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Notes to Accounts of Cheviot Company Ltd.

Mar 31, 2016

1. Based on the valuation report by a Chartered Engineer, an external valuer, certain fixed assets of the Company''s DTA unit were revalued, on appraisal method as follows :

a) Freehold land was revalued in the years ended 31st March, 1997, 31st March, 2003 and 31st March, 2008 with last revalued amount at Rs. 6,257.10. Freehold land has further been revalued at Rs. 9,647.26 on 31st March, 2016, resulting in increase in the net book value of the said asset by Rs. 3,390.16 with a corresponding credit to the revaluation reserve account;

b) Buildings were revalued in the years ended 31st March, 1997 and 31st March, 2003 with last revalued amount at Rs. 4,165.09;

c) Plant & equipment and electrical installations were revalued in the years ended 31st March, 1998 and 31st March, 2003 with last revalued amount at Rs. 7,083.95 and Rs. 415.93 respectively.

2. Capital commitments not provided for at the date of this balance sheet are estimated at Rs. 893.86 (Previous year Rs. 1.27) in respect of tangible assets and Rs. 6.36 (Previous year Rs. 9.03) in respect of intangible assets after netting of advances paid.

3. Computer software comprising of Oracle ERP Software, considered material, has a carrying amount of Rs. 72.08 (Previous year Rs. 81.19), as on 31st March, 2016, to be amortized over the remaining period of seven years and eleven months.

4. Based on the information available with the Company, the principal amount due to Micro and Small Enterprises, as defined under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act, 2006) is Rs. Nil (Previous year Rs. Nil). Further, no interest during the year has been paid or payable under the terms of the MSMED Act, 2006.

5. Due to insolvency of a party, appearing under trade receivable, claim had been lodged with the Official Administrator, appointed by the Court, for outstanding amount of Euro 100612.56 and for related expenses incurred. The Company has received claim against said receivable to the extent of 80% of the original Invoice amount from ECGC Ltd. under its buyer exposure policy, credited under trade payable, with a contingency that out of the amount received from the party, 80% thereof is reimbursable to ECGC Ltd. Accordingly, provision for doubtful receivables, has been made in respect of outstanding amount as on 31st March, 2016, net of amount recovered from ECGC Ltd.

6. Total stores and spare parts consumed during the year are Rs. 2,310.43 (Previous year Rs. 1,869.21) and include Rs. 463.26 (Previous year Rs. 296.81) debited to relevant expense heads.

7. Expenditure towards corporate social responsibility (CSR) :

a) As per Section 135 of the Companies Act, 2013, gross amount required to be spent by the Company for expenditure towards CSR during the year is Rs. 72.78 (Previous year Rs. 74.64).

c) Amount spent during the year includes an amount of Rs. 40.00 (Previous year Rs. 65.00) contributed to Jan Priya Trust, a registered trust over which a key management person and his relatives have a significant influence.

8. Jute manufacturing cess, debited under other expenses in Note 27, includes increase / (decrease) in cess, on account of difference between the closing and opening stock of finished goods amounting to Rs. 4.89 [Previous year (Rs. 3.24)].

9. Derivative instruments and unhinged foreign currency exposure :

a) The Company uses forward exchange contracts to hedge its exposures in foreign currency. Forward exchange contracts for trade receivables outstanding as at balance sheet date is Rs. 540.84 (Previous year Rs. 72.97).

b) Forward cover for firm commitment in respect of future sales against export order as at balance sheet date is Rs. 1,369.96 (Previous year Rs. 148.39). The mark to market gain thereon amounting to Rs. 24.95 (Previous year Rs. 26.08) has not been accounted for due to prudent accounting policy.

c) Foreign currency exposure (net) at year end that are not hedged by derivative instruments or otherwise is Rs. 619.23 (Previous year Rs. 1,215.24).

10. ACCOUNTING OF GOVERNMENT GRANTS IN ACCORDANCE WITH AS-12

Government grants received by the Company comprise of capital incentive of Rs. 46.15 (Previous year Rs. 10.31), export incentives of Rs. 604.57 (Previous year Rs. 303.03) and other revenue grants of Rs. 8.36 (Previous year Rs. 2.88).

11. EMPLOYEE BENEFITS DISCLOSURES IN ACCORDANCE WITH AS-15 (REVISED)

i. Defined Contribution Plans

The Company has during the year recognized an expense of Rs. 573.65 (Previous year Rs. 513.62) towards defined contribution plans.

Out of the total contribution, made for employees'' provident fund, a sum of Rs. 78.01 (Previous year Rs. 74.60) has been made to Cheviot Company Limited Employees'' Provident Fund while the remaining contribution has been made to the provident fund plan operated by the Regional Provident Fund Commissioner. Further, considering the past track and fair value of the plan assets of the Trust, the Company does not envisage any shortfall in liability towards the interest payable by the Trust at the notified interest rate.

