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Notes to Accounts of Faze Three Ltd.

Mar 31, 2016

Note No. 1 Foreign Currency Convertible Bonds

The principal outstanding of the Foreign Currency Convertible Bonds is USD 8 Min. The said bonds were convertible into Equity Shares of the company at 85 per share as per the terms of the offer on or prior to 27th December 2011 at the option of the holders. Since the said bonds were not converted / previously redeemed prior to the redemption date, they become due for redemption along with redemption premium and applicable interest thereon. The company has provided for the aforesaid premium and interest payable year on year and classified here along with principal value of FCCBs

outstanding.

Note No. 2 Corporate Guarantee Liability

The Company had given Corporate Guarantee to Canara Bank London for grant of credit facilities by the Bank to PANA Textil Gmbh (''PANA''), sub-subsidiary of the company for principal value 4.4 Min Euros. Due to the European crises and overall adverse economic scenario in 2009-10, PANA filed for bankruptcy in 2010. The bankruptcy court ruled that PANA to be wound up and appointed the official administrator during FY 2012. Owing to the liquidation, the entire principal liability along with applicable interest thereon and other charges devolved onto the company as per the terms of the corporate guarantee agreement with Canara Bank London. The Liabilities on account of the aforesaid as claimed by the Bank from time to time have been classified here. Pending conclusion of the terms and compliance for resolution of the said liability, the company has discontinued annual provision of accrued overdue interest on the said liability and the same is disclosed as contingent liability. As per the sanction of credit facilities from Canara Bank, a 5% retention (cut back) on every export bill discounted is kept as Fixed deposit (retention) for recovery of this liability. The balance in the retention account of 1211.15 Lacs was classified as non-current Cash and Cash equivalent in FY 2015 (Refer Note 19). The balance as on March 31,2015 along with additions during the year in the retention account amounting of 1431.83 Lacs has been paid to Canara Bank London during the year are classified under Other Current Assets (Refer Note 19).

3. Exceptional items

The company has given Corporate guarantee to Canara Bank London for grant of working capital facilities by the Bank to PANATextil Gmbh (‘PANA’), sub-subsidiary of the company for principal value 4.4 Million Euros. Due to the European crises and overall adverse economic scenario in 2009-2010, PANA filed for bankruptcy in 2010. The bankruptcy court ruled that PANA to be wound up and appointed the official administrator during FY 2012. Owing to the liquidation, the entire principal liability along with applicable interest thereon and other charges devolved onto the company as per the terms of the corporate guarantee agreement with Canara Bank London. The applicable annual charge & forex fluctuation on the said liability as claimed by the Bank from time to time have been provided.

4. Related Party Transactions

a. Related parties where control exists

Name of the related party Relationship

V R Woodart Limited Associate

Aunde India Limited Associate

Ajay Anand (HUF) Associate

Instyle Investments Private Limited Associate

Rohina Anand Khira Daughter of Managing Director

Ashok Anand Brother of Whole - time Director

Key Management Personnel (KMP)

Ajay Anand Managing Director

Sanjay Anand Whole-time Director

Martin Golla Sr. VP - Legal & Company Secretary (resigned w.e.f 26/03/2016)

Ankit Madhwani Chief Financial Officer (w.e.f 09/07/2015)

5 The Company does not have any current tax liability for the year

6 Going Concern

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The management believes that it is appropriate to prepare these financial statements on ‘going concern’ basis, for the following reasons:

a) The company has not made operating losses during the year. Besides, there are sufficient orders on hand pending execution. The management is fully seized of the matter and is of the view that going concern assumption holds true and that the company will be able to discharge / resolve its liabilities in the normal course of business.

b) As the Net worth of the company was eroded in the previous years, it became mandatory under section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 to file a reference to BIFR for revival and rehabilitation of the company. Accordingly, the company has filed reference with BIFR on 2308-2012 which has been registered by BIFR on 04-09-2012.

