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12th Annual Report 2016-17 1

KRIBHCO SHYAM FERTILIZERS LIMITED

Director’s Report 02

Auditor’s Report 24

Balance Sheet 30

Statement of Profit & Loss 32

Cash Flow Statement 35

Significant Accounting Policies 37

Notes Forming Part of Accounts 46

Contents

2 12th Annual Report 2016-17


DIRECTORS’ REPORT

Dear Members

Your Directors are pleased to present the Twelfth Annual Report on the business and operations of your Company together with the Audited Statement of Accounts for the Financial Year ended on March 31, 2017.

FINANCIAL RESULTS (` in Lakh)

Particulars Year ended 31.03.2017 Year ended 31.03.2016Revenue from Operations & Other Income 161720.69 190224.42Profit Before Interest, Depreciation & Tax 16249.39 19288.81Less : Interest 10439.82 13037.63Less : Depreciation 8080.36 8041.72Profit/(Loss) Before Tax (2270.79) (1790.54)Less : Tax Expenses 0 24.93Add : Other Comprehensive Income (283.14) (22.63)Total Comprehensive Income (2553.93) (1838.10)

PERFORMANCE HIGHLIGHTS

During financial year 2016-17, the Company produced 9.318 Lakh MT of Urea and 5.478 Lakh MT of Ammonia with capacity utilization of 107.78% and 109.21% for Urea and Ammonia respectively. The Energy consumption figures for Urea was 5.6487 Gcal/MT and Ammonia was 7.937 Gcal/MT. During the year, the production beyond reassessed capacity was 0.67 Lakh MT.

The production level achieved in the year 2016-17 were much below the production planned for year as company had to take a unplanned shutdown of 26 days to rectify the damage to CO2 absorber in Ammonia plant.The production level was also down due to continued problem with the Synthesis Converter which is limiting the plant load. Action has been taken to address these problems and a new Synthesis Basket of S-300 design has been ordered on M/s HTAS, Denmark and likely to be installed in shutdown planned in September 2017. Production levels of ammonia and urea are expected to increase substantially after this replacement.

The marketing environment during the year has been quite hostile and the demand for Urea has been relatively poor. Despite this, your Company has achieved excellent performance in its dispatch and sales operations.

During the year 9.38 Lakh MT Urea was dispatched to various destinations and 8.75 Lakh MT Urea was sold. During the year your company has imported and traded in DAP.

The New Urea Policy 2015 has been announced effective from 01.06.2015. As per the new policy, KSFL falls under Group I of gas based Urea units. As per the revised energy norms communicated by Govt. of India for the period 01.06.2015 to 31.03.2018 shall be 5.643 Gcal/MT of urea and the energy norm to be achieved for 2018-2019 onwards shall be further reduced to 5.5 Gcal per MT. For production beyond Reassessed Capacity, the units will be entitled to variable cost plus incentive equal to the lowest of the PMT fixed costs of all the indigenous Urea units. The present lowest PMT fixed cost for indigenous Urea units is around ` 2300/- PMT.

The subsidy income includes the impact of additional fixed cost reimbursement of ` 350/- PMT in respect of the production upto reassessed capacity and incentive at ` 2300/- PMT beyond reassessed capacity. However, the reimbursement from Government is currenty being done without considering impact of additional fixed cost though notified under modified NPS III.



Action for improving the energy norm to meet the new norm of 5.50 Gcal/MT w.e.f. 01.04.2018 is underway and study is being undertaken. In view of huge capital outlay the Company is taking up the matter with Govt. of India. The issues relating to reimbursement of Marketing Margin and Additional Cost due to non regcognized Input Taxation (ACTN) are being contested by the Fertilizer Industry and pending as on date before the Court of Law.

Your Company has prepared its financial statements under newly introduced IND AS which prescribes different formats such as Balance Sheet, Statement of Profit and Loss (duly reflecting Profit and Loss in the year and other Comprehensive Income separately), Statement of Changes in Equity etc.

During the year, your Company has done its maiden issue of Unlisted, Unsecured, Rated, Non-Convertible Debentures in Series A and B of ` 100 crore each totaling to ` 200 crore.

FUTURE OUTLOOK

While the production levels during year 2017-18 would remain constrained, the Company is very positive about future outlook as all production limitations are likely to be addressed in the shutdown planned during September 2017 and Company would be back on path of high production and productivity.

Production target for FY 2017-18 has been set at 9.54 Lakh MT of Urea with an energy consumption of 5.577Gcal/MT of Urea. To achieve these targets, a comprehensive Performance Plan has been prepared which sets performance parameters and targets.

DIVIDEND

The Directors of the Company do not recommend any dividend for the year 2016-17.

FIXED DEPOSITS

Your Company has not accepted any fixed deposits from the public during the year under review.

SHARE CAPITAL

The paid up Equity Share Capital as on March 31, 2017 was ` 800.06 crore. During the year under review, the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity. As on March 31, 2017, none of the Directors of the Company hold shares or any convertible instruments of the Company.

Krishak Bharati Cooperative Limited (KRIBHCO), promoter of the Company, which was holding 92.51% of the paid up share capital of the Company at the beginning of the year, had further acquired approximately 7.49% equity shares of the Company from STL Fertilizers Pvt. Ltd on April 13, 2016 and 2 nos of equity shares from Shyam Basic Infrastructure Projects Pvt. Ltd., on April 21, 2016. As on 31.03.2017, the entire shareholding of the Company being held by KRIBHCO.

DIRECTORS

Shri Alok Tandon (DIN 00027563), Director of the Company has resigned from the directorship of the Company w.e.f. 20.04.2016. Your Directors wish to place on record their gratitude and appreciation for valuable services rendered by him during his tenure.

Shri. Virendra Prakash Kaushik (DIN 00059733) was the Managing Director of the Company since 01.05.2007. On completion of his tenure on 30.04.2016, he was relieved from the responsibilities of the Managing Director of the Company. Your Directors wish to place on record their gratitude and appreciation for valuable services rendered by him during his tenure.

Shri N. Sambasiva Rao, Director of the Company (DIN 06400663) and Managing Director of KRIBHCO had taken the additional charge of Managing Director of the Company for the period from 01.05.2016 to 27.05.2016. Shri O.P.Gupta, Sr. Vice President (Works) posted at Shahjahanpur Plant appointed as an Additional Director of the Company on 28.05.2016 and has also given the additional charge of Managing Director of the Company w.e.f. 28.05.2016. Subsequently Shri O. P. Gupta (DIN 07519713) was posted to Corporate Office at Noida w.e.f. 12.12.2016



with independent and exclusive charge of Managing Director of the Company.

In accordance with the provisions of Companies Act, 2013 and Company’s Articles of Association, Dr. Chandrapal Singh Yadav (DIN 00023382), Director of the Company retires at the ensuing Annual General Meeting and being eligible, offer himself for re- appointment. The Board of Directors recommends his re-appointment for consideration of the shareholders.

Consequent to completion of two term as an Independent Director, Shri Vijai Narain Rai (DIN 0036496) and Smt. Nishi Arora Sabharwal (DIN 06963293) ceased to be Director of the Company w.e.f. 19.03.2017. Your Directors wish to place on record their gratitude and appreciation for valuable services rendered by them during their tenure.

Shri B. D. Sinha (DIN 00026823) and Smt. Shilpi Arora (DIN 00264257) were inducted as Additional Directors of the Company under the category of Independent Director (Non-executive) w.e.f. 20.03.2017 for a period of 2 years and are not liable to be retire by rotation. As per the provisions of Section 161 of the Companies Act, 2013, their Directorship is upto the date of the ensuing Annual General Meeting of the Company. The Board of Directors recommends their appointment in the ensuing Annual General Meeting.

CORPORATE GOVERNANCE

Your Company has followed good Corporate Governance Practices in accordance with the provisions of the Companies Act, 2013 and Rules made thereunder. The various details on Board Composition, Managerial Remuneration, meetings of the Board, about its Committees, Key Managerial Personnel etc., are given hereunder:

BOARD COMPOSITION

As on 31.03.2017, the Board of Directors of your Company comprises of seven members of which four are Non-Executive Directors, one is Executive Director and two are Non-Executive Independent Directors including a Woman Director. The Chairman

of the Company is a Non-Executive and is a KRIBHCO (Promoter) nominated Director. The appointment of Directors is being made by the resolutions of the Board of Directors and Shareholders of the Company.

MANAGERIAL REMUNERATION

The Non-Executive Directors are paid sitting fees for attending each meeting of the Board of Directors and Committees thereof. During the year none of the Directors have been granted any stock options, commissions etc. The remuneration paid to the Executive Director is in accordance to the recommendation of the Nomination and Remuneration Committee to the Board of Directors and Shareholders of the Company.

MEETINGS OF BOARD

The Board of Directors of the Company met 05 times during the financial year 2016-17 on 21st April, 2016, 27th May, 2016, 26th July, 2016, 14th November, 2016 and 7th March, 2017.

COMMITTEES OF THE BOARD

Currently the Board has three Committees – Audit Committee, Nomination and Remuneration Committee and Corporate Social Responsibility Committee.

AUDIT COMMITTEE

The Audit Committee met 4 times during the finan-cial year 2016-17 on 21st April, 2016, 26th July, 2016, 14th November, 2016 and 7th March, 2017.

With the change in Independent Directors, the Audit Committee of the Board was reconstituted w.e.f. 20.03.2017 and comprises of following three Directors with Independent Directors forming a majority.

Shri B. D. Sinha – Chairman;

Shri N. Sambasiva Rao – Member;

Smt. Shilpi Arora – Member

In accordance to the provisions of the Act, the Company has established a Vigil Mechanism and



formulated a policy in order to provide a framework for responsible and secure Vigil Mechanism. The Vigil Mechanism Policy is placed on the website of the Company at http://ksfl.in/coc.htm.

NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee met 05 times during the FY 2016-17 on 21st April, 2016, 17th May, 2016, 26th July, 2016, 14th November, 2016 and 7th March, 2017.

With the change in Independent Directors, the Nomination and Remuneration Committee of the Board was reconstituted w.e.f. 20.03.2017 and comprises of following three directors with Independent Directors forming a majority.

Shri N. Sambasiva Rao – Chairman;

Shri B. D. Sinha – Member;

Smt. Shilpi Arora – Member

In accordance to the provisions of the Act, the Company has formulated a Nomination and Remuneration Policy for its Directors, Key Managerial Personnel and Senior Management. The Policy is placed on the website of the Company at http://ksfl.in/coc.htm.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

With the change in Independent Directors, the Corporate Social Responsibility Committee of the Board was reconstituted on 20.03.2017 and comprises of following three directors of which one is an Independent Director.

Shri N. Sambasiva Rao – Chairman;

Shri B. D. Sinha – Member;

Shri O. P. Gupta – Member

Your Company has formulated a Corporate Social Responsibility Policy and the same is placed on the website of the Company at http://ksfl.in/coc.htm. In view of the accumulated losses in the Company’s financial statement, the Company has not undertaken

any CSR activities, project or program during the year. Accordingly, No meeting of Corporate Social Responsibility Committee (CSR) held during the Financial Year 2016-17.

KEY MANAGERIAL PERSONNEL’S

The tenure of Shri R. Venkataramanan, Chief Financial Officer of the Company has been extended for a further period of three years w.e.f. 01.01.2017. The extension has been made in accordance to the provisions of section 203 of the Companies Act, 2013.

The Key Managerial Personnel of the Company are as under:

Shri O.P. Gupta – Managing Director;

Shri R. Venkataramanan – Chief Financial Officer;

Shri Bipin C. Phuloria – Company Secretary

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received necessary declarations from each Independent Director of the Company confirming that he/she met the criteria of independence as prescribed under section 149(6) of Companies Act, 2013.

BOARD EVALUATION

During the year under review the evaluation of performance of the Directors individually as well as evaluation of Board and its Committees has been done. The evaluation process was carried by circulating evaluation forms listing out assessment criteria for the performance of the Board, its Committees, Chairperson and all the individual Directors. The performance evaluation of each Director was carried out by all the Directors excluding the Director being evaluated in addition to performance evaluation of Board, Chairperson and Committees of the Board by giving the ratings in evaluation form. The Board had reviewed the rating and remarks given by Directors and noted for further improvement. The Directors expressed to continue with the existing evaluation process.



RISK MANAGEMENT

Your Company has put in place proper and adequate systems and practices, policies relating to the identification, assessment, monitoring and mitigation of strategic, operational and environmental risks to achieve its business objectives. The systems are reviewed from time to time to identify the element of the risk and to take preventive action. The Company has also taken comprehensive Mega Risk Insurance coverage for its assets. In addition to business risk, the safety of employees and workers is also of utmost importance in your Company. To make healthy and safe environment, the Company has implemented Occupational Health and Safety (OHS) and obtained OHSAS-18001 certification.

INTERNAL FINANCIAL CONTROL

Your Company has a well-defined Internal Control System that is adequate and commensurate with the nature of its business, size and complexity of its operations to ensure adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial disclosures. The Company maintains its records in ERP system and the work flow and approvals are routed through ERP. The Company also have an effective budgetary control mechanism in place to take care of the capex and revenue expenditure. There is a monitoring system in place to compare the actual performance with the budget.

The Company’s Internal Auditors scrutinize and sample check the internal controls and the work flow of the organization with the policies, procedures, manuals, approvals of the Management and Board of Directors of the Company. The report of the Internal Auditor with Management comments is submitted to the Audit Committee for its review.

AUDITORS & AUDITORS REPORT

M/s S. K. Mehta & Co., Chartered Accountants, who are the Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The Company has received from the auditors a certificate to this effect that their re-appointment, if made, would be within the prescribed limits & conditions specified in sections 139 & 141 of the Companies Act, 2013. The Board of Directors recommends their re-appointment.

The notes to the accounts in Auditors Report are self-explanatory and therefore, do not call for any further comments.

COST AUDITORS

Pursuant to Section 148 of the Companies Act, 2013 and the Rules made thereunder the Central Government has directed that the cost accounts maintained by the Company be audited by a Cost Auditor.

The Cost Audit Report for FY 2015-16 has been given by the Cost Auditor of the Company, M/s Ravi Sahni & Associates, Cost Accountant and the same was filed on 24th August, 2016 which was within the due date of filing.

For FY 2016-17, M/s Ravi Sahni & Associates, Cost Accountant were appointed as Cost Auditor of the Company with the approval of the Central Government. The Cost Audit Report for FY 2016-17 will be filed within the prescribed time schedule.

For FY 2017-18, the Company is proposing to the Central Government for appointment of M/s Ravi Sahni & Associates, Cost Accountants as the Cost Auditor of the Company. As required under the Companies Act, 2013, the remuneration payable to the cost auditor is required to be placed before the Members in a general meeting for their ratification. Accordingly, a resolution seeking Member’s ratification for the remuneration payable to M/s Ravi Sahni & Associates, Cost Accountants, Cost Auditors is included in the Notice convening the Annual General Meeting.



SECRETARIAL AUDITOR

The Board has appointed M/s Agarwal S. & Associates, Practising Company Secretaries to conduct the Secretarial Audit for the financial year 2016-17 as required under section 204 of the Companies Act, 2013 and Rules made thereunder. The Secretarial Audit Report for the financial year ended March 31, 2017 is appended as Annexure 1 to this Report. The Secretarial Audit Report is self-explanatory and does not contain any qualification, reservation or adverse remark.

INTERNAL AUDITORS

M/s G. S. Mathur & Co., New Delhi have been appointed as Internal Auditors of the Company for the financial Year 2016-17. The Audit observations along with the Management action plan have been discussed in the meeting of the Audit Committee.

SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES

Your Company does not have any Subsidiaries, Joint ventures or Associate Companies.

LOAN, GUARANTEE OR INVESTMENTS

The Company has not either directly or indirectly given any Loan, Guarantee or made any Investment in/to any other Body Corporate or to any person beyond the limit prescribed under Section 186 of the Companies Act, 2013. The details of investments are provided in the notes to the Financial Statements forming part of the Annual Report.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

The details of transactions with Related Party are provided in the notes to the Financial Statements forming part of the Annual Report.

ANNUAL RETURN

In accordance with section 134(3)(a) of the Companies Act, 2013, an extract of the annual return

as provided under Section 92 of the Companies Act, 2013 is appended as Annexure 2 to this report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3) (m) of the Companies Act 2013 read with Rule 8 of the Companies (Accounts) Rules 2014, is appended as Annexure 3 to this report.