12. SEGMENT REPORTING IN ACCORDANCE WITH AS - 17

The Company is engaged in a single business segment i.e. manufacturing and sale of Jute goods. Hence, disclosure requirements as required by Accounting Standard - 17 are not applicable in respect of business segment. However, the geographical segments considered for disclosure are as under :

13. RELATED PARTY DISCLOSURE IN ACCORDANCE WITH AS - 18

A. Relationships

1. Controlling Group

i. Holding Company :

Harsh Investments Private Limited (HIPL)

ii. Others :

a. Abhyadoot Finance and Investments Private Limited (AFIPL)

b. Cheviot Agro Industries Private Limited (CAIPL)

c. Cheviot International Limited (CIL)

d. Mr. Harsh Vardhan Kanoria (Mr. H.V. Kanoria)

e. Mrs. Malati Kanoria (Wife of Mr. H.V. Kanoria)

f. Mr. Utkarsh Kanoria (Son of Mr. H.V. Kanoria)

2. Key Management Personnel

i. Mr. H. V. Kanoria

ii. Mr. N. K. Kejriwal

3. Relatives of Key Management Personnel

i. Mrs. Malati Kanoria (Wife of Mr. H.V. Kanoria)

ii. Mr. Utkarsh Kanoria (Son of Mr. H. V. Kanoria)

iii. Mrs. Bimla Kejriwal (Wife of Mr. N.K. Kejriwal)

4. Enterprises over which Key Management Personnel [specified in Para 2 (i) above] and relatives of Key Management Personnel [specified in Para 3 (i) & (ii) above] have significant influence.

i. Jan Priya Turst

ii. Bright & Shine Micro Products Pvt. Ltd. (BSMPPL)

14. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS IN ACCORDANCE WITH AS - 29

a. In accordance with AS - 29 - "Provisions, Contingent Liabilities and Contingent Assets", the Company as a prudent measure, has made following provisions in the books :

Provision for contingencies represents estimates made mainly for probable claims arising out of disputes pending with the authorities under various statutes. The probability and timing of the outflow with regard to these matters depend on the ultimate settlement / conclusion with the relevant authorities.

b. Contingent liabilities not provided for :

i. Sales Tax in dispute - Rs. 82.88 (Previous year Rs. 16.49) under appeal and not acknowledged as debt, against which a sum aggregating to Rs. 46.06 has been deposited till date (Previous year Rs. Nil).

ii. Income Tax in dispute - Rs. 162.68 (Previous year Rs. 236.27) under appeal and not acknowledged as debt.

iii. Wealth Tax in dispute - Rs. 222.75 (Previous year Rs. 222.75) under appeal and not acknowledged as debt.

iv. Excise Duty including penalty in dispute - Rs. 4,949.99 and interest thereon (amount not yet quantified) (Previous year Rs. 2,475.00 against show cause cum demand notice) under appeal before CESTAT, being barred by limitation as per legal opinion was not acknowledged as debt and against which Rs. 185.62 has been deposited (Previous year Rs. Nil).

v. Service Tax in dispute - Rs. 1.44 (Previous year Rs. 1.44) against show cause notice not acknowledged as debt, for which appropriate reply has been furnished and matter not yet adjudicated.

vi. Additional bonus liability for the previous year ended 31st March, 2015 amounting to Rs. 127.94 (Previous year Rs. Nil) not acknowledged by the Company on account of judicial pronouncements including interim stay granted against retrospective amendment of The Payment of Bonus Act, 1965, pending adjudication.

15. The Company is maintaining separate books of account for its different undertakings viz, DTA at Budge and EOU at Falta, SEZ. Effective from 1st April 2015, operations of the Company''s Captive Power Plant [CPP] unit have been combined with DTA unit since the CPP unit is not required to function as an independent unit due to completion of exemption period available under Section 80-IA of the Income Tax Act, 1961.

16. The Company had paid interim dividend of Rs. 17/- per ordinary share of the face value of Rs. 10/- each amounting to Rs. 766.91 during the year ended 31st March, 2016. No further final dividend was recommended by the Board of directors for the year ended 31st March, 2016 (Previous year - dividend of Rs. 17/- per ordinary share amounting to Rs. 766.91 was recommended).

17. The previous year''s figures have been re-grouped/re-classified to conform to the current year''s classification.


Mar 31, 2013

1. Based on the valuation report by a Chartered Engineer, an external valuer, the Company''s freehold land had been revalued on appraisal method at Rs. 6,257.10 on 31st March, 2008 resulting in increase in the net book value of the assets of Rs. 3,075.24 by a corresponding credit to revaluation reserve account.

