1. GENERAL INFORMATION
JCT Limited (the Company) is primarily a manufacturer of cloth and
nylon filament yarn. The Company''s manufacturing facilities are
located in Phagwara and Hoshiarpur.
2.1 10,00,000 OPCPS of Rs.1,000 lakhs are redeemable on 31.12.2016
(date extended from 31.12.2011). 20% of the face value is optionally
covertible into equity shares during the currency of OPCPS.They are
neither entitled to dividend nor carry any voting right.
2.2 1,400,000 OPCPS of Rs.1,400 lakhs are redeemable on 26.12.2015
(date extended from 26.12.2010) with the option to convert before that
the whole amount into equity shares at a rate to be determined and as
permissble under the SEBI guidelines.They are neither entitled to
dividend nor carry any voting right.
3.1 Redemption premium of US$ 5.08 million equivalent to
Rs.2294.92lakhs (Previous year:Rs.2294.92 lakhs) fully provided in
share premium account on 2.5% FCCB of US $ 25.42 millions has been
reinstated at Rs 2619.79 lakhs as at 31.03.12 and the resultant
exchange fluctuation has been adjusted in the share premium account.
Company raised US$ 30 million through issue of 2.5% unsecured FCCBs on
8.4.2006. FCCBs of US$ 4.58 million stood converted into equity shares
in earlier years and the balance of US$ 25.42 million (equivalent to
Rs.13,098.93 lakhs) became due for redemption on 08-04-2011 alongwith
premium of 20.075% (US$ 5.08 million equivalent to Rs.2,619.79 lakhs).
The Company could not redeem the same due to paucity of cash funds.
Further, provision of Rs.924.78 lakhs towards yield protection on the
unpaid amount is not considered necessary as this will not be payable
once the restructuring is completed considering the changes in economic
scenario. In the meantime, the Bank of New York Mellon, Trustee has
filed winding up petition before the Hon''ble High Court of Punjab and
Haryana at Chandigarh on 29th September,2012, which is pending hearing
/disposal. In the light of ongoing talks with some of the major bond
holders and the merit of the petition,The Company does not anticipate
any adverse outcome of the said litigation.
4.1 Secured Working Capital Loans have been taken from consortium of
scheduled banks and are secured by first charge ranking pari-passu
inter-se amongst member banks on all the stocks of raw materials, stock
in process, semi-finished and finished goods, stores and spares, bills
receivable and books debts and all other movables current assets both
present and future pertaining to Company''s Textile and Filament Units.
These are also secured by second charge over the fixed assets
pertaining to abovesaid Units and by personal guarantees of Chairman
and Managing Director and Sh. M M Thapar. Working Capital Loans from
Allahabad Bank are additionally secured by First Charge by way of an
equitable mortgage over the land admeasuring around 9 acres and
structurres thereon at Phagwara.
4.2 Secured loans from other is secured against pledge of shares held
under Current Investments of the company - Refer Note 15(a)i.
5.1 There is no amount due and outstanding to be credited to Investors
Education & Protection Fund.
5.2 Includes for machinery and civil works Rs.4.53 lakhs (Previous
Year : Rs. 36.40 lakhs)
6.1 (a) The Company had revalued its certain freehold land held at
Tehsil Phagwara on 01.04.2005 and the resultant revalued amount of Rs.
10,417.70 lakhs was substituted for the historical cost in the gross
block of land,net block as at 31.03.12 is Rs 10,417.70 lahks.
(b) The Company had revalued its freehold land at Village Chohal,
Hoshiarpur on 15.03.2010 and the resultant revalued amount of
Rs.4,403.91 lakhs was substituted for the historical cost in the gross
block of land,net block as at 31.3.12 is Rs 4359.66 lakhs.
(c) The Company had revalued its certain freehold land at Sriganganagar
on 30.4.85 and the resultant revalued amount of Rs.134.58 lakhs was
substituted for the historical cost in the gross block of land, net
block as at 31.3.12 is Rs. 50.19 lakhs.
(d) During the year ended 31.3.2012, the company had adjusted Rs.44.09
lakhs relating to Filament unit, Hoshiarpur from revaluation reserve
against sale of land.
