NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2015 1. Corporate Information The Company is one of the largest manufacturer of Urea in private sector in India and is also into the trading of fertilisers and other agri inputs. The Company is also into manufacturing of Synthetic and Cotton Yarn. Shipping Division of the Company is engaged in the business of running of ships for cargo. 2. Basis of Preparation The financial statements of the Company have been brpared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has brpared these financial statements to comply in all material respects with the accounting standards notified under Section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rule 2014. The financial statements have been brpared on an accrual basis and under the historical cost convention except for derivative financial instruments and investment acquired in exchange for another asset which have been measured at fair value. The accounting policies adopted in the brparation of financial statements are consistent with those of brvious year, except for the change in accounting policy explained below. 2a) Summary of significant Accounting Policies i) Change in Accounting Policy Till the year ended 31 March 2014, Schedule XIV to the Companies Act, 1956, brscribed requirements concerning debrciation of fixed assets. From the current year, Schedule XIV has been replaced by Schedule II to the Companies Act, 2013. Considering the applicability of Schedule II, the management has re-estimated useful lives and residual values of all its fixed assets. The management believes that debrciation rates currently used fairly reflect its estimate of the useful lives and residual values of fixed assets, although these rates in certain cases are different from lives brscribed under Schedule II. The Company was brviously not identifying components of fixed assets separately for debrciation purposes; rather, a single useful life was used to debrciate each item of fixed asset. Due to application of Schedule II to the Companies Act, 2013, the Company has changed the manner of providing debrciation on its fixed assets. Now, the Company identifies and determines separate useful life for each major component of the fixed asset, if they have useful life that is materially different from that of the remaining asset. The Company has used transitional provisions of Schedule II to adjust the impact of component accounting arising on its first application. If a component has zero remaining useful life on the date of Schedule II becoming effective, i.e., 1 April 2014, its carrying amount, after retaining any residual value, is charged to the opening balance of retained earnings. The carrying amount of other components, i.e., components whose remaining useful life is not NIL on 1 April 2014, is debrciated over their remaining useful life. Had the Company continued to use the earlier policy of debrciating fixed asset, the profit for the current year would have been lower by Rs. 3986.58 lacs (net of tax impact of Rs. 2052.78 lacs) (including Rs. 732.10 lacs towards change in residual value of ships from NIL to 5%), retained earnings at the beginning of the current year would have been higher by Rs. 1269.02 lacs (net of tax impact of Rs. 653.42 lacs) and the fixed assets would correspondingly have been lower by Rs. 4116.92 lacs. ii) Use of Estimates The brparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based upon management's best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods. iii) Tangible Fixed Assets Fixed assets, are stated at cost, net of accumulated debrciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price. Subsequent expenditure related to an item of fixed assets is added to its book value only if it increases the future benefits from the existing asset beyond its brviously assessed standard of performance. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred except when significant parts of fixed assets are required to be replaced at intervals, the Company recognizes such parts as individual assets with specific useful lives and debrciates them accordingly. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the fixed assets as a replacement if the recognition criteria are satisfied. Any trade discounts and rebates are deducted in arriving at the purchase price. The Company adjusts exchange differences arising on translation/settlement of long-term foreign currency monetary items pertaining to the acquisition of a debrciable asset to the cost of the asset and debrciates the same over the remaining life of the asset. In accordance with MCA circular dated August 09, 2012, exchange differences adjusted to the cost of fixed assets are total differences, arising on long-term foreign currency monetary items pertaining to the acquisition of a debrciable asset, for the period. Gains or losses arising from derecognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized. iv) Debrciation on Tangible Fixed Assets Debrciation is provided using Straight Line Method as per the useful life of the asset estimated by the management which are equal to the useful life brscribed under Schedule II to the Companies Act, 2013 other than the cases as mentioned in para (i) to (viii) below where the useful life is different from those brscribed in Schedule II to the Companies Act, 2013. A major portion of the plant at Fertiliser division of the Company has been considered as continuous process plant. S. No. Assets Useful lives (i) Second hand fixed assets at Textile division On technically assessed remaining useful lives of such assets ranging from 3 to 7 years. (ii) - Leasehold Land Amortised over 99 Years - Leasehold Improvement Ranging from 4 to 15 Years - Assets under finance lease Ranging from 3 to 9 Years These assets are amortised :over the period of respective leases or useful life of assets, whichever is lower. (iii) Insurance/ Machinery Spares :Over the remaining useful lives of mother assets ranging from 1 to 18 years. (iv) Ships of Shipping Division 25 years based on the technical