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Notes to Accounts of Hindusthan National Glass & Industries Ltd.

Mar 31, 2015

1. Contingent Liabilities and Commitments

a. Contingent Liabilities' (to the extent not provided for) (Rs,in Lakhs)

SI. Particulars ref As at As at No. note no. March 31, 2015 March 31, 2014

(i) Guarantee furnished to bank on behalf of Subsidiaries 2.29.A.2 29,449.50 49,262.31

(ii) Guarantee furnished to banks on behalf of an entity over 2.29.A.2 1,800.00 1,800.00

which directors of the Company has significant influence.

(iii) Sales Tax matter under appeals 3,224.54 1,148.57

(iv) Excise Duty and Octopi demand issued against which the 1,563.70 1,618.32

Company has preferred appeals and which in the opinion of the management are not tenable.

(v) Cases pending with labour courts (to the extent ascertainable) 530.72 599.24

(vi) Other Claims against the Company not acknowledged as debt. 450.36 432.78

(vii) Octroi on Transportation of natural gas through pipeline. 323.77 310.09

(viii) Local Area Development Tax Demand 4,724.52 2,982.37

(ix) Demand of stamp duty against leasehold land purchased 96.10 96.10 from Haryana Sheet Glass Ltd.*

(x) Disputed Entry Tax for the Financial Year 2007-08, 2008-09, 153.04 59.81

2009-10, 2010-11, 2011-12 ,2012-13 and 2013-14 **

(xi) Mathadi Act for 1999-2001 45.48 -

(xii) Maharashtra Tax on the Entry of Goods into Local Areas Act, 1,684.00 - 2002 from 2012-13 to 2014-15

(xiii) Right of Recompense of Lenders as per CAP guidelines. 1,242.00 -

(xiv) Demand from Gas Authority of India limited for under drawn 1,758.00 -

quantity of LNG***

* Appeal fled before Tax Board, Rajasthan

** Disputed Entry Tax for the FY 2007-08 till 2013-14 challenged by other body corporate and pending before H'ble Supreme Court. Considering the prudence full liability have been provided for i.e. amounting to Rs. 219.79 Lakhs. As per the interim order of H.ble High Court, 50% amount have been deposited/ shown under noncurrent assists and for remaining 50% amount Bank guarantee have been provided for. In view of final decision, no provision have been made for interest liability and has been shown as contingent liability.

*** In terms of Long Term Gas supply Agreement (GSA) with GAIL (India) Limited (referred to as 'Seller'), there are under drawn quantities of Re-Liquifed Natural Gas (RLNG) equivalent to Rs. 4600 Lakhs for the contract year 2014. Unit has received demand notice dated February 27, 2015 from Seller aggregating to Rs. 1758 Lakhs only representing an aggregate under drawn quantity of 4.398 MMSCM approximately against Take or Pay deficiency. However, the Unit had disputed the same and fled a writ petition with H'ble High Court of Jaipur and the same is pending for resolution.

The unit has represented to the seller to waive off the demand raised since the plant is closed due to various factors and there is no possibility to use the gas. Unit had also alternatively requested Gail India Limited to transfer the under drawn RLNG to another unit at Bahadurgarh (Haryana) and surrender the connection. Accordingly, pending resolution and in view of proposed use of RLNG in other unit as stated above, no effect of the same has been given in these accounts. Further, management is confident that there will not be any material amount on resolution/ settlement.

2. The Company's pending litigation comprises of claims against the Company and proceeding pending with tax/statutory/ government authorities. The Company has reviewed all its pending litigations and proceedings and has made adequate provisions, and disclosed the contingent liabilities, where applicable, in its financial statement. The Company does not expects the outcome of these proceedings to have a material impact on its financial position. Future cash outflows in respect of item no. (iii) to (xiv) as mentioned above are determinable only on receipt of judgment/decisions pending with various forums/ authorities.

3. The Board is of the opinion that the assets other than Fixed Assets and Non-current investments have a value on realization in the ordinary course of business at least equal to the amount at which they are stated.

4.Related Party disclosures

i. names of the related parties and nature of relationship a) subsidiary Companies

Glass Equipment (India) Limited (GEIL) (Merged with HNGIL with effect from April 1, 2014, Refer note no. 2.44)

HNG Global GmbH

Quality Minerals Limited (QML) (Merged with HNGIL with effect from April 1, 2014, Refer note no. 2.44)

B) Joint Venture Company (up to September 30, 2014)

HNG Float Glass Limited (HNGFGL) (Refer Note 2.12.8 &2.12.9)

C) Joint Venture Company (from October 1, 2014)

HNG Float Glass Limited (HNGFGL) (Refer Note 2.12.8 & 2.12.9)

d) Key Managerial Personnels and their relatives.

(i) Shri C. K. Somany - Chairman and Non Executive Director (Relative of Key Managerial Personnel) (ii) Shri Sanjay Somany - Vice Chairman and Managing Director and Key Managerial Personnel (iii) Shri Mukul Somany - Vice Chairman and Managing Director and Key Managerial Personnel (iv) Shri Rakesh Kumar Sharma - Executive Director and Key Managerial Personnel (v) Shri Bharat Somany - Relative of the Director

e) enterprises over which any person described in [d (i) to (v)] above is able to exercise significant influence and with whom the Company has transactions during the year.