2. Certain assets transferred from DTA unit to Falta SEZ unit, during the year, of gross block of Rs. 187.36 and accumulated depreciation of Rs. 177.32 have been shown as capital work in progress at Falta SEZ unit, as yet to be installed there.

3. Capital commitments not provided for at the date of this Balance Sheet are estimated at Rs. 751.61 (Previous year Rs. 116.32) after netting of advances paid.

4. Based on the information available with the Company, the principal amount due to Micro and Small Enterprises, as defined under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act, 2006) is Rs. Nil (Previous year Rs. Nil). Further, no interest during the year has been paid or payable under the terms of the MSMED Act, 2006.

5. Total stores and spare parts consumed during the year are Rs. 2,108.47 (Previous year Rs. 2,150.21) and include Rs. 216.74 (Previous year Rs. 251.22) debited to relevant expense heads.

6. Consignment sales expenses, disclosed in Note 28, comprise of cess, rent, rates and taxes, insurance, delivery charges, brokerage and commission and miscellaneous expenses, the amount of rent being Rs. Nil (Previous year Rs. 0.52), rates and taxes being Rs. Nil (Previous year Rs. 0.30) and insurance being Rs. Nil (Previous year Rs. 0.29).

7. Foreign currency exposure (net) at year end that are not hedged by derivative instruments or otherwise is Rs. 1,254.43 (Previous yearRs. 1,628.78).

8. EXCHANGE DIFFERENCE ON FOREIGN CURRENCY IN ACCORDANCE WITH AS - 11

Exchange difference (net), other than finance cost, amounting to Rs. 184.19 (Previous year Rs. 340.45) have been credited to respective revenue heads in the Statement of Profit and Loss.

9. ACCOUNTING OF GOVERNMENT GRANTS IN ACCORDANCE WITH AS - 12

Government grants received by the Company comprise of capital subsidy of Rs. 100.42 (Previous year Rs. 55.52), export incentives of Rs. 142.46 (Previous year Rs. 209.51) and other revenue grants of Rs. 69.36 (Previous year Rs. 72.79).

10. EMPLOYEE BENEFITS DISCLOSURES IN ACCORDANCE WITH AS - 15 (REVISED)

i. Defined Contribution Plans

The Company has during the year recognised an expense of Rs. 481.13 (Previous year Rs. 436.94) towards defined contribution plans.

Out of the total contribution, made for employees'' provident fund, a sum of Rs. 71.72 (Previous year Rs. 60.48) has been made to Cheviot Company Limited Employees'' Provident Fund while the remaining contribution has been made to the provident fund plan operated by the Regional Provident Fund Commissioner. Further, considering the past track and fair value of the plan assets of the Trust, the Company does not envisage any shortfall in liability towards the interest payable by the Trust at the notified interest rate.

11. SEGMENT REPORTING IN ACCORDANCE WITH AS - 17

The Company operates through two business segments namely, a) Jute goods and b) Captive power generation. However, Captive power generation is not a reportable segment in terms of the criteria laid down in paragraph 27 of the Accounting Standard -17, as the revenue/results/assets of this segment are not more than the threshold limit of 10% of the total segment revenue/results/assets and as such the disclosure requirements as required by Accounting Standard -17 are not applicable in respect of business segment. However, the geographical segments considered for disclosure are as under:

12. RELATED PARTY DISCLOSURE IN ACCORDANCE WITH AS - 18

A. Relationships

1. Controlling Group

i. Holding Company:

Harsh Investments Private Limited (HIPL) ii. Others:

a. Abhyadoot Finance and Investments Private Limited (AFIPL)

b. Cheviot Agro Industries Private Limited (CAIPL)

c. Cheviot International Limited (CIL)

d. Mr. Harsh Vardhan Kanoria (Mr. H. V. Kanoria)

e. Mrs. Malati Kanoria (Wife of Mr. H. V. Kanoria)

f. Mr. Utkarsh Kanoria (Son of Mr. H. V. Kanoria)

2. Associates

i. Jan Priya Trust ii. Shashvat Foundation

3. Key Management Personnel

i. Mr. H.V. Kanoria ii. Mr. N. K. Kejriwal

iii. Mr. D. Mazumdar iv. Mr. D. K. Mohta

v. Mr.M.K.Patni

4. Relative of Key Management Personnel

Mrs. Bimla Kejriwal (Wife of Mr. N. K. Kejriwal)

13. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS IN ACCORDANCE WITH AS - 29

a. In accordance with Accounting Standard 29 - "Provisions, Contingent Liabilities and Contingent Assets", the Company as a prudent measure, has made following provisions in the books :

Provision for contingencies represents estimates made mainly for probable claims arising out of disputes pending with the authorities under various statutes (i.e. Excise and Sales Tax). The probability and timing of the outflow with regard to these matters depend on the ultimate settlement / conclusion with the relevant authorities.

b. Contingent liabilities not provided for:

i. Sales Tax in dispute - Rs. 0.62 (Previous year Rs. 5.06) under appeal and not acknowledged as debt.

ii. Income Tax in dispute - Rs. 188.76 (Previous year Rs. 145.82) under appeal and not acknowledged as debt.

