1. The Management has capitalized under Fixed Assets Accumulated Lease
Equalization Net of Lease adjustment Account Rs.47.01 lacs.
2. (a) A sum of Rs. 440.63 lacs included in Loans and Advances Net
Investment on lease Rs. 280.37 lacs is not recoverable for which no
provision is made. Consequently the loss is understated by Rs. 784.37
(b) Secured loans from banks is secured by assignment of hire purchase
and lease agreements, lien on fixed deposits and personal guarantee of
some of the present and past directors of the company. There is no
operation in the accounts with ING Vysya Bank since 18th September,
2008 and the bank has filed a suit before the Debt Recovery Tribunal.
The Company has paid Rs. 75 Lakhs to ING Vysya Bank Ltd subsequent to
the balance sheet date towards One Time Settlement against term loan.
The company has received a letter dated 16.08.2011 from Karur Vysya
Bank Limited for One Time Settlement of their dues out of court.
Interest is not provided for the above facilities.
(c) The company has not provided interest on deposits amounting to Rs.
Subject to (a) (b) and ( c ) above, the company has followed the
prudential norms for income recognition, concentration of
credit/investment, asset classification and provisioning in respect of
non-performing assets, as per the norms prescribed by Reserve Bank of
3. Lease Equalization Charges for the year on Assets Leased up to
31-03-2001 has been accounted for as per the Guidance Note (Revised)
issued by the Institute of Chartered Accountants of India.
4. In the opinion of the management and based on legal opinion
obtained by the Company, AS 28: Impairment of Assets is not applicable to
the Company since the Company is in the business of Equipment Leasing,
Hire Purchase, Bills Discounting and ICDs which are considered as financial assets.
5. Income from operations is inclusive of overdue compensatory charges
and net of rebates and discounts. The overdue compensatory charges
receivable as on 31-3-2011 is Rs. 38.25 Lacs (Previous Year Rs. 38.25
6. Balances in Sundry debtors, hirers, lessees and other loans,
advances and deposits are subject to confirmation.
7. Tax deducted at source on Income from Investments and Bank Deposits
is Rs, 46,187/- (P.Y. Rs. 74,687/-)
8. Deposits with banks include: (a) Rs. 10.65 lacs (P.Y. Rs. 10.18
Lacs) under lien for facilities availed from the State Bank of India
and (b) Rs.4.25 lacs (P.Y. Rs.4.60 lacs) against bank guarantee availed
from the Karur Vysya Bank furnished to Tamilnadu Sales Tax authorities
for the year 2004-05, in respect of appeal pending before the appellate
9. The Company is primarily engaged in the business of Hire Purchase
Financing and Equipment Lease Financing. Since these activities are
covered by the same set of Risks and Rewards, these have been
considered as a single segment, which is in accordance with the guiding
principle enunciated by AS-17: Segment Reporting.
10. The Company has not considered Deferred Tax Asset for the year as
per AS-22: in view of reliability of the said asset against
sufficient future taxable income.
The Components of Deferred Tax Asset arising out of Timing Differences
Deferred Tax Asset on account of Carry Forward Losses
under the Income Tax Act Rs. 331.59 Lacs
Deferred Tax Liability on account of difference in
WDV of Fixed Assets Rs. 61.63 Lacs
Deferred Tax Asset (Net) Rs. 269.96 Lacs
11. Contingent Liabilities :
A bank guarantee has been furnished for Rs.4.60 lacs to Tamilnadu Sales
Tax Authorities towards disputed tax, surcharge and penalty.
Interest on delayed payments to STFCL Rs. Nil (Rs.34.80 lacs) has not
been considered in the accounts.
Interest on IC D received is not quantified and provided for.
Gratuity, Earned Leave and Bonus were neither quantified nor paid to
employees who left the employment during the year.
12. Related Party Disclosures as per AS 18 issued by the Institute of
Chartered Accountants of India.
(a) List of related parties Nature of relationship
(i) Mukunda Insurance Services Ltd(MIS) Associate company
(ii) Mukunda Securities Ltd(MS) Associate company
(b) Key Management Personnel(KMP)
Mr.B.R.Viswanath Setty - Chairman and Managing Director
(c) Associate Companies/Firms : Transactions during the year (Rs.in
lacs) : NIL (Previous
Key Management Personnel :
Remuneration to Chairman and Managing Director Rs. 72,600/- (Rs.
13. AS 21 : Consolidated Financial Statements is not applicable to the
14. Sundry Debtors includes Rs. Nil (Rs.Nil) being amounts due from
companies / firms in which some of the Directors of the Company are
interested as Directors/Partners.
15. Due to fluctuations in electrical power supply and non-working of
UPS the hard disk in the server crashed resulting in loss of data
stored in the server as well as software programmes installed therein.
With the available back-up and retrieved data the accounts were
reconstructed. An amount of Rs. 76.36 lacs could not be reconciled.
16. Previous Year s figures have been rearranged, regrouped and
restated wherever necessary to conform to current year s