Tcc a Report

THE TRAVANCORE-COCHIN CHEMICALS LIMITED

1

CONTENTS

Page

Board of Directors 0 3

Ten year Financial Statistics 0 4

Notice to Shareholders 0 6

Directors Report to Shareholders 0 8

Annexure to the Directors Report 1 2

Balance Sheet as at 31st March, 2010 1 6

Profit and Loss Account for the year ended 31st March, 2010 1 7

Schedules to Balance Sheet 1 8

Schedules to Profit and Loss Account 2 4

Notes on Accounts 2 8

Balance Sheet Abstract 3 9

Cash Flow Statement 4 0

Auditors Report to Shareholders 4 1

Comments of C & AG of India 4 6

Comments of Principal Secretary (Finance), Govt. of Kerala 4 8

Reply to the Comments of C & AG of India 49

Reply to the Comments of Principal Secretary (Finance) 5 0

2THE TRAVANCORE-COCHIN CHEMICALS LIMITED

MAJOR PRODUCTSCaustic Soda (Rayon Grade) Lye & Flakes

Liquid Chlorine

Hydrochloric Acid (Mercury Free)

Sodium Hypochlorite


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Board of Directors

Shri. K. S. Srinivas, I.A.SC h a i r m a n

Shri. V. Muraleedharan NairManaging Director

Shri. M. R. KarmachandranNominee of KSIDC

Shri. R. Madhusoodhanan Nair

Shri. J. Vijayamohanan

Shri. N. I. Paulose

Company Secre tary

Smt. Susan Abraham

B a n k e r sState Bank of Travancore

AuditorsM/s. Menon & AyyarChartered AccountantsIyyattil Road, ErnakulamKochi-682 011

Cost AuditorsN. P. Gopalakrishnan & Co.Cost AccountantsDD Vyapar BhavanKadavanthra P. O.Kochi-682 020

Legal AdvisorsM/s. Menon & PaiA d v o c a t e s , E r n a k u l a m

Registered Office & WorksUdyogamandal - 683 501Kerala State


` in lakhs

2009 2008 2007- 2006- 2005- 2004- 2003- 2002- 2001- 2000-

2010 2009 2008 2007 2006 2005 2004 2003 2002 2001

Sales 10752 12063 9390 12321 10877 8869 9123 7421 9031 9253

Other Income 6 8 6 3 1 3 1674 2 1 9 1 5 8 4 5 0 4 9 2 1 8 1 5 5 3 1 6 7

Stock: Increase/Decrease 3 3 2 - 3 6 4 1 9 9 13 - 8 1 -143 - 6 0 3 3 3 -257

Total Income 11770 12340 11068 12739 11048 9238 9472 7542 9917 9163

Material Consumed 1603 2043 1268 1648 1594 1031 1161 9 9 0 1231 1501

Power, Fuel, Stores & Repairs 6186 6374 5668 6702 5675 4663 5140 4252 6093 5772

Employee Cost 2455 2333 2634 2369 1678 2288 1556 1566 1609 1585

Selling & Administrative

Expenses 1 4 5 76 71 78 75 59 58 49 60 76

Other Expenditure 49 38 35 49 12 1 3 5 1 2 6 31 93 1 4 4

Total Expenditure 10438 10864 9676 10846 9034 8177 8041 6888 9086 9078

Gross Margin 1332 1476 1392 1893 2014 1061 1431 6 5 4 8 3 1 85

Interest and Bank Charges 6 6 0 7 9 0 2 8 9 9 6 4 6 0 6 6 5 7 6 8 7 6 6 9 6 7 7 8 1 6

Depreciation 9 3 7 9 6 9 1012 9 2 0 8 2 7 1233 6 4 3 6 0 3 8 2 0 5 5 6

Profit/Loss Before Prior

Period Items -265 -283 91 9 5 8 1 -831 1 0 1 -618 -667 -1284

Prior Period Items 15 1 0 - 4 7 5 3 0 2 0 - 7 4 0 0

Profit/Loss Before Taxation -250 -273 44 62 5 8 1 -829 1 0 1 -692 -667 -1284

Provision for Taxation

Current Tax 0 -1 5 5 48 0 7 0 0 0

Fringe Benefit Tax -1 9 11 8 10 0 0 0 0 0

Income Tax Paid (prior period) 0 0 0 0 0 0 0 0 0 -2

Net Profit /Loss -249 -281 28 49 5 2 3 -829 83 -692 -667 -1282

Net Block 7222 7783 8558 9407 7998 6399 7061 7646 7290 7649

Capital Work-in-Progress 2 3 0 41 11 1 9 4 2 1915 25 14 1 9 7 2 0 7

Current Assets Loans and

Advances 4007 3636 3457 3717 3576 2589 4268 3325 4189 4200

Current Liabilities and Provisions 4898 4701 5474 5583 5859 5064 4889 4498 7847 7232

Investments 2 2 2 2 0 0 0 0 0 0

Accumulated Loss 1315 1066 7 8 6 8 1 3 8 6 2 1385 5 5 5 6 3 9 3324 2658

Total Utilisation 7878 7827 7340 8357 7519 7224 7020 7126 7153 7482

Working Capital (WC) (CA-CL) -891 -1065 -2017 -1866 -2283 -2475 -621 -1173 -3658 -3032

TEN YEAR FINANCIAL HIGHLIGHTS


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Long Term Borrowing 4267 4008 4030 4574 4856 5088 4889 4859 5013 4596

Short Term Borrowing 9 8 2 9 7 9 8 0 7 5 8 8 1 4 4 0 0 0 0 46

Share Capital (SC) 2131 2131 2131 2131 2131 2131 2131 2131 2131 2131

Interest Accrued 1 2 5 3 3 8 0 1064 3 8 8 5 0 1 3 6 9 0

Loan from Govt. of Kerala 3 7 2 3 7 2 3 7 2 0 0 0 0 0 0 0

Reserves & Surplus 0 0 0 0 0 0 0 0 0 0

Deferred Payment Liability 0 0 0 0 0 0 0 0 0 7 0 9

Total Sources 7878 7828 7340 8357 7519 7224 7020 7126 7153 7482

Networth(SC+Reserves-Acc.loss) 8 1 6 1065 1345 1318 1269 7 4 6 1576 1492 -1193 -527

Capital Employed(Net Block+WC) 6330 6718 6541 7541 5715 3924 6440 6473 3632 4617

Finished Goods 5 9 0 2 4 7 2 9 5 3 0 8 1 0 9 96 1 7 7 3 2 0 3 8 0 47

Work-in-Progress 19 29 17 0 0 0 0 0 0 0

Raw Materials 3 6 7 5 3 5 2 4 4 2 4 8 2 8 0 82 1 8 2 1 9 6 2 6 1 3 2 5

Materials in Transit 55 90 62 64 1 6 1 65 9 16 3 3

Stores and Spares 6 0 1 6 0 3 4 0 0 4 2 5 4 1 3 3 9 6 3 5 3 3 4 5 5 2 0 4 2 7

Sundry Debtors 1130 9 7 4 1229 1425 1099 9 5 5 1176 1218 1067 1398

Cash and Bank Balance 59 1 0 2 1 1 5 1 3 9 1 2 4 1 6 5 7 1 0 2 0 2 4 1 6 4 9 7

Loans and Advances 1186 1056 1095 1108 1386 8 2 4 1046 9 1 5 1369 1309

Other Current Assets 0 0 0 0 4 6 84 1 1 3 1 4 8 1 6 3

Stores and Spares in Transit 0 0 0 0 0 0 5 3 1 0 25 31

Total 4007 3636 3457 3717 3576 2589 4268 3325 4189 4200

Cash Profit/(Loss) 6 8 8 6 8 9 1040 9 6 9 1350 4 0 4 7 2 6 (89) 1 5 3 (726)

Installed Capacity

Caustic Soda Lye & Flakes 57750 57750 57750 55520 48370 52250 74250 74250 66000 66000

By-products:Chlorine 51200 51200 51200 49190 42857 46295 65785 65785 58476 58476

Production

Caustic Soda Lye &Flakes 48923 47519 42298 57487 51004 47201 55285 47263 54141 58631

By-products:Chlorine 43745 42599 36423 50520 45190 41820 48983 41875 47969 51947

Capacity Utilisation (%)

Caustic Soda Lye & Flakes 84.72 82.28 73.24 103.54 105.45 90.34 74.46 63.65 82.03 88.83

By-products:Chlorine 85.44 83.2 71.14 102.70 105.44 90.33 74.46 63.65 82.03 88.83

Government Levies

Excise Duty 8 7 2 1477 1466 1927 1706 1333 1318 1070 1353 1342

Sales Tax 3 7 0 4 1 8 3 8 8 4 5 9 4 3 1 4 2 2 4 0 5 3 3 5 4 1 1 4 0 0

Income Tax Paid 0 0 5 5 48 0 7 0 0 0

` in lakhs

2009 2008 2007- 2006- 2005- 2004- 2003- 2002- 2001- 2000-

2010 2009 2008 2007 2006 2005 2004 2003 2002 2001


NOTICE TO SHAREHOLDERS

Notice is hereby given that the Fifty-EighthAnnual General Meeting of the Members of TheTravancore-Cochin Chemicals Limited will beheld on Thursday, the 30th September, 2010, at 11.00AM at the Registered Office of the Company atEloor, Udyogamandal -683 501, Kerala to transactthe following:-

ORDINARY BUSINESS

1. To receive, consider and adopt the DirectorsReport, the Audited Balance Sheet as at 31st

March, 2010 and the Profit & Loss Accountfor the year ended 31st March, 2010 andAuditors Report thereon.

2. To fix the remuneration of Auditors, and inthis connection to pass with or withoutmodifications, the following resolution as anORDINARY RESOLUTION:

RESOLVED THAT pursuant to the provisionsof Section 619 read with Section 224(8)(aa) andother applicable provisions, if any of theCompanies Act, 1956, the Board of Directors ofthe Company be and is hereby authorized to fixthe remuneration plus traveling and other out-of-pocket expenses incurred by the StatutoryAuditors of the Company appointed by theComptroller and Auditor General of India forthe year 2010-11.

