nagarjuna information systems limited - Nagarjuna Fertilizers

NAGARJUNA OIL CORPORATION LIMITED 

AUDITOR’S REPORT 

The Members of 


1. We have audited the attached Balance Sheet of Nagarjuna Oil Corporation Ltd, as at 

31 st March, 2007, Expenditure Pending Allocation Account of the company and also 

the cash flow statement for the year ended on that date annexed thereto. These 

financial statements are the responsibility of the company’s management. Our 

responsibility is to express an opinion on these financial statements based on our 

audit. 

2. We conducted our audit in accordance with the auditing standards generally accepted 

in India. These standards require that we plan and perform the audit to obtain 

reasonable assurance about whether the financial statements are free of material 

misstatement. An audit includes examining, on a test basis, evidence supporting the 

amounts and disclosures in the financial statements. An audit also includes assessing 

the accounting principles used and significant estimates made by management, as well 

as evaluating the overall financial statement presentation. We believe that our audit 

provides a reasonable basis for our opinion. 

3. As required by the Companies (Auditor’s Report) Order, 2003 as amended by 

Companies (Auditors’ Report) Order (Amendment) 2004, issued by the Central 

Government of India in terms of sub-section (4A) of section 227 of the Companies 

Act, 1956, we enclose in the Annexure a statement on the matters specified in 

paragraphs 4 and 5 of the said Order. 

4. Further to our comments in the Annexure referred to above, we report that: 

i) We have obtained all the information and explanations, which to the best of 

our knowledge and belief were necessary for the purposes of our audit; 

ii) 

iii) 

iv) 

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; 

The Balance Sheet, Expenditure Pending Allocation Account and the cash 

flow statement dealt with by this report is in agreement with the books of 

account; 

In our opinion, the Balance Sheet, Expenditure Pending Allocation Account 

and the cash flow statement dealt with by this report complies with the 

applicable Accounting standards referred to in sub-section (3C) of section 211 

of the Companies Act, 1956;


v) On the basis of written representations received from the directors, as on 31 st 

March, 2007 and taken on record by the Board of Directors, we report that 

none of the directors is disqualified as on 31 st March, 2007 from being 

appointed as a director in terms of clause (g) of sub-section (1) of section 274 

of the Companies Act, 1956; 

vi) 

We draw attention to Note 3 under Schedule 9 to the Financial Statements: 

Financial Statements for the year are drawn up on a going concern basis on 

considering the developments in the financial closure (equity and debt tie up) 

and management’s perception of operational and commercial viability of the 

project. 

vii) 

In our opinion and to the best of our information and according to the 

explanations given to us, the said accounts read together with other notes 

thereon and Significant Accounting Policies give the information required by 

the Companies Act, 1956, 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 31 st March, 2007; 

ii) 

iii) 

in the case of the Expenditure Pending Allocation Account, of the 

expenditure for the year ended on that date; 

in the case of the cash flow statement, of the cash flows for the year 

ended on that date. 

for M. BHASKARA RAO & Co. 

CHARTERED ACCOUNTANTS 

Sd/- 

K MURALIDHAR 

Partner 

MEMBERSHIP NO.201570 

Place: Hyderabad. 

Date: 26-04-2007.


ANNEXURE 

RE: NAGARJUNA OIL CORPORATION LTD. 

Referred to in paragraph 3 of our report of even date 

(i) 

(a) The company has maintained proper records showing full particulars including 

quantitative details and situation of fixed assets. 

(b) According to the information and explanations given to us all the assets have 

been physically verified by the management once during the year under report. 

As explained to us, no discrepancies were noticed on such verification. 

(ii) 

(c) During the year, the company has not disposed off substantial part of the fixed 

assets. 

The company does not have inventory. Hence clause (ii) of paragraph 4 of the 

Companies (Auditors’ Report) Order, 2003 is not applicable. 

(iii)(a) According to the information and explanations given to us, the company has not 

granted any loans secured or unsecured, to companies, firms or other parties 

covered in the register maintained under section 301 of the Companies Act, 1956. 

