Ballarpur International Graphic Paper Holdings B.V ...€¦ · Report of the Managing Directors ... (BGPPL) and Ballarpur Industries Limited (BILT), a Company with limited liability

Ballarpur International Graphic Paper Holdings B.V

Consolidated Financial Statements

As at 30 June 2012

PricewaterhouseCoopers Accountants N.V.For identification purposes only

Ballarpur International Graphic Paper Holdings B.V.All amounts in thousands unless otherwise stated

Page 1

Report of the Managing Directors

The Managing Directors herewith submits their report for the year ended 30 June 2012.

The Company

Ballarpur International Graphic Paper Holdings B.V. ("the Company"), was incorporated on 29 April 2008 inAmsterdam, The Netherlands as a private Company with limited liability.

The consolidated financial statements include the financial position and results of the Company and itssubsidiaries Ballarpur Paper Holdings B.V. (BPH), BILT Graphic Paper Products Limited (BGPPL) and

Ballarpur Industries Limited (BILT), a Company with limited liability in India, is the holding Company of theGroup. BILT is part of Avantha Group which is the ultimate parent. BILT is incorporated and domiciled inIndia.

The principal activities of the subsidiaries included in the consolidated financial statements are as follows:

Company Production Units Principal Activity Country ofIncorporation

Equity interest on 30June 2012

BPH Holding Netherlands 100.00%

BGPPL India 99.99%

Ballarpur Pulp and paper India

Bhigwan Paper India

Kamalapuram Pulp Rayon grade India

SFI Sabah Pulp, paper and forestry Malaysia 97.80%

The non-controlling interest in BGPPL is owned by BILT and the non-controlling interest in SFI is owned bythe Government of Malaysia.

The registered office address of the Company is Paasheuvelweg 16, 1105BH, Amsterdam, The Netherlands.

The correspondence address of the Company is Paasheuvelweg 16, 1105BH, Amsterdam, The Netherlands.

The Company's registration number with the Trade Register of the Chamber of Commerce in Amsterdam is34301128.

Activities

The Group is engaged in manufacturing of writing and printing paper and rayon grade pulp. These are inaccordance with the Company's Articles of Incorporation.



Page 2

Directors

The directors who served during the period are as stated below:

Result for the period

30 June 2012 is US$$ resulting in an Equity of

US$$ . In the opinion of the directors, the results of the Group during the financial year have notbeen substantially affected by any item, transaction or event of a material and unusual nature.

DIVIDEND

No dividend has been paid or declared by the Company to the equity shareholders since the end of theprevious financial year. The directors also do not recommend any dividend payment to equity shareholdersin respect of the current financial year.

During the year the company issued subordinated perpetual capital securities of US$ 200,000 which hasbeen classified as equity in the financial statements. In February 2012 the company has declared couponpayments amounting to US$9,750 which has been reflected as distribution in the statement of changes ofequity.

RESERVES AND PROVISIONS

There were no material transfers to or from reserves or provisions during the financial year other than thosedisclosed in the financial statements.

OTHER FINANCIAL INFORMATION

At the date of this report, the directors are not aware of any circumstances:

(a) which would render the values attributed to current assets in the financial statements of the Companymisleading; or

(b) which have arisen which render adherence to the existing method of valuation of assets or liabilities ofthe Company misleading or inappropriate; or

(c) not otherwise dealt with in this report or financial statements which would render any amount stated in thefinancial statements of the Company misleading.

At the date of this report, there does not exist:

Any major contingent liability of the Company which has arisen since the end of the financial yearNo contingent or other liability has become enforceable, or is likely to become enforceable within the periodof twelve months after the end of the financial year which, in the opinion of the directors, will or may



Page 3

substantially affect the ability of the Company to meet its obligations as and when they fall due.

SIGNIFICANT EVENTS

The Group entered into following transactions:

1. In August 2011, the Group issued subordinated perpetual capital securities of US$ 200,000 whichwere listed on the Singapore stock exchange. The proceeds were utilised for repayment of profitcertificate held by the Ballarpur International Holdings B.V. (BIH), the parent company and forcapital expenditure requirement of its subsidiaries. The capital securities have no maturity date butare redeemable at the option of the company. Further the interest distribution on the securities isalso at the sole discretion of the issuer. Accordingly the company has classified these securities asequity in the financial statements. The transaction cost amounting to US$9,760 have been adjustedin the carrying value. In February 2012, the company has declared interest payments amounting toUS$ 9,750 which has been reflected as distribution in the statement of changes in equity.

2. On 11 August 2011, the Group re-purchased 13,500 of the 20,000 profit certificates issued to theParent Company for a consideration of US$94,500. On the date of re-purchase, the differencebetween the proportionate carrying value of the certificates re-purchased (US$33,340) and the fairvalue of the corresponding liability on the date of the re-purchase (US$30,620) has been accountedfor in the income statement. The balance of the excess of re-purchase price over the fair value of theliability amounting to US$63,880 has been disclosed as an equity distribution to the ParentCompany.

3. Pursuant to the expansion of production capacity, the Indian subsidiary is eligible for incentivesunder the scheme of Government of Maharashtra and an application to this effect was filed with therelevant Authorities in 2009. During the year ended 30 June 2012, the Group has received theeligibility certificates from Government according to which the Ballarpur and Bhigwan unit of theIndian subsidiary are eligible for incentive not exceeding US$104,331 and US$139,019 over aperiod of 9 years and 12 years respectively.

MANAGEMENT DISCUSSION AND ANALYSIS

Net results for the year

The consolidated operating profit of the Group has reduced mainly due to lower EBITDA margin of uncoatedpaper and pulp at BGPPL and depreciation in INR.

The expansion for additional production of 120,000 MT of pulp has been completed successfully and thecapacity is under stabilisation and ramp-up at SFI, Malaysia. The first consignment of 7,000 tonnes of pulpwas despatched from Malaysia in July, 2012. The pulp mill modernisation project at Ballarpur is in anadvanced stage of construction. Most of the major shipments have reached the site or have been erected.Section wise pre-commissioning trials of the pulp mill modernisation is expected to progressively commencefrom January 2013.

The board considers the business from a production unit perspective which also aligns with the products andarkets. Accordingly, management considers the performance of its

businesses as follows:

Coated paper manufactured in India Bhigwan production unit



Page 4

Uncoated paper manufactured in India Ballarpur production unitUncoated paper manufactured in Malaysia SFI production unitRayon grade pulp manufactured in India Kamalapuram production unit

The reportable operating segments derive their revenue primarily from the manufacture and sale of paperand pulp.

The results of these activities are included in the relevant segment as this is how the segments arepresented to the board. All the production units, with the exception of Kamalapuram, sell their products inboth domestic and export markets.

The board assesses the performance of the operating segments based on a measure of EBITDA. Interestincome and expenditure and derivative gains and losses are not allocated to segments, as this type ofactivity is driven by the central treasury function, which manages the cash and risk positions of the Group.

The segment information provided to the board for the reportable segments for the years ended 30 June2012 and 30 June 2011 is as follows: (also refer post balance sheet note 1 below)

EBITDA represents profit before tax as adjusted by depreciation and finance costs (net).

In another significant development to strengthen the capital structure of the Company as a consolidatedentity, in August 2011, the Company successfully completed placement of US$200,000 perpetual bonds witha rate of 9.75 per cent per annum. These bonds are listed on the Singapore Stock Exchange. The proceedsfrom these bonds have been used to repay debt and to finance requisite capital expenditure of Ballarpur pulpcapacity expansion. These bonds are classified as equity under International Financial Reporting Standard(IFRS) and 50 per cent for rating purposes. This issuance will significantly improve the capital structure of thecompany.

During the year 2011-2012, Ballarpur unit produced 248,560 MT of paper. There has been a significantincrease in capacity of unit Ballarpur with the installation of a new paper machine, PM-7 which wascommissioned by Allimand, France with an installed capacity of 165,000 MTPA. In 2011-12, PM-7 hasproduced 133,727 MT of paper. The state of the art machine and finishing section has enhanced quality,provided better packaging for customer and reduced man power engagement. Ballarpur unit produced128,440 MT of pulp. Improved operational efficiencies resulted in better pulp quality with consistentbrightness and increased pulp strength for better operations of paper machines. The pulp mill operations



Page 5

have been further optimised with change in the raw material mix of wood and bamboo, which has resulted inenhanced performance of the paper machine in terms of quality of paper produced.

The total production at Bhigwan in 2011-12 was 279,315 MT of coated paper and coated boards. Theexisting paper line produced 140,483 MT of coated paper and coated boards. The new paper machine line,which started commercial production from the month of March, 2009 produced 138,832 MT. The reduction inproduction in terms of weight was due to increased production of lower grammage but high value addedpapers that yielded better financial returns. Process changes were undertaken, such as fiber furnishoptimisation, usage of BCTMP, filler increase in base paper resulting in higher ash content, optimisation ofcoating formulations. These operational improvements have helped offset the impact of rising input prices toa large extent.

In 2011-12, paper production at SFI was 116,118 MT which is about 12 per cent lower than 2010-11. Lowerpaper production was mainly due to the project tie-in shutdown taken for pulp mill up-gradation from 12

th

September 2011 to 5th

November 2011. The shutdown was longer than what was originally planned due toproject related obstacles. Out of the total paper production of the unit, 28,816 MT was exported. Thebleached pulp production was 94,767 MT, which was 5 per cent lower than 2010-11. As regards plantationactivity, SFI has continued to increase its scale of operations by directly employing labour. This included anaddition of some 600 workers during the year 2011-12 bringing the total to 850.

During 2011-12, unit Kamalapuram produced 88,719 MT of Rayon Grade pulp, an increase of 724 MT over2010-11.There were several system improvement and plant sustainability projects to improve overallefficiency of the plants. These include modification of evaporator bodies, thereby increasing throughput andsteam economy, updating and fine tuning of DD washer operations resulting in increase of recoveryefficiency from 92.6% to 94.04%.

The Group has net current liability position as at 30 June, 2012 primarily due to increase in capital creditors,delay in capitalisation of pulp manufacturing facility at Ballarpur and SFI, Malaysia and increase in short termborrowings. These balances have increased due to capital expansion plans and current portion of long termborrowings due for payment in accordance with the terms of the loan agreements. The Group is earningprofit and has positive cash flows from operations. The directors believe the Group will be able to managethe cash flows for at least the next twelve months based on drawing facilities, efficient working capitalmanagement and proposes to raise equity in future to reduce the outstanding debt obligations.

INTERNAL CONTROL OF PROCESSES, PROCEDURES, RISK MANAGEMENT AND QUALITYCONTROL

The Board is ultimately responsible for the Group's system of internal controls and for reviewing itseffectiveness. However, such a system is designed to manage rather than eliminate risk of failure to meetbusiness objectives and can provide only reasonable and not absolute assurance against material

risks in relation to the achievement of business objectives and appropriate risk responses.

The risk management is an integral part of our approach and includes, management reviews and reviews inbusiness and internal controls over financial reporting and provide a reasonable level of assurance that thefinancial reporting does not contain any material inaccuracies. The financial statements fairly represent thefinancial condition and result of operations of the Company and provide the required disclosures. Themanagement has a risk management and control system, which is designed to ensure that significant risksare identified and are monitored and to ensure compliance with relevant laws and regulations.

The processes which the Board has applied in reviewing the effectiveness of the Group's system of internalcontrols are summarized as follows:

Risk assessment and evaluation are an integral part of the annual strategic planning cycle. Every unit isrequired to document the management and mitigating actions in place and proposed; the principal risksidentified during the annual strategic planning cycle and the effectiveness of the management and mitigatingactions in place are reviewed. Regularly, objectives which are not addressed within the business unit,appropriate approaches are developed to managing and mitigating these risks. Annual financial plans,significant capital investments or contractual commitments and major acquisitions are all subject to review



Page 6

and approval by the Board; there are Group Accounting Policies which set out the minimum standards andprocedures to be applied in relation to risk areas which are regarded as significant, a process of self-assessment of compliance and reporting thereon has been established, providing for a documented trail ofaccountability. The necessary actions are taken to remedy any failings or weaknesses identified by its reviewof the internal control system. Monthly financial information which includes key performance and riskindicators and regular reports on significant legal issues and insurance matters are received from the relateddepartments.

The Groups perceivable risks to the business are financial risks, including foreign currency risk, market risk,credit risk, liquidity and Interest rates risk, cash flow risk and tax risk. The Group has formulated a financialrisk management framework whose principal objective is to minimize its exposure to risks and/or costsassociated with the financing, investing and operating activities.

(i) Foreign currency risk

The major foreign currencies that the Group deals in are United States Dollar, Malaysian Ringgit and Euro.Indian Rupees is the functional currency of the Group. To minimize the risk, it will engage in forward buyingand hedging when necessary. During the previous financial year, the Company had entered into currencyforward contracts.

(ii) Market risk

The Group faces competition from local and foreign competitors. Nevertheless, it believes that it hascompetitive advantage in terms of high quality products and by continually upgrading its expertise and rangeof products to meet the needs of its customers. We have in place policies to manage exposure tofluctuations in the prices of the key raw materials and commodities used in the operations. We enter intofixed price contracts to establish determinable prices for key raw materials and consumables.

(iii) Credit risk

To minimize the risk, the Group has in place a policy whereby it ensures a large customer base in variousindustries and geographical locations so as to limit high concentration in a customer or customers from aparticular market also wherever required customers granted credit are required to have a collateral. We areof the opinion that the risk of incurring material losses related to this credit risk is remote.

(iv) Liquidity risk

The Group practices prudent liquidity risk management to minimize the mismatch of financial assets andliabilities and to maintain sufficient credit facilities for contingent funding requirement of working capital. The

cash to meeton its undrawn committed borrowing facilities at all

times so that the Group does not breach borrowing limits or covenants (where applicable) on any of itsborrowing facilities.

The Group is required to maintain ratios (including total debt to EBITDA / net worth, EBITDA to grossinterest, debt service coverage ratio, secured coverage ratio) as mentioned in the loan agreements atspecified levels. In the event of failure of the company to meet any of these ratios these loans becomecallable at the option of lenders. Refer note 3.1(d) and note 21(1) of the financial statements for noncompliance with certain covenants during the year.

(v) Interest Rate Movement Risk

are linked to LIBOR and prime lending rates of banks in India. The Group has taken interest rate swaps forcertain of its LIBOR linked borrowings post 30 June 2008. To mitigate the exposure to interest ratefluctuations on borrowings the Group is utilizing interest rate swaps, interest rate options and forward rateagreements.



Page 7

(vi) Cash flow risk

The Company reviews its cash flow position regularly to manage its exposure to fluctuations in future cashflows associated with its monetary financial instruments.(vii) Other risk

The Company is also exposed to certain biological assets related risks and tax and legal risks which havebeen explained in the financial statements.

Environmental and personnel related information

We recognise our responsibility to help preserve the future of our planet while continuing to createsustainable value for the business. We will do this by minimising environmental impacts and being costeffective. We are determined to reduce the carbon intensity of our operations and use energy more efficientlyas a key part of our commitment to sustainable growth and to help combat climate change. We have in placean integrated environment policy and standards. Our policy and standards deal with environmental issuesrelated to the manufacturing of our products, energy, water, protecting bio-diversity and the eco-systemsfrom which we source raw materials, the management of our supply chain and the distribution, sale andconsumption of our products. We comply with all the mitigation measures to preserve the environment whencarrying out our operations.Our effluent and gas quantity discharges comply with the standards set under theEnvironmental Quality Regulations.

