Final-4-KSFL-2013-20th September 2013.pmd

KRIBHCO SHYAM FERTILIZERS LIMITED

1

DIRECTORS’ REPORT

Dear Members

Your Directors have great pleasure in presenting the Eighth Annual Report on the business and operations of your

Company together with the Audited Statement of Accounts for the year ended on March 31, 2013.

FINANCIAL RESULTS(` in Lacs)

Particulars Year ended 31.03.2013 Year ended 31.03.2012

Revenue from Operations & Other Income 134590.72 127705.64

Profit Before Interest, Depreciation & Tax 27735.87 27040.46

Less : Interest & Depreciation 25699.81 24119.60

Add: Prior Period adjustments 3.39 44.19

Profit/ (Loss) Before Tax 2039.45 2965.05

Less: Tax Expenses 423.19 617.10

Profit/ (Loss) after Tax 1616.26 2347.95

Add: Balance of Profit/ (Loss) brought forward (12018.85) (14366.80)

Balance of Profit/ (Loss) carried to Balance Sheet (10402.59) (12018.85)

PERFORMANCE HIGHLIGHTS

During the year 2012-13, the overall performance of the

Shahjahanpur Plant of your Company has been very good

and plant achieved production of 6,00,090 MT Ammonia

with capacity utilization of 119.64% and 10,08,296 MT

Urea with capacity utilization of 116.62%. KSFL

Shahjahanpur plant has maintained the highest degree

of productivity and it has now maintained Urea

production level of more than one million MT per year

for three years in a row. Ammonia production has also

been in excess of 6 lakh MT per year for the last three

years. Plants also achieved the best ever specific energy

of 7.874 Gcal/MT Ammonia and 5.576 Gcal/ MT Urea in

FY 2012-13. Your Company commenced production of

Neem-Coated-Urea from Aug 11 and during the year

2012-13 the production was 3,51,352 MT which was

34.85% of total Urea production.

Your Company crossed the “cut-off” level of 9,09,810

MT and “qualifying” production level of 9,55,301 MT of

Urea fixed by Department of Fertilizer, Government of

India, thus making it eligible for Import Parity Price (IPP)

Scheme. Consequently the entire production beyond the

“cut-off” level amounting to 98,486 MT qualified for

pricing under the IPP.

During the year, your Company achieved excellent

performance in its dispatch and sales operations. With

the sincere efforts made by KRIBHCO’s marketing

department, 10.06 LMT Urea was dispatched out of

which 9.95 LMT Urea was sold. The Company has

received all payments for sale of Urea and there are no

pending receivables from the sales channel for the year

2012-13.

PERFORMANCE AWARDS

Your Company has been declared joint runners-up for

FAI Award for the Best Overall Performance of an

operating fertilizer unit for nitrogen (ammonia and urea)

for the year 2011-12. This is the second consecutive year

when your Company has got the FAI award for Best

Overall Performance. The award was given by Hon’ble

Minister of State for Chemicals and Ferti lizers,

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ANNUAL REPORT 2012-138th

Shri Srikant Kumar Jena on 10th December, 2012 at the

FAI Annual Seminar and was received by Shri V.P. Kaushik,

Managing Director of the Company.

FUTURE OUTLOOK

For FY 2013-14, outlook is very positive and your

Company has targeted to surpass all its previous records

of production and energy consumption. To achieve these

targets, a comprehensive Performance Plan has been

prepared which sets performance parameters and

targets for each and every department and section.

DIVIDEND

The Directors of the Company do not recommend any

dividend for the year 2012-13.

DIRECTORS

The Board of Directors in their meeting held on

December 5, 2012 appointed Shri Ajay Khanna as

Alternate Director to Shri Alok Tandon. On attending the

meeting of the Board of Directors by Shri Alok Tandon

(original director) on March 21, 2013, the Alternate

Director vacated the office with immediate effect in

pursuance to the provisions of section 313 of the

Companies Act, 1956.

The Board of Directors in their meeting held on

March 21, 2013 has appointed Shri Rajan Chowdhry as

an Additional Director of the Company with effect from

March 21, 2013. As an Additional Director Shri Rajan

Chowdhry holds office till the ensuing Annual General

Meeting of the Company. The Company has received a

notice under section 257 of the Companies Act, 1956

from a member, proposing the candidature of Shri Rajan

Chowdhry for being appointed as Director of the

Company. The Board of Directors recommends his

appointment and the necessary resolution is proposed

for your approval.

In accordance with the provisions of Companies Act,

1956 and Company’s Articles of Association,

Shri Waghji Rughnath Boda, Director of the Company is

due to retire by rotation at the ensuing Annual General

Meeting and being eligible, offer himself for

re-appointment. The Board of Directors recommends his

re-appointment.

AUDITORS & AUDITORS REPORT

M/s G.K. Choksi & Co., Chartered Accountants, who are

the Statutory Auditors of the Company, hold office till

the conclusion of the forthcoming Annual General

Meeting. The Company has received a special notice

from a Member of the Company, in terms of section

225(1) of the Companies Act, 1956, proposing the

appointment of M/s S.K. Mehta & Co., Chartered

Accountants as the Statutory Auditors of the Company

in place of M/s G.K. Choksi & Co. the retiring auditors of

the Company. The retiring auditors have informed the

Company that they have no representation to make in

this context.

M/s S.K.Mehta & Co., Chartered Accountants have

expressed their willingness to act as Statutory Auditors

of the Company, if appointed, and have further

confirmed that the said appointment would be in

conformity with the limits specified under section

224(1B) of the Companies Act, 1956. The Board of

Directors recommends their appointment.

The Auditors Report is self explanatory and therefore,

do not call for any further comments except point (xvii)

of Annexure to the Auditor’s Report. On this point (xvii)

the Management clarifies that during the financial year

2012-13, the Company had repaid long term loans of

` 667.78 crore availed in the earlier years for acquisition

of Shahjahnpur Plant and for other capex. The Company

had made relentless efforts to finalize long term ECB/

rupee loan for repayment of long term loans. However

due to higher interest rates on long term borrowings, it

chose to avail short term loan available at lower rate of

interest. As a result, the Company had considerably

reduced its finance cost, which otherwise would have

been much higher. The Company is in the process of

finalizing a long term loan of ` 500 crore at most

competitive interest rate to replace the outstanding

short term loan.

COST AUDITORS

The Central Government has directed the Company to

conduct audit of cost accounts by a Cost Auditor.

For FY 2011-12, the Cost Audit report was filed on

30th January, 2013 by the Cost Auditor of the Company,

M/s K.G. Goyal & Associates, Cost Accountant within the

due date of filing.


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For FY 2012-13, M/s K.G. Goyal & Associates, Cost

Accountant were appointed as Cost Auditor of the

Company with the approval of the Central Government

who will file the Cost Audit Report for FY 2012-13 directly

to the Central Government.

For FY 2013-14, the Company is proposing to the Central

Government for re-appointment of M/s K.G. Goyal &

Associates, Cost Accountant as the Cost Auditor of the

Company.

FIXED DEPOSITS

Your Company has not accepted any fixed deposits from

the public during the year under review.

PARTICULARS OF CONSERVATION OF ENERGY,

TECHNOLOGY ABSORPTION AND FOREIGN

EXCHANGE EARNINGS AND OUTGO

In accordance with the requirements of Section

217 (1) (e) of the Companies Act, 1956 read with Rule

(2) of the Companies (Disclosure of Particulars in the

Report of the Board of Directors) Rules 1988, as

amended from time to time, with respect to

conservation of Energy, Technology Absorption, Foreign

Exchange Earnings and Outgo is annexed and forms part

of this report.

DIRECTORS RESPONSIBILITY STATEMENT IN

TERMS OF SECTION 217(2AA) OF THE COMPANIES

ACT, 1956

As required under Section 217 (2AA) of the Companies

Act, 1956, the Board of Directors of your Company

confirms that:

a. in the preparation of the annual accounts for the

financial year ended 31st March, 2013 the

applicable accounting standards had been

followed along with proper explanation relating

to material departures;

b. the Directors had selected such accounting

policies and applied them consistently and made

judgments and estimates that are reasonable and

prudent so as to give true and fair view of the state

of affairs of your Company at the end of the

financial year and of the profit or loss of your

Company for that period;

c. the Directors had taken proper and sufficient care

for the maintenance of adequate accounting

records in accordance with the provisions of

Companies Act, 1956 for safeguarding the assets

of your Company and for preventing and detecting

fraud and other irregularities;

d. the Directors had prepared the annual accounts

on a going concern basis.

PARTICULARS OF EMPLOYEES

The particulars of employees as required under the

provisions of Section 217(2A) of the Companies Act,

1956, read with the Companies (Particulars of

Employees) Rules, 1975, as amended from time to time

are not applicable on the Company for the year ended

31st March, 2013.

HUMAN RESOURCES, INDUSTRIAL RELATIONS &

SOCIAL WELFARE

During the year under review, the Company continued

to place great importance on training and development

of human resources and accordingly considerable efforts

were made in training and development of the potential

of the employees. Towards this end apart from in-house

training programmes, the employees were also

nominated for attending external training programs and

seminars in specified areas by leading agencies.

The industrial relations between the management and

its employees remained very harmonious and peaceful

during the year & no man-days were lost due to

industrial unrest.

The Company is continuing with its policy of extension

of welfare activities so as to improve the working

environment and living conditions of the employees.

Various religious functions, yoga camp, health check-up,

sports day, tournaments were organized in the township

from time to time so as to maintain harmonious & joyful

atmosphere. All the employees with their family

members had participated and enjoyed the occasions.

The hospital, infrastructure, school and other facilities

in the Company’s township are being improved and

considerable investments have been made wherever

required.

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Your Company is also working for the welfare of

surrounding villages as part of its Corporate Social

Responsibility. Your Company is organizing regular

medical camps (twice in a week) at nearby villages,

wherein the health check up of the villagers are done

by our medical team and necessary medicines are

distributed to them on free of cost basis. Your Company

is also operating a widow pension scheme and pension

to 186 widows of nearby villages is being disbursed

regularly. Your Company is also extending its resources

for providing relief in case of natural calamities such as

floods etc.and providing contribution for upkeep of park

in nearby areas.

ENVIRONMENT PROTECTION, HEALTH AND

SAFETY

Your Company continued to focus on the key areas of

Environment Protection, Health and Safety and all the

regulatory and legislative requirements are being

complied. Trade and domestic effluent are treated in

respective treatment plant. Due to effective

environmental management system, the treated

effluent, ambient air quality and stack emission are

monitored and maintained as per standards. The

Company operates an Environmental Management

System which complies with the requirements of

ISO-14001:2004 and the Quality Management System

complies with the requirement of ISO 9001:2008 for the

manufacture of fertilizer grade urea.

The Company has also obtained OHSAS-18001

certification and implementation of Occupational Health

and Safety (OHS) is being done in the plant effectively

to make healthy and safe environment. Annual Medical

check-up of all the employees was completed in

compliance to the statutory requirements as well as the

conditions of OHSAS 18001-2007. Further improvement

in safety standards of Company in terms of

infrastructure, skill of employees etc. is in progress to

ensure zero accident.

All Safety & Fire Systems including fire tenders at plant

are in healthy condition.

ACKNOWLEDGEMENT

Your Directors have pleasure in recording their

appreciation of the continued guidance & support

provided by the Lenders, Department of Fertilizers (DoF)-

Govt. of India, Reserve Bank of India, Company’s

Bankers, Government Agencies, Customers and

Suppliers.

Your Directors hereby wish to place on record their

appreciation of the efficient and loyal services rendered

by all staff and work force at all levels through their

involvement, dedication and sincerity in achieving an all

round success. This unstinted support has been and

continues to be integral to your Company’s ongoing

growth.

