Notes to Accounts of Gujarat Poly Electronics Ltd.

Mar 31, 2019

Background

Gujarat Poly Electronics Limited is engaged in the manufacturing and trading of Ceramic Capacitors both Multi layer and Single layer. The company is public limited company and is listed on the Bombay Stock Exchange (BSE).

Authorization of standalone financial statements

The financial statements were authorized for issue in accordance with a resolution of the directors on 10th May ,2019.

a. Rights, preference and restrictions attached to shares:

Equity Shares

The Company has issued only one class of equity shares having face value of Rs. 10 (March 31, 2019 : Rs. 10; April 1, 2018 Rs.10) per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts in proportion to the number of equity shares held by the shareholders.

1.01 The Company plans to meet its working capital requirement for the forthcoming year from future profits. The Management of the company is confident that there are adequate opportunities for growth and company would be able to sustain reasonably higher profit in future. Having regard to the above, the financial statements have been prepared by the Management of the company on a “Going concern” basis. The holding company has committed to provide financial support to the Company as may be required to carry on as a going concern.

1.02 Asset taken on Operating Lease

The Company has taken sales and marketing offices on operating lease basis. Amount of lease rentals recognized in the Statement of Profit and Loss for the year in respect of these cancellable operating leases is Rs. 6,54,012/-p.a. (Previous year : Rs.6,53,172/-). The lease term is 9 years for Delhi office and 2 years for Bangalore office.

b) Defined Benefit Plans:

The Company sponsors funded defined benefit plans for qualifying employee. The defined benefit plans are administered by separate fund that are leagally separate fund from the entity. The board of the fund is responsible for the investment policy with regard to assets of the fund.

These plans typically expose the Company to Actuarial risks such as : investment risk, interest rate risk, longetivity risk and salary risk. No other post-retirement benefit are provided to the employees.

1. Sensitivity Analysis

Below is the sensitivity analysis determined for significant actuarial assumption for determination of defined benefit obligation and based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period.

Key assumptions for determination of Defined Benefit Obligation are Discount Rate (i.e. Interest Rate) Salary Growth Rate and Employee Turnover Rate

1.03 Dues to Micro and Small Enterprises

There is no outstanding amount at the year end to the creditors qualify as supplier under the Micro, Small and Medium Enterprise Development Act, 2006 and there is no delay in payment to such creditors during the year therefore no liability u/s 16 of the said Act has arose. Accordingly, no disclosure is required to be made u/s. 22 of the Act.

1.04 Capital Management Risk management

For the purpose of the Company’s capital management, capital includes issues capital and all other equity reserves. The Company manages its capital structure to ensure that it will be able to continue as going concern while maximizing the return to the stakeholders.

The details of outstanding capital and payables to holding company on account of loan is as under

1.05 Financial Instruments :

(i) Methods & assumption used to estimates the fair values

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The following method and assumption is used to estimate the fair values:

(a) The carrying amounts of receivables and payables which are short term in nature such as trade receivables, other bank balances, loans to employees, borrowings, trade payables, other financial liabilities and cash and cash equivalents are considered to be the same as their fair values.

(ii) Categories of financial instruments

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2: directly or indirectly observable market inputs, other than Level 1 inputs; and Level 3: inputs which are not based on observable market data

1.06 Financial Risk Management

The Company’s financial risk management is an integral part of how to plan and execute its business strategies. The Company’s financial risk management policy is set by the Board of Directors. The details of different types of risk and management policy to address these risks are listed below:

The Company’s activities are exposed to various risks viz. Credit risk, Liquidity risk and Market risk. In order to minimise any adverse effects on the financial performance of the Company, it uses various instruments and follows polices set up by the Board of Directors / Management.

(i) Credit risk

Credit risk arises from the possibility that counter party will cause financial loss to the company by failing to discharge its obligation as agreed.

The Company has specific policies for managing customer credit risk; these policies factor in the customers’ financial position, past experience and other customer specific factors. The Company uses the allowance matrix to measure the expected credit loss of trade receivables from customers.

Based on the industry practices and business environment in which the Company operates, management considers that the trade receivables are in default if the payment are more than 18 months past due.

