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Notes to Accounts of Duncans Industries Ltd.

Sep 30, 2014

1. (i) In terms of the Scheme of rehabilitation sanctioned by BIFR (the scheme) 8.25% redeemable cumulative preference shares are redeemable in five annual installments commencing from March, 2017.

(ii) 435 Equity shares for which calls were in arrears, were forfeited in the previous year.

(iii) Equity share capital include 4200 equity shares amounting to Rs.0.42 lacs issued in terms to the Scheme against fractional entitlement of shares to a person authorised by the Board to hold these shares in trust and sell the same to distribute the proceeds to the shareholders against their fractional entitlements of shares.

iv) Terms and Rights attached to equity shares:

The company has one class of equity shares having par value of Rs. 10 per share. Each share holder is eligible for one vote per share held. The dividend proposed by the board of directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, In the event of liquidation the equity share holder are eligible to receive the remaining assets after discharging all liabilities of the Company, in proportion to their shareholding.

v) Terms and Rights attached to Redeemable Cumulative Preference Shares (RCPS) :

The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting. In the event of liquidation of the company before redemption of the RCPS, the holders of RCPS shall have priority over equity shareholders in the payment of dividend and repayment of capital.

2. (i) The cash credit from bank, term loans from bank and Arcil including non-fund based facilities retained for tea operation are secured / to be secured by first charge over the immoveable properties (both present and future), moveable fixed assets (both present and future) and current assets (both present and future) and secured by way of personal guarantee of one of the Director of the Company.

Further, term loans from bank is secured by pledge of shares of the Company held by other body corporates and one of the Director and collateral security of flat of another body corporate.

(ii) Term Loans from Bank:

a) Working Capital Term Loan of Rs. 2026.25 lacs (Rs.1466.30 lacs included in current maturities of long term borrowings) is repayable as: Rs. 530.50 lacs on 30th September, 2014, Rs. 655.80 lacs on 31st March, 2015, Rs. 280 lacs on 30th September, 2015, Rs.280 lacs on 31st, March 2016, Rs. 279.90 lacs on 30th September, 2016 and carries interest of 4.80% per annum above base rate of SBI at monthly rests.

b) Funded Interest Term Loan (interest free) of Rs.599 lacs (Rs.359.00 lacs included in current maturities of long term borrowings) is repayable in five equal half yearly installments of Rs.120 lacs each on 30th September and 31st March.

(iii) In terms of the BIFR order dated 22nd January, 2014, term loan from ARCIL of Rs.1137 lacs (Rs.758 lacs included in current maturities of long term borrowings) is repayable in three yearly installments of Rs.618 lacs (including interest of Rs.239 lacs) commencing from 30th September, 2014 (extended from 15th March, 2013). However, ARCIL has preferred an appeal before AAIFR against the extension granted to the Company for repayment of loan.

(iv) Current maturities of Long term borrowings include Rs.1029.50 lacs and interest accrued and due (shown under Note 5(b)) includes Rs.289.93 lacs which have fallen due for payment on 30th September, 2014 in terms (ii) & (iii) above.

(v) Current maturities of Long term borrowings has been disclosed under Other Current Liabilities (Refer Note 5(b)).

(vi) The amount payable to the secured lenders as One Time Settlement (OTS) in terms of the scheme has been deposited in Escrow with the SBI (the Monitoring Agency appointed by BIFR), as per the stipulations in the scheme. All the lenders excepting PICUP have accepted the payment and the charges and securities against the loan given by them have been released / yet to be released.

3. (i) Unsecured creditors of Rs.590.28 lacs (as on 30.9.2014 Rs.577.85 lacs) (Rs.381.09 lacs included in Current maturities of Other Long term Liabilities) are payable in three equal annual installments after a moratorium of one year from the date of sanction of the Scheme.

(ii) Unsecured advances from bodies corporate and 15% OCD of Rs.758.81 lacs (as on 30.9.2014 Rs.682.87 lacs) (Rs. 429.94 lacs included in Current maturities of Other Long term Liabilities) is repayable in three equal annual installments after a moratorium of one year from the date of sanction of the Scheme.

(iii) Current maturities of Other Long term Liabilities pertaining to (i) and (ii) has been disclosed under Other Current Liabilities (Refer Note 5(b)).

(iv) Amount payable for hire purchase loans is due for payment and will be adjusted against the subsidies available from Tea Board.

(v) The liability in respect of (ii) above is payable out of the funds provided by Kanpur Fertilizers and Cement Limited (KFCL) pursuant to the Scheme on transfer of Fertiliser Undertaking.

