| 1. CONTINGENT LIABILITIES:
a) Guarantees issued by Bank and outstanding Rs.23.00 Lacs (P.Y Rs.
230.00 Lacs). Contingent Liabilities not provided for
a) On letter of credits. - Rs. 554 Lacs (P.Y Rs. 465.00 Lacs).
b) On bills discounted with banks - Rs. 95.30 Lacs (P.Y Rs. 460.68
Lacs).
c) On capital commitments not provided for - Rs. 39 Lacs (P.Y Rs. 39
Lacs).
d) Disputed excise duty Rs. 5,44,44,178.00 and disputed service tax Rs.
5,89,076.00 Demanded by the excise department as per show cause notice
no. C. No. IV CE(9) CP/117/2008/11504 dt. 07.08.09 and show cause
notice no. C.No. IV -CE(9) CP/62/2007/1506-1513 dt. 18.07.2008,
respectively.
2. Managerial remuneration to the Managing Director has been paid as
per previous rates Rs. 1463400/- (Previous year RS. 1463400/- the
remuneration has been paid as per Central Government approval vide
letter no. NIL dated 26.04.06.
3. In compliance with the requirement of Accounting Standard -2,
valuation of inventories, which is mandatory from 1st April 1999, the
company has changed the accounting, excise duty and provided excise
duty liability on stock as on balance sheet date and included in
valuation of such stocks. However on the closing stock of finished
goods provision of excise duty of Rs. 2580 & provision for education
cess, and higher secondary education cess of Rs. 77 has not affected
the profit & loss account of the company.
4. CENVAT credit available on raw materials is accounted by booking
raw material purchases of net of excise duty. Similarly CENVAT credit
entitlement on capital goods is accounted on booking the capital goods
net of excise duty. Both these credits are accumulated and shown as
receivable in "Loans and Advances" for adjustment in due course against
duty payable on dispatch of finished goods, subject to compliance of
excise rules in this regard.
5. The balances of Secured Loans, Unsecured Loans, Debtors, Creditors
and Loans & Advances etc are subject to confirmation and
reconciliation.
6. Financial & Management information systems
To practice an integrated accounting system which unifies both
financial books and costing records The books of accounts and other
records have been designed to facilitate compliance of the relevant
provisions of the Companies Act on the one hand, and meet the internal
requirements of information and systems for planning, review and
internal control on the other.
7. Unsecured loans include RS. 93,053/- received in earlier years from
"Foreign Promoters" represents excess amount received towards allotment
of Equity Shares. Reserve Bank of Indias approval to refund the amount
is still awaited.
8. Additional information pursuant to the provisions of paragraphs 3,
4C & 4D of part II of schedule VI of the Companies Act, 1956 are given
in the enclosed annexure.
9.. Previous year figures have been re-arranged/regrouped wherever
necessary to confirm to the classification adopted in the current year,
10. The Company made a Rights issue of Equity Shares of RS. 10/- each
at a premium of Rs.12/- per share to existing shareholders in the ratio
of one-equity shares for every three equity shares held in the
Financial Year 1995-96. Allotment was made on 15.07.95 and share
application money and allotment money has been apportioned to Share
Capital and Share Premium as per the terms of letter of offer.
Application money called at the time of application was RS. 5.50 Per
share out of which RS. 2.50 as share application money and balance RS.
3/- towards Share Premium. The Allotment Money was payable on 31.08.95.
Calls in arrears in respect of equity shares has been accounted for and
deducted from issued share capital account, the balance in arrears in
respect of share premium will be accounted for as and when received.
11. The financial statements are prepared on accrual basis, in
accordance with the generally accepted accounting principles and
provisions of Companies Act, 1956 as adopted consistently by the
Company, except gratuity, Leave encashment, LTA and premium on Right
Issue being accounted for on Cash Basis. Claims etc which is
unascertainable is accounted for as and when settled.
12. Inventory shows a sum of RS. 907.42 lacs towards cost of Dies
manufactured in house for production of forging in Forge Shop. The
consumption of Dies has not been charged as per utilization of the
Dies, but is being charged to Profit & Loss account as & when the
respective Die is discarded. During the current year as certified by
management Rs. 13.63 Lacs have been spent on manufacturing of Dies for
various new products and has been charged on account of discarding of
dies Rs. 0 Lacs.
13 Based on the information available with the company, the company has
identified 4 vendors as Micro and Small Enterprises as defined in the
Micro, Small and Medium Enterprises Development Act 2006. The balance
due to such vendors as at 31.03.2009 has been disclosed separately
under current liabilities and provisions (refer schedule 9).