AMCL Machinery Limited (AMCL) Brabourne Commerce Private Limited (BCPL) Mould Equipment Limited (MEL) Rungamattee Trexim Private Limited (RTPL) Somany Foam Limited (SFL) Saurav Contractors Private Limited (SCPL) Khazana Marketing Private Limited (KMPL) Spotme Tracon Private Limited (STPL) Spotlight Vanijya Limited (SVL)

5. Remuneration paid to Vice Chairman and Managing Directors amounting to Rs. 641.91 Lakhs for the year and Rs. 302.72 Lakhs (excluding Rs. 399.03 Lakhs for which the central government approval has been received during the year) for year 2013-14, which due to inadequacy of proft exceeded the limits prescribed under the provisions of Companies Act, 2013 and Companies Act, 1956 respectively. The Company has made an application before the Central Government and necessary approvals in this respect are awaited.

6. Leases

The Company has acquired certain assets under financial lease, the cost of which is included in the Gross Blocks of Buildings and Vehicles. The lease term is 75 years (Rishikesh and Head Office) and 95 years (In case of Sinnar) for Building. The lease term is 3 - 5 years for Vehicles, after which the legal title will pass on the Company. The lease has been recognized as an asset at the present value of the minimum lease payments. Minimum lease payments payable in future at the balance sheet date and their present value are as under :

7. deferral/Capitalization of exchange differences

In accordance with the amendment to AS 11, the company has capitalized/recapitalized exchange loss/gain respectively arising on long-term foreign currency loan, amounting to Rs. 1,771.25 Lakhs (Previous year Rs. 3,545.75 Lakhs) to the cost of Plant & Equipments. The company does not have any other long-term foreign currency monetary item. Hence, the amount of exchange loss differed in the "Foreign Currency Monetary Item Translation Difference Account" is Rs. NIL (Previous Year : Rs. NIL). The unamortized amount as on March 31, 2015 is Rs. 5,971.64 lakhs (Previous year : Rs. 5,088.98 lakhs).

The estimates of rate of escalation in salary considered in actuarial valuation taken into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is as certified by the Actuary.

The expected rate of return on plan assets is determined considering several applicable factors, mainly the composition of plan assets held, assessed risks, historical results of return on plan assets and the Company's policy for plan assets management.

The contributions expected to be made by the Company for the year 2015-16 is yet to be determined.

8. Pursuant to Scheme of Amalgamation (the scheme)under the provisions of Companies Act 1956, with effect from April 1, 2014 (appointed date), Glass Equipment (India) Limited (GEIL) and Quality Minerals Limited (QML) have been amalgamated with the Company. GEIL is engaged in manufacturing of IS machines and services of IS machines which are used in glass manufacturing industry. QML is engaged in business of cursing of feldspar and supply of same.

The scheme has been sanctioned by the Hon'ble High Court at Calcutta vide its order dated March 31, 2015. The scheme became effective on May 7, 2015.

The amalgamation has been accounted for under "Pooling of Interest Method" as prescribed by the Accounting Standard-14 "Accounting of Amalgamation". Amalgamation has been done in the nature of merger.

In accordance with the scheme of amalgamation :

(i) The Assets and Liabilities of the GEIL and QML have been incorporated in the financial statement of the company at the carrying amount as at March 31, 2014.

(ii) Upon the scheme becoming effective, all the equity shares of GEIL and QML held by the Company have been cancelled.

9. In view of the aforesaid amalgamation, the figure for the previous year are not comparable with figures of the current year.

10. Figures for previous year have been regrouped and/or rearranged wherever considered necessary.


Mar 31, 2014

NOTE 1.1 SHARE APPLICATION MONEY PENDING ALLOTMENT

The Shareholders in its meeting held on December 18, 2012 had approved the proposal of allotment of 110,00,000 equity shares of Rs. 2 each for cash at price ofRs. 200, including a premium ofRs. 198 each aggregating to Rs. 220,00,00,000 to M/s Rungamattee Trexim Private Limited, Spotlight Vanijya Limited and Spotme Tracon Private Limited on a preferential basis. The Company had received share application money of Rs. 1,460.00 Lakhs for 7,30,000 equity shares. Equity Shares were required to be allotted within 15 days from the receipt of all necessary approvals from statutory authorities (stock exchanges wherever Company''s shares are listed, in this case). In view of inordinate delay in receiving such approvals, the Company has refunded the application money so received during the year.

1.1.2 Term loans from Banks and Financial Institutions are secured by first charge ranking pari-passu on all immovable properties by way of equitable mortgage and hypothecation of all moveable properties both present and future of the Company and second charge ranking pari-passu on entire current assets of the Company, both present and future, save and except specific assets exclusively hypothecated in favour of respective lenders. Vehicle Finance Loans are secured against vehicles obtained under finance lease arrangements.

1.1.3 Timing difference with respect to depreciation differential has been considered to the extent of deferred tax liability. As a matter of prudence, the remaining amount of the differential resulting in deferred tax asset has been ignored.

1.1.4 Working Capital Facilities (Fund Based and Non-Fund Based and acceptances as referred to in Note no. 2.8.1 below) from banks are secured by hypothecation of entire current assets of the company, both present and future and second charge on entire fixed assets of the company in favour of consortium bankers led by State Bank of India

1.1.5 This is not due for payment to Investor Education and Protection Fund

1.1.6 Represents advance received in respect of Sale Deed executed for Land at Outram Street.

2.12.2 Investment held by the Company in HNG Global GmbH are pledged in the favour of the term lender for HNG Global GmbH in respect of its borrowing facility.

2.12.3 During the year, the Company, along with the promoters of HNG Float Glass Limited (HNGFL) (HNG Group) has entered into a Joint Venture agreement on a equal basis (50:50) with Trakaya Cam Sanayii AS of Turkey (joint venture partner) for jointly pursuing the float glass business through HNGFL in India. Accordingly, 586.27 lakhs equity shares in HNGFL have been divested by the Company in favour of the joint venture partner and profit of Rs. 7,598.06 lakhs arising in this respect has been included in Other Income for the year ended March 31, 2014.

