Dai Ichi Karkaria Ltd. ಖಾತೆಯ ಉಪಯುಕ್ತ ಮಾಹಿತಿ

Mar 31, 2018

1. Company overview

Dai-ichi Karkaria Limited (‘the Company’) is domiciled in India with its registered office situated at 3rd Floor, Liberty Building, Sir Vithaldas Thackersey Marg, Mumbai 400 020, India. The Company was incorporated on 13 May 1960 under the provisions of Indian Companies Act, 1956 and its equity shares is listed on Bombay Stock Exchange (BSE) in India. The Company is engaged in manufacturing of speciality chemicals.

The manufacturing activities of the Company are carried out from its plants located at Kasarwadi and Kurkumbh, Pune (Maharashtra) and Dahej (Gujarat).

2. Basis of preparation

A. Statement of compliance

These financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the the Companies (Indian Accounting Standards) Rules, 2015 (as amended), notified under Section 133 of the Companies Act, 2013 (‘the Act’) and the other relevant provisions of the Act.

The Company’s financial statements up to and for the year ended 31 March 2017 were prepared in accordance with the Companies (Accounting Standard) Rules, 2014, notified under Section 133 of the Act and the other relevant provisions of the Act (Indian GAAP).

As these are the Company’s first financial statements prepared in accordance with Indian Accounting Standards (Ind AS), Ind AS 101, First-time Adoption of Indian Accounting Standards has been applied. An explanation of how the transition to Ind AS has affected previously reported financial position, financial performance and cash flows of the Company is provided in Note 3.

The financial statements were authorised for issue by the Company’s Board of Directors on 3 May 2018.

Details of the Company’s accounting policies are included in Note 2A.

B. Functional and presentation currency

These financial statements are presented in Indian Rupees (INR), which is also the Company’s functional currency. All amounts have been rounded off to the nearest lakh, except for share data and per share data, unless otherwise stated.

C. Basis of measurement

These financial statements have been prepared on the historical cost basis, except for the following items:

D. Use of estimates and judgements

The preparation of these financial statements in conformity with the recognition and measurement principles of Ind AS requires the management of the Company to make estimates and judgements that affect the reported balances of assets and liabilities, disclosures relating to contingent liabilities as at the date of the financial statements and the reported amounts of income and expense for the periods presented.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and future periods are affected.

Key sources of estimation of uncertainty at the date of the financial statements, which may cause a material adjustment to the carrying amounts of assets and liabilities within the next financial year, is in respect of useful lives of property, plant and equipment, valuation of deferred tax assets, provisions and contingent liabilities and fair value measurement of financial instruments have been discussed below. Key source of estimation of uncertainty in respect of revenue recognition and employee benefits have been discussed in their respective policies.

Useful lives of property, plant and equipment

The Company reviews the useful life of property, plant and equipment at the end of each reporting period. This reassessment may result in change in depreciation expense in future periods.

Valuation of deferred tax assets (including MAT credit entitlement)

The Company reviews the carrying amount of deferred tax assets at the end of each reporting period. The policy has been explained under note 2A K.

Provisions and contingent liabilities

A provision is recognised when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised in the financial statements. Contingent assets are neither recognised nor disclosed in the financial statements.

Fair value measurement of financial instruments

When the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. The policy has been further explained under note 2A A.

E. Current and non-current classification

All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out in Schedule III of the Act. Based on the nature of it’s activities and the time between the acquisition of assets for processing and their realization in cash or cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities.

Note 3 First- time adoption of Ind AS

I. First-time adoption of Ind AS

The consolidated financial statements for the year ended March 31, 2017 have been prepared in accordance with Ind AS as issued and effective as at March 31, 2017. The Company’s opening Ind AS balance sheet was prepared as at 1 April 2016, the Company’s date of transition to Ind AS. In preparing the opening balance sheet, the Company’s has applied the mandatory exceptions and certain optional exemptions from full retrospective application of Ind AS in accordance with the guidance in Ind AS 101 ‘First Time Adoption of Indian Accounting Standards’.

This note explains the principal adjustments made by the Company’s in restating its Indian GAAP financial statements to Ind AS, in the opening balance sheet as at April 1, 2016 and in the financial statements as at and for the year ended 31 March 2017.

II. Optional exemptions from retrospective application

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

a) Deemed cost for Property, Plant and Equipment (PPE), Intangible assets

The Group has elected to measure all the items of PPE and intangible assets at its previous GAAP carrying values which shall be the deemed cost as at the date of transition. As per FAQs issued by Accounting Standards Board (ASB) by Ind AS Transition Facilitation Group of Ind AS (IFRS) Implementation Committee of ICAI, deemed cost, is the amount used as a surrogate for the cost or depreciated cost and for the purpose of subsequent depreciation or amortisation, deemed cost becomes the cost as the starting point. Information regarding gross block of assets, accumulated depreciation and provision for impairment under Previous GAAP has been disclosed by way of a note forming part of the financial statements.

b) Deemed cost for investment in subsidiary and joint venture

The Company has elected to use the previous GAAP carrying amount of its investment in subsidiaries and joint venture on the date of transition as its deemed cost on that date, in its standalone financial statements. Consequently, deemed investment arising on account of financial guarantee contract on behalf of the subsidairies or joint venture, for no conisderation, has not been recognised.

b) Deemed cost for Government Grants

Ind AS 101 - First-time adoption of Indian Accounting Standards permits the Group to apply the requirements in Ind AS 109 - Financial Instruments, and Ind AS 20 - Accounting for Government Grants and Disclosure of Government Assistance, prospectively to government loans existing at the date of transition to Ind AS.

Accordingly, the Group has opted for exemption from retrospective application for fair valuation of such Government Grants (i.e. Sales Tax Deferral Loan)

III. Mandatory exemptions from retrospective application

The Group has applied the following exceptions to the retrospective application of Ind AS as mandatorily required under Ind AS 101:

i. Estimates

On assessment of the estimates made under the Previous GAAP financial statements, the Group has concluded that there is no necessity to revise the estimates under Ind AS, as there is no objective evidence of an error in those estimates. However, estimates that were required under Ind AS but not required under Previous GAAP are made by the Group for the relevant reporting dates reflecting conditions existing as at that date.

ii. Classification and measurement of financial assets

The classification of financial assets to be measured at amortised cost or fair value through other comprehensive income is made on the basis of the facts and circumstances that existed on the date of transition to Ind AS.