Protecting the health and safety of employees is fundamental to Our Business Principles programme tostrengthen performance. Human resource management at the Group is built upon core values of honesty,integrity, flexibility and respect for individual and team performance. Over the years, these values have beenimbibed at all levels to produce superior results. Phenomenal growth of the economies has led to a shortageof talent across industries. The challenge of acquiring and retaining talent in the Company is beingaddressed in multiple ways such as providing opportunities to promising young managers, lateral hiring,focused training, aggressive hiring of graduate engineers, targeted financial rewards and campus relations.The Group has steered industrial relations to focus on productivity and improved work practices.

Future outlook

The group has already commissioned pulp mill at SFI during the year ended 30 June 2012 and expects tocommission the pulp mill of Indian subsidiary during the next financial year. The expected cost benefits andrelated margin increase will result in higher EBITDA margin in the next financial year as the import of hardwood pulp will be replaced with internally manufactured pulp.

Subsequent to the year end the Group has restructured its business by exchanging the pulp manufacturingfacility at Kamalapuram with paper manufacturing facilities at Sewa and Ashti of Ballarpur Industries Limited,a related party. The restructuring would result in a net increase in revenue from operations of US$ 5 millionand would result in a reduction in EBIDTA of US$ 18 million as per the statutory financial statementsprepared under the generally accepted accounting principles in India. This would help the group consolidateits paper business and, provide access to copier paper market and bring in cost efficiencies.

Post Balance Sheet events

1. On 4 July, 2012 the board of directors of BGPPL, subsidiary of the Group, have approved a group

restructuring plan. The group restructuring was approved by the shareholders of BIGPH on 6 July ,

2012. As part of the group restructuring, the business undertakings of Ballarpur Industries Limited,

situated at Units Sewa and Ashti engaged in the business of manufacture of copier paper will be

exchanged with the business undertaking of BGPPL situated at Unit Kamalapuram engaged in the

business of manufacture of rayon grade pulp. The transaction resulted in a net inflow of US$ 6,634

to the Group paid by BILT after necessary working capital adjustments.

After the year-end, as part of the group restructuring, the management of the Company has agreedto dispose the net assets relating to the unit at Kamalapuram in a board meeting held on 3 July,2012 and subsequently the approval of the shareholders was also obtained on 6 July, 2012. Since,



Page 8

there was no commitment by management at the year-end, this has been accounted for as a postbalance sheet non-adjusting event. As part of the transaction, net assets amounting to US$75,383will be disposed. The results relating to Kamalapuram is included in pulp segment under note 5.

Since the transaction will be between entities under common control, the management of BIGPHexpects to apply predecessor basis of accounting to this transaction, whereby the assets andliabilities of Sewa and Ashti will be recorded at the IFRS carrying values and the difference betweenthe carrying values of the new units and Kamalapuram as compared to the net consideration will berecognised in equity.

2. On 4 July, 2012 the board of directors of BGPPL approved the purchase of captive power plants ofAPIL situated at units Ballarpur, Sewa and Bhigwan along with a maximum debt of US$67,123 fromAPIL for a payable consideration aggregating to US$ 41,440 by BGPPL to APIL. The considerationfor sale would be adjusted for working capital changes. The acquisition is subject to approvals byregulatory authorities.

3. On 18 July, 2012 the Group repurchased remaining 6,500 profit certificates issued to a BIH for aconsideration of US$ 45,500. On the date of repurchase the difference between the proportionatecarrying value of the profit certificates repurchased (US$ 13,889) and the fair value of thecorresponding liability on the date of the repurchase (US$ 9,456) will be accounted for in the incomestatement. The balance of the excess of repurchase price over the fair value of the liabilityrepurchased will be disclosed as an equity distribution to the parent company.

4. The Group has entered into following transactions of term loan borrowings:

a) Ballarpur Paper Holdings B.V. (BPH) one of the subsidiaries of the Company, has taken newUS$ 58,000 loan from Standard Chartered Bank for repurchase of profit certificates.

b) BILT Graphic Paper Products Limited (BGPPL) one of the subsidiaries of the Company, hastaken new US$ 25,000 loan from Rabobank for capital expenditure requirement.

c) Sabah Forest Industries Sdn. (SFI) one of the subsidiaries of the Company, has taken new US$25,000 loan from Rabobank for capital expenditure and long term working capital requirementsand US$ 25,000 from Standard Chartered Bank for capital expenditure.



Page 9

Date:21 December, 2012

Managing Directors

____________________ ___________________Gautam Thapar Rajeev Ranjan Vederah

____________________ ____________________Bhuthalingam Hariharan Pradeep Vasudeo Bhide

______________________ ____________________Jane Fields Wicker - Miurin Yogesh Agarwal

____________________ ___________________Kunnasagaran Chinniah Steward Norman Hicks

__________________Doeke van der Molen



Page 10

Consolidated income statement

The notes on pages 15 to 74 are an integral part of these consolidated financial statements.



Page 11

Consolidated statement of comprehensive income

Items in the statements above are disclosed net of tax. The income tax relating to each component of othercomprehensive income is disclosed in note 31.




Page 12

Consolidated statement of financial position



Ballarpur International Graphic Paper Holdings B.V.All amounts in US Dollars thousands unless otherwise stated

Page 13

Consolidated statement of changes in equity



Ballarpur International Graphic Paper Holdings B.V.All amounts in US Dollars thousands unless otherwise stated

Page 14

Consolidated statement of cash flows

Refer note 17 for issue of share against settlement of debt obligation.Refer note 21 for issue of profit certificate against settlement of debt obligation.The notes on pages 15 to 74 are an integral part of these consolidated financial statements.



Page 15

Notes to consolidated financial statements

1. General information and development of the BIGPH Group

and domiciled in the Netherlands, is currently a majority owned subsidiary of Ballarpur International HoldingsILT

/BILT domiciled in India. BILT is part of Avantha Group which is the ultimateparent.

operations comprise of production of pulp and paper spanning across three production units inIndia and one in Malaysia. The unit in Malaysia owns two timber licenses granted under a 99 years lease bythe State Government of Sabah, Malaysia for extraction of timber from the natural forest and for industrialtree plantation (ITP) in Sabah, Malaysia.

These consolidated financial statements include the financial position and results of the Company and itssubsidiaries Ballarpur Paper Holdings B.V. (BPH), BILT Graphic Paper Products Limited (BGPPL) and

).

The principal activities of the subsidiaries included in the consolidated financial statements are as follows:

Company Production Units Principal Activity Country ofIncorporation

Equity interest on 30June 2012

BPH Holding Netherlands 100.00%

BGPPL India 99.99%

Ballarpur Pulp and paper India

Bhigwan Paper India

Kamalapuram Pulp Rayon grade India

SFI Sabah Pulp, paper and forestry Malaysia 97.80%

The non-controlling interest in BGPPL is owned by BILT and the non-controlling interest in SFI is owned bythe Government of Malaysia.

The registered office address of the Company is Paasheuvelweg 16, 1105BH, Amsterdam, The Netherlands.

The consolidated financial statements of the group for the year ended 30 June 2012 were authorised forissue in accordance with the resolution of the Board of directors on 21 December 2012.

2. Summary of significant accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements areset out below.

2.1 Basis of preparation

The consolidated financial statements of the Group have been prepared in accordance with International

as adopted by the European Union. It has been prepared under the historical costconvention, except for available for sale financial assets, financial assets and financial liabilities (includingderivative instruments) at fair value through profit or loss and biological assets, which have been measuredat fair value.

The preparation of consolidated financial statements in conformity with IFRS requires the use of certaincritical accounting estimates. It also requires management to exercise its judgment in the process of

ounting policies. The areas involving a higher degree of judgment or complexity, orareas where assumptions and estimates are significant to the consolidated financial statements are



Page 16

disclosed in note 4.

2.2 Changes in accounting policy and disclosure on adoption of new standards

a. New and amended standards adopted by the Group

The following new standards and amendments to standards are mandatory for the first time for the financialyear beginning 1 July 2011.

IAS 1 (Amendment), Presentation of Financial Statements (effective from 1 January 2011): Entities maypresent either in the statement of changes in equity or within the notes an analysis of the components ofother comprehensive income by item. The Group presents separate line items in statement of changes inequity for analysing the components of other comprehensive income and hence this amendment is notrelevant for the Group.

IFRS 7, Transfers of financial assets (effective on or after 1 July 2011): This statement requires disclosuresto help users of financial statements evaluate the risk exposures relating to transfers of financial assets andthe effect of those risks on an entity's financial position. The amendment does not have any impact on theGroup's financial statements since there was no transfer of financial assets.

IAS 24 (revised), Related party disclosures', (effective on or after 1 January 2011): IAS 24 (revised) issued inNovember 2009. It supersedes IAS 24, Related party disclosures', issued in 2003. The revised standardclarifies and simplifies the definition of a related party and removes the requirement for government-relatedentities to disclose details of all transactions with the government and other government-related entities.When the revised standard is applied, the Group and the parent will need to disclose any transactionsbetween its subsidiaries and its associates. The amendment does not have any impact on the Group'sfinancial statements since there were no transactions with government-related entities.

IFRIC 14, Prepayments of a minimum funding requirement (effective on or after 1 January 2011): Theamendment corrects an unintended consequence of IFRIC 14, IAS 19 The limit on a defined benefitasset, minimum funding requirements and their interaction'. Without the amendments, entities are notpermitted to recognise as an asset some voluntary prepayments for minimum funding contributions. This wasnot intended when IFRIC 14 was issued, and the amendments correct this. Earlier application of theamendment is permitted. The amendments should be applied retrospectively to the earliest comparativeperiod presented. The amendment does not have any impact on the Group's financial statements.

b. New and amended standards, and interpretations issued but not effective for the financial yearbeginning 1 July 2011 and not early adopted

IAS 1 (Amendment), Presentation of Financial Statements (effective from 1 July 2012): The amendmentrequires entities to separate items presented in OCI into two groups, based on whether or not they may berecycled to profit or loss in the future. Items that will not be recycled such as revaluation gains on property,plant and equipment will be presented separately from items that may be recycled in the future, such asdeferred gains and losses on cash flow hedges. Entities that choose to present OCI items before tax will berequired to show the amount of tax related to the two groups separately. The Group intends to adopt theamendment from the accounting period beginning on or after 1 July 2012. This amendment does not have

IFRS 9 (Amendment), Financial instruments: IFRS 9 addresses the classification, measurement andrecognition of financial assets and financial liabilities. IFRS 9 was issued in November 2009 and October2010. It replaces the parts of IAS 39 that relate to the classification and measurement of financialinstruments. IFRS 9 requires financial assets to be classified into two measurement categories: thosemeasured as at fair value and those measured at amortised cost. The determination is made at initialrecognition. The classification depends on the entity's business model for managing its financial instrumentsand the contractual cash flow characteristics of the instrument. For financial liabilities, the standard retains



Page 17

most of the IAS 39 requirements. The main change is that, in cases where the fair value option is taken forfinancial liabilities, the part of a fair value change due to an entity's own credit risk is recorded in othercomprehensive income rather than the income statement, unless this creates an accounting mismatch. TheGroup is yet to assess IFRS 9's full impact and intends to adopt IFRS 9 no later than the accounting periodbeginning on or after 1 January 2015.

IFRS 10, Consolidated Financial Statements', effective for annual periods beginning on or after 1 January2013: IFRS 10 supersedes IAS 27 Consolidated and Separate Financial Statements and SIC-12Consolidation Special Purpose Entities. The IFRS defines the principal of control and establishes controlas the basis for determining which entities are consolidated in the consolidated financial statements. TheIFRS also sets out the accounting requirements for the preparation of consolidated financial statements. TheGroup is currently evaluating the impact that the adoption of this standard will have on its consolidatedfinancial statements. The standard has not yet been endorsed by EU.

IAS 12 (Amendment), Income taxes (effective for annual periods beginning on or after 1 January 2012):Currently IAS 12, 'Income taxes', requires an entity to measure the deferred tax relating to an assetdepending on whether the entity expects to recover the carrying amount of the asset through use or sale.This amendment added another exception to the principles of IAS 12 that there is rebuttable presumptionthat investment property measured at fair value is recovered entirely by sale. The rebuttable presumptionalso applies to the deferred tax liabilities or assets that arise from investment properties acquired in abusiness combination, if the acquirer subsequently uses the fair value model to measure those investmentproperties. The amendment does not have any impact on the Group's financial statements. The Groupintends to adopt the amendment from the accounting period beginning on or after 1 January 2012.

IAS 19 (revised), Employee benefits', issued in June 2011 (effective for annual periods beginning on or after1 January 2013): It supersedes IAS 19, Employee benefits'. The revised standard eliminates the corridorapproach and method of calculating finance cost on a net funding basis. The standard has not yet beenendorsed by the EU. The standard is not expected to have any impact on the Group's financial statements.The Group intends to adopt the amendment from the accounting period beginning on or after 1 January2013.

IAS 1, Presentation of Financial Statements, (effective for annual periods beginning on or after 1 January2013): When an entity produces an additional balance sheet as required by IAS 8, the balance sheet shouldbe as at the date of the beginning of the preceding period that is, the opening position. No notes arerequired to support this balance sheet. . The Group intends to adopt the amendment from the accountingperiod beginning on or after 1 January 2013.financial statements.

IAS 16, Property, Plant and Equipment, (effective for annual periods beginning on or after 1 January 2013):The previous wording of IAS 16 indicated that servicing equipment should be classified as inventory, even ifit was used for more than one period. Following the amendment, this equipment used for more than oneperiod is classified as property, plant and equipment. . The Group intends to adopt the amendment from theaccounting period beginning on or after 1 January 2013. The Group is currently evaluating the impact thatthis amendment will have on its consolidated financial statements.

IAS 32, Financial Instruments: Presentation, (effective for annual periods beginning on or after 1 January2013): Prior to the amendment, IAS 32 was ambiguous as to whether the tax effects of distributions and thetax effects of equity transactions should be accounted for in the income statement or in equity. Theamendment clarifies that the treatment is in accordance with IAS 12. So, income tax related to distributions isrecognised in the income statement, and income tax related to the costs of equity transactions is recognisedin equity. . The Group intends to adopt the amendment from the accounting period beginning on or after 1January 2013. The Group is currently evaluating the impact that this amendment will have on itsconsolidated financial statements.

Certain amendments relating to IAS 27, IAS 28, IAS 34, IFRS 1, IFRS 11, IFRS 12, IFRS 13, IFRIC 13 and



Page 18

IFRIC 20 are not disclosed as these amendments are not applicable to the Group.

2.3 Consolidation

(a) Subsidiaries

Subsidiaries are all entities (including special purpose entities) over which the Group has the power togovern the financial and operating policies generally accompanying a shareholding of more than one half ofthe voting rights. The existence and effect of potential voting rights that are currently exercisable orconvertible are considered when assessing whether the Group controls another entity. Subsidiaries are fullyconsolidated from the date on which control is transferred to the Group. They are de-consolidated from thedate that control ceases.