evaluation, as the ships are double hull crude oil/product tankers the life is estimated to be 25 years, as such kind of ships are allowed for acquisition without technical clearance and further charter-in of such ships are permitted subject to CAP2 (condition assessment program) rating provided the life is below 25 years. (v) Vehicles :Debrciated over 5 years. After the expiry of 5 years, the vehicle gets normally replaced. (vi) Railway Siding :25 years based on technical evaluation that the railway siding is currently in use. (vii) Plant and Machinery at Textile division :9.19 years based on the technical assessment carried out by the management. (viii) Certain Plant & Machinery of fertilizer division:On technically assessed remaining useful life of such assets ranging from 1 to 2years. Assets costing below Rs.5,000 are debrciated in the year of purchase. v) Intangible Assets Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Intangible assets are amortised on a straight line basis over the estimated useful economic life. The following are the acquired intangible assets: Software Cost of software is amortized over their estimated useful life of five years on straight line basis. The amortization period and the amortization method are reviewed at least at each financial year end. If the expected useful life of the asset is significantly different from brvious estimates, the amortization period is changed accordingly. If there has been a significant change in the expected pattern of economic benefits from the asset, the amortization method is changed to reflect the changed pattern. Such changes are accounted for in accordance with AS-5, "Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies". Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized. vi) Impairment of tangible and intangible assets The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's (CGU) net selling price and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their brsent value using a br-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining net selling price, recent market transactions are taken into account, if available, and if no such transactions can be identified an appropriate valuation model is used. The Company bases its impairment calculation on detailed budgets and forecast calculations which are brpared separately for each of the Company's CGU's to which the individual assets are allocated. These budgets and forecast calculations are generally cover a period of five years. For longer periods, a long term growth rate is calculated and applied to project future cash flows after the fifth year. Impairment losses, including impairment on inventories, are recognized in the statement of profit and loss. After impairment, debrciation is provided on the revised carrying amount of the asset over its remaining useful life. vii) Leases Finance leases, which effectively transfer to the Company substantially, all the risk and benefits incidental to the ownership of the leased item,are capitalized at inception of the lease term at the lower of the fair value of the leased property and brsent value of minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized as finance costs in the statement of Profit and Loss. Lease management fees, legal charges and other initial direct costs are capitalized. A leased asset is debrciated on a straight-line basis over the useful life of the asset or the useful life envisaged in Schedule II to the Companies Act, 2013, whichever is lower. However, if there is no reasonable certainty that the Company will obtain the ownership by the end of the lease term, the capitalized asset is debrciated on a straight-line basis over the shorter of the estimated useful life of the asset, the lease term or the useful life envisaged in Schedule II to the Companies Act, 2013. Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term. viii) Government grants and subsidies Grants and subsidies from the government are recognized when there is reasonable assurance that (i) the Company will comply with the conditions attached to them, and (ii) the grant/ subsidy will be received. Where the grant or subsidy relates to revenue, it is recognized as income on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs, which they are intended to compensate. Where the grant relates to an asset, it is recognized as deferred income and released to income in equal amounts over the expected useful life of the related asset. ix) Investments Investments, which are readily realizable and intended to be held for not more than a year from the date on which such investn are classified as current investments. All other investments are classified as long-term investments. On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties. If an investment is acquired in exchange for another asset, the acquisition is determined by reference to the fair value of the asset given up or by reference to the fair value of the investment acquired, whichever is more clearly evident. Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments. On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss. x) Inventories Inventories are valued as follows: Bunkers remaining on board* Lower of cost and net realizable value. Cost is determined on weighted average basis. Spares and Lubricants Lower of cost and net realizable value. Cost is determined on First -In -First -Out basis. Naphtha, Raw materials, Packing materials, other stores and spares Lower of cost and net realizable value. However, materials and other items held for use in the production of finished goods are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is determined on a weighted average basis. Catalyst in Use At debrciated cost on the basis of amortization over their estimated useful lives ranging from three to fifteen years as technically assessed. Loose Tools At debrciated cost arrived at on the basis of amortization over a period of three years. Work in Process and Finished Goods Lower of cost and net realizable value. Cost includes direct materials, labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of Finished goods includes excise duty where ever applicable. Cost is determined on a weighted average basis. Traded products Lower of cost and net realizable value. Cost includes the cost of purchase and other costs incurred in bringing the inventories to their brsent location and condition. Cost is determined on weighted average basis. Waste At net realisable value. *included under the inventory of stores and spares. Net Realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. xi) Borrowing Costs Borrowing costs include interest and amortization of ancillary costs incurred in connection with the arrangement of borrowing. Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. xii) Revenue Recognition Revenue is recognised to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific criteria must also be met before revenue is recognised: (a) Sale of Goods Revenue, including subsidy, in respect of sale of products is recognised when the significant risks and rewards of ownership of the goods are passed on to the buyer. Excise Duty deducted from turnover (gross) is the amount that is included in the amount of turnover (gross) and not the entire amount of liability accruing during the year. The Company collects Sales Tax and VAT on behalf of Government and therefore, these are not economic benefits flowing to the Company. Hence, these are excluded from the revenue. Subsidy on Urea is recognized based on Concession price including freight as notified under the New Pricing Scheme (NPS-Stage III), Uniform Freight Policy and New Investment Policy 2008. The concession price and freight is accounted based on notified prices, further adjusted for input price escalation/ de-escalation and as estimated by the management based on the brscribed norms in line with known policy parameters. Subsidy on Phosphatic and Potassic (P&K) fertilizers is recognized as per concession rates notified by the Government of India and the estimates by the management, in accordance with Nutrient Based Subsidy Policy from time to time. Freight subsidy has been accounted for as per the Uniform Freight Policy. Subsidy on Gypsum is recognized based on district wise concession rates, as notified by the Government of Rajasthan. (b) Income from operations of Ships In respect of voyage charter, revenue is recognized on proportionate number of days of respective voyage. In case of time charter (including cost plus charter), revenue is recognized on time proportion basis. (c) Interest Interest income is recognised on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Interest income is included under the head 'other income' in the statement of profit and loss. Further, interest on delayed payment from customers are accounted on accrual basis to the extent these are measurable and ultimate collection is reasonably certain. (d) Dividend Dividend income is recognized when the Company's right to receive dividend is established by the reporting date. (e) Insurance Claims Claims receivable on account of insurance are accounted for to the extent the Company is reasonably certain of their ultimate collection. (f) Export Benefits Export benefits under Duty Drawback Scheme, Focus Market Scheme, Status holder incentive scheme and Focus Product Scheme are accounted for in the year of export of goods. Foreign Currency Translation (a) Initial recognition Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. (b) Conversion Foreign currency monetary items are retranslated using the exchange rate brvailing at the reporting date. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. Non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are, translated using the exchange rates that existed when such values were determined. (c) Exchange differences The Company accounts for exchange differences arising on translation / settlement of foreign currency monetary items as below: i) Exchange differences arising on long-term foreign currency monetary items related to acquisition of a fixed asset are capitalized and debrciated over the remaining useful life of the asset. ii) Exchange differences arising on other long-term foreign currency monetary items are accumulated in the 'Foreign Currency Monetary Item Translation Difference Account' and amortized over the remaining life of the concerned monetary item. iii) All other exchange differences are recognized as income or as expense in the period in which they arise. For the purpose of i) and ii) above, the Company treats a foreign currency monetary item as "long-term foreign currency monetary item", if it has a term of 12 months or more at the date of its origination. In accordance with MCA circular dated 09 August 2012, exchange differences for this purpose, are total differences arising on long-term foreign currency monetary items for the period. (d) Forward exchange contracts not intended for trading or speculation purposes The brmium or discount arising at the inception of forward exchange contract is amortized and recognized as an expense / income over the life of the contract. Exchange differences on such contracts, except the contract which are long-term foreign currency monetary items, are recognized in the statement of profit and loss in the period in which the exchange rates change. Any profit or loss arising on calculation or renewal of such forward exchange contract is also recognized as income or as expense for the period. Any gain/loss arising on forward contracts which are long-term foreign currency monetary items is recognized in accordance with paragraph (c ) (i) above. xiv) Retirement and other employee benefits (a) Retirement benefit in the form of Provident Fund is a defined benefit obligation in case of fertiliser and shipping division of the Company and is provided for on the basis of actuarial valuation on projected unit credit method made at the end of each financial year. The difference between the actuarial valuation of the provident fund of employees at the year-end and the balance of own managed fund is provided for as liability in the books. Any excess of