For and on behalf of the Board of Directors

Place : Noida (Dr. Chandrapal Singh Yadav)

Dated : 26th June, 2013 Chairman


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Particulars UNIT Year ended Year ended31.03.2013 31.03.2012

Power and Fuel Consumption

1. Electricity

(a) Purchased

Unit MWH NIL NIL

Total Amount `/Lacs NIL NIL

Rate per unit `/KWH NA NA

(b) Own Generation

Through Gas Turbine Units

Qty (Gross) MWH 134967 134936

Units per SM³ of Gas KWH/SM³ 4.28 4.26

Cost per unit `/KWH 2.89 2.65

2. Fuel Consumption

(a) Natural Gas (Amm-Fuel,power and steam)

Qty 1000SM³ 288446.29 290938.92

Total Cost in Lacs 35661.22 32836.81

Rate/Unit `/1000 SM³ 12363.21 11286.49

(b) Naphtha

Qty MT NIL 565.900

Total Cost ` in Lacs NIL 223.20

Cost/Unit `/MT NA 39442.12

(c) HSD

Qty KL 7.219 10.898

Total Cost ` in Lacs 3.09 4.24

Cost/Unit `/Litre 42.83 38.92

Consumption Per UnitProduction (Urea)

Natural Gas SM³/MT 286.07 285.51

Naphtha Kg/MT NIL 0.56

HSD Litres/MT 0.01 0.01

ANNEXURE ‘A’ TO THE REPORT OF DIRECTORS PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES

ACT, 1956 READ WITH PARTICULARS AS PER THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE

REPORT OF THE BOARD OF DIRECTORS) RULES, 1988

A. CONSERVATION OF ENERGY

Conservation of energy is a high priority area for the Company and constant efforts are being made to reduce

energy costs at all levels. The strong internal controls have helped to conserve energy consumption at the plant.

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B. TECHNOLOGY ABSORPTION

Research and Development (R&D)

(a) Specific areas in which R & D was carried out by the Company - None

(b) Benefits derived as a result of the above R & D - NA

(c) Future Plan & Action - NIL

(d) Expenditure on R & D - NIL

Technology Absorption, Adaptation and Innovation:

1. Efforts in brief made towards technology absorption, adaptation and innovation:

Feasibility study was carried out in 2012 by M/s Haldor Topsoe, Denmark (HTAS) for enhancing ammonia

production capacity to 2000 MTPD and capability to generate CO2 for producing 3500 MTPD urea. Based on

the current & previous studies recommendations made by M/s HTAS for revamp of ammonia plant, some of

the schemes such as replacement of piping of PG line at synthesis gas compressor suction side; Replacement

of burners of 2 rows in primary reformer with better design & higher capacity; HP regenerator tower packing

replacement, Rearrangement of boiler feed water exchanger (E-1211A/B) etc. were implemented in

FY 2012-13. Additional cooling tower cell for ammonia plant was also commissioned this year. Action for

implementation of few more schemes are being taken.

2. Benefits derived as a result of the above:

Implementation of above measures has resulted in achieving lowest ever yearly specific energy consumption

for ammonia as well as urea in FY 2012-13. After implementation of remaining schemes plant performance

will further improve.

3. Information regarding Technology Imported during the last five years:

No technology has been imported since the Company acquired the plant on 18th January, 2006.

C. FOREIGN EXCHANGE EARNINGS

Earnings : ` 38.65 lacs

D. FOREIGN EXCHANGE OUTGO

Outgo : ` 621.11 lacs


7

INDEPENDENT AUDITOR’S REPORT

To,

The Members,

KRIBHCO SHYAM FERTILIZERS LIMITED,

New Delhi.

Report on the Financial Statements

We have audited the accompanying financial statements

of Kribhco Shyam Fertilizers Limited (“the Company”),

which comprises the Balance Sheet as at March 31,

2013, and the Statement of Profit and Loss and Cash

Flow Statement for the year then ended, and a summary

of significant accounting policies and other explanatory

information.

Management’s Responsibility for the Financial

Statements

Management is responsible for the preparation of these

financial statements that give a true and fair view of the

financial position, financial performance and cash flows

of the Company in accordance with the Accounting

Standards referred to in sub-section (3C) of section 211

of the Companies Act, 1956 (“the Act”). This

responsibility includes the design, implementation and

maintenance of internal control relevant to the

preparation and presentation of the financial statements

that give a true and fair view and are free from material

misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these

financial statements based on our audit. We conducted

our audit in accordance with the Standards on Auditing

issued by the Institute of Chartered Accountants of India.

Those Standards require that we comply with ethical

requirements and plan and perform the audit to obtain

reasonable assurance about whether the financial

statements are free from material misstatement.

An audit involves performing procedures to obtain audit

evidence about the amounts and disclosures in the

financial statements. The procedures selected depend

on the auditor’s judgment, including the assessment of

the risks of material misstatement of the financial

statements, whether due to fraud or error. In making

those risk assessments, the auditor considers internal

control relevant to the Company’s preparation and fair

presentation of the financial statements in order to

design audit procedures that are appropriate in the

circumstances. An audit also includes evaluating the

appropriateness of accounting policies used and the

reasonableness of the accounting estimates made by

management, as well as evaluating the overall

presentation of the financial statements.

We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our audit

opinion.

Opinion

In our opinion and to the best of our information and

according to the explanations given to us, the financial

statements give the information required by the Act in

the manner so required and give a true and fair view in

conformity with the accounting principles generally

accepted in India.

(a) in the case of the Balance Sheet, of the state of

affairs of the Company as at March 31, 2013;

(b) in the case of the Statement of Profit and Loss, of

the profit for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash

flows for the year ended on that date.

Report on Other Legal and Regulatory

Requirements

1. As required by the Companies (Auditor’s Report)

Order, 2003 (“the Order”) issued by the Central

Government of India in terms of sub-section (4A)

8


of section 227 of the Act, we give in the Annexure a

statement on the matters specified in paragraphs 4

and 5 of the Order.

2. As required by section 227(3) of the Act, we report

that:

(a) we have obtained all the information and

explanations which to the best of our

knowledge and belief were necessary for the

purpose of our audit;

(b) in our opinion proper books of account as

required by law have been kept by the Company

so far as appears from our examination of those

books;

(c) the Balance Sheet, Statement of Profit and Loss

and Cash Flow Statement dealt with by this

Report are in agreement with the books of

account;

(d) in our opinion, the Balance Sheet, Statement

of Profit and Loss and Cash Flow Statement

comply with the Accounting Standards referred

to in sub-section (3C) of section 211 of the

Companies Act, 1956;

(e) on the basis of written representations received

from the Directors as on March 31, 2013, and

taken on record by the Board of Directors, none

of the Directors is disqualified as on

March 31, 2013, from being appointed as a

Director in terms of clause (g) of

sub-section (1) of section 274 of the Companies

Act, 1956.

FOR G. K. CHOKSI & CO.

[Firm Registration No. 101895W]

Chartered Accountants

SANDIP A. PARIKH

Partner

Membership No. 40727

Place : Ahmedabad

Date : 26th June, 2013


9

(i) (a) The Company has maintained proper records

showing full particulars, including quantitative

details and situation, of its fixed assets.

(b) As explained by management, major items of

fixed assets were physically verified by the

Management at the end of the year, in

accordance with the regular programme of

verification which in our opinion is reasonable,

having regard to the size of the Company and

nature of its assets. No material discrepancy

was noticed on such physical verification.

(c) The Company has not disposed of any

substantial part of its fixed assets during the

year as would affect its going concern status.

(ii) (a) In our opinion, physical verification of

inventory has been conducted by the

management at reasonable intervals.

(b) In our opinion and according to the

information and explanations given to us, the

procedure of physical verification of inventory

followed by the Management is reasonable

and adequate in relation to the size of the

Company and the nature of its business.

(c) On the basis of our examination of records of

inventory, in our opinion, the Company is

maintaining proper records of inventory. No

material discrepancy was noticed on physical

verification of the inventory.

(iii) (a) As per the information and explanations given

to us, the Company has not granted any loans,

secured or unsecured, to companies, firms or

other parties covered in the Register

maintained under Section 301 of the

Companies Act, 1956. Accordingly the clauses

4(iii)(a) to 4(iii)(d) of the report are not

applicable.

(b) As per the information and explanations given

to us, the Company has not taken any loans,

secured or unsecured, from companies, firms

or other parties covered in the Register


Companies Act, 1956. Accordingly the clauses

4(iii)(c) to 4(iii)(g) of the report are not

applicable.

(iv) In our opinion and according to the information and

explanations given to us, there is adequate internal

control system commensurate with the size of the

Company and the nature of its business, for the

purchase of inventory, fixed assets and with regard

to the sale of goods and services.

During the course of audit, we have not observed

any continuing failure to correct major weakness

in Internal Control System.

(v) (a) In our opinion and according to the


particulars of contracts or arrangements

referred to in Section 301 of the Companies

Act, 1956 have been entered in the Register

maintained under that Section;

(b) In our opinion and according to the


transactions made in pursuance of contracts

or arrangements entered in the register


Companies Act, 1956 have been made at

prices which are reasonable having regard to

the prevailing market prices at the relevant

time.

(vi) The Company has not accepted any deposits from

the public. Accordingly, the provisions of Clause (vi)

of paragraph 4 of the Order are not applicable to

the Company.

(vii) In our opinion, the Company has an internal audit

system commensurate with the size and nature of

its business.

(viii) We have broadly reviewed the books of account

maintained by the Company pursuant to the

Rules made by the Central Government for

ANNEXURE TO THE AUDITORS’ REPORT

(Referred to in our Report of even date to the members of Kribhco Shyam Fertilizers Limited)

10


maintenance of cost records prescribed under

Section 209(1)(d) of the Companies Act, 1956, and

are of the opinion that prima facie, the prescribed

accounts and records have been made and

maintained.

(ix) (a) According to the information given to us, the

Company is generally regular in depositing

with appropriate authorities undisputed

statutory dues and the Company had no

arrears of such outstanding statutory dues as

at 31st March, 2013 for a period more than six

months from the date they became payable.

(b) According to the information and explanations

given to us, the Company had no disputed

outstanding statutory dues as at 31st March,

2013, except as enumerated here under:

(x) The company has accumulated losses of

`10402.59 lacs as at balance sheet date which

does not exceed 50% of its net worth. It has not

incurred any cash losses in the current financial

year or in immediately preceding financial year.

(xi) As per the information and explanations given to

us, the Company has not defaulted in the

repayment of dues to financial institutions, banks

or debenture holders during the year. The

company has so far not issued any debentures.

(xii) As per the information and explanations given to

us, the Company has not granted any loan or

advance on the basis of security by way of pledge

of shares, debentures and other securities.

[` in Lacs]

Nature of the Dues Amount Forum where dispute is pending

Stamp Duty on Deed of Mortgage(Refer note 2.31 of the Financial Statement)

F.Y. 2008-2009 19000.00 Hon’ble High Court

Trade Tax / VAT / Entry Tax(Refer note 2.32 of the Financial Statement)

F.Y. 2005-2006 21.60 Joint Commissioner (Appeals)


F.Y. 2007-2008 18.16 Additional Commissioner (Appeals)

F.Y. 2007-2008 875.42 Additional Commissioner ( Appeals)





Income Tax Demand notice(Refer note 2.33 of the Financial Statement)

A.Y. 2007-2008 to 2009-2010 558.95 Income-tax Appellate Tribunal,

Lucknow Bench

A.Y. 2010-2011 98.64 Commissioner of Income-tax (Appeals)

A.Y. 2008-2009 79.45 (*) See note below

Excise 166.00 Central Excise & Service Tax Appellate

(Refer note 2.34 of the Financial Statement) Tribunal

(*)The company in the process of preferring appeal before appropriate authorities


11

(xiii) The provisions of any special statute applicable

to chit fund / nidhi / mutual benefit fund /

societies are not applicable to the Company.

