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Notes to Accounts of Indokem Ltd.

Mar 31, 2015

1.Contingent Liabilities:

a) Disputed Income Tax demand on appeal Rs. 611.82 lacs (Rs. 446.77 lacs).

b) Sales Tax demand amounting to Rs. 30.49 lacs (Rs. 30.49 lacs), under appeal (Net of paid Rs. 3.15)

c) Interest demand on Service Tax Rs. 2.78 lacs (Rs. 2.78 lacs)

d) Claims against the Company not acknowledged as debts Rs. 84.25 lacs (Rs.. 84.25 lacs )

e) Custom Duty, if any payable in the event of non-fulfllment of export obligations in respect of advance license availed amounting to Rs. 30.27 lacs ( Rs. 34.27 lacs).

2. a) Secured Loan represents amount of Rs. 1410 lacs due to bank in pursuant to One Time Settlement reached in the past .

The Company has not repaid any amount during the year and continued to provide interest at the normal rate since the date of settlement and total interest provision up to the year end is Rs. 370 lacs. The Company has further negotiated with the concerned bank in subsequent year i.e. in financial year 2015-16 and settled the total dues at Rs. 1850 lacs (net of margin money realization of Rs. 27.13 lacs) and the same has been fully repaid. The Impact of additional interest amounting to Rs. 164.06 lacs and gain on settlement of principal amount of Rs. 67.39 lacs is accounted in the year of settlement.

b) As regards the old debtors amounting to Rs. 306.52 lacs, since the Company is in process of recovering these amount, no provision has been made for doubtful debtors.

c) The inventories of Ankleshwar plant brought to Mumbai has been valued at Rs. 333.26 lacs at the year end is as certifed by the management only.

3. The Company has changed the method of depreciation on fixed assets in pursuance to the provisions contained in the Companies Act 2013 ("The Act") w.e.f 1/4/2014 and amortized the net carrying value of the fixed assets over its useful lives as specified in Part 'C' of the Schedule II of the Act. Based on the transitional provisions therein, an amount of Rs. 1.73 lacs has been debited to the opening balance of Profit and Loss Account being balance value of the fixed assets whose useful lives have already expired as at the beginning of the year.

4. In the opinion of the Board, the current assets, loans and advances are approximately of the value stated, if realized in the ordinary course of business. The provision for depreciation, and all known liabilities are adequate and not in excess of the amounts considered reasonably necessary. No personal expenses have been charged to revenue accounts.

5. The Company has reinstated Rs. 321.51 lacs towards interest and loan receivable by crediting Capital Reserve upon determination of its virtual certainty of recovery. The said amount represents the balance which was taken at "NIL" value from amalgamating Companies in the past based on fair valuation at that point of time and as per the Scheme of amalgamation / merger approved by the Hon'ble High Court of Judicature at Bombay.

6. In the absence of necessary information relating to the suppliers registered as Micro, Small and Medium Enterprises under the Micro, Small and Medium Enterprises Development Act, 2006, the Company has not been able to identify such suppliers and disclose the information required under the said Act relating to them.

7. In the opinion of the management no provision for impairment in the value of fxed assets of Ankles war factory is necessary considering excess of realizable value of such fixed assets as against its carrying amounts in the books of accounts on overall basis.

8. In view of continuous losses, no provision has been made for Deferred Tax Asset (Net) arising out of carry forward losses, depreciation etc. as per prudential norms for recognition as specifed in Accounting Standard No 22 on Accounting for taxes on income as issued by the Institute of Chartered Accountants of India. Debit balance of Deferred Tax Assets amounting to Rs. 5.72 lacs represents balance transferred from one of the transferor companies viz. Khatau Capacitors Pvt Ltd (KCPL) in pursuance to the Scheme of amalgamation entered during the year and will be reviewed on overall basis of the Company in future year.

* Excludes provision for gratuity, where the actuarial valuation is done on overall Company basis

9. Interest paid on Loans includes a sum of Rs. 95.42 Lacs (Rs. 63.37 lacs) paid to directors.

10. Related Party Disclosure: List of Related Parties :

( A ) Key Management Personnel and their relatives

1. Mr. M. K. Khatau Chairman and Managing Director

2. Mrs. Leela K Khatau Mother of Mr. M. K. Khatau and

Director of the Company

3. Mrs. Asha M Khatau Spouse of Mr. M. K. Khatau and

Director of the Company

4. Mr. Manish M Khatau Son of Mr. M. K. Khatau

( B ) Associates :

(i) Priyamvada Holdings Limited

(ii) Orchard Acres

(C) Enterprises signifcantly infuenced by the Key Management Personnel or their relatives (i) Refnol Resins and Chemicals Limited (ii) Spiweld Chemtrade Pvt. Ltd. (iii) Asha Marine Products Pvt. Ltd. (iv) Samudra Dyechem Pvt.Ltd. (v) Formost Chemicals Pvt. Ltd. (vi) Textomax Chemicals Pvt. Ltd.

*Excludes provision for Gratuity, where the actuarial valuation is done on overall Company basis

11. Scheme of Arrangement and Amalgamation

A. In terms of the Scheme of Arrangement and Amalgamation ("the scheme") under sections 391 to 394, read with sections 100 to 103 of Companies Act 1956 or any other corresponding provisions of the Companies Act 2013, sanctioned by the order dated 4th September 2015, of the Hon'ble High Court of Judicature at Bombay, effective from 30.09.2015 :

1. Indokem Exports Limited (IEL) and Khatau Capacitors Private Limited (KCPL) hereinafter referred to as transferor Companies are amalgamated with Indokem Limited under the "purchase method" from the appointed date 1st April 2014. Transferor Company 1 ("IEL") is engaged in the Textile dyes and chemicals business and Transferor company 2 ("KCPL") is engaged in the business of manufacturing and dealing in electrical capacitors.

