferral sales tax on monthly pro-rata basis for the period April 2000 to April 2006 amounting to Rs.8,448,007 (Previous year Rs.8,448,007). The Company has filed a writ petition against these notices in the High Court. The Company does not expect any liability to crystallize on this account. Further, no provision has been made in respect of disputed demands from sales-tax Authorities to the extent of Rs.8,027,687 (Previous Year Rs.NIL ) since the Company has reasons to believe that it would get relief at the appellate stage as the said demands are excessive and erroneous. Against the above, the Company has already paid Rs.1,910,796 (Previous year Rs.NIL).

(ii) No provision has been made in respect of disputed demands from Income-tax Authorities to the extent of Rs.46,165,467 (Previous Year Rs.51,052,250) since the Company has reasons to believe that it would get relief at the appellate stage as the said demands are excessive and erroneous. Against the above the Company has already paid Rs.28,135,277 (Previous year Rs.30,627,270).

5 Segment reporting

The Company publishes standalone financial statements along with the consolidated financial statements in the annual report. In accordance with Accounting Standard 17, Segment Reporting, the Company has disclosed the segment information in the consolidated financial statements.


Mar 31, 2016

a. for foreign currency loans

- Export Import Bank of India Overseas Investment Finance Loan : LIBOR 450 basis points

b. for rupee term loans : 10.74 % to 11.59 % per annum. Previous Year (11.00 % to 14.80% per annum.)

II. Deferred payment liabilities

a. Deferral of sales tax liabilities represent interest free deferred sales tax loan received from Government of Tamilnadu. Repayable up to 2017-18 based on the deferment availed in the respective years. In case of default in repayment of ''Deferred sales tax liabilities '' the movable and immovable properties of the company are liable to be attached / proceeded towards the realization of outstanding Government loan under Revenue Recovery Act.

i. Working Capital Demand Loan/Cash credit/Export accounts and Bills purchased / discounted are secured by hypothecation of stock of raw materials, work in progress, finished goods and book debts and secured by a second charge on all of the Company''s immovable fixed assets both present and future.

ii. The interest rates for other rupee loans : 11.00 % to 14.15% per annum Previous Year (12.20 % to 14.50% per annum.)

a. Unpaid dividend, unpaid matured deposits and interest accrued thereon included above represent amounts to be credited to the Investor Education and Protection Funds as and when they become due

(i) The Sales Tax authorities have issued notices to the Company whereby the authorities have disputed the method of availment of deferral sales tax on monthly pro-rata basis for the period April 2000 to April 2006 amounting to Rs.8,448,007 (Previous year Rs. 8,448,007). The Company has filed a writ petition against these notices in the High Court. The Company does not expect any liability to crystallize on this account.

(ii) No provision has been made in respect of disputed demands from Income-tax Authorities to the extent of Rs. 51,052,250 (Previous Year Rs. 12,114,057) since the Company has reasons to believe that it would get relief at the appellate stage as the said demands are excessive and erroneous. Against the above, the company has already paid Rs. 30,627,270. (Previous Year Rs.10,566,447).

(iii) Other claims against the company not acknowledged as debts: Rs.46,433,000 (Previous Year NIL)

(C) Other Commitments:

The company has been allotted a plot in 2011 in Dahej by Gujarat Industrial Development Corporation for setting up a manufacturing facility. In terms of the said allotment the company has paid the consideration and possession letter for land has been obtained in April 2015. The company is obligated to set up a manufacturing facility within the specified period as per the terms and conditions of allotment, failing which penalty as per agreement is payable.

*Rs.790,030 (Previous Year Rs.470,840) included in Research and Development Expenses and Rs.1,825,676 (Previous Year Rs.838,750) Included in Director''s remuneration.

**Rs.482,951 (Previous Year Rs.206,588) included in Research and Development Expenses and Rs.319,250 (Previous Year Rs. 248,438) included in Director''s remuneration.

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.

The 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.

D.2 Accounting Standard (AS-17) “Segment Reporting” :

As permitted by paragraph 4 of Accounting Standard 17, “Segment Reporting” notified by the Companies (Accounting Standards) Rules, 2006, the company has disclosed Segment results on the basis of Consolidated Financial Statements. The same are therefore not disclosed for standalone financial statements.

D.3 Accounting Standard (AS-18) “Related party disclosures” : Subsidiary Companies:

Tarderiv International Pte Ltd (subsidiary company) (TIPL)

Cheminvest Pte Ltd (Step down subsidiary) (CPL)

Optimistic organic Sdn Bhd (Step down subsidiary)(OOSB)

Lapiz Europe Limited (step down subsidiary from 1st November 2015)

Enterprise over which the Key Managerial Personnel and their relatives are able to exercise significant influence

Ultramarine and Pigments Ltd. (UPL)

Thirumalai Charity Trust (TCT)

Managerial Personnel R.Parthasarathy (Managing Director)

Ramya Bharathram (Whole Time Director with effect from 03.11.2014)

P. Mohanachandra Nair (Executive Director with effect from 28.10.2015)

Key Managerial Personnel N Nambirajan (CFO) upto 08.08.2015 P Krishnamoorthy (CFO) with effect from 28.10.2015 T Rajagopalan (CS)

Relatives of Directors S.Varadharajan

S. Narayan

D.4 Accounting Standard (AS-19) “Accounting for Leases” :

a) During the year the company has taken office premises/residential premises under cancelable lease. Lease rent accounted in profit and loss account Rs. 2,525,739 (Previous Year Rs. 2,831,828). The said lease is cancelable at the option of the lessee at three months notice. The deposit paid in respect of the same is Rs. 1,680,255 (Previous Year Rs.1,680,255).

b) The Company has given office premises on lease to a Company under the same management under cancelable lease arrangement for a period of five years. The lease arrangement can be cancelled at the option of lesser or lessee either giving two months notice. The Company has taken interest free security deposit of Rs. 1,400,000 (Previous Year Rs. 1,400,000) Lease rent received during the year and accounted as income is Rs.3,832,433 (Previous Year Rs. 3,942,629).

