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Notes to Accounts of GEE Ltd.

Mar 31, 2015

1. Particulars of Holding Company

Not Applicable

2. Rights, Preference and Restrictions of Share holders ^ Equity shares of the company has par value of Rs. 21- per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the company, the holder of equity shares will be entitled to receive remaining assets if any after distribution of all prefrential accounts.The distribution will be pro-rata to the equity share held by the shareholder.

Apart from right,restrictions and preferences prescribed by the companies Act 1956.The Articles of Association of the company elaborately deal with the above.The reader is requested to refer to respective document for details.

3. There are no shares reserved for issue under options and contracts commitments for the sale of shares / disinvestment

Pursuant of order of the Honorable High Court, Mumbai during the year 2008-09,901,786 Equity shares have been issued for the consideration other than cash to amalgamating companies in the Scheme of Amalgamation of Ferroseal India Private Limited, Filarc Engineers Private Limited, Sagar Merchandise Private Limited with GEE Limited.

4. There are no securities convertible into equity and preference share.

5. Contingentliabilitiesand commitments

* Guarantees outstanding as at 31st March 2015: Rs 1,683,106/-(asat3r'Mardr2014:Rs.5,523,952/-)

* Foreign LC outstanding as at 31st March 2015 :Rs49,870,363/- (as at 31st March 2014:Rs.4,687,120/-)

* Disputed Demands against the Company as at 31st March 2015 (paid under protest and thereby reflecting under Loans and Advances):

Custom Duty - Rs 1,500,000 (as at 31st March 2014: Rs 1,500,000)

Excise Duty - Rs 20,710,006 (as at 31st March 2014: Rs 20,710,006)

The Company had received a show cause notice dated 12th May 2010 demanding Rs.4.02 Cr.of CENVAT credit on certain imported material, imported in the year 2008-09.Under the instructions from excise authorities the Company has already reversed under protest CENVAT credit ofRs.3.09Cr in the earlier year. Pending disposal of the case a sum of Rs.2.1 Cr. reversed under protest is shown under"Claims against the excise authorities"under the head loans and advances.The Company has filed an early hearing application and the next hearing is scheduled on 10th August, 2015. Based on the legal opinion, thecompany is hopeful of favourable order as the matter is one of interpretation of law.

* Assessment for Sales Tax/Vat for the year 2006-07 has been completed during the current financial year and the sales tax/vat demand of Rs. 23.25 Lacs excluding interest and penalty has been raised for non submission of Central Sales Tax Declaration Forms.The Company has filed appeal for the above mentioned years seeking time for submission of Central Sales Tax Declaration Forms.The management is of the opinion that there will be no liability as pending Central SalesTax Declaration Forms will be submitted soon. Similar SalesTax Appeal for FY 2005-06 & 2008-09 is pending before Sales Tax Authorities forthe SalesTax demand of Rs.21.70 Lacs&30.37 Lacs excluding interest & penalty, respectively.

However the company has made payment under protest of Rs.11 lacs, Rs. 10 Lacs & Rs. 12.55 Lacs for FY 2005-06,2006-07 & 2008-09 respectively, which is shown under sundry assets in the Balance Sheet.

* Income Tax Liability as per TDS (Traces) for various years is Rs.l 1,77,928/-. The Management has represented that necessary rectification applications are being made and there would not be any liability on this count.

6. Borrowings

Secured Loan

a. Term Loans from Banks are secured by mortgage/hypothecation of related immovable/movable assets of the Company, both present and future.The term loans are repayable in instalments and carried interest @ 13.70% p.a. Final repayments are due on August 2016. Amount of term loan repayable within a period of one year is Rs.636.56 lacs.

b. Working Capital Loans from Banks are secured by hypothecation of stocks and book debts ranking pari-passu between them as also mortgage/hypothecation of specified immovable and movable fixed assets of the Company ranking pari-passu by way of second charge.The facilities carried interest @ 12.25%.

c. Vehicle Loans are secured by hypothecation of related vehides.The vehicle loans are repayable in installments spread over 3 to 5 years and carries interest ranging from 9.3% to 12.44%. Amount of vehicle loan repayable within a period of oneyear is Rs.7.24 lacs (excluding interest)

The Company has exited from consortium banking arrangement with SBI&TJSB in 2015-16. All borrowing limits from SBI have been taken over by DBS Bank Ltd.The company has entered into a multiple banking arrangement with DBS Bank&TJSB Bank.

