3.11 Provisions, Contingent Liabilities and Contingent Assets
3.11.1. Provisions
Provisions are recognized when there is a present obligation (legal or constructive) as a result of a past
event and it is probable that an outflow of resources embodying economic benefits will be required to
settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are
determined by discounting the expected future cash flows (representing the best estimate of the
expenditure required to settle the present obligation at the balance sheet date) at a pre-tax rate that
reflects current market assessments of the time value of money and the risks specific to the liability. The
unwinding of the discount is recognized as finance cost.
3.11.2. Contingent Liabilities
Contingent liability is a possible obligation arising 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 or a present obligation that arises from past events but is not
recognized because it is not possible that an outflow of resources embodying economic benefit will be
required to settle the obligations or reliable estimate of the amount of the obligations cannot be made.
The Company discloses the existence of contingent liabilities in Other Notes to Financial Statements.
3.11.3. Contingent Assets
Contingent assets usually arise from unplanned or other unexpected events that give rise to the
possibility of an inflow of economic benefits. Contingent Assets are not recognized though are
disclosed, where an inflow of economic benefits is probable.
3.12 Intangible Assets
3.12.1. Recognition and Measurement
Other Intangible Assets
Software which is not an integral part of related hardware, is treated as intangible asset and are stated at
cost on initial recognition and subsequently measured at cost less accumulated amortization and
accumulated impairment loss, if any.
3.12.2. Subsequent Expenditure
Subsequent costs are included in the asset’s carrying amount, only when it is probable that future
economic benefits associated with the cost incurred will flow to the Company and the cost of the item
can be measured reliably. All other expenditure is recognized in the Statement of Profit & Loss.
3.12.3. Amortization
- Other Intangible assets are amortized over a period of three years.
- The amortization period and the amortization method are reviewed at least at the end of each Financial
year. If the expected useful life of the assets is significantly different from previous estimates, the
amortization period is changed accordingly.
3.12.4. Intangible Assets under Development
Intangible Assets under development is stated at cost which includes expenses incurred in connection
with development of Intangible Assets in so far as such expenses relate to the period prior to the getting
the assets ready for use.
3.13 Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to
equity shareholders by the weighted average number of equity shares outstanding during the period.
The weighted average number of equity shares outstanding during the period is adjusted for events
such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation
of shares) that have changed the number of equity shares outstanding, without a corresponding change
in resources.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable
to equity shareholders and the weighted average number of shares outstanding during the period are
adjusted for the effect of all potentially dilutive equity shares.
3.14 Measurement of Fair Values
A number of the Company’s accounting policies and disclosures require the measurement of fair values,
for both Financial and non-Financial assets and liabilities.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The fair value measurement is
based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company. The fair value of an
asset or a liability is measured using the assumptions that market participants would use when pricing
the asset or liability, assuming that market participants act in their economic best interest. A fair value
measurement of a non-Financial asset takes into account a market participant’s ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market
participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which
sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and
minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the Financial statements are
categorized within the fair value hierarchy, described as follows, based on the input that is significant to
the fair value measurement as a whole:
- Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
- Level 2 — Inputs other than quoted prices included within Level 1, that are observable for the asset or
liability, either directly or indirectly; and
- Level 3 — Inputs which are unobservable inputs for the asset or liability.
External valuers are involved for valuation of significant assets & liabilities. Involvement of external
valuers is decided by the management of the company considering the requirements of Ind As and
selection criteria include market knowledge, reputation, independence and whether professional
standards are maintained.
3.15 Leases
3.15.1. The company as Lessor
Leases for which the Company is a lessor is classified as finance or operating leases. Whenever the
terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract
is classified as finance lease. All other leases are classified as operating leases.
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant
lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the
carrying amount of the leased asset and recognised on a straight-line basis over the lease term.
3.15.2. Company as lessee
The Company assesses whether a contract is or contains a lease, at inception of the contract. The
Company recognises a right-of-use asset and a corresponding lease liability with respect to all lease
arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term
of 12 months or less) and leases of low value assets. For these leases, the Company recognises the
lease payments as an operating expense on a straight-line basis over the lease term, unless another
systematic basis is more representative of the time pattern in which economic benefits from the leased
assets are consumed. Contingent and variable rentals are recognized as expense in the periods in
which they are incurred.