IV Transition to Ind AS - Reconciliations

The following reconciliations provide the explanations and quantification of the differences arising from the transition from Previous GAAP to Ind AS in accordance with Ind AS 101:

i. Reconciliation of Equity as at 1st April 2016

ii. Reconciliation of Equity as at 31 March 2017

iii. Reconciliation of Statement of Profit and Loss for the year ended 31 March 2017

iv. Adjustments to Statement of Cash Flows for the year ended 31 March 2017

Previous GAAP figures have been reclassified/regrouped wherever necessary to conform with financial statements prepared under Ind AS.

Notes to reconciliation of equity as at 1 April 2016 between Indian GAAP to Ind AS:

(a) Fair valuation of investment in quoted equity shares:

The Company has investment in quoted equity shares of other companies. These investments have been fair valued on the date of transition with a corresponding unrealised gain of Rs. 8 lakhs, being recognised in retained earnings.

(b) Fair valuation of investments in Mutual Fund

The Company has investment in mutual funds. These investments have been fair valued on the date of transition with a corresponding unrealised gain of Rs. 707 lakhs, being recognised in retained earnngs.

(c) Deferred tax

The Company has recoginsed a deferred tax liability of Rs. 111 lakhs on the temporary differences arising on account of the above Ind AS adjustments

(d) Other equity

Other equity as at 1 April 2016 has been adjusted consequent to the above Ind AS transition adjustments

Notes to reconciliation of equity as at 31 March 2017 between Indian GAAP to Ind AS:

(a) Fair valuation of investment in quoted equity shares:

Under Previous GAAP equity shares of other companies were measured at cost or market value, which ever is lower. Under Ind As, the Company has designated these investments at fair value through profit or loss (FVTPL). Accordingly, these investments are required to be measured at fair value. At the date of transition to Ind AS, difference between the fair value of the instruments and the carrying value under Previous GAAP has been recognised in retained earnings. Fair value changes Rs. 1 lakh are recognised in the Statement of Profit and Loss for the year ended 31 March 2017.

(b) Fair valuation of investments in Mutual Fund

Under Previous GAAP the mutual funds were measured at cost or market value, whichever is lower. Under Ind AS, the Company has designated these investments at fair value through profit or loss (FVTPL). Accordingly, these investments are required to be measured at fair value. At the date of transition to Ind AS, difference between the fair value of the instruments and the carrying value under Previous GAAP has been recognised in retained earnings. Fair value changes Rs. 322 lakhs are recognised in the Statement of Profit and Loss for the year ended 31 March 2017.

(c) Deferred tax

The Company has recoginsed a deferred tax asset of Rs. 49 lakhs on the temporary differences arising on account of the above Ind AS adjustments.

(d) Other equity

Other equity as at 31 March 2017 has been adjusted consequent to the above Ind AS transition adjustment.

(iii) Notes to reconciliation of Statement of profit and loss for the year ended 31 March 2017 between Indian GAAP to Ind AS:

(a) Reclassification of excise duty

Excise duty (net of excise benefits) of Rs. 800 Lakhs has been reclassified from revenue to other expenses. This has resulted in increase of revenue and other expenses by Rs. 800 Lakhs.

(b) Fair valuation of quoted equity shares and mutual fund investments recognised in earlier period

The Company has recognised mark to market gain on quoted equity shares and mutual fund investments amounting to Rs. 324 Lakhs in Retained Earnings on transition to Ind AS. Accordingly, the realised gain accounted under Indian GAAP on sale of such equity shares and mutual fund investments in the year ended 31 March 2017 was reversed.

(c) Actuarial gain/loss

Under Ind AS, all actuarial gain and loss are recognised in other comprehensive income. Under previous indian GAAP the Company has recognised actuarial gains and losses in the statement of profit and loss amounting to Rs. 46 Lakhs.

(d) Deferred tax

The Company has recoginsed a deferred tax expense of Rs. 65 Lakhs on the temporary differences arising on account of the above Ind AS adjustments.

(e) Adjustments to Statement of Cash Flows for the year ended 31 March 2017

There are no material differences between the Statement of Cash Flows presented under Ind AS and Indian GAAP

Notes

* Amount below Rupees One Lakh

1) - Out of the total depreciation on property, plant and equipment for the year Rs. 447 lakhs (**Previous year: Rs. 225 lakhs), depreciation on leasehold land of ‘ Nil. (**Previous year: Rs. 23 lakhs) being depreciation for Dahej project is transferred to capital work-in-progress and Rs. 447 lakhs (Previous year: Rs. 202 lakhs) has been charged off to the Statement of Profit and Loss (Refer Note 32).

2) - Capital work in process comprises of expenditure in respect of Dahej Plant under construction. Borrowing cost capitalised related to construction of the plant aggregates Rs. 373 lakhs (previous year Rs. 43 lakhs)

3) - The Company has availed the deemed cost exemption in relation to the property, plant and equipment and intangible assets on the date of transition and hence the net block carrying amount of the earlier GAAP as at 31 March 2016 has been considered as the gross block carring amount as at 1 April 2016.

4) - Kindly refer note 18 on borrowing, for the details related to charged on property, plant and equipment of the Company.

(E) There were no equity shares allotted as fully paid up pursuant to contracts without payment received in cash, there were no bonus shares alloted and there were no equity shares bought back, during the period of 5 years immediately preceding the Balance Sheet date.

(F) The Company has one class of equity shares having par value of Rs. 10/- per share. The dividend proposed by the Board of Directors is subject to the approval of the members at the ensuing AGM of the Company, except in case of interim dividend which is paid as and when declared by the Board of Directors.

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

Nature and Purpose of Reserves

(a) Capital reserve

Any profit or loss on purchase, sale, issue or cancellation of the Company’s own equity instruments is transferred to capital reserve.

(b) Capital redemption reserve

A statutory reserve created to the extent of sum equal to the nominal value of the share capital extinguished on buyback of company’s own shares pursuant to Section 69 of the Companies Act, 2013.

(c) Securities premium account

Securities premium reserve is credited when shares are issued at a premium. It is utilized in accordance with the provisions of the Act, to issue bonus shares, to provide for premium on redemption of shares, write-off equity related expenses like underwriting costs, etc.

