EICL Annual Report 2012-13 Option Aeicl.in/wp-content/uploads/2015/03/ANNUAL-REPORT-EICL...Profile...

Company Information

CHAIRMANMr. Karan Thapar

DIRECTORS

Mr. J. K. JainMr. Vijay RaiMr. Praveen SachdevMr. T. Balakrishnan

MANAGING DIRECTOR& CHIEF EXECUTIVE OFFICER .

Dr. Venkatesh Padmanabhan (w.e.f.11.03.2013)

SR. VICE PRESIDENTCORPORATE FINANCE ACCOUNTS &ADMINISTRATION

Mr. S. K. Jain

COMPANY SECRETARYHEAD CORPORATE - LEGAL

Mr. P. S. Saini

REGISTERED OFFICETC-79/4, VeliThiruvananthapuram-695 021(Kerala)

HEAD OFFICEN-75, Connaught CircusNew Delhi - 110001

THE SHARES OF THE COMPANY ARE LISTED ON BSE LIMITED LISTING FEE FOR THE YEAR 2013-2014 HAS BEEN PAID TO BSE LIMITED

AUDITORSWalker, Chandiok & Co

Chartered Accountants

L-41, Connaught Circus

New Delhi - 110001

COST AUDITORSA. R. Narayanan & Co.

Cost Accountants

Door No. 62/5621, 1st Floor,

Prabhat Building

T.D Road, Ernakulam, Cochin- 682011

BANKERSAxis Bank Limited

State Bank of India

Yes Bank Limited

ICICI Bank Limited

IndusInd Bank Limited

CORPORATE OFFICE801-803, Tower-B, 8th FloorGlobal Business Park,Gurgaon-122 002 (Haryana)

WORKSThiruvananthapuram (Kerala)Yamunanagar (Haryana)Shimoga (Karnataka)

Annual Report 2012-13Directors’ Report

DIRECTORS' REPORTFOR THE YEAR ENDED 31ST MARCH, 2013

To,The Members:

Your Directors have pleasure in presenting the Annual Report with audited statement of accounts for the year ended 31st March, 2013.

(` in Crores)

31st March, 2013 31st March, 2012

Gross operating Profit (before interest and depreciation) 55.33 56.96 Less : Interest 19.29 19.06

Gross Profit before Depreciation 36.04 37.90Less : Depreciation 14.89 13.37

Profit before tax and exceptional items 21.15 24.53Less : Exceptional Items 1.29 2.22

Tax Expenses :

Current Tax 5.96 4.96Short (Excess) Provision adjusted 0.76 0.08Deferred Tax 1.27 2.44

Profit after Tax 11.87 14.83

To which is added :

- Balance brought forward from the previous year 61.78 54.02

Leaving a balance of 73.65 68.85

Which your Directors recommend to be appropriated as under :

Interim Dividend Paid

- ` 5.50 per Preference Share on 30,00,000 11% Preference Shares 1.65 1.65 of Rs.100/- each (last year ` 5.50 per Preference Share)

- ` Nil per Equity Share of ` 2/- each - 1.51 (last year ` 0.30 per Equity Share of ` 2/- each)

Proposed Dividend

- @ ` 5.50 on 30,00,000 11% Preference Shares of ` 100/- each 1.65 1.65

(last year ` 5.50 per Preference Share)

- @ ` 0.20 per Equity Share of ` 2/- each 1.00 - (last year Nil)

Tax on Dividend 0.72 0.78

Transfer to General Reserve 1.19 1.48

Carried forward to next year’s account 67.44 61.78

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DIVIDEND

Your Directors are pleased to recommend a final dividend @ ` 0.20 per Equity Share on 5,02,76,013 Equity Shares, face value of Rs.2/- each, amounting to ` 1,00,55,203/- and ` 5.50 per Preference Share on 30,00,000 11% Cumulative Redeemable Preference Shares, face value of ` 100/- each, amounting to 1,65,00,000/-.

During the year, the Company had declared and paid an interim dividend @ 5.50 per preference share on 30,00,000 11% Cumulative Redeemable Preference Shares of ` 100/-

steach for the year ended 31 March, 2013 amounting to ` 1,65,00,000/-.

The total outgo on account of dividend including dividend tax of 71,89,770/- will be 5,02,44,973/-.

OPERATIONS

Your Company registered an overall growth of about 11% in its net sales turnover from ` 378 Crores in the previous year to 421 Crores in the current year. However, the EBIDTA of ` 55.33 Crores was almost at the same level as in the previous year of 56.96 Crores. The profit after tax declined by about 24% from ` 14.83 Crores in the previous year to `11.87 Crores in the year under review.

The net sales from clay business increased from 205 Crores to 235 Crores (an increase of about 14%) over the previous year. However, the operating margins were under pressure mainly due to increase in the cost of fuel and power without any corresponding increase in sales realization and the operating profit remained at ` 39 Crores as against ` 40 Crores in the previous year.

The starch business has shown a marginal growth in sales of 8% from ` 172.75 Crores in the previous year to ` 186.37 Crores for the year ended 31-03-2013. The starch division as a whole suffered a loss of Rs.3.32 Crores in the current year as against a profit of ` 3.90 Crores in the previous year, essentially on account of steep hike in maize price, in case of Yamunanagar unit, which could not be passed on to the customers. However, Yamunanagar unit recorded an operating profit (EBIT) of ` 1.78 Crores for the year 2012-13. Specialty starch plant established in Shimoga with a capital outlay of ` 45 Crores has not achieved its full capacity and is working at a level of 30% of its capacity and has largely contributed to the dismal performance of the starch business. This unit recorded an operating loss of ` 5.10 Crores during the year under review. Overall, the operations of the Company were also affected due to slow down in the growth of the economy.

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The proposed clay project at Bhuj, Gujarat, charges for which the Company had acquired 10.50 hectares land has been put on hold and company is closely watching the economic changes.

The detailed review of the operations and performance of the Clay and Starch businesses is contained in the Management Discussion and Analysis Report which is appended to the Directors' Report and form part of it.

EXPORTS

The continued global economic slow down impacted the growth in exports particularly in starch. Your Company's total exports were at 28 Crores in the year under review as compared to 25 Crores in the previous year.

RESEARCH & DEVELOPMENT ACTIVITIES

The continued emphasis on R&D activities and strong research orientation has played a stellar role in new product development, application support to the customers as well as technical support to plant operations.

Particulars with respect to R&D activities carried out, benefits derived, and the expenditure incurred thereon during the year under review are provided in Form B annexed to this report and form part of this report.

FIXED DEPOSITS

On 31st March, 2013 fixed deposits amounting to ` 36,38,000/- which became due for repayment had remained unclaimed by 17 depositors.

CORPORATE GOVERNANCE

The Company has complied with the code on corporate governance as prescribed under Clause 49 of the Listing Agreement with Bombay Stock Exchange. A compliance report alongwith Auditor's Certificate confirming the compliance is appended herewith and forms part of this report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

As required under rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the particulars relating to Conservation of Energy in respect of Starch Division and detail of Technology absorption in respect of Starch and Clay Divisions are annexed herewith in Form A.

Directors’ Report Annual Report 2012-13

The company has recorded export earnings of 28 Crores and remittance of foreign currency equivalent to ` 6.76 Crores towards various purposes details of which have been incorporated in the Notes to Accounts No. 35 to 37.

DIRECTORS

Mr. Karan Thapar and Mr. J.K. Jain , Directors being longest in the office, are liable to retire by rotation and are eligible for reappointment. Their appointments are recommended for your approval. The profile of Mr. Karan Thapar and Mr. J.K.Jain seeking reappointment, forms part of the Corporate Governance Report. Dr. Venkatesh Padmanabhan was appointed as an Additional Director of the Company and as the Managing Director and Chief Executive Officer of the Company for a period of 5 years w.e.f. 11-03-2013. As an Additional Director Dr. Venkatesh Padmanabhan will hold office upto the date of ensuing Annual General Meeting of the Company. A notice U/s 257 of the Companies Act, 1956, proposing his candidature as a Director of your Company, has been received. His appointment as a Director and as the Managing Director is recommended for your approval. The Profile of Dr. Venkatesh Padmanabhan seeking appointment, forms part of the Corporate Governance Report.

Mr. Rahul Gupta Executive Director of the Company ceased to be the Executive Director/ Director w.e.f. 31-12-2012 . Mr. Rahul Gupta had been associated with the Company

ndfrom 2 March, 2009. The Board place on record its appreciation for the invaluable service rendered by Mr. Rahul Gupta during his association with the Company.

DELISTING

The Company has received a proposal from M/s DBH International Pvt. Ltd. (DBH) one of the Promoters of the Company, to voluntarily delist the equity shares of the Company from Bombay Stock Exchange, the only stock exchange where the Equity Shares of the Company are listed, in terms of SEBI (Delisting of Equity Shares) Regulations, 2009. DBH has given the floor price of 41/- per Equity Share. DBH has requested the Company to seek the shareholders approval by way of Postal Ballot in accordance with SEBI (Delisting of Equity Shares ) Regulations, 2009 by way of Special Resolution and get in principle approval of Bombay Stock Exchange. Your Company is taking necessary steps in this matter.

PROMOTER GROUP

The Promoter Group holding in the Company currently is 77.92% of the Company's Equity Capital. The Members

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may note that the promoter group companies, are controlled by Mr. Karan Thapar, comprising of the following Companies 1) Greaves Cotton Ltd., (2) Premium Transmission Ltd., (3) Pembril Industrial & Engineering Company Pvt. Ltd., (4) DBH International Pvt. Ltd. (5) Karun Carpets Pvt. Ltd., (6) Greaves Leasing Finance Ltd ( ) Dee Greaves Ltd., ( ) Bharat Starch Products Ltd., ( ) DBH Global Holdings Ltd., (1 ) DBH Investments Pvt. Ltd., (1 ) Greaves Farymann Diesel GmbH (1 ) DBH Consulting Ltd. (1 ) Greaves Auto Ltd. (1 ) Greaves Cotton Netherlands B.V. Ascot International FZC (16) Premium Transmission Cooperatie UA, (17) DBH Stephan Ltd. and (18) Premium Stephan B.V.

PARTICULARS OF EMPLOYEES UNDER SECTION 217 (2A) OF THE COMPANIES ACT, 1956

Statement of particular of employees as required under Section 217 (2A) of the Companies Act, 1956 read with the Companies (particulars of employees) Rules, 1975 as amended upto date are attached herewith and form part of Directors' Report, as Annexure 'A”.

AUDITORS

M/s Walker, Chandiok & Co., Chartered Accountants, the existing Auditors retire and are eligible for reappointment. Their appointment and remuneration is recommended for your approval.

RESPONSIBILITY STATEMENT

Pursuant to the requirements of section 217 (2AA) of the Companies Act, 1956, it is hereby confirmed;

a) That the Company has followed the applicable accounting standards in the preparation of the Annual Accounts for the year ending 31-03-2013 and there is no material deviation from the previous year.

b) That the Company has selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company for the year ended 31st March, 2013 and of the profit of the year ended 31.03.2013.

c) That the Company has taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities and;

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d) That the Annual Accounts are prepared on a going concern basis.

CORPORATE SOCIAL RESPONSIBILITY

Your Company in its avowed commitment towards environment protection and social responsibility, continues to provide free water under its rain water harvesting scheme to the neighbouring villages around the Thonnakkal Mines through pipelines and water tankers. The Company also regularly conducts medical camps for the villagers.

HUMAN RESOURCES

Your Company believes in and lay special emphasis on team work, skill development and development of leadership and functional capabilities of the management staff.

INDUSTRIAL RELATIONS

The Board of Directors place on record their sincere appreciation of the active, dedicated and valuable contribution of the Company's employee at all levels.

During the year under review, industrial relations in the Company continued to be cordial and peaceful.

ACKNOWLEDGEMENT

The Board of Directors place on record their appreciation for the invaluable support and co-operation extended by Banks/Financial Institutions viz. Axis Bank Ltd., State Bank of India, Indusind Bank Ltd., ICICI Bank Ltd and Yes Bank Ltd. and Central and State Governments and other Government authorities. The Directors also express their sincere thanks to all other stakeholders for their valuable continued support to the Company.

FOR AND ON BEHALF OF THE BOARD

Sd/- Sd/- (Vijay Rai) (Dr. Venkatesh Padmanabhan) Director Managing Director & CEO

Place : Gurgaon Date : 03-05-2013

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F O R M – A

ENERGY CONSERVATION STATEMENT

FOR STARCH BUSINESS

Power & Fuel Consumption 2012-13 2011-12

1. Electricity

a. Purchased

Units (KWH) 12,680,410 14,623,897

Total amount ( ` Lacs) 832.28 735.00 Rate/Unit 6.56 5.03

b. Own Generations

(i) Through Diesel Generator sets

Units (KWH) 1,465,617 733,587 Units/ Ltr of diesel 3.00 2.97 Cost/unit (Rs) 13.18 12.91

(ii) Through CO-Generation

Power Plant (Units) 498,274 1,484,150

2. Fuela. Coal and Lignite

Quantity (MT) 1,575 1,076 Total Cost ( Rs. Lacs ) 104 75.15

Average rate/MT (Rs.) 6,589 6,987

b. Agro waste - Husk, Wood waste etc.

Quantity ( MT ) 32,523 37,227 Total Cost ( Rs. Lacs ) 833 840 Average rate/MT (Rs.) 2,561 2,256

c. Furnace Oil

Quantity ( per '000 KL ) 132 187 Total Cost ( Rs. Lacs ) 50 75.26 Average rate (Per KL) (Rs) 37,473 40,259

Consumption/MT of production

i) Electrcity ( UNITS/MT ) 256 303

ii) Fuel

a. Coal and Lignite (Kg) 27.5 19.4 b. Agro waste - Husk,

Wood waste etc. (Kg) 568.6 669.9

c. Furnace Oil (KL) 2.3 3.4


F O R M – B

1. Specific Areas in which R & D Carried out by the Company:-

Clay Division

a) Developed and commercialised Low TDS, finer grade Hydrous Kaolin for Electro deposition coating.

b) Identified and developed process route for the modification of Bentonite (Non -kaolin product).

c) Developed Composite product for PVC Pipe application.