3.15.3. Lease Liability
The lease payments that are not paid at the commencement date are discounted using the interest rate
implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in
the Company, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee
would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use
asset in a similar economic environment with similar terms, security and conditions.
Lease payments included in the measurement of the lease liability comprise:
• Fixed lease payments (including in-substance fixed payments) payable during the lease term and
under reasonably certain extension options, less any lease incentives;
• Variable lease payments that depend on an index or rate, initially measured using the index or rate
at the commencement date;
• The amount expected to be payable by the lessee under residual value guarantees;
• The exercise price of purchase options, if the lessee is reasonably certain to exercise the options;
and
• Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to
terminate the lease.
The lease liability is presented as a separate line in the Balance Sheet.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the
lease liability (using the effective interest method) and by reducing the carrying amount to reflect the
lease payments made.
The Company re measures the lease liability (and makes a corresponding adjustment to the related
right-of-use asset) whenever:
• The lease term has changed or there is a change in the assessment of exercise of a purchase
option, in which case the lease liability is re measured by discounting the revised lease payments
using a revised discount rate.
• A lease contract is modified and the lease modification is not accounted for as a separate lease, in
which case the lease liability is re measured by discounting the revised lease payments using a
revised discount rate.
3.16 Standards issued but not yet effective
Ministry of Corporate Affairs (“MCA”) notifies new standard or amendments to the existing standards
under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 31,2024,
MCA has not notified any new standards or amendments to the existing standard applicable to the
company.
4 Significant Judgements and Key sources of Estimation in applying Accounting Policies
Information about Significant judgements and Key sources of estimation made in applying accounting
policies that have the most significant effects on the amounts recognized in the Financial statements is
included in the following notes:
- Useful lives of depreciable/ amortizable assets (tangible and intangible): Management reviews
its estimate of the useful lives of depreciable/ amortizable assets at each reporting date, based on the
expected utility of the assets. Uncertainties in these estimates relate to actual normal wear and tear that
may change the utility of plant and equipment.
- Defined Benefit Obligation (DBO): Employee benefit obligations are measured on the basis of
actuarial assumptions which include mortality and withdrawal rates as well as assumptions concerning
future developments in discount rates, medical cost trends, anticipation of future salary increases and
the inflation rate. The Company considers that the assumptions used to measure its obligations are
appropriate. However, any changes in these assumptions may have a material impact on the resulting
calculations.
- Provisions and Contingencies: The assessments undertaken in recognizing provisions and
contingencies have been made in accordance with Indian Accounting Standards (Ind AS) 37,
‘Provisions, Contingent Liabilities and Contingent Assets’. The evaluation of the likelihood of the
contingent events is applied best judgement by management regarding the probability of exposure to
potential loss.
- Allowances for Doubtful Debts: The Company makes allowances for doubtful debts through
appropriate estimations of irrecoverable amount. The identification of doubtful debts requires use of
judgment and estimates. Where the expectation is different from the original estimate, such difference
will impact the carrying value of the trade and other receivables and doubtful debts expenses in the
period in which such estimate has been changed.
- Fair value measurement of Financial Instruments: When the fair values of Financial assets and
Financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active
markets, their fair value is measured using valuation techniques including the Discounted Cash Flow
model. The input to these models are taken from observable markets where possible, but where this not
feasible, a degree of judgement is required in establishing fair values. Judgements include
considerations of inputs such as liquidity risk, credit risk and volatility.
a) Various Term Loans amounting to ? 925.66 lakhs was availed between 1990 and 1992 from a consortium of 3 Financial Institutions (FIs) namely ICICI,
IDBI and IFCI, with ICICI as the lead Institution, and was secured by first mortgage ranking pari-passu of all the immovable properties both present
and future and a first charge by way of hypothecation of all the movables (save & except book debts) including movable machinery, spares, tools
& accessories, present & future subject to prior charge to be created in favour of the company's bankers on the stock of raw materials, semi-finished
and finished goods, consumable stock and such movables as may be agreed by the lead institution for securing the working capital requirements.
However the total amount so received was only ? 894.02 Lakhs and the balance was adjusted against Interest payable.
Over the years, the Company made a total repayment of ? 1286.77 Lakhs out of which ? 1101.88 Lakhs was made under/after the BIFR Scheme to the
consortium member. The major portion of this was paid to the lead institution, ICICI, as part of approval for the BIFR Rehabilitation Scheme/Package.
