1. The company has filed cases against the following debtors for which
no provision is made;
(a) Against M/S. Kansso Packaging Private Limited, the Company has
obtained the decree and realised Rs. Nil.
(b) Criminal complaint No. 923/M/98 against Mayank Corrugating
Industries for Rs. 8.25,0007-
(c) Criminal complaint No. 1689/M/98 against Kedia Paper Agency for Rs.
(d) Against M/S. Andhra Pradesh Paper Mills Limited in Rajamundhry
Court Andhrapradesh, for Rs.39,25,7047-. The Court has rulesd in favour
of the Company and awarded Rs. 22,45,946.00. The Company has filed
petition to recover the amount.
2. The company had been declared as Sick Industrial Company under the
meaning of section 3(1) (O) of the Sick Industrial Companies Act, on
16th March, 1998. B.I.F.R. recommended liquidation of the Company vide
its Order dated 13.06.2002.
Subsequently, the Company with prior discussions with several lenders
filed a rehabilitation scheme under section 391 of the Companies Act,
1956 with the
Mumbai High Court on 27.09.2003. The petition was admitted and under
the directions of the Hon able High Court, the meetings of all classes
of Shareholders and lenders were held and the Company received the
necessary approvals from them. The Registrar of the High Court has
filed his report and the matter is pending in the High Court.
3. At present there is uncertainty about rehabilitation of the Company
(Refer note No. 3). In view of this, of the company has not
ascertained and provided for deferred tax Assets / Liability as
required by accounting standard 22 issued by I.C.A.I..
4. The net worth of the Subsidiary Company Inter Fresh (Malaysia) SON
BHD, Malaysia is negative and hence the Company has made necessary
provision to cover possible losses.
5. Debtors include debts amounting to Rs 422.18 Lacs (Rs. 415.66 Lacs)
which are outstanding for more than 6 Months and hence considered
doubtful. The Company is in the process of taking necessary action for
recovery of the aforesaid dues. Provision has been made only for Rs.
63.36 Lacs in the books of accounts.
6. In the absence of confirmations in respect of balances of Sundry
Debtors, Loans & Advances & Creditors, the balances have been taken as
per the books of accounts and are subject to reconciliation and
adjustments. The company is in the process of reconciling the above. No
provision for interest on Inter-corporate loans has been made in the
accounts and amount of interest is not ascertained.
7. Inter Corporate loans of Rs. 60.22 Lacs taken by the company are
secured against security of shares given by HMG Engineering Private
Limited and HMG Trading & Investments Ltd.
8. The company is yet to redeem 50000 Non Convertible Debenture of
Rs. 100/- each aggregating to Rs. 50,00,000/-, which was due redemption
on 19th May 1997 and are not redeemed till date.
9. No Interest / Penal interest / liquidated damages payable on loan
has been provided for in the Accounts.
10. Enforcement Directorate, Foreign Exchange Regulation Act (FERA),
has initiated investigations of alleged FERA violation involving the
company regarding non receipt of certain debtors amounting to US$
1,62,835/- (Rs. 58,32,750/-approx) beyond the stipulated period and
issued a show cause notice. Out of the total amount as above, a sum of
US $ 37,7157- has been received by the company, while obtaining
permission from Reserve Bank of India for writing off an amount of US $
32,605/-. The Enforcement Directorate levied on the Company a penalty
of Rs. 6.50 Lacs against which the company has preferred an appeal.
Enforcement Directorate issued a shoe cause notice for non realisation
of Debtors to the extent of $ 4,99,036.34, beyond the stipulated
period. The Company has filed its written reply, wherein it has been
stated that the correct amount should be $ 2,57,967V; and had personal
hearing in the matter. The Company is awaiting the order from the
11. The net worth of Marvel Pharmachem. is negative. No provision for
the shortfall in value of investment of Rs. 2.79 lacs is made.
12. The company has not made provision for dividend on the cumulative
Preference Shares aggregating to Rs. 55.67 Lacs unto the date on which
the Preference Shares had to be redeemed.
13. The details of suits filed against the Company for which no
provision has been made in Accounts.