(d) General reserve

This represents appropriation of profit by the Company.

(e) Retained Earnings

Retained earnings comprises of undistributed earnings net of amounts transferred to General reserve.

(f) Other items of other comprehensive income

Other items of other comprehensive income consist of re-measurement of net defined benefit liability/asset.

The term loan from Axis Bank and HDFC Bank is secured by:

a) First pari-passu charge by way of hypothecation/mortgage of entire movable and immovable Fixed assets of the Company, both present and future at Dahej;

b) Second pari-passu charge by way of hypothecation charge on entire current assets of the Company, including stock and book debts, both present and future;

c) First pari-passu charge on entire movable and non movable Fixed Assets of the Company, both present and future at Kasarwadi and Kurkumbh.

Note (iii)

Under the package scheme of incentive for industries in backward area, the Company has been sanctioned deferral of payment of sales tax collection for a period of 74 months commencing August 1, 2000 upto an amount of Rs. 484 Lakh for the Kurkumbh unit at Pune. The deferred amount is recognized as long term borrowing and is unsecured, interest free and payable after a moratorium period of 10 years in 5 yearly equal installments which commenced from year 2011.

4 Details on derivative instruments and unhedged foreign currency exposures

I. There were no outstanding forward exchange contracts entered into by the Company during the financial year and outstanding as at 31 March 2018 (previous year Nil, 1 April 2016 Nil)

II. The year-end foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given below:

5 Corporate Social Responsibility Expenditure

As per Section 135 of the Act, a Company meeting the applicability threshold, needs to spend atleast 2% of its average net profit for the immediately preceding three financial years on CSR activities. the Company was required to spend the gross amount of Rs. 28 lakhs (previous year Rs. 22 lakhs) during the year on corporate social responsibility activities.

6 Disclosure of Employee Benefits as per Indian Accounting Standard 19 is as under:

i) Defined contribution plans:

The Company makes contributions towards provident fund and Employees State Insurance Scheme Contributions which are defined benefit contribution plan for qualifying employees. Under the plan, the Company is required to contribute a specified percentage of payroll cost to the retirement benefit plan to fund the benefits. The provident fund plan is operated by the Government administered employee provident fund. Eligible employees receive the benefits from the said Provident Fund. Both the employees and the Company make monthly contribution to the Provident Fund plan equal to a specific percentage of the covered employee’s salary. The Company has no obligations other than to make the specified contributions.

The Company has recognised the following amounts in the statement of Profit and Loss

ii) Defined benefit plan:

The Company earmarks liability towards funded Group Gratuity and provides for payment to vested employees as under:

a) On Normal retirement/ early retirement/ withdrawal/resignation:

As per the provisions of Payment of Gratuity Act, 1972 with vesting period of 5 years of service.

b) On death in service:

As per the provisions of Payment of Gratuity Act, 1972 without any vesting period.

The Company also provided for protected Gratuity calculated based on additional 15 days of service for all employees upto 1 December 2003.

The Company has established an income tax approved irrevocable trust fund to which it regularly contributes to finance liabilities of the plan. The fund’s investments are managed by insurance company as per the mandate provided to them by the trustees and the asset allocation is within the permissible limits prescribed in the insurance regulations.

The most recent actuarial valuation of the present value of the defined benefit obligation for gratuity was carried out as at 31 March 2018 by an independent actuary. The present value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.

The following table sets out the status of the gratuity plan and the amounts recognised in the Company’s financial statements as at 31 March 2018

Discount rate: 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.

Salary Escalation Rate: The estimates of future salary increases, considered in actuarial valuation, takes into account the inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

7 Disclosures in respect of Specified Bank Notes (SBN)

The disclosures regarding details of specified bank notes held and transacted during 8th November 2016 to 30th December 2016 has not been made since the requirement does not pertain to financial year ended 31st March 2018. Corresponding amounts as appearing in the audited financial statements for the period ended 31 March 2017 have been disclosed.

Details of SBN held and transacted during the period from 8 November 2016 to 30 December 2016 is given below:

* Amount below Rupees One Lakh

** For the purpose of this clause, the term “Specified Bank Notes” shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O.3407 E, dated the 8 November, 2016

*** These are advances given to employees prior to 8th November, 2016 returned back to the company in SBN’s after notification of Government of India dt. 8 November, 2016.

8 Segment Reporting

The Company has presented data relating to its segments based on its consolidated financial statements, Accordingly, in terms of paragraph 4 of the Indian Accounting Standard 108 (IND AS-108) “Segment Reporting”, no disclosures related to segments are presented in this standalone financial statement.

Based on the recomandation of the Nomination and Remuneration committee, all decisions relating to the remuneration of the directors are taken by the Board of Directors of the Company, in accordance with shareholders’ approval, wherever necessary.

All other related party transactions are made in the normal course of business and on terms equivalent to those that prevail in an arm’s length transactions.

Figures in the brackets are the corresponding figures of the previous year.

9 Financial instruments - Fair values and risk management

A. Accounting classification and fair values

The Company uses the following hierarchic structure of valuation methods to determine and disclose information about the fair value of financial instruments:

Level 1: inputs to valuation are quoted (unadjusted) prices in active markets for identical assets and liabilities;

Level 2: inputs to valuation are other than quoted prices included in level 1 that are observable for asset or liability, either directly or indirectly;

Level 3: inputs are not based on observable market data. Fair value are determined in whole or in part using a valuation model based on assumption that are either supported by prices from observable current market transaction in the same instruments nor are they based on available market data.

B. Measurement of fair values

The Management assessed that cash and bank balances, trade receivables, trade payables, cash credit and other financial assets and liabilites approximate their carrying amounts largely due to short-term maturities of these instruments.

The following methods and assumptions were used to estimate the fair value

a) The fair value of the quoted investments/units of mutual fund scheme are based on market price/net asset value at the reporting date.

i. Risk management framework

The Company’s board of directors has overall responsibility for the establishment and oversight of the Company’s risk management framework.

The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

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

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

- Credit risk ;

- Liquidity risk ; and

- Market risk

i. Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and investments in debt securities.

The carrying amount of following financial assets represents the maximum credit exposure:

Trade and other receivables

Trade receivables are consisting of a large number of customers. The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate.