4. (i) Current maturities of Other Long term liabilities include Rs.361.33 lacs due against unsecured creditors and liabilities as given in Note 5(a)(i)&(ii)) above.

(ii) The amount of unclaimed refund warrants has been kept deposited in separate bank a/c shown under other bank balances.(Note 14)

(iii) Security deposits and advances includes Rs.4888.11 lacs (Previous Year Rs.3827.32 lacs) being advance financing against sale of tea.

(iv) The Company has sought confirmation from the suppliers confirming their status under "The Micro Small and Medium Enterprises Development Act, 2006" To the extent information is available with the Company, there are no suppliers covered under the said Act.

(v) Refer Note 28 also.

(vi) # Investments net of diminution of Rs. 29021 lacs (Previous Year Rs. 27843 lacs)

(vii) ## Market Quotations in respect of Non-Traded shares are not available since long. Therefore market values of these investments have not been stated.

(viii) During the year advance towards equity participation of Rs. 1163.94 lacs(Santipara Tea Company Ltd. Rs.853.78 lacs and Pentonville Software Ltd. Rs.310.15 lacs) and loans and deposits of Rs.14.06 lacs recoverable from Pentonville Software Ltd. have been converted into equity shares of the respective companies.Physical/demat shares have not been received.However, necessary formalities for issue of shares etc.is yet to be completed.

5. (i) Loans and deposits includes Rs.1780.80 lacs (Previous Year Rs.1721.47 lacs) outstanding from Santipaia Tea Company Ltd. (STCL). Considering the strategic involvement and consequential restructuring etc., no provision has been considered necessary in this respect.

(ii) Refer Note 28 also.

(iii) Loans and deposits include Rs.1685 lacs (Previous Year Rs.1685 lacs included in Long Term Loans and Advances) given to Andhra Cements Limited (ACL) in earlier years in terms of the scheme of rehabilitation of ACL is recoverable from ISG Traders Ltd.by March, 2015 in terms of the agreement in this respect.

(iv) Refer Note 28 also.

(vi) Negotiations in respect of wage rate for tea workers due for revision with effect from 1.4.2014 have not yet been concluded. Pending this, wages for the period from April 2014 to September 2014 has been recognized based on the rates prevailing till 31.3.2014.Impact of the revision, if any, for the said period, will be given effect to on finalization of the same.

(vii) Refer Note 27 also.

6. Related Party disclosures pursuant to Accounting Standard - 18. List of Related Parties with whom the Company had transaction:

(a) Subsidiaries

Dail Consultants Ltd (DCL), North India Fertiliser Ltd. (NIFL), Leyden Leasing and Financial Services Ltd (LLFSL), and Pentonville Software Ltd (PSL).

(b) Associate / Group Company

ISG Traders Limited (ISG),Santipara Tea Co Limited (STC) (w.e.f.28.03.2014)

(c) Key Management Personnel

Mr. G. P. Goenka, Wholetime Director, Mr. A. K. Goel, Wholetime Director (till 31.12.2013), Mr. S. P. Gupta, Executive Director (till 15.05.2012). Mr. M.H.Chinoy, Wholetime Director, (w.e.f. 01.01.2014) and Mr. Rajesh Sharma, Managing Director (w.e.f.27.09.2014).

7. Notes:

(i) Previous year figures are given in brackets.

(ii) The above Related Party Information is as identified by the Management and relied upon by the auditors.

(iii) In respect of the above parties, there is provision for doubtful debts of Rs. 103.72 lacs as on 30.09.2014 (Previous Year. Rs. 427.94 lacs) out of which Rs. Nil (Previous Year. Rs. Nil) has been written back during the year.

(iv) Reference is invited to Note 10(a) and (b).

Defined Benefit Scheme

The employee''s gratuity, superannuation and provident fund (other than those covered and contributed under Employee''s Provident Fund Organization) Scheme are defined benefit plans. The present value of obligations are determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for Leave Encashment is recognized in the same manner as gratuity.

8. Notes:

i) Assumptions relating to future salary increases, attrition, interest rate for discount & overall expected rate of return on Assets have been considered based on relevant economic factors such as inflation, market growth & other factors applicable to the year/period over which the obligation is expected to be settled.

ii) The Guidance issued by the Accounting Standard Board (ASB) on implementation AS-15, Employees benefit (Revised 2005) states that provident funds set up by employers which requires interest shortfall to be met by the employer, needs to be treated as defined benefit plan. The fund does not have any unprovided existing deficit or interest shortfall.

