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Notes to Accounts of Garware Polyester Ltd.

Mar 31, 2015

Out of the above:

(i) 200,000 Equity Shares of Rs. 10/- each were allotted as fully paid up to various schemes operating under UTI Assets Management Company Ltd. at a premium of Rs. 22.67/- per share on 23rd December, 2008 as per arrangement. (Previous Year 200,000).

(ii) 254,764 Equity Shares of Rs. 10/- each fully paid-up issued to the shareholders of Garware Chemicals Limited (GCL) as per the scheme of arrangement under Section 391 to 394 of the Companies Act, 1956 on 14th November, 2011 (Previous Year 254,764).

(iii) 5,446,000 0.01% Cumulative Redeemable Preference Shares of Rs. 100/- each were allotted as fully paid up to IDBI at par (4,954,000 on 7th November, 2007 and 492,000 on 19th June, 2008) as per arrangement (Previous Year 5,446,000).

Terms / Rights attached to Shares:

Equity Shares:

The company has only one class of equity shares having a par value of Rs. 10/- per share. Each equity shareholder is entitled to One Vote per share. The company declares and pays dividends in Indian Rupees. The dividend proposed by the board of directors is subject to approval of shareholders in the ensuing Annual General Meeting.

As per the Companies Act, 2013, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts in the event of liquidation of the company. The distribution will be in proportion to the number of equity shares held by the shareholder.

Preference Shares:

The Preference Shares amounting to Rs. 4,954.00 Lakhs allotted on 07.11.2007 were redeemable in 3 equal installments from 1st April, 2014 to 1st April, 2016 and Rs. 492.00 Lakhs allotted on 19.06.2008 were redeemable in single installment on 1st April, 2016. These Preference Shares carry a fixed cumulative dividend of 0.01% per annum.

The company has fully redeemed the above Preference Shares amounting to Rs. 5,446.00 Lakhs by paying Rs. 4,000.00 Lakhs as One Time Settlement in full and final payment. The difference of Rs. 1,446.00 Lakhs has been credited in the Statement of Profit and Loss Account under Other Income.

1) Term Loan of Rs. 7,604.94 Lakhs (Previous Year Rs. 9,154.66 Lakhs) are secured by first pari-passu charge on Fixed Assets of the company both present and future except Land and Building at Vile Parle, Mumbai, and also by way of second pari-passu charge on current assets of the company. The loans are repayable in 20 quarterly installments from quarter ended March 2011 till December 2018.

2) Fixed assets finances of Rs. 310.12 Lakhs (Previous Year Rs. 213.49 Lakhs) are secured by hypothecation of specific assets. The loans are repayable in 60 monthly / 20 quarterly installments. The installments are payable from October 2010 till January 2020 covering all loans taken at various dates.

3) Deferral Loan from SICOM is payable from April 2016 to April 2026.

4) The rate of interest on Foreign Currency Loans are at LIBOR 7.5%, on Rupee Loan @ 12.75% to 14.05% p.a. and on Fixed Assets Loan @ 9.94 % to 11.80% p.a.

a) Cash / Packing Credit Loans are secured by hypothecation of all the current assets including all stocks, book debts etc. of the company and further secured by a second charge on fixed assets of the company excluding property at Vile Parle.

b) Interest on Working Capital (Rupee) Loans ranges between 11% to 15.80% p.a. and Foreign Currency Loans Libor 2.5% to Libor 3.50% p.a.

2. The company has redeemed during the year 54,46,000, 0.01% Cumulative Redeemable Preference Shares of Rs. 100/- each aggregating to Rs. 5,446.00 Lakhs issued and allotted to IDBI Bank Ltd., by paying Rs. 4,000.00 Lakhs as One Time Settlement in full and final settlement of the above-said Preference Shares. The difference of Rs. 1,446.00 Lakhs has been treated as Other Income.

3. The remuneration of Rs. 965.72 Lakhs paid to the Managing Director, Joint Managing Directors and Director are subject to the sanction of the Central Government in respect of which applications have been made and are pending with the Government. (Previous Year Out of Rs. 237.82 Lakhs which was subject to sanction of the Central Government, Rs. 89.61 Lakhs are still pending under approval for which revised application has been made).

