Notes to Accounts of Ecoboard Industries Ltd.

Mar 31, 2016

Notes:

1 Conveyance for office building valued Rs. 7.03 lakh is pending execution.

2 Depreciation on fixed assets is provided at the rates detetermined in accordance with the provisions of the Companies Act, 2013.

Depreciation on tangible assets is provided on the straight line method as prescribed in Schedule II to the Companies Act, 2013 over the remaining useful life of the assets.

3 In respect of fixed assets whose remaining useful life was nil as on 01/04/2014, the carrying amount of the assets as on that date, as reduced by their estimated residual value (not being more than 5% of the original cost) worked out to Rs. 937 lakh. As prescribed in Schedule II, this amount was adjusted against the opening balance of retained earnings during the Financial Year 2014-15.

4. Deferred Tax:

In view of the losses incurred by the Company during last few years, the Company has accumulated net deferred tax asset of Rs. 2165 lakh as on 31/03/2016 (Previous year- Rs. 1565 lakh) in terms of provisions of Accounting Standard 22 ‘Accounting for Taxes on Income”

Following prudent accounting policy and the guidelines contained in the Accounting Standard, the management has decided not to make adjustment in the books of accounts for the value of the said deferred tax asset until such time that there is reasonable certainty of realization thereof against sufficient future taxable income.

5. Related party disclosures:

(in terms of Accounting Standard 18 issued by the Institute of Chartered Accountants of India)

(i) List of related parties:

Key management persons. Mr. GRK Raju, Mr. GPK Raju and Mrs. I.V.Sujani

Relatives of key management persons. Mrs. G Jayalakshmi, Mr. P Srinivas Raju, Mrs. Sitarama,

Mrs. Srilakshmi vegesna Raju, Mr. G.V.S.Raju,

Mr. G. S.N.Raju

Associates- Companies/ firms in which key Vesar Furnitek Pvt Ltd.

management persons are having control/ substantial interest.

Related party relationships are as identified by the Company and are relied upon by the auditors.

6. Discontinuing Operation:

The Company has decided to dispose off/ sell its particle board plant including land and buildings situated at village Jambhulwadi, near Islampur in District Sangli. Production in this plant was discontinued in April 2010. Proposal was approved by shareholders on 8^th February 2013. Plant and machinery and some of the movable assets of this Unit were sold during the year ended 31.03.2015. Efforts for sale of remaining immovable assets including land and building of this Unit are in progress.

7. Earnings in Foreign Currency:

There were no exports or earnings in foreign currency during the current or the previous year.

8. The Company is registered for a period of more than five years. Its accumulated losses at the end of the financial year were more than 50% of its net worth. The Company incurred cash losses during the current financial year and during the immediately preceding financial year.

9. There were no outstanding dues payable to micro, small and medium enterprises as on the balance sheet date. Classification of suppliers as micro, small and medium enterprises is done as per information provided by the supplier. No interest is paid/ payable during the year to such enterprises.

10. Expenses includes Prior period expenses Rs. 6.35 lakhs (Previous year Rs.12.91lakhs)

11. Balances of debtors, advances and creditors are subject to confirmation.

12. Previous year figures are reclassified/ regrouped, where required, to conform with current year presentation.

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Mar 31, 2015

1. Rights, preferences and restrictions attached to shares

The Company has issued only one class of Equity shares. Each Share has a paid up value of Rs.10/-. Every share- holder is entitled to one vote per share. Each share is entitled to dividend at the rate as may be declared by the Board and approved by the shareholders at the Annual General Meeting.

2. Company had adjusted in past duty refund receivable from MSEDC in terms of order of MERC. MSEDC is making payment of above claim in monthly instalments by way of adjustment in monthly electricity bills. However, balance amount of claim (Rs. 141.69 lakh) in respect of Velapur unit is not confirmed by MSEDC. In case of Jambhulwadi Unit, provision is made for duty refund claim of Rs 138.57 lakh which has become doubtful of recovery due to closure of the unit.