This decision has been taken to reduce finance cost as ROI offered by DBS is significantly lower than that of SBI.

Unsecured Loan:

The Company has borrowed monies in form of Inter corporate deposit (ICDs) from various parties.The balance as at 31st March,2015 is Rs.720.29 Lacs.The said ICDs are unsecured and bears interest @ 12%p.a.

7. Change in Depreciation Estimate

In accordance with requirements prescribed under Schedule II of the Companies Act 2013, the company has assessed the estimated useful life of its assets and has adopted the useful life as prescribed in the Schedule II in respect of all assets.

(i) The depreciation charged to Statement of Profit and Loss includes the carrying amount of those assets whose useful life is over at the beginning ofthefinancial year amounting to Rs.79,605/-

(ii) The depreciation charged to Statement of Profit and Loss is lower by Rs 10,433,355/- on account of changes in estimated useful life

8. Based on the information available with the Company, the amounts due to SSI units and suppliers registered under Micro, Small and Medium Enterprises Development Act, 2006 as at 31st March 2015 are not outstanding for more than 30 days.The SSI units have been identified by the Company and relied upon by the auditors.

9. In the opinion of the management, the current assets, loans & advances are expected to realize at least the amount at which they are stated, if realized in the ordinary course of business and provision for all known liabilities have been adequately made in the accounts.

10. Segment Information

The Company is engaged in the business of manufacturing Welding consumables,Copper coated wires, Flux Cored Wires and Welding fluxes and is organisationally managed in two units. Accordingly,the Company has only one business reporting segment.lt has customers in India as well as outside India. However,as per AS-17,segment reporting is not required to be furnished.

11. Related Party Disclosures

Related Party disclosures, as required by AS-18 "Related Party Disclosures"are given below:-

Relationship

(I) Key management personnel (Whole Time Directors)

Mr.S.L.Agarwal- Managing Director Mr.S.M.Agarwal - Executive Director Mr.G.K.Saraf-Executive Director Mr.M.P.Dhanuka-Executive Director (Marketing)

(ii) KeyManagementPersonnel(Relativesof Directors)

Mr.O.P.Agarwal - President (Marketing)

Mr.Umesh Agarwal - Vice President (Technical)

Mrs.Payal Agarwal - Vice President (Finance)

Mrs.Nirmala Agarwal - Public Relation Officer Mrs.Sneha Agarwal-Administrative Manager Ms.Puja Agarwal - Operational Manager

(iii) Companies where Significant Influence exists(with whom transactions have taken place)

Anant Business Pvt.Ltd RShankarlal Sales Pvt.Ltd Vitro Commodities Pvt. Ltd.

BakshiChempharma Pvt.Ltd.

Note: Related party relationship is as identified by the company and relied upon by the auditors

12. Information regarding managerial remuneration:

Statement of Profit & Loss includes managerial remuneration fortheyear2014-15isRs.9,702,561; (2013-14: Rs.9,751,561)

Notes:

1 The Company's productsareexemptfrom licensing requirements under New Industrial Policy in terms of Notification No. 477(E) dated 25th July,

1991 & F.No. 10/43/91 -LP dated 2nd August, 1991.

2. Opening Stock,Turnover,Closing Stock in respect of goods for resale are included in respective product categories.

3. Installed Capacity details is given for a single standard size production plan.

13. Long term contracts and derivatives contract in the financial years:

The Company does not have longterm contract including long term derivative contract.

14. Investor Education and Protection Fund:

There is noamount required to be transferred to Investor Education and Protection Fund by the Company.

