1. Due to the losses suffered by the Company in the earlier year which
exceeded the Paid-up Capital and Reserves, the Company became a sick
company within the meaning of Section 3(1)(o) of the Sick Industrial
Companies (Special Provisions) Act of 1985-(SICA). Thereafter the
Board of Directors filed a 'Reference' under Section 15(1) of the said
Act with the Board for Industrial and Financial Reconstruction (BIFR).
The BIFR vide, its Order dated : 16-03-99 declared the company as a
sick company as per the provisions of Section 16(1) of the said Act
1.1 The BIFR, in its Order, as referred to earlier, have appointed
Industrial Development Bank of India (IDBI) as the Operating Agency
and have directed them to prepare and submit the Rehabilitation
Proposal. The IDBI is in the process of preparing the proposal.
2. The Company carried on its manufacturing activities till 19th July
1998 and thereafter declared Closure due to its inability to continue
with the manufacturing activities on account of financial constraints
and other related factors.
2.1 Some of the Lenders and Creditors of the company have filed Winding
up petitions and/or suits for recovery of their dues in various courts.
The said winding-up petitions/suits are stayed/kept pending in view of
the provisions of Section 22 of the Sick Industrial Companies (Special
Provisions) Act of 1985.
3. Despite the aforesaid circumstances these accounts for the year
ended 31st March 1999 have been prepared on a Going Concern basis for
the following reasons :
(1) The management barring unforseen circumstances wishes to restart
the manufacturing activities and implement the expansion project and is
exploring the various possibilities in that direction,
(2) IDBI as the Operating Agency is in the process of preparing the
4. I The Company has contingent liabilities
not provided for in respect of : Previous Year
a. Sales Bills discounted and remaining unpaid
ason the date of balancesheet 3,35,664
Rs.Nil (Since realised Rs.Nil)
b. Guarantees and Letter of Credits given by
Bank on behalf of the Company Rs.2,46,214/- Nil
c. Thedemand for WaterCharges of Rs.5,46,214/-
in respect of Ankleshwar Unit which has been
disputed and not admitted by the Company,against
which an amount of Rs.3,00,000/- has been
deposited with GIDC and Bank Guarantee has been
furnished for Rs.2,46,214/- pursuant to the interim
order of High Court of Gujarat. 5,46,214
II. Estimated amount of capital contracts
(net of advances) not provided for Rs.NIL/- 2,16,400
III. Provision has not been made for :
a. Excise Duty of Rs.9,07,153 for alleged wrong
ful availment of Modvat on Import of Gum Rosin
and other Capital Goods, which is disputed by the
Company in appeal before Central Excise Tribunal. 9,07,153
b. Land Revenue Cess of Rs.4,91,405/- as the same is
disputed in Appeal before Revenue Authorities. 4,91,405
c. Customs duty of Rs.1,45,072/- in respect of
imported waste paper as Company's appeal is pending
before the Central Excise Tribunal against the order
of Assistant Collector of Customs, Porbander. 1,45,072
d. Doubtful Debts of Rs.6,85,043/- 21,07,173
e. Income Tax liability in respect of assessment
year 1996-97 as the liability in resect of the same
is disputed in Appeal before the Appellate Authorities 1,15,51,793
5. The Company has paid Rs.12,75,000/- out of outstanding
Rs.22,60,252/- as upto 31st March 1999 to Oil & Natural Gas Corporation
Ltd; as monthly installment of principal amount of arrears towards rate
difference and royalty for the period prior to January 1987, pursuant
to the final order passed by the Supreme Court of India. However, as
reported earlier, on the basis of legal advice, no provision has been
made for interest of Rs.2,11,83,755 on the principal amount of the
arrears as claim by the Oil & Natural Gas Corporation Ltd; vide their
letter dated, 8th August, 1990 or the amount of interest as
subsequently claimed by them before the Supreme Court for which the
Company has not been provided with any details or basis as the
liability in respect of interest remains unascertained due to direction
as to its payment having not been given by the Supreme Court.
