Notes to Accounts of Hindustan Flurocarbons Ltd.

Mar 31, 2024

1. The above land is revalued as per Ind AS and the original land value before Ind AS revaluation is Rs.59 Lakhs. Factory land of 126.13 acres is located at Rudraram P.O., Kandi Mandal, Sangareddy Dist. Telangana State and land is freehold. HOCL is secured part of land to the extent of 84.31 acres.

2. Fair value of total land as on 31.03.2024 is Rs. 14663.57 Lakhs. Since the fair value of the land is higher than the carrying value as per books of accounts, carrying value of the land held for sale continues to be reported in accordance with para 15 of Ind AS 105.

3. Buildings include Time Office building (Gross value of Rs.4.33 Lakhs), Security Post (Gross value of Rs. 4.55 Lakhs) and Fencing & Compound Wall (Gross value of Rs.145.58 Lakhs). Total Gross value Rs.154.46, Accumulated depreciation: Rs.39.56 Lakhs and Net value Rs.114.90. Depreciation not provided during the year since there are no operations in the company.

9.6 Rights, preferences and restrictions attached to equity shares:

The Company has one class of equity shares having a par value of Rs. 10 per share. Each shareholdei is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject tc the approval of the shareholders in the ensuing Annual General Meeting. The equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferentia amounts, in proportion to their shareholding. There are no restrictions attached to equity shares except as contained in the Articles of Association of the Company.

*GOI has disbursed loan of Rs.7370 Lakhs on 26.05.2020 for settling the dues of Employees, Creditors and closure of Loans and disbursed Rs.217 Lakhs on 15.03.2022 as per decision of CCEA.

(A) . The Term loan from HOCL is secured by part of the land to the extent of 84.31 acres of the Factory

& Plant and Buildings at Rudraram Village.

(B) . The Term loan from HOCL of Rs. 2744.06 lakhs is Zero coupon loan as per terms of the BIFR

agreement and is repayable in seven equal annual instalments as per the loan agreement commencing from FY 2010-11. The instalment due for FY 2010-11,2011-12, 2012-13, 2013-14,

2014- 15, 2015-16 & 2016-17 amounting to Rs.2744.06 lakhs is not paid by the company and the total loan amount due to HOCL is Rs.3197.08 lakhs.

(C) . The Term loan from HOCL of Rs.753.02 lakhs is Interest bearing @ 10.25% to 14.50% repayable

in 5 annual instalments commencing from FY 2010-11 as per the loan agreement. The company is continuing default in payment of all the instalments due and interest during the F Y 2010-11 to

2015- 16 amounting to Rs.453.01 lakhs is not paid by the company. Since HOCL Board approved for waiver of interest from 01.04.2023 onwards, no interest has been provided from 01.04.2023 onwards.

(D) . The company had outstanding plan loan of Rs.360 Lakhs availed from Government of India for

manufacture of MPTFE and Rs. 1320 Lakhs availed for refurbishment of the Plant @11.5% p.a. and both the loans repayable in 5 annual installments commencing from F.Y. 2015-16. The Company had repaid Rs.1.00 Crore with interest of Rs.24.92 lac during the month of March, 2017 and accordingly principal and interest outstandings were adjusted. The instalment due for F.Y. 201516,2016-17, 2017-18, 2018-19 and 2019-20 amounting to Rs. 1,580.00 lakhs shown in Note-14. Company had received letter no.P.51015/06/2019-Ch.III(Vol.II) dated 29.01.2020 on closure of HFL in which interest on Rs.15.80 crore will be freezed upto 31.03.2019. Hence interest has not been provided from the year 2019-20 onwards.

The Company’s Provident Fund was exempted under section 17 of Employees’ Provident Fund and Miscellaneous Provisions Act,1952. As per the directives of Closure letter received from DCPC on 29.01.2020, company had started giving VRS to employees from May, 2020 onwards to Sept, 2022 and even non-regular employees were relieved on VSS during Oct, 2022. Remaining five (5) regular employees of HFL were transferred and posted to HOCL rolls w.e.f Sept, 2022. Since there is no employee in HFL, the Board in its meeting held on 30.01.2023 has approved to close the Employees Provident Fund Trust and surrender the balance amount with the Trust with Employees Provident fund Organisation after audit. Based on the application submitted to the Employees Provident Fund Organisation, they withdrawed the exemption vide letter dt.16.04.2024.

As per the directives of Closure letter received from DCPC on 29.01.2020, all the employees were relieved by Sept. 2022. Since there is no employee in HFL, the Board in its meeting held on 30.01.2023 has approved to close the Employees Group Gratuity Trust and surrender the Insurance Policies available with LIC. Accordingly the Trust was closed, settled the account by LIC and closed the bank account on 04.04.2024.

20. Contingent Liabilities and Commitments
Particulars	As at 31-03-2024	As at 31-03-2023
i) Contingent Liabilities Claims against the company not acknowledged as debt a) ESI b) Damages on Delayed Payment of Provident Fund with Interest * c) Other Claims (Legal cases)	13.46 94.89 1,112.50	13.46 94.89 1,114.50
Total	1,220.85	1,222.85
Note: The differential interest @ 2.75% (14.25%-11.50%) on Govt. Plan loan is not provided in the books as GoI had freezed interest up to 31.3.2019.

i) Claims against the company not acknowledged as debt: Details

a) ESI: Rs.13.46 Lakhs

ESI demand by ESI Corporationdues of Rs.15,99,902/- towards contribution of 153 employees for the period from 01.01.1997 to 30.09.2000. HFL has remitted Rs.7,99,951/- as per court order towards 50% of the principal amount. Interest claimed upto 31.03.2001 was Rs.5,46,139. Therefore, the balance amount of Rs.13,46,090 (1599902 546139-799951) shown as contingent liability.

b) Damages on Delayed Payment of Provident Fund with Interest: Rs.94.89 Lakhs

This is the damages demanded by EPFO towards delayed payment of PF dues during the period 2000-01 to 2010-11. The Company has written to Central Provident Fund Commissioner for waiver of damages for delayed payment of PF dues during the period 2000-01 to 2010-11 considering the fact that the company was a BIFR referred Company.

c) Other Claims (Legal cases): Rs.1112.50 Lakhs

1. WP/24588/2013 before Hon’ble High court judicature for the state of Telangana & for AP: Mr. T.Eshwaraiah, Ex-Chief Mgr (HR) had opted VRS in 2009 and relieved from the services on 31.01.2009. Consequent to revision of pay scales of 1997 & 2007 a writ petition was filed by him in June, 2013 on account of wage revision arrears. Vakalat and Counter is filed by the company. Matter pending before Hon’ble High Court; The HFL Board had also clarified that VRS-2009 optees are not eligible for wage revision arrears. Even the DCPC also clarified the same. Hence, in the view of the Company, the case is not tenable in law.

2. WP/12909/2013 before Hon’ble High court Judicature for the state of Telangana and for AP: Mr. V. Giridhar & others had opted VRS in 2009 and relieved from the services on 31.01.2009. Consequent to revision of pay scales of 1997 & 2007 a writ petition was filed by them in June, 2013 on account of wage revision arrears. Vakalat and counter filed by the company. Matter pending before Hon’ble High Court; The HFL Board had also clarified that VRS-2009 optees are not eligible for wage revision arrears. Even the DCPC also clarified the same. Hence, in the view of the Company, the case is not tenable in law.