15. Corporate Social Responsibility (CSR):

During the year the company was required to spend 2% of average profits for last three years towards CSR expenditure as per Section 135 of the Act which works to Rs. 15,94,159/- for the year.The company has spent Rs. 16,00,000/-amount on CSR expenditure.

16. Publicdeposit:

The company has not accepted any depositfrom the public, within the meaning of Sections 73 to 76 of companies Act 2013 and the rules framed there under.

17. Previous year's figures have been regrouped / rearranged wherever considered necessary,to conform to the current period's presentation.


Mar 31, 2014

1. Rights, Preference and Restrictions of Share holders

Equity shares of the company has per value of Rs. 2/- per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the company, the holder of equity shares will be entitled to receive remaining assets if any after distribution of all prefrential accounts. The distribution will be pro rate to the equity share held by the shareholder.

Apart from right, restrictions and preferences prescribed by the companies Act 1956. The Articles of Association of the company elaborately deal with the above. The reader is requested to refer to respective document for details.

2. There are no shares reserved for issue under options and contracts commitments for the sale of shares / disinvestment

3. There are no securities convertible into equity and preference share.

4. Contingent liabilities and commitments

* Guarantees outstanding as at 31st March 2014: Rs. 5,523,952 (31st March 2013: Rs.6,374,521)

* Foreign LC outstanding as at 31st March 2014: Rs 4,687,120 (31st March 2013: 1,58,22,673)

* Disputed Demands against the Company as at 31st March 2014 (paid under protest and thereby reflecting under Loans and Advances): Custom Duty - Rs. 1,500,000 (31st March 2013: Rs. 1,500,000)

* Assessment for Sales Tax/Vat for the year 2005-06 and 2008-09 has been completed during the current financial year and the sales tax/vat demand of Rs. 21.70 lacs and Rs. 30.37 Lacs excluding interest and penalty for the year 2005-06 and 2008-09 respectively has been raised for non submission of Central Sales Tax Declaration Forms. The Company has filed appeal for the above mentioned years seeking time for submission of Central Sales Tax Declaration Forms. The management is of the opinion that there will be no liability as pending Central Sales Tax Declaration Forms will be submitted soon. However the company has made payment under protest of Rs. 2,350,000/- which is shown under sundry assets in the Balance Sheet

5. Secured Loan

a. Term Loans from Banks are secured by mortgage/hypothecation of related immovable/movable assets of the Company, both present and future. The term loans are repayable in installments and carried interest @ 13.70% p.a. in the last fiscal. Final repayments are due on August 2016. Amount of term loan repayable within a period of one year is Rs.664.84 lacs.

b. Working Capital Loans from Banks are secured by hypothecation of stocks and book debts ranking pari-passu between them as also mortgage/hypothecation of specified immovable and movable fixed assets of the Company ranking pari-passu by way of second charge. The facilities bore interest @12.25% in the last fiscal.

c. Vehicle Loans are secured by hypothecation of related vehides. The vehicle loans are repayable in installments spread over 3 to 5 years and carries interest ranging from 9.3% to 12.44%. Amount of Vehide loan repayable within a period of one yearis Rs. 36.58 Lacs (excluding interest).

d. Foreign Currency Term Loan (FCTL) facility, carved out within the overall term loan facility, has been repaid in full in the current financial year.

e. During the year the company has borrowed money in form of Inter corporate deposit (ICDs) from various parties. The said ICDs are unsecured and bears interest @ 12%p.a.

6. No amount was due for credit to Investor Education & Protection Fund as at 31st March 2014.

7. Based on the information available with the Company, the amounts due to SSI units and suppliers registered under Micro, Small and Medium Enterprises Development Act, 2006 to extent identified as at 31st March 2014 are not outstanding for more than 30 days. The SSI and MSME units have been identified by the Company and relied upon by the auditors.

8. In the opinion of the management, the current assets, loans & advances are expected to realize at least the amount at which they are stated, if realized in the ordinary course of business and provision for all known liabilities have been adequately made in the accounts.

