Nagarjuna Fertilisers and Chemicals

1.  Estimated amount of contracts remaining to be executed on capital
 account and not provided for (net of advance)
 
 i) In respect of Capital and Service Orders Rs.5303.13 Lakhs (Previous
 year Rs.7713.00 lakhs)
 
 ii) In respect of 86.55 acres of land in possession, compensation is
 not ascertained.  
 
 2 A. Contingent Liabilities:
 
 (i) Counter guarantees given to Bankers in respect of Bank guarantees
 Rs.4697.29 Lakhs (Previous year Rs.3641.47 Lakhs)
 
 (ii) (a) Corporate guarantees given to banks on behalf of Nagarjuna Oil
 Corporation Ltd., a subsidiary company Rs Nil Lakhs (Previous year Rs.
 11790.25 Lakhs) includes invoked guarantee of Rs Nil lakhs (Previous
 year Rs. 5222.82 lakhs.)
 
 (b) In an agreement with the lenders and some shareholders of Nagarjuna
 Oil Corporation Limited, the Company has agreed to give an undertaking
 to fund cost over runs, if any.
 
 (iii) Taxation matters under appeals Rs.681.84 lakhs (Previous Year
 Rs.1706.52 lakhs)
 
 B. Claims against the company not acknowledged as debts Rs.2133.58
 lakhs (Previous year Rs.1955.85 lakhs).
 
 3.  Share Capital:
 
 In accordance with the CDR Scheme 37,20,372 0.01% Optionally
 Convertible Cumulative Redeemable Preference Shares - (OCCRPS) of
 Rs.100 each were issued to certain lenders to compensate the
 differential rate of interest for the year 2003-04.
 
 Pursuant to the Guidelines governing issues of Preference Shares, the
 said OCCRPS are to be converted into Equity Shares within 18 months
 from the Date of Allotment. Since the said OCCRPS were not converted
 into Equity Shares within the time prescribed by SEBI, they remain as
 Ordinary Redeemable Preference Shares. These are redeemable after the
 entire debt liabilities are fully paid
 
 The Warrants Allotment Committee of the Board of Directors at its
 meeting held on October 26, 2007 allotted 2,25,00,000 warrants
 convertible into equity shares to the Core Promoters of the company
 pursuant to the approval of the Board of Directors and the Members of
 the company in accordance with the Guidelines prescribed by Securities
 and Exchange Board of India for Preferential Issues at a price of
 Rs.29/-per warrant, the price being determined by the Statutory
 Auditors of the company in accordance with the Preferential Issue
 guidelines.
 
 The company has received Rs.652.50 lakhs being the 10% of the value of
 the warrants as advance and the balance amount is to be received before
 25,h April 2009. The company has received communication from the Core
 Promoters expressing their inability to pay the balance amount and
 convert the said 2,25,00,000 warrants into equity shares. The Warrants
 Allotment Committee of Directors had accordingly annulled the
 2,25,00,000 warrants allotted to the Core Promoters and the upfront 10%
 payment made by the Core Promoters stands forfeited in terms of the
 SEBI guidelines for preferential issue.
 
 4.  Secured Loans:
 
 A) DEBENTURES
 
 i 30,00,000, 14.50% Secured Redeemable Non-Convertible Debentures of
 Rs.100/- each issued to LIC redeemable in 41 structured quarterly
 instalments commencing from 31st March, 2006 as per reschedulement in
 line with the CDR Package.
 
 ii 80,00,000, 15.00% Secured Redeemable Non-Convertible Debentures of
 Rs.100/- each issued to IFCI, redeemable in 41 structured quarterly
 instalments commencing from 31.s1 March, 2006 as per reschedulement in
 line with the CDR Package.
 
 iii 1,53,30,000, 15.00% Secured Redeemable Non-Convertible Debentures
 of Rs.100/- each issued to ICICI, redeemable in 21 structured quarterly
 instalments commencing from 31s March, 2011 as per reschedulement in
 line with the CDR Package.
 
 iv 25,00,000, 15.00% Secured Redeemable Non-Convertible Debentures of
 Rs.100/- each issued to IFCI, redeemable in 41 structured quarterly
 instalments commencing from 31s1 March 2006 as per reschedulement in
 line with the CDR Package.
 
 v 30,00,000, 13.25% Secured Redeemable Non-Convertible Debentures of
 Rs.100/- each issued to LIC, redeemable in 41 structured quarterly
 instalments commencing from 31st March, 2006 as per reschedulement in
 line with the CDR Package.
 
