Chemfab Alkalies Ltd. (Old) ಖಾತೆಯ ಉಪಯುಕ್ತ ಮಾಹಿತಿ

Mar 31, 2016

Note:

i) The amounts shown above represent best possible estimate carried on the basis of the available information. The uncertainties and possible reimbursement are dependent on the outcome of the various case proceedings which have been initiated by the Company or the claimants, as the case may be, and therefore cannot be predicted accurately.

ii) Figures in bracket indicate previous year figures

iii) Also Refer Note 32 below.

1. Income Tax Demands

During the previous year, the Income Tax Department had appealed before the Income Tax Appellate Tribunal (ITAT) against the Order passed by the Commissioner of Income Tax (Appeals) for the Assessment Year 2010-11 relating to the disallowance of sales commission paid to various commission agents. The Company had filed its cross objections challenging the Department’s contentions and it is hopeful of a favorable outcome. The amount involved in this appeal is estimated at Rs. 1,34,53,017. Based on professional advice obtained in the matter, the Company is hopeful of a favorable outcome in the Appeal.

2. The National Green Tribunal, in an appeal filed by a party, granted an ex parte stay, restraining the construction activities pertaining to the expansion and operation of the Plant without valid consent order. The Company strongly objected the averments of the complainant and filed its counter for vacating the stay which was granted. Further, the Company’s petition seeking directions to the authorities concerned for the grant of Consent to Establish (NOC) for the expansion is also pending before the Hon’ble Forum.

3. Power and fuel for the year ended 31 March 2016 includes charge towards the Fuel and Power Purchase Cost Adjustment (FPPCA) amounting to Rs 85,84,890/- (P.Y - Rs. 94,47,120/-) (net of provision no longer required written back during the year Rs. 2,15,12,205 (P.Y - Rs. 1,53,42,129)). The above includes a provision of Rs. 2,32,84,470/- towards FPPCA determined by the management pending receipt of demand notices. Further, the Company has filed a joint appeal along with certain other applicants against the increase in power tariff fixed by the Electricity Department, Pudhucherry, with effect from 1 April 2013, which is pending disposal.

4. The Company has granted an amount of Rs. 26,16,78,010 (including Rs. 11,46,32,838 given during the year) as Interoperate deposit (ICD) to Teamec Chlorates Limited (TCL), which is outstanding as at 31 March 2016. TCL had difficulties in repaying its debts to the Banks / others and its Net worth was eroded as per the audited financial statements for the year ended 31 March 2015. A reference was made to the Board for Industrial and Financial Reconstruction (BIFR) by TCL during the year ended 31 March 2015. Such reference was not accepted by BIFR and subsequently during the year, TCL entered into a One-time settlement (OTS) with its lenders directly and is in the process of settling their dues.

Due to improved business operations, higher cash flows as reported by TCL and based on it’s request, the Company has restructured the outstanding ICDs as under.

i. All the amounts provided as ICDs under various tranches are consolidated and are repayable in 3 years and are subject to interest @ 11.5% per annum with effect from 25 March 2016.

ii. The entire amount of outstanding ICD including the interest receivable thereon is fully guaranteed by TEAM by way of a corporate guarantee.

iii. The amounts are additionally secured by way of mortgage of land owned by Titanium Equipment and Anode Manufacturing Company Limited (TEAM), to the extent of Rs. 10,00,00,000.

iv. TCL has also provided an undertaking that a paripassu security on its assets will be created in favour of the Company on discharge of its dues to the banks.

Considering the above developments, the available security in the form of corporate guarantee and mortgage of land provided by TEAM, the entire amount outstanding from TCL is considered as good for recovery.

5. Provision for current tax for the year has been determined based on the total income of the Company for the year ended 31 March 2016 and in accordance with the Income Tax Act, 1961, duly considering the deduction / exemption proposed to be claimed by the Company in the Return of Income. The tax charge for the current year amounting to Rs. 4,55,15,341/-(PY Rs. 3,22,23,442/-) includes a net adjustment of Rs. 17,58,200/- (P.Y. Rs. 2,13,817/-) towards prior periods based on the reassessment of tax claims made in the past with respect to various matters considering the developments including completion of tax assessments.

6. Cash Credit facilities are secured by exclusive first charge on all current assets of the Company, exclusive first equitable mortgage of factory land and building, second charge on the fixed assets of the Company and pledge of other assets of the Company. The Company has not utilized these Cash Credit facilities during the current period and in the previous year.

Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management. This has been relied upon by the auditors.