c) The company has entered into an agreement with Gujarat Industrial Development Corporation for allotment of land (leasehold). After complying with conditions related to erection of factory building and works, a lease agreement will be entered for a term of 99 years.(Refer Note C.32-(c))

E.4 Long Term loans and advances

Loans and advances (to wholly owned subsidiary companies) includes an amount of Rs.316,110,048 (US$ 4,812,881) {Previous year Rs.298,639,288 (US$ 4,812,881)} recoverable from Optimistic Organic Sdn.Bhd. (OOSB). This amount represents amount recoverable by the company from erstwhile TCL Industries (Malaysia) Sdn. Bhd. (TCL(M)). The liability was taken over by OOSB on winding up of TCL (M).

The operations of OOSB have been stabilized during the current year and the capacity expansion has been completed to increase the MA production capacity to 3500 Tons per month by the end of financials year 2015-16. Consequently the cash generation has shown improvement and is expected to stabilized in the year 2016-17 and so OOSB is certain to meeting its obligations including the repayment of above loans and advances.

E.6 Effect due to change in depreciation as per Schedule II to the Companies Act, 2013

The company had during the previous year provided depreciation on fixed assets based on estimated life and realizable value as prescribed in Schedule II of the Companies Act, 2013, except on few assets, where different life has been estimated based on technical advice (Refer note B.IV).

Following provisions of Schedule II, an amount of Rs. NIL (Previous Year Rs. 51,681,001) was determined as carrying amount of assets on 1st April 2014 where remaining useful life of asset is Nil, and after retaining Rs. NIL (Previous year Rs. 17,178,798) towards residual value, an amount of Rs. NIL ((Previous year Rs. 22,774,904 (Net of tax of Rs.11,727,299)) has been adjusted in the opening balance of the retained earnings.

Had not there been any change in useful life of assets prescribed by statute, depreciation for the year would have been higher by Rs.NIL (Previous Year Rs.514 Lakhs.)

E.8 Provision for performance related variable pay

During the year the Company has paid / provided an amount of Rs.35,404,849/- as performance related variable pay. The same includes Rs.12,204,849/- related to FY 2014-15 which is paid. The Company has estimated and made a provision of Rs.23,200,000/- towards the same for FY 2015-16, pending performance appraisals.

E.9 Appointment of Executive Director

Mr. P. Mohanachandra Nair has been appointed as an Executive Director with effect from 28th October 2015. Remuneration of Rs.2,278,994/-, paid or payable to him is subject to Shareholders'' approval in the ensuing annual general meeting.

E.11 Previous Year''s Figures

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


Mar 31, 2014

1. Commitments and contingent liabilities

2013-2014 2012-2013

Rs. Rs.

(A) Commitments/contingent liabilities

(i) Estimated amount of contracts to be executed on capital account and not provided for 12,502,130 13,780,702

Against which advances paid 691,075 3,599,769

(ii) Guarantees issued by Banks on behalf of Company 95,229 212,000

(iii) Bond in favor of excise authorities 160,000 160,000

(iv) Corporate Guarantee issued to a bank on behalf of subsidiary 587,047,000 -

(B) Claims against the Company not acknowledged as debts in respect of following items:

(i) The Sales Tax authorities have issued notices to the Company whereby the authorities have disputed the method of availment of deferral sales tax on monthly pro-rata basis for the period April 2000 to April 2006 amounting to Rs.7,537,505 (Previous year Rs. 7,537,505). The Company has fled a writ petition against these notices in the High Court. The Company does not expect any liability to crystallize on this account.

(ii) The company had received a demand of Rs. 99,363,453 (Previous Year Rs. 99,363,453) from enforcement directorate toward alleged non-submission of bill of entries for imports in earlier years. However, the Company has received letters from the concerned banks as well as Reserve Bank of India accepting that the said omission was not on the part of the Company. The appeal fled by the Company before the appellate tribunal was dismissed on limitation grounds.

The Company thereafter, fled an appeal against the said order of the appellate tribunal as well as a writ petition to quash the proceedings, before the Hon''ble High Court at Bombay. The Hon''ble High Court was of the opinion that the appeal was not maintainable and rejected the same as well as the Writ petition.

Aggrieved by this order, the Company fled a Special Leave Petition before the Hon''ble Supreme Court of India on 15th September, 2008. The said matter was fnally heard by the Hon''ble Supreme Court of India on 7th May, 2010 & the order pronounced on 11th April, 2011.

The Hon''ble Supreme Court of India has vide its order dated 11th April,2011 set aside the order passed by the Foreign Exchange Appellate Tribunal on 25th October,2007 and the order dated 24th July, 2008 passed by the Hon'' ble High Court of Bombay and remitted the appeals back to the Foreign Exchange Appellate Tribunal for fresh consideration in accordance with the law on the basis of findings recorded by them. The Company does not expect any liability to crystalise on this account.

(iii) No provision has been made in respect of disputed demands from Income-tax Authorities to the extent of Rs.39,668, 926 (Previous Year Rs. 82,106,136) since the Company has reasons to believe that it would get relief at the appellate stage as the said demands are excessive and erroneous. Against the above, the company has already paid Rs. 29,102,479 (Previous Year Rs. 95,436,546).

(C) Other Committeemen’s:

The company had entered into an agreement with Gujarat Industrial Development Corporation for allotment of land for setting up chemical unit. As per the said agreement , the company within a period of six months from the date of agreement and within a period of two years from the said date build and completely fnish it for occupation building to be used as industrial factory.

D. Disclosure in accordance with Accounting Standards as notifed by the Companies (Accounting Standards) Rules, 2006.

2. Accounting Standard (AS) - 2 on Valuation of inventories:

During the financial year 2012-13, the Company had changed its policy on valuation of inventory (except stores and spares) from weighted average cost method to first-in first-out method.