SOCIAL COMMITMENTS

Your Company is performing various activities for the development of communities, their welfare and for all round improvement in the quality of their life on a regular basis. Your Company is organizing regular medical camps 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 to widows of nearby villages. Your Company is also extending its resources for providing relief in case of natural calamities such as floods, winters etc. and providing contribution for upkeep of park in nearby areas.

HUMAN RESOURCES, INDUSTRIAL RELATIONS & SOCIAL WELFARE

During the year under review, many initiatives have been taken to support business through organizational efficiency, process change support and various employee engagement programmes which has helped the Company to achieve higher productivity levels. The Company has 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 cordial during the year.

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. The salaries of employees at all levels were reviewed during the year and necessary escalation granted for taking care of the erosion in money value since last wage revision in 2011. The wage revision was done and implemented in harmonious way. Company continues to organize/support conducting of various religious functions, yoga camp, health check-up, sports day, tournaments in its township from time to time so as to maintain harmonious & joyful atmosphere. The school, hospital and other infrastructure facilities in the Company’s township are being improved and adequate investments have been made wherever required.

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 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 is a continuous process in compliance to the statutory requirements as well as the conditions of OHSAS 18001-2007. Various training programs related to rescue operations, emergency management, fire safety were organized in

addition to mock drills to check the emergency preparedness. 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.

PARTICULARS OF THE EMPLOYEES

None of the employees of the Company falls under the ambit of Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

SIGNIFICANT AND MATERIAL ORDERS

There are no significant or material orders passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations in future.

NO MATERIAL CHANGES AND COMMITMENTS HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. No complaints were received during the year 2016-17.

DIRECTORS RESPONSIBILITY STATEMENT

As required under section 134(5) of the Companies Act 2013, the Board of Directors of your Company confirms that:

a. in the preparation of the annual accounts for the financial year ended 31st March, 2017, the applicable



accounting standards have been followed along with proper explanation relating to material departures;

b. the Directors have 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 have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities;

d. the Directors have prepared the annual accounts on a going concern basis;

e. the directors, in the case of a listed company, have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; - Not Applicable

f. the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

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, Debenture holders, Debenture Trustee, Mutual Funds, 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: 27th April, 2017 Chairman



ANNEXURE-1

Form No. MR-3 SECRETARIAL AUDIT REPORT

FOR THE FINANCIAL YEAR ENDED 31st MARCH, 2017 {Pursuant to Section 204(1) of the Companies Act, 2013 and rule 9 of the Companies

(Appointment and Remuneration of Managerial Personnel) Rules, 2014}

To, The Members, Kribhco Shyam Fertilizers Limited.

We, have conducted the Secretarial Audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by Kribhco Shyam Fertilizers Limited (hereinafter called ‘the Company’). Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluat-ing the corporate conducts/statutory compliances and expressing our opinion thereon.

Based on our verification of the Company’s books, papers, minute books, forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit, We hereby report that in our opinion, the Company has, during the audit period covering the financial year ended on 31st March, 2017 complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and Compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:

We have examined the books, papers, minute books, forms and returns filed and other records maintained by the Company for the financial year ended on 31st March, 2017 according to the provisions of:

(i) The Companies Act, 2013 (the Act) and the rules made thereunder;

(ii) The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made thereunder; - Not Applicable

(iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder; - Not Applicable

(iv) Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings; - Not Applicable

(v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’):-

(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulation, 2011;- Not Applicable

(b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992; - Not Applicable

(c) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009; - Not Applicable

(d) The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999; - Not Applicable

(e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008; - Not Applicable



(f) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client; - Not Applicable

(g) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; and - Not Applicable

(h) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998; - Not Applicable

(vi) Compliances / processes / systems under other applicable Laws to the Company, as per compliance certificate submitted to the Board, are being verified on the basis of random sampling.

We have also examined compliance with the applicable clauses of the following:

(i) Secretarial Standards issued by the Institute of Company Secretaries of India.

(ii) The Listing Agreements- Not Applicable.

During the period under review the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards, etc. mentioned above.

We further report that the Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors and Independent Directors. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act.

Generally, adequate notice is given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.

Majority decision is carried through while the dissenting members’ views, if any, are captured and recorded as part of the minutes.

We further report that there are adequate systems and processes in the Company commensurate with the size and operations of the company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines.

We further report that during the audit period, the Company has issued 2000 Unsecured, Rated, Unlisted, Redeemable and Non-Convertible Debentures Amounting to ` 2,00,00,00,000/-

For Agarwal S. & Associates, Company Secretaries,

(Sachin Agarwal) Partner

Place: New Delhi FCS No. : 5774 Date: April 17, 2017 C.P No. : 5910

This report is to be read with our letter of even date which is annexed as “Annexure A” and forms an integral part of this report.



“Annexure A”

To, The Members, Kribhco Shyam Fertilizers Limited

Our report of even date is to be read along with this letter.

1. Maintenance of secretarial record is the responsibility of the management of the Company. Our Responsibility is to express an opinion on these secretarial records based on our audit.

2. We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. We believe that the processes and practices, we followed provide a reasonable basis for our opinion.

3. We have not verified the correctness and appropriateness of financial records and Books of Accounts of the Company.

4. Where ever required, we have obtained the Management representation about the compliance of laws, rules and regulation and happening of events etc.

5. The Compliance of the provisions of corporate and other applicable laws, rules, regulations, standards are the responsibility of management. Our examination was limited to the verification of procedures on test basis.

6. The Secretarial Audit Report is neither an assurance as to future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company.

For Agarwal S. & Associates, Company Secretaries,

(Sachin Agarwal) Partner

Place: New Delhi FCS No. : 5774 Date: April 17, 2017 C.P No. : 5910



ANNEXURE-2

Form No. MGT-9 EXTRACT OF ANNUAL RETURN

as on the financial year ended on 31.03.2017 [Pursuant to section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies

(Management and Administration) Rules, 2014]

I. REGISTRATION AND OTHER DETAILS:

(i) CIN U24121DL2005PLC143452(ii) Registration Date 08.12.2005(iii) Name of the Company KRIBHCO SHYAM FERTILIZERS LTD.(iv) Category/Sub-Category of the Company Manufacturing / Urea Manufacturing(v) Address of the Registered Office and Contact Details A-60, Kailash Colony, New Delhi – 110048

Tel. 011-29243412

(vi) Whether listed Company No(vii) Name, Address and Contact details of

Registrar and Transfer Agent, if anyLink Intime India Pvt. Ltd. 44, Community Centre, 2nd Floor, Naraina Industrial Area, Phase – I, (Near PVR Naraina) New Delhi - 110028 Tel :011-41410592/93/94 Email : [email protected]

II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY

All the business activities contributing 10% or more of the total turnover of the company shall be stated:-

Sl. No. Name and Description of main products / services

NIC Code of the Product/service

% to total turnover of the company

1 Urea 0031021000 91.2

III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES

S. No. Name and Address of the Company

CIN/GLN Holding/ Subsidiary / Associate

% of shares held Applicable Section

NIL NIL NIL NIL NIL NIL



IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity)

(i) Category-wise Share Holding

Category of Shareholders

No. of Shares held at the beginning of the year [As on 01.04.2016]

No. of Shares held at the end of the year [As on 31.03.2017]

% Change during

the year

Demat Physical Total % of Total

Shares


SharesA. Promoter

(1) Indian

a) Individual/ HUF 0 0 0 0 0 0 0 0 0

b) Central Govt 0 0 0 0 0 0 0 0 0

c) State Govt(s) 0 0 0 0 0 0 0 0 0

d) Bodies Corp. 5,99,52,676 2 5,99,52,678 7.49 0 0 0 0 0

e) Banks / FI 0 0 0 0 0 0 0 0 0

f) Any other (– Cooperative)

74,01,04,460 5 74,01,04,465 92.51 80,00,57,136 7 80,00,57,143 100 (+) 7.49

Total shareholding of Pro-moter (A)

80,00,57,136 7 80,00,57,143 100 80,00,57,136 7 80,00,57,143 100 Nil

B. Public Shareholding

1. Institutions 0 0 0 0 0 0 0 0 0

a) Mutual Funds 0 0 0 0 0 0 0 0 0

b) Banks / FI 0 0 0 0 0 0 0 0 0

c) Central Govt (s)

0 0 0 0 0 0 0 0 0

d) State Govt(s) 0 0 0 0 0 0 0 0 0

e) Venture Capital Funds

0 0 0 0 0 0 0 0 0

f) Insurance Companies

0 0 0 0 0 0 0 0 0

g) FIIs 0 0 0 0 0 0 0 0 0

h) Foreign Venture CapitalFunds

0 0 0 0 0 0 0 0 0

i) Others (specify)

0 0 0 0 0 0 0 0 0

Sub-total (B)(1):- 0 0 0 0 0 0 0 0 0



Category of Shareholders

No. of Shares held at the beginning of the year [As on 01.04.2016]

No. of Shares held at the end of the year [As on 31.03.2017]

% Change during

the year


Shares


Shares2. Non-Institutions

a) Bodies Corp. 0 0 0 0 0 0 0 0 0i) Indian 0 0 0 0 0 0 0 0 0ii) Overseas 0 0 0 0 0 0 0 0 0

b) Individuals 0 0 0 0 0 0 0 0 0i) Individual shareholders holding nominal share capital upto Rs. 1 lakh

0 0 0 0 0 0 0 0 0

ii) Individual shareholders holding nominal share capital in excess of Rs 1 lakh

0 0 0 0 0 0 0 0 0

c) Others (specify)

0 0 0 0 0 0 0 0 0

Non Resident Indians 0 0 0 0 0 0 0 0 0Overseas Corporate Bodies

0 0 0 0 0 0 0 0 0

Foreign Nationals

0 0 0 0 0 0 0 0 0

Clearing Members

0 0 0 0 0 0 0 0 0

Trusts 0 0 0 0 0 0 0 0 0Foreign Bodies - D R

0 0 0 0 0 0 0 0 0

Sub-total (B)(2):- 0 0 0 0 0 0 0 0 0Total Public Shareholding (B)=(B)(1)+ (B)(2)

0 0 0 0 0 0 0 0 0

C. Shares held by Custodian for GDRs & ADRs

0 0 0 0 0 0 0 0 0

Grand Total (A+B+C)

80,00,57,136 7 80,00,57,143 100 80,00,57,136 7 80,00,57,143 100 Nil



(ii) Shareholding of Promoters

S. No.

Shareholder’s Name

Shareholding at the beginning of the year

Shareholding at the end of the year % change in share holding during

the year

No. of Shares

% of total Shares of

the company

% of Shares Pledged/

encumbered to total shares

No. of Shares % of total Shares of

the company

%of Shares Pledged/

encumbered to total shares

1 Krishak Bharati Cooperative Limited

74,01,04,465 92.51 0 80,00,57,143 100 0 (+) 7.49

2 STL Fertilizers Pvt. Ltd.

5,99,52,676 7.49 7.49 0 0 0 (-) 7.49

3 Shyam Basic Infrastructures Projects Pvt. Ltd.

2 0 0 0 0 0 NIL

Total 80,00,57,143 100 7.49 80,00,57,143 100 0 NIL

(iii) Change in Promoters’ Shareholding (please specify, if there is no change)

S. No.

Name of the Shareholder Shareholding at the beginning of the year

Cumulative Shareholding during the year

No. of shares

% of total shares of the

company

No. of shares

% of total shares of the

companySTL Fertilizers Private Limited

1 At the beginning of the year 5,99,52,676 7.49 5,99,52,676 7.49

2 Transfer on April 13, 2016 (5,99,52,676) (7.49) (5,99,52,676) (7.49)

3 At the end of the year 0 - 0 -

Shyam Basic Infrastructure Projects Pvt. Ltd.

1 At the beginning of the year 2 - 2 -

2 Transfer on April 21, 2016 (2) - (2) -

3 At the end of the year 0 - 0 -

Krishak Bharati Cooperative Limited

1 At the beginning of the year 74,01,04,465 92.51 74,01,04,465 92.51

2 Purchase on April 13, 2016 5,99,52,676 7.49 80,00,57,141 100.00

3 Purchase on April 21, 2016 2 - 80,00,57,143 -

4 At the end of the year 80,00,57,143 100 80,00,57,143 100



(iv) Shareholding of Directors and Key Managerial Personnel:

S. No.

Shareholding of each Directors and each Key Managerial Personnel

Shareholding at the beginning of the year

Cumulative Shareholding during the year

No. of shares

% of total shares of the company

No. of shares

% of total shares of the company

1 At the beginning of the year NIL NIL NIL NIL

2 Date wise Increase / Decrease in Share holding during the year specifying the reasons for increase / decrease (e.g. allotment / transfer / bonus/ sweat equity etc):

NIL NIL NIL NIL

3 At the end of the year NIL NIL NIL NIL

(v) INDEBTEDNESS - Indebtedness of the Company including interest outstanding/accrued but not due for payment (` In Lakh)

Particulars Secured Loans excluding deposits

Unsecured Loans Deposits Total Indebtedness

(`)Indebtedness at the beginning of the financial year

i) Principal Amount 1,06,067.41 59,212.50 0 1,65,279.91

ii) Interest due but not paid 0 0 0 0

iii) Interest accrued but not due 494.43 26.63 0 521.06

Total (i+ii+iii) 1,06,561.84 59,239.13 0 1,65,800.97

Change in Indebtedness during the financial year

Addition 0 0 0 0

Reduction 13,634.82 12,483.75 0 26,118.57

Net Change -13,634.82 -12,483.75 0 -26,118.57

Indebtedness at the end of the financial year

i) Principal Amount 92,623.74 46,742.77 0 1,39,366.52

ii) Interest due but not paid 0 0 0 0

iii) Interest accrued but not due 303.28 12.60 0 315.88

Total (i+ii+iii) 92,927.02 46,755.38 0 1,39,682.40



VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

A. Remuneration to Managing Director, Whole-time Directors and/or Manager:

S. No.

Particulars of Remuneration

Name of MD/WTD/ Manager Total Amount (`)Shri V. P. Kaushik– Managing Direc-tor (01/04/2016 to 30/04/2016)

Shri O.P.Gupta– Managing Direc-tor (28/05/2016 to 31/03/2017)

1 Gross salary(a) Salary as per provisions contained in section 17(1) of the Income-tax Act, 1961

40,53,865.00 30,45,140.00 70,99,005.00

(b) Value of perquisites u/s 17(2) Income-tax Act, 1961

3,300.00 49,350.00 52,650.00

(c) Profits in lieu of salary under section 17(3) Income- tax Act, 1961

- - -

2 Stock Option NIL NIL NIL3 Sweat Equity NIL NIL NIL4 Commission

- as % of profit - others, specify…

NIL NIL NIL

5 Others, please specify NIL NIL NIL Total A 40,57,165.00 30,94,490.00 71,51,655.00 Ceiling as per the Act ` 136.30 Lakh

B. Remuneration to other directors:

S. No.


Name of Directors Total Amount (`)

1 Independent Directors

Shri Vijai Narain Rai Smt. Nishi Arora Sabharwal

Fee *for attending board/ committee meetings

2,00,000.00 2,00,000.00 4,00,000.00

Commission NIL NIL NILOthers, please specify NIL NIL NIL

Total (1) 2,00,000.00 2,00,000.00 4,00,000.002 Other Non-Executive

DirectorsDr. Chandrapal Singh Yadav

Shri Waghji Rugnath Boda

Shri N. Sambasiva Rao

Shri Rajan Chowdhry

Fee*for attending board/ committee meetings

1,00,000.00 40,000.00 1,90,000.00 1,00,000.00 4,30,000.00

Commission NIL NIL NIL NIL NILOthers, please specify NIL NIL NIL NIL NIL

Total (2) 1,00,000.00 40,000.00 1,90,000.00 1,00,000.00 4,30,000.00 Total B=(1+2) 8,30,000.00



Total Managerial Remuneration

NIL NIL NIL NIL NIL

Overall Ceiling as per the Act

* sitting fee does not include service tax paid by the Company

C. Remuneration to Key Managerial Personnel other than MD/Manager/WTD

S. No.


Key Managerial Personnel

Shri V. P. Kaushik – Managing Director (01/04/2016 to 30/04/2016)

