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Notes to Accounts of Bemco Hydraulics Ltd.

Mar 31, 2014

1. (a) Rights/preferences attached to Equity Shares

The Company has Equity Shares having par value of Rs. 10/- per share. Each holder of Equity Shares is entitled to one vote per share. Holders of Equity Shares are entitled to dividend, in proportion to the paid up amount, proposed by Board of Directors subject to approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of Equity Shares will be entitled to receive any of the remaining assets of the company, after distribution of all preferential amounts.

(b) Rights, Preferences and Restrictions attached to Preference Shares of Rs. 100/- each

The dividend on preference shares proposed by the Board of Directors is subject to approval of shareholders in the ensuing Annual General Meeting. Each holder of Preference Share is entitled to one vote per share only on resolutions placed before the Company which directly affect the rights attached to the said shares. In the event of liquidation of the Company before redemption of preference shares, the holders of preference shares will have priority over equity shares in the payment of dividend and repayment of capital but shall not be entitled to any surplus arising thereto.

2. Note:

(i) Term loan from Bank of Maharashtra is secured by equitable mortgage of Land & Building and 1st charge on the Fixed Assets of the company on pari-passu basis with State Bank of India and personal guarantee of three directors of the company. Interest payable thereon is at base rate 4.75% repayable in 54 monthly installments of Rs. 1.86 lacs each after a moratorium period of 6 months. Interest shall be serviced as and when applied. As on 31-03-2014, 43 installments are due for repayment amounting to Rs. 79,53,500/- excluding interest (P.Y. Rs. 1,00,44,000/-).

(ii) Term loan from State Bank of India is secured by equitable motrgage of Land & Building and 1st charge on the Fixed Assets of the company pari-passu basis with Bank of Maharashtra and personal guarantee of three directors of the company. Interest payable thereon is at base rate 4.60% repayable in 40 monthly installments after a moratorium period of 8 month. Of the 40 installments, first 20 installments would be of Rs 2 lacs each and the balance 20 installments would be of Rs. 3 lacs each. As on 31-03-2014, 31 installments are due for repayment amounting to Rs. 82,00,000.00 excluding interest (P.Y. Rs. 1,00,00,000/-).

(iii) Motor Car Loans from banks are secured by hypothecation of motor car, repayable in equated monthly installments carrying interest on reducing balance method varying between 10% per annum to 12.5% per annum. As on 31-03-2014 734 installments (Previous Year 542 installments) are due for repayment amounting to Rs 62,55,421/- excluding interest (Previous Year Rs 60,37,599/-)

3. Note

(i) Cash credit availed from Bank of Maharashtra is secured by hypothecation of inventory and receivables upto 120 days as primary security and equitable mortgage of factory land and building and personal guarantee of three directors of the Company. Interest on cash credit is payable at floating rate being base rate of respective bank plus spread varying between 5% to 5.50% at monthly rests.

(ii) Cash credit availed from State bank of India is secured by hypothecation of inventory and receivables upto 120 days as primary security and equitable mortgage of factory land and building and personal guarantee of three directors of the Company. Interest on cash credit is payable at floating rate being base rate of respective bank plus spread varying between 4% to 4.50% at monthly rests.

(iii) Raw Material Assistance Scheme availed from NSIC is secured by bank guarantee amounting to Rs 10,000,000/ -. Interest is payable @ 11% per annum on amount outstanding. Additional interest at the rate of 2% percent per annum is payable if payment is not made within stipulated time limit.

(iv) As on 31-03-2014 , default in repayment of Cash Credit ("CC") limit maintained with Bank of Maharashtra ("BOM") amounts to Rs 66,53,031/-

(v) As on 31-03-2014 , default in repayment of Cash Credit ("CC") limit maintained with State Bank of India ("SBI") amounts to Rs 1,50,469/-.