The effect of this change in the methodology of valuation of inventory resulted in higher valuation of inventories for the financial year 2012-13 by Rs.69,425,741 and profit for the financial year 2012-13 was higher by Rs.46,925,741 (net of tax).

3. Accounting Standard (AS) – 15 on "Employee Benefits" :

i. Defined Contribution Plans :

The Company has recognized the following amounts in the statement of profit and loss account for the year :

4. Accounting Standard (AS-17) "Segment Reporting" :

As permitted by paragraph 4 of Accounting Standard 17, "Segment Reporting" notified by the Companies (Accounting Standards) Rules, 2006, the company has disclosed Segment results on the basis of Consolidated Financial Statements. The same are therefore not disclosed for standalone financial statements.

5. Accounting Standard (AS-18) "Related party disclosures :

Subsidiary Companies:

Tarderiv International Pte Ltd (subsidiary company) (TIPL) Cheminvest Pte Ltd (Step down subsidiary) (CPL) Optimistic organic Sdn Bhd (Step down subsidiary)(OOSB)

Entity in which the company has significant influence (i.e. more than 20% in voting power directly or indirectly)

Thirumalai Charity Trust (TCT)

Others

Ultramarine and Pigments Ltd. (UPL)

Managing Director

R.Parthasarathy

Key Management Personnel

Dhanpat Raj Dhariwal ( as CEO upto 31.10.2013 and as advisor from 01.11.2013 ) C G Sethuram (CEO) ( from 01.11.2013 )

Relatives of Directors

Ramya Bharathram S.Varadharajan S. Narayan

6. Accounting Standard (AS-19) "Accounting for Leases" :

a) During the year the company has taken office premises/residential premises under cancelable lease. Lease rent accounted in profit and loss account Rs.3,473,473(Previous Year Rs. 1,246,892). The said lease is cancelable at the option of the lessee at three months notice. The deposit paid in respect of the same is Rs. 1,749,255 (Rs.473,255).

b) The Company has given office premises on lease to a Company under the same management under cancelable lease arrangement for a period of five years. The lease arrangement can be cancelled at the option of lesser or lessee either giving two months notice. The Company has taken interest free security deposit of Rs. 1,400,000 (Previous Year Rs. 1,400,000) Lease rent received during the year and accounted as income is Rs.3,617,294 (Previous Year Rs. 3,696,784).

c) The company has entered into an agreement with Gujarat Industrial Development Corporation for allotment of land (leasehold). After complying with conditions related to erection of factory building and works, a lease agreement will be entered for a term of 99 years.

7. Accounting Standard (AS-20) "Earnings per share" :

The Basic and Diluted EPS is calculated as under:

8. Long Term loans and advances

Loans and advances (to subsidiary companies) includes an amount of Rs.287,329,017/- (US$ 4,812,881) {Previous year Rs.411,879,337/- (US$ 7,616,112)} recoverable from Optimistic Organic Sdn.Bhd. (OOSB) .This amount represents amount recoverable by the company from erstwhile TCL Industries (Malaysia) Sdn. Bhd. (TCL(M)). The liability was stake over by OOSB on winding up of TCL (M).

OOSB has reported improved performance in 2013-14 and has made part repayment of Rs.186,580,069/- ( ( US$ 3,050,000 ) (Previous Year Rs.40,308,113/- (US$ 750,000). From 2012-13, the company is also charging simple interest @ 6% per annum on the outstanding dues, which is also recovered for 2013-14. The company believes that in view of the above, the entire amount due from OOSB will be ultimately recovered.

9. Loans and Advances

Other loans and advances include Rs.6,20,000 (previous year Nil) recoverable from director towards excess contribution made to superannuation fund The same has since been recovered

10. Previous Year''s Figures

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


Mar 31, 2013

A. CORPORATE INFORMATION

Thirumalai Chemicals Limited is a public limited company domiciled in India incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two stock exchanges in India. The company is engaged in manufacturing and selling chemicals. The company caters to both domestic and international markets.

I. In respect of term loans from banks and financilal institutions, terms of repayments and nature of security are given below:

a. Term loan from Bank of India, is repayble in equal 30 monthly instalments starting from July 2012 up to December 2014.The loan is secured by way of second charge (on pari passu basis) over the immovable properties of the Company.

b. Export Import Bank of India Overseas Investment Finance loan is repayable in 16 equal quarterly instalments starting from July 2012 up to April 2016. The loan is secured by First Pari Passu charge on Movable fixed assets and immovable assets at Ranipet, Tamilnadu.

c. Export Import Bank of India Working Capital Demand Loan is repayable in 16 equal quarterly instalments starting from July 2012 up to April 2016. The loan is secured by First Pari Passu charge on Movable fixed assets and immovable assets at Ranipet, Tamilnadu.

d. Export Import Bank of India EOU Loan is repayable in 21 equal quarterly instalments starting from March 2009 upto March 2014. The loan is secured by First Pari Passu charge on Movable fixed assets and immovable assets at Ranipet, Tamilnadu.

e. The interest rates in case of loans vary as below

a. for foreign currency loans

-Export Import Bank of India Overseas Investment Finance Loan : LIBOR 450 basis points

b. for rupee term loans : 11.23% to 14.5% per annum.

II. Deferred payment liabilities

a. Amounts due to Gujarat Industrial Develoment Corporation represents amount payable for acquiring lease hold land for industrial project. This loan is repayable in 12 equal quarterly instalments commencing from June 2011 to March 2014.

b. Deferral of sales tax liabilities represent interest free deferred sales tax loan received from Government of Tamilnadu. Repayable up to 2016-17 based on the deferment availed in the respective years. An amount of Rs. Nil (Previous Year Rs. 379,047) only has been guaranteed by Shri R.Parthasarathy, Managing Director of the company. For the Deferred Sales Tax liabilities In case of default in repayment of ''Deferred sales tax liabilities'' the movable and immovable properties of the company are liable to be attached / proceed towards the realization of outstanding Government loan under Revenue Recovery Act.