3. To appoint a director in the place of Shri. J.Vijayamohanan, who retires by rotation andis eligible for re-appointment.

SPECIAL BUSINESS4. To consider and if thought fit, to pass with or

without modifications, the followingresolution as an ORDINARY RESOLUTION:-

RESOLVED THAT Shri. N.I. Paulose, whowas appointed by the Board of Directorspursuant to the provisions of Section 260 ofthe Companies Act, 1956 and Article 77 of theArticles of Association of the Company, as an

Additional Director of the Company and whoholds office up to the date of the Fifty-EighthAnnual General Meeting, being eligible forappointment and in respect of whom Noticeunder Section 257 of the Companies Act hasbeen received by the Company be and ishereby appointed as Director of the Companyliable to retirement by rotation.

5. To consider and if thought fit, to pass with orwithout modifications the following resolutionas an ORDINARY RESOLUTION: -

RESOLVED THAT Shri. R. MadhusoodhananNair, who was appointed by the Board ofDirectors pursuant to the provisions ofSection 262 of the Companies Act, 1956 andArticle 77 of the Articles of Association ofthe Company, as a Director to fill the casualvacancy caused by resignation, and who, interms of Section 262, was entitled to holdthe office until the Fifty-Eighth AnnualGeneral Meeting, be and is hereby appointedas Director of the Company liable toretirement by rotation.

EXPLANATORY STATEMENT PURSUANTTO SECTION 173(2) OF THECOMPANIES ACT, 1956

Item No.4

Consequent upon the advice of the Government ofKerala, your Directors appointed Shri. N.I. Pauloseas a Director on 7th November, 2009. Inaccordance with Section 260 of the CompaniesAct, 1956 and Article 77 of the Articles ofAssociation of the Company, Shri. N.I. Paulosewill hold office only up to the date of Fifty-EighthAnnual General Meeting. A notice under Section257 of the Companies Act, 1956, has beenreceived from a member signifying his intentionto propose Shri. N.I. Paulose as Director of theCompany.


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Note: A member entitled to attend and vote at a meeting is entitled to appoint a proxy to attend and voteinstead of himself and a proxy need not be a member. The form of proxy should be deposited atthe registered office of the Company not less than 48 hours before the time of holding the meeting.

Your Directors consider it in the interest of theCompany to continue to avail of the services ofShri. N. I. Paulose as a Director of the Companyand propose the resolution for your approval. Noneof the Directors of the Company is interested inthis resolution except Shri. N. I. Paulose.

Item No.5

Consequent upon the advice of the Governmentof Kerala, your Directors appointed Shri. R.Madhusoodhanan Nair as a Director to fill thecasual vacancy caused by resignation, on 26th

June, 2010. In accordance with Section 262 ofthe Companies Act, 1956 and Article 77 of theArticles of Association of the Company, Shri. R.Madhusoodhanan Nair will hold office only upto the date of the Fifty Eighth Annual General

By order of the Board of DirectorsFor The Travancore-Cochin Chemicals Ltd.

Sd/-Udyogamandal Susan Abraham28. 08. 2010 Company Secretary

Meeting. A notice under Section 257 of theCompanies Act, 1956, has been received from amember signifying his intention to proposeShri. R. Madhusoodhanan Nair as Director of theCompany.

Your Directors consider it in the interest ofthe Company to continue to avail of theservices of Shri. R. Madhusoodhanan Nair asa Director of the Company and propose theresolution for your approval. None of theDirectors of the Company is interested inth is reso lu t ion except Shri. R.Madhusoodhanan Nair.


DIRECTORS REPORT TO THE SHAREHOLDERS

To the Shareholders,

Your Directors present the Fifty-Eighth Annual

Report on the business and operations of theCompany, together with Audited Accounts for

the year ended 31st March 2010.

The total production of Caustic Soda in the

country during the year was around 23.26 lakhsMT registering an increase of approximately

6%. The installed capacity also increased to 32.02

lakhs MT, registering an increase of 10%. Ourproducts have to face more competition on

account of increase in the installed capacity by

2.79 lakh MT per annum. Due to recession inCaustic Soda demand there is pressure on

realization.

The Company continues to be a major player inSouth India with a market share of nearly 13%.

The demand for Caustic Soda is expected to grow

at a steady rate of 4% to 5% over the next 3 years,especially due to the demand from Aluminium

manufactures. Even though the sale price of

Caustic Soda is low, the Company is able todispose of its Hydrochloric Acid and Chlorine to

maintain Caustic Soda production at full

capacity.

PRODUCTION

The Gross Production of Caustic Soda for the year

2009-10 was 48922.535MT out of which

38701.213MT was produced in 125 TPD AGCPlant, 5353.098MT in UHDE-I Plant and

4868.224MT UHDE-II Plant. The Capacity

Utilization was 84.71% only, mainly due to

reduction in market and sales realization duringthe year 2009-2010.

SUMMARY OF PERFORMANCE

(` in lakhs)

2009-2010 2008-2009

Profit/(Loss) before depreciation 687 695

Depreciation 937 969

Profit/(Loss) after depreciation (250) (274)

Provision for taxation 1 7

Net Profit/(Loss) after tax (249) (281)

Add: Balance Profit/(Loss) brought

forward from previous year (3808) (3527)

Balance carried to Balance Sheet (4057) (3808)

MARKETING

The ECU realization for the products during2009-2010 shows declining trend from April2009. Chlorine and Hydrochloric Acid pricesshowed slight improvement from March 2010.The average ECU realization for the year was` 22968 per MT.

The Company has sold 44549MT of Caustic Soda(in Lye and flakes forms), 12838MT of LiquidChlorine, 93068MT of Hydrochloric Acid(Commercial Grade) and achieved a turnover of` 116.18 crores.

PROJECTS

(1) 50 TPD Caustic Soda CapacityAugmentation Project

The Companys proposal for theenhancement of Caustic Soda capacity


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DIRECTORS REPORT (Contd.....)

expansion from 175 TPD to 225 TPD by theaddition of another 50 TPD Membrane CellCaustic Soda Plant is before the Governmentseeking approval. The project cost envisaged` 56 crores and is proposed to be financedby external sources like commercial loans,funding from other profit making PSUs etc.The project implementation period is 22months. Subsequent to the commencementof the 50 TPD Caustic Capacity ExpansionProject, TCC will be proceeding with theproject of Capacity Augmentation of theexisting Caustic Evaporation Plant from 100TPD to 190 TPD.

(2) Horizontal Saturator & Secondary BrinePurification System

The ongoing project of Horizontal Saturatorand Secondary Brine Purification systemwhich is aiming at the modification of theexisting Brine Plant system is in the finalstage of completion. The pre-commissioningand guarantee test run works are going onand the system is expected to be in normalprocess line soon.

(3) 5 TPD Sodium Chlorate Plant

A MOU was signed between TCC & VSSCon 25.03.2010 for setting up of a 5 TPDSodium Chlorate Plant at TCC premises andsupply of the Sodium Chlorate produced tothe Ammonium Perchlorate ExperimentalPlant (APEP) of VSSC at Alwaye. The projectis fully funded by VSSC. The total gestationperiod for the project is 21 months fromsigning of MOU and is envisaged to beexecuted on LSTK basis. Preliminary project

works have already been completed and theproject activities are progressing as perschedule.

(4) Lease Agreement with KSIE

The Company has entered into a leaseagreement with KSIE for setting up aContainer Freight Station on 8.53 Acres ofland on a lease based profit sharingarrangement as per Govt. Order G.O (Rt)No.801/2009/ID.

SAFETY & POLLUTION CONTROL

The Company is committed to achieve excellencein Safety, Health and Environmental protection.The Company has developed a scheme of trainingon safety equipments and handling of hazardouschemicals. Regular and periodic training isimparted to workers and officers in batches inaccordance with a prepared schedule. Appropriatetraining programs are designed and imparted tosuit the requirements of different groups viz,customers, contract workers, drivers and cleanersof trucks and lorries carrying hazardous chemicalsfrom the premises of our company.

The Company is conducting Mock drill regularly(once in six months) to test and improve theemergency preparedness of all concerned.

The Company has started the process ofimplementation of ISO 14001 and OHSAS 18001Systems in order to obtain certification byDecember 2010.

The Company received the Certificate of Honourfor Outstanding Achievement in PollutionAbatement instituted by the Government ofKerala.

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ENERGY CONSERVATION

Energy Monitoring Station intended for real timevisualizing of energy parameters is beingimplemented in a phased manner. Energy Auditwas conducted in-house and various energysaving measures were identified. Feasibleproposals are being planned for implementationin a phased manner.

PERSONNEL RELATIONS

Industrial Relations remained cordial andpeaceful. The period of the Long Term wagesettlement for workmen expired on 31.03.2010.All the existing vacancies up to April 2010among the worker category were filled up byrecruiting suitable candidates from EmploymentExchange. A referendum was held among theemployees and three unions qualified and gotrecognised.

EROSION OF 50% OF THE NETWORTH OFTHE COMPANY

As already reported to the shareholders, as per theaudited annual accounts of the Company for thefinancial year ended 31st March 2009, theaccumulated losses had resulted in the erosion ofmore than 50% of the peak net worth of theCompany. During the year under review theCompany, as required under Section 23 of the SickIndustrial Companies (Special Provisions) Act1985, reported the fact of such erosion to BIFR.

REPAYMENT OF KIRFB LOAN

During the year the Term Loan from KeralaIndustrial Revitalisation Fund Board (KIRFB) wasrepaid with a soft loan of 8.5% interest fromKerala Financial Corporation (KFC).

DIRECTORS

Shri. M. Thomas, resigned from the Board ofDirectors w.e.f. 31.03.2010.

