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Notes to Accounts of Indian Hume Pipe Company Ltd.

Mar 31, 2015

In Lacs 2014-15 2013-14

1.1 CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR) :

1 Contingent Liabilities

a) Guarantees given by the Banks 30177.36 26040.57

b) Claims against the company not acknowledged as debts 136.27 136.27

c) Sales Tax / VAT demand under appeal 3350.94 588.25

d) Demands raised by Excise department excluding interest, if any, leviable thereon. 1495.21 1497.76

e) Service Tax demand under appeal 11468.31 11468.31

The Management believes that the outcome of any pending litigation will not have a material adverse effect on the Company''s financial position and the results of operations.

2 Capital Commitments

Commitments for Capital Expenditure are estimated at 442.37 267.62

2.1 RESEARCH AND DEVELOPMENT EXPENDITURE

Expenses on research and Development during the year under various heads amount to Rs. 298.09 Lacs (Previous year Rs. 279.23 Lacs)

2.2 Confirmations have not been received from some of the Debtors, Creditors and Depositors.

2.3 STOCK-IN-TRADE-LAND

a. During the year, the Company has converted Industrial land admeasuring about 27,504.78 sq. meters approximately at Badarpur, New Delhi, hitherto held as Fixed assets in to Stock in Trade on 12th November, 2014 at a book value of Rs. 399.25 Lacs.

b. During the previous year, the Company had converted its industrial land admeasuring about 48,288 sq. meters approximately at Hadapsar Pune, hitherto held as Fixed Assets in to Stock in Trade w.e.f. 31st July, 2013 at a book value of Rs. 1.32 Lacs.

c. During the previous year, the Company had converted land admeasuring about 14,070 sq. meters approximately at Wadala Mumbai, hitherto held as Fixed assets in to Stock in Trade w.e.f. 31st October, 2013 at a book value of Rs. 0.70 Lacs.

2.4 The Company has incurred an expense of Rs. 55.00 Lacs towards Corporate Social Responsibility by way of contributing the amount to Ratanchand Hirachand Foundation during the year.

NOTES:

1 BUSINESS SEGMENTS

The Company has considered "Business Segment" as the primary reporting segment for disclosure.The products included in each of the reported domestic business segments are as follows:

a. Construction contracts including Water Supply Schemes, Pipes Supply & Laying Projects

b. Others include Railway Sleepers, Air Rifles, Development of Land and Other Miscellaneous items.

Segment revenue relating to each of the above domestic business segment includes income from services provided, where applicable. The above business segments have been identified considering:

1. The nature of products & service

2. The differing risks & returns

2 There are no inter segment sales.

3 Since the Company does not have any significant business outside India there are no reportable geographic segments.

VI Accumulated compensated absences (non vesting)

Actuarial valuation of sick leave has been made on 31-03-2015. Provision in respect of this benefit amounts to Rs. 9.17 Lacs for the financial year ending 31-03-2015. (Previous year Rs. 9.73 Lacs.)

Gratuity cost, as disclosed above, is included under Employee benefit expenses.

VII Provident Fund

The Company contributed Rs. 269.11 Lacs towards Provident Fund during the year ended 31st March 2015. (Previous year Rs. 229.27 Lacs.)

2.5 During the year, the Company has re-assessed its liability towards interest on income tax provision pertaining to earlier years pursuant to amendment to section 220 of the Income Tax Act 1961. Due to this re-assessment and based on legal advice obtained, an amount of Rs. 312.35 lakhs towards interest provision of earlier years has been written back and disclosed as an exceptional item during the year.

2.6 The Company has charged off an amount of Rs. 25.33 Lacs (net of deferred tax of Rs. 13.04 Lacs) in the opening retained earnings pertaining to assets whose balance useful life was Nil as at 1st April,2014, pursuant to such adoption, in accordance with transitional provisions as per note 7(b) to Part C of Schedule II of the Companies Act, 2013,

2.7 The depreciation for the year is higher by Rs. 305.36 Lacs, pursuant to adoption of useful lives as per Part C of Schedule II of the Companies Act, 2013.

