Basis of Consolidation

The consolidated financial statements relate to Galaxy Surfactants Limited (the Company) and its subsidiary companies. The Company and its subsidiaries constitute the Group.

Basis of Accounting:

The financial statements of the subsidiary companies used in the consolidation are drawn up to the same reporting date as that of the Company, i.e., for the year ended 31st March, 2016.

The financial statements of the Group have been brpared in accordance with the applicable Accounting Standards in India and other generally accepted accounting principles.

Principles of Consolidation:

The consolidated financial statements have been brpared on the following basis:

The financial statements of the Company and its subsidiary companies have been consolidated on a line - by - line basis by adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances and intra-group transactions and resulting unrealised profit as per applicable Accounting Standards in India.

The excess of the Company’s portion of equity as at the dates on which the investments in subsidiary companies are made over the cost to the Company of its investment in subsidiaries is recognised in the financial statements as “Capital Reserve on Consolidation”.

The consolidated financial statements are brsented, to the extent possible, in the same format as that adopted by the Company for its separate financial statements. Differences, if any, in accounting policies have been disclosed separately.

The operations of the Company’s subsidiaries are considered as non-integral operations for the purpose of consolidation.

Rates applied for conversion of foreign currency:
For Balance Sheet - year end rate of respective currency except for share capital and br incorporation reserves which have been converted at the rate brvailing on the date of acquisition of the subsidiaries.
For Statement of Profit and Loss in case of subsidiaries held throughout the year - average rate for the year.
For Statement of Profit and Loss in case of subsidiary whose operations commenced from part of the year - average rate for the period of operations of such subsidiary.

Exchange differences arising on consolidation are recognised in Foreign Currency Translation Reserve.

Particulars of Subsidiaries:

Name of the Company	Country of Incorporation	Percentage of Voting Power as at 31st March, 2016
Galaxy Chemicals Inc.	USA	100%
Galaxy Holdings (Mauritius) Ltd.	Mauritius	100%
Galaxy Chemicals (Egypt) S.A.E.	Egypt	100%
Rainbow Holdings GmbH	Germany	100%
TRI-K Industries Inc.	USA	100%

Significant Accounting Policies adopted in brparation of Consolidated Financial Statements

Basis for brparation of financial statements:

Accounting Convention:
The financial statements have been brpared in conformity with generally accepted accounting principles in India under the historical cost convention on accrual basis. These financial statements have been brpared to comply in all material aspects with the         Accounting Standards notified under Rule 7 of the Companies (Accounts) Rules, 2014 in respect of section 133 of the Companies Act, 2013 and other recognised accounting practices and policies. The accounting policies have been consistently applied by the Company and are consistent with those used in the brvious year, except wherever stated otherwise.

Use of Estimates:
The brparation of the financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities as at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates. Any revisions to accounting estimates are recognised prospectively and revised, in current and future periods.

Revenue Recognition:

Sale of Goods:
Domestic sales are recognised at the point of dispatch of goods when the substantial risks and rewards of ownership in the goods are transferred to the buyer as per the terms of the contract and are net of returns. Sales are stated net of trade discounts and taxes on sale.
Export sales are recognised when significant risks and rewards in respect of ownership of goods are transferred to the buyer as per the terms of the contract.
Export entitlements are recognised as income when the right to receive the same as per the terms of the scheme is established in respect of the exports made and where there is no significant uncertainty regarding the ultimate realisation .

Other Income:
Dividend income on investments is recognised when the right to receive dividend is established. Interest income is recognised on time proportionate basis taking into account amount involved and rate of Interest.

Fixed Assets/ Intangible Assets:

Fixed assets/intangible assets are stated at cost of acquisition or construction less accumulated debrciation or amortisation. The cost of fixed assets includes all costs incidental to acquisition or construction including taxes, duties (net of CENVAT and set-off), cost of installation and commissioning, interest on borrowings attributable to acquisition of fixed assets and other indirect expenses incurred up to trial run.

Debrciation & Amortisation:

Debrciation has been provided on the straight line method as per the useful life brscribed in Schedule II to the Companies Act, 2013. Debrciation on additions/ deletions during the year is provided on pro-rata basis from/up to the date of such addition/ deletion.
Leasehold land is amortised over the primary period of lease.
Intangible assets are amortised on a straight line basis over their useful lives.

Inventories:

Inventories are valued at cost or net realisable value, whichever is lower. Cost of inventories is arrived at on weighted average basis. The cost of manufactured products comprises direct costs and production overheads at br-determined rates and excise duty, where applicable. Goods-in-transit are stated at actual cost incurred upto the date of Balance Sheet.