7. During the year, the Company incurred an aggregate amount of Rs. 22,99,655 towards corporate social responsibility in compliance of Section 135 of the Companies Act 2013 read with relevant schedule and rules made there under. The details of the CSR spend are given below: -

Gross amount required to be spent by the Company during the year (Rs.) 49,60,575 Amount spent by the Company during the year on:

8. Employee benefit plans I Defined contribution plans

a. The Company makes Provident Fund, Superannuation Fund and Employee State Insurance Scheme contributions which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized Rs. 65,66,902 (Year ended 31 March, 2015 Rs. 54,93,334) for Provident Fund contributions, Rs. 15,43,061 (Year ended 31 March, 2015 Rs. 13,58,936) for Superannuation Fund contributions, Rs. 2,94,183 (Year ended 31 March, 2015 Rs. 2,39,034) for Employee State Insurance Scheme contributions and Rs 6,87,680 (Year ended 31 March, 2015 Rs 2,69,201) for Employee Deposit Linked Insurance Scheme in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

Defined benefit plans

b. The Company offers the following employee benefit schemes to its employees:

i. Gratuity (included as part of (Contribution to Provident and other Funds) in Note 27 Employee benefits expense) The following table sets out the funded status of the defined benefit schemes and the amount recognized in the financial statements:

51. Employee Stock Option Scheme

a) The ESOP scheme titled “CAESOS 2015” [Chamfer Alkalis Employees Stock Option Scheme 2015] was approved by the shareholders through postal ballot on 5th March 2016. 4,00,000/- options are covered under the Scheme for 4,00,000/- equity shares.

The Compensation Committee of the Company, had granted 1,68,000/- options under this Scheme to employees of the Company as of 31 March 2016. The shares covered by such options were 1,68,000/-equity shares.

The vesting period of these options range over a period of 2 to 4 years. The options may be exercised within a period of 12 months from the date of vesting.

Weighted average remaining contractual life for options outstanding as at 31 March, 2016 - 4 Years (As at 31 March, 2015 - Nil). Note- The ESOP scheme has been implemented only during the current year 2015-16.

Note- The ESOP scheme has been implemented only during the current year 2015-16.

9. MAT Credit

Provision for Income Tax for the current year has been calculated in accordance with the provisions of the Income Tax Act, 1961.

Taking into consideration the future profitability and the taxable position in the subsequent years, the Company had recognized “MAT Credit Entitlement” to the extent of Rs. 24,37,259/- during the previous year ended 31 March 2015 in accordance with the Guidance Note on “Accounting for Credit Available in respect of Minimum Alternate Tax under Income Tax Act, 1961” issued by the Institute of Chartered Accountants of India.

During the current year ended 31 March 2016, the Company is liable to pay income tax under the normal stream. Hence, the Company has utilized the entire MAT credit entitlement towards its current tax liability in accordance with the aforesaid Guidance Note.

10. Details on derivatives instruments and unheeded foreign currency exposures

(a) No forward exchange contracts were open as at 31 March 2016. The forward exchange contracts, wherever taken, are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables outstanding.

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Mar 31, 2015

(A) Disclosure of Rights

The Company has issued only one class of equity shares having a par value of Rs.5 per share. Each holder of Equity Share is entitled to one vote per share. The Company declares dividends in Indian rupees. Dividend when proposed by the Board of Directors is subject to the approval of the shareholders at the Annual General Meeting, except in the case of interim dividend, if any.

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

b. Contingent liabilities in respect of

(i) Guarantees given by the Company to the Customs Department on behalf of Titanium Equipment and Anode Manufacturing Company Limited (Refer Note 47) 1,15,00,000 80,00,000

(ii) Outstanding letters of credit 2,23,08,367 2,26,54,655

(iii) Sales tax, Excise, Service Tax and other demands against which the Company has filed appeals and for which no provision is considered required as the Company is hopeful of successful outcome in the appeals. 35,31,107 2,41,52,812

Notes:

(i) The amounts shown above represent best possible estimate carried on the basis of the available information. The uncertainties and possible reimbursement are dependent on the outcome of the various case proceedings which have been initiated by the Company or the claimants, as the case may be, and therefore cannot be predicted accurately.

(ii) Figures in bracket indicate previous year figures.

2. Income Tax Demands

A. Orders Relating To Financial Year 2011-12 and 2012-13

During the year, the Company received orders from the Income Tax Department for the financial years 2011-12 and 2012-13 primarily disallowing a portion of the Sales Commission expenditure aggregating Rs. 53,40,174/- and Rs. 39,13,140/- respectively. The tax demanded on account of the disallowances are Rs. 19,32,743/- and Rs. 18,42,597/- for the financial years 2011-12 and 2012-13 respectively. The aforesaid disallowance was made on technical grounds in the absence of confirmation letters from some commission agents. The Management duly considering the order received on the similar matter in the earlier years, the amounts involved and the significant time /cost involved in continuing to litigate this matter has decided not to prefer any further appeals and has paid and accounted for the tax demand as a charge in the financial statements for the year ended 31 March 2015. Also refer Note 34 below.

B. Appellate Order relating to the Financial Year 2009-10

During the year, the Income Tax Department has appealed before the Income Tax Appellate Tribunal (ITAT) against the Order passed by the Commissioner of Income Tax (Appeals) for the Assessment Year 2010-11 relating to the disallowance of sales commission paid to various commission agents. The Company has filed its cross objections challenging the Department''s contentions and it is hopeful of a favorable outcome. The amount involved in this appeal is estimated at Rs. 1,34,53,017. Based on professional advice obtained in the matter, the Company is hopeful of a favorable outcome in the Appeal. (Also refer Note 34 below).