7 There are no outstanding dues to small and medium enterprises as defined under MSMED Act, 2006.

8 Debit / Credit balances are subject to confirmation and reconciliation

9 Previous year figures have been regrouped / reclassified wherever necessary to correspond with the current period classification /disclosure


Mar 31, 2015

1. Corporate Information

Faze Three Limited (the company) is a public company domiciled in India and incorporated under the provisions of Indian Companies Act, 1956. The company's equity shares are listed for trading on the Bombay Stock Exchange. The company is engaged in manufacturing of Home furnishing items.

2. Basis of Accounting

The Financial statements have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP). The company has prepared these financial statements to comply with all material respects with the accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules 2014.

3. Exceptional items

The company has given Corporate guarantee to Canara Bank London for grant of working capital facilities by the Bank to PANA Textil Gmbh ('PANA'), sub-subsidiary of the company for principal value 4.4 Million Euros. Due to the European crises and overall adverse economic scenario in 2009-2010, PANA filed for bankruptcy in 2010. The bankruptcy court ruled that PANA to be wound up and appointed the official administrator during FY 2012. Owing to the liquidation, the entire principal liability along with applicable interest thereon and other charges devolved onto the company as per the terms of the corporate guarantee agreement with Canara Bank London. The applicable annual charge & forex fluctuation on the said liability as claimed by the Bank from time to time have been provided.

4. Miscellaneous expenses under Note 27 'Other Expenses' mainly includes net -write offs of Rs. 8.84 Mln (PY Rs. 12.18 Mln), Security expenses Rs. 7.70 Mln (PY Rs. 6.43 Mln), compensation to canara bank on invocation of corporate guarantee Rs. 17.43 Mln (PY Rs. 22.23 Mln) etc.

5. Depreciation on Tangible fixed assets

The Company has not ascertained the useful life of its Fixed Assets and not worked out depreciation as per Schedule II of the Companies Act 2013. The depreciation charged in the books is as per Schedule XIV of the Companies Act 1956.

6. Going Concern

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The management believes that it is appropriate to prepare these financial statements on 'going concern' basis, for the following reasons:

a) The company has not made operating losses during the year. Besides, there are sufficient orders on hand pending execution. The management is fully seized of the matter and is of the view that going concern assumption holds true and that the company will be able to discharge / resolve its liabilities in the normal course of business.

b) As the Net worth of the company was eroded in the previous years, it became mandatory under section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 to file a reference to BIFR for revival and rehabilitation of the company. Accordingly, the company has filed reference with BIFR on 23-08-2012 which has been registered by BIFR on 04-09-2012.

7. There are no outstanding dues to small and medium enterprises as defined under MSMED Act, 2006.

8. Debit / Credit balances are subject to confirmation and reconciliation

9. Previous period figures

The Company has reclassified previous year figures to conform to this year's classification.


Mar 31, 2014

1. Corporate Information

Faze Three Limited (the company) is a public company domiciled in India and incorporated under the provisions of Indian Companies Act, 1956. The company's equity shares are listed for trading on the Bombay Stock Exchange. The company is engaged in manufacturing of Home furnishing items.

2. Basis of Accounting

The Financial statements have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP). The financials are prepared under the historical cost convention on an accrual basis and to comply in all material respects with the Accounting Standards notified under the Companies (Accounting Standard) Rules, 2006 (as amended) to the extent applicable and relevant provisions of the Companies Act, 1956.

3. Terms/rights attached to Equity Shares

The Company has only one class of Equity Shares having a par value of Rs. 10/- per share. All the Equity Shares rank pari passu in all respect.

4. The company has not issued bonus shares and shares for consideration other than cash nor the company has bought back any shares during the period of five years immediately preceeding the reporting date.

5. Details of shareholders holding more than 5% shares in the Company

6. Foreign Curreny Convertible Bonds

The current outstanding of principal value of Foreign Currency Convertible Bonds have become due for redemption on 27th Demember, 2011 and were not redeemed on that date. These Bonds have redemption premium and interest payable which has been provided in the books of accounts.