plan asset over projected benefit obligation is ignored as such surplus is distributed to the beneficiaries of the trust. Provident Fund in respect of Textile division of the Company and Pension Fund of all divisions of the Company are defined contribution scheme. The division has no obligation, other than the contribution payable to the provident fund. The division recognizes contribution payable to the provident fund scheme as an expenditure, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. (b) Superannuation Fund is a defined contribution scheme. Liability in respect of Superannuation Fund to the concerned employees of Fertiliser and Shipping division is accounted for as per the Company's Scheme and contributed to Life Insurance Corporation of India (LIC) / ICICI Prudential Life Insurance Company Limited (ICICI) every year. The divisions do not have any other obligation, other than the contribution payable to the superannuation fund. The divisions recognize contribution payable to the superannuation fund scheme as an expenditure, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. (c) Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each financial year. However, in respect of Fertiliser division, the Company has taken policies from LIC, ICICI and Birla Sunlife Insurance Company Limited (BSLI) and for Shipping and Textile divisions, the Company has taken a policy from LIC to cover the gratuity liability of the employees. The difference between the actuarial valuation of the gratuity of employees at the year-end and the balance of funds with LIC, ICICI and BSLI is provided for as liability in the books. (d) Retirement benefit in the form of post retirement medical benefits is a defined benefit obligation in case of fertiliser division of the Company and is provided for on the basis of actuarial valuation on projected unit credit method made at the end of each financial year. (e) Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date. (f) The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end. Actuarial gains / losses are immediately taken to the statement of profit and loss and are not deferred. The Company brsents the entire leave as a current liability in the balance sheet, since it does not have an unconditional right to defer its settlement for 12 months after the reporting date. xv) Income Taxes Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to tax authorities in accordance with the Income-tax Act, 1961 enacted in India. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and tax laws enacted or substantively enacted at the reporting date. Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed debrciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits. In the situations where the Company is entitled to a tax holiday under the Income-tax Act, 1961 enacted in India, no deferred tax (asset or liability) is recognized in respect of timing differences which reverse during the tax holiday period. Deferred tax in respect of timing differences which reverse after the tax holiday period is recognized in the year in which the timing differences originate. However, the Company restricts recognition of deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized. For recognition of deferred taxes, the timing differences which originate first are considered to reverse first. At each reporting date, the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax asset to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized. The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income, will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and deferred taxes relate to the same taxable entity and the same taxation authority. xvi) Segment Reporting Policies Identification of segments The Company's operating businesses are organized and managed separately according to the nature of products manufactured, traded and services provided, with each segment rebrsenting a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the locations of customers. Allocation of common costs Common allocable costs are allocated to each segment in proportion to the relative sales of each segment. Unallocated items All the common income, expenses, assets and liabilities, which are not possible to be allocated to different segments, are treated as unallocated items. Segment accounting policies The Company brpares its segment information in conformity with the accounting policies adopted for brparing and brsenting financial statements of the Company as a whole. xvii) Earnings per share Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of the equity shares outstanding during the year. For the purpose of calculating diluted earning per share, net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effect of all dilutive potential equity shares. xviii) Provisions A provision is recognized when the Company has a brsent obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their brsent value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting period and adjusted to reflect the current best estimates. xix) Cash and Cash equivalents Cash and cash equivalents for the purpose of cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less. xx) Derivative Instruments In accordance with the ICAI Announcement, derivative contracts, other than foreign currency forward contracts covered under Accounting Standard 11, are marked to market on a portfolio basis, and the net loss, if any, after considering the offsetting effect on the underlying hedge item, is charged to the Statement of Profit and Loss and the net gain, if any, is ignored. xxi) Employee Stock Option Scheme Measurement and disclosure of the employee stock option scheme is done in accordance with Securities and Exchange Board of India (Share based employee benefits) regulations, 2014 and the Guidance Note on Accounting for Employee Share-based Payments, issued by the Institute of Chartered Accountants of India. The Company measures compensation cost relating to employee stock options using the intrinsic value method. Compensation expense is amortized