Shri O. P. Gupta– Managing Director (28/05/2016 to 31/03/2017)

CFO CompanySecretary

Total Amount (`)

1. Gross salary

(a) Salary as per provisions contained in section 17(1) of the Income-Tax Act, 1961

40,53,865.00 30,45,140.00 22,72,103.00 20,18,006.00 1,13,89,114.00

(b) Value of perquisites u/s 17(2) Income-Tax Act, 1961

3,300.00 49,350.00 32,400.00 NIL 85,050.00

(c) Profits in lieu of salary under section 17(3) Income Tax Act, 1961

NIL NIL NIL NIL NIL

2. Stock Option NIL NIL NIL NIL NIL

3. Sweat Equity NIL NIL NIL NIL NIL

4. Commission NIL NIL NIL NIL NIL

- as % of profit NIL NIL NIL NIL NIL

- others, specify… NIL NIL NIL NIL NIL

5. Others, please specify- NIL NIL NIL NIL NIL

Total 40,57,165.00 30,94,490.00 23,04,503.00 20,18,006.00 1,14,74,164.00



VII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES:

Type Section of the Companies Act

Brief Description

Details ofPenalty/Punishment/Compoundingfees imposed

Authority[RD / NCLT/ COURT]

Appealmade,if any(giveDetails)

A. COMPANYPenalty NIL NIL NIL NIL NILPunishment NIL NIL NIL NIL NILCompounding NIL NIL NIL NIL NIL

B. DIRECTORSPenalty NIL NIL NIL NIL NILPunishment NIL NIL NIL NIL NILCompounding NIL NIL NIL NIL NIL

C. OTHER OFFICERS IN DEFAULTPenalty NIL NIL NIL NIL NILPunishment NIL NIL NIL NIL NILCompounding NIL NIL NIL NIL NIL

Place: Noida (U. P.) Date: 27th April, 2017

(Dr. Chandrapal Singh Yadav) Chairman

DIN No. 00023382 "KRIBHCO Bhawan"

Kribhco Shyam Fertilizers Ltd. A-10, Sector-1, Noida (U. P.) 201301



ANNEXURE -3

Disclosure of Particulars pursuant to Rule 8 of the Companies (Accounts) Rules 2014

A. CONSERVATION OF ENERGY

(i) Steps taken or Impact on conservation of energy:

KSFL recognizes the importance of energy conservation and is fully committed to minimizing use of energy. Plant operations are continuously reviewed and modifications made to reduce energy consumption wherever possible. In continuation to our efforts for reducing the specific energy consumption for production of ammonia and urea, KSFL is in process of implementing the following schemes:

(a) Replacement of synthesis gas convertor internals from existing S-200 to S-300 type in synthesis section of Ammonia Plant.

(b) Installation of Vacuum Pre-concentrator in 11-Unit of Urea Plant for recovery of heat of condensation from condensation of decomposed gases of medium pressure section. & Installation of MP Pre Decomposers in both the streams of Urea plant in order to consume the steam saved by installation of VPC in 11-Unit. Thus the overall impact will be reduction in Boiler load.

(c) Uprating of one no. Gas turbine for the capacity increase & reduction in specific energy consumption.

(d) Retrofit of existing synthesis gas turbine with new high efficiency steam turbine for energy saving.

(e) Provision of S-50 converter with additional synthesis loop boiler for better ammonia conversion & reduction in energy consumption.

(ii) Steps taken by company for utilizing alternate source of energy:

We are exploring the possibility for installation of solar cells on roof top of Control rooms of the plant and utilization of generated power in our system to reduce power load on GTG.

(iii) Capital Investment on Energy Conservation Equipment’s:

` 228.57 crore (Estimated Cost for the schemes mentioned above)

B. TECHNOLOGY ABSORPTION

(i) The Efforts made towards Technology Absorption:

(a) Technical study for installation of MP Pre decomposers in Urea plant has been completed by M/s Saipem, India and by M/s Urea Casale, Switzerland. We are on the way to award Detailed Engineering Work Order to the qualified vendor for saving in energy in Urea Plant.

We have placed an order for Vacuum Pre-Concentrator (VPC) as installed in 21-Unit for 11-Unit also. The expected date of delivery of VPC is Jan-2018. The LP Steam saved will be utilized in Medium Pressure Section of both the units by installing MP Pre- decomposer in both the units. Ultimately, we will save the HP Steam which will reduce the boiler load thus energy consumption.



(b) Technical study completed by M/s Siemens and M/s GE for the replacement of steam turbine used to run the synthesis gas compressor with the modern high efficiency steam turbine. Discussions with the vendors are under progress. This will reduce the energy consumed by synthesis gas turbine and thus energy consumption per ton of ammonia will reduce which in turn will reduce specific energy consumption of product urea.

(c) Preliminary technical discussion with HTAS, KBR & Casale has been completed. NIT prepared for floating tender.

(ii) The benefits derived like product improvement, cost reduction, product development or import substitution:

Schemes indicated above are energy saving schemes which also provide flexibility in plant operation. Schemes implemented so far have, accordingly, resulted in gradual reduction in specific energy consumption for production of Ammonia & Urea and have also resulted in sustained plant operation at higher loads.

The scheme studied and suggested above are in the direction to meet DOF/FICC revised urea energy consumption norm of 5.50 Gcal/ MT (yearly basis) from the year 2018-19.

(iii) In case of technology imported (imported during the last three years reckoned from the beginning of the financial year):

(a) Details of the technology imported

(i) Urea Casale design of Vacuum Pre- concentrator, is being used in 21-Unit of Urea Plant for recovery of heat of condensation from decomposed gases of medium pressure section.

(ii) Replacement of synthesis gas convertor internals from existing S-200 to S-300 type in synthesis section of Ammonia Plant for better conversion & energy efficiency.

(iii) Urea Casale design of Vacuum Pre- concentrator, to be used in 11-Unit of Urea Plant for recovery of heat of condensation from decomposed gases of medium pressure section.

(b) The year of Import:

(i) Technology was imported in the year 2015.

(ii) Order was placed on M/s HTAS, Denmark for replacement of Synthesis gas convertor internals and the catalyst so as to increase ammonia conversion and thus energy conservation. The internals and the catalyst were ordered in 2016-17 and likely to be delivered in India in July-17.

(iii) The order for Vacuum Pre-Concentrator (VPC) has been placed for installation 11- Unit of Urea Plant. The expected date of delivery of VPC is Jan-2018.

(c) Whether the technology been fully absorbed:

(i) Yes, it is fully absorbed from Dec’ 2015. (ii) No. (iii) No.

(d) If not fully absorbed, areas where absorption has not taken place:

(i) N.A. (ii) To be installed in Ammonia Plant in September-2017. (iii) To be installed in Urea Plant after Jan-2018.

(iv) Expenditure incurred of Research and Development

NIL



C. FOREIGN EXCHANGE EARINGS AND OUTGO:

2016-17 2015-16

Foreign Exchange outgo ` 9494.37 Lakh ` 472.98 Lakh

Foreign Exchange earned NIL NIL

Place: Noida (U. P.) Date: 27th April, 2017

(Dr. Chandrapal Singh Yadav) Chairman

DIN No. 00023382 "KRIBHCO Bhawan"

Kribhco Shyam Fertilizers Ltd. A-10, Sector-1, Noida (U. P.) 201301



INDEPENDENT AUDITORS’ REPORT

To The Members Kribhco Shyam Fertilizers Limited

Report on the Ind AS Financial Statements

We have audited the accompanying Ind AS financial statements of Kribhco Shyam Fertilizers Limited (‘the Company’), which comprise the balance sheet as at 31 March 2017, the statement of profit and loss (including other comprehensive income), the statement of cash flows and the statement of changes in equity for the year then ended and a summary of the significant accounting policies and other explanatory information (herein after referred to as “Ind AS financial statements”).

Management’s Responsibility for the Financial Statements

The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read with relevant rules issued there under.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safe guarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Ind AS 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 Ind AS financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the Ind AS financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the Ind AS financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Ind AS 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 including the Ind AS, of the financial position of the Company as at 31 March, 2017, and its financial performance including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”) issued by the Central Government of India in terms of section 143(11) of the Act, we give in the Annexure A, a statement on the matters specified in the paragraph 3 and 4 of the order.

2. As required by Section 143(3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

(b) In our opinion proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

(c) The balance sheet, the statement of profit and loss, the statement of cash flows and the statement of changes in equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion, the aforesaid-Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act read with relevant rule issued there under;

(e) On the basis of the written representations received from the directors as on 31 March 2017 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2017 from being appointed as a

director in terms of Section 164(2) of the Act;

(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in “Annexure B”; and

(g) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i) The Company has disclosed the impact of pending litigations on its financial position in its-Ind AS financial statements – Refer Note No. 35 to the Ind AS financial statements;

ii) The Company does not have any foreseeable losses on long-term contracts including derivative contracts, if any, in respect of which any provision is required to be made under the applicable law and Accounting Standards.

iii) There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company; and

iv) The Company has provided requisite disclosures in its Ind AS financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8th November, 2016 to 30th December, 2016 and these are in accordance with the books of accounts maintained by the Company. Refer Note No. 43 (c) to the Ind AS financial statements.

For S. K. Mehta & Co. Chartered Accountants

(FRN 000478 N)

(B.P.Saxena) Partner

Membership No.:010568Place : Noida (U.P.) Date : 27.04.2017



ANNEXURE “A” TO THE AUDITORS’ REPORT

The Annexure referred to in Independent Auditors’ Report to the members of the Company on the Ind AS financial statements for the year ended 31st March 2017, we report that:

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation, of its fixed assets.

(b) The Company has a regular programme of physical verification of its fixed assets by which fixed assets are verified in phased manner, 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 title deeds of immovable properties are held in the name of Company.

(ii) In our opinion, physical verification of inventory has been conducted by the management at reasonable intervals. No material discrepancy was noticed on such physical verification of Inventory.

(iii) As per the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms, Limited liability Partnerships or other parties covered in the Register maintained under section 189 of the Companies Act, 2013. Accordingly the clauses (iii) (a), (iii) (b) & (iii) (c) of the report are not applicable.

(iv) As per the information and explanations given to us, the Company has not given any loans, investments, guarantees and security and as such the provisions of Section 185 & 186 of the Companies Act, 2013 are not applicable.

(v) The Company has not accepted any deposits from the public. Accordingly, the directives issued by RBI and the provisions of section 73 to 76 or any other relevant provisions of the Companies Act, 2013 & the rules framed there under are not applicable to the Company.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for maintenance of cost records prescribed under Section 148(1) of the Companies Act, 2013 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(vii) (a) According to the information and explanation given to us, the Company is regular in depositing undisputed statutory dues with appropriate authorities including Provident Fund, ESI, Income Tax, Sales Tax, Service Tax, Custom Duty, Excise Duty, VAT, Cess and other statutory dues applicable to the company and that there are no undisputed statutory dues outstanding as on 31st March, 2017 for a period more than six months from the date they became payable.

(b) According to the information and explanations given to us, following disputed demands of Excise Duty/ other statutory dues have not been deposited:

[` in Lakh]

Nature of the Dues Amount Forum where dispute is pending

Stamp Duty on Deed of Mortgage

F.Y. 2008-2009

19000.00 Hon’ble High Court, Allahabad

Income Tax 60.89 CIT Appeals, DelhiExcise/ Service Tax 835.43 Central Excise & Service Tax

Appellate Tribunal, Delhi



(viii) As per the information and explanations given to us, the Company has not defaulted in the repayment of loans or borrowings to financial institutions, banks or Government or dues to Debenture holders.

(ix) As per the information and explanations given to us, the Company has not raised any money by way of initial Public offer or further Public offer (including debt instruments ). However during the year the Company has issued 2000 nos. of unsecured non-convertible Debentures of ` 10,00,000/- each amounting to ` 20,000 Lakh.

Further in our opinion and according to the information and explanations given to us, on an overall basis, money raised by way of term loans and Debentures have been applied for the purposes for which they were obtained.

(x) According to the information and explanations given to us, no material fraud on or by the Company by its officers or employees has been noticed or reported during the year under review.

(xi) In our opinion, Managerial remuneration has been paid/provided in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Companies Act, 2013.

(xii) The Company is not a Nidhi Company. Accordingly, paragraph 3 (xii) of the Order is not applicable.

(xiii) In our opinion all transactions with the related parties are in compliance with Section 177 and 188 of the Companies Act, 2013 where applicable and the necessary details have been disclosed in the Ind AS financial statements as required by the applicable Accounting Standards.

(xiv) The Company has not made any preferential allotment or private placement of shares or fully or partly convertible Debentures during the year under review. As such the compliance of Section 42 of the Companies Act, 2013 and the utilization of amount for the purpose funds are raised is not applicable.

(xv) According to the information and explanations given to us, the Company has not entered into any non-cash transactions with Directors or persons connected with him and as such the compliance of provisions of Section 192 of the Companies Act, 2013 are not applicable.

(xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.


(FRN 000478 N)

(B.P.Saxena) Place : Noida (U.P.) Partner Date : 27.04.2017 Membership No.: 010568



AnnExuRE-B To ThE AuDIToRS’ REPoRT Report on the Internal Financial Controls under Clause (i) of

Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of Kribhco Shyam Fertilizers Limited (‘the Company’) as of 31 March 2017 in conjunction with our audit of the Ind AS financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (‘ICAI’). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial

controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the Ind AS financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain



to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to

error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become in adequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2017, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.


(FRN 000478 N)

(B.P.Saxena) Place : Noida (U.P.) Partner Date : 27.04.2017 Membership No.: 010568



Continued...

BALANCE SHEET AS AT MARCH 31,2017

(` in Lakh)Particulars Note March 31, 2017 March 31, 2016 April 1, 2015 No. I ASSETS

1 Non-current assets a. Property, Plant and 2 105,476.30 113,000.36 116,464.54 Equipment b. Capital work-in-progress 3 1,010.55 609.56 2,620.82 c. Intangible assets 4 1,896.78 2,046.50 2,204.03 d. Financial Assets: i) Investments 5 5,250.25 5,250.25 5,250.25 ii) Loans 6 15.69 15.50 19.35 e. Other non-current assets 7 905.78 114,555.35 1.84 120,924.01 59.81 126,618.80

2 Current assets a. Inventories 8 17,928.21 8,910.89 6,897.17 b. Financial Assets: i) Trade receivables 9 80,514.91 103,178.95 114,370.45 ii) Cash and cash 10 80.08 151.14 573.88 equivalents iii) Bank balances other 11 0.07 72.12 71.28 than above iv) Loans 6 29.65 31.91 32.48 v) Other financial assets 12 776.89 86.62 87.01 c. Other current assets 7 6,388.00 6,087.69 6311.82 d. Current Tax Assets (Net) 13 568.69 106,286.50 568.02 119,087.34 557.59 128,901.68

3 Non Current Assets classified as held for Disposal 1,381.57 1,427.80 1,453.23

TOTAL ASSETS 222,223.42 241,439.15 256,973.71 II EQUITY AND LIABILITIES

1 Equity Equity Share Capital 14 80,005.71 80,005.71 80,005.71 Other Equity 15 (22,205.57) 57,800.14 (19,651.64) 60,354.07 (17,813.54) 62,192.17 2 Liabilities 1 Non-current liabilities a. Financial Liabilities Borrowings 16 53,954.02 60,972.44 61,803.00 b. Provisions 17 2,445.53 1,659.62 1,511.25 c. Deferred Tax Liabilities (Net) 18 – 56,399.55 – 62,632.06 – 63,314.25



BALANCE SHEET AS AT MARCH 31,2017

(` in Lakh)Particulars Note March 31, 2017 March 31, 2016 April 1, 2015 No.

2 Current liabilities a. Financial Liabilities i) Borrowings 16 78,412.50 99,452.30 109,896.61 ii) Trade payables 19 9,417.86 7,807.28 10,615.79 iii) Other financial liabilities 20 10,974.34 8,661.27 8,424.36 b. Other current liabilities 21 8,976.44 2,236.92 2,307.84 c. Provisions 17 242.59 108,023.73 295.25 118,453.02 222.69 131,467.29

TOTAL EQUITY AND LIABILITIES 222,223.42 241,439.15 256,973.71 Significant Accounting Policies 1 Notes To Financial Statements 2 - 43 Accompanying notes referred to above form an integral part of the financial statements As per our report of even date

FOR S. K. MEHTA & CO. FOR AND ON BEHALF OF BOARD OF DIRECTORS Chartered Accountants (FRN 000478 N)

B. P. SAXENA N. SAMBASIVA RAO RAJAN CHOWDHRY O. P. GUPTA Partner Director Director Managing Director Membership No.: 010568

Place : Noida R. VENKATARAMANAN BIPIN C. PHULORIA Date : 27th April, 2017 Chief Financial Officer Company Secretary

Continued...