(xiv) In our opinion and according to the information

and explanations given to us, the Company does

not deal or trade in shares, securities, debentures

and other investments.

(xv) In our opinion, the terms and conditions on which

the Company has not given guarantees for loans

taken by other from banks or financial

institutions.

(xvi) In our opinion and according to the information

and explanations given to us, on an overall basis,

the term loans have been applied for the purposes

for which they were obtained.

(xvii) In our opinion and according to the information

and explanations given to us, and on an overall

examination of the Balance Sheet of the Company,

we report that company has utilised funds to the

tune of ̀ 48793.15 lacs raised on short term basis

for long term investments.

(xviii) The Company has not made preferential allotment

of shares to companies covered in the register

maintained under Section 301 of the Companies

Act, 1956.

(xix) The Company has not issued any debentures

during the year under review.

(xx) The Company has not raised any money by public

issue during the year.

(xxi) According to the information and explanations

given to us, no fraud on or by the Company has

been noticed or reported during the year under

review.

FOR G. K. CHOKSI & CO.



SANDIP A. PARIKH

Partner


Place : Ahmedabad

Date : 26th June, 2013

12


BALANCE SHEET AS AT MARCH 31, 2013[` in Lacs]

Particulars Notes March 31, 2013 March 31, 2012

EQUITY AND LIABILITIESShareholders’ FundShare Capital 2.1 80,005.71 80,005.71Reserves and Surplus 2.2 (10,402.59) (12,018.85)

–––––––––––––– ––––––––––––––69,603.12 67,986.86

––––––––––––––Non-Current LiabilitiesLong term borrowings 2.3 2,825.57 33,115.75Deferred tax liabilities (Net) 2.4 0.00 0.00Long term provisions 2.5 1,113.56 990.79

–––––––––––––– ––––––––––––––3,939.13 34,106.54

––––––––––––––Current liabilitiesShort term borrowings 2.6 1,24,651.33 63,028.29Trade payables 2.7 6,229.25 5,425.83Other current liabilities 2.8 19,426.94 55,709.83Short term provisions 2.9 361.59 656.96

–––––––––––––– ––––––––––––––1,50,669.11 1,24,820.91–––––––––––––– ––––––––––––––

Total: 2,24,211.36 2,26,914.31–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––

ASSETSNon-current assetsFixed assets

Tangible assets 2.10 1,36,459.24 1,45,267.52Intangible assets 2.11 3,490.75 4,737.45Capital work-in-progress 2.12 512.18 618.14Intangible assets under development 2.13 53.85 53.85

–––––––––––––– ––––––––––––––1,40,516.02 1,50,676.96

––––––––––––––Non-current investments 2.14 7,350.00 7,350.00Long term - loans and Advances 2.15 153.54 52.31Other non-current assets 2.16 15.05 50.66

Current AssetsInventories 2.17 6,428.30 4,846.99Trade receivables 2.18 59,770.15 47,725.25Cash & cash equivalents 2.19 433.18 8,407.04Short term - Loans & advances 2.20 9,439.06 7,695.04Other current assets 2.21 106.06 110.06

–––––––––––––– ––––––––––––––76,176.75 68,784.38

–––––––––––––– ––––––––––––––Total: 2,24,211.36 2,26,914.31

–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––Significant Accounting Policies 1Notes forming part of accounts 2

The accompanying notes are an integral part of the financial statements.

As per our report of even dateFOR G. K. CHOKSI & CO. FOR AND ON BEHALF OF THE BOARD[Firm Registration No. 101895W]Chartered Accountants

SANDIP A. PARIKH B. D. SINHA ALOK TANDON V. P. KAUSHIKPartner Director Director Managing DirectorMembership No. 40727

RAJAN CHOWDHRY BIPIN C. PHULORIADirector & Chief Financial Officer Company Secretary

Place : New Delhi Place : New DelhiDate : 26th June, 2013 Date : 26th June, 2013


13

STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED MARCH 31, 2013[` in Lacs]

Particulars Notes March 31, 2013 March 31, 2012

INCOME

Revenue from operations 2.22 1,35,258.97 1,27,820.78

Less : Excise duty 1,473.56 1,265.26–––––––––––––– ––––––––––––––1,33,785.41 1,26,555.52

Other Income 2.23 805.31 1,150.12–––––––––––––– ––––––––––––––

Total Revenue 1,34,590.72 1,27,705.64––––––––––––––––––––––––––––

EXPENSES

Cost of materials consumed 2.24 89,415.88 83,173.53

Changes in inventories 2.25 (1,301.03) (827.03)

Employee benefits expenses 2.26 3,909.23 3,896.93

Finance costs 2.27 13,958.94 12,856.24

Depreciation and amortization expenses 11,740.87 11,263.36

Manufacturing and other expenses 2.28 14,830.77 14,421.76

Prior period adjustments 2.29 (3.39) (44.19)–––––––––––––– ––––––––––––––

Total Expenses 1,32,551.27 1,24,740.60–––––––––––––– ––––––––––––––

Profit for the year before Tax 2,039.45 2,965.04

Tax Expenses

Current Tax 423.19 617.10

[Including short Provision of Tax `13.19 lacs

(P.Y. Net of excess provision of tax `2.91 lacs.)]

Deferred Tax 0.00 0.00–––––––––––––– ––––––––––––––

423.19 617.10–––––––––––––– ––––––––––––––

Profit/(Loss) for the period carried to Balance sheet 1,616.26 2,347.94–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––

Earnings per equity share:

Basic and diluted `0.20 `0.29

Significant Accounting Policies 1

Notes forming part of accounts 2






14


CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2013[` in Lacs]

Particulars 2012-2013 2011-2012

A Cash Flow from Operating Activities:Net Profit Before Tax, after Prior Period Adjustments 2,039.45 2,965.05Adjustment for:Depreciation 11,740.88 11,263.36Interest and Hedging Cost (Net) 13,958.94 12,856.24(Profit) / Loss on sale of assets (Net) 351.52 507.67(Profit) / Loss on Sale of Investments (27.08) 538.50Interest Income (561.79) (929.92)Prior Period Depreciation (9.58) –

–––––––––––––– ––––––––––––––Operating Profit before Working Capital Changes 27,492.34 27,200.90

–––––––––––––– ––––––––––––––Adjustment for:Inventories (1,581.31) (997.38)Trade and Other Receivables (13,853.14) (23,133.36)Trade Payable and Provisions (35,022.61) 17,259.88

–––––––––––––– ––––––––––––––Cash Generated from Operations (22,964.72) 20,330.04

–––––––––––––– ––––––––––––––Income Tax Paid (Net of Refunds) (725.15) (58.61)

–––––––––––––– ––––––––––––––Net Cash from Operating Activities [A] (23,689.87) 20,271.43

–––––––––––––– ––––––––––––––B Cash Flow from Investing Activities

Purchase of Fixed Assets including C.W.I.P. (2,041.45) (3,381.65)Proceeds from Sale of Fixed Assets 119.55 25.65Proceeds from Sale of Investments (Net) 27.08 6,840.00Interest Received 564.39 1,028.98

–––––––––––––– ––––––––––––––Net Cash from Investing Activities [B] (1,330.43) 4,512.98

–––––––––––––– ––––––––––––––C Cash Flow from Financing Activities

Repayment of long term borrowings (30,290.17) (41,893.44)Proceeds from short term borrowings/cash credit 61,623.04 28,028.29Repayment of short term borrowings/cash credit – (2,500.00)Interest Paid (14,286.43) (13,083.59)Proceeds from Issue of share capital – –

–––––––––––––– ––––––––––––––Net Cash from Financing Activities [C] 17,046.44 (29,448.74)

–––––––––––––– ––––––––––––––Net Increase/(Decrease) in Cash & Cash Equivalents [A+B+C] (7,973.86) (4,664.33)

–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––Cash and Cash Equivalents as at the beginning of the year 8,407.04 13,071.37Cash and Cash Equivalents as at the close of the year 433.18 8,407.04

–––––––––––––– ––––––––––––––Net Increase/(Decrease) in Cash and Cash Equivalents (7,973.86) (4,664.33)

–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––

Note:(a) The above cash flow statement has been prepared under the ‘Indirect Method’ as set out in Accounting Standard -3 on

cash flow statement issued by the ICAI.(b) Figures in brackets denotes cash outflow.







15

NOTE-1 : SIGNIFICANT ACCOUNTING POLICIES

1.1 Basis Preparation of Financial Statements

The financial statements are prepared under the

historical cost convention on accrual basis and in

accordance with the requirements of the

Companies Act, 1956 and in compliance with the

applicable accounting standards referred to in sub-

section (3C) of the section 211 of the said Act. The

accounting policies, except otherwise stated, have

been consistently applied by the Company.

1.2 Use of Estimates

The presentation of financial statements in

conformity with the Generally Accepted Accounting

Principles requires estimates and assumptions to

be made that affect the reportable amount of assets

and liabilities on the date of financial statement

and the reportable amount of revenue and

expenses during the reporting period. Differences

between the actual results and estimates are

recognised in the year in which the results are

known / materialised.

1.3 Revenue Recognition

(a) Sales

Sale is recognised upon the transfer of

significant risks and reward of ownership to

the customers. Sales are stated at net of

discount and rebates allowed.

(b) Interest

Interest income is recognized on a time

proportion basis taking into account the

amount outstanding and rate applicable.

(c) Subsidy from Government under Group

Concession Scheme

The Subsidy on Urea and Equated Freight from

the Government of India under Group

Concession Scheme are recognised as revenue

on the basis of sales. Further, subsidy is

recognized based on management’s

estimation taking into consideration the

guidelines, policies, instructions and

clarifications given by the Government and

input price escalation/de-escalation.

1.4 Fixed Assets

(a) F ixed assets are carried at cost less

depreciation and impairment loss, if any. The

cost of fixed assets includes cost of acquisition

and directly attributable cost for bringing the

assets in an operational condition for their

intended use including pre-operative

expenditure till commencement of

commercial production and other incidental

expenses subsequent thereto up-to the date

of stabilisation of production but excluding

refundable taxes and duties thereon, if any.

(b) Intangible assets are recognised as per the

criteria specified in Accounting Standard - 26

“Intangible Assets” issued by the Institute of

Chartered Accountants of India and are

amortised over the useful life of the assets or

ten years, whichever is earlier.

(c) Machinery Spares / Standby Equipments

which can be used only in connection with an

item of Fixed Asset and whose use is expected

to be irregular are capitalized.

(d) Capital work- in-progress is carried at cost and

also includes stock at site, material in transit

and capital advances.

1.5 Borrowing Costs

Borrowing costs that are attributable to the

acquisition or construction of qualifying assets are

capitalised as part of the cost of assets. A qualifying

asset is one that necessarily takes substantial period

of time to get ready for intended use.

All other borrowing costs are charged to revenue.

1.6 Depreciation

(a) Depreciation on Fixed Assets has been

provided on Straight Line Method at the rates

and manner specified under the Schedule XIV

(as amended) to the Companies Act, 1956. The

plant is a continuous process plant and the

depreciation is charged accordingly.

Fixed Assets costing up-to ` 5,000/- are being

fully depreciated in the year of acquisition.

16


(b) Depreciation on subsequent replacement of

Catalyst is equally charged over the estimated

useful lives as technically assessed.

(c) Depreciation on Machinery spares / Standby

Equipments has been charged over the

residual life of related Plant and Machinery.