(c) During the year gratuity trust vide ltr dt 10.07.2014 from the office of the Commissioner of Income Tax, Kolkata-II, Kolkata has been dissolved and proceeds of Rs.809 lacs from the same has been shown as recoverable from Fund to be utilized for repayment of gratuity liability shown as above.

(d) The scheme for superannuation benefit to employees has ceased with effect from 31st July, 2003 and the liability existing as on that date is repayable to the eligible employees at specified return of 5% per annum on their retirement. The scheme being presently not in operation and the company''s liability now being restricted to the shortfall in interest thereon if any, the liability in this respect as determined by the actuary is charged to profit and loss account as employee benefit on year to year basis.

9. (a) The Company having negative networth, is a sick industrial company under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). The Rehabilitation Scheme (the Scheme) sanctioned by the Board for Industrial and Financial Reconstruction (BIFR) is under implementation. Considering this and pending ameliorative steps and prospects thereof, the accounts of the Company has been prepared on going concern basis.

(b) Rehabilitation measures approved by the BIFR include reduction of Equity Share Capital and 8.25% Redeemable Cumulative Preference Share Capital by 60 % amounting to Rs.3763.36 lacs and consolidation thereof at their original face value, reduction of 0.001 % Redeemable Cumulative Preference Share Capital by Rs.16598.33 lacs, issuance of further equity capital to the promoters of Rs.4221 lacs including conversion of existing unsecured loans of Rs.3055.50 lacs from them into equity post reduction and consolidation of the existing equity share capital and transfer of capital redemption reserve amounting to Rs.1500 lacs to the Surplus of the Company.

(c) Post reduction and consolidation as required in terms of the scheme, equity Shares of Rs.10/- each amounting to Rs. 3947 lacs (including Rs.525 lacs during the year) have been issued to the promoters / associates and issuance of further equity shares on receipt of balance contribution to the extent of Rs.274 lacs from the promoters / associates is under implementation.

10. In respect of dues of provident fund, during the year the authorities have granted permission for payment of dues of Rs.2086.23 lacs (As on 30.09.2014 Rs.1908.83)(Rs.1535.70 lacs included in other long term liabilities) in 72 equal monthly installments. However, the necessary application for grant of waiver of the penal interest and damages is pending before the relevant authority.

11. In respect of levy of salami by the Government of West Bengal on renewal of lease of tea estates in certain circumstances and pursuant to the decision of Hon''ble High Court at Calcutta in a similar matter, the Company has preferred an appeal against the said imposition before the appropriate authority. Accordingly, pending finalization of the matter, Rs.811.67 lacs (Previous year Rs. 811.67 lacs) has not been provided for in this respect which would be payable in equal annual installments over the lease period i.e. 30 years. However, this is not likely to have revenue impact, since the same will be capitalized to the cost of land as and when paid by the Company.

12. Remuneration amounting to Rs.719.30 lacs (including Rs.196.68 lacs for the twelve months period) paid to the current Managing Director / Wholetime Directors and ex-wholetime director / ex-Managing Directors / ex Executive Director are pending approval of Central Government.

13. Certain debit and credit balances including advances, trade receivables, trade payables and other liabilities are subject to confirmation and reconciliation thereof.

14. The Company operates in single business segment of Tea in India and therefore disclosure requirements of AS-17 on Segment Reporting is not applicable.

15. In accordance with Accounting Standard 22 ''Accounting for taxes on Income'', the company has accounted for deferred tax. The company has significant amount of carried forward losses and depreciation under the Income Tax Act, 1961. However, as a matter of prudence deferred tax asset has been recognised to the extent of deferred tax liability.

16. Contingent liabilities and commitments to the extent not provided for :

(Rs. In lacs)

Year Ended 30th Period Ended 30th September, 2014 September, 2013

a) Guarantees (excluding since released) given by the Company on behalf of bodies corporate

Limit 860.00* 860.00*

Amount Outstanding 860.00* 860.00*

b) Guarantees given by Bank on behalf of the Company 500.89 347.71

c) Cumulative Dividend on Preference Shanes 783.75 752.40

d) Claims against the Company not acknowledged as debts (to the extent ascertainable from available records)

i) Income / Agriculture Tax matters pending in appeal at various stages (other than 88.83 88.83 matters awaiting quantification by assessing authorities and/ or with favourable appellate decisions for earlier years, against which further appeals are pending)

ii) Sales Tax matters under appeal (to the extent ascertained) 61.05 252.22

e) A show cause notice issued in 1986 in respect of erstwhile tobacco division taken up for hearing by the adjudicator. The management is of the view that in accordance with the Scheme of Arrangement approved Not Not by Calcutta High Court, ascertainable ascertainable liabilities relating to Excise stood vested from 1st April, 1984 to New Tobacco Company Ltd. (NTC) pursuant to transfer of tobacco business to the said NTC effective that date.