STATEMENT OF PROFIT & LOSS FOR THE YEAR ENDED MARCH 31,2017

(` in Lakh)

Particulars Note No.

March 31, 2017 March 31, 2016

I Revenue From Operations 22 161,150.20 189,708.75

II Other Income 23 570.49 515.67

III Total Revenue (I+II) 161,720.69 190,224.42

IV EXPENSES

Cost of materials consumed 24 119,317.15 149,334.67

Purchases of Stock-in-Trade 25 9,279.26 –

Changes in inventories of finished goods, Stock-in -Trade and work-in-progress

26 (8,442.03) (2,221.26)

Excise Duty Expenses 862.94 1,183.24

Employee benefits expense 27 6,018.74 4,851.56

Finance costs 28 10,439.82 13,037.63

Depreciation and amortization expenses 29 8,080.36 8,041.72

Other expenses 30 18,435.24 17,787.40

TOTAL EXPENSES 163,991.48 192,014.96

V Profit/(loss) before tax (III-IV) (2,270.79) (1,790.54)

VI Tax expense

Current Tax – –

Deferred tax – –

Earlier Year Taxes – 24.93

VII Profit/(loss) for the year (2,270.79) (1,815.47)

VIII Other Comprehensive Income

A (i) Items that will not be reclassified to profit or loss 31 (283.14) (22.63)

(ii) Income tax relating to items that will not be reclassified to profit or loss

– –

B (i) Items that will be reclassified to profit or loss – –

(ii) Income tax relating to items that will be reclassified to profit or loss

– –

IX Total Comprehensive Income(VII+VIII) (2,553.93) (1,838.10)

Continued...



Particulars Note No.

March 31, 2017 March 31, 2016

Earnings per Equity Share 32

Basic & Diluted (in `) (0.32) (0.23)

Significant Accounting Policies 1

Notes on Financial Statements 2 - 43

Accompanying notes referred to above form an integral part of the financial statements As per our report of even date




Continued...

STATEMENT OF PROFIT & LOSS FOR THE YEAR ENDED MARCH 31, 2017

(` in Lakh)



STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED MARCH 31,2017 (` in Lakh)

Particulars March 31, 2017 March 31, 2016 April 1, 2015

No. of Shares Amount No. of Shares Amount No. of Shares Amount

a Equity Share Capital

Balance at the beginning of the reporting period

800,057,143 80005.71 800,057,143 80005.71 800,057,143 80,005.71

Changes in equity share capital during the year

– – – – – –

Balance at the end of the reporting period

800,057,143 80,005.71 800,057,143 80,005.71 800,057,143 80,005.71

b Other equity

Particulars Reserves & Surplus

Retained earnings

Items of Other Comprehensive Income

Remeasurement of net defined benefits

Total

Balance at April 1, 2015 (17,813.54) – (17,813.54)Loss for the year (1,815.47) – (1,815.47)Other comprehensive income for the year

– (22.63) (22.63)

Total comprehensive income for the year

(1,815.47) (22.63) (1,838.10)

Balance at March 31, 2016 (19,629.01) (22.63) (19,651.64)Loss for the year (2,270.79) – (2,270.79)Other comprehensive income for the year

– (283.14) (283.14)

Total comprehensive income for the year

(2,270.79) (283.14) (2,553.93)

Balance at March 31, 2017 (21,899.79) (305.77) (22,205.57)

As per our report of even date






Cash Flow Statement annexed to the Balance Sheet for the Year Ended March 31,2017

(` in Lakh)

PARTICULARS March 31, 2017 March 31, 2016

A. CASH FLOW FROM OPERATING ACTIVITIES

Net operating profit/(loss) before tax (2,270.79) (1,790.54)Re-measurement gain loss on defined benefit plans routed through Other Comprehensive Income

(283.14) (22.63)

Depreciation of Property Plant and Equipment 7,921.02 7,883.39 Amortisation of Intagible Assets 159.34 158.33 (Profit)/Loss on Sale/Retirement of Property Plant and Equipment (Net)

17.32 1.00

Provision for Doubtful Debts and Advances & Fixed Assets 46.23 25.44Interest Expenses 10,439.82 13,037.63 Interest Income (361.82) (368.39)Operating Profit/(loss) before Working Capital changes 15,667.99 18,924.23(Increase) / Decrease in Short term Trade Receivables 22,664.04 11,191.51 (Increase) / Decrease in Short term financial assets - Loans 2.25 0.58 (Increase) / Decrease in Long term financial assets - Loans (0.18) 3.85 (Increase) / Decrease in Other Short term financial assets (694.21) 0.14 (Increase) / Decrease in Other Short term assets (300.32) 224.13 (Increase) / Decrease in Other Long term assets (903.94) 57.97 (Increase)/Decrease in Inventories (9,017.32) (2,013.72)Increase / (Decrease) in Short term Trade Payables/ Provisions 1,557.92 (2,735.95)Increase / (Decrease) in Long term Trade Payables/ Provisions 785.92 148.36 Increase / (Decrease) in Other Short term Financial Liabilities 373.43 482.07 Increase / (Decrease) in Other Short term Liabilities 6,739.51 (70.92)Cash generated (used) in /from Operations before tax 36,875.09 26,212.26 Direct Taxes (0.67) (35.37)Net cash flow (used) in/ from Operating Activities 36,874.42 26,176.89

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Intangible Assets (9.61) (0.80)Purchase of Property Plant & Equipment (990.60) (2,419.96)Sale/Disposal of Property Plant and Equipment 175.34 10.99 Interest Received 365.74 368.65 Net cash flow (used) in/ from Investing Activities (459.13) (2,041.13)Net cash (used) in/ from Operating and Investing Activities 36,415.29 24,135.76

Continued...



PARTICULARS March 31, 2017 March 31, 2016

C. CASH FLOW FROM FINANCING ACTIVITIES

Long-term borrowings repaid during the year (4,873.59) (1,021.78)Short term borrowings repaid during the year (net) (21,039.80) (10,444.32)Interest paid (10,645.00) (13,091.56)Net cash (used) in/ from Financing Activities (36,558.39) (24,557.66)Net cash (used) in/ from Operating, Investing & Financing Activities

(143.10) (421.90)

Net increase/(decrease) in Cash & Cash equivalent (143.10) (421.90)Opening balance of Cash & Cash equivalent 223.25 645.15 Increase in Cash & Cash equivalent on Amalgamation (Refer Note a )Closing balance of Cash & Cash equivalent 80.15 223.25 Notes:

a) Cash and cash equivalents included in the Cash Flow Statement comprise of the following:-

i) Cash Balance on Hand 80.08 151.14 ii) Balance with Banks :

-In Fixed Deposits* 0.07 72.12 Total 80.15 223.25

*Not available for use and includes amount deposited as securities with Government and other departments.

b) The above cash flow statement has been prepared under the ‘Indirect Method’ as set out in Ind AS-7 on Statement of Cash Flows as notified under Companies Act.

c) Figures in brackets denote cash outflow.

As per our report of even date




Cash Flow Statement annexed to the Balance Sheet for the Year Ended March 31,2017

(` in Lakh)

Continued...



NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2017

NOTE 1 : SIGNIFICANT ACCOUNTING POLICIES

A. CORPORATE INFORMATION

Kribhco Shyam Fertilizers Limited is a public Company domiciled in India and is incorporated under the provisions of the Companies Act applicable in India. The shares of the Company are unlisted. The registered office of the company is located at A-60, Kailash Colony, New Delhi-110048. The Company is wholly owned subsidiary of Krishak Bharati Cooperative Limited (KRIBHCO).

The Company manufactures nitrogenous fertilizer viz. Urea through integrated Urea and Ammonia manufacturing facility at Shahjahanpur in the state of Uttar Pradesh in India. The Company also trades in Phosphatic and Potassic Fertilizers.

B. SIGNIFICANT ACCOUNTING POLICIES

1. Basis of Preparation of Financial Statements

The Financial statements are prepared in accordance with Ind AS notified under the Companies (Indian Accounting Standard) Rules, 2015.

The Company has adopted all Ind AS standards and the adoption was carried out in accordance with Ind AS 101- First time adoption of Indian Accounting Standards. For all the periods upto 31st March 2015, the financial statements were prepared under historical cost convention in accordance with Indian Accounting Principles generally accepted in India as prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (IGAAP), which was the previous GAAP. Reconciliations and descriptions of the effect of the transition has been summarized in Note 39.

The financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value:

• Certain financial assets and liabilities• Derivative Financial Instruments

The financial statements are presented in Indian Rupees (‘INR’) and all values are rounded to the nearest lakh only, except otherwise indicated.

2. Revenue Recognition

(a) Sales

Sale is recognized 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 Effective Interest Rate (EIR) method.

(c) Subsidy from Government of India

i) Subsidy on Urea from the Government of India under Group Concession Scheme/ Pricing Scheme is recognized as revenue on the basis of quantity sold. Further, subsidy is recognized based on management’s estimation taking into consideration the guidelines, policies, instructions and clarifications given by the Department of Fertilizers, Government of India (GOI) from time to time and is further adjusted for input price escalation/de-escalation.

ii) Subsidy on Phosphatic and Pottassic Fertilisers is recognized based on quantity sold.

iii) Freight Subsidy is recognized on the quantity sold in terms of schemes notified by the Government of India (GOI).

(d) Others

Income from sale of scrap/salvage is recognized when sold.



3. Fixed Assets

(i) Property, Plant & Equipments are carried at cost less depreciation / amortization and impairment loss, if any. 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 stabilization of production but excluding refundable taxes and duties thereon, if any.

(ii) An intangible asset is recognized where it is probable that the future economic benefit attributable to the asset will flow to the Company and the cost of the asset can be measured reliably. Such assets are stated at cost less accumulated amortization.

(iii) Spares are recognized in accordance with Ind AS-16 “Property, Plant & Equipment” when they meet the definition of property, plant & equipment. Otherwise, such items are classified as inventory.

(iv) Capital work- in-progress is carried at cost.

4. Borrowing Cost

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use.

All other borrowing costs are recognized as expenses in the period in which they are incurred.

5. Depreciation / Amortization

Depreciation:

(i) Depreciation on Plant & Machinery has been provided on Straight Line Method, based on useful life technically assessed by Company based on report of independent expert.

(ii) Fixed Assets individually costing up to ` 5,000/- are being fully depreciated in the year of acquisition.

(iii) Depreciation on Spares capitalised has been charged over the residual life of such spares.

(iv) Depreciation on other Fixed Assets has been provided on Straight Line Method based on useful life as specified in Schedule II of the Companies Act, 2013.

(v) Depreciation on assets discarded from active use and held for disposal is not being provided.

Amortization:

(i) Value of Leasehold Land and Site Development expenses is amortized over the period of lease.

(ii) Intangible assets in the nature of Gas Price Right, Locational Benefits in term of present future products as identified by the independent valuer in terms of its valuation report for the purpose of determining the fair value of individual assets taken over by the company in the year 2006 are amortized on straight line method basis over the period of twenty five years.

(iii) Intangible assets comprising of computer software are amortized on straight line method over a period of legal right or five years whichever is earlier on pro-rata basis.



6. Impairment of Assets

The carrying amount of cash generating unit is reviewed at each balance sheet date where there is any indication of impairment based on internal / external indicators. An impairment loss is recognized in the statement of profit and loss where the carrying amount exceeds the recoverable amount of the cash generating unit. An impaired loss is reversed if there is change in the recoverable amount and such loss either no longer exists or has decreased.

7. Catalysts

Catalysts are charged to revenue over their estimated useful life. Value of Catalysts yet to be consumed in production process is considered as part of Inventories.

8. Foreign Currency Transactions

(i) Foreign currency transactions are recorded at exchange rates prevailing on the date of such transactions.

(ii) 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 translation is recognized in the statement of Profit & Loss.

(iii) Non-monetary items denominated in foreign currency are reported using exchange rate prevailing on the date of transactions.

9. Investments

(i) Long-term investments are stated at acquisition cost. Provision for diminution in the value of long-term investments is made to recognize a decline, other than temporary in the value of such investments.

(ii) Current investments are valued at lower of cost and fair value determined on individual assessment basis.

10. Inventories

Inventories are valued at lower of cost and net realizable value.

(a) Cost in respect of various types of inventories is computed as under:

i) Raw Materials, Packing Materials, Chemicals & Catalyst in Stock, Stores and Spares at weighted average cost.

ii) Stock in process at direct cost and appropriate portion of overheads.

iii) Finished goods (Manufactured Urea) at annualized cost of production.

iv) Traded Products (Imported P&K Fertilizers) at procurement cost determined on weighted average basis plus direct expenses.

(b) Net Realizable Value is computed as under:

i) Finished goods (Manufactured Urea) is Concession Price / Import Parity Price (IPP) determined in accordance with norms of Government of India less estimated costs necessary to make the sales.

ii) Traded goods (Imported P&K Fertilizers) is estimated selling price plus subsidy rate notified by Government of India less estimated costs necessary to make the sales.

11. Financial instruments

(i) Financial assets:

Initial recognition and measurement

All financial assets are recognised initially at fair value. However in the case of financial assets not recorded at fair value through profit or loss, it is recognized at fair value plus transaction costs that are attributable to the acquisition of the financial asset.



Subsequent measurement

For purposes of subsequent measurement, financial assets are classified in two broad categories:

• Financial assets at fair value• Financial assets at amortised cost

Where assets are measured at fair value, gains and losses are either recognised entirely in the statement of profit and loss (i.e. fair value through profit or loss), or recognised in other comprehensive income (i.e. fair value through other comprehensive income).

A financial asset that meets the following two conditions is measured at amortised cost (net of any write down for impairment) unless the asset is designated at fair value through profit or loss under the fair value option.

• Business model test: The objective of the Company’s business model is to hold the financial asset to collect the contractual cash flows (rather than to sell the instrument prior to its contractual maturity to realise its fair value changes).

• Cash flows Characteristics test: The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A financial asset that meets the following two conditions is measured at fair value through other comprehensive income unless the asset is designated at fair value through profit or loss under the fair value option.

• Business model test: The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets.

• Cash flows characteristics test: The contractual terms of the financial asset give

rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Even if an instrument meets the two requirements to be measured at amortised cost or fair value through other comprehensive income, a financial asset is measured at fair value through profit or loss if doing so eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as an ‘accounting mismatch’) that would otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on different basis.

All equity investments are measured at fairvalue with changes is recognized in other comprehensive income.

De-recognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily de-recognised (i.e. removed from the Company’s statement of financial position) when:

• The rights to receive cash flows from the asset have expired, or

• The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement and either

a) The Company has transferred substantially all the risks and rewards of the asset, or

b) The Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.



When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Company’s continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

Impairment of financial assets

In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:

a) Financial assets measured at amortized costb) Financial Assets measured at fair value through Other Comprehensive Income (OCI)

Expected Credit losses are measured through a loss allowance at an amount equal to:

a) The 12 Months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date)

b) Full Lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument)

The Company follows ‘simplified approach’ for recognition of impairment loss allowance on Trade receivables. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime

Expected Credit Losses at each reporting date, right from its initial recognition.

As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

For recognition of impairment loss on other financial assets and risk exposure, the company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month Expected Credit Losses is used to provide for impairment loss. However, if credit risk has increased significantly, Lifetime Expected Credit Losses is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month Expected Credit Losses.

For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis.

(ii) Financial liabilities:

Initial recognition and measurement

All financial liabilities are recognised initially at amortised cost net of directly attributable transaction costs except for derivative financial liabilities which are recognized at fair value through Statement of Profit & Loss.



The Company’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts.

Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

Financial liabilities at fair value through profit or loss.

Financial liabilities designated upon initial recognition at fair value through profit or loss are measured subsequently through Statement of Profit & Loss

Loans and borrowings

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the Effective Interest Rate method (EIR).

Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.