(ii) Liquidity Risk

Liquidity risk is risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company’s principal sources of liquidity are cash and cash equivalents, borrowings and the cash flow that is generated from operations.

(iii) Market Risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The Company is exposed in the ordinary course of business to risks related to changes in foreign currency exchange rate and interest rate.

Market Risk - Foreign Exchange

Foreign currency risk is that risk in which the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company operates internationally and a portion of its business is transacted in one currency and therefore the Company is exposed to foreign exchange risk through its overseas sales in one foreign currency. The Company hedges the receivables by forming view after discussion with Forex Consultant and as per polices set by Management.

The carrying amount of the Company’s foreign currency denominated monetary liabilities as at the end of the reporting period is as follows:

1.07 Segment Reporting

The Company’s business activity fall within a single business segment viz. Capacitors, comprising mainly trading in Ceramic Capacitors and all the sales are made in India. Considering the same, there are no reportable segments (business / or geographical) in accordance with the requirements of Ind AS 18 “Operating Segment”.

1.08 The Company has aggressively focused in Trading of goods. Due to change in technological advancements, commercial considerations and market preferences, the company has taken up exercise to identify inventories which has very slow turnover ratio. The company will pass necessary accounting treatment on final ascertainment of the same.

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Mar 31, 2015

1. CORPORATE INFORMATION

Gujarat Poly-AVX Electronics Limited (the Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The Company in collaboration with AVX corporation, USA has set up a state of art facilities for manufacturing of capacitors.

2. a. Rights of Equity Shareholders:

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. 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.

b. Rights of 1/2% Non-cumulative Redeemable Preference Shareholders:

981,500 1/2% Non-cumulative Preference shares of Rs. 100 each fully paid-up have been allotted to term lenders as per AAIFR order without payment being received in cash, out of which 490,750 shares were redeemable on 31st March 2008 and balance on 31st March 2009.

The Company has one class of Preference shares having a par value of Rs.100 per share. The holders of such shares shall have the right to receive all notices of general meetings of the co. but not the right to vote at any meetings of the company.

In the event of liquidation of the company, the holder of preference shares will have priority over equity shares in the payment of dividend and repayment of capital but shall not have any further or other right to participating either in profit or assets.

3. Contingent liabilities:

(Amount in Rs.)

As at 31.03.15 As at 31.03.14

Disputed Demand of Employees' State Insurance Corporation 102,838 NIL

Future cash outflows in respect of the above matters are determinable only on receipt of judgments / decisions pending at various forums / authorities.

4. In the year 1997, the Board for Industrial and Financial Reconstruction (BIFR) declared the Company a Sick Industrial Undertaking within the meaning of section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act (SICA), 1985. The Scheme of rehabilitation ("the Scheme") of the Company was sanctioned by the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) by its Order dated 27th March, 2002 which became effective from 1st April, 2002. The Scheme envisaged financial restructuring, One Time Settlement (OTS) of the balance dues of term lenders and reschedulement of the working capital finance.

In terms of the Scheme sanctioned by the AAIFR, the Company has fully paid dues to term lenders and bank and obtained no due certificates from them.

During the financial year 2012-13, the company paid Rs.201 lacs to IDBI, in full and final settlement of all their claims including their claims towards principal amount, interest, penal interest and all other charges, costs, expenses etc. IDBI has also issued a "No due certificate".

During the financial year 2013-14, the company paid Rs.241.91 lacs to Bank of Baroda, in full and final settlement of all their claims including their claims towards interest and all other charges, costs, expenses etc. as also amount payable towards outstanding balance of Cash Credit Account, including interest thereon till date. The Company has received the No Dues Certificate from Bank of Baroda.

In the meantime, the Company vide its application No.MA-464/BC/2013 dated 4th September 2013 approached BIFR to get discharge from the purview of SICA/BIFR as its net worth has become positive as per its audited financials for the year ended 31st March, 2013.

Accordingly, the BIFR vide its order dated 1st November, 2013 has directed that the Company ceases to be a sick industrial company within the meaning of Section 3(1) (o) of the SICA as its net worth has turned positive and has discharged it from the purview of SICA/BIFR.