Future cash out flow in respect of d) & e) is dependent upon the outcome of judgments/decisions.

*The above figure does not include interest payable in respect of a body corporate as it is not ascertainable.

16.1 Estimated value of Capital Commitments (Net of Advances Rs.Nil Previous Year Rs. 7.51 lacs) - Rs.Nil (Previous Year Rs.68.19 lacs).

16.2 Expenditure in Foreign Currency on account of:

* Foreign Travel Rs.23.16 lacs (Previous Year Rs.9.59 lacs).

17.(a) Figures for the period ended 30th September, 2013 relates to the period of 18 months and therefore, these are not comparable with figures of current year.

(b) The previous period figures have been reclassified / regrouped / rearranged to make it comparable with the current year''s figures.

1. No part of Subsidiaries'' Profits / (Losses) has been dealt with in the Company''s Accouts.

2. There has been no change in the Company''s interest in the Subsidiaries between the end of their financial years and that of the Company.

3. Material changes in respect of Fixed Assets etc of Subsidiary Companies between the close of their financial years and that of the Company - Not Applicable.


Sep 30, 2013

1. (a) Exceptional item for the year ended 31st March, 2012 represents income arising on adjustments consequent to the settlement of loans and liabilities (other than those pertaining to fertilizer undertaking demerged to Kanpur Fertilizers and Cement Ltd. (KFCL)) and net of charges on account of diminution in value of Investments.

(b) Profit from Discontinuing operation for the year ended 31st March, 2012 represents income arising on adjustments consequent to the settlement of loans and liabilities pertaining to fertilizer undertaking demerged to KFCL.

2. Prior period adjustment represents:

a. Subsidy on DAP, Interest and Other charges pertaining to fertilizer undertaking transferred to KFCL amounting to Rs. 128.29 lacs.

b. Rs. 33.23 lacs being reversal on account of interest on Provident Fund.

c. Rs. 4.94 lacs being reversal on account of other liabilities.

3 .1 Related Party disclosures pursuant to Accounting Standard – 18. List of Related Parties with whom the Company had transaction:

(a) Subsidiaries

Dail Consultants Ltd (DCL), North India Fertiliser Ltd. (NIFL), Leyden Leasing and Financial Services Ltd (LLFSL) , and Pentonville Software Ltd (PSL).

(b) Associate/Group Company

ISG Traders Limited (ISG)

(c) Key Management Personnel

Mr. G. P. Goenka, Wholetime Director, Mr. A. K. Goel, Wholetime Director, and Mr. S. P. Gupta, Executive Director ( till 15.05.2012) .

4.1 (a) The Company is a sick industrial company under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) and the Rehabilitation Scheme (the Scheme) sanctioned by the Board for Industrial and Financial Reconstruction (BIFR) is under implementation.

(b) The Company''s appeals filed before the Appellate Authority (AAIFR) for rectification of certain inadvertent errors in the Scheme has been allowed and BIFR has carried consequential modifications / corrections in the scheme vide its order dated 25th April, 2013 issued on 9th May,2013.

4.2 (a) Rehabilitation measures approved by the BIFR include reduction of Equity Share Capital and 8.25% Redeemable Cumulative Preference Share Capital by 60 % amounting to Rs 3763.36 lacs and consolidation thereof at their original face value, reduction of 0.001 %Redeemable Cumulative Preference Share Capital by Rs 16598.33 lacs, issuance of further equity capital to the promoters of Rs.4221 lacs including conversion of existing unsecured loans of Rs.3055.50 lacs (Previous Year Rs 3055.50 lacs) from them into equity post reduction and consolidation of the existing equity share capital and transfer of capital redemption reserve amounting to Rs 1500 lacs to the Surplus of the Company.

(b) Consequent to the above, reduction of share capital of the Company and transfer of Capital Redemption Reserve has been given effect to in these accounts by corresponding adjustment to carried forward losses to the extent of Rs. 21861.69 lacs and the equity share capital and the preference share capital so reduced has been consolidated.