Starch Division

a) Developed maize starch based oil well drilling starch.

b) Developed maize starch based coal binder.

c) Developed new coating binder.

d) Development of Cold water soluble adhesive for paper sack application.

2. Benefits derived as a result of the above Research & Development :-

Clay Division

a) High value addition product .

b) Scope for New area of diversification (Non - Kaolin product).

c) Opened up New Market area.

Starch Division

a) Increased market share of oil well drilling starch with higher contribution.

b) Entry into a new segment & export.

c) Opened up new segment of starch based adhesive .

3. Future Plan of Action :-

Clay Division

a) Development of 'New product ' for the Tyre inner liner application.

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b) Development of High Aspect ratio Kaolin for the Rubber and Coating industry.

c) Indepth study and Identification of the suitable Matrix

blend for the New Mining area.

Starch Division

a) Development of high temp. drilling starch.

b) Development of organic binder for Ore industries.

c) Development of textile printing thickener.

d) Starch adhesive for corrugation industries.

4. Expenditure on R & D :-

31st March, 2013 31st March,2012(`) (`)

a) Capital 33,35,200/- 41,04,099/-

b) Recurring 1,68,14,917/- 1,91,96,934/-

c) Total 2,01,50,117/- 2,33,01,033/-

d) R&D Expenditure 0.46 0.59as a percentage of Total turnover


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Corporate Governance

2.2 Board Meetings

The meetings of the Board of Directors of the Company are usually held at Company's Corporate Office at Gurgaon and generally chaired by Mr. Karan Thapar, Chairman of the Company. During the year, the Company held five Board Meetings on 1st May, 2012, 26th July, 2012, 29th October, 2012, 10th December, 2012 and 28th January, 2013.

3. AUDIT COMMITTEE

3.1 Composition

The Audit Committee consists of three Independent Directors viz. Mr. Vijay Rai, Mr. J.K. Jain and Mr. P.Sachdev. Mr. Vijay Rai is appointed by the Committee as the Chairman of

the Committee. The Company Secretary is the Secretary to the Committee. The Executive Director/ Managing Director and Senior Vice President (Corporate Finance, Accounts & Administration) are the permanent invitees at the Committee Meetings.

During the year, the Committee met four times, on 1st May, 2012, 26th July, 2012, 29th October, 2012, and 28th January, 2013

Attendance of the Members at the Committee Meetings was as under :-

Name Number of Meetings attended

Mr. Vijay Rai 4

Mr. J.K. Jain 4

Mr.P. Sachdev 4

Name of the Category of No. of Board Attendance No. of other Committee Memberships Directors Director Meetings at last Directorships As a As a

attended AGM Member Chairman

Mr. Karan Thapar Chairman 5 No 8 1 - (Non-Executive Promoter)

Mr. S.K. Toshniwal Non-Executive 1 No 3 - 1 upto 22-06-2012 Independent

Mr. Vijay Rai Non-Executive 5 Yes 9 3 1 Independent

Mr. J.K. Jain Non-Executive 5 No 2 3 0 Independent

Mr. P.Sachdev Non-Executive 5 No 3 2 1Independent

Mr. Rahul Gupta upto 31.12.2012 Executive Director 4 No - 1 -

Mr. T. Balakrishnan Non-Executive 5 Yes 9 0 0Independent

Dr. Venkatesh Padmanabhan Managing Director 0 No 0 0 0w.e.f. 11-03-2013 & CEO

As on 31-03-2013, the Directors of the Company are not related to each other and are independent of each other.

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Governance stipulated under Clause 49 of the Listing Agreement with the Stock Exchange.

2. BOARD OF DIRECTORS

2.1 Composition of Board of Directors

The composition of the Board is in full compliance of Clause 49 of Listing Agreement and has optimum combination of executive and non executive Directors. The Board of Directors consist of six directors, comprising of a Non-Executive Chairman, a Managing Director and four Non-Executive / independent Directors as on 31-03-2013.The composition of the Board, attendance of the Directors at the Meetings and also other directorships / memberships / Chairmanship of the Committees, are as follows :

CORPORATE GOVERNANCE

1. COMPANY PHILOSOPHY

Corporate governance in EICL Ltd. is based on principles such as conducting the business with all integrity and fairness, being transparent with regard to all transactions, making all the necessary disclosures and decisions, complying with all the applicable laws, accountability and responsibility towards the stakeholders and commitment to conducting business in an ethical manner. The method adopted by the Company can fulfill its goals and objectives in a manner that adds to the value of the company and is also beneficial for all stakeholders, customers and employees in the long term. Your Company is in compliance with the guidelines on Corporate

Annual Report 2012-13

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3.2 Terms of Reference

The terms of reference of the Audit Committee inter alia, include the following :

- To discuss with the Auditors both Internal Auditors as well as Statutory Auditors on adequacy of internal controls in systems and procedures.

- Adherence to significant Accounting Policies and compliance with the Accounting Standards.

- Overseeing the Company's financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.

- Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of the Internal as well as Statutory Auditors and the fixation of audit fees and fees for other services rendered by the Auditors.

- To review periodic financial results before submission to the Board with particular reference to;

- Any changes in accounting policies and practices.

- Major accounting entries based on exercise of judgement by Management.

- Any qualification in draft audit report.

- Compliance with Accounting Standards.

- Compliance with Stock Exchange and legal requirements concerning financial statements.

- Review of financial reporting system.

- Ensuring regulatory compliances.

- To review the related party transactions.

- To seek information from any employee.

- To obtain outside legal or other professional advice.

- To investigate any activity within its terms of reference.

- To secure attendance of outsiders with relevant expertise, if it considers necessary.

- Approval of appointment of CFO (i.e., the whole-time Finance Director or any other person heading the finance function or discharging that function) after assessing the qualifications, experience and background, etc. of the candidate.

4. SHAREHOLDERS/INVESTORS GRIEVANCE COMMITTEE

The Shareholders Grievance/Share Transfer Committee comprises of Mr. Karan Thapar, Mr. Rahul Gupta Executive Director ( till 31- 12- 2012) as members and Mr.P. Sachdev as Chairman of the Committee.

The Committee deals in matters relating to transfer and transmission of shares, issue of duplicate share certificates, redressing of investor's complaint such as non receipt of shares/dividends etc. and other matters related to shares of the Company. The complaints received during the year were addressed to the satisfaction of the shareholders.

Mr. P.S. Saini, Company Secretary is the Compliance Officer of the Company. During the year, the Committee met twice on 30-06-2012 and 31-01- 2013.

5. RISK MANAGEMENT COMMITTEE

The Risk Management Committee comprises of following three Directors;

1. Mr. J.K. Jain, Chairman

2. Mr. Vijay Rai, Member

3. Mr. Rahul Gupta, Executive Director

upto 31- 12- 2012

4. Mr. T. Balakrishnan, Member w.e.f. 28- 01- 2013

During the financial year 2012-13, the Committee met twice. The Company has well defined Risk Assessment and Minimization Policy duly approved by the Board of Directors of the Company. The Committee evaluated the anticipated risks associated with the affairs of the Company and the necessary steps had been taken to mitigate/ minimize the risks.

6. REMUNERATION TO DIRECTORS

A. Executive Director / Managing Director & CEO (Amount in `)Salary Perquisites Retirement Benefits Commission Total

MR. RAHUL GUPTA 50,46,984/- 1,30,950/- 26,30,421/- – 78,08,355/-upto 31- 12- 2012

MR. VENKATESH 5,53,096/- 847/- 29,723/- – 5,83,666/-PADMANABHAN w.e.f 11- 03- 2013


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B. Non-Executive Directors

I. (Amount )

Name Sitting Fees

Mr. Karan Thapar 82,000/-

Mr. S.K. Toshniwal upto 22-06-2012 20,000/-

Mr. Vijay Rai 2,00,000/-

Mr. J.K. Jain 1,80,000/-

Mr. P. Sachdev 1,44,000/-

Mr. T. Balakrishnan 1,00,000/-

II. (Amount )

Chairman Commission

MR. KARAN THAPAR 16,33,758/-

The members of the Company in their Annual General meeting held on 08-09-2009 approved the payment of Commission @ 1% per annum, in aggregate, to the Non-Executive Directors of the Company u/s 309 of the Companies Act, 1956 on the Net Profit of the Company as calculated u/s 349 and 350 of the Companies Act, 1956. Keeping in view the overall involvement of Shri Karan Thapar, Chairman of the Company in the affairs of the Company’s business, the Directors resolved to give 1% commission to Shri Karan Thapar.

III. Director’s Shareholding

The following non-executive directors are holding shares in the Company as on 31 03-2013 :-

No. of Shares

1. Mr. Karan Thapar 72000

2. Mr. Vijay Rai 12836

7. GENERAL MEETINGS

Last three Annual General Meetings were held as under :-

Financial year Date of Time Venue Ended Meeting

31st March, 2012 22nd June, 11.00 a.m TC-79/4, Veli,

2012 Thiruvananthapuram, Kerala

31st March, 2011 10th June, 11.00 a.m. TC-79/4, Veli,


31st March, 2010 29th June, 11.30 a.m. TC-79/4 Veli,


A Special resolution under Sections 16, 31 and 94 of the Companies Act, 1956 approving alteration of Clause V of Memorandum of Association and Article 5 of Articles of Association of the Company for the substitution of increased Authorised Capital from ` 380,000,000/- to ` 480,000,000/- was unanimously passed in the Annual General Meeting held on 29th June, 2010.

A Special resolution approving sub-division of Equity Shares of `10/- each into Equity Shares of ` 2/- each was unanimously passed in the Annual General Meeting held on 29th June, 2010.

A Special resolution approving issue of 27,931,119 Bonus Equity Shares of 2/- each in the ratio of 5:4 by utilizing Capital Redemption Reserve was unanimously passed in the Annual General Meeting held on 29th June, 2010.

A Special resolution approving to change the name of the Company from ENGLISH INDIAN CLAYS LIMITED to “EICL LIMITED” and alteration of the Memorandum of Association and the Articles of Association, Books of Accounts, Statutory Records, Letterheads, Name plates etc. accordingly was unanimously passed in the Annual General Meeting held on 22nd June, 2012.

8. DISCLOSURES

a. Related Party Transactions

With respect to the detail of related party transactions of material nature, a suitable disclosure as required by Accounting Standard (AS-18) has been made in the Annual Report. All the directors have disclosed their interest in Form 24AA pursuant to section 299 of the Companies Act, 1956 and as and when any changes in their interest take place, they are placed before the Board at its meetings.

The Company did not have any material significant related party transaction which may have potential conflict with the interest of the Company.

b. Compliance by the Company

There were no instances of non-compliance of any requirements of the Stock Exchange, SEBI and other statutory authorities on any matters relating to capital market during the last 3 years ending March 31, 2013.


12


c. Code of Conduct

The Company's Code of Conduct as adopted by the Board of Directors of the Company at its meeting held on 28th October, 2005 is a comprehensive Code laying down in detail the standards of business conduct, ethics and governance. The Code is available on the Company's Website: www.eicl.in.

The Code has been circulated to all the members of the Board and the Senior Management and the compliance of the same has been affirmed by them. A declaration signed by the Managing Director & CEO of the Company is given below :

“I hereby confirm that all Directors and Senior Management of the Company have affirmed compliance with the Company's Code of Conduct for the financial year ended 31st March, 2013.

Sd/-

Place : Gurgaon Dr.Venkatesh Padmanabhan Date : 03- 05- 2013 Managing Director & CEO

d. MD & CEO/CFO CertificationThe Managing Director & CEO and Senior Vice President (Corporate Finance & Accounts and Admn.) have signed a joint certificate accepting responsibility for the financial statements and confirming the effectiveness of the internal control systems, as required in Clause 49 of the Listing Agreement as per Annexure 1.

9. MEANS OF COMMUNICATION

The Company usually publishes quarterly, half-yearly and annually, its financial results in Cochin edition of Financial Express in English and Mangalam in Malayalam Language. The said results are promptly furnished to the stock exchange for display on their website and are also displayed on the Company's website www.eicl.in.

Information about the Company in general, management, its financials, its products etc. can be accessed at the Company's website.

Management Discussion and Analysis Report is appended and form part of the Annual Report.

10. GENERAL SHAREHOLDER INFORMATION

10.1 Disclosures regarding re-appointment of Directors

a. Mr. Karan Thapar

Mr. Karan Thapar, Chairman of the Company aged 56 years, is a Chartered Accountant and belongs to the Promoter family. He joined the Board of the Company in the year 1990. He possesses rich experience of over 30 years in managing companies having interest in diversified areas. He holds 72000 equity shares in the company. He holds Directorships in following companies.

Other Directorships

1. Greaves Cotton Ltd.2. Bharat Starch Products Ltd.3. Premium Transmission Ltd.4. DBH International Pvt. Ltd.5. DBH Consulting Ltd.6. Karun Carpets Pvt. Ltd.7. Premium Transmission Co- operatie UA8. DBH Stephan Ltd.

Committee Memberships

Shareholders Grievance EICL Ltd

Share Transfer Committee Greaves Cotton Ltd

b. Mr. J. K. Jain

Mr.J.K.Jain aged 68 years is fellow member of the institute of Chartered Accountant of India having 37 years of experience as finance Executive in both private and public Sectors in India and abroad such as GAIL (INDIA) Ltd., State Trading Corporation , Projects & Equipment Corporation and Engineering Projects (India) Ltd. He has gained rich and varied experience through working in companies engaged in manufacturing, Services, Trading, Construction and Projects. He is not holding any shares in the Company and holds Directorship in following Companies:

Other Directorships

1. Jamna Auto Industries Ltd.

2. Mahanagar Gas Ltd.

Committee Memberships

Audit Committee

- Mahanagar Gas Ltd.

- Jamna Auto Industries Ltd.

- EICL Ltd - Chairman.


13


c. Dr. Venkatesh Padmanabhan

Dr.Venkatesh Padmanabhan aged 50 years is a Graduate Mechanical Engineer from the Birla Institute of Technology, Ranchi (BITS – Mesra). He further went on to finish his MS in Engineering Management and Ph. D in Industrial Engineering from University of Pittsburgh, USA. He was subsequently honoured as the Outstanding Young Engineer of the Year by the Engineering Society of Detroit in 1994.

