Mangalore Refinery and Petrochemicals

1.  Contingent Liabilities not provided for in respect of :
 
 1.1 Corporate Guarantee given by the Company towards loan of
 Rs.3,372.30 Million sanctioned by certain bankers / financial
 institutions to New Mangalore Port Trust (NMPT) for  construction of
 Jetties. Amount outstanding as at the close of the year is Rs.230.27
 Million (Previous Year Rs.469.82 Million).
 
 1.2 Claims against the Company not acknowledged as debt Rs.457.35
 Million (Previous Year Rs.474.69 Million).
 
 1.3 Disputed tax/Duty demands pending on appeal:
 
 a) Income Tax : Rs. 833.84 Million (Previous Year Rs.219.11 Million);
 
 b) Commercial Tax: Rs.3,381.72 Million (Previous Year Rs. 3,731.71
 Million) - includes Rs.474.16 Million relating to projects (Previous
 Year Rs. 474.16 Million).  (Against this Rs.471.02 Million is paid
 under protest and included under loans & advances);
 
 c) Excise Duty: Rs. 173.53 Million (Previous Year Rs.  342.59 Million),
 (against this Rs,41.45 Million is paid under protest and is included
 under loans & advances;
 
 d) Customs Duty: Rs. 126.67 Million (previous year Rs.31.62 Million).
 
 1.4. The estimated amount of contracts remaining to be executed on
 capital account and not provided for (net of advances) Rs 2,775.79
 Million (Previous Year Rs. 2,870 Million).
 
 2 Loans and Advances :
 
 2.1 Loans to employees / Port Trust represents Loans to employees/ port
 trust having repayment schedule of more than seven years, balance
 outstanding is Rs. 528.80 Million (Previous Year Rs. 501.47 Million).
 
 2.2 Loans and advances include refund claims for Custom Duty orr
 project imports Rs.378.70 Million (Previous year Rs.378.70 Million) and
 Central Sale Tax Rs.309,32 Million (Previous year 366.91 Million). A
 further refund due towards Commercial Taxes Rs.2,884.43 Million is also
 included therein for which there is a matching liability to pay to
 customers on receipt of the refund which is included under sundry
 creditors - others
 
 4.  The Company has yet to receive response of its confirmation letters
 from some of the Sundry Debtors , Loans and Advances and Sundry
 Creditors. Reconciliation and adjustment will be effected on receipt of
 confirmations which in the opinion of the management will not be
 significant.
 
 5.  Accounting of State Level VAT
 
 To fall in line with the Guidance note on accounting of State- level
 VAT issued by the Institute of Chartered Accountants of India, the
 company has changed its accounting policy on sale of products to
 exclude the state level VAT which was hitherto included in the sale of
 products. Consequently the sale of products and expenditure on sales
 tax are lower by Rs. 2,153.09 Million (previous year Rs. 1,687.48
 Million)
 
 6.  Provision for Wage Revision:
 
 The wage revision of management and non-management cadres is due
 effective from 01.01.07 and 01.04.07 respectively. During the year a
 provision of Rs. 165.00 Million towards the said wage revision has been
 made on estimated basis.
 
 7.  Following expenses are included under other heads of expenses.
 
 a) Stores and spares consumed Rs 339.56 Million (Previous Year Rs.
 245.48 Million).
 
 b) Insurance Rs. 11.37 Million (Previous year Rs. 18.14 Million)
 
 8.  Dues to Micro, Small & Medium enterprises:
 
 The classification of the suppliers under Micro, Small and Medium
 Enterprises Development Act, 2006 is made based on the submission of
 the registration certificate under the said Act by the suppliers. The
 outstanding to the Micro, Small & Medium Enterprise more than 16 days
 of closing date is NIL.
 
 9.  Forward Contracts to cover Forex Risk:
 
 Forward contracts to the tune of US8 Million are outstanding as on
 31.03.08, which were entered into, to hedge the risk of changes in
 foreign currency exchange rates on future export sales against existing
 long term export contract. The notional mark to market loss on these
 unexpired contracts as on 31.03.2008 amounting to Rs.120.47 Million has
 not been considered in the financial statements. The actual loss/gain
 could vary and be determined only on settlement of the contract on
 their respective due dates, 10 Employee Terminal Benefits:
 
 (A) Brief Description : A general description on the type of Defined
 Benefit Plans is as follows:
 
 a) Earned Leave Benefit (EL) Accrual - 32 days per year Accumulation up
 to 300 days allowed EL accumulated in excess of 60 days is allowed for
 encashment while in service
 
 b) Sick Leave (SL)
 
 Accrual - 10 days per year Encashment while in service is not allowed
 Encashment on retirement in permitted and entire accumulation is
 allowed for encashment
 
 c) Gratuity
 
 15 days salary for every completed year of service.  Vesting period is
 5 years and the payment is restricted to Rs.3.50 lacs
 
 d) Long Service Emblem
 
 On completion of each milestone of service from the date of joining and
 also at the time of retirement, employees will be gifted with Gold
 Coin, weight depends on the milestone of service completed.
 
 e) Post Retirement Medical Benefits
 
 After retirement, on payment of one time employees share of premium,
 the employee and his/her spouse will be covered under Group Medical
 Insurance.