(c) Post reduction and consolidation as required in terms of the scheme, equity Shares of Rs 10/- each amounting to Rs 3422 lacs has been issued during the period to the promoters / associates and issuance of further equity shares on receipt of balance contribution to the extent of Rs 799 lacs from the promoters / associates is under implementation.

(d) In terms of the Scheme sanctioned by the BIFR , the fertiliser undertaking has been de-merged and transferred to Kanpur Fertilizers and Cement Ltd ( KFCL) w.e.f. 1st October,2010. In consideration of transfer, KFCL has issued 1 (one) equity share of Rs.10 each fully paid up for every 40 (forty) equity shares of Rs.10 each (post reduction and consolidation as above) held by the equity shareholders of the Company at the record date specified for the purpose.

5. In respect of the dues of the provident fund, the necessary application has been filed before the relevant authority for grant of waiver of the penal interest and damages and payment thereof in 72 monthly installments. The application made before Hon''ble BIFR for issuance of necessary direction in this respect is pending.

6. In respect of levy of salami by the Government of West Bengal on renewal of lease of tea estates in certain circumstances and pursuant to the decision of Hon''ble High Court at Calcutta in a similar matter, the Company has preferred an appeal against the said imposition before the appropriate authority. Accordingly, pending finalization of the matter, Rs 811.67 lacs (Previous year Rs. 811.67 lacs) has not been provided for in this respect which would be payable in equal annual installments over the lease period i.e. 30 years. However, this is not likely to have revenue impact, since the same will be capitalized to the cost of land as and when paid by the Company.

7. Remuneration amounting to Rs. 522.40 lacs (including Rs. 176.20 lacs for the eighteen months period) paid to the current Wholetime Directors and ex-wholetime directors/ex-Managing Directors/Executive Director are pending approval of Central Government.

8. The Company operates in single business segment of Tea in India and therefore disclosure requirements of AS-17 on Segment Reporting is not applicable.

9. In accordance with Accounting Standard 22 "Accounting for taxes on Income", the company has accounted for deferred tax. The company has significant amount of carried forward losses and depreciation under the Income Tax Act, 1961. However, as a matter of prudence deferred tax asset has been recognised to the extent of deferred tax liability.

10.1 Estimated value of Capital Commitments (Net of Advances Rs. 7.51 lacs Previous Year Rs. 98.19 lacs)- Rs. 68.19 lacs (Previous Year Rs. 161.31 lacs).

10.2 Expenditure in Foreign Currency on account of:

- Foreign Travel Rs. 9.59 lacs (Previous Year Rs. 3.45 lac).

11. (a) Figures for the period ended 30th September, 2013 relates to the period of 18 months therefore these are not comparable with the previous year figures.

(b) The previous year''s figures have been reclassified/regrouped/rearranged to make it comparable with the current period figures.


Mar 31, 2012

Terms and Rights attached to equity shares:

The company has one class of equity shares having per value of Rs. 10 per share. Each share holder is eligible for one vote per share held. The dividend proposed by the board of directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation the equity share holder are eligible to receive the remaining assets after discharging all liabilities of the Company, in proportion to their shareholding.

Terms and Rights attached to preference shares:

The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting. In the event of liquidation of the company before redemption of the RCPS, the holders of RCPS shall have priority over equity shareholders in the payment of dividend and repayment of capital.

(i) In terms of the one time settlement (OTS) arrived at in respect of secured borrowings, cash credit, term loans from bank and loan from ARCIL has been continued for operations of tea division. The balance amount of the borrowings from the secured creditors (other than 15% NCD, OCD and loan from bodies corporate secured by pledge of shares of ISG Traders Ltd.) have been settled for Rs. 25721 lacs (OTS amount) and has been transferred to KFCL for payment there against in terms of the Scheme (Note 29.1( c)).

(ii) Loans and Debentures in earlier years from Financial Institutions, Banks, ARCIL and other bodies corporate including non fund based facilities, save and except otherwise stated, against specific balances under secured loans are secured/to be secured by a pari passu first charge on the fixed and current assets of the Company. These loans and facilities are further secured by the personal guarantee of a director and the pledge of the unencumbered equity shares held by the promoters in the Company.

OTS amount payable as per (i) above has since been deposited by the KFCL in Escrow with the SBI, the Operating Agency appointed by BIFR, as per the stipulations in the scheme. All the lenders excepting ARCIL and a few other minority lenders (aggregating Rs. 13882 lacs) have since accepted the payment and released the charges and securities against the loan given by them. The Company's appeal filed before the AAIFR as given in Note 29.2 (c) is pending for disposal. Moreover the matter has also been taken up with the respective lenders for release of the securities, etc and acceptance of the OTS amount.

