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Notes to Accounts of Clutch Auto Ltd.

Mar 31, 2014

I) That the Faridabad unit & Alrnadabad unit are not working properly since 2C11 due to labor trouble and the Stocks being in the closed units are almost depleted the self life is over & n most of the cases the consignments lying in the unit are outdated or Damage or unbalanced, therefore the Company the valued The same at The only scrap realizable value.

II) Material for Navistar Inc, USA supplied to CAPCI (USA) on Navistar's consignment bas s have been reshipped to the Company in India due to refusal to lift material. Company has not been in a position to get The container released from port Author ties & also has not boon able to pay other related dues eg: Custom Duty, Warehousing and incidental changes to various authorities for which Company has made several requests to the bankers in various consortium meeting tc cooperate and release sanctioned limits. Company has not bean supported by the Banks financially is getting the Material released. The Banks have so far not cooperated, hence materials are still lying in the docks or abandoned in USAS may be auctioned by the concerned authorities in due course for recovery of the is dues. The Company is made to suffer duo to supportive approach and non-disbursement of necessary and essential payments

III) Company had incurred huge expenditure to the extent of Rs.o7 Crore (Approx) in developing Hi the Clutches with the help of leading Technology Institutions of the Country under the aegis of CSIS under the NIMTLI Program of Dept of Science & Technology. Govt of India. Shifting or existing Manufacturing Plant from Faridabad to B hi wadi, is likely to take time and requires resources to re-establish the Research facilities. hiring or Competent professionals, retrieval ordeal Tor research Work and sustain activities pursuant to theis Research & Development already done which has reached the stage of Lab to Market "he Company needs substantial funds to take benefit of Technology as developed so to reach production stage i.e. from Lab to Market. In the present scenario and considering unsupportive approach of Banks in releasing funds even for essential payments, it has become impossible to carry on research work to terminal point. The Research took 5 to 6 years and now product has to be established in the market. Due to financial constraints and in view of non-availability of funds. the expenditure on research had to abandon and realisable value is nil. . The Current state of capitalized value of Research & Development expenditure docs not reflect the true value of the Assets in the Balance Sheet as Readable Economic value is almost nil at the moment. In licht of above, the Board has decided to reflect the true state of affairs in the Balance sheet and thought it present to write off these expenses standing at Rs. Sfi.79 Crore.

IV) Settlement agreement has been entered into with the Workers on 08.07 2013 but amount of claim/ settlement is yet to bad. identified, matter is pending adjudication with Additional Chief Secretary. Labor & Employment. Govt of Haryana and other forums for the interpretation of the terms of the Agreement.

V) The Company has been showing debts outstanding against original Equipment Markets segment. These outstanding debts are on account of non- settlement of Warranty Claims forwanded by the Customers of earlier years since incorporate on of the Company. During the year, the Company has provided for Rs. 55.00.01,072' on account of Doubtful Debts in the Balance Sheet so far and Balance warranty claims yet to be determined to be determined & be provided for. Had the company provided the warranty claims in respect we preceding financial year, its loss would have increased and Sundry Debtors would have reduced correspondingly.

VI) Company has not made provision (or the Employee Benefit Expenses, which will be settled on cash basis as & when liabilities to which will arise.

VII) Notes to financial statements form an integrate part of financial statements.


Mar 31, 2013

I. SECURED LOANS

a) Nature Of Sec unity

i) Term Loan from RIICO

The company has availed project term simian of Rs. 3800.00 lacs from R11 CO i. e. E2S .951 acts against Land aid 2 81.25 lacs swap ping of term loan from Axis Bank & balance Rs. 2683.80 lacs for Duding and Plants Machinery stands. Disbursed Rs.3513.1S Lacs up to 31.03.2013 Secured by way of equitable mortgage/ hypothecation of fixed assets present Suture of the company sky pari-passu first charge fin terms of Inter creditor and Security Sharing Agreement: executed with DEC. Germany on 19.12.2008) & guaranteed by Managing Director.

ii) External Commercial Borrowing (ECB)form DEO, Germany

The Company has executed CCD Loan Agreements viz Loan Agreement-1 dot, 18,12.2012 for US $ 6 Mn, [FC Expenditure] and other Loan Agree merit- II at. 07.07.2003 for US $ 4 Month. {stands disbursed on 11.02.2003) [Rupee Expenditure] with M/s. Deutsche In fastenings- and En wick lungs Is haft shah, Facial Republic of Germany, for capacity ex pansies & modernization. The above Loan is secured by first ranking mortgage on the present and Tulare immovable assets and first ranking phone line on all present and future movable assets (other than current assets and stocks).

iii} Term Loan from ICICI Bank Ltd.