However, the accumulated losses of the Company at the end of this financial year have resulted in erosion of 50% or more of its peak net worth during the immediately preceding five financial years. Company will have to report the fact of such erosion to BIFR as per Sec.23 of SICA and accordingly the Company has submitted report on 3rd September. 2014 pursuant to provisions of Sec.23 (1)(a)(i) of SICA , 1985 stating erosion of 50% or more of its peak net worth during the immediately preceding five years.

5. As at 31st March, 2015, the current liabilities of the Company (including Rs. 51,984,203/- due to an entity exercising significant influence) exceeded the current assets by Rs. 1,267,526/-. Further, the Company has incurred loss amounting to Rs.1,748,916/- during the year and the accumulated losses have resulted in erosion of more than 50% of its net worth as at 31st March 2015. The Company plans to meet its working capital requirement for the forthcoming year from future profits. The Management of the Company is confident that there are adequate opportunities for growth and Company would be able to be profitable in future. Having regard to the above, the financial statements have been prepared by the Management of the Company on a going concern basis.

6. Excise Duty shown as deduction from Revenue from Operations represents the amount of excise duty collected on sales. Excise duty expense under Note-24(f), "other expenses", represents the difference between excise duty element in amounts of closing stock and opening stock.

7. In view of unabsorbed losses/depreciation and in the absence of taxable income under the provisions of the Income Tax Act, 1961 the Company has not provided for tax in the current year. Further, in view of the brought forward loss/unabsorbed depreciation as per books of account, the Company also does not have any tax liability under section 115JB of the Income tax Act, 1961.

8. The balance due to Micro & Small Enterprises as defined under MSMED Act, 2006 as at 31st March 2013 and 2014 is NIL. No interest during the year and previous year has been paid under the terms of the MSMED Act, 2006. This has been determined to the extent Micro & Small Enterprises have been identified on the basis of information collected by the management, which has been relied upon by the auditors.

9. Assets taken on operating lease:

The Company has taken sales and marketing offices on operating lease basis. Amount of lease rentals recognized in the Statement of Profit and Loss for the year in respect of these cancellable operating leases is Rs. 543,934/- (Previous year Rs.7,36,381/-). The lease term is 9 years for Delhi office and 2 years for Bangalore office.

10. Segment Reporting

The Company's business activity fall within a single business segment viz. Capacitors, comprising mainly trading in Ceramic Capacitors and all the sales are made in India. Considering the same, there are no reportable segments (business / or geographical) in accordance with the requirements of Accounting Standard (AS) -17 "Segment Reporting", prescribed under the Companies (Accounting Standards) Rules, 2006.

11. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.

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Mar 31, 2014

1. CORPORATE INFORMATION

Gujarat Poly-AVX Electronics Limited (the Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The Company in collaboration with AVX Limited., USA has set up a state of art facilities for manufacturing of capacitors.

2. In the year 1997, the Board for Industrial and Financial Reconstruction (BIFR) declared the Company a Sick Industrial Undertaking within the meaning of section 3(l)(o) of the Sick Industrial Companies (Special Provisions) Act (SICA), 1985. The Scheme of rehabilitation ("the Scheme") of the Company was sanctioned by the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) by its Order dated 27th March, 2002 which became effective from 1st April, 2002. The Scheme envisaged financial restructuring, One Time Settlement (OTS) of the balance dues of term lenders and reschedulement of the working capital finance.

In terms of the Scheme sanctioned by the AAIFR, the Company has fully paid dues to term lenders and bank and obtained no due certificates from them.

During the financial year 2012-13, the company paid Rs.201 lacs to IDBI, in full and final settlement of all their claims including their claims towards principal amount, interest, penal interest and all other charges, costs, expenses etc. IDBI has also issued a "No due certificate". The payments have been treated as exceptional items in the financial statements of the respective financial year.

During the financial year 2013-14, the company paid Rs. 241.91 lacs to Bank of Baroda, in full and final settlement of all their claims towards interest and all other charges, costs, expenses etc. as also amount payable towards outstanding balance of Cash Credit Account, including interest thereon till date. The Company has received the No Dues Certificate From Bank of Baroda.

