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Notes to Accounts of Agio Paper & Industries Ltd.

Mar 31, 2014

1. SHARE CAPITAL

a) The Company has only one class of issued shares i.e. Ordinary Shares having par value of Rs.10/- per share. Each holder of Ordinary Share is entitled to one vote per share and equal right for dividend. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the ordinary shareholders are eligible to receive the remaining assets of the Company after payment of all preferential amounts, in proportion to their shareholding.

b) The Company does not have any holding company or ultimate holding company.

c) No Ordinary Shares have been reserved for issue under options and contracts/commitments for the sale of shares/disinvestment as at the Balance Sheet date.

d) No Ordinary Shares have been bought back by the Company during the period of 5 years preceding the date as at which the Balance Sheet is prepared.

e) No Ordinary Shares have been issued pursuant to scheme of amalgamation and arrangement for consideration other than cash in immediately preceding five years.

f) No securities convertible into Ordinary/Preference shares have been issued by the Company during the year.

g) No calls are unpaid by any Director or Officer of the Company during the year.

2. LONG-TERM BORROWINGS

Security

Term Loan, Working Capital Term Loan & FITL is secured by equitable mortgage of all fixed assets including leasehold/ freehold land, building and Capital Work in Progress (both present & future). The above loans are also guaranteed by a relative of director.

i) Term Loan - I & II is repayable in 20 quarterly balloning installments starting from quarter ending June 2013 and ending at March 2018.

ii) Working Capital Term Loan is repayable in 16 quarterly balloning installments starting from quarter ending June 2013 and ending at March 2017

iii) FITL is repayable in 40 remaining equal monthly installments starting from month ending December 2012 and ending at March 2016.

NOTES :

The above disclosure and maturity profile are based on loan restructuring scheme sanctioned by the bank vide their renewal dated 24.01.2013.

During the year due to non payment of instalments and interest due on the above loans, the bank took the symbolic possession of the tangible property secured against the loans and proposed to auction the property to realise their dues. As per the information''s available with the company, in absence of any bid, the auction could not be materialised. The company has initiated necessary talks with the bank to reach to a compromise settlement and deposited a sum of Rs. 1 Cores with the bank as no lien Fixed deposit to be adjusted with the loan balance upon settlement. Further in absence of any balance confirmation by the bank as at 31.03.2014, the loan balances are subject to confirmation by the bank, however the company have continued to provide interest as per the terms and conditions of above renewal letter received from the bank.

3. Contingent and disputed liabilities not provided for:-

Claims against the Company not acknowledged as debts (Amount in Rs.) As at As at 31st March 2014 31st March 2013

i) Disallowance of Modvat Credit on input items Felts & etc from 1993 - 2005 - 381,404

ii) Disallowance of Modvat Credit on input items Felts & etc from November, 1991 to May, 1992 320,192 320,192

iii) Disputed income tax liability relating to disallowance of depreciation in calculation of book profit under MAT provisions pending before Kolkata High Court for the financial year 1996- 1997. 796,364 796,364

iv) Disputed income tax liability relating to imposition of interest on advance tax not paid u/s 154 pending before Deputy Commissioner of Income Tax, Kolkata for the financial year 2007 - 2008. 550,000 550,000

B. Estimated amount of contracts remaining to be executed on Capital Account not provided for Rs. nil, (net of advance), Previous Financial Year Rs. nil (net of advance).

C. Bank guarantee outstanding at the year end is Rs.1,510,773 (Previous year Rs.15,10,773).

D. The Company has incurred net loss of Rs.57,663,902 and cash loss Rs.5,49.07,161 during the year ended 31st March, 2014 and the net worth of the Company has been fully eroded. These financial statements have been prepared on a going concern basis based on the future strategic plan envisaged by the management for the revival of the company and on the basis of a comfort letter received from a promoter company confirming their continued financial support.

E. The paper factory remains under shut down w.e.f. 6th October, 2010 to fulfil certain pollution control measures as laid down by Central Pollution Control Board. The management of the company is taking active steps to comply with the required norms to start the factory. The management is also actively considering to begin paper production through alternate means. As reported earlier, the new paper mill with an annual capacity of 18,000 MT is under installation and waiting for necessary clearance to commence production as mentioned above. The power plant also could not be started due to non operation of the paper mill and thus still kept under capital work in progress.

F. In compliance with Accounting Standard AS-28 relating to "Impairment of Assets", the company has reviewed the carrying amount of its fixed assets as at the end of the year. Based on the future strategic plans and the valuation report of the fixed assets of the company , no impairment of assets is envisaged at the balance sheet date.