(B) Claims against the Company not acknowledged as debts in respect of following items:

(i) The Excise authorities have in their show cause notices questioned the company''s claim for Modvat on certain items amounting to Rs. 99,945 (Previous year Rs. 99,945). The company has paid Rs. NIL (Previous Year Rs. NIL) against the same which are shown under the head Advances. The Company does not expect any liability to crystallize on this account.

(ii) The Sales Tax authorities have issued notices to the Company whereby the authorities have disputed the method of availment of deferral sales tax on monthly pro-rata basis for the period April 2000 to April 2006 amounting to Rs. 7,537,505 (Previous year Rs. 7,537,505). The Company has filed a writ petition against these notices in the High Court. The Company does not expect any liability to crystallize on this account.

(iii) The company had received a demand of Rs. 99,363,453 (Previous Year Rs. 99,363,453) from enforcement directorate toward alleged non-submission of bill of entries for imports in earlier years. However, the Company has received letters from the concerned banks as well as Reserve Bank of India accepting that the said omission was not on the part of the Company. The appeal filed by the Company before the appellate tribunal was dismissed on limitation grounds.The Company thereafter, filed an appeal against the said order of the appellate tribunal as well as a writ petition to quash the proceedings, before the Hon''ble High Court at Bombay. The Hon''ble High Court was of the opinion that the appeal was not maintainable and rejected the same as well as the Writ petition.

Aggrieved by this order, the Company filed a Special Leave Petition before the Hon''ble Supreme Court of India on September 15, 2008. The said matter was finally heard by the Hon''ble Supreme Court of India on May 7, 2010 & the order pronounced on April 11, 2011.The Hon''ble Supreme Court of India has vide its order dated April 11, 2011 set aside the order passed by the Foreign Exchange Appellate Tribunal on October 25, 2007 and the order dated July 24, 2008 passed by the Hon''ble High Court of Bombay and remitted the appeals back to the Foreign Exchange Appellate Tribunal for fresh consideration in accordance with the law on the basis of findings recorded by them. The Company does not expect any liability to crystalise on this account.

(iv) No provision has been made in respect of disputed demands from Income-tax Authorities to the extent of Rs. 82,106,136 (Previous Year Rs. 134,345,983) since the Company has reasons to believe that it would get relief at the appellate stage as the said demands are excessive and erroneous. Against the above, the company has already paid Rs. 95,436,546 (Previous Year Rs. 122,191,555).

(B) Other Commitments:

The company had entered into an agreement with Gujarat Industrial Development Corportation for allotment of land for setting up chemical unit. As per the said agreement, the company within a period of six months from the date of agreement and within a period of two years from the said date build and completely finish it for occupation building to be used as industrial factory.

C. Disclosure in accordance with Accounting Standards as notified by the Companies (Accounting Standards) Rules, 2006.

C.1 Accounting Standard (AS) - 2 on Valuation of inventories:

Effective as of April 01, 2012, the Company has changed its policy on valuation of inventory (except stores and spares) from weighted average cost method to first-in first-out method.

Under the prior policy, the cost of all categories of inventories had been based on their weighted average cost method. Effective as of April 01, 2012, the cost of all categories of inventories (except stores and spares), is based on first-in first-out (FIFO) method.

The management believes that using the first-in first out method will produce more accurate, reasonable and relevant information on the amounts of inventory reported in the balance sheet and in turn, more accurate material consumption reported in the statement of profit and loss.

The effect of this change in the methodology of valuation of inventory is resulting in higher valuation of inventories as on year end by Rs. 69,425,741 and profit for the year higher by Rs. 46,925,741 (net of tax).

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.

The 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.

C.3 Accounting Standard (AS-17) "Segment Reporting" :

As permitted by paragraph 4 of Accounting Standard 17, "Segment Reporting" notified by the Companies (Accounting Standards) Rules, 2006, the company has disclosed Segment results on the basis of Consolidated Financial Statements. The same are therefore not disclosed for standalone financial statements.

C.4 Accounting Accounting Standard (AS-18) "Related Party Disclosures" :

Subsidiary Companies:

- Tarderiv International Pte Ltd (subsidiary company) (TIPL) (w.e.f 28th December 2010)

- Cheminvest Pte Ltd (Step down subsidiary) (CPL) (w.e.f 28th December, 2010)

- Optimistic Organic Sdn Bhd (Step down subsidiary)(OOSB) (w.e.f 28th December, 2010)

Entity in which the company has substantial interest (i.e. more than 20% in voting power directly or indirectly)

Thirumalai Charity Trust (TCT)

Others

Ultramarine and Pigments Ltd. (UPL)

Managing Director Mr. R. Parthasarathy Key Management Personnel Mr. Dhanpat Raj Dhariwal (CEO)

Relatives of Directors Ms. V. Jaya

Ms. Ramya Bharathram Mr. S. Varadharajan Mr. S. Narayan

C.5 Accounting Standard (AS-19) "Accounting for Leases" :

a) During the year the company has taken office premises/residential premises under cancelable lease. Lease rent accounted in profit and loss account Rs. 1,246,892 (Previous Year Rs. 1,200,969). The said lease is cancelable at the option of the lessee at three months notice. The deposit paid in respect of the same is Rs. 4,73,255 (Rs. 419,255).

b) The Company has given office premises on lease to a Company under the same management under cancelable lease arrangement for a period of five years. The lease arrangement can be cancelled at the option of lesser or lessee either giving two months notice. The Company has taken interest free security deposit of Rs. 1,400,000 (Previous Year Rs. 1,400,000) Lease rent received during the year and accounted as income is Rs. 3,696,784 (Previous Year Rs. 3,369,470).

c) The company has entered into a agreement with Gujarat Industrial Development Corportation for allotment of land (leasehold). After complying with conditions related to erection of factory building and works, a lease agreement will be entered for a term of 99 years.