The Risk Management Committee has established a credit policy under which each new customer is analysed individually for creditworthiness before the Company’s standard payment and delivery terms and conditions are offered. Sale limits are established for each customer and reviewed quarterly.

The Company establishes an allowance for impairment that represents its estimate of expected losses in respect of trade and other receivables.

At March 31, 2018, the maximum exposure to credit risk for trade and other receivables by geographic region was as follows.

Management believes that the unimpaired amounts that are past due by more than 180 days are still collectible in full, based on historical payment behaviour and extensive analysis of customer credit risk.

The movement in the allowance for impairment in respect of trade and other receivables during the year was as follows.

ii. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

The majority of the Company’s Trade receivables are due for maturity within 60 days from the date of billing to the customer. Further, the general credit terms for Trade payables are approximately 45 days. The difference between the above mentioned credit period provides sufficient headroom to meet the short-term working capital needs for day-to-day operations of the Company. Any short-term surplus cash generated, over and above the amount required for working capital management and other operational requirements, are retained as Cash and Investment in short term deposits with banks. The said investments are made in instruments with appropriate maturities and sufficient liquidity.

Exposure to liquidity risk

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include estimated interest payments and exclude the impact of netting agreements.

iii. Market risk

Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company’s income or the value of its holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables and long term debt. The Company is exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and the market value of our investments. Thus, our exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currency. The objective of market risk management is to avoid excessive exposure in our foreign currency revenues and costs.

Currency risk

The Company is exposed to currency risk on account of its payables and receivables in foreign currency. The functional currency of the Company is Indian Rupee. The Company has major exposure to USD

Sensitivity analysis

A reasonably possible strengthening (weakening) of the Indian Rupee against various foreign currencies at March 31 would have affected the measurement of financial instruments denominated in foreign currencies and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases.

Interest rate risk

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing investments will fluctuate because of fluctuations in the interest rates.

Exposure to interest rate risk

Company’s interest rate risk arises from borrowings and fixed income securities. Fixed income securities exposes the Compant to fair value interest rate risk. The interest rate profile of the Company’s interest-bearing financial instruments as reported to the management of the Company is as follows.

Fair value sensitivity analysis for fixed-rate instruments

The Company does not account for any fixed-rate financial assets or financial liabilities at fair value through profit or loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss.

A change of 100 basis points in interest rates would not have any material impact on the equity

Cash flow sensitivity analysis for variable-rate instruments

A change of 100 basis points in interest rates would not have any material impact on the equity

10 Capital Management

The Company’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return on capital as well as the level of dividends to ordinary shareholders.

The Company monitors capital using a ratio of ‘adjusted net debt’ to ‘total equity’. For this purpose, adjusted net debt is defined as total liabilities, comprising interest-bearing loans and borrowings and obligations under finance leases, less cash and cash equivalents. Adjusted equity comprises all components of equity.

The Company’s adjusted net debt to equity ratio at the year end is as follows:

The company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

Significant management judgement is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of deferred income tax assets. The recoverability of deferred income tax assets is based on estimates of taxable income by each jurisdiction in which the relevant entity operates and the period over which deferred income tax assets will be recovered.

11 The comparative financial information for the year ended 31 March 2017 and the transition date opening balance sheet as at 1 April 2016 included in these financial statements, are based on the previously issued statutory financial statements prepared in accordance with the Companies (Accounting Standards) Rules, 2006 audited by auditors other than B S R & Co. LLP as adjusted for the differences in the accounting principles adopted by the Company on transition to the Ind AS.

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Mar 31, 2017

(E) There were no equity shares allotted as fully paid up pursuant to contracts without payment received in cash, there were no bonus shares allotted and there were no equity shares bought back, during the period of 5 years immediately preceding the Balance Sheet date.

(F) The Company has one class of equity shares having par value of '' 10/- per share. The dividend proposed by the Board of Directors is subject to the approval of the members at the ensuing AGM of the company, except in case of interim dividend which is paid as and when declared by the Board of Directors.

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

Note (i)

The term loan from Axis Bank is secured by:

a) First pari-passu charge by way of hypothecation/mortgage of entire movable and immovable Fixed assets of the Company, both present and future at Dahej;

b) Second pari-passu charge by way of hypothecation charge on entire current assets of the Company, including stock and book debts, both present and future;

c) First pari-passu charge on entire movable and non movable Fixed Assets of the Company, both present and future at Kasarwadi and Kurkumbh.

d) For other sanctioned but unutilized facilities as at 31 March, 2017. Refer Note 37

Note (iii)

Under the package scheme of incentive for industries in backward area, the Company has been sanctioned deferral of payment of sales tax collection for a period of 74 months commencing August 1, 2000 upto an amount of '' 4,84,42,000 for the Kurkumbh unit at Pune. The deferred amount is recognized as long term borrowing and is unsecured, interest free and payable after a moratorium period of 10 years in 5 yearly equal installments which commence from year 2011.

(e) The wage agreement with employees at Kasarwadi Plant had expired on 30 November, 2008. Negotiations with employees are in progress. Pending finalization of an agreement, the Company has made an accrual of '' 76,68,839/-(Previous year '' 84,86,994) based on its estimate of likely settlement with the employees. The Company does not expect any further significant additional liability on this account.

Future outflows in respect of above matters are determinable only on receipt of judgment/decisions pending at various forums/ authorities.

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Mar 31, 2016

(E) There were no equity shares allotted as fully paid up pursuant to contracts without payment received in cash, there were no bonus shares alloted and there were no equity shares bought back, during the period of 5 years immediately preceding the Balance Sheet date.

(F) The Company has one class of equity shares having par value of Rs. 10/- per share. The dividend proposed by the Board of Directors is subject to the approval of the members at the ensuing AGM of the company, except in case of interim dividend which is paid as and when declared by the Board of Directors.

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

1. Details on derivative instruments and unhedged foreign currency exposures

I. There were no outstanding forward exchange contracts entered into by the Company during the financial year and outstanding as at March 31, 2016 (previous year Nil)

2. Other Income includes Rs.1,232,306 /- being additional compensation received during the year in respect of compulsory acquisition of parcel of land at Kasarwadi by Government of Maharashtra.

