Mar 31, 2013
I) Account Reconciliation/Confirmation in respect of certain accounts
of Vendor''s have not been received and they are subject to
confirmations and reconciliation.The management is of the opinion that
adjustment, if any arising out of such reconciliation would not have
material effect on the financial statement of current year.
ii) Due to multiplicity of processes and items, it is not possible for
the Company to maintain record or movement of stock in process on the
shop floor on perpetual basis. The Company however, physically verifies
such stocks at the end of year and valuation is made on the basis of
such physical verification.
iii) The company is engaged in the manufacturing of Springs, which in
the context of Accounting Standard 17 is considered the only primary
business segment. However, secondary segment reporting is performed on
the basis of location of the customer. All the business assets of the
company are situated in India.
iv) Secured Loan
The Company is contesting in various Courts and Tribunals the
exaggerated claims by the assignees of the various Term Loans availed
between 1990 and 1992 from a consortium of 3 Financial Institutions
(FIs) namely ICICI, IDBI and IFCI. The Company availed Term Loans of Rs.
9,25,66,743 between 1990 and 1992 from the consortium, with ICICI as
the lead Institution. However the total amount so received was only Rs.
8,94,02,900 and the balance was adjusted against Interest payable. Due
to recession in the market and accumulated losses which were partly
occasioned by high interest rates and partly by time over-run and cost
over-run, and despite best efforts of the promoters and the management,
the Company turned into a sick company and was referred to the Board
for Industrial and Financial Reconstruction (BIFR) vide Reference Case
No. 197/97
A Rehabilitation Scheme/Package formulated and agreed upon by all the
FIs was approved by the BIFR on 27-12-1999 wherein the dues were
freshly determined and fixed as Rs. 1178 lakhs to be paid by 31 -03-2002.
The Net Worth of the Company turned positive and after considering the
Balance Sheet for the year ended on 31st March 2000, the BIFR closed
the reference case on 04-10-2001.
As per the package, one of the sources of finance to repay the FIs was
Working Capital facilities. Since the Company was under RBI''s
defaulters list, no banks were willing to extend the required working
capital limits. This was duly brought to the notice of the BIFR.
However, despite the best efforts, the Company could not arrange the
working capital limits thereby leading to delayed repayments to the
Financial Institutions.
In all, however, over the years, the Company made a total repayment of
Rs. 12,86,76,952 out which Rs. 11,01,88,705 was made under/after the BIFR
Scheme to the consortium members. The major portion of this was paid to
the lead institution, ICICI, as part of approval for the BIFR
Rehabilitation Scheme/Package. As the Company did not have the details
of amounts adjusted by and amongst members of the Consortium out of the
various repayments made by it and since, ICICI had filed a winding-up
petition in the High Court of Punjab & Haryana at Chandigarh on
08-10-2004 for recovery of Rs. 3,29,92,998, the Company, after October
2005, preferred not to make any further payments to the FIs since the
matter was sub-judice. In 2005, the RBI released a Scheme / Guidelines
for One-Time Settlement of loan accounts of Small and Medium Companies.
Since the Company fulfilled the criteria for availing the benefits
under the said Scheme, which is binding upon the Banks and FIs, the
Company re-calculated the payments made under the said Scheme, and
after adjusting the amounts already paid to the consortium members, the
dues towards the consortium came out to be Rs. 2,62,126 only. The
Company accordingly made an application under the OTS Scheme to the FIs
before the deadline of end March 2006 and offered to pay the said
amount of t 2,62,126.
However, the Financial Institutions did not settle the Company''s matter
under RBI''s OTS Guidelines and demanded unreasonably high amounts.
In the meanwhile, ICICI assigned its debts to Kotak Mahindra Bank Ltd.
(KMBL) on 25-04-2005, and both IFCI and IDBI assigned their debts to
Dhir & Dhir Asset Reconstruction and Securitisation Company Ltd. (now
known as Alchemist Assets Reconstruction Company Ltd. (AARCL)) on
05-03-2008 for Rs. 3,04,00,000 and 12-08-2008 for Rs. 4,11,50,000
respectively.
