a. Method of Preparation of accounts:
Accounts are prepared on historical cost convention, in accordance with
the normally accepted accounting principles.
b. Fixed Assets:
Fixed assets are stated at their original cost of acquisition,
including taxes, freight and other incidental expenses incurred in
connection with the erection / commissioning / construction of the said
assets, less accumulated depreciation.
Inventories are valued at cost or net realizable, whichever is lower.
Depreciation is computed on straight-line basis in accordance with the
provisions of Schedule XIV to the Companies Act, 1956.
2. The Company is a Sick unit and is before the Hon''ble BIFR in Case
No.210/2000. The company has reached OTS with both the secured
creditors and submitted a viable revival proposal to the Hon''ble
3. Pending finalization of one time settlement with banks no interest
was provided on principal outstanding loans from 01.04.2005 to
4. Claims not accepted as debt by the company and pending in courts /
a) Liability if any on alleged sale and leaseback transaction.
b) Appeals against the Arbitration awards and Decreetal orders of the
Learned Single Judge are pending before the Division Bench in the High
Court Judicature at Madras
c) Claim of Central Excise Department amounting to Rs.25.74 Lakhs
pending in appeal.
5. The Company declared a Lay-Off with effect from December 06, 2004.
Pending final settlement, no provision has been made in the books of
account for terminal benefits like gratuity, bonus and leave
6. The term Loans from Industrial Development Bank of India and State
Bank of Hyderabad are secured by joint equitable mortgage of land and
buildings, hypothecation of plant & machinery and other movable assets,
excluding book debts, and on the personal guarantee of some of the
directors of the Company.
a) The working capital loans from State Bank of Hyderabad are secured
by a first charge on all goods, book debts and movable assets of the
Company and on the personal guarantee of some of the directors. The
working capital term loan is secured by a second charge on the fixed
assets of the Company.
b) SASF Cell (IDBI had accepted the OTS Proposal of the Company on
18.06.2007 and also had accepted the down payment of Rs.15.00 Lakhs
arranged by the Company. As such, the Company has not provided compound
and penal interest on term loan for the year under review.
c) Reportedly SBH has assigned its debt to ASREC India Ltd. on
07.11.2006. Deutsche Bank being the power of attorney holders of ASREC
had reached OTS with the Company on 02.03.2007. As such, the Company
has not provided compound and penal interest on term loan from SBH for
the year under review.
7. Redundant fixed Assets of Rs.96.19 Lakhs (approx) have been given
to another EOU, after obtaining permissions from VEPZ / Central Excise
authorities, on a returnable basis without any rental charges.
8. Claims made by the Company
a) The claim filed by the Company against National Insurance Company
before the Learned Addl. Chief Judge City Civil Court Hyderabad has
been dismissed with costs and hence the - same is debited to statement
of profit & loss during the year as exceptional item.
b) Claim filed by the Company against the Revenue Divisional Officer,
Nalagonda under National Highway Act 1956 US 3(a), 3(d) and 3(b) is
pending for finalization.
9. No confirmations have been obtained for sundry creditors, debtors
and other balances outstanding.
10. As regards to the compliance of provision relating to the dues to
the small scale industries in terms of companies (Amendment) Act, 1999
the company has sent letters to the creditors to confirm whether they
are SSI Units. The company is yet to receive the confirmations from
them. Hence, the company could not quantify the dues, if any, to the
small-scale industries/ ancillary undertakings.
11. The company has not made any related party transaction during the
Financial Year under review. However the Outstanding balance of
un-secured loan taken from the Managing Director as at March 31, 2012
12. Segment Reporting: The Company has not performed any operations
during the year under review and hence Segment Reporting is not
13. Earnings Per Share: The Company has incurred a net loss of
Rs.2,43,32,438/- during the year under review and hence EPS is not
14. Deferred taxation:
Even though, the company has unabsorbed depreciation, carry forward of
losses and adjustments under section 43 B of Income tax Act, 1961
deferred tax asset as per the Accounting Standard - 22 Accounting for
taxes on income issued by the Institute of Chartered Accountants of
India, has not been recognized in the Books of account as the company
is 100% EOU and eligible for tax exemption u/s 10A of income tax Act,
1961 and also generation of sufficient taxable income in near future is
uncertain. In view of the appeal preferred against the order of BIFR as
detailed in Note No. 2 and also considering the fact that deferred tax
assets are more than the deferred tax liabilities, no provision has
been made in respect of deferred tax liability. Taking a more prudent
view deferred tax assets have not been recognized in the books of
16. Aoditional information pursuant to the provisions of Paragraphs 3
& 4 of Schedule VI to the Companies Act, 1956.
17. Previous year''s figures are rearranged or regrouped wherever
18. As there was no production ability no depreciation is charged for