1. CONTINGENT LIABILITIES NOT PROVIDED FOR:
1.1 Claims against the Company not acknowledged as debts to the extent
ascertainable (Interest can not be estimated reliably) aggregates to
Rs..23.81 crore (Previous year Rs..26.56 crore) which include the
a) Claims preferred by local Authorities amounting to Rs. 8.34 crore (net
of payment made/liability provided of Rs..3.95 crore). The Capitalization
of land at Kurul Township and factory at Thai Unit has been made
subject to Arbitration awards/Court decisions in this behalf.
b) SCADA charges claimed by M/s GAIL(I)Ltd. Rs.. 1.47 crore & water
charges claimed by Municipal Corporation of Greater Mumbai. Rs..0.21
c) Claims before arbitrators/courts, are Rs.. 13.79 crore (previous
year Rs.. 16.64 crore).
1.2 Corporate Guarantee executed by the Company on behalf of its Joint
Venture Company, FACT-RCF Building Products Ltd aggregates to Rs.. 17.50
crore(Previous year Rs.. 17.50 crore).
1.3 Show cause notices issued by Excise Authorities aggregating to
Rs..4.09 crore (Previous year Rs..3.98 crore), disputed by the company.
1.4 Demand raised by Excise Authorities (other than as mentioned in
Para 26.3) and other authorities aggregating to Rs..20.90 crore (Previous
yearRs..20.35 crore), disputed by the company.
1.5 a) Demands raised by Income Tax Authorities, disputed by the
company aggregating to Rs..316.85 crore (Previous year Rs..5.61 crore),
against which the amount of Rs..4.05 crore has been deposited with Tax
b) Demands raised by Sales Tax Authority, disputed by the company
aggregating to Rs..3.57 crore (previous year Rs..3.5 7 crore)
c) Demands raised by Service Tax Authority, disputed by the company
aggregating to Rs..0.15 crore (previous year Rs..nil crore)
d) Demand raised by Custom Authorities (other than as mentioned in Para
26.9) disputed by the company aggregating to Rs..80.77 crore.
1.6 The amount of claims in respect of legal cases filed against the
Company for lab our matters and not acknowledged as debts is not
1.7 In case of use of Naphtha purchased by the company at confessional
rate of excise duty for the purposes other than mentioned in the
exemption notification for the period from November 96 to Feb.2005, the Commissioner of Excise has passed an
order for payment of excise duty of Rs..9.66 crore and penalty of Rs..9.66 crore plus interest at appropriate
rate. The Company filed an appeal in CESTAT. CESTAT passed order No.A/270- 271/12/EB/C-ll Dated 27.03.2012
and confirmed the Demand of Rs..9.66 crore & penalty of Rs..4.67 crore. The company is in the process of
filing an appeal against this order with appropriate adjudicating authority.
For the period from March 2005 to Oct. 2005, show cause notice is
served for Rs.. 1.77 crore for the same reason. Commissioner of excise
passed an order for payment of excise duty of Rs.. 1.77 crore & penalty of
Rs.1.77 crore plus interest at appropriate rate, The Company has filed an
appeal in CESTAT & stay has been granted
In case of Naphtha purchased by the Company at confessionals rate of
excise duty & used for the purpose other than mentioned in the
exemption notification for the period July 2007 to March 2008 the
Commissioner of Excise (Adj.) has issued show cause notice demanding
payment of excise duty of Rs..6.11 crore (P.Y.Rs..6.11 crore). Company
replied to the show cause and a personal hearing was held on
14-10-2010.Order is still awaited.
For the period April 2008 to August 2009 show cause notice is served
for Rs.. 11.77 crore (PY.Rs.. 11.77 crore) for the same reason. Company
replied to the show cause and a personal hearing was held on
14-10-2010.Order is still awaited.
1.8 Demand of Rs..33.48 crore raised by Municipal Corporation of Greater
Mumbai (BMC) towards additional sewerage charges levied from 5-4-1987
are disputed by the Company in a Writ Petition filed in Bombay High
Court. The Honorable High Court vide its interim Order dated 10-11-92
has granted stay on recovery of the demand for the period up to the
date of the Order and directed the Company to pay sewerage charges from
the date of the order which is being paid by the Company. The matter
has been disposed off by the High Court, and is now resting in Supreme
Court, with stay granted to continue. As a part of an agreement entered
into with BMC for obtaining raw sewerage, the Company has paid an
interest free deposit of Rs..16 crore to BMC(included in Schedule K)
representing approximately 50% of the disputed demand which would be
against the disputed demand in case the Court rules in favor of BMC. No
provision is considered necessary for the disputed demand ofRs..33.48
crore as the claim of BMC is not tenable.