4. a) Land, Building, Plant and Machinery, Office equipment and major portion of other fixed assets acquired before 4th October 1999 were revalued on the basis of the valuation of these assets carried out by a firm of registered valuer. According to the Valuer''s Report these fixed assets were valued on the following basis:

Land : Market value basis

Building : Present day cost less depreciation

Machinery : Market value basis, present cost less depreciation

The surplus arising thereon as compared to net book value amounting to Rs.468.73 lacs was credited to Revaluation Reserve.

b) Total depreciation for the year is Rs. 1,25,73,117 /- (Previous year Rs. 67,07,372/-), out of this the extent of depreciation charged on the write up on account of revaluation amounting to Rs. 5,28,310/ - (Previous year Rs. 5,33,454/-) has been recouped from Revaluation Reserve and the balance of Rs. 1,20,44,807/- (Previous year Rs. 61,73,918/-) is charged to the Statement of Profit and Loss.

5. The Company is engaged in the manufacturing and sale of hydraulic press machine and related equipments, which as per the Accounting Standard AS-17 is considered the only reportable business segment. The geographical segment is not relevant as exports are insignificant.

6. In accordance with the provisions of Accounting Standard on Impairment of Assets (AS 28), the management has made an assessment of assets in use and considering the business prospects related thereto, no provision is considered necessary on account of impairment of Assets.

7. Stores consumed in the current year and previous year is 100% indigenous.

8. The estimated amount of contracts remaining to be excuted on capital account not provided for amounts to Rs. Nil (P.Y. Rs. 8,34,000/-) (net of advance)

9. Warranty expenses on rectification work are accounted for on natural heads as and when incurred & charged to provision on year end. Warranty expenses include Rs. Nil/- (P.Y. Rs. 34,84,549/-) on account of free supplies of materials under warranty period.

10. Disclosures pursuant to Accounting Standards AS - 29 "Provisions, Contingent Liabilities and Contingent Assets"

(Figures in Rs.)

Particulars Balance as at Additions Amount paid/ Balance 01/04/2013 during the reversed/ as at year used during 31/03/2014 the year

Provision for Liquidated Damages - 2,15,69,891 2,15,69,891 -

Provision for Warranty Claims 9,01,148 - 1,85,231 7,15,917

11. Previous period figures have been recast/restated wherever necessary.

12. The company had issued 3,40,000 Equity Shares of Rs. 10/- each at a premium of Rs. 50/- per share on preferential basis to Promoters and an Independent Investor aggreagting to Rs. 204 lakhs during the year. The funds raised on preferential basis has been utilised for repayment of unsecured loans and redemption of preference shares.


Mar 31, 2013

A) The overall expected rate of return on assets is based on the expectation of the average long term rate of return expected on investments of the Fund during the estimated term of the obligations.

b) The Actual Return on Plan Assets is as follows (Rs.) 13,76,969 (10,72,645)

The estimates of future salary increases considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors.

c) Retirement age 58 years or 70 years if extension is given

(1.1) Related party disclosures (where transactions have taken place).

i Key Management personnel:

Shri Madan Mohan Mohta

Shri Anirudh Mohta

ii Relatives of Key management personnel:

Smt. Urmila Devi Mohta

iii Enterprises where key management personnel have significant influence:

U. D. Finn vest Pvt Ltd

Mohta Capital Pvt Ltd

Bemco Precitech Pvt Ltd

U.D.Polyproducts Pvt Ltd

Related party relationship in terms of AS-18 - Related party Disclosures have been certified by the management and relied upon by the Auditors. There are no related parties where control exists in terms of AS-18.

iv In respect of above parties, there is no provision for doubtful debts as at year end and no amount has been written off or written back during the year in respect or debts due rrom / to tnem.

v The following related party transactions were carried out during the year.

(1.2) a) Land, Building, Plant and Machinery, Office equipment and major portion of other fixed assets acquired before 4th October 1999 were revalued on the basis of the valuation of these assets carried out by a firm of registered valuer. According to the Valuer''s Report these fixed assets were valued on the following basis:

Land : Market value basis

Building : Present day cost less depreciation

Machinery : Market value basis, present cost less depreciation

The surplus arising thereon as compared to net book value amounting to Rs.468.73 lacs was credited to Revaluation Reserve.

b) Total depreciation for the year is Rs. 67,07,372/- (Previous year Rs. 93,76,051/-), out of this the extent of depreciation charged on the write up on account of revaluation amounting to Rs. 5,33,454/- (Previous year Rs. 5,37,118/-) has been recouped from Revaluation Reserve and the balance of Rs. 61,73,918 /- (Previous year Rs. 88,38,333/-) is charged to the Statement of Profit and Loss .