In the meanwhile, ICICI assigned its debts to Kotak Mahindra Bank Ltd (KMBL) on 25-04-2005, and both IFCI and IDBI assigned their debts to Dhir &
Dhir Asset Reconstruction and Securitisation Company Ltd. (now known as Alchemist Assets Reconstruction Company Ltd. (AARCL)) on 05-03¬
2008 for ? 304.00 Lakhs and 12-08-2008 for ? 411.50 Lakhs respectively.
Further to directions of the Hon'ble Punjab & Haryana High Court, Chandigarh, the Company deposited ? 500 Lakhs in the High Court which was
appropriated to Alchemist Assets Reconstruction Company Ltd. (? 300 Lakhs) and Kotak Mahindra Bank Ltd, (? 200 Lakhs) on 09-08-2011.
The Company had given physical possession of Approx. 10.04 Acre land whose approx. cost appearing in books is Rs. 12.02 Lakhs, to Alchemist
Asset Reconstruction Company Ltd., assignees of IDBI & IFCI (Financial Institutions) on 8th March 2013 as per the directions of the Hon'ble Supreme
Court who re-affirmed the Interim Orders of Hon'ble Punjab & Haryana High Court, Chandigarh of 09-08-2011. The land is stated to be sold by
Alchemist Asset Reconstruction Company Ltd. for Rs. 1350 lakhs.
As per Hon’ble Supreme Court order dated 7.5.2012, AARCL was supposed to share Rs.450 lakhs with KMBL out of the sale proceeds of 10.04 acres
land of the Company which was stated to be sold by AARCL for Rs.1350 Lakhs.
In view of the fact that KMBL received Rs.650 Lakhs (Rs.200 Lakhs out of deposit made by Company in Punjab &Haryana High Court and Rs.450
Lakhs out of sale of Company’s excess land from Hon’ble Supreme Court’s registry), KMBL and Coventry settled the pending matter OA 2/2007 and
filed a joint application before DRT-2 Delhi in this regard, which then disposed off the matter as settled vide order dated 06.02.2021. The joint
application inter-alia records the stipulation: “With the receipt of entire OTS amount of Rs.650 Lakhs along with accrued interest, the Applicant
Bank/KMBL is left with no further claim against the Defendant No.1”. However, it was agreed that Counter-claim of Coventry will continue against
other lenders / assignees. AARCL has filed an application in March 2023 in pending Company appeal in Punjab & Haryana High Court to dispose off
the appeal as infructuous in view of said settlement.
The Company is contesting the assignments and the exaggerated claims by the assignees in various Courts and Tribunals.
[for further details see Note no. 31 (7) (E)]
b) Vehicle loans (from Mahindra & Mahindra Finance Limited, Totyota Financial service India Limited and HBD Financial Services Ltd.) are secured by
way of hypothecation of related assets. These are repayable in maximum 60 Installments, repayment period thereof varying from December, 2020
ending on April '2026, bearing interest rate varying from 9.24% p.a to 12.51% p.a.
c) Company have not filed any stock statement to banks in current financial year i.e. 23-24 and in previous financial year 22-23 due to disputes with
banks as referred in Note 31 (7) (e).
The Company’s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and
other payables. The main purpose of these financial liabilities is to finance the Company’s operations. The
Company’s principal financial assets include loans, trade and other receivables and cash and cash equivalents
that are derived directly from its operations.
The Company’s financial risk management is an integral part of how to plan and execute its business strategies.
The Company is exposed to market, credit and liquidity risk.
The Company’s senior management oversees the management of these risks. The senior professionals
working to manage the financial risks and the appropriate financial risk governance framework for the Company
are accountable to the Board of Directors and Audit Committee. This process provides assurance to Company’s
senior management that the Company’s financial risk-taking activities are governed by appropriate policies and
procedures and that financial risk are identified, measured and managed in accordance with Company policies
and Company risk objective.
A) Credit Risk Management
The credit risk is the risk of financial loss arising from counter party failing to discharge an obligation. The
Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer.
However, management also considers the factors that may influence the credit risk of its customer base,
including the default risk. The credit risk is controlled by analysing credit limits and credit worthiness of
customers on continuous basis to whom the credit has been granted, obtaining necessary approvals for credit.
For banks and financial institutions, only high rated banks/institutions are accepted.