G. Balance confirmations from some of the parties of trade receivable, unsecured loans, advances and trade payable are yet to be received.


Mar 31, 2013

A. Contingent and disputed liabilities not provided for:- Claims against the Company not acknowledged as debts

(Amount in Rs.) As at As at 31st March 2013 31st March 2012

i) Disallowance of Modvat Credit on input items Felts & etc from 1993 – 2005 381,404 381,404

ii) Disallowance of Modvat Credit on input items Felts & etc from November, 1991 to May, 1992 320,192

iii) Disputed income tax liability relating to disallowance of depreciation in calculation of book profit under MAT provisions pending before Kolkata High Court for the financial year 1996- 1997. 796,364 796,364

iv) Disputed sales tax liability for interest on installment for FY 2002-03 & 2003-04 37,701

v) Disputed provident fund liabilities 1990-99 & 1999 -2008, Stay granted from provident fund Appellate Tribunal (net of advance). 2,64,000

vi) Disputed income tax liability relating to imposition of interest on advance tax not paid u/s 154 pending before Deputy Commissioner of Income Tax, Kolkata for the financial year 2007 – 2008. 550,000 550,000

B . Estimated amount of contracts remaining to be executed on Capital Account Rs. nil, (net of advance), Previous Financial Year Rs 74,00,000, (net of advance).

C. Bank guarantee outstanding at the year end is Rs.15,10,773 (Previous year Rs.15,10,773).

D. The Company has incurred net loss of Rs. 8,12,21,254 and cash loss Rs.7,84,50,222 during the year ended 31st March 2013 and the net worth of the Company has been fully eroded. These financial statements have been prepared on a going concern basis based on the future strategic plan envisaged by the management for the revival of the company and on the basis of a comfort letter received from a promoter company confirming their continued financial support.

E. The paper factory remains under shut down w.e.f. 6th October, 2010 to fulfil certain pollution control measures as laid down by Central Pollution Control Board. The management of the company is taking active steps to comply with the required norms to start the factory. The management is also actively considering to begin paper production through alternate means. As reported earlier, the new paper mill with an annual capacity of 18000 MT is under installation and waiting for necessary clearance to commence production as mentioned above. The power plant also could not be started due to non operation of the paper mill and thus still kept under capital work in progress.

F. In compliance with Accounting Standard AS-28 relating to "Impairment of Assets”, the company has reviewed the carrying amount of its fixed assets as at the end of the year. Based on the future strategic plans and the valuation report of the fixed assets of the company, no impairment of assets is envisaged at the balance sheet date.

G. Balance confirmations from some of the parties of trade receivable, unsecured loans, advances and trade payable are yet to be received.

H. Employee Benefits:

a) Defined Contribution Plan:

The Company makes contribution towards provident fund and Employee''s State Insurance Corporation (ESIC) to a defined contribution retirement benefit plan for qualifying employees. The Provident Fund plan and ESIC are operated by concerned Government agencies created for the purpose. Under the said schemes the company is required to contribute a specific percentage of pay roll costs in respect of eligible employees to the retirement benefit scheme to fund the benefits. The contribution payable to these plans by the company is at the rates specified in the rules of the scheme.

b) Defined Benefits Plan:

i) Gratuity : 15 days salary for every completed year of service. Vesting period is 5 years and payment is restricted to Rs. 10.00 lacs. ii) Leave: The employees of the Company are also eligible for encashment of leave on retirement.

iii) The present value of defined obligation and related current cost are measured using the Projected Credit Method with actuarial valuation being carried out at each balance sheet date.

c) The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

d) The table below illustrates experience adjustment disclosure as per Para 120 (n) (ii) of Accounting Standard 15 – Employee Benefits.

e) The disclosure as required by Para 120 of Accounting Standard – 15 "Employee Benefit” has been made to the extent applicable to the Company.

I. No borrowing cost as per Accounting Standard -16 " Borrowing Costs” has been capitalised during the year.

J. The company does not have any exposure in foreign currency at the year end.

K. Segment Reporting

The Company''s business activities fall within a single primary reportable segment viz., Writing & Printing Paper. Accordingly, pursuant to Accounting Standard (AS)-17 on Segment Reporting, Segmental Information is not given.

L . In view of substantial brought forward losses and depreciation, the year end deferred tax position reflects net deferred tax assets and the same has not been recognised on acount of prudence.

M Previous year''s figures have been regrouped and/or re-arranged wherever necessary, to conform the current year classification.