(iii) offsetting of financial instruments:

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

(iv) Derivative financial instruments and hedge accounting:

The Company enters into derivative contracts to hedge its Loans, Buyers Credit and Letter of credits etc. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

Any gains or losses arising from changes in the fair value of derivatives are taken directly to statement of profit and loss.

12. Employee Benefits

a) Short Term Benefits: Short Term Employee Benefits are accounted for in the period during which the services have been rendered.

b) other Long Term Employee Benefits:

a) The Company’s contribution to the Provident Fund is remitted to Recognized Provident Fund established for this purpose based on a fixed percentage of the eligible employee’s salary and charged to Statement of Profit and Loss.

b) The Company operates defined benefit plans for Gratuity. The cost of providing such defined benefits is determined using the projected unit credit method of actuarial valuation made at the end of the year. Actuarial gains / losses are charged to Other Comprehensive Income.



c) Obligations on Compensated Absences are provided using the projected unit credit method of actuarial valuation made at the end of the year. Actuarial gains/ losses are recognized in Statement of Profit and Loss.

13. Taxation

a) 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 statement of Profit and Loss 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.

b) Deferred Tax

Deferred Income Tax (expense or credit) is recognized for the current year temporary differences between carrying amount of an asset or liability in the balance sheet and its tax base.

Deferred Tax Assets in respect of unabsorbed depreciation and tax losses are recognized to the extent it is probable that future taxable profit will be available against which they can be utilized. 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.

14. 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 the Competent Authority.

15. Leases

i) operating 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 terms of respective lease agreements.

ii) Finance Lease: Finance leases are capitalized at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the statement of profit and loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with Ind AS- 23.

16. Provisions and Contingent Liabilities

(a) Provision is recognized when the Company has a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are determined based on management estimate required to settle the obligation at the



balance sheet date and are not discounted to present value.

(b) Contingent Liabilities are disclosed on the basis of judgment of the management/ independent experts. These are reviewed at each balance sheet date and are adjusted to reflect the current management estimate.

17. Revenue Recognition in the Event of Uncertainty

Following items are recognized when no significant uncertainty exists with regard to the amount to be realized and ultimate collection thereof:

(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

carrying amount of assets or liabilities affected in fu-ture periods.

Judgements

In the process of applying the company’s accounting policies, management has made the following judgement, which have the most significant effect on the amounts recognised in the financial statements:

Contingencies

Contingent liabilities may arise from the ordinary course of business in relation to claims against the Company, including legal, contractor and other claims. By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to occur. The assessment of the existence, and potential quantum, of contingencies inherently involves the exercise of significant judgement and the use of estimates regarding the outcome of future events.

Estimates and Assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from

C) SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the



binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the asset’s performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes.

Defined benefit plans

The cost of the defined benefit gratuity plan and other long term employment benefits and the present value of the gratuity obligation and other long term employment benefit obligations are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions.

All assumptions are reviewed at each reporting date.

The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation.

The mortality rate is based on publicly available mortality tables. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates for the country.

Fair value measurement of financial instruments

The Financial Instruments have been derived based on active trading prices for the investments in bonds. The Derivative Instruments have been measured based on derived price provided by the bank. The investment in Equity Shares have been valued based on the condition of loan attached. The Shares will be redeemed at par at the closure of limits and hence have been carried at par value.



NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31,2017

2. PROPERTY, PLANT & EQUIPMENT (` in Lakh)

Particulars Land - Lease hold

Factory Buildings

Non Factory Building

Plant & Equipments

Furniture &

Fixtures

Vehicles Com-puter

Office Equip-ments

Total

Carrying value

As at April 1, 2015 8,534.75 1,897.52 1,972.08 103,822.79 64.33 70.17 60.33 42.57 116,464.54

Additions – 122.12 435.98 3,814.30 18.75 8.25 2.64 29.14 4,431.18

Disposals – – – 6.00 3.57 0.12 2.61 0.54 12.84

Other Adjustments – – – 112.67 – – – 0.11 112.78

As at March 31, 2016 8,534.75 2,019.64 2,408.06 107,518.42 79.51 78.30 60.36 71.06 120,770.10

Additions – 23.39 4.69 494.72 3.93 – 46.51 16.38 589.62

Disposals – – – 205.82 – – 3.94 2.90 212.66

As at March 31, 2017 8,534.75 2,043.03 2,412.75 107,807.32 83.44 78.30 102.93 84.54 121,147.06

Depreciation/Amortization

Charge for the year 131.55 138.32 72.84 7,476.56 19.67 11.81 20.58 12.05 7,883.38

Disposals – – – 1.01 3.19 0.10 2.61 0.18 7.09

Others – – – 106.44 – – – 0.11 106.55

As at March 31, 2016 131.55 138.32 72.84 7,369.11 16.48 11.71 17.97 11.76 7,769.74

Charge for the year 131.55 124.14 79.73 7,519.47 15.96 11.25 24.72 14.21 7,921.02

Disposals – – – 13.31 – – 3.94 2.76 20.00

As at March 31, 2017 263.10 262.46 152.57 14,875.27 32.44 22.96 38.75 23.21 15,670.76

Net carrying value

As at April 1, 2015 8,534.75 1,897.52 1,972.08 103,822.79 64.33 70.17 60.33 42.57 116,464.54

As at March 31, 2016 8,403.20 1,881.32 2,335.22 100,149.30 63.03 66.59 42.39 59.30 113,000.36

As at March 31, 2017 8,271.65 1,780.57 2,260.18 92,932.05 51.00 55.34 64.18 61.33 105,476.30

Notes:

i) Refer Note 16- for Pledge /Hypothecation of Fixed Assets against borrowings

ii) Refer Note 35- regarding disclosure relating to Capital Commitments for Tangible fixed assets



3. CAPITAL WORK IN PROGRESS (` in Lakh)

Factory Buildings

Non Factory Building

Plant & Equip-

ments

Railway Siding

Re-vamp Am-

monia Plant

Others Total

As at April 1, 2015 23.91 377.28 1,936.87 62.40 220.36 – 2,620.82

Additions 30.80 27.34 1,486.80 16.43 – 24.92 1,586.29Amount transferred to PPE 47.13 404.64 3,145.78 0.00 – – 3,597.55As at March 31, 2016 7.58 0.00 277.89 78.83 220.36 24.92 609.56

Additions 15.81 0.19 606.32 84.28 – 10.05 716.65Amount transferred to PPE 23.39 0.19 237.37 – – 34.68 295.63Other Adjustments – – 20.03 – – – 20.03As at March 31, 2017 – 0.00 626.81 163.11 220.36 0.29 1,010.55

Notes:

i) Refer Note 16- for Pledge/Hypothecation of Capital Work in Progress against borrowings ii) Refer Note 35- regarding disclosure relating to Capital Commitments

4. INTANGIBLE ASSETS (` in Lakh)

Computer Software

Others Total

Carrying value

As at April 1, 2015 93.55 2110.48 2204.03

Additions 0.80 – 0.80 As at March 31, 2016 94.35 2,110.48 2,204.83

Additions 9.61 – 9.61 As at March 31, 2017 103.96 2,110.48 2,214.44

Amortization

Charge for the year 24.76 133.57 158.33 As at March 31, 2016 24.76 133.57 158.33

Charge for the year 25.76 133.57 159.33 As at March 31, 2017 50.52 267.14 317.66

Net Carrying Value

As at April 1, 2015 93.55 2,110.48 2,204.03

As at March 31, 2016 69.59 1,976.91 2,046.50

As at March 31, 2017 53.44 1,843.34 1,896.78

Notes-

1) Other intangible asset represent Gas Price Right, Locational Benefits in terms of present/future products 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 lakh MT Urea Plant at Shahjahanpur, Uttar Pradesh.

2) Refer Note 16- for Pledge /Hypothecation of Intangible Assets against borrowings.



5. INVESTMENTS (NON-CURRENT) (` in Lakh)

March 31, 2017 March 31, 2016 April 1, 2015

Unquoted, Non Trade

(A) Investment in Bonds Carried at Amortized Cost In Bond issued by Govt of India

6.65% Fertilizer Company - Special Bond 2023

3,150.00 3,150.00 3,150.00

7.00% Fertilizer Company - Special Bond 2022

2,100.00 2,100.00 2,100.00

(B) Investment in Equity instruments Carried at Fair value through OCI

2500 equity shares @ 10/- each fully paid up of Saraswat Cooperative Bank Limited

0.25 0.25 0.25

TOTAL 5,250.25 5,250.25 5,250.25 Aggregate amount of unquoted investments

5,250.25 5,250.25 5,250.25

Aggregate amount of impairment in value of investments

– – –

6. LOANS Non-Current Current

March 31, 2017 March 31, 2016 April 1, 2015 March 31, 2017 March 31, 2016 April 1, 2015

Unsecured, consid-ered good unless otherwise stated

Security Deposits – – – 8.88 5.76 7.52Loans and advances to Employees

15.69 15.50 19.35 20.77 26.15 24.96

TOTAL 15.69 15.50 19.35 29.65 31.91 32.48

7. OTHER ASSETSUnsecured, consid-ered good, unless otherwise stated

Capital Advances 904.39 – 58.16 – – –

Balance with Revenue authorities

– – – 117.91 148.35 341.89

Prepaid Expenses – – – 126.93 87.03 106.37 Deferred Cost 1.39 1.84 1.65 119.15 – –Advance for Expenses – – – 253.58 81.88 93.13 Stamp Duty Paid under Protest

– – – 5,770.43 5,770.43 5,770.43

TOTAL 905.78 1.84 59.81 6,388.00 6,087.69 6,311.82



8. INVENTORIES (` in Lakh)


Stock in Process 44.96 51.16 47.44 Finished Goods 9,488.91 1,684.40 719.09 Finished Goods in transit 3,170.72 2,527.00 1,274.77 Packing material 113.19 143.46 189.97 Catalyst in Use 568.93 657.43 999.73 Chemicals & Catalyst 637.33 137.76 168.54 Loose Tools 4.47 2.84 5.24 Stores and spares 3,958.10 3,765.24 3,550.79

17,986.61 8,969.29 6,955.57 Less: Provision for Obsolete, Surplus and Non moving items

58.40 58.40 58.40

TOTAL 17,928.21 8,910.89 6,897.17

9. TRADE RECEIVABLESFrom Related Parties 142.40 4.07 –From Others 80,372.51 103,174.88 114,370.45

TOTAL 80,514.91 103,178.95 114,370.45 Breakup for Security details

Secured, Considered good – – –Unsecured considered good* 80,514.91 103,178.95 114,370.45

80,514.91 103,178.95 114,370.45

*The above trade receivables includes ` 22.71 Lakh (P.Y. ` 22.71 Lakh) 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 decided in favour of the Company and M/s B. S. Trading Co., has been asked to deposit ` 30.00 Lakh with the Company towards compensation.

10. CASH AND CASH EQUIVALENTSCASH & CASH EQUIVALENTS

- Balance with banks in Current Accounts

41.82 103.61 567.85

- Cash on hand 0.62 1.81 2.08 - Cheques & Draft in Hand 37.64 45.72 3.95

TOTAL 80.08 151.14 573.88



11. OTHER BANK BALANCES (` in Lakh)


Fixed deposits 0.07 72.12 71.280.07 72.12 71.28

Note: Fixed Deposits are not available for use as these are deposited as securities with Government/Other Departments

12. OTHER FINANCIAL ASSETSNon-Current Current

March 31, 2017 March 31, 2016 April 1,2015 March 31, 2017 March 31, 2016 April 1,2015

Unsecured, Considered good, unless otherwise stated.

Interest accrued on deposits & GOI Bonds

– – – 81.81 85.74 85.99

Other Receivables – – – 695.08 0.88 1.02 TOTAL – – – 776.89 86.62 87.01

13. CURRENT TAX ASSET (NET)March 31, 2017 March 31, 2016 April 1, 2015

Advance tax & TDS (Net) 568.69 568.02 557.59 TOTAL 568.69 568.02 557.59

14. EQUITY SHARE CAPITALAuthorised

100,00,00,000 (P.Y. 100,00,00,000) Equity Shares of Rs.10/- each

100,000.00 100,000.00 100,000.00

Issued, subscribed and fully paid up

80,00,57,143 (P.Y. 80,00,57,143) Equity Shares of Rs.10/- each Fully Paid up

80,005.71 80,005.71 80,005.71

TOTAL 80,005.71 80,005.71 80,005.71 Notes:

1. During the period of five financial years immediately preceeding the Balance Sheet date, the Company has not:(i) allotted any fully paid up 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.

2. The Company has only one class of equity shares having a par value ` 10/- per share. The holders of the equity shares are entitled to receive dividends as declared from time to time and are entitled to voting rights proportionate to their share holding at the meetings of shareholders.



(A) Reconcillation of the number of Shares: (` in Lakh)


Equity Shares

Share outstanding as at the beginning of the year

800,057,143 800,057,143 800,057,143

Add: Issued during the year – – –Balance at the end of the year 800,057,143 800,057,143 800,057,143

(B) Details of Number of Shares held by the Holding Enterprise

Number of Equity Shares % of Holding

Particulars March 31, 2017 March 31, 2016 April 1,2015 March 31, 2017 March 31, 2016 April 1,2015


800,057,143 74,01,04,467 680,034,286 100.00% 92.51% 85.00%

(C) Details of Shareholders holding more than 5% shares in the Company

Number of Equity Shares Percentage (%)

Particulars March 31, 2017 March 31, 2016 April 1,2015 March 31, 2017 March 31, 2016 April 1,2015


800,057,143 74,01,04,465 680,034,286 100.00% 92.51% 85.00%

STL Fertilizers Private Limited

– 59,952,678 120,022,857 – 7.49% 15.00%

TOTAL 800,057,143 800,057,143 800,057,143 100.00% 100.00% 100.00%

15. OTHER EQUITY (` in Lakh)


Retained Earning

Balance at the beginning of the Financial year

(19,651.64) (17,813.54) (17,813.54)

Profit / (Loss) for the year (2,270.79) (1,815.47) – Other comprehensive income for the year

(283.14) (22.63) –

Balance at the end of the Financial year

(22,205.57) (19,651.64) (17,813.54)



16. BORROWINGS (` in Lakh)

Non-Current Current


LONG TERM Term Loans

i) From Banks Secured

State Bank of India (Note 1)

– 19,984.52 22,963.63 – 2,000.00 2,000.00

HDFC (Note 2) 15,991.58 20,987.92 22,984.20 5,000.00 2,000.00 2,000.00 Union Bank of India – – 15,000.00 – – –State Bank of India (Note 3)

18,000.00 20,000.00 – 2,000.00 – –

33,991.58 60,972.44 60,947.83 7,000.00 4,000.00 4,000.00 ii) From Others

(Unsecured)

Interest free UP Trade tax Loan in lieu of Trade tax deferment scheme

– – 855.17 – 855.17 1,046.40

Debentures Unsecured

Non Convertible Redeemable Debentures (Note 4)7.50% Series A 9,981.22 – – – – –7.50% Series B 9,981.22 – – – – –

19,962.44 – – – – –TOTAL 53,954.02 60,972.44 61,803.00 7,000.00 4,855.17 5,046.40

Secured Loan

Securities for secured loan

Note 1) Secured loans ` 0.00 Lakh (Previous year ` 22000 Lakh - Amortized Cost - 21984.52 Lakh) from State Bank of India is secured by way of First pari passu charge on the entire fixed assets of the Company and second pari-passu charge on all the 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 holding enterprise - Krishak Bharati Cooperative Limited (KRIBHCO).

Note 2) Secured loans ` 21000.00 Lakh (Amortized Cost - ` 20991.58 Lakh) (Previous year ` 23000.00 Lakh - Amortized Cost- ` 22987.92 Lakh) from HDFC Bank Ltd is secured by way of First pari passu charge on the entire fixed assets of the Company and second pari-passu charge on all the 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 holding enterprise- Krishak Bharati Cooperative Limited (KRIBHCO).

Note 3) Secured loans ` 20000.00 Lakh (Previous year ` 20000.00 Lakh) from State Bank of India is secured by way of First pari passu charge on the entire fixed assets of the Company and second pari-passu charge on all the 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 holding enterprise - Krishak Bharati Cooperative Limited (KRIBHCO).