The Group applies the acquisition method to account for business combinations. The considerationtransferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurredto the former owners of the acquiree and the equity interests issued by the Group. The considerationtransferred includes the fair value of any asset or liability resulting from a contingent considerationarrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a businesscombination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition- by-acquisition basis, either at fair value or at the non-

Acquisition-related costs are expensed as incurred.

held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisitiondate. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset orliability is recognised in accordance with IAS 39 either in profit or loss or as a change to othercomprehensive income. Contingent consideration that is classified as equity is not remeasured, and itssubsequent settlement is accounted for within equity.

Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fairvalue of non-controlling interest over the net identifiable assets acquired and liabilities assumed. If thisconsideration is lower than the fair value of the net assets of the subsidiary acquired, the difference isrecognised in profit or loss.

Inter-company transactions, balances and unrealised gains on transactions between Group companies areeliminated. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changedwhere necessary to ensure consistency with the policies adopted by the Group.

(b) Transactions with non-controlling interests

The Group treats transactions with non-controlling interests as transactions with the equity owners of theGroup. For purchases from non-controlling interests, the difference between any consideration paid and therelevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains orlosses on disposals to non-controlling interests are also recorded in equity.

When the Group ceases to have control or significant influence, any retained interest in the entity is re-measured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value isthe initial carrying amount for the purposes of subsequently accounting for the retained interest as anassociate, joint venture or financial asset. In addition, any amounts previously recognised in othercomprehensive income in respect of that entity are accounted for as if the Group had directly disposed of therelated assets or liabilities. This may mean that amounts previously recognised in comprehensive incomeare reclassified to profit or loss.



Page 19

2.4 Segmental reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chiefoperating decision-maker. The chief operating decision-maker, who is responsible for allocating resourcesand assessing performance of the operating segments, has been identified as the board that makes strategicdecisions.

2.5 Foreign currency translation

(a) Functional and presentation currency

the primary economic environment in which the entity oper The functionalcurrency of the Malaysian operations at SFI is Malaysian ringgit, and the functional currency of the Indianoperations and the Dutch holding entities is Indian rupees (INR).

Group believesthis is a currency familiar to international investors and the Company attracts financing in US$.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailingat the dates of the transactions. At each balance sheet date, monetary items denominated in foreigncurrencies are translated at the exchange rates prevailing at the balance sheet date. Non-monetary itemscarried at fair value that are denominated in foreign currencies are translated at the exchange ratesprevailing at the date when the fair value was determined. All foreign exchange gains or losses arerecognised in the income statement, except when deferred in other comprehensive income as qualifyingcash flow hedges.

(c) Translation into presentation currency

The results and financial position of all the Group entities that have a functional currency different from thepresentation currency are translated into the presentation currency as follows:

assets and liabilities for each balance sheet presented are translated at the closing rate at the date ofthat balance sheet;components of equity are translated at historical rates;income and expenses for each income statement are translated at average exchange rates; andall resulting exchange differences are recognised as a separate component of other comprehensiveincome.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets andliabilities of the foreign entity and translated at the closing rate.

The translation rates applied to translate from the functional currencies Indian rupee and Malaysian ringgitinto the presentation currency US$ are as follows:

Currency Code

As at 30June2012

Averageyear

ended30 June

2012

As at30 June

2011

Averageyear

ended30 June

2011

Indian rupee INR 56.23 50.84 45.42 45.79

Malaysian ringgit MYR 3.20 3.09 3.04 3.09



Page 20

2.6 Property, plant and equipment

Property, plant and equipment are stated at historical cost less accumulated depreciation. Historical costincludes expenditure that is directly attributable to the acquisition of the items.

Subsequentappropriate, only when it is probable that future economic benefits associated with the item will flow to theGroup and the cost of the item can be measured reliably. The carrying amount of the replaced part isderecognised. All other repairs and maintenance are charged to the income statement during the financialperiod in which they are incurred.

Advances paid towards acquisition of property, plant and equipment outstanding at each balance sheet dateand the cost of asset not put to use before such date are disclosed under capital work in progress.

Freehold land is not depreciated. Depreciation is charged on a straight line basis so as to write off the cost ofthe assets to their residual values over their estimated useful lives using the straight-line method, as follows:

BuildingsFactory buildingsResidential buildings

8 to 26 years55 to 61 years

Plant and machinery and equipmentPaper, pulp and utility plants, machinery and equipmentacquired and installed in recent years (2009 onwards)Other paper, pulp and utility plants, machinery andequipmentOffice and other equipment

20 to 30 years

15 to 18 years4 to 10 years

Motor vehicles 4 to 5 yearsJetty and access roads 25 years

The estimated useful lives, residual values and depreciation method are reviewed at each year end, with theeffect of any changes in estimate being accounted for on a prospective basis.

The gain or loss arising on the disposal or retirement of an item of property, plant and equipment isdetermined as the difference between the sales proceeds and the carrying amount of the asset and isrecognised in the income statement.

2.7 Biological assets

Biological asset is defined as the timber forest managed by the Group which is involved in agriculturalactivity of transformation of the biological assets. The biological assets are valued and reported at fair valueafter deduction of estimated selling cos biological assets is calculated as thepresent value of anticipated future cash flow from the assets discounted at pre-tax weighted average cost ofcapital of the business unit. The calculation is based on existing, sustainable forest surveys andassessments regarding growth, timber prices, felling costs including costs for statutory replanting. Thechanges in fair value are recorded in a separate line item in operating profit.

2.8 Impairment of non-financial assets

Assets that have an indefinite useful life, for example, goodwill are not subject to amortisation and are testedannually for impairment and additionally whenever there is a triggering event for impairment. Assets that aresubject to amortisation and depreciation are reviewed for impairment whenever events or changes incircumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised

recoverable



Page 21

amount is the higher of fair value less costs to sell and value in use. For the purposes of assessingimpairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows(cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed forpossible reversal of the impairment at each reporting date.

2.9 Financial assets

The Group classifies its financial assets in the following categories: loans and receivables, available-for-saleand at fair value through profit or loss. The classification depends on the purpose for which the financialassets were acquired. Management determines the classification of its financial assets at initial recognition.

Regular purchases and sales of financial assets are recognised on the trade-date the date on which theGroup commits to purchase or sell the asset. Investments are initially recognised at fair value plustransaction costs for all financial assets not carried at fair value through profit or loss. Financial assetscarried at fair value through profit or loss are initially recognised at fair value, and transaction costs areexpensed in the income statement. Financial assets are derecognised when the rights to receive cash flowsfrom the investments have expired or have been transferred and the Group has transferred substantially allrisks and rewards of ownership.

(a) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are notquoted in an active market. They are included in current assets, except for maturities greater than 12 monthsafter the balance sheet date. Loans and receivables are subsequently carried at amortised cost using theeffective interest method.

(b) Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are either designated in thiscategory or not classified in any of the other categories. They are included in non-current assets unlessmanagement intends to dispose of the investment within 12 months of the balance sheet date. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fairvalue. Change in the fair value of non-monetary securities classified as available for sale are recognised inother comprehensive income.

(c) At fair value through profit or loss

Derivative financial instruments are classified in this category and are subsequently carried at fair value withchanges recorded in the income statement, unless they are designated as hedges. Assets in this categoryare categorised as current assets if they are expected to be realised within 12 months of the balance sheetdate.

The Group assesses at each balance sheet date whether there is objective evidence that a financial asset ora group of financial assets is impaired.

2.10 Derivative financial instruments and hedging activities

(a) Derivative financial instruments

Derivative financial instruments are initially recognised at fair value on the date a derivative contract isentered into and are subsequently re-measured at their fair value at the end of each period. The method ofrecognizing the resulting gain or loss depends on whether the derivative is designated as a hedginginstrument, and if so, the nature of the item being hedged.



Page 22

(b) Hedging activities

The Group had designated certain borrowings in cash flow hedging relationship. Currently derivatives havenot been designated in a cash flow hedge relationship.The Group documents at the inception of the transaction the relationship between hedging instruments andhedged items, as well as its risk management objectives and strategy for undertaking various hedgingtransactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis,of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes infair values or cash flows of hedged items.

The full fair value of the hedging derivative is classified as a non-current asset or liability when the remainingmaturity of the hedged item is more than 12 months and as a current asset or liability when the remainingmaturity of the hedged item is less than 12 months.

i. Cash flow hedge

The effective portion of foreign exchange results relating to proportion of the borrowings that are designatedand qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss relating tothe ineffective portion is recognised immediately in the income statement.

Amounts accumulated in other comprehensive income are recycled in the income statement in the periodswhen the hedged item affects profit or loss (for example, when the forecast sale that is hedged takes place).

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedgeaccounting, any cumulative gain or loss existing in other comprehensive income at that time remains in othercomprehensive income and is recognised when the forecast transaction is ultimately recognised in theincome statement. When a forecast transaction is no longer expected to occur, the cumulative gain or lossthat was reported in other comprehensive income is immediately transferred to the income statement.

ii. Derivatives at fair value through profit or loss and accounted for at fair value through profit or loss

Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any thesederivative instruments are recognised immediately in the income statement.

2.11 Impairment of financial assets

(a) Assets carried at amortised cost

The Group assesses at the end of each reporting period whether there is objective evidence that a financialasset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired andimpairment losses are incurred only if there is objective evidence of impairment as a result of one or more

has an impact on the estimated future cash flows of the financial asset or group of financial assets that canbe reliably estimated.

The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:significant financial difficulty of the issuer or obligor;a breach of contract, such as a default or delinquency in interest or principal payments;the Group financial difficulty, granting to theborrower a concession that the lender would not otherwise consider;it becomes probable that the borrower will enter bankruptcy or other financial reorganisation;

The Group first assesses whether objective evidence of impairment exists.



Page 23

carrying amount and the present value of estimated future cash flows (excluding future credit losses thathave not been incurredamount of the asset is reduced and the amount of the loss is recognised in the consolidated incomestatement. If a loan or held-to-maturity investment has a variable interest rate, the discount rate formeasuring any impairment loss is the current effective interest rate determined under the contract. As apractical expedient, the Gobservable market price.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be relatedobjectively to an event occurring after the impairment was recognised (such as an improvement in the

of the previously recognised impairment loss is recognised in theconsolidated income statement.

(b) Assets classified as available for sale

The Group assesses at the end of each reporting period whether there is objective evidence that a financialasset or a group of financial assets is impaired. For debt securities, the Group uses the criteria referred in (a)above. In the case of equity investments classified as available for sale, a significant or prolonged decline inthe fair value of the security below its cost is also evidence that the assets are impaired. If any suchevidence exists for available-for-sale financial assets, the cumulative loss measured as the differencebetween the acquisition cost and the current fair value, less any impairment loss on that financial assetpreviously recognised in profit or loss is removed from other comprehensive income and recognised in theconsolidated income statement. Impairment losses recognised in the consolidated income statement onequity instruments are not reversed through the consolidated income statement. If, in a subsequent period,the fair value of a debt instrument classified as available for sale increases and the increase can beobjectively related to an event occurring after the impairment loss was recognised in profit or loss, theimpairment loss is reversed through the consolidated income statement.

Impairment testing of trade receivables is described in note 2.13.

2.12 Inventories

Inventories are stated at lower of cost and net realizable value. Cost is determined on the weighted averagemethod except for log inventories for which cost is determined on a first-in, first-out basis. The cost of directwork in progress and finished goods comprises the cost of raw materials, labour and proportion ofconversion costs.

Net realisable value represents the estimated selling price for inventories less all estimated costs tocompletion and costs necessary to make the sale.

The cost for the purpose of transfer from biological assets is fair value of harvested produce less estimatedselling costs.

2.13 Trade receivables

Receivables are recognised initially at fair value and subsequently measured at amortised cost using theeffective interest method, less provision for impairment. A provision for impairment is established when thereis objective evidence that the Group will not be able to collect all amounts due according to the original terms

ount andthe present value of estimated future cash flows, discounted at the original effective interest rate. Thecarrying amount of the asset is reduced and the amount of the loss is recognised in the income statement.Subsequent recoveries of amounts previously written off are credited in the consolidated income statement.



Page 24

2.14 Cash and cash equivalents

In the consolidated statement of cash flow, cash and cash equivalents includes cash in hand, deposits heldat call with banks, other short-term highly liquid investments with original maturities of three months or less,and bank overdrafts. In the consolidated balance sheet, bank overdrafts are shown within borrowings incurrent liabilities.

2.15 Share capital, share premium and perpetual securities

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares areshown in equity as a deduction, net of tax, from the proceeds.

Par value of the equity share is recorded as share capital and the amount received in excess of the par valueis classified as share premium.

Instruments which have no contractual obligations towards principal redemption and interest distributionswhich meets the definition of equity instrument are classified as Equity.

2.16 Trade payables

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using theeffective interest method.

2.17 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings aresubsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) andthe redemption value is recognised in the income statement over the period of the borrowings using theeffective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlementof the liability for at least 12 months after the balance sheet date.

If the company revises its estimates of payments or receipts, the carrying amount of the financial liability isadjusted to reflect actual and revised estimated cash flows. The entity recalculates the carrying amount bycomputing the present value of estimated future cash flows at the financial instrument's original effectiveinterest rate and the adjustment is recognised in profit or loss as income or expense.

A financial liability is extinguished from the balance sheet when the obligation is discharged, cancelled orexpired. This condition is met when the debtor either:

- discharges the liability by paying the creditor normally with cash, other financial assets, goods orservices

- is legally released from primary responsibility for the liability either by the process of law or by thecreditor

Where an existing financial liability is replaced by another liability from the same lender on substantiallydifferent terms, or the terms of an existing liability are substantially modified, such an exchange ormodification is treated as a derecognition of the original liability and the recognition of a new liability, suchthat the difference in the respective carrying amounts together with any costs or fees incurred are recognisedin profit or loss.

Where borrowings from the shareholders or entities under common control are extinguished forconsideration other than fair value, the difference between the consideration and the fair value of theborrowings is accounted for as equity distribution/contribution and the difference between the carrying value



Page 25

and the fair value of the borrowing is accounted for in the consolidated income statement.Borrowing costs are expensed as incurred, except for interest directly attributable to the acquisition,construction or production of an asset that necessarily takes a substantial period of time to get ready for itsintended use, in which case they are capitalised as part of the cost of that asset. Capitalisation of borrowingcosts commences when expenditures for the asset and borrowing costs are being incurred and the activitiesto prepare the asset for its intended use are in progress. Borrowing costs are capitalised up to the date whenthe project is completed and ready for its intended use.

To the extent that funds are borrowed specifically for the purpose of obtaining a qualifying asset, the amountof borrowing costs eligible for capitalisation is determined at the actual borrowing costs incurred on thatborrowing during the period less any investment income on the temporary investment of those borrowings.

To the extent that funds are borrowed generally and used for the purpose of obtaining a qualifying asset, theamount of borrowing costs eligible for capitalisation is determined by applying a capitalisation rate to theexpenditures on that asset. The capitalisation rate is the weighted average of the borrowing costs applicableto the borrowings of the Group that are outstanding during the period, other than borrowings madespecifically for the purpose of obtaining a qualifying asset. The amount of borrowing costs capitalised duringa period should not exceed the amount of borrowing cost incurred during that period. Other borrowing costsare recognised as expenses when incurred.