(1.3) The Company is engaged in the manufacturing and sale of hydraulic press machine and related equipments, which as per the Accounting Standard AS-17 is considered the only reportable business segment. The geographical segment is not relevant as exports are insignificant.

(1.4) In accordance with the provisions of Accounting Standard on Impairment of Assets (AS 28), the management has made an assessment of assets in use and considering the business prospects related thereto, no provision is considered necessary on account of impairment of Assets.

(1.5) a)Disclosure of the amount due to the Micro, Small & Medium Enterprises(on the basis of the information and records available with the management)

(1.6) The estimated amount of contracts remaining to be excuted on capital account not provided for amounts to Rs. 8,34,000/- (P.Y. Rs. NIL) (net o advance)

(1.7) Warranty expenses on rectification work are accounted for on natural heads as and when incurred & charged to provision on year end.Warranty expenses include Rs. 34,84,549/- (P.Y. Rs. 71,285/-) on account of free supplies of materials under warranty period.

(1.8) Previous period figures have been recast/restated wherever necessary.


Mar 31, 2012

(i) Terms/rights attached to Equity Shares

The Company has Equity Shares having par value of Rs. 10/- per share. Each holder of Equity Shares is entitled to one vote per share. Holders of Equity Shares are entitled to dividend, in proportion to the paid up amount, proposed by Board of Directors subject to approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of Equity Shares will be entitled to receive any of the remaining assets of the company, after distribution of all preferential amounts.

(II) Terms/rights attached to Preference Shares

(1) Rights/preferences attached to Preference Shares

The dividend on preference shares proposed by the Board of Directors is subject to approval of shareholders in the ensuing Annual General Meeting. Each holder of Preference Share is entitled to one vote per share only on resolutions placed before the Company which directly affect the rights attached to the said shares. In the event of liquidation of the Company before redemption of preference shares, the holders of preference shares will have priority over equity shares in the payment of dividend and repayment of capital but shall not be entitled to any surplus arising thereto.

Note:

(i) Term loan(s) are secured by charge on all Fixed assets except fixed assets otherwise exclusively charged. Amount of term loan due as on 31.03.2011 has been fully paid in the financial year 2011-2012. Interest @ BPLR of respective bank plus spread of 2% is chargeable on reducing balance method on the said term loan(s). As on 3.1-03-2011 seven installments are due for repayment amounting to Rs 752,626/-.

(ii) Finance Lease obligations are with respect to various hire purchase agreements entered into by the company for acquisition of motor cars from time to time. All such agreements are secured by hypothecation of respective motor car. Obligation under such agreement(s) is repayable in equated monthly installments. Interest thereon is payable as per respective agreement on reducing balance method varying between 10% per annum to 12.5% per annum. As on 31-03-2012 488 installments (Previous Year 657 installments) are due for repayment amounting to Rs 3,595,851/- including interest (Previous Year Rs 4,780,341/-)

Note

(i) Cash credit availed from banks is secured by hypothecation of inventory and receivables up to 120 days as primary security and equitable mortgage of factory land and building and personal guarantee of three directors of the Company as collateral security. Interest on cash credit is payable at floating rate being base rate of respective bank plus spread varying between 4.75% to 6.75%.

(ii) Raw Material Assistance Scheme availed from NSIC is secured by bank guarantee amounting to Rs 10,000,000/-. Interest is payable @ 11% per annum on amount outstanding. Additional interest at the rate of 2% percent per annum is payable if payment is not made within stipulated time limit.