(d) Depreciation on assets discarded from active

use has not been charged.

(e) Value of Leasehold Land and Site Development

is written off over the period of lease.

1.7 Impairment of Assets

An asset is impaired if there are sufficient indication

that the carrying cost would exceed the recoverable

amount of cash generating asset. In that event an

impairment loss so computed would be recognised

in the accounts in the relevant year.

1.8 Foreign Currency Transactions

(a) Foreign currency transactions are recorded at

exchange rates prevailing on the date of such

transactions.

(b) Foreign currency monetary assets and

liabilities remaining unsettled at the year end

are translated at the closing exchange rate.

Gain and losses on account of exchange

difference either on settlement or on

translation is recognized in the relevant head

of Profit & Loss Account.

(c) Non-monetary items denominated in foreign

currency are reported using exchange rate

prevailing on the date of transactions.

(d) In respect of Foreign Currency Term Loans,

interest cost incurred on account of hedging

is being charged to Profit & Loss Account. Any

profit or loss on settlement / cancellation of

forward contract is recognized as an income

or expense for the year in which they arise.

1.9 Investments

Investments are classified as long term or current.

Long-term investments are stated at acquisition

cost. Provision for diminution in the value of long-

term investments is made only if such a decline is

other than temporary. Current investments are

valued at lower of cost and market rate on

individual investment basis.

1.10 Inventories

Valuation of stock is done as follows:

(a) Raw Material, At lower of Cost and

Packing Material Net Realisable Value

and Stores &

Spares

(b) Work-in-Progress At lower of Cost

& Finished Goods (raw material and

appropriate proportion

of overheads) and Net

Realisable Value

(c) Scrap At Estimated

Realisable Value

Notes:

(i) Cost of inventories is determined on the basis of

weighted average method.

(ii) Realisable value of manufactured finished goods is

the Concession Price as determined as per the norms

of the Fertilizer Industry Co-ordination Committee.

1.11 Employees Benefits

Gratuity, Leave Encashment and Sick Leave liability

is accounted for on accrual basis computed as per

actuarial valuation made at the end of each

financial year in accordance with AS-15 (Revised).

1.12 Taxation

(a) Current Tax

Income Tax expense comprises of current

tax. Provision for taxation is ascertained on

the basis of assessable profits computed in

accordance with the provisions of Income

Tax Act, 1961. However, where the tax is

computed in accordance with the provisions

of Section 115 JB of the Income Tax Act,

1961 as the Minimum Alternate Tax (MAT),

it is charged off to the Profit and Loss

Account of the relevant year. However,

credit of MAT would be taken within the

permissible time period when the

company’s profits would be subject to

normal income tax rates.


17

(b) Deferred Tax

Deferred Income Tax (expense or credit) is

recognised for the current year timing

differences between taxable income and

accounting income for the year and reversal

of timing difference of earlier years.

Deferred Tax Assets in respect of carry

forward of unabsorbed depreciation and tax

losses are recognised to the extent there is

virtual certainty of their realisation against

future taxable profits. However, in case of

other items, recognition is done on the basis

of reasonable certainty.

Deferred Tax assets and liabilities are

measured using the tax rates and the tax

laws that have been enacted or substantially

enacted at the balance sheet date.

1.13 Pre Project Expenditure

The expenses on pre-feasibility study reports,

market survey reports, techno-economic

feasibility reports etc. on new projects is allocated

to the fixed assets on completion of the projects.

Where the projects are proved infructuous they

are charged off in the year in which the decision

is taken to scrap the same by Competent

Authority.

1.14 Lease

Assets taken on lease under which, all risks and

rewards of ownership are effectively retained by

the lessor are classified as operating lease. Lease

payments under operating lease are recognized

as expense on accrual basis in accordance with

the respective lease agreements.

1.15 Provisions, Contingent Liabilities and

Contingent Assets (AS-29)

Provisions involving substantial degree of

estimation in measurement are recognised when

there is a present obligation as a result of past

events and it is probable that there will be an

outflow of resources. Contingent liabilities are not

recognised but are disclosed in the notes.

Contingent assets are neither recognised nor

disclosed in the financial statements.

1.16 Revenue Recognition in the Event of Uncertainty

The following items are recognised on realization

basis:

(a) Claims for

(i) Shortage/Damages on movement of

fertilizers

(ii) Under-charges on freight paid to Railways

(iii) Rebate on freight from Railways

(iv) Interest on overdue payments.

(v) Insurance claims

(vi) Refund of Purchase Tax, Sales Tax,

Turnover Tax, Customs, Excise and

Electricity Duties excess charged.

(b) Penalties and Compensation

(c) Difference in Service Charges payable to

KRIBHCO.

18


NOTES - 2 : NOTES FORMING PART OF ACCOUNTS

[` in Lacs]

Particulars March 31, 2013 March 31, 2012

2.1 SHARE CAPITAL

(a) Authorised

100,00,00,000 (P.Y. 100,00,00,000) Equity Shares of `10/- each 1,00,000.00 1,00,000.00–––––––––––––––– –––––––––––––––––––––––––––––––– ––––––––––––––––

(b) Issued, Subscribed and fully Paidup

80,00,57,143 (P.Y. 80,00,57,143) Equity Shares of `10/-

each Fully Paid up 80,005.71 80,005.71–––––––––––––––– –––––––––––––––––––––––––––––––– ––––––––––––––––

Note :

During the period of five financial years immediately preceeding the Balance Sheet date, the company has not:

(i) allotted any fully paidup equity shares by way of bonus shares;

(ii) allotted any equity shares pursuant to any contract without payment being received in cash;

(iii) brought back any equity shares.

(c) Reconciliation of number of shares

Number of Equity Shares

March 31, 2013 March 31, 2012

As at April 1, 2012 80,00,57,143 80,00,57,143

Add

Shares issued for Cash or Right Issue or Bonus 0 0

Exercise of Share Option under ESOS / ESOP 0 0

Shares issued in Business Combination 0 0–––––––––––––––– –––––––––––––––– 80,00,57,143 80,00,57,143

Less

Shares bought back / Redemption etc. 0 0––––––––––––––– –––––––––––––––

As at March 31, 2013 80,00,57,143 80,00,57,143––––––––––––––– –––––––––––––––––––––––––––––– –––––––––––––––

(d) Rights, Preferences and Restrictions

The authorised share capital of the Company has only one class of shares referred to as ‘equity shares’ having a par

value of `10/- each. The rights and privileges to equity shareholders are general in nature and defined under the

Articles of Association of the Company and as allowed under Companies Act, 1956.

The equity shareholders shall have:

(i) right to vote in shareholder’s meeting. Where voting is to be made on a show of hands, every member

present in person and holder of equity share, shall have one vote and in case of poll, the voting rights shall be

in proportion to the shares in the paid up capital of the Company;

(ii) right to receive dividend in proportion to the amount of capital paid up on the shares held.

The shareholders are not entitled to exercise any voting right either personally or proxy at any meeting of the

Company in cases calls or other sums payable have not been paid.

If the Company shall be wound up the distribution of available assets/losses to the equity shareholders shall be in

proportion to the paid up capital.

Particulars


19

Particulars

(e) Details of Shareholdings

Number of Shares held by Holding Enterprise

Number of Equity Shares % of Holding

March 31, 2013 March 31, 2012 March 31, 2013 March 31, 2012

Krishak Bharati Co. Op. Ltd. 68,00,34,286 68,00,34,286 85.00 85.00

Shareholders holding more than 5% shares

Number of Equity Shares Percentage (%)


Krishak Bharati Co. Op. Ltd. 68,00,34,286 68,00,34,286 85.00 85.00

STL Fertilizers Pvt. Ltd. 12,00,22,855 12,00,22,855 15.00 15.00

(f) The company has not issued any share capital which may be used for specific purpose as on balance sheet date.

(g) The company does not have any shares which have been reserved for issue under options and contract / commitments

for the sale of share / disinvestment.

(h) The company has not issued any preference shares either convertible in to equity or non convertible.

(i) The Company does not have any calls in arrears / unpaid calls and has not forfeited any shares at balance sheet date.

2.2 RESERVES AND SURPLUS [` in Lacs]


Surplus / (Deficit) in Statement of Profit & Loss

Balance as per previous financial statements (12,018.85) (14,366.80)

Add : Profit for the year 1,616.26 2,347.95

–––––––––––––– ––––––––––––––

Balance available for appropriation (10,402.59) (12,018.85)

Less : Appropriations 0.00 0.00

Net Surplus / (Deficit) (10,402.59) (12,018.85)–––––––––––––––– –––––––––––––––––––––––––––––––– ––––––––––––––––

2.3 LONG TERM BORROWINGS [` in Lacs]

Non-current portion Current maturities


Secured

Term Loans from Banks

In Foreign Currency 0.00 0.00 0.00 22,684.09

(Refer note 1 below)

In Rupee Currency

Syndicate Bank 0.00 1,880.00 0.00 3,780.00(Refer note 1 below)

WBSC Bank Ltd. 0.00 0.00 0.00 5,554.00


Particulars

Particulars

20


[` in Lacs]

Particulars March 31, 2013 March 31, 2012 March 31, 2013 March 31, 2012

2.3 LONG TERM BORROWINGS (Contd...)

Vijaya Bank 0.00 15,000.00 15,000.00 0.00


Axis Bank Ltd. 0.00 12,000.00 0.00 0.00


Union Bank 0.00 0.00 0.00 15,000.00


HDFC Bank 0.00 0.00 0.00 5,880.00


0.00 28,880.00 15,000.00 52,898.09

Unsecured

UP Trade Tax Loan in lieu of Trade

Tax Deferment 2,825.57 4,235.75 1,410.18 0.00

2,825.57 33,115.75 16,410.18 52,898.09

Less:

Amount disclosed under the head

“Other Current Liabilities” 0.00 0.00 16,410.18 52,898.09

Total : 2,825.57 33,115.75 0.00 0.00

Secured Loans

1. ` NIL (Previous Year ` 33,898.09 lacs) Secured by a First pari passu charge over all the fixed assets of the Company

including a pari passu priority first mortgage and charge on all the company’s fixed assets, present and future and also

assignment of all the company’s right, title, benefit and interest, in and under all the permits, licenses, authorisations

etc. and further guaranteed by joint and several corporate guarantees of KRIBHCO and Shyam Basic Infrastructure

Projects Pvt. Ltd.

2. ` 15,000 lacs term Loan (Previous Year ̀ 42,000 lacs) secured by second pari passu charge over the fixed assets of the

company and further guaranteed by joint and several corporate guarantees of KRIBHCO.

3. Term loan from HDFC Bank ` NIL (Previous Year ` 5,880) secured against pledge of 7.95% Fertilizer Company - Govt.

of India Bond of face value of ̀ NIL (Previous Year ̀ 2,100 lacs) 7.00% Fertilizer Company - Govt. of India Bonds of face

value of ` NIL(Previous year ` 2,100 lacs) and 6.65% Fertilizer Company-Govt. of India Bonds of face value of ` NIL

(Previous year ` 3,150 lacs).

Terms of Repayment of Loans

Vijaya Bank Loan is repayable by way of Bullet payment on 24th February, 2014 i.e three years from the date of

first drawal.

Unsecured Loan

Guranteed by Bank Guarantee.The financial assistance has been provided by the Pradeshiya Industrial and Investment

Corporation of Uttar Pradesh Ltd. (PICUP) under Trade Tax Deferment Scheme of State Govt. of U.P. and is re-payable in

yearly installment of `1,410.18 lacs, ` 924 lacs, `1,046.40 lacs and ` 855.17 lacs which falls due on 31st May, 2013,

31st May, 2014, 31st May, 2015 and 31st May, 2016.