2.18 Taxation

Income tax expense represents the sum of current and deferred tax. Tax is recognised in the incomestatement, except to the extent that it relates to items recognised directly in other comprehensive income. Inthis case the tax is also recognised directly in equity or in other comprehensive income.

The current tax is based on taxable profit for the year/period. Taxable profit differs from profit as reported inthe income statement because it excludes items of income or expense that are taxable or deductible in otheryears and it further excludes items that are never taxable or deductible. The current income tax charge iscalculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in thecountries where the Company and its subsidiaries operate and generate taxable income.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in thefinancial statements and the corresponding tax bases used in the computation of taxable profit and areaccounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for alltaxable temporary differences, and deferred tax assets are generally recognised for all deductible temporarydifferences, unused tax losses and unused tax credits to the extent that it is probable that future taxableprofits will be available against which those deductible temporary differences, unused tax losses and unusedtax credits can be utilised. Such assets and liabilities are not recognised if the temporary difference arisesfrom goodwill or from the initial recognition (other than in a business combination) of an asset or liability in atransaction that at the time of the transaction affects neither the taxable profit or loss nor the accountingprofit or loss.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to theextent that it is no longer probable that sufficient taxable profits will be available against which the temporarydifferences can be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period inwhich the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enactedor substantively enacted at the balance sheet date. The measurement of deferred tax liabilities and assetsreflects the tax consequences that would follow from the manner in which the Group expects, at the reportingdate, to recover or settle the carrying amount of its assets and liabilities.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries andassociates, except where the timing of the reversal of the temporary difference is controlled by the Groupand it is probable that the temporary difference will not reverse in the foreseeable future.



Page 26

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset currenttax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate toincome taxes levied by the same taxation authority on either the taxable entity or different taxable entitieswhere there is an intention to settle the balances on a net basis.

2.19 Employee benefits

(a) Gratuity plan

The gratuity plan is a defined benefit plan that, at retirement or termination of employment, provides eligibleemployees with a lump sum payment, which is a function of the last drawn salary and completed years ofservice. The liability recognised in the balance sheet in respect of gratuity plan is the present value of thedefined benefit obligation at the balance sheet date less the fair value of plan assets, if any, together withadjustments for unrecognised past service costs. The defined benefit obligation is calculated annually byindependent actuaries using the projected unit credit method. The present value of the defined benefitobligation is determined by discounting the estimated future cash outflows using an appropriate governmentbond rate and that have terms to maturity approximating to the terms of the related gratuity liability.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions arecharged or credited to income statement in the period in which they arise.

(b) Compensated absences

The Group operates both accumulating and non accumulating absences plan. The Group measures theexpected cost of accumulating compensated absences as the additional amount expected to be paid as aresult of the unused entitlement that has accumulated at the balance sheet date. Expense on non-accumulating compensated absences is recognised in the period in which the absences occur. The Grouprecords a liability for accumulating balance based on actuarial valuation.

(c) Short-term employee benefits

The Group recognises a liability and an expense for bonuses. The Group recognises a provision wherecontractually obliged or where there is a past practice that has created a constructive obligation.

Wages, salaries, paid annual leave and sick leave, bonuses, and non-monetary benefits are accrued in theperiod in which the associated services are rendered by employees of the Group.

(d) Post-employment benefits - Defined contribution plans

on plans are charged to the income statement in the period towhich they relate. Once the contributions have been paid, the Group has no further payment obligations.Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the futurepayments is available.

2.20 Revenue recognition

Revenue from sale of goods is recognised when the risks and rewards of ownership have passed to thecustomers and is inclusive of excise duty. Usually, this means that sales are recorded upon delivery of goodsto customers in accordance with agreed terms of delivery. Revenue is recognised net of discounts, returnsand value added taxes.

Dividend income is recognised when the right to receive payment is established.

Interest income is recognised on a time-proportion basis using the effective interest method. When areceivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the



Page 27

estimated future cash flows discounted at the original effective interest rate of the instrument, and continuesunwinding the discount as interest income. Interest income on impaired loans is recognised using the originaleffective interest rate.

Export incentives are recognised at the time of export when the Group will comply with all attachedconditions.

Rental income is accrued on a time basis by reference to the agreements entered into.

2.21 Government grants / Assistance

Grants from the government are recognised at their estimated value where there is reasonable assurancethat the grant will be received and the Group will comply with all necessary conditions. Government grantsare classified as grants relating to assets and revenue grants based on the nature of the grants. Grantsrelating to assets are initially measured based on estimated grant receivable under the scheme. The grantsare recognised in the income statement on a systematic basis over the useful life of the asset. Amount ofbenefits receivable in excess of grant income accrued based on usage of the assets is accounted asdeferred income. Change in estimates are recognised prospectively over the remaining life of the assets.Government revenue grants relating to costs are deferred and recognised in the income statement over theperiod necessary to match them with the costs that they are intended to compensate.

Sales tax incentives

The Group receives the benefit of certain sales tax incentives under the Packaged Scheme Incentive of theMaharashtra Government (theScheme are recognized when it is reasonable to expect that the benefit will be received and that all relatedconditions will be met. The main benefits relevant to the Group are the Sales Tax Deferment Scheme, theSales Tax Exemption Scheme and the Sales Tax Refund Scheme.

(a) Sales Tax Deferment Scheme

The benefit of a sales tax deferral with no associated interest outflow is recognized as deferred income inaccordance with the imputation under IAS 20 Accounting for Governments Grants and Disclosure ofGovernment Assistance. This deferred sales tax liability is measured in accordance with IAS 39 FinancialInstruments: Recognition and Measurement. The benefit of the interest free loan is measured as thedifference between initial carrying value of the loan at fair value in accordance with IAS 39 and the sales taxcollected. The deferred sales tax liability to the State is measured at amortized cost using the effectiveinterest rate method and therefore a finance charge is recorded as the discount on this liability unwinds. Incertain cases, the Group settles the net present value of deferred sales tax liability and recognizes thebenefit as grant income over the period.

(b) Sales Tax Exemption Scheme

The benefit of the sales tax exemption applies to qualifying sales to customers within the state ofMaharashtra of paper produced from one of the paper machine in Bhigwan. As per the scheme, the Group isexempt from levying and payment of sales tax on sales of paper to customers that would otherwise bepayable and hence no adjustment is made to revenue.

(c) Sales Tax Refund Scheme

The benefit of sales tax refund scheme applies to qualifying sales to customers made from the MaharashtraState for assets of the company in Ballarpur and Bhigwan. Under the scheme, sales tax is levied andcollected from the customer and claim for refund is filed with the sales tax authorities. These benefits areaccounted for as capital grant over the useful life of the related assets.



Page 28

2.22 Prepaid land lease payments

Prepaid land lease payments in the balance sheet represent up-front payment made for finance leases forland use rights paid and payable to the counterparties. Land use rights are carried at cost and are charged tothe consolidated income statement on a straight-line basis over the respective periods of the leases whichrange from 30 years to 99 years.

2.23 Leases

Leases of property, plant and equipment, where the Group has substantially all the risks and rewards of

the lower of the fair value of the leased property and the present value of the minimum lease payments.

Each lease payment is allocated between the liability and finance charges so as to achieve a constant rateon the remaining balance of the liability for each period. The corresponding rental obligations, net of financecharges, are included in current and non-current borrowings. The interest element of the finance cost ischarged to the income statement over the lease period so as to produce a constant periodic rate of intereston the remaining balance of the liability for each period. The property, plant and equipment acquired underfinance leases are depreciated over the shorter of the useful life of the asset and the lease term.

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor areclassified as operating leases. Payments made under operating lease (net of any incentives received fromthe lessor) are charged to the income statement on a straight line basis over the period of the lease.

2.24 Compound financial instruments

The liability component of a compound financial instrument is recognised initially as fair value of a similarliability that does not have an equity component. The equity component is recognised initially at thedifference between the fair value of the compound financial instrument as a whole and the fair value of theliability component. Any directly attributable transaction costs are allocated to the liability and the equitycomponents, if material, in proportion to their initial carrying amounts.

Subsequent to the initial recognition, the liability component of a compound financial instrument is measuredat amortised cost using the effective interest method. The equity component of a compound financialinstrument is not re-measured subsequent to initial recognition except on conversion or expiry.

2.25 Dividend/Distribution

statements in the period in Distribution

period in which the coupon payments are declared by the Company.

2.26 Business combination

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. Theconsideration for each acquisition is measured at the aggregate of the fair values (at the date of exchange)of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange forcontrol of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the date ofacquisition. Subsequent changes in such fair values are adjusted against the cost of acquisition where theyqualify as measurement period adjustments. All other subsequent changes in the fair value of contingentconsideration classified as an asset or liability are accounted for in accordance with relevant IFRSs.Changes in the fair value of contingent consideration classified as equity are not recognised.



Page 29

Prior to adoption of IFRS 3R, contingent consideration was accounted for in the financial statements on thedate of finalization of the additional consideration. Such amounts were adjusted in the carrying value ofgoodwill unless a negative goodwill was recognised as part of the business combination wherein it wasrecognised in the income statement.

In case of transactions under common control and transfer of assets to a joint venture entity, that does notmeet the definition of a business combination within the scope of IFRS 3, management applies thepredecessor basis of accounting and records the assets and liabilities at the carrying amount of the previousfinancial statements.

2.27 Provisions

Provisions for environmental restoration, restructuring costs and legal claims are recognised when the grouphas a present legal or constructive obligation as a result of past events; it is probable that an outflow ofresources will be required to settle the obligation; and the amount has been reliably estimated. Restructuringprovisions comprise lease termination penalties and employee termination payments. Provisions are notrecognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlementis determined by considering the class of obligations as a whole. A provision is recognised even if thelikelihood of an outflow with respect to any one item included in the same class of obligations may be small.Provisions are measured at the present value of the expenditures expected to be required to settle theobligation using a pre-tax rate that reflects current market assessments of the time value of money and therisks specific to the obligation. The increase in the provision due to passage of time is recognised as interestexpense.

3. Financial risk management

3.1 Financial risk factors

interest rate risk, cash flow interest rate risk and price risk), commodity risk, credit risk and liquidity risk. Thenagement programme focuses on the unpredictability of financial markets and seeks

financial instruments to hedge certain risk exposures.

(a) Foreign exchange risk

The Group has borrowings, deposits and balances with banks, derivative financial instruments, financialtrade and other receivables and payables which are denominated in currencies other than the functionalcurrency of the respective Group entity. A significant portion of these balances is denominated in US$. Thepayments and year end translation of these instruments will be affected by exchange rate movements.

Certain transactions of the Group act as a natural hedge as a portion of both assets and liabilities aredenominated in foreign currencies. For the remaining exposure to foreign exchange risk, the Group adopts apolicy of selective hedging based on risk perception of the management. Further, the Group has managed itsrisks of highly probable forecast sales with foreign currency borrowings. Refer to note 12 for forwardexchange contracts outstanding and hedging activities at each balance sheet date and the gain/lossrecognised on this contract.

The tables below summarise the impact of changes in the exchange rate of INR to US$, INR to Euro, MYRto US$ and MYR to Eurobefore tax for the year and as a result of movement of year-end balances. The impact on equity is alsosame. The sensitivities are based on the assumption that the exchange rate changes by 5%/10% in respectto INR to US$, 3%/10% in respect to INR to EUR, 1%/2% in respect to MYR to US$ and 1%/3% in respect toMYR to EUR for the years ended 30 June 2011 and 30 June 2012 with all other variables held constant.



Page 30

(b) Interest rate risk

non convertible debentures issued at fixed rate (refernote 21). These borrowings are linked to LIBOR. The Group also has certain outstanding interest rateswaps, refer note 12 for interest rate swap contracts outstanding as at each balance sheet date and thegain/loss recognised on these contracts.

The table below summarises the impact of changes in interest rates. The impact is expressed in terms of theresulting change ithat the interest rate changes by 50 basis points for the years ended 30 June 2011 and 30 June 2012 with allother variables hold constant.



Page 31

(c) Credit risk

The Group considers factors such as track record, size of the institution, market reputation and servicestandards to select the banks with which balances are maintained. Generally, the balances are maintainedwith the institutions with which the Company has also availed borrowings. The Group does not maintainsignificant cash and deposit balances other than those required for its day to day operations.

The Group extends credit to customers in normal course of business. The Group considers factors such ascredit track record in the market and past dealings with the Group for extension of credit to customers. TheGroup monitors the payment track record of the customers. The Group has also taken security deposits fromits distributors, which mitigate the credit risk to an extent.

The Group maintains balances and deposits with financial institutions after consideration of their marketreputation. The deposits and balances of the Group have been maintained with financial institutions whichhas credit rating of

AAA (Aa ratings are judged to be of highest quality and are subject to minimal credit risk), AA andAA+ (Aa ratings are judged to be of high quality and are subject to very low credit risk) and A (Aratings are considered upper-medium grade and are subject to low credit risk).

P1 (P1 ratings are judged to be of highest quality and are subject to minimal credit risk), P2 (P2ratings are judged to be of high quality and are subject to low credit risk) and P3 (P3 ratings areconsidered of adequate quality and are subject to medium credit risk).

Maximum exposure to credit risk and credit quality is disclosed in note 9 and note 10.

(d) Liquidity risk

The Group relies on a mix of borrowings, capital infusion and excess operating cash flows to meet its needsfor funds. The current committed lines of credit are sufficient to meet its short to medium term expansionneeds.

on its undrawn committed borrowing facilitiesat all times so that the Group does not breach borrowing limits or covenants (where applicable) on any of itsborrowing facilities. Nevertheless, a breach of covenant took place at the year-end which is in the process ofbeing remediated by obtaining waiver from the banks. The management expects that the breach would nothave effect on the cash flow requirements of the group.



Page 32

non-derivative financial liabilities and net-settled derivative financialliabilities into relevant maturity groupings based on the remaining period at the balance sheet to thecontractual maturity date. The maturity profile based on undiscounted cash flows is as under:

The amount of profit certificates (further described in note 21.2. (b)) issued and outstanding as at 30 June2011 and 30 June 2012 are included in thebalance sheet dates since they are perpetual in nature.

The Group is required to maintain ratios (including total debt to EBITDA / net worth, EBITDA to grossinterest, debt service coverage ratio, secured coverage ratio) as mentioned in the loan agreements atspecified levels. In the event of failure of the company to meet any of these ratios these loans becomecallable at the option of lenders.

The loans with Rabobank, Nordea Bank and Yes Bank (refer note 21.1) which has been classified as currentportion of long term borrowings due to non-compliance of certain financial covenant have been treated in thematurity analysis in accordance with the original terms of the agreements as the waiver has been received oris in the process of receiving subsequently form relevant banks at the time of issue of financial statements.(refer note 37)

3.2 Capital risk management

concern in order to provide returns for shareholders and benefits for stakeholders. The Group also proposesto maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capitalstructure, the Group may adjust any dividend payments, return capital to shareholders or issue new shares.Perpetual capital securities are considered as equity and profit certificates are not considered as equity.The following table shows the components of equity managed by the Group:

3.3 Fair value estimation

The tables below analyses financial instruments carried at fair value, by valuation method. The different



Page 33

levels have been defined as follows:

Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).