As the company has not granted any loans to such parties, sub clauses (b), (c) and 

(d) of clause (iii) of this Order are not applicable. 

(b) According to the information and explanations given to us, the company has not 

taken any loans secured or unsecured, from companies, firms or other parties 

covered in the register maintained under section 301 of the Companies Act, 1956. 

As the company has not taken any loans from such parties, sub clauses (f) and (g) 

of clause (iii) of this Order are not applicable. 

(iv) 

(v) 

(vi) 

In our opinion and according to the information and explanations given to us, 

there are adequate internal control systems commensurate with the size of the 

company and the nature of its business with regard to purchase of fixed assets. 

During the year the company had no purchase of inventory or sale of goods or sale 

of services. In our opinion and according to the information and explanations 

given to us, there is no continuing failure to correct major weakness in internal 

control systems. 

(a) In our opinion and according to the information and explanations given to us 

and based on the representations by the management, there is no contract or 

arrangement that needs to be entered in the register to be maintained under 

section 301 of the Act. 

(b) In view of the above, clause v (b) of paragraph 4 of the Companies (Auditor’s 

Report) Order, 2003 is not applicable. 

The company has not accepted any deposits from the public.


(vii) 

In our opinion the company has an internal audit system commensurate with the 

size and nature of its business. 

(viii) As the project is under implementation, the provisions of clause viii of paragraph 

4 of the Companies (Auditors’ Report) Order, 2003 is not applicable. 

(ix) 

(a) According to the information and explanations given to us and the records of 

the company, the company has been regular in depositing undisputed statutory 

dues including provident fund, income tax, customs duty, service tax and other 

applicable statutory dues with the appropriate authorities. According to the 

information and explanations given to us, there are no arrears of statutory dues as 

at 31 st March 2007 which are outstanding for a period of more than 6 months from 

the date they became payable. 

(b) According to the information and explanations given to us, there were no dues 

of income tax/ sales tax/ wealth tax/service tax/ customs duty/ excise duty/ cess 

which have not been deposited on account of any dispute. 

(x) 

(xi) 

As the project is under implementation stage the company has no accumulated 

losses at the end of the financial year and has not incurred any cash losses in the 

financial year under report and in the immediately preceding financial year. 

The Company has defaulted in repayment of dues to banks / financial institution as 

follows: 

Bank / Financial 

Institution 

Date / Period of 

Default 

Particulars 

Principal O/s 

(Rs.) 

Interest O/s 

(Rs.) 

Karur Vysya June 2001 to Devolvement of 

0 7,23,78,018 

Bank Ltd. March 2007 Letters of Credit 

Indian Overseas January 2005 to Devolvement of 18,92,77,976 1,69,07,420 

Bank 

March 2007 Letters of Credit 

UTI Bank Ltd January 2005 to Devolvement of 48,76,35,483 16,56,00,747 

March 2007 Letters of Credit 

Exim Bank March 2007 Overdue Interest 0 1,85,76,717 

(xii) 

According to the information and explanations given to us, the company has not 

granted any loans and advances on the basis of security by way of pledge of 

shares, debentures and other securities. 

(xiii) The company is not a Chit Fund/Nidhi/Mutual fund/Society. Accordingly the 

provisions of clause 4(xiii) of the Companies (Auditor’s Report) Order, 2003 are 

not applicable to the company. 

(xiv) 

The company is not dealing in or trading in shares, securities, debentures and 

other investments. Accordingly the provisions of clause 4(xiv) of the Companies 

(Auditor’s Report) Order, 2003 are not applicable to the company.


(xv) 

(xvi) 

According to the information and explanations given to us, the company has not 

given any guarantee for loans taken by others from any bank or financial 

institution. 

In our opinion the term loan was applied for the purpose for which it was 

obtained. 

(xvii) According to the information and explanations given to us and on an overall 

examination of the balance sheet of the company, we report that short term funds 

were not used for long term investment during the year. 

(xviii) According to the information and explanations given to us, the company, during 

the year under report, has not made any preferential allotment of shares to parties 

and companies covered in the register maintained under Section 301 of the 

Companies Act, 1956. 

