Onerous contracts

A contract is considered as onerous when the expected economic benefits to be derived by the Company from the contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision for an onerous contract is measured at the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognizes any impairment loss on the assets associated with that contract.

Rights preferences and restrictions attached to equity shares

The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividends and share in the Company’s residual assets. The equity shareholders are entitled to receive dividend was declared from time to time subject to payment of dividend to preference shareholders. The voting rights of an equity shareholder are in proportion to its share of the paid-up equity capital of the Company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable have not been paid.

Rights preferences and restrictions attached to 6% cumulative redeemable optionally convertible preference shares

The The Company had issued 3,838,135 , 6% cumulative redeemable convertible preference shares of INR 100 each to the promoters on 12 September 2007. Out of these shares, 752,500 shares were converted into equity shares of the company after the expiry of 36 months at par on 10th November,2010. The remaining 3,085,635 shares shall carry the option of being converted at the option of the holder into ordinary equity shares of the Company after the expiry of a period of sixty months at a price to be determined in accordance with the then prevailing SEBI (DIP) guidelines or can be redeemed by the Company at par after the end of year 5,6,7 and 8 from the date of allotment. During the year the promoters have exercised the option of conversion and accordingly converted preference shares of 10,85,635/- with face value of Rs. 100/- each as 10856350 equity shares of Rs. 10/- each on September 10, 2015.

"* Details of term loans obtained from the financial institutions “

Term loan - II from financial institutions is obtained from State Industrial and Investment Corporation of Maharashtra Limited and carry an interest rate of 18.00% per annum and is repayable in 1 quarterly installment of INR 4,000,000 and 16 quarterly installments of INR 6,000,000 commencing from December 2011.

“Term loan - III from financial institutions is obtained from State Industrial and Investment Corporation of Maharashtra Limited and carries an interest rate of 18.00% per annum and is repayable in 16 quarterly installment of INR 10,000,000 and 1 quarterly installment of INR 40,000,000 commencing from June 2015.

“As on the balance sheet date Rs.620 Lakhs is overdue in repayment of principal in respect of SICOM Loan and Rs. 573.97 Lakhs overdue towards interest.

“The loans are secured against first charge and hypothecation of entire fixed assets of the Company, both present and future, including land and building together with plant and machinery at Nandikandi unit and irrevocable personal guarantee of the promoter director/¹"

** Loans from Mr T Sandeep Reddy, Director of the Company (related party) includes an amount of Rs.10,762,154 (previous year INR 10,762,154) carrying no interest and INR 23,85,393(previous year INR 23,85,393) carries an interest rate of 15% per annum. The loans do not have a fixed repayment term and will be repaid subject to the Company having adequate cash profits.

# Vehicle loan is obtained from HDFC Bank in the financial year 2014-15 and carries an interest rate of 11.50% per annum and is repayable in 60 equal monthly installment including interest of INR 10,144 with the last installment due in March 31, 2019 The loan is secured against the hypothecation of vehicle.

* The The cash credit and over draft facilities from bank carry an interest rate of 14% per annum computed on a monthly basis on the actual amount utilized and are repayable on demand. The loan is secured against hypothecation on entire stocks, book debts, loans and advance etc., at the Balabadrapuram and Nandikandi units along with personal guarantee of Mr. T Sandeep Kumar Reddy.

*** Loans from Others Carry an interest rate of 14.5% per annum and are repayable on demand .

1. In November 2000, the Company was declared to be a sick industrial company under the Sick Industrial Companies (Special Provisions) Act, (SICA) 1985. Industrial Development Bank of India, which was appointed as the operating agency has sanctioned the Rehabilitation Scheme on 29 May 2008. The scheme among other things envisages the reliefs and the concessions to be provided to the Company by various authorities, sources of finance and the application funds. On 28 June 2010 the Board of Industrial and Financial Reconstruction (BIFR) passed orders relieving the Company from the purview of SICA considering the net worth of the Company.

2. As at March 31, 2016 the accumulated losses amounted to Rs.79,58,43,558 /- which is more than fifty percent of the peak net worth of the company during the four financial years immediately preceding the current financial year. The financial statements have been prepared on a going concern basis based on a Comfort letter received from its promoters for a continued support to the company with all necessary assistances including financial and operations to continue with the operations of the company. Promoters are hopeful that company would be able to generate sufficient profits in the foreseeable future to make it economically viable. Keeping in view the plans for introducing new products and disposal of one of the manufacturing unit located at Biccavolu in Andhra Pradesh.

3. Income tax expense

Current tax: Current tax provision for the year is Rs. Nil (previous year: Rs. Nil)

Deferred tax: Deferred tax assets have been recognized only to the extent of deferred tax liability on excess depreciation provided in the books of account over depreciation allowable under the income tax laws since this is virtually certain of realization. In absence of virtual certainty of realization, deferred asset on carry forward losses and other timing differences have not been recognized. Accordingly there was no impact on profit and loss account for the year.

The conversion of outstanding Cumulative Redeemable Optionally Convertible Preference Shares into equity, if made would have the effect of increasing/ (reducing) the earning/ (loss) per share and would therefore be anti-dilutive. Hence the preference shares are anti-dilutive and are ignored in the calculation of diluted earnings per share.

4. Segment reporting

The entire operations of the Company relate to only one segment namely, “Maize” Processing and its sales in India" and accordingly there is only one business and geographical segment.

5. Leases

The Company has taken office facilities on lease under cancellable and non-cancellable operating lease arrangements. The total rental expenses under cancellable operating lease was INR 32,44,401/- (previous year INR 30,98,105) has been included under "Rent" in the Statement of Profit and Loss. An amount of Rs. Nil (previous year INR Nil) was remitted as non cancellable lease deposit.

6. Employee benefits

Defined contribution plan

The company makes contributions, determined as a specified percentage of employee’s salaries, in respect of qualifying employees towards provident fund and employee state insurance, which are defined contribution plans. The company has no obligations other than the above to make specified contributions. The contributions are charged to the statement of profit and loss as they accrue. The amount recognized as an expense towards contribution to provident fund and employee state insurance aggregated to Rs 49,13,217/- (Previous Year Rs. 63,12,849/-).

Defined benefit plans

The company operates two defined benefit plans that provide gratuity benefit ad compensated absences benefit. The gratuity plan entitles an employee, who has rendered at least 5 years of continuous service to receive one-half month’s basic salary for each year of completed service at the time of retirement/resignation/ termination of employment.

Discount rate: The discount rate is based on the prevailing market yields of Indian government securities as at the balance sheet date for the estimated term of the obligations.

Salary escalation rate: The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.

The Company does not have any plan assets.

7. Amounts payable to Micro, Small and Medium enterprises

The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect of the amounts payable to such enterprises has been made in the financial statements based on information received and available with the Company. Further, in view of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the aforesaid act is not expected to be material. The Company had received a claim for Rs. 7,987,616 from a small and micro enterprise towards overdue interest. During the earlier years the Company has received a stay order from the High Court of Andhra Pradesh. Hence, no provision towards the interest is made during the current year.

8. CIF value of imports

There are no imports made during the current year and previous year.

9. Expenditure in foreign currency

There are no expenditure in foreign currency in current year and previous year.

10. Unheeded Foreign Currency Exposure

Nil

11. Previous year figures have been regrouped/ reclassified wherever necessary, to conform to the current classification.