C. The Income Tax Department has issued show cause notice for the financial years 2005-06 to 2012-13 for initiating penal proceedings under section 271(1)(c). The Company has requested the department to drop the penal proceedings which is pending disposal. The Company is hopeful of a favorable outcome.

31. The National Green Tribunal, in an appeal filed by a party, granted an ex parte stay, restraining the construction activities pertaining to the expansion and operation of the Plant without valid consent order. The Company strongly objected the averments of the complainant and filed its counter for vacating the stay which was granted. Further, the Company''s petition seeking directions to the authorities concerned for the grant of Consent to Establish (NOC) for the expansion is also pending before the Hon''ble Forum.

3. Power and fuel for the year ended 31 March 2015 includes charge towards the Fuel and Power Purchase Cost Adjustment (FPPCA) amounting to Rs 94,47,120/- (net of provision no longer written back during the year Rs. 1,53,42,129 (P.Y - Nil)). FPPCA charge for the year includes a provision of Rs. 2,15,12,205/- determined by the management pending receipt of demand notices. Further, the Company has filed a joint appeal along with certain other applicants against the increase in power tariff fixed by the Electricity Department, Puducherry, with effect from 1 April 2013, which is pending disposal.

4. The Company had given Inter Corporate deposits (ICD) to Teamec Chlorates Limited (TCL), at their request to meet their working capital requirements. The principal amount outstanding on account of these ICDs as at 31 March 2015 is Rs. 14,70,45,171 (As at 31 March 2014 Rs. 12,00,00,000) which also includes an amount of Rs. 2,70,45,171 that has been converted into ICD during the year from the balance of Trade /Other Receivables outstanding from TCL.

Further, due to various developments, TCL could not repay an amount of Rs 2,00,00,000 which became due for repayment on 8 February 2015 as per the original terms of sanction of the ICD and requested for an extension. Hence, at the request of TCL, the Board of Directors, duly considering professional advice, extended the tenure of the ICD to February 2017. Whilst the net worth of TCL has been fully eroded as per the latest audited financial statements and during the year it has made an application to the Board for Industrial and Financial Reconstruction (BIFR), the Management of the Company, based on the discussions with TCL and considering certain other developments believes that no provisioning is required to be made for the outstanding ICDs as at this stage.

5. Provision for current tax for the year has been determined based on the total income of the Company for the year ended 31 March 2015 and in accordance with the Income Tax Act, 1961, duly considering the deduction / exemption proposed to be claimed by the Company in the Return of Income. The tax charge for the current year amounting to Rs. 3,22,23,442/- (P.Y Rs. 7,36,10,767/-) includes a net adjustment of Rs. 2,13,817/- (P.Y. Rs. 77,89,233/-) towards prior periods based on the reassessment of tax claims made in the past with respect to various matters considering the developments including completion of tax assessments. Also refer Note 30 above.

6. Cash Credit facilities are secured by exclusive first charge on all current assets of the Company, exclusive first equitable mortgage of factory land and building, second charge on the fixed assets of the Company and pledge of other assets of the Company. The Company has not utilised these Cash Credit facilities during the current period and in the previous year.

7. As on 31 March 2015, based on and to the extent of information available with the Company regarding registration of suppliers as Micro, Small and Medium Enterprises under the Micro, Small and Medium Enterprises Development Act, 2006, there are no amounts outstanding in respect of these vendors.

8. Fixed Assets and Depreciation - Adoption of Schedule II to the Companies Act, 2013

During the year, pursuant to the notification of Schedule II to the Companies Act, 2013 with effect from April 1, 2014, the Company has revised the estimated useful life of its assets to align the useful life with those specified in Schedule II except for Continuous Process Plant (CPP) assets in whose case the life of the assets has been assessed as 17.99 years based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc.

Further, any part or components of fixed assets which are separately identifiable and expected to have a useful life which is different from that of the main assets are capitalized and depreciated separately, based on the technical assessment of the Management.

Further, assets individually costing Rs. 5,000/- or less that were depreciated fully in the year of purchase are now depreciated based on the useful life considered by the Company for the respective category of assets. The details of previously applied depreciation rates / useful life are as follows:

Pursuant to the transition provisions prescribed in Schedule II to the Companies Act, 2013, the Company has adjusted an amount of Rs. 39,22,639/- (net of deferred tax of Rs. 20,19,857/-) against the opening Surplus balance in the Statement of Profit and Loss under Reserves and Surplus where the remaining useful life of the asset was determined to be Nil as on April 1, 2014.

The depreciation expense in the Statement of Profit and Loss for the year is higher by Rs. 92,78,283/- consequent to the change in the useful life of the assets in compliance with the Schedule II to the Companies Act, 2013. Also refer Note 11 (2).

