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Mangalam Timber Products

BSE: 516007|NSE: MANGTIMBER|ISIN: INE805B01012|SECTOR: Miscellaneous
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Notes to Accounts Year End : Mar '16

b Rights, preferences and restrictions attached to shares Equity Shares

The Company has one class of Equity Shares having par value of Rs 10/- per share. Each Shareholder is entitled to one vote per share and equal right for dividend. In the event of liquidation the equity shareholders are eligible to receive the remaining assets of the Company after payment of all preferential amounts in proportion to their shareholding.

7.5% Non- cumulative Redeemable Preference Shares

7.5% Non- Cumulative Redeemable Preference shares of Rs.100/- each are redeemable at par within a period not exceeding nine years from date of allotment i.e. 10th October, 2012. In the event of liquidation, the preference shareholders are eligible to receive the paid up value of the preference share, if any out of the remaining assets of the Company in preference to equity shareholders. c The Company does not have any Holding company / ultimate Holding Company.

e No Equity shares have been reserved for issue under options and contracts/commitments for the sale of shares / disinvestment as at the Balance sheet date.

1. Royalty on wood had been increased by the Government of Odisha with retrospective effect from 1st April, 1988 vide its letter dated 2nd September, 1993 against which the Company had filed a writ petition before the Odisha High Court. The Odisha High Court vide its order dated 16th May, 1995 had upheld the writ petition of the Company. Government of Odisha had filed a Special Leave Petition before the Supreme Court. The Hon''ble Supreme Court vide its order dated 11th November, 2003 has dismissed the special leave petition filed by the Government of Odisha and upheld the decision of the Hon''ble High Court of Odisha passed in favour of the Company. The Hon''ble Supreme Court had also directed the Govt. of Odisha to implement the judgment of the Hon''ble High Court of Odisha expeditiously and in any case within a period of four months from the date of the order of the Supreme Court. Subsequently, Government of Odisha has lodged a claim for Rs.303.49 lacs (net of excess amount of royalty paid by the Company in earlier years) on the Company on account of alleged failure in taking up replantation in the area harvested by the Company. This claim has been denied by the Company. In terms of the Supreme Court judgment, the Company has lodged its claim with the Government of Odisha, the monetary value of which is much higher in comparison to the claim lodged by the Govt. of Odisha against the Company, to honour its commitments made to the Company as directed by the Hon''ble High Court of Odisha and upheld by the Hon''ble Supreme Court. The Management is of the view that no provision against the said demand is necessary, as no liability is likely to arise on this account and Rs.81.04 lacs paid in earlier year and included under advances recoverable has been considered good of recovery.

2. Government of Odisha has issued Demand Notice for Rs.1224.92 Lacs towards License fees, Import fees, Excise Duty, Pass fees, Application fees on import of Methanol into Odisha without obtaining license from competent authority from the year 2002-03 to 2008-09.

The Company has already taken license from concerned authorities and challenged above demand on the ground that as methanol is imported from other countries, provision of Odisha Excise (Methanol Alcohol) Rules 1976 are not applicable for use of Methanol as raw material.

The Company has obtained interim stay on above matter from the Hon''ble High Court of Odisha at Cuttack on 20.11.08, for Rs.847.00 Lacs and for Rs.223.57 Lacs furnished Indemnity Bond.

A further demand has been received for the year 2009-10 & 2010-11 totaling Rs.154.20 Lacs for which necessary documents has been submitted for signing of Indemnity Bond.

Pass fees paid for import of Methanol into Odisha amounting to Rs. 224.41 lacs for the year 2007-08, 2008-09, 2009-10, 2010-11 & 2011-12 has been shown as advance which is considered as good for recovery, since the management is of the view that no liability is likely to arise on this account in future.

3. Demand for Rs.18.15 Lacs (Previous year Rs.27.32 Lacs) against Delay payment Surcharge from Odisha State Electricity Board has not been accepted by the Company and the matter is under dispute. However, as a matter of abundant caution an equivalent amount has been provided for to take care of the liability, if any, in this respect.

4. SEGMENT INFORMATION

a. The Company operates in one segment only i.e. Medium Density Fibre Board and accordingly information required under Accounting Standard-17 issued by Central Government is not applicable.

b. In order to sustain long-term availability of firewood, principal raw material for the Company''s main product- Medium Density Fibre

Board, the Company is engaged in plantation under various schemes on the land owned by third parties. The Company''s role is to develop and supply seedlings to such third parties. Since development of seedlings is an integral part of plantation activity which is incidental to main activity of the Company, this operation has not been treated as a separate segment under Accounting Standard - 17 issued by Central Government.

5. Related party information as identified by the management as per Accounting Standard-18 on Related Party Disclosure issued by Central Government.

A) List of related parties:

i) Key Management Personnel:

1) Shri Tara Chand Sharma (01.04.2014 - 31.07.2015)

2) Shri Soumitra Kumar De ( 13.08.2015 - 31.03.2016)

ii) Enterprises over which significant influence exercised by Director :

Mangalam Cement Ltd.

6. Tax credit shall be allowed to the extent of amount of MAT paid in earlier years depending upon the profits earned by the Company in future years, in accordance with the provisions of Section 115JAA of the Income Tax Act, 1961.