Dr. Padmanabhan has 23 years of work experience and joined us from Royal Enfield, a division of Eicher Motors Ltd., where he was the Chief Executive Officer. Prior to Royal Enfield, he successfully held Leadership Positions with Daimler Chrysler Corp. and General Motors in Germany and the USA. Dr. Venkatesh Padmanabhan was appointed on the Board of the Company w.e.f.11th March 2013 and designated him as Managing Director and Chief Executive Officer.

Other Directorships

NIL

10.2 Forthcoming Annual General Meeting

The Forty Ninth Annual General Meeting of the Company is scheduled to be held on Wednesday, 12th June, 2013 at TC-79/4, Veli, Thiruvananthapuram, Kerala at 11.00 a.m. inter-alia, to consider and adopt the Annual Accounts for the year ended 31st March, 2013.

10.3 Financial Calendar

The financial year - 1st April to 31st March

Announcement of financial results

For year ended 31st March, 2013 on 03 - 05 - 2013.

The Board of Directors had declared an interim dividend ` 5.50/- per Preference Share on 11% 30,00,000 Cumulative Redeemable Preference Shares of Rs.100/- each for the year ended 31st March, 2013 . The said interim dividend was paid on 02-11-2012.

The Board of Directors have recommend a final dividend @ 0.20/- per Equity Share of 2/- each and @ .5.50/- per preference share (` 5.50 per preference share as an interim

dividend is already paid) on 11% 30,00,000 Cumulative Redeemable Preference Shares of ` 100/- each respectively for the year ended 31st March, 2013.

The quarterly/half yearly results for the financial year 2013-14 will be announced as follows :-

First Quarter ending 30th June, 2013 by 14th August, 2013

Half yearly ending 30th September, 2013 by 14th November, 2013.

Third Quarter ending 31st December, 2013 by 14th February, 2014.

Annual audited results by 30th May, 2014.

10.4 BOOK CLOSURE

The Register of Members of the Company will remain closed from 10-06-2013 to 12-06-2013 (both days inclusive).

10.5 LISTING ON STOCK EXCHANGE & SHARE CODE NO.

The Shares of the Company are listed on the BSE Ltd. as per details given below :-

Name Address Stock Code

BSE Ltd. Phiroze Jeejeebhoy 526560Tower, Dalal Street,

Mumbai 400 001

10.6 MARKET PRICE DATA – Bombay Stock Exchange

MONTH HIGHEST (Rs.) LOWEST (Rs.)OF THE MONTH OF THE MONTH

April, 2012 42.60 38.10

May, 2012 44.70 38.50

June, 2012 43.00 39.00

July, 2012 46.50 40.50

August, 2012 46.00 40.45

September, 2012 42.50 36.05

October, 2012 41.95 38.00

November, 2012 41.80 37.55

December, 2012 41.90 36.00

January, 2013 50.30 37.00

February, 2013 44.00 35.50

March, 2013 44.25 31.00


14


10.7 REGISTRAR AND SHARE TRANSFER AGENT

RCMC Share Registry Pvt. Ltd.B-106, Sector -2, Noida - 201 301, U.P. Phone : 0120-4015880 Fax : 0120-4015839 Email : [email protected]

10.8 SHARE TRANSFER SYSTEM

Share lodged in physical form for transfer / Transmission, are usually transferred / Transmitted within 15 days, if the documents are clear in all aspects. Requests received for dematerialization of shares are processed and the confirmation is given by the Registrar & Transfer Agent to the Depositories within 21 days.

10.11 DEMATERIALISATION OF SHARES

The Equity Shares of the Company can be traded on the Bombay Stock Exchange only in dematerialized form.

The ISIN Number allotted to Equity Shares is INE 267F01024.

As on March 31, 2013, 49,801,452 Equity Shares being 99.05% of the total Equity Shares Capital are in dematerialized form with NSDL/CDSL.

10.12 PLANT LOCATIONS

UNIT ADDRESS

Clay Unit TC-79/4, Veli, Thiruvananthapuram – 695 021, KERALA

Corn Wet Radaur Road, Milling Unit P.O. Yamunanagar 135 001,

HARYANA

Specialty Starch Plot No 145, SEZ RoadUnit Machenahalli Indusrial Area, Nidige Post,

Shimoga 577222, KARNATAKA

10.9 D I S T R I B U T I O N O F E Q U I T Y SHAREHOLDING PATTERN AS ON MARCH 31, 2013

CATEGORY NO. OF PERCE-SHARES OF NTAGE

Rs. 2/- EACH

Promoters 39174603 77.92Indian Institutional Investors 0 -Other Bodies Corporate 3041266 6.05Foreign Institutional Investors 2993544 5.95NRIs/OCBs 98194 0.20

Mutual Funds 0 - General Public 4955570 9.86 Directors & Relatives 12836 0.02 TOTAL 50276013 100

10.13 ADDRESS FOR CORRESPONDENCE

EICL LimitedTC-79/4, Veli,Thiruvananthapuram 695 021, KERALAPhone : (0471) 4095111 Fax : (0471) 2742233 Email : [email protected]

EICL LimitedGlobal Business Park, 801-803, Tower-B, M.G. Road, Gurgaon 122 002, Haryana Phone : (0124) 280 3379-83 Fax : (0124) 280 3372 Email : [email protected]

11. NON MANDATORY REQUIREMENT

The Company has provided and maintained a Chairman's Office with requisite facilities, for use by its Non-Executive Chairman, at the Company's expense. The Company also reimburse all expenses incurred in his furthering the Company's business interest.

For & on behalf of the Board Sd/- Sd/-

Place : Gurgaon Vijay Rai Dr. Venkatesh Padmanabhan Date : 03-05-2013 Director Managing Director & CEO

10.10 DISTRIBUTION OF SHAREHOLDING AS ON 31ST MARCH, 2013

Shareholding of No. of Percentage No. of Shares Percentage

Nominal value (Rs.) ShareholdersUpto 5000 14138 98.22 3403298 6.775001-10000 125 0.87 445441 0.8910001-20000 73 0.51 482060 0.9620001-30000 21 0.15 254340 0.5130001-40000 5 0.03 83028 0.1740001-50000 7 0.05 153861 0.3150001-100000 11 0.08 364053 0.72100001 & above 14 0.10 45089932 89.68TOTAL 14394 100 50276013 100


15


MANAGING DIRECTOR & CEO AND CFO CERTIFICATION

To,The Board of DirectorsEICL Ltd.

We, Dr. Venkatesh Padmanabhan, Managing Director & CEO and S.K. Jain, Sr. Vice President (Corporate Finance & Accounts), responsible for the finance function certify that :

a) We have reviewed the financial statements and cash stflow statement for the year ended 31 March, 2013

and to the best of our knowledge and belief:

i) these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;

ii) these statements together present a true and fair view of the Company's affairs and are in compliance with existing Accounting Standards, applicable laws and regulations.

b) To the best of our knowledge and belief, no transactions entered into by the Company during the

styear ended 31 March, 2013 are fraudulent, illegal or violative of the Company's Code of Conduct.

c) We accept responsibility for establishing and maintaining internal controls for financial reporting and have evaluated the effectiveness of internal control systems of the Company for such reporting. We have disclosed to the Auditors and the Audit Committee, deficiencies, if any, in the design or operation of such internal controls, of which we are aware, and the steps have been taken to rectify these deficiencies.

d) We have also indicated to the Auditors and the Audit Committee that :

i) There has not been any significant change in internal control over financial reporting during the year under reference;

ii) There has not been any significant change in accounting policies during the year requiring disclosure in the notes to the financial statements; and

iii) We are not aware of any instance of fraud during the year with involvement therein of the management or any employee having a significant role in the Company's internal control system with respect to financial reporting.

Sd/-

Dr. Venkatesh Padmanabhan S.k. Jain Managing Director & CEO Sr. Vice President (Corpt. F&A)

Place : Gurgaon Date : 03-05-2013

Sd/-

AUDITORS’ CERTIFICATE ON COMPLIANCE WITH THE CONDITIONS OF CORPORATE GOVERNANCE UNDER CLAUSE 49 OF THE LISTING AGREEMENT

To the Members of EICL Limited

We have examined the compliance of conditions of Corporate Governance by EICL Limited (“the Company”) for the year ended on March 31, 2013, as stipulated in clause 49 of the listing agreement of the Company with the stock exchange.

The compliance of conditions of corporate governance is the responsibility of the management. Our examination was limited to procedures and implementation thereof, adopted by the Company, for ensuring the compliance of the conditions of Corporate Governance as stipulated in said clause. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, and as per representations made by Directors and the Management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned listing agreement.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.

for Walker, Chandiok & CoChartered AccountantsFirm Registration No: 001076N

Sd/-per Ashish GuptaPartnerMembership No. 504662

Place: GurgaonDate : May 03, 2013


16

Management Discussion and Analysis Report

1. Competitive and External Environment

a. The domestic environment remained challenging during 2012-13 with slowing demand, high inflation and high interest rates and growing uncertainty. The global macroeconomic conditions deteriorated, with recession in the Eurozone, and slackening in the US economy. These factors resulted in a weak investment climate in India. The business environment remained challenging during the year with lower GDP growth and slowdown in investments.

b. The growth in manufacturing slowed down significantly to 3.2% from 3.9% last year. The industry segments of concern to EICL that were impacted adversely, were Paper & Board (throughout the year), and the continued recession in the Textile Industry. Superimposed on the above was the inception of the down turn in the Starch commodity cycle from October 2012 onwards, and the significant increase in industrial fuel prices.

c. The macro-economic environment is not very healthy. There is an increasing competition in Calcined Clay and Value added Clays Business segment from few smaller companies. The company has been focusing on the development of new products which is the key strength.

d. The Company has put on hold its Bhuj Project for setting up a manufacturing facility and is closely watching the economic changes.

e. The competition in the modified starch business segment from domestic players, who have migrated up the value chain, is increasing and is reflected by lower margins. The Company is responding by increased effort in developing of import substitution products and applications; also in development of export markets in Asia and Africa. The modern facility at Shimoga (Karnataka) has also not yet started paying back.

2. Overall Performance

a. Net Sales Turnover increased to ` 421 Cr., showing growth of 11% over the previous

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

year. EBIDTA and PAT declined by 3% and 20% to ` 55 Cr. and ` 12Cr. respectively, mainly due to the adverse business environment.

b. The settlement expenses relating to workers of the closed operations have been provided in the P&L statement.

c. The land bank of Kaolin raw material at Kerala continued to be augmented. Total committed during the year was approx. 5 Cr. In addition, various opportunities are explored outside Kerala and outside India.

d. The Company's R&D Unit continued to play a key role in developing new products, and new applications; also in offering application support to the customers. The various new products have been developed and expected to be marketed in FY 2013-14 in both the segments.

3. Segment Wise Business Performance

(` Crores)

2011-12 2012-13

Starch Clay Total Starch Clay Total

Net Sales 172.75 205.33 378.08 186.37 235.14 421.51

EBIDTA 8.20 49.19 57.39 1.62 48.75 50.37

EBIT 3.90 40.67 44.57 (3.32) 39.16 35.84

The un-allocable expenses for the year were ` 1.48 Cr and profit on sale of assets of Puducherry plant is 5.50 Cr.

a. Clay

i. The Sales of the Clay Business were higher in volume and value terms by 7% and 14% respectively due to better product mix. Export volumes grow by about 14%.

ii. The margins reduced substantially due to fuel and chemicals price increase and increase in fixed cost, which could not be fully passed on.

iii. The commercialization of delaminated Clay products developed by in-house R&D augers well for future growth.


17


iv. The plant at Kollam, acquired from Wolkem, has been found to be unviable due to various external and internal factors. The plant and machinery related to this plant are being transferred to other locations for effective use and the land and buildings will be put-up for sale.

b. Starch

i. The Sales of the Starch Business were higher in volume and value terms by 3% and 8% respectively due to increase in sales realization.

ii. The margins reduced very significantly due to high spurt in prices of raw material (Corn) which could not be passed on due to the depressed off-take from the paper and other industry segments; also due to the slow pace of product approval from the newly commissioned Shimoga plant, which incurred EBIDTA loss during the Financial Year.

iii. The land related to Pondicherry plant was sold at a profit of ` 5.50 Cr which is not included in the above EBIDTA.

4. Outlook for 2013-14

a. The macro economic environment has shown some sign of recovery and the market growth forecast has been estimated to be 8% for Clays and 5% for modified Starches.

It is expected that there would be further currency devaluation leading to higher fuel and chemical prices.

Interest rates may reduce marginally during the course of the year.

b. The competitive environment is expected to remain at the present level with no significant capacity increase during the coming year, other than in Calcined Clay and in Paper Starches.

c. Considering the above factors, no significant capacity increase is being planned during the year. Focus will be on consolidation, improving the operating efficiency and capacity utilization.

d. Shimoga plant is expected to reach 70% capacity utilization by end of FY 2013-14, thereafter no longer incurring cash losses.

e. Overall, we expect to recover from the dip experienced during 2012-13, in both businesses.

f. Various areas of diversification and growth are under study and there are expected to take shape by end of FY 2013-14, for following year implementation.

5. Internal Control Systems

The Company has a structured system of internal controls to ensure compliance with applicable statutory laws and regulations as also internal policies. The Company has in place the following mechanism:

a. Monthly and Quarterly Reviews of each Division's performance by Senior and Top Management.

b. Biannual Internal Audits of all Divisions.

c. Quarterly Review of efficacy of Internal Audits and Company performance by the Audit Committee of the Board.

d. Regular reporting to the Board on investor related matters as well as fulfillment of SEBI Listing Agreement requirements and other Corporate Laws.

e. All Units are linked and operating on SAP ERP.

f. All Divisions (other than new Unit at Shimoga) continued to be certified for ISO 9001:2000 compliance and Yamunanagar Starch division is also certified for Operational HACCP Specification MI-H02.

6. Human Resources

Recruitment and Retention of human resource capital is a major challenge in India today, more so for smaller companies and at factory location.

In order to meet the strategic objective of profitable growth, following initiatives have been taken up and continued.