(iii) The cash credit from bank, term loan from banks and ARCIL including non-fund based facilities retained for tea operation are secured/to be secured by first charge over the immoveable properties, moveable fixed assets and current assets of Tea Division and security by way of personal guarantee of one of the Director of the Company.

(iv) 15% Redeemable NCD's, 15% OCD and loan from bodies corporate secured by pledge of 33,45,000 equity shares of ISG Traders Ltd held by the Company have been settled for Rs.578 lacs and are repayable within a period of 90 days (since repaid) from the date of the sanction of the Scheme.

(v) Unsecured fixed deposits from shareholders and public are repayable to the extent of 85% of the principal amount of the fixed deposits within 180 days (since repaid) without carrying any interest in terms of the Scheme, in full and final settlement of entire outstanding in this respect.

(vi) Unsecured advances from bodies corporate and 15% OCD is repayable for Rs 758.81 lacs being 25% value of the principal amount in three equal annual installments after a moratorium of one year from the date of sanction of the Scheme.

(vii) Unsecured advances from promoters amounting to Rs. 3055.50 lacs are to be converted into equity shares at par after reduction of the existing equity share capital in terms of the Scheme (Note 29.2 (a)).

(viii) Amounts payable as per (iv) to (vi) above have been transferred to KFCL (Note 29.1(c)). In terms of the Scheme these amounts are required to be paid through the Company and as such Rs. 7075.76 lacs payable in respect of these have been included under Other Current Liabilities and Rs. 758.81 lacs under Other Long Term Liabilities. Corresponding amount receivable from KFCL have been included under Other Current Assets.

(ix) In terms of the Scheme, Rs. 3643.75 lacs payable for FRCN has been transferred to KFCL for full and final settlement in terms of the order passed by Hon'ble High Court at Calcutta (Note 29.1(c)).

1. Non Current Investments:

(i) # Investments net of diminution of Rs. 27843 lacs (Previous Year Rs. 23521 lacs).

(ii) Keeping in view of the provisions of Accounting Standard on Investments (AS 13), the Company's investment in ISG Traders Ltd, an associate company has been evaluated based on valuation carried out by an independent firm of chartered accountants and further diminution in value thereof by Rs. 4322.11 lacs has been recognized in this year and included under Exceptional Items.

(iii) * Market quotations in respect of Non-Traded shares are not available since long. Therefore market values of these investments have not been stated.

2. (a) Long Term Loans and Advances:

(i) Loans and deposits include Rs.1685 lacs (Previous Year Rs.1685 lacs) given to Andhra Cements Limited (ACL) in earlier years. In terms of the scheme of rehabilitation of ACL, the said loan has been assigned to Boydell Media Private Ltd., a wholly owned subsidiary of ISG Traders Ltd and is recoverable by March, 2015 in terms of the deed of assignment.

(ii) Loans and deposits and advance towards equity participation includes Rs. 2002.66 lacs (Previous Year Rs. 1577.61 lacs) outstanding from Santipara Tea Company Ltd. (STCL) of which Rs. 853.79 lacs will be converted into equity. Considering the strategic involvement and consequential restructuring etc, provision of Rs. 853.79 lacs made in earlier years has been considered to be adequate.

3. Exceptional Items:

Exceptional Items (net) Rs. 864.91 lacs represents income arising on settlement of loans and liabilities amounting to Rs. 5187.02 lacs (other than those pertaining to Fertiliser Undertaking de-merged to KFCL) and charges on account of diminution in value of investments amounting to Rs. 4322.11 lacs.

4. Discontinuing Operations:

Following the sanction of the Scheme by BIFR (Note 29.1(b)), Fertiliser Undertaking has been de-merged to KFCL w.e.f.1st October, 2010 and operations pertaining to said undertaking has been discontinued with effect from the said date. Consequently income of Rs. 72947.20 lacs arising on settlement of loans and liabilities and Rs. 586.57 lacs on account of write back of expenses over income for the period from 1st October, 2010 to 31st March, 2011, after deducting therefrom charges on account of provisions for other current assets and other charges pertaining to fertilizer undertaking Rs. 2752.49 lacs has been shown as profit from discontinuing operations.

5. Expenditure in Foreign Currency on account of:

-Foreign Travel Rs.3.45 lacs (Previous Year Rs.0.52 lac).