4. LEASES

The company has entered into Finance and Operating Lease Agreements. As required under the Accounting Standard 19 on 'Leases', the future minimum lease payments on account of each type of lease are as follows:

a. Operating Leases

The company has taken various residential / commercial premises and vehicles on operating leases. These operating lease are in the nature of "cancellable lease" therefore disclosure as per Accounting Standard - 19 is not required.

5. Legal and Professional Charges include Rs. 6.25 Lakhs (Previous Year Rs. 5.75 Lakhs) paid to some of the Partners of the Auditors and Rs. 5.56 Lakhs paid to a firm in which one of the Director is a proprietor, (Previous Year Rs. 4.67 Lakhs) for Corporate Law and Tax Services.

6. The Company has expensed out / written off Sales Tax receivable of Rs. 1,684.36 Lakhs in prior years pursuant to an amendment of MVAT Act by the Government of Maharashtra with retrospective effect. However, as per legal opinion obtained by the company, this amendment was not applicable to CST. Accordingly, the balance amount of Rs. 622.16 Lakhs out of Rs. 1,178.30 Lakhs relating to CST which has been expensed out earlier, is written back by the company in the previous year.

7. SEGMENT REPORTING

a) The company is only in one line of business namely - Polyester Films.

b) The Segment Revenue in the Geographical Segment considered for disclosure are as follows:

i) Revenue within India includes sales to customers located within India.

ii) Revenue outside India includes sales to customers located outside India including Export Benefits / Incentives.

8. RELATED PARTY DISCLOSURES

a) List of Related Parties

Subsidiary Garware Polyester International Limited

Step down Subsidiary Global Pet Films Inc.

Key Management Personnel Shri. S. B. Garware - Chairman and Managing Director

Mrs. S. S. Garware - Director

Mrs. Monika Garware Modi - Vice Chairperson & Joint Managing Director

Mrs. Sarita Garware Ramsay - Joint Managing Director

Ms. Sonia S.Garware - Director

Mr. M. S. Adsul - Director - Technical

Entities in which some Garware Industriees Ltd. of the Directors are Great View Real Estates Pvt. Ltd. interested

9. CAPITAL AND OTHER COMMITMENTS

Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 279.46 Lakhs (Previous Year Rs. 1,053.31 Lakhs) against which an advance of Rs. 27.19 Lakhs (Previous Year Rs. 99.01 Lakhs) has been paid.

10. CONTINGENT LIABILITIES

a) Contingent Liabilities not provided for - As at As at 31.03.2015 31.03.2014 Rs. in Lakhs Rs. in Lakhs

Disputed matters in appeal / contested in respect of:

Income Tax 1,404.81 1,487.64

Excise Duty and Service Tax 44.20 477.16

Sales Tax 1,178.30 900.96

Local Body Tax 383.06 383.06

Maharashtra State Electricity Board (MSEB) 27.72 27.72

TOTAL 3,038.09 3,276.54

b) The Company has given counter-guarantees for Rs. 6,606.34 Lakhs (Previous Year Rs. 5,182.57 Lakhs) to Banks in respect of guarantees given by the Banks to third parties for Purchase of Equipments, Supply of Goods, Clearance of Goods from Customs, Excise Bonds, etc.

c) Letters of Credit opened on behalf of the Company by Banks for purchase of materials and equipment amount to Rs. 22,506.53 Lakhs (Previous Year Rs. 25,904.60 Lakhs).

d) Bills of Exchange discounted under Bill Marketing Scheme amount to Rs. 3,174.72 Lakhs (Previous Year Rs. 2,653.07 Lakhs).

This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

11. FINANCIAL AND DERIVATIVES INSTRUMENTS

a) Derivatives contracts entered into by the company and outstanding as on 31st March, 2015: i) Forward Contract is Rs. 1,864.86 Lakhs (Previous Year Rs. Nil Lakhs)

b) Foreign Currency Exposure that are not hedged by derivatives instruments as on 31st March, 2015 amounts to Rs. 7,323.28 Lakhs (Previous Year Rs. 1,388.88 Lakhs). The un-hedged exposures are naturally hedged by future foreign currency earning and earnings linked to foreign currency.