Shri. M. R. Karmachandran, was nominated byKerala State Industrial Development CorporationLtd. as the Nominee Director of KSIDC w. e. f.16.09.2009 in place of Shri. A. K. Nair.

The Board appointed Shri. N. I. Paulose as anAdditional Director of the Company w.e.f07.11.2009 and also Shri. R. MadhusoodhananNair as Director in casual vacancy caused byresignation of Shri. M. Thomas, w.e.f 26.06.2010.They hold office up to the date of the ensuingAnnual General Meeting. Notice has beenreceived from a member proposing thecandidatures of Shri. N. I. Paulose and Shri. R.Madhusoodhanan Nair as Directors.

The Board places on record its appreciation forthe services rendered by Shri. A. K. Nair and Shri.M. Thomas, as Directors of the Company.

AUDITORS

M/s Menon & Ayyar, Chartered Accountants, 57/1059 Iyyattil Road, Iyyattil Junction, Cochin-682011, were appointed by the Comptroller andAuditor General of India as Statutory Auditors ofthe Company for the year 2009-2010.

COST AUDITORS

The Company re-appointed M/s N.P.Gopalakrishnan & Company, Cost Accountants,Apartment No.311, 4th Floor, DD Vyapar Bhavan,K.P.Vallon Road, Kadavanthra,P.O., Cochin-682020 as Cost Auditors for the year 2010-2011subject to the approval of the Central Governmentand the approval is awaited.


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For and on behalf of the Board of Directors

Sd/-

K. S. SRINIVAS, I.A.SChairman

Udyogamandal

28. 08. 2010

AUDIT COMMITIEE

As per the provisions of Section 292A of theCompanies Act 1956, the Board of Directors hasconstituted an Audit Committee. Presently, theAudit Committee comprises of three Directors,namely Shri. M. R Karmachandran, Shri. R.Madhusoodhanan Nair and Shri. J.Vijayamohanan. Shri. M. R Karmachandran isthe Chairman of the Audit Committee. ThreeAudit Committee meetings were held during theyear.

DIRECTORS RESPONSIBILITYSTATEMENT:

As required under Section 217 (2AA) of theCompanies Act, 1956, your Directors confirmthat:

i) In the preparation of the annualaccounts, the applicable AccountingStandards have been followed alongwith proper explanation relating tomaterial departures;

ii) The Directors have selected suchaccounting policies and applied themconsistently and made judgments andestimates that are reasonable and prudentso as to give a true and fair view of thestate of affairs of the company as at 31st

March, 2010 and of the profit of thecompany for the year ended on that date;

iii) The Directors have taken proper andsufficient care for the maintenance ofadequate accounting records inaccordance with the provision of theCompanies Act, 1956 for safeguarding the

assets of the Company and preventing anddetecting fraud and other irregularities;

iv) The Directors have prepared the annualaccounts on a going concern basis.

DISCLOSURE OF PARTICULARS:

The details regarding conservation of energy andtechnology absorption are given in the formatprescribed under the Companies (Disclosure ofParticulars in the Report of Board of Directors)Rules, 1988 as Annexure-A to this report.

None of the employees of the Company were inreceipt of remuneration exceeding the limitsprescribed under Section 217 (2A) of theCompanies Act, 1956.

ACKNOWLEDGEMENT:

Your Directors wish to place on record theirappreciation of the support which the companyhas received from our Customers, Kerala IndustrialRevitalisation Fund Board (KlRFB), KeralaFinancial Corporation (KFC), Kerala StateElectricity Board (KSEB), State Bank ofTravancore, Indian Overseas Bank, State Bank ofIndia, suppliers, business associates and mostimportantly the employees. Your Directors alsowish to record their gratitude for the assistancereceived from the Government of Kerala.

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ANNEXURE-A TO THE DIRECTORS REPORT

COMPANIES (DISCLOSUREOF PARTICULARS IN THE REPORT OFBOARD OF DIRECTORS) RULES, 1988

(A) CONSERVATION OF ENERGY

(a) Energy Conservation measurestaken:

i) 352.174MT Furnace Oil was savedon account of using Hydrogenin the Continuous Caustic SodaConcentration and Flaking Unit.

ii) Furnace Oil usage was reduced by1030MT, on account of usingexcess steam from FACT. Steampurchased and consumed fromFACT during the year 2009-10was 14290MT at the rate of` 1270.22 per MT.

iii) Company saved 5.11 lakhs Kwh ofelectrical energy through variousEnergy Conservation measures.

(b) Additional investments and proposals,if any, being implemented for reductionof consumption of energy:

Twelve identified energy saving pro-posals were implemented. These iden-tified measures include application ofvariable frequency drives, downsizingof pumps, replacement of lower effi-ciency motors with higher efficiencyclass motors, installation of LT capaci-tor bank, implementation of EnergyMonitoring Systems, increased utiliza-tion of Hydrogen in Continuous Caus-

tic Soda Plant etc. with a total poten-tial saving of 5.11 lakhs Kwh perannum and 352.174MT of Furnace Oilper annum.

(c) Impact of measures (a) and (b) abovefor reduction of energy consump-tion and consequent impact on thecost of production of goods:

Information furnished in Form A

(B) TECHNOLOGY ABSORPTION

(d) Efforts made in technology absorp-tion as per Form B of the Annex-ure:

Information furnished in Form B.

(C) FOREIGN EXCHANGE EARNINGSAND OUTGO

(e) Activities relating to exports, initia-tives taken to increase exports,development of new export marketsfor products and services and exportplans:

There were no exports during theyear.

(f) Total foreign exchange used andearned:

Foreign Exchange used: ` 186.53 lakhs

Foreign Exchange earned : Nil


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FORM A[See Rule 2]

FORM FOR DISCLOSURE OF PARTICULARS WITHRESPECT TO CONSERVATION OF ENERGY

(A) POWER AND FUEL CONSUMPTION

Current Year Previous Year

2009-2010 2008-2009

1. Electricity

a) Purchased

Units (Lakhs Kwh) 1305.52 1283.63

Total Amount (` in Lakhs) 4529.83 4804.91

Rate/Unit ( .`) 3.47 3.74

b) Own Generation Nil Nil

2. Coal (specify quality and where used) NA NA

3. Furnace Oil

Quantity (MT) 2935.86 3504.78

Total Amount (` in Lakhs) 699.44 849.04

Average Rate (`/MT) 23824 24225.00

(B) CONSUMPTION PER UNIT OF PRODUCTION(Products with details)

Electricity (Kwh) 2669 2701

Furnace Oil (Litres) 60.01 73.75

Production (net) (MT) 46203 44628

Coal NA NA

Others NA NA

ANNEXURE-A TO THE DIRECTORS REPORT (Contd...)

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FORM B[See Rule 2]

FORM OF DISCLOSURE OF PARTICULARSWITH RESPECT TO TECHNOLOGY ABSORPTION

ANNEXURE-A TO THE DIRECTORS REPORT (Contd...)

RESEARCH AND DEVELOPMENT (R & D)

1. Specific areas in which R & D wascarried out by the Company

Nil

2. Benefits derived as a result of above R & D

Nil

3. Future plan of action

The Company is on the lookout for newprojects in the field of LNG utilizationas an LNG Terminal is being proposed atKochi.

4. Expenditure on R & D

Nil

TECHNOLOGY ABSORPTION,ADOPTION AND INNOVATION

1. Efforts in brief made towards technologyabsorption, adoption and innovation:

Nil

2. Benefits derived as a result of the aboveefforts e.g., product improvement, costreduction, product development, importsubstitution etc.

Nil

3. Details of technology imported duringthe last 5 years reckoned from thebeginning of the financial year.

a) Imported Membrane Cell Technol-ogy has been adopted for the pro-duction of Caustic Soda. 25 TPDMembrane Plant UHDE-II is the thirdstage of conversion of Mercury CellPlant to Membrane Cell Plant.

b) Year of import 2005-06

c) The above technology for the pro-duction of Caustic Soda has beenfully absorbed.

d) N A


Sd/-

K. S. SRINIVAS, I.A.SChairman

Udyogamandal

28. 08. 2010


15

ADDENDUM TO DIRECTORS REPORT

Explanations of Board of Directors with reference to Para 9(b) and 11 of the

Annexure to Auditors Report dated 1st September 2010:

Para 9 (b): These cases will be dealt with appropriately as and when decisions

are communicated by the concerned forum.

Para 11: Request was made to the Government of Kerala for conversion of Loan

to equity and for wavier of interest. The Government has informed that the

proposal will be considered as a part of a revival proposal when submitted by theCompany.