Terms of repayment

1) State Bank of India The loan is repayable in quarterly installments of ` 5.00 crore each starting from 30.06.2015 to 31.03.2017, quarterly installments of ` 12.50 crore each from June 2017 to March 2020 and quarterly installments of ` 15 crore each from June 2020 to March 2021. However ` 10.00 crore each has been repaid in first two instalments of loan in FY 2015-16 and ` 200.00 crore was prepaid on 06.12.2016 and the loan has been fully repaid as on 31.03.2017.

2) HDFC Bank Limited The loan is repayable in quarterly installments of ` 5.00 crore each starting from 30.06.2015 to 31.03.2017, quarterly installments of ` 12.50 crore each from June 2017 to March 2020 and quarterly installments of ` 15 crore each from June 2020 to March 2021.

3) State Bank of India The loan is repayable in 20 quarterly installments of ` 10.00 crore each starting from 31.12.2017.

Unsecured Loans/Borrowings

Note 4) Non - Convertible Debentures of ` 20000.00 Lakh (Amortized Cost - ` 19962.44 Lakh) in the form of representing 2000 No of ` 10,00,000/- each were allotted on 06.12.2016 and same is redeemable after three years from date of allotment i.e. on 06.12.2019 with Put/Call Option available after every six months from date of allotment. These Debentures are guaranteed by Corporate Guarantee of Holding Enterprise (KRIBHCO).

16. BORROWINGS (` in Lakh)


SHORT TERMWorking Capital Loans

Secured Loans from Banks (Note 1) 31,195.10 41,094.97 29,530.28 Special Banking Arrangement Facility (Note 2)

20,437.06 – –

51,632.16 41,094.97 29,530.28 Unsecured

From Banks (Note 3) 15,780.34 58,357.33 80,366.33 Commercial Paper (Note 4) 11,000.00 – –

TOTAL 78,412.50 99,452.30 109,896.61 Secured Loans:

Note 1) Cash Credit ` 31195.10 Lakh (Previous Year ` 41094.97 Lakh) from Banks is secured by first pari passu charge on all the current assets of the Company by way of hypothecation of stock, store, book-debts and other current assets of the Company and further guaranted by the Corporate Guarantee of holding enterprise Krishak Bharati Cooperative Limited (KRIBHCO).

Note 2) Loan in the nature of Special Banking Arrangement from State Bank of India is secured by hypothecation of subsidy receivable from Government of India and same is directly repayable by Government of India to lenders.

Unsecured Loans from Banks:

Note 3) All the unsecured loans of ` 15780.34 Lakh (Previous Year ` 58357.33 Lakh) are guaranteed by Corporate Guarantee of holding enterprise - Krishak Bharati Cooperative Limited (KRIBHCO).

Note 4) Commercial Paper of ` 100 crore is backed by Stand By Letter of Credit issued by Bank in favour of Issuing and Paying Agent



17. PROVISIONS (` in Lakh)

Non-Current Current

March 31, 2017 March 31, 2016 April 1,2015 March 31, 2017 March 31, 2016 April 1, 2015

Provision for Employee Benefits

Gratuity 1,462.89 1,099.22 1,015.84 140.48 159.62 114.77 Provision for Leave Encashment

982.64 560.40 495.41 101.36 131.26 107.39

2,445.53 1,659.62 1,511.25 241.84 290.88 222.16 Other Provisions

For Excise duty on closing stock

– – – 0.75 4.37 0.53

0.75 4.37 0.53TOTAL 2,445.53 1,659.62 1,511.25 242.59 295.25 222.69

18. DEFERRED TAX LIABILITIESMarch 31, 2017 March 31, 2016 April 1, 2015

Deferred tax assets/ liabilities are attributable to the following items:Deferred Tax Assets

-Unabsorbed depreciation 17,677.11 18,479.96 18,013.47 -Provision for Employee Benefits 843.96 619.51 536.10 - Other Provisions 98.11 83.83 18.05 Sub - Total (a) 18,619.18 19,183.30 18,567.62 Deferred Tax Liabilities

-Fixed assets 18,619.18 19,183.30 18,567.62 Sub - Total (b) 18,619.18 19,183.30 18,567.62 Net Deferred Tax Liability (b)-(a) – – –

Note: Deferred Tax Assets in respect of unabsorbed depreciation are recognized to the extent of net deferred tax liability on the concept of the probability that future taxable profit will be available against which it can be utilized as envisaged in Ind AS 12- Income Taxes.

19. TRADE PAYABLESFor Goods & Services

Total outstanding dues of micro and small enterprises

– – –

Total outstanding dues other than micro and small enterprises

9,417.86 7,807.28 10,615.79

TOTAL 9,417.86 7,807.28 10,615.79 Note: Trade payables are not interest bearing and normally settled within 60 days



20. OTHER FINANCIAL LIABLITY (` in Lakh)

Non-Current Current


Current maturities of long-term borrowings

– – – 7,000.00 4,855.17 5,046.40

Interest accrued but not due on borrowings

– – – 315.88 521.06 574.99

Deposit from Contractor/Vendors

– – – 1,361.93 1,381.84 1,358.43

Dealer margin payable

– – – 1,195.60 1,204.50 1,263.51

Employee Dues Payable

– – – 860.37 698.70 181.03

Derivative (Forward Contract)

– – – 240.56 – –

TOTAL – – – 10,974.34 8,661.27 8,424.36

21. OTHER LIABILITIESAdvances from customers

– – – 1,765.24 1,359.65 1,403.25

Statutory dues payable

– – – 630.27 872.41 898.35

Other Payable – – – – 4.86 6.24 Subsidy on Unsold Stock

– – – 6,580.93 – –

TOTAL – – – 8,976.44 2,236.92 2,307.84

22. REVENUE FROM OPERATIONSMarch 31, 2017 March 31, 2016

Revenue from Operations Sale of products (including excise duty);

57,275.52 57,816.34

Concession/Price Support from Central Government (net of recovery/adjustments)

103,874.68 131,892.41

TOTAL 161,150.20 189,708.75 Notes:

1) Sales are net of Discounts/Rebates2) Breakup of revenue from sale of products :

- Urea 46,955.31 52,617.88 - Ammonia 2,847.85 4,992.31 - P&K Fertilizers 7,216.50 –- Others 255.86 206.15

TOTAL 57,275.52 57,816.34



22. REVENUE FROM OPERATIONS (CONTD...) (` in Lakh)

March 31, 2017 March 31, 2016

3) Breakup of revenue from Concession/Price Support from Central Government :Urea:

- Price Concession 89,538.89 121,007.97 - Freight Subsidy 10,472.07 10,884.44

P&K Fertilizers- Price Concession 3,244.96 –- Freight Subsidy 618.76 –

TOTAL 103,874.68 131,892.41

23. OTHER INCOMEInterest Income:

- From Banks 3.40 9.53 - Government Securities 356.48 356.48 - Others 1.94 2.39

Rentals / Compensation of Properties 18.38 12.26 Profit on disposal/retirement of fixed assets 0.16 5.48 Insurance claim received 1.97 8.83 Liability no longer required written back 9.58 2.90 Scrap Sales 93.00 36.46 Miscellaneous 85.58 81.34

TOTAL 570.49 515.67 Note: Interest Income represents amount calculated using

effective rate of interest method for financial assets carried at Amortised Cost

24. COST OF MATERIALS CONSUMEDRaw Materials - Fertilizers 67,038.22 84,343.55 Raw Materials - Non-Fertilizers 213.16 150.83 Packing Materials 3,027.25 3,188.36 Chemicals and Catalysts 1,194.46 1,307.50 Power, Fuel & Water 47,844.06 60,344.43

TOTAL 119,317.15 149,334.67

25. PURCHASES OF STOCK-IN-TRADEPurchases of Traded Goods - P&K Fertilizers 9,279.26 –

TOTAL 9,279.26 –



26. CHANGES IN INVENTORIES OF FINISHED GOODS, STOCK-IN -TRADE AND WORK-IN-PROGRESS(` in Lakh)

March 31, 2017 March 31, 2016

Inventories at the end of the year

- Finished goods 12,659.63 4,211.40 - Stock in Process 44.96 51.16

12,704.59 4,262.56 Inventories at the beginning of the year

- Finished goods 4,211.40 1,993.86 - Stock in Process 51.16 47.44

4,262.56 2,041.30 Net (Increase) / Decrease (8,442.03) (2,221.26)

Details of Inventories Finished Goods (Manufactured)

- Urea 12,366.45 3,996.39 - Ammonia 287.04 215.01 Finished Goods(Traded)

- P&K Fertilizers 6.14 –TOTAL 12,659.63 4,211.40

Stock in Process

- Urea 6.81 7.67 - Ammonia 38.15 43.49

TOTAL 44.96 51.16

27. EMPLOYEE BENEFITS EXPENSESalaries, wages and bonus 5,327.37 4,223.21 Contribution to Provident & other funds 321.50 248.98 Staff welfare expenses 367.93 376.98 Others 1.94 2.39

TOTAL 6,018.74 4,851.56

28. FINANCE COSTSInterest:On Term Loans 5,686.37 6,050.94 On Working Capital 4,638.46 6,865.82 Other Borrowing Costs 114.99 120.87

TOTAL 10,439.82 13,037.63 Note: Interest expenses represent amount calculated

using effective interest rate method classified at Amortised Cost.



29. DEPRECIATION AND AMORTIZATION EXPENSE (` in Lakh)

March 31, 2017 March 31, 2016

Depreciation/Amortisation on Tangible Assets 7,921.02 7,883.39 Amortisation on Intangible Assets 159.34 158.33

TOTAL 8,080.36 8,041.72

30. OTHER EXPENSESVehicle Running and Maintenance 87.18 88.51 Repairs & Maintenance :- Plant and Equipments 1,262.03 1,733.90 - Buildings 156.52 201.40 Insurance 165.07 151.96 Rates & Taxes 31.12 53.44 Travelling Expenses 37.48 33.32 Freight and Forwarding Charges 14,526.52 13,393.09 Service Charges 1,245.53 1,321.51 Directors' Sitting Fees 10.22 11.43 Legal and professional charges 64.26 70.60 Auditor's Remuneration- for Statutory audit 10.12 10.08 - for other services 1.45 0.94 - for reimbursement of out of pocket expenses 0.26 – Printing and Stationery 2.91 3.51 Loss on discarding/ disposal of fixed assets 17.48 6.49 Pollution Control Expenses 2.50 0.63 Bagging Expenses 262.15 279.38 Rent 23.95 23.60 Bank charges 92.06 32.47 Provision for dimunition in the value of assets held for disposal

46.23 25.44

Foreign Exchange Fluctuation Loss (Net) 17.71 4.91 Miscellaneous expenses 372.49 340.79

TOTAL 18,435.24 17,787.40

31. OTHER COMPREHENSIVE INCOMEItems that will not be re-classified to Profit or Loss

Remeasurements of the Defined Benefit Plans 283.14 22.63 TOTAL 283.14 22.63



32. EARNING PER SHARE (` in Lakh)

March 31, 2017 March 31, 2016

Total Comprehensive Income for the year (2,553.93) (1,838.10)Weighted Average number of Equity Shares outstanding during the year

800,057,143 800,057,143

Earning Per Share - Basic & Diluted (`) (0.32) (0.23)Face value per share (`) 10 10

33. OPERATING LEASESThe Company’s Significant leasing arrangements are in respect of operating lease of premises for the office of the Company. This leasing agreement is usually renewable on mutually agreed terms but is cancelable. These payaments are shown as “Rent” in Note No. 30 of “Other Expenses”.

34. FINANCE LEASES (` in Lakh)

March 31, 2017 March 31, 2016 March 31, 2015

The Company has entered into finance lease for Land with U.P. State Industrial Development Corporation Limited

A) Leasehold Land taken on finance lease as lessee i) Minimum Lease Payments:

- Within one year 6.32 6.32 6.32- After one year but not more than five years 44.23 34.76 25.28- More than five years 1,390.30 1,406.07 1,421.85 TOTAL 1,440.85 1,447.15 1,453.45

ii) Present Value of Minimum Lease Payments:- Within one year 6.32 6.32 6.32- After one year but not more than five years 31.97 25.22 19.19- More than five years 86.94 86.59 86.27

TOTAL 125.22 118.13 111.78Add: Future Finance Charges 1,315.63 1,329.02 1,341.67

TOTAL 1,440.85 1,447.15 1,453.45B) The Net Carrying Value of the assets acquired under Finance Lease are

included in Tangible Assets.

35. CONTINGENT LIABILITIES & COMMITMENTS (` in Lakh)

March 31, 2017 March 31, 2016

1 Contingent Liabilities:

a) Claim against the company not acknowledged as debts:- Stamp Duty on Mortgage (Refer Note 43a) 19,000.00 19,000.00 - Excise / customs / service tax matters in dispute/ under appeal 835.43 828.00 - Income tax matters in dispute/ under appeal 60.89 60.11 - Other Claims 33.56 33.56 - Disputes relating to Labour matters Not ascertainable Not ascertainable



b) The Hon’ble High Court of Lucknow had given a judgement on 07.09.2012 wherein the sale of Reliance gas to Fertilizer Companies was decided to be leviable with CST instead of VAT. State of U.P. filed an SLP before Hon’ble Supreme Court of India against this order of High Court of Lucknow which is admitted by Hon’ble Supreme Court. Matter is yet to be decided by Hon’ble Supreme Court. No effect of the same is given in the accounts pending final outcome of the case.

(` in Lakh)

March 31, 2017 March 31, 2016

2 Capital Commitments:

Estimated Amount of Contracts remaining to be executed on capital account (Net of advances)

1,039.03 411.10

3 Others

a) Department of Fertilizers (GOI) is implementing Direct Benefit Transfer in the Country and has directed Fertilizer Manufacturers to install Point of Sale devices at retail points accordingly KSFL's commitment is to the tune of ` 744.72 Lakh for this procurement.

b) The Company has issued an undertaking of ` 11,184.00 Lakh 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 Lakh on Urea and payment of Interest of ` 10,959.00 Lakh by Oswal Chemicals & Fertilizer Limited. An escow account uder 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 said escrow account adequately covers the amount of undertaking.

36. EMPLOYEE BENEFITSa) Defined Contribution Plans:

The Company has recognised an expense of ` 321.50 Lakh (Previous Year ` 248.98 Lakh) towards the defined contribution towards Employees Provident Fund & Employee Pension Scheme administered by Government of India.

b) Defined benefits plans:

General Descriptions for Defined Benefit Plans

1) Gratuity:Each employee rendering continous service of 5 years or more is entitled to receive gratuity amount equal to 15/26 of the monthly emoluments for every completed year of service.

2) Leave Encashment:Each employee is entitled to get 30 earned leaves for each completed year of service. Encashment of earned leaves is allowed during service subject to maximum accumulation of 240 days including sick leaves. In addition, each employee is entitled to get 12 Sick leaves during the year. The accumulation of sick leaves is permitted for encashment only at the time of retirement.