(xix) The company has not issued any debentures during the year. 

(xx) 

(xxi) 

The company has not made any public issue of shares during the year. 

Based upon the audit procedures performed and information and explanations 

given by the management, we report that no fraud on or by the company has been 

noticed or reported during the course of our audit. 

for M. BHASKARA RAO & Co. 

CHARTERED ACCOUNTANTS 

Sd/- 

K MURALIDHAR 

Partner 

MEMBERSHIP NO.201570 

Place: Hyderabad. 

Date: 26-04-2007.


AUDITED ACCOUNTS 

31 ST MARCH, 2007


BALANCE SHEET AS AT 31 ST MARCH 2007 

As at 

As at 

Particulars Schedule 31.03.2007 31.03.2006 

Rupees 

Rupees 

Sources of Funds 

Shareholders' Funds 

Share Capital 1 6,845,000,000 5,920,000,000 

Reserves and Surplus 2 106,842 106,842 

Secured Loans 3 1,595,296,233 1,601,705,916 

Total 8,440,403,075 7,521,812,758 

Application of Funds 

Fixed Assets 4 

Gross Block 54,062,074 53,465,906 

Less: Depreciation 18,932,847 17,927,909 

Net Block 35,129,227 35,537,997 

Capital Work in Progress 5 8,070,754,865 6,981,877,419 

Expenditure pending allocation account 3,197,053,944 2,642,430,259 

Current Assets, Loans and Advances 6 

Cash and Bank Balances 4,341,774 14,718,073 

Other Current Assets 

Loans and Advances 6,746,702 7,686,843 

11,088,476 22,404,916 

Less: Current Liabilities and Provisions 7 3,200,713,366 2,487,527,762 

Net Current Assets (3,189,624,890) (2,465,122,846) 

Miscellaneous Expenditure 

(to the extent not written off or adjusted) 8 327,089,929 327,089,929 

Total 8,440,403,075 7,521,812,758 

Accounting policies and Notes on Accounts 9 

As per our report attached 

For M Bhaskara Rao & Co., 

Chartered Accountants 

V K Muralidhar 

Partner 

Place: Hyderabad 

Date: April26,2007 

For and on behalf of the Board 

Dr.Abid Hussain 

Chairman 

Shr KS Raju 

Shri Minoo R Shroff 

Shri S Ramasundaram 

Shri Shankarnarayan R Rao 

Directors 

S Rammohan 

Managing Director


EXPENDITURE PENDING ALLOCATION ACCOUNT AS AT 31 ST MARCH 2007 

As at 

As at 

Particulars 31.03.2007 31.03.2006 

Rupees 

Rupees 

Salaries & Wages 40,601,579 17,064,342 

Contribution to Provident and other funds 4,447,275 2,014,932 

Staff Welfare expenses 2,923,210 1,624,668 

Rent 5,787,451 4,672,000 

Rates & Taxes including Fringe Benefit Tax 3,304,925 17,327 

Repairs and Maintenance - Others 2,535,432 1,678,517 

Insurance-Office eqpt. & others 1,129,002 1,385,106 

Printing & Stationery 548,156 347,624 

Postage, Telephone and Telex etc. 1,449,137 1,182,731 

Travelling and Conveyance 12,786,353 8,386,608 

Advertisement 270,025 265,961 

Recruitment & Training 665,429 283,301 

Legal & Professional Charges 37,214,292 10,796,167 

Directors Sitting Fees 24,000 22,000 

Directors Travel Expenses 3,268,432 2,107,226 

Auditors Remuneration 593,324 499,909 

Loss on sale of fixed assets (Net) 155,843 380,122 

Security Expenses 2,281,719 1,863,447 

Electricity and Water charges 2,186,315 1,786,751 

Miscellaneous Expenses 2,357,408 1,202,038 

Depreciation 1,703,733 2,761,487 

Interest 417,794,389 300,765,062 

Financing Charges 10,966,789 11,247,387 

Less: Miscellaneous Income (TDS on Deposits -Rs.2,088/-, 

previous year Rs.1,083/-) (370,533) (9,890) 