Credit Risk of various classes of assets is managed as given below:
I. Cash and cash equivalents and deposits with banks
The company maintains its Cash and Cash Equivalents with credit worthy banks and financial institutions and
reviews it on an on-going-basis. Moreover, the interest bearing deposits are with banks of good reputation, good
past track record and high quality credit rating. Hence the credit risk is assessed to be low. The maximum
exposure to credit risk as at 31st March 2023 and 31st March 2022 is the carrying value of such cash and cash
equivalents and deposits with banks as shown in note 10 and 11 of the financials.
II. Trade Receivables
Trade receivables of the company are typically unsecured and are derived from revenue earned from
customers. Credit risk is managed through credit approvals and periodic monitoring the creditworthiness of
customers to which the company grants credit terms in the normal course of business. The major customers of
company are highly reputed. Before sales company assess and evaluate the creditworthiness, general
feedback about the customer in the market, past experience, if any with customer and accordingly negotiates
the terms and conditions with the customers.
The company assesses its Trade receivables for impairment at the end of each reporting period. In determining
whether an impairment loss should be recorded in profit and loss, the company makes judgments whether there
is observable data indicating a measurable decrease in the estimated future cash flows and from such Trade
receivables. The company customer base is normally highly reputed clients. The company has a provisioning
policy based on past experience, customer creditability and also on the nature of business.
The maximum exposure to the credit risk as at 31st March 2024 and 31st March 2023 is the carrying value of such
trade receivables as shown in note 8 of financials.
Reconciliation of loss allowance provision
B) Liquidity Risk
1. The Company determines its liquidity requirement in the short, medium and long term. This is done by
drawings up cash forecast for short term and long term needs.
2. The company have liquidity risk due to that all the outstanding are paid as and when funds are available
based on the preferences. The Company manage its liquidity risk in a manner so as to meet its normal
financial obligations. Such risk is managed through ensuring operational cash flow while at the same time
maintaining adequate cash and cash equivalent position.
C) Market Risk Management
I. Foreign Currency Risk
1. The company operates internationally and is exposed to foreign exchange risk arising from foreign currency
transactions, primarily with respect to the uS$ and EURO. Foreign exchange risk arises from future
commercial transactions and recognised assets and liabilities denominated in a currency that is not the
company’s functional currency (INR). The risk is measured through a forecast of highly probable foreign
currency cash flows. The objective of the hedges is to minimize the volatility of the INR cash flows of highly
probable forecast transactions.
2. The company uses foreign exchange forward contracts to hedge its exposure in foreign currency risk. The
company measures the forward contract at fair value through profit and loss not classified as hedge.
3. The spot component of forward contracts is determined with reference to relevant spot market exchange
rates. The differential between the contracted forward rate and the spot market exchange rate is defined as
the forward points.
D) Price Risk
I) Price Risk
(I) The entity do not have any investment in quoted securities or other equity instruments except for
investments in group entities. Thus, the company is not exposed to any price risk.
II) Commodity Price Risk
The Company is affected by the price volatility of steel commodities. Its operating activities require the
ongoing purchase of Steel therefore require a continuous supply of steel. Due to significantly increased
volatility of the price of the steel , the Company has entered into various purchase contracts for steel.
The Company has developed and enacted a risk management strategy regarding steel price risk and its
mitigation.
E) Legal Risk
The entity have legal risk which is defined as below:
Secured loan:
a. The Company is contesting in various Courts and Tribunals the exaggerated claims by the assignees of the
various Term Loans availed between 1990 and 1992 from a consortium of 3 Financial Institutions (FIs)
namely ICICI, IDBI and IFCI.
b. The Company availed Term Loans of Rs. 925.67 lakhs between 1990 and 1992 from the consortium, with
ICICI as the lead Institution. However, the total amount so received was only Rs. 894.03 lakhs and the
balance was adjusted against Interest payable. Due to recession in the market and accumulated losses
which were partly occasioned by high interest rates and partly by time over-run and cost over-run, and
despite best efforts of the promoters and the management, the Company turned into a sick company and
was referred to the Board for Industrial and Financial Reconstruction (BIFR) vide Reference Case
No.197/97.
c. A Rehabilitation Scheme/Package formulated and agreed upon by all the FIs was approved by the BIFR on
27-12-1999 wherein the dues were freshly determined and fixed as Rs. 1178 lakhs to be paid by 31-03¬
2002.
