| 1. Company overview
Tecpro Systems Limited is an engineering company primarily engaged in
designing, engineering, manufacturing, supply, installation and
erection of material handling systems, power plants including balance
of plant packages in power sector.
2. (a) The Authorized Share Capital of the Company has been
reclassified and divided into 8,11,50,000 Equity Shares of Rs. 10 each
amounting to Rs. 81,15,00,000and 50,00,000 Preference Share of Rs, 100
each amounting to Rs.50,00,00,000 during the year.
(b) During the five years period ended 31 March 2014 Company has issued
equity shares for consideration other than cash as follows:-
1,65,26,291 equity shares of Rs. 10 issued during the year 2009-10 as
fully paid-up shares to shareholders of erstwhile Tecpro Ashtech
Limited and erstwhile Tecpro Power Systems Limited, pursuant to a
scheme of amalgamation, for consideration other than cash.
3. Nature of security
Working capital facility comprises cash credit, buyer's credit, export
packing credit and bills discounted from banks.
* Working Capital facilities are secured by first charge on the present
and future current assets of the company on pari passu basis.
* Cash credit, short term loans and buyers credit from certain banks
are further primarily / collaterally secured by way of hypothecation /
mortagage of moveable / immoveable fixed assets of the Company on a
pari passu basis other than those specifically funded through term
loans and charged to State Bank of India and by way of equitable
mortgage over certain assets of certain directors (includes a relative
of a director) of the Company on pari passu basis.
* Packing Credit loan from DBS Bank is secured by second charge on the
current assets and moveable fixed assets of the Company.
* The facilities are also secured by personal guarantee of Mr. Amul
Gabrani (director), Mr. Ajay Kumar Bishnoi (director) and Mrs.
Bhagwanti Gabrani (relative of director, except for facility availed
from DBS Bank)
* Further, facilties from SBI are also secured by pledge of certain
shares by Mr. Amul Gabrani and Mr. Ajay Kumar Bishnoi (directors of the
Company) and the loan from SBI is also secured by corporate guarantee
given by Fusion Fittings (I) Limited.
4. (i) The Company has incurred a loss during the year and has had to
face a very tight liquidity position arising out of, among other
things, overall deceleration in the economy, lower industrial growth,
delayed decisions at various levels affecting the project progress.
With delayed recoveries from customers, the Company was unable to
service interest and ensure prompt repayment of principal amount due to
bankers. In the circumstances, the board of directors in its meeting
held on 28.12.2013 had decided to approach the banks through the
corporate debt restructuring (CDR) process for restructuring of the
Company's debt. The CDR empowered group in its meeting held on March
29,2014 has admitted the Company's proposal under the CDR which is
under consideration. The restructuring of debt under CDR supports the
continued assumption of going concern' in drawing up the financial
statements and will ensure that the company meets its obligations as
and when it falls due.
(ii) The circumstances of tight liquidity detailed in (i) above has:
(a) Resulted in delays in project execution on account of funding
difficulty and increased costs due to stretched time frames. Certain
customers have therefore encashed Bank Guarantees of Rs.295,57,00,000
including performance guarantee of Rs. 117,27,55,000 for the
delays.These are however considered realizable based on continuous
steps / engagement with the customers for realisation of dues.
(b) Necessitated certain customers to make direct payments to Company's
vendors to avoid delays in deliverables.The Company has initiated steps
to obtain confirmation of payment from such vendors for adjustment of
payments made by customers.
(iii) Recoverability of debts and Unbilled Revenue including Rs.
165,63,02,000 outstanding for a period of more than three years,debts
for additional supplies/work made upon request by customers outside of
the contract, debts from certain customers who have encashed bank
guarantees and Rs.39,42,68,165 recognized as interest income arising
from delayed payments made by certain customers (included in Note 22)
is considered realisable based on interactions with the customers and
negotiations/discussions.
(iv) An exercise of circularization of balances of
vendors/Creditors/Debtors and reconciliation of the balances with the
books of account has been initiated subsequent to the end of the year
and adjustments, if any, will be made upon completion of the said
exercise.
(v) In respect of certain contracts, there have been significant delays
in completion of the projects beyond the contracted dotes. This could
lead to levy of liquidated damages by the customers as per the terms of
contract with them. Till date the company has not been made aware of
significant liquidated damages being levied by its customers and
accordingly no provision is considered necessary in this regard by the
Management.
5. The gross block of leasehold land includes Rs. 7,60,86,192
(previous year Rs. 7,60,86,192) on account of revaluation of leasehold
land belonging to erstwhile Blossom Automotive Private Limited which
has been transferred to the Company on amalgamation with effect from 1
April 2008. Consequent to the same, there is an additional charge of
depreciation of Rs. 10,01,034 (previous year Rs. 10,01,034) and an
equivalent amount has been withdrawn from revaluation reserve. This has
no impact on profit for the year.