Sub-Total 554,623,685 372,344,823 

Brought forward from previous year 2,642,430,259 2,270,085,436 

Carried forward to Balance Sheet - Total 3,197,053,944 2,642,430,259 

As per our report attached to the Balance Sheet 




Partner 





Chairman 

Shr KS Raju 




Directors 

S Rammohan 

Managing Director


SCHEDULES FORMING PART OF BALANCE SHEET AS AT 31 ST MARCH 2007 

As at 

As at 

Particulars 31.03.2007 31.03.2006 

Rupees 

Rupees 

Schedule 1 - Share Capital 

Authorised 

2,000,000,000 Equity Shares of Rs.10/- each 20,000,000,000 12,000,000,000 

(Previous year 1,200,000,000 Equity Shares 

of Rs.10/- each) 

Issued, and Subscribed 

684,500,000 (Previous year 592,000,000) Equity Shares 6,845,000,000 5,920,000,000 

of Rs.10/- each, fully paid 

Total 6,845,000,000 5,920,000,000 

Schedule 2 - Reserves & Surplus 

General Reserve 106,842 106,842 

Total 106,842 106,842 

Schedule 3 - Secured Loans 

From Financial Institution * 

Exim Bank-Rupee Term Loan 644,794,874 696,474,012 

From Banks - Overdraft * 

Karur Vysya Bank - 54,518,562 

UTI Bank 487,635,483 487,635,483 

Indian Overseas Bank 189,277,976 219,277,976 

Hire Purchase Loan * 

ICICI Bank 124,997 291,665 

1,321,833,330 1,458,197,698 

Interest Accrued and Due 273,462,903 143,508,218 

Total 1,595,296,233 1,601,705,916 

* Repayments falling due in the next twelve months - Rs.769,152,008/- (Rs. 820,082,941/-)



Schedule 4 - Fixed Assets 

Rupees 

Gross Block (At Cost) DEPRECIATION Net Block 

Additions Deductions/ Deductions/ 

Particulars As at during Adjustments As at Upto For the Adjustments Upto As at As at 

31.03.2006 the Period during the Period 31.03.2007 31.03.06 Period during the Period 31.03.2007 31.03.2007 31.03.2006 

Freehold Land 23,541,435 23,541,435 23,541,435 23,541,435 

Furniture, Fixtures & Office Equipment 28,386,310 1,610,522 239,700 29,757,132 17,246,353 1,572,815 74,928 18,744,240 11,012,892 11,139,957 

Vehicles 1,538,161 5,100 779,754 763,507 681,556 130,918 623,867 188,607 574,900 856,605 

Total 53,465,906 1,615,622 1,019,454 54,062,074 17,927,909 1,703,733 698,795 18,932,847 35,129,227 35,537,997 

PREVIOUS YEAR 53,875,520 709,335 1,118,949 53,465,906 15,827,426 2,761,487 661,004 17,927,909 35,537,997 38,048,094



Particulars As at 31.03.2007 As at 31.03.2006 

Rupees 

Rupees 

Schedule 5 - Capital Work in Progress 

Site Development 97,228,709 97,228,709 

Building under construction 19,543,812 16,876,216 

Plant & Machinery: 

Equipment at Site * 4,230,038,451 4,144,024,344 

Equipment at European Ports** 2,783,782,863 610,752,492 

Construction Power 2,150,708 2,150,708 

Technical Services 878,798,561 892,026,593 

Advance against Capital Expenditure: 

Land & Site Development 48,638,543 48,638,543 

Plant & Machinery and Others 10,573,218 1,170,179,814 

* includes - Rs.69,45,00,104 (Previous year 

63,53,62,361) represents Cenvatable Customs 

duty. 

