| 01. Contingent liabilities
a. Income-Tax (under dispute)
PARTICULARS As at 30-06-2000 As at 30-06-1999
Rs. in Lakhs Rs. in Lakhs
i. Matters in respect of which the 226.98 226.98
Company has succeeded before the
Appellate Authority and the Dept.,
is in appeal (excluding interest)
ii. Matters in respect of which the 75.03 495.92
Department has won before the Appelate
Authority and the Company is in appeal
(excluding interest)
Total 308.67 722.90
b. Sales Tax matters under dispute Nil (Previous year Rs. 133.84 Lakhs)
c. Sales Tax leviable, if any, pursuant to Deeds of assignment of
certain receivables executed by the Company. Amount not ascertainable.
d. Financial guarantees to Banks Rs. 4.09 Lakhs (Previous year Rs.
30.23 Lakhs) in respect of the banks' portfolio of truck funding
handled by the Company.
02. Liability in respect of partly paid shares Rs. 51.10 Lakhs
(previous year Rs. 51.10 Lakhs)
03. Arrears of Dividend on Preference Share Capital :
-- 13% Cumulative Redeemable Preference Shares, Rs. 1,51,45,000/-
(Previous year 72,15,000/-) including Dividend Tax.
-- 14% Cumulative Redeemable Preference Shares, Rs. 1,00,43,045/-
(Previous year 47,84,455/-) including dividend Tax.
04. General
a) Going Concern
The Accounts for the year have been drawn up on a going concern basis,
as in the previous year, notwithstanding cessation of financial
services business, restoration of Insecticides Manufacturing Business
to Vijaya Lakshmi Insecticides and Pesticides Limited (VIPL) and
continued losses over the last two years, pending a final decision by
the Management about the future business plans.
b) Cessation of financial services activities
Considering the constriction in business in the NBFC sector, high risk
profile and change in regulations in respect thereof, the Company
decided not to carry on any of the activities listed in clauses (i) to
(vi) of Section 45 I (c) of Reserve Bank of India Act, 1934 and
accordingly did not carry on such activities. Acceptance of fixed
deposits was also stopped by the Company effective 10th December 1998.
The Company has been advised, through written legal opinions from
senior counsel, to the effect that the provisions governing NBFCs under
Chapter IIIB of the RBI Act, 1934, shall no longer be applicable to the
Company. The Company has written to the RBI to treat, as withdrawn,
the Company's application for registration as a Non Banking Financial
Company (NBFC). Decision of the Reserve Bank of India is awaited.
Income from financial services activities reported during the year
represents income accrued and due on the businesses concluded during
the previous years. The Company is continuing its efforts to collect
the receivables due in respect of financial services activities entered
into in the previous years.
c) Manufacturing unit at Shadnagar, Andhra Pradesh
The Company's manufacturing facilities at Shadnagar in Andhra Pradesh
has commenced commercial production with effect from 1st July 1999.
05. Capital Commitments
On Capital Account (net of advances) not provided for Rs. Nil Lakhs
(Previous year Rs. 15.18 Lakhs)
06. Cumulative Redeemable Preference Shares :
a) Pursuant to consent received from the holders of 13% Cumulative
Redeemable Preference Shares (CRPS), the date of redemption of the said
CRPS has been extended from 19th August 1999 to 19th August 2001.
b) Against 14% Cumulative Redeemable Preference Shares of Rs. 100/-
each aggregating to Rs. 3,07,88,000/- :
i) 2,53,330 shares have fallen due on 22nd September 2000 and ;
ii) Balance 54,550 shares are due for redemption on 14th November 2000.
07. Secured Loans
a) Debenture Series IV :
i. Series IV Debentures together with interest thereon are secured by a
mortgage/first charge on specified fixed assets in favour of the State
Bank of Hyderabad, the trustees for the Debenture holders. These
Debentures are redeemable in three equal annual instalments at the end
of the 5th, 6th and 7th year from the date of allotment i.e.
27-03-1993. A premium of 5% of the face value is also payable on the
expiry of the 7th year together with redemption instalment.
ii. Against the second and third instalment due on 27th March 1999 and
March 2000 of Rs. 100 Lakhs each Rs. 10 Lakhs has been paid during the
year and Rs. 190 Lakhs together with premium on redemption aggregating
to Rs. 15 Lakhs has not been paid on the due date. The Company has
approached the debenture holders for deferment of payment of aforesaid
amount of Rs. 205 lakhs to 31st March 2001. The consent of debenture
holders is awaited.
b. The Working Capital facilities including Demand Loans from Banks
are secured by hypothecation of current assets both present and future
subject to the exclusive charge created/to be created in favour of the
lending banks on the movable assets of the Company
The credit facilities from Banks are further secured by personal
guarantees of Sri K S Raju, a former Director of the Company and M/s.
K S Raju & Associates Holdings (P) Ltd.
c. The term loan facilities from Financial Institutions and Banks are
secured by exclusive hypothecation of equipment procured under the
respective loans.
d. In respect of securitisation of lease receivables on "with recourse"
basis, the assignees are additionally entitled to the security of the
underlying leased assets for any shortfall in recovery.
08. Unsecured Loans :
a) Fixed Deposits
The Company Law Board (CLB) - Southern Region, on a petition filed by
the Company seeking approval of the CLB to make repayment in respect of
deposits matured and yet to mature extending beyond the contracted date
of maturity, has ordered the payment of interest and principal amounts
in a phased manner spread over three years as provided in their Order
dated 29th February 2000.
b) Debenture Series V :
Debentures Series V aggregating to Rs. 250 Lakhs are held by Bank of
Madura. As per terms of issue the Debentures are to be redeemed at the
end of 17 months from the date of allotment 15-01-1998. i.e.,
15-06-1999. This was extended with consent of the debenture holders to
fall due on 15-06-2000.