In the meantime, the Company vide its application No.MA-464/BC/2013 dated 4th September 2013 approached BIFR to get discharge from the purview of SICA/BIFR as its net worth has become positive as per its audited financials for the year ended 31st March, 2013.

Accordingly, the BIFR vide its order dated 1st November, 2013 has directed that the Company ceases to be a sick industrial company within the meaning of Section 3(1) (o) of the SICA as its net worth has turned positive and discharged it from the purview of SICA/BIFR.

However, the accumulated losses of the Company at the end of this financial year have resulted in erosion of 50% or more of its peak net worth during the immediately preceding four financial years. Company will report the fact of such erosion to BIFR as per S.23 of SICA.

3. As at 31st March, 2014, the current liabilities (including Rs 4,87,66,002/- to an entity exercising significant influence) exceeded the current assets by Rs. 13,04,768/- and the Company had incurred losses till the previous year. The Company plans to meet the working capital requirement for the forthcoming year from future profits. The Management of the Company is confident that there are adequate opportunities for growth and Company would be able to become profitable in future. Having regard to the above, the financial statements have been prepared by the Management of the Company on a going concern basis.

4. Excise Duty shown as deduction from sales represents the amount of excise duty collected on sales. Excise duty expenses under Note-24(f), "Manufacturing Expenses", represents the difference between excise duty element in amounts of closing stocks and opening stocks.

5. In view of unabsorbed losses/depreciation and in the absence of taxable income under the provisions of the Income Tax Act, 1961 the Company has not provided for tax in the current year. Further, in view of brought forward loss/unabsorbed depreciation as per books of accounts, the Company also does not have tax liability under section 115JB of the Income tax Act, 1961. Accordingly no provision for income tax has been made in the accounts under Income Tax Act, 1961.

6. Employee benefits:

The accruing liability on account of gratuity and leave encashment is accounted as per Accounting Standard 15 (revised 2005) "Employee Benefits". The Company has defined benefit plans for gratuity to eligible employees. The Company also provides leave encashment to the employees. The details of these defined benefit plans recognised in the financial statements are as under:

7. Assets taken on operating lease:

The Company has taken sales & marketing office on operating lease basis. Amount of lease rental recognized in the statement of Profit & Loss in respect of cancellable operating lease Rs.7,36,381/- (Previous year Rs.6,59,664/-)

8. As the Company''s business activity fall within single business segment viz. Capacitor, comprising mainly manufacture of Ceramic Capacitor and all the sales are made in India. Considering the same, there are no reportable segment (business or geographical) in accordance with the requirements of Accounting Standard (AS)-17 Segment Reporting, prescribed under Company (Accounting Standards) Rules, 2006.

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

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Mar 31, 2013

1. In the year 1997, the Board for industrial and Financial Reconstruction (BIFR)declared the Company a Sick Industrial Undertaking within . the meaning of section 3(l)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985. The Scheme of rehabilitation ("the Scheme") of the Company was sanctioned by the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) by its Order dated 27th March, 2002 which became effective from 1st April, 2002. The Scheme envisaged financial restructuring, One Time Settlement (OTS) of the balance dues of term lenders and reschedulement of the working capital finance.

In terms ofthe Scheme sanctioned by the AAIFR, in the financial year 2009-10, the Company fully paid due loans payable in cash, interest on loans and interest on interest to the lenders. The resultant gain of Rs. 2893.19 lacs in the form of remission of past interest on the term loans had been recognized in the financial statements for that year.

As per the Scheme, the Company had allotted (i) 750,000 nos. of equity shares of face value of Rs. 10 each aggregating to Rs.75 lacs and (ii) 981,500 nos. of J4% Non-Cumulative Redeemable Preference Shares of face value of Rs.lOOeach aggregating to Rs. 981.50 lacs to the term lenders. As per the terms of issue, the Non-Cumulative Redeemable Preference Shares were redeemable on 31st March, 2008 and 31st March, 2009 in equal installments. However, due to non-availability of divisible profits as well as non-availability of required finance, the Company could not redeem the Preference Shares on the above stated due dates. The term lenders have been insisting on redemption of the said Preference Shares. The BIFR, at its hearing held on 28th April, 2009, passed an Order directing the Company to redeem the said Preference Shares. Against the said Order of the BIFR, the Company filed an Appeal to the AAIFR. The AAIFR vide its Order dated 22nd February, 2011, upheld the said Order of the BIFR. Against the Order of the AAIFR, the Company filed a writ petition in the High Court, Gujarat. The High Court of Gujarat, vide its order dated 8th April 2013, quashed and set aside the order passed by the AAIFR and the BIFR.