9. Employee benefit plans

I. Defined contribution plans

a. The Company makes Provident Fund, Superannuation Fund and Employee State Insurance Scheme contributions which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs. 54,93,334(Year ended 31 March, 2014 Rs. 51,18,636) for Provident Fund contributions, Rs. 13,58,936 (Year ended 31 March, 2014 Rs. 13,39,212) for Superannuation Fund contributions, Rs. 2,39,034 (Year ended 31 March, 2014 Rs. 2,43,430) for Employee State Insurance Scheme contributions and Rs 2,69,201 (Year ended 31 March, 2014 Rs 2,80,626) for Employee Deposit Linked Insurance Scheme in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

Defined benefit plans

b. The Company offers the following employee benefit schemes to its employees:

i. Gratuity (included as part of (Contribution to Provident and other Funds) in Note 26 Employee benefits expense)

The following table sets out the funded status of the defined benefit schemes and the amount recognised in the financial statements.

10. Segment Information

The Company has identified business segments as its primary segment and geographical segments as its secondary segment.

a) Primary segment:

Effective 1 April 2014, the Company has reviewed its business oversight mechanism and has realigned all its operations under single business segment (i.e.) "Dealing with Chlor Alkali and Related Products / Services", based on the assessment of the overall risks and rewards.

11. Related party disclosures

a) List of Related parties and description of relationship

(i) Individuals exercising Significant influence Mr. Suresh Krishnamurthi Rao - Chairman

(ii) Relatives of above Mrs. K.M. Padma (Mother of Mr. Suresh Krishnamurthi Rao)

Mrs. Meenakshi Ratnam (Wife of Mr. Suresh Krishnamurthi Rao)

(iii) Entities in which persons listed in (i) and

(ii) above exercise significant influence CHKR Foundation

Dr Rao Holdings Pte Ltd

Titanium Equipment and Anode Manufacturing Company Limited (TEAM) Teamec Chlorates Limited (TCL)

(iv) Key Management Personnel (KMP) Mr. Nitin S Cowlagi - Chief Financial Officer

Mr. K Mohamed Ibrahim - Company Secretary (upto 14 November 2014)

The Company has taken on lease certain vehicles during the prior years under non-cancellable operating lease agreements. There were no non-cancellable operating lease arrangements as at 31 March 2015. The rental expense under such operating leases was Rs. Nil /- (Previous Year Rs. 38,02,355/-).

12. Subsequent to the resignation of the Company Secretary with effect from 14 November 2014, the Company is in the process of appointing a qualified Whole-time Company Secretary as stipulated under the Companies Act 2013.

13. Previous year figures have been regrouped or reclassified wherever necessary to conform to current year''s classification.

14. The Board of Directors has reviewed the realisable value of all current assets of the Company and has confirmed that the value of such assets in the ordinary course of business will not be less than the value at which these are recognised in the financial statements. In addition, the Board has also confirmed the carrying value of the non-current assets in the financial statements. The Board, duly taking into account all the relevant disclosures made, has approved these financial statements in its meeting held on 27 April 2015.

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Mar 31, 2014

1. Amount in Rs.

Particulars As at 31 March 2014 As at 31 March 2013

a. Commitments

(i) Estimated amount of contracts remaining to be executed and not provided for in these accounts (net of advances) in respect of purchase of :

- Tangible assets 20.48,31,068 47,57.63,871

- Intangible assets 24,36.000 -

b. Contingent liabilities in respect of

(i) Guarantees given by the Company to the Customs department on behalf of Titanium Equipment and Anode Manufacturing Company Limited (Refer Note 45) 80,00,000 75,00,000

(ii) Outstanding letters of credit 2,26,54,655 24,88,41,400

(iii) Income Tax, Sales tax ,Excise, Service Tax and other demands against which the Company has challenged / filed appeals and 2,41.52,812 2,01,77,809 for which no provision is considered required as the Company is hopeful of successful outcome in the appeals.

2. Income Tax Demands

A. Orders Relating To Financial Year from 2005-06 to 2008-09 and 2010-11 received during the Financial Year 2013-14

During the year, the Company received orders from the Income Tax Department disallowing a portion of the Sales Commission expenditure aggregating Rs. 1,73,26,736 /- for the Financial Years from 2005-06 to 2008-09 and 2010-11 resulting in a total additional tax demand of Rs.64,17,086/- on this account for the said years. The aforesaid disallowance was made on technical grounds in the absence of confirmation letters from some commission agents. The Management, duly considering the legal opinion obtained, the amounts involved and the significant time /cost involved in continuing to litigate this matter, has decided not to prefer any further appeals and has paid and accounted for the tax demand as a charge in the financial statements for the year ended 31 March 2014. Also Refer Note 35 below.