2.15.1 Inventories of Stores and Spare Parts include certain slow moving, non-moving and obsolete items. A provision of Rs. 729.97 Lakhs (Previous Year Rs. 715.01 Lakhs ) towards obsolescence for such slow moving, non-moving and obsolete items are carried in the books and the Management is of the opinion that the same is adequate and no further provision is required there against.

2.15.2 Inventories includes items lying with third parties.

2.15.3 Refer Note 2.3 to Financial Statements in respect of charge created.

2.17.1 Deposit with Banks are pledged with the Government Authorities.

2.18.2 Includes Rs. 23.21 Lakhs (Previous Year Rs. 23.21 Lakhs) deposited against demand raised by the Sales Tax Authority.

2.18.3 Includes Insurance Claim Receivable Rs. 45.65 Lakhs (Previous Year : Rs. 143.56 Lakhs).

2.19.1 Valued at lower of net book value or estimated net realisable value.

2.21.2 The Company has entered into a settlement with a bank, with regard to certain disputed foreign exchange transactions entered into in earlier years. In terms of the settlement, the Company has paid the settled amount and excess provision to the extent ofRs. 764.63 Lakhs has been written back.

2.22.1 Profit or loss on sale of Raw Materials has been adjusted in consumption.

2.25.1 Profit or loss on sale of stores has been adjusted in consumption.

2.25.2 Electricity Duty waiver benefit under State Incentive Schemes and subsidy received under State Incentive has been credited to Power and Fuel Account.

NOTE 2.29

Rs. in Lakhs

CONTINGENT LIABILITIES (to the extent not provided for)

SI. Particulars Ref As at As at No. Note No. March 31, 2014 March 31, 2013

(i) Guarantee furnished to bank on behalf of Subsidiaries 49,262.31 43,487.85

(ii) Guarantee furnished to a bank on behalf of an entity over which directors of the Company have significant influence 1,800.00 1,800.00

(iii) Sales Tax matter under appeals 1,148.57 1,169.28

(iv) Excise Duty and octroi demand issued against which the Company has preferred appeals and which in the opinion of the Management are not tenable. 1,618.32 1,186.19

(v) Cases pending with Labour Courts (to the extent ascertainable) 599.24 179.37

(vi) Claim for increased price of land acquired at Bahadurgarh by the then Punjab Government and given to the Company against which the claimants have preferred an appeal in the Supreme Court against the order of the High Court. 0.30 0.30

(vii) Other Claims against the Company not acknowledged as debt. 432.48 561.44

(x) Demand of stamp duty against leasehold land purchased 96.10 96.10 from Haryana Sheet Glass Ltd.*

(xi) Disputed Entry Tax for the Financial Year 2007-08, 2008- 59.81 59.59 09, 2009-10, 2010-11, 2011-12, 2012-13 and 2013-14**

(xii) Show cause notice from Central Excise FY 2008-09 *** - 9.74

(xiii) Export Commitment against EPCG - 535.48

* Appeal filed before Tax Board, Rajasthan

** Challenged by the other body and pending before Hon''ble Supreme Court.

*** Appeal filed before Commissioner- Appeal - Jaipur

On the basis of current status of individual cases and as per the legal advices received, wherever applicable the Management is of the view that no provision is required in respect of these cases. Further Cash outflow in respect of item no. (iii) to (xii) as mentioned above is dependent upon outcome of final judgement/decision.

NOTE 2.33

GRATUITY AND OTHER POST-EMPLOYMENT BENEFIT PLANS

As per Accounting Standard 15 "Employee Benefits" (AS - 15), the disclosures of Employee benefits as defined in the Accounting Standard are given below :

The guidance on implementing Accounting Standard - 15 (Revised 2005) on Employees Benefits issued by Accounting Standard Board (ASB) states that benefits involving employer established provident funds, which require the interest shortfalls to be recompensed are to be considered as "Defined Benefit Plans". The Actuarial Society of India has issued the final guidance for measurement of provident fund liabilities during the quarter ended December 31, 2011. The actuary has accordingly provided a valuation and based on the below provided assumptions there is no shortfall as at March 31, 2014.

The Company contributed Rs. NIL towards provident fund during the year ended March 31, 2014 (Rs. NIL during the year ended March 31, 2013).

b) Defined Benefit Plan

The employees'' gratuity fund scheme managed by Insurer is a Defined Benefit Plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

V. Compensated Absences

The actuarial liability of Compensated Absences (Unfunded) of accumulated privileged leave of the employees of the Company as at March 31, 2014 is Rs. 348.77 Lakhs (March 31, 2013- Rs. 396.55 Lakhs).

VI. In respect of Gratuity (funded), the funds are managed by the insurers. Accordingly, the percentage or amount that each major category constitutes the Fair Value of total plan assets and effect thereof on overall expected rate of return on asset have not been disclosed.

The estimates of rate of escalation in salary considered in actuarial valuation takes into account inflation, seniority, pro- motion and other relevant factors including supply and demand in the employment market. The above information is as certified by the Actuary.

The expected rate of return on plan assets is determined considering several applicable factors, mainly the composition of plan assets held, assessed risks, historical results of return on plan assets and the Company''s policy for plan assets manage- ment.

The contributions expected to be made by the Company for the year 2014-15 is yet to be determined.