over the vesting period of the option on a straight line basis. xxii) Contingent Liabilities A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a brsent obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements. xxiii) Basis of classification of Current and Non Current Assets and Liabilities in the balance sheet have been classified as either current or non-current based upon the requirements of Schedule III to the Companies Act, 2013. An asset has been classified as current if (a) it is expected to be realized in, or is intended for sale or consumption in, the Company's normal operating cycle; or (b) it is held primarily for the purpose of being traded; or (c) it is expected to be realized within twelve months after the reporting date; or (d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date. All other assets have been classified as non-current. A liability has been classified as current when (a) it is expected to be settled in the Company's normal operating cycle; or (b) it is held primarily for the purpose of being traded; or (c) it is due to be settled within twelve months after the reporting date; or (d) the Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date. All other liabilities have been classified as non-current. An operating cycle is the time between the acquisition of assets for processing and their realization in cash or cash equivalents. 2 Government Grants and Subsidies (a) Nitrogenous Fertilizers are under the Concession Scheme including freight as per New Pricing Scheme (NPS-Stage III), Uniform Freight Policy and New Investment Policy 2008. The concession price and freight has been accounted for on the basis of notified prices, further adjusted for input price escalation/ de-escalation and as estimated by the management based on the brscribed norms in line with known policy parameters. The NPS - Stage III policy was applicable for the period from October 1, 2006 to March 31, 2010, which has been extended thereafter provisionally till further orders. Accordingly, the impact of revised concession price has been accounted for. Contribution from sale of surplus ammonia has been accounted for in accordance with the known policy parameters. Current year's subsidy income is inclusive of Rs. 628.16 lacs (Previous year Rs. 2872.89 lacs) being the subsidy income, pertaining to earlier years, but determined during the year. (b) Subsidy on traded fertilisers (other than Gypsum) has been accounted based on Nutrient Based Policy as notified by the Government of India. Current year’s subsidy income is inclusive of NIL (Previous year Rs. -1014.87 lacs) being the subsidy income, pertaining to earlier years butdetermined during the year. (c) Subsidy on traded fertilisers (Gypsum) has been accounted as notified by the Government of Rajasthan. (d) The Textile Division of the Company is eligible for interest concession under the TUFS (Technology Upgradation Fund Scheme) of the Government of India. Accordingly, the Company has availed interest concession of Rs.158.20 lacs (Previous year Rs. 242.65 lacs) during the year and reduced the same from interest expenses. 3 Pending receipt of appeal effect orders for the assessment years where appeals have been decided in favour of the Company by the Commissioner of Income Tax (Appeals] and/ or Income Tax Appellate Tribunal, interest on income tax refund has not been recognized thereof as the amount is brsently not reasonably determinable. Interest income on this refund shall be recognized in the year the appeal effect order is received from Income Tax Department. 4 The Deferred Tax charge and dividend distribution tax for the current year ended March 31, 2015 includes additional charge of Rs.760.85 lacs and Rs. 28.75 lacs respectively. This is due to increase in rate of surcharge of income tax as proposed in the Finance Bill, 2015. 5 Based on the favourable decision by Income Tax Appellate Tribunal (ITAT] and CIT (Appeals], the Company had, during the brvious year, reversed the amount of provision for Income Tax relating to Section 80_IA of Income Tax Act, 1961 for various years aggregating to Rs. 5975.82 lacs. The same was shown as Income tax credit related to earlier years. 6 The Company had during the brvious year consolidated the financial statements of CFCL Employees Welfare Trust ('Trust'] with the standalone financial statements of the Company as per the opinion of Expert Advisory Committee (EAC] of Institute of Chartered Accountant of India (issued in the month of March 2014]. The Trust had acquired in the past equity shares of the Company from the secondary market for transfer to the eligible employees as per the CFCL Employees Stock Option Scheme of the Company. Consequently, the Shareholders' Funds of the Company had been adjusted by Rs.1656.92 lacs i.e. (a] downward adjustment in share capital by Rs.225.34 lacs being the face value of 2,253,402 equity shares held by the Trust, (b] downward adjustment in reserves by Rs.1518.79 lacs rebrsenting the purchase price in excess of face value of such equity shares; and (c] increase in reserves by Rs.87.21 lacs towards the accumulated profits of the Trust till 31.03.2013 and dividend received by the Trust during the year 2012_13. Further, the amount of loan of Rs.1665.10 lacs outstanding in the name of Trust in the books of the Company as at 31.03.2014 had been eliminated against the amount of loan outstanding in the name of Company appearing in the books of Trust as at 31.03.2014. 7 Previous Year's figures have been regrouped and/or rearranged wherever necessary to conform to this year's classification. As per our report of even date For S.R. Batliboi & Co. LLP Chartered Accountants ICAI Firm Registration No. 301003E per Anil Gupta Partner Membership No - 87921 Place : Gurgaon Date : April 30,2015 For and on behalf of the Board of Directors of Chambal Fertilisers and Chemicals Limited Anil Kapoor Managing Director Abhay Baijal Chief Financial Officer S.K. Poddar Chairman M.S. Rathore Vice President - Legal, Corporate Communication & Secretary Place : New Delhi Date : April 30,2015 |