14. The Company is maintaining separate books of account for its different undertakings viz, DTA, Captive Power Plant at Budge Budge and EOU at Falta, SEZ.

15. The Board of Directors recommend payment of dividend of Rs. 15/- (Previous year Rs. 13/-) per Ordinary share of the face value of Rs. 10/- each for the year ended 31st March, 2013.

16. The previous year''s figures have been re-grouped / re-classified to conform to the current year''s classification.


Mar 31, 2012

1. Based on the valuation report by a Chartered Engineer, an external valuer, the Company's freehold land had been revalued on appraisal method at Rs 6,257.10 on 31st March, 2008 resulting in increase in the net book value of the assets of Rs 3,075.24 by a corresponding credit to revaluation reserve account.

2. Capital commitments not provided for at the date of this balance sheet are estimated at Rs 116.32 (Previous year Rs 521.12) after netting of advances paid.

3. Based on the information available with the Company, the principal amount due to Micro and Small Enterprises, as defined under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act, 2006) is Rs Nil (Previous year Rs Nil). Further, no interest during the year has been paid or payable under the terms of the MSMED Act, 2006.

4. Total stores and spare parts consumed during the year are Rs 2,150.21(Previous year Rs 1,943.04) and include Rs 251.22 (Previous year Rs 198.63) debited to relevant expense heads.

5. Consignment sales expenses, disclosed in Note 28, comprise of cess, rent, rates and taxes, insurance, delivery charges, brokerage and commission and miscellaneous expenses, the amount of rent being Rs 0.52 (Previous year Rs 0.12), rates and taxes being Rs 0.30 (Previous year Rs 3.67 ) and insurance being Rs 0.29 (Previous year Rs 0.29).

6. Forward cover for foreign currency receivables outstanding at year end is Rs Nil (Previous year Rs 94.88). Foreign currency exposure (net) at year end that are not hedged by derivative instruments or otherwise is Rs 1,628.78 (Previous year Rs 777.82).

7. EXCHANGE DIFFERENCE ON FOREIGN CURRENCY IN ACCORDANCE WITH AS - 11

Exchange difference (net), other than finance cost, amounting to Rs 340.45 (Previous year Rs 196.17) have been credited to respective revenue heads in the Statement of Profit and Loss. Such difference includes premium received amounting to Rs Nil (Previous year Rs 0.43) and exchange loss amounting to Rs Nil (Previous year Rs 0.16) in respect of outstanding forward contracts. Premium on outstanding forward exchange rate contracts to be recognised in the subsequent year amounts to Rs Nil (Previous year Rs 0.82).

8. ACCOUNTING OF GOVERNMENT GRANTS IN ACCORDANCE WITH AS - 12

Government grants received by the company comprise of capital subsidy of Rs 55.52 (Previous year Rs 27.21), export incentives of Rs 209.51 (Previous year Rs 499.77) and other revenue grants of Rs 72.79 (Previous year Rs 32.30).

9. EMPLOYEE BENEFITS DISCLOSURES IN ACCORDANCE WITH AS - 15 (REVISED)

i. Defined Contribution Plans

The Company has during the year recognised an expense of Rs 436.94 (Previous year Rs 399.55) towards defined contribution plans.

Out of the total contribution, made for employees' provident fund, a sum ofRs 60.48 (Previous year Rs 53.24) has been made to Cheviot Company Limited Employees' Provident Fund while the remaining contribution has been made to the provident fund plan operated by the Regional Provident Fund Commissioner. Further, considering the past track and fair value of the plan assets of the Trust, the Company does not envisage any shortfall in liability towards the interest payable by the Trust at the notified interest rate.

Expected rate of return on plan assets is based on the average long-term rate of return expected on investments of the funds during the estimated term of the obligations.

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.

a. General description of the defined plans :

i. Gratuity Plan

This is a funded defined benefit plan for qualifying employees. The Company makes contributions to the Cheviot Company Limited Employees' Gratuity Trust Fund. Gratuity is payable to all eligible employees of the Company on superannuation, death, permanent disablement and on resignation/termination of employment in terms of the Provisions of the Payment of Gratuity Act or as per the Company's rule, whichever is more beneficial to the employee.

ii. Leave Plan

Eligible employees can carry forward and encash leave on superannuation, death, permanent disablement and on resignation/termination of employment in accordance with the Company's scheme subject to a maximum of 45 days depending on the grade/category of employee.