2.8 In the opinion of the Board, none of the assets other than Fixed Assets and Non-Current Investments have a value on realisation in the ordinary course of business lower than at least equal to the amount at which they are stated.

2.9 Figures for Previous Year have been regrouped, wherever necessary.


Mar 31, 2014

Rs. in lacs

2013-14 2012-13 1.1 CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR) :

1 Contingent Liabilities

a) Guarantees given by the Banks 26040.57 21942.51

b) Performance Corporate guarantees given by the Company to various contractees. - 963.76

c) Claims against the company not acknowledged as debts 136.27 120.59

d) Sales Tax/Vat demand excluding those recoverable from customers for the years 1980-81 to 588.25 537.84 2013-14 under appeal.

e) Demands raised by Excise department excluding interest, if any, leviable thereon. 1497.76 1494.17

f) Service Tax demand excluding those recoverable from customers upto the Year 2013-14 under 11468.31 10684.32 appeal.

1.2 RESEARCH AND DEVELOPMENT ExPENDITURE

Expenses on Research and Development during the year under various heads amount to Rs. 279.23 lacs (Previous year Rs. 256.75 lacs)

1.3 Confirmations have not been received from some of the Debtors, Creditors and Depositors.

1.4 a. The Company has converted its industrial land admeasuring about 48,288 sq. meters approximately at Hadapsar Pune, hitherto held as Fixed Assets in to Stock in Trade w.e.f. 31st July, 2013 at a book value of Rs. 1,32,269.50.

b. The Company has converted its land admeasuring about 14,070 sq. mtrs. approximately at Wadala Mumbai, hitherto held as Fixed assets into Stock-in-trade w.e.f. 31st October, 2013 at a book value of Rs. 69,709.49.

1.5 Amount of Rs. 20.00 lacs (Previous year Rs. 33.50 lacs) is paid towards Legal and Professional fees to a solicitor firm in which, one of the director is a sole proprietor.

1.6 In the opinion of the Board, none of the assets other than Fixed Assets and Non-Current Investments have a value on realisation in the ordinary course of business lower than at least equal to the amount at which they are stated.

1.7 Figures for Previous Year have been regrouped, wherever necessary.


Mar 31, 2013

Rs. in lacs

Particulars 2012-13 2011-12

1.1 Contingent liabilities and commitments (to the extent not provided for)

1 Contingent Liabilities

a) Guarantees given by the Banks 21942.51 17281.31

b) Performance Corporate guarantees given by the Company to various contractees. 963.76 963.76

c) Claims against the company not acknowledged as debts 120.59 120.59

d) Sales Tax /VAT demand excluding those recoverable from customers for the years 1980-81 to 537.84 568.20 2012-13 under appeal.

e) Demands raised by Excise department excluding interest, if any, leviable thereon. 1494.17 1649.72

f) Service Tax demand excluding those recoverable from customers upto the Year 2012-13 under 10684.32 3576.68 appeal.

1.2 Research and Development Expenditure

Expenses on Research & Development during the year under various heads amount to Rs. 256.75 lacs (previous year Rs. 236.66 lacs)

1.3 Confirmations have not been received from some of the Debtors, Creditors and Depositors.

1.4 During the year, the Company has received from Government of Andhra Predesh for Chilamathur factory, under Industrial Investment Promotion Policy Rs.140.65 lacs towards reimbursement of sales tax for the year 2009-10 to 2011-12 and Rs.10.38 lacs towards reimbursement of power cost for the year 2011-12 to 2012-13. These amounts have been included under the head " Other Operating Income".

1.5 In the opinion of the Board, none of the assets other than Fixed Assets and Non-Current Investments have a value on realisation in the ordinary course of business lower than at least equal to the amount at which they are stated.

