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Notes to Accounts of Gontermann Peipers (India) Ltd.

Mar 31, 2015

** The Company's Land, Building and Plant & Machinery were revalued as on 31st March, 2007 by the consultants, wherein company's land has been valued on present market value and Building, Plant and Machinery has been valued on depreciated replacement cost basis resulting in to a net increase in the book value of such assets and capital reserve by Rs.4399.17 lacs. Consequence to the said revaluation there is an additional charge of depreciation of Rs. 156.88 lacs (Rs. 162.03 lacs) and an equal amount has been withdrawn from Revaluation reserve and credited to the Profit & Loss account. This has no impact on profit for the year.

As per terms of the CDR scheme, the Promoters have infused a sum of Rs.1227.34 Lacs as their contribution during financial year 2013-14 which was reflected under the head 'Share Application Money Pending Allotment'. During the year, the company have issued 83,20,000 equity shares of Rs.10 each on preferential allotment basis at a premium of Rs.4.75 and refunded Rs.13,729 to them.

Installments falling due in respect of above Loans up to 31.03.2016 have been grouped under "Current maturity of long-term borrowings" (Refer note 7)

There is continuing default throughout the year towards repayment of principal and interest. As on the Balance Sheet date there is a default of Rs.247.36 lacs on account of principal and Rs.218.18 lacs on account of interest

1. There is no indication of any impairment based on external/internal factors and hence no provision for the impairment loss has been recognized in terms of Accounting Standard-28, Impairment of Assets, as notified under section 133 of the Companies Act, 2013.

2. During the year, application filed to the Central Government seeking permission under section 309 (5B) and other applicable provisions of the Companies Act, 1956 for wavier of recovery of remuneration aggregating to Rs. 42.58 Lacs paid in excess of limits specified in section 198 of the said Act in earlier years to Ex-Managing Director, is rejected and accordingly the Company initiated steps for recovery of such remuneration from the Ex-Managing Director.

3. Pursuant to the approval of final restructuring package by CDR-Empowered Group on 28th December 2012, all CDR lenders have sanctioned the restructuring proposal in line with CDR LOA. Thereafter, Master Restructuring Agreement has also been signed with the lenders participating in the CDR package on 26th April 2013. The scheme was applicable with effect from 01st January 2012. The impact of the restructuring package has been implemented by all CDR lenders and also accounted by the company in the books.

- Promoters have infused an amount of Rs. 15.74 crore partly as Share Capital of Rs 12.27 crore and balance as unsecured loan in terms of the LOA.

- Entire shareholding of the Promoters/ Promoters Group pledged in favor of the Security Trustees to secure the credit facilities sanctioned to the company.

- Trust and Retention Account (TRA) has been opened with UCO Bank as per the requirement of the LOA.

- Steps where initiated on the project as envisaged in CDR package.

- Joint charge has been created on the movable assets of the company in favor of Lenders covered under CDR package.

- Creation of pari-passu charge on the immovable assets of the company is pending for which NOC for ceding first/second charge on the fixed assets of the company has been obtained from existing charge holder so as to execute necessary legal documents but NDC has not yet been obtained.

4. The Board of Directors of the Company in its meeting held on 29th May 2014 and Equity Shareholders and Preference Shareholders of the company in their meeting held on 28th March 2015, have approved the Scheme of Amalgamation of Geetapuram Port Services Limited (GPSL) and its Wholly Owned Subsidiary, North East Natural Resources Private Limited with the Company and their respective shareholders as per the provision of Section 391 to 394 of the Companies Act, 1956, with requisite majority. The appointed date of the amalgamation is 01st April 2013 and the scheme is subject to necessary approval of creditors, statutory authorities and the Hon'ble High Courts of Calcutta and Bombay. Upon effectiveness of the Scheme, necessary accounting treatment will be dealt with by the company in the financial statements and as per scheme every shareholder of GPSL holding 1 (one) fully paid-up equity shares of Rs. 10/- each shall be entitled to receive 40 (forty) fully paid-up equity shares of Rs. 10/- each in the Company.

5. The Company's operating results and financial position on reporting date are materially affected due to manifold factors which includes economy slow-down, liquidity issues etc. which has eroded the net worth of the company substantially. The company has initiated constructive steps for diversification and company's expectations of enhancement of working capital facilities/term loans from banks and promoters contribution to meet its short term and long term obligations. However, the company expects improved performance in view of expectations of necessary approval of scheme of amalgamation pending before Hon'ble High Court of Calcutta and Bombay.

6. Balances of amount receivable and payable, advances to suppliers and from customers in respect of some of the parties are unconfirmed and pending for reconciliation.