3. Computation of Earnings per Share (EPS)

Profit / (Loss) after tax -698.81 -898.13 (Rs. in lakhs)

No. of Equity Shares- Weighted 178.32 178.32 average (in lakhs)

Earnings per share- (Face value- Rs. 10 per share):-

Basic (Rs.) (3.92) (5.04)

Diluted (Rs.) (3.92) (5.04)

4. Security Clause:

Working capital loans from consortium of bankers are secured by first charge on the Company's current assets, present and future, including stocks, goods in process, goods in transit, receivables and book debts.

5. These loans are further secured by pari passu charge by joint equitable mortgage of immovable properties of the Company situated at village Jambhulwadi in district Sangli and at village Velapur in district Solapur in Maharashtra. The above loans are further secured by personal guarantees of some of the Directors of the Company.

Vehicle loans are secured by hypothecation of respective vehicle.

6. Deferred Tax:

In view of the losses incurred by the Company during last few years, the Company has accumulated net deferred tax asset of Rs. 1565 lakh as on 31/03/2015 (Previous year- Rs. 1089 lakh) in terms of provisions of Accounting Standard 22 "Accounting for Taxes on Income".

Following prudent accounting policy and the guidelines contained in the Accounting Standard, the management has decided not to make adjustment in the books of accounts for the value of the said deferred tax asset until such time that there is reasonable certainty of realisation thereof against sufficient future taxable income.

Current Year Previous Year Rs. in lakhs Rs. in lakhs

7. Contingent liabilities :

a) estimated amount of capital 474.84 0.00 expendiiture commitments (Net of advances)

b) Claims against the Company not acknowledged as debt

(i) Excise duty claims disputed in appeals (excluding interest) 1205.85 661.52

(ii) Legal case against the company lodge by suppliers but disputed by the company 73.42 0.00

c) Letters of credit and bank guarantees outstanding 109.24 166.18 (net of margin deposits)

8. Related party disclosures :

(in terms of Accounting Standard 18 issued by the Institute of Chartered Accountants of India)

(i) List of related parties:

Key management persons. Mr GRK Raju, Mr GPK Raju and Mrs. I.V.Sujani

Relatives of key management Mrs G Jayalakshmi, Mr Srinivas Indukuri, Mrs. Sitamma, Mrs. Srilakshmi persons. vegesna Raju, Mr. G.V.S.Raju, Mr. G. S.N.Raju

Companies/ firms in which Vesar Furnitek Pvt Ltd. key management persons are having control/ substantial interest.

9. Related party relationships are as identified by the Company and are relied upon by the auditors.

(ii) Related party transactions :

Nature of transaction Current Year Previous Year Rs. in lakhs Rs. in lakhs

Transactions with key management persons-

Deposits taken 736.80 174.23

Remuneration paid 45.02 46.16

Interest paid 24.78 18.38

Rent paid 3.60 3.60

Rent deposits given 3.60 3.60

Transactions with relatives 0.00 0.00 of key management persons-

Transactions with associates -

Purchases (Gross) 2.17 0.00

Sales (Gross) 14.81 12.44

Deposits taken 7.50 0.00

Deposits repaid 7.50 0.00

Trade receivables 1.77 1.94

10. Segment Results :

The Company has two reportable segments, namely, Particle Boards and Bio Systems. Select financial information relating to these segments is given below.

Current Year Previous Year Rs. in lakhs Rs. in lakhs Revenue:

Particle Boards 1,393.58 2,713.91

Bio Systems 299.70 93.91

Total 1,693.28 2,807.82

Profit before interest and tax:

Particle Boards (371.46) (449.39)

Bio Systems 85.77 2.03

Others 54.87 0.00

Total (230.82) (447.36)

Less:-Interest 467.99 450.77

Profit before tax (698.81) (898.13)

Less:- Income tax 0.00 0.00

Profit after tax (698.81) (898.13)

Capital employed:

Segment assets less segment liabilities

Particle Boards 786.23 2,507.45

Bio Systems 143.86 58.09

Total 930.09 2,565.54

11. Discontinuing Operation:

The Company has decided to dispose off/ sell its particle board plant consisting of land, buildings, plant and machinery and all other movable and immovable property situated at village Jambhulwadi, near Islampur, Taluka Walwa, District Sangli (Maharashtra).