1. Structured training on Managerial Skill Development for Middle and Senior Management.


18


2. Development of leadership capabilities amongst Senior Management team, through training, exposure, job rotation etc.

3. Recruitment of young managers (including Management and Engineering trainees) as a corporate pool.

4. Induction of Senior Management professionals in critical gap areas.

7. Risks and Concerns

a. The company's risk profile is renewed bi-annually by a Risk Audit Committee comprising of three Board Members.

b. Both businesses are sensitive to energy prices due to high level of fuel intensiveness. Various energy conservation measures have been implemented and being implemented, to mitigate the impact of the rising energy cost.

c. The economic slowdown has resulted in supply exceeding demand in Starch business. Simultaneously, the entry of new players in the Clay market has created further competitive pressure. The company is focusing on exports and on new application development to reduce the impact of these external factors.

d. There is a public hostility on mining activity. The company is spending considerable effort in carrying out mining in a safe and environment friendly way, and in addition taking care of the needs of the community.

8. Corporate Social Responsibilities

a) The Company continued to pursue its agenda on social responsibility during the year. The Rain Water Harvesting scheme is working efficiently and the water stored in the reservoir is shared with surrounding villages.

b) The Company also regularly conducts Medical Camps for the villages around the various Mines and factories.

9. Statement of Caution

Representations and statements made under 'Management Discussions and Analysis' is based on

the projection and expectation on the basis of the present market conditions. Actual results may materially differ due to several factors which could influence the Company's business operations such as demand and supply conditions, prices of input, changes in Government levies and regulations, industrial relations and other economic developments in the country.


Auditors’ Report

Independent Auditors' Report

To the Members of EICL Limited (formerly known as English Indian Clays Limited)

Report on the Financial Statements

1. We have audited the accompanying financial statements of EICL Limited, (“the Company”), which comprise of the Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss and Statement of Cash Flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

2. Management is responsible for the preparation of these financial statements, that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 (“the Act”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

3. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from any material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

6. In our opinion and to the best of our information and

according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

ii) in the case of Statement of Profit and Loss, of the profit for the year ended on that date; and

iii) in the case of the Statement of Cash Flows, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

7. As required by the Companies (Auditor's Report) Order, 2003 (“the Order”) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

8. As required by Section 227(3) of the Act, we report that:

a. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

c. the financial statements dealt with by this report are in agreement with the books of account;

d. in our opinion, the financial statements comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Act; and

e. on the basis of written representations received from the directors, as on March 31, 2013 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act.

For Walker, Chandiok & CoChartered AccountantsFirm Registration No.: 001076N

Sd/-per Ashish GuptaPartner Membership No.: 504662

Place: GurgaonDate : May 03, 2013

19


Annexure to the Independent Auditors' Report of even date to the members of EICL Limited on the financial statements for the year ended March 31, 2013

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, we report that:

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) The Company has a regular program of physical verification of its fixed assets under which fixed assets are verified in a phased manner over a period of three years, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) In our opinion, a substantial part of fixed assets has not been disposed off during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year, except for goods-in-transit and stocks lying with third parties. For stocks lying with third parties at the year-end, written confirmations have been obtained by the management.

(b) The procedures for physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies between physical inventory and book records were noticed on physical verification.

(iii) (a) The Company has not granted any loan, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clauses 4(iii)(b) to 4(iii)(d) of the Order are not applicable.

(b) The Company has taken unsecured loans from three parties covered in the register maintained under Section 301 of the Act. The maximum amount outstanding during the year is ``₹22,865,000 and the year-end balance is ` 4,489,000.

(c) In our opinion, the rate of interest and other terms and conditions of loans taken by the Company are not, prima facie, prejudicial to the interest of the Company.

(d) In respect of loans taken, repayment of the principal amount and the interest is regular.

(iv) In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature

of its business for the purchase of inventory and fixed assets and for the sale of goods. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas.

(v) (a) In our opinion, the particulars of all contracts or arrangements that need to be entered into the register maintained under Section 301 of the Act have been so entered.

(b) In our opinion, the transactions made in pursuance of such contracts or arrangements and exceeding the value of ₹Rupees five lakhs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion, the Company has complied with the directives issued by the Reserve Bank of India, the provisions of Sections 58A and 58AA and other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 1975, as applicable, with regard to the deposits accepted from the public. According to the information and explanations given to us, no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal, in this regard.

(vii) In our opinion, the Company has an internal audit system commensurate with its size and the nature of its business.

(viii) According to the information and explanations given to us, the Companies (Cost Accounting Records) Rules, 2011 have become applicable to the Company during the current year and the said rules have not prescribed any specific formats for the cost statements relating to manufacturing operations. In terms with the clarification issued by the Ministry of Corporate Affairs, the Management believes that the records currently maintained by Company provide the information required under the said rules. We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Clause (d) of sub-section(1) of Section 209 of the Act in respect of Company’s manufacturing operations and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(ix) (a) Undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, sales-tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues, as applicable, have generally been regularly deposited with the appropriate authorities, though there has been slight delay in a few cases. Further, no undisputed amounts payable in respect thereof were outstanding at the year-end for a period of more than six months from the date they become payable.

Auditors’ Report

20


Name of the statute Nature of dues Amount (`) Amount paidunder the amount relates dispute is

protest (`) pending

Central Excise Act, 1944 Misclassification of 63,494,596 - April 1, 1997 to Central Excise and maize starch December 18, 2001 Service Tax Appellate

Tribunal, New Delhi

Central Excise Act, 1944 MODVAT claimed on 54,905,715 - Year 2000 to 2004 Central Excise and lubricant and transformer oil Service Tax Appellate

Tribunal, New Delhi

Central Excise Act, 1944 MODVAT claimed on 52,464,020 1,241,379 Year 2000 to 2004 Central Excise andlubricant and transformer oil Service Tax Appellate

Tribunal, New Delhi

Income Tax Act, 1961 Disallowance in respect of 21,765,100 - Assessment Year (AY) Commissioner of provision made towards a 2010-11 Income Tax (Appeals)gratuity fund

Income Tax Act, 1961 Disallowance in respect of 52,438,648 - AY 1997-98 and Commissioner of interest claimed on lease AY 1999 to 2002 Income Tax (Appeals)transactions

Income Tax Act, 1961 Disallowance in respect of AY 1997-98 Commissioner of interest claimed as Income Tax (Appeals)deductible expense

Period to which Forum where

Auditors’ Report

(b) The dues outstanding in respect of sales-tax, income-tax, custom duty, wealth-tax, excise duty, cess on account of any dispute, are as follows:

(x) In our opinion, the Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and the immediately preceding financial year.

(xi) The Company has not defaulted in repayment of dues to any bank or financial institution during the year. The Company did not have any outstanding debentures during the year.

(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause 4(xii) of the Order are not applicable.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society. Accordingly, provisions of clause 4(xiii) of the Order are not applicable.

(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable.

(xv) In our opinion, the terms and conditions on which the Company has given guarantee for loans taken by others from banks or financial institutions are not, prima facie, prejudicial to the interest of the Company.

(xvi) In our opinion, the Company has applied the term loans for the purpose for which these loans were obtained.

(xvii) In our opinion, no funds raised on short-term basis have been used for long-term investment by the Company.

(xviii) During the year, the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clause 4(xviii) of the Order are not applicable.

(xix) The Company has neither issued nor had any outstanding debentures during the year. Accordingly, the provisions of clause 4(xix) of the Order are not applicable.

(xx) The Company has not raised any money by public issues during the year. Accordingly, the provisions of clause 4(xx) of the Order are not applicable.

(xxi) No fraud on or by the Company has been noticed or reported during the period covered by our audit.

For Walker, Chandiok & Co

Chartered Accountants

Firm Registration No.: 001076N

Sd/-

per Ashish Gupta

Partner

Membership No.: 504662

Place: Gurgaon

Date : May 03, 2013

21


Balance Sheet as at Notes March 31, 2013 March 31, 2012`

EQUITY AND LIABILITIESShareholders’ funds

Share capital 2 400,552,026 400,552,026 Reserves and surplus 3 1,211,335,022 1,142,975,696

1,611,887,048 1,543,527,722Non current liabilitiesLong term borrowings 4 466,315,307 586,981,520 Deferred tax liabilities (net) 5 240,704,865 228,043,125 Other long term liabilities 6 14,169,385 13,892,863Long term provisions 7 29,486,271 18,610,660

750,675,828 847,528,168

Current liabilitiesShort term borrowings 8 522,819,559 505,177,602Trade payables 9 345,336,858 307,969,604 Other current liabilities 10 408,123,442 477,592,476 Short term provisions 11 53,006,840 54,925,724

1,329,286,699 1,345,665,406

TOTAL 3,691,849,575 3,736,721,296 ASSETSNon current assetsFixed assets 12 Tangible assets 2,457,429,265 2,430,538,224 Intangible assets 4,077,150 5,439,191 Capital work in progress 55,632,594 85,264,661 Non current investments 13 500,000 500,000 Long term loans and advances 14 56,175,465 80,992,990 Other non-current assets 15 3,156,000 5,411,028

2,576,970,474 2,608,146,094

Current assets

Inventories 16 457,399,975 425,428,310 Trade receivables 17 545,496,643 463,196,755 Cash and cash balances 18 22,514,411 56,190,042 Short term loans and advances 19 73,484,786 144,161,361 Other current assets 20 15,983,286 39,598,734

1,114,879,101 1,128,575,202

TOTAL 3,691,849,575 3,736,721,296

significant accounting policies 1

The accompanying notes are an integral part of the financial statements.This is the Balance Sheet referred to in our report of even date.

`

Summary of

Balance Sheet

For Walker, Chandiok & Co For and on behalf of the Board of Directors

Chartered Accountants Sd/- Sd/-

Sd/- Vijay Rai Ashish Gupta Managing Director and Chief Executive Officer Director

Partner Sd/- Sd/-S. K. Jain P. S. Saini

Place : Gurgaon Sr. Vice President Company Secretary & Head Corporate Legal Date : May 03 , 2013 Corporate Finance, Accounts & Administration

Dr. Venkatesh Padmanabhan

22


Profit & Loss Account

Statement of Profit & Loss for the year ended Notes March 31, 2013 March 31, 2012

` `

INCOME

Revenue from operations (gross) 21 4,369,324,223 3,901,358,749

Less: Excise duty 154,195,168 120,506,701

Revenue from operations (net) 4,215,129,055 3,780,852,048

Other income 22 63,085,751 20,432,550

Increase in inventories of finished goods and

work in progress 23 63,600,030 51,654,776

Total income 4,341,814,836 3,852,939,374

EXPENSES

Cost of materials consumed 1,793,468,750 1,583,948,266

Purchase of traded goods 49,593,040 48,942,079 Employee benefit expenses 24 441,997,703 362,528,753 Finance costs 25 192,981,259 190,633,548

Depreciation and amortisation expense 12 148,861,711 133,680,240

Other expenses 26 1,503,423,315 1,287,904,456

Total expenses 4,130,325,778 3,607,637,342

Profit before tax and exceptional items 211,489,058 245,302,032

Exceptional items 27 12,912,715 22,169,932

Profit before tax and after exceptional items 198,576,343 223,132,100

Tax expense:

- Current tax 59,632,000 4,9,601,383

- Tax earlier years 7,606,291 8,00,000

- Deferred tax 12,661,740 24,363,013

Profit for the year 118,676,312 148,367,704

Earnings per share: 28

-Basic 1.60 2.19

-Diluted 1.60 2.19

Summary of significant accounting policies 1

The accompanying notes are an integral part of the financial statements.This is the Statement of Profit & Loss referred to in our report of even date.

23








Statement of Cashflows

Statement of Cash Flows for the year ended March 31, 2013 March 31, 2012` `

A. Cash flow from operating activities:

Net profit before tax 198,576,343 223,132,100 Adjustments for:

Depreciation and amortisation 148,861,711 133,680,240

Interest expense 192,981,259 196,322,621

Interest income (5,833,796) (3,290,600)

Unrealised exchange fluctuation loss / (gain) 3,503,183 (1,593,957)

(Profit)/ Loss on sale of fixed assets (net) (53,326,925) 2,358,526

Debts/advances written off 3,102,863 176,088

Provision for bad & doubtful debts/advances 3,777,439 2,878,616

Liability no longer required written back (1,763,325) (5,394,103)

Amortisation of Government grant (267,818) (267,818)

Operating profit before working capital changes 489,610,934 548,001,713

Adjustments for changes in working capital :

- Movement in trade receivables (92,683,374) (4,247,476)

- Movement in other receivables (current and non current) 54,611,629 (17,666,256)

- Movement in inventories (31,971,665) (59,224,826)

-Movement in trade and other payables (current and non current) 47,382,082 779,655

Cash generated from operations 466,949,606 467,642,810

Direct taxes paid (26,355,819) (54,049,641)

Net cash generated from operating activities 440,593,787 413,593,169

B. Cash flow from investing activities:

Additions to fixed assets and capital work in progress (161,692,253) (365,609,094)

Proceeds from sale of fixed assets 98,276,562 6,390,040

Investment in fixed deposits with banks 7,235,381 11,864,271

Unpaid dividend accounts (23,202) 32,282

Interest received 6,472,163 2,932,759

Net cash used in investing activities (49,731,349) (344,389,742)

C. Cash flow from financing activities:

Proceeds from borrowings

- Receipts 100,000,000 427,535,000

- Payments (279,598,380) (358,329,620)

Repayment/(Proceeds) from public deposits (net) (1,961,000) 8,096,000

24


Statement of Cashflows

Statement of Cash Flows for the year ended March 31, 2013 March 31, 2012` `

Repayment of inter corporate deposits (25,000,000) 25,000,000

Proceeds from cash credits/working capital demand loan (net) 17,641,957 121,075,993

Interest paid (192,333,327) (194,671,748)

Dividends paid (32,976,742) (73,263,241)

Dividend taxes (5,353,426) (11,878,246)

Net cash used in financing activities (419,580,918) (56,435,862)

Net (decrease)/increase in cash and cash equivalents (28,718,480) 12,767,564

Cash and cash equivalents at the beginning of the year 39,394,705 26,627,140

Cash and cash equivalents at the end of the year 10,676,225 39,394,705

Cash and cash equivalents comprise

Cash [including cheques in hand of ` 431,011 (2011-12 : `1,166,409)] 1,699,521 2,232,410

Savings account with post office 272 272

Deposit accounts (other than pledged) 165,706 35,000,000

Balance with scheduled banks in current accounts 8,810,726 2,162,023

Total 10,676,225 39,394,705

Note :

Figures in parentheses indicate cash outflow.