(a) Alpha Group (Hong Kong) Ltd. has filed the Suit being No. A8463 of
1995 as amended on 22nd April, 1997 in the Supreme Court of Hong Kong
against the Company to recover US$ 81,200 approx. Rs. 29.07 lacs) being
difference in the market price and the contract price for the supply of
(b) Indian Bank has filed a Suit in the High Court of Judicature at
Bombay inter-atia against the Company for the recovery of Rs.
6,21,865/= alongwith interest @ 22.25% from the date of filing of the
suit i.e. 13/1/1997 until the date of payment.
(c) Bank of Nova Scotia has filed a Suit on 5.7.97 in the High Court of
Mumbai against the Company for the recovery of export credits amounting
to Rs. 19,20,65,455/= together with interest @ 18% p.a. w.e.f. 1st
July, 1997 until the date of payment.. Subsequently the case has been
transferred to the Debt Recovery Tribunal where the Company has
obtained a stay. The Mumbai High Court has also granted a stay vide its
Order dated 01.07.2005.
(d) LIC Housing Finance has filed a criminal complaint being case No.
1108/S/98 under the negotiable Instruments Act for dishonor of cheque
amounting to Rs. 18.50 Lacs.
(e) State Bank of Hydrabad has filed a suit No. 127 of 2003 in the Debt
Recovery Tribunal, Mumbai, for Rs. 25,30,79,102/=. The Mumbai High
Court has granted a stay vide its Order dated 01.07.2005.
(f) Calyon Bank, formerly known as Credit Agricole Indosuez has filed a
suit being No. 239 of 1998 in High Court of Mumbai for recovery of Rs.
3,35,12,941.17. The Mumbai High Court has granted a stay vide its
Order dated 01.07.2005.
14. In the absence of statements and confirmation of balance from
Banks / Financial Institutions / Inter Corporate Loans, the balances as
per the books of Accounts have been taken and the same are subject to
adjustments and reconciliation. We are not able to express any opinion
on the same.
15. (a) The company holds 100% share capital of its subsidiary
company, Marvel Pharmachem Limited, and the loss of this subsidiary
company is not dealt with in the books of account of the company.
(b) The company holds 60% share capital of its subsidiary company
Inter-Fresh Meat Centre SON BHD, incorporated in Malaysia. The
profit/(loss) of this subsidiary company is not dealt with in the books
of account of the company.
16. (a) (i) The Income Tax & Wealth Tax Assessments have been
Assessment Year 1997-98. No intimation has been received from the
Income Tax authorities in respect of assessment year 1998-99 and
1999-2000. In respect of Assessment year 1991-92 and 1992-93 the
outstanding demand as on 31.3.2001 is Rs.71,49,000/-which is disputed
in appeal by the company.
(ii) In respect of Assessment year 1994-95 the outstanding undisputed
principal demand is Rs.81,11,579. No provision has been made for the
above amounts in the books of account..
(b) No provision for Income Tax is considered necessary in view of the
past losses, and Company is declared as SICK Industrial Company U/s
3(1) (0) of the Sick Industrial Companies Act,
(c) The Sales Tax Authorities has raised demand aggregating To Rs. 1260
Lacs upto assessment year 1998-99. This includes principal and interest
and penalties. The company has neither accepted the liability, nor was
in a position to go in appeal. The Company has made provision of Rs.
422 Lacs and is exploring avenues of preferring an appeal..
17. Advances to Suppliers (Frozen Food Division) of Rs. 223.30 Lacs
(Rs. 226.06 Lacs) are outstanding for more than a year. In spite of
agreements for advances with many parties, we are unable to comment on
its recoverability. The company is in process of taking suitable action
to recover the said dues.
18. Bank balances include a sum of Rs. 0.07 Lacs (Rs.0.07 Lacs) lying
in a Refund account representing unencashed refund orders, and sum of
Rs. 3.28 Lacs (Rs. 3.28 Lacs) representing unencashed dividend
warrants/ debenture interest warrant.
