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Rainbow Papers
BSE: 523523|NSE: RAINBOWPAP|ISIN: INE028D01025|SECTOR: Paper
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« Mar 13
Notes to Accounts Year End : Mar '14
CORPORATE INFORMATION :
 
 The company is engaged in manufacturing and marketing of paper. It uses
 various qualities of waste papers as its raw material for manufacturing
 finished paper. The company offers wide range of paper including
 Writing & printing paper, Newsprint paper, Duplex Board,Coated Paper,
 Colour Paper and Board, Crepe paper, Poster paper, Cast coated paper &
 fluroscent paper.  During the financial year 2011-12 the company has
 acquired 100% equity shares in two companies viz. Rainbow Papers
 JLT(Dubai) and Rainbow Infrabuild Pvt Ltd. M/s Rainbow Infrabuild Pvt
 Ltd has ceased to be a subsidiary of the company from 28.05.2013.
 
 BASIS OF PREPARATION OF FINANCIAL STATEMENT:
 
 These financial statements have been prepared to comply in all material
 aspects with the Accounting Standards notified by Companies (Accounting
 Standards) Rules, 2006 (as amended) and relevant provisions of the
 Companies Act 1956, read with General Circular No 15/2013 dated 13th
 September 2013, issued by the Ministry of Corporate Affairs in respect
 of Section 133 of the Companies Act 2013 All Incomes and Expenditures
 having material bearing on the Financial Statements are recognized on
 accrual basis.
 
 Terms/rights, preferences and restrictions attached to securities:
 
 Equity Shares:
 
 The company has one class of equity shares having a par value of ` 2
 each. Each share holder is eligible for one vote per share held. The
 dividend proposed by the board of director is subject to the approval
 of share holders in the ensuing Annual General meeting, except in case
 of interim dividend. In the event of liquidation, the equity share
 holders are eligible to receive the remaining assets of the company
 after distribution of all preferential dues, in proportion to their
 shareholding.
 
 Terms of securities convertible into equity shares:
 
 Convertible Warrants:
 
 On December 20,2012 the company has alloted 90,00,000 convertible
 warrants on prefrential allotment basis to promoter group company at a
 price of ` 81/- which shall be convertible into equity shares (at the
 sole option of warrant holder(s)) at any time within a period of 18
 months from the date of allotment of warrants. The lock-in of shares
 acquired by excerise of the warrants shall be for the period of 3
 years.
 
 Nature of security and terms of repayment for secured borrowings
 
 Term loan :
 
 Term Loan in Rupee Currency are secured by way of First hypothecation
 charge on Pari passu basis over the fixed assets of the company,
 situated at 1423&1453 paiki of village: Rajpur, Taluka: Kadi,
 Dist:Mehsana. Second charge on paripasu basis on all current assets,
 situated at survey no 1423&1453 paiki of village: Rajpur, Taluka: Kadi,
 Dist:Mehsana .The loan is further secured by personal guarantee of
 Managing Director, Promoter and a body corporate. Term Loan is carring
 Rate of Interest(at present) from 13% to 14.50% p.a. repayable over a
 period of 5 to 7 years.
 
 Term Loan in Foreign currency were secured by way of First
 hypothecation charge on Pari passu basis over the fixed assets of the
 company, situated at 1423 & 1453 paiki of village: Rajpur, Taluka:
 Kadi, Dist:Mehsana. Second charge on paripasu basis on all current
 assets, situated at survey no 1423 & 1453 paiki of village: Rajpur,
 Taluka: Kadi, Dist:Mehsana .The loan is further secured by personal
 guarantee of Managing Director, Promoter and a body corporate. Term
 Loan is carring Rate of Interest(at present) from LIBOR  7 to 8.5%
 repayable over a period of 5 years.
 
 Corporate Loan from Allahabad Bank secured by way of exclusive charge
 on survey no 1439/p/1,1440/p/1 & 1441/p admeasuring 11288 sq. meter
 area together with building and fixed structure thereon situated at
 village: Rajpur, Taluka: Kadi, Dist:Mehsana. The loan is further
 secured by personal guarantee of Managing Director of the company.Term
 Loan is carring Rate of Interest (at present) 12.95% p.a. repayable in
 16 equal monthly installments having moratarioum period of 6 months.
 
 Corporate Loan from Bank of India is secured by way of exclusive charge
 on survey no 1524,1457-58,1483-84,1447/4/p together with building and
 fixed structure thereon situated at village: Rajpur, Taluka: Kadi,
 Dist:Mehsana. The loan is further secured by personal guarantee of
 Managing Director, promoter and promoter group companies. Term Loan is
 carring Rate of Interest (at present) 14.50% p.a. repayable in 27
 balance equal monthly installments.
 
 Corporate Loan from IFCI Ltd is secured by way of pledge of 1,33,44,270
 equity shares having Face Value of ` 2/- each,.  being held by
 promoters and promoter group companies .The loan is further secured by
 personal guarantee of Managing Director. Term Loan is carring Rate of
 Interest (at present) 14.75% p.a. and will repayable in 5 years with
 balloning installments quartlerly.
 
