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Notes to Accounts of Blue Bird (India) Ltd.

Mar 31, 2010

Nature of Operations

Blue Bird (India) Limited ["The Company"] is engaged in the manufacturing of Student Books / Exercise Books, Printing and Publication of books, trading of paper and Commercial Printing etc. The Company is also engaged in construction activity.

1. Contracts remaining to be executed on capital account and not provided for Rs. 196.00 Lacs (Previous Year Rs. 519.00 Lacs)

2. Contingent Liability not provided for-

a) Bank Guarantees issued by banks on behalf of the Company Rs. 163.15 Lacs (Previous year Rs.163.15 lacs) for import of Plant & Machinery against licenses granted under EPCG Scheme for payment of Customs Duty.

b) Other Bank Guarantees - Rs. 46.90 Lacs (Previous Year Rs.48.10 lacs)

c) Guarantee Bonds issued in favour of the Customs Authorities amounting to Rs. 1524.00 lacs (Previous year Rs. 1,524.00 Lacs) for fulfillment of export obligations of USD 134.15 Lacs equivalent to Rs.6,123.13 Lacs for import of machinery against licenses granted under EPCG Scheme. The Company has to fulfill the said export obligation by August 06, 2016. The Company has fulfilled export obligations of USD 106.93 lacs upto March 31, 2010, however, the cancellation of the guarantee bonds to that extent is in process.

d) Fines/Penalties for default in payment of statutory dues (Amount not ascertainable).

e) Disputed Income Tax demands in respect of earlier years Rs. 22.06 Lacs (Previous Year Rs.22.06 lacs). The amount has been paid under protest against these demands.

3. Non convertible Debentures were to be redeemed in full latest by August 31, 2009. The debentures have not been redeemed.

4. Material Consumption is net of sale of raw material of Rs. 192.66 Lacs (Previous Year Nil)

5. Other liabilities include Rs. 2.01 Lacs (Previous year Rs.2.12 Lacs) being amounts refundable to unsuccessful! share applicants in the public issue and Rs. 3.50 Lacs (previous year Rs. 3.67Lacs) being dividend warrants not encashed by shareholders. These amounts are lying in separate bank accounts.

6. The Company, during the year, incurred cash loss. Also it could not recover its dues from the customers in time. This has resulted into a cash crunch faced by the Company. Consequently, the Company defaulted in repayment of interest and principal amounts to its lenders. The Company has also received notices under Section 433 and 434 of the Companies Act, 1956 from a lender and a few suppliers for non payment of their dues. The Company is in negotiations with these parties for reschedulement / extension of time. The Company is confident of settling the matter amicably.

The Company has submitted a Corporate Debt Restructuring (CDR) proposal to CDR cell of Reserve Bank of India, seeking extension of time for repayment of its borrowings and interest thereon and certain other concessions effective January 31, 2010. In the said proposal, payment of all dues has been considered to be made in a phased manner. The proposal has been admitted by the CDR cell subject to fulfillment of certain conditions. The Company is confident of compliance of all the requisite formalities and of getting the proposal approved from CDR cell. The viability of CDR proposal is assessed by an independent agency appointed by the lead bank of consortium.

In view of the foregoing, the accounts have been prepared on going concern basis.

7. Statement of Related Parties Disclosure

A. List of Related parties

Associate Companies N.S. Shares & Investments Private Limited

Ajinkya Hotelling Private Limited

Vastu Housing Finance Corporation Limited

Bhoomiputra Infrastructure Private Limited

Key Management Personnel Nitin Sontakke, Chairman & Managing Director

Apoorv Sontakke, Director Marketing ( Exports) Upto

August 31, 2009

David Kunder, Director Finance

Satish Bhagwat, Director Technical

Santosh Dhankude, Director Production

Relatives of Directors Vidya Sontakke

Apoorv Sontakke - after September 1, 2009

8. The Company has not given or taken any asset on financial lease as on Balance Sheet date. The Company has taken two manufacturing premises and commercial premises under cancelable operating leases. The lease agreements are usually renewable by mutual consent on mutually agreeable terms. The expenses in respect of operating leases have been accounted as Administrative Expenses.

9. In the opinion of the management, all the Current Assets, Loans and Advances are good, recoverable and approximately of the value stated, if realized in the ordinary course of the business.

10. Debtors and Creditors are subject to confirmation, reconciliation and consequential adjustments, if any. During the year, the lead bank of the consortium had appointed an independent firm of Chartered Accountants to assess the correctness and recoverability of the major customers covering substantial part of the dues of the Company. The said auditors have submitted their report.

On assessment of debtors, the management is of the opinion that it may be able to recover only some partial dues from some of its customers. Considering this eventuality, a provision for doubtful debts has been made on estimated basis.

11. Land (Stock in Trade) includes -

(i) Advances paid for purchase of land - Nil ( Previous year Rs.306.03 lacs) (ii) Right to purchase of land acquired under a memorandum of understanding - Nil (Previous Year - Rs. 67.37 )

12. Disclosure as per AS 15 (As per report received from LIC of India)

The Principal assumption in actuarial valuation of Gratuity (Funded) is as under Discount Rate 8.00%

Expected rate of return on assets 7.50%

Expected rate of future salary increase 5.00%

13. Previous years figures are regrouped / rearranged wherever necessary to conform with the current years presentation.

Oct 26, 12:00 am
Oct 26, 4:14 pm
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