Sd/-

Thiruvananthapuram K. S. SRINIVAS, I.A.S1st September 2010 Chairman

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As at As atSchedule 31st March 2010 31st March 2009

` in lakhs ` in lakhs ` in lakhs

SOURCES OF FUNDSShareholders Funds:Share Capital 1 2,131.19 2,131.19Reserves & Surplus 2 0.00 2,131.19 0.00

Loan Funds:Secured Loans 3 5,248.91 5,267.23Unsecured Loans 4 497.45 5,746.36 429.44

TOTAL 7,877.55 7,827.86

APPLICATION OF FUNDSFixed Assets: 5Gross Block 16,485.75 16,190.32Less: Depreciation 9,264.12 8,407.28Net Block 7,221.63 7,783.04CAPITAL WORK-IN-PROGRESS 6 229.93 41.32Investments 7 2.30 2.30Current Assets, Loans and Advances 8 4,006.67 3,636.45Less: Current Liabilities & Provisions 9 4,898.03 4,701.13Net Current Assets (891.36) (1,064.68)Profit & Loss Account 10 1,315.05 1,065.88

TOTAL 7,877.55 7,827.86

NOTES ON ACCOUNTS 21

BALANCE SHEET AS AT 31st MARCH, 2010


Sd/-V. MURALEEDHARAN NAIR

Managing Director

Sd/-JIJU FRANCIS

Deputy Financial Controller

Sd/-SUSAN ABRAHAMCompany Secretary

Udyogamandal28th August, 2010

As per our Report of even date

For MENON & AYYAR(Chartered Accountants)

(Firm Regn. No. 0020S8S)

Sd/-MOHANAN KUTTICKAT

Partner(Membership No. 15842)

Sd/-R. MADHUSOODHANAN NAIR

Director


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PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31st MARCH, 2010

Current PreviousSchedule Year Year

` in lakhs ` in lakhs

I N C O M ESales (Gross) 11,617.63 13,537.10Less: Excise Duty 869.79 1,475.85Net Sales 11 10,747.84 12,061.25Trading Sales 4.61 1.40Other Income 12 685.60 313.46

TOTAL 11,438.05 12,376.11EXPENDITURERaw Material Consumed 13 1,601.53 2,035.24Trading Purchase 1.38 7.64Power, Fuel, Stores and Repairs 14 6,186.25 6,374.41Employee Cost 15 2,454.88 2,333.12Selling & Administration Expenses 16 144.93 76.33Other Expenditure and Losses 17 49.28 37.72Interest and Financial Charges 18 660.01 789.87Depreciation 936.94 969.47

12,035.20 12,623.80(Increase)/Decrease in Stocks 19 (332.81) 35.62

TOTAL 11,702.39 12,659.42Profit/(Loss) Before Prior Period Items (264.34) (283.31)Prior Period Items (Net) 20 14.61 9.79Profit/(Loss) Before Taxation (249.73) (273.52)Provision for Taxation

Income Tax 0.00 (1.53) Fringe Benefit Tax (0.56) 8.56

(Includes prior year tax of ` -0.57 lakhs, P.Y. Nil)

Net Profit/(Loss) after Taxation (249.17) (280.55)Balance of Loss B/F from Last Year (3,808.32) (3,527.77)Balance Loss carried to Balance Sheet (4,057.49) (3,808.32)Earnings per share (in `) (1.17) (1.32)



Managing Director

Sd/-R. MADHUSOODHANAN NAIR

Director

Sd/-JIJU FRANCIS









18


SCHEDULES TO BALANCE SHEET AS AT 31st MARCH, 2010

As at As at31st March 2010 31st March 2009


SCHEDULE 1

SHARE CAPITAL

A u t h o r i s e d :

3,25,00,000 Equity Shares of ` 10 each 3,250.00

17,50,000 Preference Shares of ` 100 each 1,750.00

5,000.00 5,000.00

Issued:

2,13,11,900 (Previous year 2,13,11,900)Equity Shares of ` 10 each** 2,131.19 2,131.19

Subscribed and Paid up:

2,13,11,900 (Previous year 2,13,11,900)Equity Shares of ` 10 each fully paid up** 2,131.19 2,131.19

TOTAL 2,131.19 2,131.19

**(Out of these 65,97,500 shares are allotted as fully paid bonus shares by capitalisation of general reserve during the year 1993-94)

SCHEDULE 2

RESERVES AND SURPLUS

General Reserve as per last Balance Sheet 2,742.44 2,742.44

Less: Deducted from Debit Balance ofProfit & Loss Account as per contra 2,742.44 2,742.44

TOTAL 0.00 0.00


19

SCHEDULE 3

SECURED LOANS

1) Term Loan from Financial Institutions:

Foreign Currency Loan from SBT 0.00 20.49

Term Loan Kerala Industrial Revitalisation Fund Board 0.00 3,987.64

Term Loan-Kerala Financial Corporation 4,266.50 4,266.50 0.00

Interest accrued and due on loans 0.00 279.98

2) Working Capital Loan (Cash Credit)Balance with SBT on overdraft account 982.41 979.12(Refer Item No. 11 of Notes on Accounts)

TOTAL 5,248.91 5,267.23

SCHEDULE 4

UNSECURED LOANS

Loan from Government of Kerala 372.05 372.05

Interest accrued and due on loans 125.40 57.39

497.45 429.44



SCHEDULES TO BALANCE SHEET (Contd.....)

20

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OR

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HIN

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LIM

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20

SCHEDULE 5

FIXED ASSETS

` in lakhs

Freehold Land 171.32 0.00 7.77 163.55 0.00 0.00 0.00 0.00 163.55 171.32

Buildings 1,978.29 0.40 30.87 1,947.82 1,121.15 78.74 19.23 1,180.66 767.16 857.14

Buildings under SIHS 2.50 0.00 0.00 2.50 2.37 0.00 0.00 2.37 0.13 0.13

Plant & Machinery 13,337.22 328.29 33.02 13,632.49 6,736.39 810.98 33.02 7,514.35 6,118.14 6,600.83

Electrical Equipments 10.14 0.00 0.00 10.14 9.63 0.00 0.00 9.63 0.51 0.51

Service Equipments 518.80 65.39 28.51 555.68 397.22 37.91 27.09 408.04 147.64 121.58

Furniture, Fixtures &Office Equipments 172.05 2.33 0.81 173.57 140.52 9.31 0.76 149.07 24.50 31.53

TOTAL 16,190.32 396.41 100.98 16,485.75 8,407.28 936.94 80.10 9,264.12 7,221.63 7,783.04

Total (Previous year) 16,173.02 233.12 215.82 16,190.32 7,614.92 969.47 177.11 8,407.28 7,783.04 8,558.10

Ason

31-3-2009PARTICULARS

Additionsduring

theyear

Sales&

Adjust-ments

GROSS BLOCK

Ason

31-3-2010

Writtenoff

upto31-3-2009

Writtenoff

duringthe year

Ason

31-3-2010

Ason

31-3-2009

Totalupto

31-3-2010

NET BLOCKDEPRECIATION

Withdrawnon assets

sold/adjustments


21

SCHEDULE 6

CAPITAL WORK-IN-PROGRESS

Horizontal Saturator 202.69 29.28

Others 27.24 12.04

TOTAL 229.93 41.32

SCHEDULE 7

INVESTMENTS

Trade-Long Term, Not Quoted

5 shares of ` 1000/- each fully paid up inCapexil Agencies Ltd. 0.05 0.05

Non Trade-Long Term, Not Quoted

250 shares of ` 100/- each fully paid up inTCC Co-operative Society Limited 0.25 0.25

20,000 shares of ` 10/- each fully paid up inKerala Enviro Infrastructure Limited 2.00 2.00

TOTAL 2.30 2.30

SCHEDULE 8

CURRENT ASSETS, LOANS AND ADVANCES

A) Inventories

(As taken, valued and certified by theManaging Director)

Stores and Spares in Stock 631.69 633.95

Less: Provision for Stores Obsolescence 31.02 31.02

600.67 602.93

Raw Materials in Stock 367.35 535.30

Goods in Transit 54.77 89.99

Work-in-Progress 18.94 29.43

Finished Goods 589.86 246.56

TOTAL 1,631.59 1,504.21




22




B) Sundry Debtors (Unsecured)Outstanding for over six months:Considered Good 61.57 46.73Considered Doubtful 153.57 149.57Other debts: Considered Good 1,068.22 927.38

1,283.36 1,123.68Less: Provision for doubtful debts 153.57 149.57

1,129.79 974.11C ) Cash and Bank Balances

Cash and stamps on hand 2.23 1.92

Balance with Scheduled Banks:

On Current A/C 5.71 30.84

On Margin on L/C Account 4.28 25.12

On Margin on Bank Guarantee 46.50 44.48

With Treasury Savings Bank A/C 0.11 0.11[Maximum amount Outstanding ` 0.11] 0.02

With Post Office Savings Bank A/C 0.02[Maximum amount Outstanding ` 0.02] 56.62 100.57

58.85 102.49D ) Loans and Advances

Advance Recoverable in Cash or inkind or for value to be received:Unsecured, Considered Good exceptto the extent specified:Advance to Staff 48.76 92.63Advance for Purchase of Goods 24.78 91.19

Claims receivable:

Considered Good 479.77 165.76

Considered Doubtful 14.77 15.42

568.08 365.00

Less: Provision for doubtfulAdvance and Claims 14.77 15.42

553.31 349.58



23



Income Tax/Wealth tax advance 221.00 246.85Sales Tax paid pending appeal 20.47 40.44Balance with Customs and Central Excise 0.64 2.02Other Sundry Deposits 362.21 383.64Pre-paid expenses 28.81 32.84Deferred Premium 0.00 0.27

1,186.44 1,055.64TOTAL 4,006.67 3,636.45

SCHEDULE 9CURRENT LIABILITIES & PROVISIONSA ) Current Liabilities

Sundry Creditors 3,354.72 2,953.53Outstanding charges 163.29 374.42Others 322.14 339.73Interest accrued but not due on loans 30.80 134.87

3,870.95 3,802.55B) Provisions

Fringe Benefit Tax 0.00 8.56Leave Encashment 457.24 446.83Gratuity 493.40 369.19Production Incentive 76.44 74.00

1,027.08 898.58TOTAL 4,898.03 4,701.13

SCHEDULE 10PROFIT & LOSS ACCOUNTProfit & Loss Account 4,057.49 3,808.32Less: General Reserve as per contra 2,742.44 2,742.44

1,315.05 1,065.88


24


SCHEDULES TO PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31st MARCH 2010