NOTE 2.34 SEGMENT INFORMATION

The Company''s exclusive business is manufacturing and selling of Container Glass and as such in the opinion of the Management this is the only reportable segment, as per the Accounting Standard 17 on Segment Reporting, issued under Companies (Accounting Standards) Rules, 2006.

RELATED PARTY DISCLOSURES

I. Names of the related parties and nature of relationship

A) Subsidiary Companies

Glass Equipment (India) Limited (GEIL) HNG Global GmbH (HNGGG) Quality Minerals Limited (QML)

B) Associate Company (Upto June 30, 2013)

HNG Float Glass Limited (HNGFL)

C) Joint Venture Company (From July 1, 2013)

HNG Float Glass Limited (HNGFL)

D) Key Management Personnels and their relatives.

(i) Mr. C. K. Somany - Chairman and Non Executive Director (Relative of Key Management Personnel) (ii) Mr. Sanjay Somany - Vice Chairman and Managing Director and Key Management Personnel (iii) Mr. Mukul Somany - Vice Chairman and Managing Director and Key Management Personnel (iv) Mr. Rakesh Kumar Sharma - Executive Director and Key Management Personnel

E) Enterprises over which any person described in [D (i) to (iv)] above is able to exercise significant influence and with whom the Company has transactions during the year.

AMCL Machinery Limited (AMCL)

Brabourne Commerce Private Limited

Mould Equipment Limited (MEL)

Rungamattee Trexim Private Limited (RTPL)

Somany Foam Limited (SFL)

Spotme Tracon Private Limited (STPL)

Spotlight Vanijya Limited (SVL)

2.35.1 Remuneration paid to Vice Chairmen and Managing Directors and Executive Director includes Rs. 579.43 Lakhs for the previous year and Rs. 542.27 Lakhs for the year, which due to inadequacy of profit has exceeded the limits prescribed under the provisions of Companies Act, 1956. The Company has made an application before the Central Government and necessary approval in this respect is awaited.

NOTE 2.36 LEASES

The Company has acquired certain assets under Financial Lease, the cost of which is included in the gross blocks of buildings and vehicles. The lease term is 75 years (Rishikesh and Head Office) and 95 years (in case of Sinnar) for Building. The lease term is 3 years for vehicles, after which the legal title will pass on the Company. The lease has been recognised as an asset at the present value of the minimum lease payments. Minimum lease payments payable in future at the Balance Sheet date and their present value are as under:

Assets taken under operating leases :

Office premises and office equipments are obtained on Operating Lease. There is no contingent rent in the lease agree- ments. The lease term is for 1-3 years and is renewable at the mutual agreement of both the parties. There is no escalation clause in the lease agreements. There are no restrictions imposed by lease agreements. There are no sublease and all the leases are cancelable in nature. The aggregate lease rentals are charged as "Rent" in Note ''2.25'' of the financial statement.

NOTE 2.37 DEFERRAL/CAPITALISATION OF EXCHANGE DIFFERENCES

In accordance with the amendment to AS 11, the Company has capitalised/decapitalised exchange loss/gain respectively arising on long-term foreign currency loan, amounting to Rs. 3,545.75 Lakhs (PY. Rs. 2,079.50 Lakhs ) to the cost of Plant & Equipments. The Company does not have any other long-term foreign currency monetary item. Hence, the amount of exchange loss deffered in the "Foreign Currency Monetary Item Translation Difference Account" is Rs. NIL (Previous Year : Rs. NIL). The unamortised amount as on March 31, 2014 is Rs. 5,088.98 Lakhs (Previous year : Rs. 2,172.55 Lakhs).

NOTE 2.44

The Board is of the opinion that the assets other than Fixed Assets and non current investments have a value on realisation in the ordinary course of business atleast equal to the amount at which they are stated.

NOTE 2.45

The Board of Directors of the Company has approved the Scheme of Amalgamation of its wholly owned subsidiaries, Glass Equipment (India) Limited and Quality Minerals Limited with the Company with effect from April 1, 2014, subject to necessary approvals.

NOTE 2.46

Figures for previous year have been regrouped and/or rearranged wherever considered necessary.


Mar 31, 2013

1.1.1 Term loans from Banks and Financial Institutions are secured by first charge ranking pari-passu on all immovable properties by way of equitable mortgage and hypothecation of all moveable properties both present and future of the Company and second charge ranking pari-passu on entire current assets of the Company, both present and future, save and except specific assets exclusively hypothecated in favour of respective lenders. Vehicle Finance Loans are secured against fixed assets obtained under Finance Lease arrangements.

1.1.2 Term Loans is against non disposal undertaking and power of attorney given by the HNG & ACE Trusts on the shares of the Company held by them.

1.1.3 Term Loans is against pledge of shares of the Company held by HNG & ACE Trusts.

1.2.1 Timing difference with respect to depreciation differential has been considered to the extent of deferred tax liability. As a matter of prudence, the remaining amout of the differential resulting in deferred tax asset has been ignored.

1.2.2 In terms of Scheme of Amalgamation under section 391 to 394 of the Companies Act, 1956 as sanctioned by the Hon''ble High Court of Calcutta vide its Order dated April 7, 2008 and by Hon''ble High Court of Delhi vide its Order dated March 19, 2008, deferred tax liability is adjusted to Securities Premium Account. Accordingly, such liability of Rs. Nil lacs (Previous year Rs. 2,419.91 lacs) for the year has been adjusted to

Securities Premium Account.

1.3.1 The Company had entered into certain foreign exchange transactions in earlier years which are disputed by the Company. The Company has been legally advised that these contracts are not permissible derivative transactions and therefore void. During the year, an arbitration award upholding the claim (including interest) of Rs. 4,349.73 lacs against the Company in relation to these very transactions has been made, which the Company has contested before the Hon''ble High Court of Bombay.