1.9 The Company had entered into a lump sum turn key contract with M/s
Uhde India Ltd (UDL) for revamp of its Old Nitric Acid plant at Trombay
Unit During 2004-05, Commissioner of Customs (Imports) Mumbai had
allowed clearance of the Air Compressor package consignment under
provisional assessment after payment of applicable custom duties,
furnishing of Bank guarantees towards demand and a revenue deposit of
Thereafter Commissioner of Customs passed an Order for payment of
Custom Duty and penalty aggregating to Rs..25.62 crore against the above
matter. Company has paid Rs..9.27 crore against provisional assessment
including Countervailing Duty (CVD) & Cenvat credit amounting to Rs..4.49
crore has been availed on the CVD paid.
The Order has been challenged before CESTAT / High Court and by an
Order dated 20th June 2007 , Bombay High Court stayed the order passed
by the Commissioner of Customs and also against invoking the bank
guarantees. The Company has renewed the Bank guarantees. Bombay High
Court has now ordered CESTAT to hear the Appeal filed by RCF and the
Appeal before bench of CESTAT is expected to be heard. Company has been
advised by their solicitors and advocates that the demand is not
sustainable and no provision is considered necessary.
Estimated amount of contracts remaining to be executed on capital
account and not provided for aggregates to Rs..96.70 crore (Previous year
Rs..294.16 crore) net of advances.
The Company has acquired entire wagons (416 wagons) originally under
lease from SBI Leasing Group. Lease rent paid during the year Rs.. Nil.
(previous year Rs.0.04 crore) The future minimum lease payments in
respect of non- cancellable operating lease as at the balance sheet
date are Further, under the Own Your Wagons Scheme” of Indian
Railways, these wagons have been sub-leased to Indian Railways. The
estimated future revenue on this account is Rs..5.65 crore (Previous year
Rs.6.35 crore).Period wise classification of which is as below.
2. Formalities relating to transfer of certain immovable and other
properties from Fertilizers Corporation of India Limited to the Company
on reorganization of the former in 1978 are not yet completed. Out
ofproperty cards for a total area of3095022 sq. mts, property cards for
465340 sq. mts (P.Y.1659352) are yet to be transferred in the name of
3. The capitalization of Freehold land at Thai Unit includes land at
Kihim having carrying Cost of Rs..0.02 crore, pending execution of
documents and transfer of title deeds in the name of Company, due to
4. Some of the balances of Trade Receivable, Trade Payable, Current
Liability and Loans and advances are subject to confirmation,
reconciliation and consequential adjustments if any. In the opinion of
the management, such adjustments would not be material.
5. Inventory includes stores and spares costing Rs..5.37 crore
(previous year Rs..9.92 crore) declared as surplus. The amount includes
stores/spares valued at Rs..2.76 crore (Previous year Rs..8.44 crore)
identified as disposable surplus and which on disposal may not fetch
full book value and accordingly, provision of Rs..2.60 crore (previous
year Rs..7.99 crore) has been made on account of estimated loss on
6. The Company is eligible to receive subsidy from Fertilizer
Industry Co-Ordination Committee (FICC) / Department of Fertilizers
(DOF) on Urea, Phosphatic & Potassic (P&K) Fertilizers at the rates
notified from time to time.
For the rates yet to be notified, due to escalations/de- escalations in
the cost of inputs and other costs, subsidy has been accounted on
Dues to Micro and small enterprises have been determined to the extent
such parties have been identified on the basis of information given by
such parties/available with the company. This has been relied upon by
7. Company has recognized its factory at Trombay, factory at Thai and
Trading, as geographical segments (primary segments) and its activities
of manufacture and sale of fertilizers, and manufacture and sale of
industrial products as business segments (secondary segments) in
accordance with Accounting Standard 17 on Segment reporting prescribed
under the Companies (Accounting Standard) Rules,2006. The segment wise
revenue, expenses and capital employed are as follows:
8. Information as per Accounting Standard (AS-18) on Related Party
Disclosures is given below:-
Names of Related Parties and Description of relationships (Excluding
with State Controlled Entities) Company is under the administrative
control of Ministry of Chemicals & Fertilizers, Government of India and
is within the meaning of state controlled enterprise of para 9 of
1) Relationship SUBSIDIARY:-
A) Rajasthan Rashtriya Chemicals & Fertilizers Ltd. JOINT VENTURES:-
A) FACT-RCF Building Products Ltd. (FRBL)
B) Urvarak Videsh Ltd. (UVL)
C) RCF-HM Construction Solutions Pvt. Ltd. (RCF-HM)
2) Key Management Personnel Whole time Directors:-
(i) ShrLR.G.Rajan, Chairman & Managing Director
(ii) Shri.Gautam Sen Director (Finance)
(iii) Shri. Manoj Priya, Director (Technical) up to 30Ih September,2011
The above amount includes salaries & allowance, Leave encashment, &
contribution to Provident fund and exclude contributions to the
Gratuity Fund since the same are on actuarial valuation for the group
of employees and medical expenses as they are covered under Group
Medic aim Policy taken by the company for all the employees and their
The company has made a full provision for diminution in value of
investment including amount paid as advance against equity pending
allotment, in respect of its subsidiary M/s. Rajasthan Rashtriya
Chemicals & Fertilizers Ltd. and Joint Venture Company M/s. RCF-HM
Construction Solutions Pvt. Ltd., amounting to Rs.0.49 crore and Rs.0.10
9. As per requirements of Accounting Standard -28 Company has carried
out impairment testing of its Cash Generating Units/Fixed Assets at
the year end. Such a test of impairment is carried out considering an
estimated useful life of 10 Years for arriving at the value in use.