During the financial year 2011-12, the Company paid Rs. 123.40 lacs to IFCI under OTS Scheme, in full and final settlement of all their claims including their claims towards principal amount, interest, penal interest and all other charges, costs, expenses etc. IFCI has issued a "No Due Certificate". During the financial year 2012-13, the Company paid Rs. 201 lacs to IDBI, in full and final settlement of all their claims including their claims towards principal amount, interest, penal interest and all other charges, costs, expenses etc. IDBI has also issued a "No Due Certificate". The payments have been treated as Exceptional items in the financial statements of the respective financial years.

On the above stated lines, the Company has negotiated with Bank of Baroda for one time settlement by making a payment of Rs.165.91 lacs, in full and final settlements of all its claims against the Company, including interest and all other charges, cost, expenses etc., excluding overdraft facility of Rs.75 lacs. Accordingly, the Company is in the process of payment of Rs.165.91 lacs to Bank of Baroda.

In the meantime, the Company has continued its business operations and has earned cash profit (before the above stated exceptional items). Accordingly, the Company has prepared the financial statements on a going concern basis.

2. Excise Duty shown as deduction from sales represents the amount of excise duty collected on sales. Excise duty expenses under Note-22(f), "Manufacturing Expenses", represents the difference between excise duty element in amounts of closing stocks and opening stocks.

3. In view of unabsorbed losses/depreciation and in the absence of taxable income under the provisions of the Income Tax Act, 1961 the Company has not provided for tax in the current year. Further, in view of brought forward loss/unabsorbed depreciation as per books of accounts, the Company also does not have tax liability under section 115JB of the Income tax Act, 1961. Accordingly no provision for income tax has been made in the accounts under Income Tax Act, 1961.

4. The Company has unabsorbed depreciation/carry forward of losses of the earlier years under Income tax laws. In absence of virtual certainty of sufficient future taxable income. Deferred Tax asset has not been recognized by way of prudence in accordance with AS-22 "Accounting for taxes" issued by the Institute of Chartered Accountants of India.

5. Employee benefits:

The accruing liability on account of gratuity and leave encashment is accounted as per Accounting Standard 15 (revised 2005) "Employee Benefits". The Company has defined benefit plans for gratuity to eligible employees. The Company also provides leave encashment to the employees. The details of these defined benefit plans recognised in the financial statements are as under:

6. Assets taken on operating lease:

Amount of lease rental recognized in the Profit & Loss Account in respect of cancellable operating lease Rs.6,59,664/- (Previous year Rs.6,28,041/-)

7. As the Company''s business activity fall within single business segment viz. Capacitor, comprising mainly manufacture of Ceramic Capacitor and all the sales are made in India, the disclosure requirements of Accounting Standard (ASJ-17 Segment Reporting, issued by The Institute of Chartered Accountant of India are not applicable.

8. Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification.

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Mar 31, 2012

(i) a. Rights of Equity Shareholders:

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. 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.

b. Rights of 1/2% Non-cumulative Redeemable Preference Shareholders:

The company has one class of preference shares having a par value of Rs.100 per share. Preference shareholders doesn't have any right to vote.

1. The Board for Industrial and Financial Reconstruction (BIFR) declared the Company a Sick Industrial Undertaking within the meaning of section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985. The Scheme of rehabilitation of the Company was sanctioned by the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) by its Order dated 27th March, 2002 which became effective from 1st April, 2002. The scheme envisaged financial restructuring, One Time Settlement (OTS) of the balance dues of term lenders and reschedulement of the working capital finance.

In terms of the rehabilitation scheme sanctioned by the AAIFR, the Company fully paid due loans payable in cash, interest on loans and interest on interest in the financial year 2009-10. Accordingly, the gain in the form of remission of past interest on term loans had been recognized in the accounts of the year 2009-10.