10. SEGMENT REPORTING IN ACCORDANCE WITH AS - 17

The Company operates through two business segments namely, a) Jute goods and b) Captive power generation. However, Captive power generation is not a reportable segment in terms of the criteria laid down in paragraph 27 of the Accounting Standard -17, as the revenue/results/assets of this segment are not more than the threshold limit of 10% of the total segment revenue/results/assets and as such the disclosure requirements as required by Accounting Standard -17 are not applicable in respect of business segment. However, the geographical segments considered for disclosure are as under:

11. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS IN ACCORDANCE WITH AS - 29

a. In accordance with Accounting Standard 29 - "Provisions, Contingent Liabilities and Contingent Assets", the Company as a prudent measure, has made following provisions in the books :

Year ended Year ended

31st March, 2012 31stMarch,2011

PROVISIONFORCONTINGENCIES Indirect taxes Indirect taxes

Balance at the beginning of the year 396.94 163.48

Additional provision during the year 93.55 233.46

Provision used during the year 5.94 -

Provision reversed during the year 213.13 -

Balance at the end of the year 271.42 396.94

Provision for contingencies represents estimates made mainly for probable claims arising out of disputes pending with the authorities under various statutes (i.e. Excise and Sales Tax). The probability and timing of the outflow with regard to these matters depend on the ultimate settlement / conclusion with the relevant authorities.

b. Contingent liabilities not provided for:

i. Sales Tax in dispute - Rs 5.06 (Previous year Rs 6.58) under appeal and not acknowledged as debt.

ii. Income Tax in dispute - Rs 145.82 (Previous year Rs 236.65) pending revision and not acknowledged as debt.

iii. Employees' state insurance in dispute Rs Nil (Previous year Rs 14.38) being contested in view of liability foreseen of Rs Nil (Previous year Rs 5.26). Provision has thus been made of Rs Nil (Previous year Rs 5.26), and against which a sum of Rs Nil (Previous year Rs 5.20) has been deposited.

12. The Company is maintaining separate books of account for its different undertakings viz, DTA, Captive Power Plant at Budge Budge and EOU at Falta, SEZ.

13. The Board of Directors recommend payment of dividend of Rs 13/- (Previous year Rs 12/-) per Ordinary share of the face value of Rs 10/- each for the year ended 31st March, 2012.

14. In view of the revision to the Schedule VI as per notification issued by the Central Government, the financial statements for the year ended 31st March, 2012 have been prepared as per the requirements of the revised Schedule VI to the Companies Act, 1956. The previous year's figures have been accordingly re-grouped / re-classified to conform to the current year's classification.


Mar 31, 2011

1. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions involving substantial degree of estimation in measurement are recognised when there is present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised but are disclosed in the notes. Contingent assets are neither recognised nor disclosed in the financial statements.

2. Based on the valuation report by a Chartered Engineer, an external valuer, the Companys freehold land had been revalued on appraisal method at Rs. 6,257.10 on 31 st March, 2008 resulting in increase in the net book value of the assets ofRs. 3,075.24 by a corresponding credit to revaluation reserve account.

3. Certain assets transferred from DTA unit to Falta SEZ unit, in the previous year, of gross block ofRs. 187.07 and accumulated depreciation ofRs. 168.99 had been shown as capital work in progress at Falta SEZ unit but have been installed and put to use by such unit in the current year.

4. Capital commitments not provided for at the date of this Balance Sheet are estimated at Rs. 521.12 (Previous yearRs. 3.45) after netting of advances paid.

5. Based on the information available with the Company, the principal amount due to Micro and Small Enterprises, as defined under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act, 2006) is Rs. Nil (Previous yearRs. Nil).

Further, no interest during the year has been paid or payable under the terms of the MSMED Act, 2006.

6. Consignment sales expenses, disclosed in Schedule -17, comprise of cess, rent, rates and taxes, insurance, delivery charges, brokerage & commission and miscellaneous expenses, the amount of brokerage and commission being Rs. 9.25 (Previous yearRs. 3.91).

7. Total stores and spare parts consumed during the year are Rs. 1,943.04 (Previous year Rs. 1,317.37) and include Rs. 198.63 (Previous year Rs. 167.48) debited to relevant expense heads.

8. Government grants received by the Company comprise of capital subsidy of Rs. 27.21 (Previous year Rs. 43.62), export incentives of Rs. 499.77 (Previous year Rs. 188.27) and other revenue grants of Rs. 32.30 (Previous yearRs. Nil).