Inputs other than quoted prices included within level 1 that are observable for the asset or liability,either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).

Inputs for the asset or liability that are not based on observable market data (that is, unobservableinputs) (level 3).

red at fair value as at 30 June,2012 and 30 June 2011.

The fair value of financial instruments traded in active markets is based on quoted market prices at thebalance sheet date and included in level 1. The Group does not have any financial instruments to beincluded in level 1 in the financial statements.

The fair value of the financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximise theuse of observable market data where it is available and rely as little as possible on entity specific estimates.If all significant inputs required to fair value an instrument are observable, the instrument is included in level2.



Page 34

If one or more of the significant inputs is not based on observable market data, the instrument is included inlevel 3.

Specific valuation techniques used to value these financial instruments include:The fair value of the available-for sale investment at 30 June 2011 was based on a comparablemarket transaction occurred in August 2011 and at 30 June 2012 is based on a valuation modelapplying discounted cash flow analysis under residual and replacement approachThe fair value of interest rate swaps has been calculated as the present value of the estimated futurecash flows based on observable yield curves.The fair value of the LIBOR profit certificates on initial recognition and on repurchase has been

borrowing rate which considers comparable margin anddiscounted cash flow analysis. However, since these instruments are carried at amortized cost, theyhave not been included in level hierarchy disclosure.

The following table presents the changes in level 3 instruments as at 30 June 2011 and 30 June 2012.

The available-for sale investment at 30 June 2011 was classified as Level 2 instrument based on acomparable market transaction which occurred in August 2011. However, in the absence of comparabletransaction in the current year, the same is classified as Level 3 instrument as at 30 June 2012 and its fairvalue is based on a valuation model applying discounted cash flow analysis under residual and replacementapproach.

The critical assumptions for determination of fair value of available for sale securities are revenue growthand cost estimates. Based on sensitivity in assumptions and methods of calculation, a range of values hasbeen determined by the management and the fair valuation of available for sale financial assets is based onmid value of these range. Other things remaining constant, if the discount rate is higher/lower by 1%, the fairvaluation would be higher/lower by US$2,063/ US$1,719.

4. Critical accounting estimates, assumptions and judgements

The preparation of consolidated financial statements requires management to make estimates, assumptionsand judgements relating to the reporting of assets and liabilities and the disclosure of contingent assets andliabilities at the date of the consolidated financial statements and for reporting amounts of revenues andexpenses during the period. Actual results could differ from those estimates.

Significant estimates and assumptions are used when accounting for the following items:

(a) Biological assets

The fair value of the biological assets is the present value of the expected future cash flows taking intoaccount estimated market prices in available markets, estimated projected growth over the rotation period forthe existing biological assets and estimated cost of extraction including transportation costs. The discountrate used is the applicable pre-tax weighted average cost of capital of the business unit. Determining theappropriate discount rate, cost and expected revenue requires significant assumptions and judgement andchanges in these assumptions could change the outcome of the plantation valuation.



Page 35

Changes in the assumptions or estimates used in these calculations may affect the results, in particular,valuation of biological assets and as a result, the amount recorded in profit or loss arising from fair valuechanges and growth.

A key assumption and estimation is the projected growth estimation over a period of 5 to 8 years perrotation. The Group involves experts on a periodic basis to determine inputs to the plantation growth modelsince they are complex and involve estimations and judgements. The expert establishes a long-term sampleplot network which is representative of the species and sites on which tree are grown and the measured datafrom these permanent sample plots are used as input into the growth estimation. Refer note 8a for sensitivityof assumptions used in the biological assets.

(b) Fair value of derivatives and available-for-sale financial asset

Derivative financial assets and liabilities are measured at their fair value. The fair value of interest rate swapshas been determined based among other estimates on applicable or effective dates and day conventions,fixed rate coupon, floating index, notional amount and reset frequency. The fair value of foreign exchangeforward and option contracts has been determined based on among other estimates the value of swap andthe mark-to-market value of option. Changes in any estimates could lead to recognition of significant fairvalue changes in income statement.

The Group has used discounted cash flow analysis for available-for-sale financial asset that is not traded inthe active market. Refer note 11 & 12.

(c) Release of hedge reserve

Foreign exchange risk in highly probable sales in future periods are hedged using foreign currencyborrowings designated as cash flow hedges. Estimating highly probable sales volume involves gathering andevaluating sales estimates for future periods as well as analysing actual outcome on a regular basis in orderto fulfil effectiveness testing requirements for hedge accounting. Deviations in outcome of sales might resultin the requirements for hedge accounting are not being fulfilled. Refer note 12.

(d) Government grants

Grants relating to assets are initially measured based on estimated grant receivable under the scheme,however not accounted for but as a basis for annual income recognition. Grants receivable is based on salesestimates within state of Maharashtra which involves gathering and evaluating sales estimates for futureperiods as well as analysing actual outcome on a regular basis. Changes in estimates could lead tosignificant changes in grant income and will be accounted for prospectively over the balance period of theasset.

Refer note 38.

The significant judgement is in relation to the following item:

Income taxes

Management judgment is required for the calculation of provision for income taxes and deferred tax assetsand liabilities. The Group reviews at each balance sheet date the carrying amount of deferred tax assets.The Group considers whether it is probable that the subsidiary will have sufficient taxable profits againstwhich the unused tax losses or unused tax credits can be utilised. The factors used in estimates may differfrom actual outcome which could lead to significant adjustment to the amounts reported in the consolidatedfinancial statements.

5. Segment information

Management has determined the operating segments based on the reports reviewed by the board that areused to make strategic decisions.



Page 36

The board considers the business from a production unit perspective which also aligns with the products andthe geographbusinesses as follows:

Coated paper manufactured in India Bhigwan production unitUncoated paper manufactured in India Ballarpur production unitUncoated paper manufactured in Malaysia SFI production unitRayon grade pulp manufactured in India Kamalapuram production unit

The reportable operating segments derive their revenue primarily from the manufacture and sale of paperand pulp. Certain segments include ancillary income as follows:

The Ballarpur production unit sells surplus pulp from its pulping facilities to the Ashti production unit,a production unit owned by BILT and it sells surplus caustic soda that it produces to the marketThe SFI production unit operates an integrated timber complex which produces plywood, sawntimber and veener wood products for external sale

The results of these activities are included in the relevant segment as this is how the segments arepresented to the board. All the production units, with the exception of Kamalapuram, sell their products inboth domestic and export markets.

The board assesses the performance of the operating segments based on a measure of EBITDA. Interestincome and expenditure and derivative gains and losses are not allocated to segments, as this type ofactivity is driven by the central treasury function, which manages the cash and risk positions of the Group.

The revenue from external parties reported to the board is measured in a manner consistent with that in theincome statement.

The segment information provided to the board for the reportable segments for the years ended 30 June2012 and 30 June 2011 is as follows:

*Net revenue from external customers represents revenue net of excise duty which is applicable to the paper and pulp operations in



Page 37

India.

**Head office / others relate to administration costs incurred by BGPPL Head office and Dutch entities.

A reconciliation of EBITDA to profit before tax is provided as follows:

No amounts are provided to the board with respect to segmental assets and liabilities and accordingly nosuch financial measures are presented here.

Breakdown of the revenue from external customers is as follows:

The entity is domiciled in the Netherlands but its subsidiaries have operations in India and Malaysia. TheGroup has no revenue from external customers in the Netherlands. Its revenue from external customers inIndia and Malaysia is shown below.

The breakdown of the major components of the total of revenue from external customers from othercountries is disclosed above. The revenues are distinguished based on their trading currency. In case ofIndia, export is primarily to the United States of America, Spain, France, Germany, Ireland, Saudi Arabia,Singapore, Australia and other African countries. In case of Malaysia, export is primarily to Philippines, SriLanka, Singapore and Thailand.



Page 38

The total of non-current assets (excluding deferred tax assets and non-current income tax assets) located inIndia and Malaysia is disclosed below:

In case of Netherlands, there were no such non-current assets.

Revenues for the years ended 30 June 2012 and 30 June 2011 amounting to US$96,807 and US$90,804respectively were derived from a single external customer being the principal customer of the Kamalapuramproduction unit, which produces rayon grade pulp.

6. Property, plant and equipment

Land and buildings includes freehold land, buildings, employee housing and infrastructure. Refer to note 21for assets charged as security.



Page 39

Property, plant and equipment include the following amounts relating to vehicles where the Group is a lesseeunder a finance lease:

Refer to note 21 for assets charged as security.

7. Capital work-in-progress

Capital work-in-progress primarily comprised plant and machinery under construction for the expansion ofproduction capacity of various production units of the Group and land and building. The pulp mill expansionat SFI was commissioned during the current year and the respective cost has been transferred to property,plant and equipment. The closing balance as at 30 June 2012 is primarily in respect of the pulp mill upgradeat Ballarpur.


8a. Biological assets

The Group - through its subsidiary SFI - manages about 288,138 (Previous year: 288,623) hectares of forestland in Sabah, Malaysia, under two licenses namely; Timber License Agreement & Timber (Plantation)License Agreement for Natural Forest Management (NFM) and Industrial Tree Plantation (ITP) granted bythe Government of Sabah, Malaysia.

Of the total available forest land, the Industrial Tree Plantation (ITP) and Natural Forest Management (NFM)licence area as per 2001 Agreement is 183,316 Ha and 104,822 Ha respectively. Area for NFM isspecifically utilised for the sustainable production of high quality tropical timber which is processed in the

Integrated Timber Complex in solid wood, plywood and veneer products. The ITP licence makes upthe remainder of the area. ITP area is planted with fast growing Acacia, Eucalyptus and Mixed TropicalHardwood (MTH) species for the production of pulpwood for the pulp and paper mill. The harvestcycle for these plantations is between 5 to 8 years. All plantation areas which are harvested are replanted.This area is currently dominated by previously logged MTH species of various ages and densities. After thistimber is harvested it is established with fast growing plantation species. The remainder of the ITP area ismade up of legal and environmental excised areas which may not be used for production.The movement of the biological assets of the Group are given below:



Page 40

The fair value of the biological assets has increased primarily due to change in mix of species to beextracted in future years and expected higher sales prices of wood logs in future years.

The Group harvested 976,331 cubic meters and 793,153 cubic meters of trees for the year ended 30 June2012 and 30 June 2011 respectively.

The Group is exposed to a number of risks related to its plantations:

i. Regulatory and environmental risks

There are various laws, regulations, enactments and agreements, which the Group has to comply with. Theoperations are regularly audited by the management internally and external audits are carried out forregulatory compliances. External audits by the various entities include government departments andInternational Forestry auditing organisations which ensure regulatory and environmental compliances. TheGroup has ensured that necessary regulations have been complied with as at the balance sheet date.

ii. Supply and demand risks

Demand is determined by the raw material required for the pulpmill. If based on such raw materialrequirement availibility reduces or ceases then external markets could be sought and the product (trees) willcontinue growing. Without sufficient labour, the required volumes to be harvested and the area required tobe planted will not take place. Insufficient financial support for operating costs will result in thediscontinuance of work.

iii. Climate and other risks

Pests and diseases may affect both the nursery and the growing stock. Prolonged drought will reduce theforecasted volume yield. Short term droughts increase the likelihood of the outbreak of wildfires which cancause timber losses. Flash floods can produce landslides resulting in restricted access and a high cost ofreconstructing roads. Continuous rain can make most roads impassable and limit timber deliveries to thepulpmill. Seasonal vigilance and fire prevention plans are put in place. Periodic and timely inspections areheld to ensure the preventive actions which minimizes the risks.

Strategic and tactical planning has been conducted through the approved management plans which includethe financial requirement for operating the three land units. Annual works plans based on the long termplanning and the budgetary requirements for this are approved and updated every year.

The valuation methodology used to determine the fair value of biological assets less costs to sell is incompliance with both IAS 41, Agriculture, and the International Valuation Standards issued by theInternational Valuation Standards Council which aims to determine the fair value of a biological asset in itspresent location and condition.

The key assumptions used in the valuation of biological assets are :I. cash flows are based on the projected revenue / of log prices, cost and extraction.

II. discount rate is based on the market rate of return for similar risks and considered as 11%.

III. projected cash flows do not take into account the finance cost, if any.



Page 41

The table below summarises the impact of changes in various inputs used in the valuation of biologicalassets:

The assumptions and methods to determine the fair value less cost to sell at point of harvest are similar tothe principles of valuation of closing balance of biological asset.


8b. Land use rights



Page 42

9. Financial instruments by category

* Prepayments, certain statutory dues recoverable and advances to suppliers are not in the nature offinancial instruments, hence not been considered.

Trade and other receivables of US$1,267 and US$2,903 for the years ended 30 June 2012 and 30 June2011 respectively, were derived from a single external customer being the principal customer of theKamalapuram, which produces rayon grade pulp.

10. Credit quality of financial assets

The credit quality of financial assets that are neither past due nor impaired can be assessed by reference toexternal credit ratings (if available) or to historical information about counterparty default rates:

Information relating to credit quality of the financial assets is presented below:



Page 43

The above table excludes cash at hand. Refer to note 16

There has been no default in case of other financial assets.

11. Available-for-sale financial asset

During the year ended 30 June 2009 the Company purchased from BILT, at a cost of US$3,920, 18,200,000Further, during the year ended 30 June 2010,

the Company purchased from BILT, at a cost of US$2,831, additional 12,011,250 shares in APIL. The0 June 2012 was 3.39%. The purchase price for both

transactions was based on the book value of the net assets.

The fair value of the available-for sale investment at 30 June 2011 was based on a comparable markettransaction occurred in August 2011. The fair value of the unlisted security as on 30 June 2012 was basedon cash flows discounted using a rate based on the market interest rate and risk premium specific to theunlisted security considered at 12.6%.



Page 44

12. Derivative financial instruments and hedging activities

Derivative financial instruments are classified as a non-current asset or liability if the remaining maturity ofthe hedged item is more than 12 months and as a current asset or liability if the maturity of the hedged itemis less than 12 months.

The derivative financial assets and liabilities are denominated in US dollar.

Interest rate swaps

During the year ended 30 June 2009, the Group entered into three interest rate swap contracts for a totalnotional principal amount of US$ 310,000. Under these arrangements, the Group receives a floating LIBORbased interest rate and pays fix or floating rates, depending on the LIBOR rate falling in one of the four pre-determined band rates. The interest rate swap arrangements are designed to protect the Group fromincrease in LIBOR rates by providing a cap of 6.0%.

The loss arising from the interest rate swap amounting to US$1,586 and US$6,243(refer note 30), for theyears ended 30 June 2012 and 2011,respectively has been recognised in the income statement in financecosts.

Hedging activities

amounting to US$253,657 was designated as a cash flow hedge against highly probable forecast exportsales of the Indian paper operations also denominated in US$. These forecast sales were expected to occurfrom 1 January 2011 to 30 June 2015. During the year ended 30 June 2009, foreign exchange loss ofUS$30,220 was recognised in other reserves, in other comprehensive income.