Accordingly, a provision for impairment has been made towards the
Rapidwall plant at Trombay unit since the expected value in use as
arrived at, is lower than its carrying amount. A provision of Rs.. 13.80
crore net of deferred tax asset of Rs.6.63 crore has been made towards
Figures in brackets are in respect of previous year
(*) Disputes, Claims and Others represent estimates made mainly for
probable claims arising out of litigations / disputes pending with
authorities /Trade Payable. Deferred Tax Benefit ofRs..0.17 crore
(Previous year Rs..2.31 crore)has been recognized on above. The timing
and probability of outflow with regard to these matters depends on the
ultimate settlement /conclusions with relevant authorities.
* These balances are not available for use by the Company as they
represent corresponding unpaid dividend liability.
10. In compliance with Accounting Standard 27 on Financial Reporting
of Interests in Joint Ventures”. The required information is as
A) FACT-RCF BUILDING PRODUCTS LTD.-A Joint venture Company with
Fertilizers & Chemicals Travancore Ltd. (FACT) for manufacture of rapid
building materials from Gypsum at Kochi.
B) URVARAK VIDESH LTD:- A joint venture with National Fertilizers Ltd.
and KRIBHCO for revival of closed Fertilizer Units of FCI/HFC group of
companies has been formed.
C) RCF-HM CONSTRUCTION SOLUTIONS PVT. LTD.:-A Joint venture with First
Future Properties Pvt. Ltd. (a consortium of M/s. Mahimtura
Consultants Pvt. Ltd. and M/s. Hiranandani Constructions Ltd.) for
marketing of rapid wall manufactured by RCF and its nominees.
The Company''s share in assets, liabilities ,income ,expenditure,
contingent liabilities and capital commitments compiled on the basis of
audited/un-audited financials received from these joint ventures are as
The company has made a full provision for diminution in value of
investment in respect of it subsidiary Rajasthan Rashtriya Chemicals &
Fertilizers Ltd. & Joint Venture Company.RCF-HM Construction Solutions
Pvt. Ltd as under.
11. Consequent upon communication received from Government of India
for the buyback of Fertilizer bonds, the company has disposed off the
balance 50% of the value of bonds amounting to Rs..348.72 crore during
the year. An additional loss ofRs..8.17 crore on such disposal during the
year has been recognized. During the year, Government of India has
settled the compensation of loss on buy back of such bonds including
bonds sold under the scheme in the previous year. An amount of Rs.. 19.20
crore has been recognized as net income consequent to full and final
settlement of loss on buyback during the year.
12. The position of (Net) Certified Emission Reductions (CER''s) or
Carbon Credits allotted and held by the company is as under:-
13. During the year company has handed over possession of land
measuring 47477 sq.mtrs adjacent to the company''s township at Chembur,
Mumbai, to MMRDA (Mumbai Metropolitan Region Development Authority) (a
statutory body under Government of Maharashtra) for the construction of
public road. However formalities pertaining to transfer of ownership &
consideration for exchange of land are yet to be completed. Pending
which company has classified the same as assets held for disposal
under Note No. 10 to financial statements.