12. The Company has two plants for production of plain and pre-laminated particle boards from sugarcane bagasse. These are located at Jambhulwadi in Distrcit Sangli and at Velapur in District Solapur. Production at Jambhulwadi plant was discontinued in April 2010 due to low capacity utilisation and continuous losses. This plant is now proposed to be sold. Production capacity of Jambulwadi plant is 80-100 m3 per day.

13. Production of particle boards at Velapur plant which has production capacity of 300 m3 per day shall continue as usual. This consolidation of production at one location is expected to bring reduction in costs.

14, Sale proceeds of Jambhulwadi plant shall be utilised to modernise facilities at Velapur plant and to reduce working capital loans and interest burden. Shareholders have given their approval to this proposal vide postal ballot resolution passed on 8th February 2013.

15. During the year Company has sold substantial portion of movable property of Jambhulwadi unit. Company expects to complete the sale of immovable property at Jambhulwadi unit in the next financial year 2015-16.

Current Year Previous Year Rs. in lakhs Rs. in lakhs

16. Expenditure in Foreign Currency :

Professional Charges 0.00 0.87

Tour & Travel 2.21 1.55

Total 2.21 2.42

17. Earnings in Foreign Currency:

There were no exports or earnings in foreign currency during the current or the previous year.

18. There were no outstanding dues payable to micro, small and medium enterprises as on the balance sheet date.

Classification of suppliers as micro, small and medium enterprises is done as per information provided by the supplier. No interest is paid/ payable during the year to such enterprises.

19. Expenses includes Prior period expenses Rs. 12.91 lakhs (Previous year Rs.0.49 lakhs)

20. Balances of debtors, advances and creditors are subject to confirmation.

21. Previous year figures are reclassified/ regrouped, where required, to conform with current year presentation.

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Mar 31, 2014

1. Rights, preferences and restrictions attached to shares

The Company has issued only one class of Equity shares. Each Share has a paid up value of Rs.10/-. Every shareholder is entitled to one vote per share. Each share is entitled to dividend at the rate as may be declared by the Board and approved by the shareholders at the Annual General Meeting.

* Company has raised claim for refund of excess electricity duty charged by Maharashtra State Electricity Distribution Company (MSEDC) in past in terms of order of Maharashtra Electricity Regulatory Commission (MERC). MSEDC is making payment of above claim in monthly instalments by way of adjustment in monthly electricity bills. However, acceptance of total claim amount is not yet received from MSEDC.

2. Security Clause :

Working capital loans from consortium of bankers are secured by first charge on the Company''s current assets, present and future, including stocks, goods in process, goods in transit, receivables and book debts.

These loans are further secured by pari passu charge by joint equitable mortgage of immovable properties of the Company situated at village Jambhulwadi in district Sangli and at village Velapur in district Solapur in Maharashtra.

The above loans are further secured by personal guarantees of some of the Directors of the Company.

Vehicle loans are secured by hypothecation of respective vehicle.

3. Deferred Tax:

In view of the losses incurred by the Company during last few years, the Company has accumulated net deferred tax asset of Rs. 1089 lakh as on 31/03/2014 (Previous year- Rs. 795 lakh) in terms of provisions of Accounting Standard 22 "Accounting for Taxes on Income".

Following prudent accounting policy and the guidelines contained in the Accounting Standard, the management has decided not to make adjustment in the books of accounts for the value of the said deferred tax asset until such time that there is reasonable certainty of realisation thereof against sufficient future taxable income.

Current Year Previous Year Rs. in lakhs Rs. in lakhs

4. Contingent liabilities :

a) Claims against the Company not acknowledged as debt Excise duty claims disputed in appeals 661.52 142.31

b) Letters of credit and bank guarantees outstanding 166.18 205.93 (net of margin deposits)

5. Discontinuing Operation :

The Company has decided to dispose off/ sell its particle board plant consisting of land, buildings, plant and machinery and all other movable and immovable property situated at village Jambhulwadi, near Islampur, Taluka Walwa, District Sangli (Maharashtra).

The Company has two plants for production of plain and pre-laminated particle boards from sugarcane bagasse. These are located at Jambhulwadi in Distrcit Sangli and at Velapur in District Solapur. Production at Jambhulwadi plant was discontinued in April 2010 due to low capacity utilisation and continuous losses. This plant is now proposed to be sold. Production capacity of Jambulwadi plant is 80-100 m3 per day.