(e) The company had revalued its building at Tehsil phagwara on 30.4.85
and the resultant revalued amount of Rs.738.41 lakhs was added to the
historical cost in the gross block of building of Rs.1077.32 lakhs.
The aforesaid revaluations were done based on reports of external
valuers at replacement / market value which resulted in net increase of
Rs.15694.60 lakhs in the gross block of fixed assets.
6.2 (a) Government grant of Rs. 416.54 lakhs received in 2008-09 was
reduced against the cost of specific plant and machinery.
(b) The Company has continued to adjust the foreign currency exchange
variation on amounts borrowed(FCCBs) for acquisition of fixed assets to
the carrying cost of fixed assets as the related borrowings originated
in the year 2006, which is in accordance with provisions of the
company''s Act 1956, read with notifications of the Government of India.
This has resulted in increase in fixed assets by Rs.1624.33 lakhs
(previous year decrease of Rs 111.85 lakhs), with corresponding
increase in FCCBs borrowings during the year.
6.3 Capital work in progress includes under noted pre-operative
expenditure pending allocation on commencement of commercial
7.1 In respect of the Company''s investment in JCT Electronics Ltd.:
(a) The Company has given an undertaking to a financial institution and
a bank of JCT Electronics Ltd. that the Company would not dispose off,
pledge, charge, or create any lien, assign 39,33,000 equity shares
having face value of Re.1 each.
(b) The company has pledged 42,87,000 equity shares having a face value
of Rs.1/- each with a financial institution for financial facility
availed by JCT Electronics Ltd.
7.2 Though Rs.597.60 lakhs was redeemable on 31.03.2012, however
moratorium of 2 years has been given for repayment of whole amount
which is now redeemable from 31.03.2014 onwards in two annual equal
7.3 Though Rs.287.24 lakhs was redeemable on 31.03.2012, however a
moratorium of 2 years has been given for repayment of whole amount
which is,now redeemable from 31.03.2014 onwards in seven annual equal
7.4 Provision for shortfall of Rs. 199.38 Lakhs (previous year Rs.
127.09 lakhs) in the aggregate market value of quoted investments as
compared to the book value is not considered necessary as in the view
of the management, there is no permanent diminution in value of
investment except to the extent for which adequate provision is already
made in the accounts.
8.1 Includes Rs.3.79 lakhs (Previous Year: Rs.3.80 lakhs) earmarked
for redemption of preference shares and Rs.6.08 lakhs ( Previous Year:
Rs 7.31 lakhs) against employees'' security deposits.
8.2 Includes fixed deposits of Rs.75 lakhs maturing on 20.03.2013
(Previous year: Rs.150 lakhs maturing on 20.03.2012)
9.1 Others comprise receivables on account of export incentives, CER
receivable, DEPB receivable, interest receivable, rent receivable,
10.1 No amount has been remitted during the year in foreign currency on
account of dividend.
10.2 Prior period expenses aggregating Rs. 52.75 lakhs (net debit) have
been accounted for in the respective heads of account (Previous Year:
15.30 lakhs (net debit.)
11. Additional notes to the financial statements for the year ended
31st March, 2012.
11.1 Contingent liabilities and commitments not provided for:
(Rs. In Lakhs)
Particulars 31.03.2012 31.03.2011
(I) Contingent Liabilities
(a) Claims against the Company not
acknowledged as debts. 19.38 18.47
(b) Guarantees given by the bankers on
behalf of the Company 205.28 229.21
(c) Unutilised letter of credit 24.80 166.31
(d) Disputed liabilities not adjusted as
expenses in the Accounts for
various ( years being in appeals
- Sales tax 735.02 454.46
- Income tax 83.04 120.87
- Excise Duty 2,422.80 2,363.51
- Stamp Duty 187.72 187.72
- Custom Duty 186.05 186.05
- Entry Tax 351.82 16.37
- Others 228.46 218.70
- Total 4,194.91 3,547.68
(a) Estimated amount of contracts
remaining to be executed on Capital 154.59 483.76
(Account and not provided for in
the accounts (net of advances)
(b) Export obligation against import
of machinery under EPCG Scheme 13,590.00 6,151.12
11.2 Corporate guarantee of Rs. 3,580.00 lakhs given to a Financial
Institution for term loan given to JCT Electronics Ltd. was invoked in
earlier years. JCT Electronics Limited was making quarterly payments to
Institution in terms of the Scheme sanctioned by the Board for
Industrial and Financial Reconstruction (BIFR) till 31.3.2011.
