1. CONTINGENT LIABILITIES
Claims against the company not acknowledged as debts:
a) Excise Duty: Show cause Notices received in earlier years for
withdrawal of Modvat credit of Rs. 3.90 Lacs have been remanded back by
the collector of appeals to A.C. Moradabad. The matter is still
pending. Pending final decision, no liability is provided.
b) Trade Tax : The company has opted for compounding scheme for trade
tax w.e.f 1.12.1999 for year 1999-2000. The learned Commissioner Trade
Tax had raised an additional demand of 22.50 lacs for the year
1999-2000, assessing higher installed capacity, against which company
has filed writ with Allahabad High Court which is pending. The
Compounding scheme application of the company for year 2000-2001,
2001-2002, and 2002-3 have also not yet been accepted by Trade Tax
deptt. The amount involved in sales tax in these three year is Rs.
251.67 lacs. The company has filed writs with Allahabad high Court who
has granted stay in all these cases. In the opinion of management, no
provision is required to be made.
c) The Trade Tax authorities have created total demand of Rs. 3.40 lacs
(Net of refund of Rs. 1.54 lacs for 1997-98) against the company in
various orders pertaining to previous period (except compounding scheme
demand) and the company has preferred appeals/in the process of filing
appeals, against these demands before higher authorities which are
pending. The company has made provision of Rs. 2.18 lacs against these
demands which in its opinion is adequate,
d) Income Tax Assessments have been completed up to the Assessment Year
2000-2001 and there is no demand outstanding against the company.
There is no liability for subsequent years as per Returns filed.The
company is of the opinion that no provision is required to be made For
any contingent liability which may arise in Appeals filed by Income Tax
e) In respect of sales tax demand created in earlier years of Rs. 9.01
lacs on account of non inclusion of by-products in the exemption
certificates, company has received a certificate duly amended including
the by products. The respective order for rectification of demand has
also been received. However company is seeking cancellation of demand
as a consequence of the rectification order received.
2. Depreciation is provided in the Accounts on the straight line
method basis and in the manner prescribed under schedule XIV of the
Companies Act, 1956 including triple shift depreciation of Rs. 31.80
lacs for the current year Company has not provided for arrears of
depreciation in respect of earlier years of Rs 141.25 Lacs. As a result
the balance of profit and loss account as shown in the balance sheet is
lower and fixed assets as shown in schedule 4 are higher to that
3. Advance from Customer of Rs. 220.40 lacs:
i) include Rs. 6.70 lacs received from the C&F Agents as security
deposit and interest thereon in the earlier years were transferred from
security deposits to regular running accounts. These depots have been
closed. In the opinion of management these amounts are payable.
ii) include Rs. 1.55 lacs and Rs. 3.46 lacs received from customers
through its Oil supply/sales agent in the months of April and May
2002,respectively which have not been adjusted pending complete details
iii) include Rs. 195.79 lacs due to Hindustan lever Ltd. which is not
confirmed and is after debiting the total claim of Rs. 147.53 lacs
comprising of Rs. 88.89 lacs debited in the year under Audit and
Rs.58.64 lacs debited in earlier year. Company has also lodged claims
of Rs. 624.99 lacs representing short lifting of agreed quantity of
Dalda, claims against revision of conversion cost, short delivery of
CPO expenses on installation of HLL machinery and rate difference (RY.
2003-04) against Hindustan Lever Ltd., but has not accounted for the
same in the Books. Company is of the view that Rs. 195.79 lacs is to be
adjusted against the claims lodged. Total claim of Rs. 772.52 lacs is
not yet acknowledged by Hindustan Lever Ltd.
iv) Management is of the view that advance from customers of Rs. 7.71
lacs is adjustable against supplies. The complete details of these
transactions after 31.3.03 is being compiled and could not be shown to
auditors for verification.
4. Sundry creditors of Rs.332.92 lacs include opening, balance of Rs.
135.48 lacs. Detailed analysis in respect of these creditors is not
done in absence of receipt of confirmation from creditors/subsequent
account position. Management is of the view that necessary adjustments
if any shall be carried out after receipt of complete details/
5. Bank balances with scheduled banks amounting to Rs. 12.18 lacs
include demand draft of Rs. 10.55 lacs in favour of custom department
for payment of duty, which was paid along with bill of entry dated
3.4.03, and accounted for in subsequent year. The other bank balances
of Rs.0.42 lacs as on 31.3.03 are unconfirmed.