21

[` in Lacs]


2.4 DEFERRED TAX LIABILITIES (NET)

The Company estimates deferred tax/(charge) using the applicable rate of taxation based on the impact of timing

difference between financial statements and estimated taxable income for the current year.

Deferred Tax Liabilities

Difference of book depreciation and tax depreciation 20,029.20 17,836.67

Deferred Tax Assets

Disallowance u/s. 43(b) allowable on payment 423.54 435.06

Unabsorb depreciation 19,605.66 17,401.61–––––––––––––– ––––––––––––––

20,029.20 17,836.67–––––––––––––– ––––––––––––––

Net Deferred Tax Liability / (Asset) 0.00 0.00–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––

Deferred Tax Assets in respect of unabsorbed depreciation have been recognized to the extent of net deferred tax

liability on the concept of virtual certainty, based on convincing evidences, as envisaged in Accounting Standard-22

(Accounting of Taxes on Income) and further clarifications/interpretations issued by The Institute of Chartered

Accountants of India.

2.5 LONG TERM PROVISIONS

For Employee Benefits

Gratuity 840.52 724.65

Privileged / Earned Leave 312.83 321.53

Sick Leave 58.57 37.92–––––––––––––– ––––––––––––––

1,211.92 1,084.10–––––––––––––– ––––––––––––––

Less :

Amount disclosed under the head “Short Term Provisions”

Gratuity 54.26 58.94

Privileged / Earned Leave 44.10 34.37–––––––––––––– ––––––––––––––

98.36 93.31–––––––––––––– ––––––––––––––

Total : 1,113.56 990.79–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––

2.6 SHORT TERM BORROWINGS

Working Capital /Short Term Loans

Secured

State Bank of India 13,500.00 0.00

State Bank of India - Cash Credit 1,484.09 0.00(Refer note 1 below)

State Bank of Travancore 15,000.00 0.00(Refer note 2 below)

IDBI Bank Ltd. 11,500.00 0.00(Refer note 3 below)

HDFC Bank - Cash Credit 8,639.07 528.29(Refer note 4 below) –––––––––––––– ––––––––––––––

50 123.16 528.29–––––––––––––– ––––––––––––––

22


[` in Lacs]


2.6 SHORT TERM BORROWINGS (Contd....)

Unsecured

Federal Bank - OD 6,819.98 7,500.00

Rabobank International 0.00 10,000.00

Union Bank of India 30,700.00 30,000.00

Vijaya Bank 0.00 7,500.00

Corporation Bank 14,400.00 0.00

State Bank of Bikaner and Jaipur 17,500.00 7,500.00–––––––––––––– ––––––––––––––

69,419.98 62,500.00–––––––––––––– ––––––––––––––

Others

Special Banking Arrangement (FICC)

State Bank of India 5,108.19 0.00–––––––––––––– ––––––––––––––

Total : 1,24,651.33 63,028.29–––––––––––––––– –––––––––––––––––––––––––––––––– ––––––––––––––––

Notes:

Secured Loan

1. Working Capital Demand Loan amounting to ` 13,500 Lacs (P.Y. ` NIL) and Cash Credit ` 1,484.09 Lacs (P.Y. ` NIL) from

State Bank of India is secured by First pari-passu charge on all current assets of the Company by way of hypothecation

of stocks, stores, book-debts and other current assets and further guaranteed by corporate guarantee of Krishak Bharati

Cooperative Limited.

2. Short Term Loan amounting to ` 15,000 Lacs ( P.Y ` NIL ) from State Bank of Travancore is secured by Second pari-passu

charge on the fixed assets of the Company both present and future and further guaranteed by corporate guarantee of

Krishak Bharati Cooperative Limited.

3. Working Capital Demand Loan amounting to ` 11,500 Lacs (P.Y ` NIL ) from IDBI Bank Ltd. is secured by First pari-passu

charge on entire current assets both present and future and further guaranteed by corporate guarantee of

Krishak Bharati Cooperative Limited.

4. Cash Credit amounting to ` 8,639.07 Lacs (P.Y ` 528.29 Lacs) from HDFC Bank is secured by exclusive charge on all

current assets of the Company by way of hypothecation of stocks, stores, book-debts and other current assets and

further guaranteed by corporate guarantees of Krishak Bharati Cooperative Limited and Shyam Basic Infrastructure

Projects Pvt. Ltd.

Unsecured Loan

` 69,419.98 lacs (Previous Year ` 62,500 lacs) is guaranteed by corporate guarantee of Krishak Bharati Cooperative Limited.

` 5,108.19 (P.Y. ` NIL) is in the nature of special banking finance against receivable from FICC.

Terms of Repayments

State Bank of India Repayable in ninety days

State Bank of Travancore Repayable within one hundred and eighty days from the date of disbursement.

IDBI Bank Ltd. Repayable within ninety days from the date of disbursement.

Union Bank of India Repayable within ninety to one hundred and eighty days from the date of each disbursement.

Corporation Bank Repayable within one year from the date of each disbursement.

State Bank of Bikaner & Repayable within one hunded and eighty days to twelve months from the date of each

Jaipur disbursement.


23

[` in Lacs]


2.7 TRADE PAYABLES

For Goods and Services

Related Party 1,088.07 948.26

(Refer note 2.38)

Others 5,141.18 4,477.57

(Refer note 2.45 for dues to Micro and Small Enterprises) –––––––––––––– ––––––––––––––

Total : 6,229.25 5,425.83–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––

2.8 OTHER CURRENT LIABILITIES

Current Maturities of Long Term Debt 16,410.18 52,898.09

Interest Accrued But not due 89.69 178.81

Interest Accrued but due 0.00 68.04

Hedging cost payable 0.00 170.33

Deposits from contractors and others 1,075.24 975.82

Advances from Customers 1,019.67 919.41

Other Payables

Employees and others 270.88 57.53

Statutory dues 561.28 441.80

–––––––––––––– ––––––––––––––

832.16 499.33

–––––––––––––– ––––––––––––––

Total : 19,426.94 55,709.83–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––

Amount payable to related party ` 0.89 lacs (P.Y. ` NIL)

2.9 SHORT TERM PROVISIONS

Provision for Employee Benefits

Gratuity 54.26 58.94

Privileged / Earned Leave 44.10 34.37

–––––––––––––– ––––––––––––––

98.36 93.31

–––––––––––––– ––––––––––––––

Others

For Taxation 260.32 562.29

(Net of Advance Tax)

For Excise on closing Stock 2.91 1.36

–––––––––––––– ––––––––––––––

263.23 563.65

–––––––––––––– ––––––––––––––

Total : 361.59 656.96–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––

24

AN

NU

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EP

OR

T 2

01

2-1

38

th

2.10 TANGIBLE ASSETS

[` in Lacs]

GROSS BLOCK AT COST DEPRECIATION / AMORTISATION NET BOOK VALUE

As at Deletions/ As at Up to For the Deletions/ Up to As at As at

Description of Assets April 01, Additions Adjustment March 31, March 31, Year Adjustment March 31, March 31, March 31,

2012 2013 2012 2013 2013 2012

Leasehold land & Site

Development 9,744.30 – – 9,744.30 815.10 131.35 – 946.45 8,797.85 8,929.20

Building

Factory Building 2,720.96 87.37 – 2,808.33 520.71 93.46 – 614.17 2,194.16 2,200.25

Non Factory Building 1,945.86 303.89 – 2,249.75 181.52 32.60 – 214.12 2,035.63 1,764.34

Plant & Machinery

Plant & Machinery 1,90,414.20 1,687.06 2,271.97 1,89,829.29 58,554.72 10 174.32 274.97 68,454.07 1,21,375.22 1,31,859.48

Capital Spares 431.36 22.21 – 453.57 141.90 23.95 – 165.85 287.72 289.46

Furniture & Fixture 130.06 3.85 – 133.91 45.59 7.36 – 52.95 80.96 84.47

Office Equipments 99.47 4.68 0.56 103.59 31.24 4.63 0.16 35.71 67.88 68.23

Computer 129.26 14.11 – 143.37 76.26 21.44 – 97.70 45.67 53.00

Vehicle 33.52 24.24 – 57.76 14.43 5.06 – 19.49 38.27 19.09

Assets Retired from

Active Use – 1,610.33 74.45 1,535.88 – – – – 1,535.88 –

Total : 2,05,648.99 3,757.74 2,346.98 2,07,059.75 60,381.47 10,494.17 275.13 70,600.51 1,36,459.24 1,45,267.52

Previous Year 1,99,974.24 6,261.72 586.96 2,05,648.99 50,418.44 10,016.65 53.73 60,381.47 1,45 267.52

KR

IBH

CO

SH

YA

M F

ER

TIL

IZE

RS

LIM

ITE

D

25

2.11 INTANGIBLE ASSETS

[` in Lacs]

Description of Assets GROSS BLOCK AT COST DEPRECIATION / AMORTISATION NET BOOK VALUE

As at Deletions/ As at Up to For the Deletions/ Up to As at As at

April 01, Additions Adjustment March 31, March 31, Year Adjustment March 31, March 31, March 31,

2012 2013 2012 2013 2013 2012

Intangible Assets 12,466.98 – – 12,466.98 7,729.53 1,246.70 – 8,976.23 3,490.75 4,737.45

(Refer note below)

Total : 12,466.98 – – 12,466.98 7,729.53 1,246.70 – 8,976.23 3,490.75 4,737.45

Previous Year 12,466.98 – – 12,466.98 6,482.83 1,246.70 – 7,729.53 4,737.45

Note :

Intangible Assets are in the nature of Gas Price Right, Locational Benefits in terms of present/future products, Trained Manpower etc. as identified by the independent valuer

M/s. Projects Developments of India Ltd. (PDIL), a Government of India undertaking, in terms of its valuation report for the purpose of determining fair value of individual assets

taken over while acquiring the 8.64 lakhs MT Urea Plant at Shahjahanpur, Uttar Pradesh.

26

AN

NU

AL R

EP

OR

T 2

01

2-1

38

th

2.12 CAPITAL WORK IN PROGRESS

[` in Lacs]

As at Deductions / As at

Particulars April 1, 2012 Additions Adjustment Capitalised March 31, 2013

Tangible Assets

Factory Building 34.87 74.22 0.36 87.52 21.21

Non-Factory Building 0.00 298.90 0.00 298.90 0.00

34.87 373.12 0.36 386.42 21.21

Plant & Equipments 180.14 1,377.00 4.29 1,515.47 37.38

Revamp

Urea Plant 47.54 0.00 0.00 0.00 47.54

Ammonia Plant 294.31 50.46 0.00 0.00 344.77

Railway Sidings 61.28 0.00 0.00 0.00 61.28

403.13 50.46 0.00 0.00 453.59

Total: 618.14 1,800.58 4.65 1,901.89 512.18

Capital Work-in-Progress includes professional fee of ` 247.29 lacs (Previous year ` 196.83 lacs) incurred on feasibility study of the following projects, which

could be adjusted in terms of the Accounting Policy no.13 of note 1.

(i) Construction of Private Railway Siding at Shahjahanpur Plant.

(ii) Revamping of Ammonia and Urea Plant.

2.13 INTANGIBLE ASSET UNDER DEVELOPMENT

[` in Lacs]

As at Deductions / As at

Particulars April 1, 2012 Additions Adjustment Capitalised March 31, 2013

ERP Software 53.85 0.00 0.00 0.00 53.85

Total: 53.85 0.00 0.00 0.00 53.85


27

[` in Lacs]


2.14 NON CURRENT INVESTMENTS(Unquoted, Non Trade)

In Bonds issued by Government of India

6.65% Fertilizer Company-Special Bond 2023 3,150.00 3,150.00



–––––––––––––– ––––––––––––––

Total : 7,350.00 7,350.00–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––

The investments amounting to ` 7,350 lacs (P.Y. ` 14,700 lacs)

was pledged against term loan from HDFC Bank. The Company

is in the process of releasing the same.