During the year ended 30 June 2010, the entire Citi loan was repaid early and as a result the hedgeaccounting was discontinued. Foreign exchange loss has been released to the income statement ofUS$7,667 and US$4,059 for the year ended 30 June 2012 and 30 June 2011 respectively. The balanceforeign exchange loss in other comprehensive income will be released to the income statement in the yearsending 30 June 2013 to 30 June 2015 based on the original forecast sales anticipated. The release of theforeign exchange loss will be based on comparison of forecasted and actual sales and is expected to resultin a charge of US$7,200, US$6,320 and US$4,960, for the years ending 30 June 2013, 30 June 2014 and 30June 2015, respectively.

Forward foreign exchange option contract

In December 2008, the Group had entered into a derivative contract in the nature of swap with optionprotection. In 2011, the Group has terminated the contract and recognized loss of US$1,212 in the income



Page 45

statement as other gains and losses.

13. Trade and other receivables

The fair values of trade and other receivables in the nature of financial assets approximate their respectivecarrying values.

Statutory dues recoverable primarily comprise envat credits available in Indiafor import duty paid on purchases of property, plant and equipment and input materials that can be offsetagainst excise duty due for qualifying domestic paper sales produced on this equipment and with these inputmaterials.

As at 30 June 2012 and 30 June 2011 trade receivables of US$32,436 and US$28,729, respectively werefully performing.

As at 30 June 2012 and 30 June 2011 trade receivables of US$1,631 and US$6,705, respectively, were pastdue but not impaired. These relate to external customers for whom there is no history of default. The ageinganalysis of these trade receivables is as follows:



Page 46

currencies:

Movements of the Group provision for impairment of trade receivables are as follows:

income statement. Amounts charged to the allowance account are generally written off when there is noexpectation of recovering additional cash.

The charges to profit and loss account from bad debt provisions and write off of receivables are as follows:

The other classes within trade and other receivables do not contain impaired assets.

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivablementioned above. The Group holds security deposits as security against certain receivables amounting toUS$4,317. The security deposits have been disclosed under trade and other payables.

14. Inventories

Raw material includes inventory of harvested logs amounting to US$27,647 and US$8,012 for the yearended 30 June 2012 and 30 June 2011 respectively.



Page 47

The charge to profit and loss from inventory provisions and write off are as follows:

15. Restricted deposits

Fixed deposits shown above are kept as security by financial institutions against bank overdrafts and bankguarantees.

16. Cash and cash equivalents

Deposits of the Group have an average effective interest rate of and 2.64% per annum and 1.73% perannum as at 30 June 2012 and 30 June 2011, respectively.

currencies:



Page 48

17. a) Share capital and premium

The movement in the share capital and share premium accounts of the Company during the period of thisconsolidated financial information was as follows:

On 29 June 2011, the Company issued 186,546 ordinary shares toThe fair value of the

shares issued was determined to be US$100,000. (Refer note 21.2)

b) Unsecured perpetual capital securities

In August, 2011, the Company raised US$200,000 through issue of unsecured dollar denominated 9.75%subordinated perpetual capital securities (the securities). The securities are listed on the Singapore stockexchange. The securities are perpetual in nature with no maturity or redemption and ranked senior only tothe share capital of the company. The proceeds from the issuance of these securities have been utilized torepay the profit certificates held by BIH and to meet the capital expenditure requirements. The securities areredeemable at the option of the Company in the 5

th/ 10

thyear from the date of allotment of securities and

thereafter on every interest payment date and the payment of stated coupon on the securities is also at thediscretion of the Company. Considering that both redemption of principal and repayment of coupon is at thediscretion of the Company, these securities have been classified as equity in the consolidated financialstatements.

Transaction cost amounting to US$ 9,760 has been adjusted in the carrying value.

In February 2012, the company has distributed payments amounting to US$ 9,750 which has been reflectedin the statement of changes in equity. Profit attributable to perpetual capital security holders post thedistribution of US$7,583 for the period February 2012 to 30 June 2012 has been considered for calculationof earnings per share (EPS). (refer note 33)



Page 49

18. Retained earnings

Retained earnings represent the undistributed consolidated profits of the company.

19. Other reserves

On conversion of the CCD the balance in other reserve on account of equity contribution received atissuance and equity distribution on conversion has been transferred to retained earnings.

On repurchase of profit certificates, balance in other reserves attributable to the difference on account ofequity contribution on issuance and equity distribution on repurchase has been transferred to retainedearnings.

The statutory reserve represents debenture redemption reserve for non-convertible debentures issued by theGroup. This is in accordance with Indian Corporate Law wherein a portion of the profits are recognised to beapportioned each year until the aggregate amount equals 25% of the face value of the debentures issuedand outstanding. The reserve will be released on redemption of the debentures.

For distribution of reserves refer the company financials.



Page 50

20. Trade and other payables

* primarily represents excess of grant receivable over grant income during the year.

T

The carrying value of trade and other payables approximate their fair value.

21. Borrowings



Page 51

21.1. Term loans

The following table shows the movement in term loans.

Included in current portion of long term borrowings is an amount of US$ 185,636 on term loan agreementswith Rabobank, Nordea Bank and Yes Bank. Under the existing agreements, the Group is required to meetcertain ratios viz. total debt to EBITDA / net worth and EBITDA to gross interest (financial covenants) appliedto the statutory financial statements prepared in the local accounting standards of the respective entities inthe Group. As at 30 June, 2012, the Group was not in compliance with certain covenants and the relatedamounts have been classified as current. At the time these financial statements were authorised for issue,the Group has received the waiver from Rabobank (BGPPL) and Nordea Bank. Further the Group hasreceived in principle approval from Yes Bank and is in the process of receiving approval for waiver fromRabobank for loan taken at SFI, Malaysia. (refer note 3.1 (d) for covenants relating to the borrowings)

The following table summarises the draw downs and repayments by facility,

(a) Term loans from a consortium led by IDBI Bank

In November 2009 BGPPL obtained a loan for INR10,000,000 (US$213,057) from a consortium led by IDBIBank. Of this INR7,500,000 (US$159,793) was borrowed from IDBI Bank at Bank Prime Lending Rate

Ivarious parts of the loan were repayable from June 2011 to December 2016. In December 2010INR9,000,000 (US$196,507), representing the IDBI Bank and Axis portions of the loan was repaid. In June2011 INR20,000 (US$441), representing the CBI portion of the loan was repaid. Unamortised transaction



Page 52

cost of US$1,732 was expensed. In August, 2011 INR 980,000 (US$ 21,577), representing the balanceportion of the CBI loan was repaid and unamortised transaction cost of US$ 133 was expensed.

(b) Term loan from consortium led by Axis Bank

In order to partially refinance the Citigroup loan, in October 2009 BIPH obtained a loan from a consortium ledby Axis Bank for US$145,000 at LIBOR plus a margin of 4.10%. The loan was repayable in instalments fromMarch 2011 to December 2014. The loan was prepaid in November 2010 and was refinanced by way of aloan from a consortium led by Rabobank. Unamortised transaction cost of US$4,534 was expensed.

(c) Term loans from consortiums led by Rabobank

In order to refinance the Axis Bank loan, in September 2010 BGPPL obtained a loan from a consortium ledby Rabobank for US$145,000 at LIBOR plus a margin of 2.8%. The loan was drawn down in November 2010and is repayable in instalments from February 2011 to May 2015. The loan is secured against all themoveable and immoveable fixed assets of the BGPPL. Instalment of US$ 6,820 and US$13,640 was repaidduring the year ended 30 June 2011 and 30 June 2012 respectively. As at 30 June 2012, US$124,381 isoutstanding.

In addition in July 2010 SFI obtained a loan from Rabobank for US$50,000 at LIBOR plus a margin of3.65%. The loan was drawn down from July 2010 to December 2010 and is repayable in instalments fromMarch 2013 to September 2016. The loan is secured against all the current and fixed assets of SFI.

(d) Non convertible debentures

In September 2010 BGPPL issued t 2,500,000each and totalling INR 5,000,000 (US$109,408) in issues arranged by ICICI Bank and Yes Bank. The NCDscarry an interest rate ranging from 8.75% to 9.00% depending on the date and amount draare repayable in instalments from September 2012 to September 2017. In December 2010 BGGPL issued afurther INR 2,500,000 NCD (US$54,331) arranged by ICICI Bank with an interest rate in the range of 9.00%to 9.75% depending upon the date and amount drawn. This is repayable in instalments from December 2012to June 2017. The debenture is secured by pari-passu first charge on the fixed assets of the BGPPL. The fairvalue of the non convertible debentures as at 30 June, 2012 amounts to US$ 122,411.

(e) Term loan from ING and Nordea Bank

In (US$39,220) loan at EURIBOR plus amargin of 1.5%.The loan was drawn down in instalments from December 2010 to February 2011 and isrepayable in instalments from December 2011 to December 2019. The loan is secured against all the currentand fixed assets of the SFI. Instalment of ,388 (US$4,331) was repaid during the year ended 30 June2012. As at 30 June 2012, (US$28,317) is outstanding.

(f) Term loan from OCBC Bank

In April 2011 SFI obtained from OCBC Bank a US$20,000 loan at LIBOR plus a margin of 3.9%.The loanwas drawn down in instalments from April 2011 to July 2011 and is repayable in instalments from April 2013to April 2017. The loan is secured against all the current and fixed assets of the SFI.

(g) Term loan from Standard Chartered Bank

In November 2010 SFI obtained from Standard Chartered Bank a US$20,000 loan at LIBOR plus a margin of3.2%.The loan was drawn down in instalments from July 2011 to November 2011 and is repayable ininstalments from March 2014 to September 2017. The loan is secured against all the current and fixedassets of the SFI.



Page 53

21.2. Borrowings from related parties (note 36)

a) Compulsory convertible debentures issued to a related party

In October 2009, BPH, a Group company, issued 100,000 LIBOR + 3.82% compulsorily convertible100,000

related party of the Group. The LIBOR CCDs are mandatorily convertible into preference shares (thatclassify as liability) on 30 June 2013 and, in addition, AIA had an option to require conversion before 30 June2013. On conversion AIA would receive preference shares to the value of US$100,000. Prior to conversion,the Group is required to pay interest at LIBOR + 3.82%. On subsequent conversion to preference shares, theGroup is required to pay an annual dividend of EURIBOR + 3.82% subject to the availability of sufficientprofits. There are no redemption terms on the preference shares.

The fair value of the liability component, included in non-current borrowings, was calculated at issuance ofthe LIBOR CCDsrepresenting the value of the equity contribution19), net of income taxes.

The LIBOR CCDs recognised in the balance sheet are calculated as follows:

The LIBOR CCDs issued to the related party, carried at amortized cost of US$81,488 as at 29 June 2011has been converted into cumulative preference shares in accordance with the term of the instrument.Thereafter, 186,546 equity shares of BIGPH, valued at US$ 100,000 th by bothparties) have been issued in consideration of the cumulative preference shares held by the related party in adebt for equity swap. IFRIC 19, relating to debt for equity swap, has not been applied since the related partyis under control of the promoter group. The difference between the amortized cost of the liability(US$81,488) and the fair value of the liability (US$76,700) on the date of the conversion amounting to gain ofUS$4,788 has been accounted for in the income statement. The difference between the fair value of theliability and the value of equity shares issued amounting to US$23,300 has been disclosed as distribution byBIGPH to AIA in the equity statement.

b) Profit certificates issued to a related party

In October 2009, BPH, a Group company had issued 20,000 LIBOR profit certificates with a par value ofEuro 20,000 to BIH, the parent company, for a consideration of US$140,000. The profit certificates do nothave any stated maturity. The Group is required to pay dividends at LIBOR, over the consideration receivedsubject to the availability of sufficient profits.

The fair value of the liability component, included in non-current borrowings, was calculated at issuance ofthe profit certificates using the averamount, representing the value of the equity contributionreserves, (note 19) net of income taxes.



Page 54

The profit certificates recognised in the balance sheet are calculated as follows:

On 11 August 2011, the Group re-purchased 13,500 of the 20,000 profit certificates issued to the ParentCompany for a consideration of US$94,500. On the date of re-purchase, the difference between theproportionate carrying value of the certificates re-purchased (US$33,340) and the fair value of thecorresponding liability on the date of the re-purchase (US$30,620) has been accounted for in the incomestatement. The balance of the excess of re-purchase price over the fair value of the liability amounting toUS$63,880 has been disclosed as an equity distribution to the Parent Company.

The fair value of the liability component of the profit certificates at 30 June 2012 and 30 June 2011 amountedto, US$9,876 and US$48,350 and was calculated using cash flows discounted at a rate based on the LIBORrate plus margin of 5.7% and 5.0% respectively.

Refer note on post balance sheet events for repurchase of balance profit certificates.

21.3. Other current borrowings

Packing credit for export sales

Packing credits for export sales are typically for up to six months to finance export sales against letters ofcredit from customers. Under the terms of the lender providing the packing credit working capital facilities toBGPPL, its charge over assets rank pari passu with other banks providing working capital facilities.

Working capital loans

Working capital loans comprise:

from banks are utilised to finance raw material import for a period of up to one year.



Page 55

21.4. Finance lease liabilities

Finance lease liabilities relate to the financing of vehicles. These lease liabilities are effectively secured asthe rights to the leased asset revert to the lessor in the event of default.

21.5. Sales tax loan deferment

Interest rate to calculate the discounted value of sales tax loan has been considered to be 11.5%.

21.6. Other information

12 and 30 June 2011 approximatedtheir respective carrying values as all the non-current borrowings are at a floating rate of interest except forthe non-convertible debentures and profit certificates which have been disclosed separately.



Page 56

The Group has the following undrawn borrowing facilities:

22. Deferred income tax

The analysis of deferred tax assets and deferred tax liabilities is as follows.

*A net asset or liability is recorded based on the legal right (same jurisdiction) and intention to settle on a netbasis or realise assets and liability simultaneously.

The gross movement on the deferred income tax account is as follows:



Page 57

The movement in deferred income tax assets and liabilities during the year, without taking into considerationthe offsetting of balances within the same tax jurisdiction, is as follows:

Deferred income tax assets are recognised for tax loss carry-forwards and tax credits to the extent that therealisation of the related tax benefit through future taxable profits is probable. The underlying tax losses and

and tax loss carry forwards in SFI, Malaysia and entities in Netherlands as detailed in the following table andfurther explained below. The applicable tax rates in the relevant jurisdictions enacted at each balance sheetdate are shown in note 31.



Page 58

The deferred tax asset on tax losses carried forward and tax credits has been created as follows:

India

Indian companies are subject to corporate income tax or MAT. If MAT is greater than corporate income tax,then MAT is levied. MAT is charged on book profits, and the excess of MAT over the lower corporate incometax amount is available as a credit against corporate income tax in the following ten years (prior to April2010: seven years). Unabsorbed depreciation represents tax losses resulting from depreciation chargeaccording to the Indian Income Tax Act which is not absorbed by taxable income and can be carried forwardagainst future tax profits indefinitely.

BGPPL has no unrecognised MAT credits and unabsorbed depreciation from prior years.

