| 1. The Fund Based (EPC/PSC) limits were generally availed for Diamond
division whereas Non fund Based (SBLC/BG) limits were utilised for
facilitating procurement of gold for manufacture of jewellery. The
Company procured gold on loan basis. As per exant FTP & RBI Guidelines,
the maximum tenor for which gold loan can be availed of is 270 days.
Accordingly, SBLCs had validity of 270 days. This was adequate to cover
manufacturing cycle of around 90 days and credit of 180 days that the
Company extended to its overseas customers.
2. Owing to delay in receipt of inward remittances from overseas
customers against export bills, the Company could not arrange for
payments for liquidating gold loans which were due in March 2013. In
view of these events of default, the bullion banks initially invoked
SBLCs which had fallen due but later, as defaults persisted, invoked
all SBLCs including even those in respect of which gold loans were not
due (save and except State Bank of India which invoked SBLCs only when
gold loans fell due for payments), as the Gold Loan Agreements executed
by the Company with Bullion Banks provided cross default clause
entitling them to recall all outstanding gold loans even in case of
single event of default. All invoked SBLCs were paid by the Consortium
Banks.
3. Further owing to continuing defaults by overseas customers and
overdrawn accounts, the Company could not repay Export Packing Credits
and Post Shipment Advances on due dates.
4. As a result of invocation and devolvement of SBLCs and defaults in
clearance of EPC/PSC, the liabilities have got crystallized in rupee
terms and the accounts are overdrawn. With no gold lines from bullion
banks and no fresh SBLCs or FB credits from consortium banks, the
operations have been materially affected after March 2013.
5 The bank has not provided with information on crystalisation of a
foreign currency loan. The Company continues to restate the foreign
currency liabilties at year/period end till 31st March 2014. The
Company has not restated its foreign currency liabilities for year
ending 31st March 2015. Had it been restated on the basis of exchange
rate as at 31.03.2015, the amount payable would have been higher by
Rs.7,467,778/-. (Previous Period Rs. Nil).
6 Few Banks have classified the Company and its directors as willful
defaulters. However, the Company has vehemently denied the same and
reiterated that they were victim of circumstances beyond their control
and are taking all possible steps to recover the same. The Company,
which had received from Standard Chartered Bank, Lead Bank of the
Consortium, notice under the SARFAESI Act, has denied all the
allegations made therein. Some of the banks have sent notices to the
promoter/ guarantor and also to the companies who have provided
corporate guarantees.
7 The Company has initiated legal proceedings before the Conciliation
Committee of Sharjah Federal Court, the step preceding to filing of
commercial cases before the Sharjah Court in May 2014. The case is
under progress and the experts appointed by the UAE Court have sought
explanations from the defaulting overseas customers. Your Company is
hopeful of an early favourable outcome from the proceedings.
8 As the Company had not declared any dividend for the FY 2013-2014 (6
month period) and FY 2012-2013 (18 month period), the question of
appropriating any amounts out of the same towards arrears of call or
allotment monies in respect of shares which were not fully paid-up just
did not arise.
9 There are no amounts of unclaimed dividend due and outstanding to be
credited to Investor Education and Protection Fund. During the year,
the Company transferred unclaimed dividend in respect of FY 2006-2007
amounting to Rs.2,168,537 (During the previous Period Rs.1,773,828 for
FY 2005-2006) to Investor Education and Protection Fund.
10 The Overdue instalments of long term debt comprise principal
outstanding amount and interest levied by bank till 30th September
2013, in respect of Axis Bank Term Loan for WindMill which was payable
and the Company has defaulted in making payments to Axis Bank in
respect of Principal Rs.7,918,400/- and Interest Rs. 1,191,525/-
(Previous Period Rs. 535,108/-) due there on. The default is continuing
as on the date of balance sheet.
11 There were minor delays for few days during the period in repayment
of instalments of Loan and Interest to ICICI Bank for vehicle loan
availed of by the Company.
Notes :
12. Impairment of Fixed Assets :
a) Please refere note no. 12 in Accounting Policy.
b) The Company has taken into consideration the Provisions of
Accounting Standard 28 - Impairment of Assets.
The Company does not have any assets, which would require impairment
and provisions.
13. Of the total WDV of Fixed Assets, Rs.9,999,629 represent WDV of
Fixed Assets of Engineering division at Jodhpur which had discontinued
operations since FY 2005-06.
The Company had provided for impairment of these assets during FY
2007-08 & 2008-09. No further provision for impairment is considered
necessary.
The Company has not been providing depreciation in respect of these
assets.