However pending final decision on the matter, as a matter of prudence the said claim alongwith interest thereon aggregating to Rs. 3,627.83 lacs (including Rs. 3,227.51 lacs till previous year) has been made in the financial statements.

1.4.1 Deposit with Banks are pledged with the Government Authorities.

1.4.2 In the opinion of the Management/Board of Directors, the "Loans and Advances" have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet.

1.5.1 The accounts of some of the customers are pending reconciliation/confirmation.

1.5.2 Provision as carried in the books are against doubtful debts and in the opinion of the Management the same is adequate and no further provision is required thereagainst.

1.6.1 Includes Rs. 23.21 lacs (Previous Year Rs. 22.81 lacs) deposited against demand raised by the Sales Tax Authority.

1.7.1 Includes Rs. 1,448.28 lacs (Previous Year: Rs. 1,448.28 lacs) recoverable from certain parties. The Company has re-called the said amount from the parties and the matter has been referred for arbitration for adjudication. Pending this, the amount has been considered good and recoverable.

1.7.2 Includes Insurance Claim Receivable Rs. 143.56 lacs (Previous Year: Rs. 268.14 lacs).

1.8 SEGMENT INFORMATION

The Company''s exclusive business is manufacturing and selling of Container Glass and as such in the opinion of the Management this is the only reportable segment, as per the Accounting Standard 17 on Segment Reporting, issued under Companies (Accounting Standards) Rules, 2006.

Geographical Segment

a) The following table shows the distribution of the Company''s Revenue from operations by Geographical market.

1.9 RELATED PARTY DISCLOSURES

I Names of the related parties and nature of relationship

A) Subsidiary Companies

(i) Glass Equipment (India) Limited (GEIL) (ii) Quality Minerals Limited (QML) (iii) HNG Global GmbH (HNGGG)

B) Associate Company

(i) HNG Float Glass Limited (HNGFL)

C) Key Management Personnels and their relatives

(i) Mr. C. K. Somany - Chairman and Non Executive Director (Relative of Key Management Personnel) (ii) Mr. Sanjay Somany - Vice Chairman and Managing Director and Key Management Personnel (iii) Mr. Mukul Somany - Vice Chairman and Managing Director and Key Management Personnel (iv) Mr. Rakesh Kumar Sharma - Executive Director and Key Management Personnel

D) Enterprises over which any person described in [C (i) to (iv)] above is able to exercise significant influence and with whom the Company has transactions during the year.

(i) AMCL Machinery Limited (AMCL)

(ii) Mould Equipment Limited (MEL)

(iii) Rungamattee Trexim Private Limited (RTPL)

(iv) Somany Foam Limited (SFL)

(v) Spotme Tracon Private Limited (STPL)

(vi) Spotlight Vanijya Limited (SVL)

1.10.1 Remuneration paid to Vice Chairmen & Managing Directors and Executive Director includes Rs. 579.43 lacs which due to inadequacy of profit has exceeded the limits prescribed under the provisions of the Companies Act, 1956. The Company has made an application on November 23, 2012 before the Central Government and necessary approval in this respect is awaited. Further the reappointment and remuneration of Rs. 4.76 lacs of the Executive Director with effect from the period from March 1, 2013 to March 31, 2013 is subject to approval of Shareholders in the ensuing General Meeting and Central Government.

1.11 LEASES

The Company has acquired certain assets under financial lease, the cost of which is included in the Gross Blocks of Buildings and Vehicles. The lease term is 75 years (Rishikesh and Head Office) and 95 years (In case of Sinnar) for Building. The lease term is 3 years for Vehicles, after which the legal title will pass on to the Company. The lease has been recognised as an asset at the present value of the minimum lease payments. Minimum lease payments payable in future at the Balance Sheet date and their present value are as under:

Assets taken under operating leases:

Office premises and office equipments are obtained on operating lease. There is no contingent rent in the lease agreements. The lease term is for 1-3 years and is renewable at the mutual agreement of both the parties. There is no escalation clause in the lease agreements. There are no restrictions imposed by lease agreements. There are no sublease and all the leases are cancelable in nature. The aggregate lease rentals are charged as "Rent" in Note ''2.25'' of the financial statement.

1.12 DEFERRAL/CAPITALISATION OF EXCHANGE DIFFERENCES

In accordance with the amendment to AS 11, the Company has capitalised/decapitalised exchange loss/gain respectively arising on long-term foreign currency loan, amounting to Rs. 2,079.50 lacs (PY. Rs. 235.25 lacs ) to the cost of Plant & Equipments. The Company does not have any other long-term foreign currency monetary item. Hence, the amount of exchange loss deffered in the "Foreign Currency Monetary Item Translation Difference Account" is Rs. NIL (PY. Rs. NIL)

1.13 Figures for previous year have been regrouped and/or rearranged wherever considered necessary.


Mar 31, 2012

* Ceramic Decorators Limited have been merged with Bra Bourne Commerce Limited with effect from April 1, 2010 as per Scheme of Arrangement duly passed by Hon'ble High Court of Calcutta vide its order dated August 9, 2011.

# Noble Enclave & Towers Private Limited and Topaz Commerce Limited have been merged with Spotlight Vanjya Limited with effect from April 1, 2010 as per Scheme of Arrangement duly passed by Hon'ble High Court of Calcutta vide its order dated December 20, 2011.

