| 1. A) The Company had been declared as a sick Company under the
provisions of clause (o) of Sub section (1) of section 3 of Sick
Industrial Companies (Special Provisions) Act,1985 (1 of 1986) by the
Honorable Board For Industrial And Financial Reconstruction vide order
dated 26th September, 2005. BIFR had ordered for change in management
in the Company against this appeal was filed with AAIFR, who has passed
a judgment in Company's favour and matter has been reverted back to
BIFR.
B) The Labour Union has filed a case against the Company under Payment
of Wages Act, for recovery of wages for the period from July'05 to Nov'
05 before the Hon Labour Court, Baroda. The Court has issued order
dated 17/2/2006 for attaching certain Plant and machinery at its
factory in Baroda. The order was executed on 20th February, 2006.
Since the Plant & Machinery was attached, the Company could not
continue the production and the management had issued notice to
employees that the employees would be called upon for work as and when
required and that no salary is payable from 20th February, 2006 till
the time the production is restarted. Accordingly the Company had
provided the salary for its employees in factory till 20th February,
2006.
2. Contingent liabilities not provided for:
(a) A civil suit has been filed by one of the parties for recovery of
unsecured loans. On the basis of legal advice, the Company disputes the
said liability of Rs. 10,340,450/- claimed by the party as the same is
time barred. The Company has not provided any interest till date. In
this respect the Company has a contingent liability of Rs.
1,88,23,000/- inclusive of interest & principal.
(b) The Company has filed a counter claim against Union Bank of India
for Rs. 7,200,000 and interest there on which approximately is Rs.
43,800,000 as on 31st March 07. The amount payable to the ARCIL (UBI)
as on 31st March, 2011 on principle basis is Rs. 12,566,944. Interest
payable till March 31,2010 was Rs. 4,92,99,845. The Company has written
back interest on working capital loan amounting to Rs. 4,92,99,845. The
Company has not provided for any interest payable on this account
during the year. In past the Company has settled working capital loan
of one of the financial institutions at much below the principle amount
and without interest. The Company is in negotiation with other
Financial Institutions also to settle the remaining working capital
loan below the principle amount. In view of this, the Company does not
anticipate any interest liability of past as well as for the current
year. Hence, no provision for current year's interest is made, and the
past liability has been written back to Statement of Profit and Loss.
(c) The Customs Department is in appeal before High court of Gujarat
against the order of CESTAT for waiver of penalty levied by the customs
department amounting to Rs. 10,00,00,000 which was reduced to
Rs.7,00,00,000. As per the CESTAT order and on merit the Company does
not expect this liability to materialize and accordingly Rs.7,00,00,000
is a contingent liability and the same has not been provided in the
books. The Company has deposited Rs. 2,20,00,000 with Customs
Authorities as deposit against the said disputed penalty. At present,
The Honorable High court of Gujarat has given a stay on the matter.
(d) The Trustees of Debenture holders as well as some debenture holders
have filed suit against the Company for recovery of principle amount of
debentures as well as interest based on compounded rests. As per
records available with the Company, the amount demanded approximately
is Rs. 85,800,000 inclusive of interest by on of the debenture holders.
The Company had provided for interest including penal interest of 16%
only on simple interest earlier. The Company has reached to settlement
with the debenture holders post year end. The debenture holders have
agreed to settle the amount payable @ 30% of principal amount
outstanding subject to certain terms and conditions. The Company is in
process of liquidating some of its assets and pay off the debenture
holders. In case the Company is not able to pay the settled amount
within stipulated period, the settlement may be cancelled by the
debenture holders. The Company has approached BIFR for the permission
to sell the assets, and is confident of getting the permission. The
Company in anticipation of liquidating the assets and paying off the
debenture holders has written back the balance amount not payable to
capital reserve. Since the event, in opinion of Company, is occurring
after the balance sheet date that requires adjustment to the amount
payable on balance sheet date, this adjustment is carried out. The
Company, following to settlement, does not anticipate additional
interest liability as demanded by the debenture holders due to which
Company has not provided interest for the current year as well as
company has written back the interest of RS. 133,401,338 provided in
the earlier years.
(e) The Company has entered into finance lease transactions i.e.
purchase and lease back of the assets with Rajasthan State Electricity
Board (RSEB) dated 30.09.1995 and 30.03.1996. As per the terms of the
agreements there was a Deferred Payment arrangement (DPA) payable in
installments towards payment of purchase consideration by the Company
to RSEB, and the lease rentals are being receivable from RSEB over a
period from 1995-2004. The Company had defaulted in payment of
installments of DPA payable to RSEB and RSEB has withheld the lease
amount payable by them to the Company.