12. The company is required to spend an amount of Rs. 41.05 Lakhs during the year on CSR expenditure as per the Section 135 of the Companies Act, 2013 read with Schedule VII thereof and company has spent Rs. 60 Lakhs during the year by way of contribution to fund of Garware Charitable Trust.


Mar 31, 2014

1. SHARE CAPITAL

Terms / Rights attached to Shares Equity Shares :

The company has only one class of equity shares having a par value of Rs. 10/- per share. Each equity shareholder is entitled to One Vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the board of directors is subject to approval of Shareholders in the ensuing Annual General Meeting.

As per the companies Act, 1956 the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts in the event of Liquidation of the company. The distribution will be in proportion to the number of equity shares held by the shareholder.

Preference Shares :

The preference shares amounting to Rs. 4,954.00 Lakhs allotted on 07.11.2007 are redeemable in 3 equal installments from 1st April, 2014 to 1st April, 2016 and Rs. 492.00 Lakhs allotted on 19.06.2008 shall be redeemed in single installment on 1st April, 2016. These preference shares carry a fixed cumulative dividend of 0.01% per annum.

2. The company has revalued its Aurangabad and Nashik land in Previous Year at Rs. 21,803.73 Lakhs on the basis of certified valuers (M/s VGK Truman Consultancy Pvt. Ltd.) report dated 25/04/2013. This has resulted in land being further revalued by Rs. 18,755.94 Lakhs. The consequent appreciation in value has been credited to Revaluation Reserve.

Further in accordance with Accounting Standard (AS-28) issued by the Institute of Chartered Accountants of India, dealing with "Impairment of Assets", the company has been advised that there was impairment of certain Cash Generating Unit (CGU) by considering the market value and its potential capacity to generate cash flows in Previous Year. On the basis of the report given by a professional consultancy firm of valuers such impairment in value of CGU works out to Rs. 13,235.03 Lakhs. This has been adjusted against the balance in Revaluation Reserve in the Previous Year as provided in the scheme of Arrangement between Garware Chemicals Ltd. and the company under Section 391 to 394 of the Companies Act, 1956 as sanctioned by the Hon''ble High Court of Judicature at Bombay by its order dated 21st October, 2011.

3. The remuneration of Rs. 237.82 Lakhs paid to the Managing Director, Joint Managing directors and Director are subject to the sanction of the Central Government in respect of which applications have been made and are pending with Government. (Previous Year Rs. 767.68 Lakhs which was subject to sanction of Central Government has been duly approved).

B. Operating Leases

The company has taken various residential / commercial premises and vehicles on operating leases. These operating lease are in the nature of "cancellable lease" therefore disclosure as per Accounting Standard 19 is not required.

4. Legal and Professional Charges include Rs. 5.75 Lakhs (Previous Year Rs. 5.50 Lakhs) paid to some of the Partners of the Auditors for other services and Rs. 4.67 Lakhs paid to a firm in which one of Director is proprietor (Previous Year Rs. 3.57 Lakhs).

5. The Company has expensed out / Written off Sales Tax receivable of Rs. 1684.36 Lakhs in prior years pursuant to amendment of MVAT Act by the Government of Maharashtra with retrospective effect. However, as per legal opinion obtained by the company, this amendment was not applicable to CST. Accordingly, balance amount of Rs. 622.16 Lakhs out of Rs. 1178.30 Lakhs relating to CST which has been expensed out earlier, is now written back by the company. (Previous Year Rs. 556.14 Lakhs has been written back).

6. SEGMENT REPORTING :

a) The company is only in one line of business namely - Polyester Film

b) The Segment Revenue in the Geographical Segment considered for disclosure are as follows: i) Revenue within India includes sales to customers located within India.

ii) Revenue outside India includes sales to customers located outside India including Export benefits / Incentives.

7. RELATED PARTY DISCLOSURES

a) List of Related Parties

Subsidiary Garware Polyester International Limited

Step down Subsidiary Global Pet Films Inc.