The Net Worth of the Company turned positive and after considering the Balance Sheet for the year ended
on 31st March 2000, the BIFR closed the reference case on 04-10-2001.
d. As per the package, one of the sources of finance to repay the FIs was Working Capital facilities. Since the
Company was under RBI’s defaulters list, no banks were willing to extend the required working capital limits.
This was duly brought to the notice of the BIFR. However, despite the best efforts, the Company could not
arrange the working capital limits thereby leading to delayed repayments to the Financial Institutions.
e. In all, however, over the years, the Company made a total repayment of Rs. 1286.77 lakhs out of which Rs.
1101.89 lakhs was made under/after the BIFR Scheme to the consortium members. The major portion of
this was paid to the lead institution, ICICI, as part of approval for the BIFR Rehabilitation Scheme/Package.
As the Company did not have the details of amounts adjusted by and amongst members of the Consortium
out of the various repayments made by it and since, ICICI ( Later assigned to KMBL) had filed a winding-up
petition in the High Court of Punjab & Haryana at Chandigarh on 08-10-2004 for recovery of Rs. 329.93
lakhs, the Company, after October 2005, (latter assigned to KMBL) preferred not to make any further
payments to the FIs since the matter was sub-judice.
f. In 2005, the RBI released a Scheme / Guidelines for One-Time Settlement of loan accounts of Small and
Medium Companies. Since the Company fulfilled the criteria for availing the benefits under the said
Scheme, which is binding upon the Banks and FIs, the Company re-calculated the payments made under
the said Scheme, and after adjusting the amounts already paid to the consortium members, the dues
towards the consortium came out to be Rs. 2.62 lakhs only.
The Company accordingly made an application under the OTS Scheme to the FIs before the deadline of end
March 2006 and offered to pay the said amount of Rs. 2.62 lakhs.
g. However, the Financial Institutions did not settle the Company’s matter under RBI’s OTS Guidelines and
demanded unreasonably high amounts.
In the meanwhile, ICICI assigned its debts to Kotak Mahindra Bank Ltd. (KMBL) on 25-04-2005, and both
IFCI and IDBI assigned their debts to Dhir & Dhir Asset Reconstruction and Securitisation Company Ltd.
(now known as Alchemist Assets Reconstruction Company Ltd. (AARCL)) on 05-03-2008 for Rs. 304 lakhs
and 12-08-2008 for Rs. 411.50 lakhs respectively.
Thereafter, the assignees filed various Applications under section 19 of The Recovery of Debts Due to
Banks and Financial Institutions Act, 1993 for recovery of debts as follows:
• In DRT-II, New Delhi by KMBL on 23-01-2007 for recovery of Rs. 472.07 lakhs.
• In DRT-I, New Delhi by AARCL on 11-12-2008 for recovery of Rs. 8449.39 lakhs plus interest for
dues calculated on the IFCI debts.
• In DRT-I, New Delhi by AARCL on 21-05-2012 for recovery of Rs. 9315.19 lakhs for dues calculated
on the IDBI debts.
h. The Company has also filed counter claims of more than Rs. 50000 lakhs on both KMBL and AARCL.
The final adjudication of the debt liability is yet to be completed by higher forums
AARCL (formerly D&DARSCL) also issued notice on 12-12-2008 under Section 13(2) of The Securitisation
and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI), 2002
demanding an amount of Rs. 14446.60 lakhs against dues calculated on both IFCI and IDBI debts. With an
application filed on 29-07-2009 u/s 14 of the SARFAESI Act with Dy. Commissioner, Rewari, they made an
attempt to take possession of the Company’s Assets. However, with timely actions, the Company obtained
from the Hon’ble Punjab & Haryana High Court, Chandigarh Stay Order against any coercive action, if any,
taken under SARFAESI Act for taking over the possession of the property in dispute.
i. The Hon’ble Punjab & Haryana High Court, Chandigarh had through interim orders dated 21-01-2011 and
11-03-2011 directed the Company to deposit a sum of Rs. 500 lakhs in the High Court, which the Company
complied with.
As per further directions of the Hon’ble High Court vide order dated 09-08-2011 the sum of Rs. 500 lakhs was
appropriated as follows:
• Rs. 300 lakhs to Alchemist Assets Reconstruction Company Ltd., and
• Rs. 200 lakhs to Kotak Mahindra Bank Ltd.