 The interest rate stands revised to 11% p.a. w.e.f. 01.04.2007 in
 respect of Debentures stated at i,ii,iii, iv, and v as per CDR letter
 dated 25th October, 2007 regarding reset of interest rates.
 
 vi 32,00,000, 12.50% Secured Redeemable Non-Convertible Debentures of
 Rs.100/- each issued to SBI, redeemable in 20 equal quarterly
 instalments commencing from 31st March 2005 as per reschedulement in
 line with the CDR Package.
 
 The interest rate stands revised to 7.50% p.a. w.e.f. 01.04.2007 in
 respect of Debentures stated above as per CDR letter dated 25m October,
 2007 regarding reset of interest rates.
 
 The above debentures (excluding Rs.4300.00 lakhs, relating to assets
 given on lease, issued to ICICI are secured by exclusive mortgage of
 leased assets) together with accrued interest, remuneration and other
 expenses thereof are secured by a registered mortgage and an exclusive
 charge on the Companys immovable property situated at
 
 Ahmedabad and an equitable mortgage and a charge on the other immovable
 and movable properties of the Company in favour of the debenture
 trustees, save and except stock in trade, book debts given as security
 to banks for obtaining working capital facilities and assets given on
 lease with exclusive charge in favour of the funding institution.  vii
 18,13,00,995 0% Secured Redeemable Non-Convertible Debentures of Re.1/-
 each have been issued to various lenders viz. State Bank of India,
 State Bank of Hyderabad, State Bank of Bikaner and Jaipur, State Bank
 of Patiala, State Bank of Travancore, State Bank of Saurashtra, Bank of
 India, Bank of Baroda, Indian Overseas Bank, UCO Bank, Union Bank of
 India, The Bank of Rajasthan Ltd., SICOM Limited, Oriental Bank of
 Commerce, Rabo India Finance (Pvt) Ltd., The Karur Vysya Bank Limited,
 Karnataka Bank Limited, Induslnd Bank Limited as envisaged in the CDR
 Package to compensate the differential rate of interest for the year
 2003-04. The debentures are redeemable after the entire debt
 liabilities are fully repaid.  
 
 B) Term Loans from Institutions are secured by way of a charge created
 through an equitable mortgage of immovable properties by deposit of
 title deeds and hypothecation of movable properties of the Company
 including movable plant and machinery, spares, tools and other
 movables, present and future, save and except stock in trade, book
 debts, and stores & spares, given as security to banks for obtaining
 working capital facilities and assets given on lease with exclusive
 charge in favour of the funding institution. They are further secured
 by way of a second charge on the current assets of the company.
 
 C) Term loans from banks together-with interest accrued thereon, are
 secured by way of a first charge on the fixed assets of the company
 ranking pari-passu with the financial institutions, a second charge
 (sub-ofdinate to the financial institutions) on the monthly subsidy and
 are further secured by way of a charge created through an equitable
 mortgage by deposit of title deeds of certain immovable property of the
 Company.
 
 D) Working Capital facilities from banks are secured by hypothecation
 by way of first charge on current assets , stock in trade, book debts
 and stores & spares, present and future and second charge on the fixed
 assets of the company.
 
 E) The company was sanctioned a Debt Restructuring Package (including
 working capital) under Corporate Debt Restructuring (CDR) Scheme on
 20.02.2004 effective from 1st April 2003 vide letter no BY.CDR (AG)/
 No.307/2003-04, dated 16th March 2004. All the lenders had approved and
 implemented the Package.
 
 The lenders reserve the right to recompense the sacrifices being made
 in case the profitability and cash flow position of the Company so
 warrants in future. The lenders have the right to reset the interest
 rates after every three years.
 
 The lenders shall have the right to convert 20% of their outstanding
 debt after financial year 31.03.2011 into equity and, in the event of
 any default in servicing the debt; the lenders shall also have the
 right to convert the defaulted amounts into equity (at par) or any
 other instruments.  The promoters shall be given the first right of
 refusal, if the converted shares/instruments are decided to be sold by
 the lenders.
 