In its tax returns for the tax years ended 31 March 2008, 2009, 2010, 2011 and 2012 BGPPL has deductedapproximately US$27,976 sales taxes that are subject to the Sales Tax Exemption scheme (refer to note2.21. b) as non-taxable income both for purposes of calculating its tax liability under normal provisions andthe MAT liability under the MAT regime. This deduction has been disputed by the Indian tax authorities forthe March 2008 tax return where they disallowed the deduction of sales tax both for the calculation of the taxunder normal provisions and under the MAT regime. This case is currently pending at appellate level. The

ompany Ballarpur is also in litigation with the tax authorities in a similar case andhas achieved favourable court rulings so far; however, the tax authorities continue to litigate this matter atthe Mumbai High Court. The Group believe that the risk of an unfavourable court decision is low both for taxdeduction under normal provisions and under the MAT regime and has therefore not adjusted the deferredtax asset on tax losses of BGPPL. However, in the event of an unfavourable court ruling, the available taxlosses will get reduced by US$5,400, US$4,400, US$5,100, US$6,200 and US$6,240, in the Indian tax years2008, 2009, 2010, 2011 and 2012 respectively. Further, an additional MAT, penalty and interest exposuremay also arise, which may be partially offset by a MAT credit.

Malaysia

SFI, the Malaysian entity, has historically been in a tax loss situation till the year 2008-09 and therefore doesnot incur any substantial current income tax expense.

SFI carries forward unused tax losses and various tax allowances, all of which are available for set-offagainst taxable income in future years for an unlimited period. Details are shown in the following table:



Page 59

In addition, SFI carries forward a tax-exempt income account from historical investment tax credits thatsubject to agreement by the Inland Revenue Board of Malaysia is available for distribution of tax-exemptdividends to the shareholders of the subsidiary. The available tax-exempt balance at each balance sheetdate is as follows:

Deferred tax assets relating to unused tax loss carry-forwards and deductible temporary differences arerecognized if it is probable that they can be offset against future taxable profits or existing temporarydifferences. Based on detailed analysis and considering future investment strategies, management hasconsidered a reasonable period for which future taxable profits can be estimated against which the lossescan be adjusted. As on 30 June, 2012, SFI recognized net deferred tax assets on tax loss carry-forwardsand other temporary differences totalling US$28,296 (2011: US$27,429) since it was foreseeable that taxloss carry-forwards and other temporary differences could be offset against future taxable profits.

In assessing the probability of offsetting cumulative tax losses, the Company applied a method on the basisof forecasted taxable results for the period 2012 - 2036 and a risk adjustment reflecting the lack of probabilityof assessment of future profits. Management is aware of this highly sensitive calculation. The company hastaken the sensitivity of the calculation into consideration by assuming a zero growth rate after 5 years in theforecasted taxable results. If the company would assume that it would be impracticable to prepare a reliableforecast after 5 years, the net DTA to be recognized would amount to US$5,358.

Unrecognised deferred taxes (SFI, Malaysia)

As at 30 June 2012 and 30 June 2011, the estimated net deferred tax assets of SFI, calculated at the

The Netherlands

The Dutch holding entities have historically been and continue to be in a tax loss situation and therefore donot incur any substantial current income tax expense.

Deferred tax assets relating to unused tax loss carry-forwards and deductible temporary differences arerecognized if it is probable that they can be offset against future taxable profits or existing temporarydifferences. Based on future projections and financing strategies, management expects the losses can beadjusted against future taxable profits. As on 30 June, 2012, recognized deferred tax assets on tax losscarry-forwards and other temporary differences amounts to US$11,934 (2011: US$6,719). If the company

other non-current tax assets (withholding tax credits which can be offset against corporate income taxpayable) would decrease by US$21,105 (2011: US$14,562).



Page 60

The unused tax losses and unrecognised deferred tax assets are as follows:

23. Retirement benefit obligations

(a) Defined benefit plan

(b) Defined contribution plans

(c) Gratuity benefit plan

In accordance with applicable Indian laws, the Group provides for gratuity, a defined benefit plan, coveringeligible employees. This plan provides for a lump sum payment to vested employees on retirement, death,incapacity or termination of employment of amounts that are based on salary and tenure of employment.Liabilities with regard to this plan are determined by actuarial valuation.

The following table sets out the funded status of the plan and thebalance sheet.



Page 61

The movement in the benefit obligation for gratuity benefit plan over the year is as follows:

The movement in the fair value of plan assets of the gratuity benefit plan of the year is as follows:

Plan assets represent the fund value maintained with an insurance company.

The components of amounts recognised in the income statement for the gratuity benefit plan are as follows:

These amounts are recognized in income statement under Employee benefit expense.

Disclosure relating to defined benefit obligation, plan assets, surplus / deficit in the plan and experienceadjustments for the current year and four previous years is disclosed below:

The principal actuarial assumptions used for the gratuity benefit plan were as follows:



Page 62

The Group assesses these assumptions with its projected long-term plans of growth and prevalent industrystandards. The mortality rates used are as published by one of the leading life insurance companies in India.

(d) Compensated absences

The Group permits encashment of leave accumulated by their employees on retirement, separation andduring the course of service. The liability for encashment of leave is determined and provided on the basis ofan actuarial valuation performed by an independent actuary at each balance sheet date. This plan iscompletely un-funded.

(e) Provident Fund

The employees of the Group participate in a provident fund plan, a defined contribution plan. The Groupmakes annual contributions based on a specific percentage of salary of each covered employee to agovernment recognised provident fund. The Group does not have any further obligation to the provident fundplan beyond making such contributions. Upon retirement or separation, an employee becomes entitled tothis lump sum benefit, which is paid directly to the employee by the fund.

(f) Superannuation fund

The employees of the Group participate in a superannuation fund plan, a defined contribution plan. TheGroup makes annual contributions based on a specific percentage of salary of each covered employee to agovernment recognised fund. The Group does not have any further obligation to this plan beyond makingsuch contributions. Upon retirement or separation, an employee becomes entitled to this lump sum benefit,which is paid directly to the employee by the fund.

24. Other operating income

Miscellaneous income includes write back of provisions and service income.



Page 63

25. Raw materials and consumables used

Stores and consumables primarily include chemicals.

The group has power purchase agreement at two of its units with Avantha Power and Infrastructure Limited.This arrangement is considered as an operating lease. Payments for other elements in the arrangement arenot separated from lease payments and all payments have been disclosed under power and fuel. The totalexpense for power under this arrangement for the year ended 30 June 2012 is US$91,708 (2011:US$80,673)

The group is purchasing Calcium Carbonate at two of its units under an agreement with Imerys New QuestIndia Pvt. Ltd and SMM Speciality Minerals Malaysia. This arrangement is considered as an operating lease.Payments for other elements in the arrangement are not separated from lease payments and all paymentshave been disclosed under Stores and consumables. The total expense for purchase of Calcium carbonateunder this arrangement for the year ended 30 June 2012 is US$20,441 (2011: US$ 20,887).

26. Other operating expenses

Others include insurance, local levies, advertisement and promotion etc. None is material enough to bedisclosed separately.

27. Auditor remuneration

28. Employee benefit expense



Page 64

29. Average number of people employed (excluding temporary workers)

30. Finance income and costs

*During 2011, the Group incurred certain transaction costs for a proposed equity offering. Since, theproposed offering have been deferred, these costs have been expensed off in the financial statements.

The table below shows the applicable capitalisation rates in respect of borrowing costs capitalised onqualifying assets:

31. Income tax expense



Page 65

A reconciliation of the theoretical income tax expense / (benefit) applicable to the profit / (loss) before incometax at the statutory tax rate in India toas follows:

*Includes sales tax exemption (US$1,494) and income and foreign exchange losses on loan given tosubsidiary (US$12,094) which is not included in tax computation.

The effect of lower tax rates in other countries fluctuates with the profit or loss situation in the operatingsubsidiary SFI in Malaysia and the holding entities in The Netherlands.

The applicable tax rates in the relevant jurisdictions enacted at each balance sheet date are as follows:

The tax (charge)/credit relating to components of other comprehensive income are as follows:



Page 66

32. Net foreign exchange gains/(losses)

The exchange differences (charged)/credited to the income statement are included as follows:

33. Earnings per share

(a) Basic

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company bythe weighted average number of ordinary shares in issue during the year.

(b) Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary sharesoutstanding to assume conversion of all dilutive potential ordinary shares. The Company has no dilutivepotential shares and accordingly diluted earnings per share is the same as basic earnings per share.

34. Contingencies

The Group is currently involved in a number of legal cases. Although it is not possible to predict the outcomeof the pending litigation with accuracy, the Group believes, based on legal opinions received, that the Grouphas meritorious defences to the claims .The Directors believe the pending actions will not require outflow ofresources embodying economic benefits and will not have a material adverse effect upon the results of theoperations, cash flows or financial condition of the Group.

Ballarpur production unit

The unit has various matters in dispute with the Central Excise Department at Nagpur. These are:

a. During March 2006 to March 2010 the Central Excise Department claimed that the benefit receivedby the unit under the sales tax deferral scheme represents additional consideration and is liable forexcise duty. The unit has appealed to the Tribunal and the Tribunal has granted unconditional stayfor payment of any excise duty and associated interest. The cumulative amount of the contingentliability as at 30 June 2012 was US$774 (2011: US$3,834).

b. During January 2001 to February 2003 the Central Excise Department issued various noticesrelating to the maintenance of separate books of account for the manufacture of paper usingunconventional raw materials. The cumulative amount of the contingent liability as at 30 June 2012was US$507 (2011: US$840).



Page 67

c. In addition the unit has other disputed amounts with the Nagpur Central Excise Department totallingUS$1,522 and which are at various stages of dispute and appeal (2011: US$1,883).

The unit has various following civil matters in dispute:

a. The water supply charges from Wardha river have been revised with retrospective effect. TheCollector, Chandrapur has raised a demand with arrears for consolidated amount of US$1,286 forperiods to May 2004. The unit has filed writ petition before High Court at Nagpur. The High Courthas granted stay and the petition is pending for final arguments and order (2011: US$1,461).

b. During August 2009 to September 2009 the Chandrapur Forest Conservation Department revisedthe bamboo royalty rate payable by the unit with retrospective effect for the period from 2005 to 2006and has demanded a total US$14,835 additional payment as at 30 June 2012.The unit haspetitioned the Nagpur High Court challenging the revision of the royalty rate and judgment is pending(2011: US$18,365).

c. According to a complaint filed by Maharashtra Lok Kamgar Sangh, as per the Model StandingOrders framed under Industrial Employment (Standing Orders) Act, 1946, applicable to thecompany, workers who work for more than 240 days in a year are to be given permanency in theCompany along with the benefits applicable to permanent workers. Amount involved is US$3,734(2011: US$4,623).The Honourable High Court of Maharashtra has ruled against the Company by an order in July 2010,against which the Company has filed a Letter Patent Appeal (LPA) in the Honourable High Court ofJudicature at Bombay.

d. Also, the unit has other labour matters in dispute amounting to US$154 (2011: US$173) and has acivil recovery suit filed against it amounting to US$765 (2011: US$215).

Bhigwan production unit

a. Two civil recovery suits have been filed against the unit amounting to US$343 (2011: US$150).

b. The unit has three matters in dispute relating to custom duty amounting to US$420 (2011: US$420),one excise matter of US$69 (2011: US$32) and one pertaining to sales tax for US$98 (2011:US$121).

c. Also, the unit has labour matters in dispute amounting to US$79.

Kamalapuram production unit

a.on the unit a grid support charge of INR0.50 per unit of power generated. The unit appealed to theHigh Court of Andhra Pradesh and the court set asid

matter is pending before the Supreme Court. The cumulative amount of the contingent liability as at30 June 2012 is US$2,411 (2011: US$2,984).

b. In October 2003 the Government of Andhra Pradesh passed an ordinance levying electricity duty oncaptive power generation at the rate of INR0.25 per unit. The unit has petitioned the High Court ofAndhra Pradesh against this ordinance. The High Court had made an interim order staying paymentof the levy and the matter is pending for hearing. The cumulative amount of the liability as at 30 June2012 is US$2,776 (2011: US$3,436).

c. In October 2005 the Andhra Pradesh Forest Department had demanded US$1,356 in respect ofroyalty, extraction charges, interest, penalties and sales tax. The unit has provided evidence to the



Page 68

Andhra Pradesh District Collector that these amounts have already been paid. The Andhra PradeshDistrict Collector has directed the Andhra Pradesh Forest Department to reconcile its accounts withthe unit. The demand remains pending on this reconciliation (2011: US$1,643).

d. Claims filed by the customers not acknowledged as debt US$947 (2011: US$1,155).

e. The unit has various matters in dispute relating to sales tax amounting to US$142 (2011: US$176).

f. Also, the unit has labour matters in dispute amounting to US$98.

SFI production unit

Harapan Permai:

The SFI had filed legal case against Harapan Permai for US$60,611 (2011: US$60,611). The claim wasarisen from the termination by the SFI unit of the timber charge agreement entered into by SFI prior to the

based upon hearing held on 25th

May, 2011. Harapan Permai filed application from leave against decision ofcourt of appeal in Federal Court for which hearing was fixed on 23 November 2011. On 30

thJanuary 2012,

High Court judge was informed that both parties are in advanced stage of settling the case out of court. Thenotice of discontinuances and notice of withdrawal was filed by Harapan Permai with High Court and FederalCourt subjectively on 24

thFebruary 2012. On 2

ndMarch 2012, LFIB signed a letter of undertaking addressed

to BPH and SFI. In that LFIB represent and further undertake to ensure that there are no further outstandingclaims, nor will there be any other claims made by Harapan Permai against SFI. The case is now consideredfully settled and disposed off.

UNP Plywood:

The SFI unit has legal case against it, by UNP Plywood for US$40,287 (2011: US$42,347). The claim arisefrom the termination by the SFI unit of the timber charge agreement entered into by SFI prior to theacquisition by BPH. The Company believes that this agreement was illegal and unenforceable. This casehas been decided against SFI unit by higher court. The Company has lost its appeal in respect of the claimby UNP Plywood and dispute is on quantum of damages which is due to be heard on 7 January 2013. TheCompany retained US$40,287 from the purchase consideration payable for the acquisition of SFI which hasbeen subsequently deposited in an escrow account. Management believes that amount retained is sufficientto pay the eventual outcome of the claim and any additional amounts due would, under the sale andpurchase agreement for the SFI unit, be required to be paid by the seller, Lion Forest Industries Berhad

In December 2008 back pay labour claims were filed by 1,070 employees amounting to US$7,324 (2011:US$7,698). However, the former holding company, LFIB, of the SFI unit, has by a letter dated 30 December2008 confirmed to the SFI unit that LFIB will accept responsibility and lead the conduct of the defence of thelegal claims of employees.

There are three other matters pending before various authorities and courts amounting to US$471 (2011:US$144).

Further, refer note 22 for income tax related contingencies.



Page 69

35. Commitments

(a) Capital commitments

Capital expenditure contracted for is as follows:

(b) Operating lease commitments

The group has taken on lease plant and machinery under its non-cancellable operating lease agreement.The future aggregate minimum lease payments under the non-cancellable operating lease in respect ofagreement with SMM Speciality Minerals SFI, Malaysia is as follows:

36. Related party transactions

the Company as on 30 June, 2012. BIH is wholly owned by Ballarpur Industries Limited which is part ofAvantha Group which is the ultimate parent.