(iii) Packing credit facility availed is secured by hypothecation of inventory for packing credit. Interest on packing credit is payable at floating rate being base rate of respective bank plus spread of 1.25%

(iv) As on 31-03-2012 the Cash Credit ("CC") limit maintained with Bank of Maharashtra ("BOM") and State Bank of India ("SBI") has been overdrawn by Rs 3,718,499/- and Rs 5,281,883/- respectively. CC limit with BOM and SBI has been overdrawn since 26-03-2012 and 25-02-2012 respectively and was cleared on 05- 05-2012 and 12-04-2012.

a) Retirement age 58 years or 70 years if extension is given (2.29)

a) Land, Building, Plant and Machinery, Office equipment and major portion of other fixed assets acquired before 4th October 1999 were revalued on the basis of the valuation of these assets carried out by a firm of registered valuer. According to the Valuer's Report these fixed assets were valued on the following basis:

Land : Market value basis

Building : Present day cost less depreciation

Machinery : Market value basis, present cost less depreciation The surplus arising thereon as compared to net book value amounting to Rs.468.73 lacs was credited to Revaluation Reserve

b) Total depreciation for the year is Rs. 9,376,051/- (Previous year Rs. 1,05,65,188/-), out of this the extent of depreciation charged on the write up on account of revaluation amounting to Rs.537,718/- (Previous year Rs. 5,37,118/-) has been recouped from Revaluation Reserve and the balance of Rs.8,838,333 /- (Previous year Rs. 1,00,28,070/-) is charged to the Profit and Loss Statement.

(1.1) The Company is engaged in the manufacturing and sale of hydraulic press machine and related equipments, which as per the Accounting Standard AS-17 is considered the only reportable business segment. The geographical segment is not relevant as exports are insignificant.

(1.2) In accordance with the provisions of Accounting Standard on Impairment of Assets (AS 28), the management has assessed assets in use and considering the business prospects related thereto, no provision is considered necessary on account of impairment of Assets.

(1.3) The financial statements have been prepared as per the format prescribed by Revised Schedule VI to the Companies Act, 1956 ('the schedule') issued by Ministry of Corporate Affairs vide Notification No. S.O. 447(E), dated 28-2-2011 [As Amended by Notification No.F.IMo. 2/6/2008-CL-V, dated 30-3-2011], Previous period figures have been recast/restated to confirm to the classification required by the Revised Schedule VI.


Mar 31, 2011

1. a) The Land, Building, Plant and Machinery, Office equipment and major portion of other fixed assets acquired before 4th October 1999 were revalued on the basis of the valuation of these assets carried out by a firm of registered valuer. According to the Valuers Report these fixed assets were valued on the following basis:

Land : Market value basis

Building : Present day cost less depreciation

Machinery Etc. : Market value basis, present cost less depreciation

The surplus arising thereon as compared to net book value amounting to Rs.468.73 lacs was credited to Revaluation Reserve.

b) Total depreciation for the year is Rs. 1,05,65,188/- (Previous year Rs. 1,00,33,272/-), out of this the extent of depreciation charged on the write up on account of revaluation amounting to Rs. 5,37,118/- (Previous year Rs. 5,29,972/-) has been recouped from Revaluation Reserve and the balance of Rs. 1,00,28,070/- (Previous year Rs. 95,03,299/-) is shown in the Profit and Loss account.

2. The Company is engaged in the manufacturing and sale of hydraulic press machine and related equipments, which as per the Accounting Standard AS-17 is considered the only reportable business segment. The geographical segment is not relevant as4. exports are insignificant.

3. EMPLOYEE BENEFITS

c. The overall expected rate of return on assets is based on the expectation of the average long term rate of return expected on investments of the Fund during the estimated term of the obligations.

d. The Actual Return on Plan Assets is as follows (Rs.)

Actual return on plan assets Rs. 9,34,273/-

f. Retirement age 58 years or 70 years if Extension is given.

g. The liability for gratuity has increased by Rs. 11.35 Lacs during the year due to increase in the statutory maximum limit of gratuity payable to an employee from Rs.3.50 lacs to Rs. 10.00 lacs vide Payment of Gratuity (Amendment) Act, 2010 w.e.f 24.05.2010.