Key Management Personnel

Shri. S. B. Garware

Mrs. S. S. Garware

Mrs. Monika Garware Modi

Mrs. Sarita Garware Ramsay

Ms. Sonia S. Garware

Enterprises over which Key Managerial Person are able to exercise significant influence

S. B. Garware Family Trust Garware Charitable Trust Garware Industriees Ltd. Great View Real Estates Pvt. Ltd.

(Associate Company Garware Chemicals Ltd. has been merged with Garware Industriees Ltd. with effect from 1/4/2013)

8. CAPITAL AND OTHER COMMITMENTS

Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 1,053.31 Lakhs (Previous Year Rs. 3,520.61 Lakhs) against which an advance of Rs. 99.01 Lakhs (Previous Year Rs. 1,640.05 Lakhs) has been paid.

9. CONTINGENT LIABILITIES -

a) Contingent Liabilities not provided for - As at As at

31.03.2014 31.03.2013

Rs. in Lakhs Rs. in Lakhs

Disputed matters in appeal / contested in respect of:

Income Tax 1,487.64 209.31

Excise Duty and Service Tax 477.16 208.48

Sales Tax 900.96 17.13

Local Body Tax 383.06 302.62

Maharashtra State Electricity Board (MSEB) 27.72 27.72

TOTAL 3,276.54 765.26

b) The Company has given counter-guarantees for Rs. 5,182.57 Lakhs (Previous Year Rs. 3,436.91 Lakhs) to Banks in respect of guarantees given by the Banks to third parties for purchase of equipment, supply of goods, clearance of goods from Customs, Excise Bonds, etc.

c) Letters of Credit opened on behalf of the Company by Banks for purchase of materials and equipment amount to Rs. 25,904.60 Lakhs (Previous Year Rs. 17,078.95 Lakhs).

10. The Previous Year''s figure have been re-grouped / reclassified to conform to this year''s classifcation.


Mar 31, 2013

1. The company has revalued its Aurangabad and Nashik land at Rs. 21''803.73 Lakhs on the basis of certifed valuer''s (M/s VGK Truman Consultancy Pvt. Ltd.) report dated 25/04/2013. This has resulted in land being further revalued by Rs.18''755.94 lakhs. The consequent appreciation in value has been credited to Revaluation Reserve.

Further in accordance with Accounting Standard (AS-28) issued by the Institute of Chartered Accountants of India'' dealing with "Impairment of Assets"'' the company has been advised that there was impairment of certain Cash Generating Unit (CGU) by considering the market value and its potential capacity to generate cash fows. On the basis of the report given by a professional consultancy frm of valuers such impairment in value of CGU works out to Rs. 13''235.03 Lakhs. This has been adjusted against the balance in Revaluation Reserve as provided in the scheme of Arrangement between Garware Chemicals Ltd. and the company under section 391 to 394 of the Companies Act. 1956'' as sanctioned by the Hon''ble High Court of Judicature at Bombay by its order dated 21st October 2011.

2. The remuneration of Rs. 767.68 Lakhs paid to the Managing director'' Joint Managing directors and Director are subject to the sanction of the Central Government in respect of which applications have been made and are pending with Government. (Previous year Rs.666.64 Lakhs which was subject to sanction of Central Government has been duly approved.)

3. LEASES :

The company has entered in to fnance and operating lease agreements. As required under the Accounting Standard 19 on ''Leases'' '' the future minimum lease payments on account of each type of lease are as follows.

B. Operating Leases

The company has taken various residential /commercial premises and vehicles on operating leases.These operating lease are in the nature of "cancellable lease" therefore disclosure as per Accounting Standard 19 is not required.

4. Legal and Professional Charges include Rs. 5.50 Lakhs (Previous year Rs. 6.09 Lakhs) paid to some of the Partners of the Auditors for other services and Rs. Nil Lakhs for Amalgamation Expenses (Previous year Rs. 74.46 Lakhs).

5. The Company has expensed out / Written off Sales Tax receivable of Rs.1''684.36 Lakhs in prior years pursuant to amendment of MVAT Act by Government of Maharashtra with retrospective effect. However'' as per legal opinion obtained by the company'' this amendment was not applicable to CST. Accordingly'' part amount of Rs. 556.14 Lakhs relating to CST which has been expensed out earlier'' is now written back by the company.