Thereafter, the assignees filed various Applications under section 19
of The Recovery of Debts Due to Banks and Financial Institutions Act,
1993 for recovery of debts as follows:
- In DRT-II, New Delhi by KMBL on 23-01-2007 for recovery of Rs.
4,72,06,961
- In DRT-I, New Delhi by AARCL on 11-12-2008 for recovery of Rs.
133,70,25,581 for dues calculated on the IFCI debts.
- In DRT-I, New Delhi by AARCL on 21-05-2012 for recovery of Rs.
93,15,19,000 for dues calculated on the IDBI debts. The Company has
also filed counter claims of more than Rs. 500 crores on both KMBL and
AARCL.
The final adjudication of the debt liability is yet to be completed.
AARCL (formerly D&DARSCL) also issued notice on 12-12-2008 under
Section 13(2) of The Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act (SARFAESI), 2002
demanding an amount of Rs. 144,46,60,272 against dues calculated on both
IFCI and IDBI debts. With an application filed on 29-07-2009 u/s 14 of
the SARFAESI Act with Dy. Commissioner, Rewari, they made an attempt to
take possession of the Company''s Assets. However, with timely actions,
the Company has obtained from the Hon''ble Punjab & Haryana High Court,
Chandigarh Stay Order against any coercive action, if any, taken under
SARFAESI Act for taking over the possession of the property in dispute.
The Hon''ble Punjab & Haryana High Court, Chandigarh had through interim
orders dated 21-01 -2011 and 11 -03-2011 directed the Company to
deposit a sum of X 5 crores in the High Court, which the Company
complied with.
As per further directions of the Hon''ble High Court vide order dated
09-08-2011 the sum of f 5 crores was appropriated as follows:
- Rs. 3 crores to Alchemist Assets Reconstruction Company Ltd., and
- Rs. 2 crores to Kotak Mahindra Bank Ltd.
Apart from the aforesaid payment of ^ 5 crores the assignees were also
given the liberty to recover further sum of Rs. 13.50 crores from the
sale of the extra land appurtenant to the factory premises. This had
further been re-affirmed by the Hon''ble Supreme Court with
modifications vide Orders dated 07-05-2012,30-07-2012 and 01-03-2013.
As per the directions of the Hon''ble Supreme Court on 01-03-2013, the
Company has given physical possession of a part of the property
comprising of approx. 10 acres of land to Alchemist Assets
Reconstruction Company Ltd. on 08-03-2013.
Since this was only an Interim Order and the amount is yet to be
adjudicated, no provision for differential Interest has been made by
the Company, nor has any effect been given in the Fixed Assets Schedule
of the Accounts. The matter is expected to come up for hearing for
final orders soon.
Also, in compliance to the directions given by Hon''ble Debts Recovery
Appellate Tribunal, Delhi (DRAT), the Company depos- ited with the
Debts Recovery Tribunal -1, Delhi (DRT-I) a sum of Rs. 51,80,619, which
was received from the District Revenue Offteer-cum-Competent Authority,
Rewari as land acquisition compensation for acquisition of approx. 0.69
acres of the Company''s land for widening of the Delhi-Jaipur NH-8
Highway.
However, the Company is of the view that after applying the Reserve
Bank of India One-Time Settlement (RBI OTS) Guidelines and after
adjusting amounts already paid, physical possession of part property
given and amount deposited with the DRT, the Company is of the opinion
that nothing will be due and payable by the Company to the
Lenders/Assignees. On the contrary amounts may become recoverable for
which claims have been filed by the Company.
v) RELATED PARTY INFORMATION:
(As identified by the Management and not verified by the Auditors.)
Relationships:
a) Key Managerial Personnel
Shri R.M. Bafna (Whole Time Director)
b) Promoter and Enterprise significantly influenced by key managerrerit
personnel and their relatives: i) Coventry Spring & Engineering Co.
Ltd.
ii) Bangalaxmi Steel Trading Co. Ltd. iii) Castleton Tea Company (P)
Ltd. Note: Related Party relationship on the basis of requirement of
Accounting Standard 18 (AS-18) as in (a), l(b)(i), l(b) (ii) &
l(b)(iii) above are certified by the management and relied upon by
Auditors.
vi) Disclosure as requirement by Accounting Standard-19 (AS-19) are as
follows:-
(a) Operating Leases:
The Company''s significant leasing arrangements are in respect of
residential flats, plant and machinery and equipments taken on lease.