3. LC ID-1 of 2015, before Hon’ble Central Govt. Industrial Tribunal, Hyd.: Mr. N. Rambabu, Production Chemist filed ID before ALC (Central), Hyd. A Counter has been filed by the respondent company. The Company had terminated the employee during January, 2014 after following the laid down provisions of Certified standing orders of the company. Since the Company had terminated him by following the approved procedures, hence the case will not tenable before the Honorable Court.

4. ID No.72 of 2012 before the Hon’ble Central Govt. Industrial Tribunal-cum labour Court, Hyderabad: The HFL workers’ trade union-A 4397 has raised an ID before ALC (Central), Hyd with a request to intervene in the matter of non-payment of overtime wages. In this connection, joint proceedings were held and issue could not settle amicably, having divergent views, the conciliation officer has submitted its failure report to Govt. of India. The respondent company has filed counter petition. As per GOI guidelines, the financial impact on account of Pay revisions for both 1997 and 2007 need to be borne by the company, since no budgetory support was not extended. Based on the commitment to DPE in writing by the recognized representative union A-3954, the GoI, had issued orders for pay revision was approved by the Board of HFL and implemented. The non-representative union -A 4397 had approached court of law for non-payment of overtime wages and filed a petition, hence this case is pending before court of law. Since existing employees are already availing the compensatory off in lieu of over time, the case will not tenable before the Honourable Court. On 25.04.2023 the case was heard and reserved for Judgement.

5. WP/9697/2000 & WA 483/2013 WA No.1194/ 2012 before Hon''ble High court, AP Hyd: Mrs. K. Nagaratnam, Asst. Mgr (Finance) has reinstated into service without back wages. Aggrieved on the order, she has filed writ appeal and counter was filed by the respondent company. The employee was re-instated as per High court order without back wages and superannuated from the services of the company on 31-Aug-2016. She has filed an appeal for back wages in the Hon''ble High court, Hyderabad and case is pending. The case is pending under CAV. The case is listed again on 28.02.2024 and continuing.

6. WP No. 20076/2019 before Hon''ble High Court Hyderabad: Smt K Rajani, Ex-Company Secretary, T.No. 262 had filed the WP against the reverification of “Pay Scale / Basic Pay anomaly fixed in September 2011”. Some of the Officers have represented the company that there is an anomaly in fixation of Pay Scale and Basic Pays against 1997 Pay Revision and have requested for refixation. The same is refixed in September 2011 to 18 Officers, one of them being Smt K Rajani. whose Pay scale and Basic Pay also refixed under anomaly. She had filed a case in High Court that the reverification and refixation of her pay scale / basic pay in February 2019 is not correct.

7. CGIT No. 134/2018: HFL Employees Union A 3954. For implementation of 2017 Wage Revision.

8. OS 414/2008 before Hon''ble city civil court, Sec-bad, CCA No. 250/2017 before High Court: M/s. Shanthi boiler & Pressure Vessels Pvt Ltd, Sec-bad had delivered the boiler and failed to comply the contractual terms as agreed. Aggrieved on the supply of items a case was filed and counter was filed by the respondent company. The Company is pleading the case in the Court of Law and is of the view that the case will be in our favour as understood from the Legal advisors and the approximate legal implication in this matter is about Rs. 13.5 Lakh, in case HFL losses the case.

9. OP No. 709/1998 before CCC, Hyderabad. CMA 2861/203 before High Court, CMA 918/2018 before High Court, COP No. 42/2019 before XXIV Addl. Chief Judge, CCC, Hyderabad, COMCA 16/ 2020 before XXIV Chief Judge, CCC, Hyderabad. Now CMA 918/2018 and COMCA 16/2020 are tagged: Case filed by M/s Rockwell Industries Limited relating to supply of CFM-22 Gas. IDBI was impleaded in the case and IDBI has filed the counter. This dispute is going on since 1998 at various Forums - Arbitration in 1998, Hon''ble Chief Judge in 2001, Hon''ble High Court later which was sent back for fresh consideration. Again in 2017, Hyd Civil Court confirmed Order of Arbitrator, party filing fresh COP before Addl Chief Judge, City Civil Court and HFL filed case in Hon''ble High Court of Telangana. Matter presently is still before Hon''ble High Court of Telangana, which had vide its Order dated 04.11.2020 has given stay on disposal of the assets of the Company. The Case is Pending now. On 02.11.2022 the case was heard on vacating of Stay. The permission was granted to dispose of Plant and Machinery through MSTC and the Order copy is received on 04.11.2022. In this regard the court has directed HFL to open a separate Bank Account to deposit the sale proceeds of Plant and Machinery. The plant sale proceeds were received on 29.03.2023 and the amount of Rs.14.21 crore was deposited in SBI as as FD .

10. WP No. 35920/2021 in Hon''ble High Court, Hyderabad: The TSSPDCL has levied the differential wheeling charges and issued notice to pay the wheeling charges around Rs.6.14 Crores for the period 2002 to 2004. If the same is not paid within fifteen days alongwith the monthly power bill the service will be disconnected. Aggrieved by the Notice of TSSPDCL, HFL has approached the Hon''ble High Court and the matter was heard and the Hon''ble High Court had granted Stay on 24.12.2021.

21. Taxes on Income

The company has not provided deferred tax asset due to huge accumulated losses incurred since there is no virtual certainty to realise in future.

22. Balances in respect of Trade payables, Other Liabilities, Trade Receivables and Other Loans and Advances are subject to Confirmation.

24. Segment Reporting

The Company’s operations consist only of manufacturing and sales of fluoro-carbons, and incidental/ ancillary activities. Hence, there are no other reportable segments under Ind AS - 108 “Operating Segment”. During the year, substantial part of the Company’s business has been carried out in India. The conditions prevailing in India being uniform, no separate geographical disclosures are considered necessary. The Company does not have operations outside India and there is no other reportable segment on that account. There are no other reportable segments.

26. Financial Instruments

a) Capital Management

The Company’s capital management objective is to maximize the total shareholder return by optimizing cost of capital through flexible capital structure that supports growth. Further, the Company ensures optimal credit risk profile to maintain/enhance credit rating.

The Company determines the amount of capital required on the basis of annual operating plan and long-term strategic plans. The funding requirements are met through internal accruals and long-term/short-term borrowings. The Company monitors the capital structure on the basis of Net debt to equity ratio and maturity profile of the overall debt portfolio of the Company.

For the purpose of capital management, capital includes issued equity capital, securities premium and all other revenue reserves. Net debt includes all long and short-term borrowings as reduced by cash and cash equivalents

c) Financial Risk Management Objectives

The company’s business activities exposed to a variety of financial risks viz., market risk, credit risk and liquidity risk. The company’s focus is to estimate a vulnerability of financial risk and to address the issue to minimize the potential adverse effects of its financial performance.

d) Market Risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The company’s exposure to market risk is primarily on account of foreign currency exchange rate risk.

i) Interest rate risk

Out of total borrowings, large portion represents short term borrowings and the interest rate primarily basing on the company’s credit rating and also the changes in the financial market. Company continuously monitoring over all factors influence rating and also factors which influential the determination of the interest rates by the banks to minimize the interest rate risks.

ii) Foreign currency risk

The company has no balances in foreign currency and consequently the company is not exposed to foreign exchange risk.

