Bhagyanagar India

1.  Reserves & Surplus (Foreign Exchange Fluctuation Reserve):
 
 - In view of steep fluctuation in foreign exchange , the company had
 created a Foreign Exchange Fluctuation Reserve by appropriating
 unrealized gain amounting to Rs 876 lacs from the Profit & Loss Account
 during the year 2007-08. in view of The Companies (Accounting
 Standards) Rules,2009 issued by the Ministry of Corporate Affairs on
 31.03.2009, which the Company has adopted, it has adjusted Rs 520.50
 lacs arose due to capitalization of notional gain on foreign exchange
 fluctuation earned during the financial year 2007-08 leaving a balance
 of Rs 355.50 lacs in the aforesaid reserve as on 31.03.2009. Detailed
 working of the impact of revised AS-11 is given in Note no. 14 to 17
 
 2.  Secured Loans:
 
 - Short-Term Loan of Rs 1000 lacs from Banks is earmarked from the Cash
 Credit limit of the company with State Bank of India and is secured by
 hypothecation of stocks, Debtors and first charge on pari- passu basis
 on specific fixed assets of the company.
 
 3.  Unsecured Loans - Foreign Currency Convertible Bonds:
 
 - During the year 2006-07, the company issued at par, 5 years Zero
 Coupon US $ denominated Foreign Currency Convertible Bonds (FCCB)
 aggregating to US $ 15 millions (INR 6864 lacs as on the date of issue)
 comprising of 150 bonds of US $ 1,00,000 each to finance capital
 expenditure. The bond- holders have an option of converting these bonds
 into equity shares at an initial conversion price of Rs 44 per share
 (Face value Rs 2 each) and the bond-holders are entitled to get 156.68
 lacs shares at any time prior to close of business on 10th October,
 2011 unless redeemed.
 
 The company has a commitment towards the FCCB bondholders to pay 8%
 half yearly compounded yield-to-maturity (YTM), in case the option of
 conversion is not exercised by them, within 5 years from the date of
 issue of the Bonds. As the liability on this account has not
 crystallized as on the date of Balance Sheet, no provision has been
 made in the books of accounts. Contingent liability on account of YTM
 is Rs 1812.93 lacs as on 31.03.2009.
 
 - In compliance with the Companies (Accounting Standards) Rules,2009
 issued the Ministry of ICorpo- rate Affairs, the exchange loss of Rs
 1624.50 lacs incurred during the year due to depreciation in Rupee rate
 vis-a-vis US$ amounting to Rs 10.83 per US$ has been adjusted partly
 against cost of
 
 Depreciable Fixed Assets in the ratio of FCCB proceeds utilized for
 acquiring those Assets and partly against cost of non-depreciable
 assets in the ratio of FCCB proceeds utilized for acquiring those
 assets. Detailed working of the impact of revised AS-11 is given in
 Note no. 14 to 17
 
 - Liability on account of Foreign Currency Convertible Bonds as on
 31.03.2009 is valued at the conversion price of that date which was Rs
 50.95 = 1 US $ as against conversion price of 31.03.2008 which was Rs
 40.12 = 1 US$
 
 - The company is obliged to pay dividend even to those FCCB Holders who
 convert their bonds into equity after adoption of the financial
 statements and up to the book closure date for dividend purposes.
 Incremental dividend payable, if any, will be paid out of the balance
 available in the Profit & Loss Account. No provision for dividend
 payable to the FCCB bondholders has been made in the books of accounts.
 
 4.  Unsecured Loans - Sales Tax deferment:
 
 The Total Sales Tax Deferment outstanding as on 01-04-2009 is Rs.
 278.59 Lacs (Previous year Rs 278.59 lacs).
 