9. Fixed assets amounting to Rs. Nil (Previous year Rs. 1.47) has been written off during the year as no longer usable.

10. Exchange difference (net) amounting to Rs. 196.17 (Previous year Rs. 11.86) have been credited to respective revenue heads in the Profit & Loss account. Such difference includes premium received amounting to Rs. 0.43 (Previous year Rs. Nil) and exchange loss amounting to Rs. 0.16 (Previous year Rs. Nil) in respect of outstanding forward contracts. Premium on outstanding forward exchange rate contracts to be recognised in the subsequent year amounts to Rs. 0.82 (Previous year Rs.Nil).

11. Disclosure pursuant to Accounting Standard -15 (Revised 2005)Employee Benefits:

i. Effective 1 st April, 2007, the Company has adopted Accounting Standard -15 (revised 2005) on "Employee Benefits".

ii. Defined Contribution Plans

The Company has during the year recognised an expense of Rs. 399.55 (Previous year Rs. 286.34) towards defined contribution plans.

Out of the total contribution, made for employees provident fund, a sum of Rs. 53.24 (Previous year Rs. 47.15) has been made to Cheviot Company Limited EmployeesProvident Fund while the remaining contribution has been made to the provident fund plan operated by the Regional Provident Fund Commissioner. Further, considering the past track and fair value of the plan assets of the Trust, the Company does not envisage any shortfall in liability towards the interest payable by the Trust at the notified interest rate.

Expected rate of return on plan assets is based on the average long term rate of return expected on investments of the funds during the estimated term of the obligations.

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.

g. General description of the defined plans : i. Gratuity plan

This is a funded defined benefit plan for qualifying employees. The Company makes contributions to the Cheviot Company Limited EmployeesGratuity Trust Fund. Gratuity is payable to all eligible employees of the Company on superannuation, death, permanent disablement and on resignation/termination of employment in terms of the Provisions of the Payment of Gratuity Act or as per the Companys rule, whichever is more beneficial to the employee.

ii. Leave plan

Eligible employees can carryforward and encash leave on superannuation, death, permanent disablement and on resignation/termination of employment in accordance with the Companys scheme subject to a maximum of 45 days depending on the grade/category of employee.

20. Segment reporting as per Accounting Standard -17 for the year ended 31 st March, 2011

The Company operates through two business segments namely Jute Goods and Captive Power Generation. However, Captive Power Generation is not a reportable segment in terms of the criteria laid down in paragraph 27 of the aforesaid Accounting Standard -17, as the revenue/results/assets of this segment are not more than the threshold limit of 10% of the total segment revenue/results/assets and as such the disclosure requirements as required by Accounting Standard -17 are not applicable in respect of business segment. However, the geographical segments considered for disclosure are as under:

21. Related Party Disclosures

Related party disclosures, as required by Accounting Standard -18 for the year ended 31st March, 2011 are as follows :

A. Relationships

1. Controlling Group

i. Holding Company

Harsh Investments Private Limited (HIPL)

ii. Others

a. Abhyadoot Finance & Investments Private Limited (AFIPL)

b. Cheviot Agro Industries Limited (CAIL)

c. Cheviot International Limited (CIL)

d. Mr. H. V. Kanoria

e. Mrs. Malati Kanoria (Wife of Mr. H. V. Kanoria)

f. Mr. Utkarsh Kanoria (Son of Mr. H. V. Kanoria)

2. Associates

i. Jan Priya Trust ii. Shashvat Foundation

3. Key Management Personnel

i. Mr. H.V. Kanoria ii. Mr. N. K. Kejriwal

iii. Mr. D. Mazumdar iv. Mr. D. K. Mohta

v. Mr. M. K. Patni

4. Relative of Key Management Personnel Mrs. Bimla Kejriwal (Wife of Mr. N. K. Kejriwal)

22. Derivative instruments outstanding :

a) Forward cover for foreign currency receivables outstanding at year end is Rs. 94.88 (Previous year Rs. Nil).

b) Foreign currency exposure (net) at year end that are not hedged by derivative instruments or otherwise is Rs. 1,214.09 (Previous year Rs. 783.21).

Provision for Contingencies represents estimates made mainly for probable claims arising out of disputes pending with the authorities under various statutes (i.e. Excise and Sales Tax). The probability and timing of the outflow with regard to these matters depend on the ultimate settlement/conclusion with the relevant authorities.

b. Contingent Liabilities not provided for -

i. Sales tax in dispute Rs. 6.58 (Previous year Rs. 6.58) under appeal and not acknowledged as debt.

ii. Income tax in dispute Rs. 236.65 (Previous year Rs. 90.83) under appeal and not acknowledged as debt.

iii. Employees state insurance in dispute Rs. 14.38 (Previous year Rs. 49.37) and interest thereon (amount not yet quantified) being contested in view of liability foreseen of Rs. 5.26 (Previous yearRs. 2.66) only with interest thereon of Rs. Nil (Previous year Rs. 0.16). Provision has thus been made of Rs. 5.26 (Previous year Rs. 2.82), and against which a sum of Rs. 5.20 (Previous year Rs. 1.50) has been deposited.

iv. Counter guarantees for bonds executed by State Bank of India - Rs. 306.16 (Previous year Rs. 216.86).