Equity Risks

The company does not have any financial instruments which are exposed to listed and non listed equity investments.

e) Credit risk management

Credit Risk refers to the risk for a counter party default on its contractual obligation resulting a financial loss to the company. The maximum exposure of the financial assets represents trade receivables, work in progress and receivables from group companies. Credit risk on trade receivables, work in progress is limited as the customers of the company mainly consist of the Government promoted entities having strong credit worthiness. For doubtful receivables the company uses a provision matrix to compute the expected credit loss allowances for trade receivables. The provision matrix takes into account ageing of accounts receivables and the company’s historical experience of the customers and financial conditions of the customers. The company has not made any provision towards amounts doubtful to receive during the year ended March 31,2024 and March 31,2023 respectively.

f) Liquidity risk management

The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. As per CCEA approval for Shutdown of the company, HFL has received an amount of Rs.75.87 Crores for implementation of VRS/ VSS, Statutory dues, payment to suppliers/contractors/utilities and other dues. The proceeds from sale of Land, Building, Plant & Machinery and other assets shall be utilised for meeting its contractual obligations. Note no.37 about CCEA procedure for disinvestment and sanction of loan from GOI details that the Company has financial assets at its disposal to reduce liquidity risk.

27. Amendment to Ind AS 7:

The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement.

The Company is currently evaluating the requirements of the amendment and has not yet determined the impact on the financial statements.

28. During the year under review, the Company had revisited its status on the reporting of Financial Instruments through OCI at amortized cost based on updated developments. Accordingly, based on realistic assessment of the underlying transactions, the Company is of view that there are no Financial Instruments which are receivable/payable in future at discounted values and hence these are shown at actual values. Accordingly, the corresponding effect between previous year and current year is passed through OCI.

29. As per the letter dated 29.01.2020 from the Ministry of Chemicals and Fertilizers, Department of Chemicals & Petrochemicals, under which the Company functions, Cabinet Committee on Economic Affairs (CCEA) in its meeting held on 22^nd Jan, 2020 had approved.

a) Shutting down the operations of the plant/unit of HFL & closure of the Company.

a) Separating the employees (regular and non-regular/adhoc) rendered surplus due to closure of plant through VRS/VSs, after payment of all their outstanding salary/wages and statutory dues, except for skeletal staff required to implement the full and final closure of the company. Employees not opting for VRS/VSS will be retrenched as per the provisions of Industrial Disputes Act, 1947.

b) Grant of interest free loan of Rs.77.20 crore by Govt. Of India to HFL to be utilized exclusively for closure related expenditure including (a) implementation of VRS/VSs for HFL employees, their dues, statutory dues, payment to suppliers/contractors/utilities dues and repayment of SBI working capital loan (b) salary/wages and administrative expenses of HFL’s skeletal staff to be temporarily retained for completing the closure of HFL for two years.

c) Above interest free loan will be repaid by HFL to Govt. of India from the sale proceeds of land and other assets of the company, as and when disposed off and after settling all the liabilities related to closure of the company

d) after settlement of all liabilities related to closure of HFL and repayment of interest free loan, surplus proceeds from disposal of land and other assets, if any, will be used for repayment of HFL’s outstanding Govt of India (Rs.15.80 crore) and interest thereon, with freezing of interest upto 31.3.2019. Full or part of the principal loan amount (Rs.15.80 crore) and interest thereon upto 31.3.2019 remaining unpaid due to insufficient sale proceeds is to be written off/waived.

e) for facilitating disposal of HFL’s land, M/s NBCC (India) Ltd may be appointed as Land Management Agency (LMA) to manage and assist in the land disposal subject to outcome of the decision of Telangana Govt/TSIIC on purchasing land of HFL.

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f) Disposal of plant, machinery and movable assets were done in March 2023 by HFL through e-auction by MSTC Ltd.

g) In pursuance of the said decision, HFL had received an amount of Rs.73.70 Crores on 26.05.2020 and Rs.2.17 crores on 15.03.2022 as interest free loan from GoI. As per the above CCEA Order and as at 31.03.2023, all the employees were relieved before 31.08.2022 except five skeleton staff who were transferred to the roll of HOCL in Sept 2022. All the undisputed dues except Govt. loans and HOCL loans were settled by utilising the interest free loan sanctioned by the Govt. of India. The total amount utilized upto 31.03.2024 was Rs.67.41 Crores. The balance amount will be utilized for settling the other dues and other operating expenditure for completing the closure of the Company. The said process is still going on.

30. Previous year’s figures have been regrouped / reclassified wherever necessary to correspond with the current year’s classification / disclosure.

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Mar 31, 2015

NOTE 1

The company has only one class of shares referred to as equity shares having a par value of Rs 10/- each.

Each holder of the equity share, as reflected in the records of the company as of the date of the shareholders meeting, is entitled to one vote in respect of each share held for all matters submitted to vote in the shareholders meeting.

NOTE 2

Disclosure of shares held by its holding company

11060000 ( Pr. Year 11060000) Equity Shares fully paid up of Rs.1106 lakhs (Pr. Year Rs. 1106 lakhs ) are held by M/s Hindustan Organics Chemicals Limited, the holding company.

3. The Term loan from HOCL is secured by part of the land to the extent of 62 acres of the Factory & Plant and Buildings at Rudraram Village.

4. The Term loan from HOCL of Rs. 2744.06 lakhs is Zero coupon loan as per terms of the BIFR agreement and is repayable in seven equal annual installments as per the loan agreement commencing from F Y 2010-11. The installment due for F Y 2010-11 , 2011-12 , 2012-13, 2013-14, 2014-15 amounting to Rs.1960.04 lacs is not paid by the company and current maturities of F Y 2015-16 amounting to Rs.392.01 lacs are shown in Note - 8 under the head ' Other Current liabilities' being current maturities of long term debt.

5. The Term loan from HOCL of Rs.756.42 lakhs is Interest bearing @ 10.25% to 14.50% repayable in 5 annual installments commencing from F Y 2010-11 as per the loan agreement. The company is continuing default in payment of all the installments due and interest during the F Y 2010-11 to 2014-15 amounting to Rs.456.43 lacs is not paid by the company & shown in Note -8 of the financial statements under the head 'Other Current liabilities' being current maturities of long term debt and interest due amounting to Rs.616.23 lakhs under Interest accrued and due.

6. Term loan of Rs. 5.00 Crore @14.20% p.a. (floating) for refurbishment of PTFE plant and setting up Modified PTFE plant repayable in 5 years 3 months including moratorium period of 9 months after the completion of the project commencing from April, 2015. The company hypothecated land of 60.285 acres and plant and machinery as collateral security besides furnishing of corporate guarantee by promoter company Viz., HOCL to this extent. Further, HOCL has given an undertaking that they will not withdraw their investments during the period of loan.

