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Rainbow Papers

BSE: 523523|NSE: RAINBOWPAP|ISIN: INE028D01025|SECTOR: Paper
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Mar 15
Notes to Accounts Year End : Mar '16

(b) Terms/rights, preferences and restrictions attached to securities:

Equity Shares:

The company has one class of equity shares having a par value of Rs.2 each. Each share holder is eligible for one vote per share held. The dividend proposed by the Board of Director, if any, is subject to the approval of share holders in the 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.

Note No A

Deferral/capitalization of exchange differences:

The company had opted to follow the option granted by notification no 225(E) dated March 31, 2009 issued by the Ministry of Corporate Affairs relating to limited relaxation in the provision of Accounting Standard-11 in respect of Foreign Exchange differences on foreign currency loans:

Exchange differences relating to long-term monetary items, arising during the year, in so far as they relate to the acquisition of a depreciable asset are added to / deducted from the cost of the asset and depreciated over the balance life of the asset.

In other cases such differences are accumulated in a Foreign Currency Monetary Item Translation Difference Account and amortized to the Profit and Loss account over the balance life of the long-term monetary item, however the period of amortization does not extend beyond; March 31, 2020 [extended by notification no GSR 913(E) dated 29th December 2011].

Accordingly, during the year Rs. 374.86 Lacs has been added (PY Rs. 239.55 was added) to the Foreign Currency Monetary Item Translation Difference Account.

Note No B

During the Year, Indian Overseas Bank has raised an objection for declaring the Dividend for the year ended on March 31, 2015 and pursuance to the same the company has reversed the proposed dividend declared and Dividend Distribution Tax thereon.

(a) 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 Survey No 1423,1453, 1439/p/1, 1440/p/1 & 1441/p Village: Rajpur, Taluka: Kadi, Dist:Mehsana. Second charge on paripasu basis on entire current assets of the company. The loan is further secured by personal guarantee of Shri Ajay Goenka Chaiman and Managing Director of company, Smt Sangeeta Goenka and three promoter group companies. Term Loan is carrying Rate of Interest(at present) from 13% to 13.75% p.a. repayable over a period of 7 years.

Corporate Loan from Bank of India is secured by way of exclusive charge on Land at Survey no 1524,1457-58,148384,1447/4/p collectively admesuring 62524 sq. mts situated at Village: Rajpur, Taluka: Kadi, Dist:Mehsana together with building and fixed structures thereon . The loan is further secured by personal guarantee of Shri Ajay Goenka Chaiman and Managing Director of company, Smt Sangeeta Goenka and three promoter group companies. Term Loan has been converted into EPBG during the year under consideration and same set of security is exclusively charged with the said bank.

Corporate Loan from IFCI Ltd is secured by exclusive charge on power division assets of the Company bearing survey No. 1474/1, 1474/2, 1475, 1476, 1477, 1478, 1517 P1, 1517 P2 (now forming part of new survey No. 1442/1) and 1451, 1473, 1520, 1521 total admeasuring 81403 Sq. Mtrs. situated at village Rajpur, Ta. Kadi, Dist. Mehsana and Further secured by exclusive charge on survey no. 1444 & part of 1445 admeasuring 16633 Sq. Mtrs. situated at village Rajpur, Ta. Kadi, Dist. Mehsana, by way of pledge of 1,32,22,317 equity shares of Rainbow Papers Limited having Face Value of Rs.2/- , being held by promoters and promoter group companies .The loan is further secured by personal guarantee of Shri Ajay Goenka Chairman and Managing Director of company. Term Loan is carrying Rate of Interest (at present) 15.05% p.a. and is repayable in 5 years with balloning installments quarterly.

Vehicle Loan:

Vehicle loan from banks were secured by hypothecation of vehicles and are repayable over a period of 3 years carrying rate of interest 11.77% p.a..Further loan is guaranteed by Shri Ajay Goenka Chairman and Managing Director of company.

*Deferred Tax liability calculated as above is excluding the assets pertaining to power Generating units, the Income of which being deductible u/s 80IA 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 timing difference arising in a year is reversed during Tax holiday period itself, no deferred Tax should be recognized.