 5.  Contingent Liability not provided for (As certified by the
 management):
 
                                              31-03-2009      31-03-2008
                                              Rs.in lakhs     Rs. In lakhs
 
 a) Counter guarantees given to the 
    Banks against Guarantee
    Issued by them                             2537.20          1766.14
 b) Letters of Credit opened by Banks/Buyers 
    credit                                     1352.59          1578.63
 c) YTM payable to the FCCB bond-holders       1812.93           751.43
 d) Sales Tax matters under dispute              11.28            11.28
 e) Custom duty on CDMA Phones                  264.07            40.07
 f) Capital Commitment (Net of Advances)           Nil            27.04
 
 6.  Fixed Assets -
 
 - Increase in cost of Plant & Machinery amounting to Rs 181.56 lacs as
 shown in Schedule-5 to the Balance Sheet includes increase of Rs 68.48
 lacs (net of decrease of Rs 29.07 lacs due to, notinal gain during the
 year 2007-08) due to notional loss during the year 2008-09 on foreign
 exchange fluctua- tion on account of FCCB liability.
 
 - Increase in cost of Windmill Plant amounting to Rs 640.68 lacs as
 shown in Schedule-5 to the Balance Sheet includes represents increase
 in cost (net of decrease of Rs 310.34 lacs due to notional gain during
 the year 2007-08) due to notional loss during the year 2008-09 on
 foreign exchange fluctua- tion on account of FCCB liability.
 
 7.  Fixed Assets - Impairment:
 
 In the view of the management, there is no impairment of the assets of
 the company and the management is fully confident of realizing the book
 value of the assets in cash or in kind. Hence, no provision for the
 same has been made in the books of accounts.
 
 8.  Cash & Bank Balance : (Rs in lakhs)
 
 - Balance in Current Account includes Rs 687 lacs parked in State Bank
 of India, Hyderabad out of the proceeds of FCCB issue.
 
 - Balance in Current Account includes Rs 24 lacs parked as call money
 deposit in ICICI Bank, UK out of the proceeds of FCCB issue.
 
 - Balance in Fixed Deposits includes Rs 218 lacs parked in ICICI Bank,
 UK out of the proceeds of FCCB issue.
 
 9.  Depreciation: (Rs in lakhs)
 
 Depreciation on fixed assets has increased by Rs 34.94 lacs due to
 adoption of The Companies (Accounting Standards) Rules,2009 issued by
 the Ministry of Corporate Affairs on 31.03.2009.
 
 10.  Sundry Debtors & other balances:
 
 In case of balances in Sundry Debtors, Loans and Advances, other
 current assets and Sundry Creditors, letters seeking confirmation of
 year-end balances are sent to the concerned parties. The Balances are
 subject to confirmation and reconciliation.
 
 Sundry creditors include Rs 1352.59 lacs secured by way of Letter of
 Credit/ Buyers credit. Further, the Company does not owe any sum to
 Micro & small enterprises as at the end of the accounting year on
 account of principal and interest under the Micro, Small and Medium
 Enterprises Development Act, 2006 as per the information and records
 available with the company about their industrial status which has been
 relied upon by the auditors..
 
 11.  Employees Benefits:
 
 A) The company has adopted the revised Accounting Standard AS-15 -
 Employees Benefits with effect from 1st April,2007.
 
 B) Defined Benefit Plan Gratuity:
 
 The company makes annual contribution to the employees group Gratuity
 Scheme of Life Insurance Corporation of India (LIC), a funded defined
 benefit plan for qualifying employees. Gratuity is payable to all
 eligible on separation /termination or death in terms of the provisions
 of The Payment of Gratuity (Amendment) Act,1997 or as per companys
 scheme whichever is more beneficial to the employees.
 
 C) Basis used to determine Expected Rate of Return on Assets
 
 The expected return on plan assets of 8% has been considered based on
 the information given by LIC which manages the funds.
 
 D) Amounts recognized as expenses
 
 Gratuity cost amounting to Rs 0.19 lacs has been included in Schedule-
 18 under contribution to Provident and other Funds.
 
 E) The management is informed by the Insuring Company (LIC) that the
 balance in -Gratuity fund will meet full liability as on 31.03.2009.
 Further, the benefits paid amounting to Rs 0.75 lacs were met by the
 LIC. Hence, they are not routed through Profit & Loss Account.