7. The company has received plan loan from government of India Rs. 3,60,00,000/-for manufacture of MPTFE on 22.8.2014 and Rs. 13,20,00,000/- for refurbishment of the Plant and HFP and FEP related items on 01.01.2015 @11.5% p.a. repayable in 5 annual installments commencing from F.Y. 2015-16. The 1st installment due for F.Y. 2015-16 amounting to Rs. 336.00 lakhs shown in Note-8 under the head 'Other Current liabilities being Govt. Plan Loan current maturities of long term debt'.

8. Secured by hypothecation of the company's entire stock of raw materials, finished goods, stock in process, consumables, stores & spares and book debts, plant and machinery and part of the land to the extent of Acres 60.285 out of the total land of Acres126.13 at Rudraram Village and guaranteed by the holding company, viz. Hindustan Organic Chemicals Ltd. The cash credit is repayable on demand and carries interest @14.2% p.a.

9. Margin money deposits are subject to first charge/ lien to secure the company's cash credit loan and term loan with a maturity period of 6 to 12 months. 15(B). The company has made a deposit with SBH (Corporate Liquid Term Deposit) for a maturity period of 1 year.

10. Balance standing to the debit/credit of parties is subject to confirmation by them and review by the Company. 14(B) Debts overdue for a period exceeding six months includes towards case filed in High Court of Andhra Pradesh, which is pending amounting to Rs.129.16 Lacs (Previous year Rs.129.16 Lacs)

11. Both employer and employees make monthly contributions of 10% instead of 12% as per BIFR scheme to a separately managed exempted EPF Trust.

12. As per Accounting Standard 15 "Employee benefits", the disclosures as defined in the Accounting Standard are given below:

The Company's Provident Fund is exempted under section 17 of Employees' Provident Fund and Miscellaneous Provisions Act,1952. Conditions for grant of exemption stipulate that the employer shall make good deficiency, if any, in the interest rate declared by the trust vis-à-vis statutory rate.

Defined Benefit Plan

The employees' gratuity fund scheme managed by a trust (Life Insurance Corporation of India) is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected unit credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in the same manner as gratuity.

Note - 13

The company has prepared these financial statements as per the format prescribed by Schedule III of the Companies Act, 2013 ('' the schedule'') issued by Ministry of Corporate Affairs. Previous period's figures have been recast/restated to conform to the classification required by the Schedule - III

Note - 14

Previous year's figures have been regrouped/reclassified, wherever necessary to confirm to current year's classification.

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Mar 31, 2014

NOTE NO. 1

BASIS OF PREPARATION OF FINANCIAL STATEMENTS:

The financial statements have been prepared under the historical cost convention on accrual basis to comply in all material aspects and in accordance with generally accepted accounting principles in India and the relevant provisions of the Companies Act,1956. The accounting policies have been consistently applied by the Company unless otherwise stated.

NOTE 2 (B)

Disclosure of shares held by its holding company

11060000 ( Pr. Year 11060000) Equity Shares fully paid up of Rs.1106 lakhs (Pr. Year Rs. 1106 lakhs ) are held by M/s Hindustan Organics Chemicals Limited, the holding company.

NOTE 2 (D)

The company has only one class of shares referred to as equity shares having a par value of Rs 10/- each.

Each holder of the equity share, as reflected in the records of the company as of the date of the shareholders meeting, is entitled to one vote in respect of each share held for all matters submitted to vote in the shareholders meeting.

4(A). The Term loan from HOCL is secured by part of the land to the extent of 82 acres of the factory & Plant and Buildings at Rudraram Village.

4(B). The Term loan from HOCL of Rs. 2744.06 lakhs is Zero coupon loan as per terms of the BIFR agreement and is repayable in seven equal annual instalments as per the loan agreement commencing from F Y 2010-11. The instalment due for F Y 2010-11 , 2011-12,2012-13, 2013-14 amounting to Rs.1568.03 lacs is not paid by the company and current maturities of F Y 2014-15 amounting to Rs.392.01 lacs are shown in Note -8 under the head '' Other Current liabilities'' being current maturities of long term debt.

4(C). The Term loan from HOCL of Rs.756.42 lakhs is Interest bearing @ 10.25% to 14.50% repayable in 5 annual instalments commencing from F Y 2010-11 as per the loan agreement. The company is continuing default in payment of instalment due and interest during the F Y 2010-11,2011-12 , 2012-13, 2013-14 amounting to Rs.305.14 lacs is not paid by the company and current maturities of F Y 2014-15 amounting to Rs.151.29 lacs are shown in Note -8 of the financial statements under the head ''Other Current liabilities'' being current maturities of long term debt and interest due amounting to Rs.558.65 lakhs under Interest accrued and due.

4(D) Term loan of Rs. 5.00 Crore @14.20% p.a. (floating) for refurbishment of PTFE plant and setting up Modified PTFE plant repayable in 5 years 3 months including monatorium period of 9 months after the completion of the project commencing from April, 2015. The company hypothecated land of 60.285 acres and plant and machinery as collateral security besides furnishing of counter guarantee by promotor company Viz., HOCL to this extent.

6(A).Secured by hypothecation of the company''s entire stock of raw materials, finished goods, stock in process, consumables, stores & spares and book debts, plant and machinery and part of the land to the extend of Acres 60.285 out of the total land of Ac 146.13 cents at Rudraram Village and guaranteed by the holding company, viz. Hindustan Organic Chemicals Ltd. The cash credit is repayable on demand and carries interest @14.2% p.a.

7(B).The information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the company.

13(B). Excise duty on closing finished goods in respect of goods manufactured by the company amounting to Rs. 21.24 lacs (previous year Rs.52.04 lacs) is included in the valuation of such stocks.

13(C). Finished goods, which have not moved for more than 3 years are valued at Rs.1.00/kg and the consequential difference in value of Rs.1.31 lacs (Previous year Rs.2.24 lacs) and there is no difference to charge off during the year.

14(A). Balance standing to the debit/credit of parties is subject to confirmation by them and reviews by the Company.

14(B) Debts over due for a period exceeding six months includes towards case filed in High Court of Andhra Pradesh, which is pending amounting to Rs.129.16 Lacs( Previous year Rs.129.16 Lacs)

15(A) Margin money deposits are subject to first charge/ lien to secure the company''s cash credit loan and term loan.

16A. The changes in valuation of Inventory of Finished goods for the year includes depletion on account of fall in selling price of finished goods at net realizable value being lower than cost amounting to Rs. 373.77 Lacs (previous year Rs. 836.19 Lacs).

17(A). Both employer and employees make monthly contributions of 10% instead of 12% as per BIFR scheme to a separately managed exempted EPF Trust.

18(B). As per Accounting Standard 15 "Employee benefits", the disclosures as defined in the Accounting Standard are given below:

The Company''s Provident Fund is exempted under section 17 of Employees'' Provident Fund and Miscellaneous Provisions Act,1952. Conditions for grant of exemption stipulate that the employer shall make good deficiency, if any, in the interest rate declared by the trust vis-a-vis statutory rate.

Defined Benefit Plan

The employees'' gratuity fund scheme managed by a trust (Life Insurance Corporation of India) is a defined benefit plan.The present value of obligation is determined based on actuarial valuation using the Projected unit credit Method,which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit seperately to build up the final obligation. The obligation for leave encashment is recognised in the same manner as gratuity.

