NOTES FORMING OF FINANCIAL STATEMENTS 1. ACCOUNTING POLICIES: (a) Basis of Accounting The accounts have been brpared on the basis that the Company is going concern and on the basis of historical costs. (b) Revenue Recognition Sale of goods is recognized on dispatch to customers. Sales includes amount recovered towards excise duty but excludes amount recovered towards sales tax and are net of trade discounts. (c) Investments Investments are valued at cost subject to application of Accounting Standard 13 accounting for investment brscribed by the Institute of Chartered Accountants of India. (d) Research and Development Revenue expenditure on research and development (R & D) is charged to the Profit and Loss Account. Capital expenditure on R & D is shown as addition to Fixed Assets. (e) Inventories Inventories are valued at lower of cost and estimated realisable value. (f) Retirement Benefits Retirement benefits to employees are provided for by payment to gratuity, superannuation and provident funds. The Company has taken a policy with the Life Insurance Corporation of India for the payment of gratuity. The brmium on policy and the difference between the amount of gratuity paid on retirement, and amount estimated as recoverable from Life Insurance Corporation of India is debited to Profit and Loss Account. Liability in respect of superannuation benefit extended to the specified employees is contributed by the Company to a Fund established with Life Insurance Corporation of India Ltd. at the rate of 15% of the annual salary of those employees. The leave encashment benefit to the employees on retirement is debited to Profit & Loss Account on Cash Basis. (g) Debrciation As per Companies Act, 2013, debrciation is to be provided as per life of assets provided in Part C of Schedule II of the Companies Act, 2013. Since financial year 2008-2009, the Company's entire operation was discontinued and key person responsible for updation of fixed asset register had left the organization and it is yet to update the itemwise description of assets in the fixed asset register, which is necessary to arrive the new rate of debrciation. Hence the Company has followed the debrciation of Schedule XIV of Companies Act' 1956. Further the exercise of applying new rate of debrciation is under process on the basis of history of the assets, hence the effect of debrciation has not been arrived and reflected in the loss incurred during the year. Debrciation on Revalued Assets: The debrciation on the revalued fixed assets has been reduced from the revaluation reserve. (h) Fixed Assets Fixed assets are recorded at historical costs and include interest to the date of commissioning on attributable borrowings. In respect of borrowings in foreign currencies for acquisition of fixed assets, increase/decrease in liability consequent on changes in rupee/foreign currencies parity, both on account of repayment during the year and restatement of the liability as at the Balance Sheet date, have been added to the cost of the Fixed Assets. Debrciation is provided on such increased costs. Revaluation of Assets: The fixed assets have been revalued to align it with the current value of the fixed assets of the Company. The revalue reserve has been created to the extent of the increase in the value of the fixed assets after netting of the impairment loss in the value of the assets. (i) Deferred Revenue Expenditure Expenses incurred towards increase in the Authorised Share Capital and towards issue of Right Equity Shares are amortised over a period of ten years from the year in which they are incurred. After 31.03.2003, any expenditure incurred for which the company will benefit in future will be amortized for 5 years according to generally accounting principles and Accounting Standards. (j) Contingent Liabilities and Provisions Contingent Liabilities are possible but not probable obligations as on the Balance Sheet date, based on the available evidence. Department appeals, in respect of cases won by the Company, are also considered as Contingent Liabilities. Provisions are recognized when there is a brsent obligation as a result of past events; and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are determined based on best estimate required to settle the obligation at the Balance Sheet date. The above policies were followed up to 31st March' 2009. Subsequently, there were no activities carried, hence there is no specific requirement for adherence of accounting policies. However, there is no specific information relating to any change of policies due to loss of key personnel in accounts as well as finance department. 2. Estimated amount of contracts remaining to be executed on Capital Account and not provided are not ascertainable. 3. Contingent Liabilities not provided for: (a) The Company has to pay interest on the outstanding Customs Duty amount at the time of clearance of goods - Amount not ascertained. (b) Bank Guarantees to Custom Rs. 25 lacs (Previous year Rs. 25 lacs) (c) Interest, damages and penalty payable to E.S.I. and Provident fund dues are not ascertainable. 4. The company entered into a wage settlement agreement with its employees on 27th October' 2003 under section 2(p) read with Rule 62 under the provisions of the Industrial Disputes Act, 1947. Under this agreement the Company has settled all past claims relating to wages, salaries, claims with regard to perquisite and any other amounts due to employees prior to December 2003 in full and final satisfaction. The payments under this settlement are sbrad over a period of 5 years from the recommencement of the operations. The agreement specifies the past liabilities relating to unpaid salary, provident fund E.S.I.C., Gratuities etc. Owing to financial crisis Company could not make the payment, the aggrieved union has filed the litigation with various claims against the Company with Gujarat, High Court. The HC, Gujarat has directed to resolve the dispute by appointing the arbitrator with their permission. The arbitration award was given as impugned award by the Arbitrator. Under provision of Section 34 of Arbitration and Conciliation Act, 1996, the said award Company is challenged in District Court, Surat. Thereafter the Ho'ble High Court of Gujarat has given the controversial Judgment during the month of May 2015 and company has filed Leave Petition challenging the above said judgment at High Court of Gujarat. Simultaneously, the Company has referred the said matter with Hon'ble BIFR for making necessary modification in Modified Draft Rehabilitation Scheme (MDRS). The probable liabilities will be booked on final verdict and BIFR directions. Hence neither liability is booked nor is it disclosed as contingent liability as awaiting for final judgment. 