** Refer to note no.7 of Schedule 9 (II) - Notes 

to Accounts 

Total 8,070,754,865 6,981,877,419



As at As at 

Particulars 31.03.2007 31.03.2006 

Rupees Rupees 

Schedule 6 - Current Assets, Loans and Advances 

A. Current Assets 

Cash and Bank Balances 

Cash on Hand 98,109 83,544 

Balances with Scheduled Banks 

Current Accounts 4,243,665 14,634,529 

Sub-Total 4,341,774 14,718,073 

B. Loans and Advances 

Loans & Advances to Employees 71,050 93,036 

Advances recoverable in cash or in kind or 

for value to be received 

Advances to Suppliers / Services / Others 13,937 155,325 

Advance Payment of Tax including TDS 366,751 659,017 

Deposits with port and Customs Authorities 581,371 717,811 

Deposits with others 4,917,260 4,294,063 

Prepaid Expenses 796,333 539,485 

Fringe Benefit Tax - 1,228,106 

Sub-Total 6,746,702 7,686,843 

Total 11,088,476 22,404,916



As at 

As at 

Particulars 31.03.2007 31.03.2006 

Rupees 

Rupees 

Schedule 7 - Current Liabilities and Provisions 

Current Liabilities 

Sundry Creditors 

Small Scale Industries Nil Nil 

Others * 3,188,944,936 2,482,848,399 

Other Liabilities 6,654,320 853,364 

Interest accrued but not due 2,204,497 2,203,911 

3,197,803,753 2,485,905,674 

Provisions 

- Taxation 117,064 117,064 

- Fringe Benefit Tax - 110,156 

- Provident fund 386,675 56,574 

- Other staff benefit schemes 2,405,874 1,338,294 

Total 3,200,713,366 2,487,527,762 

* Includes amount due to Nagarjuna Fertilizers and Chemicals Ltd., 

the Holding Company - Rs.14,78,18,771/- (Previous year 

Rs.57,19,46,838/-). Deposit from Tamil Nadu Industrial 

Development Corporation Ltd. Rs.23,20,00,000/-.(Previous year 

Rs.23,20,00,000) 

Schedule 8 - Miscellaneous Expenditure 

(to the extent not written off or adjusted) 

Preliminary Expenses 327,089,929 327,089,929 

Total 327,089,929 327,089,929


SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT 31 ST MARCH 2007 

SCHEDULE 9 – Accounting Policies and Notes to Accounts 

I Significant Accounting Policies: 

1. General: 

The Company follows accrual system of accounting and recognizes the income 

and expenditure on accrual basis unless otherwise stated. The accounts are 

prepared on historical cost convention. 

2. Fixed Assets: 

a. Fixed assets are stated at historical cost less depreciation. 

b. Borrowing Costs incurred on acquisition of Qualifying Assets are 

Capitalised. 

3. Foreign Currency Transactions: 

The transactions in foreign currencies remaining outstanding at the end of the 

year are translated at the exchange rates prevailing on the date of the Balance 

Sheet or at the rate of exchange fixed under contractual agreements. Exchange 

gain/ loss on transactions relating to liabilities incurred to acquire fixed assets is 

treated as an adjustment to the cost of fixed assets. Exchange gains and losses on 

foreign exchange transactions other than those relating to fixed assets are 

adjusted in the profit and loss account. 

4. Expenditure pending allocation: 

Expenditure during construction period other than those directly related to an 

asset is included under “Expenditure pending allocation” and is allocated to 

various fixed assets at the time of commencement of commercial production, as 

determined in accordance with the Generally Accepted Accounting Principles. 

5. Depreciation on Fixed Assets: 

Depreciation on fixed assets is provided on straight-line method at the rates and 

in the manner prescribed in Schedule XIV of the Companies Act, 1956. 

6. Retirement Benefits: 

The company’s liability towards gratuity and superannuation benefits of eligible 

employees is covered by a policy with LIC and the annual contributions are paid / 

provided in accordance with this scheme. Leave encashment is provided on the 

basis of valuation by independent actuaries, as at date of the Balance Sheet. 

1

7. Impairment of Assets: 

Impairment of an Asset is reviewed and recognized in the event of changes and 

circumstances that indicate that the carrying amount of an asset is not 

recoverable. Difference between the carrying amount of an asset and the 

recoverable amount is recognized as impairment loss in the statement of Profit 

and Loss in the year of impairment. 

