India Foils

1.  Contingent Liabilities :
 
 (a) Sales Tax demands aggregating Rs. 5495.68 lacs (2007 - Rs. 2945.30
 lacs) against the Company not acknowledged as debts against which
 appeals are pending at various stages with the concerned authorities.
 
 (b) Excise Duty demands aggregating Rs. 1030.71 lacs (2007 - Rs.
 1083.81 lacs) against the Company not acknowledged as debts against
 which appeals are pending at various stages with the concerned
 authorities.
 
 (c) Demand from Kolkata Port Trust in respect of increased lease rental
 amounting to Rs 155.05 lacs (2007-Rs.NIL) against the Company not
 acknowledged as debt as the matter is subjudice and is pending before
 the Estate officer, Kolkata Port Trust.
 
 2.  Preference Shares:
 
 (a) 1,000, 8% Cumulative Redeemable Preference Share of Rs 100 each is
 redeemable at par on 2nd March, 2012.
 
 (b) 24,00,000 and 3,50,000, 8% Cumulative Redeemable Preference Shares
 of Rs. 100 each are redeemable at par on 29th September 2008.
 
 (c) Arrears of fixed cumulative dividends represent:
 
 (i) Rs. 501.68 lacs (2007 - Rs. 501.68 lacs) in respect of Preference
 Shares already redeemed in earlier years.
 
 (ii) Rs. 990.60 lacs (2007 - Rs 770.60 lacs) in respect of 24,00,000
 and 3,50,000, 8% Cumulative Redeemable Preference Shares of Rs. 100
 each issued in September, 2003.
 
 (iii) Rs. 0.09 lacs ( 2007 - Rs. 0.01 lacs) in respect of 1,000, 8%
 Cumulative Redeemable Preference Shares of Rs 100 each issued on 2nd
 March, 2007.
 
 3.  Revaluation
 
 (a) Based on valuation report submitted by a professional valuer
 appointed for the purpose, Freehold Land and Freehold Buildings at
 Kamarhati factory and major items of Plant and Machinery of the Company
 were revalued as at 31st March.  1994 on the then current cost basis
 and adjusted for depreciation element wherever applicable. The
 resultant increase in net book value on such revaluation amounting to
 Rs. 1949.58 lacs was added to cost and transferred to Revaluation
 Reserve as at 31st March, 1994.
 
 (b) Based on valuation report submitted by the Companys professional
 valuer appointed for the purpose, Freehold Land and Buildings and Plant
 and Machinery of the Companys Sheet Division (erstwhile LMI), acquired
 pursuant to the Scheme of Amalgamation with effect from 1st April 1997,
 were revalued as at 31st March, 1994, on the then current cost basis
 and adjusted for depreciation element as applicable. The resultant
 increase in net book value on such revaluation amounting to Rs.4441.52
 lacs was added to cost and shown under Revaluation Reserve as at 31st
 March, 1994 and after adjustment over the years, the balance Rs.3917.16
 lacs.as at 1st April, 1997 had been added to the Revaluation Reserve in
 the relevant year.
 
 4.  Provision for Excise Duty Rs 38.73 lacs (2007 - Rs 32.28 lacs) in
 respect of closing stock of applicable items of inventories has been
 included in these accounts. However, this does not have any effect on
 the years result.
 
 5.  The operations at Taratala and Hoera units of the Company are under
 suspension since April 2002 and September 2003 respectively.
 Accordingly, fixed assets lying in the aforesaid units with carrying
 amount aggregating Rs.5668.17 lacs as at 31 st March, 2008 are
 currently not in use. However, usage of such fixed assets is currently
 under active consideration and based on physical Verification of assets
 at Hoera and Taratala units by an independent valuer, the management is
 of the opinion that majority of these assets are in good condition.
 Impairment loss for such assets at this stage, if any, has neither been
 ascertained nor provided for in these accounts.
 
 The networth of the Company has been fully eroded and accordingly on a
 reference made by the Company, the Board for Industrial and Financial
 Reconstruction (BIFR) has declared it to be a sick company in terms of
 Section 3(l)(o) of the Sick Industrial Companies (Special Provisions)
 Act, 1985 vide its order dated 9th May, 2006 , However, in view of the
 ongoing business/financial restructuring initiatives by the Company for
 improvement in revenue and reduction in cost (including borrowing cost)
 financial support being received from the promoter group from time to
 time [also refer Notes (1) and (2) on Schedule 15 in this regard], and
 financial restructuring envisaged in the Draft Rehabilitation Scheme
 submitted with
 
 BIFR in the current year, the management considers that it is
 appropriate to prepare the Companys accounts on a going concern
 basis inspite of losses incurred by the Company and erosion of its net
 worth.
 