Mar 31, 2011

1. Contingent and disputed liabilities not provided for:-

A Claims against the Company not acknowledged as debts As at 31st March, 2011 As at 31st March, 2010

1. Disallowance of Modvat Credit on input items Felts & etc from 1993-2005 16.09 16.45 (Show Cause Notice issued by Excise Department).

2. Disputed income tax liability relating to disallowance of depreciation in 7.96 7.96 calculation of book profit under MAT provisions pending before Kolkata High Court for the financial year 1996-1997.

3. Disputed sales tax liability for pending Declaration Forms & etc. for 1999-2000 - 5.94 to 2004-05.

4. Disputed provident fund liabilitiesl 990-91 to 2000-2001 & 2003-2004, stay 2.64 2.64 granted from provident fund Appellate Tribunal (net of advance).

5. Disputed income tax liability relating to imposition of interest on advance tax not 6.23 7.17 paid u/s 154 pending before Deputy Commissioner of Income Tax, Kolkata for the financial year 2007-2008.

The above claims / demands are at various stages of appeal and in the opinion of the Company are not tenable.

The provisions for disputed obligatory liabilities on account of cases pending with courts/concerned authorities based on estimate made by the company considering the facts and circumstances.

3. Estimated amount of contracts remaining to be executed on Capital Account (Net of Advances) Rs. 74.00 lacs (Previous Financial Year Rs 56.90 lacs).

4. Bank guarantee outstanding at the year end is Rs.15.11 lacs (Previous year Rs.15.11 lacs).

5. Depreciation/Amortization for the year includes arrear depreciation amounting to Rs. 357.39 lacs (Previous year Rs. 357.39 lacs) related to financial year 1996-1997 to 1999-2000.

6. In earlier years the Company had taken unsecured foreign currency loan amounting to Rs.9,47,33,625/- (balance as on 31.03.2011) for the rehabilitation of the Company. The Board of the Company had also decided to issue right share to the lender in lieu of the loan. However considering the present scenario and in view of term of settlement reached between the Company and the lender, the loan liability remained as on 31.03.2011 after payment of settlement amount has been foregone by the lender.

7. The power plant has been commissioned and started generating power from 16th October, 2008 and was operated until 19th February, 2009. As the power plant can be made fully operational with the upcoming additional paper production capacity, the same is considered under trial run and has been shown under capital work in progress.

8. Additional paper machine with an annual capacity of 18000 MT is under installation. However, pulp mill of the new paper machine has commenced its trial run production w.e.f. 25th October, 2009 and has generated 2017 MT of pulp during 2010-11 (previous year 2487 MT).

9. In compliance with Accounting Standard AS-28 relating to "Impairment of Assets", the company has reviewed the carrying amount of its fixed assets as at the end of the year and no impairment of assets is envisaged.

10. Balance confirmations from some of the parties of sundry debtors, unsecured loans, advances and creditors are yet to be received.

11. The factory remains under shut down w.e.f. 6th October, 2010 to fulfill certain pollution control measures laid down by Central Pollution Control Board.

12. Employee Benefits:

a) Defined Contribution Plan:

The Company makes contribution towards provident fund and Employee's State Insurance Corporation (ESIC) to a defined contribution retirement benefit plan for qualifying employees. The Provident Fund plan and ESIC by concerned Government agencies created for the purpose. Under the said schemes the Company is required to contribute a specific percentage of pay roll costs in respect of eligible employees to the retirement benefit scheme to fund the benefits. The contribution payable to these plans by the Company is at the rates specified in the rules of the scheme.

b) Defined Benefits Plan:

i) Gratuity: 15 days salary for every completed year of service. Vesting period is 5 years and payment is restricted to Rs. 10.00 lacs. ii) Leave: The employees of the Company are also eligible for encashment of leave on retirement.

iii) The present value of defined obligation and related current cost are measured using the Projected Credit Method with actuarial valuation being carried out at each balance sheet date.

c) Amount not recognized as an asset, because of the limit prescribed in Accounting Standard 15 (Revised 2005) i.e. Employees Benefits is Rs. Nil.

d) There is no reimbursement right at the balance sheet date.

e) Fair value of plan assets does not include any amount for Companies own financial instruments or any property occupied by or other assets used by, the Company.

f) The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

h) Comparative values of defined benefit plans for the past three years instead of four financial years as required by Accounting Standard - 15 (Revised 2005) on Employees Benefits are provided, this being only the fourth year of adoption of the Standard.

i) The disclosure as required by Para 120 of Accounting Standard - 15 "Employee Benefit" has been made to the extant applicable to the Company.

