| 1. Company Overview
Rhodia Specialty Chemicals India Ltd is a Public Limited Company
incorporated under the Companies Act, 1956. It is a subsidiary of
Rhodia UK Ltd (holding 72.93%). The Company is primarily engaged in
manufacturing surfactants for serving markets in home, personal care
and agrochemical markets. It also manufactures chemicals used in
industrial formulations, paints and coatings as well as for oil fields.
It also sources some trading products from overseas group companies and
markets in India.
As at As at
31 March 31 March
2014 2013
Rs. '000 Rs. '000
2 Contingent Liabilities not provided
for in respect of: A. Claims against the
Company not acknowledged as debt:
(a) Excise matters in respect of :
- Matters relating to undervaluation of
assessable value 17,508 17,508
- Non payment of duty on clearance of
goods meant for 5,815 5,815
export by the customer - Availment of
modvat credit 1,508 784
24,831 24,107
(b) Customs matters in respect of:
- Matters relating to differential
custom duty rate on product 22,301 22,301
(c) Income tax (including fringe
benefit tax) matters
- In respect of matters such as addition
to the value of 24,244 24,244
closing stock under the provisions of
Section 145 A of the
Income Tax Act, 1961, disallowances
of certain expenditure as revenue
expenditure, etc. in respect of which the
Company / Income tax department is in
appeal with the
first / higher appellate authority
- In respect of matters where the
Company has received 1,595 1,595
favorable order / partial relief from
the first appellate
authority but the Income Tax Department
is pursuing
further with the higher appellate authority
(d) Sales Tax
- Matters relating to certain sales
considered as exempt sales 174 174
and sales tax on discounts given to customers
(e) Employee related matters:
- Matters pending with the Labour
Court for the 700 800
reinstatement of services of certain
ex-employees
- Matters pending with the Assistant
Labour Commissioner Not Not
for the permanent employment of casual
workers ascertainable ascertainable
(f) Matters pending with the High Court /
Civil Court relating to 7,991 7,991
counter claim / claim against the Company
for the alleged
breach of marketing arrangement / non-
payment for supplies made respectively.
(g) Service Tax 346 134
Note: Future ultimate outflow of resources embodying economic benefits
in respect of matters stated under 27 A(a) to 27 A(g) above is
uncertain as it depends on the final outcome of judgements / decisions
on the matters involved.
3 Capital Commitments (to the extent not provided for)
The estimated amount of contracts remaining to be executed on capital
account (net of capital advances) and not provided for, is Rs. 3,202(000)
[Previous period Rs. 15,358(000)].
4 The suppliers covered under the Micro, Small and Medium Enterprises
Development Act, 2006 (the Act) as given in Note 8 - Trade payables
regarding the Micro and Small Enterprises has been determined based on
the details regarding the status of the suppliers obtained by the
Company. This has been relied upon by the auditors.
5 Segment information
(a) Primary business segment
The Company is engaged in manufacture of organic chemicals. As the
Company is engaged only in one business segment, the Balance Sheet and
the Statement of Profit & Loss Account for the period pertains to one
business segment.
(iii) Significant leasing arrangements
1. Under the agreements, refundable interest free deposits / advance
rent have been given.
2. The agreements contain provision for renewal.
3. The period of agreement ranges between 36 months to 60 months.
4. Under certain agreements, the Company is entitled to permit certain
specified parties the use or sharing of the premises.
5. The lease agreements provide for an increase in the lease payments
by 15% from the 34th month till the 59th month when it expires
automatically.
6 Related Party Disclosures
Related Party Disclosures in accordance with the Accounting Standard 18
- 'Related Party Disclosures' are given below:
(a) Parties where Control exists:
Solvay S.A. is the ultimate holding company. Rhodia UK Ltd. holds
72.93% of the equity share capital in the Company and is a step down
subsidiary of Solvay S.A.
(b) Names of the related parties with whom the Company had transactions
during the year / period
(i) Fellow Subsidiaries: Solvay Inc. USA Rhodia Nicca Ltd. Rhodia
Polyamide Co. Ltd., Korea Solvay (China) Co. Ltd.
Solvay Specialty Chemicals Asia Pacific Pte. Ltd. Rhodia Feixiang
Specialty Chemicals Co. Ltd. Zhuhai Solvay Specialty Chemicals Co.
Ltd. Solvay Hengchang (Zhangjigang) Specialty Chemical Co. Ltd.
