From Notes to Financial Statements
1. CORPORATE OVERVIEW
a. Nagarjuna Fertilizers and Chemicals Limited (Erstwhile NFCL) has during the year undertaken restructuring of its businesses. Accordingly, a Composite Scheme of Arrangement and Amalgamation (“Scheme”) was prepared, which was duly consented by the shareholders at the Court Convened Meeting held on 15th April, 2011 and also received the approval of jurisdictional High Courts of Andhra Pradesh at Hyderabad and Bombay at Mumbai. The restructuring envisaged de-merger of the Oil business undertaking to a separate company, Nagarjuna Oil Refinery Limited (“NORL”). The scheme also provide for merger of residual business of Erstwhile NFCL into its wholly owned subsidiary viz., Kakinada Fertilizers Limited (“KFL”) along with the business operation of iKisan Limited (iKisan). The entire scheme is made effective from 30th July, 2011 but operative from 1st April, 2011, being the Appointed Date.
b. Pursuant to the Scheme:
i. Oil Business Undertaking of erstwhile NFCL was demerged into NORL and residual NFCL and iKisan are merged in to KFL.
ii. The Effective Date of the Scheme is 30th July, 2011 but shall be operative from the Appointed Date i.e. 1st April, 2011. The Record Date of determining shareholders eligible to receive shares of KFL and NORL was fixed as 1st September, 2011.
iii. Equity Shares were allotted to the shareholders of erstwhile NFCL and iKisan on 1st October, 2011 and the account of the respective of shares, the existing pre-arrangement issued capital of Rs. 5 lakh stood cancelled.
iv. The name of KFL stands changed to Nagarjuna Fertilizers and Chemicals Limited w.e.f. 19th August, 2011
c. The Financial Statement for the year have been drawn-up incorporating necessary adjustments as envisaged in the Scheme and in compliance with purchase method of accounting under AS 14 (Accounting for Amalgamations). In accordance with the Scheme:
i. the assets and liabilities of residual business of erstwhile NFCL and iKisan have been recorded in the books of KFL at Fair Values as on 1st April, 2011
ii. the fair values were determined by the Board of Directors based on the report obtained from a reputed firm of valuers.
iii. the difference between the fair value of equity shares and face value of equity shares is considered as Securities Premium.
iv. the difference between the value of net assets transferred to KFL over the fair value of Equity shares, and Preference shares allotted is credited to Capital Reserve Account. shareholders were credited in electronic mode or share certificates issued, as the case may be. Consequent to the allotment
v. on and from effective date, the Authorised shares capital of NFCL stands increased to Rs.
801,00,00,000/- comprising of 621,00,00,000 equity shares of Rs. 1/- each and 2,00,00,000 preference shares of Rs. 90/- each.
vi. 59,80,65,003 equity shares of Rs. 1/- each aggregating to Rs. 59,80,65,003/- have been allotted to the shareholders of erstwhile NFCL and iKisan on 1st October, 2011 without payment being received in cash.
d. Amalgamation expenses incurred Rs. 500.16 lakh have been adjusted to capital reserve.
e. The Bombay Stock Exchange vide letter dated 14th December, 2011 approved the application of the company for listing of the equity shares and the National Stock Exchange vide letter dated 13th January, 2012 accorded in-principle approval for listing of the equity shares subject to relaxation by Securities and Exchange Board of India from the fulfilment of requirement under Rule 19(2)(b) of Securities Contracts (Regulation) Rules, 1957.