Secured by hypothecation of specific assets purchased there against and guaranteed by Managing Director Scoured by an exclusive charge by way of hypothecation on all movable properties under the Sponsored Research & Development program of World Bank (SPREAD) under the agreement dated Hot August, 2013.

iv} Term Loans from Reliquary Fives Ltd.

The Company has been san cottoned term loan of Rs. 350.001 lacs from Relegate Finevest: Limited for purchase of plant & Machinery out of which only Rs. 276.57 laus was disbursed. This term loan insecure by hypos healing of specific assets purchased cutoff term loan and further guaranteed by the Managing Directors Executive Directors of the Company.

v) Working Capital Loans from banks

Secured by hypothecation of stock of finished goods, semi finished goods- raw material, consumable stores and book debts of the company. The3e securities rank pari-passu in favors of venous banks viz. State Bark of Travancore. Canera Bank, Central Bank of India, State Bank of India, DBS Bank S Exit Bank. Secured by noncore charge by way of equitable mortgage of fixed assort* and guaranteed by Managing Director.

b) Non fund based limits

Assets charged with Bank also cover security for these limits.

II. UNSECUREDLOANS

a) Ministry of Science and Technology under the aegis of CSIR. has approved a Project under ''NMITL scheme on 30 03.2009 and had san stained unsecured soft loan of Rs. 1503.55 lacs @ 3% rate of interest abut of which Rs. 1493.35 lacs stands disbursed.

b) Lending from LIC Mutual Fund stands at Rs. 21.90 Crores Unsecured Redeemable Non-Convertible debentures of Rs. 10 Lacs each. This was pronounced surplus un objective, being a Haired from illegal accruals and other sources. In order to save the interest cost to profitability, lending was assigned, who took over the said debt and indemnifies repayment along with interest accruing. III.RE-LOCATION PROGRAMME

That company has acquired Lessee Hold Industrial Pot measuring SO.3''10 sq.mt from Rajasthan State industry Dove top ferment & Investment Corporation Ltd. (RIICO), Jaipur vide Plot No. SP2 - 173 & 174, at Industrial Area Kahrani (Bhiwadi Extn.) Dist, Alwar (Rajasthan) for relocation of its existing manufacturing unit.

V. CONTINGENT LIABILITIES

2013 2012 Rs. In lacs Re. In lacs

i) Claiming aunts the company not acknowledged as debts. 540.74 25.93

ii) Disputed Excise duty (including penalty of Rs. 215.63 lacs), under appeal before Cantonal Excised 421.36 421.36

Service Tax Appellate Tribunal (Rs.50 lata paid as deposit and aliens under loan a and advances Schedule -IX)

iii) Disputed Horn Director General of Foreign Trade (DG FT) To issue show case notice relating lu not 150.72 150.72 fill full export obligation

iv) income Tax Command notice issued by ACIT. Company not acknowledge as debts, appeal pending 107,00 41,85

before the Humble I TAT. Delhi v) Cherubs discounted with Banks - 48.76

vi) Guarantees given by Banter {excluding liabilities provided) 224.00 136.10

vii) The company is contingently I able for payment of interest on delayed payments made beyond 27.60 54.56

the appointed day during the financial year as well as on outstanding amount al the year end to Micro, Small, and Medium Enterprises under the provisions of Section 16 of The Small, and Medium Enterprises Development Act. 2006.

VI. CURRENT ASSETS, LOANS AND ADVANCES

i) Basis coquinas five particulars given below under item XIV is as under;

(1) Producing figures have-been ascertained on the basis of production report summaries. The opening and closing balances of finished goods are based on stock records and physically verified inventories. Sales quantities have been furnished or the basis of sales invoices.

(2) The quantities of different classes of raw materials and components consumed law heed cervix/eri by position a separate ledger, the opening Lilies & purchase ad deducing there from thing stock. The qualified for differed Learns have no: been ascertained from stock cams. The Company is still to traduce a procedure for correlation of materials costumed with production.

(3) Stock of semi - finished, raw material and finished goods includes slow moving and non-moving stock of Rs, 1.35 lacs (16.27lacs). In the opinion of the Management. reduction is considered necessary in the value of the stocks.

(O Semi -finished goods have been ascertained on the basis of physical verification,

(5) Fin is had Goods comprise of varied specifications and inclusion number of coin pennants. In "the absence of a scientific system of costing in vogue, value of closing stock is worked out, as in the past, by reducing from the selling price, an appropriate margin towards profit & selling expenses.