The arrangements range is about 11 months and generally are renewable
by mutual consent or mutually agreeable terms. Under these
arrangements, generally refundable interest free deposits have been
given.
vii) Contingent Liabilities not provided for:
2012-2013 2011-2012
(i) Notice involving Excise Duty
demand against Appeal No.
E/3581/10-SM. Order dated 20.01.2011
amounting to Rs. 5,60,613/- pre deposited
Rs. 1,50Rs.000/- on dated
18.02.2011 410,613 410,613
(ii) Notice involving Excise duty
demand against Appeal No.
E/919/11-SM. Order dated 28.07.2011
amounting to Rs. 2,22,212/-
pre deposited Rs. 1,50,000/-on dated
12.08.2011 72,212
(iii) Outstanding Bank Guaranty 3,00,000
(iv) Claims under adjudication
[Refer Note No. 21 (B)(viii)]
* In DRT-II, New Delhi by KMBL
for recovery of 4,72,06,961 4,72,06,961
* In DRT-I, New Delhi by AARCLfor
recovery of dues calculated on
the IFCI debts 133,70,25,581 ,70,25,581
* In DRT-I, New Delhi by AARCL for
recovery of dues calculated on
the IDBI debts 93,15,19,000
(The Company has also filed counter claims of more than Rs. 500 crores on
both KMBL and AARCL)
viii) Previous year figures have been re-grouped, re-arranged wherever
considered necessary. As per our Report of even date attached
Mar 31, 2010
(Amount in Rupees)
1. CONTINGENT LIABILITIES NOT PROVIDED FOR:
As at 31st As at 31st
March, 2010 March, 2009
Estimated amount of contracts remaining
to be executed 39,48,500 39,48,500
on Capital account and not provided for
(net of Advance)
2. SECURED LOAN:
A) Term Loans from Financial Institutions are secured by first mortgage
ranking pari-passu of all the immovable properties both present and
future and a first charge by way of hypothecation of all the movables
(save & except book debts) including movable machinery, spares, tools &
accessories, present & future subject to prior charge to be created in
favour of the companys bankers on the stock of raw materials,
semi-finished and finished goods, consumable stock and such movables as
may be agreed by the lead institution for securing the working capital
requirements.
B) Lenders have at their option a right to convert the 20% of
outstanding amount into fully paid equity shares, in the event of
default by the Company in payment of principal and / or interest.
C) The Company, in 1990 availed Term Loans of Rs. 9,25,66,743 from a
consortium of three financial institutions namely ICICI, IDBI and IFCI,
with ICICI as the lead institution. Due to recession in the market and
accumulated losses which were partly occasioned by high interest rates
and partly by time over-run and cost over-run, and despite best efforts
of the promoters and the management, the Company turned into a sick
company and was referred to Board for Industrial and Financial
Reconstruction (BIFR) vide Reference Case No. 197/97.
A Rehabilitation Scheme/Package formulated and agreed upon by all the
FIs was approved by the BIFR on 27.12.1999 where under the dues were
freshly determined and fixed as Rs. 11,78,00,000. The net worth of the
Company turned positive and after considering the Balance Sheet for the
year ended on 31st March, 2000, the BIFR closed the reference case on
4.10.2001.
As per the package, one of the sources of finance to repay the FIs was
working capital facilities. Since the Company was under RBIs
defaulters list, no banks were willing to extend the required working
capital limits. This was duly brought to the notice of the BIFR.
However, despite the best efforts, the Company could not arrange the
working capital limits thereby leading to delayed repayments to the
Financial Institutions.
In all, however, over the years, the Company made a total repayment of
Rs. 12,84,13,109 out which Rs. 11,01,88,705 was made under/after the
BIFR Scheme to the consortium members. The major portion of this was
paid to the lead institution, ICICI. As the Company did not have the
details of amounts adjusted by and amongst members of the Consortium
out of the various repayments made by it and since, ICICI had filed a
winding-up petition in the High Court of Punjab & Haryana at Chandigarh
on 8.10.2004 for recovery of Rs.3,29,92,998. the Company, after October
2005, preferred not to make any further payments to the FIs since the
matter was sub-judice
D) In 2005, the RBI released a Scheme / Guidelines for One-Time
Settlement of loan accounts of Small and Medium Companies. Since our
Company fulfilled the criteria for availing the benefits under the said
Scheme, which is binding upon the banks and FIs, our Company
re-calculated the payments made under the said Scheme, and after
adjusting the amounts already paid to the consortium members, the dues
towards the consortium came out to be Rs.2,62,126/- only.