Apart from the aforesaid payment of Rs. 500 lakhs, the assignees were also given the liberty by Division
Bench of Hon’ble Punjab & Haryana High Court to recover further sum of Rs. 1350 lakhs from the sale of the
surplus land appurtenant to the factory premises, without prejudice to rights and contentions of the parties.
This had further been re-affirmed by the Hon'ble Supreme Court with modifications vide Orders dated 07-05¬
2012, 30-07-2012 and 01-03-2013. As per the directions of the Hon'ble Supreme Court on 01-03-2013, the
Company has given physical possession of a part of the property comprising of approx. 10 acres of land to
Alchemist Assets Reconstruction Company Ltd. on 08-03-2013. The Appeals are pending adjudication
before the Division Bench of Hon'ble Punjab & Haryana High Court.
Since this was only an Interim Order and the amount is yet to be adjudicated, no provision for differential
Interest has been made by the Company, nor has any effect been given in the Fixed Assets Schedule of the
Accounts.
j. Also, in compliance to the directions given by Hon’ble Debts Recovery Appellate Tribunal, Delhi (DRAT), the
Company deposited with the Debts Recovery Tribunal - I, Delhi (DRT-I) a sum of Rs. 51.81 lakhs, which was
received from the District Revenue Officer-cum-Competent Authority, Rewari as land acquisition
compensation for acquisition of approx. 0.69 acres of the Company’s land for widening of the Delhi-Jaipur
NH-8 Highway.
As per the direction of the Recovery Officer (RO) of DRT-1, New Delhi vide order dated 27-10-2021, the
aforesaid Rs.51.81 lakhs along with accrued interest has been released and paid to AARCL.
k. Final Arguments in Debts Recovery Tribunal-1, Delhi (DRT-I) for dues calculated on the IFCI debts were
made and pronouncement of the Order was made by DRT on 18-01-2016 for recovery of Rs. 8449.39 lakhs
together with simple interest @ 13.5% p.a. The Company has filed on Appeal in the Appellate Court (DRAT)
against this order, along with an Application for waiver of the pre-deposit. However, the application for waiver
was dismissed by the DRAT on 12th October 2017 and consequently the appeal was dismissed by DRAT on
30th November 2017 on account of non-deposit of 75% of the amount ordered by DRT-I on 18-01-2016.
The Company has filed a Writ Petition in the Hon'ble High Court, Delhi against the Dismissal Orders of the
Appellate Court (DRAT) as the Company is of the view that the said Order as well as DRT’s Order is not in
accordance with the law and after applying the Reserve Bank of India One-Time Settlement (RBI OTS)
Guidelines and after adjusting amounts already paid, physical possession of part property given and
amount deposited with the DRT, the Company is of the opinion that nothing will be due and payable by the
Company to the Lenders/ Assignees. On the contrary, amounts may become recoverable which claims have
been filed by the Company. However, the said writ not listed as the Company pursured the matter before
Hon'ble Punjab & Haryana High Court and the Hon'ble Supreme Court.
l. In the meanwhile, the Appeal filed by the Company before the Commissioner, Gurgaon Div. was allowed on
10-03-2016. Court held that the Assignment Deed on the basis of which AARCL filed the case in DRT-I is
under-stamped to the extent of about Rs. 500 lakhs Stamp Duty.
Against this Order of Id. Commissioner, Alchemist Asset Reconstruction Company Ltd. (AARC) had filed
Writ Petition in the Punjab & Haryana High Court, Chandigarh which granted an interim stay on the
Commissioner's Order. The said writ petition was finally allowed vide order dated 04-05-2023. The
Company has filed an appeal against said order which is pending before the Division Bench.
m. Pursuant to DRT-1 Judgement / Recovery Certificate dated 18-01-2016, the Recovery Officer-II of DRT-1,
Delhi in February 2019 served a Notice for settling sale proclamation for the sale of the Factory Property.
The Company's lawyer pointed out to the RO on 08.02.2019 that the description / area of land mentioned in
the Notice is wrong and also that the Company had filed an application before the RO for keeping the
proceedings in abeyance till the application filed by the Company challenging RO's orders of attachment
and sale is decided by the Hon'ble Punjab & Haryana High Court. The matter before the RO is still pending,
awaiting adjudication of High Court appeals.