26. The Company is maintaining separate books of account for its different undertakings viz, DTA, Captive Power Plant at Budge Budge and EOU at Falta, SEZ.

27. Previous years figures have been re-grouped/re-arranged wherever necessary to make them comparable.


Mar 31, 2010

1. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of piist events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised but are disclosed in the notes. Contingent assets are neither recognised nor disclosed in the financial statements.

2. CONTINGENT LIABILITIES NOT PROVIDED FOR

i. Sales tax in dispute - Rs. 6.58 (Previous year Rs. 14.90) under appeal and not acknowledged as debt.

ii. Excise duty including penalty in dispute - Rs. Nil (Previous year Rs. 1,078.35) and interest thereon Rs. Nil (Previous year amount not quantified) under appeal before CESTAT, of which Rs. Nil (Previous year Rs. 847.12) being barred by limitation as per legal opinion was not acknowledged as debt. (Refer note no.3 of this Schedule).

iii. Income tax in dispute - Rs. 90.83 (Previous year Rs. Nil) under appeal and not acknowledged as debt.

iv. Employeesstate insurance in dispute Rs. 49.37 (Previous year Rs. Nil) and interest thereon (amount not yet quantified) being contested in view of liability foreseen of Rs. 2.66 only with interest thereon of Rs. 0.16. Provision has thus been made of Rs. 2.82, against which a sum of Rs. 1.50 has been deposited.

v. Counter guarantees for bonds executed by State Bank of India - Rs. 216.86 (Previous year Rs. 226.39).

3. Provision in respect of excise duty including penalty in dispute of Rs. 231.23 along with interest thereon of Rs. 50.04 was made in the year ended 31.03.2008 against which an appeal was preferred before CESTAT. Such appeal has since been disposed off vide Honble CESTAT order dated 16.03.2010 and as per terms of the Order, provision of penalty on excise duty amounting to Rs. 115.61 and interest thereon of Rs. 25.02, being no longer payable has been written back in the accounts and included under the head related income for the current year and demand of Rs. 847.12, considered as contingent liability, being barred by limitation has been set aside. As a result, balance provision of Rs. 110.73 [net of cenvat credit allowed as per CESTAT order amounting to Rs. 4.88] and interest thereon of Rs. 52.75 [including Rs. 27.73 provided in the current year] upto 31.03.2010, remains fully provided in these accounts, representing the amount payable in terms of said CESTAT Order, against which an appeal is being filed before the Honble Supreme Court.

4. Based on the valuation report by a Chartered Engineer, an external valuer, the Companys Freehold land had been revalued on appraisal method at Rs. 6,257.10 on 31st March, 2008 resulting in increase in the net book value of the assets of Rs. 3,075.24 by a corresponding credit to revaluation reserve account.

5. i. Consequent to debonding of Export Oriented Unit (EOU), Budge Budge, all its assets have been transferred to Domestic Tariff Area (DTA) unit effective 1st April, 2009. Depreciation on fixed assets of such EOU was being provided on written down value method at applicable rates specified in Schedule XIV to the Companies Act, 1956. In view of depreciation on fixed assets of corresponding period at DTA unit being provided on straight line method, the basis of charging depreciation on the assets of EOU has been changed in the current year, with retrospective effect, from written down value method to straight line method in respect of assets added upto 31st March, 1999, at applicable rates, to be in conformity with the policy followed in DTA unit;

ii. In view of the change mentioned in (i) above, the quantum of depreciation provided in the books in respect of such assets pertaining to EOU upto 31 st March, 2009 is found to be provided in excess by Rs. 59.02 which has been written back in these accounts;

iii. Had the previous practice been followed, the depreciation charge in respect of such assets would have amounted to Rs. 6.50 as against actual charge of Rs. 6.97 in these accounts, and consequently the profits for the year would have been higher by Rs. 0.47.

6. Certain assets transferred from DTA unit to Falta SEZ unit, during the year, of gross block of Rs. 187.07 and accumulated depreciation of Rs. 168.99 have been shown as capital work in progress at Falta SEZ unit, as yet to be installed there.

7. Capital commitments not provided for at the date of this Balance Sheet are estimated at Rs. 3.45 (Previous year Rs. 1,873.85) after netting of advances paid.

8. Based on the information available with the company, the principal amount due to Micro and Small Enterprises, as defined under the Micro, Small, and Medium Enterprises Development Act, 2006 (MSMED Act, 2006) is Rs. Nil (Previous year Rs. Nil).