4. Related party disclosures (where transactions have taken place).

i. Key Management personnel:

Shri Madan Mohan Mohta

Shri Anirudh Mohta

ii. Relatives of Key management personnel:

Smt. Urmila Devi Mohta

iii. Enterprises where key management personnel have significant influence:

U. D. Finnvest Pvt Ltd

Sri Ramachandra Enterprises Pvt Ltd

Mohta Capital Pvt Ltd

Bemco Precitech Pvt Ltd

U.D.Rolyproducts Pvt Ltd

Related party relationship in terms of AS-18 - Related party Disclosures have been certified by the management and relied upon by the Auditors. There are no related parties where control exists in terms of AS-18.

iv. In respect of above parties, there is no provision for doubtful debts as on 31st March 2011 (as on 31st March 2010 NIL/-) and no amount has been written off or written back during the year (previous year Rs. NIL/-) in respect of debts due from/to there

5. Deferred Tax Assets / Liability is recognized as per Accounting Standard - 22 "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India.

b. Deferred tax assets and liabilities are being offset as they relate to taxes on income levied by the same governing taxation laws.

6. Excise duty deducted from sales is the total excise duty collected during the year on sales. Excise duty on opening and closing stock of inventory has been deducted from respective stock values

7. In accordance with the provisions of Accounting Standard on Impairment of Assets (AS 28), the management has assessed assets in use and considering the business prospects related thereto, no provision is considered necessary on account of impairment of Assets.

8. (a) Company has written to the suppliers asking them to confirm their status under Micro, Small & Medium Enterprises Development Act 2006, however no intimation has been received from any of the suppliers.

9. Amount due within one year in respect of term loan and vehicle loan (including overdue amounts as at 31st March 2011) is Rs. 29.20 lacs (as on 31st March 2010 Rs. 66.67 Lacs).

10.

a. 11% 14,732 Cumulative Redeemable Preference Shares of Rs. 100/- each aggregating to Rs. 14,73,200/- are redeemable at the premium of Rs. 60/- each on 31st March 2012.

b. 11% 18,000 Cumulative Redeemable Preference Shares of Rs.100/- each aggregating to Rs. 18,00,000/- are redeemable at par on 31st March 2014.

c. 11% 20,000 Cumulative Redeemable Preference Shares of Rs.100/- each aggregating to Rs. 20,00,000/- are redeemable at par on 31st March 2020.

11. Balances in Sundry Debtors, Advance from Customers, Sundry Creditors, Loans and Advances are subject to confirmation from respective parties. In the opinion of the management, this shall not have any material impact on the financial statements.

12. In the opinion of the Board, Current Assets, Loans & Advances (other than those considered doubtful) have a value on realisation equal to the amounts at which they are rated in the Balance Sheet in the ordinary course of business.

13. Contingent Liabilities not provided for:

a) Unexpired Bank Guarantees Rs. 864.17 Lacs (As on 31.03.2010 Rs. 500.15 Lacs)

14. QUANTITATIVE & OTHER INFORMATION PURSUANT TO REQUIREMENTS OF PART II OF SCHEDULE VI TO THE COMPANIES ACT, 1956.

a. CAPACITY AND PRODUTION:

NOTE:

i. It is not practicable to indicate precisely the installed capacity of each item manufactured by the Company mentioned above, as the Companys plant has the capacity of producing various items, which is over-lapping for each product. The installed capacities, as indicated above are estimates as certified by the Management. Due to changes in prices, inflation, product-mix etc., the installed capacity has been enhanced suitably, wherever necessary.

ii. Figures in respect of actual production of Axial Piston Pumps include 57 nos. (42 nos.) used for captive consumption.

iii. No license is required for manufacture of any of the products of the Company.

iv. Installed capacity has been certified by the management & relied upon by the Auditors. being a technical matter.

d. Stores consumed in the current year and previous year is 100% indigenous.