The Company has received a notice from Rajasthan Rajya Vidyut Prasaran
Nigam Ltd.(Formerly known as RSEB) raising a demand of approximately
Rs.71,590,000 and interest @ 20% p.a based on monthly rests. The
Company has raised a claim for lease rental receivable of approximately
Rs. 40,800,000 on RSEB after adjusting all balance purchase price of
leased assets. The Company has filed a suit in the Rajasthan High Court
for recovery of Lease Rentals from R.S.E.B of approximately Rs.
96,492,000 including Interest @ 20%p.a., after adjusting the DPA
amount. The Company does not expect any liability on this account.
(f) Other Disputed Statutory liabilities:
Sr. Name of the Forum where dispute Period to which Unpaid Amt
No Statutory Dues is pending amount relates
1 Income Tax Assessing Officer
(Set Aside by 1996-97 1,661,022
hon'ble lTAT)
2 Income Tax Assessing Officer
(Set Aside by 1997-98 1,414,267
hon'ble lTAT)
3 Income Tax ITAT-Ahmedabad 1999-00 63,000
4 Income Tax ITAT-Ahmedabad 2000-01 55,000
5 Income Tax
Penalty ITAT-Ahmedabad 2007-08 1,801,250
(g) Income-tax matters of the Company for Assessment Year 1996-97 and
1997-98 were pending before hon'ble ITAT, Ahmedbad. Hon'ble ITAT has
decided some issues in favour of the Company, some against the Company,
and some are sent back to the Assessing Officer for re-verification. In
the light of this, the Company is uncertain as to the income-tax
liability involved in these matters as the appeal efect is yet to be
given by the Income-tax Authorities. Further to this, The Revenue had
preferred appeal before hon'ble Gujarat High Court. Hon'ble High Court
dismissed appeals of Revenue except upholding disallowance on account
of travel expenses. Appeal effect for this is yet to be given by the
Revenue, and is likely to be decided along with other set aside matters
to the Assessing Officer. The Company is not able to quantify the
liability on this account following to non availability of necessary
information on an overall basis.
(h) Hon'ble Labour Court, Baroda under the Payment of Wages Act has
directed the Company to pay RS. 129,961,108 to various workers. The
Company has filed Miscellaneous Application before the hon'ble Court to
review its decision as according to the Company, it has already settled
some of the labour dues.
(i) The Company has preferred an appeal before hon'ble Customs, Excise,
and Service Tax Appellate Tribnual for a penalty of RS. 41,424 levied
and confirmed by the lower authorities for the period 2004-05 to
2007-08.
(j) Indo Nippon Chemical co Ltd (INCC) has filed a L.E. & C.Suit
No.97/126 of 2000 in hon'ble Small Causes Court of Mumbai against the
Company to vacate leased premises that the Company has been using, and
as per the Court order dated 08.05.2013, the Company was directed to
deliver possession of suit premises to INCC. The Company has filed an
appeal with the Revision Bench which stayed the above order subject to
the Company depositing Rs 2,00,000 over and above the Rs 30,000 that it
continues to deposit in the Small causes court as rent The Company
accepted this order partly and continued to deposit the Rs. 30,000 rent
per month in court; however went into appeal against the other part of
the order in High Court of Mumbai which allowed the company to pay
arrears at the rate of Rs. 1,00,000 per month which was to be deposited
by the company within two weeks from the order date 17th Feb 2014 which
has been complied with, and the Company has paid Rs. 10 lacs for 10
months for the period May 2013 to Feb 2014 and Rs. 30,000 per month for
8 months amounting to Rs. 2,40,000 for the period May 2013 to Dec 2013
and continues to pay Rs 30,000 per month as rent. Hence the contingent
liability of the company could be Rs. 1,00,000 per month from March2014
till the matter is heard and finally decided by the Revision Bench of
Small Causes Court, Mumbai.
3. Revaluation of Fixed Assets
(i) Based on the valuation report of M/s.Bahulikar Assoicates,
Chartered Engineers and environmental Consultants and in order to
reflect replacement cost of buildings and Plants & Machineries
originally installed and Plants & Machineries acquired on expansion in
1990-91, the Company had revalued the same as on 31.03.1997. As a
result of such revaluation the value of building has been increased by
Rs. 3,04,33,000. (Net) {Gross block Rs. 33,047,000 lacs Less:
accumulated depreciation till 31.3.97 Rs. 2,614,000} and value of Plant
& Machinery has been increased by Rs. 356,635,000 (net), {gross block
Rs. 412,148,000, less accumulated depredation upto 31.3.97 of Rs.
55,513,000}. The resultant increase in value as on 31.3.97 of Rs.
3,870,68,000, thus had been Transferred to revaluation reserve.
(ii) Depreciation provided up to last year included depreciation on
difference between the revalued cost of the assets and original WDV of
the said assets. However, since depreciation on revalued plant and
machinery has been fully adjusted against revaluation reserve, there is
no additional depreciation as such during the year as compared to the
previous year. The balance amount of Revaluation Reserve standing to
the credit on this account is credited to Statement of Profit and Loss
by reduction in dpreciation charge.