5.1 The Company has not provided for interest in respect of arrears of
rate difference, royalty and transportation charges aggregating to
Rs.45,60,004/- for the period from 30/01/87 to 22/11/89 as the same is
6. Hon'ble Gujarat High Court has set aside the order passed by the
State Government rejecting the Company's application for exemption to
hold vacant land pursuant to the provision of Section 20 of Urban Land
(Ceiling & Regulation) Act,1976 and has remanded the matter to the
State Government with the direction of consider the application for
exemption to hold vacant land afresh and to take final decision thereon
in accordance with law.
7. Capital work in progress under Expansion Project includes directly
attributable expenditure incured for the assets at site, other direct
costs in respect thereof and interest and other finance charges
incurred for borrowing to acquire those assets.
7.1. The Company has continued its past accounting policy to capitalise
interest and other finance charges incurred for borrowings to acquire
the said assets and accordingly Rs.1,30,36,869/- have been charged to
capital work in progress.
7.2 The company has during the year transferred certain advances
aggregating to Rs.513607/- representing the amounts paid in the past in
connection with the project work remaining unadjusted and certain other
expenses incurred during the year in relation to the project work
aggregating to Rs.2,38,750/- to Capital Work-in-progress.
7.3 Pre-operative Expenses includes Right Issue expenses of
Rs.20,75,696/- Previous Year Rs. 20,75,696/-
7.4 Pre-operative Expenses shall be capitalised upon completion of
the Expansion Project.
8. 14%, 56,278 Non Convertible Debentures of Rs.100/- each are secured
by second legal mortgage in English form inter-alia on all the
Company's Plant and Machinery situated at Utran, Dist. Surat save and
except machinery acquired under Equipment Refinance Scheme.
8.1 The Debentures are redeemable at par in three instalments at the
end of 6th, 7th and 8th year from the date of allotment i.e. 31st
8.2 The Company has not made payment of the instalments of
Rs.56,27,160/- falling due upto 31st March 1999 in respect of
redemption of 14% Secured Non-Convertible Debentures.
8.3 In view of the losses during the year, no amount has been
transferred to Debenture Redemption Reserve Account.
9. Certain payments to the Sundry Creditors aggregating to
Rs.62,86,250/- during the year and the balances of Sundry Debtors,
Sundry Creditors, Depositors and parties to whom loans and advances
have been given and from whom received are subject to confirmations and
in certain cases are subject to reconcilation and adjustments, if any.
9.1 Confirmations of Balances in respect of Current/Temporary overdraft
Accounts with some Banks, Fixed Deposits with Banks and Secured and
Unsecured Loans, are not available for verifications by the Auditors
9.2 No provision has been made for the interest, overdue interest &
penal interest and Hire charges claimed by the Banks, Financial
institutions and others, the amount which is estimated at Rs.
29,39,322- as the company has not accepted its liability in that
9.3 Interest in respect of Working Capital Term Loans from UCO Bank has
been provided upto 30th Setember 1998, as per intimations received from
9.4 Balances in Accounts of the companies under the same management and
also companies in which the Director's are interested are subject to
reconciliations, if any.
10. The company has still to comply :
a) with the provisions of section 370 of the Companies Act of 1956, as
regards the loan to a company under the same management Jayant
Industrial Packaging Limited, given in the earlier year.
b) with the provisions of section 372 of the Companies Act of 1956, as
regards to the investment in the earlier year, in the shares of Jayant
Industrial Packaging Limited.
11. Loans and Advances Recoverable in cash and kind include loan of
Rs.16,97,501/- (Previous Year Rs.16,77,501/-) given to Jayant Fibre
Container Pvt. Ltd. a private company under the same management as that
of the company in contravention of the provision of Section 295 of the
Companies Act, 1956.
12. The Company has not complied with the provisions of Section 58A of
the Companies Act, 1956 with regard to Public Deposit accepted by it.