B. Order relating to the Financial Year 2009-10 received during the previous year 2012-13 which is under appeal

i. During the previous year 2012-13, the Company received an order from the Income Tax Department for the Financial Year 2009-2010 challenging and disallowing the claim of membrane as a deductible expenditure and the incurrence of the Sales Commission expenditure.

ii. In the aforesaid assessment order, Sales Commission expenditure amounting Rs.2,93,25,806/-was disallowed by the Department as not being genuine on account of preponderance of probabilities. The Company contends that these are genuine and valid transactions, and that the total amount which was actually paid to the Commission agents for the services rendered was Rs. 2,66,03,358/- and the balance amounts were paid towards quantity and other discounts provided to customers. The Company strongly believes that the disallowance has been incorrectly made by the Department based on certain incorrect assumptions on the method of working of the Commission agents and the question of genuineness of the aforesaid sales commission expenditure incurred by the Company is beyond doubt and such tax claims are not tenable.

iii. Accordingly, the Company has also filed an Appeal against this order before the CIT (Appeals), Chennai and obtained a stay on the demand. Subsequently, consequent to vacation of the stay the Company has paid the entire amount demanded subject to the disposal of the appeal filed.

iv. Considering the recent orders received during the current year on a similar matter (Refer Note 31A above), based on legal advice obtained, and by applying the principle of Res Judicata, the Management during the current year, has provided for an amount of Rs. 4,12,792/- towards the demand arising on account of sales commission for the Financial Year 2009-10 on grounds of prudence. Hence, the net potential balance Income Tax liability (including the relevant interest) of Rs.1,34,53,017 on this account, is disclosed under "Contingent Liabilities". (Also Refer Note 35 below).

C. The department has issued show cause notice for the aforesaid financial years 2005-06 to 2010-11 for initiating penal proceedings under section 271(l)(c). The Company has requested the department to drop the penal proceedings which is pending disposal. The Company is hopeful of a favorable outcome.

3. The National Green Tribunal, South Zone, in an appeal filed by a party, granted an ex parte stay, restraining the construction activities pertaining to the expansion and operation of the plant without valid consent order. The Company strongly objects to the averments of the complainant and had filed its counter for vacating the stay which was granted subsequently. Further, the company''s petition seeking directions to authorities concerned for the grant of Consent to Establish (NOC) for the expansion is already pending before the Hon''ble Forum. Based on the professional advice on the matter, the Company expects favorable orders from the Tribunal.

4. Power and fuel for the year ended 31 March 2014 includes charge towards the Fuel and Power Purchase Cost Adjustment (FPPCA) amounting to Rs 3,29,41,013. The above includes a provision of Rs. 1,53,42,129/- towards FPPCA for the periods for which demand is not yet received and hence determined based on management assessment. Further, the Company has filed a joint appeal along with certain other applicants against the increase in power tariff fixed by the Electricity Department, Puducherry, with effect from 1 April 2013, which is pending disposal.

5. The Company is implementing a project for improving the process technology and modernizing the plant ("the project"), the completion of which is in progress as at 31 March 2014 and is awaiting the required regulatory clearances. The management is hopeful of obtaining the required clearances and commissioning the project in the near future. An amount of Rs. 56,44,73,667/- incurred on the project is included as a part of Capital Work in Progress.

6. Provision for current tax for the year has been determined based on the total income of the company for the year ended 31 March 2014 and in accordance with the Income Tax Act, 1961, duly considering the deduction / exemption proposed to be claimed by the Company in the Return of Income. The tax charge for the current year amounting to Rs. 7,36,10,767/- (P.Y Rs. 12,11,88,900/-) includes a net adjustments of Rs. 77,89,233/- (P.Y. Rs. 89,16,900/-) towards prior periods comprising of Rs. 68,29,878/- for additional provision made by the management in connection with the tax demands arising out of sales commission (Refer Note 31 above) and the reversal of tax provisions amounting to Rs 1,46,19,111/- based on the reassessment of tax claims made in the past with respect to various matters considering the developments including completion of tax assessments.

7. Cash Credit facilities are secured by exclusive first charge on all current assets of the Company, exclusive first equitable mortgage of factory land and building, second charge on the fixed assets of the Company and pledge of other assets of the Company. The Company has not utilised these Cash Credit facilities during the current period and in the previous year.

8. As on 31 March 2014, based on and to the extent of information available with the Company regarding registration of suppliers as Micro, Small and Medium Enterprises under the Micro, Small and Medium Enterprises Development Act, 2006, there are no amounts outstanding in respect of these vendors.

9. Employee Benefits

A. Denned Contribution Plans

a. The Company makes Provident Fund and Superannuation Fund contributions which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs. 47,15,051 (Year ended 31 March, 2013 - Rs 41,53,553) for Provident Fund contributions and Rs. 13,39,212 (Year ended 31 March, 2013 Rs 11,69,537) for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

10. Previous year figures have been regrouped or reclassified wherever necessary to conform to current years classification.

11. In connection with the preparation of the financial statements, the Board has confirmed the propriety of the contracts / agreements entered into and the resultant income earned / expenses incurred and the balance of assets and liabilities arising out of the same after reviewing the levels of authorisation, the available documentary evidences and the overall control environment. Further, the Board of Directors has reviewed the realisable value of all current assets of the Company and has confirmed that the value of such assets in the ordinary course of business will not be less than the value at which these are recognised in the financial statements. The Board, duly taking into account all the relevant disclosures made, has approved these financial statements in its meeting held on 11 April 2014.