The Company accordingly made an application under the OTS Scheme to the
FIs before the deadline of end March 2006 and offered to pay the said
amount of Rs.2,62,126/-.
However, the Financial Institutions did not settle the Companys matter
under RBIs OTS Guidelines and demanded unreasonably high amounts
In the meanwhile ICICI assigned its debts to Kotak Mahindra Bank Ltd
(KMBL) on 25.04.2005. The Company was constrained to file Civil Suit
No. 1569/2006 in Delhi High Court in August 2006 against ICICI, IDBI,
IFCI and KMBL for declaring that RBI circulars in question are
applicable to the Settlement of NPA dues of the Company and that in
consequence thereto, the Company is liable to pay only Rs.2,62,126/- to
the consortium and to restrain each of the FIs from taking any coercive
steps for recovery against the Company till the judicial determination of
alleged dues by the Honble Court. The said suit was disposed with the liberty
to the Company to take all possible defences if and when any legal
proceedings are resorted by the FIs.
The Company then filed Inter-Pleader suit offering to deposit the said
amount in the court, which was disposed off on 10.05.2007, in view of
the filing of the application by KMBL on 23.01.2007 in the Debts
Recovery Tribunal-ll (DRT-II), New Delhi for recovery of Rs.
4,72,06,961. The said case is being con- tested by the Company and the
adjudication of dues is sub-judice.
E) In 2008, IFCI and IDBI are stated to have assigned their loan
accounts to Dhir & Dhir Asset Reconstruc- tion and Securitization
Company Ltd. (D&DARSCL) for Rs.3,04,00,000 and Rs. 4,11,50,000
respectively. D&DARSCL filed an application in DRT-I, Delhi for
recovery of Rs. 133,70,25,581, for the dues calculated , on the IFCI
debts. The same is being contested by the Company.
D&DARSCL also issued notice under Section 13(2) of SARFAESI Act
demanding an amount of Rs. 144,46,60,272 against dues calculated On
both IFCI and IDBI debts. The same was duly replied to by the Company,
raising vital questions of fact and law.
The winding-up petition which was filed by ICICI on 08.10.2004 in the
High Court of Punjab & Haryana at Chandgarh, was admitted on 26.05.2005
and the Company judge in his order dated 29.05.2009 directed for
advertisement to be issued as factum of admission which was published
on 22.07.2009. On 29.07.2009 D&DARSCL filed an application u/s 14 of
SARFAESI Act with Dy. Commissioner, Rewari in attempt to take
possession of the Companys assets.
However, the High Court of Punjab & Haryana at Chandigarh vide its
Order dated 21.8.2009 directed that, as an interim measure, the present
management of the Company shall not be dispossessed. The said order was
challenged by D&DARSCL (its name was subsequently changed to Alchemist
Asset Reconstruction Company Ltd.) in the Division Bench, but its
appeal was dismissed on 18.02.2010.
Meanwhite the DRT-II imposed a cost of Rs. 2000/- on Kotak Bank on
11.12.2009 for not filling their response to our reply and further
imposed a cost of Rs. 25000/- on 01.02.2010 on ICICI Bank for not
furnishing the details of the payments received by them from our
Company.
An application for directing the lenders to calculate and settle our
dues as per OtS guidelines of RBI as per the judgement of Supreme Court
in Sardar Associates, case has been filled in DRT-I which is pending.
The Company is hopeful that in view of Supreme Courts judgement, the
liability would be settled as per the RBI guidelines, by which our
liability would come to Rs. 2.62 lakhs only. Alchemist Assets
Reconstruction Company Limited (formerly known as Dhir & Dhir Assets
Reconstruc- tion and Securitization Company Limited) has sent letters
on 05.05.2010 to seven customers of the Company for stopping payments
of purchase consideration of goods purchased from the Company in breach
of the High Court order dated 21.08.2009. In reply to this the Company
has filed a contempt of Court petition on 27.05.2010. The matter is
still pending in the Court.