Production of particle boards at Velapur plant which has production capacity of 300 m3 per day shall continue as usual. This consolidation of production at one location is expected to bring reduction in costs.

Sale proceeds of Jambhulwadi plant shall be utilised to modernise facilities at Vela plant and to reduce working capital loans and interest burden. Shareholders have given their approval to this proposal vote postal ballot resolution passed on 8th February 2013.

Company expects to complete this sale of unit by end of financial year 2014-15.

6. Expenditure in Foreign Currency :

On account of professional charges paid, travel expenses etc:- Rs. 2.42 lakhs (Previous year - Rs. 5.48 lakhs)

7. Earnings in Foreign Currency:

There were no exports or earnings in foreign currency during the current or the previous year.

8. There were no outstanding dues payable to micro, small and medium enterprises as on the balance sheet date.

Classification of suppliers as micro, small and medium enterprises is done as per information provided by the supplier. No interest is paid/ payable during the year to such enterprises.

9. Expenses includes Prior period expenses Rs. 0.49 lakhs (Previous year - NIL)

10. Balances of debtors, advances and creditors are subject to confirmation.

11. Previous year figures are reclassified/ regrouped, where required, to conform with current year presentation.

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Mar 31, 2013

1. Security Clause :

Working capital loans from consortium of bankers are secured by first charge on the Company''s current assets, present and future, including stocks, goods in process, goods in transit, receivables and book debts.

These loans are further secured by pari passu charge by joint equitable mortgage of immovable properties of the Company situated at village Jambhulwadi in district Sangli and at village Velapur in district Solapur in Maharashtra.

The above loans are further secured by personal guarantees of some of the Directors of the Company.

Vehicle loans are secured by hypothecation of respective vehicle.

2. Deferred Tax :

In view of the losses incurred by the Company during last few years, the Company has accumulated net deferred tax asset of Rs. 795 lakh as on 31/03/2013 (Previous year- Rs. 567 lakh) in terms of provisions of Accounting Standard 22 "Accounting for Taxes on Income".

Following prudent accounting policy and the guidelines contained in the Accounting Standard, the management has decided not to make adjustment in the books of accounts for the value of the said deferred tax asset until such time that there is reasonable certainty of realisation thereof against sufficient future taxable income.

Current Year Previous Year

Rs. in lakhs Rs. in lakhs

3. Contingent liabilities :

a) Claims against the Company not acknowledged as debt

Excise duty claims disputed in appeals 142.31 141.62

b) Letters of credit and bank guarantees outstanding 205.93 231.09 (net of margin deposits)

4. Exceptional income :

Exceptional income during the previous year comprised of profit on sale of surplus land at non plant location.

5. Discontinuing Operation :

The Company has decided to dispose off/ sell its particle board plant consisting of land, buildings, plant and machinery and all other movable and immovable property situated at village Jambhulwadi, near Islampur, Taluka Walwa, District Sangli (Maharashtra).

The Company has two plants for production of plain and pre-laminated particle boards from sugarcane bagasse. These are located at Jambhulwadi in Distrcit Sangli and at Velapur in District Solapur. Production at Jambhulwadi plant was discontinued in April 2010 due to low capacity utilisation and continuous losses. This plant is now proposed to be sold. Production capacity of Jambulwadi plant is 80-100 m3 per day.

Production of particle boards at Velapur plant which has production capacity of 300 m3 per day shall continue as usual. This consolidation of production at one location is expected to bring reduction in costs.

Sale proceeds of Jambhulwadi plant shall be utilised to modernise facilities at Velapur plant and to reduce working capital loans and interest burden. Shareholders have given their approval to this proposal vide postal ballot resolution passed on 8th February 2013. Company expects to complete this sale of unit by end of financial year 2013-14.

6. Expenditure in Foreign Currency :

On account of professional charges paid, travel expenses etc.-Rs. 5.48 lakhs

7. Earnings in Foreign Currency :

There were no exports or earnings in foreign currency during the current or the previous year.

8. There were no outstanding dues payable to micro, small and medium enterprises as on the balance sheet date.

Classification of suppliers as micro, small and medium enterprises is done as per information provided by the supplier. No interest is paid/ payable during the year to such enterprises.

