1. During the year as per the order dated 1/12/2010 issued by the
Board for Industrial and Financial Reconstruction (BIFR) the Company
has been ceased to be a sick industrial company under the provisions of
Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) as in
opinion of the Board the net worth of the company turned positive and
its revival is sustainable and therefore discharged from the purview of
SICA / BIFR.
2. Loans and Advances : -
Advances recoverable in cash or in kind, include the following :
a) the Company uses industrial alcohol as a raw material and has been
paying sales-tax and vend fees on the same. During the year 1989-90, on
25th October, 1989 in the matter of Synthetics & Chemicals Limited V/s.
state of UP. and others industrial alcohol consumer, the Supremo Court
held that payment of vend fee and sales tax on industrial alcohol,
unfit for human consumption, is illegal and should not bo levied,
prospectively. the company has accordingly, filed separate writ
petition in the High Court of Gujarat, for stay of future recovery. the
High Court granted an interim stay for the recovery, against which
Government of Gujarat filed a special leave petition with respect to
the sales tax matter but was unable to obtain a stay from the Supreme
Court against the interim stay order granted by the High Court.
In the year 1991-92 based on the judgement of Supreme Court in the
matter of Synthetics & Chemicals Limited V/s. state of U.P. on
sales-tax, Gujarat High Court vacated the interim stay obtained by the
company on 22nd October 1991. Accordingly sales tax is being charged
from 23rd October, 1991 by the suppliers of industrial alcohol in the
state and the company paying the same. However, the company''s petition
both in the matter of salos-tax and vend fees remains pending for
Ponding disposal as aforementioned of the Company''s cases the Company
had set-up as recoverable the amount of vend fees and sales-tax of Rs.
15.91 lacs and 7.24 lacs respectively for the year 1989-90 and 1990-91.
the Company has received refund of the entire amount against the vend
fees before 31st March, 2003 leaving a balance of Rs. 7.24 lacs yet to
bo received towards sales-tax. the company has considered the said
amount under Loans & Advances as Advances recoverable in cash or in
b) During the year 1991-92, a levy of 0.20 paise per bulk litre of
industrial alcohol had been made by the proscribed authorities on
purchase of alcohol as administration fees.
the Company has paid a sum of Rs. 2.54 lacs up to 27th April, 1991
under protest, which has been set up as recoverable as Loans and
Advances, and filed a Special Civil Application for stay which was
granted on 23rd April 1991, by the High Court. Accordingly no further
sum up to 31st March 1992 was paid.
During the year 1991-92, the said High Court, without prejudice to the
rights and contentions of the parties, has ordered a reduced levy of 5
paise per bulk litre.
the company has also received a demand notice for Rs. 4.40 lacs for the
period up to 10th June, 1992 towards administrative fees from the
Adjustment, if any, to the cost of purchase of Alcohol will be made on
the final disposal of the application.
c) the company has paid Rs.1.52 lacs under protest towards excise duty
for the period from January, 1992 to March, 1993 on the sale of waste
acid which has been set up as recoverable as Loans and Advances since
the company has disputed the classification and levy of Excise Duty.
Adjustments, if any, will be made on the final disposal of the matter.
3. During the financial year 2003-2004, pursuant to the BIFR order the
partly paid up equity shares have been converted in to fully paid up
equity shares based on the value of shares already paid and thereafter,
all the fully paid up equity shares have been converted in to fresh
fully paid up equity shares of Rs. 10 each after reducing the total
number of shares by 90%. During the year the company has complied with
the procedures prescribed in the listing agreements with the stock
exchanges including issue of fresh equity share certificates in lieu of
old equity share certificates.
4. Contingent liability not provided for on account of:
i) Excise Duty disputed by the
Company pending disposal 16,62,494 16,62,494
ii) Drainage charges disputed
by the Company pending
disposal 8,80,975 8,80,975
iii) Back wages and reinstatement
demand made by certain
dismissed at Ankleshwar Amount not Amount not
factory, pending adjudication. Ascertainable Ascertainable
5. the Company is primarily engaged in business of manufacturing of
Industrial Alcohol, Acetaldehyde, Acetic Acid and Auxiliaries &
Chemicals. Since the inherent nature of activities as a whole are
governed by the same set of risk and returns these have been grouped as
a single segment, the results of which are reflected in the financial
statements. the said treatment is in accordance with the Accounting
standard - 17 on ''Segment Reporting''issued by the Institute of
Chartered Accountants of India.
6. Related Party Disclosures (a) Relationship:
i. Key Management Personnel:
Manish Navnitlal Patel - Managing Director (Also controls
majority of voting powers of the Company)
ii. Relatives of Key Management Personnel :
Devika Navnitlal Patel (Mother), Hem Manish Patel (Wife),
Bela Sandip Jhaveri (Sister), Chaula Navnitlal Patel
(Sister) and Hemangini Sameer Sinha (Sister)
iii. Enterprises over which key management personnel alongwith
relatives is able to exercise significant influence:
Gujarat Alcohol and Allied Chemicals Pvt. Ltd.,
Shree Maulikarjun Trade Invest Pvt. Ltd.,
Shree Bhuvanakaram Trade Invest Pvt. Ltd., Shree
Vishvamurte Trade Invest Pvt. Ltd.,
Shree Suprinit Trade Invest Pvt. Ltd., Mahalaxmi Trading
Agency, Chandramani Chemicals and Prakruti Enterprise.
7. Net Deferred Tax Assets, mainly representing past losses and
unabsorbed depreciation, have not been recognized following the
principles of prudence due to uncertainty of the quantum of future
profits in terms of Accounting standard - 22 for ''Taxes on Income''
issued by the Institute of Chartered Accountants of India.