The AARCL had filed separate application Under Section 19 of RDDB Act in respect of alleged debts of IDBI,
which is also pending in DRT.
n. As per Hon’ble Supreme Court order dated 7.5.2012, AARCL was supposed to share Rs.450 lakhs with
KMBL out of the sale proceeds of 10.04 acres land of the Company which was stated to be sold by AARCL for
Rs.1350 Lakhs. As AARCL failed to do so, KMBL filed Contempt Petition in Hon’ble Supreme Court which
directed AARCL to deposit Rs.450 lakh in the Court. Finally, Hon’ble Supreme Court disposed off the
contempt petition on 23.09.2019 and released said Rs.450 lakhs alongwith accrued interest to KMBL and
directed parties to raise their rival contentions before the High Court.
The appeals are pending before the Division Bench of Hon'ble Punjab & Haryana High Court at Chandigarh.
In view of the fact that KMBL received Rs.650 Lakhs (Rs.200 Lakhs out of deposit made by Company in
Punjab &Haryana High Court and Rs.450 Lakhs out of sale of Company’s excess land from Hon’ble
Supreme Court’s registry), KMBL and Coventry settled the pending matter OA 2/2007 and filed a joint
application before DRT-2 Delhi in this regard, which then disposed off the matter as settled vide order dated
06.02.2021. The joint application inter-alia records the stipulation: “With the receipt of entire OTS amount of
Rs.650 Lakhs along with accrued interest, the Applicant Bank/KMBL is left with no further claim against the
Defendant No.1”. However, it was agreed that Counter-claim of Coventry will continue against other lenders
/ assignees. AARCL has filed an application in March 2023 in pending Company appeal in Punjab & Haryana
High Court to dispose off the appeal as infructuous in view of said settlement.
The appeals filed by the Company, in which stay was granted in favour of the Company, are pending before
the Division Bench of Punjab & Haryana High Court at Chandigarh. The Hon’ble High Court would inter-alia
adjudicate whether the claim raised by the assignees is exorbitant and excessive. Hon’ble Supreme Court
also while disposing the Contempt petition of Kotak Bank against M/s Alchemist also directed to agitate all
issues before the High Court. Earlier, M/s Alchemist had filed an application before the High Court to transfer
the Company Appeal to the NCLT but withdrew the application on 09.04.2019 after Company objected to the
same by filing a detailed reply. Now, in 2024, M/s Alchemist has filed a petition under Section 7 of IBC before
the NCLt, Chandigarh, which is pending.
8. Capital Management
The Company objective to manage its capital is to ensure continuity of business while at the same time
provide reasonable returns to its various stakeholders but keep associated costs under control. In order to
achieve this, requirement of capital is reviewed periodically with reference to operating and business plans
that take into account capital expenditure and strategic Investments. Sourcing of capital is done through
judicious combination of equity/internal accruals and borrowings, both short term and long term. Net debt
(total borrowings less current investments and cash and cash equivalents) to equity ratio is used to monitor
capital.
9. Confirmation from Trade Receivables
The Company has process of sending confirmations of balance to Trade receivables through Electronic media
once in a year. However account reconciliation/confirmation in respect of certain accounts of Debtors have not
been received and they are subject to confirmations and reconciliation. Discrepancies, if any, found on receipt of
confirmations shall be accounted for as and when the confirmations are received. The Management is of the
opinion that adjustment, if any, arising out of such reconciliation would not have material effect on the financial
statements of current year.
10. Confirmation from Trade Payables
The Company has a process of sending confirmations of balances to Trade payables through Electronic media
once in a year. However account reconciliation/confirmation in respect of certain accounts of Vendors have not
been received and the are subject to confirmations and reconciliation. Discrepancies, if any, found on receipt of
confirmations shall be accounted for as and when the confirmations are received. The management is of the
opinion that adjustment, if any, arising out of such reconciliation would not have material effect on the financial
statements of current year.
Description of Risk Exposure:
Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such
company is exposed to various risks as follow:
I. Financial Assumptions
A) Salary Increases- Salary increase takes into account inflation, seniority, promotion and other relevant
factors such as supply and demand in the employment market.
B) Discount Rate: The rate used to discount post-employment benefit obligations is determined by reference to
market yields at the balance sheet date on government bonds. The currency and term of the government bonds
is consistent with the currency and estimated term of the post-employment benefit obligations.