2.15 LONG TERM LOANS AND ADVANCES

(Unsecured, considered good unless otherwise stated)

Capital Advances 129.12 32.47

Security Deposits 4.65 4.17

Other Loans and Advances

Employees 19.77 15.67

–––––––––––––– ––––––––––––––

Total : 153.54 52.31–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––

Amount receivable from related parties, directors and officers ` NIL (P.Y. ` NIL).

2.16 OTHER NON CURRENT ASSETS :(Unsecured, Considered good, unless otherwise stated)

VAT Input Receivables 1.43 0.00

Fixed Deposits 1.90 34.81

(With maturity of more than 12 months)

Prepaid Expenses 11.72 15.85(To be settled after 12 months)

–––––––––––––– ––––––––––––––

Total : 15.05 50.66–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––

2.17 INVENTORIES(As taken, valued and certified by the Management)

Stock in Process 29.69 33.22

Finished Goods 667.58 646.80

Finished Goods in Transit 1,707.15 423.37

Stores and Spares 4,023.88 3,743.60

–––––––––––––– ––––––––––––––

Total : 6,428.30 4,846.99–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––

Inventory items have been valued considering the significant accounting policy No. 1.10 disclosed in Note No. 1 to these

financial statement.

28


[` in Lacs]


Breakup of Inventories

Stock in Process

Ammonia 27.30 29.55

Urea 2.39 3.67–––––––––––––– ––––––––––––––

29.69 33.22–––––––––––––– ––––––––––––––

Finished goods

Ammonia 119.10 418.02

Urea 548.48 228.78–––––––––––––– ––––––––––––––

667.58 646.80–––––––––––––– ––––––––––––––

Finished goods in Transit

Ammonia 0.00 0.00

Urea 1,707.15 423.37–––––––––––––– ––––––––––––––

Total: 1,707.15 423.37–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––

2.18 TRADE RECEIVABLE

(Unsecured, considered good, unless otherwise stated)

Debt outstanding for the period exceeding six months

Claims due from Government of India 5,929.01 7,010.61

Others 29.74 24.62

(Refer note 1 below) –––––––––––––– ––––––––––––––

5,958.75 7,035.23–––––––––––––– ––––––––––––––

Others debts

Claims due from Government of India 52,534.45 40,340.18

Others 1,276.95 349.84

(Refer note 2 below) –––––––––––––– ––––––––––––––

53,811.40 40,690.02–––––––––––––– ––––––––––––––

Total : 59,770.15 47,725.25–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––

Notes:

1. The above trade receivables includes ` 22.71 lakhs is recoverable from M/s B.S. Trading Co., Uttarakhand against whom a legal

suit for recovery has been filed by the company under Negotiable Instruments Act, 1881. A civil suit has also been filed against

M/s. B.S.Trading Co., for recovery of the outstanding with interest. The suit was admitted and has been decreed in favour of the

company. Therefore the said debts have been considered as good for recovery and no provision for doubtful recovery in respect

thereof has been made.

2. Amount due from associate enterprise Krishak Bharati Co. Op. Ltd. (Related party) ` 3.15 lacs (P.Y. ` 12.37 lacs)

3. The amount dues by :

– Directors NIL NIL

– Officers either severally or jointly with other persons NIL NIL

– Firms or private companies in which any director is partner or director or a member. NIL NIL


29

[` in Lacs]


2.19 CASH AND CASH EQUIVALENTS

Balances with scheduled banks

Current / Cash Credit accounts 183.79 560.68

Fixed Deposits

With maturity of less than 3 months 0.00 7,000.00

Cheques / Demand Drafts on hand 185.16 597.86

Cash in hand 2.25 1.03

Remittances in transit 0.00 236.71

Other Bank balances

Fixed deposits 61.98 10.76

(With maturity for more than 3 months but less than 12 months) –––––––––––––– ––––––––––––––

Total : 433.18 8,407.04–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––

2.20 SHORT-TERM LOANS AND ADVANCES(Considered good unless otherwise stated)

Advances to Employees 53.80 31.60

Contractors & Suppliers 81.46 122.06

Others

Balances with revenue authorities 627.71 273.67

Stamp duty paid under protest 5,770.43 5,770.43

Prepaid Expenses 127.78 110.95

Additional VAT on Natural Gas 392.12 1,378.65(Recoverable from Government of India)

VAT Recoverable 2,302.42 0.00

Other Recoverable 83.34 7.68–––––––––––––– ––––––––––––––

9,303.80 7,541.38–––––––––––––– ––––––––––––––

Total : 9,439.06 7,695.04–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––

Amount receivable from related parties, Directors and Officers ` NIL (P.Y. ` NIL).

2.21 OTHER CURRENT ASSETS

Interest accrued :

On Govt. Bonds 101.29 105.49

On Fixed Deposits 3.77 2.17–––––––––––––– ––––––––––––––

105.06 107.66

Deposits 1.00 2.40–––––––––––––– ––––––––––––––

Total : 106.06 110.06–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––

30


[` in Lacs]


2.22 REVENUE FROM OPERATIONS

Sale of Products 59,051.00 59,178.82(Net of discounts / rebates)

Concession / Price Support from Central Government 75,802.26 68,641.96(Net of recovery / adjustments)

Other Operating Revenue 405.71 0.00(Refer note below) –––––––––––––– ––––––––––––––

Total : 1,35,258.97 1,27,820.78–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––

Concession / Price Support from Government of India

Nitrogenous fertilizers are under the concession scheme as notified by Government of India (GOI) from time to time. The

concession on nitrogenous fertilizers has been accounted for keeping in view the practice in the industry, norms, parameters

and guidelines fixed/ followed by Fertilizer Industry Co-ordination Committee (FICC) from time to time, pending notification by

the FICC. On fixation of final concession price, necessary adjustments, if any, has been made in the accounts for the year in

which such price is fixed.

Breakup of sales of product

Urea 52,512.86 52,991.11(Excludes transit & other losses)

Ammonia 6,515.66 6,187.71(Excludes captive consumption)

Electricity 22.48 0.00–––––––––––––– ––––––––––––––

Total : 59,051.00 59,178.82–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––

Breakup of Concession / price support

Urea

Price Concession 67,315.84 61,074.92

Freight Subsidy 8,486.42 7,567.04

–––––––––––––– ––––––––––––––

Total : 75,802.26 68,641.96–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––

Other Operating Revenue

Pursuant to order passed by Hon’ble High Court of Allhabad, Lucknow Bench, the amount of `1,832.86 lacs being

VAT charged by the suppliers on supplies of natural gas stands recoverable from them. Consequently the claim of

subsidy from FICC also stands reduced by `1,427.15 lacs. The Company has recognised both the adjustment under

other operating revenue and disclosed the same under revenue from operation.


31

[` in Lacs]


2.23 OTHER INCOME

Interest Income

From Banks 39.82 235.12

Government securities 521.97 694.44

Others 3.72 0.36–––––––––––––– ––––––––––––––

565.51 929.92–––––––––––––– ––––––––––––––

Gain on sale of investments 27.08 37.04

Rentals / Compensation of Properties 27.47 30.11

Other Non-Operating Income

Profit on disposal/retirement of fixed assets 0.00 0.18

Insurance claim received 1.76 0.00

Sundry Balances W/off (Net) 10.68 0.00

Excess provisions written back 7.91 4.19

Income from Training 38.65 23.64

Scrap Sales 65.91 87.55

Miscellaneous 60.34 37.49–––––––––––––– ––––––––––––––

185.25 153.05–––––––––––––– ––––––––––––––

Total : 805.31 1,150.12–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––

2.24 COST OF MATERIAL CONSUMED

Raw Materials 50,423.51 47,176.30

Packing Materials 2,903.10 2,539.49

Chemicals & Catalysts 418.92 379.84

Power, Fuel & Water 35,670.35 33,077.90–––––––––––––– ––––––––––––––

Total : 89,415.88 83,173.53–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––

Breakup of Raw Materials Consumed

Natural Gas 50,423.51 47,176.30–––––––––––––– ––––––––––––––

Total : 50,423.51 47,176.30–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––

Breakup of Power, Fuel and Water

Power - Natural Gas 35,653.45 32,836.81

Fuel

Naptha consumed 0.00 223.20

HSD consumed 3.09 4.24

Water 13.81 13.65–––––––––––––– ––––––––––––––

Total : 35,670.35 33,077.90–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––

32


[` in Lacs]


2.25 CHANGES IN INVENTORIES

Closing Stock

Finished Goods 2,374.73 1,070.17

Work in Progress 29.69 33.22–––––––––––––– ––––––––––––––

2,404.42 1,103.39–––––––––––––– ––––––––––––––

Opening Stock

Finished Goods 1,070.17 276.36

Work in Progress 33.22 0.00–––––––––––––– ––––––––––––––

1,103.39 276.36–––––––––––––– ––––––––––––––

Decrease / (Increase) in Inventories ( 1,301.03) ( 827.03)–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––

2.26 EMPLOYEES BENEFITS EXPENSES

Salary, Allowances, Wages & Bonus 3,191.22 3,056.44

Contribution to Provident & other funds 456.20 619.29

Staff Welfare expenses 261.81 221.20–––––––––––––– ––––––––––––––

Total : 3,909.23 3,896.93–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––

2.27 FINANCE COST

Interest on

Foreign currency term loans 595.31 709.18

Rupee Term loans 4,323.65 5,883.90

On Cash credit and Short term Loans 7,730.08 3,953.66–––––––––––––– ––––––––––––––

12,649.04 10,546.74–––––––––––––– ––––––––––––––

Other Borrowing Cost

Other ancillary Cost 73.78 26.36

LC Charges 0.00 22.51

Hedging Charges 1,009.31 1,710.13–––––––––––––– ––––––––––––––

1,083.09 1,759.00–––––––––––––– ––––––––––––––

Adjustments on account of foreign exchange fluctuation 226.81 550.50–––––––––––––– ––––––––––––––

Total : 13,958.94 12,856.24–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––


33

[` in Lacs]


2.28 MANUFACTURING AND OTHER EXPENSES

Stores & Other Consumables 313.37 149.87

Repairs and Maintenance:

Buildings 119.86 224.91

Plant, Machinery and Other Equipments 1,784.01 1,642.94

Others 3.76 3.54–––––––––––––– ––––––––––––––

1,907.63 1,871.39–––––––––––––– ––––––––––––––

Insurance Charges 197.71 191.71

Travelling Expenses:

Directors 1.72 11.19

Others 35.82 35.17–––––––––––––– ––––––––––––––

37.54 46.36–––––––––––––– ––––––––––––––

Printing and Stationery 11.69 21.52

Rent, Rates & Taxes

Rent 6.32 6.32

Rates & Taxes 41.69 35.67–––––––––––––– ––––––––––––––

48.01 41.99–––––––––––––– ––––––––––––––

Communication Expenses 14.13 14.90

Publicity & Sales Promotion 4.94 4.37

Bagging Expenses 198.80 224.03

Freight Outward and Handling 10,672.32 9,276.31

Warehousing Charges 45.20 73.79

Director Sitting Fees 2.05 2.35

Service Charges 423.76 419.68

Vehicle Running & Maintenance 85.36 88.98

Legal and Professional Charges 73.15 61.61

Auditor’s Remuneration 16.85 13.83

Bank Charges 39.30 23.80

Loss on Assets discarded / retired from Active Use 164.39 507.51

Loss on sale of Investments 0.00 575.54

Loss on sale of Fixed Assets 187.15 0.34

Foreign Exchange Fluctuation 11.09 454.02

Miscellaneous Expenses 376.33 357.86–––––––––––––– ––––––––––––––

14,830.77 14,421.76–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––

Break-up of Auditor’s Remuneration

As Auditors 10.67 8.43

Tax Matters 5.06 4.72

Certification Fees 0.35 0.55

Out of Pocket Expenses 0.77 0.13–––––––––––––– ––––––––––––––

Total: 16.85 13.83–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––

34


[` in Lacs]