7. Invocation of Corporate guarantee

The Company had given Corporate Guarantee to Canara Bank London in respect of its German subsidiary namely Pana Textil Gmbh to the extent of 4.4 Mln Euros. The said guarantee had been invoked and the liability payable to the Bank has been provided in the books of account. (Refer note 28)

8. Exceptional items

The Company had given Corporate Guarantee to Canara Bank, London in respect of its German subsidiary namely Pana Textil Gmbh ('Pana') to the extent of principal amount of 4.4 Mln Euros and further dues as may accrue on that account. This subsidiary is in the process of being wound up. The said liability being a foreign exchange liability is re-stated as on reporting date based on prevailing rate of Euros. The said corporate guarantee is invoked by the Bank on the company and the final amount is in the process of being crystallized which is subject to receipt of proceeds from the liquidator of Pana and discussions between the company and the bank.

9. Related party disclosures

A) Related parties where control exists

Relationship Name / Entity

Associates V R Woodart Limited

Aunde India Limited

Ajay Anand (HUF)

Instyle Investments Pvt. Ltd.

Key Management personnel (KMP) Ajay Anand (Additional Director w.e.f.1/10/13)

Rashmi Anand (Whole Time Director till 17.06.2013)

Sanjay Anand (Whole Time Director)

B) Related parties with whom transactions have taken place

Relationship Name / Entity

Son of Ajay Anand Vishnu Anand

Daughter of Ajay Anand Rohina Anand

10. Contingent Liabilities

Particulars 31st March 31st March 2014 2013 Rs. Rs.

(i) Contingent Liabilities

(a) Claims against the company not acknowledged as debt 2,729,559 1,961,016

(b) Guarantees and Letter of Credit 18,318,192 30,986,946

(c) Other money for which the company is contingently liable 21,532,908 39,954,813

(d) Legal charges and other expenses / dues on account of liquidation of Pana Textil Gmbh 60,000,000 Nil

(ii) Commitments

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for - -

(b) Uncalled liability on shares and other investments partly paid - -

(c) Other commitments (specify nature) - -

11. Going Concern

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The management believes that it is appropriate to prepare these financial statements on 'going concern' basis, for the following reasons:

a) The company has not made operating losses during the year. Besides, there are sufficient orders on hand pending execution. The management is fully seized of the matter and is of the view that going concern assumption holds true and that the company will be able to discharge / resolve its liabilities in the normal course of business.

b) As the Net worth of the company was eroded in the previous years, it became mandatory under section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 to file a reference to BIFR for revival and rehabilitation of the company. Accordingly, the company has filed reference with BIFR on 23- 08-2012 which has been registered by BIFR on 04-09-2012.

12. There are no outstanding dues to small and medium enterprises as defined under MSMED Act, 2006.

13. Debit / Credit balances are subject to confirmation and reconciliation

14. Previous period figures

The Company has reclassified previous year figures to conform to this year's classification.


Mar 31, 2013

1. Corporate Information

Faze Three Limited (the company) is a public company domiciled in India and incorporated under the provisions of the Indian Companies Act, 1956. The company''s equity shares are listed for trading on Bombay Stock Exchange. The company is engaged in manufacturing of Home furnishing products.

2. Basis of Accounting

The Financial statements have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP). The financials are prepared under the historical cost convention on an accrual basis and to comply in all material respects with the Accounting Standards notified under the Companies (Accounting Standard) Rules, 2006 (as amended) to the extent applicable and relevant provisions of the Companies Act, 1956.

3. Exceptional items

The Company had given Corporate Guarantee to Canara Bank, London in respect of its German subsidiary namely Pana Textile Gmbh to the extent of 4 Mln Euros. This subsidiary is in the process of being wound up. Based on the status of the insolvency proceedings, the Company has during the year, provided a further sum of Rs. 54.21 Mln towards its liability. Apart from aforesaid it also includes foreign exchange loss on account of restatement of FCCB liability and diminution in value of investments made in an associate company in accordance with Accounting Standard – 13 (AS – 13).

a. Other transaction

Lease rent of Rs. 600,000 (PY Rs. 600,000) has been paid to Rohina Anand for rent of premises, salaries have been paid to Ajay Anand Rs. 864,000 for three months ( PY Rs. 3,456,000)and gratuity Rs. 1,000,000 ( PY Nil ) and to Ashok Anand Rs. 907,200 (PY Rs. 898,100). Apart from sale/purchase of goods and services Rs. 31,375 is paid to Aunde India Limited for reimbursement of expenses.