The summarized position of various defined benefit plans recognized in Statement of Profit & Loss, other Comprehensive Income & Balance Sheet are as under:

Particulars March 31, 2017 March 31, 2016

Gratuity Long term Compensated

Absences


Absences

Non-Funded Non-Funded Non-Funded Non-Funded

I) Change in present value of obligation during the year

Present value of obligation at the beginning of the year

1,258.83 691.65 1,130.61 602.80



(` in Lakh)



Absences


Absences


Add-Amount Recognised in Statement of Profit and Loss:

- Current Service Cost 78.41 143.38 77.14 62.71 - Interest Cost 93.86 46.20 83.71 42.83 - Past Service Cost – 117.37 – –- Actuarial losses/(gains) – 284.10 – 97.93

Add-Amount Recognised in Other Comprehensive Income:

Actuarial losses/(gains) 283.14 – 22.63 –Less

Benefits Paid (110.87) (198.70) (55.26) (114.62)Present Value of obligation as at year end 1,603.37 1,084.00 1,258.83 691.65

II) Reconciliation of Present value of Defined Benefit Obligation

1. Present Value of obligation as at year-end 1,603.37 1,084.00 1,258.83 691.65 2. Funded status {Surplus/(Deficit)} (1,603.37) (1,084.00) (1,258.83) (691.65) Net Asset/(Liability) (1,603.37) (1,084.00) (1,258.83) (691.65)

III) Expenses recognised in the Statement of Profit and Loss

1. Current Service Cost 78.41 143.38 77.14 62.71 2. Interest Cost 93.86 46.20 83.71 42.83 3. Past service Cost – 117.37 – –4. Actuarial losses/(gains): – 284.10 – 97.93

TOTAL EXPENSE 172.27 591.05 160.85 203.47 IV) Expenses recognised in the Statement of Other Comprehensive Income

1. Net Actuarial (Gain)/Loss 283.14 – 22.63 –TOTAL EXPENSE 283.14 – 22.63 –

V) Bifurcation of Defined Benefit Obligation at the end of the year

1. Current Liability 140.48 101.36 159.62 131.26 2. Non-Current Liability 1,462.89 982.64 1,099.22 560.40

TOTAL 1,603.37 1,084.00 1,258.84 691.66 VI) Actuarial Assumptions

1. Discount Rate 7.00% 7.00% 7.80% 7.80%2. Mortality Table IALM

(2006-08) IALM

(2006-08) IALM

(2006-08) IALM

(2006-08) 3. Salary Escalation 5.00% 5.00% 7.00% 7.00%



VII) Sensitivity Analysis (` in Lakh)

March 31, 2017 March 31, 2016

Increase Decrease Increase Decrease

Gratuity

Discount rate (1 % movement) 122.63 109.24 103.66 91.71 Future salary growth ( 1 % movement) 123.85 112.21 103.45 93.18 Attrition Rate (25% movement) 7.95 8.46 2.64 2.82 Long term Compensated Absences

Discount rate (1 % movement) 88.11 77.65 58.47 51.23 Future salary growth (1 % movement) 88.99 79.75 58.36 52.05 Attrition Rate (25% movement) 7.14 7.68 1.87 2.02

VIII) Maturity Profile of Defined Benefit Obligation

March 31, 2017 March 31, 2016


Absences


Absences


Time Period (in years)

Upto 1 140.48 101.36 159.62 131.26 2-5 621.95 448.50 377.29 224.36 6-10 1,238.14 776.91 1,062.79 589.97 11-15 1,353.92 722.16 1,408.27 656.54 Above 15 2,019.42 985.84 2,538.27 1,060.77

TOTAL 5,373.91 3,034.77 5,546.24 2,662.90

37. SEGMENT INFORMATION For management purposes, the Company is organised into business units based on its products and services and has two reportable segments, as follows: Manufactured Goods Traded Goods No opertaing segments have been aggregated to form the above reportable operating segments. The Chief Operation Decision maker monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements.

A) Segment Information (` in lakh)

31 March 2017 31 March 2016

Manufactured Products

Traded Products

Total Manufactured Products

Traded Products

Total

Revenue

External customers 150,069.98 11,080.22 161,150.20 189,708.75 – 189,708.75 Inter-segment – – – – – –

TOTAL REVENUE 150,069.98 11,080.22 161,150.20 189,708.75 – 189,708.75



(` in Lakh)

31 March 2017 31 March 2016

Manufactured Products

Traded Products

Total Manufactured Products

Traded Products

Total

Income/(Expenses):

Depreciation and amortization

8,080.36 – 8,080.36 8,041.72 – 8,041.72

Segment Result:

Segment Profit 6,838.78 794.92 7,633.71 10,742.80 – 10,742.80 Total Assets 211,829.38 4,575.09 216,404.47 235,620.89 – 235,620.89 Total Liabilities 24,535.29 205.59 24,740.88 15,284.11 – 15,284.11 Other disclosures:

Capital expenditure 1,000.21 – 1,000.21 2,420.76 – 2,420.76

B) Reconciliation to amounts reflected in the financial statement:i) Reconciliation of profit (` in Lakh)

March 31, 2017 March 31, 2016

Segment profit 7,633.71 10,742.80 Add:

Finance income 361.82 368.39 Profit/(Loss) on Sale & Disposal of Assets (17.32) (1.00)Other Non- operating income 208.51 553.01 141.79 509.18 Less:

Exchange Gain/Loss (Net) 17.71 4.91 Finance Cost 10,439.82 10,457.53 13,037.63 13,042.54 Profit before tax (2,270.79) (1,790.54)ii) Reconciliation of Assets

Segment operating assets 216,404.47 235,620.89 Investments 5,250.25 5,250.25 Advance Tax & TDS (Net) 568.69 568.02

TOTAL ASSETS 222,223.42 241,439.15 iii) Reconciliation of Liabilities

Segment operating liabilities 24,740.88 15,284.11 Borrowings (Short term and Long Term) 132,366.52 160,424.74 Current Maturities of Long term Borrowings 7,000.00 4,855.17 Interest Accrued on Borrowings 315.88 521.06

TOTAL LIABILITIES 164,423.28 181,085.08

C) Revenue from external customers: India 161,150.20 189,708.75 Outside India – –Total revenue as per statement of profit and loss 161,150.20 189,708.75 Note: The revenue information above is based on the

locations of the customers.



(` in Lakh)

March 31, 2017 March 31, 2016

D) non-Current operating assets: India 108,383.63 115,656.42 Outside India – –

TOTAL 108,383.63 115,656.42 Note: Non-current assets for this purpose consist of Property, Plant and

Equipment, Capital work in progress and Intangible assets.

E) Information about revenue from major products which is included in revenue: Products

- Urea 146,966.27 184,510.29 - Ammonia 2,847.85 4,992.31 - P&K Fertilizers 11,080.22 – - Others 255.86 206.15

TOTAL 161,150.20 189,708.75

38. RELATED PARTY DISCLOSURESRelated party disclosure, as required by Ind AS 24, is as below:-(a) List of Related Parties

(i) Holding Enterprise

Krishak Bharati Cooperative LimitedOther related parties with whom Company has transactions:

(ii) Key Managerial Personnel (KMP):

Mr. V. P. Kaushik Managing Director till 30.04.2016Mr. R Venkataramanan Chief Financial OfficerMr. Bipin C. Phuloria Company SecretaryMr. N. Sambasiva Rao Managing Director from 01.05.2016 till 27.05.2016 Mr. O. P. Gupta Managing Director from 28.05.2016 till date

(b) The following transactions were carried out with related parties : (` in Lakh)

Particulars31.03.2017 31.03.2016

(a)(i) (a)(ii) Total (a)(i) (a)(ii) Total

Sale of Goods 2,274.27 – 2,274.27 2,460.62 – 2,460.62 Services charges paid/ payable

1,245.53 – 1,245.53 1,321.51 – 1,321.51

Reimbursement for salary & other expenses

30.80 – 30.80 3.53 – 3.53

Amount paid/payable for Rent, Electricity & Other Services

20.07 – 20.07 26.53 – 26.53

Managerial Remu-neration (KMP)

– 135.38 135.38 – 107.49 107.49



(c) Closing Balances of related parties (` in Lakh)

Particulars31.03.2017 31.03.2016 01.04.2015

(a)(i) Total (a)(i) Total (a)(i) Total

Amount payable For Goods & Services

2,396.57 2,396.57 1,205.31 1,205.31 2965.09 2,965.09

Other Payables 23.15 23.15 0.15 0.15 4.55 4.55 Amount Recoverable (Security deposit)

2.66 2.66 2.66 2.66 2.66 2.66

Trade Receivable 142.40 142.40 4.07 4.07 – –The transactions with related parties are made on terms equivalent to those that prevail in arm’s length transactions. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates. Outstanding balances at the year end are unsecured.

Note for Managerial Remuneration (KMP) (` in Lakh

31.03.2017 31.03.2016

Short Term Employee Benefits 119.16 98.69 Post Employment Employee Benefits - Gratuity Paid 10.13 3.97 - Defined Contribution Plan (Provident Fund)

6.09 4.83

TOTAL 135.38 107.49 As the liability for gratuity and leave encashment are provided on actuarial basis for the Company as a whole, amounts accrued pertaining to Key Managerial Personnel are not included above as the same is not ascertainable.

39. FIRST TIME ADOPTION OF IND ASThese financial statements, for the year ended 31st March 2017, are the first the Company has prepared in accordance with Ind AS. For periods up to and including the year ended 31st March 2016, the Company prepared its financial statements in accordance with accounting standards notified under Section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on 31st March 2017, together with the comparative period data as at and for the year ended 31st March 2016, as described in the summary of significant accounting policies. In preparing these financial statements, the Company’s opening balance sheet was prepared as at 1st April 2015, the Company’s date of transition to Ind AS. This note explains exemptions availed by the Company in restating its Indian GAAP financial statements, including the balance sheet as at 1st April 2015 and the financial statements as at and for the year ended 31st March 2016.

A. Exemptions applied:

1. Mandatory exemptions

a) Estimates

The estimates at 1st April 2015 and at 31st March 2016 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies) apart from the following items where application of Indian GAAP did not require estimation:Fair Value Through Other Comprehensive Income – Unquoted Equity Shares

The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at 1st April 2015, the date of transition to Ind AS and as of 31st March 2016.



b) Derecognition of Financial Assets:

The company has applied the de-recognition requirements in Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS.

c) Classification and measurement of financial assets:

i. Financial Instruments (Loan to employees, Security deposits received and paid) :

Financial assets like loan to employees has been classified and measured at amortised cost on the basis of the facts and circumstances that exist at the date of transition to Ind ASs. Since, it is impracticable for the Company to apply retrospectively the effective interest method in Ind AS 109, the fair value of the financial asset or the financial liability at the date of transition to Ind AS by applying amortised cost method, has been considered as the new gross carrying amount of that financial asset or the financial liability at the date of transition to Ind AS.

ii. Financial Instruments (Equity shares) :

The Company has designated unquoted equity instrument held at 1st April 2015 as investment carried at fair value through OCI.

iii. Financial Instruments (GOI Special Bonds) :

The Company has designated investments in GOI Special Bonds held at 1st April 2015 as investment carried at Amortised Cost.

d) Impairment of financial assets (Trade receivables and other Financial Assets) :

At the date of transition to Ind ASs, the Company has determined that assessment of significant increase in credit risk since the initial recognition of a financial instrument would require undue cost or effort, the Company has recognised a loss allowance at an amount equal to lifetime expected credit losses at each reporting date until that financial instrument is derecognised (unless that financial instrument is low credit risk at a reporting date).

2. Optional exemptions

a) Deemed Cost-Previous GAAP carrying amount (PPE and Intangible) :

The Company has elected to continue with the carrying value for all of Property, Plant and Equipment and Intangible Assets, as recognised in its Indian GAAP financial as deemed cost at the transition date.

b) Designate of previously recognised financial instrument:

The Company has elected this exemption and opted to: Designate financial asset(Investment in Govt Bonds) at Amortised Cost as per Ind AS 109 based on facts and

circumstances as on transition date; Designate an investment in equity shares at Fair Value through Other Comprehensive Income, as per Ind AS 109, based

on facts and circumstances exist on transition date.



B. Reconcilliation of Equity as previously reported under IGAAP to Ind AS (` in Lakh)

As at April 1,2015

Particulars Note Adjustments Adujstments

No. IGAAP IND AS IGAAP IND AS

I ASSETS

1 Non Current Asset

a Property, Plant & Equipment

1 112,527.46 472.91 113,000.36 116,231.39 233.15 116,464.54

b Capital work-in-prog-ress

609.58 – 609.56 2,620.82 – 2,620.82

c Other Intangible assets 2,046.50 – 2,046.50 2,204.03 – 2,204.03

d Investments 5,250.25 – 5,250.25 5,250.25 – 5,250.25

e Loans 17.34 (1.84) 15.50 21.00 (1.65) 19.35

f Other non-current assets

– 1.84 1.84 58.16 1.65 59.81

2 Current Asset

a Inventories 9,471.43 (560.54) 8,910.89 7,261.40 (364.23) 6,897.17

b Financial Assets:

- Trade receivables 3 107,803.46 (4,624.51) 103,178.95 118,994.90 (4,624.45) 114,370.45

- Cash and cash equivalents

151.14 – 151.14 573.88 – 573.88

- Bank balances other than above

72.12 – 72.12 71.28 – 71.28

- Loans 33.69 (1.78) 31.91 34.46 (1.98) 32.48

- Other financial assets 84.84 1.78 86.62 85.03 1.98 87.01

c Current Tax Assets (Net)

568.02 – 568.02 557.59 – 557.59

d Other current assets 6,087.69 – 6,087.69 6,311.82 – 6,311.82

3 Non Current Assets classified as held for Disposal

1,427.80 – 1,427.80 1,453.23 – 1,453.23

TOTAL 246,151.32 (4,712.17) 241,439.15 261,729.24 (4,755.53) 256,973.71

II EQUITY & LIABILITIES

1 Equity

a Equity Share Capital 80,005.71 – 80,005.71 80,005.71 – 80,005.71

b Other Equity (14,967.03) (4,684.61) (19,651.64) (13,110.18) (4,703.36) (17,813.54)



As at April 1,2015 (` in Lakh)

Particulars Note Adjustments Adujstments

No. IGAAP IND AS IGAAP IND AS

2 Non Current Liabilities

Financial Liabilities :

a Borrowings 2 61,000.00 (27.56) 60,972.44 61,855.17 (52.17) 61,803.00

b Provisions 1,659.62 0.00 1,659.62 1,511.25 – 1,511.25

3 Current Liabilities

Financial Liabilities :

a Borrowings 99,452.30 – 99,452.30 109,896.61 – 109,896.61

b Trade payables 7,807.28 – 7,807.28 10,615.79 – 10,615.79

c Other financial liabilities

8,661.27 – 8,661.27 8,424.36 – 8,424.36

d Provisions 295.25 – 295.25 222.69 – 222.69

e Other current liabilities

2,236.92 – 2,236.92 2,307.84 – 2,307.84

TOTAL 246,151.32 (4,712.17) 241,439.15 261,729.24 (4,755.53) 256,973.71

C. Reconcilliation of Statement of Profit & Loss as previously reported under IGAAP to Ind AS for the year ended March 31,2016 (` in Lakh)

Particulars Note No. IGAAP Adjustments IND AS

I Revenue From Operations

1 188,532.73 1,176.02 189,708.75

II Other Income 513.29 2.38 515.67

III Total Revenue (I+II) 189,046.02 1,178.40 190,224.42

IV EXPENSES

Cost of materials consumed 149,334.67 0.00 149,334.67

Changes in inventories of finished goods, Stock-in-Trade and work-in-progress

(2,221.26) (0.00) (2,221.26)

Excise Duty Expenses 1 7.22 1,176.02 1,183.24

Employee benefits expense 2,5 4,872.81 (21.25) 4,851.56

Finance costs 3 13,013.01 24.62 13,037.63

Depreciation and amortization expenses

4 7,993.20 48.52 8,041.72

Other expenses 4,5 17,897.72 (110.33) 17,787.40

Prior Period Adjustments 5 (19.44) 19.44 –

TOTAL EXPENSES 190,877.93 1,137.02 192,014.96



(` in Lakh)

Particulars Note No. IGAAP Adjustments IND AS

V Profit/(loss) before tax (III-IV) (1,831.92) 41.38 (1,790.54)

VI Tax expense

- Current Tax – – –

- Deferred tax – – –

- Earlier year 24.93 – 24.93

VII Profit/(loss) for the period (1,856.85) 41.38 (1,815.47)

VIII Other Comprehensive Income

a (i) Items that will not be reclassified to profit or loss

2 – (22.63) (22.63)

(ii) Income tax relating to items that will not be reclassified to profit or loss

– – –

b (i) Items that will be reclassified to profit or loss

– – –

(ii) Income tax relating to items that will be reclassified to profit or loss

– – –

IX Total Comprehensive Income (VII+VIII)

(1,856.85) 18.75 (1,838.10)

40. FINANCIAL INSTRUMENTSFinancial instruments by category

The carrying value and fair value of financial instruments by categories other than those with carrying amounts that are reasonable aproximations of fair values as of March 31, 2017 were as follows:

(` in Lakh)

ParticularsAmortised

cost

Financial assets/ liabilities at fair value through profit or loss

Financial assets/liabilities at fair

value through OCI

Total carrying value

Total fair value

Assets:

Investments- Equity – – 0.25 0.25 0.25 - Government securities 5,250.00 – – 5,250.00 5,115.91

TOTAL 5,250.00 – 0.25 5,250.25 5,116.16

Liabilities:

Derivative Forward Contract – 240.56 – 240.56 240.56 TOTAL – 240.56 – 240.56 240.56

The carrying value and fair value of financial instruments by categories other than those with carrying amounts that are reasonable aproximations of fair values as of March 31, 2016 were as follows:



(` in Lakh)

ParticularsAmortised

cost

Financial assets/ liabilities at fair value through profit or loss

Financial assets/liabilities at fair

value through OCI

Total carrying value

Total fair value

Assets:

Investments – – – – –- Equity – – 0.25 0.25 0.25 - Government securities 5,250.00 – – 5,250.00 4,948.46

TOTAL 5,250.00 – 0.25 5,250.25 4,948.71

The carrying value and fair value of financial instruments by categories other than those with carrying amounts that are reasonable aproximations of fair values as of April 1, 2015 were as follows: Assets:

Investments-Equity and preference securities – – 0.25 0.25 0.25 -Government securities 5,250.00 – – 5,250.00 4,904.06

TOTAL 5,250.00 – 0.25 5,250.25 4,904.31

Notes:

1) The management assessed that Fair Value of Cash & Cash Equivalents, Other Bank Balances, Trade Receivables, Other Current Financial Assets, Trade Payables, Short Term Borrowings, Long Term Floating Rate Loans and Other Current Financial Liabilities approximate their carrying amounts.