Current Previous Current Year Previous YearYear Year ` in lakhs ` in lakhs

Quantity in MT Value

SCHEDULE 11

SALES

Caustic Soda 44,549 45,450 8,754.60 9,484.75

Chlorine Products 42,801 40,917 1,993.24 2,576.50

TOTAL 10,747.84 12,061.25

SCHEDULE 12

OTHER INCOME

Other Sales 88.05 47.61

Rent 162.01 162.77

Miscellaneous Receipts 64.48 47.93

Interest 29.44 28.88

Profit on Sale of Assets 336.21 0.69

Provision for expenses not required 0.00 0.25

Freight and transporting charges 0.00 2.53

Excise Duty (Net) 0.00 17.03

Exchange rate gain 5.41 5.77

TOTAL 685.60 313.46

SCHEDULE 13

RAW MATERIALS CONSUMED

Common Salt 82,688 81,887 1,448.81 1,773.31

Other Chemicals 152.72 261.93

TOTAL 1,601.53 2,035.24


25

SCHEDULE 14

POWER, FUEL, STORES AND REPAIRS

Resin Consumed 0.00 4.56

Power and Fuel 5,410.78 5,700.26

Water Consumed 10.06 0.27

Packing Materials Consumed 68.44 50.91

Factory Expenses 17.62 11.20

Factory Insurance 25.12 23.02

Repairs and maintenance 654.23 584.19

TOTAL 6,186.25 6,374.41

SCHEDULE 15

EMPLOYEE COST

Salaries, Wages and Bonus 1,819.72 1,714.83

Contribution-PF, ESI, Approved Gratuity Fund etc. 344.56 334.63

Welfare Expenses 290.60 283.66

TOTAL 2,454.88 2,333.12

SCHEDULE 16

SELLING & ADMINISTRATION EXPENSES

Lighting 3.09 4.77

Rates & Taxes (other than Income Tax) 68.33 2.56

Printing & Stationery 7.30 7.66

Advertisement & Publicity 14.69 16.33

Travelling Expenses 8.66 10.49

Freight & Transporting Charges 10.03 0.00

General Expenses 27.13 23.35

Directors Sitting Fees 0.06 0.02

Value

Current Year Previous Year` in lakhs ` in lakhs

SCHEDULES TO PROFIT & LOSS ACCOUNT (Contd.....)

26


Remuneration to Auditors:

Audit Fees 0.90 0.90

Certification Fee 0.06 0.05

Expenses 0.25 1.21 0.25

Sales promotion expenses 0.28 0.13

Tax / cost / sales tax / internal audit fee expenses 1.93 1.86

Legal fees and expenses 0.38 2.01

Exchange Loss 1.84 5.95

TOTAL 144.93 76.33

SCHEDULE 17

OTHER EXPENDITURE AND LOSSES

Assets scrapped 1.47 37.69

Bad debts and claims written off 10.54 0.03

Provision for doubtful debts 4.00 0.00

Excise Duty Paid (Net) 33.27 0.00

TOTAL 49.28 37.72

SCHEDULE 18

INTEREST & FINANCIAL CHARGES

Interest on Term Loans 467.09 595.91

Other Interests 163.44 161.65

Bank Charges 29.21 29.53

Premium in forward contract 0.27 2.78

TOTAL 660.01 789.87


Value

Current Year Current Year Previous Year` in lakhs ` in lakhs ` in lakhs


27


ValueCurrent Year Current Year Previous Year` in lakhs ` in lakhs ` in lakhs

SCHEDULE 19

INCREASE/DECREASE IN STOCKS & WORK-IN-PROGRESS

Opening Stock of Finished Goods & Work-in-Progress 275.99 311.61

Closing Stock of Finished Goods & Work-in-Progress 608.80 275.99

TOTAL -332.81 35.62

SCHEDULE 20PRIOR PERIOD ITEMS (NET)Income/CreditInterest 0.00 11.60

Inspection of DM Water units 0.25 0.00

Service tax on transportation 3.25 0.17

Excise Duty on raw materials 0.91 0.00

Factory General expenses 17.22 0.00

TOTAL (A) 21.63 11.77

Computer/Weigh Bridge Service Charges 0.00 0.27

Repairs & Maintenance 0.41 0.84

Safety Manual 0.00 0.10

Transport Charges 0.70 0.40

Testing Charges 0.00 0.13

Analysis Charges for Pollution 3.06 0.16

Book Binding Charges 0.00 0.08

Civil Works 0.37 0.00

Staff Training Expenses 0.09 0.00

Water Cess 2.39 0.00

TOTAL (B) 7.02 1.98

Net (A-B) 14.61 9.79

28


NOTES ON ACCOUNTS

SCHEDULE 21

1 . ACCOUNTING POLICIES

1. Accounting Convention

All revenues, costs, assets and liabilities are accounted for on accrual basis except customs

duty claims and insurance claims which are accounted for on receipt basis.

2. Sales

Sales (gross) exclude Sales Tax.

3. Retirement Benefits

a) The Companys liability towards gratuity to employees is covered by a Group Gratuity

Scheme with Life Insurance Corporation of India.

b) Leave encashment on cessation of employment is accounted on the basis of actuarial

valuation.

4. Inventories

a) Stock-in-Trade

Caustic Soda Lye, Flakes and by-products are valued at lower of cost or net realisable

value. Work-in-Progress is valued at cost.

b) Raw materials, Packing materials, Fuel Oil and Stores and Spares are valued at cost. Cost

means the Weighted Average Cost.

5. Investments

All Investments are of long term nature and are carried at cost.

6. Fixed Assets

All Fixed Assets are carried at cost less depreciation. Interest on loan during the period of

construction is added to the cost of Fixed Asset.


29

7. Depreciation

a) For Plant and Machinery:

Depreciation is charged on straight line method on the plant and machinery existing ason 16-12-1993 at the rates prevailing prior to 16-12-1993 and on the plant and machinery

acquired on or after that date at the revised rate as per circular No. 14/93 dt. 20-12-1993 and

notification GSR No. 756 E dated 16-12-1993 issued by the Ministry of Finance, Departmentof Company Affairs in respect of revision of rates of depreciation in Schedule XIV to the

Companies Act 1956, except in the case of Cell Membrane for which depreciation is

charged at the rate of 25%, 16.67% on anode/cathode mesh of the AGC Plant and 12.5%on anode/cathode mesh of Uhde Plant depending on the life of these assets.

b) For Buildings, Service Equipments, Fixtures, Office Equipment and Electrical

Installation:

Depreciation is calculated on written down value basis at the rates specified in

Schedule XIV to the Companies Act, 1956.

8 . Foreign Exchange Transactions

a) Transactions in foreign currency are recorded at the exchange rates prevailing on

the date of transactions.

b ) Monetary items denominated in foreign currency at the year end are restated at

year end rates. In case of items which are covered by forward exchange

contract, the difference between the year end rate and rate on the date of thecontract is recognized as income or expenditure and the premium paid on

forward contract is recognized over the life of the contract.

c) Any income or expense on account of exchange difference either on settlementor on translation is recognized in the Profit and Loss Account.

9 . Revenue Recognition

a) Sale of goods are recognised on accrual basis.

b ) Other income is accounted on accrual basis except where the receipt of income

is uncertain.

c) Dividend from investments are recognised in the Profit and Loss Account when

the right to receive payment is established.

NOTES ON ACCOUNTS (Contd.....)

30


10. Government Grants

Revenue grants received from Government are recognised as other income and related

expenses are debited to Profit and Loss Account.

11. Amortisation

Deferred Research and Development expenditures are written off over a period of three years.

12. Segment Reporting

The company is exclusively engaged in the manufacture of Caustic Soda and two by-products

viz. Chlorine and Hydro-Chloric Acid which are considered to constitute a single chemical

segment.

13. Accounting for Taxes on Income

Deferred tax assets and deferred tax liabilities arising from timing difference between taxableincome and accounting income for a period that originate in one period and are capable of

reversal in one or more subsequent periods are recognised, subject to consideration of prudencein respect of deferred tax assets as set out in Accounting Standard 22 on Accounting for Taxes

on Income issued by the Institute of Chartered Accountants of India.

14. Impairment of Assets

The Company has an internal system to assess the impairment of Assets. Appropriate disclosure

on material impairment of losses and their treatment in Profit & Loss Account, classes of assetsand nature of impairment will be made in the year in which the impairment is recognized.

2 . CONTINGENT LIABILITY NOT PROVIDED FOR

a) The estimated amount of contract remaining to be executed on capital account:` 6.02 lakhs (Previous Year ` 5.38 lakhs)

b) Counter Guarantees to bank outstanding:` 441.88 lakhs (Previous Year ` 439.63 lakhs)

c) Claims raised against the Company not acknowledged as debt:

` 28,269 lakhs (Previous Year ` 23,969 lakhs)

d) LCs outstanding:

` 42.68 lakhs (Previous Year ` 243.80 lakhs)



31


e) For Sales Tax:Nil (Previous Year ` 93.89 lakhs)

f) For Income Tax:


g) For Central Excise


h) For Service Tax:

` 115.39 lakhs (Previous Year Nil)

3 . LOANS AND ADVANCES INCLUDE:

a) Claims on supplier for breach of contract for ` 9.68 lakhs for which recovery proceedings

are in progress. (Previous year ` 9.68 lakhs). However, by way of abundant cautionnecessary provision has been created against the claim including interest accrued till

31-03-1992.

b) Dues from Managing Director ` Nil (Maximum ` Nil) (Previous year ` Nil, Maximum ` Nil).

4. Balances of Sundry Debtors, Sundry Creditors and Advances are subject to confirmation.

5. In the opinion of the Board, the Current Assets, Loans and Advances have the value, on realisation, in

the ordinary course of business at least equal to the amount at which they are stated.

6. The Company has opted for Amnesty Scheme for the years 1980-81 to 2004-05 introduced bythe Government of Kerala for PSUs as per notification No. 9948/G2/09-10 Dt. 17/04/2009 for

one time settlement of pending Sales Tax cases. Accordingly the Company has paid ` 65.37

lakhs (including the payments made during earlier years) against full settlement of pending casesand this amount is charged to Profit & Loss Account during the year under the head Rates &

Taxes.

7. Income Tax appeals for the assessment years 1992-93, 1993-94, 1994-95, 1996-97, 1997-98,

1998-99, 2001-02 and assessment for the assessment years 2008-09 and 2009-10 are pending.

8. Stock of stores and spares include stock of packing materials ` 16.45 lakhs and stock of Fuel

Oil ` 25.70 lakhs.