1.6 Figures for Previous Year have been regrouped, wherever necessary.


Mar 31, 2012

1.1 CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR) :

Rs.in Lacs

2011-12 2010-11

Particulars

1 Contingent Liabilities

a) Guarantees given by the Banks 17281.31 13649.99

b) Performance Corporate guarantees given by the Company to various contractees. 963.76 807.67

c) Claims against the company not acknowledged as debts 120.59 120.59

d) Additional Sales Tax demand excluding Rs902.26 lacs (Previous year Rs905.24 lacs) recoverable from

customers for the years 1980-81 to 2009-10 under appeal. 568.20 506.32

e) Demands raised by Excise department excluding interest, if any, leviable thereon. 1649.72 1877.10

f) Additional Service Tax demand excluding those recoverable from customers upto the Year 2010-11 under appeal. 3576.68 3488.18

g) The Company had received notice under section 148 of the Income Tax Act 1961 for reopening of assessment for the year ended 31st March 2004 in respect of its investments made in long term Capital Gains Bonds. The Company has challenged re- opening of assessment by filing a writ petition in the High Court of Bombay. The Writ Petition has been dismissed by the High Court of Bombay. The Company has filed Special Leave Petition (SLP) in the Supreme Court of India, which is pending for admission. Meanwhile, Income Tax Department has began the assessment proceeding, however, no demand of income tax has been received in this matter till date. - -

2 Capital Commitments

Commitments for Capital Expenditure are estimated at 298.31 -

3 other Disclosures

In respect of fraud at two factories reported in the last annual report, following is the position in current year.

a) Out of Rs 17.39 lacs, Rs 15.05 lacs has been recovered/ adjusted upto May 2010. One of the party has challenged the recovery/ adjustments and the matter is subjudice. The criminal complaints against the parties and ex-employees involved in the fraud are pending in the court and for balance amount legal action has been initiated.

b) As reported in the last report the misappropriated amount involved is Rs 44.82 lacs. The proceedings of the Criminal case filed against the ex-employee of the Company have been concluded and the accused was convicted and awarded punishment of 3 years imprisonment and was released, as the accused was in judicial custody for 3 years 4 months. For recovery of aforesaid amount, civil suit proceedings are in progress.

1.2 Research and Developement Expenditure:

Expenses on Research and Developement during the year under various heads amount to Rs236.66 lacs (Previous year Rs 203.55 lacs)

1.3 Confirmations have not been received from some of the Debtors, Creditors and Depositors.

NOTES:

1 business segments

The Company has considered "business segment as the primary reporting segment for disclosure. The products included in each of the reported domestic business segments are as follows:

a. Construction contracts including water supply schemes, pipes supply & laying projects.

b. Others include Railway Sleepers, Air Rifles and Other Miscellaneous items.

Segment revenue relating to each of the above domestic business segments includes income from services provided, wherever applicable. The above business segments have been identified considering:

1. The nature of products & services

2. The differing risks & returns

2 There are no inter segment sales.

3 Since the Company does not have any significant business outside India there are no reportable geographic segments.

1.4 Employee Benefits (Continued)

Accumulated compensated absences (non vesting)

Actuarial valuation of sick leave has been made on 31-03-2012. Provision in respect of this benefit amounts to Rs 13.86 lacs for the financial year ending 31-03-2012. (Previous year Rs 10.18 lacs.)

Gratuity cost, as disclosed above, is included under Employee benefit expenses

VI provident Fund

The Company contributed Rs 40.79 lacs towards Provident Fund during the year ended 31st March 2012. (Previous year Rs 46.24 lacs.)

1.5 Remuneration:

Remuneration paid to Chairman & Managing Director is in excess of the limits specified in Schedule XIII of the Companies Act, 1956 by Rs 69 lacs. The Company has made an application seeking approval from Central Government. Approval is awaited. The approval for the same from the shareholders will be sought in ensuing Annual General Meeting.