(6) In the opinion of the Board and to the best of their knowledge and belief, Value of realization of current assets, loans and advances in the ordinary course of business would not be less than the amount at which they are stated in the balance sheet. Balance of person apace units are subject to confirmation for the respective parties.

(7) The cal a new Kind Sundry Debtors and Sundry Creditors are subjecting information.

(8) During the financial year 2007-C8, the company incurred an amount of Rs. 31.&B Crore the development of product for Ws. Navistar Inc, Chicago, IL, USA. However, the same has neither capitalized Fortran''s formed the same to the Statement of Profit 8 Loss, as they had no recognized the product manufactured by the company and the case Is pending with the US Court.


Mar 31, 2012

I. SECURED LOANS

a) Nature Of Security

i) Term Loan from RIICO

The company has availed project terms loan of Rs. 3800.00 lacs from RIICO i.e. 828.95 lacs against Land and 281.25 lacs swapping of term loan from Axis Bank & balance Rs. 2689.80 lacs for building and Plant & Machinery stands. Disbursed Rs.3226.16 Lacs upto 31.03.2012. Secured by way of equitable mortgage / hypothecation of fixed assets present & future of the company by pari-passu first charge (in terms of Intercreditor and Security Sharing Agreement executed with DEG, Germany on 19.12.2008) & guaranteed by Managing Director and secured by pari-passu second charge on current assets present & future.

ii) External Commercial Borrowing (ECB) from DEG, Germany

The Company has executed ECB Loan Agreements viz Loan Agreement - I dt. 18.12.2007 for US $ 8 Mn. [FC Expenditure] and other Loan Agreement - II dt. 07.07.2008 for US $ 4 Mn. (stands disbursed on 11.02.2009) [Rupee Expenditure] with M/s. Deutsche Infestations- und Entwicklungsgesellschaft mbh, Federal Republic of Germany, for capacity expansion & modernisation. The above Loan is secured by first ranking mortgage on the present and future immovable assets and first ranking hypothecation on all present and future movable assets (other than current assets and stocks)

iii) Term Loans from Technology Development Board / ICICI Bank Ltd.

Secured by hypothecation of specific assets purchased there against and guaranteed by Managing Director. Secured by an exclusive charge by way of hypothecation on all movable properties under the Sponsored Research & Development program of World Bank (SPREAD) under the agreement dated 6th August, 2003.

iv) Term Loans from Religare Finvest Ltd.

The Company has been sanctioned term loan of Rs. 350.00 lacs from Religare Finvest Limited for purchase of Plant & Machinery out of which only Rs. 276.57 lacs was disbursed. This term loan is secured by hypothecation of specific assets purchased out of term loan and further guaranteed by the Managing Director & Executive Directors of the Company.

v) Working Capital Loans from banks

Secured by hypothecation of stock of finished goods, semi finished goods raw material, consumable stores and book debts of the company. These securities rank pari-passu in favour of various banks viz. State Bank of Travancore, Canara Bank, Central Bank of India, State Bank of India, DBS Bank & Exim Bank. Secured by second charge by way of equitable mortgage of fixed assets and guaranteed by Managing Director.

b) Non fund based limits

Assets charged with Bank also cover security for these limits.

II. UNSECURED LOANS

a) Ministry of Science and Technology under the aegis of CSIR, has approved a Project under 'NMITLI' scheme on 30.03.2008 and had sanctioned unsecured soft loan of Rs. 1503.55 lacs @ 3% rate of interest out of which Rs. 1493.35 lacs stands disbursed.

b) Lending from LIC Mutual Fund amounting to Rs. 21.70 Crores, secured by way of issuance of 217 Nos i.e.(during the year company redeemed 8 Nos of NCD at par) Unsecured Redeemable Non-Convertible debentures of Rs. 10 Lacs each. This was pronounced surplus on objective, being attained from internal accruals and other sources. In order to save the interest cost to profitability, lending was assigned, who took over the said debt and indemnified repayment along with interest accruing.

III. CAPITAL COMMITMENTS

Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.370.57 lacs (Rs. 746.57 lacs) relating to purchase of Plant & machinery.

IV. RE-LOCATION PROGRAMME

The company has acquired Lease Hold Industrial Plot measuring 50,340 sq.mt from Rajasthan State Industrial Development & Investment Corporation Ltd. (RIICO), Jaipur vide Plot No. SP2 - 173 & 174, at Industrial Area Kahrani (Bhiwadi Extn.) Distt, Alwar (Rajasthan) for relocation of its existing manufacturing unit.

