1 The net worth of the Company has substantially eroded. However, these
accounts have been prepared by applying the assumption of Going Concern
in view of continuing business operations. Further, the Management of
the Company is taking steps towards optimization of its operations and
is of the view that same shall enable the Company to achieve positive
results and the restoration of positive net worth. ¦
PARTICULARS For the year For the year
31st March, 2011 31st March/2010
2 Contingent Liabilities:
(a) The Company has imported
capital goods under 18,00,000 18,00,000
the EPCG Scheme at
concessional duty with an
export obligation for which
bank guarantee has
been provided for in
favour of Government of
India. In the event
export obligation is not
fulfilled the Company
would be liable to pay the .
custom duty saved along
with interest thereon.
The amount of custom
duty saved is Rs.
(b) Excise demands, where
of the 58,313 58,313
Appellate Authorities are
disputed by the Excise
Department in further appeals.
3 No provision has been made for
(a) Estimated gratuity payable
to its employees at a 2,13,31,769 1,76,73,792
future date, being the
difference between the''
liability determined on
actuarial valuation and the
(b) Estimated leave salary
payable to its employees at 10,19,514 10,19,514
a future date, representing
the difference between
the liability determined on
actuarial valuation and
the-provision made therefore
as upto ,31st March,
2007. Further, effective
year ended 31st March,
2008 actuarial valuation has
not been carried out.
4 The Company had revalued it''s leasehold land, buildings, electrical
installations and plant and machinery acquired upto 31st March, 1995
and held as on 1st April, 1996 at their Current Replacement Cost on
the basis of a report by an approved value by ¦transferring the
resultant difference between the Current Replacement Cost and
Original Cost of Rs. 5,13,83,446/- to the Revaluation Reserve
Account. Difference in depreciation in respect of revalued assets as
provided on Current Replacement Cost and Original Cost is adjusted
(a) Till 31st March, 1996 depreciation adjusted to Revaluation Reserve
Account is Rs. 2,16,57,503/-.
(b) For the year depreciation transferred from Revaluation Reserve
Account to the Profit and Loss Account is Rs.2,39,938 /- (Previous Year
5 During the previous year, the Company had sold its freehold land
situated at Pathardi Nasik for Rs. 18,00,000/- and earned profit of Rs.
56,37,254/-, representing an extraordinary item. The said profit is
included in the amount of Profit on Sale of Fixed Assets under the
Schedule of Other Income.
6. The Company''s 36/70,000 6% Cumulative Convertible Preference Shares
of Rs 30/ each wen, converted into 36,70,000 equity shares of Rs. 10/-
each fully paid up at a premium Rs. 20/- per share on 26th September,
2007. However, the Company has not paid the Cumulative Dividend of Rs
1,42,97,918/-in respect of the said 6% cumulated convertible preference
shares up to the date of their conversion into equity shares, as the
management is of the view that the same is not payable as not declared.
7. The Company in accordance with the approval accorded by it
shareholders at its extra ordinary general meeting held on 8th
January,2008 had issued 1830000 Zero Percent Convertible Warrants of
Rs.30/- per warrant convertible into 183000 on vemdie Waianae of Rs.
30/- per warrant convertible into 18,30,000 equity shares of Rs. 10/-
each at a premium, of Rs. 20/- per share on preferential basis
placement as per rite SEB1 (Disclosure & Investor Protection) being 10
% of the amount receivable on issue thereof. During the previous year
account of non-receipt of 90%. of me amounts payable on convulse hereof
some warrant were cancelled by the Board of Directors at their meeting
held on 28th January 2010 and consequently the application money
received there against was forfeited and credited to Capital Reserve
8.1. In the absence of Net Profit as computed under Section 349 of
the Companies Act made. Consequently, the computation of Net Profit
under Section 349 of the Companies Act, 1956 has not been shown.
9. The Company is in the process of evaluating the utility as well as
realisable value of certain inventories of stores, spare parts and die
blocks which have remained unmoved for asserting whether there is any
need to provide for obsolescence/ impairment. Upon completion of such
execrate, necessary provision shall be made thereof, if required.
10. No provision for doubtful debts aepreeatine to Rs.23649749
Previous Year Rs 2,49,34,621 ) has been made as the Company continues
its efforts to recover them bv taking appropriate legal steps and or
personal follow up actions.
11. The Company had entered into an agreement, effective 1st April,
2005 with Messrs. Invest well for portfolio management and investment
Activities 24 Months. In accordance with the said agreement, the
profits (Net) earned during the period of 24 months were to be shared
equally and the losses (Net) incurred were to be borne by Messrs.
Invest well. The said Agreement was mutually extended for a further
period of 12 months. As on 31.03.20T1, there is a debit balance of Rs.