9. The Company has received a show cause notice dated 12th May 2010 demanding Rs.4.02 Cr. of CENVAT credit on certain imported material, imported in the year 2008-09. Under the instructions from excise authorities the Company has already reversed under protest CENVAT credit of Rs.3.09 Cr in the earlier year. Pending disposal of the case a sum of Rs. 2.1 Cr. reversed under protest is shown under "Claims against the excise authorities" under the head loans and advances. The Company has replied to the show cause notice and based on the legal opinion, is hopeful of favorable order, as the matter is one of interpretation of law.

10. Segment Information

The Company is engaged in the business of manufacturing Welding electrodes, Copper coated wires, Flux Cored Wires and Welding fluxes and is organisationally managed in two units. Accordingly, the Company has only one business reporting segment. It has customers in India as well as outside India. However, as per AS-26, segment reporting is not required to be furnished.

11. Related Party Disclosures

Related Party disclosures, as required by AS-18 "Related Party Disclosures" are given below:-

Relationship

I) Key management personnel (Whole Time Directors

Mr. S. L. Agarwal - Managing Director Mr.S.M. Agarwal - Executive Director Mr. G. K. Saraf - Executive Director Mr.M.P. Dhanuka - Executive Director (Marketing)

(ii) Key Management Personnel (Relatives of Directors)

Mr.O.P. Agarwal - Vice President (Marketing) Mr. Umesh Agarwal - Vice President (Technical) Mrs. Payal Agarwal - Vice President (Finance) Mrs. Nirmala Agarwal - Public Relation Officer Mrs. Sneha Agarwal - Administrative Manager

(iii) Companies where Significant Influence exists (with whom transactions have taken place)

Anant Business Pvt. Ltd R Shankarlal Sales Pvt. Ltd Vitro Commodities Pvt. Ltd. Bakshi Chempharma Pvt. Ltd.

12. a) Information regarding managerial remuneration

Statement of Profit & Loss includes managerial remuneration for the year 2013-14 (Rs. 9,751,561);(2012-13: Rs. 9,107,132)

Note. The computation of managerial remuneration u/s 198/349 of the Companies Act, 1956 has not been provided as no commission is paid to the Directors.

b) Information regarding payment to relatives of directors Statement of Profit & Loss includes payment to relatives of directors as under:

Notes:

1. The Company''s products are exempt from licensing requirements under New Industrial Policy in terms of Notification No. 477(E) dated 25th July, 1991 & F.No. 10/43/91 -LP dated 2nd August 1991.

2. Opening Stock, Turnover, Closing Stock in respect of goods for resale are included in respective product categories.

3. Installed Capacity data is given for a single standard size production plan.

13. Previous year''s figures have been regrouped / rearranged wherever considered necessary, to conform to the current period''s presentation.


Mar 31, 2013

1. Secured Loan

a. Term Loans from Banks are secured by mortgage/hypothecation of related immovable/movable assets of the Company''''both present and future.The term loans are repayable in installments spread over 4.5 years and carries interest at 16% to 13.4% p.a. Final repayments are due on August 2016. Amount of term loan repayable within a period of one year is Rs.512.34 lacs (excluding interest).

b. Working Capital Loans from Banks are secured by hypothecation of stocks and bookdebts ranking pari-passu between them as also mortgage/hypothecation of specified immovableandmovablefixed assets of the Company ranking pari-passu by way of second charge.The facilities carry interest rangingfrom 15.75% to 10.60% in the last fiscal.

c. Vehicle Loans are secured by hypothecation of related vehicles.The vehicle loans are repayable in installments spread over 3 to 5 years and carries interest ranging from 9.3% to 12.44%. Final repayments are due till November 2014. Amount of term loan repayable within a period of one year is Rs.41.73 lacs (excluding interest)

d. A bank has carved-out Foreign Currency Term Loan (FCTL) facility within the overall term loan facility sanctioned by the bank in 2011-12.The Company has repaid the FCTL as and when it became due on maturity in 2012-13''''thereby recrediting the Rupee term loan account.Further''''the Company has entered into fresh FCTL in 2012-13. Since the FCTLs are repayable after a year'''' the bank recredits the Rupee Term Loan account accordingly. Hence'''' there is no repayment schedule for the FCTL.The carved-out portion of Loan is secured by mortgage / hypothecation of related immovable/ movable assets of the Company'''' both present and future and carries interest ranging from 6.5% to 8.8%.