7. In the opinion of the management, the value of assets other than fixed assets and non-current investments, on realization in the ordinary course of business, will not be less than the value at which these are stated in the Balance Sheet.

8. During the year, depreciation on fixed assets is provided based upon Useful Life indicated in Schedule II Part C of the Companies Act, 2013 on Straight Line Method (SLM). Erstwhile, the company was providing depreciation based upon Schedule XIV of the Companies Act, 1956 on Straight Line Method (SLM). Due to change in useful lives, deprecation for the year is increased by Rs. 85.24 Lacs and in the absence of profits, deferred tax is increased by Rs. 26.34 Lacs.

9. Borrowings cost capitalized during the year are Rs. NIL (Previous year Rs. NIL)

10. Company's products are being sold under warranty which is either based on number of years (which generally ranges from 4-8 years) or on guarantee tonnage.

* The parties specified above are Related Parties in a broader sense and are included for making the financial statements more transparent.

Note: Related party relationships are stated as identified by the Management and relied upon by the Auditors.

11. Deferred Tax

(Refer Note No. 11)

Deferred Tax Asset (Net) of Rs. 2,820.75 Lacs (including Rs. 1,059.29 Lacs created during the year) recognized up to 31.03.2015 in respect of Unabsorbed Depreciation, Carry Forward Business Losses and disallowances under Income tax Laws, is based on future profitability projections made by the management with virtual certainty that sufficient future taxable income will be available against which such Deferred Tax Assets can be realized.

12. Employee Benefits (Accounting Standard-15)

(a) Short Term Employee Benefits

Short Term Employee Benefits are recognized as an expense on an undiscounted basis in the Statement of Profit and Loss of the year in which the related service is rendered.

b) Post-Employment Benefits

(i) Provident Fund

The Contribution to Provident fund and family pension scheme is recognized as expenses and is charged to the Statement of Profit and Loss.

(ii) Defined Benefit Plan

Liability for Gratuity is recognized on the basis of actuarial valuation made at the end of the year on Projected Unit Credit Method.

(c) Long Term Employee Benefits

The liability for Leave Encashment/Compensated Absences of eligible employees is recognized on the basis of an actuarial valuation made at the end of the year on Projected Unit Credit Method.

(d) Gains and losses arising out of actuarial valuation made at the end of the year are recognized immediately in the Statement of Profit and Loss.

(e) Employee Benefits:

The summarized position of Post-employment benefits and long term employee benefits recognized in the Statement of Profit and Loss and Balance Sheet as required in accordance with Accounting Standard - 15 (Revised) "Employee Benefits" is as under:

i) Defined Contribution Plans

The company makes contributions at a specified percentage of payroll cost towards Employee Provident Fund (EPF) and Employee State Insurance (ESI) for the qualifying employees. The company has recognized contribution amounting to Rs. 225.35 Lacs (Previous year Rs. 197.39 Lacs) in the Statement of Profit & Loss.


Mar 31, 2014

The company has one class of Equity shares having a par value of Rs. 10 per share. Each shareholder is eligible for one vote per share held. The dividend as and when proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity share holders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.

6% Cumulative Optionally Convertible Redeemable Preference Shares (COCRPS) 13,18,700 of Rs 10/- each fully paid up were issued to Export Import Bank of India and are redeemable at par in two equal annual instalments commencing from 2013. Out of this 4,00,000 Preference Shares has been redeemed during the year and the balance will be redeemed in the financial year 2014-15.

Note 1A. SHARE APPLICATION MONEY PENDING ALLOTMENT

As per terms of the CDR Scheme the Promoters have infused a sum of Rs.1227.34 Lacs (net) by way of Promoters Contribution which has been reflected under the head `Share Application Money Pending Allotment''. The Company will issue equity shares of Rs. 10/- each at a premium of Rs. 4.75 each in the Financial Year 2014-15. The Company has sufficient authorized equity share capital to cover the share capital on allotment of equity shares pending allotment as of March 31, 2014.