V. CONTINGENT LIABILITIES 2012 2011

Rs. In lacs Rs. In lacs

i) Claims against the company not acknowledged as debts. 25.93 22.49

ii) Disputed Excise duty (including penalty of Rs. 215.68 lacs), under appeal before Central Excise & Serv- 421.36 421.36 ice Tax Appellate Tribunal (Rs.50 lacs paid as deposit and shown under loans and advances Schedule - IX )

iii) Disputed from Director General of Foreign Trade (DGFT) for issue show case notice relating to not fill 150.72 150.72 full export obligation

iv) Income Tax Demand notice issued by ACIT. Company not acknowledge as debts, appeal pending before 41.95 23.45 the CIT (appeal) - VI

v) Cheques discounted with Banks 48.76 123.73

vi) Guarantees given by Banks (excluding liabilities provided) 136.10 113.10

vii) The company is contingently liable for payment of interest on delayed payments made beyond the ap- 54.56 59.13 pointed day during the financial year as well as on outstanding amount at the year end to Micro, Small, and Medium Enterprises under the provisions of Section 16 of The Micro, Small, and Medium Enterprises Development Act, 2006.

VI. CURRENT ASSETS, LOANS AND ADVANCES

i) Basis of quantitative particulars given below under item XIV is as under;

(1) Production figures have been ascertained on the basis of production report summaries. The opening and closing balances of finished goods are based on stock records and physically verified inventories. Sales quantities have been furnished on the basis of sales invoices.

(2) The quantities of different classes of raw materials and components consumed have been derived by posting in a separate ledger, the opening quantities & purchases and deducting there from the closing stock. The quantities for different items have not been ascertained from stock cards. The Company is still to introduce a procedure for correlation of materials consumed with production.

(3) Stock of semi - finished, raw material and finished goods includes slow moving and non-moving stock of Rs.16.27 lacs (16.05lacs). In the opinion of the Management, no reduction is considered necessary in the value of the stocks.

(4) Semi - finished goods have been ascertained on the basis of physical verification.

(5) Finished Goods comprise of varied specifications and include a number of components. In the absence of a scientific system of costing in vogue, value of closing stock is worked out, as in the past, by reducing from the selling price, an appropriate margin towards profit & selling expenses.

(6) In the opinion of the Board and to the best of their knowledge and belief, Value of realization of current assets, loans and advances in the ordinary course of business would not be less than the amount at which they are stated in the balance sheet. Balance of personal accounts are subject to confirmation for the respective parties.

VII. Previous year figures have been regrouped & rearranged, wherever required to conform to the revised presentation of accounts.

Note: - Figures in brackets are in respect of previous year

VIII. Notes to financial statements form an integral part of financial statements.


Mar 31, 2010

1) SECURED LOANS

a) Nature Of Security

i) Term Loan from AXIS BANK

Secured by way of equitable mortgage / hypothecation of fixed assets present & future of the company by pari-passu first charge (in terms of Intercreditor and Security Sharing Agreement executed with DEG, Germany on 19.12.2008) & guaranteed by Managing Director and secured by pari- passu second charge on current assets present & future.

ii) External Commercial Borrowing (ECB) from DEG, Germany

The Company has executed ECB Loan Agreements viz Loan Agreement - I dt. 18.12.2007 for US $ 8 Mn. [FC Expenditure] and other Loan Agreement - II dt. 07.07.2008 for US $ 4 Mn. (stands disbursed on 11.02.2009) [Rupee Expenditure] with M/s. Deutsche Investitions- und Entwicklungsgesellschaft mbh, Federal Republic of Germany, for capacity expansion & modernisation. The above Loan is secured by first ranking mortgage on the present and future immovable assets and first ranking hypothecation on all present and future movable assets (other than current assets and stocks).

iii) Term Loans from Technology Development Board / ICICI Bank Ltd.

Secured by hypothecation of specific assets purchased there against and guaranteed by Managing Director.

Secured by an exclusive charge by way of hypothecation on all movable properties under the Sponsored Research & Development program of World Bank (SPREAD) under the agreement dated 6th August, 2003.

iv) Working Capital Loans from banks

Secured by hypothecation of stock of finished goods, semi finished goods raw material, consumable stores and book debts of the company. These securities rank pari-passu in favour of various banks viz. State Bank of Travancore, Canara Bank, Central Bank of India, State Bank of Inodre, Exim Bank & DBS Bank. Secured by second charge by way of equitable mortgage of fixed assets and guaranteed by Managing Director.

b) Non fund based limits

Assets charged with Bank also cover security for these limits.