D.1 Long Term loans and advances

Loans and advances (to subsidiary companies) includes an amount of Rs. 411,879,337/- (US$ 7,616,112) (Previous year Rs. 425,500,435/- (US$ 8,366,112)) recoverable from Optimistic Organic Sdn.Bhd. (OOSB). This amount represents amount recoverable by the company from estwhile TCL Industries (Malaysia) Sdn. Bhd. (TCL(M)). The liability was staken over by OOSB on winding up of TCL (M).

OOSB has reported improved performance in 2012-13 and has made part repayment of Rs. 40,308,113/- (US$ 750,000) in 2012-13. From 2012-13, the company is also charging simple interest @ 6% per annum on the outstanding dues, which is also recovered for 2012-13. The company believes that in view of the above, the entire amount due from OOSB will be ultimately recovered.

''Forward contracts outstanding at year end for hedging accounts payables Rs. 13,775,000 (Previous Year: NIL)

D.2 Commission payable to non executive directors

The Board of directors has approved commission to non-executive directors for Rs. 5,302,414 (Previous year NIL) which is subject to the approval of shareholders in accordance with the Companies Act, 1956.

D.3 Previous Year''s Figures

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


Mar 31, 2011

As at As at 2010-2011 2009-2010 Rs. Rs.

1. Contingent Liability in respect of:

a) Estimated amount of contracts to be executed on capital account 1,355,000 NIL and not provided for

Against which advances paid NIL NIL

b) Guarantees issued by Banks on behalf of Company (since revoked) 314,131,200 396,241,200

c) Bond in favor of excise authorities 160,000 160,000

2. Claims against the Company not acknowledged as debts and not provided for NIL NIL

3. a) The Excise authorities have in their show cause notices questioned the companys claim for Modvat on certain items acquired for the expansion project amounting to Rs. 599,945 (Previous year Rs. 1,799,945). The company has paid Rs. 350,000 (Previous Year Rs. 1,350,000) against the same which are shown under the head Advances. The Company does not expect any liability to crystallise on this account.

b) The Sales Tax authorities have issued notices to the Company whereby the authorities have disputed the method of availment of deferral sales tax on monthly pro-rata basis for the period April 2000 to April 2006 amounting to Rs. 7,537,505 (Previous year Rs. 7,537,505). The Company has filed a writ petition against these notices in the High Court. The Company does not expect any liability to crystallize on this account.

4. The Company had received a demand of Rs. 99,363,453 (Previous Year Rs. 99,363,453) from enforcement directorate toward alleged non submission of bill of entries for imports in earlier years. However, the Company has received letters from the concerned banks as well as Reserve Bank of India accepting that the said omission was not on the part of the Company. The appeal filed by the Company before the Foreign Exchange Appellate Tribunal was dismissed on limitation grounds. The Company thereafter, filed an appeal against the said order of the appellate tribunal as well as a writ petition to quash the proceedings before the Honble High Court at Bombay. The Honble High Court was of the opinion that the appeal was not maintainable and rejected the same as well as the Writ petition.

Aggrieved by this order, the Company filed a Special Leave Petition before the Honble Supreme Court of India on 15th September, 2008. The said matter was finally heard by the Honble Supreme Court of India on 7th May, 2010 & the order pronounced on 11th April, 2011.

By the said Order, the Honble Supreme Court of India has set aside the order dated 25th October, 2007 passed by the Foreign Exchange Appellate Tribunal and the order dated 24th July, 2008 passed by the Honble High Court of Bombay and remitted the appeals back to the Foreign Exchange Appellate Tribunal for fresh consideration in accordance with the law on the basis of findings recorded by them. The Company does not expect any liability to crystalise on this account.

5 No provision has been made in respect of disputed demands from Income-tax Authorities to the extent of Rs. 102,707,853 (Previous Year Rs. 74,065,933) since the Company has reasons to believe that it would get relief at the appellate stage as the said demands are excessive and erroneous. Against the above, the company has already paid Rs. 59,055,767 (Previous Year Rs. NIL)

6 The Ministry of Corporate Affairs, Government of India, vide General Circular No. 2 and 3 dated 8th February, 2011 and 21st February, 2011 respectively has granted a general exemption from compliances with section 212 of the Companies Act, 1956, Subject to fulfillment of conditions stipulated in the circular the Company has satisfied the conditions as stipulated and hence is entitled to the exemption. Necessary information relating to the subsidiaries has been included in the Consolidated Financial Statement.

16 Loans and advances includes excess contribution towards superannuation to Managing Directors recoverable Rs. 1,536,000 (Previous year Rs. 3,168,000). This amount has since been recovered.

17 Interest paid on fixed Loans include paid on Loans from Managing Directors Rs. 837,024 (Previous Year Rs. 329,325)

19 Unpaid dividend, unpaid matured deposits, unpaid matured debentures and interest accrued thereon (Included in Current Liabilities - Schedule 11) represent amounts to be credited to the Investor Education and Protection Fund as and when they become due.

20 Interest Free Sales Tax Loan comprise of follows

Product - Maleic Anhydride Rs. 379,047 (Previous year Rs. 8,618,448)

Product - Food Acids Rs. 17,786 (Previous year Rs. 2,407,778)

Product - Phthalic Anhydride Rs. 166,472,488 (Previous year Rs. 196,822,694)

In case of default in repayment of the first loan, the movable and immovable properties of the company and that of the Directors are liable to be attached / proceeded towards the realization of defaulted tax installments.

In case of default in repayment of the second and third loans, the movable and immovable properties of the company shall be liable to be attached / proceeded towards the realization of outstanding Government loan under Revenue Recovery Act.

