(i) Previous year figures have been regrouped and rearranged wherever
(ii) In the previous year 2007 - 2008 the Company has prepared the
financial statements for the 15 months unlikely the financial
statements prepared in the earlier years. However, the change in
accounting policy has not affected materially to the financial
statements of the Company. Further, the results for both the financial
years i.e., ended as at 31.03.2008 and 31.12.2006 are not comparable.
(iii) Due to poor financial position of the Company and other related
factors, the company was not been able to repay the amounts due in
respect of term loans as well as working capital loans & overdrafts
obtained from Scheduled Banks & other Financial Institutions as a
result of which whole of the Fixed Assets has been acquired by the IFCI
Ltd vide panchnama dated 13.03.2008.
(iv) During the year company has credited the profit and loss account
with the total amount of Rs.6452 thousand as prior period items on
account of following error/omission incurred in the previous year:
i. Rs.6226 thousand on account of Service tax liability created in the
earlier year as prior period adjustment on account of non
interpretation of law.
ii. Rs. 226 thousand on account of commission charges created in the
(v) Depreciation on Fixed Assets has been charged on Straight line
method basis upto 13.03.2008 as whole of the Fixed Assets has been
compulsory acquired by the IFCI Ltd as a result of non payment of dues.
(vi) No provision for taxation has been made in the annexed accounts,
as there is no liability in respect of the same. The company has not
adopted AS-22 Accounting for Taxes on Income issued by the ICAI as
the company has carried forward business losses & unabsorbed
depreciation from previous years and according to the information &
explanations given by the management of the company there is no
certainty as to whether in future the company will be able to generate
profits. Therefore following the concept of prudence & virtual
certainty as envisaged by the aforesaid AS-22, provisions for DTA/DTL
have not been made in the annexed accounts.
(vii) Due to overall sluggish market conditions, poor financial
position of the Company and various other factors, it has not been able
to repay term loans as well as working capital loans & overdrafts
obtained from scheduled banks & Financial Institutions as per the
repayment schedule. The management has dispensed the provision of
providing interest, interest on interest, overdue interest, penal
interest and liquidated damages on Term loan and all the working
capital loans from all the Scheduled Banks/Financial Institutions the
aggregate amount has not been ascertained. As in the opinion of
management providing such huge amount of interest, which is merely
based on management estimation in the absence of non-availability of
any documentary evidences to support the amount, is not relevant at
(viii) Company has not deposited the statutory dues towards employer
provident fund, employee state insurance, Central Sales Tax (incl of
7027 thousand and 3625 thousand.)
(ix) During the period covered under audit the company had adjusted
security deposits made with Madhya Pradesh electricity board of Rs 8678
thousands on account of electricity dues.
As per the information available with the company none of the
creditors have confirmed that they are registered under the Micro and
Small Enterprises Development Act, 2006.
(a) The instruments are held in the name of Company except to the
extent exempt under section 49 of the Companies Act, 1956.
(b) Investments held are fully paid-up unless otherwise stated.
(c) Aggregate Book value of Investments as at the year-end is 16456.12
thousand (Previous Year 266 thousand). Market value of quoted
investments (to the extent stock exchanges quotations are available) is
Rs. 1.40 thousands (previous year Rs. 59.44 thousand). The aggregate
book value of unquoted investment is 16454.72 thousand (Previous Year
(xi) Sundry debtors, Loans and advances, creditors, balance in Current
Account, Packing Credit Account with banks and Rupee Term Loan Accounts
with Financial Institutions / Banks are subject to confirmation and
reconciliation with respective Parties / Banks/ Financial Institutions.
(xii) As per the information and explanations given to us by the
management of the company, the unpaid/unclaimed dividend lying idle in
UCO Bank account for Rs.892 thousands has not been transferred to the
general revenue account of the Central Government in accordance with
the provisions of section 205-A of the Companies Act, 1956 because of
the following reasons:
(a) No intimation for transfer of the amount by UCO bank has ever been
received by the company.
(b) Despite being repeated efforts made by the company to collect
information regarding these accounts, no information . has been
received by the company so that the legal requirements regarding the
transfer of the amount could have been complied with.
The management has filed an application with UCO Bank under the Right
to Information Act, 2005 to collect the reconciliation statement in
order to ascertain exactly how much amount is remaining after settling
the claims of shareholders that has to be transferred u/s 205-A of the
Companies Act, 1956.