32


9. Individual items in excess of ` 5000/- each only have been disclosed under the head prior periodIncome/Expenditure.

10. Margin on Letter of Credit and Bank Guarantees have been deposited with State Bank of

Travancore.

11. Loan from Kerala Financial Corporation and working capital loan from State Bank of Travancore

are secured by first mortgage on pari-passu basis in favour of the lender of all the immovable

properties, both present and future and first charge on pari-passu basis by way of hypothecationin favour of the lender, of all the movables (save and except book debts) including movable

machinery, machinery spares, tools and accessories present and future. In addition to this,

working capital loan is also secured by hypothecation of raw materials, general stores, packingmaterials, finished goods and book debts.

12. Micro & Small Scale Business Entities:

There are no Micro and Small Enterprises, to whom the company owes dues, which are

outstanding for more than 45 days as at 31st March 2010. This information as required to be

disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has beendetermined to the extent such parties have been identified on the basis of information available

with the company.

13. Claims receivable considered good includes ` 44.38 lakhs being the cenvat claims taken from

the purchase of raw material and capital goods.

14. Credit to be availed on the KVAT on Capital goods: ` 0.86 lakhs.

15. As directed by the Govt. of Kerala vide G.O. No. (MS) No. 165/98/ID dated Thiruvananthapuram,

24.11.1998, the Company has leased out 20 acres of land to M/s. BSES Kerala Power Ltd. for 15 years.The lease deed has been registered on 23.07.1999.

16. Deferred Tax: The Company has unabsorbed depreciation and carried forward business losses

available for set off against taxable income to be generated in future years as per Income TaxAct, 1961. However, in consideration of the accumulated loss of the company and in the

absence of virtual certainty regarding generation of future taxable income, no deferred tax

asset has been recognised for the year as a measure of prudence, in accordance with theAccounting Standard 22 on Accounting for Taxes on Income issued by the Institute of

Chartered Accountants of India.



33

17. Govt. of Kerala as part of financial restructuring has allowed various concessions/waivers to theCompany vide G.O. (MS) No. 4/2003/ID dated 06.01.2003 and as part of this restructuring package,

government has freezed the power tariff rate at the August 2001 rate of ` 2.42/kwh till the

implementation of the Barapole Hydel Project by the Company in July 2004. Government of Keralahas directed the Company to remit the electricity charges from January 2005 onwards at the ruling tariff

rate. For the period from August 2001 to December 2004, the Company has paid electricity charges

at the rate of ` 2.42/kwh as per the above Government orders. But Kerala State Electricity Board(KSEB) has not accepted the Government orders granting concession to the Company and demanded

the electricity charges at the then prevailing rates for the period from 01.08.2001 to 31.12.2004. An

amount of ` 300 crores being the difference between the concessional rate and the existing rate of` 51.25 crores and the interest accrued thereon up to 31.03.2010 of ` 248.75 has been demanded by

KSEB which is not acknowledged as debt by the Company, but disclosed under contingent liabilities.

18. a) The Company has received notice from the Special Tahasildhar (LA), ICTT, Vallarpadam toacquire 4 acres 47 cents and 300 sq. links for National Highway in connection with Vallarpadam

International Container Transhipment Terminal (ICTT) project and pending finalisation of the

compensation as directed by the District Authorities, the Company has given advance possessionof the land and allowed the National Highway Authority of India (NHAI) to carry on the road

construction activity on this land during 2008-09. The District Collector has subsequently fixed

the net compensation payable to the company for this land and building thereon at ` 342.70 lakhsand has intimated the same to the Special Tahasildhar (LA), ICTT, Vallarpadam vide his letter

No. C6-25766/04 dated 21.04.2010 and sale deed was registered on 15.07.2010. Pending

registration of the sale deed, on the strength of the legal advice received, the company hasrecognised the profit of ` 324.06 lakhs on the sale of this land and building thereon under

acquisition during the year. As per the Government order No. G.O. (Ms) No. 113/2010/RD dt.

24/03/2010 sanctioning the sale of this land, the sale price is to be treated as capital contributionof the State Government to the company. As this land is acquired by the company, the cost

of which is included in Fixed Assets, company could not implement this direction and the sale

price is adjusted against the cost of land and profit on sale of fixed assets.

b) Out of this 4 acres, 47 cents and 300 sq. links of land acquired by the National HighwayAuthority of India (NHAI) a dispute regarding the ownership of 16.729 cents by the Company

is also pending in the court. Compensation to the Company for these lands are not paid since

the land is a private holding land and liability, if any, on the disposal of these cases will beborne by the NHAI.


34


19. The Company has also sold 49 cents of land to Eloor Panchayath as per the direction ofGovernment GO (Rt) No. 211/2009/ID dated 17.02.2009 at ` 12.92 lakhs and the company has

recognised a profit of ` 12.15 lakhs during the year.

20. Employee Benefits: The Company has classified the various benefits provided to employees as under:

a) Defined contribution plan

During the year, the company has recognized the employers contribution to

i) Employees provident fund amounting to ` 175.73 lakhs.

ii) State Insurance Scheme amounting to ` 0.60 lakhs as part of Employee cost.

b) Defined Benefit Plan:

As per actuarial valuation as on 31st March 2010 and recognized in the financial statement

in respect of employee benefit schemes:

1. Reconciliation of opening and closing balances of Defined Benefit obligation

(` in lakhs)Gratuity Leave Encashment(Funded) (Unfunded)

2009-10 2008-09 2009-10 2008-09

Defined Benefit obligationat beginning of the year 746.43 709.19 446.83 393.50Current Service Cost 33.84 34.71 168.55 177.20Interest Cost 61.06 58.31 42.49 38.57Actuarial (gain)/loss 88.74 103.65 (57.77) (108.06)Benefits paid (203.11) (159.25) (142.86) (54.38)Defined Benefit obligationat year end 726.96 746.43 457.24 446.83

2.. Reconciliation of opening and closing balances of fair value of plan assets

(` in lakhs)Gratuity (Funded)

2009-10 2008-09Fair value of plan assets at beginning of the year 377.24 490.82Expected return on plan assets 30.18 39.27Actuarial (gain)/loss (5.31) 0.12Employer contribution 34.56 6.28Benefits Paid (203.11) (159.25)Fair value of plan assets at year end 233.56 377.24


Particulars

Particulars


35

3. Reconciliation of fair value of assets and obligations



2009-10 2008-09 2009-10 2008-09

Fair value of plan assetsas at 31st March 233.56 377.24 Nil Nil

Present value of obligationas at 31st March 726.96 746.43 457.24 446.83

Amount recognized inBalance Sheet 493.40 369.19 457.24 446.83

4. Expense recognized during the year


2009-10 2008-09 2009-10 2008-09

Current Service Cost 33.84 34.71 168.55 177.20

Interest Cost 61.06 58.13 42.49 38.57

Expected return on Plan Assets (30.18) (39.27) Nil Nil

Actuarial (gain)/loss 94.05 103.53 (57.77) (108.06)

Net Cost 158.77 157.10 153.27 107.71

Particulars

Particulars

Mortality Table (Indian Lives Mortality)

5. Actuarial Assumptions (` in lakhs)

Gratuity Leave Encashment(Funded) (Unfunded)1994-96 1994-96

(Ultimate) (Ultimate)

Discount rate (per annum) 8% 8%Expected return on plan assets (per annum) 8%Rate of escalation in salary (per annum) 5% 5%

Particulars

36



21. The previous year figures have been re-grouped/re-arranged wherever necessary and figures in

brackets relate to those previous year.

22. Capacities and Production:

Capacity per Annum Production

2009-10 2008-09 2009-10 2008-09Licensed Installed Installed M. T. M. T.

M. T. M. T. M. T.

Caustic Soda 85,800 57,750 57,750 48,923 47,519

By-products ofCaustic Soda:

Chlorine 76,019 51,200 51,200 43,745 42,599

23. a) Opening and Closing stock of Goods Produced:Opening Stock as on Closing Stock as on

01-04-2009 31-03-2010Quantity Value Quantity Value

M.T. ` in lakhs M.T. ` in lakhs

Caustic Soda 1026 220 2969 574(1578) (287) (1026) (220)

By-products of Caustic Soda:Chlorine 649 27 344 16

(362) (25) (649) (27)

(Figures for previous year are shown in brackets)

b) Details of trading goods:

HCl Opening Purchase Sales Closing Acid Stock Stock

MT Value MT Value MT Value MT Value 2009-10 Nil Nil 576.34 1.38 576.34 4.61 Nil Nil

2008-09 Nil Nil 521.39 7.64 521.39 1.04 Nil Nil


37

Current Year Previous Year` in lakhs ` in lakhs

24. i) Expenditure on employees who were in receiptof remuneration of not less than ` 24 lakhsper annum Nil Nil

ii) Expenditure on employees for part of the financialyear who were in receipt of remuneration of notless than ` 2 lakhs per month Nil Nil

25. Managerial Remuneration to Managing Directors and Directors:

Current Year Previous Year(` in lakhs) (` in lakhs)

Salaries and Allowances 13.17 9.86

Contribution to Provident Fund 0.17 0.79

Medical Expenses 0.10 0.09

Total 13.44 10.74

26. Travelling Expenses paid to:

27. Value of imports calculated on CIF basis during the period in respect of:


Raw materials including Process Chemicals Nil Nil

Components and spare parts 111.97 319.52

Capital Goods 65.24 27.55


Managing Director 0.85 1.46

Directors 0.49 0.39

Staff 7.33 8.64

Total 8.67 10.49

38


28. Expenditure in Foreign Currency for:


Professional charges Nil Nil

Other matters Nil Nil

31. Earnings per share 31-03-2010 31-03-2009

Net Profit/(Loss) as per Profit and Loss A/c. ` (249.17 lakhs) ` (280.55 lakhs)