Note 2. Contingent Liabilities (Rs in Lacs)

2013-2014 2012-2013

1. Estimated amount of contracts remaining to be executed on Capital account and not provided for (Net of Advances) 908.51 835.99

2. Contingent Liabilities not provided for in respect of: -

(i) Outstanding Bank Guarantees 646.17 906.62

(ii) Bills discounted with banks 221.59 146.27

(iii) Disputed Income Tax cases with the different authorities of Income Tax. 1716.00 1716.00

(iv) Central Excise claims against show cause notices being disputed by the company 247.08 247.08

(v) Service Tax claims against show cause notices being disputed by the company 102.12 102.12

(vi) Sales Tax demands for earlier years being disputed by the Company 472.91 472.91

(vii) Maximum demand charges payable to West Bengal State Electricity Board to the extent and up to the period disputed by the company, against which a case is pending with Hon''ble Calcutta High Court. 208.88 208.88

(viii) Other Suits filed by the vendors & others against the company, for which a case is pending with Hon''ble Calcutta High Court. 0.98 0.98

(ix) Customs Duty demand against import of a machine, being contested by the Company 1.50 1.50

(x) Capital goods imported under E.P.C.G. Scheme without payment of customs duty against future export obligations. 607.00 535.39

3. Estimated amount of contracts remaining to be executed on revenue account and not provided for 1458.05 1786.80

3. There is no indication of any impairment based on external/internal factors and hence no provision for the impairment loss has been recognized in terms of Accounting Standard 28 Impairment of Assets, issued by The Institute of Chartered Accountants of India.

4. Director remuneration aggregating to Rs.42.58 Lacs (Rs. 43.44 Lacs) paid in earlier year to the Ex- Managing Director after adjustment of his dues with the company is in excess of the limit specified under section 198 of the Companies Act, 1956 as well as the approval received from the Ministry of Corporate Affairs, however the said remuneration is as per the approval obtained from Remuneration Committee, Board of Directors of the company as well as approved by the shareholders of the company. The company has initiated steps to seek waiver of recovery of excess remuneration pursuant to provision of section 309(5B) read with schedule XIII and other applicable provisions of Companies Act, 1956.

5. Pursuant to the approval of final restructuring package by CDR-Empowered Group on December 28, 2012, all CDR lenders have sanctioned the restructuring proposal in line with CDR LOA. Thereafter, Master Restructuring Agreement has also been signed with the lenders participating in the CDR package on April 26, 2013. The scheme was applicable with effect from January 1, 2012. The impact of the restructuring package has been implemented by all CDR lenders and also accounted by the company in the books. Ø Promoters have infused an amount of Rs.15.74 crore partly as Share Application pending allotment of Rs 12.27 crore and balance as unsecured loan in terms of the LOA.

Entire shareholding of the Promoters/ Promoters Group pledged in favour of the Security Trustees to secure the credit facilities sanctioned to the company.

- Trust and Retention Account (TRA) has been opened with UCO Bank as per the requirement of the LOA.

- Steps where initiated on the project as envisaged in CDR package.

- Joint charge has been created on the movable assets of the company in favour of Lenders covered under CDR package.

- Creation of parri passu charge on the immovable assets of the company is pending for which NOC for ceding first/second charge on the fixed assets of the company has obtained from existing charge holders so as to execute necessary legal documents.

6. During the year investment in equity of a company registered overseas of Rs.61.17 lacs against 23,47,555 Equity Share of Lion Corporation, Berhad of Malaysian Ringgits (RM) 1 each has been accounted in the books of account. This is against conversion of export proceeding from overseas customer by way of Scheme of Arrangement as approved by Hon''ble Malaysian High Court binding on all unsecured creditors. The company has already sought approval from Reserve Bank of India. The management considers all Investments as long term Investments and in the perception of management there is no permanent diminution in the value of such investment.

7. The Board of Directors of the Company in its meeting held on 29th May, 2014 has approved to amalgamate Geetapuram Port Services Limited (GPSL) and its wholly owned subsidiary, North East Natural Resources Private Limited with the Company as per the provision of Section 391 to 394 of the Companies Act, 1956. The appointed date of the amalgamation is 1st April, 2013 and the scheme is subject to necessary approval of shareholders, creditors, statutory authorities and the Hon''ble High Courts of Calcutta and Bombay. Upon effectiveness of the Scheme, necessary accounting treatment will be dealt with by the company in the financial statements and as per Scheme every shareholder of GPSL holding 1 (one) fully paid-up equity shares of Rs. 10/- each shall be entitled to receive 40 (forty) fully paid-up equity shares of Rs. 10/- each in the Company.

8. Significant accounting policies and practices adopted by the company are disclosed in the statement annexed to these financial statements as Annexure I.