This is the Statement of Cash Flows referred to in our report of even date.

25








1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. Background and nature of operations

EICL Limited (formerly known as English Indian Clays Limited), a Company incorporated in India in 1963, under the Companies Act, 1956, was part of the erstwhile Thapar Group. The Company is engaged in the business of mining of clay (kaolin) and manufacturing of processed clay, starch and allied products.

2. Basis of preparation

The financial statements have been prepared to comply with the Accounting Standards referred to in the Companies (Accounting Standards) Rule, 2006 issued by the Central Government in exercise of the power conferred under sub-section ( I ) (a) of section 642 and the relevant provisions of the Companies Act, 1956 (the 'Act'). The financial statements have been prepared under the historical cost convention on the accrual basis. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

3. Use of estimates

In preparing the Company's financial statements in conformity with the accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods.

4. Fixed assets

Fixed assets (other than those which have been revalued), including capital spares, leasehold improvements, technical know how costs and research and development assets are stated at cost. Cost includes direct expenses related to acquisition and installation and interest incurred during construction period.

The revalued fixed assets are restated at their estimated current replacement values as on the date of revaluation as determined by the approved valuers.

Intangible assets are recognised if it is probable that the future economic benefits attributable to the asset

Notes on Accounts

Notes to the financial statements for the year ended March 31, 2013

will flow to the enterprise and cost of the asset can be measured reliably in accordance with Accounting Standard – 26, 'Intangible Assets'.

Foreign currency loans availed for aquisition of fixed assets are converted at the rate prevailing on the due date for installments repayable during the year and at the rate prevailing on the date of Balance Sheet for the outstanding loan. The fluctuation is adjusted in the original cost of fixed assets.

5. Depreciation/Amortisation

a) Tangible fixed assets

Depreciation on fixed assets is provided as per straight line method at higher of the following:-

a) Depreciation on original cost as specified in Schedule XIV to the Companies Act, 1956 or

b) Depreciation on revalued value based on the residual life of the asset.*

* Since the list of the assets is too large, it is not practicable to give the individual depreciation rates for each of the assets.

In respect of additions and deletions, depreciation charge is restricted to the period of use. All assets costing 5,000 or less are fully depreciated in the year of addition.

Leasehold land and leasehold improvements are depreciated on a straight line method basis over the period of lease.

b) Intangible assets

Intangible assets including technical know-how/brand and computer software/ licence fee are amortised on straight line basis over their useful lives of 10 years and 5 years respectively from the date of acquisition / implementation. The amortisation period and method are reviewed at each year end.

6. Investments

Investments that are readily realisable and intended to be held for not more than one year are classified as current investments; all other investments are classified as long term investments. Long term investment is carried at cost less provision (if any) for decline in value which is other than temporary in nature. Current investments are carried at lower of cost and fair value.

26


Notes on Accounts

7. Impairment of assets

All assets other than inventories, investments and deferred tax asset are reviewed for impairment in accordance with the applicable accounting standard wherever events or changes in circumstances indicate that the carrying amount may not be recoverable. Assets where carrying value exceeds the recoverable amount are written down to the recoverable amount.

8. Inventories

Inventories, including stores and spare parts, raw materials (including clay matrix-mined and purchased), work in process and finished goods, are valued at lower of cost and net realisable value. Cost is ascertained on weighted average basis.

Total mining expenses except depreciation on fixed assets at mines are considered as raw material cost for clay matrix – mined. In respect of finished goods and work in progress, appropriate overheads are considered based on normal operating capacity. Cost of finished goods also includes excise duty if applicable.

9. Employees benefits

(a) Short term employee benefits

Short term employee benefits are recognised in the period during which the services have been rendered.

(b) Long term employee benefits

(i) Provident fund and employees state insurance schemes

All employees of the Company are entitled to receive benefits under the Provident Fund, which is a defined contribution plan. Both the employee and the employer make monthly contributions to the plan at a predetermined rate of the employees' basic salary. These contributions are made to the fund administered and managed by the Government of India and by an approved trust (to the extent employees covered under the trust) for this purpose. In addition, some employees of the Company are covered under the employees' state insurance schemes, which are also defined contribution schemes recognised and administered by the Government of India.

In respect of employees, the Company makes specified monthly contribution towards the employees' provident fund to the provident fund trust administered by the Company. The minimum interest payable by the provident fund

trust to the beneficiaries every year is notified by the Government. The Company has an obligation to make good the shortfall, if any, between the return on respective investments of the trust and the notified interest rate.

The contributions made to provident fund trust are charged to Statement of Profit and Loss as and when they become payable. In addition, the Company recognises liability for shortfall in the plan assets vis-à-vis the fund obligation, if any. The Guidance on implementing AS 15, Employee Benefits (revised 2005) issued by Accounting Standard Board (ASB) states that benefits involving employer established provident funds, which require interest shortfalls to be recompensed are to be considered as defined benefit plans. Pending the issuance of the guidance note from the Actuarial Society of India, the Company's actuary has expressed an inability to reliably measure provident fund liabilities. Accordingly, the Company is unable to exhibit the related information.

The Company's contributions to both these schemes are expensed in the Statement of profit and loss.

Superannuation plan - Some employees of the Company are entitled to superannuation, a defined contribution plan which is administered through Life Insurance Corporation of India (“LIC”). Superannuation benefits are recorded as an expense as incurred.

(ii) Gratuity

The Company provides for gratuity obligations through a defined benefit retirement plan (the 'gratuity plan') covering all employees. The gratuity plan provides a lump sum payment to vested employees at retirement or termination of employment based on the respective employees' salary and years of employment with the Company. The Company has taken gratuity policy with HDFC Insurance to cover the liability. The Company provides for the gratuity plan based on actuarial valuations in accordance with Accounting Standard 15 (revised).

Actuarial gains and losses are recognised as and when incurred.

(iii) Other employee benefits

Leave encashment–The Company has

27


Notes on Accounts

recognised liability for short term compensated absences on full cost basis with reference to unavailed earned leaves at the year end. To the extent, the compensated absences qualify as a long term benefit, the Company has provided for the long term liability at year end as per the actuarial valuation using the Projected Unit Credit Method.

10. Foreign currency transactions

i) Initial recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

ii) Conversion

Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.

iii) Exchange differences

Exchange differences arising on the settlement of monetary items or on restatement of the Company's monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expenses in the year in which they arise.

As per the amendment of the Companies (Accounting Standard) Rules, 2006 - 'AS 11' relating to 'The Effects of Changes in Foreign Exchange Rates' exchange difference arising on conversion of long term foreign currency monetary items is recorded under the head 'Foreign Currency Monetary Item Translation Difference Account' and is amortised over period not extending beyond, earlier of March 31, 2020 or maturity date of underlying long term foreign currency monetary items.

Obligations under forward exchange contracts are translated at contracted rates of exchange and the difference between the contracted rate and the exchange rate at the date of the transaction is recognised as income or expense over the life of the contract. Further exchange difference on such contracts i.e. difference between the exchange rate at the reporting/settlement date and the exchange rate

on the date of inception of contract/the last reporting date, is recognised as income/expense for the period.

11. Research & development expenses

Revenue expenditure incurred on research and development is charged to Statement of profit and loss in the year it is incurred. Capital expenditure is included in the respective heads under fixed assets and depreciation/amortisation thereon is charged to depreciation in the profit and loss account.

12. Government grant

Government grants relating to depreciable fixed assets are treated as deferred income and recognised in the Statement of profit and loss over the remaining useful life of the related assets.

13. Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

i) Revenue from sale of goods

a) Revenue from sale of goods is recognised when all the significant risks and rewards of ownership are transferred to the buyer and the Company retains no effective control of the goods transferred to a degree usually associated with ownership; and

b) No significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of goods.

ii) Interest

Interest income is recognised on a time proportion basis taking into account the amount outstanding and the interest rate applicable.

14. Borrowing costs

Borrowing costs are charged to revenue except in cases where costs relate to qualifying assets in which case such costs are capitalised as a part of cost of respective assets till the date they are put to their intended use.

15. Taxation

Tax expense for the year, comprising current tax and deferred tax is included in determining the net profit for the year. Provision for the current tax is made based on liability computed in accordance with the relevant tax rates and tax laws. Provision for deferred tax is made for all temporary timing differences

28


arising between the taxable income and accounting income at currently enacted tax rates. Deferred tax assets are recognised only if there is reasonable certainty that they will be realised and are reviewed for the appropriateness of their respective carrying values at each balance sheet date.

16. Segment accounting

The accounting policies applicable to the reportable segment are the same as those used in the preparation of the financial statements as set out above.

Segment revenue and expenses include amounts which are directly identifiable to the segment or allocable on a reasonable basis.

Segment assets include all operating assets used by the segment and consist primarily of debtors, inventories and fixed assets. Segment liabilities include all operating liabilities and consist primarily of creditors and statutory liabilities.

17. Earnings per share (EPS)

The earnings considered in ascertaining the Company's basic EPS comprises net profit after tax. The number of shares used in computing basic EPS is the weighted average number of shares outstanding during the year.

The earnings considered in ascertaining the Company's dilutive EPS comprises net profit after tax as adjusted for expenses or income that would result from the conversion of the dilutive potential equity shares. The number of shares used in computing diluted EPS is the weighted average number of shares outstanding during the period as adjusted for the effects of all dilutive potential equity shares.

18. Leases

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets during the lease term, are classified as operating leases. Operating lease payments are recognized as an expense in the Profit and Loss Account on a straight line basis over the lease term.

19. Mine restoration

The Company provides for the expenditure required to restore its mines based on technical and management's judgment on the future use of land and being reviewed annually.

20. Provisions and contingencies

The Company creates a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a

Notes on Accounts

reliable estimate can be made of the amount of obligation. A disclosure for a contingent liability is made where there is a possible obligation or a present obligation that may but probably will not require an outflow of resources. Disclosure is also made in respect of a present obligation that probably requires an outflow of resources, where it is not possible to make a reliable estimate of the related outflow. Possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company are also included in the disclosure of the contingent liability. Where there is a present obligation in respect of which the likelihood of outflow resources is remote, no provision or disclosure is made.

Contingent assets are not recognized in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognized in the period in which the change occurs.

29


2 SHARE CAPITAL

As at March 31, 2013 As at March 31, 2012Particulars Number ` Number

Authorised share capital

Equity shares of ` 2/- each 90,000,000 180,000,000 90,000,000 180,000,000

Preference shares of ` 100/- each 3,000,000 300,000,000 3,000,000 300,000,000

480,000,000 480,000,000

Issued, subscribed and fully paid up share capital

Equity shares of ` 2/- each 50,276,013 100,552,026 50,276,013 100,552,026

11% cumulative redeemable preference 3,000,000 300,000,000 3,000,000 300,000,000 shares of ` 100/- each

400,552,026 400,552,026

a) There is no movement in the equity share capital and preference share capital during the current year and the previous year.

b) Terms and rights attached to equity shares

The Company has only one class of equity shares having the par value of 2 per share. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees.

During the year ended March 31, 2013, the amount of per share dividend recognised as distributions to equity shareholders

was ` Nil (2011-12 : ` 0.30 per share) Dividend proposed by the Board of Directors subject to the approval of the

shareholders is 0.20 per share (2011-12: Nil per share).

In the event of liquidation of the Company, the holder of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

c) Terms and rights attached to preference shares

Preference shares carry a cumulative dividend of 11% p.a. Each holder of preference share is entitled to one vote per share only on resolutions placed before the Company which directly affect the rights attached to the cumulative preference shares. The Company declares and pays dividend in Indian Rupees.

During the year ended March 31, 2013, the amount of per share dividend recognised as distributions to preference

shareholders was 11.00 (2011-12 : 11.00 per share) of which dividend proposed by the Board of Directors subject to the

approval of the shareholders is 5.50 per share (2011-12 : 5.50 per share).

11% Cumulative redeemable preference shares are redeemable at par at the option of the Company not earlier than 18 months but not later than 5 years from the date of allotment/renewal September 04, 2011 and October 01, 2009 for

` 200,000,000 and 100,000,000 respectively, i.e. between March 04, 2013 to September 04, 2016 and March 31, 2011 to September 30, 2014 respectively.

`

Notes

30


Notes

d) Shares held by Holding Company

Equity shares

Particulars As at March 31, 2013 As at March 31, 2012Number ` Number `

DBH International Private Limited, 25,658,240 51,316,480 25,658,240 51,316,480Holding Company

Preference shares

Particulars As at March 31, 2013 As at March 31, 2012Number ` Number `

DBH International Private Limited, 2,000,000 200,000,000 2,000,000 200,000,000Holding Company

e) Aggregate number of bonus shares, equity shares issued for considerations other than cash and shares bought back during the period of five years immediately preceding the reporting period.

Particulars Year (aggregate No. of shares)

2011-2012 2010-2011 2009-2010 2008-2009 2007-2008

Equity Shares :

Fully paid up by way of bonus shares - 27,931,118 - - -

f) Details of shareholders holding more than 5% shares in the Company

As at March 31, 2013 As at March 31, 2012

Name of Shareholders No. of % of holding No. of % of holdingshares held shares held

Equity Shares :

DBH International Private Limited 25,658,240 51.03 % 25,658,240 51.03 %

Karun Carpets Private Limited 13,399,375 26.65 % 13,399,375 26.65 %

Lotus Global Investments Limited 2,993,544 5.95 % 2,993,544 5.95 %

11% Preference shares

DBH International Private Limited 2,000,000 66.67 % 2,000,000 66.67 %

Karun Carpets Private Limited 1,000,000 33.33 % 1,000,000 33.33 %

31


Notes

3 RESERVES AND SURPLUS

Capital reserves 633,688 633,688

Capital redemption reserve 44,137,764 44,137,764

General reserve

Balance at the beginning of the year 480,292,575 465,455,805

Add: Transferred from surplus in Statement of Profit and Loss 11,867,631 14,836,770for the year

Balance at the end of the year 492,160,206 480,292,575

Foreign currency monetary item translation difference account

Balance at the beginning of the year 72,013 -

Add: Amount recognised during the year - 82,920

Less: Amount amortised during the year - (10,907)Less: Amount capitalised during the year 72,013 -

Balance at the end of the year - 72,013

Surplus in Statement of Profit and Loss

Balance at the beginning of the year 617,839,656 540,191,761

Add: Profit for the year 118,676,312 148,367,704

Appropriations

Less : Proposed dividends

- Preference shares 16,500,000 16,500,000

- Equity shares 10,055,203 -

Less: Interim dividends

- Preference shares 16,500,000 16,500,000

- Equity shares - 15,082,804

Less: Corporate dividend tax 7,189,770 7,800,235

Less: Transfer to general reserve 11,867,631 14,836,770

Balance at the end of the year 674,403,364 617,839,656

Total 1,211,335,022 1,142,975,696

Particulars As at March 31, 2013 As at March 31, 2012` `

32


Notes

Notes:

a) Rupee term loan from banks comprises of:

(i) Loan of 250,000,000 taken from Axis Bank during the financial year 2010-11 and carries interest @ base rate+2.50% p.a. The loan is repayable in 16 equal quarterly installments starting from September 27, 2011.