*These amounts are subject to Income Tax Assessment of the company and on the assumption of certainty of its Payment in subsequent years.

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 and 1453 of Village: Rajpur, Taluka: Kadi, Dist:Mehsana. Second charge on paripasu basis on all fixed assets, situated at survey no 1423 and 1453 of Village: Rajpur, Taluka: Kadi, Dist:Mehsana .The loan is further secured by personal guarantee of Shri Ajay Goenka Chairman and Managing Director of the company.

Whatever information the company could identify as above were possible at the year end only, and in view of this according to the company, it could not identify payments beyond due date during the year and to make interest provisions to that extent, due to numerous transactions concluded during the year as per the agreed terms with the suppliers. However the company has made due interest provisions over the requisite year end balances.

(i) Inclusion of Civil Works as Plant and Machinery or Building, being technical matter, is certified by the management

(ii) Treatment of Capitalization being technical matter, is as certified by the management

(iii) Pursuant to the enactment of Companies Act 2013, during the Financial Year ended on March 31,2015, the company has applied the estimated useful lives as specified in Schedule II. Accordingly the unamortized carrying value is being depreciated / amortized over the revised/remaining useful lives. The written down value of Fixed Assets whose lives have expired as at 1st April 2014 have been adjusted (net of tax), in the opening balance of General Reserve amounting to Rs. 26.98 Lacs.

(iv) *During the Financial Year ended as at 31st March 2014 revaluation of the land was carried out by the registered approved valuer, based on their report land is revalued at Rs. 21970.90 lacs, in pursuance to this upward revalued amount of Rs. 21019.02 lacs is shown as addition to Fixed Asset and accordingly Revelation reserve to that extent has been shown under head of Reserve and Surplus.

(i) 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.

(ii) 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.

(iii) Advances to Project suppliers are shown under Long term loans & advances included in Capital advances.

Commitment:

Estimated amount of contracts, remaining to be executed on capital accounts and not provided for Rs Nil net of advance (P.Y Nil ).

EPBG is secured by way of First hypothecation charge on Pari passu basis over the fixed assets of the company, situated at Survey No 1423,1453, Village: Rajpur, Taluka: Kadi, Dist:Mehsana. Second charge on paripasu basis on entire current assets of the company. It is further secured by personal guarantee of Shri Ajay Goenka Chairman and Managing Director of company, Smt Sangeeta Goenka and three promoter group companies. EPBG will be reduced over a period of 10 years in balloning installments.

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.

VIII. 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 2016-17 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.

1) (a) Few accounts of Loan Liabilities & borrowings, Current liabilities, Trade receivables, Loans and advances given (Including Advance for Land), Balance with Revenue Authority and Statutory Dues are subject to confirmations and reconciliation and necessary adjustment, if any , will be made on receipt thereof. However, the management does not expect any material difference affecting the current years'' financial statements.

(b) During the year under consideration major addition in Fixed asset was made out of Capital Work in progress of Rs. 54736.18 Lacs as on 31st March 2015. Till previous year the interest cost, Power & Fuel Stores and other pre-operative expenses pertaining to these fixed assets were capitalized in the cost of assets, however the fixed assets were put to use during the year and therefore the said expenses pertaining to the same has been charged to Statement of Profit & Loss.

(c) During the year under consideration physical verification of stock was carried out and various discrepancies in stock as per books and physical were found and the same have been accounted for in the books under respective heads of the material.

(d) During the year under consideration, the Company has written off its Minimum Alternate Tax credit of Rs. 24.63 Crore (Previous Year Rs. NIL) as the company is not anticipating normal income tax in the foreseeable specified period.

(e) During the year under consideration, on the basis of technical evaluation, the company has re-determined estimated useful life of some of the Plant & Machinery and accordingly the depreciation has been recomputed and its full effect has been given in the Statement of Profit & Loss for the year under consideration and accordingly Loss for the year is higher by Rs 5012.56 Lacs

(f) Certain Long outstanding advances for Capital Goods and Various other Advances are subject to confirmation from the respective parties. In the opinion of Management, these are good and recoverable.