18 (C) Actuarial valuation was carried out from F Y 2011-12 onwards.

18 (D) As per BIFR-MDRS, the company has implemented the wage revision for officers and non- officers of 1997 w.e.f. December 2010 and wage revision of 2007 w.e.f.October, 2012. Salary for the year includes arrears provided on account of pay fixation in the revised scale vide wage revision settlement as per DPE guidelines, based on 2007 wage revision for officers and non- officers amounting to Rs.1018.34 lacs (Pr.year Rs. 1044.57 lacs).

NOTE - 3 CONTINGENT LIABILITIES AND COMMITMENTS:

(Rs. In lacs) As at As at 31 March 2014 31 March 2013

(i) Contingent Liabilities

(a) ESI 13.46 13.46

(b) Wage Revision arrears for employees 0.00 1070.34

13.46 1083.80

(ii) Commitments

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for 287.25 0.00

300.71 1083.80

Note - 4 - TAXES ON INCOME:

26(A)The company has not provided deferred tax asset due to huge accumulated losses incurred since there is no virtual certanity to realise in future.

Note - 5

The company has prepared these financial statements as per the format prescribed by Revised Schedule VI of the Companies Act, 1956 (" the schedule'''') issued by Ministry of Corporate Affairs. Previous period''s figures have been recast/restated to confirm to the classification required by the revised Schedule - VI

Note - 6

Previous year''s figures have been regrouped/reclassified, wherever necessary to confirm to current year''s classification.

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Mar 31, 2013

BASIS OF PREPARATION OF FINANCIAL STATEMENTS:

The financial statement have been prepared under the historical cost convention on accrual basis to comply in all material aspects and in accordance with generally accepted accounting principles in India and the relevant provisions of the Companies Act,1956. The accounting policies have been consistently applied by the company unless otherwise stated.

NOTE - 1 CONTINGENT LIABILITIES AND COMMITMENTS:

(Rs. In lacs) As at As at 31 March 2013 31 March 2012 (i) Contingent Liabilities

(a) ESI 13.46 13.46

(b) Wage Revision arrears for employees 1070.34 1159.85

1083.80 1173.31

(ii) Commitments

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for 0.00 65.00

1083.80 1238.31

Note - 2 - TAXES ON INCOME:

2(A). Provision for current tax on profits for the year has not been made under Minimum Alternate Tax under section 115JB of Income Tax Act 1961 since the minimum of carried forward of losses or unabsorbed depreciation as per books of accounts are set off during the year against the current year book profit.

2 (B). The company has not provided deferred tax asset due to huge accumulated losses incurred since there is no virtual certanity to realise in future.

Note - 3

The company has prepared these financial statements as per the format prescribed by Revised Schedule VI of the Companies Act, 1956 (''''the schedule'''') issued by Ministry of Corporate Affairs. Previous period''s figure have been recast/restated to confirm to the classification required by the revised Schedule-VI

Note - 4

Previous year''s figures have been regrouped/reclassified, wherever necessary to confirm to current year''s classification.

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Mar 31, 2012

NOTE NO. 1

BASIS OF PREPARATION OF FINANCIAL STATEMENTS:

The financial statements have been prepared under the historical cost convention on accrual basis to comply in all material aspects and in accordance with generally accepted accounting principles in India and the relevant provisions of the Companies Act, 1956. The accounting policies have been consistently applied by the Company unless otherwise stated.

NOTE 2 : SHARE CAPITAL

NOTE 2 (D)

The company has only one class of shares referred to as equity shares having a par value of Rs 10.

Each holder of the equity share, as reflected in the records of the company as of the date of the shareholder meeting, is entitled to one vote in respect of each share held for all matters submitted to vote in the shareholder meeting.

The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the Annual General Meeting.

3(A). The Term loan is secured by part of the land to the extent 82.13 acres of the factory at Rudraram Village

3(B). The Term loan of Rs. 2744.06 lakhs is Zero coupon loan as per terms of the BIFR agreement and is repayable in seven equal installment as per the loan agreement commencing from F Y 2010-11. The installment due for F Y 2010-11 & 2011-12 amounting to Rs. 784.01 lakhs is not paid by the company and same is shown in Note - 9 under the head 'Other Current liabilities' being current maturities of long term debt.

3(C). The Term loan of Rs. 754.42 lakhs is Interest bearing @ 10.25% to 14.50% repayable in 5 annual installment commencing from F Y 2010-11 as per the loan agreement. The company is in continuing default in payment of installment due and interest during the F Y 2010-11 & 2011-12. The installment due of Rs. 301.77 lakhs is shown in Note -9 of the financial statements under the head "Other Current liabilities" being current maturities of long term debt and interest due amounting to Rs. 428.83 lakhs under Interest accrued and due.

NOTE 4 : OTHER LONG TERM LIABILITIES (Rs. In lakhs)

4(A). Creditors for capital goods includes an amount of Rs.850.74 lacs payable to M/S SRF Ltd towards supply and erection of Plant and Machinery relating to CDM Project. The total outstanding amount as per contract for plant and machinery supply and mechanical completion is Rs.1250.00 lacs. As per the terms of BOT contract dated 14-8-2007, the payment is to be made in the form of CERs. The contract equated Rs.1250.00 lacs to 6,59,500 CERs in 5 installments of 131900 each. However, the total installments of CERs are reduced to 4.13 and the company has so far transferred 210652 CERs as 1.32 installments for a value of Rs.399.26 lacs. The balance Rs.850.74 lacs is payable in balance 2.81 installments as per revised contract terms equaling to 448848 CERs.

5(A).Secured by hypothecation of the company's entire stock of raw materials, finished goods, stock in process, consumables, stores & spares and book debts, plant and machinery and part of the land to the extent of Ac 64 out of the total land of Ac 146.13 cents at Rudraram Village and guaranteed by the holding company, viz. Hindustan Organic Chemicals Ltd. The cash credit is repayable on demand and carries interest 15.5% p.a.

NOTE 6: TRADE PAYABLES (Rs. In lakhs)

7(A). Disclosure in accordance with Section 22 of Micro, Small and Medium Enterprises Development Act, 2006

7(B). The information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the company.

NOTE 8 : INVENTORIES

8(B). Excise duty on closing finishing goods in respect of goods manufactured by the company amounting to Rs.16.87 lacs (previous year 5.34 lacs) is included in the valuation of such stocks.

8(C). Finished goods, which have not moved for more than 3 years are valued at Rs. 1.00/kg and the consequential difference in value of Rs. 2.24 lacs (Previous year Rs. 0.00 lacs) has been charged off during the year.

NOTE 9: TRADE RECEIVABLES

15(A). Balance standing to the debit/credit of parties is subject to confirmation by them and reviews by the Company.

NOTE 10: OTHER INCOME

10(A). The company has determined the Defined Benefit Plans being Gratuity and leave encashment during the year on actuarial valuation, as certified by actuary. This has resulted in excess provision of Rs. 65.89 lacs made in earlier years, which has been written back included in other non-operating income.

NOTE 11: EMPLOYEE BENEFITS EXPENSES

11(A). Both employer and employees make monthly contributions of 10% instead of 12% as per BIFR scheme to a separately managed exempted EPF Trust.