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Mar 31, 2013

(a) Disclosure of Rights

The Company has issued only one class of equity shares having a par value of Rs.5 per share. Each holder of Equity share is entitled to one vote per share. The Company declares dividends in Indian Rupees. Divdend when proposed by the Board of Directors is subject to the approval of the shareholders at the Annual General Meeting, except in the Case of interim Dividend, if any.

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

(b)Authorised share capital includes 51,00,000 Equity Shares of Rs. 10/- each (P.Y 51,00,000 Equity Shares of Rs.10/- each) being authorised share capital of Rs. 5,10,00,000 (P.Y Rs. 5,10,00,000/-) of erstwhile Membrane Technologies Limited which stood combined with the authorised share capital of the Company based on the Scheme of Amalgamation approved by the Hon''ble High Court of Madras vide its Order dated 8 March 2006.

Notes:

(i) The amounts shown above represent best possible estimate carried on the basis of the available information. The uncertainities and possible reimbursement are dependent on the outcome of the various case proceedings which have been initiated by the Company or the claimants, as the case may be, and therefore cannot be predicted accurately.

(ii) Figures in bracket indicate previous year figures.

1. Power and fuel includes charge towards the incremental fuel surcharge levy by the Electricity Department, Puducherry, amounting to Rs.4,94,51,407/- for the Year ended 31 March 2013 and also Rs. 1,98,81,149/- debited towards the Incremental Fuel Surcharge levy by the Electricity Department, Puducherry, for the period from April to October, 2010, consequent to the Order dated 25 September 2012, of the Joint Electricity Regulatory Commission, for Goa and Union Territories.

2. (i) During the year, the Company received an order from the Income Tax Department demanding Rs. 2,30,79,800/- for the Financial Year 2009-2010 challenging and disallowing the claim of membrane as a deductible expenditure and the incurrence of the Sales Commission expenditure.

(ii) In the aforesaid assessment order, Sales commission expenditure amounting Rs.2,93,25,806/- was disallowed by the department as not being genuine on account of preponderance of probabilities. The Company contends that these are genuine and valid transactions, and that the total amount which was actually paid to the Commission agents for the services rendered was Rs. 2,66,03,358/- and the balance amounts were paid towards quantity and other discounts provided to customers. The Company strongly believes that the disallowance has been incorrectly made by the Department based on certain assumptions on the method of working of the Commission agents and the question of genuineness of the aforesaid sales commission expenditure incurred by the Company is beyond doubt and such tax claims are not tenable. Also refer para (iii) below.

(iii) Accordingly, the Company has also filed an Appeal against this order before the CIT (Appeals), Chennai, and based on the professional advice obtained by it in the matter, the Company is hopeful of a successful outcome of the Appeal. Hence, the net potential Income Tax liability (including the relevant interest) of Rs.1,38,65,809/- on this account, is disclosed under "Contingent Liabilities".

(iv) Further, as at 31 March 2013, an amount of Rs.75,00,000/- has been paid by the Company against the above total disputed tax amount and stay has been granted by the Department for the balance amount of demand.

3. Cash Credit facilities are secured by exclusive first charge on all current assets of the Company, exclusive first equitable mortgage of factory land and building, second charge on the fixed assets of the Company and pledge of other assets of the Company. The Company has not utilised these Cash Credit facilities during the current period and in the previous year.

4. Provision for current tax for the year has been determined based on the total income of the company for the year ended 31 March 2013 and in accordance with the Income Tax Act, 1961, duly considering the deduction / exemption proposed to be claimed by the Company in the Return of Income. Further the tax charge for the current year includes an amount of Rs. 89,16,900/- (P.Y. 2,94,00,000/-) towards additional provision made by the management based on the reassessment of certain tax claims made in the past with respect to the ongoing assessments based on various developments and on the grounds of prudence.

5. As on 31 March 2013, based on and to the extent of information available with the Company regarding registration of suppliers as Micro, Small and Medium Enterprises under the Micro, Small and Medium Enterprises Development Act, 2006, there are no amounts outstanding in respect of these vendors.

6. Employee Benefits

A. Defined Contribution Plans

The Company makes Provident Fund and Superannuation Fund contributions which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs. 41,53,553 (Year ended 31 March 2012 - Rs 36,63,463) for Provident Fund contributions and Rs. 11,69,537 (Year ended 31 March 2012 Rs. 8,63,545) for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

B. The Company''s obligation towards the Gratuity Fund is a defined benefit plan and is funded with Life Insurance Corporation of India. The details of actuarial valuation as provided by the Independent Actuary are given below:

7. Segment Information

The Company has identified business segments as its primary segment and geographical segments as its secondary segment.

a) Primary segment reporting (by Business Segments)

Business segments are primarily Chlor Alkali segment and Other segment.