1.6 Current Liabilities include Rs 1.99 lacs towards unclaimed amounts of preference shares redeemed and Rs 0.55 lacs towards unclaimed proceeds from sale of fractional shares issued pursuant to the bonus issue made by the Company in the year 2005-06.

1.7 In the opinion of the Board, all assets other than Fixed Assets and Non-Current Investments have a value on realisation in the ordinary course of business at least to the amount at which they are stated.

1.8 The financial statements for the year ended March 31, 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notifications of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended March 31, 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.


Mar 31, 2010

2009-10 2008-09 Rs.Lacs Rs.Lacs

1 CONTINGENT LIABILITIES:

a) Guarantees given by the Banks 15483.74 12687.73

b) Claims against the company not acknowledged as debts 121.03 178.36

c) Additional Sales Tax demand excluding Rs.902.26 lacs (Previous year Rs.905.24 lacs) recoverable from customers for the years 1980-81 to 2009-10 under appeal. 614.74 322.12

d) Demands raised by Excise department excluding interest, if any, leviable thereon. 2063.67 2244.40 e) Additional Service Tax demand excluding those recoverable from customers for the 2150.90 1889.17 Year 2004-05 under appeal.

2 Expenses on Research & Development during the year included under various heads, amounts to Rs.196.49 lacs (Previous year Rs.182.88 lacs).

3 Confirmations have not been received from some of the Debtors, Creditors and Depositors.

4 Related party disclosures, as required by AS 18

A. Names of Related Parties & Nature of Relationship

i) Ratanchand Investment Pvt. Ltd. Ultimate Holding Company

ii) IHP Finvest Ltd Promoter Holding Company (Holding 65.92% in Equity)

iii) Mr.Rajas R. Doshi Key Management Personnel

(Chairman & Managing Director) iv) Mrs. Jyoti R. Doshi (Director) Relatives of Key Management Personnel

Mr. Aditya R. Doshi

Mr. Mayur R. Doshi (Executive) v) Mobile Systems India Pvt. Ltd. Companies in which control exists directly/ indirectly

Raj Jyoti Trading & Investment Pvt. Ltd. vi) Walchand Foundation Other Related Party

Ratanchand Foundation

(Formed U/s 25 of the Companies Act, 1956)

III M/s. The Indian Hume Pipe Co. Ltd.

Combined water supply scheme to Bellampally and Mandamarry under HUDCO Phase-Ill consisting of (1) Construction of 9.00 m dia intake well cum pump house 1 No (2) 600mm dia D.I.D/F Connecting main (3) 6 Nos. of 3.00 M dia infiltration wells (4) 600mm dia RCC NP3 class pipes infiltration gallery 250m long (5) Providing 500mm dia PSC field test pressure of 10 KSC main for common sump at Municipal office (6) Providing 500mm dia PSC field test pressure of 12 KSC pumping main from common sump at Municipal office Mandamarry to Junction Point in Bellampally (Package I)

5 During the financial year 2008-09, the Companys claim U/s 80IA of the Income Tax Act 1961 pertaining to F.Y2002-03 was allowed by the Income Tax Appellate Tribunal Mumbai, as a result the Company had taken credit for tax refund of Rs.398.53 lacs and interest of Rs.122.85 lacs. The Income Tax (IT) dept. preferred an appeal against this order before the Honble High Court, Mumbai. As a matter of abundant caution, the Company had created "General Reserve No.ll" equivalent to Income Tax Refund. The Finance Act 2009 retrospectively amended Section 80IA to withdraw relief under this section. Hence, the Company has made provision during March 2010 quarter of Rs.397.89 lacs towards tax refund which has been shown under Prior Years Adjustment - Provision for Taxation of Earlier Years and interest thereon of Rs.185.16 lacs. Consequently the amount of Rs.400.00 lacs previously apportioned to "General Reserve II" has been transferred to the Profit & Loss A/c.

6 Figures for Previous Year have been regrouped, wherever necessary.

 
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