13. The Company revalued its Buildings, Plant and Machinery excluding
Plant and Machinery acquired during the year ended 31-3-1996 financial
year, Electrical installation and laboratory equipments as on 31.03.97
based on Revaluation Report from an approved valuer at its
Depreciated Present Fair Market.Value as stated here under :
(a) Building 9,22,90,563
(b) Plant & Machinery 8,15,83,142
(c) Electrical Installation 79,51,385
(d) Laboratory Equipment 1,93,028
The corresponding aggregate amount of Rs. 18,20,18,118/- had been
transferred to Revaluation reserve as on that date.
14. The amount representing the difference between the depreciation of
the Depreciated Fair Market Value and the original cost of
Rs.64,60,498/- (Previous Year Rs. 73,51,722) has been transferred from
Revaluation Reserve Account to the Profit and Loss Account (Refer to
Note No.9.3 Under 'A').
15. Plant and Machinery includes Rs.25,03,950/- being the cost of the
items purchased on the Hire-Purchase basis, the legal ownership of
which shall be transfered in the name of the company upon the payment
of the final instalment in terms of the Hire-Purchase Agreement.
15.1 Adjustments as shown in the Schedule No.5 of the Fixed Assets
represent interse rectifications.
15.2 Depreciation has been provided for the Whole year ended 31-03-1999
in respect of Assets used for production activities though however,
production has been discontinued effective from 19-07-1998 to provide
for wear and tear and depletion in value due to efflux of time.
16. The proposal of the Board of Directors of not calling the uncalled
amount of Rs.20/- per Share out of the total amount of Rs.40/- per
share payable in respect of the Rights Equity Shares issued earlier, as
approved by the Shareholders at the General Meeting held on 15th
November 1997 is subject to approval of the Hon'ble High Court of
When finally sanctioned by the Hon'ble High Court of Gujarat, the
necessary adjustment shall be made by transferring the requisite amount
of Share Premium received to Share Capital so as to make partly Paid up
Shares as fully paid-up.
17. The proposal of the Board of Directors to waive interest chargeable
on the late payment of allotment money in respect of Right Shares
issued during the earlier year is subject to the approval of Securities
and Exchange Board of India (SEBI).
18. The investment in the Equity Shares of unquoted companies may not
have the same value at which they are stated, if realised in the
ordinary course of business. However, no provision is made for the
dimunition in value as the amount thereof is not ascertained.
19. The management has not been able to physically verify the Stores &
Spares and Stock-in-Trade as on 31- 03-1999 in view of the closure of
the factory after the discontinuation of manufacturing operations and
labour unrest which followed thereafter.
19.1 The inventories of Stores & Spares and Stock-in-Trade excluding
Finished Goods as shown in Current Assets and Loans & Advances are on
the basis of a Certificate issued by the Management. The Quantity of
inventories as stated in Certificate and the value thereof have been
arrived after taking into consideration the book balances as on
30-06-1998 and the receipts and issue thereafter till 19th July 1998,
being the date on which the manufacturing operations were discontinued.
The values of inventories as stated are their estimated values' as
certified by the Management on the basis of available information with
19.2 In case of Finished Goods, the Quantitative thereof have been
taken on the basis of Central Excise records as available with the
company as on 31-07-1998 and have been valued at their estimated net
20. The Company has provided for the Salaries, Wages and other Benefit
aggregating to Rs.1,02,89,950/- for the period from August 1998 to
March 1999 on the basis of the available records in respect of the
period prior to the closure of the factory though its liability in
respect thereof is 'indeterminate'.
21. Power and Fuel includes provision for Rs.20,89,200/- charged by
Gujarat Electricity Board as Minimum Demand Charges and Rs.35,90,838/-
charges by Gas Authorities of India Ltd. as transportation charges
though the liability in respect of the same is not accepted by the
22. Prior Years adjustments represents items of expenses being
short/excess provided in the earlier years.