6.1 Related Party disclosures pursuant to Accounting Standard -18. List of Related Parties with whom the Company had transaction:

(a) Subsidiaries

Dail Consultants Ltd (DCL), North India Fertiliser Ltd. (NIFL), Leyden Leasing and Financial Services Ltd (LLFSL) , and Pentonville Software Ltd (PSL).

(b) Associate/Group Company

ISG Traders Limited (ISG)

(c) Key Management Personnel

Mr. A. K. Goel, Wholetime Director, and Mr. S. P. Gupta, Executive Director.

6.2 The aggregate amount of transaction with Related Parties is as follows:

Notes:

(i) Previous year figures are given in brackets.

(ii) The above Related Party Information is as identified by the Management and relied upon by the auditors.

(iii) In respect of the above parties, there is provision for doubtful debts of Rs. 427.94 lacs as on 31.3.2012 out of which Rs. 17.62 lacs has been written back during the year.

7. (a) The disclosures required under Accounting Standard 15 "Employee Benefits" notified in the Companies (Accounting Standards) Rules 2006 in respect of tea division are given below:

Defined Benefit Scheme

The employee's gratuity, superannuation and provident fund (other than those covered and contributed under Employee's Provident Fund Organization) Scheme are defined benefit plans. The present value of obligations are determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for Leave Encashment is recognized in the same manner as gratuity.

Notes:

i) Assumptions relating to future salary increases, attrition, interest rate for discount & overall expected rate of return on Assets have been considered based on relevant economic factors such as inflation, market growth & other factors applicable to the period over which the obligation is expected to be settled.

ii) The Guidance issued by the Accounting Standard Board (ASB) on implementation AS-15, Employees benefit (Revised 2005) states that provident funds set up by employers which requires interest shortfall to be met by the employer, needs to be treated as defined benefit plan. The fund does not have any unprovided existing deficit or interest shortfall. In regard to any future obligation arising due to interest shortfall (i.e. in case Government interest to be paid on provident fund scheme exceeds rate of interest earned on investment), pending the issuance of the Guidance Note from the Actuarial Society of India, the Company's actuary has expressed his inability to reliable measures the same

(c) The scheme for superannuation benefit to employees has ceased with effect from 31st July, 2003 and the liability existing as on that date is repayable to the eligible employees at specified return of 5% per annum. on their retirement. The scheme being presently not in operation and the company's liability now being restricted to the shortfall in interest thereon if any, the liability in this respect as determined by the actuary is charged to profit and loss account as employee benefit on year to year basis.

8. The Scheme of Arrangement for transfer of the Tea Undertaking of the Company to Shubh Shanti Services Limited on a going concern basis with effect from 1st April, 2001 has become infractus in view of the current Scheme of Arrangement for de-merger of the Fertilizer Undertaking sanctioned by BIFR as per Note 29.1(b). Necessary step for withdrawing the petition pending before the Hon'ble High Court at Calcutta is being taken.

9.1 (a) The Company is a sick industrial company under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). The Rehabilitation Scheme (the Scheme) for revival of the Company has been sanctioned by the Board for Industrial and Financial Reconstruction (BIFR) vide its Order dated 16th January, 2012 and the rehabilitation measures in terms of the Scheme are under implementation.

(b) In terms the of Scheme of Arrangement sanctioned by the BIFR pursuant to the Order as given above the Fertiliser Undertaking has been de-merged and transferred to Kanpur Fertilizers and Cement Limited (KFCL) w.e.f 1st October, 2010 and the same has become effective on filing of the Scheme with the Registrar of Companies of the respective States on 24th January, 2012. Consequent to this all assets and liabilities, rights and obligations including contingent liabilities, employees and all legal and other proceedings and operations of the said division with effect from said date have been transferred to and vested with KFCL.

(d) Rs. 40317.75 lacs being the deferential amount with respect to above assets and liabilities have been adjusted against the accumulated losses of the Company.

(e) Further, other adjustments consequent to the sanction of the Scheme and settlement of the loans and liabilities etc to the extent these are relatable to Fertiliser undertaking amounting to Rs.70781.28 lacs (net) have been shown as profit from discontinuing operation leaving the balance amount of Rs. 5187.02 lacs (net) which has been shown under exceptional items (Note 21 & 22).

9.2 (a) The Scheme also envisages reduction of Equity Share Capital and 8.5% Cumulative Redeemable Preference Share Capital by 60 % amounting to Rs 3763.36 lacs and consolidation thereafter at their original face value, 0.001% Cumulative Redeemable Preference Share Capital by Rs. 16598.33 lacs, issuance of further equity capital to the promoters of Rs. 4182 lacs including conversion of unsecured loans of Rs. 3055.50 lacs from them into equity post reduction and consolidation of the existing equity share capital and transfer of capital redemption reserve amounting to Rs. 1500 lacs to the surplus of the Company.