22 Segment Reporting

As permitted by paragraph 4 of Accounting Standard 17, "Segment Reporting" notified by the Companies (Accounting Standards) Rules, 2006, the company has disclosed Segment results on the basis of Consolidated Financial Statements. The same are therefore not disclosed for standalone financial statements.

25 A) Related Party Disclosures as required by Accounting Standard 18 is as follows:

a) Subsidiary Companies:

- Tarderiv International Pte Ltd (subsidiary company) (TIPL) (w.e.f 28th December 2010)

- Cheminvest Pte Ltd (Step down subsidiary) (CPL) (w.e.f 28th December 2010)

- Optimistic organic Sdn Bhd (Step down subsidiary)(OOSB) (w.e.f 28th December 2010)

b) Entities in which the company has substantial interest (i.e. more than 20% in voting power directly or indirectly) Ultramarine and Pigments Ltd. (UPL), TCL Industries (Malaysia) Sdn. Bhd. (TCLM) (under liquidation) and Thirumalai Charity Trust (TCT)

c) Managing Directors

Mr. S.Sridhar

Mr. R.Parthasarathy

d) Key Management Personnel

Mr.S.V.S.Ramaraju – Chief Operation Officer up to 31/01/2011

e) Relatives of Directors

Ms. V. Jaya

Ms. Ramya Bharathram

Mr. S. Varadharajan from 01/03/2011

D) DISCLOSURE IN RESPECT OF MATERIAL RELATED PARTY TRANSACTIONS DURING THE YEAR

a) Investments in 500,000 Equity Shares of USD 1 each in TIPL Rs. 22,480,000 Investments in 4,500,000 Preference Shares of USD 1 each in TIPL Rs. 202,320,000

b) Purchase of Goods from UPL Rs. 333,409 (Rs. 276,401), TCLM Rs. NIL (Rs. NIL)

c) Sale of Goods to TCLM Rs. 21,913,966 (Rs. 18,555,283), UPL Rs. 23,516 (Rs. NIL)

d) Expenses Recharged from UPL Rs. 2,920,049 (Rs. 40,040),

e) Expenses Recharged by UPL Rs. 37,559 (Rs. 143,576),

f) On rendering of services from Mr. R Parthasarathy Rs. 12,000 (Rs. 12,000) UPL Rs. 368,685 (Rs. 1,915,854)

g) Outstanding payables to UPL Rs. 115,891 (Rs. 143,576) TCLM Rs. NIL (Rs. 4,463,023)

h) Outstanding receivable from TCLM Rs. 1,675,722 (Rs. 337,062,448), from UPL Rs. 609,202 (Rs. 877,307), Outstanding receivable from OOSB Rs. 371,706,338 (Rs. NIL)

i) Deposits Taken from UPL Rs. 211,287,864 (Rs. 106,796,775), Mr. Dilip Thakkar Rs. 3,000,000 (Rs. 5,500,000)

j) Interest expenses on deposits taken from UPL Rs. 10,821,828 (Rs. 4,113,418), from Mr. Dilip J. Thakkar Rs. 861,846 (Rs. 305,370), Ms. Indira Dilip Thakkar Rs. 444,184 (Rs. 334,881), from Ms. Mitali Rohit Lakhanpal Rs. 349,438 (Rs. 333,620),

k) Outstanding deposits receivable from TCLM Rs. NIL (Rs. 46,265,609)

l) Outstanding deposits payable to Dilip Thakkar Rs. 9,700,000 (Rs. 6,700,000)

m) Remuneration paid to Key Management Personnel Mr.S.V.S.Ramaraju Rs. 3,228,890 (Rs. 2,678,916)

n) Remuneration paid to relative of Directors Ms.V.Jaya Rs. 401,493 (Rs. 399,421) and Mr. S. V. Rajan Rs. 49,996 (Rs. NIL) Mrs.Ramya Bharathram Rs. 236,261(Rs. NIL)

o) Receiving of services includes amount paid to Thirumalai Charity Trust Rs. 145,636 (Rs. 211,200)

26 DISCLOSURES AS REQUIRED BY AS 27 FINANCIAL REPORTING OF INTEREST IN JOINT VENTURE The company had investments in a jointly controlled entity as per the following details:

a) Name and Country of Incorporation : TCL Industries ( Malaysia) SDN BHD, Malaysia

b) Proportion of ownership interest : 39.93%

c) As per details given in Note No. 26, since TCLM is in the process of Creditors Voluntary Winding Up, other details are not available and hence not disclosed.

27 The company had an investment of Rs. 182,769,550 in ordinary share of TCL Industries (Malaysia) Sdn Bhd (TCLM). Since, TCLM is in the process of Creditors Voluntary Winding Up, the investment of the company in TCLM was pursuant to an order of the Mumbai High Court in August 2009 adjusted in 2009-10 against the Securities Premium and other capital reserves of the Company.

In the process of Creditors Voluntary Winding up also, TCLM continued its operations under the control of the liquidator.

The said fixed assets (consisting of land, plant and machinery and other equipments) of TCLM were acquired by Optimistic Organic Sdn Bhd (OOSB) on 23rd September,2010 from the liquidator through the tender process.

OOSB continues to operate the plant and has also recognized the dues payable by TCLM to the company. Appropriate agreements for the same between OOSB and the company are in the process of being entered into. The Company has also consequently transferred and included the above items as "Loans and Advances" (Schedule 10). The balance as on 31st March, 2011 is Rs. 371,706,337.

The Company believes that the above amounts due from TCLM and now recognized by OOSB would be ultimately recoverable.

30 4. Other Long Term benefits

The Companys Long Term benefit includes Leave encashment payable at the time of retirement in full, other wise it is encashable during the year in which services are rendered subject to in excess of 30 days.Present value of obligation as at the beginning of the year is Rs. 10,576,222 (Rs. 10,597,285) and the actuarial gain and losses are recognised in full in the Profit and Loss account for Rs. 625,701 (Previous year Rs. 21,063 (Gain)). The Present value of obligation as at March 31, 2011 is Rs. 11,201,923 (Previous Year Rs. 10,576,222)

32 A} During the year the company has taken office premises under cancelable lease. Lease rent accounted in profit and loss account Rs. 993,075 (Previous Year Rs. 312,750). The said lease is cancelable at the option of the lessee at three months notice.