 The Company is to disinvest its equity investments and recover loans
 and advances lent to subsidiary/group companies to the extent and in
 the manner envisaged.
 
 Shares held in subsidiary companies- NOCL (9,90,00,000) and JESCO
 (2,25,61,693) are under pledge with Banks/ Financial Institutions as
 security for the loan availed by the Company.
 
 All the Term Loans from Institutions and Banks, Counter Guarantees,
 Working Capital facilities from banks are personally guaranteed by Shri
 K.S.Raju, Chairman and Managing Director of the Company.
 
 5.  Unsecured Loans:
 
 a) Fixed Deposits:
 
 There are no deposits which are claimed but remain unpaid as on the
 date of the Balance Sheet. The balance of matured unclaimed deposits
 outstanding as on 31.03.2009 was Rs 9.07 lakhs (previous year Rs.22.70
 lakhs).  During the year unclaimed deposits transferred to the Investor
 Education and Protection Fund on the relevant due dates Rs.9.19 Lakhs
 (previous year:Rs. 6.83 Lakhs).
 
 b) Sales Tax Deferral:
 
 The Govt, of Andhra Pradesh has extended to the Company, the incentive
 of sales tax deferral scheme pursuant to which the sales tax
 attributable to the sales effected out of production is deferred
 (interest-free) for a period of 14 years from 19.03.1998.  The deferred
 sales tax of each year is repayable after the expiry of the period
 deferred.
 
 6.  Land and Buildings:
 
 a Includes 22.38 acres leased to Nagarjuna Agricultural Research and
 Development Institute.
 
 b.  Includes 5 acres, the possession of which is yet to be taken, title
 under dispute.
 
 c.  Includes Land valued at Rs.958.08 lakhs and Buildings valued at
 Rs.291.92 lakhs vested with the Company pursuant to the order dated
 27-04-98, of the Honble High Court of Andhra Pradesh.
 
 d.  Includes 45.04 acres attached by Govt of AP in terms of GO Ms
 No.158 dt. March 16,2009. The Company has filed a writ petition in the
 High Court of A.P. challenging the notification of the Govt, of A.P.
 
 e.  Excludes value of 86.55 acres, which is in the possession and use
 of the Company pending fixation of compensation by the State
 Government.
 
 f.  Excludes value of 14.06 acres (pending completion) of proposed
 alienation and handing over possession by Govt.  of Andhra Pradesh
 including 3.14 acres which cannot be alienated under Andhra Pradesh
 Land Reforms Act, 1973.
 
 g.  Includes advance paid towards land and building of Rs. 317.00 lakhs
 and 730.00 lakhs respectively, pending registration since the title
 deeds are yet to be received from the transferor company.
 
 A) NOCL which is implementing the Oil Refinery Project has made good
 progress in this financial year. Equity and Long Term Loan requirements
 have been tied up. During the year the Company has received an amount
 of Rs,284.78crs towards equity and Rs.609.17 crs (out of total amount
 of Rs.3193 crs) towards long term loan disbursement. Land required for
 the project has been acquired/allotted. Various major contracts for
 civil works, project management consultancy, acquisition and erection
 of Plant and Machinery have been entered into. Marketing arrangements
 have been made with major Oil Companies. The project is viable and the
 management is confident of implementing the project.
 
 The repayment of loan obtained by NOCL from term lenders and interest
 and other charges thereon, are secured by way of negative lien on the
 entire share holding of the Company in NOCL.
 
 B) In respect of investment in JESCO, management is of the opinion that
 there is no diminution in the value of the investment and that the
 realisation from sale of assets of the JESCO is expected to be in
 excess of investments made.
 
 7.  Group Concession Scheme - (GCS) Subsidy
 
 Nitrogenous fertilizers are under the Group Concession Scheme as per
 New Pricing Scheme announced by the Government of India, Department of
 Fertilizers vide their letter dated 08th, March, 2007 to be implemented
 for the period from 01.10.2006 to 31.03.2010 (NPS-III). The Concession
 Rate for Plant-1 and Plant-2 for the period 01.04.2008 to 31.03.2009
 has been recognized based on the latest notified rates under NPS-III
 and further adjusted with input price escalation aggregating Rs.
 7468.26 Lakhs (Previous year Rs. 5220.43 lakhs) as estimated by
 Management.
 