14. Disclosure under Clause 32 of Listing Agreement
Since the company has not given any loans and advances in the nature of
loans to its subsidiary and the subsidiary has not acquired any shares
of the company, no disclosures under clause 32 of the Listing Agreement
15. Employee Benefits:-
The required disclosure under the Revised Accounting Standard 15 is
General Description of defined Benefit Plan
1) Provident Fund:-
The Provident Fund contributions are made to a Trust administered by
the Company. The interest rate payable to the members of the Trust
shall not be lower than statutory rate of interest declared by the
Central Government under the Employees Provident Funds and
Miscellaneous Provisions Act, 1952. Shortfall if any shall be made good
by the RCF Employees Provident Fund Trust out of the reserve created by
the Trust, as per circular C.Ex. /Misc./Comp./Audit/2009/43789 dated
21s'' Oct 2010 issued by EPFO. During the current year, as at the
Balance Sheet date, the income earned by the Trust and reserves are
sufficient to cover interest payable to employees. During the year an
amount of Rs.25.60 crore has been charged of to statement of Profit &
loss towards contribution by the Company.
The total plan liabilities under the RCF Ltd. Employees Provident Fund
Trust as at 31st March 2012 as per the unaudited financial statement
for the year then ended is f .637.97 crore (P.Y. Rs..584.43 crore) as
against total plan assets ofRs..637.97Crore (P.Y.Rs..584.43 crore). The
funds of the trust have been invested under various securities as
prescribed under the rules of the trust.
The Company operates gratuity plan wherein every employee is entitled
to the benefit equivalent to fifteen days salary last drawn for each
completed year of service depending upon the date of joining .The same
is payable on death, separation from service, or retirement, whichever
is earlier. The benefit vests after five years of continuous service.
3) Leave Encashment:-
The company has been accounting for provision on account of leave
encashment on retirement based on actuarial valuation carried out as at
the Balance date.
The liability for the leave encashment on , retirement as ''at 31st March
2012 isRs..153.37 crore (P.Y.Rs.. 141.02 crore)
4) Post Retirement Medical Benefits:-
Employees of the company upon retirement/separation under Voluntary
Retirement Scheme are entitled to medical benefits as per the scheme in
5) Long Term Service Award
As a part of cordial relation and appreciation of long dedicated
service. Company is honouring its employees with a memento on
completion of 25 years of service.
General Description of Defined Contribution Plan
Contributory Superannuation Scheme: -
Company has introduced during the year a pension scheme in accordance
with Govt, of India guideline. The scheme is a defined contribution
scheme. Employees are required to exercise their option to be a part of
the scheme & make a contribution equivalent to the amount contributed
by the company to the fund, upon becoming the member of the scheme.
Under the scheme the employee shall be eligible for pension provided
they have put in at least 15 years of service in the company &
superannuate from the company which is as per Govt, of India guideline.
During the year company has provided an amount of Rs.2.84 crore as
contribution towards the said scheme.
Experience adjustments on Plan Liabilities - Not available * Experience
adjustments on Plan Assets -Not available *
* The Management has relied on the overall actuarial
valuation conducted by the actuary. However experience adjustments on
Plan liabilities and assets are not readily available and hence not
Estimates of future salary increase considered in the actuarial
valuation take into account inflation, seniority, promotion and other
relevant factors such as demand and supply in the employment market.
16. Employee Benefits Expense includes Rs.. 11.91 crore (Previous Year
Nil) being tax borne by the Company on deemed perquisite value of
accommodation provided to employees for the period from 1.4.2007 to
31.3.2012 which is allowed under Section 10(10CC) of Income Tax Act
1961. The Company has been advised that bearing of tax liability of
such nature does not contravene provisions of Section 200 of the Act.
17. Change in Accounting Policy
Monetary assets and liabilities in foreign currency, which were out
standing as at the year end were translated at the year end at the
closing exchange rate and the resultant exchange differences were
recognized in the statement of profit & loss up to 31st March,2011.
Pursuant to paragraph 46A of AS 11: The Effects of Changes in Foreign
Exchange Rates, inserted vide Notification No.GSR 914 (E) dated
December 29, 2011 the company has, during the year, exercised the
option of adding or deducting such exchange difference to the cost of
asset in respect of long term foreign currency monetary items.
As a result, exchange differences aggregating to Rs. 11.46 crore relating
to the acquisition of depreciable capital asset have been adjusted with
the cost of such asset and would be depreciated over the balance life
of the asset.
18. Since implementation of SAP, creation of liability for expenses
takes place in two stages and Income tax is deducted at the second
stage. According to the legal opinion obtained by the Company and as
per the practice followed by other companies using SAP the process of
deduction and remittance of Tax at source is correctly followed.
19. Additional Information:
Additional information in respect of goods manufactured, value of
imports calculated on CIF basis, expenditure in foreign currency during
the year on account of royalty, know-how etc., consumption of raw
material, spare parts and components during the year, earnings in
foreign exchange, etc. is as follows:
20. Previous year figures have been re-arranged and regrouped wherever
necessary and/or practicable to make them comparable with those of the