Sunshield Chemicals Ltd. Rhodia Mexico SA DA CV
Rhodia Operations S.A.S., France
Rhodia Poliamida E Especialidades LTD A, Brazil
P.T. Solvay Manyar
Solvay Asia Pacific Co. Ltd., Bangkok
Rhodia Polymers & Specialties India Pvt. Ltd.
Solvay (ZHENJIANG) Chemicals Co. Ltd.
Solvay (Zhangjiagang) Specialty Chemicals Co. Ltd.
Rhodia Korea Co. Ltd.
Solvay Specialities India Private Limited Solvay (Bangpoo) Specialty
Chemicals Ltd.
Note: The above have been identified on the basis of the information
available with the Company. (ii) Key Management Personnel:
Mr. Manoj Khullar, Managing Director
Mr. Thomas Leutner (upto 31.12.2012)
The above amount does not include gratuity and compensated absence
payable which is actuarially determined on an overall basis for the
Company as a whole and individual information in respect of director is
not available.
(e) Short-term loan from bank (Note 7) of Rs. 303,708(000) [Previous
period Rs. 172,217(000)] is secured by a corporate guarantee from Rhodia
SA France, a subsidiary of the ultimate holding company.
(f) No amounts have been written off / provided for or written back in
respect of amounts receivable from or payable to the related parties.
2. Defined Benefit Plan (Funded)
(a) A general description of the Employees Benefit Plan:
The Company has an obligation towards gratuity, a funded defined
benefit retirement plan covering eligible employees.
The plan provides for lumpsum payment to vested employees at
retirement, death while in employment or on termination of the
employment. In case of vested non management staff, gratuity is
calculated in accordance with the provisions of the Payment of Gratuity
Act,1972. Further, in case of retirement or superannuation after the
completion of more than 20 years of service, additional gratuity of 20%
of the amount of the gratuity calculated in accordance with the
provisions of the Payment of Gratuity Act, 1972 is also payable. In
case of vested management staff, gratuity benefit is an amount
equivalent to 15 / 30 days salary depending upon the terms of
appointment for each completed year of service subject to a maximum of
30 months salary. Vesting occurs upon the completion of five years of
service.
VII. The expected rate of return on the plan assets is based on the
average long term rate of return expected on investments of the Fund
during the estimated term of the obligations. The actual return on plan
asset is Rs. 2,073(000) [Previous period Rs. 1,384(000)]
VIII. The discount rate is based on the prevailing market yields of
Government of India securities as at the Balance Sheet date for the
estimated term of the obligations.
The assumption of the future salary increases, considered in actuarial
valuation, takes into account the inflation, seniority, promotion and
other relevant factors.
7 (a) Excise duty paid and collected from customers is shown
separately and deducted from the Gross sales and Processing charges in
the Statement of Profit and Loss. (b) Excise duty appearing under
Other expenses (Note 26) represents (i) the difference between the
excise duty included in the closing stock and that in the opening stock
of manufactured finished goods Rs. 5,170(000) (Debit)[Previous period: Rs.
1,963(000) (Credit)] and (ii) the excise duty on rejections, etc. Rs.
258(000) (Credit) [Previous period Rs. 1,115(000) (Debit)].
8 Discontinuing Operation
The operation of the Phosphate Business becoming commercially unviable,
the Company has suspended its operations of Ambarnath unit from July
2008.
The information relating to discontinuing operation as required under
Accounting Standard 24 (AS 24) "Discontinuing Operations" is given here
under:
(a) The initial disclosure event for the discontinuing operation, as
defined in Accounting Standard 24 (AS 24) "Discontinuing Operations"
occurred during 2007.
(b) As at 31 March 2014, the carrying amount of (i) the total assets to
be disposed of was Rs. Nil [Previous period Rs. 4,078(000)] and (ii) the
total liabilities to be settled was Rs. Nil [Previous period Rs.
2,141(000)]. The carrying value of fixed assets held for disposal
included in total assets was Rs. Nil [Previous period Rs. Nil].
9 Exceptional item:
Customs duty differential was payable for the year and previous periods
in respect of one of the products as per the interaction with Customs
authorities.
10 Disclosure as per Clause 32 of the Listing Agreements with the Stock
Exchange The Company has not given any loans and advances in the nature
of loans to subsidiaries, associates and firms / companies in which
directors are interested.
11 Prior Year Comparatives
The current period financial statements are for twelve months from 1
April 2013 to 31 March 2014 as against previous period of fifteen
months from 1 January 2012 to 31 March 2013. In view of this, the
figures for the current period are not strictly comparable to those of
the prior period of fifteen months.
12 Previous period figures have been regrouped / reclassified wherever
necessary to correspond with the current year's classification /
disclosure.
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