6. Contingent liabilities and commitments (to the extent not provided
for)
As at As at
31 March 2014 31 March 2013
(i) Claims against the company not
acknowledged as debt: Sales tax matters 242,844,937 242,844,937
(ii) Claims against the company not
acknowledged as debt: Entry tax matters 48,556,771 48,556,771
(iii) Claims against the company not
acknowledged as debt: Central excise
matters 1,049,990 1,049,990
(iv) Claims against the company not
acknowledged as debt: Service tax
matters 6,536,536 6,536,536
(v) Claims against the company not
acknowledged as debt: Others 197,561,000 -
(vi) Demand for additional price/
enhancement cost in respect of factory
plots situated in Bawal* 9,885,115 9,885,115
(vii) Sales tax liability against
which forms to be collected 2,817,994,489 3,227,603,543
(viii) Income tax laibility
disputed (refer Note 39) 501,400,000 -
* The Company had received notices dated 4 December 2007 and 29
December 2007 from HSIIDCL for additional price/ enhancement cost
amounting to Rs.98,85,115 (previous year Rs. 98,85,115 {including
interest}), in respect of factory plots situated in Bawal. The Company
filed a writ petition in the Punjab and Haryana High Court on 8 January
2008 and obtained a stay order on 9 January 2008. This matter is under
adjudication. Pursuant to above, Rs.98,85,115 (previous year Rs.
98,85,115) have been disclosed as 'Contingent liability' in the notes
to the accounts.
7. The company has paid remuneration to a managerial person in excess
of limits specified in provisions of Companies Act 1956 by Rs.
51,94,660. Pending the approval from the shareholders and the Central
Government the excess remunaration paid has been included under Note 16
8. On March 6,2012 search proceedings under Section 132 of the Income
Tax Act, 1961 ("the Act") were undertaken in respect of the Company.
The search proceedings were effectively concluded vide last Panchnama
drawn on May 3,2012.The Company had furnished during the earlier year
return of income for six assessment years beginning from assessment
year 2006 07 pursuant to notices received from the Income Tax
Department. Tax assessments upto 2010-11 was completed with no ad-
ditional demand. As regards Assessment Years 2011 -12 and 2012-13 the
assessments have been completed and a demand of Rs 50,14,00,000 has
been raised on the Company. This demand is being disputed and has
accordingly been disclosed under contingent liability.
9. The Company has adopted the principles of Accounting Standard 30 -
Financial instruments: Recognition and measurement, issued by the
Institute of Chartered Accountants of India, with effect from April
1,2013, in respect of designated contracts meeting necessary criteria
as "Cash flow hedges". The gain and losses on effective Cash flow
hedges are recognised in Hedge Reserve Account till the underlying
forecasted transaction occurs. This is different from the earlier year
practice of reckoning all gains and losses on such contracts in the
Statement of Profit and Loss. However, there is no impact due to the
aforesaid change on the results for the year ended March 31,2014 due to
the ineffectiveness of the hedges. '
10. General description of gratuity plan:
Gratuity Plan (Defined benefit plan)
The Company operates gratuity plan wherein every employee is entitled
to the benefit equivalent to 15 days salary (includes dearness
allowance) last drawn for each completed year of service. The same is
payable on termination of service, or retirement, or death whichever is
earlier. The benefits vests after five years of continuous service. The
Company has set a limit of Rs. 10,00,000 (previous year Rs. 10,00,000)
per employee.
11. Disclosure in respect of operating leases under Accounting Standard
(AS) - 19 "Leases" prescribed by the Companies (Accounting Standards)
Rules, 2006.
a) General description of the Company's operating lease arrangements:
The Company enters into operating lease arrangements for leasing area
offices, factory building, equipments and residential premises for its
employees.
Some of the significant terms and conditions of the arrangements are:
* agreements for most of the premises may generally be terminated by
the lessee or either party by serving one to six month's notice or by
paying the notice period rent in lieu thereof.
* the lease arrangements are generally renewable on the expiry of lease
period subject to mutual agreement.
* the Company shall not sublet, assign or part with the possession of
the premises without prior written consent of the lessor.
b) Lease rent charged to the statement of profit and loss on account of
Minimum lease rentals Rs. 25,23,31,549 (previous year Rs.
44,09,77,858).
12. Segment reporting
The Company's primary segment is identified as business segment based
predominantly on nature of product and services and secondary segment
is identified based on the geographical location of the customer as per
Accounting Standard 17. The revenue from individual segments is less
than 10% of total revenue from external sales and inter-segment sales
and therefore there are no reportable segments for the current and
previous year.
# Company has given a letter of comfort for various facilities taken by
Hythro Power Corporation Limited from a bank with limit of Rs. Nil
(previous year Rs. 32,00,00,000)
## Guarantees and collateral security given by Ajay Kumar Bishnoi and
Amul Gabrani for various facilities taken by the Company from banks
with a limit of Rs. 5273,18,00,000 (previous year Rs. 4903,08,00,000
and Bhagwanti Gabrani (relative of a Director) for various facilties
taken by the Company from banks with a limit of Rs. 5056,00,00,000
(previous year Rs.4471,58,00,000).
A Guarantees given by Fusion Fittings (I) Limited for various
facilities taken by the Company from a bank with a limit of Rs.
2201,64,00,000 (previous year Rs. 2166,58,00,000)
@ Ajay Kumar Bishnoi and Amul Gabrani have pledged their shares in the
Company with a bank for credit facilities taken by the Company with a
limit of Rs. 2201,64,00,000 (previous year Rs. 2166,58,00,000)
Figures in bracket refer to previous year 31 March 2013
13. Estimated amount of contracts remaining to be executed on capital
account and not provided for [net of advances of Rs. NIL (previous year
Rs. 5,46,12,843)] is Rs. NIL- (previous year Rs. 10,22,81,190).
14. Previous year figures in balance sheet have been regrouped /
recast wherever necessary to conform to the current year's
classification/presentation. Further, the current year figures are not
comparable with previous year on account of amalgamation.
15. The figures for the previous year are drawn from accounts audited
by a different firm of chartered accountants.
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