6. SEGMENT REPORTING :

a) The company is only in one line of business namely - Polyester flm.

b) The Segment Revenue in the Geographical segment considered for disclosure are as follows:- i) Revenue within India includes sales to customers located within India.

ii) Revenue outside India includes sales to customers located outside India including Export Benefts / Incentives.

7. CAPITAL AND OTHER COMMITMENTS

Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 3''520.61 Lakhs (Previous year Rs. 5''169.49 Lakhs) against which an advance of Rs.1''640.05 Lakhs (Previous year Rs. 81.26 Lakhs) has been paid.

8. CONTINGENT LIABILITIES

As at As at

a) Contingent Liabilities not provided for - 31.03.2013 31.03.2012

Rs. in Lakhs Rs. in Lakhs Disputed matters in appeal / contested in respect of:

Income Tax 209.31 158.20

Excise Duty and Service Tax 208.48 43.94

Sales Tax 17.13 17.13

Local Body Tax 302.62 0.00

Maharashtra State Electricity Board (MSEB) 27.72 27.72

TOTAL 765.26 246.99

b) The Company has given counter-guarantees for Rs. 3''436.91 Lakhs (Previous year Rs. 906.52 Lakhs) to Banks in respect of guarantees given by the Banks to third parties for purchase of equipment'' supply of goods'' clearance of goods from Customs'' Excise Bonds'' etc.

c) Letters of Credit opened on behalf of the Company by Banks for purchase of materials and equipment amount to Rs. 17''078.95 Lakhs (Previous year Rs. 17''320.00 Lakhs).

d) Bills of Exchange discounted under Bill Marketing Scheme amount to Rs. 3''189.27 Lakhs (Previous year Rs. 2''334.90 Lakhs).

9. The previous year''s fgure have been re-grouped / reclassifed to conform to this year''s classifcation.


Mar 31, 2012

1) Zero Coupon Bonds of Rs. Nil (previous year Rs. 63.00 Lakhs) were secured by charge on fixed assets of the company situated at Aurangabad and Nashik and also by way of second charge on current assets of the company. The company does not have power to reissue the said Zero coupon bonds.

2) Term Loans of Rs. 3,288.99 Lakhs (previous year Rs. 7,596.26 Lakhs) are secured as under:

a. Term Loan of Rs. 88.16 Lakhs (previous year Rs. 578.73 Lakhs) is secured by charge on the Specific project assets and also by way of second charge on current assets of the company. The loan is repayable in 24 quarterly installments from quarter ended June 2007 till March 2013.

b. Term Loan of Rs. 2,317.75 Lakhs (previous year Rs.1,196.89 Lakhs ) is secured by charge on the Specific project assets and also by way of second charge on current assets of the company. The loan is repayable in 20 quarterly installments from quarter ended March 2011 till December 2015.

c. Term Loan of Rs. 883.08 Lakhs (previous year Rs.Nil) is secured by charge on Fixed assets of the company situated at Aurangabad and Nasik and also by way of second charge on current assets of the company. The loan is repayable in 20 quarterly installments from quarter ended June 2012 till March 2017.

d. Term Loan of Rs. Nil (previous year Rs.5,383.50 Lakhs) was secured by charge on Fixed assets of the company situated at Aurangabad and Nasik also by way of second charge on current assets of the company.

e. Term Loan of Rs. Nil (previous year Rs. 437.14 Lakhs) was against the Fixed Deposits.

3) Vehicle Finances of Rs. 444.33 Lakhs (previous year Rs. 450.60 Lakhs) are secured by hypothecation of Specific assets. The loans are repayable in 60 monthly installments. the installment are payable from May 2007 till November 2016 covering all loans taken at various dates.