F) Loan from HDFC Bank Ltd., against hypothecation of motor cars.
G) Loan from Maruti Suzuki India Ltd. against hypothecation of motor
cars.
3. The Company has no process of sending confirmation to its
Creditors and Debtors. But the management confirms that the receivables
stated in the Balance Sheet is realizable & payable in the Balance Sheet
are payable to the amount stated *
A) The Company has paid Rs. 5,53,423/- (From 01 August, 09 to 31st
March, 10) towards remuneration including perquisites to whole time
director Mr. R.M. Bafna without prior permission of Central Government
in contravention of section 198, 309 & 349 under Companies Act 1956.
The Company is in process of applying for permission to Central
Government for post approval under these sections.
4. Deferred Tax: The details of the net Deferred Tax Asset of Rs.
88,52,497/- (Previous Year net Deferred Tax Assets of Rs. 1,09,68,108/-)
are as under:
5. Due to multiplicity of processes and items, it is not possible for
the Company to maintain record or movement of stock in process on the
shop floor on perpetual basis. The Company however, physically verifies
such stocks at the end of year and valuation is made on the basis of
such physical verification.
6. The company is engaged in the manufacturing of Springs, which in
the context of Accounting Standard 17 is considered the only primary
business segment. However, secondary segment reporting is performed on
the basis of location of the customer. All the business assets of the
company are situated in India
7. RELATED PARTY INFORMATION:
(As identified by the Management and not verified by the Auditors.)
I. Relationships:
a) Key Managerial Personnel
Shri R.M. Bafna (Whole Time Director)
b) Promoter and Enterprise significantly influenced by key management
personnel and their relatives:
i) Coventry Spring & Engineering Co, Ltd.
ii) Bangalaxmi Steel Trading Co. Ltd.
iii) Castleton Tea Company (P) Ltd. Note: Related Party relationship
on the basis of requirement of Accounting Standard 18 (AS-18) as in
l(a), l(b)(i),l(b)(ii) & l(b)(iii) above are certified by the
management and relied upon by Auditors.
II. Transactions with related parties
b) Defined benefit plan:
The Employees Gratuity Fund is not funded and managed by the Company.
The present value of , obligation is determined based on actuarial
valuation using the projected unit credit method. The obligation for
leave encashment is recognized in the same manner as gratuity.
8. In the absence of information about Sundry Creditors as regard to
the status /classification of the relevant enterprises into Micro,
Small and Medium Enterprises, information as required under
Notification No. G.S.R.719(E) dated 16.11.2007 issued by the
Department of Company affairs in respect of the total amount payable
and the amount of interest thereon payable during the year and at the
end of the year to them could not be ascertained.
9. The Company has odopted Accounting Standard-29 "Provisions,
Contingent Liabilities and Contingent Assets" Issued by The Institute
of Chartered Accountants of India with effect from 1st April 2004. The
relevant disclosure as per AS-29 is as follows:-
10. Disclosure as required by Accounting Standard-19 (AS-i9) are as
follows:- a) Operating Leases:
i) The Companys significant leasing arrangements are in respect of
residential flats, plant and ma- chinery and equipments taken on lease.
The arrangements range is about 11 months and generally are renewable
by mutual consent or mutually agreeable terms. Under these
arrangements, gener- ally refundable interest free deposits have been
given.
The future minimum lease payments under non-cancellable operating lease
of following periods are as under:-
ii) Commercial premises have been given on operating lease of Rs.
72,000/- 31st March, 2010 (Rs. 72,000/- 31st March 2009) having its
original cost on pro-rata basis of Rs. 54,599/- (31st March, 2009 Rs.
54,599/-) and accumulated depreciation of Rs. 17,519/- (31st March,
2009 Rs. 16,628/-) as at 31st March 2010. Depreciation for above assets
for the current year Rs. 890/- (31st March, 2009 Rs. 890/-). Under
these arrangements, no refundable security has been taken. b) Finance
Leases The Company has not entered into any material financial lease.
11. Previous year figures have been re-grouped, re-arranged wherever
considered necessary.