Investments:

Long term investments are stated at cost. Provision is made for diminution in the value of investments where, in the opinion of the Board of Directors, such diminution is other than temporary. Short term investments are stated at lower of cost and market value.

Foreign Currency Transactions:

Transactions in foreign currency are recorded at the rate of exchange brvailing on the date of the transactions. Foreign currency assets and liabilities are converted at contracted/year- end rates as applicable. Exchange differences on settlement/conversion are recognised in the Statement of Profit and Loss. Wherever forward contracts are entered into, the brmium is dealt with in the Statement of Profit and Loss over the period of the contracts.

The assets and liabilities are translated at the exchange rate brvailing on the Balance Sheet date and items of income and expenditure are translated at the average exchange rate for the period. Exchange differences arising on consolidation are recognised in the Foreign Currency Translation Reserve until the disposal of net investment.

Research and Development:

Revenue expenditure on research and development is charged to the Statement of Profit and Loss of the year in which it is incurred. Capital expenditure on research and development is shown as an addition to relevant fixed assets.

Employee Benefits:

Short term employee benefits are recognised as expense in the Statement of Profit and Loss of the year in which service is rendered.

Contribution to defined contribution schemes such as Provident Fund and Family Pension Fund are charged to the Statement of Profit and Loss.

The Company makes annual contribution to Employees Group Gratuity cum Life Assurance Scheme in respect of qualifying employees and the same is recognised as an expense in the Statement of Profit and Loss. Additional liability, if any, in respect of gratuity and liability in respect of leave encashment is recognised on the basis of valuation done by an independent actuary applying project unit credit method. The actuarial gain/loss arising during the year is recognised in the Statement of Profit and Loss of the year.

Borrowing Costs:

Borrowing costs that are attributable to the acquisition, construction of qualifying assets are capitalised as part of cost of such assets up to the date the assets are ready for intended use. All other borrowing costs are recognised as an expense in the year in which they are incurred.

Taxation:

Current tax is determined as the amount of tax payable in respect of taxable income for the period after taking into account MAT credit, if any, as determined in accordance with the provisions of the Income Tax Act, 1961, except for the overseas subsidiaries and joint ventures where current tax provision is determined based on the local tax laws.

Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

Earnings per Share:

Basic earnings per share are calculated by dividing the net profit for the year attributable to the equity shareholders by the weighted average of the number of equity shares outstanding during the year.

Diluted earnings per share is calculated by dividing the net profit for the year attributable to the equity shareholders by the weighted average of the number of equity shares outstanding during the year as adjusted for the effects of all dilutive potential equity shares.

Impairment of Assets:

The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset, or recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Statement of Profit and Loss. If at the Balance Sheet date, there is an indication that a brviously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount and the difference is recognised in the Statement of Profit and Loss.




Provision and Contingent Liabilities

Provisions are recognised when the Company has a legal and constructive obligation as a result of a past event, for which it is probable that a cash outflow will be required and a reliable estimate can be made of the amount of the obligation.

Contingent Liabilities are disclosed when the Company has a possible obligation and it is probable that a cash outflow will not be required to settle the obligation.

When there is a possible obligation or a brsent obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.



Contingent Liabilities and Claims not provided for
Figures in Rs. Crore

Particulars	31st March 2016	31st March 2015
(a) Counter guarantees given to banks	10.73	23.79
(b) Corporate guarantees given to bank in connection with    borrowings by subsidiary company	159.68	204.81
(c) Export bills discounted [Including factored debts with recourse option Rs. Nil /-(Previous year Rs.34 Crores)]	-	50.37
(d) Letter of credit outstanding	8.05	18.52
(e) Claims against the Company not acknowledged as debts
- Excise duty & service tax	5.44	3.97
- Income tax	2.00	2.72
- Sales tax	1.24	1.24
- Custom duty	0.32	0.17
- Electricity cess	0.95	0.93
(f) Duty liability in case of non-fulfilment of export obligation	0.05	0.24
(g) Manufacturing contract stipulating a minimum specific      production volume commitment by September 30, 2017    - Pending commitment as on 31st March 2016	21.06	-

 
Estimated amount of contracts remainingto be executed on Capital Account
Figures in Rs. Crore

Particulars	31st March 2016	31st March 2015
Contracts remaining to be executed (Net of advances)	9.80	12.14

Earnings per Share

Particulars	31st March 2016	31st March 2015
Net profit after tax (Rs. Crore)	101.13	67.99
Weighted average number of equity shares outstanding during the year	3,54,54,752	3,54,54,752
Nominal value of equity shares (Rs.)	10	10
Earnings per Share basic & diluted (Rs.)	28.52	19.18

Segment Reporting (Accounting Standard 17)

Primary segment: Business segment
The Company is engaged in the manufacture of specialty chemicals which is considered as the only business segment.