8. Operating Leases

The Company has taken on lease certain vehicles under non cancellable operating lease agreements. The rental expense under such operating leases was Rs.73,10,567 /- (Previous Year Rs.52,90,536/-). Future minimum lease payments on non cancellable lease agreements as at 31 March 2013 are as follows:

General description of lease terms:

(i) Lease rentals are charged on the basis of agreed terms.

(ii) Vehicles are taken on lease over a period of 24 to 36 months.

9. Earnings Per Share

Net Profit for the year has been used as the numerator and number of shares has been used as denominator for calculating the basic and diluted earnings per share.

10. The Company has not used any derivative instruments to hedge its foreign currency exposures. The details of foreign currency balances which are not hedged as at the balance sheet date are as below:

11. During the year, pursuant to the approval of shareholders through postal ballot, the Company has altered the object clause of the Memorandum of Association to include the undertaking of trading business in sugar and its allied products. However, as at 31 March 2013, no activity has been undertaken on this account.

12. Other Current Assets as at 31 March 2013, represents interest accrued on fixed deposits placed with banks amounting to Rs. 14,95,227/- (P.Y Rs 10,50,101/-)

13. Previous year figures have been regrouped or reclassified wherever necessary to conform to current years classification.

14. The Board of Directors has reviewed the realisable value of all current assets of the Company and has confirmed that the value of such assets in the ordinary course of business will not be less than the value at which these are recognised in the financial statements. Further, the Board, duly taking into account all the relevant disclosures made, has approved these financial statements for the year ended 31 March 2013 in its meeting held on 11 April 2013.

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Mar 31, 2011

1. Excise Duty

Excise Duty on sales for the year has been disclosed as reduction from the turnover. Excise duty relating to the difference between the closing stock and opening stock has been included in Schedule 12 "Materials"

Amount / Rs. 31- March-2011 31-March-2010

2. Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for in these accounts (net of advances) 2,06,76,173 1,42,53,278

3. Contingent liabilities in respect of

(a) Counter Guarantees to Banks for guarantees given by the banks 4,63,90,326 6,11,36,000

(b) Guarantees given by the Company to the customs department on behalf of Teamco Hitech Engineering Limited 50,00,000 50,00,000

(c) Letters of credit 1,18,40,000 1,80,03,054

(d) Sales tax, Income tax and Excise demands against which the Company has filed appeals and for which no provision is considered required as the Company is hopeful of successful outcome in the appeals. 1,03,37,354 3,06,23,177

4. Cash Credit facilities are secured by exclusive first charge on all current assets of the Company exclusive first equitable mortgage of factory land and building,second charge on the fixed assets of the Company and pledge of other assets of the Company.

5. There was a minor Chlorine gas leak in the Chlor-alkali plant at Puducherry on 26th January, 2011. The District Magistrate and Puducherry Pollution Control Committee had ordered temporary closure of the Plant operations until further orders and investigations. The investigations by the concerned Government Authorities have been completed and Orders are awaited. The Company has also filed a Writ Petition before the Honble High Court of Madras, to issue directions to the concerned authorities for permitting the Company to recommence its operations. The Company is hopeful of a favourable outcome in this matter and hence the financial statements have been prepared on a going concern basis.

6. The Board of Directors, in their meeting held on 05/12/2010, have approved the Scheme of Arrangement under Section 391 to 394 of the Companies Act, 1956 to demerge the business and operations relating to "Hollow Fibre Ultra Filtration Membranes, Packaged Drinking and Energy Water, Health Shoppe" (Demerged Undertaking) of the Company into Titanium Equipment and Anode Manufacturing Company Limited ("Resulting Company") with effect from the 1st December, 2010 ("Appointed Date"). This scheme has been approved by the Shareholders, in their meeting convened by the Honble High Court of ¦ Madras, held on 31/1/2011 and sanctioned by the Honble High Court of Madras vide its order dated 14/03/2011. The said Order has been filed with the Registrar of Companies, Tamil Nadu on 26/03/2011 which is the effective date of the scheme. In consideration for the above transfer, the Company has been allotted 1,66,465, 6% Redeemable Cumulative Preference Shares of the face value of Rs. 100 each at par in the capital of Resulting Company. The demerger surplus of Rs.2,77,78,728 which represents the consideration and excess of liabilities over assets transferred has been disclosed as an exceptional item in the profit and loss account.

7. Related Party Disclosures - As identified by the management and relied upon by the auditors

a) List of Related parties and description of relationship

(i) Parties with Significant influence

Teamco Hitech Engineering Limited

Titanium Equipment and Anode Manufacturing company Limited

Teamec Chlorates Limited

(ii) Key Management Personnel Dr.C.H.Krishnamurthi Rao

Relatives of above

Mr. Suresh Krishnamurthi Rao Mrs. K.M.Padma

8. The interest on fixed loan amounting to Rs.2,23,847 pertains to the interest on term loan availed from Bank of Baroda by the demerged undertaking for the period from 19th November 2010 to 30th November 2010. The loan has been taken over by the resulting company upon demerger.