6. (i) SecuredLoansfromlFCIamountingtoRs.1.92Croresandinterestaccrued
of Rs. 1.84 Crores aggregating to Rs. 3.76 Crores has been recalled by
IFCI vide their letter dated 19th May, 1999. The interest of Rs. 146.56
(after adjusting the payment of Rs. 3.15 lakhs) for the period
01.04.2002 to 31.03.2003 has been provided at contractual rate of
interest. Rs.3.15 Lacs was paid during the year to IFCI against OTS
settlement which did not mature and amount has been debited to them.
(ii) Secured loans from Oriental Bank of Commerce of principal amount
and interest accrued of Rs. 3.78 Crores is on the basis of Certificate
received from the Bank as on 31.3.99. Interest of Rs.130.82 Lacs for
the period 1.04.02 to 31.03,2003 has been provided at contractual rate.
(iii) Secured loans from SBOP of Rs. 162.56 Lacs of Principal amount is
as per Certificate from the Bank. The interest of Rs. 90.90 Lacs.for
the period 1.04.02 to 31.03.2003, has been provided at contractual
rate. The second charge on fixed assets on the company has been
filed but not yet registered. Company has not received any intimation
from the Registrar of Companies with regard to the same.
(iv) The outstanding balances of Term Loan and working capital loans as
on 31.3.2003 are not confirmed. Interest on these loans has been
provided at contractual rate.
(v) The company has not provided interest of Rs. 12.41 lacs on
unsecured loans from a company under the same management during the
year (previous year Rs. 16.21 lacs, and aggregate up to date of Rs.
41.03 lacs). As per the terms of loans/deposit interest is payable
and will be accounted for on actual payment basis. As a result the loss
of the year has been understated by Rs. 12.41 lacs.
7. (i) Advances include a sum of Rs. 2.19 lacs deposit of margin with
M/s Durga Automobiles Ltd. New Delhi in respect of deposit of booking
of vehicles in June96. The finance was to be provided by City Bank.
The Bank refused to give finance in July96. On follow up with Durga
Automobiles to refund the deposit, it has been reported vide their
letter dated 22.5.97 that the amount has been refunded to M/s Sukrit
Finlease P. Ltd. on the written instruction of Sh. H.S. Chhabra
erstwhile Dy. Managing Director of the Company. The Company has sought
written clarifications from the Directors concerned as directed by the
Board vide its meeting dated 26.6.1997.
(ii) Advances include a sum of Rs. 0.88 lacs receivable from M/s Ajay
Associates. The amount was given for payment of Road Tax etc. for
purchases of vehicles as mentioned in 9(i) above.
(iii) It had been observed at the time of reconciliation of accounts in
earlier years with M/s Rising Polymers, a packing material supplier
that purchases of Rs. 3.51 lacs vide purchase voucher no. 9512/45 and
credited in the account of supplier and payment of Rs. 3.50 lacs vide
cheque no. 552550 dated 18.1.96 did not appear in the books of the
party. On further verification with the Bank, it was found that the
cheque originally was issued for transfer of fund from Oriental Bank of
Commerce to State Bank of Patiala under the joint signatures of MD and
the then Deputy MD Sh. H.S. Chhabra of the Company was altered in the
name of Dee kay Enterprises under the sole signature of the then Dy MD
(iv) Another cheque no. 5661479 dated 17.5.96 issued for Rs. 3.50 Lacs
for inter bank transfer was altered under the sole signature of the
then Dy. MD Sh. H.S. Chhabra in favour of Sh. Om Prakash, with whom
company had no business dealings. The relevant vouchers/entries are not
traceable in records. Efforts are being made to find these entries.
(v) Further, two cheques bearing no 528312 dated 20.10.95 lor Rs. 0.90
lacs and cheque no. 928320 dt. 28.10.95 lor Rs. 0.66 lacs issued in
favour of Hindustan Lever Ltd. and Jai Enterprises respectively were
changed in the name of JVD Enterprises by the then Dy. MD. Sh. H.S.
Chhabra. The account of JVD Enterprises has been credited by these
amount on account of bills lor office renovation which are not
traceable and it appears that these credits are fake.
The Board had authorised the Managing Director to take actions as may
be required under various applicable laws against the then Dy. M.D. Sh.
H.S. Chhabra. The Audit committee vide its meeting held on 5.9.02 had
directed to place the legal opinion sought earlier in the matter and
further directed to seek legal opinion to remove Mr. Chhabra from the
office of director. The directions of Audit committee are under
consideration of the management.