3. During the previous year, with effect from April, 2014, the Company had revised estimated useful lives of fixed assets as per the lives prescribed in the schedule II to the Companies Act, 2013. During the current year, the management has confirmed its reassessment of the useful lives of assets, which is in line with such assertion in the previous year. Further, assets individually costing Rs. 5,000/- or less continue to be depreciated fully in the year of purchase. The details of previously applied depreciation method, rates/useful life are as follows.

4. Corporate Social Responsibility Expenditure

In terms of Section 135 of the Companies Act, 2013, the Company was required to spend the gross amount of Rs. 14,71,250/-(previous year Rs.11,63,000/-) during the year on Corporate Social Responsibility (CSR) activities.

During the year, the Company has charged to the statement of profit and loss account an amount of Rs. 5,00,000 (previous year Rs. 11,63,000)on CSR activities. The amount is contributed to Maneckji and Shirinbai Neterwala Foundation.

5. During the previous year, the company has sold its remaining holdings in Inogent Laboratories Pvt. Ltd. at a consideration of Rs.8,97,15,130 resulting in a profit of Rs. 7,45,22,823 which is disclosed as an exceptional item in the Statement of Profit & Loss.

Note 6. Disclosures under Accounting Standards 30.1 Employee benefit plans

(A) Defined contribution plans

The Company provides Provident 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. 63,23,467 (previous year Rs. 59,78,451) for Provident Fund contributions and Rs. 2,64,751 (previous year Rs. 4,25,739) for Employee State Insurance Scheme 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) Defined benefit plans

The Defined Benefit Plans comprise of Gratuity. Gratuity is a benefit to an employee based on 15 days of last drawn salary for each completed year of service.

Note 7. Disclosures under Accounting Standards

(i) The Company operates exclusively in the Specialty Chemicals business segment which is the only reportable business segment.

(ii) The geographical segments individually contributing 10 percent or more of the Company''s revenues and segment assets are shown separately:

Note 8. Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.

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Mar 31, 2014

1. COMPANY OVERVIEW

Dai-ichi Karkaria Ltd. (DKL) was incorporated on 13 May, 1960 under the laws of the Republic of India and has its registered office at Mumbai (Maharashtra). DKL is engaged in manufacturing of Specialty Chemicals. The Company has joint venture with CTI Chemicals Asia Pacific Pte. Ltd., Singapore.

The activities of the Company are carried out at its plants located at Kasarwadi and Kurkumbh, Pune (Maharashtra).

Note (i) The term loans are secured against hypothecation of the vehicles purchased under the loans and are payable in equated monthly installments (EMI) detailed as under :

Note (ii) Under the package scheme of incentive for industries in backward area, the Company has been sanctioned deferral of payment of sales tax collection for a period of 74 months commencing August 1, 2000 up-to an amount of Rs.4,84,42,000/- for the Kurkumbh unit at Pune. The deferred amount is recognized as long term borrowing and is unsecured, interest free and payable after a moratorium period of 10 years in 5 yearly equal installments which commence from year 2011.

The deferred sales tax liability is payable in annual installments as below:

Principal amount payable to Micro and Small Enterprises (to the extent identified by the Company from available information and relied upon by the auditors) is Rs.1,91,202/- (2013: Rs.61,643/-) including unpaid amounts of Rs. Nil (2013: Rs. Nil) outstanding for more than 45 days. No interest is due thereon.

(b) Wage agreement at Kasarwadi Plant had expired on 30 November, 2008. Negotiations with employees are in progress. The Company does not expect any significant additional liability on this account.

Future cash outflows in respect of the matters specified in a) (i) and c) are determinable only on receipt of judgments/ decisions pending at various forums/authorities.

2. Employee Benefits:

(A) Defined Benefit Plans

The Company makes Provident Fund, Employee State Insurance Scheme and Maharashtra Labour Welfare 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.54,52,592 (Year ended 31 March, 2013 Rs.50,88,208) for Provident Fund contributions, Rs.5,81,025 (Year ended 31 March, 2013 Rs.7,99,149) for Employee State Insurance Scheme contributions, Rs.14,760 (Year ended 31 March, 2013 Rs.15,408) for Maharashtra Labour Welfare Fund 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.

3. Employee Benefits (Contd.)

(i) The Defined Benefit Plans comprise of Gratuity. Gratuity is a benefit to an employee based on 15 days last drawn salary for each completed year of service.

(a) The Discount rate is based on the prevailing market yields of Indian Government securities as at the Balance Sheet date for the estimated terms of the obligations.

(b) Expected Rate of Return of Plan Assets: This is based on the expectation of the average long term rate of return expected on investments of the Fund during the estimated term of obligations.

(c) Salary Escalation Rate: The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.

4. Disclosure as per Clause 32 of the Listing Agreements with the Stock Exchanges

(i) Loans and advances in the nature of loans given to subsidiaries, associates, firms/companies in which directors are interested:

Note: Figures in bracket relate to the previous year.

5. I n the arbitration proceedings under order no. C/1438A & C/1438B of September 12, 1986, arbitration award was declared on September 25, 2006, pursuant to which ONGC was directed to pay Rs.55,45,325/- along-with interest at 9% from the date of award till the date of payment.

The Company and ONGC had filed appeals against the award in the Mumbai High Court. Vide order dated December 6, 2012, the Court upheld the award. ONGC has paid a sum of Rs.66,74,457/- to the company towards full and final settlement which has been accounted for in 2012-13.

6. Lease payable/ receivable under cancellable operating lease:

The Company has taken office under operating lease. The lease is not non cancellable. The lease payment recognized in the Statement of Profit and Loss, debited to rent account is Rs.25,17,556/- (2013: Rs.22,01,646/-)

The Company has given commercial premises under leave and license agreement for a period of 18 months. The said agreement is non-cancellable for the first 6 months, and the future minimum lease payments (all not later than one year) under the non-cancellable period is Rs.12,06,660/- (2013: Rs.11,71,170/-). The lease rental credited to the Statement of Profit and Loss is Rs.1,40,89,530/- (2012: Rs.1,43,97,850/-).

7. Segment information:

The Company is principally engaged in single business segment - manufacturing of specialty chemicals and operates materially in one geographical segment as per Accounting Standard 17 on segment reporting.

8. During the year, management has reviewed the identification and classification of related party relationships. Based on this review the related party relationships identified and transactions with them are detailed below:

(A) Relationships:

(i) Related parties where the control exists

Dai-Ichi Gosei Chemicals (India) Limited (DGCIL) - a Subsidiary company

(ii) Other related parties with whom the company had transactions

(a) Jointly controlled entity:

Champion Dai-ichi Technologies India Ltd. (CDTIL).