2) The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

Fair value hierarchy

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

The following table presents fair value hierarchy of assets and liabilities measured at fair value on a recurring basis as of March 31, 2017:

(` in Lakh)

Particulars March 31, 2017 Level 1 Level 2 Level 3

Assets

Investments in government securities 5,250.00 – 5,115.91 –Investments in equity instruments 0.25 – 0.25 –

TOTAL 5,250.25 – 5,116.16 –Liabilities

Derivative Forward Contract 240.56 – 240.56 –TOTAL 240.56 – 240.56 –



The following table presents fair value hierarchy of assets and liabilities measured at fair value on a recurring basis as of March 31, 2016:

(` in Lakh)

Particulars March 31, 2016 Level 1 Level 2 Level 3

Assets


TOTAL 5,250.25 – 4,948.71 –

The following table presents fair value hierarchy of assets and liabilities measured at fair value on a recurring basis as of April 1, 2015: (` in Lakh)

Particulars April 1, 2015 Level 1 Level 2 Level 3

Assets


TOTAL 5,250.25 – 4,904.31 –

Methods and assumptions

The following methods and assumptions were used to estimate the fair values:- The fair values of the bonds are based on price derived as per Clearing Corporating of India (CCIL) report at the reporting

date. - The investment in Equity Shares have been valued based on the condition of loan attached. The Shares will be redeemed

at par at the closure of limits and hence have been carried at par value.- The Foreign Currency Loan has been valued based on reference rate of Reserve Bank of India at the reporting date.

41. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES1 Financial risk factors

The Company's activities expose it to a variety of financial risks, market risk, credit risk and liquidity risk. The Company's primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The primary market risk to the Company is Interest Rate risk.The Company’s principal financial liabilities comprise Borrowings, trade and other payables, security deposits, employee liabilities. The main purpose of these financial liabilities is to finance the Company’s operations. The Company’s principal financial assets include trade and other receivables, Other Financial Assets and cash / cash equivalents that derive directly from its operations. The Company also holds investments and enters into derivative transactions.Company is exposed to a number of different financial risks arising from natural business exposures as well as its use of financial instruments including market risk relating to interest rate, foreign currency exchange rates. Senior management oversees the management of these risks with appropriate financial risk governance framework for the Company.

i. Market risk

Market risk is the risk where the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk, currency rate risk, interest rate risk and other price risks. Financial instruments affected by market risk include loans and borrowings, deposits, investments, and derivative financial instruments. Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. This is based on the financial assets and financial liabilities held as at March 31, 2017 and March 31, 2016.



The sensitivity analysis excludes the impact of movements in market variables on the carrying value of post-employment benefit obligations provisions and on the non-financial assets and liabilities. The sensitivity of the relevant Statement of Profit and Loss item is the effect of the assumed changes in the respective market risks. The Company’s activities expose it to a variety of financial risks, including the effects of changes in foreign currency exchange rates and interest rates. The Company uses derivative financial instruments such as foreign exchange forward contracts depending upon the underly-ing contract and risk management strategy to manage its exposures to foreign exchange fluctuations and interest rate.

a) Foreign Currency Risk and senstivity

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities (when revenue or expense is denominated in a foreign currency) and Borrowings.

The Company manages its foreign currency risk through hedging. The hedging is mostly undertaken through forward contracts. The following table analyzes foreign currency risk from financial instruments as of March 31, 2017:

(` in Lakh)

Particulars ` Equivalent of USD

` Equivalent of Euro

Total

Other receivables 141.43 – 141.43Trade payables (100.45) (2.17) (102.62)Net assets / (liabilities) 40.98 (2.17) 38.81

Note: The above Net Assets/(Liabilities) excludes the value of foreign currency borrowing which was hedged through forward contract.

The following table analyzes foreign currency risk from financial instruments as of March 31, 2016:Trade payables (2.67) (11.41) (14.08)Net assets / (liabilities) (2.67) (11.41) (14.08)

The following table analyzes foreign currency risk from financial instruments as of April 1, 2015: Trade payables (1.39) – (1.39)Net assets / (liabilities) (1.39) 0.00 (1.39)

Sensitivity analysis is computed based on the changes in the income and expenses in foreign currency upon conversion into functional currency, due to exchange rate fluctuations between the previous reporting period and the current reporting period.

(` in Lakh)

ParticularsImpact on Profit & Loss Account

March 31, 2017 March 31, 2016

USD Sensitivity absolute impact 2.05 0.13Euro Sensitivity absolute impact 0.11 0.57Note: The Sensitivity has been based taking 5% variation in the value of Foreign Currency. For the year ended March 31,

2017 and March 31, 2016, every percentage point depreciation / appreciation in the exchange rate between the Indian rupee and U.S. dollar, has affected the Company's Net Profit by approximately 0.04% and 0.002%, respectively.

b) Exposure to Interest Risk

The Company is also exposed to interest rate risk from the possibility that changes in interest rates will affect future cash flows of a financial instrument, principally financial debt. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s long-term and short term debt obligations with floating interest rates.



Interest Rate Risk Exposure (` in Lakh)


Borrowings (Floating Rates) 139,366.52 165,279.91 176,746.01

Sensitivity

ParticularsImpact on Profit & Loss Account

March 31, 2017 March 31, 2016

Interest Rate Increase by 0.50% 696.83 826.40 Interest Rate decrease by 0.50% 696.83 826.40 The assumed movement in interest rate sensitivity analysis is based on the currently observable market environment, showing a significantly higher volatility than in prior years.

c) Derivative financial instruments

The Company holds derivative financial instruments such as foreign currency forward contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank. These derivative financial instruments are valued based on inputs that are observable in the marketplace.The following table gives details in respect of outstanding foreign exchange forward contracts:


USD In Lakh Equivalent ` In Lakh

USD In Lakh Equivalent ` In Lakh

Forward contracts

U.S. dollars 227.57 14,758.18 – –TOTAL FORWARDS 227.57 14,758.18 – –

The foreign exchange forward is maturing within 1 month from reporting date.

ii. Credit risk

Customer credit risk is managed by each business unit subject to the Company’s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive analysis and outstanding customer receivables are regularly monitored.Ageing Analysis of Trade Receivables

(` in Lakh)


Upto Six Months

More than Six Months

Upto Six Months More than Six Months

Secured – – – –Unsecured 66,569.83 13,945.08 92,325.53 10,853.42

TOTAL 66,569.83 13,945.08 92,325.53 10,853.42

iii. Liquidity risk

Company monitors its risk of a shortage of funds diligently. The Company seeks to manage its liquidity requirement by maintaining access to both short term and long term debts from banks, money market and debt market. Company has committed credit facilities from banks.

Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of Bank overdrafts, Cash Credits, Working Capital Term Loans, Commercial papers, Debentures etc. The Company has access to a sufficient variety of sources of funding.



Approximately 65% of the Compant’s debt will mature in less than one year at 31st March 2017 (31st March 2016: 65.53%, 1st April 2015: 68%) based on the carrying value of borrowings reflected in the financial statements. The Company has access to a sufficient variety of sources of funding and debt maturing within 12 months can be rolled over with existing lenders.The table below provides details regarding the contractual maturities of significant financial liabilities as of March 31, 2017:

(` in Lakh)

Particulars Less than 1 year

1-2 years 2-4 years 4-7 years Total

Borrowings 85,412.50 9,000.00 38,954.02 6,000.00 139,366.52 Trade payables 9,417.86 – – – 9,417.86 Other financial liabilities * 3,974.34 – – – 3,974.34

TOTAL 98,804.70 9,000.00 38,954.02 6,000.00 152,758.72

The table below provides details regarding the contractual maturities of significant financial liabilities as of March 31, 2016:Borrowings 104,307.47 12,000.00 28,000.00 20,972.44 165,279.91 Trade payables 7,807.28 – – – 7,807.28 Other financial liabilities * 3,806.10 – – – 3,806.10

TOTAL 115,920.85 12,000.00 28,000.00 20,972.44 176,893.29

The table below provides details regarding the contractual maturities of significant financial liabilities as of April 1, 2015:Borrowings 114,943.01 19,855.17 20,000.00 21,947.82 176,746.00 Trade payables 10,615.79 – – – 10,615.79 Other financial liabilities * 3,377.96 – – – 3,377.96

TOTAL 128,936.76 19,855.17 20,000.00 21,947.82 190,739.75

* Excluding Current Maturities of Long Term Borrowings, which is included in Borrowings.

d) Footnotes to the reconciliation of equity as at April 1, 2015

1 Property Plant & Equipment & Inventory

Spares,other than insurance spares were classified as inventory under existing Indian GAAP. However under Ind AS, spare parts are recognised when they meet the definition of property, plant and equipment. Such stores and spares have been capitalised and depreciated under Ind AS retrospectively till the transition date and the impact has been adjusted through retained earnings. For the year ended 31st March 2016, the Company has de-recognised the consumption of spares under Ind AS and only depreciation of such spares has been recorded.

2 Borrowings

Under Indian GAAP, transaction costs incurred in connection with borrowings are charged to Statement of Profit & loss as and when incurred. Under Ind AS, transaction costs are included in the initial recognition amount of financial liability and charged to Statement of Profit & Loss using the effective interest method.

3 Trade Receivables

During the current year, Department of Fertilizers, Government of India has clarified by way of notification dated 17.06.2016 that reimbursement of secondary freight will be allowed to Fertilizer Companies at the lower of Normative per tonne per Km (PTPK) rates notified by DOF or actual expenditure incurred by the Fertilizer Companies during the said months effective from 01/04/2008. Adjustment relating to excess income recognized by the Company upto 31/03/2015 of ` 4624.49 Lakh has been made in the opening reserve as at 01/04/2015.



e) Footnotes to the reconcilliation of Statement of Profit & Loss for the year ended March 31,2016

1 Revenue from Operations

As per Indian GAAP, the revenue was disclosed net of excise duty collected. However as per Ind AS, the revenue from operations is inclusive of Excise Duty. Accordingly excise duty paid on sales have been disclosed as expense.

2 Defined benefit liability

Both under Indian GAAP and Ind AS, the Company recognised costs related to its post-employment defined benefit plan on an actuarial basis. Under Indian GAAP, the entire cost, including actuarial gains and losses, are charged to Profit & Loss A/c. Under Ind AS, remeasurements [comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability] are recognised in Other Comprehensive Income. Due to this, the employee benefit cost is reduced and remeasurement gains/ losses on defined benefit plans has been recognized in the Other Comprehensive Income for the year ended 31st March 2016.

3 Finance Cost

Under Indian GAAP, transaction costs incurred in connection with borrowings are charged to Profit or Loss for the period. Under Ind AS, transaction costs are included in the initial recognition amount of financial liability and charged to Statement of Profit & Loss using the effective interest method.

4 Depreciation of Property, Plant and equipment & Other Expenses

Spares, other than insurance spares were classified as inventory under existing Indian GAAP. However under Ind AS, spare parts are recognised when they meet the definition of property, plant and equipment. Such stores and spares have been capitalised and depreciated under Ind AS retrospectively till the transition date and the impact has been adjusted through retained earnings. For the year ended 31st March 2016, the Company has de-recognised the consumption of spares under Ind AS and only depreciation of such spares has been recorded.

5 Prior Period Items

Under Indian GAAP, the prior period Items were disclosed separately. However in Ind AS, these items have been reclassified to natural heads as the items were not material.

42. CAPITAL MANAGEMENTFor the purpose of the Company’s capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders. The primary objective of the Company’s capital management is to maximise the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The Company monitors capital using a gearing ratio, which is Long Term Borrowings divided by total capital plus Long Term Borrowings.

(` in Lakh)


Long Term Borrowings 60,954.02 65,827.61 66,849.40 Long Term Borrowings 60,954.02 65,827.61 66,849.40 Equity 57,800.15 60,354.07 62,192.17 Capital and Long Term Borrowings : 118,754.17 126,181.68 129,041.57 Gearing Ratio 0.51 0.52 0.52

In order to achieve this overall objective, the Company’s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings.

No changes were made in the objectives, policies or processes for managing capital during the years ended 31st March 2017 and 31st March 2016.



43. OTHER NOTES

a) Stamp Duty

Collector Stamps/District Magistrate, Shahjahanpur passed an order dated 13/08/2008 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 crore (the amount revised from ̀ 190 Lakh to ̀ 190 crore 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 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 writpetition was admitted 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.

b) Claim Pending Settlement

During the year 2006-07, the Company had paid stamp duty of ` 190.80 crore on transfer/registration of Assets acquired from Oswal Chemicals & Fertilizers Limited vide sale agreement dated 31st March 2006. The Company had paid the amount of stamp duty as finalized by Additional District Magistrate (F&R), Collector of Stamps, Shahjahanpur on total sale consideration of ` 1908 crore. The Company has

filed an appeal before the Board of Revenue, Uttar Pradesh for refund of total Development Tax amounting to ` 38.16 crore paid at the rate of 2% in respect of all assets and stamp duty amounting to ` 19.54 crore 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, U.P., 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 crore paid by the Company (based on actual computation) has been disclosed as “Stamp Duty paid under protest” under the head “Other Current Assets” 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.



c) Details of Specified Bank Notes (SBN) held and transacted during the period from 8th November, 2016 to 30th December, 2016 as provided in the Table below:

Particulars SBNs Other Denomination Notes

Total (`)

Closing cash in hand as on 08/11/2016 170,000 6,708 176,708

(+) Permitted Receipts NIL 795,371 795,371

(-) Permitted Payments NIL 694,934 694,934

(-) Amount deposited in Banks 170,000 NIL 170,000

Closing cash in hand as on 30.12.2016 NIL 107,145 107,145

d) Information in respect of Micro, Small and Medium Enterprises as required by The Micro, Small and Medium Enterprises Development Act, 2006 as at : (` in Lakh)

Sr. No. Particulars 2016-17 2015-16

1 The principal amount and the interest due thereon remaining unpaid to any supplier as at the end of each accounting year:(i) Principal Amount Due Nil Nil

(ii) Interest due thereon Nil Nil

2 The amount of interest paid by the buyer in terms of section 18, along with the amounts of the payment made to the supplier beyond the appointed day during each accounting year as announced by any dispute resolution council/authority

Nil Nil

3 The amount of interest due and payable for the period of delay in making payment ( which have been paid but beyond the appointed day during the year) but without adding the interest specified under this Act:(i) Payment made to supplier (Other than interest) beyond the appointed day during the year

Nil Nil

(ii) Interest paid to supplier on principal amount paid beyond the appointed day during the year

Nil Nil

(iii) Interest due and payable to supplier on principal amount paid beyond the appointed day during the year

Nil Nil

4 The amount of interest accrued and remaining unpaid at the end of each accounting year and

Nil Nil

5 The amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise, for the purpose of disallowance as a deductible expenditure under section 23.

Nil Nil

The above information has been provided to the extent such parties have been identified on the basis of information available with the Company.



e) 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.

f) All the Financial Assets and Liabilities are carried at amortized cost except for following:

1) Equity Instruments in Saraswat Bank Fair Value through Other Comprehensive Income; 2) Derivative Instruments (Forward Contract) Fair Value through Profit & Loss Account.

g) Previous year’s figures have been regrouped/ rearranged wherever considered necessary for comparative purpose.




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