1.1 In respect of 14,641,600 Equity Shares held by HNG Trust and ACE Trust, the Trustees had informed the Company of their decision to forego their rights to dividend on shares held by them for the year 2010-11 and accordingly dividend was not declared on these shares. Consequently, Proposed Dividend and Dividend Distribution Tax amounting to Rs.219.62 Lacs and Rs.35.63 Lacs respectively has been written back during the year.

1.2 Term Loan from Banks and Financial Institutions are secured by first charge ranking paripassu on all immovable properties by way of equitable mortgage and hypothecation of all moveable properties both present and future of the Company and second charge ranking pari-passu on entire current assets of the Company, both present and future, save and except specific assets exclusively hypothecated in favour of respective lenders.

Rupee Term Loan from others are secured by pledge of Equity Share held by HNG and ACE Trust.

Vehicle Finance Loans are secured against fixed assets obtained under finance lease arrangements.

Note:

1.1 Working Capital Facilities (Fund Based and Non Fund Based) from banks are secured by hypothecation of entire Current Assets of the Company, both present and future and second charge on entire Fixed Assets of the Company in favour of consortium bankers led by State Bank of India.

1.2 The Company had entered into certain derivative transactions in earlier years which are being disputed by the Company. However, in pursuance of announcement dated March 29, 2008 of "The Institute of Chartered Accountants of India" on "Accounting for Derivatives" and as a matter of prudence the claims as crystallised as on the date of knock out intimation on such transaction in earlier years and interest thereon amounting to Rs. 3,227.51 Lacs (including Rs. 2,827.18 Lacs provided in the previous year) remains provided and included in the above provision. The matters are subjudice and the Company has been legally advised that these contracts are void ab-initio.

1.3 The Company has provided for Minimum Alternate Tax (MAT). The Company is entitled to MAT Credit and accordingly based on evidences MAT Credit of Rs.1,450 Lacs (P Y Rs.NIL) has been recognised in these Financial Statements.

1.4 In terms of Scheme of Arrangement pursuant to the Order of Hon'ble High Court of Calcutta dated April 7, 2008

(a) and by the Hon'ble High Court, Delhi dated March 19, 2008 (the Scheme) sanctioning the amalgamation of Ace Glass Containers Limited (AGCL) with the Company, 1,368,872 and 2,141,448 equity shares of Rs. 10/- each of the Company issued in lieu of the shares of the Company held by AGCL and shares of AGCL held by the Company were transferred to ACE Trust and HNG Trust respectively in earlier years for the sole benefit of the Company. Out of the shares so transferred 6,844,360 and 7,797,240 equity shares of Rs. 2/- each of the Company (after subdivision of 1 equity share of Rs. 10/- each into 5 equity shares of Rs. 2/- each w.e.f. November 13, 2009) are held by ACE Trust and HNG Trust respectively as on 31st March 2012.

1.5 In view of the shares being held for the sole benefit of the Company as mentioned above and book value thereof

(b) as such not being Company's investments representing the value of the beneficial interest recoverable from the Trust, these have no longer been so classified in the accounts of the Company. Accordingly, these have been shown as deduction from the Shareholders' Fund and adjusted against the General Reserve of the Company. Consequent to this, General Reserve and Investments are lower to that extent. However, this does not have any impact on the profit of the Company for the year.

1.6 Receipt from the Trusts on account of beneficial interest will be credited to the Capital Reserve.

1.7 Inventories of Stores and Spare Parts include items, which are lying since earlier years. A provision of Rs. 729.97 Lacs (P Y. Rs. 685.15 Lacs) towards obsolescence is carried in the books and the Management is of the opinion that the same is adequate and no further provision is required there against.

1.8 Inventories includes items lying with third parties.

1.9 The accounts of some of the customers are pending reconciliation / confirmation.

1.10 A provision is carried in the books against doubtful debts and the Management is of the opinion that the same is adequate and no further provision is required there against.

1.11 A provision of Rs.32.50 Lacs (P.Y. Rs.46.04 Lacs) is carried in the books against credit notes issuable to customers and the Management is of the opinion that the same is adequate and no further provision is required there against.

* Appeal filed before Tax Board, Rajasthan

** Challenged by the other body and pending before Hon'ble Supreme Court.

On the basis of current status of individual cases and as per the legal advice obtained, wherever applicable the Management is of the view that no provision is required in respect of these cases. Further cash outflow in respect of item no. (iii) to (xii) as mentioned above is dependent upon outcome of final judgment/decision.

1.12 In the opinion of the Management/Board of Directors, the "Loans and Advances" have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet.

2. RELATED PARTY DISCLOSURES

I Names of the related parties and nature of relationship

A) Subsidiary Companies

Glass Equipment (India) Limited (GEIL)

Quality Minerals Limited (QML)

HNG Global GmbH (HNGGG)

B) Associate Company

HNG Float Glass Limited (HNGFL)

C) Key Management Personnels and their relatives

(i) Mr. C. K. Somany - Chairman and Non Executive Director (Relative of Key Management Personnel)

(ii) Mr. Sanjay Somany - Vice Chairman and Managing Director and Key Management Personnel

(iii) Mr. Mukul Somany - Vice Chairman and Managing Director and Key Management Personnel

(iv) Mr. Rakesh Kumar Sharma - Executive Director and Key Management Personnel

D) Enterprises over which any person described in [C (i) to (iv)] above is able to exercise significant influence and with whom the Company has transactions during the year.