As per sanctioned scheme of AAIFR, Company had allotted equity shares of Rs.75 lacs and /% Non-Cumulative redeemable preference shares of Rs.981.50 lacs, redeemable on 31st March, 2008 and 31st March, 2009, to term lenders. Preference shares were not redeemed on due date due to non-availability of divisible profits and financial inability of the Company to redeem the shares. The term lenders have been insisting on redemption of the said Preference Shares. The Board for Industrial & Financial Reconstruction (BIFR) at its hearing held on 28th April, 2009 passed an Order directing to redeem the said Preference Shares. Against the said Order of BIFR, the Company had filed an Appeal to AAIFR. AAIFR vide its Order dated 22nd February, 2011 upheld the said Order of BIFR. Against the Order of AAIFR, Company has filed the writ petition in the High Court, Gujarat, Ahmedabad.

The operation of the Order dated 22nd February, 2011 passed by the AAIFR, has been stayed by the Order on 21st June, 2011 by the High Court, Gujarat.

In the meanwhile, IFCI & IDBI have revoked the OTS on account of alleged default in redeeming the said preference shares. The Company suitably replied to IFCI and IDBI and has not acknowledged any liability on account of said revocation of OTS as in its opinion the same is not lawful. Company has now arrived at an OTS with IFCI and has paid Rs.123.40 lacs in full and final settlement of all their claims including their claims towards principal amounts, interest, penal interest and all other charges, costs, expenses etc. The said payment has been treated as an Exceptional item. IFCI has issued a No Dues Certificate. Company is also negotiating with IDBI for OTS. Company will take all other necessary steps as may be legally advised. Accordingly, Company has prepared the accounts on a going concern basis.

2. Amount due to/from banks and some parties are subject to adjustment, if any required on receipt of balance confirmation or settlement of account.

3. Excise Duty shown as deduction from sales represents the amount of excise duty collected on sales. Excise duty expenses under Note- 22(f), "Manufacturing Expenses", represents the difference between excise duty element in amounts of closing stocks and opening stocks.

4. In view of unabsorbed losses/depreciation and in the absence of taxable income under the provisions of the Income Tax Act, 1961 the Company has not provided for tax in the current year. Further, in view of brought forward loss/unabsorbed depreciation as per books of accounts, the Company also does not have tax liability under section 115JB of the Income tax Act, 1961. Accordingly no provision for income tax has been made in the accounts under Income Tax Act, 1961.

5. The Company has unabsorbed depreciation/carry forward of losses of the earlier years under Income Tax laws. In absence of virtual certainty of sufficient future taxable income, Deferred Tax Asset has not been recognized by way of prudence in accordance with AS-22 Accounting for Taxes on Income issued by The Institute of Chartered Accountants of India.

6. Assets taken on operating lease:

Amount of lease rental recognized in the Profit & Loss Account in respect of cancellable operating lease Rs.6,28,041/- (Previous year Rs.5,49,720/-)

7. As the Company's business activity fall within single business segment viz. Capacitor, comprising mainly manufacture of Ceramic Capacitor and all the sales are made in India, the disclosure requirements of Accounting Standard (AS)-17 Segment Reporting, issued by The Institute of Chartered Accountants of India are not applicable.

8. The Revised Schedule VI has become effective from 1st April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.

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Mar 31, 2010

1. The Board for Industrial and Financial Reconstruction (BIFR) declared the company a sick industrial undertaking within the meaning of section 3 (1)(o) of the Sick Industrial Companies (Special provisions) Act 1985. The Scheme of rehabilitation of the Company was sanctioned by the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) by its order dated 27th March 2002 which became effective from 01.04.2002. The scheme envisaged financial restructuring, One Time Settlement (OTS) of the balance dues of term lenders and reschedulement of the working capital finance.