2. No amount was due for credit to Investor Educations Protection Fund as at 31st March 2013.

3.The amounts due to SSI units as at 31" March 2013 are not outstanding for more than 30 days.The SSI units have been identified by the Company and relied upon by theauditors.

The Company has not received any intimation from "suppliers" regarding their status under the Micro'''' Small and Medium Enterprises Development Act'''' 2006 and hence disclosures'''' if any'''' relating to amounts unpaid as at the year end together with interest paid / payable as required under the said Act have notbeenfurnished.

4. In the opinion of the management'''' the current assets'''' loans & advances are expected to realize at least the amount at which they are stated'''' if realized in the ordinary course of business and provision for all known liabilities have been adequately made in the accounts.

5 .The Company has received a show cause notice dated 12th May 2010 demanding Rs.4.02 Cr. of CENVAT credit on certain imported material'''' imported in the year 2008-09.Undertheinstructionsfrom excise authorities the Company has already reversed under protest CENVAT credit of Rs.3.09Cr in the earlier year. Pending disposal of the case a sum of Rs.2.1 Cr. reversed under protest is shown under"Claims against the excise authorities"underthe head loans and advances.The Company has replied to the show cause notice and based on the legal opinion'''' is hopeful of favorable order'''' as the matter is one of interpretation of law.

6. Related Party Disclosures

Related Party disclosures''''as required by AS-18"Related Party Disclosures"are given below:-

Relationship

(i) Key management personnel (Whole Time Directors)

Mr. S. L. Agarwal - Managing Director

Mr. S. M. Agarwal - Executive Director

Mr. G. K. Saraf - Executive Director

Mr. M. P. Dhanuka - Executive Director (Marketing)

(ii) Key Management Personnel (Relatives of Directors) Mr. O.P. Agarwal - Vice President (Marketing) Mr. Umesh Agarwal - Vice President (Technical) Mrs. Payal Agarwal - Vice President (Finance) Mrs. Nirmala Agarwal - Public Relation Officer Mrs.Sneha Agarwal - Administrative Manager

(iii) Companies where Significant Influence exists (with whom transactions have taken place) Anant Business Pvt. Ltd RShankarlal Sales Pvt. Ltd Vitro Commodities Pvt. Ltd. Bakshi Chempharma Pvt. Ltd.

7. Previous year''s figures have been regrouped / rearranged wherever considered necessary'''' to conform to the current period''s presentation.


Mar 31, 2012

The accompanying notes are an integral part of the financial statements

The accompanying notes are an integral part of the financial statement

a) Cash Flow Statement has been prepared under the Indirect method as set out in the Accounting Standard-3 as per the Companies (Accounting Standards) Rule,2006

b) Fixed Deposit with bank having more than 12 months maturity are not included in cash and cash equivalents

c) Figures in bracket indicates outflows.

d) Previous year figures are regrouped and reclassified, wherever necessary.

1. Particulars of Holding Company Not Applicable

2. Rights, Preference and Restrictions of Share holders

Equity shares of the company has per value of Rs. 21- per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the company, the holder of equity shares will be entitled to receive remaining assets if any after distribution of all preferential accounts. The distribution will be pro rate to the equity share held by the shareholder.

Apart from right, restrictions and preferences prescribed by the companies Act 1956.The Articles of Association of the company elaborately deal with the above. The reader is requested to refer to respective document for details.

3 There are no shares reserved for issue under options and contracts commitments for the sale of shares / disinvestment Pursuant of order of the Honorable High Court, Mumbai during the year 2008-09,901,786 Equity shares have been issued for the consideration other than cash to amalgamating companies in the Scheme of Amalgamation of Ferro seal India Private Limited, Filarc Engineers Private Limited, Sagar Merchandise Private Limited with GEE Limited.

