01. Accounts for the year are drawn for 12 months covering the period
July'95 to June'96 as against 15 months covering April'94 to June'95
in respect of the previous period and therefore are not comparable.
02. Capital Commitments:
Estimated amount of Contracts to be executed on Capital Account and
not provided for - Rs. Nil (Previous period Rs.9.40 lacs).
03. Contingent Liabilities:
Rs. in lacs
As at As at
i) Claims made against the Company not
acknowledged as debt:
Towards Income tax/Interest
Tax (net of Taxes adjusted) 204.20 155.68
(Refer Note No.10)
ii) In terms of the disinvestment arrangement with its former
subsidiary - Nagarjuna Hire Purchase Limited (presently SM Finance
Limited), the company may be required to bear liabilities towards
income tax upto the period ended 31.03.1990, that may finally
aggregate in respect of the erstwhile subsidiary.
04. The Company has a liability of Rs.40.00 Lakhs against partly paid
05. Secured Loans:
a) Term Loans:
Term Loans from Industrial Finance Corporation of India Ltd. (IFCI),
Industrial Reconstruction Bank of India (IRBI) and Small Industries
Development Bank of India (SIDBI) are secured by exclusive
charge/hypothecation of equipments, Plant and Machinery and Other
assets acquired out of the said loans. The Financial Institutions
shall also have a right to collect from the Lessees/Hire Purchasers
the amounts of rents/Hire purchase rentals in respect of the leased
assets in the event of the company committing any default. All the
said facilities are further secured by the personal guarantee of
Dr. K.V.L.N. Raju, former Managing Director of the company. Some of
the loans taken from Industrial Finance Corporation of India are also
secured by personal guarantee of Shri. K.S. Raju, former Director of
b) Cash Credit:
The Cash credit from the banks are secured by stock on Hire and
receivables on account of Hire purchase transactions, Leased assets
and lease rental receivables except those specifically charged to term
lending Financial Institutions and all other current assets of the
company and are further secured by personal guarantee of
Dr. K.V.L.N. Raju, former Managing Director of the company.
The above said loans are also covered by the Corporate Guarantee of
M/s. Asia Pacific Financial Services Limited and the Personal
Guarantee of Shri. R.S. Chowdhury, Director of the company.
06. a) The investments have been physically verified by the management
as on 30-06-1996. Investments held other than at Registered Office
are verified by a Chartered Accountants firm which has been relied
upon by the Auditors.
b) In the opinion of the management, Investments in the equity shares
being permanent in nature and diminution, if any, being temporary in
nature, no provision is considered in respect of the notional
diminution in the value of the said investments.
07. Overdues including compensation charges and suit filed accounts on
account of Hire purchase, Lease debtors and other receivables and
receivables under Loans and Advances have been considered good for
recovery as assessed by the Management. However, shortfall in
recovery of the above will be met from the Contingency Reserve.
08. Reconciliation of certain bank accounts and business related
accounts are in progress. The effect of the above on the accounts
will be dealt with on completion of the reconciliation.
09. No provision for Income tax has been made, based on certain
favourable/adverse appellate orders on disputed issues in the earlier
years. However, the Income tax department/company are in appeal
against the above said appellate orders.
10. The prudential norms prescribed by The Reserve Bank of India vide
its letter no DFC:COC:No. 1707.174.93-94 dated 13th June 1994 in
respect of a) Income Recognition b) Accounting for Investments
c) Asset Classification and d) Provisioning for bad and doubtful debts
are not considered by the company for compilation of its financial
statements as the same are not mandatory.
11. The company has been legally advised that as the principal object
of the company as laid down in the Memorandum of Association
encompasses the business of financing industrial enterprises, the
provisions of section 370 (1) of the Companies Act, 1956 are not
applicable to it.
12. As a result of implementing The Guidance Note on Lease Accounting
(Revised) issued by the Institute of Chartered Accountants of India,
in respect of assets leased with effect from 1.4.95, the profit for
the year is stated lower by Rs.343669.
13. Balances in respect of Hire purchase/Lease Debtors, Loans and
Advances and Other receivables are subject to confirmation.
14. Acquisition cost of Consumer Durables in pursuance of Hire
Purchase Agreements Rs. Nil (Previous period Rs.66.69 lacs).
15. Other additional information pursuant to 4(C) and 4(D) of Part-II
of Schedule VI of The Companies Act 1956 - Not applicable.
16. a) Details of Auditors' Remuneration (included in Other expenses
in Schedule 12 - Administration and General expenses):