Entities which are part of Avantha Group are considered as related parties for the Group.

The transactions with related parties have been bifurcated into following categories for disclosure based onthe nature of relationship:

a) Immediate Holding Company: Ballarpur International Holdings B.V.

b) Holding Company: Ballarpur Industries Limited

c) Entities over which Avantha Group exercises significant influence / control: Crompton Greaves Limited,APR Sacks Ltd., Imerys Newquest India Pvt. Ltd., Avantha Holdings Limited, Avantha Power andInfrastructure Ltd., SMI Newquest India Pvt. Ltd., Mirabelle Trading Pte. Ltd., Saraswati Travels Pvt. Ltd.,Leading Line Merchant Traders Pvt. Ltd., ASA Agencies Pvt. Ltd.

The following transactions were carried out with the related parties:



Page 70

(a) Sale of goods and services

(b) Purchase of goods, fixed assets and services

(c) Key management compensation

Total remuneration paid to the directors are as follows:

Executive Director:

The remuneration for one of the director of the Company has been paid by the Group amounting to US$465.The remuneration paid includes contribution to defined benefits and contribution schemes and is inclusive ofbonus.



Page 71

Non-Executive Directors:

For the year ended 30 June 2012 and 30 June 2011, there were two directors of BIGPH that had beennominated by private equity investors. These directors were not paid any emoluments by the Group. For theyear ended 30 June 2012 and 30 June 2011, there were three directors of the Company that were paid bythe ultimate parent, Ballarpur, which made no recharge to the Group. These directors are directors of theultimate parent and a number of affiliates. Accordingly, the above details include no emoluments in respectof these directors. Their total emoluments as included in the aggregate of key management compensationdisclosed in the financial statements of the ultimate parent are US$279 and US$1,172 for the year ended 30June 2012 and 30 June 2011, respectively.

Independent Directors:

(d) Year-end payables to related parties:

The payables to related parties arise mainly from purchase transactions and are due two months after thedate of purchase. The payables bear no interest.

(e) Year-end receivables from related parties:



Page 72

The receivables from related parties arise mainly from sale transactions and are due one months after thedate of sales. The receivables are unsecured in nature and bear no interest. No provisions are held againstreceivables from related parties nil (2011: nil).

(f) Borrowings from related parties

Refer to note 21.2. for detailed information about borrowings from related parties and related equity effects ateach balance sheet date.

Further, refer note 30 and for gain on conversion of CCD.

(g) Interest expense to related parties

(h) The Group has been provided certain administrative, accounting, legal, treasury, marketing, procurementand other support services by the holding company and the ultimate holding company.

37. The Group has net current liability position as at 30 June, 2012 primarily due to increase in capitalcreditors, delay in capitalisation of pulp manufacturing facility at Ballarpur and SFI, Malaysia and increase inshort term borrowings. These balances have increased due to capital expansion and current portion of longterm borrowings due for payment in accordance with the terms of the loan agreements. The Group is earningprofit and has positive cash flows from operations. The directors believe the Group will be able to managethe cash flows for at least the next twelve months based on drawing facilities, efficient working capital



Page 73

management. The Group further proposes to raise equity in future to reduce the outstanding debtobligations.

38. Sales tax grant

(a) Sales tax refund scheme

Pursuant to the expansion of production capacity, the Indian subsidiary is eligible for incentives under thescheme of Government of Maharashtra and an application to this effect was filed with the relevantAuthorities in 2009. During the year ended 30 June 2012, the Group has received the eligibility certificatesfrom Government according to which the Ballarpur and Bhigwan unit of the Indian subsidiary are eligible forincentive not exceeding US$104,331 and US$139,019 over a period of 9 years and 12 years respectively.

Based on sales estimates, the Indian subsidiary is eligible for incentive of US$ 17,334 and US$ 46,322 overa period of 9 years and 12 years respectively. Grant receivable on account of the incentives accrued grossamount to US$ 2,018 and US$ 8,094 for Ballarpur and Bhigwan respectively which has been disclosed innote no 13. The income for incentives recognised during the current year amount to US$ 1,495 and US$5,147 for Ballarpur and Bhigwan respectively and excess of receivable over the income has been disclosedin deferred income. If the sales estimates are higher/ lower by 5%, the effect on the income statement isdisclosed below:

(b). Sales Tax Deferment Scheme

Pursuant to the expansion in earlier years, the Indian subsidiary is entitled to benefit associated with theinterest free sales tax loan which is repayable after a stipulated period. Income relating to such schemeamounted to US$1,742.

39. Post Balance Sheet events


restructuring plan. The group restructuring was approved by the shareholders of BIGPH on 6 July,






After the year-end, as part of the group restructuring, the management of the Company has agreedto dispose the net assets relating to the unit at Kamalapuram in a board meeting held on 3 July,2012 and subsequently the approval of the shareholders was also obtained on 6 July, 2012. Since,there was no commitment by management at the year-end, this has been accounted for as a postbalance sheet non-adjusting event. As part of the transaction, net assets amounting to US$75,383will be disposed. The results relating to Kamalapuram is included in pulp segment under note 5.



Page 74

Since the transaction will be between entities under common control, the management of BIGPHexpects to apply predecessor basis of accounting to this transaction, whereby the assets andliabilities of Sewa and Ashti will be recorded at the IFRS carrying values and the difference betweenthe carrying values of the new units and Kamalapuram as compared to the net consideration will berecognised in equity. The effect on the financial statements cannot be calculated at this stage sincethe acquired business is not an existing preparer of financial statements under IFRS as adopted bythe European Union.

2. On 4 July, 2012, the board of directors of BGPPL approved the purchase of captive power plants ofAPIL situated at units Ballarpur, Sewa and Bhigwan alongwith a maximum debt of US$67,123 fromAPIL for a payable consideration aggregating to US$ 41,440 by BGPPL to APIL. The considerationfor sale would be adjusted for working capital changes. The acquisition is subject to approvals byregulatory authorities.








Page 75

Company balance sheet as at 30 June 2012

(before proposed profit appropriation)



Page 76

The notes are an integral part of these company financial statements.



Page 77

Income statement for the year ended 30 June 2012

The notes are an integral part of these company financial statements.

Notes to the company financial statements

1. Accounting information and policies

1.1. Basis of preparation

The company financial statements of Ballarpur International Graphic Paper Holdings B.V. (hereafter: thecompany) have been prepared in accordance with Part 9, Book 2 of the Dutch Civil Code. In accordance

prepared based on the accounting principles of recognition, measurement and determination of profit, asapplied in the consolidated financial statements. These principles also include the classification andpresentation of financial instruments, being equity instruments or financial liabilities.

As the financial data of the company are included in the consolidated financial statements, the incomestatement in the company financial statements is presented in its condensed form (in accordance with article402, Book 2 of the Dutch Civil Code).

In case no other policies are mentioned, refer to the accounting policies as described in the accountingpolicies in the consolidated financial statements of this Annual Report. For an appropriate interpretation, thecompany financial statements of Ballarpur International Graphic Paper Holdings B.V. should be read inconjunction with the consolidated financial statements.

The company prepared its consolidated financial statements in accordance with the International Financial

1.2. Financial fixed assets

1.2.1. Investments in consolidated subsidiaries Investments in consolidated subsidiaries are entities(including intermediate subsidiaries and special purpose entities) over which the company has control, i.e.the power to govern the financial and operating policies, generally accompanying a shareholding of morethan one half of the voting rights. Subsidiaries are recognised from the date on which control is transferred tothe company or its intermediate holding entities.

They are derecognised from the date that control ceases.

The company applies the acquisition method to account for acquiring subsidiaries, consistent with theapproach identified in the consolidated financial statements. The consideration transferred for the acquisitionof a subsidiary is the fair value of assets transferred, liabilities incurred to the former owners of the acquireeand the equity interests issued by the company. The consideration transferred includes the fair value of anyasset or liability resulting from a contingent consideration arrangement.

Identifiable assets acquired and liabilities and contingent liabilities assumed in an acquisition are measuredinitially at their fair values at the acquisition date, and are subsumed in the net asset value of the investmentin consolidated subsidiaries. Acquisition-related costs are expensed as incurred.



Page 78

Investments in consolidated subsidiaries are measured at net asset value.

Net asset value is based on the measurement of assets, provisions and liabilities and determination of profitbased on the principles applied in the consolidated financial statements.

When an acquisition of an investment in a consolidated subsidiary is achieved in stages, any previously heldequity interest is remeasured to fair value on the date of acquisition. The remeasurement against the bookvalue is accounted for in the income statement.

When the company ceases to have control over a subsidiary, any retained interest is remeasured to its fairvalue, with the change in carrying amount to be accounted for in the income statement.

When parts of investments in consolidated subsidiaries are bought or sold, and such transaction does notresult in the loss of control, the difference between the consideration paid or received and the carryingamount of the net assets acquired or sold, is directly recognised in equity.

Foreign currency financial fixed assets are considered as monetary assets and translated at closing rate.Exchange difference arising on such translation is recognized in the income statement.

1.2.2. Investmentexceeds its interest in the investment, (including separately presented goodwill or any other unsecured non-current receivables, being part of the net investment), the company does not recognise any further losses,unless it has incurred legal or constructive obligations or made payments on behalf of the investment. Insuch case the company will recognise a provision.

1.2.3. Investments; unrealised gains and losses Unrealised gains on transactions between the company andits investments in consolidated subsidiaries are eliminated in full, based on the consolidation principles.Unrealised gains on transactions between the company and its investments in associates are eliminated to

Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of theassets transferred.

1.2.4. Amounts due from investments

Amounts due from investments are stated initially at fair value and subsequently at amortised cost.Amortised cost is determined using the effective interest rate.



Page 79

2 Investments in subsidiaries

Movements can be broken down as follows:

Fresh issue of shares represent investment of 6,259,625 shares in BPH at a consideration of US$ 100,000.

List of subsidiaries

Ballarpur International Graphic Paper Holdings B.V. has direct and indirect interests in the followingsubsidiaries:

Share in

equity

%

Ballarpur Paper Holdings B.V., Netherlands

Sabah Forest Industries SDN. BHD., Malasiya

100

97.78

BILT Graphic Paper Products Ltd., India 99.9

Ballarpur International Graphic Paper Holdings B.V. exercises decisive control over the related parties. Othercompanies whose financial and operating activities it can control also qualify as related parties.

3 Trade and other receivables



Page 80

4 Cash and cash equivalents

5

The authorised share capital of Ballarpur International Graphic Paper Holdings B.V. amounts to EURO 90,0.01 each. Of these, 1,865,455 ordinary shares have been

issued.

amounting to US$100,000 issued by BPH and held by AIA into equity. The fair value of the shares issuedamounted to US$100,000.

Movements in the number of shares in 2011/2012 were as follows:

The breakdown of the shareholders equity by components differs from the breakdown shown in the

consolidated statement of changes in Group equity due to the fact that these company financial statements

follow the legal situation of the company while the consolidated financial statements follow the accounting

principles related to reverse acquisition accounting under IFRS in the year ended June 2009.



Page 81

Statements of changes in equity

Legal reserve comprise of gain arising on change in fair value of biological assets (US$34,057), statutoryreserve on debentures issued by the Group (US$41,284) and loss on fair valuation of available for salefinancial assets (US$12,179). Such reserves together with translation and other reserves are notdistributable by the company.

Share premium includes retained earnings (US$69,153) and translation reserves (US$19,917) up to June2008 of BPH consolidated financial statements which was accounted for as a reverse acquisition accounting.

Reference is made to the Consolidated statement of changes in Group Equity and Note above.

6 Current liabilities



Page 82

7 Employee numbers (average): NIL

8 Remuneration of the board:

Management fee Refer note 36 (c) of consolidated financial statement.

9 Related parties

The following transactions were carried out with the related parties:

a. Reimbursement of Expenses

b. Loan to subsidiary

Loans to subsidiary represent US$95,000 (repayable in ten years as per terms of the loan) and US$67,000(repayable on demand) @ 9.90% given to Ballarpur Paper Holdings B.V.

c. Year-end balances arising from investing activities :

Payable to related parties:

Receivable from related parties:

10. Audit fees

Refer note 27 of consolidated financial statements.



Page 83

Amsterdam

Date: 21 December, 2012

Managing Directors

____________________ ___________________Gautam Thapar Rajeev Ranjan Vederah

____________________ ____________________Bhuthalingam Hariharan Pradeep Vasudeo Bhide

______________________ ____________________Jane Fields Wicker - Miurin Yogesh Agarwal

____________________ ___________________Kunnasagaran Chinniah Steward Norman Hicks

__________________Doeke van der Molen

Paasheuvelweg 16,1105BHAmsterdamThe Netherlands

Ballarpur International Graphic Paper Holdings B. V.Registered at the Chamberof Commerce in Amsterdamunder number 34301128



Page 84

Other information

Statutory appropriation of Results

According to Article 14 of the company's Articles of Association:-

1. Profit \ (Loss) will be taken to mean the credit \ debit balance of the adopted profit and loss account.2. The company's result shall be at the disposal of the general meeting of shareholders. No distribution of

profits for the benefit of the company will be made on shares owned by the company.3. The company can only make distributions to shareholders from profits qualifying for payment, insofar as

the shareholder's equity exceeds the paid-up and called-up part of the capital, to be increased by thereserves that have to be maintained by virtue of the Dutch Law.

4. With due observance of the provisions of Dutch law the management board may, after a proposalthereto by the general meeting of the shareholders, declare and pay out an interim dividend, insofar asthe company's profits so permit.

Proposed appropriation of Results

The directors propose to carry forward the result for the period as accumulated deficit.

Post Balance Sheet events


restructuring plan. The group restructuring was approved by the shareholders of BIGPH on 6 July,






After the year-end, as part of the group restructuring, the management of the Company has agreedto dispose the net assets relating to the unit at Kamalapuram in a board meeting held on 3 July,2012 and subsequently the approval of the shareholders was also obtained on 6 July, 2012. Since,there was no commitment by management at the year-end, this has been accounted for as a postbalance sheet non-adjusting event. As part of the transaction, net assets amounting to US$75,383will be disposed. The results relating to Kamalapuram is included in pulp segment under note 5.

Since the transaction will be between entities under common control, the management of BIGPHexpects to apply predecessor basis of accounting to this transaction, whereby the assets andliabilities of Sewa and Ashti will be recorded at the IFRS carrying values and the difference betweenthe carrying values of the new units and Kamalapuram as compared to the net consideration will berecognised in equity. The effect on the financial statements cannot be calculated at this stage sincethe acquired business is not an existing preparer of financial statements under IFRS as adopted bythe European Union.

2. On 4 July, 2012, the board of directors of BGPPL approved the purchase of captive power plants ofAPIL situated at units Ballarpur, Sewa and Bhigwan alongwith a maximum debt of US$67,123 fromAPIL for a payable consideration aggregating to US$ 41,440 by BGPPL to APIL. The considerationfor sale would be adjusted for working capital changes. The acquisition is subject to approvals byregulatory authorities.



Page 85







Documents

Ballarpur International Graphic Paper Holdings B.V ...€¦ · Report of the Managing Directors ... (BGPPL) and Ballarpur Industries Limited (BILT), a Company with limited liability