5. Claims against the Company not acknowledged as debts: (a) Payment of Excise Duty disputed by the Company in respect of: Input & Capital Goods Matters - 7 45,15,63,446/-(Previous Year 7 19,55,84,081/-) 6. Various cases filed against the Company; (I) 3(Three) Nos of Unsecured Creditors have filed Winding Up Petitions against the Company in Ahmadabad High Court for their total claims of 7 1,76,93,526/-.The Company has filed necessary appropriate responses and its Petition Leave has been admitted and other matters are pending for further disposal. (II) Various cases of labour matters, excise matters, gratuity matters and criminal cases under section 138 of the Negotiable Instruments Act, 1938 have been filed against the Company during the normal course of business, which are insignificant to affect the existence of the Company in the opinion of the management. 7. The settlement with the unsecured lenders under the CDR was made a part of the scheme filed with BIFR and pursuant to the sanction of the scheme the amount payable to Principal PNB mutual fund is 7 77,66,556 being 42% of the principal amount of 7 1,84,91,800. The Company has made a payment of 7 7,76,656 on 11.11.2006 against the said liability and the balance amount of 7 69,89,900 is awaiting confirmation of the same. 8. The Company has no information of the suppliers covered under the Micro, Small and Medium Enterprises Development Act' 2006. Accordingly, interest provision required under the said Act is not made. 9. (i) Excise Duty on manufactured goods lying in bond will be taken into account when goods are taken out of bond, as company's practice. (ii) The above practice has no effect on the loss. 10. The balances of Sundry Debtors, Sundry Creditors, secured loans, unsecured loans, Bank balances and Loans & Advances are subject to confirmation and are shown as appearing in the Account. 11. (i) The liability for retiring/resigned employee's gratuities payable in accordance with the payment of Gratuities Act and Company's rule are determined and overdue for the employees upto 31st March, 2015 is 7 41,33,60,529/-. (PY 7 46,03,53,449/-). (ii) As per the past policy, the company's liability under Provident Fund Act (Funded) is determined on the basis of actuarial valuation made at the end of the financial year. The Company's Provident Fund liabilities are covered under defined benefit plans and all the future and current obligations for PF liabilities were secured by way of investment in Government Securities through Company's PF Trust. However, the company could not make any investment to cover the future and current obligation of PF liabilities as per Accounting Standard 15 and no actuarial losses are determined and debited as per projected unit credit method to Profit & Loss account. As per the past policy, the company's liability under Provident Fund Act (Funded) is determined on the basis of actuarial valuation made at the end of the financial year. But the cancellation of the Trust as per order of Ministry of Labour, Government of Gujarat, the company has paid the amount of PF contribution along with interest during the current financial year, hence no requirement of further funding against the PF contribution. Owing to the dispute with the labour since past many years, the liability may arise in event of final verdict issued in favour of labour. No interest & penalties notices are issued after cancellation of said trust. 12. Income Tax a. In view of the loss, the Company has not made any provision of Income Tax. b. The Income Tax Department has seized 7 12,06,455 bank balance on account of dispute. 13 . In the financial year 2011-12, Asset Care & Reconstructions Enterprise Limited has purchased the IFCI loan for total consideration of 7 25 Crore from IFCI by way of Assignment Deed dated 30th March' 2012. Consequently, all the charges attached with the movable and immovable of the properties are registered with Asset Care & Reconstructions Enterprise Limited (ACRE). Now company has paid entire loan of ACRE and security assignment is under process from ACRE to Body Corporate enlisted Note of Balance sheet. 14. The Company has discontinued operation of NTC plant from financial year 1999-2000 and all other plants have been discontinued from August' 2008. No provision for impairment of assets of the Company has been made. No effect is separately reported in the profit and loss account as per Accounting Standard 24 related to Discontinue operation. 15. (i) Since no commission is payable to the Managing Director as per the terms of appointment. The computation of net profit in accordance with section 198 of the Companies Act, 2013 is not required. (ii) During the year, the Company has not paid managerial remuneration like brvious year. 16. In view of substantial accumulated losses carried forward and unabsorbed debrciation under the Income Tax Act, the Accounting Standard 22 (AS 22) relating to "Accounting for Taxes on Income" cannot be implemented on Balance Sheet date as sufficient future taxable income is not yet achieved. 17. Owing to the closure of all operation, there are no material consumption, no inflow and outflow of foreign exchange due to import or any other expenditure were incurred during the year. 18. The Extra Ordinary items reported in profit & loss account for Rs. 11,01,878/- is on account of liabilities no longer payable to suppliers & other parties. The said entries are passed on account various reconciliation and confirmation from various parties. 19. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure. For and on behalf of Board of Directors In terms of our report attached For AMPAC & Associates Chartered Accountants FRN 112236w P. B. Sheth Partner D B Patel Managing Director DIN -00056513 B H Patel Director DIN -01690183 Place: Mumbai Date: 30th May, 2015 |