14. Deferred Tax Assets (Net) - The accounting standard 22, viz
accounting for taxes on income issued by the Institute of Chartered
Accountants of India, has become applicable to the company. The Company
has unabsorbed depreciation and unabsorbed loss which is to be carried
forward as per the provisions of Income Tax Act, 1961. In the opinion
of management there is no certainty that sufficient future taxable
income will be available against which deferred tax asset can be
realised, accordingly no deferred tax asset has been recognized.
15. Related Party Disclosures
(a) Key Management Personnel and relatives Mr. Deshbir Singh - Managing
Director
16. Segment reporting
(a) Since the Companys business activity falls within a single
business and geographical segment, there are no additional disclosures
to be provided under accounting standard 17 "Segment Reporting" other
than those provided in financial Statements.
(b) The Major products dealt in by the company are Forgings &
Crankshafts.
17. Current tax provision on account of substantial carry forward of
losses and unabsorbed Depreciation, the management is of the opinion
that there will not be any tax liabilities on current profits which are
adjustable with unabsorbed depreciation and carry forwarded of losses
as such no provision for current tax has been made. However, Provision
for Taxation on current year profit has been made based on relevant
provisions of Income Tax Act 1961.
18. The company issued 90,00,000 convertible warrants during the year
2004-05 in which, the warrant holders have an option to convert these
warrants into equity shares determined at an initial conversion price
of Rs. 14.25 per share within a period of 18 months from the date of
allotment i.e. 6th October 2004 to 5th April 2006. During current year
2005-06 Out of 9000000 warrant holders 4000000 haveexercised their
option and paid the conversion price at Rs. 14.25 per share during the
year and the total proceeds (Net of Advance) Rs.512 lacs have been used
for OTS due of financial institutions working capital requirement and
other corporate purposes. During the year 2006-07 out of 50,00,000
warrant holders 1500000 have exercised their option and paid the
conversion price at Rs. 14.25 per share and total proceeds (Net of
Advance) Rs. 192 Lacs have been used for acquiring assets. The company
has refunded Rs. 50.75 Lacs to a warrant holder with the prior approval
of Board of Directors, who has not exercised his option for conversion
of w.arrants in to shares.
19. On 22.12.06 the company issued 2 Crore equity shares of Rs.1/- to
M/s Duke Special Situation Fund at Rs. 3.10 per share on preferential
allotment basis. The total proceeds of Rs. 6.20 crore have been
utilized for import of machinery.
The company also issued 6 crore convertible warrant at an initial
conversion price of Rs.3.10 per Share and paid 10% as
application/allotment money. The warrant holder have an option to
convert these warrants into equity share within a period of 18 month
from the date of allotment i.e. 22nd December 2006 to 21st June 2008,
The total proceeds received from warrant holder Rs. 186 lacs have been
used for import of Machinery.
During the year under review, the warrant holder(s) have not exercised
their option as such, the subscription received from them amounting Rs.
186 lacs has been forfeited with the permission of Board.
20. In the opinion of management, there is no impairment of any of the
fixed Assets of the company in terms of AS-28 Issued by The ICAI.
21. The Sundry Debtors and Loans & Advances which are outstanding for
more than two years according to the aging but no provision for bad
debts and doubtful debts have been provided for because management is
of the view that these amounts are recoverable even if they are
outstanding for more than two years under the aging system.
22. The consumption of consumable stores includes stores used for
repairing of Plant & Machinery etc. items, since the segregation of
such items are not possible.
23. General:
A) Expenses in excess of 1% of total revenue is freight & cartage
included in charges general Rs. 15.87 Lac (Previous Year Rs. 39.36 Lac)
B) Earning on exchange Rate Fluctuation on Cancellation of Forward
Contract has been included in charges General Credit Rs. 1706 (Previous
Year Credit Rs. 1657881/-)
24. Previous year Income and previous year expenses,
unrecovered/unclaimed amounts written of and written back have been
charged to Profit and Loss Account after netting.
25. During the year under review the workers adopted the go slow
tactics and with the result the production suffered and most of the
expenses related to manufacturing exceeded abnormally and could not
meet with the actual norms of consumption being achieved in the past.
26. During the year under review in view of levy of service tax on Job
work undertaken by the company but the department disputed that the
liabilities on work is for excise duty and not service tax, with the
result they raided the factory and impounded the record, which are
still with department.
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