14. Assets in the Column Sold/Scrapped/Dispossed off above, includes
Assets lying in the tenanted properties not recoverable due to vacation
of such premises has been written off at WDV.
Similarly the assets also includes certain softwares /hardwares for
business no longer in operation for eg. Commodity/Derivatives/ bullion.
The total WDV of such assets above is Rs.3,122,190/-.
15. The Company has considered depreciation as per Schedule II of the
Companies Act,2013.Thus assets which have exceeded their estimated
useful life have not been charged depreciation and are reflected at
their realizable residual/scrap value.The other assets have been
depreciated over their useful life as per Schedule II provisions.
16. The Company holds 49% of total paid-up equity share capital of
Forever Precious Jewellery and Diamonds Limited (FPJDL). FPJDL's
operations including its retail Jewellery /Gold business is totally
suspended. The auditors, for the period ended KH, X51DEG IaHb E5>'
NF5$@*'< S0dU9 5, 5 )%)VA%@)A D%)D'1)L
17. FPJDL has also initiated legal action against its defaulting overseas
cutomers.
18. The Company has accounted for permanent diminution in the value of
long term investments in group concern as above.
19. As stated by the Management, entire inventory of diamonds and pearls
at Surat & Mumbai which, though hypothecated in favour of consortium,
was in Company's possession has been placed in the lockers in PNB and
is in the joint custody with PNB since 18.06.2013. The banks had got
inventory valued on 30.09.2013 and the total value of inventory, as per
valuation report, was Rs.393,500,031.
20. The Stock at Chennai SEZ and Cochin SEZ unit are also in joint
custody with PNB since November 2013 at Company's premises.
21. The Company has not carried out any fresh valuation of Diamonds
during the year or as at 31st March 2015 as per requirement of AS -2.
The Valuation of Diamonds as carried out as on 30th September 2013 to
ascertain the market value has been adopted by the Company. The Company
has valued its stock of Gold ar rates prevailing as at 31st March 2015.
22. All export receivables were restated on the basis of exchange rate
as at 31.03.2013. In view of persistent defaults by overseas customers
in clearing outstanding dues, it is deemed expedient not to take
cognisance of depreciation of rupee vis-a-vis dollar since last
restatement, especially as the outstanding amounts are expected to be
realised in phased manner over an uncertain period of time.
Accordingly, export receivables have been carried forward on the basis
of exchange rate as at 31.03.2013 and have not been restated on the
bais of exchange rate as at the end of the accounting year i.e.
31.03.2015.
23. Likewise, Trade Payables in respect of Imports have been carried
forward on the bais of exchange rate as at 31.03.2013 and have not been
restated on the basis of exchange rate as at the end of the accounting
period i.e. 31.03.2015 as the same are expected to be paid off out of
realisations from export receivables.
24. Had the export receivables and import payables been restated on the
basis of exchange rate as at 31.03.2015, Net gain / (loss) on Foreign
Currency Transactions / Translations would have been higher by Rs.
2,152,907,396 for the current year. (Previous period loss of
Rs.1,355,674,462). The Total net gain till date would have been higher
by Rs. 7,157,707,732 .
25. The board of directors of the Company in its meeting held on 30th
May 2015 have decided not to provide Interest for the year on its
outstandings / borrowings including Term loan for windmill as all their
accounts are classified as NPAs. Most of the Banks do not charge any
interest on the Company's borrowings as according to RBI prdential
norms, interest is to be charged on NPA account on actual basis and not
on accrual basis. The Interest Charged by some banks during the year
which is not considered by the Company amounts to Rs.2,146,853,979/-.
The Company used to provide for interest in its accounts @ 12.5 % of
the outstanding amounts being the average rate for the rupee export
finance. Thus the Interest that should have been charged to the Profit
and loss for the year amounts to Rs. 565,86,78,505/-.This action has
resulted in the loss for the year being lower by Rs. 5,658,678,505/-.
26. The Company has not restated its foreign currency liabilities for
year ending 31st March 2015. Had it been restated on the basis of
exchange rate as at 31.03.2015, the finance cost would have been higher
by Rs.7,467,778/-. (Previous Period Rs. Nil).
27. The interest expenses includes Expenses for the prior period Rs.
77,771/-.
28.During the preceding 2 years, the Company witnessed unprecedented
turn of events. The Company enjoyed credit facilities of Rs. 375 crores
as Fund Based limits and Rs. 3470 crores as Non Fund Based limits,
alongwith adhoc limits to the extent of 20% of the above limits for peak
period, from 14 banks. The Non Fund Based limits were mainly used for
purchase/ import of gold from overseas bullion banks as well as from
nominated agencies in India against Standby Letters of Credit of the
consortium banks.