 Pending finalisation of Net Gain and IPP benefit as per the
 policies for Production and Sale of Urea beyond 100% re- assessed
 capacity, the company has estimated the Net Gain and IPP benefit in
 accordance with the known policy parameters in this regard.
 
 Adjustments if any, on notification of final prices under the scheme
 will be considered in the year in which notifications are received.
 
 8.  Sundry Debtors, Loans and Advances :
 
 a.  Debts and advances identified as irrecoverable and doubtful are
 written off - Rs.2.66 Lakhs (previous year Rs.  37.45 lakhs) as bad
 debts.
 
 b.  Certain advances aggregating to Rs.5267.32 lakhs were outstanding
 as on 31 March2008, out of which Rs.700 lakhs is due annually as per
 the CDR Scheme. As against the same the. company could recover Rs.125
 laktis only during the year. However, management is pursuing the matter
 and confident of recovering the balance amount.
 
 c.  Confirmations of balances from most: of the sundry debtors have
 been obtained and others are awaited.
 
 9.  Income Tax:
 
 a) Current Tax :
 
 Provision for current tax is made for the amount of tax payable in
 respect of taxable income for the yeai\ under Income Tax Act 1961. The
 Company after making review of the pending tax matters, is of the
 opinion that no further provision is necessary in respect of disputed
 tax demand of Rs.681.84.lakhs (previous year: Rs. 1706.52 Lakhs) which
 are in various stages of appeals. Any further provision required in
 respect of disputed tax will be considered on completion of the
 appellate proceedings.
 
 10.  Sales are net of cash discounts of Rs.165.84 lakhs (Previous year
 Rs. 276.61 lakhs)
 
 11.  Segmental Accounting
 
 The financial results relate mainly to fertilizer segment.  In
 Accordance with Accounting Standard (AS) -17, since the financial
 results of micro irrigation segment is less than the limit for separate
 disclosure, the same is not shown separately.
 
 12. Related party transactions
 
 1. Names of related parties and description of relationship.
 
 a) Subsidiaries
 
 (i) Nagarjuna Oil Corporation Limited
 
 (ii) Jaiprakash Engineering & Steel Co. Limited
 
 b) Associates
 
 (i) iKisan Limited
 
 (ii) Nagarjuna Agrichem Limited
 
 c) Key Management Personnel 
 
 Mr.K.S.Raju, Chairman & Managing Director
 
 Mr.K.Rahul Raju, Joint Managing Director 
 
 Mr.PP.Singh, Director - Technical 
 
 Mr.R.S.Nanda, Director & Chief Operating Officer
 
 d) Relatives of Key Management Personnel.
 
 (i) Smt. Lakshmi Raju (Daughter of Shri K.S.Raju and Sister of K Rahul
 Raju.)
 
 (ii) Smt. K Lakshmi Raju (Sister of Shri K S Raju )
 
 e) Enterprises able to exercise significant influence
 
 (i) Nagarjuna Management Services Private Ltd.
 
 (ii) Nagarjuna Holdings Private Ltd
 .
 (iii) Chinnar Securities Private Limited
 
 (iv)K R R Holding Private Limited
 
 (v) K S Raju & Associates Holdings Private Ltd.
 
 Defined Benefit Plan
 
 The employees gratuity fund scheme managed by Life Insurance
 Corporation of India is a defined benefit plan. The present value of
 obligation is determined based on actuarial valuation using the
 Projected Unit Credit Method, which recognizes each period of service
 as giving rise to additional unit of employee benefit entitlement and
 measures each unit separately to build up the final obligation.
 
 13.  Dues to Micro, Small and Medium Scale Industrial Undertakings,
 exceeding 45 days - NIL,
 
 14.  Previous year figures have been re-grouped / re-classified /
 re-cast wherever necessary.
 
 15.  Amounts are rounded off to the nearest Rupees in Lakhs. Figures in
 brackets represent credits / deductions.rounded off to the nearest
 Rupees in Lakhs. Figures in brackets represent credits / deductions.