(ii) Loan of 250,000,000 taken from State Bank of India during the financial year 2010-11 and carries interest @ base rate+2.25% p.a. The loan is repayable in 16 equal quarterly installments starting from October 28, 2011.

(iii) Loan of ` 200,000,000 taken from IndusInd Bank during the financial year 2011-12 and carries interest @ base rate+2.00% p.a. The loan is repayable in 12 equal quarterly installments starting from September 30, 2012.

(iv) Loan of ` 275,000,000 (including ECB of US$ 1,500,000) sanctioned by ICICI Bank of which loan of ` 100,000,000 taken from ICICI Bank during the financial year 2012-13 and carries interest @ base rate+2.75% p.a. The loan is repayable in 24 equal quarterly installments starting from February 14, 2014.

b) Loan of ` 275,000,000 (including ECB of US$ 1,500,000) sanctioned by ICICI Bank of which US$ 1,500,000 taken from ICICI Bank during the financial year 2011-12 and carries interest @ Libor+4.65% p.a. The loan is repayable in 28 quarterly installments starting from March 08, 2012.

c) All term loans from banks are secured by an equitable charge on all immovable properties of the Company, both present and future and are also secured by way of hypothecation of the Company's movable properties including movable plant and machinery, machinery spares, tools and accessories and other movables both present and future (save and except book debts) subject to prior charges created in favour of the Company's bankers on stocks of raw materials, consumable stores, finished goods, etc. for working capital facilities. The above charges rank pari-passu with charges created/to be created by the Company in favour of other term lending banks.

d) Deposits from public carry interest rate ranging from 9.00% to 10.50% p.a. and the same is repayble within a period of 1 to 3 years from the date of deposit as per the scheme opted by the deposit holder.

e) Current maturities of long term borrowings are disclosed under the head other current liabilities in note 10.

4 LONG TERM BORROWINGS

As at March 31, 2013 As at March 31, 2012Particulars ` `

Non current Current Non current Current

Secured

Term loans

Rupee term loan from banks (note a) 351,041,667 195,833,333 446,875,000 277,500,000

Foreign currency loans from banks (note b) 74,314,640 5,945,400 75,285,520 1,961,940

425,356,307 201,778,733 522,160,520 279,461,940

Unsecured

Public Deposits (note d)

From public 40,959,000 104,765,000 45,821,000 83,488,000

From related parties - 4,489,000 19,000,000 3,865,000

Other loans and advances

Intercorporate deposits - - - 25,000,000

40,959,000 109,254,000 64,821,000 112,353,000

Total 466,315,307 311,032,733 586,981,520 391,814,940

33


Notes

5 DEFERRED TAX LIABILITIES (NET)

Particulars ` `

Deferred tax liabilities

Fixed assets: Impact of difference between tax 266,125,187 252,559,769depreciation and depreciation charged for the financial year

Gross deferred tax liability 266,125,187 252,559,769

Deferred tax assets

Employee benefits 14,046,318 14,360,051

Provision for doubtful debts and advances 9,508,997 7,957,921

Tax impact of other expenses charged in the financial 1,865,007 2,198,672statement but allowable as deductions in future years under income-tax

Gross deferred tax assets 25,420,322 24,516,644

Deferred tax liabilities(net) 240,704,865 228,043,125

6 OTHER LONG TERM LIABILITIES


Deferred government grants 2,888,890 3,112,368

Deposits from employees 221,641 221,641

Deposits from vendors (note a) 6,583,854 5,983,854

Deposits from customers (note a) 4,475,000 4,575,000

Total 14,169,385 13,892,863

Notes:a) Deposits from vendors/customers are considered as long term in view of long term purpose and nature of deposits.

7 LONG TERM PROVISIONS


Provision for employee benefits

Gratuity (funded) 19,703,288 10,203,302Leave encashment (unfunded) 9,782,983 8,407,358

Total 29,486,271 18,610,660

As at March 31, 2013 As at March 31, 2012

34


Notes

8 SHORT TERM BORROWINGS

` `

Secured

Loans repayable on demand

From banks

Cash credit account with scheduled banks (note a and b) 92,819,559 155,177,602

Working capital demand loans (note a and b) 430,000,000 350,000,000

Total 522,819,559 505,177,602

Notes:

a) Cash credit and working capital demand loans along with guarantees and letters of credit facilities given by the banks are secured by hypothecation of finished goods, semi-finished goods, consumable stores and spares, raw material and book debts at Yamunanagar, Thiruvananthapuram and Shimoga factories and second pari passu charge on block of fixed assets of the Company.

b) Cash credit and working capital demand loans from banks comprises of the following:

(i) Cash credit of ` 300,000,000 sanctioned by Axis Bank is repayable on demand and carries interest rate at base rate+2.50% p.a. (including a sub-limit of 300,000,000 as working capital demand loan at base rate+1.25% p.a.).

(ii) Cash credit/working capital demand loan of ` 200,000,000 from State Bank of India is repayable on demand and carries interest rate at base rate+0.50% p.a. Working capital demand loan of 100,000,000 is availed at 10.75% p.a.

(iii) Cash credit/working capital demand loan of 100,000,000 from Yes Bank is repayable on demand and carries interest rate at base rate+2.25% p.a.

(iv) Cash credit/working capital demand loan of 150,000,000 from IndusInd Bank is repayable on demand and carries interest rate at base rate+2.25% p.a. Working capital demand loan of 125,000,000 is availed at 11.25% p.a.

(v) Cash credit/working capital demand loan of ` 100,000,000 sanctioned by ICICI Bank during the financial year 2012-13 is repayable on demand and carries interest @ base rate+2.75% p.a. Working capital demand loan of 55,000,000 is availed at @ base rate+2.35% p.a."

9 TRADE PAYABLES


Due to Micro, Small & Medium Enterprises * 5,713,807 3,621,322

Total outstanding dues to units other than Micro, 184,076,056 183,979,003 Small & Medium Enterprises

Creditors for expenses 155,546,995 120,369,279

Total 345,336,858 307,969,604

*The management has identified enterprises which have provided goods and services to the Company and which qualify under the definition of micro and small enterprises, as defined under Micro, Small and Medium Enterprises Development Act, 2006 (MSMEDA). Accordingly, the disclosure in respect of the amounts payable to such enterprises as at March 31, 2013 has been made in the financial statements based on information received and available with the Company. (Further in the view of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the MSMEDA is not expected to be material).

Particulars As at March 31, 2013 As at March 31, 2012

35


Notes

10 OTHER CURRENT LIABILITIES


Current maturities of long term borrowings (note 4) 311,032,733 391,814,940

Interest accrued but not due on borrowings 10,814,879 10,166,947

Unpaid dividends 2,228,469 2,205,211

Unclaimed matured public deposits 3,638,000 1,263,000

Employee related payables 24,310,490 20,747,034

Capital creditors 19,160,993 20,510,831

Advance from customers 7,820,724 4,325,961

Deferred government grants 223,478 267,818

Statutory dues

Excise duty payable 8,905,730 5,258,450

Provident fund payable 3,240,923 3,018,694

Sales tax payable 7,343,905 8,130,534

TDS payable 4,483,807 4,321,659

ESI payable 324,105 398,329

Other statutory dues 17,401 15,345

Other liabilities

Other payables 4,577,805 5,147,723

Total 408,123,442 477,592,476

11 SHORT TERM PROVISIONS


Provision for employee benefits

Gratuity payable - 12,517,014

Leave encashment payable 21,838,580 23,131,997

Others Proposed dividend (note a) 26,555,203 16,500,000 Provision for taxes on dividend 4,513,057 2,676,713 Provision for wealth tax 100,000 100,000

Total 53,006,840 54,925,724

Note:

a) Details with respect to proposed dividend:

Dividend proposed to:

- Equity shareholders 10,055,203 -

- Preference shareholders 16,500,000 16,500,000

Proposed dividend per share:

- Equity shareholders 0.20 -

- Preference shareholders 5.50 5.50

36


Notes12

FIX

ED

AS

SE

TS

(A

mou

nt i

n `)

For

th

e ye

ar e

nd

ed M

arch

31,

201

3

Par

ticu

lars

Gro

ss B

lock

Dep

reci

atio

n /

am

orti

zati

onN

et B

lock

Op

enin

gA

dd

itio

ns

Bor

row

ing

cost

Sal

e/U

pto

Up

toF

or t

he

Sal

e/U

pto

As

atA

s at

bal

ance

du

rin

g th

e ye

arca

pit

alis

edad

just

men

tsM

arch

31,

201

3M

arch

31,

201

2ye

arad

just

men

tsM

arch

31,

201

3M

arch

31,

201

3M

arch

31,

201

2T

angi

ble

ass

ets

Lan

d &

sit

e de

velo

pmen

t L

ease

hold

15,0

40

-

-

-

15,

040

15,

040

-

-

15,

040

-

-

Fre

ehol

d70

5,12

4,45

5 4

8,68

6,88

5 -

1

1,53

0,16

8 7

42,2

81,1

72

21,

293

-

-

21,

293

742

,259

,879

7

05,1

03,1

62

Fac

tory

and

oth

er b

uild

ings

471

,699

,195

3

5,89

2,72

1 -

3

,523

,229

5

04,0

68,6

87

74,

186,

171

23,

839,

032

316

,188

9

7,70

9,01

5 4

06,3

59,6

72

397

,513

,024

P

lant

and

mac

hine

ry2,

063,

181,

653

102

,350

,896

3

31,3

83

4,8

21,3

15

2,1

61,0

42,6

17

763

,506

,371

118

,159

,763

2

,992

,134

8

78,6

74,0

00

1,2

82,3

68,6

17

1,29

9,67

5,28

2 F

urni

ture

, fix

ture

s an

d 3

4,87

0,91

0 7

,932

,407

-

4

,888

,570

3

7,91

4,74

7 1

9,59

4,75

8 2

,757

,557

2

,493

,201

1

9,85

9,11

4 1

8,05

5,63

3 1

5,27

6,15

2 of

fice

equ

ipm

ent

Lea

seho

ld i

mpr

ovem

ents

6,2

50,0

00

-

-

-

6,2

50,0

00

5,7

75,2

72

2,1

3,62

4 -

5

,988

,896

2

61,1

04

4,7

4,72

8 V

ehic

les

and

cycl

es 2

2,68

2,41

8 1

,168

,976

-

7

,336

,765

1

6,51

4,62

9 1

0,18

6,54

2 1

8,72

,775

3

,669

,048

8

,390

,269

8

,124

,360

1

,24,

95,8

76

Tot

al t

angi

ble

ass

ets

3,3

03,8

23,6

71

196

,031

,885

3

31,3

83

32,

100,

047

3,4

68,0

86,8

92

873

,285

,447

146

,842

,751

9

,470

,571

1

,010

,657

,627

2

,457

,429

,265

2,

430,

538,

224

Inta

ngi

ble

ass

ets

Tec

hnic

al k

now

-how

/bra

nd67

,118

,471

-

-

-

6

7,11

8,47

1 6

7,11

8,47

1 -

-

6

7,11

8,47

1 -

-

C

ompu

ter

soft

war

e /

21,

678,

113

-

-

-

21,

678,

113

16,

238,

922

1,3

62,0

41

-

17,

600,

963

4,0

77,1

50

5,4

39,1

91

lice

nce

fees

Tot

al i

nta

ngi

ble

ass

ets

88,7

96,5

84

-

-

-

88,

796,

584

83,

357,

393

1,3

62,0

41

-

84,

719,

434

4,0

77,1

50

5,4

39,1

91

Tot

al

3,39

2,62

0,25

5 1

96,0

31,8

85

331

,383

3

2,10

0,04

7 3

,556

,883

,476

9

56,6

42,8

40 1

48,2

04,7

92

9,4

70,5

71

1,0

95,3

77,0

62

2,4

61,5

06,4

15

2,43

5,97

7,41

5 C

apit

al w

ork

in p

rogr

ess

--

--

--

--

-55

,632

,594

85,2

64,6

61

For

th

e ye

ar e

nd

ed M

arch

31,

201

2

(Am

ount

in

`)

