1. Secured Loans:
a. The Term Loans from ARCIL are secured by first pari-passu mortgage
of all immovable properties, save and except assets charged to IDBI
earlier, and is further secured by way of hypothecation of all movable
properties (save and except the book debts) of the company subject to
prior charges created in favour of Company''s Bankers on inventory of
the Company to secure the borrowing for working capital.
b. The Term Loan from Export Import Bank of India is secured by way of
Hypothecation of all the present and future movable fixed assets except
book debts and stock and is further secured by first pari passu
mortgage of all the immovable assets of company save and except assets
charged to IDBI earlier.
c. Working Capital Borrowings from Export Import Bank of India
represents the amount of foreign Usance bills discounted by the Bank.
d. All the above loans are further secured by personal guarantees of
Managing Director and Ex-Chairman.
2. Secured Lenders viz, Asset Reconstruction Company (India) Limited
(ARCIL) and Export Import Bank of India took the possession of the
Secured Assets of the company under section 13 (4) of Securitization
And Reconstruction of Financial Assets And Enforcement of Security
Interest Act, 2002 ( SARFAESI Act) on 11th July, 2007 against their dues
and appointed the Company as Custodian of the Secured Assets and
permitted to continue the Business activities on a payment of Rs 25,000
per month towards royalty charges till 31st March, 2011. Thereafter,
they have withdrawn the custodian ship. They have also filed petition
for winding up of the company before the hon''ble High Court of M.P.,
which is pending for admission.
The Commercial Tax Department also took action for recovery of their
dues by way of attachment of Fixed Assets under the Provisions of M.P.
Land Revenue Code, 1959.
Hence, Consequential fate of Secured fixed assets taken over by the
secured lenders is not ascertainable. Therefore , any adjustment on
account of possession of the assets is also not ascertainable in the
circumstances as on 31 st March, 2011.
3. As the accumulated losses of the Company had exceeded its entire net
worth in earlier years, the Company had been declared a Sick Industrial
Company within the meaning of Clause (O) of sub section 1 of section 3
of the Sick Industrial Companies (Special Provisions) Act, 1985 (SfCA)
vide order of BIFR dated 17th May, 2006. Pursuant to the action taken by
secured Lenders under section 13(4) of the SARFAESI Act, 2002 the BIFR,
vide its order dated 26th November, 2007 has abated the reference filed
by the Company under SICA.
As the Company has concluded one time settlement with working capital
bankers and IDBI and is pursuing settlement discussions with remaining
Secured Lenders and is keen to revive its operations, the accounts of
the Company have been prepared on going concern basis. In case the
Company is unable to continue as a going concern in future, the
resultant adjustments, if any, are presently not ascertainable.
4. In view of One-time settlement achieved by the Company and its
ongoing discussions with other lenders, the estimated amount of the
interest for the year amounting to Rs. 322.98 Lacs (Prev. Yr. 322.98
Lacs) has not been provided in books of accounts of the Company. Total
amount of Interest not provided for as on the date of Balance Sheet is
Rs. 4346.03 (Prev. Yr. 4023.05 Lacs).
5. As per the Information''s available with the Company in response to
the enquiries from all existing suppliers with whom Company deals, none
of the suppliers are registered with the Micro, Small & Medium
Enterprises Development Act, 2006.
6. Balances of some of the Sundry Debtors, Creditors, Loans & advances
are taken as per Books of Account and are subject to confirmation from
respective parties. However, in the opinion of the management these
accounts will fetch the amount as stated in the books of accounts on
realization in the ordinary course of business.
7. Sales Tax, Purchase Tax and Income Tax Assessment are pending at
various stages. Provision of Taxes in the opinion of management is
8. No Provision for taxation has been considered necessary in view of
Carry forward losses, and unabsorbed depreciation and other allowances
under the Income Tax Act.
9. Vehicles in the block of Fixed Assets are in the name of Directors,
as the finances have been arranged by them.
These vehicles are in the possession of the Company. The amount of
installments outstanding for payment to financing agencies as on the
date of Balance Sheet is Rs. 0.72 (2.16) Lacs.
10. Excise duty drawback receivable related with Exports of previous
years, earlier denied by the Custom authorities, now have been allowed
by the Hon''ble CESTAT, New Delhi and therefore have been shown as
Income underthe head ''Other Income''
11. Bad debts and irrecoverable debit balances written off during the
year is Rs. 6.76 Lacs (Prev.Yr. NIL) which were shown as receivables in
earlier years now determined and adjusted.
12. Prior Period items represent amount ascertained and accounted for
During the Year on the basis of various assessments completed during the
Year and other settlements related with earlier years.
13. Related Party Disclosures:
A. List of related Parties: Shri Pramod Somani (relationship: Managing
B. Transactions with related parties NIL
14. Traveling and Conveyance includes Directors Traveling-Inland Rs.
5,57,607 (Prev.Yr. 2,28,483), Foreign Traveling Directors Rs. Nil
(Prev. Yr. Nil) and Foreign Traveling-others Rs. Nil (Pre.Yr.Nil).
15. Segment Information : The Company is operating in Single segment.
16. The Computation of net Profit in accordance with section 349 of the
Companies Act, 1956 has not been given, as Commission by way of
percentage of Profit is not payable for the year to any of the
Directors of the Company.
17. In the opinion of the directors the assets had recoverable value as
compared to their carrying Cost, and therefore no provision is
18. Figures have been rounded off to the nearest rupee.
19. Previous year figures have been regrouped / rearranged, wherever
20. Figures and remarks in the brackets pertains to the previous year,
unless other wise specified.
There is no reasonable / virtual certainty supported by convincing
evidence that sufficient future income will be available against the
net deferred tax assets. In consideration of prudence, the company has
not considered the net deferred tax Assets in the Books of Accounts.
21. In the opinion of the Board the current assets, loans & advances
have a value on realisation in the ordinary course of business, at
least equal to the amounts at which these are stated and that the
provisions for all the known liabilities has been adequately made and
not in excess of the amount reasonably necessary and there is no
Contingent liability other than listed below.
a) Interest to Secured Lenders Rs. 43.46 Crores. ( Prev.Yr. Rs. 40.23
b) Provision for accrued gratuity liability made , pending actuarial
valuation and accounting policy followed.
c) Claim not acknowledged as debts Rs. 15 Lacs. (Prev.Yr. 3.50 Lacs)
21. Schedules referred to herein are under the same signature and form
an integral part of the Accounts.