Annual Report 2004 - Nagarjuna Fertilizers

NFCL
9. Land and Buildings:
a
Includes 68 acres leased to Nagarjuna Agricultural Research and Development Institute.
b. Includes 5 acres, the possession of which is yet to be taken, title under dispute.
c. Includes Land valued at Rs.958.08 lakhs and Buildings valued at Rs.291.92 lakhs vested with the Company
pursuant to the order dated 27-04-98, of the Hon’ble High Court of Andhra Pradesh.
d. Excludes value of 33 acres, which is in the possession and use of the Company pending fixation of compensation
by the State Government.
e. Excludes 14.06 acres pending completion of proposed alienation and handing over possession by Govt. of A.P.
including 3.14 acres which cannot be alienated under AP Land Reforms Act, 1973.
10. Investments :
The Company has investments in the following subsidiary Companies :
1. Nagarjuna Oil Corporation Ltd (NOCL)
2. Nagarjuna Power Corporation Ltd (NPCL)
3. Jaiprakash Engineering and Steel Company Ltd (JESCO)
NOCL which is implementing the Oil Refinery Project has made substantial progress in tying up the Balance Equity
has tied up marketing arrangement in full and has received approval for Sales Tax Loan from the Govt. of Tamil Nadu.
With these developments, the financial closure is expected to be completed in few months. All statutory clearances
and permits have already been obtained and are subsisting.
NPCL which is implementing the Power Project has obtained an in-principle sanction from Power Finance Corporation
(PFC) for their part of the loan. The balance debt component shall be syndicated by PFC with the other lenders /
banks. The Power Purchase Agreement (PPA) has already been finalised and the same shall be re-signed in
accordance with the new norms. NPCL has also issued Letter of Intent for the EPC Contract. Equity tie up with a
strategic partner is in the advanced stage of finalisation.
The above two companies are in the project stage and any diminution in the latest available book value as
compared to the cost of such shares before commencement of operations by the companies cannot be considered
a permanent diminution. Consequently, no provision is considered necessary at this stage.
Investment in JESCO, the Steel Project of the Company has since been shelved. The realisations from sale of
assets of the Company is expected to be in excess of the investments made. Hence, there is no diminution in the
value of the investment.
11. Sundry Debtors, Loans and Advances :
The comprehensive review of the Sundry Debtors and Loans and Advances including Rs. 24760.00 lakhs relating
to fertilizer subsidy claims and, other receivables carried out by an independent agency indicated that it was not
appropriate to carry forward a sum of Rs. 46638.27 lakhs as good for recovery under the above head as chances
of recovery of same is bleak considering the Management’s efforts over the last few years proving futile, adverse
judicial pronouncements and rejection of fertiliser subsidy claims by Government Authorities.
The Company has further written off Rs. 128.11 lakhs in the profit and loss account representing irrecoverable book
debts relating to manufactured products.
Accordingly, the value of Sundry Debtors and Loans and Advances including fertiliser subsidy claims and other
receivables has been restated at Rs. 40614.66 lakhs as against Rs. 87252.93 lakhs. As per the Guidance Note of
the Institute of Chartered Accountants of India, the reduction in value of Sundry Debtors and Loans and Advances
has to be charged to the Profit and Loss Account, however, in accordance with the Scheme sanctioned by the
Hon’ble High Court of Andhra Pradesh an amount of Rs. 46638.27 lakhs being the effect of such restatement has
been adjusted against Revaluation Reserve.
12. Income Tax:
a) Current Tax :
Provision for current tax has been made on book profits in accordance with section 115 JB of the Income Tax
Act, 1961. The provision for tax in respect of assessments not yet completed is computed by the company
taking into consideration the treatment of various matters as decided in the Company’s income tax assessments
of the earlier years.
b) Deferred Tax :
In accordance with the Accounting Standard No.22 issued by ICAI and followed by the company, a sum of
Rs.2070.29 lakhs (previous year Rs.3567.55 lakhs) deferred tax credit was drawn from the Deferred Tax
Liability A/c. and debited to the Profit & Loss A/c.
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