a The company has only one class of Issued share i.e, Equity Shares
having par value of Rs 10/- per share. Each Shareholder is entitled to
one vote per share and equal right for dividend. In the event of
liquidation the equity shareholders ae eligible to receive the
remaining assets of the company after payment of all preferential
amount in proportion to their shareholding.
b The company does not have any Holding company / ultimate Holding
a Term loan taken from banks is repayable in 7 quaterly equal
installment of Rs.14 lacs each starting from 1st April 2012 and balance
in the 8th installment.
b Term loan is secured by hypothecation of assets acquired out of term
c Deferred payment liabilities are secured by hypothecation of assets
acquired out of loan. Repayment schedule of the same for the next three
years is Rs.7.35 Lacs, Rs.4.71 Lacs & Rs.0.33 Lacs respectively.
d Loan from Mangalam Cement Limited amounting to Rs. 3,000 lacs
received at the time of pending scheme of amalgamation of the company
with them which was subsequently withdrawn by Mangalam Cement Limited
has been classified as Long term Borrowing in view of representation
made by the company for rescheduling the payment terms.
e Repayment schedule of Other loans for next five years are Rs.125
lacs, Rs.150 lacs, Rs.75 lacs, Rs.150 lacs & Rs.75 lacs respectively.
f Cash credit amounting to Rs.995.32 Lacs (PY Rs.707.33 Lacs) and bill
discounting and letter of credit amounting to Rs.379.50 Lacs (PY
Rs.344.69 lacs) are secured by prior charge by way of hypothecation of
stocks, debts and other current assets and second charge to be created
over entire fixed assets both present and future.
Note 1.1 Disclosure to Financial Statements
(Rs. in lacs)
2012 31ST MARCH,
1. Contingent liabilities not provided
for in respect of :
a) Sales Tax matters pending in appeal 1,403.90 1,304.14
b) Excise/Service Tax matters as under :
i) Excise matters pending in appeal 135.82 135.82
ii) Service Tax Outward Freight Nil 52.21
c) State Excise matters pending in appeal 1,070.72 847.15
d) Bank guarantees given in favour of
District Magistrate and Collector
Nabarangpur and remaining outstanding 5.00 5.00
e) Demand of Electricity Duty raised by
Southern Electricity Supply Company of
Odisha Ltd. for the period from April,
2008 to January, 2011 70.53 Nil
(part of BIFR period). (Also refer
Note No. 11)
2. Royality on wood had been increased by the Government of Odisha
with retrospective effect from 1st April, 1988 vide its letter dated
2nd September, 1993 against which the Company had filed a writ petition
before the Odisha High Court. The Odisha High Court vide its order
dated 16th May, 1995 had upheld the writ petition of the Company.
Government of Odisha had filed a Special Leave Petition before the
Supreme Court. The Hon''ble Supreme Court vide its order dated 11th
November, 2003 has dismissed the special leave petition filed by the
Government of Odisha and upheld the decision of the Hon''ble High Court
of Odisha passed in favour of the Company. The Hon''ble Supreme Court
had also directed the Govt. of Odisha to implement the judgement of the
Hon''ble High Court of Odisha expeditiously and in any case within a
period of four months from the date of the order of the Supreme Court.
Subsequently, Government of Odisha has lodged a claim for Rs.303.49
lacs (net of excess amount of royalty paid by the Company in earlier
years) on the Company on account of alleged failure in taking up
replantation in the area harvested by the Company. This claim has been
denied by the company. In terms of the Supreme Court judgement, the
Company has lodged its claim with the Government of Odisha, the
monetary value of which is much higher in comparison to the claim
lodged by the Govt. of Odisha against the company, to honour its
commitments made to the Company as directed by the Hon''ble High Court
of Odisha and upheld by the Hon''ble Supreme Court. The Management is of
the view that no provision against the said demand is necessary, as no
liability is likely to arise on this account and Rs.81.04 lacs paid in
earlier year and included under advances recoverable has been
considered good of recovery.
3. Government of Odisha has issued Demand Notice for Rs.1070.72 lacs
towards Licence fees, Import fees, Excise Duty, Pass fees, Application
fees on import of Methanol into Odisha without obtaining licence from
competent authority from the year 2002-03 to 2008-09.