9. Previous period''s figures, which are given in brackets, have been re-grouped/re-arranged wherever necessary.


Mar 31, 2013

Note 1. Contingent Liabilities

(Rs in Lacs)

2012-2013 2011-2012

1. Estimated amount of contracts remaining to be executed on Capital account and not provided for (Net of Advances) 835.09 840.64

2. Contingent Liabilities not provided for in respect of:

(i) Outstanding Bank Guarantees 906.62 1162.21

(ii) Bills discounted with banks 146.27 320.50

(iii) Central Excise claims against show cause notices being disputed by the company 247.08 247.08

(iv) Service Tax claims against show cause notices being disputed by The company 102.12 102.12

(v) Sales Tax demands for earlier years being disputed by the Company 121.72 49.36

(vi) Maximum demand charges payable to West Bengal State Electricity Board to the extent and up to the period disputed by the company, against which a case is pending with Hon''ble Calcutta High Court. 208.88 208.88

(vii) Customs Duty demand against import of a machine, being contested by the Company 1.50 1.50

(viii) Capital goods imported under E.P.C.G. scheme without payment of customs duty against future export obligations. 535.39 515.05

3. Estimated amount of contracts remaining to be executed on revenue account and not provided for 1786.80 1400.10

2. There is no indication of any impairment based on external/internal factors and hence no provision for the impairment loss has been recognized in terms of Accounting Standard 28 Impairment of Assets, issued by The Institute of Chartered Accountants of India.

3. Director remuneration aggregating to Rs.43.44 lacs (57.76) paid in earlier year to the Ex-Managing Director after adjustment of his dues with the company is in excess of the limit specified under section 198 of the Companies Act, 1956 as well as the approval received from the Ministry of Corporate Affairs, however the said remuneration is as per the approval obtained from Remuneration Committee, Board of Directors of the company as well as approved by the shareholders of the company. The company has initiated the process of recovery of the above excess remuneration from Ex Managing Director and the recoverable amount appears under the head short term loans and advances.

4. Pursuant to the application submitted to the Corporate Debt Restructuring (CDR) Cell for restructuring of Company''s financial facilities, the final restructuring package was approved by CDR-Empowered Group on December 28, 2012. The Master Restructuring Agreement has also been signed with the lenders participating in the CDR package on April 26, 2013. The scheme is applicable effective January 1, 2012. The impact of the restructuring has been taken in the financial results.

The Salient Features of the Scheme are as follows :-

- Cut off Date:- 01st January 2012

- CDR lender''s :- UCO Bank ( Monitoring Institution), Allahabad Bank and State Bank of India.

- Term Loan - UCO Bank

- Repayment of balance principal of Rs 42.99 crore in 40 quarterly ballooning installment commencing from 1st January, 2012 and ending on 31st December, 2021.

- Term loan to carry interest rate which shall be equal to the referring banks base rate.

- Interest funding for a period of 24 Months ie from 1st January, 2012 till 31st Dec, 2013 into Funded Interest Term Loan (FITL) of Rs 9.03 crore. However, interest on Term Loan from 1st January 2012 till 31st march 2013 of Rs 5.77 Crore has been converted into Funded Interest Term Loan and excess interest/penal interest on Term Loan of Rs 2.51 Crores has been reversed.

- FITL to carry interest @ 10.20% p.a. Repayment of FITL in 32 quarterly ballooning installment commencing from 1st January, 2014 and ending on 31st December, 2021.

- Working Capital Facilities - Allahabad Bank, UCO Bank & State Bank of India

- In order to have desired and healthy Current Ratio, conversion of current working capital amounting to Rs. 29 crores into Working Capital Term Loan-I (WCTL-I), carrying interest rate which shall be equal to the referring banks base rate. Repayment of WCTL-I in 36 quarterly ballooning installment commencing from 1st January, 2013 and ending on 31st December, 2021.

- Convert LC devolved/to be devolved amounting to Rs 8.18 cr and overdue due to exchange rate difference Rs 1.75 cr into Working Capital Term Loan-II (WCTL-II), carrying interest rate which shall be equal to the referring banks base rate. Repayment of WCTL-II in 36 quarterly ballooning installment commencing from 1st January, 2013 and ending on 31st December, 2021.

- Funding of interest on WCTL I & II for a period of 24 Months ie from 1st January, 2012 till 31st December, 2013 into Funded Interest Term Loan (FITL) of Rs 8.18 cr. However, interest on WCTL I and WCTL II for the period from 1st January 2012 till 31st march 2013 of Rs 5.08 Crores has been converted into Funded Interest Term Loan and excess interest/working interest charged on Working Capital Interest facility of Rs 5.23 Crores has been reversed. FITL to carry interest @ 10.20% p.a. Repayment of FITL in 32 quarterly ballooning installment commencing from 1st January, 2014 and ending on 31st December, 2021.

- Sustainable Working Capital Limit backed by Drawing Power of Rs 41 crore shall carry an interest rate which shall be equal to the referring banks base rate.

- Project Finance for balancing Equipment UCO Bank

Additional Capex amounting to Rs 19.74 crore is required for which term loan from UCO Bank of Rs.9.05 crores @ 12% p.a., repayable in 24 quarterly ballooning installment commencing from 1st January, 2014 and ending on 31st December, 2020.