4 There are no securities convertible into equity and preference share.

5. Contingent liabilities and commitments

- Guarantees outstanding as at 31st March 2012 :Rs.5,890,216 (31stMarch 2011:Rs. 1,454,913)

- Foreign LC outstanding as at 31st March 2012:Rs. 9,373,763 (31st March 2011: Rs.8,841,287

- Disputed Demands against the Company as at 31st March 2012 (paid under protest and thereby reflecting under Loans and Advances): Custom Duty:Rs.1,500,000 (31 st March 2011: Rs.1,500,000)

6. Secured Loan

a. Term Loans from Banksare secured by mortgage/hypothecation of related immovable/movable assets of the Company, both present and future. The term loans are repayable in installments spread over 4.5 years and carries interest at 16% p.a. Final repayments are due on August 2016. Amount of term loan repayable within a period of one year is Rs.240.96 lacs (excluding interest).

b. Working Capital Loans from Banks are secured by hypothecation of stocks and book debts ranking pari-passu between them as also mortgage/hypothecation of specified immovable and movable fixed assets of the Company ranking pari-passu by way of second charge. The facilities carry interest ranging from 13.70% to 14.25%.

c. Vehicle Loans are secured by hypothecation of related vehides.The vehicle loans are repayable in installments spread over 3 to 5 years and carries interest ranging from 9.3% to 12.44%. Final repayments are due from Dec 2013 till November 2014. Amount of term loan repayable within a period of one year is Rs. 25.42 lacs (excluding interest)

d. During the year, a bank has carved-out Foreign Currency Term Loan (FCTL) facility within the overall term loan facility sanctioned by the bank. However the Company is yet to receive repayment schedule for this carved-out amount of FCTL. Pending formal sanction of repayment schedule the Company is maintaining adequate margin deposit. The carved-out portion of Loan is secured by mortgage/hypothecation of related immovable/movable assets of the Company, both present and future and carries interest ranging from 6.5% to 8.8%.

7. No amount was due for credit to Investor Education & Protection Fund as at 31st March 2012.

8.The amounts due to SSI units as at 31s' March 2012 are not outstanding for more than 30 days. The SSI units have been identified by the Company and relied upon by the auditors.

The Company has not received any intimation from "suppliers" regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures, if any, relating to amounts unpaid as at the yearend together with interest paid / payable as required under the said Act have not been furnished.

9. In the opinion of the management, the current assets, loans & advances are expected to realize at least the amount at which they are stated, if realized in the ordinary course of business and provision for all known liabilities have been adequately made in the accounts.

10 .The Company has received a show cause notice dated 12th May 2010 demanding Rs.4.02 Cr. of CENVAT credit on certain imported material, imported in the year 2008-09. Under the instructions from excise authorities the Company has already reversed under protest CENVAT credit of Rs.3.09 Cr in the earlier year. Pending disposal of the case a sum of Rs. 2.1 Cr. reversed under protest is shown under "Claims against the excise authorities" under the head loans and advances. The Company has replied to the show cause notice and based on the legal opinion, is hopeful of favorable order, as the matter is one of interpretation of law.

11. Segment Information

The Company is principally engaged in a single business segment viz., welding electrodes and related components. The Company has identified two geographical segments which comprises of Overseas and India. However, overseas segment reporting is not given as the turnover from the said business is less than 10% of the total turnover of the Company. Therefore, segment reporting as per Accounting Standard 17"Segment Reporting "is not given.