AMCL Machinery Limited (AMCL)

Brabourne Commerce Private Limited (BCPL)

Mould Equipment Limited (MEL)

Rungamatte Trexim Private Limited (RTPL)

Somany Foam Limited (SFL)

Spotlight Vanjya Limited (SVL)

3. LEASES

The Company has acquired certain assets under financial lease, the cost of which is included in the Gross Blocks of Buildings and Vehicles. The lease term is 75 years for Building. The lease term is 3 years for Vehicles, after which the legal title will pass on the Company. The lease item has been recognised as an asset at the present value of the minimum lease payments. Minimum lease payments payable in future at the balance sheet date and their present value are as under:

4. DEFERRAL/CAPITALISATION OF EXCHANGE DIFFERENCES

The Ministry of Corporate Affairs (MCA) has issued the amendment dated December 29, 2011 to AS 11 - The Effects of Changes in Foreign Exchange Rates, to allow Companies deferral/capitalisation of exchange differences arising on Long-term Foreign Currency Monetary Items.

In accordance with the amendment to AS-11, the Company has capitalised/decapitalised exchange loss/gain respectively arising on long-term foreign currency loan, amounting to Rs. 195.15 Lacs (P.Y. NIL ) to the Capital Work-in-Progress. The Company does not have any other Long-term Foreign Currency Monetary Item. Hence, the amount of exchange loss deffered in the "Foreign Currency Monetary Item Translation Difference Account" is Rs. NIL (PY. Rs. NIL)

5. Figures for P. Y. have been regrouped and/or rearranged wherever considered necessary.

6. Till the year ended March 31, 2011, the Company was using pre-revised Schedule VI to the Companies Act, 1956, for the preparation and presentation of its Financial Statements. During the year ended March 31, 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the Company. The Company has reclassified P Y. figures to conform to this year's classification. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of Financials Statements. However, it significantly impacts presentation and disclosures made in the Financial Statements, particularly presentation of Balance Sheet.


Mar 31, 2011

(Rs. in Lacs) 2010-2011 2009-2010

1) Contingent liabilities not provided for

a) Outstanding Bank Guarantees/Letter of Credit 8,939.96 4,336.91

b) Guarantee furnished to a bank on behalf of an entity over which directors of the 3,600.00 3,600.00 Company has significant influence.

c) Sales Tax matter under appeals 1,088.94 1,345.17

d) Excise Duty and Octroi demand issued against which the Company has preferred 1,120.00 958.37 appeals and which in the opinion of the management are not tenable.

e) Cases pending with labour courts (to the extent ascertainable) 507.28 530.92

f) Claim for increased price of land acquired at Bahadurgarh by the then Punjab 0.30 0.30 Government and given to the Company against which the claimants have preferred an appeal in the Supreme Court against the order of the High Court.

g) Other Claims against the Company not acknowledged as debt. 379.61 304.63

h) Disputed entry Tax for the Financial Year 2007-08, 2008-09 and 2009-10 248.22 167.37

Notes : On the basis of current status of individual cases and as per the legal advice obtained, wherever applicable the management is of the view that no provision is required in respect of these cases. Further Cash outflow in respect of item no. c) to i) as mentioned above is dependent upon outcome of final judgment/decision.

b) (i) In terms of Scheme of Arrangement pursuant to the Order of Honble High Court at Calcutta dated 7 April 2008 and by the Honble High Court at Delhi dated 19 March 2008 (the Scheme) sanctioning the amalgamation of Ace Glass Containers Limited (AGCL) with the Company, 2141448 and 1368872 equity shares of the Company issued in lieu of the shares of AGCL held by the Company and shares of the Company held by AGCL were transferred to HNG Trust and Ace Trust respectively in earlier years. (ii) These shares have been held for the benefit of the Company. Therefore proceeds of Rs.5592.95 Lacs arising on sale of 29,10,000 shares by the HNG Trust during the year being part of the shareholders fund, based on experts opinion have been credited to the Capital Reserve and the corresponding book value of beneficial interest in these shares have been adjusted from the said reserve. The remaining beneficial interest represented by 14641600 shares of the Company have been continued to be shown under investments at book value, as originally classified in terms of the Scheme.

2) Financial and Derivative Instruments:

a) The Company had entered into certain derivative transactions in earlier years which are being disputed by the Company. However, in pursuance of announcement dated 29 March 2008 of "The Institute of Chartered Accountants of India" on "Accounting for derivatives" and as a matter of prudence the claims as crystallised as on the date of knock out intimation on such transaction and interest thereon amounting to Rs. 2827.18 Lacs (including Rs. 2,452.19 Lacs provided in the previous year) remains provided in these accounts.

b. In terms of Scheme of Amalgamation under section 391 to 394 of the Companies Act, 1956 as sanctioned by the Hon,ble High Court of Calcutta vide its Order dated 7 April 2008 and by Hon,ble High Court at Delhi vide its Order dated 19 March 2008, deferred tax liability of Rs.148.82 Lacs (previous year Rs.2792.84 Lacs) for the year has been adjusted to Share Premium Account.

c. The Company has provided for Minimum Alternate Tax (MAT). The Company is entitled to MAT Credit and accordingly based on evidences MAT Credit of Rs. NIL Lacs (previous year Rs. 365.00 Lacs) has been recognised in these accounts.

d. Provision for Income Tax has been made after considering the set off of unabsorbed depreciation and bought forward business loss of erstwhile Ace Glass Containers Limited merged with the Company with effect from 1 April 2006.

3) The Company has incurred Rs. 12.83 Lacs (Previous year Rs. 11.98 Lacs) on account of Research and Development expenses which has been charged to Profit and Loss Account.