(xiii) Contingent Liabilities not provided for Year ended as on
31st March 2008
Penalty u/s 271(1)(c) under
Income Tax of Rs.3408 thousand in 3408 thousand
respect of Assessment Year 2002-03
in respect of which the company has gone
on appeal in ITAT, New Delhi. Based on
judicial pronouncements, the Companys
claim is likely to be accepted by
A total demand of Rs. 1698 thousand
for excise duty & penalty in 1698 thousand
relation to the waste sales without
payment of appropriate duty
was earlier pending before the
Honorable supreme court which
during the year referred back to
CESTAT for re-consideration by
the honorable apex court.
Based on recent judicial pronouncements,
the Companys claim is likely to
be accepted by appellate authorities.
A total amount of Rs. 13699
thousand is pending before different 13699 thousand
appellate Authorities under M.RCommercial
Act, 1994 in different stages.
Based on recent Judicial pronouncements,
the Companys claim is likely
to be accepted by Appellate authorities.
The Company has filled an appeal
with Commissioner of Income Tax 90000 thousand
(Appeal) for the assessment year 2003 - 2004
which involves an amount
of Rs. 90000 thousand.
The company has filed appeal to CESTAT
against order of Commissioner 1851 thousand
(Appeals), Customs & Central Excise,
Indore ordering payment of Import
Duty of Rs. 1851 thousand for the
Tata Murata Auto Corner, Other Contingent
Liabilities not provided for Include:
(a) Excise Duty (On account of excess OTA removal) for Rs. 2090
(b) Custom/Excise Duty (On account of removal of Diesel Generator sets)
for Rs. 2494 thousands.
(c) Excise Duty demanded through SCN on account of search & seizure
took place at both Plant & Head office- Excise duty on Polyester Yarn
for Rs. 32300 thousands
Excise duty on Cotton Yarn for Rs.18565 thousands
Excise duty on DTA sales for Rs. 25428 thousands
Excise duty for charging lower rate of duty for Rs. 1259 thousands
Excise duty on account of foregoing duty on PSF for Rs.1240 thousands
Custom Duty on account of foregoing duty on HSD/LDO Import for Rs.9122
(d) The Asst.Commissioner Commercial, Gwalior in his order dated 29th
January 2007, has imposed demand of sales tax inclusive of interest &
penalty on the company for an amount of Rs. 15635 thousands.
(e) A demand of Rs. 6356 thousands had been raised by the electricity
department, Gwalior as Electricity duty chargeable on production of
electricity generated through Diesel generator in earlier period.
However the management of the company considers it contingent that
since the company is a sick company and the application is already
pending in AAIFR for its final decision, than only the exact liability
will be known.
However in the opinion of the management all the above-mentioned
liabilities are contingent in nature, as company will contest the
demand by filing appeals to the respective departments.
In view of the above the same have not been considered in the financial
results up to the reporting period.
(xiv)Security Deposit worth Rs. 13,793 thousand standing with MPSEB
(Madhya Pradesh State Electricity Board) on account of Electricity has
been adjusted with the Dues for the Electricity Expenses for the years.
(xv) Segment Reporting
Since the company primarily operates in,one segment-Cotton & Polyester
Staple Fibre (PSF). Segment reporting as required under AS-17 Segment
Reporting issued by the ICAI is not applicable to the company.
(xvi) The Company still this year has consumption of 5.45 electricity
unit per kg. of yarn production. As compared to the industry average of
4 unit per kg. of yarn production. The same is due to low productivity.
(xvii) The Company had filed a reference with the Honorable Board for
Industrial & Financial Reconstruction (BIFR) on 2nd January 2001 The
same was accepted by the Honorable BIFR vide case no. 30/2001 on 12th
January 2001 The Honorable BIFR vide its order dated 18th August 2005
ordered for the winding up of the Company. Being aggrieved by this
order the Company went into appeal with Honorable Appellate Authority
for Industrial & Financial Reconstruction (AAIFR) on 4th October 2005
and the same was admitted by the AAIFR vide appeal no. 115/2005.The
reference made by the Company has been abated by the AAIFR in its last
hearing held in the Month of May 2007.
In calculating EPS, No.of shares used are 18705956 which have been
arrived at after deducting 16044 equity shares (relating to calls in
arrears of Rs. 160442 divided by Rs. 10 face value per share) from the
originally issued 18722000 shares.
(xviii) Trading of the shares of the company has been suspended by the
Bombay Stock Exchange w.e.f 18th February 2002.The company had filed an
application for the revocation of suspension of trading of securities
of the company on which final decision of the BSE is still pending till
the date of this report.
The company has also applied for the de-listing of its securities vide
resolution passed by the shareholders in the AGM held as on 13th June
2006 as in the opinion of management since the company is a sick
industrial company getting the securities listed on more than one stock
exchange is a financial burden to the company. However no de-listing
order has yet been received by the company.