The Company, after obtaining licence from relevant authorities, has
challenged above demand on the ground that as methanol is imported from
other countries, provision of Odisha Excise (Methanol Alcohol) Rules
1976 are not applicable for use of Methanol as raw material.
The Company has obtained interim stay on above matter from the Hon''ble
High Court of Odisha at Cuttack on 20.11.08 for Rs.847.00 lacs &
Rs.223.57 lacs furnished under Indemnity Bond.
Pass fees paid for import of Methanol into Odisha amounting to Rs.
224.41 lacs for the year 2007-08, 2008-09,2009-10 , 2010-11 & 2011-12
has been shown as advance which is considered as good for recovery,
since the management is of the view that no liability is likely to
arise on this account in future.
4. Demand for Rs.27.32 Lacs against Delay Payment Surcharge from
Odisha State Electricity Board has not been accepted by the Company and
the matter is under dispute. However, as a matter of abundant caution
an equivalent amount has been provided for to take care of the
liability, if any, in this respect.
5. SEGMENT INFORMATION
a) The Company operates in one segment only i.e. Medium Density Fibre
Board and accordingly information required under Accounting Standard-17
issued by Central Government is not applicable.
b) In order to sustain long-term availability of firewood, principal
raw material for the Company''s main product- Medium Density Fibre
Board, the Company is engaged in plantation under various schemes on
the land owned by third parties. The Company''s role is to develop and
supply seedlings to such third parties. Since development of seedlings
is an integral part of plantation activity which is incidental to main
activity of the Company, this operation has not been treated as a
separate segment under Accounting Standard- 17 issued by Central
6. Tax credit shall be allowed to the extent of amount of MAT paid in
earlier years depending upon the profits earned by the Company in
future years, in accordance with the provisions of Section 115JAA of
the Income Tax Act, 1961.
7. Salaries and Wages aggregating to Rs.20.69 Lacs (Previous year
Rs.15.41 Lacs) identifiable with forest operation have been allocated
directly to respective functional account heads instead of debiting to
primary heads of account.
8. In accordance with the licence granted by the Government of Odisha
in the year 1986, the Company had undertaken plantation in certain
Government land which is ready for harvesting. Despite consistent
follow up, the Government did not allow the Company to harvest the
plantation on the pretext that the Special Leave Petition filed by the
Government of Odisha was pending before the Hon''ble Supreme Court. The
Hon''ble Supreme Court had dismissed the Special Leave Petition filed by
the Government of Odisha in the royalty matter, as referred to in Note
No.2 above. Since the Government of Odisha had not allowed the Company
to harvest the plantation done by the Company even after the dismissal
of Special Leave Petition filed by the Government of Odisha, the
Company had no alternative but to file a Writ Petition in the High
Court of Odisha seeking direction to allow the Company to harvest the
plantation done by the Company on its own cost on Government land and
also other stipulations relating to rate of royalty and weighment
norms. The Hon''ble High Court of Odisha had vide its order dated 8th
July, 2004, had without expressing any opinion with regard to merits of
the contentions raised by the company, disposed of the petition with a
direction to the Government of Odisha and its various officers to
dispose of the representations made to them strictly in accordance with
law as expeditiously as possible preferably within a period of six
months. In compliance with the directions from the Hon''ble High Court
of Odisha, the Government has reiterated its claim for recovering cost
of plantation on 244.825 hectares. The Company has denied its liability
to any such claim.
9. The Company has undertaken Plantation under Farm Forestry Scheme,
inter-alia, in the State of Chhattisgarh in association with the forest
department of Chhattisgarh Government. As per the agreement part sale
consideration of supply of seedlings is to be paid to the Company at
the time of harvesting of the plantation. Accordingly, part sale
consideration of Rs. 73.38 lacs (Previous year Rs. 73.38 lacs) relating
to previous years along with interest will be received by the company
at the time of harvesting. Based on the legal opinion obtained by the
company, the same will be accounted for in the year in which the
plantation is harvested.
10. Pursuant to Rehabilitation scheme Sanctioned by Board of
Industrial & Financial Reconstruction (BIFR), the Company is exempted
from payment of electricity duty on power consumed for a period of 10
years from the date of sanction of the scheme. BIFR has discharged the
company from the purview of Sick Industrial Companies (Special
Accordingly Rs. 197.75 Lacs being amount paid for the period from 1st
April, 2000 to 31st March, 2008 and considered as income in earlier
years have been shown as Other Advance under Long Term Advance.