4. Contingent liabilities

Particulars 31st March 2013 31st March 2012

(i) Contingent Liabilities

Claims against the company not acknowledged as debt 1,961,016 -

Guarantees and Letter of Credit 30,986,946 23,976,300

Other money for which the company is contingently liable 39,954,813 43,103,420

(ii) Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for - -

Uncalled liability on shares and other investments partly paid - -

Other commitments (specify nature) - -

5. Miscellaneous expenses under Note 26 ''Other Expenses'' mainly includes net w/offs of Rs. 61.04 Mln (PY Rs. 151.65 Mln), Security expenses Rs. 4.12 Mln (PY Rs. 5.14 Mln), Repairs-Others Rs. 6.31 Mln (PY Rs. 6.73 Mln), Loss on sale of Assets Rs. 0.43 Mln (PY Rs. 0.43 Mln), etc.

6. Going Concern

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The management believes that it is appropriate to prepare these financial statements on ''going concern'' basis, for the following reasons:

a) The company has not made operating losses during the year. Besides, there are sufficient orders on hand pending execution. The management is fully seized of the matter and is of the view that going concern assumption holds true and that the company will be able to discharge its liabilities in the normal course of business.

b) As the Net worth of the company was eroded in the previous year, it became mandatory under section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 to file a reference to BIFR for revival and rehabilitation of the company. Accordingly, the company has filed reference with BIFR on 23-08-2012 which has been registered by BIFR on 04-09-2012.

7. There are no outstanding dues to small and medium enterprises as defined under MSMED Act, 2006.

8. Debit / Credit balances are subject to confirmation and reconciliation.

9. Previous period figures

The Company has reclassified previous year figures to conform to this year''s classification.


Mar 31, 2012

1. Corporate Information

Faze Three Limited (the company) is a public company domiciled in India and incorporated underthe provisions of the Indian Companies Act, 1956. The company s equity shares are listed for trading on the Bombay Stock Exchange. The company is engaged in manufacturing of Home furnishing items.

2. Basis of Accounting

The Financial statements have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP). The financials are prepared under the historical cost convention on an accrual basis and to comply in all material respects with the Accounting Standards notified under the Companies (Accounting Standard) Rules, 2006 (as amended) to the extent applicable and relevant provisions of the Companies Act, 1956.

a. Terms/rights attached to Equity Shares

The Company has only one class of Equity Shares having a par value of Rs. 10/- per share. All the Equity Shares rank pari passu in all respect.

b. The company has not issued bonus shares and shares for consideration other than cash nor the company has bought back any shares during the period of five years immediately preceding the reporting date.

Note No.3.1

The term loan is secured by pari passu charge by way of EMT of Land & Building and Hypothecation of specific Plant & Machineries and other movable fixed assets in respect of the expansion / new projects as prime security and collaterally secured by way of extension of the first charge on the existing fixed assets of the company excluding office property at Worii. The office property at Worli is exclusively charged to Canara Bank. (Comprising built up area 1983 sq.ft)

Term loans from Canara bank included above carries interest of (BPLR 0.25 bps) to (BPLR 1.25 bps). The same Loan was taken from FY 2002 and is repayable in quarterly installments by FY 2015. Some of the loans included above fall under Technology Ungradation Fund Scheme of Ministry of Textiles (TUFS) which are eligible for a interest subsidy of 500 bps.

Term loans from Allahabad bank included above carries interest of (Base Rate 450 bps). The same Loan was taken from FY 2010 and is repayable in quarterly installments by 2016. Other Loans are repayable in monthly installments by 2014 There is no default in repayment of the term loans.