Further, no interest during the year has been paid or payable under the terms of the MSMED Act, 2006.

9. Consignment sales expenses, disclosed in Schedule-17, comprise of cess, rent, rates and taxes, insurance, delivery charges, brokerage & commission and miscellaneous expenses, the amount of brokerage and commission being Rs. 3.91 (Previous year Rs. 15.43).

10. Total stores and spare parts consumed during the year are Rs. 1,317.37 (Previous year Rs. 1,596.61) and include Rs. 167.48 (Previous year Rs. 208.51) debited to relevant expense heads.

11. Government grants received by the company comprise of capital subsidy of Rs. 43.62 (Previous year Rs. 19.50) and export incentives of Rs. 188.27 (Previous year Rs. 218.14).

12. Fixed Assets amounting to Rs. 1.47 (Previous year Rs. 6.49) has been written off during the year as no longer usable.

13. Remaining amortisation period of specialised software comprising of Oracle ERP software, considered material, is Nil (Previous year one year) of which the carrying amount is Rs. Nil (Previous year Rs. 2.38) as on 31.03.2010.

14. Exchange difference (net) amounting to Rs. 11.86 (Previous year Rs. 168.96) have been credited to respective revenue heads in the profit and loss account.

15. Disclosure pursuant to Accounting Standard (AS) - 15 (Revised 2005) "Employee Benefits"

i. Effective 1 st April, 2007, the company has adopted Accounting Standard 15 (revised 2005) on "Employee Benefits" issued by Institute of Chartered Accountants of India (ICAI).

ii. Defined Contribution Plans

The Company has durirtg the year recognised an expense of Rs. 286.34 (Previous year Rs. 317.60) towards defined contribution plans.

Out of the total contribution, made for employees provident fund, a sum of Rs. 47.15 (Previous year Rs. 59.73) has been made to Cheviot Company Limited Employees Provident Fund while the remaining contribution has been made to the provident fund plan operated by the Regional Provident Fund Commissioner. Further, considering the past track and fair value of the plan assets of the Trust, the Company does not envisage any shortfall in liability towards the interest payable by the Trust at the notified interest rate.

iii. Defined Benefit Plans

g. General description of the defined plans :

a. Gratuity plan

This is a funded defined benefit plan for qualifying employees. The Company makes contributions to the Cheviot Company Limited EmployeesGratuity Trust Fund. Gratuity is payable to all eligible employees of the Company on superannuation, death, permanent disablement and on resignation/termination of employment in terms of the Provisions of the Payment of Gratuity Act or as per the Companys rule, whichever is more beneficial to the employee.

b. Leave plan

Eligible employees can carry forward and encash leave on superannuation, death, permanent disablement and on resignation/termination of employment in accordance with the Companys scheme subject to a maximum of 45 days depending on the grade/category of employee.

16. Segment reporting as per Accounting Standard (AS) -17 issued by the ICAI for the year ended 31 st March, 2010

The Company operates through two business segments namely Jute Goods and Captive Power Generation. However, Capitve Power Generation is not a reportable segment in terms of the criteria laid down in paragraph 27 of the aforesaid AS-17, as the revenue / results / assets of this segment are not more than the threshold limit of 10% of the total segment revenue / results / assets and as such the disclosure requirements as required by AS-17 are not applicable in respect of business segment. However, the geographical segments considered for disclosure are as under:

17. Related Party Disclosures

Related party disclosures, as required by AS -18 as issued by the ICAI for the year ended 31 st March, 2010 are as follows: A. Relationships

1. Controlling Group

i. Holding Company

Harsh Investments Private Limited ii. Others

a. Abhyadoot Finance & Investments Private Limited

b. Cheviot Agro Industries Limited

c. Cheviot International Limited

d. Powertone Trading Co, Private Limited

e. Mr. H. V. Kanoria

f. Mrs. Malati Kanoria (Wife of Mr. H. V. Kanoria)

g. Master Utkarsh Kanoria (Son of Mr. H. V. Kanoria)

2. Associates

a. Jan Priya Trust

b. Shashvat Fondation

3. Key Management Personnel

a. Mr. H. V. Kanoria b. Mr. N. K. Kejriwal c. Mr. D. Majumdar d. Mr. D. K. Mohta e. Mr. P. K. Chatterjee f. Mr. P. C Kothari g. Mr. M. K. Patni h. Mr. S. Datta i. Mr. A. K. Das j. Mr. D. K. Bera

4. Relative of Key Management Personnel

Mrs. Bimla Kejriwal {Wife of Mr. N. K. Kejriwal)

18. The Company is maintaining separate books of account for its different undertakings viz., DTA, Captive Power Plant at Budge Budge and EOU at Falta SEZ.

19. Previous years figures have been re-grouped/re-arranged wherever necessary to make them comparable.