Based on legal opinion obtained by the company, all terms and
conditions so far not implemented by respective agencies as stated in
the Rehabilitation Scheme sanctioned by BIFR are still in force.
11. The Company''s CDM Project has been registered at
UNFCCC and is currently undergoing verification for actual
quantification of emission reduction.
12 (i) Trade Receivables outstanding for more than six months from the
date they are due for payment amounts to Rs. 144.27 Lacs (Previous Year
Rs. 142.34 Lacs) which have become overdue. Legal and other persuasive
steps have been taken for recovery of such debtors. Such debtors have
been considered good and eventually recoverable. Accordingly, no
provision against the same has been considered necessary.
(ii) Trade Receivables amounting to Rs. 64.91 lacs (Previous Year- Nil)
considered as doubtful of recovery in the earlier years, have been
written off during the year, which has been adjusted against provision
for doubtful debts.
13. EMPLOYEES BENEFIT
(I) Defined Benefit Plans Gratuity
The Company provides for gratuity, a defined benefit retirement plan
covering eligible employees. As per the scheme of the Gratuity Fund
Trust, administered and managed by the Independent Board of Trustees,
the Company first makes the payment to vested employees at retirement,
death, incapacitation or termination of employment of an amount based
on the respective employee''s salary and the tenure of employment and
then gets the reimbursement from it. Vesting occurs upon completion of
five years of service. Liabilities with regard to the Gratuity Plan are
determined by actuarial valuation.
The Company makes the annual provision in the Profit & Loss statement
for the leave liability on the basis of the actuarial valuation for the
Leave encashment Scheme which is an unfunded Plan for the qualified
(II) Defined Contribution Plans Provident Fund
The employees of the company receive defined contribution for Provident
Fund benefit. Aggregate contributions along with interest thereon are
paid at retirement, death, incapacitation or termination of employment.
Both the employees and the company make monthly contributions at
specified percentage of the employee''s salary to the concerned
Provident Fund Authorities. The company has no liability to Fund the
shortfall in the interest over the statutory rate declared by the
The Company has the Superannuation Scheme for the executive cadre of
employees viz President, Sr. Vice President and Vice President, who
has completed 5 years of continuous service. The Company makes the
defined contribution on annual basis for the eligible employees to the
Trust fund, which is administered and managed by the Independent Board
of Trustees. The Company forwards the settlement request of the vested
employees at retirement, death, incapacitation to the Fund. Fund makes
the payment of the commuted value and buys the annuity for the
uncommuted credit balance of the concerned members. This year no
executive is entitled under this scheme.
Employees State Insurance
Both the employees and the company make monthly contributions at
specified percentage of the employee''s salary to the concerned ESI
Other Defined contribution for Employee Benefits
The defined contribution for Employees State Insurance, Leave Travel
Allowance and Medical reimbursements are recognized on actual basis in
the Profit & Loss Statement in the year when the eligible employee
actually renders the service.
14. i) The Gratuity scheme is invested in a Group Gratuity policy
offered by Life Insurance Corporation (LIC) of India. The information
on the allocation of the fund into major asset classes and expected
return on each major class are not readily available. The expected rate
of return on plan assets is based on the assumed rate of return
provided by company''s Actuary.
ii) The Leave Encashment scheme is invested in a Group Leave Encashment
policy offered by Life Insurance Corporation (LIC) of India. The
information on the allocation of the fund into major asset classes and
expected return on each major class are not readily available. The
expected rate of return on plan assets is based on the assumed rate of
return provided by company''s Actuary.
15. DERIVATIVE INSTRUMENTS
The Company does not enter into any derivative instruments for trading
or speculative purposes.
16. MICRO ENTERPRISES AND SMALL ENTERPRISES
There are no Micro and Small enterprises, to whom the Company owes
dues, which are outstanding for more than 45 days as at 31st March,
2012. This information as required to be disclosed under the Micro,
Small and Medium Enterprises Development Act, 2006 has been determined
to the extent such parties have identified on the basis of information
available with the Company. This has been relied upon by the auditors.
17. Figures are expressed in Rupees in Lacs.
18. Previous year''s figures have been regrouped / rearranged wherever