4) As per Accounting Standard 15 "Employee Benefits" (AS - 15), the disclosures of Employee benefits as defined in the Accounting Standard are given below:

The guidance on implementing Accounting Standard - 15 (Revised 2005) on Employees Benefits issued by Accounting Standard Board (ASB) states that provident fund trustees set up by the employers which require the interest shortfall to be made by the employers needs to be treated as "Defined Benefit Plan". According to the management, in consultation to the actuary, it is not practical or feasible to actuarially value the Provident liability in the absence of any guidance from Actuarial Society of India and also due to the fact that the rate of interest as notified by the Government can vary annually. Accordingly, the Company is currently not in a position to provide other related disclosures as required by the AS - 15 read with ASB guidance. However, with regard to the position of the fund and confirmation to the Trustees of such fund there is no shortfall as at year-end.

Defined benefit Plan

The employees gratuity fund scheme managed by Insurer is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

V. Compensated Absences

The actuarial liability of Compensated Absences (Unfunded) of accumulated privileged leave of the employees of the Company as at 31.03.2011 is Rs. 342.17 Lacs (31 March 2010 - Rs. 233.92 Lacs).

VI. In respect of Gratuity (funded), the funds are managed by the insurers. Accordingly, the percentage or amount that each major category constitutes the Fair value of total plan assets and effect thereof on overall expected rate of return on asset have not been disclosed.

The estimates of rate of escalation in salary considered in actuarial valuation taken into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is as certified by the actuary.

The expected rate of return on plan assets is determined considering several applicable factors, mainly the composition of plan assets held, assessed risks, historical results of return on plan assets and the Companys policy for plan assets management.

The contributions expected to be made by the Company for the year 2011-12 is yet to be determined.

5) The Companys exclusive business is manufacturing and selling of Container Glass and as such in the opinion of the management this is the only reportable segment, as per the Accounting Standard 17 on Segment Reporting, issued under Companies (Accounting Standards) Rules, 2006.

6) The accounts of some of the customers are pending reconciliation / confirmation and Sales Tax deferment loan of Rs.938.69 Lacs is subject to confirmation and the same have been taken as per the balances appearing in the books.

A provision of Rs.749.09 Lacs (Previous year Rs. 695.06 Lacs) is carried in the books against doubtful debts and the management is of the opinion that the same is adequate and no further provision is required there against.

7) In the opinion of the Management/Board of Directors, the "Current Assets Loans and Advances" have a realisable value on in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet.

8) Disclosure of "Sundry Creditors under Current Liabilities" is based on the information available with the Company regarding the status of the suppliers as defined under the "Micro, Small and Medium Enterprise Development Act, 2006" (the Act). There are no delays in payment made to such suppliers. There is no overdue amount outstanding as at the balance sheet date. Based on above the relevant disclosures u/s 22 of the Act are as follows:

9) Profit or loss on sale of Raw Materials and Stores has been adjusted in consumption.

10) Stores and Spare Parts consumption includes materials consumed for Repairs and Replacement.

11) Inventories of Stores and Spare Parts include items, which are lying with the Company. A provision of Rs. 685.15 Lacs (Previous year Rs. 706.27 Lacs) towards obsolescence is carried in the books and the management is of the opinion that the same is adequate and no further provision is required there against.

12) Related Party Disclosures as identified by the management in accordance with the Accounting Standard - 18.

A) Subsidiary Companies

i) Glass Equipment (India) Limited

ii) Quality Minerals Limited

B) Associate

i) HNG Float Glass Limited

C) Directors and Relatives

i) Shri Chandra Kumar Somany - Chairman and Non Executive Director (Relative of Key Management Personnel)

ii) Shri Sanjay Somany - Vice Chairman and Managing Director and Key Management Personnel*

iii) Shri Mukul Somany - Vice Chairman and Managing Director and Key Management Personnel*

iv) Shri Rakesh Sharma - Executive Director and Key Management Personnel w.e.f. 1 March 2011

v) Shri Ram Raj Soni - Executive Director and Key Management Personnel upto 30 September 2010

* Shri Sanjay Somany, Managing Director and Shri Mukul Somany, Joint Managing Director, both of them have been re-designated as Vice- Chairman and Managing Director w.e.f 1 October 2010

D) Enterprises over which any person described in [C (i) to (iv)] above is able to exercise significant influence and with whom the Company has transactions during the year.

i) AMCL Machinery Limited

ii) Ceramic Decorators Limited

iii) Microwave Merchants Private Limited

iv) Mould Equipment

v) Mould Equipment Limited

vi) Noble Enclave and Towers Private Limited

vii) Somany Foam Limited

viii) Rungamatte Trexim Private Limited

ix) Topaz Commerce Limited

13) a) The Company has acquired certain assets under financial lease, the cost of which is included in the Gross blocks of Buildings and Vehicles. The lease term is 75 years for Building. The lease term is 3 years for Vehicles, after which the legal title will pass on the Company. The lease has been recognised as an asset at the present value of the minimum lease payments. Minimum lease payments payable in future at the Balance Sheet date and their present value are as under. There is no escalation clause in the lease agreement for vehicles:

b) Assets taken under operating leases:

Office premises and office equipments are obtained on operating lease. There is no contingent rent in the lease agreements. The lease term is for 1-3 years and is renewable at the mutual agreement of both the parties. There is no escalation clause in the lease agreements. There are no restrictions imposed by lease agreements. There are no sublease and all the leases are cancelable in nature. The aggregate lease rentals are charged as "Rent" in Schedule Q of the financial statement.

14) Figures for previous year have been regrouped and/or rearranged wherever considered necessary.

15) Schedule "A" to "L" and "S" form an integral part of Balance Sheet and Schedule "M" to "S" form an integral part of Profit and Loss Account.

 
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