Number of equity shares outstanding 21311900 21311900

Earnings per share (in Rupees) -1.17 -1.32

30. Earnings in Foreign Exchange on account of Export and Sales for Export


Nil Nil

Current Year Previous YearValue % Value %

(` in lakhs) (` in lakhs)Imported 186.53 8.01 165.76 6.20Indigenous 2141.28 91.99 2509.84 93.80

Total 2327.81 100 2675.60 100

29. Value of all Raw Materials, Stores and Spares and Components consumed:


39

BALANCE SHEET ABSTRACT

32. Information pursuant to the provisions of Part IV of Schedule VI to the Companies Act, 1956.

BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE

I. Registration DetailsRegistration No. U24299KL1951SGC001237 State Code 09Balance Sheet Date 31-3-2010

II. Capital raised during the year (Amount in ` Thousands)Public Issue Nil Rights Issue NilBonus Issue Nil Private Placement Nil

III. Position of Mobilisation and Deployment of Fund (Amount in ` Thousands)Total Liabilities 787755 Total Assets 787755Sources of Funds:Paid-up Capital 213119 Reserves & Surplus 0Secured Loans 524891 Unsecured Loans 49745Deferred Payment Liability 0Application of Funds:Net Fixed Assets 745156 Investments 230(including Capital Work in Progress)

Net Current Assets (89136) Misc. Expenditure 0Accumulated Losses 131505

IV. Performance of Company (Amount in ` Thousands)Turnover 1143805 Total Expenditure 1168778Profit/(Loss) Before Tax (24973) Profit/(Loss) After Tax (24917)Earnings Per Share in Rs. (1.17) Dividend Rate % Nil

V . Generic Names of Three Principal Products/Services of Company (as per monetary terms)Item Code No. (ITC Code) Product Description

2815.12 Caustic Soda2801.19 Chlorine



Managing Director

Sd/-R.MADHUSOODHANAN NAIR

Director

Sd/-JIJU FRANCIS









40


CASH FLOW STATEMENT FOR THE YEAR ENDED 31st MARCH 2010

(` in lakhs)

A . CASH FLOW FROM OPERATING ACTIVITIES:Net Profit/(loss) before tax and extra ordinary items -249.74 -273.52Adjustments for:Add: Depreciation 936.94 969.47

Interest expenses 660.01 789.87Assets scrapped 1.47 37.69

Less: Interest Income 29.44 28.88Profit on Sale of Assets 336.21 0.69

Operating profit before working capital changes 983.03 1493.94Adjustments for:

Trade receivables -155.69 255.03Other receivables -130.80 47.34Inventories -127.38 -485.94Trade and other payables 300.97 -808.06Taxes on income 0.57 -7.03

Cash generated from Operating Activities (A) 870.70 495.28

B. CASH FLOW FROM INVESTING ACTIVITIES:Purchase of fixed assets -585.02 -263.87Sale of fixed assets 355.62 1.71Interest received 29.44 28.88Cash used in Investing Activities (B) -199.96 -233.28

C . CASH FLOW FROM FINANCING ACTIVITIES:Repayment of long term borrowings 258.38 -21.75Increase in working capital loan 3.29 172.54Interest paid -976.05 -425.56Cash used in Investing Activities (C) -714.38 -274.77Net Increase/Decrease in Cash (A+B+C) -43.64 -12.77Opening Cash & Cash Equivalents 102.49 115.26Closing Cash & Cash Equivalents 58.85 102.49



Managing Director

Sd/-R.MADHUSOODHANAN NAIR

Director

Sd/-JIJU FRANCIS









2009-10 2008-09


41

AUDITORS REPORT TO SHAREHOLDERS

ToThe Members ofThe Travancore-Cochin Chemicals Limited

1. We have audited the attached BalanceSheet of The Travancore-Cochin Chemi-cals Limited, Udyogamandal - 683 501, asat 31st March 2010 and also the Profit andLoss Account and Cash Flow Statement forthe year ended on that date annexed thereto.These financial statements are the respon-sibility of the Companys management.Our responsibility is to express an opinionon these financial statements based on ouraudit.

2. We conducted our audit in accordance withthe auditing standards generally acceptedin India. Those standards require that weplan and perform the audit to obtain rea-sonable assurance about whether the finan-cial statements are free of material mis-statement. An audit includes, examiningon a test basis, evidence supporting theamounts and disclosures in the financialstatements. An audit also includes assess-ing the accounting principles used andsignificant estimates made by manage-ment, as well as evaluating the overallfinancial statement presentation. We be-lieve that our audit provides a reasonablebasis for our opinion.

3. As required by the Companies (AuditorsReport) Order, 2003, issued by theCentral Government in terms of sub section227 (4A) of the Companies Act, 1956, we

annex hereto a statement on the mattersspecified in paragraphs 4 & 5 of the saidOrder.

4. Further to our comments in the Annexurereferred to in paragraphs 3 above, wereport that:

a) We have obtained all the informationand explanations, which to the best ofour knowledge and belief were neces-sary for the purpose of our audit;

b) In our opinion, proper books ofaccount as required by law have beenkept by the Company so far as appearsfrom our examination of those books.

c) The Balance Sheet, Profit and LossAccount and Cash Flow Statement dealtwith by this report are in agreementwith the books of Account of theCompany.

d) In our opinion, the Balance Sheet,Profit and Loss Account and Cash FlowStatement dealt with by this reportcomply with the Accounting Standardsreferred to in sub-section (3C) ofSection 211 of the Companies Act,1956;

e) In view of notification No. GSR 829 (E)dated 21st October, 2003, issued byMinistry of Finance, Department ofCompany Affairs, the provisions of clause(g) of sub-section (1) of section 274of the Companies Act, 1956, are notapplicable to the Company.

42


f) In our opinion and to the best of ourinformation and according to theexplanations given to us, the saidaccounts read together with the Signifi-cant Accounting Policies and notes thereongive the information required by theCompanies Act, 1956 in the mannerso required and give a true and fair viewin conformity with the accountingprinciples generally accepted in India;

i) in the case of the Balance Sheet, ofthe state of affairs of thecompany as at 31st March, 2010;

AUDITORS REPORT (Contd.....)

ii) in the case of the Profit and LossAccount, of the loss for the yearended on that date; and

iii) in the case of the Cash Flow State-ment, of the cash flows for the yearended on that date.

For MENON & AYYAR

Chartered Accountants


Sd/-

MOHANAN KUTTICKAT

Ernakulam Partner

1st September, 2010 (Membership No. 15842)


43


ANNEXURE TO THE AUDITORS REPORT

Annexure referred to in paragraph 3 ofour report to the members of TheTravancore-Cochin Chemicals Limited, onthe accounts for the year ended March31, 2010.

1. a) The company has maintained properrecords showing full particularsincluding quantitative details and situationof fixed assets.

b) According to the information and expla-nations given to us, the physical verifica-tion of major items of fixed assets wascarried out by the management during theyear and no material discrepancies werenoticed on such verification.

c) During the year the company has notdisposed of substantial part of its fixedassets which has effect on the Companyas a going concern.

2. a) As explained to us, inventories have beenphysically verified by themanagement at regular intervalsduring the year.

b) In our opinion and according to theinformation and explanations given to us,the procedures of physical verification ofinventories followed by the managementare reasonable and adequate in relation tothe size of the company.

c) The company has maintained properrecords of inventories. Discrepanciesnoticed on such physical vertificationbetween physical stocks and the bookrecords have been properly dealt within the books of account.

3. According to the information and explanationsgiven to us, the Company has neither

taken nor granted any loan, secured orunsecured from/to companies, firms orother parties covered in the register main-tained under section 301 of the Compa-nies Act, 1956. Accordingly, para 4 (iii)(b) (c) and (d) of the Order are notapplicable.

4. In our opinion and according to the infor-mation and explanations given to us, theinternal control procedures for the pur-chase of inventories and fixed assets andfor the sale of goods and services, aregenerally adequate commensurate with thesize of the company and the nature of itsbusiness. During the course of our audit,we have not observed any continuingfailure to correct major weakness in inter-nal controls.

5. a) According to the information and expla-nations given to us we are of the opinionthat the transaction that needs to beentered in the register maintained undersection 301 of the Companies Act, 1956have been so entered.

b) In our opinion, and according to theinformation and explanations given tous the transactions made in pursuanceof contracts or arrangements enteredin the register maintained under sec-tion 301 of the Companies Act, 1956and exceeding the value ` 5.00 lakhsin respect of any party during the yearhave been made at prices which arereasonable having regard to prevailingmarket prices at the relevant time.

6. According to the information andexplanations given to us and as per thebooks of account of the Company, the

44


Company has not accepted any depositsfrom the public.

7. The Company has appointed a firm ofChartered Accountants for conducting in-ternal audit. In our opinion, the internalaudit system is fairly adequate commensu-rate with the size of the Company andnature of its business.

8. We have broadly reviewed the books ofaccounts maintained by the Company inpursuance to the rules made by the CentralGovernment for the maintenance of thecost records under Section 209 (1) (d) ofthe Companies Act, 1956 and are of theopinion that prima facie the prescribedaccounts and records have been made andmaintained. However, we have not madea detailed examination of those accountsand records to determine whether they areaccurate or complete.

9. a) The Company is generally regular indepositing undisputed statutory duesincluding Provident Fund, Investor

education and Protection Fund,Employees State Insurance, Incometax, Sales Tax, Wealth Tax, ServiceTax, Customs Duty, Excise Duty, Cessand other statutory dues whereverappliable with the appropriate authori-ties.