8 Provision has been made for liability towards leave encashment of
Rs.1.11 lacs and gratuity payable of Rs.2.37 lacs as per Payment of
Gratuity Act, in respect of factorys staff. No further liability in
respect of H.O. is made as it is considered that provision already made
in books in earlier year is adequate. Total provision in respect of
leave encashment in books as at 31.03.2003 is Rs. 5.56 Lacs, detail of
which is under preparation.
9. Payment to the auditors includes Rs. 1.00 lacs for Audit Fee, Rs.
0.30 lac for taxation matters.
10. The company had been declared sick company under the provisions of
SICA vide order of the BIFR dt 20th April, 2001. AAIFR vide its order
dated 29.10.2001 set aside the order of BIFR dated 20.04.01 and
dismissed the reference made by the company under section 15(1) of
SICA. The Company has filed Writ on 06.08.2002 against Order of AAIFR
in Delhi High Court, which is pending.The company made fresh reference
before the BIFR on 04.01.2002 on the basis of annual accounts for the
period ending 31.03.2001. The BIFR vide its order dated 24.06.2002
dismissed the reference on the ground that reference made by the
company was time barred. Against the order of BIFR dated 24.06.2002
company has filed appeal on 26.08.2002 before AAIFR, which is pending.
Company filed third reference with BIFR based on Balance Sheet dated
31.3.02 which was also rejected by BIFR being time barred. Company
filed Appeal with AAIFR which is pending.
11. The accounts of the company for the year ended 31.03.2003 have
been prepared on Going Concern basis. The ability of the company to
continue as a Going Concern is inter alia dependent upon the decision
of appellate authorities with regard to acceptance of the reference
application under section 15(1) of SICA and the rehabilitation package
as a result thereto.
12. IFCI, Oriental Sank of Commerce, and State Bank of Patiala have
filed suit for recovery of dues with Debt Recovery Tribunal, Delhi
which are pending.The company is contesting the same on the ground that
these suits are not maintainable as it is a sick company and its
Appeal/Writ are pending with Delhi High Court and AAIFR.
13. Managerial Remuneration
Managerial Remuneration paid to Directors.
Salary Rs. 3.18 lacs
Perquisites Rs. 1.69 lacs
(Previous year 4.87 lacs)
14. Detail of security deposit of Rs. 0.30 lacs included in other
current assets is presently not available. Efforts are being made to
trace the same and necessary accounting entries, it any will be passed
15. (i) Fixed Assets include vehicles costing Rs. 9.64 lacs taken
under lease agreement by the directors in their individual capacities
and sold to the companies at original cost in October, 1998. Payment to
lessors have been made and steps are being taken to register the
vehicles in the name of the company.
(ii) Addition in Plant & Machinery include Rs. 4.91 Lacs incurred
towards purchase of Thermic Fluid Heater.
16. Company has received the Cost Auditor Report for the financial
year ending 2001. Inter alia, Cost Auditors have made certain
observations with regard to maintenance of records relating to
receipts, issue & balance of direct materials/ stores and spares in
terms of value, records for power generated laying standard norms for
consumption of power etc. Cost audit has not yet been completed for
17. Expenses Payable include Telephone Expenses payable of Rs. 0.60
lacs & unpaid salary of Rs. 0.06 lacs outstanding for more than 3
18. Soap stock is used internally to manufacture Acid Oil.
19. Loans & Advances include other advances of Rs. 1.30 lacs which
represent excess payments made to the depositor against his credit
balance lying at the opening of the year.The balance is not confirmed.
It is not ascertainable whether the amount is recoverable or not.
20. Sundry Debtors of Rs 12.90 lacs are unconfirmed as at the close of
21. Loans and Advances include
(I) Rs 11.71 lacs due from M/s Velani Oil Traders. The party has given
a confirmation showing that there is debit balance of Rs 15.08 lacs in
his books of accounts. The difference of Rs 26.78 lacs include Rs 35.00
lacs admitted by him through a undated letter but not credited by him
in the account. Similarly another sum of Rs 10.00 lacs credited by us
in his account on account of money received has not been debited by him
in our account in his books of account. The remaining difference of Rs
1.78 lacs remains unreconciled at the year end. The company is in the
process of obtaining the statement of account of the party uptill date
and necessary entries if any shall be made thereafter.