12. Related Party Disclosures

Related Party disclosures, as required by AS-18 "Related Party Disclosures" are given below:-

Relationship

(i) Key management personnel (Whole Time Directors)

Mr.S. L. Agarwal - Managing Director

Mr. S. M. Agarwal - Executive Director

Mr. 6. K. Saraf - Executive Director

Mr. M. P. Dhanuka - Executive Director (Marketing)

(ii) Key Management Personnel (Relatives of Directors)

Mr.O.P. Agarwal - Vice President (Marketing)

Mr. Umesh Agarwal - Vice President (Technical)

Mrs.Payal Agarwal - Vice President (Finance)

(iii) Companies where Significant Influence exists (with whom transactions have taken place)

Anant Business Pvt. Ltd

R Shankarlal Sales Pvt. Ltd Vidya Finvest Pvt. Ltd.

Vitro Commodities Pvt. Ltd.

Bakshi Chempharma Pvt. Ltd.

Note: Related party relationship is as identified by the Company and relied upon by the auditors.

Note: The computation of managerial remuneration u/s 198/349 of the Companies Act, 1956 has not been provided as no commission is paid to the Directors.

Notes:

1. The Company's products are exempt from licensing requirements under New Industrial Policy in terms of Notification No. 477(E) dated 25th July, 1991 & F.No. 10/43/91 -LP dated 2nd August 1991.

2. Opening Stock, Turnover, Closing Stock in respect of goods for resale are included in respective product categories.

3. Installed Capacity data is given for a single standard size production plan.

13. Previous year's figures have been regrouped / rearranged wherever considered necessary, to conform to the current period's presentation.

Schedules 1 to 22 annexed to and forming part of the statement of accounts have been duly authenticated.


Mar 31, 2010

1. Contingent liabilities and commitments

. Guarantees outstanding as on 31st March 2010 Rs. 3,523,222 (31st March 2009: Rs. 3,644,289)

. Foreign LC outstanding as on 31 st March 2010 Rs. 1,673,914 (31 st March 2009: Rs. Nil)

2. Share Capital

a. Authorised Share Capital- Shareholders of the Company have approved increase in authorized share capital of the Company at the annual general meeting held on the 30th September, 2009 from existing capital of Rs. 5 crores to Rs. 10 crores.

b. Paid-up Share Capital- During the year the Company issued 4,725,175 bonus shares of Rs. 2 each, fully paid up, in the ratio of 1 (one) equity share for every 4 equity shares as approved by the shareholders at the EGM held on the 14th of August, 2009. Thus, the paid up share capital as on 31 st March, 2010 has increased by Rs. 9,450,350.

3. Secured Loan

a. Term Loan: As on 31 st March 2010, Rs. 178,936,669 (RY. Rs. 17,680,087)

During the year, the Company obtained sanction of new term loan amounting to Rs. 33 crores, to part finance the project for expanding capacity of two plants, out of which, Rs. 13 crores has been availed as on 31st March, 2010. The term loan is repayable by August, 2016 with 18 months moratorium period.

Security for Term Loan (SBI)

. 1st Mortgage/ Hypothecation charge on fixed assets of the Company including land & building, plants machinery, furniture & fixtures, computers etc. (existing & proposed to be acquired) at Kalyan & Kolkata excluding the leasehold land at Wagle Estate, MIDC, Thane, residential flat and vehicles on parri-passu basis with the Thane Janata Sahakari Bank.

. Collateral 2nd hypothecation charge on entire current assets including stocks of raw material, work-in-progress, finished goods, stores & spares and book debts on parri-passu basis. Security for Term Loan (Thane Janata Sahakari Bank)

. 1st Mortgage/Hypothecation charge on fixed assets of the Company including Land & Building and Plant & Machinery at Kalyan & Kolkata including the leasehold land at Wagle Estate, MIDC, Thane on parri-passu basis with the State Bank of India.

. Collateral Term Deposit kept as security with the Thane Janata Sahakari Bank to remain as collateral covering existing and proposed total exposure.

b. Cash Credit: As at 31 st March 2010, Rs. 160,038,412 (P.Y. Rs. 133,736,423) are secured by 1 st hypothecation charge on entire current assets including stock of raw all stock of raw material, work-in-progress, finished goods, stores & spares and book debts on parri-passu basis with both the banks. It is also secured by 2nd charge by way of mortgage/hypothecation on the assets considered under primary security for the term loans on parri-passu basis.