Thereafter the said institution with the consent of all the secured
lenders whose interests were effected had filed a Modified Debt
Restructuring Scheme (MDRS) before the BIFR covering the deferment of
over-due quarterly instalments. The invocation of corporate guarantee
is under abeyance till the approval of the MDRS.
11.3 (a) The Company has not recorded cumulative deferred tax assets on
account of timing differences as stipulated in Accounting Standard 22
on Accounting for Taxes on Income issued by the Institute of
Chartered Accountants of India in view of uncertainty of future taxable
(b) In view of no taxable profits, no provision for Income Tax as per
the provisions of the Income tax Act, 1961 is considered necessary.
Adequate provision in respect of Wealth tax has been made in the
11.4 In view of accumulated losses:
(i) No commission is payable to whole time directors.
(ii) No capital redemption reserve has been created during the year.
The Company has leased facilities under cancellable and non cancellable
operating lease arrangements with a lease terms ranging from 1 to 3
years, which are subject to renewal thereafter at mutual consent. The
cancellable arrangements can be terminated by either party after giving
due notice. The lease rent expense recognized during the year amounts
to Rs. 117.64 lakhs (Previous Year: Rs. 84.73 Lakhs). The future lease
payments in respect of non- cancellable operating leases for a period
later than one year but not later than 5 years is Rs. 100.85 lakhs as
at 31st March, 2012 (Previous year Rs.103.80 lakhs).
11.6 Going Concern:
Accumulated losses have resulted in substantial erosion in net worth of
the Company. However, the financial statements have been prepared on a
going concern basis on the strength of continued support of the
promoters, bankers/ other lenders. Further, the restructuring of
Company''s debts with its bankers has been approved under Corporate
Debt Restructuring Cell (CDR) mechanism in its meeting held on
12/09/2012 as per LOA dated 21/09/2012 which shall be implemented after
completing all the conditions stipulated therein and the impact thereof
as such shall be given in the accounts on its fulfilment of all the
formalities/conditions. The management, considering the future plans
for operations and support of the promoters, lenders, business
associates and workmen is hopeful of improved profitability leading to
improvement in its financial position.
11.7 Discontinued Operations:
11.7.1 The operations at Unit-I of Sriganganagar Textile Mill were
discontinued since 16.11.2009. The identified asset being land having
net book value of Rs. 84.65 lakhs is carried at the net book value as
expected net realizable value is higher, and is disclosed in Note
No.20.1 as ''Assets held for disposal''. Advances of Rs. 421.50 lakhs
received from the buyers of the asset are included in other Current
Liabilities to be adjusted pending completion of legal formalities.
11.7.2 During the year, operations at Unit-II of Sriganganagar Textile
Mill were discontinued. The Company entered into an agreement with the
workers unions pursuant to which full and final dues of some of the
workers have been settled and paid off. Company also entered into
agreement for disposal of the assets of the Unit except Land and
Building. The identified fixed assets pending disposal having net book
value of Rs. 216.59 lakhs and inventory of Rs.61.52 lakhs are carried
at the net book value, expected net realizable value being higher, and
are disclosed in Note No.20.1 and 16.2 respectively as ''Assets held
for disposal''. Advances of Rs.180 lakhs received from a buyer of
these assets are included in other Current Liabilities to be adjusted
on sale of assets.
11.7.3 Company has recognised loss of Rs. 142.89 lakhs as ''Loss from
discontinuing Operations'' and disclosed it separately in the
''Statement of Profit & Loss''. In earlier years results of the Unit
were included under ''Textile Segment''.