(g) The Balance payable to Cargill International Trading PTE Limited, a party from whom advance against export order has been received is subject to confirmation from the said party and reconciliation, if any, will be made on receipt of its confirmation. Since the export obligation could not be fulfilled by the company, the said party has invoked the Bank Guarantee issued in its favour by few banks. The liability arisen out of this invocation of Bank Guarantee now stands payable in the books of the company in the name of the respective bankers.

(h) SEBI has vide its order WTM/RKA/MIRSD2/41/2016 dated 22nd March, 2016 has banned operations of M/s. Sharepro Services (I) Private Limited under section 11, 11B and 11D of Securities Board of India Act, 1992 in respect of frauds committed by them in transfer of dividends and transfer/ transmission of shares of their clients company. M/s Sharepro Services (I) Private Limited is also Registrar and Share Transfer Agent of the Company. In absence of non availability of information the impact of the same on the Company cannot be ascertained.

(i) The Company is in process of filling the vacancy of Chief Finance Controller.

(j) Some of the Micro & Small Enterprises have filed case against the company and the matter is pending before Micro & Small Enterprises Facilitation Council. The company has not provided for interest payable on the Principal amount outstanding.

Notes:

2) Geographical Segments considered for disclosures are as follows:

- Operating revenue outside India includes Paper sales (incl. deemed Export) and Export incentive.

3) DERIVATIVE INSTRUMENTS (As certified by management):

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.

b) Foreign currency exposure at the year end not hedged by derivative instruments.

(*) The Company has not remitted any amount in foreign currencies on account of dividends during the year and does not have information as to the extent to which remittances, if any, in foreign currencies on account of dividends have been made by/on behalf of non-resident shareholders.

4. Certain creditors, Bankers and Financial Institutions have served the notice for Winding-up of the Company under the provision of the Companies Act, 1956. Further IFCI limited have served the Notice under section 13(2) of Chapter III of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act, 2002) against the company. Further some of the banks have recalled their loan facilities granted. However, the company is of the opinion that going concern is not affected.

5) In view of the erosion of 100% net worth of the Company as on 31st March 2016, the Company has become Sick Industrial Company under Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA 1985). Accordingly, the Company has to file ''reference'' in prescribed ''Form A'' to the Hon''ble Board for Industrial & Financial Reconstruction (BIFR) to comply with the provisions of Section 15(1) of the SICA 1985 within 60 days from the date of forming such opinion by the Board of Directors.

6) During the year, the business of subsidiary company Rainbow Papers JLT has shifted its operation from Dubai Multi Commodity Centre to Umm Al Quwain Free Trade and became Rainbow Paper FZC and therefore the entire investment of the company in the shares of Rainbow Paper JLT has been transferred in the name of Rainbow Paper FZC. Further Rainbow Paper JLT has ceased to be subsidiary company from 22nd March 2016 due to dilution of stake by the Parent Company.

7) (a) In the Opinion of the management the trade receivables, short term and long term loan and advances are realizable at the value stated if realized in the ordinary course of the business and the provision for all the known liabilities are adequate.

(b) The Classification/Grouping of the accounts are made by the management, on the basis of the available data with the company and which has been relied upon by the auditor.

(c) The amount of the inventories has been taken by the management, on the basis of the information available with the company.

(d) The accounts of Service Tax receivable/payable, CENVAT receivable/payable, VAT input credit receivable/payable are subject to reconciliation, submission of its returns for its claims and/or its assessment

8) During the year the company has written off Rs 1945.88 Lacs (Previous Year Rs. Nil) of the various Debts and Loan & advances as the management is of the opinion that the same are irrecoverable from the concerned parties.

9) As per section 135 of Companies Act 2013 and Rules made there under, the company is liable to incur Rs. 57.79 Lacs during the year under consideration on CSR activities. As against this during the year, company has spent Rs. NIL (Previous Year Rs. Nil) on CSR activities.

10) The figures of previous year in the financial statements have been adopted from the last year''s audited financial statements and therefore some Previous Year figures could not be regrouped to make them comparable with Current Year.

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