6,32,66,282/- in the name of. Messrs. Invest well, which comprises of
funds utilized and losses and costs incurred in relation to the said
activities. The management is of the view that the said amount of Rs.
6,32,66,282/-due from M/s Invest well is good for recovery.
12. Loans and Advances include Rs. 2,75,69,994/-, being the aggregate
amounts paid to Prathamesh Investment & Trading Private Limited
including, on their behest, for certain services rendered by them in
connection with Preferential Issue of Shares and Warrants by the
Company in the earlier period(s).
No provision has been made for the fees payable by the Company to them,
as the amount payable has not been agreed upon by and between the
Company and the said Prathamesh Investment, & Trading Private Limited
as yet. The management has decided that as and when the said- fees are
determined, then amount thereof shall be charged off to Share Premium
Account ,:in accordance with the provisions of Section 79 of the-
Companies Act, 1956 and hence, provision at this junction is not
13. The Company had entered into a license cum operating agreement
(the agreement) with Business Combine Limited (BCL) under which, w.e.f.
1st April, 2005, BCL had granted the Company an exclusive license to
operate its factory for manufacture of S.g! Iron Castings of various
types ,& machine components, as per the terms and conditions as stated
therein. The said agreement has been discontinued w.ei. 1st October,
2008 and consequently, the amount of security deposit of Rs.
9,00,00,0.00/- placed by the Company has been refunded during the year.
As on 31st March, 2011 an amount of Rs. 7,04,68,215/- is recoverable
from BCL, which includes the following which are subject to
reconciliation and confutation by item.
(a) Interest of Rs. 1,86,57,778 charged by the company during the
previous year on the outstanding balances recoverable from BCL,
However, the Company has not charged such interest on the outstanding
balances recoverable from BCL for the year.
(b) Labour charges of Rs.81,60,395/- credited by the Company to BCL
towards products manufactured by them for and upto years ended 31st
(c) Debit notes issued by the Company for rejection(s) as well as
reimbursement of expenses for and upto years ended 31st March, 2011.
The aforesaid debit of interest/rejection(s)/reimbursement of expenses
and credits for conversion charges are subject to acceptance by BCL,
The necessary adjustments if any arising upon finalization/settlement of
the aforesaid claims-shall be made in the year in which the same are
Further, in the opinion of the Management of the Company, the amount
due from BCL as on 31.03.2011 of Rs. 7,04,68,215/- is good for
recovery, though it is a Sick Industrial Company as it continues its
business operations and the Company. endeavors to recover the same.
14. Advances includes Rs. 1,07,87,214 (Previous Year Rs. 1,05,28,192)
paid to suppliers which are subject to reconciliation and necessary
adjustment entries shall be passed upon reconciliation thereof.
15. The balances of Sundry Debtors, Loans and Advances and Sundry
Creditors are subject, to conformation/reconciliation. Necessary
adjustment entries shall be passed upon receipt of conformations/
16. The Company does not have any information as regards status of the
vendors covered under the Micro, Small and Medium Enterprises Act, 2006
and consequently, no disclosure of the amount due to such vendors along
with interest payable, if any, has been made.
17. No provision has been made for the income tax demand of Rs,
64,90,611 for earlier years as the same are disputed in appeals.
18. The Company has constituted an audit committee under Section 292A
of the Companies Act, 1956. The audit committee had functioned during
the year. However; the Management of the ''Company is taking steps to
make the same more effective.
19. SEGMENT REPORTING PURSUANT TO ACCOUNTING STANDARD-17:
The Company is engaged. in the business of manufacture arid sale of
carbon and alloy steel forgings and hence, The company has only one
business segment. Further, the Company does not have any geographical
(a) Deferred tax : In accordance with Accounting Standard (AS - 22) on
Accounting for Tax on Income notified by the Companies (Accounting
Standards) Rules,20Q6 , Deferred Tax Assets consist of substantial
amounts of''carry'' forward losses and unabsorbed depreciation under fee
Income Tax Act, 1961. However, since the availability of sufficient
future taxable income against Which the said benefits can be set off is
not possible to be ascertained with virtual certainty, Deferred Tax
Assets have not been recognised as a measure of abundant caution.
(b) Current Tax Company has incurred loss during the year and hence no
provision for current tax has been made during the year.
21. DISCLOSURE IN RESPECT OF RELATED PARTIES PURSUANT TO ACCOUNTING
A. Related Parties and their relationship:
1. Mr. C.D Dhongde: Managing Director, a Key Management Personnel
2 Business Combine Limited: Promoter Company (*)
3. Hindustan Hardy Spicer Limited and XLO India Limited: Companies in
which a director of the Promoter Company exercises significant
influence-(*). (*) Referred to as Associated Enterprises
Note: Related parties and then relationship are as identified by the
Company and relied upon by the Auditors.