7. In accordance with the license granted by the Government of Odisha in the year 1986, the Company had undertaken plantation in certain Government land which is ready for harvesting. Despite consistent follow up, the Government did not allow the Company to harvest the plantation on the pretext that the Special Leave Petition filed by the Government of Odisha was pending before the Hon''ble Supreme Court. The Hon''ble Supreme Court had dismissed the Special Leave Petition filed by the Government of Odisha in the royalty matter, as referred to in Note No.2 above. Since the Government of Odisha had not allowed the Company to harvest the plantation done by the Company even after the dismissal of Special Leave Petition filed by the Government of Odisha, the Company had no alternative but to file a Writ Petition in the High Court of Odisha seeking direction to allow the Company to harvest the plantation done by the Company on its own cost on Government land and also other stipulations relating to rate of royalty and weighment norms. The Hon''ble High Court of Odisha had vide its order dated 8th July, 2004, had without expressing any opinion with regard to merits of the contentions raised by the Company, disposed of the petition with a direction to the Government of Odisha and its various officers to dispose of the representations made to them strictly in accordance with law as expeditiously as possible preferably within a period of six months. In compliance with the directions from the Hon''ble High Court of Odisha, the Government has reiterated its claim for recovering cost of plantation on 244.825 hectares. The Company has denied its liability to any such claim.

8. (i) The Company has undertaken Plantation under Farm Forestry Scheme, inter-alia, in the State of Chhattisgarh in association with the forest department of Chhattisgarh Government. As per the agreement part sale consideration of supply of seedlings is to be paid to the Company at the time of harvesting of the plantation. Accordingly, part sale consideration of Rs. 73.38 Lacs relating to earlier years along with interest will be received by the Company at the time of harvesting. Based on the legal opinion obtained by the Company, the same will be accounted for in the year in which the plantation is harvested.

(ii) The Company has undertaken Plantation under Farm Forestry Scheme, inter-alia, in the State of Odisha in association with the Farmers by bipartite agreement. As per the agreement part sale consideration of supply of seedlings is to be paid to the Company at the time of harvesting of the plantation. Accordingly, part sale consideration of Rs. 2.22 Lacs relating to this year along with interest will be received by the Company at the time of harvesting. Based on the legal opinion obtained by the Company, the same will be accounted for in the year in which the plantation is harvested.

9. Pursuant to Rehabilitation Scheme Sanctioned by Board of Industrial & Financial Reconstruction (BIFR), the Company is exempted from payment of electricity duty on power consumed for a period of 10 years from the date of sanction of the scheme. BIFR has discharged the Company from the purview of Sick Industrial Companies (Special Provision) Act,1985.

Accordingly Rs. 197.75 Lacs being amount paid for the period from 1st April, 2000 to 31st March, 2008 and considered as income in earlier years have been shown as Other Advance under Long Term Advance.

Based on legal opinion obtained by the Company, all terms and conditions so far not implemented by respective agencies as stated in the Rehabilitation Scheme sanctioned by BIFR are still in force.

10. The Company''s CDM Project already been registered at UNFCCC and pending completion of certain procedural formalities 1764076 tCER unit has not yet been received.

11. Trade Receivables outstanding for more than six months from the date they are due for payment includes Rs. 337.82 Lacs (Previous Year Rs. 278.25 Lacs) which have become overdue. Legal and other persuasive steps have been taken for recovery of such debtors. Such debtors have been considered good and eventually recoverable. Accordingly, no provision against the same has been considered necessary.

12. EMPLOYEES BENEFIT

(I) Defined Benefit Plans Gratuity

The Company provides for gratuity, a defined benefit retirement plan covering eligible employees. As per the scheme of the Gratuity Fund Trust, administered and managed by the Independent Board of Trustees, the Company first makes the payment to vested employees at retirement, death, incapacitation or termination of employment of an amount based on the respective employee''s salary and the tenure of employment and then gets the reimbursement from it. Vesting occurs upon completion of five years of service. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation.

Leave Encashment

The Company makes the annual provision in the Statement of Profit and Loss for the leave liability on the basis of the actuarial valuation for the Leave encashment Scheme which is an unfunded Plan for the qualified employees.

(II) Defined Contribution Plans Provident Fund

The employees of the Company receive defined contribution for Provident Fund benefit. Aggregate contributions along with interest thereon are paid at retirement, death, incapacitation or termination of employment. Both the employees and the company make monthly contributions at specified percentage of the employee''s salary to the concerned Provident Fund Authorities. The Company has no liability to Fund the shortfall in the interest over the statutory rate declared by the Government.

Employees State Insurance

Both the employees and the Company make monthly contributions at specified percentage of the employee''s salary to the concerned ESI Authorities.

Other Defined contribution for Employee Benefits

The defined contribution for Employees State insurance, Leave Travel Allowance and Medical reimbursements are recognized on actual basis in the Statement of Profit & Loss in the year when the eligible employee actually renders the service.

The estimates of future salaries increases, considered in actuarial valuations, take in to account of inflation, seniority, promotion and other relevant factors such as supply and demand in employment market.

13. i) The Gratuity scheme is invested in a Group Gratuity policy offered by Life Insurance Corporation (LIC) of India. The information on the allocation of the fund into major asset classes and expected return on each major class are not readily available. The expected rate of return on plan assets is based on the assumed rate of return provided by the Company''s Actuary.

ii) The Leave Encashment scheme is invested in a Group Leave Encashment policy offered by Life Insurance Corporation (LIC) of India. The information on the allocation of the fund into major asset classes and expected return on each major class are not readily available. The expected rate of return on plan assets is based on the assumed rate of return provided by the Company''s Actuary.

14. DERIVATIVE INSTRUMENTS

The Company does not enter into any derivative instruments for trading or speculative purposes.

15. MICRO ENTERPRISES AND SMALL ENTERPRISES

There are no Micro and Small enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at 31st March, 2016. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have identified on the basis of information available with the Company. This has been relied upon by the auditors

16. Previous year''s figures have been regrouped/rearranged wherever considered necessary.

Source : Dion Global Solutions Limited
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