13. During the year borrowing cost amounting to Rs. 41.63 lacs (Previous year Rs. 190.02 lacs) has been capitalized and grouped under Capital Work- in-Proqress.

14. Segment Reporting

The Company's business activities fall within a single primary reportable segment viz., Writing & Printing Paper. Accordingly, pursuant to Accounting Standard (AS)-17 on Segment Reporting, Segmental Information is not given.

15. Operating Leases

The Company does not have any lease agreement as at the end of the year. The total rental expenses under non-cancelable operating lease for the year is Rs.8,75,000 (Previous year Rs.15,00,000).

(i) Closing stock includes stock with consignment Agent 73.30 M.T. {Previous Year: 192.85 MT) of paper.

(ii) Pulp plant is an integral part of the Paper plant and therefore capacity and actual production of pulp are not separately shown.

Note: The above Remuneration does not include provision for post retirement benefits under Accounting Standard 15, since the same is not available for individual's employees.

16. Previous year's figures have been regrouped and/or re-arranged wherever necessary, to conform the current year classification.


Mar 31, 2010

1, Contingent and disputed liabiiities not provided for:- (Rs. in Lacs)

A Claims against the Company not acknowledged as debts As at 31st March, 2010 As at 31st March, 2009

1. Disallowance of Modvat Credit on input items Felts & etc from 1993-2005 16.45 50.29 (Show Cause Notice issued by Excise Department).

2. Disputed income tax liability relating to disallowance of depreciation in 7.96 7.96 calculation of book profit under MAT provisions pending before Kolkata High Court for the financial year 1996-1997.

3. Disputed sales tax liability for pending Declaration Forms & etc. for 1999-2000 5.94 30.47 to 2004-05.

4. Disputed provident fund liabilities!990-91 to 2000 -2001 & 2003 -2004, Stay 2.64 2.64 granted from provident fund Appellate Tribunal (net of advance). ,

5. Disputed income tax liability relating to imposition of interest on adyanc|tax not 7.17 Nil paid u/s 154 pending before Deputy Commissioner of Income Tax, Kolkfltator the financial year 2007 -2008.

6. Arrear depreciation amounting to Rs. 357.39 lacs (Previous year Rs. 357.39 lacs) from the financial year 1996-1997 to 1999-2000 remains to be provided. The Company has already taken necessary approvals from the shareholders In the earlier Annual General Meeting regarding adjustment of arrear depreciation with securities premium account. The Company is in the process of complying with necessary formalities in this regard.

7. Unsecured Loan in foreign currency represents money brought in earlier years by the promoters of the company in the process of rehabilitation. The board had decided to retain the amount for the proposed right issue of the company. However in view of unfavorable market situation, the Company did not launch the right issue and the loan of Rs. 999.44 lacs (Previous year Rs. 1082.15 lacs) equivalent to $ 22.14 lacs (Previous year $21.14 lacs) has been kept as interest free loan,

8. The power plant has been commissioned and started generating power from 16th October 2008 and was operated until 19th February, 2009. As the power plant can be made fully operational with the upcoming additional paper production capacity, the same Is considered under trial run and has been shown under capital work in progress.

9. Additional paper machine with an annual capacity of 18000 MT is under installation. However, pulp mill of the new paper machine has commenced its trial run production w.e.f., 25th Oct, 2009 and has generated 2487 MT of pulp during 2009-10.

10. Impairment Loss on assets provided during the year Rs. Nil (Previous year Nil).

11. Balance confirmations from some of the parties of sundry debtors, unsecured loans, advances and creditors are yet to be received.

12. During the year borrowing cost amounting to Rs. 190.02 lacs (Previous year Rs. 132.49 lacs) has capitalized and grouped under Capital Work-in Progress.

13. Segment Reporting

The Companys business activities fall within a single primary reportable segment viz., Writing & Printing Paper. Accordingly, pursuant to Accounting Standard (AS)-17 on Segment Reporting, Segmental Information is not given.

14. Related partys disclosures under AS-18

Name of Parties Relationship

A. 1, Arrow Syntax Pvt Ltd Associate Company and having

significant influence over the Company

B. 1. Foto Exim FZE, Dubai Common Director

2. Orion IT Parks Pvt Ltd

3. Dhanshree Impex Pvt. Ltd.

C. 1. D. Kumar-Whole Time Director Key Management Personnel

Note: The above Remuneration does not include provision for post retirement benefits under Accounting Standard 15, since the same is not available for individuals employees.

15. Previous years figures have been regrouped and/or re-arranged wherever necessary, to conform the current year classification.

 
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