B} The Company has given office premises on lease to a Company under the same management under cancelable lease arrangement for a period of five years. The lease arrangement can be cancelled at the option of lessor or lessee either giving two months notice. The Company has taken interest free security deposit of Rs. 1,400,000 (Previous Year Rs. 1,400,000) Lease rent received during the year and accounted as income is Rs. 2,638,340 (Previous Year Rs. 1,852,455)

33 Shri S.V.Rajan and Ms.Ramya Bhartram, relatives of directors are entitled to remuneration in terms of their respective Terms of appointment. As required by Section 314 of the Companies Act, 1956, the remuneration payable is subject to approval of members in the forthcoming annual general meeting and approval of Central Government if required.

34 Previous Years figures have been grouped wherever necessary.


Mar 31, 2010

As at As at 2009-2010 2008-2009 Rs. Rs.

1.Contingent Liability in respect of:

a Estimated amount of contracts to be executed on capital account NIL 2,815,845 and not provided for

Against which advances paid NIL 2,815,845

b Guarantees issued by Banks on behalf of Company 396,241,200 51,472,000

c Bond in favor of excise authorities 160,000 501,200

2. Claims against the Company not acknowledged as debts and not provided for NIL NIL

3. a) The Excise authorities have in their show cause notices questioned the companys claim for Modvat on certain items acquired for the expansion project amounting to Rs. 1,799,945 (Previous year Rs. 1,799,945). The company has paid Rs. 1,350,000 (Previous Year Rs. 1,350,000) against the same which are shown under the head Advances. The Company does not expect any liability to crystallize on this account.

b) The Sales Tax authorities have issued notices to the Company whereby the authorities have disputed the method of availment of deferral sales tax on monthly pro-rata basis for the period April 2000 to April 2006 amounting to Rs. 7,537,505 (Previous year Rs. 7,537,505). The Company has filed a writ petition against these notices in the High Court. The Company does not expect any liability to crystallize on this account.

4. The company has received a demand of Rs. 99,363,453 (Previous Year Rs.99,363,453) from enforcement directorate toward alleged non submission of bill of entries for imports in earlier years. However, the Company has received letters from the concerned banks as well as Reserve Bank of India accepting that the said omission was not on the part of the Company. The appeal filed by the Company before the appellate tribunal was dismissed on limitation grounds.

The Company had filed an appeal against the said order of the appellate tribunal as well as a writ petition to quash the proceedings before the Honble High Court at Bombay. The Honble High Court was of the opinion that the appeal was not maintainable and rejected the same as well as the Writ petition.

Aggrieved by this order, the Company filed a Special Leave Petition before the Honble Supreme Court of India. The said matter has been heard by the Honble Supreme Court of India and a decision on the same is awaited. The Company does not expect any liability to crystalise on this account.

5. No provision has been made in respect of disputed demands from Income-fax Authorities to the extent of Rs. 74,065,933 (Previous Year Rs. 105,252,611) since the Company has reasons to believe that it would get relief at the appellate stage as the said demands are excessive and erroneous. Against the above, the company has already paid Rs. NIL (Previous Year Rs. 25,886,270)

6. Loans and advances includes amount recoverable from directors Rs.3.168,000 (Previous Year Rs.NIL) towards recovery of excess remuneration paid.

7. Interest paid on fixed Loans include interest paid on Loans from Managing Directors Rs.329.325 and (Previous Year Rs. 578)

8. Unpaid dividend, unpaid matured deposits, unpaid matured debentures and interest accrued thereon (Included in Current Liabilities - Schedule 11) represent amounts to be credited to the Investor Education and Protection Fund as and when they become due.

9. Interest Free Sales Tax Loan comprise of follows

Product - Maleic Anhydride Rs. 8,618,448

Product - Food Acids Rs. 2,407,778

Product - Phthalic Anhydride Rs. 196,822,694

In case of default in repayment of the first loan, the movable and immovable properties of the company and that of the Directors shall be liable to be attached / proceeded towards the realization of defaulted tax installments.

In case of default in repayment of the second and third loans the movable and immovable properties of the company shall be liable to be attached / proceeded towards the realization of outstanding Government loan under Revenue Recovery Act.

10. Disclosure requirement of accounting Standard 17 "Segment Reporting" issued under Companies (Accounting Standard) Rules notified u/s. 211.

a) Primary Segment

The Company has disclosed Business Segment as the primary segment. Segments have been identified taking into account the nature of the products, the differing risk and returns, the organization structure and internal reporting system. The Companys operation predominantly relate to manufacture of Chemical Products and its Intermediaries.

b) Secondary Segment

The business segment has been considered as the primary segment and the geographical segment has been considered as the secondary segment. "Chemicals" and "power generation" are the business segments and necessary information is given hereunder.

c) Segment Revenue, Segment Results, Segment Assets and Segment Liabilities include the respective amounts identifiable to each of the segments as also amounts allocated on a reasonable basis. The expenses, which are not attributable to the business segment, are shown as unallocated corporate cost

11. A. Related Party Disclosures as required by Accounting Standard 18 is as follows :

a) Entities in which the Company has substantial interest (i.e. more than 20% in voting power directly or indirectly)