P

arti

cula

rs

Gro

ss B

lock

Dep

reci

atio

n /

am

orti

zati

on

Net

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ck

Op

enin

gA

dd

itio

ns

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row

ing

cost

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e/U

pto

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toF

or t

he

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e/U

pto

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s at

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ance

du

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g th

e ye

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arch

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arch

31,

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d an

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te d

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ent

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0 1

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-

1

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0 -

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reeh

old

584

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1

38,3

45,4

20

540

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1

8,37

3,38

3 7

05,1

24,4

55

21,

293

-

-

21,

293

705

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,162

5

84,5

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75

Fac

tory

and

oth

er b

uild

ings

363

,217

,929

1

34,0

49,2

38

3,2

54,4

54

28,

822,

426

471

,699

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6

9,08

2,78

5 1

2,49

7,59

7 7

,394

,211

7

4,18

6,17

1 3

97,5

13,0

24

294

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,144

P

lant

and

mac

hine

ry 1

,779

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,730

2

93,1

62,8

73

6,4

66,1

40

15,

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090

2,0

63,1

81,6

53

663

,957

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112

,746

,447

13,

197,

662

763

,506

,371

1

,299

,675

,282

1

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,404

,144

F

urni

ture

, fix

ture

s an

d 3

1,10

1,62

5 6

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-

3

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3

4,87

0,91

0 1

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4,97

0 3

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2

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1

9,59

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8 1

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ents

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00

-

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icle

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4,9

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76

-

5,5

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35

22,

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172

2,1

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2,0

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61

10,

186,

542

12,

495,

876

13,

285,

305

Tot

al t

angi

ble

ass

ets

2,7

87,9

28,5

69

577

,405

,831

1

0,26

1,24

4 7

1,77

1,97

3 3

,303

,823

,671

7

68,0

65,0

83 1

30,5

29,4

81

25,3

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17

873

,285

,447

2

,430

,538

,224

2,

019,

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486

Inta

ngi

ble

ass

ets

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hnic

al k

now

-how

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and

67,1

18,4

71

-

-

-

67,

118,

471

67,

118,

471

-

-

67,

118,

471

-

-

Com

pute

r so

ftw

are

16,

720,

037

4,9

74,5

76

-

16,

500

21,

678,

113

13,

104,

662

3,1

50,7

59

16

,499

1

6,23

8,92

2 5

,439

,191

3

,615

,375

/

lice

nce

fees

Tot

al i

nta

ngi

ble

ass

ets

83,8

38,5

08

4,9

74,5

76

-

16,

500

88,

796,

584

80,

223,

133

3,1

50,7

59

16

,499

8

3,35

7,39

3 5

,439

,191

3

,615

,375

Tot

al

2,87

1,76

7,07

7 5

82,3

80,4

07

10,

261,

244

71,

788,

473

3,3

92,6

20,2

55

848

,288

,216

133

,680

,240

25,

325,

616

956

,642

,840

2,4

35,9

77,4

15 2

,023

,478

,861

Cap

ital

wor

k in

pro

gres

s-

--

--

--

--

85,2

64,6

6131

2,29

7,21

9

Not

es :

a)

Add

itio

ns t

o pl

ant

and

mac

hine

ry i

nclu

de a

ddit

ions

to

rese

arch

and

dev

elop

men

t as

sets

am

ount

ing

to `

3,3

35,2

00 (

2011

-12:

` 4

,104

,099

) an

d de

prec

iati

on c

harg

e fo

r th

e ye

ar i

nclu

des

` 2,

387,

906

(20

11-1

2: `

2,2

09,7

29)

on a

ccou

nt o

f re

sear

ch a

nd

deve

lopm

ent a

sset

s.b)

Pur

suan

t to

the

sale

cum

leas

e ag

reem

ent d

ated

May

22,

200

8, th

e C

ompa

ny h

as a

cqui

red

land

for t

he p

urpo

se o

f set

ting

up

a st

arch

man

ufac

turi

ng p

lant

at S

him

oga,

Kar

nata

ka. T

he C

ompa

ny h

as p

aid

an a

mou

nt o

f 5

3,13

0,00

0 as

all

otm

ent c

onsi

dera

tion

and

th

e la

nd s

hall

be

tran

sfer

red

in th

e na

me

of th

e C

ompa

ny o

n a

free

hold

bas

is a

t end

of 1

0 ye

ars,

pay

men

t of r

egis

trat

ion

char

ges,

sta

mp

duty

at p

reva

ilin

g pr

ice

upon

fulf

illm

ent o

f cer

tain

con

diti

ons.

As

per a

gree

men

t the

land

has

bee

n tr

ansf

erre

d on

leas

e ba

sis

to C

ompa

ny fo

r the

per

iod

of 1

0 ye

ars

and

Com

pany

is re

quir

ed to

pay

leas

e re

nt o

f

68,

410

and

mai

nten

ance

cha

rges

of

9

9,60

0 pe

r ann

um.

c)C

apit

al w

ork

in p

rogr

ess

incl

ude

borr

owin

g co

st

Nil

(201

1-12

: 3

31,3

83).

d)A

djus

tmen

ts in

clud

e fi

xed

asse

ts h

eld

for

sale

rep

rese

nt la

nd a

nd b

uild

ings

of

gros

s boo

k va

lue

15,

053,

397

(201

1-12

: 1

5,05

3,39

7) a

nd n

et b

ook

valu

e

14,

737,

209

(20

11-1

2:

14,

813,

599)

loca

ted

at K

olla

m u

nit,

whi

ch m

anag

emen

t int

ends

to d

ives

t w

ithi

n th

e ne

xt 1

2 m

onth

s at

am

ount

s eq

ual t

o or

exc

eedi

ng th

e as

set c

arry

ing

valu

es a

t the

resp

ecti

ve B

alan

ce S

heet

dat

es.

e)A

ddit

ions

to fa

ctor

y an

d ot

her b

uild

ings

incl

udes

1

,960

,760

and

add

itio

ns to

pla

nt a

nd m

achi

nery

incl

udes

3

,078

,187

on

acco

unt o

f cap

ital

isat

ion

of fo

reig

n ex

chan

ge fl

uctu

atio

n of

long

term

bor

row

ings

.f)

Dep

reci

atio

n fo

r the

yea

r exc

lude

s de

prec

iati

on a

mou

ntin

g 6

56,9

19 o

n as

sets

hel

d fo

r sal

e (P

uduc

herr

y U

nit)

.

37


Notes

13 NON CURRENT INVESTMENT


Trade investments (valued at cost unless otherwise stated)Investment in equity instruments 500,000 500,000

Total 500,000 500,000

Details of trade investments (unquoted)

Name of the body corporate No. of Shares Face Partly Paid/ Amout (`) Amount (`)

Value(`) Fully paid

1 2 3 4 5 6

March 31, March 31, March 31, March 31,

2013 2012 2013 2012

Equity

Kerala Enviro Infrastructures Limited 50,000 50,000 10 Fully paid 500,000 500,000

50,000 50,000 500,000 500,000

14 LONG TERM LOANS AND ADVANCES


Secured, considered good

Capital advances (note a) - 4,850,729

Unsecured, considered good

Capital advances 3,614,611 12,267,140

Security deposits 26,681,230 30,586,285

Loans and advances to related parties (note b) 200,000 5,200,000


Amounts paid under protest recoverable 20,599,741 20,599,741

Others 5,079,883 7,489,095

Unsecured, considered doubtful

Amounts paid under protest 15,365,255 15,365,255

Less: Provision for doubtful advances (15,365,255) (15,365,255)

Total 56,175,465 80,992,990

Notes:a) Capital advances are secured by way of bank guarantees received from the supplier of equipments/ services relating

to capital jobs.

b) Amounts due from related parties:

- DBH International Private Limited - 5,000,000

- Bharat Starch Products Limited 200,000 200,000

38


15 OTHER NON CURRENT ASSETS


Deposit with maturity more than twelve months - 775,000

Margin money (note a) 3,156,000 3,318,528 Pledged deposits (note b) - 1,317,500

Total 3,156,000 5,411,028 Notes:(a) Margin money deposits are pledged with banks for issuance of bank guarantees and letter of credits.(b) Pledged deposits include deposits pledged with government authorities.

16 INVENTORIES


Raw materials 127,883,795 184,752,314

Work in progress 32,513,699 20,866,936

Finished goods 166,339,598 114,386,331

Stores and spares [including goods in transit of 130,662,883 105,422,729` 256,618 (2011-12:` 694,000)]

Total 457,399,975 425,428,310

17 TRADE RECEIVABLES


Trade receivables outstanding for a period less than six months from the date they are due for payment

Secured, considered good 4,217,233 7,320,570

Unsecured, considered good 531,550,185 447,188,140

535,767,418 454,508,710 Trade receivables outstanding for a period exceeding six months from the date they are due for paymentSecured, considered good 142,798 39,790Unsecured, considered good 9,586,427 8,648,255 Unsecured, considered doubtful 12,610,612 9,162,163 Less: Provision for doubtful debts (Note a) (12,610,612) (9,162,163)

9,729,225 8,688,045

Total 545,496,643 463,196,755

Note:

a) Out of this ` 328,990 (2011-12: ` 2,500,000) have been recovered during the current year and therefore the provision has been written back.

Notes

39


18 CASH AND BANK BALANCES

Particulars As at March 31, 2013 As at March 31, 2012` ``

Cash and cash equivalents

Cash in hand 1,268,510 1,066,001

Cheques in hand 431,011 1,166,409

Post office savings deposits 272 272

Current accounts 8,810,726 2,162,023

Demand deposits with original maturity of less than three months 165,706 35,000,000

10,676,225 39,394,705

Other bank balances

Deposit with original maturity more than three months but 2,769,284 10,810,632less than twelve months

Margin money (note a) 6,493,602 2,304,690

Pledged deposits (note b) 285,283 1,413,200

Unpaid dividend accounts 2,290,017 2,266,815

11,838,186 16,795,337

Total 22,514,411 56,190,042

Notes:

a) Margin money deposits are pledged with bank for issuance of bank guarantees and letter of credits.

b) Pledged deposits include deposits pledged with government authorities.

19 SHORT TERM LOANS AND ADVANCES



Advances to vendors 11,800,220 9,115,599

Loans and advances to related parties (note a) 1,306,500 1,725,436


- Advance income tax [net of provision ` 258,245,250 955,917 41,838,388

(2011-12 : ` 191,006,960)]

- Deposits with excise & other tax authorities 45,617,267 64,218,389

- Prepaid expenses 10,144,081 10,464,119

- Others (note b) 3,660,801 16,799,430

Total 73,484,786 144,161,361

Notes:

a) Amounts due from related parties:

- Premium Transmission Limited 1,306,500 1,725,436

b) Includes insurance claim receivable ` Nil (2011-12 : 10,946,435) with respect to damaged inventory. `

Notes

40


20 OTHER CURRENT ASSETS



Fixed assets held for sale (note a and b) 14,737,209 37,714,290

Interest receivable 1,246,077 1,884,444

Total 15,983,286 39,598,734

Notes:

a) Fixed assets held for sale represent land and buildings of gross book value 15,053,397 (2011-12 : ) and net book value 14,737,209 (2011-12 : 14,813,599) located at Kollam unit, which management intends to divest within the next 12 months at amounts equal to or exceeding the asset carrying values at the respective Balance Sheet dates.

b) Previous year fixed assets held for sale represent land and buildings of gross book value 45,092,126 (net book value 37,714,290) located at Puducherry unit.

21 REVENUE FROM OPERATIONS

Particulars Year ended March 31, 2013 Year ended March 31, 2012` `

Sale of products 4,352,395,670 3,880,495,800

Other operating revenues

- Sale of scrap 16,928,553 20,862,949

Total 4,369,324,223 3,901,358,749

Details of products sold:


Clay products 2,318,455,794 2,019,581,913

Starch and allied products 1,763,226,793 1,642,887,725

By products & others 287,641,636 238,889,111

Total 4,369,324,223 3,901,358,749

22 OTHER INCOME


Government grants 267,818 267,818

Other income 1,481,377 11,480,029 Net gain on sale of fixed assets (Note a) 53,326,925 -

Exchange fluctuation (net) 412,510 -

Interest Income 5,833,796 3,290,600

Liabilities no longer required written back 1,763,325 5,394,103

Total 63,085,751 20,432,550

Note :

a) Includes ` 59,690,000 gain on sale of land of Puducherry unit.

` ` `15,053,397

Notes

41


23 INCREASE IN INVENTORY OF FINISHED GOODS AND WORK IN PROGRESS

Particulars` `

Opening stock

Finished goods 114,386,331 51,761,310

Stock in process 20,866,936 31,837,181

Total 135,253,267 83,598,491

Closing stock

Finished goods 166,339,598 114,386,331

Stock in process 32,513,699 20,866,936

Total 198,853,297 135,253,267

Increase in inventory of finished goods and work-in-progress 63,600,030 51,654,776

Details of inventory:


Finished goods

Clay products 72,357,713 58,268,815

Starch and allied products 89,842,869 54,071,805

By products & others 4,139,016 2,045,711

Total 166,339,598 114,386,331

Stock in process

Clay products 6,499,440 4,115,439

Starch and allied products 25,093,367 16,546,051

By products & others 920,892 205,446

Total 32,513,699 20,866,936

24 EMPLOYEE BENEFIT EXPENSES


Salaries, wages and bonus 397,527,836 324,489,304

Contribution to provident and other funds 17,659,886 16,039,920

Gratuity expense (note a) 3,369,402 5,409,785

Staff welfare expenses 24,250,985 22,580,266

442,808,109 368,519,275

Less: Amount capitalised during the year 810,406 5,990,522

Total 441,997,703 362,528,753 Notes:

a) Net of amount recovered from related parties 108,600 (2011-12 : .

b) Employee benefit expenses includes research and development expenses (note 41).

Year ended March 31, 2013 Year ended March 31, 2012

` ` 113,772)

Notes

42


25 FINANCE COSTS

Particulars` `

Interest expense (note a) - On fixed period loans 86,984,239 112,381,554 - Others 105,997,020 83,941,067Less: Interest capitalised - (5,678,166)

192,981,259 190,644,455

Amortisation of foreign currency monetary item - (10,907)translation difference accountTotal 192,981,259 190,633,548

Note: a) Interest expense includes amount paid or payable to directors ` Nil (2011-12: ` 58,004 )

26 OTHER EXPENSES


a) Manufacturing expensesStores consumed 50,138,687 41,257,336Power and fuel 964,431,782 811,506,265 Repairs and maintenance- Plant & machinery 88,217,369 85,161,338 - Factory buildings 9,491,458 6,097,342 - Others 14,094,162 14,093,208 Other manufacturing expenses 59,999,389 52,490,686 Royalty 8,251,075 8,447,400Increase in excise duty on finished goods 4,057,309 2,494,408

Total (A) 1,198,681,231 1,021,547,983 b) Administration expenses

Rent 21,913,800 19,007,150 Rates & taxes 13,376,360 8,601,625Insurance 6,834,116 6,529,306Exchange fluctuation (net) - 995,072Directors' sitting fees 797,170 620,000Office & other expenses (note a) 79,022,499 69,331,492Payment to auditors (note 29) 3,568,838 3,657,208Travelling & conveyance 35,245,222 30,431,952Charity & donation 1,336,550 1,317,300Bad debts/advances written off (net) 3,102,863 176,088Provisions for doubtful debts/advances 3,777,439 2,878,616Other financing charges 5,343,090 5,306,668 Loss on sale/write off of fixed assets - 2,358,526

Total (B) 174,317,947 151,211,003c) Selling and distribution expenses

Packing & forwarding expenses 54,130,929 37,085,087 Commission to selling agents and others 27,327,170 39,052,512Cash discount 11,943,419 12,034,419Other selling expenses 37,022,619 27,973,452Total (C) 130,424,137 115,145,470

Total (A+B+C) 1,503,423,315 1,287,904,456Note:

a) Office and other expenses includes research and development expenses (note 41)

Year ended March 31, 2013 Year ended March 31, 2012

Notes

43


27 EXCEPTIONAL ITEMS

Exceptional items pertains to expenses incurred on settlement of workers/ staff amounting to ` 12,912,715 related to Kollam unit of the Company (2011-12: ` 22,169,932) arising from the closure of Puducherry operations w.e.f October 10, 2011.