11(B). As per Accounting Standard 15 "Employee benefits", the disclosures as defined in the Accounting Standard are given below:

The Company's Provident Fund is exempted under section 17 of Employees' Provident Fund and Miscellaneous Provisions Act, 1952. Conditions for grant of exemption stipulate that the employer Shall make good deficiency, if any, in the intrerest rate declared by the trust vis-a-vis statutory rate.

Defined Benefit Plan

The employees' gratuity fund scheme managed by a trust (Life Insurance Corporation of India) is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected unit credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognised in the same manner as gratuity.

11(C). Previous year's figures are not reported, as the actuary valuation was not carried out in earlier years and respective details are unavailable.

11(D). The arrears on account of pay fixation in the revised scale with effect from 01-01-1997 vide wage revision settlement as per DPE guidelines, have not been provided for in books at the close of the year amounting to Rs.1160 lakhs (Pr. year Rs.1552 Lakhs). As per BIFR-MDRS, the company has implemented the wage revision for officers and non officers w.e.f. December 2010 and arrears to this effect could not be charged to profit and loss account since BIFR categorically has stipulated that arrears should be released subject to availability of funds. Accordingly, the liability has been shown under contingent liability.

11 (E) An amount of Rs.95.71 lacs had been incurred towards VRS payments for employees (Rs. 58.45 for 6 employees for the current year and Rs. 37.26 lacs towards balance amount of an amortized) inprevious year Rs. 74.52 lacs in accordance with BIFR's Modified Draft Rehabilitation Scheme(MDRS) in August 2011. This total amount is taken to P & L Account. In accordance with BIFR's Modified Draft Rehabilitation Scheme (MDRS). As per AS-15 issued by ICAI, VRS expenditure is to be written off

over the pay back period only and cannot be amortized. However the company is following the BIFR Scheme.

NOTE - 12 CONTINGENT LIABILITIES AND COMMITMENTS:

(Rs. In lakhs)

As at As at 31 March 2012 31 March 2011 (i) Contingent Liabilities

(a) Claims against the company not acknowledged as debt 0.00 12.01

(b) Guarantees/FLC/ILC/Obtained as on 31-03-12 0.00 10.00

(d) ESI 13.46 13.46

(e) Wage Revision arrears for employees 1159.85 1800.00

1173.31 1835.47

(ii) Commitments

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for 65.00 0.00

65.00 0.00

1238.31 1835.47 Note - 13 - TAXES ON INCOME:

13(A). Provision for current tax on profits for the year has not been made under Minimum Alternate Tax under section 115JB of Income Tax Act 1961 since the minimum of carried forward of losses or unabsorbed depreciation as per books of accounts are set off during the year against the current year book profit.

13 (B). The company has not provided deferred tax asset due to huge accumulated losses incurred since there is no virtual certainty to realise in future.

Note - 14

The company has prepared these financial statements as per the format prescribed by Revised Schedule VI of the Companies Act, 1956 ("the schedule") issued by Ministry of Corporate Affairs. Previous period's figure have been recast/restated to confirm to the classification required by the revised Schedule-VI

Note - 15

Previous year's figures have been regrouped/reclassified, wherever necessary to confirm to current year's classification.

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Mar 31, 2011

1. The Company entered into a lease-cum-sale agreement with Andhra Pradesh Industrial Infrastructure Company (APIIC) in April 1986 for the land acquired by APIIC under the Land acquisition act and allotted 146.13 acres to the company. Subsequently the title in respect of the land had been transferred in favour of the company.

2. SECURED LOANS:

2.1 Cash Credit, ILC/FLC/BG, Short Term Corporate Loan and Long Term Loan facilities from State Bank of Hyderabad is secured by hypothecation of raw materials, stock-in-process, finished goods, consumable stores,book debts, Buildings, Plant and Machinery and Company's Land (Ac.64.00 cents out of the total land of Ac 146.13 cents at Rudraram Village).

2.2 Cash Credit, ILC/FLC/BG, Short Term Corporate Loan and Long Term Loan facilities from State Bank of Hyderabad are guaranteed by the holding company, viz. Hindustan Organic Chemicals Ltd.

2.3. An amount of Rs.3874.22 lacs (Previous year Rs.3753.17 lacs) is due to Hindustan Organic Chemicals Limited (HOCL) including Rs.121.06 lacs (Previous year Rs.128.97 lacs) provided during the year as interest on HOCL loan for which 1st Charge was created on Company's land (Ac. 82.00 cents of land out of the total land of Ac 146.13 cents at Rudraram Village).

2.4 The company has provided an amount of Rs. 135.99 lacs towards interest on HOCL Loan. However no interest was provided for loan amount of Rs.2609.72 lacs pursuant to BIFR Modified Draft Rehabilitation Scheme.

2.5 During the year an amount of Rs.130.00 lacs was received from HOCL (Holding Co.) as Unsecured Loan and interest to the extent of Rs. 14.93 accrued on the loan.

3. FIXED ASSETS:

3.1. The Company entered into a lease-cum-sale agreement with Andhra Pradesh Industrial Infrastructure Company (APIIC) in April 1986 for the land acquired by APIIC under the Land acquisition act and allotted to the company. Subsequently the title in respect of the land had been transferred in favour of the company in the year 1999-2000.

3.2. During the year the company has recognized an addition of Rs.1250.00 lacs in the head Plant and Machinery pursuant to BOT contract dated 14.8.2007 entered with M/S SRF LTD. As per the terms of the contract the CDM Project is to be implemented with terms and conditions.

The terms and conditions in brief are as under:

a. SRF Ltd. shall procure and install the CDM Plant for a contract price of Rs.1250.00 lacs, the plant is used for incinerating R-23 gas to claim for CERs from UNFCCC.

b. The Plant shall be handed over to the company after the Mechanical run and commissioning of the system.

c. During the year 2010-11 the mechanical completion and commissioning of the plant was completed in April 2010 (7th April, 2010) and handed over to the company.

Pursuant to the above the company had capitalised Rs. 1250.00 lacs as Plant and Machinery addition during the year. Along with the above addition the company had capitalised the below amounts as addition to the fixed assets.

Plant and Machinery Rs.260.70 lacs

Furniture and Fixtures Rs.1.91 lacs

Computers along with software Rs.14.14. lacs

Machinery spares are accounted in closing stock as they are of general usage.

3.3 No impariment of assets is done during the current financial year as per AS-28.

4. INVENTORIES:

4.1 During the year the company reported the closing inventory of Rs.2081.07 lacs. Out of the total the stock-in-process amounts to Rs.65.86 lacs has detailed under and CER's stock was valued at Rs.1697.07 lacs. With regard to CERs (Carbon Emission Reductions), they are the Credits issued by UNFCCC(United Nations Framework Convention on Climate Change) to the company for successful reduction / incineration of R-23 gas. R-23 gas falls in the list of gases having potential of global warming and is eligible category of Carbon Credits as per the KYOTO Protocol. Hence the company is eligible for claiming Carbon Credits after the incineration of the R-23 gas. In the previous year, the company incinerated R-23 gas with technology help with BOT Contractor SRF Ltd. (vide Built-operate-transfer agreement dated(14-8-2007) and filed the data to UNFCCC for getting Carbon Credits (CERs) During the current financial year 2010-11, UNFCCC confirmed 420793 CERs to the company in its site (www.unfccc.int) after deducting 2% i.e., 8588 CERs as adaptation fund deduction. Of the above CERs received, the company had forgone 210652 CERs as instalments payment to SRF Ltd., for the Plant and Machinery as per the BOT agreement of Plant & Machinery entered 14th August,2007. After the above outflow of CERs, the company is left with 210142 CERs treated as finished closing stock. The value of the CERs is taken at Rs.169706945/- adopting the value of 1 CER in the International Exchange as on 31-03-2011 at 13.07 Euros and taking the Euro value at Rs.63.05 in terms of INR and valued at 98% of the total value (considering 2% margin for valuation)

4.2. Excise duty on closing finishing goods in respect of goods manufactured by the company amounting to Rs.5.34 lacs (previous year 5.47 lacs) is included in the valuation of such stocks.