Ultramarine and Pigments Ltd. (UPL), TCL Industries (Malaysia) Sdn. Bhd. (TCLM) (under liquidation) and Thirumalai Charity Trust (TCT)

b) Managing Directors Mr. S.Sridhar

Mr. R.Parthasarathy

c) Key Management Personnel

Mr. S.V.S.Ramaraju - Chief Operation .Officer

d) Relatives of Directors Ms. V.Jaya

D. Disclosure in respect of material related party transactions during the year

i) Purchase of Goods from UPL Rs. 276.401 (Rs. 11.085,413). TCLM Rs. NIL (Rs. 512,156,843) ii) Sale of Goods to TCLM Rs. 18,555.283 (Rs. 19.395,570), UPL Rs. NIL (Rs. 5,355) iii) Expenses Recharged from UPL Rs. 40.040 (Rs. 1.896.902)

iv) Expenses Recharged by UPL Rs. 143,576 ( Rs. 55,505)

v) On rendering of services from Mr. R. Parthasarathy Rs. 12,000 (Rs. 12.000) UPL Rs. 1,915,854 (Rs. 106,063)

vi) Outstanding payables to UPL Rs. 143.576 (Rs. 89,498) TCLM Rs. 4,463,023 (Rs. 5.047,534)

vil) Outstanding receivable from TCLM Rs. 337,062.448 (Rs. 419,677,651), from UPL Rs. 877,307 (Rs. 247,284)

viii) Deposits Taken from UPL Rs. 106,796,775 (Rs. 102,532,188), Mr. Dilip Thakkar Rs.5,500,000 (Rs. NIL)

ix) Interest expenses on deposits taken from UPL Rs. 4,113,418 (Rs. 981,197), from Ms. Indira Dilip Thakkar Rs. 334,881 (Rs. 313,993), from Ms. Mitali Rohit Lakhanpal Rs. 333,620 (Rs. 332,195),

x) Interest income from TCLM Rs. NIL (Rs. 14,976,073), UPL Rs. NIL (Rs. 35,599)

xi) Outstanding deposits receivable from TCLM Rs. 46,265,609 (Rs. 52,274,242)

xii) Outstanding deposits payable to Dilip Thakkar Rs. 6,700,000 (Rs.NIL)

xiii) Remuneration paid to Key Management Personnel Mr.S.V.S.Ramaraju Rs. 2,678,916 (Rs. 2,201,201),

xiv) Remuneration paid to relative of Directors Ms.V.Jaya Rs. 399,421 (Rs. 418,247)

xv) Receiving of services includes amount paid to Thirumalai Charity Trust Rs.211,200 (Rs.NIL)

26. Disclosures as required by AS 27 Financial Reporting of Interest in Joint Venture The Company has investments in a jointly controlled entity as per the following details:

a) Name and Country of Incorporation: TCL Industries (Malaysia) SDN BHD, Malaysia

b) Proportion of ownership interest: 39.93%

c) As per details given in Note No.26, since TCLM has gone for creditors voluntary winding up, other details are not available

12. The Company has an investment of Rs. 182,769,550 in ordinary share of TCL Industries (Malaysia) Sdn Bhd (TCLM). TCLM has been making losses on the manufacture of Maleic Anhydride (MAN) due to the high prices of Benzene feedstock and as on 31" December 2007 its net worth had been eroded. In January 2008, TCLM successfully commissioned its plant for the manufacture of MAN from Butane instead of Benzene, which was expected to make TCLM competitive with other MAN manufacturers. However, with the global meltdown in Sep - Dec 2008 TCLM had to close operations as its operations became unviable. As a result, one of the unsecured creditors of TCLM appointed a provisional liquidator on 2nd January 2009. At the meeting of creditors and shareholders of TCLM on 3rd February 2009, the appointment of the provisional liquidator was confirmed. In view of the above developments, the realisability of the investment in TCLM is highly uncertain. The Board of Directors of the Company therefore in their meeting dated 28.01.2009 decided to write down the said investment of Rs. 182,769,550 against the Securities Premium and other capital reserves of the Company.

After obtaining approval of Shareholders in the Extraordinary General Meeting held on I2h March, 2009 for the same, the Company filed a petition u/s 78, 100 to 104 of the Companies Act, 1956 before the Honble High Court of Bombay to adjust the said amount against the Reserves of the Company. The Honble High Court of Bombay approved the above adjustment vide its order dated 5" August 2009. The said scheme of adjustment became effective after the order of the Honble High Court of Bombay was filed with the Registrar of Companies, Mumbai.

In terms of the said order of the Honble High Court of Bombay, the investment of Rs. 182,769,550 in TCLM was adjusted as under:

Amalgamation Reserve: Rs. 1.870,920

Capital Reserve: Rs.2,500,000

Securities Premium: Rs. 178,398,630

Had the Company followed the provisions of AS 13 "Accounting for Investments as prescribed by the Companies (Accounting Standards) Rules, 2006, the write-down in the value of the investment in TCLM would have to be charged to the Profit and Loss A/c with corresponding reduction in the profit for the year.

14. Other Long Term benefits

The Companys Long Term benefit includes Leave encashment payable at the time of retirement in full, otherwise it is encashable during the year in which services are rendered subject to in excess of 30 days. Present value of obligation as at the beginning of the year is Rs. 10.597.285 (Rs. 9,235,544) and the actuarial gain and losses are recognised in full in the Profit and Loss account for Rs. 21,063 (Gain) (Previous year Rs. 1,361,741-Loss). The Present value of obligation as at March 31. 2010 is Rs. 10.576,222 (Previous Year Rs. 10.597.285)

15. A) During the year the Company has taken office premises under cancelable lease. Lease rent accounted in profit and loss account Rs. 312,750 (Previous Year Rs. 259,000). The said lease is cancelable at the option of the lessee at three months notice.

B) The Company has given office premises on lease to a Company under the same management under cancelable lease arrangement for a period of five years. The lease arrangement can be cancelled at the option of lessor or lessee either giving two months notice. The Company has taken interest free security deposit of Rs. 1,400,000 (Previous Year Rs. 1,400,000) Lease rent received during the year and accounted as income is Rs. 1,852,455 (Previous Year Rs. 1,838,055)

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