2.29 PRIOR PERIOD ADJUSTMENTS

Income

Stock adjustments 0.00 57.09

Others 15.20 38.80–––––––––––––– ––––––––––––––

15.20 95.89–––––––––––––– ––––––––––––––

Expenditure

Depreciation & Amortisation 0.01 0.13

Stores & Spares Consumption 0.00 23.42

Others 11.80 28.15–––––––––––––– ––––––––––––––

11.81 51.70–––––––––––––– ––––––––––––––

Net prior period adjustments ( 3.39) (44.19)–––––––––––––– –––––––––––––––––––––––––––– ––––––––––––––

2.30 CLAIM PENDING SETTLEMENT

During the year 2006-07, the Company had paid

stamp duty of `190.80 crores on transfer/

registration of Assets acquired from Oswal

Chemicals & Fertilizers Limited vide sale

agreement dated 31st March 2006. The Company

has paid the amount of stamp duty as finalized by

Additional District Magistrate (F&R), Collector of

Stamps, Shahjahanpur on total sale consideration

of ` 1908 crores. The Company has filed an

appeal before the Board of Revenue, Uttar Pradesh

for refund of total Development Tax amounting

to ` 38.16 crores paid at the rate of 2% in respect

of all assets and stamp duty amounting to ̀ 19.54

crores paid on Leasehold Land, Site Development,

intangible Assets/benefits and Current Assets,

challenging the levy of the same. Upon dismissal

of appeal by Board of Revenue, UP, the Company

has filed a writ petition before the Hon’ble High

court, Allahabad challenging the order passed by

Board of Revenue.

Hon’ble High Court has allowed the writ petition

in part and the orders of ADM (F&R),

Shahjahanpur and Chief Controlling Revenue

Authority have been set aside. The matter has

been remanded back to ADM (F&R), Shahjahanpur

to decide the case afresh in the light of the

observations made in the order of the Hon’ble

High Court after giving opportunity of hearing to

the Company.

Pending final outcome, the sum of ` 57.70 crores

paid by the Company (based on actual

computation) has been disclosed as “Stamp Duty

paid under protest” under the head of Short Term

Loans & Advances in Note No 2.20 of the Financial

Statement. However, for the purpose of Income

Tax, based on the advice received from Tax

Consultant, the Company has claimed the

depreciation on the same in the Income Tax

Return filed for the assessment years 2006-07

(revised), 2007-08 and thereafter.

2.31 STAMP DUTY

Collector Stamps/DM, Shahjahanpur passed an

order dated 13/08/08 observing that the deed

of mortgage executed on 31/01/2006 between

Oswal Chemicals & Fertilizers Limited, UTI Bank

Limited (Security Trustee) and the Company, will

attract stamp duty of ` 190 crores (the amount

revised from ` 190 lacs to ` 190 crores upon

rectification application and subsequent order by

Collector of Stamps) and also served an order for

recovery on the Company. Aggrieved by the order,

the Company has preferred an appeal before the

Chief Controlling Revenue Authority, Uttar Pradesh


35

and filed stay petition before the Hon’ble

High Court of Allahabad. In response, the Hon’ble

High Court of Allahabad granted stay on recovery

proceedings. The Chief Controlling Revenue

Authority (CCRA) pronounced the judgment

against the Company. The Company had filed a

writ petition before the Allahabad High Court

against the judgment of CCRA. The writ petition

was admitted and decided in favour of the

Company wherein it was decided that till the next

date of listing, the operation of the order passed

by the Collector Stamp, Shahjahanpur and that of

the CCRA shall remain stayed. The matter is

pending as on balance sheet date.

Pending final award, based on legal opinion by

an expert obtained by the Company, the Company

has not made any provision in respect of aforesaid

demand, and however, the same has been

disclosed as contingent liability in “Notes forming

part of accounts”.

2.32 TRADE TAX

(a) The company had received Trade Tax

assessment order related to the financial

year 2005-06 and 2006-07 from the

Dy. Commissioner (Assessment), Commercial

Taxes, Shahjahanpur assessing Trade Tax on

sale of Anhydrous Ammonia @ 12% as

against @ 4% being collected and

deposited by the Company, and raising

demand of ` 21.60 lacs and ` 65.99 lacs

respectively for the two years.

Upon appeal preferred by the Company, the

Joint Commissioner (Appeals) cancelled the

order passed by the Dy. Commissioner and

referred the case back to Dy. Commissioner

for reassessment. Aggrieved by the order

passed by Joint Commissioner, the Company

had preferred an appeal before the Hon’ble

Tribunal of Commercial Tax, Bareilly. The

Hon’ble Tribunal has decided the case in

favour of the Company and advised Joint

Commissioner to decide the case.

On similar grounds, the Dy. Commissioner,

Commercial Taxes, Shahjahanpur, had

passed an order raising demand of

` 18.16 lacs in respect of financial year

2007-08. The Company has preferred an

appeal against the order before Additional

Commissioner (Appeals) who has stayed the

demand to the extent of 70% on furnishing

of Security Bond with the Appropriate

Authorities.

The department had preferred appeal

before the Hon’ble High Court on the same

issue. During the financial year 2011-12, the

Hon’ble High court had decided the case in

favour of the Company by striking down the

department’s plea. In view of the order

passed by the Hon’ble High Court, the

appeals pending at various levels are

expected to be decided in favour of the

Company during the subsequent financial

years.

The Company, therefore, does not

anticipate any liability in future and

consequently the Company has neither

provided for any liability nor disclosed

the same as contingent liability in the

financial statements.

(b) During the year 2010-11, the Company had

received an order with a demand notice for

` 875.42 lacs for the year 2007-08 from

Dy. Commissioner, Commercial Tax,

Shahjahanpur disallowing the Company’s

claim in respect of concessional tax rate on

Natural Gas. An appeal has been filed by

the Company before the Additional

Commissioner (Appeals) challenging the

order of the Assessing Authority. On an

application made for grant of stay of the

demand, 90% of the demand has been

stayed by the Learned Tribunal on

furnishing on Security Bond and the balance

10% of the demand amount has been

deposited by the Company and disclosed as

“Balances with Government Authorities”

under the head Short Term Loans and

Advances in Note No. 2.20 of the financial

statements. The appeal has been heard and

orders are awaited.

(c) During the financial year 2011-12, the

Company had received an order along with

36


a demand notice of ` 77.31 lacs in respect

of VAT for the year 2007-08 (January 2008

to March, 2008) from the Dy. Commissioner,

Commercial Taxes, Shahjahanpur upon

assessing the taxable turnover of the

Company after including road freight paid

on Urea. An appeal has been filed by the

Company before Joint Commissioner

(Appeal) challenging the order of the

Assessing Authority. The appeal is yet to be

heard.

The Company has been granted stay for

90% of the demand on furnishing Security

Bond while balance 10% of the demand

amount has been deposited by the

Company. The same has been disclosed

as “Balances with Government Authorities”



statements.

(d) During the financial year 2011-12 under

review, the Company has received Entry-

Tax assessment order from Deputy

Commissioner, Trade Tax Shahjahanpur

with a demand of ` 344.00 lacs for the

financial year 2007-08. The Tax was levied

by the State Government on purchase of

Natural Gas from GAIL in Uttar Pradesh.

Upon appeal before Joint Commissioner

(Appeals), Bareilly, stay has been granted

on furnishing of Security Bond. The appeal

is yet to be heard.

(e) During the year 2011-12, the Company had

received an order along with a demand

notice of ` 129.60 lacs in respect of VAT

for the year 2008-09 from by the

Dy. Commissioner, Commercial Taxes,

Shahjahanpur upon assessing the taxable

turnover of the Company after including

road freight paid on Urea & Scrap Sale

(Export). An appeal has been filed by the

Company before Joint Commissioner

(Appeal), challenging the order of the

Assessing Authority. As against the demand

the Company has deposited the sum of

` 100 lacs during the current financial year

and the same has been disclosed as

“Balances with Government Authorities”



statements.

(f) During the current financial year the

Company has received an order for year

2008-09 from Deputy Commissioner Sales

Tax raising demand of ` 367.32 lacs on

account of entry tax. The Company has

preferred an appeal which is yet to heard.

The Company has however been granted

stay on the demand by the appropriate

authority.

Pending final outcome in respect of matters

enumerated at Note No. 2.32 (b), (c), (d),

& (e) based on the merit of the cases, the

Company does not anticipate any liability

and consequently, no provision in the books

of accounts has been made. The demands,

however, have been disclosed as contingent

liability in the financial statements.

2.33 INCOME TAX

The Income Tax Officer (TDS), Bareilly has

passed orders on 30th March, 2011 u/s 201(1) and

201(1A) of the Income Tax Act, 1961 in respect of

the assessment years 2007-08 to 2009-10

directing the Company to deposit the sum of

` 3,774 lacs being the amount of Tax ought to have

been deducted at Source or short deducted at

source (including interest thereon) from payments

made to gas suppliers/transporters for

transmission of Natural Gas and also from other

payments.

The Company had filed an application before

appropriate authority seeking stay of demand and

also preferred an appeal before Commissioner of

Income Tax (Appeals), Bareilly. In response to

an application seeking stay of demand the

appropriate authority granted stay on 50% of the

demand with condition to deposit the balance

50% on or before 31st March, 2012. The Company

had made representation to Member (Revenue)

requesting him to keep the demand in abeyance


37

till the appeal is decided. The appeal preferred

before CIT(A) has been partially allowed in current

year directing the assessing officer to recompute

the demand. The demand was recomputed at

` 558.95 lacs by the assessing authority. As against

the recomputed demand, the Company has

already deposited a sum of ` 189.36 lacs while in

respect of balance amount of ` 369.59 lacs the

Company has been granted stay by the

appropriate authority. The Company has preferred

an appeal before ITAT, Lucknow Bench which has

been heard and orders are awaited.

Pending final outcome, the Assessing Officer

(TDS) has passed an order on 28th March, 2013

for assessment year 2010-11 raising demand of

` 98.64 lacs on the similar ground. The Company

is in the process of filing appeal before the

appropriate authorities.

During the year under review, the Company has

also received a notice u/s 271(1)(c) of the Income

Tax Act, 1961 and a demand for ` 79.45 lacs for

the assessment year 2008-09 from Deputy

Commissioner of Income Tax. The Company is in

the process of filing appeal before the appropriate

authority.

In view of the above the Company has not

provided for any liability in the financial

statements but disclosed the same as Contingent

Liability in Note No. 2.40 of the financial

statements and the sum of ` 189.36 lacs already

paid has been disclosed as “Balances with

Government Authorities” in Note No. 2.20 of

the financial statements.

2.34 EXCISE

During the current financial year, the Department

of Excise & Customs served show cause notice

raising demand of ` 828.00 lacs on the Company

with regard to wrong availment of cenvat credit.

The Company disputed the show cause notice

and the Commissioner of Central Excise reduced

the demand to `166.00 lacs. The Company

preferred an appeal before CESTAT and the

Company has been granted stay on demand.

Pending final outcome of the proceeding, the

Company has not provided for liability but

disclosed the same as contingent liability in

Note No. 2.41 of the financial statements.