The Company has approached the Debenture holders seeking consent for
further extending the date of repayment, the reply is still awaited.
09. Fixed Assets :
Deletions under land represents sale of immovable property situated at
Hyderabad, originally acquired in settlement of a debt. Necessary
clearances from Central/State Governments as required are yet to be
obtained for the effective transfer of title in favour of purchasers,
10. Investments :
No provision has been considered in respect of the diminution in the
value of quoted investments (non-trade), amount Rs. 175.36 Lakhs
(previous year Rs. 190.84 lakhs), as in the opinion of the management,
such diminution is on account of depressed market conditions which is
not considered permanent.
Further, due to non-availability of financial statements from
respective companies where the management has made investments in
unquoted equity shares and debentures of a company, the networth of
such companies could not be determined to enable providing for
diminution, amount not ascertained (previous year - amount not
ascertained).
11. Current Assets, Loans & Advances and Current Liabilities :
a) Stock on Hire and Lease Debtors (Considered good) include Rs.
1682.25 Lakhs (previous year Rs. 1038.30/- Lakhs) due from parties.
against whom the Company has initiated legal action.
During the year under report, Income Tax department sought to verify
certain lease transactions entered into by the Company Accordingly, the
Department officials have carried out survey operations on lessees'
premises and not being fully satisfied with the documentation and
evidence that was produced, treated some of the leases as finance
transactions and disallowed depreciation. The Company has for good
order agreed with the Department recomputed depreciation claim for the
year and for earlier years and filed returns accordingly However, the
Company continued to reflect the said transactions as finance leases in
its books of account; Income recognition from those leases and
provision for depreciation has accordingly been made in the financial
statement. The effect of change in treatment of the lease transactions
for Income Tax Assessments has resulted in a net additional tax demand
of Rs. 23.02 lakhs which has been fully provided.
b. Balances under stock on hire, Sundry Debtors, Lease Rental Debtors,
Trade Bills Purchased, Other Debts, Loans & Advances and Sundry
Creditors represent the aggregate receivables or payables against
manufacturing and financial services and are subject to reconciliation
and confirmation by respective parties.
c. The review and efforts initiated by the Company to realise
outstanding overdues relating to hire purchase, lease, bills
receivables, business deposits and other credit facilities has
continued during the year as well but the recoveries are sluggish.
However the recovery proceedings are being continued.
The Company has during the course of recovery proceedings of the
outstanding receivables against borrowers repossessed assets. Short
fall, if any, arising on disposal of such assets has not been
determined.
As an outcome of the review, the Company has during the year written
off debts aggregating to Rs. 1921.21 lakhs as irrecoverable, Further
shortfall in the recovery will be considered and provided on completion
of the review.
12. Income Tax :
a) Liability towards Income Tax has been computed upto 31st March 2000
in line with the uniform accounting year requirement of Income Tax
Department and in the absence of the taxable income, as computed, no
provision has been made.
b) The Income Tax liability has been arrived at taking into
consideration the benefits likely to be available to the Company in the
appellate orders of the previous years. The Company as well as the
Income Tax Department are in appeal, and the said appeals are in
various stages of disposal. Pending crystallisation of the tax
liability, the Company has paid an aggregate amount of Rs. 12.28
crores, including TDS of Rs. 8.06 crores (previous year Rs. 17,62
crores, including TDS Rs. 11.67 crores), and the Company has charged
off the liability to the extent they have crystallised.
c) In respect of Income Tax matters where proceedings for pending
assessments are in progress, additional demand, if any, will be
provided on completion and final determination.
d) The impact, if any, consequent to the envisaged acquisition,
restoration and licensing of the Insecticides undertaking of VIPL
during prior years has not been considered in the accounts, pending
completion of assessment proceedings of the Company,
13. Prudential Norms and Provisioning
The Company ceased to carry on the activities listed under clauses (i)
to (vi) of Section 45-1 (c) of the Reserve Bank of India Act, 1934 and
based on the legal opinion, to the effect that the provisions governing
NBFCs under Chapter III B of the Reserve Bank of India Act, 1934, are
no longer applicable to the Company including the Prudential Norms on
Income Recognition and Provisioning, prescribed by the RBI, the
Prudential Norms are hence not require to be followed. Consequently
amount of provisioning and derecognition of income required to be made
as per Prudential Norms has not been quantified.
14. Income Recognition :
a) Diminution in the value of stock-in-trade (shares) aggregating to
Rs. 84.23 lakhs (Previous Year Rs. 91.76 Lakhs) consequent to valuation
in accordance with the accounting policy of the Company has been
considered as a loss on arbitrage and stated net of income from
arbitrage.
b) Income on account of overdue compensation charges has been
recognised on accrual basis to the extent of certainty of collection as
assessed by the Management.
15. Reconciliations
Reconciliation of Bank accounts and business related accounts including
hire purchase, lease, public deposits etc. are in progress and yet to
be completed. The impact of adjustments arising out of such
reconciliations will be dealt with in the accounts on completion of
reconciliation. The effect on the profit/loss for the year is not
ascertainable at present.
16. In the absence of profits no Computation of net profits in
accordance with Section 349 of the Companies Act, 1956 has been made.
17. Previous year figures have been regrouped, reclassified and recast
wherever necessary to conform to current year's classification.
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