(b) Key management personnel (KMP):

Mrs. S. F. Vakil - Managing Director (SFV)

(c) Relatives of key management personnel:

(i) Mr. D. M. Neterwala - Father of Managing Director (DMN)

(ii) Ms. Meher F. Vakil - Daughter of Managing Director (MFV)

(iii) Ms. P R. Mehta - Sister of Managing Director (PRM)

(d) Other Related Parties:

(i) Indian Oxides & Chemicals Limited (IOCL)

(ii) Rose Investments Limited (RIL)

(iii) Inogent Laboratories Private Limited (ILPL)

(iv) SDN Company (SDNC)

(v) Uni Klinger Limited (UKL)

(vi) Anosh Finance & Investment Pvt. Ltd. (AFIPL)

(vii) Universal Ferro & Allied Chemicals Limited (UFACL)

(viii) General Pharmaceuticals Pvt. Ltd. (GPPL)

(ix) Netel India Limited (NIL)

(x) Neterwala Consulting & Corporate Services Limited (NCCS)

(xi) Chemicals and Ferro Alloys Private Limited (CFAPL)

Note: Related party relationship is as identified by the company and relied upon by the auditors.

(B) Transactions carried out with related parties referred in A above, in ordinary course of business:

Notes:

(i) The accompanying notes are an integral part of the financial statements

(ii) The Cash flow is prepared under the ''Indirect Method'' as set in Accounting Standard 3 - Cash flow Statement.

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Mar 31, 2013

1. COMPANY OVERVIEW

Dai-ichi Karkaria Ltd. (DKL) was incorporated on 13 May, 1960 under the laws of the Republic of India and has its registered office at Mumbai (Maharashtra). DKL is engaged in manufacturing of Specialty Chemicals. The Company has joint venture with CTI Chemicals Asia Pacific Pte. Ltd., Singapore.

The activities of the Company are carried out at its plants located at Kasarwadi and Kurkumbh, Pune (Maharashtra).

As at As at 31 March, 2013 31 March, 2012 Rs. Rs.

2. (a) Contingent liabilities and commitments (to the extent not provided for)

(i) Contingent Liabilities

(i) Guaranty issued to others by Bank secured by counter guarantee f the company and by charge on the fixed assets, inventories and book debts of the Company. 1,41,97,321 1,94,13,765

(ii) Customs duty bonds 8,62,91,546 7,35,52,625

3. Employee Benefits:

(A) Defined contribution plans

The Company makes Provident Fund, Employee State Insurance Scheme and Maharashtra Labour Welfare 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.50,88,208/- (Year ended 31 March, 2012 Rs.47,18,160/-) for Provident Fund contributions, Rs.7,99,149/- (Year ended 31 March, 2012 Rs.7,73,387/-) for Employee State Insurance Scheme contributions and Rs.15,048/- (Year ended 31 March, 2012 Rs.15,012/-) for Maharashtra Labour Welfare 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.

4. In the arbitration proceedings under order no. C/1438A & C/1438B of September 12, 1986, arbitration award was declared on September 25, 2006, pursuant to which ONGC was directed to pay Rs.55,45,325/- along-with interest at 9% from the date of award till the date of payment.

The Company and ONGC had filed appeals against the award in the Mumbai High Court. Vide order dated December 6, 2012, the Court upheld the award. ONGC has paid a sum of Rs.66,74,457/- to the company towards full and final settlement which has been accounted for during the year.

5. Lease payable/ receivable under cancellable operating lease:

The Company has taken office under operating lease. The lease is not non cancellable. The lease payment recognized in the Statement of Profit and Loss, debited to rent account is Rs.22,01,646/- (2012: Rs.23,78,146/-)

The Company has given commercial premises under leave and license agreement for a period of 18 months. The said agreement is non-cancellable for the first 8 months, and the future minimum lease payments (all not later than one year) under the non-cancellable period is Rs.11,71,170/- (2012: Rs. Nil). The lease rental credited to the Statement of Profit and Loss is Rs.1,43,97,850/- (2012: Rs.1,48,79,184/-).

6. Segment reporting:

The Company is principally engaged in single business segment – manufacturing of specialty chemicals and operates materially in one geographical segment as per Accounting Standard 17 on segment reporting.

7. During the year, management has reviewed the identification and classification of related party relationships. Based on this review the related party relationships identified and transactions with them are detailed below:

(A) Relationships:

(i) Related parties where the control exists

Dai-Ichi Gosei Chemicals (India) Limited (DGCIL) – a Subsidiary company

(ii) Other related parties with whom the company had transactions

(a) Jointly controlled entity:

Champion Dai-ichi Technologies India Ltd. (CDTIL).

(b) Key management personnel (KMP): Mrs. S. F. Vakil – Managing Director (SFV)

(c) Relatives of key management personnel:

(i) Mr. D. M. Neterwala – Father of Managing Director (DMN) (ii) Ms. Meher F. Vakil – Daughter of Managing Director (MFV)

(d) Other Related Parties:

(i) Indian Oxides & Chemicals Limited (IOCL)

(ii) Rose Investments Limited (RIL)

(iii) Inogent Laboratories Private Limited (ILPL)

(iv) SDN Company (SDNC)

(v) Uni Klinger Limited (UKL)

(vi) Anosh Finance & Investment Pvt. Ltd. (AFIPL)

(vii) Universal Ferro & Allied Chemicals Limited (UFACL)

(viii) General Pharmaceuticals Pvt. Ltd. (GPPL)

(ix) Netal India Limited (NIL)

(x) Neterwala Consulting & Corporate Services Limited (NCCS)

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Mar 31, 2012

1. COMPANY OVERVIEW

Dai-ichi Karkaria Limited ("the Company") was incorporated on 13th May, 1960 under the laws of the Republic of India and has its registered office at Mumbai (Maharashtra). The Company is engaged in manufacturing of Specialty Chemicals. The Company has a joint venture with CTI Chemicals Asia Pacific Re. Ltd., Singapore.

The manufacturing activities of the Company are carried out at its plants located at Kasarwadi and Kurkumbh, Pune (Maharashtra).