Secondary segment: Geographical segment
   Figures in Rs. Crores

	Segment Revenues	2015-16	2014-15
A.	Revenues within India	624.50	746.04
B.	Revenues outside India	1224.24	1198.77
	Gross sales of products	1848.74	1944.81

Asset Purchase of Surfactants International, LLC.:

On January 16, 2014, the Company, through its subsidiary TRI-K Industries Inc. entered into an Asset Purchase Agreement (the “Agreement”) with Surfactants International, LLC (“SI”) for the purpose of expanding its business operations and obtaining the right to service specific clients which SI had relationships with. SI is engaged in the sale and distribution of chemicals for the personal care, household, institutional and special industrial product industries throughout the United States. An amount of USD 0.20 Crore was paid over and above the current assets acquired. This has been treated in the consolidated financial statements as under:

Identifiable Intangible Assets and Goodwill:	USD(Crore)	INR(Crore)
Trademarks/Tradenames	0.02	1.44
Goodwill	0.18	10.54
Total Fair Value of Assets acquired	0.20	11.98

The total acquisition related expense associated with the purchase of assets of SI amounted to $0.01 Crore (Rs. 0.66 Crore) comprising of legal fees and valuation report expense. Entire amount is expensed and charged to the Statement of Profit and Loss in the year of incurrence.

Trademarks / Trade names are being amortised over a period of 3 years.
Goodwill is being amortised over a period of 5 years.

Related Parties Disclosures

a. Names of the related parties and nature of relationship:
  
Key Management Personnel and their relatives:

Key Management Personnel-Whole-Time Directors	Relative of Key Management Personnel
Mr. U. Shekhar	Mrs. Lakshmy Shekhar, Wife Mr. Karthik Shekhar, Son Ms. Nandini Shekhar, Daughter
Mr. S. R. Shanbhag ( till 22nd May , 2015)	Mrs. Vandana Shanbhag, Wife Mrs. Sneha Salil Save,  Daughter Mr. Pranav Shanbhag, Son
Mr. G. Ramakrishnan	Mrs. Jayashree Ramakrishnan, Wife Mr. Amit Ramakrishnan, Son Mr. Akaash Ramakrishnan, Son
Mr. U. K. Kamat	Mrs. Dhanvanti Kamat, Wife Mr. Paresh Kamat, Son Ms. Mallika Kamat, Daughter
Mr. R. Venkateswar	Mrs. Geetha Venkateswar, Wife Mrs. Priyanka Venkateswar, Daughter Ms. Sneha Venkateswar, Daughter

      




Entities over which key management personnel are able to exercise significant influence:

Galaxy Emulsifiers Private Limited

Galaxy Finsec Private Limited

Osmania Traders Private Limited

Galaxy Chemicals [Partnership Firm]

Galaxy Estates & Holdings [Partnership Firm]

Galaxy Investments [Partnership Firm]

Shubh Estates & Properties [Partnership Firm]

Galaxy Surfactants Limited – Employees’ Welfare Trust

b. The following transactions were carried out with related parties in the ordinary course of business:

					Figures in Rs. Crore

		Particulars	Entities where Key Management Personnel can exercise significant influence	Key Management	Relatives of Key Management Personnel
		Personnel
		2015-16	2014-15	2015-16	2014-15	2015-16	2014-15
1		Expenditure:
	a	Managerial Remuneration:
		U. Shekhar			1.95	1.05
		G. Ramakrishnan			1.95	1.12
		S. R. Shanbhag			0.45	1.03
		U. K. Kamat			1.78	1.02
		R. Venkateswar			1.95	0.94
	B	Remuneration:
		Amit Ramakrishnan					0.55	0.54
	C	Interest on Fixed Deposits:
		Galaxy Chemicals	0.09	0.27
		U. Shekhar			0.17	0.55
		Karthik Shekhar					0.01	0.06
		Nandini Shekhar					0.03	0.05
		Jayashree Ramakrishnan					0.02	0.08
		Others			-	-	0.03	0.02
	D	Dividend:
		Galaxy Chemicals	8.25	3.65
		Galaxy Emulsifiers Pvt. Ltd.	0.49	0.22
		Galaxy Surfactants Limited - Employees' Welfare Trust	0.26	0.11
		U. Shekhar			3.81	1.65
		S. R. Shanbhag			3.69	1.63
		G. Ramakrishnan			2.11	0.93
		U. K. Kamat			0.09	0.04
		Jayashree Ramakrishnan					1.66	0.72
		Others					0.21	0.10
2		Unsecured Loans:
	A	Fixed Deposit repaid:
		Galaxy Chemicals	1.90	-
		U. Shekhar			3.30	0.80
		G. Ramakrishnan				0.01
		Karthik Shekhar					0.25	0.40
		Nandini Shekhar					0.18	0.22
		Jayashree Ramakrishnan					0.59	0.11
		Others					0.03	0.36
	B	Balances as at year end:
		Galaxy Chemicals	-	1.90
		U. Shekhar			-	3.30
		Karthik Shekhar					-	0.25
		Nandini Shekhar					0.14	0.32
		Jayashree Ramakrishnan					0.07	0.66#
		Lakshmy Shekhar					0.16	0.16
		Others			-	-	0.06	0.09
	C	Interest accrued but not due on Fixed Deposits:
		Galaxy Chemicals	-	0.58
		U. Shekhar			-	1.01
		Karthik Shekhar					-	0.08
		Nandini Shekhar					0.05	0.09
		Lakshmy Shekhar					0.05	0.03
		Others					-	0.01
3		Loans and Advances:
	A	Balance as at year end:
		Galaxy Surfactants Limited – Employees’ Welfare Trust	1.17	1.42