(ii) Rs 22.33 lacs due from M/s Siri Ram Kishan Chand against
commission of Rs 14.65 lacs payable to M/s Pawa Associates. With regard
to excess payment of Rs. 5.68 lacs company is asking the details from
the party and on receipt of the same the necessary entries, if any,
will be passed in the books of account.
(iii) Rs 3.20 lacs towards electricity charges receivable and adjusted
in the month of April 2003. The relevant document could not be produced
before audit for verification on account of non completion of
subsequent books of account.
22. Material consumed vide schedule no 10 is net of highsea sales of
245 MT of CPO amounting to Rs 53.10 lacs. The cost of purchase of this
material of Rs 50.82 lacs is also debited in this account. The sale
proceeds of Rs 53.10 lacs includes profit of Rs 2.28 lacs on this
transaction and is on the basis of the amount actually realised in the
subsequently year which could not be shown to the audit pending
completion of subsequent books of account.
23. Closing stock of Raw Material of 13.0890 MT amounting to Rs 4.59
lacs is in transit, the documents of which could not be produced before
audit for verification.
24. Discount on sales of Rs 5.34 lacs is debited on the basis of
statement received from M/s Velani Oil Traders representing major
amount towards freight charges for goods dispatched on FOR basis.
Necessary supporting documents are being obtained.
25. Current Liability include :
(i) Rs 0.47 lacs payable to employees who have left the organisation.
(ii) TDS payable of Rs 2.24 lacs
(iii) PF payable of Rs 1.21 lacs
(iv) ESI payable of Rs 0.07 lacs
(v) Sales Tax payable of Rs 1.12 lacs These amounts could not be paid
due to financial crunch.
26. Administration & Other Expenses include, Freight Rs 0.60 lacs and
Legal & Professional Charges include Rs 0.36 lacs, supporting document
of which could not be produced before the audit for verification.
27. Company has verbally made an arrangement with M/s Velani Oil
Traders in respect of manufacture of Vanaspati sold directly under the
brand Grih Laxmi. Total sale of the same during the year under audit
is Rs 20.30 crores. The sale proceeds in this respect is received by
M/s Velani Oil Traders in its personal bank account and payments to the
supplier of oil is also made by him through the same. Monthly statement
of receipt and payment by M/s Velani Oil Traders is received by the
company on the basis of which entries regarding transaction of sales,
purchases and other expenses are recorded in the books of account.
28. During the Year Companys product have been made subject to levy
of Excise Duty. During the year a sum of Rs 30. 08 lacs have been paid
towards excise duty. Sales are shown inclusive of excise duty and
corresponding expenses are debited to the Profit & Loss Account. Excise
reconciliation is under progress and, therefore, could not be produced
before audit for verification.
29. Related Party Disclosures :
As accounting standard 18 `Related Party Disclosures came into effect
in respect of accounting period commencing on or after 01.04.2001, the
information given below is only in respect of transactions entered into
by the company during the year with the related parties,
(i) Name and nature of relationship with related parties:
Enterprises over which key management personnel is able to exercise
Significant influence :
Rattan Chand Harjas Rai, Delhi
Rattan Chand Harjas Rai, Moulding Pvt. Ltd. Delhi
Crystic Resins India Pvt. Ltd.
Key Management Personnel:
Sh. P.B. Jain (Managing Director)
Sb..,R.B. Jain (Director)
Sh. S.K. Jain (Director)
(ii) Transaction with the related parties during the year ended 31st
Rs. in lacs
Raised unsecured Loan free of interest 8.49
(iii) Key Management personal:
Sh. P.B. Jain 3.24
Sh. S.K. Jain 1.63
30. The accounting loss is more than tax loss as at 31.03.2003. The
deferred tax assets has not been recognised (as per AS 22) as there is
no reasonable certainty with regard to generation of sufficient future
income to recover such deferred tax assets.
31. As company is dealing in single product requirements relating to
segmental reporting (AS 17) are not applicable.
32. Earning Per Share :- Computation for Basic
Earning Per Share : 31.03.2003 Rs.(in lacs)
a) Loss as per Profit & Loss Account 415.78
b) Computation of Weighted Average
Number of Equity Shares :
No. of Equity Share outstanding as on 01.04.2002 72,77,500
No. of Equity Share outstanding as on 31.03.2003 72,77,500
Basic Earning Per Share(Weighted Average) Rs. (-)5.73
33. Previous year figures have been regrouped wherever considered
necessary to make them comparable with those of current year.
34. Information with respect to dues to small scale industrial
undertakings is not available.