4) Deferral Loan from SICOM is payable from April 2016 to April 2026

5) The rate of interest on Foreign Currency loans ranges between LIBOR 7% to 7.5%, 14.25% on Rupee Loans and 8.92% to 15.5% on vehicle loans

a) Cash / packing Credit / Working Capital Demand Loans are secured by hypothecation of stores, spares and packing materials and stock- in-trade and book debts of the Company and further secured by a second charge on the movable assets of the Company and immovable properties situated at Aurangabad and Nasik.

b) Working Capital Loans are secured by hypothecation of stores, spares and packing materials and stock-in-trade of the Company.

c) Interest on working capital (Rupee) Loans ranges between 12.50% to 17% and Foreign currency loans 2.46% to 4.54%.

6. The remuneration of Rs. 616.22 Lakhs paid to the Managing director and Joint Managing directors are subject to the sanction of the Central Government in respect of which applications have been made and are pending with Government.

7. The significant leasing arrangements of the company are in respect of operating leases for premises and vehicles. these leasing arrangements range between 11 months and 5 years and are usually renewable by mutual consent on mutually agreeable terms. the agreeable lease rental payable are charged to profit and Loss account and shown under administrative, selling and general expenses in appropriate heads.

8. The break up of expenses capitalized and shown under Capital Work in progress (pending Allocation) as on 31.03.2012 is as under:

9. Legal and professional Charges include Rs. 6.09 Lakh (previous year Rs. 7.70 Lakh) paid to some of the partners of the Auditors for other services and Rs. 74.46 Lakhs for Amalgamation expenses (previous year Rs. 14.27 Lakhs).

10. Export Benefits / incentives are accounted on accrual basis. Accordingly, net estimated benefit aggregating to Rs. 1,273.82 Lakhs (previous year Rs. 1,345.41 Lakhs) against export effected during the year has been credited to export Benefits earned account which has been included in sales.

11. In accordance with Accounting Standard 28 (AS 28) issued by the institute of Chartered Accountants of India on impairment of Assets, the company had appointed professional consultancy firm as the Valuer's to assess impairment of each cash generating unit (CGu) by taking market value and its potential capacity to generate cash flows. According to the Valuer's report, there is no impairment to any of the assets as such no provision for impairment of assets is required to be made in the accounts.

12. SEGMENT REPORTING:

a) The company is only in one line of business namely - polyester film.

b) The Segment Revenue in the Geographical segment considered for disclosure are as follows:-

i) Revenue within India includes sales to customers located within India.

ii) Revenue outside India includes sales to customers located outside India including export Benefits / incentives.

13. CAPITAL AND OTHER COMMITMENTS

Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 5,169.49 Lakhs (previous year Rs.3,221.79 Lakhs) against which an advance of Rs. 81.26 Lakhs (previous year Rs. 310.55 Lakhs) has been paid.

14. CONTINGENT LIABILITIES -

a) Contingent Liabilities not provided for - As at As at 31 March 2012 31 March 2011 Rs. in Lakhs Rs. in Lakhs

Disputed matters in appeal / contested in respect of:

Income tax 158.20 83.16

Excise Duty 43.94 43.94

Sales tax 17.13 17.13

Maharashtra State electricity Board (MSEB) 27.72 27.72

TOTAL 246.99 171.95

b) The Company has given counter-guarantees for Rs. 906.52 Lakhs (previous year Rs. 887.91 Lakhs) to Banks in respect of guarantees given by the Banks to third parties for purchase of equipment, supply of goods, clearance of goods from Customs, excise Bonds, etc.

c) Letters of Credit opened on behalf of the Company by Banks for purchase of materials and equipment amount to Rs. 17,320.00 Lakhs (previous year Rs. 9,314.21 Lakhs).

d) Bills of exchange discounted under Bill Marketing Scheme amount to Rs. 2,334.90 Lakhs (previous year Rs. 1,851.66 Lakhs).

15. DEFERRAL / CAPITALIZATION OF EXCHANGE DIFFERENCES

In accordance with the amendment / earlier amendment to AS 11, the company has capitalized exchange loss, arising on long-term foreign currency loan / Creditors, amounting to Rs. 409.46 Lakhs (previous year Rs. 19.27 Lakhs) to the cost of plant and equipments.

16. The previous year's figure have been re-grouped / reclassified to conform to this year's classification which is as per Revised Schedule Vi. this adoption does not impact recognition and measurement principles followed for preparation of financial statement as at 31st March 2011.

 
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