(b) KFCL in consideration of transfer as per note 29.1(c) above shall issue 1 (one) equity share of Rs. 10 each fully paid up for every 40 (forty) equity shares of Rs. 10 each (post reduction and consolidation as above) held by the equity shareholders of the Company at the record date to be specified for the purpose.

(c) The Company has preferred appeals for rectification of certain inadvertent errors in the Scheme which have been admitted by the Appellate Authority (AAIFR). Necessary effect with respect to (a) and (b) above will be given on completion of necessary formalities pending disposal of appeals before AAIFR.

10. In terms of the Scheme, Hon'ble BIFR has directed to waive penal interest and damages as per rules and policy for late/non payment of provident fund dues till cut off date i.e. 1.10.2010, and to consider to allow payment of provident fund dues with statutory rate of simple interest after moratorium of one year in 36 monthly installments. The matter is being pursued with the relevant authorities for necessary approval.

11. The Company had filed a Writ Petition before the Hon'ble High Court at Calcutta challenging the applicability of Section 274 (1) (g) of the Companies Act, 1956 and a stay has been granted by the High Court on this matter. Consequently, as per the legal opinion received, provisions for the disqualification of directors in terms of the said Section are not applicable to the Directors of the Company.

12. In respect of levy of salami by the Government of West Bengal on renewal of lease of tea estates in certain circumstances and pursuant to the decision of Hon'ble High Court at Calcutta in a similar matter, the Company has preferred an appeal against the said imposition before the appropriate authority. Accordingly, pending finalization of the matter, Rs. 811.67 lacs (Previous year Rs. 811.67 lacs) has not been provided for in this respect which would be payable in equal annual installments over the lease period i.e. 30 years. However, this is not likely to have revenue impact, since the same will be capitalized to the cost of land as and when paid by the Company.

13. Remuneration amounting to Rs. 597.29 lacs (including Rs. 105.78 lacs for the year) paid to the current Wholetime/Executive Directors and ex-wholetime directors/ex-Managing Director are pending approval of Central Government.

14. Consequent to demerger of Fertiliser Undertaking, the Company operates in single business segment of Tea.

15.1 Contingent liabilities and commitments to the extent not provided for :

(Rs. in lacs) Year ended Year ended 31st March, 31st March, 2012 2011

a) Guarantees (excluding since released) given by the Company on behalf of bodies corporate Limit 5568.89 5568.89

Amount Outstanding 4010.21 4746.14

b) Guarantees given by Banks on behalf of the Company 256.12 267.64

c) Cumulative Dividend on Preference Shares 705.38 627.72

d) Claims against the Company not acknowledged as debts (to the extent ascertainable from available records)

i) Income/Agriculture Tax matters pending in appeal 685.84 644.33 at various stages (other than matters awaiting quantification by assessing authorities and/or with favourable appellate decisions for earlier years, against which further appeals are pending)

ii) Sales Tax matters under appeal 257.52 24.65 (to the extent ascertained)

e) A show cause notice issued in 1986 in respect Not ascertainable Not ascertainable of erstwhile tobacco division taken up for hearing by the adjudicator. The management is of the view that in accordance with the Scheme of Arrangement approved by Calcutta High Court, liabilities relating to Excise stood vested from 1st April, 1984 to New Tobacco Company Ltd. (NTC) pursuant to transfer of tobacco business to the said NTC effective that date.

Future cash out flow in respect of a) to e) is dependent upon the outcome of judgments/ decisions.

15.2 Estimated value of Capital Commitments (Net of Advances Rs. 98.19 lacs Previous Year Rs. 33.82 lacs) -Rs. 161.31 lacs (Previous Year Rs. 130.30 lacs).

16.1 Consequent to the notifications under the Companies Act,1956, the financial statements for the year ended 31st March,2012 are prepared under revised Schedule VI . Accordingly, the previous year's figures have been reclassified/regrouped/rearranged to make it comparable with the current year's figures.

16.2 The previous years figures are inclusive of the figures of the fertilizer undertaking which has been transferred to KFCL in terms of the scheme for revival of the company sanctioned by the Hon'ble BIFR (Note 29.1 and 29.2). Accordingly, figures for the current year are not comparable with the corresponding figures of previous year.

 
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