4. As a part of restructuring package, the Company had entered into an
agreement with one of the creditors to restructure the Company's
liabilities of US $ 66,31,140.27 equivalents amounting to
Rs.290,121,000 as on 31.3.2000 due and payable to them as under
(a) Out of the total amount payable Rs. 60,000,000 have been waived by
the said creditor.
(b) The Company's liability in terms of US dollars payable to the said
creditor has been converted in terms of Rupee at prevailing exchange
rate as on 31.3.2000.
(c) The said creditor has deferred an amount of Rs. 230,100,000 due and
payable to it. Subsequent, to the agreement, the Company had paid Rs.
23,500,000, and the balance outstanding payable is Rs. 206,619,439.
Since the amount is fixed in Rupee terms, the amount is not revalued at
exchange rate prevailing at the year end.
4. In the opinion of the management, the current assets, loans and
advances are approximately of the value stated if realized in the
ordinary course of business. The provision for all known liabilities is
adequate and is made on the basis of information available and not in
excess of the amount reasonably necessary.
5. Except in few cases where balance confirmations are available, the
remaining balances under the heads Secured Loans, Unsecured Loans,
Sundry Debtors, Sundry Creditors, Other Liabilities, Loans & Advances
and Deposits are shown as appearing in books of account and are subject
to reconciliation / adjustment, if any.
6 A. Payment of remuneration to Managing director prescribed under
Schedule XIII to the Companies Act, 1956. The Company proposed to its
Chairman & Managing Director to consider waiver of salary in view of
the difficult financial position of the Company. Accordingly, the
Chairman & Managing Director accepted the proposal and agreed for not
to provide salary for year ending on March 31,2014.
B. In the absence of operating profit during the year, no commission
is payable to the Managing Director and hence computation of net profit
u/s 349 has not been given.
7. (i) Income Tax assessments are completed up to Assessment Year 2011
-12.
(ii) In view of carry forward losses, no provision for tax has been
provided for the current year. The Company has decided not to make any
provisions for deferred tax assets based on principle of Prudence,
which requires Company to make provision for deferred tax assets only
if it expects to realize them in future. However the Company doesn't
expect to have taxable income in the near future against which the
deferred Tax assets can be realized. Consequently the Company has not
made provisions for deferred tax assets arising due to timing
difference in the books of account as required by the Accounting
Standard 22 - Taxes on Income.
8. The Company has written off unrealizable Investments to the tune of
Rs. 0 during the year (Previous year Rs.8300).
The Company has written back liabilities not payable during the year to
the extent of Rs. 1,82,240 (Previous year Rs. 13,34,01,338) that had
significantly improved the bottom line at end of the year.
9. Debenture Redemption Reserve is brought at par with outstanding
debentures on the balance sheet date by transfering the necessary
amount Profit and Loss Appropriation. The said outstanding balance is
considered as per the letter from the Debentureholders.
10. The Company has written and requested the Income Tax Department to
adjust refunds of past years against Unpaid undisputed dues on account
of direct taxes. The Company is awaiting the reply barring one case
where adjustment is made by the IT Department and reduced liability of
the Company.
11. The Company has to its credit unclaimed dividends and debenture
money to the tune of Rs. 16,26,188 which is due to be transferred to
Investors' Protection Fund of the Government of India. The Bankers are
refusing to transfer these sums in view of non availability of names of
the beneficiaries. The Company is attempting to its level best to sort
the issue out.
12. All the expenses debited to Statement of Profit and Loss are
incurred for the purpose of business or revival of operations of the
Company. The amounts paid to or incurred by the directors and employees
of the Company are paid / incurred under contractual agreement or
customary, and according to the management, none of the expenses of
personal nature are debited to stetement of profit and loss.
13. Information pursuant to Schedule VI to the Companies Act 1956 is
given in these accounts to the extent applicable in view of the
Management.
14. Previous year's figures have been regrouped and rearranged
wherever necessary so as to make them comparable with that of the
current year.
15. "The Micro, Small and Medium Enterprise Development Act, 2006" has
repealed the provision of interest on delayed payment to small scale
and ancillary industrial undertaking Act, 1993. The management does not
find it necessary to provide for interest on delayed payments to the
suppliers covered by the said Act in view of insignificant amount and
probability of its outgo.
16. The Company has only one reportable business segment hence no
further disclosure is required under Accounting Standard-17 on "Segment
reporting".
17. Disclosures required under Accounting Standard-19 on "Leases".
Finance Lease - Assets Given on Lease
The Company has dispute With RSEB [Note 2 (e)] above, and the matter is
pending before hon'ble Court, the Company is not receiving any payment
from the Lessee. The Company has depreciated entire amount of assets
given on lease to RSEB amounting to Rs. 188,270,340.
18. Notes "1" to "29" form an integral part of the accounts and have
been duly authenticated.
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