15. Figures for the previous year have been regrouped, re-arranged wherever necessary.


Mar 31, 2010

1. a) The Land, Building, Plant and Machinery, Office equipment and major portion of other fixed assets acquired before 4th October 1999 were revalued on the basis of the valuation of these assets carried out by a firm of registered valuer. According to the Valuers Report these fixed assets were valued on the following basis:

Land : Market value basis

Building : Present day cost less depreciation

Machinery Etc. : Market value basis, present cost less depreciation

The surplus arising thereon as compared to net book value amounting to Rs.468.73 lacs was credited to Revaluation Reserve.

b) Total depreciation for the year is Rs. 1,00,33,272/- (Previous year Rs. 95,39,768/-), out of this the extent of depreciation charged on the write up on account of revaluation amounting to Rs. 5,29,972/- (Previous year Rs. 5,15,885/-) has been recouped from Revaluation Reserve and the balance of Rs. 95,03,299/- (Previous year Rs. 90,23,883/-) is shown in the Profit and Loss account.

2. The Company is engaged in the manufacturing and sale of hydraulic press machine and related equipments, which as per the Accounting Standard AS-17 is considered the only reportable business segment. The geographical segment is not relevant as exports are Nil.

3. EMPLOYEE BENEFITS

a. Post Retirement Benefits : Defined Contribution Plans

4. Related party disclosures (where transactions have taken place).

i. Key Management personnel:

Shri Madan Mohan Mohta

Shri Anirudh Mohta

ii. Relatives of Key management personnel:

Smt. Urmila Devi Mohta

iii. Enterprises where key management personnel have significant influence: U. D. Finn vest Pvt Ltd Sri Ramachandra Enterprises Pvt Ltd Mohta Capital Pvt Ltd Bemco Precitech Pvt Ltd U.D.Polyproducts Pvt Ltd

Related party relationship in terms of AS-18 - Related party Disclosures have been certified by the management and relied upon by the Auditors. There are no related parties where control exists in terms of AS-18.

iv. In respect of above parties, there is no provision for doubtful debts as on 31st March 2010 and no amount has been written off or written back during the year in respect of debts due from to them.

5. Deferred Tax Assets / Liability is recognized as per Accounting Standard - 22 "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India.

a. The break up of deferred tax assets and liabilities and reconciliation of current year charge/credit is as under

6. Excise duty deducted from sales is the total excise duty collected during the year on sales. Excise duty on opening and closing stock of inventory has been deducted from respective stock values

7. In accordance with the provisions of Accounting Standard on Impairment of Assets (AS 28), the management has assessed assets in use and considering the business prospects related thereto, no provision is considered necessary on account of impairment of Assets.

8. Amount due within one year in respect of term loan and vehicle loan (including overdue amounts as at 31st March 2010) is Rs. 66.67 lacs (as on 31st March 2009 Rs. 29.88 Lacs).

9. a. 11% 14,732 Cumulative Redeemable Preference Shares of Rs. 100/- each aggregating to Rs. 14,73,200/- are redeemable at the premium of Rs. 60/- each on 31st March 2012.

b. 11% 18,000 Cumulative Redeemable Preference Shares of Rs.100/- each aggregating to Rs. 18,00,000/- are redeemable at par on 31st March 2014.

c. 11% 20,000 Cumulative Redeemable Preference Shares of Rs.100/- each aggregating to Rs. 20,00,000/- are redeemable at par on 31st March 2020.

10. Balances in Sundry Debtors, Advance from Customers, Sundry Creditors, Loans and Advances are subject to confirmation from respective parties. In the opinion of the management, this shall not have any material impact on the financial statements.

11. In the opinion of the Board, Current Assets, Loans & Advances (other than those considered doubtful) have a value on realisation equal to the amounts at which they are stated in the Balance Sheet in the ordinary course of business.

12. Contingent Liabilities not provided for:

a) Claims against the Company not acknowledged as debts (ESIC) Rs. Nil (As on 31.03.2009 Rs. 1.55 Lacs).

b) Unexpired Bank Guarantees Rs. 500.15 Lacs (As on 31.03.2009 Rs. 610.29Lacs)

13. Figures for the previous year have been regrouped, re-arranged wherever necessary.

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