8. Contingencies: 

Losses arising from claims, litigation, assessments, fines, penalties etc., are 

provided for when it is probable that a liability may be incurred and the amount 

can be reasonably estimated. 

II. 

Notes to Accounts: 

1. Estimated amount of contracts remaining to be executed on capital account and 

not provided (net of advances): 

Capital Commitments 

Plant and Machinery 

Foreign Currency Contracts * 

Indian Contracts 

For the year ended 

31.03.07 

(Rupees) 

2,177,063,587 

107,926,296 


31.03.06 

(Rupees) 

2,999,337,704 

100,453,154 

Technical Services 

Foreign Currency Contracts ** 

Indian Technical Services 

2,320,582,342 

186,122,946 

931,853,107 

184,437,720 

Land and Site Development 221,633,698 221,245,182 

Building and Civil Works 230,652,986 393,211,798 

Total 5,243,981,855 4,830,538,665 

* Includes difference in foreign exchange translation Rs.429,718,350(Previous 

Year Rs.774, 231,383) 

** Includes difference in foreign exchange translation Rs.116,006,567 (Previous 

Year Rs.169, 827,455) 

Most of the Contracts on capital account have expired. Since the financial closure is 

expected shortly, the company is renegotiating the terms and most of the contractors 

have expressed willingness to continue, which are in various stages of finalization. 

Thereafter, the figures mentioned above may undergo a revision based on the 

renegotiated contracts. 

2

2. Contingent Liabilities: 

Claims against the company not acknowledged as debts: Rs. 1,65,000 

(Previous year – 1,65,000) 

3. Financial Statements: 

The financial statements for the year have been drawn up as a going concern based 

on the Management’s assessment of the project after taking into account the 

following positive developments: 

• Project has been appraised by the equity participants and re-appraised by 

Industrial Development Bank of India (IDBI) and SBI confirming the 

commercial viability. 

• Achieved 100% equity participation (Rs.1372 crores) with commitments 

from leading industrial groups and others in India and Overseas. 

• Term loan of Rs.500 crores sanctioned by IDBI. State Bank of India 

(SBI) has also given sanction for Rs 300 crores and Life Insurance 

Corporation of India for Rs 85crores. Mandate for syndication given to 

IDBI and SBI for tying up the balance Rupee term loan of Rs. 1340 

crores. ‘In principle’ sanction aggregating Rs.550 crores has been 

received from some banks and the sanction process for the remaining 

rupee term loan with other banks is in progress. 

• The contracts with ABB Lummus to act as Project Management 

Consultants have been renewed. The agreements with other Process 

Licensors are in the process of revival and are expected to be finalized 

soon. 

• Marketing of company’s products in the domestic and overseas markets 

have been tied up with oil companies comprising of reputed public and 

private sector companies. 

• Equipment stored at Cuddalore and ports in Europe are subjected to 

regular inspection and technical experts have certified the good 

condition of the equipment. 

• The Company has obtained and is in the process of obtaining statutory 

clearances and approvals. 

Despite the delay in execution of the Project, in view of the positive developments 

during the year as stated above, the Management perceives that the project is viable 

and is confident of implementation of the Project. 

3

4. Share Capital 

During the year, pursuant to Resolution passed at 15 th Annual General Meeting 

held on 25 th September 2006, the Authorised Share Capital of the Company has 

been increased from 1,200,000,000 equity shares of Rs.10/- each aggregating to 

Rs.12,000,000,000/- to 2,000,000,000 equity shares of Rs.10/- each aggregating 

to Rs.20,000,000,000/-. 