  # Includes Rs. 0.04 Crore as transmission of fixed deposit to legal heir






Leases

Operating Leases

a) Tri-K Industries Inc. has entered into non-cancellable lease agreement for the use of a corporate office, manufacturing facility and storage. The following is the schedule of the future minimum lease payments under this non-cancellable operating lease:

Year ending March 31:     Rs. Crore
2017     3.90
2018     3.83
2019     2.55
2020     2.39
2021     2.47
Total Minimum Lease Payments           15.14

Rent expenses for the year 2016 and 2015 amounts to Rs.3.15 Crore (USD 0.04 Crore) & Rs.3.18 Crore (USD 0.04 Crore)

b) Galaxy Surfactants Ltd has entered into operating lease agreements towards use of godowns, offices and residential brmises for its employees. Most of the lease agreements provide for cancellation by either party with a notice period of 30 days. Lease rental payments recognised in the Statement of Profit and Loss for the year are Rs. 0.91 Crore (Previous Year : Rs.0.98 Crore).

Details of CSR Expenditure

The details of Expenditure incurred by the Holding Company on Corporate Social Responsibility (CSR) activities are as below:
    Figures in Rs.Crore

Particulars	In Cash	Yet to be Paid	Total
I. Gross Amount required to be spent by the Company during the year	-	-	2.07
II. Amount Spent during the year on:
a.Construction/Acquisition of any asset	-	-	-
b. On purpose other than above	1.75	-	1.75

One of the subsidiary company [Galaxy Chemicals (Egypt) SAE] has accumulated losses of           USD 1.50 Crore (Rs. 85 Crore).
During FY 2015-16, the said subsidiary company has been granted a shareholder’s loan amounted to USD 1.50 Crore subject to interest rate and six months Libor + 5% or 7% Egyptian government rate. 
USD 1 Crore had been used for capital increase in Galaxy Chemicals (Egypt) SAE and remaining     USD 0.5 Crore to support the credit need of the company that may arise from business performance and timing gaps.

Previous Year Figures:

Figures pertaining to the subsidiary companies and figures relating to brvious year have been reclassified/ regrouped wherever necessary to bring them in line with the Company’s financial statements.


  As per our Report attached

For P.D. Kunte & Co.(Regd.) Chartered Accountants

For and on behalf of the Board

D. P. SAbr Partner Mem. No. 40740	U. SHEKHAR Managing Director		G. RAMAKRISHNAN Executive Director - Innovation

Navi Mumbai Date: 4th June 2016

R. VENKATESWAR Executive Director – Finance & CFO

V.SHITOLE Head - Resource Mobilisation & Utilisation Process & Company Secretary

Employee Benefits:

Short term employee benefits are recognised as expense in the Statement of Profit and Loss of the year in which service is rendered.

Contribution to defined contribution schemes such as Provident Fund and Family Pension Fund are charged to the Statement of Profit and Loss.

The Company makes annual contribution to Employees Group Gratuity cum Life Assurance Scheme in respect of qualifying employees and the same is recognised as an expense in the Statement of Profit and Loss. Additional liability, if any, in respect of gratuity and liability in respect of leave encashment is recognised on the basis of valuation done by an independent actuary applying project unit credit method. The actuarial gain/loss arising during the year is recognised in the Statement of Profit and Loss of the year.

Segment Reporting (Accounting Standard 17)

Primary segment: Business segment
The Company is engaged in the manufacture of specialty chemicals which is considered as the only business segment.

Secondary segment: Geographical segment
                            
               Figures in Rs. Crores

	Segment Revenues	2015-16
A.	Revenues within India	624.50
B.	Revenues outside India	1224.24
	Gross sales of products	1848.74