- The promoters contribution as per CDR scheme has been infused within 31stMarch, 2013.

5. In accordance with the Accounting policy and Accounting Standard -29, provision has been made for estimated warranty liability in respect of rolls sold to customers. The details of the same is as under -

6. Significant accounting policies and practices adopted by the company are disclosed in the statement annexed to these financial statements as Annexure I.

7. Previous period''s figures, which are given in brackets, have been re-grouped/re-arranged wherever necessary.


Mar 31, 2012

The Company has one class of Equity shares having a par value of Rs. 10 per share. Each shareholder is eligible for one vote per share held. The dividend as and when proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity share holders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.

6% Cumulative Optionally Convertible Redeemable Preference Shares (COCRPS) 13,18,700 of Rs 10/- each fully paid up were issued to Export Import Bank of India and are redeemable at par in two equal annual instalments commencing from 2013.

* represents capital investment subsidy received from Govt.

** The Company's Land, Building and Plant & Machinery were revalued as on 31st March, 2007 by the consultants, wherein company's land has been valued on present market value and Building, Plant and Machinery has been valued on depreciated replacement cost basis resulting in to a net increase in the book value of such assets and capital reserve by Rs.4399.17 lacs. Consequence to the said revaluation there is an additional charge of depreciation of Rs 194.90 lacs ( Rs. 246.39 Lacs) and an equal amount has been withdrawn from Revaluation reserve and credited to the Profit & Loss account. This has no impact on profit for the year.

Working capital loans are secured against Hypothecation of Raw Materials, Finished Goods, Stock in Process, Stores & Spare parts, Trade bills, Movables etc and personal guarantee of promoters of the Company and joint mortgage through second charge on the immovable properties of the Company.

Working Capital Loans from Banks include Rs. 595.40 Lacs continuing default towards repayment of working capital facilities (includes interest default of Rs 223.59 Lacs) (period of defaults less than 90 days)

Due to Exchange rate fluctuation, working capital has become overdrawn by a sum of Rs. 375.60 Lacs.

Note 1. Contingent Liabilities

(Rs in Lacs)

2011-2012 2010-2011

1. Estimated amount of contracts remaining to be executed on Capital account and not provided for (Net of Advances) 840.64 1089.99

2. Contingent Liabilities not provided for in respect of: -

(i) Outstanding Bank Guarantees 1162.21 1009.93

(ii) Bills discounted with banks 320.50 242.84

(iii) Central Excise claims against show cause notices being disputed by the company 247.08 245.18

(iv) Service Tax claims against show cause notices being disputed by the company 102.12 13.94

(v) Sales Tax demands for earlier years being disputed by the Company 49.36 244.07

(vi) Maximum demand charges payable to West Bengal State Electricity Board to the extent and up to the period disputed by the company, against which a case is pending with Hon'ble Calcutta High Court. 208.88 208.88

(vii) Customs Duty demand against import of a machine, being contested by the Company 1.50 1.50

(viii) Capital goods imported under E.P.C.G. scheme without payment of customs duty against future export obligations. 515.05 468.96

3. Estimated amount of contracts remaining to be executed on revenue account and not provided for 1400.10 935.47

2. There is no indication of any impairment based on external/internal factors and hence no provision for the impairment loss has been recognized in terms of Accounting Standard 28 Impairment of Assets, issued by The Institute of Chartered Accountants of India.

3. Director remuneration aggregating to Rs.57.76 lacs paid in earlier year to the Ex-Managing Director is in excess of the limit specified under section 198 of the Companies Act, 1956 as well as the approval received from the Ministry of Corporate Affairs, however the said remuneration is as per the approval obtained from Remuneration Committee, Board of Directors of the company as well as approved by the shareholders of the company. The company has initiated the process of recovery of the above excess remuneration from Ex-Managing Director and the recoverable amount appears under the head short term loans and advances.

4. Due to sluggish market conditions in Steel Industries, the company has not been able to repay certain loans in respect of expansion-cum-modernization plan undertaken by the company as per the stipulated repayment schedule. The management has undertaken measures to improve the financial position of the company by way of restructuring of bank loans. The company has already applied to Corporate Debt Restructuring (CDR) cell on 28.03.2012 for restructuring of loans and the management is confident that such overdue/restructuring will not effect the ongoing concern assumption.

5. Significant accounting policies and practices adopted by the company are disclosed in the statement annexed to these financial statements as Annexure I.

6. Previous period's figures, which are given in brackets, have been re-grouped/re-arranged wherever necessary.

 
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