5. i. Secured Loans: 

a) Rupee Term Loan from Exim Bank is secured by mortgage of immovable 

properties and hypothecation of the Company’s movable fixed assets both 

present and future, including movable Plant & Machinery, appliances, furniture, 

vehicles, machinery spares and stores, tools and accessories, whether or not 

installed. The loan is further secured by exclusive pledge of equity shares of the 

Company held by Nagarjuna Fertilizers and Chemicals Limited of aggregate 

face value of Rs. 90 crores. 

b) Overdraft from Karur Vysya Bank Limited for interest due and UTI Bank 

Limited resulting out of devolvement of foreign Letters of Credit opened by the 

respective Banks are secured by a charge created by way of hypothecation of 

refinery equipment imported under Foreign Letters of Credit opened with the 

respective Banks. The charge is ranking pari-passu with other lenders. 

c) Overdraft from Indian Overseas Bank resulting out of devolvement of foreign 

Letters of Credit opened by the Bank is secured by a charge created by way of 

hypothecation of all the Company’s movable assets and properties present and 

future, whether or not installed including movable plants, machineries, goods, 

semi-finished and finished goods, consumable stores and spares, stock in trade, 

goods in process, movables in transit, bills receivables and book debts. The 

charge is ranking pari-passu with other lenders. 

All the above loans are further secured by Corporate Guarantee of Nagarjuna 

Fertilizers and Chemicals Limited, the holding company. 

d) Vehicle Loan from ICICI Bank is secured by the hypothecation of the Car 

purchased. 

ii. 

iii. 

UTI Bank has filed an application with Debt Recovery Tribunal (DRT) in June 

2005, for recovery of its dues. The Company is in the process of raising the 

loan required in full (including UTI Bank loan portion) for the Project and 

accordingly mandated IDBI and SBI for syndication. The Company is confident 

of achieving financial closure during the year 2007-08,which will enable the 

Company to settle the dues to UTI Bank in full. 

Of the loan outstanding, Exim Bank has agreed to convert Rs.28 crores into 

convertible debentures. 

4

6. Land: 

Land totaling to 509 acres has been acquired directly by the Company. State Industries 

Promotion Corporation of Tamil Nadu Limited (SIPCOT) has acquired 736 acres of 

land for handing over to the company. The company has made a part payment, which is 

included under Capital Work in Progress. On payment of balance amount, the same will 

be transferred / leased to the Company. 

7. Equipment: 

The Company has entered into an agreement with Uhde GmbH in February 1996 for 

supply, dismantling, packing, storage and transportation of Mobil Refinery Equipment 

at a cost of DM.284.11 Million. On payment of DM 133.43 Million (equivalent to 

Rs.299.76 Crores), Uhde GmbH dispatched part of the equipment, which is received 

and stored at Bonded Ware House at Company’s Plant site at Cuddalore. Against the 

balance due, the Company had already paid an advance of DM 48.49 Million 

(equivalent to Rs. 115.99 Crores) leaving an outstanding of DM 102.19 Million 

(equivalent to Rs. 302.72 Crores). The rest of equipment, for which the amount is 

outstanding, is retained at European Ports by Uhde GmbH at the risk and responsibility 

of the Company. 

The Company has subsequently entered into further agreement(s) for storage of the rest 

of equipment at European Ports, which inter alia provides for ownership rights and in 

case of non-payment of dues to Uhde GmbH, disposal after giving notice to the 

Company. The agreement for Storage was valid upto 31 st March 2007 and the 

Company has requested Uhde GmbH to extend the agreement for storage till 30 th June 

2007 and the Company is confident of getting a positive response from them. 

Considering the fact that Uhde GmbH has only constructive right of ownership and 

disposal of equipment in the event of non payment of storage charges and based on 

legal opinion, the amount of Euro 14.67 Million (equivalent to Rs.85.02 Crores) due to 

Uhde GmbH by the Company has been recognised in the Books of account. 

Uhde GmbH has agreed for conversion of Euro 14.65 Million aggregating Rs. 84.88 

Crores into Equity, which will be effected by the Company after obtaining necessary 

approvals. 

8. Balances in the accounts of Suppliers, Advances Recoverable and Other receivables are 

subject to confirmation. 

9. Managerial Remuneration: 

Particulars 

Managing Director 


31.03.2007 

(Rupees) 


31.03.2006 

(Rupees) 

Salary 32,85,484 24,00,000 

Perquisites 13,79,668 11,10,828 

Contribution to Provident Fund 

and other funds 

5,20,248 3,81,692 

Total 51,85,400 38,92,520 

5

10.. Auditors’ Remuneration: 

S. No Particulars For the year ended 

31.03.2007 

(Rupees) 


31.03.2006 

(Rupees) 

a) Statutory Audit 4,97,920* 4,00,000 

b) Certification 5,612 33,629 

c) Out of pocket expenses 89,792 66,280 

Total 5,93,324 4,99,909 

* Includes service tax of Rs.48,960/- relating to previous year. 