(A) The Company has one class of equity shares having a par value of Rs 10/- per share. Each equity share holder is eligible for one vote per share held. Each equity share holder is entitled to dividend as and when the Company declares and pays dividend after obtaining share holders approval. Dividends are paid in Indian Rupees.

Note (i) : The term loan of Rs 4,61,000/- from HDFC Bank Ltd. is secured against hypothecation of the vehicle purchased under the loan and is payable in 60 equated monthly installments of Rs 10,268/- each commencing from October 2011 at an interest rate of 12.50% p.a. on reducing balance.

Note (ii) : Under the package scheme of incentive for industries in backward area, the company has been sanctioned deferral of payment of sales tax collection for a period of 74 months commencing August 1, 2000 up to an amount of Rs 48,442,000 for the Kurkumbh unit at Pune. The deferred amount is recognized as long term borrowing and is unsecured, interest free and payable after a moratorium period of 10 years in 5 yearly equal installments which commence from year 2011.

Principal amount payable to Micro and Small Enterprises (to the extent identified by the Company from available information and relied upon by the auditors) as at 31st March, 2012 is Rs Nil (2011: Rs 64,525) including unpaid amounts of Rs Nil (2011: Rs Nil) outstanding for more than 45 days. No interest is due thereon.

2012 2011 Rs. Rs. 2. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances)........................... 18,32,873 83,96,708

3. (a) Contingent Liabilities not provided for:

(i) Guarantees issued to others by Bank secured by counter guarantee of the company and by charge on the fixed assets, inventories and book debts of the company and personal guarantee of the Chairman of the company............................ 1,94,13,765 2,83,79,092

(ii) Guarantee given to Bank of Baroda, for credit facilities extended to Joint Venture - Champion Dai-ichi Technologies India Ltd............. - 2,25,00,000

(iii) Customs duty bonds.................**7,35,52,625 5,26,50,472

** Includes Rs 5,06,70,7517- of Bonds, issued jointly in name of the Company and Champion Dai-ichi Technologies India Ltd.

(b) Wage agreement at Kasarwadi Plant was expired on 30th November, 2008. Negotiations with employees are in progress. The Company does not expect any significant additional liability on this account.

(c) Claims against the company not acknowledged as debts relating to:

4. Employee Benefits:

A. Defined Benefit Plan:

The Defined Benefit Plans comprise of Gratuity. Gratuity is a benefit to an employee based on 15 days last drawn salary for each completed year of service.

(a) The Discount rate is based on the prevailing market yields of Indian Government securities as at the Balance Sheet date for the estimated terms of the obligations.

(b) Expected Rate of Return of Plan Assets : This is based on the expectation of the average long term rate of return expected on investments of the Fund during the estimated term of obligations.

(c) Salary Escalation Rate : The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.

(B) Defined Contribution Plan

Amount recognized as an expense in the Statement of Profit & Loss in respect of Defined Contribution Plan is Rs 55,11,559 (2011: 53,67,009).

5. In 2010-11, the Company had executed a tripartite shareholders agreement dated 26th May, 2010, with CTI Chemicals Asia Pacific Re. Ltd. and its wholly owned subsidiary - Basic Oil Treating (India) Ltd,(now known as Champion Dai-ichi Technologies India Ltd), for formation of Joint Venture.

Pursuant to the formation of Joint Venture, the shareholding of Champion Dai-ichi Technologies India Ltd (formerly known as Basic Oil Treating (India) Ltd.), is held by the Company and CTI Chemicals Asia Pacific Re. Ltd. in the ratio of 50:50. Accordingly Champion Dai-ichi Technologies India Ltd. (Formerly known as Basic Oil Treating (India) Ltd), has ceased to be a subsidiary of the Company w.e.f 7th September, 2010.

6. Oil and Natural Gas Corporation Limited (ONGC):

In the arbitration proceedings under order no C/1438-a and C/1438-b of September 12,1986, arbitrator declared the award and directed the ONGC to pay Rs 55,45,325 after retaining Rs 29,36,060 for dosage compensation and release of bank guarantee. -

The Company and ONGC have filed appeals against the award hence no adjustment have been recognized in the accounts.

7. Lease payable/receivable under cancellable operating lease:

The Company has taken office under operating lease. The lease is not non cancellable. The lease payment recognized in the statement of profit and loss, debited to rent account is Rs 23,78,146/- (2011- Rs 21,48,561/-).

The Company has given commercial premises under leave and licence agreement, which is not non cancellable. Lease rental credited to the statement of profit and loss is Rs 1,48,79,184/- (2011- Rs 1,39,27,607/-).

8. Although the Company's equity interests in Inogent Laboratories Private Limited (IPIL) and Performance Polymers and Chemicals Private Limited (PPCL) exceed 20%, these have been treated (as in earlier year) as under:

PPCL has been classified as trade investment as the proposed JV for which the Company invested in PPCL was not pursued. During the year, the Company has sold the Shares of PPCL to the Director of that Company.

9. Segment reporting:

Primary Segment:

The Company is principally engaged in single business segment - manufacturing of specialty chemicals only.

10. During the year, management has reviewed the identification and classification of related party relationships. Based on this review the related party relationships identified and transactions with them are detailed below:

A. Relationships:

Related parties where control exists:

(i) Subsidiary Company:

Basic Oil Treating (India) Limited (BOTI), (Subsidiary upto 6th September, 2010 - Refer Note 33) Dai-ichi Gosei Chemicals (India) Limited (DGCIL)

(ii) Joint Venture

Champion Dai-ichi Technologies India Ltd. (CDTIL), (w.e.f. 7th September, 2010 - Refer Note 33)

(iii) Key management personnel

Mrs. S. F. Vakil - Managing Director (SFV).