Note No.4.1

Packing Credit Foreign Currency (PCFC) and Packing Credit Rupees (PCRS) is secured by way of hypothecation of Current Assets (raw materials, WIP, finished goods, spares & stores and goods meant for exports, book debts etc) as prime security and collaterally secured by extension of the charge on the Fixed Assets of the company excluding Office property at Worli. The office property at Worii is exclusively charged to Canara Bank. (Comprising built up area 1983sq.ft).

PCFC and PCRS facilities are from Canara Bank carrying interest rate of (LIBOR 350 bps) for PCFC facility and 11.25 % for PCRS facility for Allahabad Bank. However, PCRS facility is eligible for interest subvention of 2 %.

Note No.5.1 Foreign Curreny Convertible Bonds

The current outstanding of principal value of Foreign Currency Convertible Bonds have become due for redemption on 27th Demember, 2011 and were not redeemed on that date. These Bonds have redemption premium and interest payable which has been provided in the books of accounts.

Note no. 5.2 - Invocation of Corporate guarantee

The Company had given Corporate Guarantee to Canara Bank London in respect of its German subsidiary namely Pana Textil GmbH to the extent of 4 Mln Euros. The said guarantee had been invoked in the last financial year and liability with respect to the same has been near crystallization as the completion of insolvency proceedings of Pana Textil GmbH is underway. Accordingly the liability has been provided in the books of accounts for the cunent year.

Note no. 5.3 - Includes an amount of Rs. 35.5 Mln received as advance against property and Rs. 44.61 Mln temporary book overdraft. There are no amounts due to be transferred to investor protection fund.

6. Exceptional items

The Company had given Corporate Guarantee to Canara Bank London in respect of its German subsidiary namely Pana Textil GmbH to the extent of 4 Min Euros. The said guarantee had been invoked in the previous year and liability with respect to the same has been near crystallization as the completion of insolvency proceedings of Pana Textil GmbH is underway. Apart from aforesaid it aiso includes write offs on account of the subsidiary. Further, it includes diminution in value of investments made in an associate company in accordance with Accounting Standard -13 (AS -13).

*The Company had given Corporate Guarantee to Canara Bank London in respect of its German subsidiary namely F ana Textil GmbH to the extent of 4 Mln Euros. The said guarantee had been invoked in the last financial year and the liability with respect to the same has been near crystallization during insolvency proceeding of Pana Textil GmbH, which are underway. Accordingly the liability has been provided in the books of accounts for the current year.

7. Miscellaneous expenses under note 26 Other Expenses mainly includes R & D - lab testing expenses of Rs. 3.87 Mln (PY Rs. 3.36 Mln), Repairs-others Rs.6.73 Mln (PY Rs. 4.31 Mln), Commission/ service charges Rs.2.22 Mln (PYRs.2.70 Mln), W/Offsof Rs. 151.65 Mfn(PYRs.nil), Security expenses Rs. 5.14 Mln (PYRs. 4.75 Mln), Printing & Stationery Rs.2.41 Mln (PY Rs.2.63 Mln), Loss on Sale of Assets Rs. 0.43 Mln (PY Rs.nil), etc.

8. Going Concern

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The management believes that it is appropriate to prepare these financial statements on going concern basis, for the following reasons:

a) The company has not made operating losses during the year. Besides, there are sufficient orders on hand pending execution. The management is fully seized of the matter and is of the view that going concern assumption holds true and that the company will be able to discharge its liabilities in the normal course of business.

b) As the Networth of the company is eroded in the current year, it is a mandatory requirement under section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 to file a reference to BIFR for revival and rehabilitation of the company. Accordingly, the Board of directors of the company have resolved to file reference to BIFR based on this Audited balance sheet.

9. There are no outstanding dues to small and medium enterprises as defined under MSMED Act, 2006.

10. Debit / Credit balances are subject to confirmation and reconciliation.

11. Previous period figures

Till the year ended 31st March 2011, the company was using pre-revised schedule VI of the Companies Act, 1956, for preparation and presentation of its financial statements. During the year ended 31 st March 2012, the revised schedule VI notified under the Companies Act, 1956, has become applicable to the Company. The Company has reclassified previous year figures to conform to this year s classification.

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