2) UNSECURED LOANS

a) Ministry of Science and Technology under the aegis of CSIR, has approved a Project under NMITLI scheme on 30.03.2008 and had sanctioned unsecured soft loan of Rs. 1503.55 lacs @ 3% rate of interest out of which Rs. 1370 lacs stands disbursed .

b) Lending from LIC Mutual Fund amounting to Rs. 25 Crores, secured by way of issuance of 250 Nos Unsecured Redeemable Non-Convertible debentures of Rs. 10 Lacs each. This was pronounced surplus on objective, being attained from internal accruals and other sources. In order to save the interest cost to profitability, lending was assigned, who took over the said debt and indemnified repayment along with interest accruing.

3) CAPITAL COMMITMENTS

Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 2480.95 lacs (Rs. 760.91 lacs) relating to purchase of machinery.

4) EXPANSION PROGRAMME

The company has acquired Lease Hold Industrial Plot measuring 50,340 sq.mt from Rajasthan State Industrial Development & Investment Corporate Ltd. (RIICO), Jaipur vide Plot No. SP2 - 173 & 174, at Industrial Area Kahrani (Bhiwadi Extn.) Distt, Alwar (Rajasthan) for expansion of its existing manufacturing unit. The company has paid Rs. 3.90 crores as Advance out of total Rs.15.40 crores payable to RIICO over a period of 5 years as lease charges.

4) The expenditure on product development & training and sales promotion & brand development carried in the balance sheet as deferred revenue expenditure are being amortized equally over a period of 5 years. Consequently an amount of Rs. 6.72 lacs (Rs. 6.72 lacs) have been written off during the current year.

5) CONTINGENT LIABILITIES 2010 2009

Rs. (n lacs Rs. In lacs

i) Claims against the company not acknowledged as debts. 22.49 24.59

ii) Disputed Excise duty (including penalty of Rs. 215.68 lacs), under appeal before Central Excise & Service Tax Appellate Tribunal (Rs.50 lacs paid as deposit and shown under loans and advances Schedule -IX) 421.36 421.36

iii) Income Tax Demand notice issued by ACIT. Company not acknowledge as debts, appeal pending before the CIT (appeal)-VI 23.45 28.01

iv) Cheques discounted with Banks 158.35 79.82

v) Guarantees given by Banks (excluding liabilities provided) 100.76 105.22

vi) Technology Development Board (TDB) - unreconciled balance of outstanding interest overdue of short Term Loan from TDB. However the The company has requested waiver for the same on 04.05.2009. 19.45 19.45

vii)The company is contingently liable for payment of interest on delayed payment made beyond the appointed day during the financial year as well as on outstanding amount at the year end to Micro, Small, and Medium Enterprises under the provisions of Section 16 of The Micro, Small, and Medium Enterprises Development Act, 2006. 69.89 78.01

6) CURRENT ASSETS, LOANS AND ADVANCES

i) Basis of quantitative particulars given below under item 17 is as under;

(1) Production figures have been ascertained on the basis of production report summaries. The opening and closing balances of finished goods are based on stock records and physically verified inventories. Sales quantities have been furnished on the basis of sales invoices.

(2) The quantities of different classes of raw materials and components consumed have been derived by posting in a separate ledger, the opening quantities & purchases and deducting there from the closing stock. The quantities for different items have not been ascertained from stock cards. The Company is still to introduce a procedure for correlation of materials consumed with production.

(3) Stock of semi - finished, raw material and finished goods includes slow moving and non-moving stock of Rs. 23.08. lacs (20.49 lacs). In the opinion of the Management, no reduction is considered necessary in the value of the stocks.

(4) Semi - finished goods have been ascertained on the basis of physical verification.

(5) Finished Goods comprise of varied specifications and include a number of components. In the absence of a scientific system of costing in vogue, value of closing stock is worked out, as in the past, by reducing from the selling price, an appropriate margin towards profit & selling expenses.

(6) In the opinion of the Board and to the best of their knowledge and belief, Value of realization of current assets, loans and advances in the ordinary course of business would not be less than the amount at which they are stated in the balance sheet. Balance of personal accounts are subject to confirmation for the respective parties.

7. RELATED PARTY DISCLOSURES -AS-18 a. Related parties and their relationship

i. Key management personnel

- Mr. V.K. Mehta, Chairman & Managing Director (Promoter)

- Mr. Anuj Mehta, Executive Director (Relative)

- Mrs Pooja Kapur Director (Relative)

b) Transactions with the above parties in the ordinary course of business.

8. Previous year figures have been regrouped, wherever necessary to correspond to current year figures

9. Additional information pursuant to para 4C & 4D of para II of Schedule VI of the Companies Act, 1956.

a) Particulars of capacity, production, Stocks & Sales - Annexure attached

b) Particulars of Raw Materials & Components consumed.



 
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