According to the information andexplanations given to us no undis-puted amounts payable in respectof the Income tax, Sales tax, Wealthtax, Service tax, Customs duty, Ex-cise duty, Cess and other statutorydues were in arrears as at March31, 2010, for a period of more thansix months from the date they be-came payable.

b) According to the information andexplanations given to us, details ofdues of Income Tax, Sales Tax,Customs Duty, Wealth Tax, ServiceTax, Excise Duty and Cess which havenot been deposited on account of anydispute are detailed below:


S l .No . Nature of Dues

Amount involved(` in lakhs)

Forum wheredispute is pending

1. Excise Duty 1.85 With Deputy Commissioner (Appeals)

15.88 With Commissioner (Appeals)

35.57 With CESTAT

2. Income Tax 144.90 With Hon. High Court of Kerala

10.81 With Commissioner (Appeals)

3. Service Tax 115.39 With Commissioner (Appeals) /Deputy Commissioner


45

10. The accumulated losses of the Companyhas exceeded 50% of the Net Worth. TheCompany has not incurred cash lossesduring the year and during the immediatelypreceding financial year.

11. The Company has defaulted in repaymentof loan amount of ` 93.01 lakhs andInterest & Penal Interest of ` 125.4 lakhsdue to Goverment of Kerala, due during thelast two years.

12. Based on our examination of the recordsand the information and explanations givento us, the Company has not granted anyloans or advances on the basis of securityby way of pledge of shares, debenturesand other securities.

13. In our opinion, the Company is not a chitfund or a nidhi, mutual benefit fund/society, therefore the provisions of clause4 (xiii) of the Companies (AuditorsReport) Order, 2003 are not applicable tothe Company.

14. In our opinion, the Company is not dealingin or trading in shares, securities, deben-tures, and other investments. Accordingly,the provisions of the clause 4 (xiv) of theCompanies (Auditors Report) Order, 2003are not applicable to the Company.

15. The Company has not given any guaranteefor loans taken by others from banks orfinancial institutions.

16. In our opinion, the term loans have been

For MENON & AYYARChartered Accountants



Ernakulam Partner1st September, 2010 (Membership No. 15842)


applied for the purpose for which theywere raised.

17. According to the information and explana-tions given to us and on an overall exami-nation of the Balance Sheet of the Company,we are of the opinion that no funds raisedon short-term basis have been used forlong-term investments and vice versa.

18. According to the information and explana-tions given to us, the Company has notmade any preferential allotment of sharesto parties and companies covered in theregister maintained under section 301 ofthe Companies Act, 1956.

19. The Company has not issued any deben-tures during the year.

20. The Company has not raised any funds byway of public issue during the year.

21. According to the information and explana-tions given to us, no fraud on orby the Company has been noticed orreported during the year.

46


OFFICE OF THE PRINCIPAL ACCOUNTANT GENERAL(AUDIT) KERALA, THIRUVANANTHAPURAM

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERALOF INDIA UNDER SECTION 619(4) OF THE COMPANIES ACT, 1956ON THE ACCOUNTS OF THE TRAVANCORE-COCHIN CHEMICALS

LIMITED, KOCHI FOR THE YEAR ENDED 31 MARCH 2010

The preparation of financial statements of The Travancore-Cochin Chemicals Limited, Kochi for theyear ended 31 March 2010 in accordance with the financial reporting framework prescribed under the CompaniesAct, 1956 and the generally accepted accounting principles is the responsibility of the management of the Company.The statutory auditors appointed by the Comptroller and Auditor General of India under Section 619(2) of theCompanies Act, 1956 are responsible for expressing opinion on these financial statements under Section 227 of theCompanies Act, 1956 based on independent audit in accordance with the Auditing and Assurance Standards prescribedby their professional body, the Institute of Chartered Accountants of India. This is stated to have been done by themvide their Audit Report dated 1st September 2010.

I, on behalf of the Comptroller and Auditor General of India have conducted a supplementary audit under Section619(3)(b) of the Companies Act, 1956 of the financial statements of The Travancore-Cochin ChemicalsLimited, Kochi for the year ended 31 March 2010. This supplementary audit has been carried out independentlywithout access to the working papers of the statutory auditors and is limited primarily to inquiries of the statutoryauditors and companys personnel and a selective examination of some of the accounting records. Based on mysupplementary audit, I would like highlight the following significant matters under section 619(4) of the CompaniesAct, 1956 which have come to my attention and which in my view are necessary for enabling a better understanding of the financial statements and the related Audit Report issued by the StatutoryAuditors.


47

A. COMMENTS ON PROFITABILITY

Profit and loss account - Loss for the year ` 249.17 lakh

1. Other income (Sch 12) - ` 685.60 lakh

This includes ` 324.06 lakh being profit on sale of land and structures, the sale deed ofwhich was executed only on 15 July 2010. The accounting of the transaction in the currentyear has resulted in understatement of loss for the year by ` 324.06 lakh with correspondingunderstatement of Fixed Assets by ` 18.64 lakh (net) and overstatement of current assets by `342.70 lakh.

2. (Increase)/Dccrease in Stocks (Sch-19) - ( ` 332.81 lakh).

Loss for the year is understated by ` 35.07 lakh due to incorrect valuation of closing stock ofCaustic Soda flakes by adopting price higher than what was actually realized. Valuation ofclosing stock of raw materials was also not in accordance with the provisions of AccountingStandard 2-Valuation of Inventories.

For and on behalf of theComptroller and Auditor General of India

Sd/-

V. KURIANPrincipal Accountant General (C&CA)

Kerala

Thiruvananthapuram

Dated: 03 -11-2010

48


GOVERNMENT OF KERALANo. 82400/PU.D3/2010/Fin. Finance (PU.D) Department

COMMENTS OF THE PRINCIPAL SECRETARY (FINANCE) ON THEAUDITED ANNUAL ACCOUNTS OF THE TRAVANCORE-COCHIN

CHEMICALS LIMITED FOR THE YEAR 2009-2010

1) The accumulated loss of the company is ` 4057 lakhs, which is more than 50%of its networth.

2) The company has been in loss during the year evenafter the sale of assets to thetune of ` 336.21 lakhs and the conversion of loan from KIRFB to KFC resultedin the reduction of interest and Bank charges, compared to the previous year of2008-09.

3) The management should take initiatives to explore the possibilities of new exportmarkets for products and services by strengthening the Research and Developmentwing by absorbing new technologies and bringing diversification of activities.

4) Sharp increase in salary expenses to the tune of ` 105 lakhs against the previousyear, does not seem commensurate with expansion of business opportunities.

5) The company should take effective measures to settle the income tax appeals &assessment and the statutory dues pending before the Court/Tribunals.

6) Government loan with interest should be repaid timely.

Sd/-

Dr. A. K. DUBEY I.A.S.Principal Secretary (Finance)

Thiruvananthapuram27. 11. 2010


49

REPLY TO THE COMMENTS OF THE COMPTROLLER ANDAUDITOR GENERAL OF INDIA ON THE AUDITED

ANNUAL ACCOUNTS OF THE TRAVANCORE-COCHINCHEMICALS LIMITED FOR THE YEAR 2009-2010

A. Comments on Profitability

1. Other Income (Schedule 12) - ` 685.60 lakh

The Government of Kerala has vide its order G.O. (MS) No.113/2010 RD.dt.24/03/2010 has accordedsanction to transfer the land to NHAI for construction of the Vallarpadom ICTT connectivity roadand to receive the compensation by the company. Even though the registration of sale deed wasexecuted only on 15.07.2010, the compensation was accrued in the year in which the compensationpackage was determined as per the DLPC package and eligibility of the company establishedwhich is in the year 2009-10. The Company accounted this amount of compensation as per thelegal advice and with the consent of the Board of Directors and hence no understatement of loss of` 324.06 lakhs and understatement of fixed assets of ` 18.64 lakhs and overstatement of currentassets of ` 342.70 lakhs.

2. Increase / Decrease in stock (Schedule 19) - ` 332.81 lakhs

As per the accounting policy of the company, stock in trade is valued at lower of the cost or netrealisable value. Accordingly the stock in trade is to be valued at lower of the cost or sale value asat the year end and not on the basis actual amount realised on subsequent sales. The accountingstandard 2 defines the net realisable value as net realisable value is the estimated selling price inthe ordinary course of business less the estimated costs of completion and the estimated costsnecessary to make the sales. As such the valuation was correctly done. This method wasconsistently followed during previous years also. Earlier, the company used to value the stock intrade at lower of cost or average sales realisation of the financial year. Subsequently as per thedirection of the then AGS audit, we changed the valuation to lower of average cost of productionor sale value in the month of April next year. This policy is being continuously followed since thenand hence there is no understatement of loss.

Sd/-

K. S. SRINIVAS, I.A.SCHAIRMAN

Thiruvananthapuram

21.12.2010

50


REPLY TO THE COMMENTS OF THE PRINCIPAL SECRETARY (FINANCE)

ON THE AUDITED ANNUAL ACCOUNTS OF THE TRAVANCORE-COCHIN

CHEMICALS LIMITED FOR THE YEAR 2009-2010

1. The accumulated loss of the Company is ` 1315 lakhs and not ` 4057 lakhs as mentioned in the comments afteradjusting the earlier years surplus and which is more than 50% of the net worth.

2. The Company is taking all efforts to increase the profitability and thereby improve the net worth. The Company wasunable to make profit during the year 2009-10 on account of power cut imposed by KSEB and power surcharge resultingin reduced capacity utilization. The fixed overheads of the Company are huge and the Company has to produce at 100% capacity in order to generate profits.

3. The Management is taking all the efforts to increase profitability including exploring new export markets. TheCompany is planning to incur an amount of ` 5 crores in the current financial year in order to make the plant energyefficient and to reduce the cost of power which constitutes 50% of cost of production.

4. The increase in employee cost is due to the increase in dearness allowance and effect of revision in salary.

5. The income tax assessments are pending only for the assessment years 2008-09 to 2010-11 and income tax appeals arepending for seven years which is under various stages of the process.

6. The cash flow position of the Company is not sufficient to repay the government loan and interest on account of theabove reasons. The loan will be repaid once the cash flow improves.

Sd/-

K. S. SRINIVAS, I.A.SCHAIRMAN

Thiruvananthapuram

21.12.2010

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