11. CIF value of Imports - Nil (Previous year- Nil) 

12. Expenditure in Foreign Currency: 

Particulars 


31.03.2007 

(Rupees) 


31.03.2006 

(Rupees) 

a) Foreign Travel 10,67,572 14,00,999 

b) Storage charges etc. 8,59,82,561 23,97,39,721 

c) Engineering Services 7,02,60,250 5,38,90,000 

d) Interest Charges NIL 11,92,07,204 

e) Syndication Fee 20,26,500 NIL 

f) Books and Periodicals 5,702 5,747 

Total 15,93,42,585 41,42,43,671 

13. Additional information pursuant to the Provisions of Paragraphs 3 &4 – C of Part – 

II of Schedule – VI of the Companies Act 1956 is not furnished since it is not 

applicable. 

14. Related party transactions: 

1. Names of related parties and description of relationship. 

a) Holding Company 

Nagarjuna Fertilizers and Chemicals Limited 

b) Fellow Subsidiaries 

Jai Prakash Engineering & Steel Company Limited 

c) Key Management Personnel 

(i ) Shri. S Rammohan (Managing Director) 

(iii) Shri. K S Raju (Director) 

(iv) Shri K.Rahul Raju (Director) 

(v) Shri P.P.Singh (Director) 

6

2. Related party transactions are as under: 

Sl. 

No 

01. 

Nature of 

transaction 

Finance: 

Share Application 

Money 

Holding 

Company 

2006-2007 

35,30,53,162 

Key Mgmt. 

Personnel 

2006-2007 

Holding 

Company 

2005-2006 

2,00,00,000 

(In Rupees) 

Key Mgmt. 

Personnel 

2005-2006 

- 

Advances received 

14,78,18,771 

42,32,62,327 

- 

02. 

Remuneration to 

Key Management 

Personnel 

5,185,400 

- 

38,92,520 

15. Profit and Loss account has not been prepared as the project is under 

Implementation. 

16. Figures of previous year have been re-grouped wherever necessary to conform to 

current year’s presentation / classification. 

___________________________________________________________________ 

Signatures to Schedules “1” to “9”. 

As per our report attached to the Balance sheet 

For M BHASKARA RAO & CO For and on behalf of the Board 



K. Muralidhar Chairman 

Partner 

Shri. K S Raju 




Place : Hyderabad 

Directors 

Date : April 26, 2007 

S Rammohan 

Managing Director 

7

A.Cash flow from Investing activities : 


CASH FLOW STATEMENT FOR THE YEAR ENDED 31st March,2007 

Rs. In Lacs 

2007 2006 

Particulars Amount Amount Amount Amount 

Purchase of Fixed Assets (16.15) (7.09) 

Capital Work in progress (10,888.77) (2,114.49) 

Expenditure pending allocation (net) (5,527.64) (3,692.03) 

Sale of Fixed Assets 1.65 0.77 

Misc Expenditure incurred (40.18) 

Adjustment towards Current Liablities 7,141.25 5,075.75 

Net Cash used in investing activities (9,289.66) (777.27) 

B.Cash flow from financing activities 

Share Capital 9,250.00 200.00 

Proceeds / (Repayment) from long term borrowings (64.10) 690.13 

Net Cash from financing activities 9,185.90 890.13 

Net increase / (Decrease) in cash and cash 

equivalent (103.76) 112.86 

Cash and cash equivalent as on 01.04.2006 147.18 34.32 

Cash and cash equivalent as on 31.03.2007 43.42 147.18 

As per our report attached 




Partner 





Chairman 

Shr KS Raju 




Directors 

S Rammohan 

Managing Director

nagarjuna information systems limited - Nagarjuna Fertilizers

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