Disability: Leaving service due to disability is included in the provision made for withdrawals from service (refer
above for withdrawals)
13. Segment Reporting
According to Ind AS 108, identification of operating segments is based on Chief Operating Decision Maker
(CODM) approach for making decisions about allocating resources to the segment and assessing its
performance. The business activity of the company falls within one broad business segment and substantially
sale of the product is within the country. The Gross income and profit from the other segment is below the norms
prescribed in Ind AS 108. Hence, the disclosure requirement of Ind AS 108 of ‘Segment Reporting’ is not
considered applicable.
14. Material Uncertainity Related to Going Concern Assumption
The Company has incurred significant operating losses, negative operating cash flow, negative working capital,
adjudication of legal process against the company for loan liability, Notice of Recovery Officer-II of DRT-1, Delhi
for settling sale proclamation for the sale of the factory property and negative net worth indicating that going
concern assumption is no longer be appropriate. However, the management is continuing with the operations,
therefore the accounts have been prepared on basis of going concern assumption. Consequently, adjustment
for amount of assets and classification of liabilities required to be recorded has not been carried out.
15. Deferred Tax Assets
There being virtual uncertainties of taxable income in subsequent year, hence deferred tax assets has not be
created in these financials.
16. Related Party Transaction
(As identified by the Management and not verified by the Auditors.)
I Relationships:
(a) Key Managerial Personnel
(i) Shri R.M. Bafna (Managing Director)
(ii) Mr. Akshit Bafna (Whole time Director)
(iii) Shri Kamal Kishore Sharma (Chief Financial Officer)
Reasons for Variance in excess of 25%
(c), (d) Debt Service Coverage Ratio, Return on Equity Ratio decreased due to decrease in profitability and
increase in Loan.
(e) Inventory Turnover Ratio decreased due to increased in inventory.
(g) Trade payables Turnover Ratio decreased due to increased in creditors.
(i) Decrease in Net Profits Ratio due to decrease in profit after tax during current financial year.
(j) Return on capital employed ratio decreased due to decrease in profitability.
(k) Since there is no investment Return on Investment is not applicable
II The Company does not have any transactions with companies which are struck off.
III None of the Loans or Advances in the nature of loans as at 31st March, 2024 and as at 31st March, 2023 are
granted to promoters, directors, KMPs and the related parties (as defined under Companies Act, 2013,)
either severally or jointly with any other person, that are: (a) repayable on demand or (b) without specifying
any terms or period of repayment.
IV The company has used the borrowings from banks and financial institutions for the specific purpose for
which it was taken.
V No proceedings have been initiated or pending against the company for holding any benami property under
the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made there under.
VI All the Registration of Charges or Satisfaction of Charges pending with the Registrar of Companies are
following
VII The company does have no any layer of companies during the current and previous year.
VIII The Company has not advanced or loaned or invested funds (either borrowed funds or share premium or
any other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities
(Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary
shall (i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by
or on behalf of the company (Ultimate Beneficiaries) or (ii) provide any guarantee, security or the like to or on
behalf of the Ultimate Beneficiaries.
IX The Company has not received any fund from any person(s) or entity(ies), including foreign entities
(Funding Party) with the understanding (whether recorded in writing or otherwise) that the company shall (i)
directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on
behalf of the Funding Party (Ultimate Beneficiaries) or (ii) provide any guarantee, security or the like on
behalf of the Ultimate Beneficiaries.
X All title deeds of immovable property are held in the name of company.
XI The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
XII The company has been declared wilful defaulter by banks and financial Institution.
XIII During the year company has not revalued its Property, Plant and Equipment.
XIV No intangible asset is under development during the current as well previous year.
XV The compliance with approved Scheme of Arrangement is not applicable to the company during the current
as well in previous year.
19. Figures for three previous periods have been Regrouped/Rearranged, wherever necessary.
In terms of our report of even date attached
For J K V S & Co. For and on behalf of the Board of Directors
Chartered Accountants Coventry Coil-O-Matic (Haryana) Limited
Firm's Registration No. 318086E
Vineet Mahipal R M Bafna Vivek Saxena
Partner Managing Director Director
Membership No. 508133 DIN No. 00159855 DIN No. 07903817
Place: Noida (Delhi NCR) Rish i Singh Kamal Kishore Sharma
Date: 28-05-2024 Com pa n y Se cretary Chief Financial officer
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