28 EARNINGS PER SHARE

Particulars Year ended March 31, 2013 Year ended March 31, 2012

a) Weighted average number of equity shares

Number of equity shares at the beginning of the year 50,276,013 50,276,013

Net profit after tax (`) 118,676,312 148,367,704

Less : Dividend on 11% cumulative redeemable 38,480,888 38,353,425 preference shares (including tax) (`)

Net profit after tax available to equity shareholders (`) 80,195,424 110,014,279

b) Potential number of equity shares at the end of the year

Total number of equity shares as per (a) above 50,276,013 50,276,013 Number of equity shares deemed converted at the - 2,430,290 beginning of the year Potential dilutive shares 50,276,013 52,706,303

c) Net profit after tax available for potential equity shareholders

Net profit after tax available to equity shareholders (`) 80,195,424 110,014,279 Income on dilutive potential equity shares (net of tax) (`) - 7,846,766

80,195,424 117,861,045

d) Basic EPS (`) 1.60 2.19

e) Diluted EPS (`) 1.60 2.19

f) Nominal value of equity share (`) 2 2

29 AMOUNT PAID / PAYABLE TO AUDITORS

As auditors 2,880,000 2,640,000 For other matters 160,000 360,000 For reimbursement of expenses 528,838 657,208

Total 3,568,838 3,657,208

30 EMPLOYEE BENEFITS

During the year, the Company has recognised the following amounts in the Statement of Profit and Loss :

Defined contribution plans

Employer’s contribution to provident fund * 17,463,776 15,648,697Employer’s contribution to superannuation fund * 196,110 265,635Employer’s contribution to ESI** 2,752,135 2,479,743

* Included in contribution to provident and other funds ** Included in welfare expenses

Defined benefit plans

Company has defined benefit plan in terms of gratuity.

a. The assumptions used to determine the gratuity benefit obligations are as follows :

Discount rate 8.00% 8.50%Expected rate of increase in compensation levels 7.50% 9.00%Rate of return on plan assets 8.70% 8.60%

Notes

44


b. Reconciliation of opening and closing balances of benefit obligations:


Projected benefit obligation 96,465,296 Current service cost 7,142,609 6,781,708 Interest cost 8,199,550 7,826,013 Benefits paid (12,038,534) (10,501,823)Actuarial gain (5,754,100) (5,465,770)

Projected benefit obligation 94,014,821 96,465,296

c. Reconciliation of fair value of plan assets :-

Fair value of plan assets at the beginning of the year 73,744,980 69,446,621 Expected return on plan assets 6,342,068 5,555,730Contributions 7,500,000 10,000,000 Benefits paid (13,043,504) (9,320,035)Actuarial loss on plan assets (232,011) (1,937,336)

Fair value of plan assets at the end of the year 74,311,533 73,744,980

d. Gratuity expense recognised in the Statement of Profit and Loss

Current service cost 7,142,609 6,781,708Expected return on plan assets (6,342,068) (5,555,730)Interest cost 8,199,550 7,826,013 Actuarial gain (5,522,089) (3,528,434)

Total 3,478,002 5,523,557

e. Amounts for the current and previous years are as follows:

Particulars 2012-13 2011-12 2010-11 2009-10 2008-09 ` ` ` ` `

Defined benefit plan-GratuityDefined benefit obligation (94,014,821) (96,465,296) (97,825,168) (90,851,422) (82,742,742)Plan assets 74,311,533 73,744,980 69,446,621 46,424,275 -

Surplus / (deficit) (19,703,288) (22,720,316) (28,378,547) (44,427,147) (82,742,742)

31 LEASE COMMITMENTS:

The Company has entered into leasing arrangements for office buildings and godown for storage of inventory that are cancelable at the option of the Company. Rent expense on account of cancelable leases for the year ended March 31, 2013 amounts to 21,913,800 (2011-12 : 19,007,150).

32 SEGMENT INFORMATION

A. Primary segment reporting (by business segments)

i. Composition of business segments

The Company’s business segments are organised as under:

Clay products: Segment manufactures and supplies the clay products to various industries like paper, paint, rubber and fiberglass etc.

Starch products: Segment comprising starch/specialty starch, syrups and modified starch, manufactures and supplies the starch products to various industries like paper, textile, food and pharma, etc.

97,825,168

Notes

45


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Notes

46


33. In accordance with the required Accounting Standard (AS-18) on related party disclosures where control exist and where transactions have taken place and description of the relationship as identified and certified by management are as follows:

A. Holding Company

DBH International Private Limited

B. Associates

Enterprises which have significant influence over the Company:

Karun Carpets Private Limited

C. Enterprises over which substantial shareholders of the Company and their relatives, have significant influence:Greaves Cotton LimitedPremium Transmission LimitedPembril Industrial & Engineering Co. Private LimitedGreaves Leasing Finance LimitedDee Greaves LimitedBharat Starch Products LimitedAravali Sports & Cultural FoundationDBH Consulting LimitedDBH Investments Private LimitedGreaves Farymann Diesel GmbHGreaves Auto LimitedGreaves Cotton Netherlands B.V.

D. Key management personnel & their relatives

Mr. Karan Thapar – Chairman

Ms. Devika Thapar (Daughter of Mr. Karan Thapar)

Mr. Karam Thapar (Son of Mr. Karan Thapar)

Mr. B M Thapar (Father of Mr. Karan Thapar)

Ms. Sulochna Thapar (Mother of Mr. Karan Thapar)

Dr. Venkatesh Padmanabhan (Managing Director and Chief Executive Officer)

Mr. Rahul Gupta (Executive Director) (upto December 31, 2012)

Mr. S.K. Jain (Sr. Vice President Corporate Finance, Accounts & Administration)

Mr. P.S. Saini (Company Secretary & Head Corporate Legal)

Notes

47


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-

-

-

-

7

,808

,355

8

,304

,600

7

,808

,355

8

,304

,600

D

r. V

enka

tesh

Pad

man

abha

n -

-

-

-

-

-

5

83,6

66

-

583

,666

-

Oth

er e

xpen

ses

Ara

vali

Spo

rts

& C

ultu

ral

Fou

ndat

ion

--

-

-75

0,00

01,

000,

000

--

750,

000

1,00

0,00

0 M

rs. S

uloc

hana

Tha

par

--

--

--

78,7

271,

771,

782

78,7

271,

771,

782

Mr.

Kar

am T

hapa

r-

--

--

-14

5,95

510

2,34

314

5,95

510

2,34

3 M

s. D

evik

a T

hapa

r -

--

--

-27

4,39

127

8,94

027

4,39

127

8,94

0 M

r. R

ahul

Gup

ta-

--

--

--

58,0

04-

58,0

04

Notes

48


b) Outstanding balances :


1. Holding company DBH International Private Limited - 5,000,000

DBH International Private Limited (5,769,372) (17,942,092)

2. Associates which have significant influence over the Company

Karun Carpets Private Limited - (929,648)

3. Enterprises over which substantial shareholders and their relatives have significant influence

Bharat Starch Products Limited 200,000 200,000

Premium Transmission Limited 1,306,500 1,725,436

4. Key management personnel & their relatives

Mr. Karan Thapar (1,633,758) (2,385,142)

Ms. Sulochana Thapar - (19,000,000)

Mr. Karam Thapar (2,288,000) (1,000,000)

Ms. Devika Thapar (2,201,000) (2,865,000)

Note:

Figures in parentheses denote credit balances

34 DETAILS OF RAW MATERIAL AND COMPONENTS CONSUMED


Clay matrix (note a) 193,430,659 190,427,294

Maize 941,534,270 866,304,959

Maize starch 234,889,251 131,134,846

Tapioca starch 36,887,218 56,008,494

Others 386,727,352 340,072,673

Total 1,793,468,750 1,583,948,266

Note: a) Clay matrix cost is inclusive of clay mining expenses.

35 VALUE OF IMPORTS ON C.I.F BASIS :


Raw material 13,802,464 16,043,131

Stores and spare parts 46,055,884 32,181,698

Capital goods 2,365,730 3,297,937

Total 62,224,078 51,522,766

Notes

49


36

EA

RN

ING

S I

N F

OR

EIG

N E

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AL

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. BA

SIS

:

Yea

r en

ded

Mar

ch 3

1, 2

013

Yea

r en

ded

Mar

ch 3

1, 2

012

Am

oun

t (`

)A

mou

nt

(`)

Exp

ort

of:

Cla

y pr

oduc

ts24

6,58

2,6

97

208,

178,

467

Sta

rch

and

alli

ed p

rodu

cts

33,8

18,2

95 3

4,44

3,57

2

By

Pro

duct

s-

10,

572,

000

280,

400,

992

253,

194,

039

37

EX

PE

ND

ITU

RE

IN

FO

RE

IGN

CU

RR

EN

CY

(C

AS

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AS

IS)

Yea

r en

ded

Mar

ch 3

1, 2

013

Yea

r en

ded

Mar

ch 3

1, 2

012

Am

oun

t (`

)A

mou

nt

(`)

Com

mis

sion

3,10

5,41

6 1

,616

,160

Tra

vell

ing

1,06

3,65

3

1,41

1,81

5

Con

sult

ancy

1,04

7,0

56 2

,799

,171

Oth

ers

192,

767

339

,848

5,40

8,89

26,

166,

994

38P

AR

TIC

UL

AR

S O

F U

NH

ED

GE

D F

OR

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N C

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Par

ticu

lars

As

at M

arch

31,

201

3 A

s at

Mar

ch 3

1, 2

012

Am

ount

(U

S$)

Am

oun

t (`

)A

mou

nt (

US

$)

Am

ount

(`)

- T

rade

rec

eiva

bles

543,

605

29,2

62,2

38

105

,837

5

,379

,695

- T

rade

pay

able

s(1

56,0

86)

(8,5

92,5

22)

(19

,950

) (

1,03

0,01

9)

- F

orei

gn c

urre

ncy

loan

s (

1,45

8,00

0)(8

0,26

2,90

0) (

1,49

6,00

0) (

77,2

38,4

80)

(1,0

70,4

81)

(59

,593

,184

) (

1,41

0,11

3) (

72,8

88,8

04)

39

IND

EG

EN

OU

S A

ND

IM

PO

RT

ED

CO

NS

UM

PT

ION

:

Ind

igen

ous

Imp

orte

d

Tot

al

Val

ue

Val

ue

Val

ue

Am

oun

t (`

)%

Am

oun

t (`

)%

Am

oun

t (`

)R

aw m

ater

ial(

s)20

12-1

31,

786,

308,

580

99.6

0%7,

160,

170

0.40

%1,

793,

468,

750

2011

-12

1,57

8,54

2,60

599

.66%

5,4

05,6

61

0.34

%1,

583,

948,

266

Sto

res

& S

par

e p

arts

2012

-13

418,

771,

311

89.9

1%47

,008

,224

10.0

9%46

5,77

9,53

5 20

11-1

237

0,01

3,22

691

.90%

32,5

93,4

668.

10%

402,

606,

692

Notes

50


Notes

40 CONTINGENT LIABILITIES AND COMMITMENTS

1) Contingent liabilities

Particulars As at March 31, 2013 As at March 31, 2012 `

a) Outstanding bank guarantees and letter of credits 41,649,453 23,257,609

b) Bills and cheques discounted - 155,141,766

c) Excise & sales tax matters:

i) Demand received from Commissioner of Central Excise, Panchkula on 63,494,596 63,494,596 account of misclassification of plain maize starch against which stay has been granted by CESTAT, New Delhi (including penalty of 31,747,298;

(2011-12: ` 31,747,298) against which an amount of ` 507,000 (2011-12 : 507,000) deposited under protest (note 3(a))

.ii) Haryana Local Area Development Tax levied by the State Government 3,216,191 3,216,191 on the goods received from other state, pending before Hon’ble Supreme

Court of India against which an amount of ` 3,216,191 (2011-12: ` 3,216,191) deposited under protest.

iii) Entry tax levied by the Government of Kerala on Special Kerosene Oil 15,133,588 15,133,588 (SKO), pending before Hon’ble Supreme Court of India against which an

amount of 15,133,588 (2011-12 : 15,133,588) deposited under protest.

d) Income tax matters (note3(b)) 74,203,748 15,421,684

Based on the above, the management is of the opinion that the appeals will be allowed in favour of the Company and hence no provision is required for the above.

2) Estimated amounts of contracts remaining to be executed on capital account (net of advances) ` 18,268,305 (2011-12: ` 54, 185,183).

3) Contingent liabilities with respect to excise and sales tax matters referred in paragraph 1 (c) above excludes demands aggregating ` 107,369,734 for the year 2000 to 2004 relating to inputs used in manufacturing of excisable and as well as exempted goods and cenvat credit of service tax, pending with Central Excise and Service Tax Appellate Tribunal (CESTAT) were set aside and remitted to the relevant authorities for a fresh decision and revision in demand. Consequently amount deposited under protest amounting to ` 1,241,379 have been considered good and recoverable and no provision for the same has been considered necessary. Further, till the time demands are received by the Company amounts of contingent liabilities, if any, is not ascertainable.

41 RESEARCH AND DEVELOPMENT EXPENSES :

Particulars Year ended March 31, 2013 Year endedMarch 31, 2012 ` `

Employee benefit expenses 9,930,241 12,280,535Office and other expenses 6,884,676 6,916,399

42 CHANGE OF NAME

With effect from June 27, 2012, the name of the Company, was changed from English Indian Clays Limited to EICL Limited

43 Previous year figures

Previous year figures have been re-grouped/recast, wherever necessary to confirm the current year classification.

`

51








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