29. During the end of March 2013, the overseas customers from the UAE
defaulted in making payments for the Company's exports which resulted
in the Company defaulting in meeting its obligations. The consortium
banks were, however, obliged to pay to the bullion suppliers
due to the enabling provision in the gold loan agreement, wherein a
single default enables bullion suppliers to recall all the gold loan.
The bankers appointed independent audit firms for forensic and
investigative audit for which the Company offered explanations.
30. The Company sent notices to the defaulting overseas customers in
October 2013. As no positive actions were received from the defaulting
overseas customers, the Company initiated legal proceedings before the
Conciliation Committee of Sharjah Federal Court, the step preceding to
filing of commercial cases before the Sharjah Court in May 2014. The
case is under progress and the experts appointed by the UAE Court have
sought explanations from the defaulting overseas customers. Your
Company is hopeful of an early favourable outcome from the proceedings.
31. Few bankers have classified the Company and its directors as willful
defaulters. However, the Company has vehemently denied the same and
reiterated that they were victim of circumstances beyond their control
and are taking all possible steps to recover the same.
32. During the year the Company received notice from Debt Recovery
Tribunal. The matter is in progress. The Company also received notice,
under the SARFAESI Act, for attachment of its assets, at all locations,
from Standard Chartered Bank, Lead Bank of the Consortium. The banks
had lodged complaints with the Central Bureau of Investigation (CBI)
and Enforcement Directorate (ED) to carry out investigations against
the Company and its promoter. The management and the directors have
fully cooperated with the agencies during their investigations.
33. During the year under review, the Directors in their meeting 20th
December 2014 decided for closure of Goa unit. Accordingly the Company
has paid / provided all statutory dues to employees and workers.
34. INTERNAL AUDIT
With the Company's business having come to standstill, the Company
being declared NPA by the banks and the consequent financial crises,
the Company has not appointed internal auditor for the year.
35.INVENTORY
Entire inventory of diamonds and pearls lying at Surat and Mumbai has
been placed in the lockers in PNB and is in the joint custody with PNB
since 18.06.2013. The banks arranged for valuation of inventory by
Customs approved valuers on 30.09.2013 and as per their report, the
total value of inventory was Rs.39,35,00,031. The stock at Chennai SEZ
and Cochin SEZ are also in the joint custody with PNB since November
2013 at Company's premises.
36.The Inventory has not been verified by the management thereafter for
the above location as the same is in the joint custody with the Bank.
The Company has not carried out any fresh valuation of Diamonds and the
valuation done on 30th September 2013 for ascertaining the market value
has been adopted by the Company.
37.
The Company has only one segment and hence the question of reporting as
per the provisions of Accounting Standard 17- "Segment Reporting"
issued by the Institute of Chartered Accountants of India does not
arise.
38.
As per the provisions of Accounting Standard 18 - "Related Party
Transactions" issued by the Institute of Chartered Accountants of
India, the details of Related Party Transactions based on disclosure
certificate issued by the Directors, is as mentioned herein below:
i) List of Related Parties : Particulars
Associates Forever Precious Jewellery and
Diamonds Limited
Revah Corporation Limited
Key Management Personnel Mr. Jaikumar Kapoor (Director
upto 05.01.2015)
Mr.Ashish Narayan (Company Secretary)
39. The Engineering Division at Jodhpur has closed its operation. The
carrying value of the total assets to be disposed off at Jodhpur is Rs.
10,054,219 (Rs. 10,063,880) as at the Balance Sheet date.
40. The Company had received Confirmations as on 31st March 2013 from
those overseas customers who have defaulted in payments. Creditors and
other debtor's confirmation are yet to be received.
41. Email by the Auditors to the overseas Sundry Debtors of the Company
as well as to Major local debtors and creditors to confirm the balances
as well as the transactions as on 31st March, 2015 had been sent.
However the said debtors/creditors have not confirmed the same to the
Auditors. Similarly letters have been sent by the Auditors to all banks
asking for independent confirmations of the amounts outstanding and due
to the Banks. The said confirmations have not been received by the
Auditors from some of the Banks.
42. The provision for depreciation and for all known liabilities are
adequate and not in excess of the amounts reasonably necessary.
43. As per the information available with the Company and certified by
them, total outstanding due to Small Enterprises as required to be
disclosed under the Micro, Small and Medium Enterprises Development
Act, 2006 at the end of the year is Rs. Nil (Nil).
44.Figures in brackets in notes 1 to 34 pertain to previous period which
was for 6 months, it is not comparable, as the current year figures are
for 12 months.
45. Previous Period figures have been re-arranged, re-grouped or
re-classified wherever necessary.
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