9. Repairs to Plant and Machinery include stores and spares consumed amounting to Rs.2,61,56,660 (Rs.2,48,64,878/-)

10. Micro, Small and Medium Enterprises Development Act, 2006

In accordance with the Notification No. GSR 719 (E) dt 16.11.2007, issued by the Ministry of Corporate Affairs, certain disclosures are required to be made relating to Micro, Small and Medium Enterprises as defined under the Micro, Small and Medium Development Act 2006. The Company is in the process of compiling relevant information from its suppliers about their coverage under the said Act. Since the relevant information is still not available, no disclosures have been made in the accounts.

11. The financial statements of the current year have been prepared after considering the results of the Demerged Undertaking upto 30th November, 2010. Hence the figures for the current year are not comparable with those of the previous year.

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Mar 31, 2010

1. Excise Duty

Excise Duty on sales for the year has been disclosed as reduction from the turnover. Excise duty relating to the difference between the closing stock and opening stock has been included in Schedule 13 "Materials"

2. The land of erstwhile Membrane Technologies Limited, is in the process of being transferred in the name of the Company.

Amount / Rs. 31- March-2010 31-March-2009

3. Contingent liabilities in respect of (a) Counter Guarantees to Banks for guarantees given by the banks 6,11,36,000 7,15,34,947

(b) Guarantees given by the Company to the customs department on behalf of Teamco Hitech Engineering Limited 50,00,000 50,00,000

(c) Letters of credit 1,80,03,054 5,15,72,788

(d) Sales tax, Income tax and Excise demands against which the Company has filed appeals and for which no provision is considered required as the Company is hopeful of successful outcome in the appeals. 3,06,23,177 1,47,73,869

4 Closure of Chlorates Division during the year

The Chlorates Division of the company at Puducherry has been closed with effect from 3rd June 2009. The cost and the net book value of the fixed assets as on date of closure was Rs. 8,41,09,623 and Rs. 4,07,20,964 respectively. As this division does not represent a major separate line of business or geographical area of operations, this has not been considered as a discontinuing operation.

The management has evaluated the options of alternate use of fixed assets at other Divisions of the company, disposal, except land and building.

Consequent to such evaluation, assets amounting to Rs. 6,84,49,001 and having a net book value of Rs.2,79,31,967 have been disposed and the loss on such disposal amounting to Rs. 1,84,46,357 has been considered in these accounts.

In respect of fixed assets transferred to other divisions amounting to Rs.66,83,020 and having a net book value of Rs.39,52,162, the management is of the view of that no impairment losses need to be provided as they are capable of being put to alternate use.

The balance fixed assets amounting to Rs.19,73,928 and having a net book value of Rs.3,67,397 have been classified as "held-for-sale" and included in the respective category of assets in Schedule IV to the financial statements.

5. During the year, the Company has obtained the approval of its members for payment of remuneration by way of commission to its Non-Executive Directors, at rates which are in excess of those prescribed under Sec.309 of the Companies Act, 1956 and accordingly provision at such higher rates amounting to Rs.1,05,55,974 have been made in these accounts. The excess amount of Rs.71,73,963 is however subject to the approval of the Central Government for which necessary applications have been filed.

6. The fixed assets of water division of the company include certain assets amounting to Rs.21,98,631 and having a net book value of Rs. 15,39,956 which have not been put to use. The management is evaluating alternate use of these assets and is of the opinion that no impairment losses need to be provided.

7. Segment Information

a) Primary segment reporting (by Business segments)

(i) The Company has considered business segment as the primary segment for disclosure. These are:

Chlor Alkali division Chlorates division Others

8. Related Party Disclosures - As identified by the management and relied upon by the auditors

a) List of Related parties and description of relationship

(i) Parties with Significant influence

Teamco Hitech Engineering Limited

Titanium Equipment and Anode Manufacturing company Limited

Teamec Chlorates Limited

(ii) Key Management Personnel Relatives of above

Dr.C.H.Krishnamurthi Rao Mr. Suresh Krishnamurthi Rao Mrs. K.M.Padma

9. Repairs to Plant and Machinery include stores and spares consumed amounting to Rs.2,48,64,878/- (P.Y. Rs.4,35,82,830/-)

10. Micro, Small and Medium Enterprises Development Act, 2006

In accordance with the Notification No. GSR 719 ( E ) dt 16.11.2007 , issued by the Ministry of Corporate Affairs, certain disclosures are required to be made relating to Micro, Small and Medium Enterprises as defined under the Micro, Small and Medium Development Act 2006. The Company is in the process of compiling relevant information from its suppliers about their coverage under the said Act. Since the relevant information is still not available, no disclosures have been made in the accounts.

11. Shifting of Registered Office during the year

During the year, the Registered Office of the Company was shifted from the Union Territory of Puducherry to State of Tamil Nadu after obtaining necessary approvals.

12. Previous year figures are regrouped wherever necessary to conform to current years classification.