9. Balances of debtors, advances and creditors are subject to confirmation.

10. Previous year figures are reclassified / regrouped, where required, to conform with current year presentation.

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Mar 31, 2012

1. Security Clause :

Working capital loans from consortium of bankers are secured by first charge on the Company's current assets, present and future, including stocks, goods in process, goods in transit, receivables and book debts.

These loans are further secured by pari passu charge by joint equitable mortgage of immovable properties of the Company situated at village Jambhulwadi in district Sangli and at village Velapur in district Solapur in Maharashtra.

The above loans are further secured by personal guarantees of some of the Directors of the Company.

Vehicle loans are secured by hypothecation of respective vehicle.

2. Deferred Tax :

In view of the losses incurred by the Company during last few years, the Company has accumulated net deferred tax asset of Rs. 567.00 lakh as on 31/03/2012 (Previous year- Rs. 575 lakh) in terms of provisions of Accounting Standard 22 "Accounting for Taxes on Income".

Following prudent accounting policy and the guidelines contained in the Accounting Standard, the management has decided not to make adjustment in the books of accounts for the value of the said deferred tax asset until such time that there is reasonable certainty of realisation thereof against sufficient future taxable income.

Current Year Previous Year Rs. in lakhs Rs. in lakhs

3.Contingent liabilities :

a) Claims against the Company not acknowledged as debt Excise duty claims disputed in appeals 141.62 50.32

b) Letters of credit and bank guarantees outstanding 231.09 142.59 (netof margin deposits)

4. Exceptional income :

Exceptional income during the current and the previous year comprised of profit on sale of surplus land at non plant location.

5. Earnings in Foreign Currency :

There were no exports or earnings in foreign currency during the current or the previous year.

6. There were no outstanding dues payable to micro, small and medium enterprises as on the balance sheet date. Classification of suppliers as micro, small and medium enterprises is done as per information provided by the supplier. No interest is paid/ payable during the year to such enterprises.

7. Balances of debtors, advances and creditors are subject to confirmation.

8. Previous year figures are reclassified/ regrouped, where required, to conform with current year presentation.

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Mar 31, 2010

1. Contingent liabilities:

(Rs. in thousands) 2009-10 2008-09

a. Estimated amount of contracts remaining to be NIL NIL executed on capital a/c (net of advances).

b. Claims against the Company not acknowledged 47799 5032 as debt.

c. Amount of bank guarantees 50145 21270

d. Amount letters of credit (net of provision). NIL 7663

2. In view of the losses incurred by the Company during last few years, the Company has accumulated net deferred tax asset of Rs. 485 lacs as on 31.03.2010 (Previous year Rs. 372 lacs) in terms of provisions of Accounting Standard 22 "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India. Following prudent accounting policy and the guidelines contained in paragraphs 15 to 18 of the said Accounting Standard, the management has decided not to make adjustment in the books of accounts for the value of the said deferred tax asset until such time that there is reasonable certainty of realisation of the said deferred tax asset against sufficient future taxable income.

3. Loans repayable within one year Rs. 4.10 lacs ( Previous Year Rs.9.72 lacs)

4. Interest includes interest on fixed loans Rs. 56.42 lacs (Previous Year-8.14 lacs).

5. Interest paid during the year is net of interest income of Rs.6.43 lacs (Previous Year Rs. 6.46 lacs). Tax deducted at source Rs.0.85 lacs ( Previous Year- Rs. 1.45 lacs ).

6. Balances of Banks, debtors, advances and creditors are subject to confirmation.

7. Classification of suppliers as Micro Small or Medium Enterprise is done where such information is provided by the supplier. No interest is paid or payable during the year to Micro Small or Medium Enterprises.

8. Previous year figures have been regrouped wherever necessary to conform to the current year classification.

9. Information pursuant to the provision of paragraph (s) 3, 4C & 4D of part II of Schedule VI to the Companies Act, 1956.

I) Licensed Capacity

Engineering division Not applicable

Particle Board division Not applicable

II) Installed capacity:

Engineering division Not ascertainable

Particle Board division * 51.00 lakhs M2