11.8 During the year the Company sold its entire shareholding in its
subsidiary company Rajdhani Trading Company Limited for a total
consideration of Rs. 5.01 lakhs. Loss of Rs. 60.70 lakhs thereon has
been shown separately in the ''Statement of Profit & Loss'' as an
11.9 Pursuant to the losses in the current year, accumulated losses as
on 31.03.2012 exceed fifty percent of the peak net worth of the Company
during preceding four financial years attracting provisions of ''Sick
Industrial Companies (Special Provisions) Act, 1985''. Accordingly,
requisite steps are being taken as envisaged under the said Act
including intimation to the ''Board for Industrial and Financial
11.10 The letters have been sent to almost all the parties for
confirmation of the balances under trade receivables, advances and
trade payables, however, due to non receipt of the response from the
parties, the balances are subject to confirmations/reconciliation in
some cases. The impact, if any, subsequent to the
confirmation/reconciliation will be taken in the year of confirmation/
11.11 During the year, the company made an interest-free security
deposit of Rs. 1150 lakhs to an associate company. The said deposit was
made due to the non-fulfillment of a specific obligation stipulated in
an agreement entered into by the Company in the year 2008 with the said
Associate Company. Subsequent to the year end, the deposit has been
repaid in full to the company by the said associate company. With
respect to the applicability of the provisions of section 295 and/or
372A of the Companies Act, 1956, the Company has been legally advised
that considering the nature of transaction and the fact that the entire
deposit has been repaid, any applicable enabling penal clauses of the
aforesaid sections, if any, are unlikely to be material.
11.12 In the opinion of the management, the value of assets other than
fixed assets and non-current investments, on realization in the
ordinary course of business, will not be less than the value at which
these are stated in the Balance Sheet.
Note: Figures in respect of Rajdhani Trading Company Limited have not
been given since it ceased to be a wholly owned subsidiary company
w.e.f.14th March 2012.
11.13 Segment Reporting:
(a) Identification of segments
i) Primary Segments
Business segment: The Company''s operating businesses are organized
and managed separately according to the nature of products, with each
segment representing a strategic business unit that offers different
products. Two identified segments are Textiles and Filament yarn. The
products considered as a part of Textile segment are cloth and yarn.
The products considered as a part of Filament segment are nylon yarn
ii) Secondary Segment
Geographical Segment: The analysis of geographical segment is based on
the geographical location of the customers.
(b) Inter Divisional transfers of goods, as marketable products
produced by separate divisions of the Company, for captive consumption
are made as if sales were made to third parties at current market
prices and are included in turnover.
(c) Unallocable Items:
Corporate income, corporate expenses, interest, capital and reserves
are considered as part of unallocable items which are not identifiable
to any business segment.
The Company has common fixed assets for producing goods for domestic
and overseas markets. Hence, separate figures for fixed
assets/additions to fixed assets cannot be furnished.
11.14 Employee Benefits:
(a) Defined Benefit Plan
Gratuity: Payable on separation as per the Employees Gratuity Act @ 15
days pay for each completed year of service to eligible employees who
render continuous service of 5 years or more.
(b) Defined Contribution Scheme
Company''s employees are covered by Provident Fund, Employees State
Insurance and Superannuation scheme etc. to which the Company makes a
defined contribution measured as a fixed percentage of salary. During
the year amount of Rs.832.34 lakhs (Previous year Rs.728.68 lakhs) have
been charged to the Statement of Profit & Loss towards contribution to
the above schemes/benefits.
(c) Other Long term Benefits
Employees of the Company are entitled to accumulate their
earned/privilege leave upto a maximum of 30 days for workers and 300
days for other employees which is payable /encashable as per the policy
of on their separation.
The estimates of rate of escalation in salary considered in actuarial
valuation take into account inflation, seniority, promotion and other
relevant factors including supply and demand in the employment market.
The above information is certified by the actuary. The expected rate
of return on plan assets is determined considering several applicable
factors, mainly the composition of plan assets held, assessed risks,
historical results of return on plan assets and the Company''s policy
for plan assets management.
12. The financial statements for the year ended 31.03.2011 were
prepared as per then applicable Schedule VI to the Companies Act, 1956.
Consequent to the notification of Revised Schedule Vi under the
Companies Act, 1956, the financial statements for the year ended
31.03.12 are prepared as per Revised Schedule VI. Accordingly, the
previous year figures have also been reclassified to conform to this