 6.  The Company has obtained a legal opinion in respect of payment of
 salaries and wages and related retiral benefits like provident fund,
 contribution to employees state insurance scheme, leave liability,
 gratuity etc to the employees of its Hoera unit, the operation of which
 is under suspension with effect from 15th September, 2003. Accordingly,
 the Company is not liable and does not require to make any provisions
 with respect to salaries and wages and other retiral benefits for the
 suspension period. The Company (other than gratuity and leave
 liability, which were actuarially ascertained and provided for based on
 the information available till date of suspension) has neither
 ascertained nor provided for salaries and wages.  liability towards
 provident fund, contribution to employees state insurance scheme, etc.
 for the employees of the said unit since the suspension of operation
 (including that for the current year).
 
 7.  Employee Benefits
 
 7.1 Consequent to the adoption of Accounting Standard (AS)-15 on
 Employee Benefitswith effect from 1st April, 2007 an amount of
 Rs.50.55 lacs arising from required remeasurement of Companys
 obligation in respect of certain post retirement defined benefit plans
 as on 1st April, 2007 (no adjustments for tax expense being required
 for reasons stated in Note 12) has been recognised with corresponding
 adjustment against the brought forward opening debit balance of the
 Profit and Loss Account.
 
 7.2 Effective 1st April 2007, employee benefit obligations have been
 measured/valued following the AS 15 on Employee Benefitsvis-a-vis
 erstwhile AS 15 on Accounting for Retirement Benefits in the Financial
 Statements of Emplovers hitherto followed. The charge (net) to the
 Profit and Loss Account on account of employee benefits during the year
 ended 31st March, 2008 would have been higher by Rs.0.77 lacs, had the
 same basis been followed as applicable for the year ended 31 st March,
 2007.
 
 7.3 Provident Funds set up by the Company
 
 In terms of the guidance on implementing Accounting Standard(AS)-15 on
 Employee Benefits issued by the Accounting Standards Board of the
 Institute of Chartered Accountants of India, a provident fund set up by
 the company is treated as a defined benefit plan since the company is
 obligated to met interest shortfall, if any. However, as at the year
 end, no shortfall remains unprovided for in respect of the provident
 funds setup by the Company. The actuary has expressed his inability to
 provide an acturial valuation of the provident funds liability as at
 the year end in the absence of any guidance from the Actuarial Society
 of India. Accordingly, complete information required to be considered
 as per AS-15 in this regard are not available and the same could not be
 disclosed.
 
 During the year, the Company has contributed Rs. 5.43 lacs (Previous
 Year-Rs. 5.27 lacs) in respect of the said provident funds.
 
 8.  Loans and Advances includes (a) Input Tax Credit Rs. 992.18 lacs (
 2007-Rs 823.78 Lacs) and (b) interest free loans (car and furniture
 loans) Rs 0.02 lacs (2007- Rs. 0.18 lacs) to various employees, which
 are recovered from their remuneration as per the repayment schedules.
 
 9.  Having regard to the losses incurred, the Company does not have
 any current tax at present and has unabsorbed depreciation and carried
 forward business losses available for set off under the Income Tax Act,
 1961. In view of inability to assess future taxable income, the extent
 of net deferred tax assets which may be adjusted in the subsequent
 years is not ascertainable with virtual certainty at this stage and
 accordingly, in keeping with Accounting Standard-22 on Accounting for
 Taxes on Income, the same has not been recognized in these accounts on
 prudent basis.
 
 10.  Pursuant to negotiated one time settlement of certain borrowings
 (based on mutual agreements with concerned lenders) during the year,
 related principal and interest provisions no longer payable,
 aggregating Rs.402.87 lacs, have been written back and disclosed as an
 Extraordinary Income in the Profit and Loss Account.
 
 11. The Company is engaged in the manufacturing of aluminium foils and
 foil packaging products. The Company is managed organizationally as a
 unified entity catering predominantly to the domestic market along with
 exports to a few countries with similar economic environment and
 therefore, according to the management, this is a single segment
 company as envisaged in the Accounting Standard 17 on Segment
 Reporting.
 
 12.  Sales include export incentives on account of Duty Entitlement
 Pass Book scheme Rs 106.83 lacs (2007 - Rs 63.36 lacs).
 
 13.  Previous years figures have been rearranged/regrouped wherever
 necessary.