NAGARJUNA OIL REFINERY LIMITED

46

For and on behalf of the Board

K.S. Raju Chandra Pal Singh Yadav

Chairman K Rahul Raju

Directors

Hyderabad Ankita Mathur A. Sudhakara Rao K.Soma Raju

November 8, 2016 Company Secretary Chief Financial Officer Manager

Signatories to Notes "1 to 31"

24. Tax Expense:

i) Provision for current tax does not arise since the company has no

taxable profits.

ii) Deferred Tax asset (Net):

Deferred tax asset is not recognised on account of unabsorbed

depreciation and unabsorbed Business Loss as a measure of

prudence.

25. As per the information furnished by Nagarjuna Oil Corporation Limited

(NOCL), it has, subsequent to March 31, 2016, identified and initiated

discussions with a new Overseas Investor Group (‘Potential Investor’) for

funding and implementation of the project. Based on the proposal given

by the Potential Investor, NOCL has submitted One Time Settlement (OTS)

proposal to lenders. The lenders have, in principle, agreed and initiated

sanctioning process. The proposal envisages OTS of the existing loans from

out of amounts to be advanced by the Potential Investor. Further, the

Potential Investor offered to acquire entire equity shares held by the

existing shareholders (other than Tamilnadu Industrial Development

Corporation (TIDCO)) at a price to be determined subject to final valuation

and mutual agreement. The Potential Investor shall infuse further funds,

as may be required, to complete the project and ensure commissioning

in next thirty eight months. The management of NOCL is confident that

the project is viable taking into account the offer made by the Potential

Investor. Accordingly, the financial statements of NOCL have been

prepared on going concern basis.

NOCL's Management considers equity infusion as the key parameter for

demonstrating continuity in the project development. Hence, in view of

all the developments narrated above and based on independent opinion

obtained by NOCL, borrowing costs ` 95,517.94 Lakhs (2014-15:

` 76,088.12 Lakhs) have been capitalised.

26. The balances under creditors for capital purchases in respect of certain

vendors (including micro and small enterprises) of the associate in

consolidation (NOCL) are subject to confirmation and reconciliation.

Certain vendors including micro and small enterprises have made claims

against NOCL towards change of scope, interest charges, storage charges

etc. NOCL shall initiate the process of negotiation and reconciliation on

achievement of financial closure. The effect, if any on these reconciliations

will be accounted for in the year of completion of the process.

27. The winding up petitions filed by 18 vendors (31.03.2015: 13 vendors) of

Associate in Consolidation (NOCL) demanding payment of their dues

aggregating to ` 14,071.47 lakhs (31.03.2015: ` 12,202.00 lakhs) are

pending before the Hon’ble High Court of Madras. As directed by the

Court,NOCL filed a Memo at the last hearing on 6.3.2015 undertaking to

convene meeting with petitioner vendors. Meetings with the vendors were

conducted by April 7, 2015 to arrive at an amicable resolution of the claims

of the petitioner vendors. Subsequently, affidavits have been filed in the

court submitting the minutes of the meetings with the vendors.

28. The Associate in Consolidation (NOCL) has taken necessary steps to

present/defend its position against civil suits by some vendors demanding

payment of their dues aggregating to ` 1,885.61 lakhs (31.03.2015:

` 917.77 lakhs ) and interest thereon.

29. Share of Group in contingent liabilities of associate

Disputed VAT demand -

Disputed Income tax demand 548.84

Disputed Customs Duty demand 4,826.69

Disputed Excise Duty Demand 39.15

Disputed Service Tax Demand 668.07

Claims raised by vendors Amounts not

(Refer note : 26, 27 and 28) ascertained

not acknowledged as debts

30. Balances in the accounts of various parties appearing in these statements

are subject to confirmations and reconciliations.

31. These consolidated financial statements, being presented for the first time,

no comparative figures have been furnished.