In terms of the rehabilitation scheme sanctioned by AAIFR, the term lenders, after financial restructuring, had agreed for settlement of their dues under One-Tme Settlement (OTS) which conferred benefit to the Company in the form of remission / write off of their past interest. However, the said remission of interest could stand withdrawn / revoked in the event of default in payment of the OTS dues of the term lenders, in accordance with the sanctioned scheme. As a result, the said gain by way of remission of interest was contingent upon the payment of OTS in full in cash in terms of clause 16 (I) of the sanctioned scheme. In view of this, no adjustment with respect to the remission of interest, accrued and due of Rs.28,93,18,634/-, on the secured loans, had been made by the Company in the accounts in earlier years. During the current year, the Company has fully repaid all the balance OTS dues, other than the FITL-I dues of Bank of Baroda, along with interest on delayed repayments, in accordance with the revised repayment schedules agreed upon with the term lenders. The Company also has repaid, during the year, a substantial part of the FITL-I dues of Bank of Baroda. Accordingly, during the year, the gain in the form of remission of past interest on term loans has been recognized in the accounts.

2. As stated in Note (1) above the company is in process of restructuring based on revival scheme and in view of foregoing, the accounts of the Company have been prepared on going concern basis, which is dependent upon the successful implementation of this scheme.

3. Amount due to/from banks, financial institution and some parties are subject to adjustment, if any required on receipt of balance confirmation or settlement of account.

4. Excise Duty shown as deduction from sales represents the amount of excise duty collected on sales. Excise duty expenses under Schedule – 13, "Operation & Other Expenses", represents the difference between excise duty element in amounts of closing stocks and opening stocks.

5. In view of unabsorbed losses and in the absence of taxable income under the provisions of the Income Ta x Act, 1961 in the current year, the Company believes that there will be no tax liability. Accordingly no provision for income tax has been made in the accounts under Income Tax Act, 1961

6. Remuneration to the Executive Director:

Note: The above excludes contribution for gratuity and leave encashment as the incremental liabilities have been accounted by the Company as a whole.

7. Employee Benefits:

The accruing liability on account of gratuity and leave encashment is accounted as per Accounting Standard 15 (revised 2005) “Employee Benefits.” The Company has defined benefit plans for gratuity to eligible employees. The Company also provides leave encashment to the employees. The details of these defined benefit plans recognised in the financial statements are as under:

Notes:

a) The estimate of future salary increase considered in actuarial valuation takes account of inflation, seniority, promotion and other relevant factors such as supply and demand in employment market.

b) This being the third year of adoption of Accounting Standard-15 (Revised) on Employee Benefits, figures of the present value of the defined benefit obligation, the fair value of the plan assets and the surplus or deficit in the plan for the three years preceding the previous year have not been included.

8. Based on information available with the company the balance due to Micro & Small Enterprise as defined under MSMED Act, 2006, as at 31st March 2009 and 2010, is NIL . No interest during the year and previous year has been paid under the terms of the MSMED Act, 2006.

9. Payment to Auditors:

10 Assets taken on operating lease

Amount of lease rental recognized in the Profit & Loss Account in respect of cancellable operating lease Rs.5,64,990/- (Previous year Rs 5,22,997/-)

11. As the Companys business activity fall within single business segment viz. Capacitor, comprising mainly manufacture of Ceramic Capacitor and all the sales are made in India, the disclosure requirements of Accounting Standard (AS)-17 Segment Reporting, issued by The Institute of Chartered Accountants of India are not applicable.

12. In accordance with the Accounting Standard-22 "Accounting for Taxes on Income" , the company has not recognised deferred tax liability arising due to certain timing differences since the same gets set off against equivalent amount of recognizable deferred tax assets arising on account of unabsorbed depreciation etc.

13. Particulars of un-hedged Foreign Currency Exposure as at balance sheet date:

14. The basic and diluted earning per share are:

15. The net amount of exchange profit included in the Profit and Loss account for the year is Rs. 5,49,320 (Previous year, L Rs. 6,77,072)

16. Related party transactions

(a) Name of related parties and description of relationship.

Sr No. Nature of relationship Name of related parties

1 Enterprise which is able to exercise significant influence Polychem Ltd.

2 Enterprise over which manage ment personnel and their relatives are able to exercise significant influence Ginners & Pressers Ltd.

3 Key management personnel Mr. A H Mehta

17. Information pursuant to the provisions of paragraphs 3,4C & 4D of part II of schedule-VI of the Companies Act, 1956.

18. Previous years figures have been regrouped/rearranged wherever necessary to make them comparable with those of the current year Signature to Schedules 1 to 15