 Vehicle Loan:
 
 Secured vehicle loan from banks are secured by hypothecation of
 vehicles and are repayable over a period of 3 years carring rate of
 interest 10.32 to 11.25% p.a..Further loan is guaranted by Managing
 Director of the company.  Secured vehicle loan from financial
 institutions are secured by hypothecation of vehicles and are repayable
 over a period of 3 years carring rate of interest 11.25 p.a.%.Further
 loan is guaranted by Managing Director of the company.
 
 Terms of repayment for unsecured borrowings
 
 Loan from financial institution:
 
 The company shall repay the loan in two installments with the first
 installment of ` 10 crore payable on 31.03.2015 and second installment
 of Rs. 20 crore payable on 31.03.2016 which carries Rate of Interest(at
 present) 15% p.a.
 
 The Company has pledged 11940000 Equity Shares of Face Value of Rs. 2/-
 each, being held by one of its Promoter Group for availing Corporate
 Term Loan of ` 30 Crores.
 
 Loans and advances from related parties:
 
 The company has taken interest free advance from related parties which
 is repayable after a period of one year.  Other loan & advances
 includes trade deposits accepted for a period morethan one year.
 
 DEFERRED TAX LIABILITIES (NET):
 
 Deferred Tax Liability calculated as above is excluding the assets
 pertaining to Power Generating Units, the income of which being
 deductible u/s 80 IA of The Income Tax Act 1961. As prescribed in ASI 3
 & ASI 5 regarding application of AS 22 in situation of “Tax Holiday”
 period under Section 80 IA , where the timing difference arising in a
 year is reversed during Tax Holiday period itself, no Deferred Tax
 should be recognized.
 
 Nature of security provided for cash credit facility:
 
 Cash Credit Limit is secured by way of First hypothecation charge on
 Pari passu basis over the current assets of the company, situated at
 1423 paiki of village: Rajpur, Taluka: Kadi, Dist:Mehsana. Second
 charge on paripasu basis on all fixed assets, situated at survey no
 1423 paiki of village: Rajpur, Taluka: Kadi, Dist:Mehsana .The loan is
 further secured by personal guarantee of Managing Director, Promoter
 and a body corporate.
 
 CAPITAL WORK IN PROGRESS COMPRISES
 
 - Cost of Fixed Assets and pre-operative expenses, being technical
 matter, are capitalized or allocated to Capital work in progress on the
 basis of data certified by technical person & the management.
 
 - Borrowing cost includes interest and other bank charges including the
 exchange difference arising from foreign currency borrowings to the
 extent that they are regarded as an adjustment to interest costs which
 are directly related to the acquisition & construction of a qualifying
 asset.
 
 - Advances to Project suppliers are shown under Long term loans &
 advances included in Capital advances.
 
 Contingent liabilities and commitments (to the extent not provided
 for):
 
                                                          (Rs. in Lacs)
 Contingent liabilities                          As at            As at
                                         March 31,2014    March 31,2013
 Guarantees:
 
 - Bank Guarantee                               681.35           803.68
 
 Other money for which company is contingently liable:
 
 - Export obligation in respect of custom
   duty on machinery imported on EPCG
   scheme (EODC is pending)                          -          2875.94
 
 Commitment:
 
 Estimated amount of contracts, remaining to be executed on capital
 accounts and not provided for Rs. 563.93 Lacs net of advance (PY Rs.
 1419.75 Lacs).
 
 Defined Benefit Plan
 
 The Company has adopted Accounting Standard 15 (AS-15) (Revised)
 “Employee Benefits” which is mandatory from accounting periods starting
 from Dec 7, 2006. Accordingly, the Company has provided for gratuity
 and leave encashment based on actuarial valuation done as per Projected
 Unit Credit Method.
 
 Expected Employer''s contribution for the next financial year
 
 On the basis of previous year''s trend, company is expecting to
 contribute the same amount as in 2014-15 to the defined contribution
 plan.
 
 For the defined benefit plan company is not liable to contribute any
 amount for leave encashment as the plan is unfunded.  However, for the
 gratuity which is funded, company is expecting to contribute such
 amount which can mitigate its future liability.
 
 The estimate 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.
 
 Balance of Un secured Loans, Creditors, Debtors, Loans & Advances and
 other parties are subject to their confirmations and reconciliation,
 due adjustment, if necessary, will be made on receipt thereof. However,
 the management does not expect any material difference affecting the
 current years'' financial statements.
 
 Based on the guiding principles given in Accounting Standard on
 “Segment Reporting” (AS-17) issued by the Institute of Chartered
 Accountants of India, the Company operates mainly in manufacturing and
 processing of Paper products and all other activities are incidental
 thereto, which have similar risk and return, accordingly, there are no
 separate reportable Segment as far as Primary Segment is concerned.
 
 Notes:
 
 1) Geographical Segments considered for disclosures are as follows :
 
 * Operating revenue outside India includes Paper sales (incl. deemed
 Export) and Export incentive.
 
 * Previous year''s figures have been regrouped or rearrange wherever
 necessary.
 
 Derivative Instruments :
 
 a) The Company has not entered into any forward contract to offset its
 foreign currency risks arising from the amounts denominated in
 currencies other than the Indian Rupee.
Source : Dion Global Solutions Limited
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