4.3. During the current year finished goods, which have not moved for more than 3 years are valued at Rs.1.00/kg and the consequential difference in value is Rs.0.00 lacs (Previous year Rs.0.00 lacs).

5. SUNDRY DEBTORS:

5.1. Debtors for the year amount to Rs.284.17 lacs net of provision for doubtful debts provided for Rs.309.64 lacs.

6. LOANS AND ADVANCES:

6.1 Telephone deposits amounting to Rs.0.57 lacs pertains to more than 3 years period. No provision is made against this as it is recoverable in nature.

7. CURRENT LIABILITIES :

7.1 Sundry Creditors includes Rs.2.23 lacs payable to Micro and small enterprises as against nil amount in the previous year. No interest is payable on the above amount.

7.2 Creditors for capital goods include an amount of Rs.862.25 lacs is payable to M/S SRF Ltd towards supply and erection of Plant and Machinery relating to CDM Project. The total outstanding amount as per contract for plant and machinery supply and mechanical completion is Rs. 1250.00 lacs. As per the terms of BOT Contract dated 14-8-2007, the payment is to be made in form of CERs. The Contract equated Rs.1250-00 lacs to 6,59,500 CERs in 5 instalments of 131900 each. However, the total instalments are reduced to 4.13 and the company transfered 210652 CERs as 1.32 instalments and valued them Rs.399.26 lacs. The balance Rs.850.74 lacs is payable in balance 2.81 installments as per revised contract terms equalant to 448848 CERs.

7.3 Amounts payable to PF, Property Tax, Nala Tax, AP Commercial Tax pertain to more than one year payables.

7.4 Wage Revision (1997) settlement arrears pertaining to employees are not provided in the books of accounts since the arrears are payable only when the company generates adequate surplus of funds. However, it is considered as Contingent liability in the Financial Statements on an estimated amount basis.

8. EMPLOYEES' BENEFIT PLANS:

8.1 Both employer and employees make monthly contributions of 10% each to a separately managed exempted EPF Trust.

8.2 Employees Gratuity Fund Scheme is managed a separate Trust maintained with LIC of India through annuity scheme. The present value of the obligation is determined by acturial valuation using projected unit credit method which recognizes the period of service proportionate to unit of employee benefits.

8.3 PROVISION FOR LEAVE ENCASHMENT:

An amount of Rs.147.98 lacs is provided as provision for the period ended 31.3.2011 (previous year Rs.86.10 lacs). This provision is made as per revised AS-15 issued by ICAI

9. INCOME:

9.1. Income for the company consist of sales (taken at gross) and later net of exsice duty and other income. In accounting sales the company had deducted an amount of Rs.89059.00 as trade discount on sale of CFM which is passed by way of journal entry and not in the invoices raised.

9.2. The other income of the company includes sale of CERs, job work of Vikram Sarabhai Space Centre (VSSC) and others. The company accounted for sale of CERs during the year. During the current financial year 210652 CERs received by the company are transferred to M/S SRF Ltd against payment of instalment for CDM Plant and 9587.62 CERs are deducted while issuing by UNFCCC against adaptation fund. The transfered CERs are considered as income as the risk and reward was transferred and reported under the head other income as 'CERs Sale' valued at Rs.399.26 lacs. The CERs given to SRS Limited are valued as per the BOT Agreement, dated 14-08-2007 wherein, the company equated Rs.12,50,00,000 (total cost of Plant & Machinery and Installation / commissioning cost of the CDM Plant and Machinery) to Rs.6,59,500 CERs in the contract. The CERs given to UNFCCC are valued at the market price in Stock Exchange of CERs on the date of such deduction by UNFCCC.

9.3. The company entered into a MOU with Vikram Sarabhai Space Centre (VSSC) in Financial Year 2009-10 for research and development of certain chemical compounds. As per the MOU it is a tripartite MOU with each party having its own mile stones and responsibilities. The company income amounted to Rs.40.00 lacs in the MOU. The company raised invoice of Rs.20.00 lacs from VSSC in financial year 2009-10 and received the same in the current financial year 2010-11 and the second invoice was raised for Rs.15.00 lacs in the financial year 2010-11. The company treated the amount received in financial year 2009- 10 amounting to Rs.20.00 lacs as prior paid income and Rs. 15.00 lacs received in the year 2010-11 as 'miscellaneous income'. The company accounted the amount received from VSSC as income as the milestones were achieved and also as the agreement with VSSC does not contain clauses of any refund of money to VSSC.

10. VRS EXPENDITURE

10.1 An amount of Rs.223.57 lacs had incurred towards VRS payments for 31 employees in accordance with BIFR's Modified Draft Rehabilitation Scheme(MDRS) in Jan 2009. This amount is amortized and taken to P & L Account over a period of 3 years. (Rs.37.26 in 2008-09, Rs. 74.52 lacs in 2009-2010, Rs.74.52 Lacs in 2010-11 included in Schedule-15) the balance of Rs.37.27 Lacs will be amortised in the next financial year 2011-12. This is in accordance with BIFR's Modified Draft Rehabilitation Scheme (MDRS). As per AS-15 issued by ICAI , VRS expenditure is to be written off over the pay back period only and cannot be amortised. However the company is following the BIFR Scheme.

11. REFURBISHMENT EXPENDITURE:

11.1 An amount of Rs.285.14 lacs has been incurred towards Refurbishment Expenditure on Plant and Machinery. This amount is amortised over a period of 5 years. Till the financial year 2010-11 Rs.180.01 lacs was taken to P & L Account and balance will be charged to P & L Account for the next two years in accordance with BIFR's Modified Draft Rehabilitation Scheme (MDRS). As per AS-6 issued by ICAI, any expenditure incurred for improvement in performance of the Plant & Machinery, should be capitalized and depreciated accordingly as per Schedule -XIV applicable to the Company. However the Company is following the guide lines contained in the BIFR's MDRS in this matter deviating from AS-6 issued by ICAI.