2.35 FOREIGN CURRENCY EXPOSURE

The foreign currency exposure in respect of foreign

currency loan (principal) amounting to

` NIL (previous year `18,522.09 lacs) was hedged

by derivative transactions for the equivalent

amount and the un-hedged loan liability, being

monetary item, had been restated at exchange

rate prevailing at year end.

The Following foreign currency exposures are not hedged by a derivative/forwarded transaction:

[` in Lacs]


Foreign Currency Loan Payable NIL 4162.00

Interest payable NIL 67.99

2.36 EMPLOYEE BENEFITS

(a) Defined contribution to provident fund and employee pension scheme

The Company makes contribution towards Employees’ Provident Fund and Employees’ Pension Scheme.

In accordance with the provisions of these schemes, the Company is required to contribute a specified

percentage of payroll costs. The Company has, during the year, recognized the sum of ` 202.17 lacs

(P.Y. `181.67) as expense towards contributions to these plans.

(b) Defined contribution towards retirement benefits:

The following table sets out the status of the gratuity and leave encashment scheme plans as at

31st March, 2013

38


[` in lacs]

Particulars Gratuity Leave Encashment Sick Leave

2012-2013 2011-2012 2012-2013 2011-2012 2012-2013 2011-2012

Changes in the present value of obligation

Present value of obligation (Opening) 724.65 468.27 321.53 234.62 37.92 30.70

Interest cost 59.68 38.63 24.23 19.36 — —

Past service cost — — — — — —

Current service cost 62.20 58.73 26.61 25.56 20.65 7.22

Curtailment Cost / (Gain) — — — — — —

Settlement Cost / (Gain) — — — — — —

Benefits paid (44.97) (29.81) (73.12) (37.81) — —

Actuarial (Gain) / Loss 38.96 188.83 13.59 79.80 — —

Present value of obligation (Closing) 840.52 724.65 312.83 321.53 58.57 37.92

Amount recognized in the balance sheet

Present value of obligation as at the year end 840.52 724.65 312.83 321.53 58.57 37.92

Fair value of plan assets as at the year end — — — — — —

(Asset) / Liability recognized in the balance sheet 840.52 724.65 312.83 321.53 58.57 37.92

Expenses recognized in the profit & loss account

Current service cost 62.20 58.72 26.61 25.56 20.65 7.22

Past service cost — — — — — —

Interest cost 59.68 38.63 24.23 19.36 — —

Expected return on plan assets

Curtailment Cost / (Credit) — — — — — —

Settlement Cost / (Credit) — — — — — —

Net Actuarial (Gain) / Loss 38.96 188.83 13.59 79.80 — —

Total expenses recognized in the profit and loss account 160.84 286.18 64.43 124.72 20.65 7.22

Principal actuarial assumption (Rate of Discounting)

Rate of discounting 8.10% 8.50% 8.1% 8.50% 8.1% 8.50%

Expected return on plan assets — — — — — —

Rate of increase in salaries 7.00% 7.00% 7.00% 7.00% 7.00% 7.00%

Reconciliation of the present value of defined benefit

obligation and the fair value of assets

Present value of funded obligation as at the year end — — — — — —

Fair value of plan assets as at year end — — — — — —

Funded (Asset)/ Liability recognized in the balance sheet — — — — — —

Present value of unfunded obligation as at the year end 840.52 724.65 312.83 321.53 58.57 37.92

Unrecognized past service cost — — — — — —

Unrecognized Actuarial (Gains) / Losses — — — — — —

Unfunded net liability recognized in the balance sheet 840.52 724.65 312.83 321.53 58.57 37.92


39

2.37 SEGMENT REPORTING

The Company’s primary business segment is manufacturing of Ammonia & Urea. Based on the guiding principles

given in Accounting Standard 17 on “Segment Reporting” issued by the Institute of Chartered Accountants of

India, this activity falls within a single primary business segment and accordingly the disclosure requirements

of Accounting Standard 17 in this regard are not applicable.

2.38 RELATED PARTY DISCLOSURE

(a) List of related parties with whom transactions have taken place during the year :

Key Management Personnel

� Mr. V. P. Kaushik, Managing Director

Holding Enterprise :

� Krishak Bharati Co-operative Ltd.

[` in Lacs]

(b) Transaction with related party 2012-2013 2011-2012

(i) Holding Enterprise

– Sale of Goods 1,681.98 2,036.34

– Sale of Spares and Equipments 3.40 —

– Service Charges 434.80 430.33

– Reimbursement of salary & other expenses 38.62 97.45

– Rent, Electricity & Other Services 18.36 16.92

– Payment for purchase of plant and Machinery / stores 33.87 2.61

(ii) Key Management Personnel

– Remuneration 55.49 50.81

[` in Lacs]

(c) Outstanding balances as at the end of the year 2012-2013 2011-2012

(i) Holding Enterprise

– Credit Balance (Net) 1,088.96 948.26

– Debit Balance 6.56 12.37

2.39 LEASES

The Company has taken office premises on cancelable operating lease where the lessee and the lessor shall

be entitled to terminate the lease agreement at any point of time before expiry of the agreed term by serving

three months’ notice in writing on the other party.

40


2.40 EARNING PER SHARE

Earning per share is calculated by dividing the profit attributable to the equity shareholders by the weighted

average number of equity shares outstanding during the year.

Sr. No. Particulars 2012-2013 2011-2012

1. Profit after tax (` in lacs) 1,616.26 2,347.94

2. Weighted Average Number of equity shares 80,00,57,143 80,00,57,143

3. Face value per share (`) 10 10

4. Earnings per Share (Basic) ` 0.20 0.29

2.41 CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS

A. Contingent Liabilities not provided for in respect of:

[` in lacs]

Particulars 2012-2013 2011-2012

Letter of credits 8,362.55 6,688.92

Disputed Trade Tax Matters (Refer note no. 2.32 (b), (c) and (d) of Financial Statement) 1,793.65 1296.73

Stamp Duty on Mortgage (Refer note no. 2.31 of Financial Statement) 19,000.00 19,000.00

Income Tax demand notice (Refer note no. 2.33 of Financial Statement) 737.59 3,870.64

Demand received from Excise and Custom Department 166.00 –(Refer note. 2.34 of Financial Statement)

B. Capital and Other Commitments

[` in lacs]

Particulars 2012-2013 2011-2012

Capital Commitments

Estimated amount of contract remaining to the executed on

capital accounts (Net of Advances) 958.55 1093.80

Other Commitments — —

C. The Company has issued an undertaking of ` 11,184.00 lacs to Department of Fertilizers, Ministry of

Chemicals and Fertilizers, Government of India (GOI) in respect of pending dispute of GOI with

Oswal Chemicals & Fertilizers Limited regarding subsidy of ` 225 lacs on urea and payment of interest of

`10,959.00 lacs by Oswal Chemicals & Fertilizers Limited. An escrow account under joint operation of

the Company and Oswal Chemicals & Fertilizers Limited has been opened for the purpose of meeting

the claim of the Department of Fertilizers. The balance in the said escrow account adequately covers the

amount of undertaking.


41

2.42 REMUNERATION TO MANAGING DIRECTOR[` in lacs]

Sr. No. Particulars 2012-2013 2011-2012

1. Salaries & Allowances 52.14 47.78

2. Contribution to P.F. & Other Funds 3.20 2.88

3. Medical and Welfare Expenses 0.15 0.15

Total: 55.49 50.81

Note:

The aforesaid remuneration does not include the value of leave encashment and gratuity since it is determined on the basis of

actuarial valuation for all employees, including directors.

2.43 Balances of some of the Contractors/ Customers/ Suppliers/ Receivables/ Payable and deposits with others

are subject to confirmation/ reconciliation and consequential adjustments, if any, which in the opinion of

management would not be material. In case of major debtors, confirmations have been received and no material

adjustment remains pending.

2.44 Additional information, to the extent applicable, required under para 5(8) of Part-II of the Schedule VI to the

Companies Act, 1956.

A. Particulars of Stock & Sales

2012-2013 2011-2012

Particulars Quantity Amount Quantity Amount

(M.T.) (in Lacs) (M.T.) (in Lacs)

Opening Stock (Including Goods Transit)

Urea 6,482.600 652.15 — NIL

Ammonia 3,393.253 418.02 2,565.261 276.36

Total : 9,875.853 1,070.17 2,565.261 276.36

Closing Stock (Including Goods Transit)

Urea 20,058.450 2,255.63 6,482.600 652.15

Ammonia 870.536 119.10 3,393.253 418.02

Total : 20,928.986 2,374.73 9,875.853 1,070.17

Sales (Net of Excise)

Urea1 9,94,692.648 1,27,751.90 10,12,461.900 1,20,965.30

Ammonia2 22,109.10 5,605.32 26,873.600 5,480.39

Total : 10,16,801.748 1,33,357.22 10,39,335.500 1,26,445.69

1 Excludes Transit & 27.102 64.800

Other Losses (MT)

2 Excludes Captive 5,80,503.217 590,268.408

Consumption (MT)

42


Particulars

Particulars

B. Raw Material Consumption (100% indigenous)

[` in Lacs]

2012-2013 2011-2012

Quantity Value (`) Quantity Value (`)

Natural Gas (MSM3) 407.79 50,423.51 417.990 47,176.30

C. CIF Value of Imports [` in lacs]

Particulars 2012-2013 2011-2012

Capital Goods 148.12 172.75

Stores and Spares 117.88 145.97

Total : 266.00 318.72

D. Analysis of Imported & Indigenous Spares consumption: [` in lacs]

2012-2013 2011-2012

Value (`) % of Total Value (`) % of Total

Imported 177.66 13.80 44.90 4.23

Indigenous 1,110.09 86.20 1,017.41 95.77

Total: 1,287.75 100.00 1,062.31 100.00

E. Expenditure in foreign currency (on payment basis): [` in lacs]

Particulars 2012-2013 2011-2012

Interest 584.81 651.45

Professional charges — 25.72

Fees for Technical Services 36.30 169.40

Foreign Travelling — 14.58

Total: 621.11 861.15

F. Earnings in Foreign Exchange: ` 38.65 (Previous year ` 23.64)

2.45 Information as required to be disclosed under the Micro, Small and Medium Enterprise Development Act, 2006

has been determined to the extent such parties have been identified on the basis of information available with

the Company.

[` in lacs]

Particulars 2012-2013 2011-2012

Unpaid to supplier as at the end of the accounting year

Principal Amount Due NIL NIL

Amount of interest paid NIL NIL

Total : NIL NIL


43

2.46 STATEMENT OF MANAGEMENT

(a) The current assets, loans and advances are good and recoverable and are approximately of the values,

if realized in the ordinary courses of business unless and to the extent stated other wise in the Accounts.

Provision for all known liabilities is adequate and not in excess of amount reasonably necessary. There

are no contingent liabilities except those stated in the notes.

(b) Balance Sheet, Statement of Profit & Loss and Cash Flow statement read together with the schedules to

the accounts and notes thereon, are drawn up so as to disclose the information required under the

Companies Act, 1956 as well as give a true and fair view of the statement of affairs of the Company as at

the end of the year and results of the Company for the year under review.

2.47 Previous year figures have been regrouped, reclassified and reworked wherever necessary for comparative

purpose.

FOR G. K. CHOKSI & CO. FOR AND ON BEHALF OF THE BOARD



SANDIP A. PARIKH B. D. SINHA ALOK TANDON V. P. KAUSHIK

Partner Director Director Managing Director


RAJAN CHOWDHRY BIPIN C. PHULORIA

Director & Chief Financial Officer Company Secretary

Place : New Delhi Place : New Delhi

Date : 26th June, 2013 Date : 26th June, 2013

Documents

Final-4-KSFL-2013-20th September 2013.pmd