(iv) Relatives of key management personnel

Mr. D. M. Neterwala - Father of Managing Director (DMN)

Mr. F. A. Vakil - Spouse of Managing Director (FAV)

(v) Other related parties

Chemicals & Ferro Alloys Limited (CFAL)

Universal Ferro & Allied Chemicals Limited (UFACL)

Indian Oxides & Chemicals Limited (IOCL)

Uni Klinger Limited (UKL)

Uni Abex Alloy Products Limited (UAAP)

SDN Company (SDNC)

Commercial Building Syndicate (CBS)

Rose Investments Limited (RIL)

General Pharmaceuticals Pvt. Ltd. (GPPL)

Uni Deritend Ltd. (UDL)

Oil Field Instrumentation (India) Pvt. Ltd. (OFIL)

Neterson Technologies Pvt. Ltd (NTPL)

Netal India Ltd (NIL)

Anosh Finance & Investment Pvt. Ltd. (AFIPL)

Inogent Laboratories Private Limited (ILPL)

Performance Polymers & Chemicals Pvt. Ltd. (PPCPL) - (Sold on 30/11/2011)

Neterwala Consulting & Corporate Service Limited (NCCSL)

Neterson Agrofarm Agency Pvt. Ltd.( NAAPL)

Uni VTL Engineering Pvt. Ltd. (UVEPV)

Unitel Finance & Investment Pvt. Ltd. (UFIPL)

Note: Related party relationship is as identified by the Company and relied upon by the auditors.

B. Transactions carried out with related parties referred in A above, in ordinary course of business:

11. The revised schedule VI has become effective from 1st April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statement. Previous year figures have been regrouped and reclassified wherever necessary to correspond with the current year's classification/disclosure.

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Mar 31, 2010

2010 2009 Rupees Rupees

1. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances).................... 57,92,562 2,88,571

2. (a) Contingent Liabilities not provided for: (i) Guarantees issued to others by Bank secured by counter guarantee of the company and by charge on the fixed assets, inventories and book debts of the company and personal guarantee of the Chairman of the company........................ 2,37,92,021 2,44,61,851

(ii) Guarantee given to Bank of Baroda, for credit facilities extended to Subsidiary company Basic Oil Treating (India) Limited.......... 2,25,00,000 2,25,00,000

(iii) Customs duty bonds.......... 5,29,40,967 5,29,40,967

3. Wage agreement at Kasarwadi Plant was expired on 30th November, 2008. Negotiations with labour union are in progress. Ultimate liability resulting from the said negotiation is not ascertainable.

4. Under the package scheme of incentive for industries in backward area, the company has been sanctioned deferral of payment of sales tax collection for a period of 74 months commencing August 1, 2000 up-to an amount of Rs. 4,84,42,000 for the Kurkumbh unit at Pune.

The deferred amount aggregating Rs. 1,29,66,855 (2009 : Rs, 1,28,21,540) is recognized as unsecured loan and is payable after a moratorium period of 10 years in 5 yearly equal installments which commence from year 2011.

5. Pursuant to a product performance claim in earlier year, the Company had recognized a provision of Rs. 1,25,28,146. Although the arbitration award in 2006 had reduced the liability of the Company, the award had not been filed with the court and consequently did not become an enforceable decree. During the year the Company has been legally advised that the limitation period (for the enforcement of the award) has expired and consequently the provision of Rs. 1,25,28,146 has been reversed.

6. Oil and Natural Gas Corporation Limited (ONGC):

In the arbitration proceedings under order no C/1438-a and C/1438-b of September 12, 1986, arbitrator declared the award and directed the ONGC to pay Rs. 55,45,325 after retaining Rs. 29,36,060 for dosage compensation and release of bank guarantee.

The Company and ONGC have filed appeals against the award hence no adjustment have been recognized in the accounts.

7. The Board of Directors of the Company at its meeting held on 28/4/2009 announced a buy back of its fully paid equity shares for an aggregate amount not exceeding Rs. 212.40 lacs at a maximum price of Rs. 36 per share from the open market through stock exchanges. The buy back commenced on 25/5/09 and closed on 27/4/10 Upto 31st March, 2010, the company has bought back 1,55,171 equity shares at an average price of Rs. 35.75 per shares by absorbing amount of Rs. 55.47 lacs. Accordingly the paid up capital of the Company stands reduced to Rs. 745.12 Lacs. The aggregate premium amount paid on bought back shares of Rs. 39.95 Lacs has been debited to Securities premium account.

8. Principal amount payable to Micro and Small Enterprises (to the extent identified by the Company from available information and relied upon by the auditors) as at 31st March, 2010 is Rs. 2,42,246 (2009: Rs. 2,42,536) including unpaid amounts of Rs. Nil (2009: Rs. Nil) outstanding for more than 45 days. No interest is due thereon.

9. Although the companys equity interests in Inogent Laboratories Private Limited (ILPL) and Performance Polymers and Chemicals Private Limited (PPCL) exceed 20%, these have been treated (as in earlier year) as under:

- PPCL has been classified as trade investment as the proposed JV for which the company invested in PPCL was not pursued.

10. Segment reporting:

The company is principally engaged in single business segment - manufacturing of specialty chemicals and operates materially in one geographical segment as per Accounting Standard 17 on segment reporting.

11. During the year management has reviewed the identification and classification of related party relationships. Based on this review the related party relationships identified and transactions with them are detailed below:

A. Relationships:

i. Related parties where control exists Subsidiary company Basic Oil Treating (India) Limited (BOTI). Dai-ichi Gosei Chemicals (India) Limited (DGCL).

ii. Key management personnel

Mrs. S. F. Vakil - Managing Director (SFV)

iii. Relatives of key management personnel

Mr. D. M. Neterwala - Father of Managing Director (Director (DMN)

Mr. F. A. Vakil - Spouse of Managing Director (FAV)

iv. Other related parties

Chemicals & Ferro Alloys Limited (CFAL) Universal Ferro & Allied Chemicals Limited (UFACL) Indian Oxides & Chemicals Limited (IOCL) Uni Klinger Limited (UKL) Uni Abex Alloy Products Limited (UAAP) SDN Company (SDNC) Commercial Building Syndicate (CBS) Rose Investments Limited (RIL) General Pharmaceuticals Pvt. Ltd. (GPPL) Viva Chem Pvt. Ltd. (VCPL) Performance Polymers & Chemicals Pvt. Ltd. (PPCPL) Uni Deritend Ltd. (UDL) Oil Field Instrumentation Ltd. (OFIL) Neterson Technologies Pvt. Ltd. (NTPL) Netal India Ltd. (NIL) Netmech Engg. Pvt. Ltd. (NEPL) Anosh Finance & Investment Pvt. Ltd. (AFIPL) Inogent Laboratories Private Limited (ILPL) Note: Related party relationship is as identified by the company and relied upon by the auditors.

12. Figures are regrouped and rearranged, wherever necessary.