The above loans sanctioned by the Thane Janata Sahakari Bank are also guaranteed by Mr. S. L. Agarwal, Managing Director and Mr. S.M. Agarwal, Executive Director.

c. Vehicle Loan: As at 31 st March 2010, Rs. 4,364,575 (P.Y. Rs. 4,876,899)

Vehicle loans are secured by hypothecation of vehicles.

4. No amount was due for credit to Investor Education & Protection Fund as at 31 st March 2010.

5. The amounts due to SSI units as at 31st March 2010 are not outstanding for more than 30 days.

6. The Company has not received any intimation from "suppliers" regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures, if any, relating to amounts unpaid as at the year end together with interest paid / payable as required under the said Act have not been furnished.

7. In the opinion of the management, the current assets, loans & advances are expected to realize at least the amount at which they are stated, if realized in the ordinary course of business and provision for all known liabilities have been adequately made in the accounts.

8. The Company imported during financial year 2008-2009 certain materials and after customizing and further processing sold them to local and upcountry customers/dealers. The Company treated these goods as inputs under CENVAT Credit Rules, 2004 and availed CENVAT credit while dispatching/selling the materials from the factory. The Excise Authorities have not accepted the Companys contention that they are eligible for setting off excise duty payable on dispatches against duty paid on imported inputs. On instructions from Excise Authorities the Company reversed under protest the CENVAT credit availed to the tune of Rs. 3.09 Crores comprising Basic, Education Cess, Higher Education Cess and Additional Duty. The Company has now received Show Cause cum Demand Notice dated 12th May, 2010 from Commissioner of Central Excise, Thane stating why the authorities should not be demanding CENVAT credit availed totaling Rs. 4.02 Crores. The Company has obtained legal opinion from a top lawyer firm confirming that the Company has not taken wrongful credit and that they were eligible for set-off of excise duty payable on dispatches/sale. The management is in the process of replying to the aforesaid show cause cum demand notice and is hopeful of getting favourable orders from the authorities as the matter is one of interpretation of law. Pending disposal of the case, a sum of Rs. 2.1 crores reversed under protest has been shown under"Claims against the excise authorities" under the head Loans and Advances.

9.Consequent upon adoption of Accounting Standard on Employee Benefits (AS 15) Revised 2005, issued by The Institute of Chartered Accountants of India, the Company has followed the revised standard. As required by the Standard, following disclosures are made. The Company has funded the gratuity liability through LIC of India.The following actuarial assumptions are followed by LIC.

Actuarial Assumptions:

Mortality Rate As per 1994-96 LIC mortality tables (Std.)

Withdrawal Rate Actual during last three years

Salary Escalation Rate 4% for each year

Discounting Rate Present discounting rate at LIC 8%

Gratuity Benefits As per Company rules

10.Segment Information

The Company is principally engaged in a single business segment viz., welding electrodes and related components.The Company has identified two geographical segments which comprises of Overseas and India. However, overseas segment reporting is not given as the turnover from the said business is less than 10% of the total turnover of the Company. Therefore, segment reporting as per Accounting Standard 17"SegmentReporting"issued by the Institute of Chartered Accountants of India is not applicable to the Company.

11. Related Party Disclosures

Related Party disclosures, as required by AS-18"Related Party Disclosures"are given below:-

Relationship

i) Key management personnel (Whole Time Directors)

Mr. S.L.Agarwal- Managing Director Mr.S.M.Agarwal - Executive Director Mr. M.P. Dhanuka-Executive Director (Marketing) Mr Avinash Saraf - Whole Time Director ii) Companies where Significant Influence exists (with whom transactions have taken place) Anant Business Pvt. Ltd. R Shankarlal Sales Pvt. Ltd. Vidya Finvest Pvt. Ltd. Vitro Commodities Pvt. Ltd. Bakshi Chempharma Pvt. Ltd.

12.Previous years figures have been regrouped / rearranged wherever considered necessary, to confirm to the current periods presentation.

 
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