2. (a) During the year, the excise duty payable on finished goods lying
in factory or sector in bonded is neither charged to the profit and
loss account nor included in the valuation of closing inventory, unlike
in the previous year where the excise duty payable on such finished
goods was charged to the profit and loss account and included in the
valuation of closing inventory. The impact, as a result of aforesaid
change in accounting policy, on the charges for the year on account of
excise duty and value of closing inventory has not been ascertained.
This change has no effect on the loss for the year.
(b) The Company had received a refund of Rs. 96.15 lakhs from the
Excise Authorities which was credited in Profit and Loss Account in an
earlier year, however subsequently Excise Authorities went in appeal
that the above refund had been granted erroneously. The case has now
been decided in favour of the Department and hence a provision of Rs.
96.15 Lakhs has been made during the year.
3. The Company has been incurring substantial operating losses, since
-96. In view of the acute position, the Company has not been able to
pay creditors on due dates and there have also been defaults in the
repayment of maturing term loan instalments and interest dues. Some
creditors have filed winding up petitions in the Bombay High Court. The
Board for Industrial and Financial Reconstruction have passed an order
dated 5th February, 2001 and recommended to the Bombay High Court for
the winding up of the Company. Meanwhile Bank of Baroda has also filed
a petition before Bombay High Court for winding up. However, the High
Court has appointed Court Receiver, in the intervening period.
The operations of the Company has come to grinding halt since
mid-November 2000. The books of account, records and documents are
lying in the Mill and H. O. and could not be accessed for the
preparation of the financial statements. The financial statements have
been prepared based on the documents and records presently available
with the management of the Company.
However, the financial statements have been prepared on a going concern
4. CONTINGENT LIABILITIES NOT PROVIDED FOR:
(i) On account of Bills discounted Rs. Nil (previous year Rs. 195.14
(ii) On account of Bank guarantee given - Not ascertainable
(previous year Rs. 4.75 lakhs)
(iii) On account of Sales tax demands aggregating - Not ascertainable
(previous year Rs. 3.87 lakhs)
(iv) On account of Excise duty demands aggregating - Not ascertainable
(previous year Rs. 431.43 lacks)
5. The commitments for capital expenditure not provided for are
estimated at - Rs. 144.59 lakhs (previous year Rs. 144.59 lakhs).
6. The Industrial Development Bank of India has an option under certain
circumstances, in terms of the loan agreement, to convert the whole of
the outstanding amount of the loan or a part not exceeding 20% of the
total loan whichever is lower into fully paid equity share at par.
However, IDBI has recalled the loan and filed a case in Debt Recovery
7. The conveyance in respect of sale in an earlier year of Rs. 465
lakhs booked on entering into binding agreements to sell certain lands
located at Hubli, Kurla and Yeotmal have still be executed. The balance
consideration of Rs. 25.50 lakhs is included in Secured Debtors. The
purchaser has raised counter claim for compensation, which is disputed
by the Company. The compensation amount is presently not ascertained.
8. (a) In the year 1998-99, in accordance with Development Control
regulation for Greater Bombay, 1991, the Company surrendered 49,706,.25
sq. mtrs. of land to Bombay Municipal Corporation and Maharashtra
Housing And Development Authority. The Company received equivalent sq.
mtrs. of Transferable Development Rights (TDR) against such surrender
of land. During the previous year the Company's share thereof being
24,829.40 sq. mtrs. alongwith 394.85 sq. mtrs. purchased, aggregating
25,224.25 sq. mtrs. was sold at the rate of Rs. 500 per sq. ft. The
net income from sale of TDR amounting to Rs. 1,242.40 lakhs had been
credited to profit and loss account of the previous year (after
adjusting cost of purchase of TDR Rs. 21.25 lakhs and cost of
development Rs. 93.91 lakhs).
(b) Preliminary and other expense aggregating Rs. 12.11 lakhs (previous
year Rs. 12.11 lakhs) attributable to the development of land have been
carried forward under Other Current Assets
9. The Company has an investment of Rs. 11.79 lakhs (previous year Rs.
11.79 lakhs) in equity shares and aggregate amount of Rs. 1,027.98
lakhs (previous year Rs. 1,022.83 lakhs) recoverable from Coromandel
Garments Limited (CGL), a wholly owned subsidiary, CGL has been
declared a sick company by The Board for Industrial and Financial
10. No provision has been made in respect of doubtful debts and
advances as the same has not been ascertained. In case of previous
year, advances aggregating Rs. 79.71 lakhs and debtors amounting to Rs.
Nil has not been considered for provision as the Company was taking
steps for recovery.
11. The Company has imported certain equipment, which has not been
cleared from customers warehouse due to paucity of funds. The cost of
this equipment amounting to Rs. 257 lakhs including provision for
custom duty and other cost is included under capital work-in-progress.
The management is of the view that this equipment would not be of use
to the Company. It is presently not possible to quantify the loss, if
any, that may arise on the sale/disposal of this equipment and no
provision is considered necessary for demurrage and detention charges
and also for other penalties, if any. In respect of some parts of the
equipment, which have already been auctioned by the custom by the
custom authorities, the adjustments for loss (if any) will be made on
receipt of complete information/demand from custom authorities.
12. The Company has incurred capital expenditure of Rs. 1,890 lakhs
(previous year Rs. 1,890 lakhs) including capital advances under the
modernisation programme. Due to difficult liquidity position, the
Company has not been able to complete the installation and
commissioning of the equipment.
13. (a) In the current year and in the earlier years, under
instructions from the Company, some of the customers made direct
payments to the creditors for supplies and expenses. During the
previous year, the Company has reconstructed the parties ledger and has
obtained/is in process of obtaining confirmations from the parties and
reconciling with the various control accounts. At the end of the
previous year the total of the various Creditors control accounts after
adjusting the unreconciled debit balance in the aforementioned accounts
exceeds the aggregate balance as per the reconstructed Creditors
Ledger by Rs. 187.60 lakhs. No steps could be taken to reconcile the
same due to closure of operations in the later part of the current
(b) During the previous year, on reconciliation of the balances certain
adjustment in Excise on cloth recoverable account and Excise MODVAT
account were identified and are disclosed under prior period item.
Capital work in progress includes Rs. 33.08 lakhs on account of prior
year MODVAT reversal.
14. Lease rentals charged to the profit and loss account in accordance
with the terms and conditions of the relevant lease agreements is Rs.
1.87 lakhs (previous year Rs. 1.87 lakhs). The balance future lease
rentals amount to Rs. Nil (previous year Rs. 1.88 lakhs).
15. Sundry creditors include total outstanding of Small Scale
Industrial (SSI) undertakings - Amount not ascertained (previous year
Rs. 25,05,635). The names of the SSI undertakings to whom the Company
owned a sum exceeding Rupees One lakh which are outstanding for more
than 30 days as at the year end - Not ascertained.
18. Previous year's figures have been regrouped wherever necessary to
make them comparable with those of the current year.