12. CONTINGENT LIABILITIES NOT PROVIDED FOR:

2010-11 2009-10 Rs.in lacs Rs.in lacs

A Claims against the Company not acknowledged as debts. 12.01 12.01

B FLC/ILC Obtained as on 31-03-2010 0.00 0.00

C ESI 13.46 13.46

D Wage Revision(1997) settlement -Salary arrears for Officers on estimated basis 700.00 600.00

E Wage Revision(1997) settlement -Salary arrears for Non-officers 1100.00 1100.00

TOTAL 1825.47 1725.47

7 Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances). 0.00 0.00

8 Expenditure incurred in foreign currency NIL NIL

13. Unpaid overdue amounts due on 31st March, 2011 to Small Scale/Ancillary Industrial suppliers on account of principal amount together with interest aggregated to Rs.0.00 lacs (Previous year Rs.0.00 lacs). This disclosure is based on information available with the company with regard to the status of the suppliers as defined under interest on delayed payments to Small Scale and Ancillary Industries Undertaking Act, 1993.

14. Balance standing to the debit/credit of parties is subject to confirmation by them and reviews by the Company.

16. ACCOUNTING FOR TAXES:

16.1.The company has not provided deferred tax asset/liability due to huge'accumulated losses in the balance sheet and is uncertain of realizing deferred tax asset against future taxable income.

17. Statutory Auditors' remuneration for Statutory Audit is Rs.0.60 lacs and Limited review fee of Rs.0.24 lacs.

22. RELATED PARTIES DISCLOSURE:

The company is a subsidiary of HOCL (HINDUSTAN ORGANIC CHEMICALS LIMITED)

Interest payable to HOCL Rs.135.99 lacs

Secured Loan from HOCL (including interest) Rs.4019.15 lacs

KEY MANAGEMENT PERSONNEL: SHRI T S GAIKWAD, Managing Director

23. SEGMENT REPORTING:

The company is in full-fledged manufacturing activity of Chemicals. There are no separate Primary and Secondary reportable segments. All the manufacturing activity is considered as Single segment.

24. PRIOR PERIOD ITEMS:

During the year the company had net off Rs.20.08 lacs prior period expense with Rs.23.24 lacs of prior period income and reported a net prior period income of Rs.3.16 lacs.The prior period income is the unpaid liabilities/unclaimed liabilities for more than 3 years.

25. LITIGATIONS AT VARIOUS AUTHORITIES:

SI.Authorities Nature of Quantam Remarks No. Litigations 1 Hon'ble High Recovery from Rs.132.00 lacs The company had Court of A.P Debtors a favorable judgment from the single bench. The deponent had approached full bench of High Court.

2 Dy.Commissio Penalty u/s Rs.19.00 lacs The case is yet ner of 53(3) of to come for Appeals, A.P. Vat Act, first hearing. VAT 2005 Not provided F.Y. 2010-11. in the books of accounts.

26. Previous year figures have been regrouped/reclassified/recast wherever necessary to conform to current year's classification.

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Mar 31, 2010

1. OTHERS:

1. The Company entered into a lease-cum-sale agreement with Andhra Pradesh Industrial Infrastructure Company (APIIC) in April 1986 for the land acquired by APIIC under the Land acquisition act and allotted to the company. Subsequently the title in respect of the land had been transferred in favour of the company.

2. LOANS:

2.1 Cash Credit, ILC/FLC/BG, Short Term Corporate Loan and Long Term Loan facilities from State Bank of Hyderabad is secured by hypothecation of raw materials, stock-in-process, finished goods, consumable stores,book debts, Buildings, Plant and Machinery and Companys Land Ac.64.00 cents out of the total land of Ac 146.00 cents.

2.2 Cash Credit, ILC/FLC/BG, Short Term Corporate Loan and Long Term Loan facilities from State Bank of Hyderabad are guaranteed by the holding company, viz. Hindustan Organic Chemicals Ltd..

3. An amount of Rs. 3753.17 lacs (Previous year Rs.3596.93 lacs) is due to Hindustan Organic Chemicals Limited (HOCL) including Rs.128.98 lacs (Previous year Rs.110.98 lacs) provided during the year as interest on HOCL loan for which 1st Charge was created on Companys Ac. 82.00 cents of land out of the total land of Ac 146.00 cents.

4. Credit has not been taken into account in respect of claims for penalty / damage recoverable from certain suppliers/ works contractors arising due to non- adherence to the stipulated contractual terms.

5. During the current year finished goods, which have not moved for more than 3 years are valued at Rs.1,00/kg and the consequential difference in value is Rs.0.00 lacs (Previous year Rs.O.OO lacs).

6. CONTINGENT LIABILITIES NOT PROVIDED FOR:

2009-10 2008-09 Rs.in lacs Rs.in lacs

A Claims against the Company not acknowledged as debts. 12.01 12.01

B FLC/ILC Obtained as on 31-03-2010 0.00 134.50

C ESI 13.46 13.46

D Salary arrears for Officers 600.00 570.00

E Salary arrears for Non-officers 1100.00 1030.00

F Differential Sales Tax due to non submission of "C" forms 13.88 276.07

TOTAL 1739.35 2036.04

7. Estimated amount of contracts remaining to be executed or capital account and not provided for (net of advances). 0.00 0.00

8. Expenditure incurred in foreign currency NIL NIL

9. Excise duty on closing finishing goods in respect of goods manufactured by the company amounting to Rs.5.47 lacs (previous year 1.79 lacs) is included in the valuation of such stocks.

10. Unpaid overdue amounts due on 31st March, 2010 to Small Scale/Ancillary Industrial suppliers on account of principal amount together with interest aggregated to Rs.O.OO lacs (Previous year Rs.O.OO lacs). This disclosure is based on information available with the company with regard to the status of the suppliers as defined under interest on delayed payments to Small Scale and Ancillary Industries Undertaking Act, 1993.

11. Balance standing to the debit/credit of parties is subject to confirmation by them and reviews by the Company.

12. As required by Accounting Standard 28 loss on impairment of incinerator system an amount of Rs.O.OO (Previous year 34.25 lacs) is charged off during the year.

13. As per AS- 22 issued by ICAI, the company has not accounted the related tax on them in its books as deferred tax assets/liability, as no sufficient income is available to realize them. Company shall recognize related tax on them, as deferred tax assets in succeeding years only when there is certainty that sufficient taxable income will be available.

14. Auditors remuneration includes Statutory Audit fee Rs.0.60 lacs and Limited review Rs.0.24 lacs.

15. During the year HFC viz. R-23 gas storage facilities were created under CDM project. The company accumulated HFC-23 Gas 42.5 MT, stored in the tank has been considered for eligible CERs to the tune of 497250 CERs. Out of this SRF(BOT Contractor of CDM Project) share is two years installments around 263800 CERs and PWC - CDM Project Consultants share is around 5% i.e. 11672.5 CERs. Balance is pertaining to HFL i.e. 221777.50 CERs. Insurance coverage is also taken for Rs.43.50 crores to cover any eventuality for one year accumulation of HFC-23 Gas. The eligible CERs of our portion 221777.50 CERs is considered as WIP and valued at the lowest rate quoted during the year in the international market i.e.Euro 10.5 per CER at exchange conversion rate of Rs.60 per EURO as on 31.3.2010. The value of CERs taken as WIP is Rs.1397.00 lacs. AsperAS-2 issued by ICAI in respect of closing stock valuation shall be made at Cost or Net Realisable value which ever is less. The cost of producing R-23 gas is Nil. The valuation of R-23 Gas is in deviation of AS-2.

16. Previous year figures have been regrouped/reclassified/recast wherever necessary to conform to current years classification.