19. Deposit with Banks of Rs. 11.99 Lacs (Rs. 17.40 lacs) are under
lien for the various credit facilities availed from them.
20. As per the past practice, the excise duty is paid on finished
goods as and when they are cleared from the factory. An estimated
amount of Rs. 4.98 Lacs (Rs. 4.98 Lacs) of excise duty is payable on
the finished goods lying in the factory and the same is not included in
the inventory valuation. However there is no effect on the profit for
the year on account of the above treatment of excise duty.
21. As per the terms of issue of debentures, the Company is required
to create debenture redemption reserve. However, no reserve has been
created during the year in absence of profits.
22. (i) 15% Secured Non-Convertible Debentures of at a premium of 5% in
three equal installments commencing from 1st October, 1997 on expiry of
6th, 7th & 8th year from the date of allotment. The premium will be
accounted on payment basis. The Company has not redeemed the first and
(ii) 17% Secured Non-Convertible Debentures of Rs. 500 Lacs (Second
Series) are redeemable at par in three equal installments commencing
from 1st August, 2000 on expiry of 6th, 7th & 8th year from the date of
(iii) 20.5% Secured Non-Convertible Debentures of Rs. 50 Lacs (Third
Series) are redeemable on 19th May, 1997 at the end of 24th months from
the date of allotment with call option exercisable by the subscriber by
giving one months notice. The Company has not redeemed the said
Secured Non-Convertible Debentures.
(iv) 18.5% Secured Non-Convertible Debentures of Rs. 1000 Lacs (Fourth
Series) are redeemable in three equal installments commencing from
5th/9th January, 2002 on the expiry of 6th, 7th & 8th years from the
date of allotment.
23. (a) Rupee Term Loans from financial institutions and
(First Series, Second Series & Fourth Series) privately placed with
financial institutions and funds are secured/to be secured by way of
mortgage of immovable properties and hypothecation of movable assets of
the Company (except book-debts), subject to prior charge(s) on stocks,
consumables and other movable assets of the Company, created/to be
created in favour of bankers ranking pari passu interse and further
subject to exclusive charge in favour of a financial institutions. The
creation of securities in respect of the Fourth Series of the
Debentures of Rs. 1000 Lacs is not complete. Further the Rupee Term
Loans from the financial institutions are secured by personal
guarantees of the Chairman and the Managing Director.
(b) Rupee Term Loans from the financial institution under Asset Credit/
Equipment Finance Scheme are secured by exclusive charge by way of
hypothecation of the plant & machinery, equipment and other assets
acquired there against and personal guarantees of the Chairman and the
(c) Non-Convertible Debentures (Third Series) are yet to be secured by
way of second charge on the immovable properties of the Company.
(d) Rupee Short Term Loan from Financial Institution are secured by way
of pledge of equity shares in the Company held by an investment Company
and personal guarantee of the Chairman and the Managing Director.
(e) Cash Credit, Packing Credit and bill discounting and other working
capital facilities from the banks are secured by hypothecation of all
the present & future Goods, book debts and other current assets of the
respective divisions of the Company for which the facilities are
sanctioned by the concerned banks by way of prior/first charge ranking
(f) Short Term Loan from IDBI is secured against securities of third
24. The Sundry Creditors include Tax deducted at source on dividend of
Rs. 19.56 Lacs, which is still unpaid.
25. Since no remuneration has been paid to the Directors, the
computation of net profit ; u/s 349 of The Companies Act, 1956 is not
26. No depreciation has been provided for during the year on assets of
paper division, amount not ascertained.
27. The Company has not made any provision for gratuity payable
amounting to Rs. 30.00 Lacs ( approx.)..
28. Pre-operative expenses amounting to Rs. 22.15 lacs (22.15 lacs)
under the heading Miscellaneous Expenditure, represents amount spent on
Enzyme Project of chemical division, whose implementation is deferred
as of date.
29. The Company is in process of collecting the information in respect
of amounts payable over Rs. 1 Lac or more to small-scale Industrial
Undertakings, which are outstanding for more than 30 days.
30. Previous years figures have been regrouped, rearranged and
reclassified wherever necessary.