2 In accordance with the scheme and as per the approval granted by the Hon'ble High Court of Bombay -

i. The assets, properties, liabilities, rights and obligations of the Transferor Companies have vested in the Company with effect from the appointed date.

ii. The assets and liabilities of the Transferor companies have been recorded at their book values as provided in the scheme.

iii. Inter corporate investments/deposits/loans/advances outstanding between the Company and the Transferor companies have been cancelled except for items mentioned in pares vi vii & ix where the impact of cancellation is shown separately as acquired under amalgamation.

iv. The sales/ purchases/income/expenses arising between the Company and the Transferor Companies have been cancelled.

v. According to the scheme of Amalgamation 8 % non cumulative redeemable preference shares of Rs. 10/- each amounting to Rs. 2,07,09,780/- would be issued to the shareholders of Transferor Companies as under :

invoked Exports Limited : 3,25,978 shares at Rs. 10/ per share amounting to

Rs. 32,59,780/- ( Ignoring fractional shares ) Khatau Capacitors Pvt.Ltd. : 17,45,000 shares at Rs. 10/- per share amounting to

Rs. 1,74,50,000/- The same has been shown as Share Capital Suspense in the Balance Sheet.

vi. The investment of the Transferor Company 2 ("KCPL") in the shares of the Company and acquired during amalgamation at book value of Rs. 47,77,782/- has been held for disposal.

vii. The face value of shares of the Company held by Transferor Company 2 ("KCPL") amounting to Rs. 96,35,840/- is held for disposal and has been reduced from the issued capital of the Company.

viii. The authorized share capital of the Company will be increased at the time of issuance of 8% non-cumulative redeemable preference shares.

ix. Investment of the Company in the Optionally Convertible Debentures of the Transferor Company 2 ("KCPL") to the extent of Rs. 81,84,600/- has been held for redemption.

x. The difference of Rs. 48,58,058/- between the face value of shares of the Company held by the Transferor Company 2 ("KCPL") and the book value of the shares acquired during amalgamation has been credited to Capital Reserve.

xi. During the process of amalgamation Net Goodwill of Rs. 132.53 lacs has been created and shown as additions to Intangible Fixed Assets. (Refer note no 12)

B. The aforesaid accounting treatment is pursuant to the Scheme as sanctioned by the Court.

12. Previous period's figures have been regrouped / rearranged wherever necessary.

13. Figures of current year are inclusive of transferor companies' financial results and hence not comparable with those of previous year.


Mar 31, 2014

NOTE NO. 1.

NOTES TO THE FINANCIAL STATEMENTS.

Corporate Information

The Company deals in dyes, sizing chemicals and auxiliaries used in Textile industry. It has Head office at Mahim, Mumbai and branch offices at Ahmedabad, Delhi and Coimbatore. It has manufacturing and warehouse facility at Dahisar Mori near Mumbai and warehouses at Ahmedabad and Coimbatore locations and manufacturing facilities at Ambernath .

NOTE NO.2

1. Contingent Liabilities:

a) Disputed Income Tax demand on appeal Rs. 446.77 lacs (Rs. 115.41 lacs).

b) Sales Tax demand amounting to Rs. 30.49 lacs (Rs. 30.49 lacs), under appeal (Net of paid Rs. 3.15)

c) Interest demand on Service Tax Rs. 2.78 lacs (Rs. 2.78 lacs)

d) Claims against the Company not acknowledged as debts Rs. 84.25 lacs (Rs. 88.66 lacs )

e) Guarantees given by the Company:

i) The Company has given counter guarantee for Rs. nil ( Rs. 570/- lacs) against the facilities availed by M/s Khatau Leasing & Finance Company Pvt. Ltd. and M/s Khatau Holdings & Trading Pvt. Ltd. towards working capital facilities from bank.

ii) Guarantee given to Gujarat Pollution Control Board Rs. 25000/ (Rs. Nil)

f) Custom Duty, if any payable in the event of non-fullflment of export obligations in respect of Advance License availed amounting to Rs. 34.27 lacs ( Rs. 36.77 lacs).

2. The audited financial result for the accounting period is for 12 months and that of previous year is for 6 months and hence not comparable.

3. a) The written down value of Factory Building and Plant at Ankleshwar held for disposal is Rs. 468.49 Lacs as against the scrap value remaining to be adjusted amounting to Rs. 353.60 lacs The Company has discontinued providing depreciation on these fixed assets from the date they have been held for disposal.

b) Inventories at Ankleshwar Plant have been evaluated at Rs. 367.61 lacs against its book value of Rs. 412.17 lacs and the same have been transferred to Dahisar Mori godown of the Company at Mumbai at the evaluated amount and has been included as inventory of the Company lying at the said godown at the same value as at the year end. In the opinion of the management the said inventories are usable for trading operations of the Company at Mumbai.

4. a) Secured Loan represents amount of Rs. 14.10 crores due to bank pursuant to One Time Settlement reached in past. The Company has not repaid any amount during the year and provided interest of Rs. 148.05 lacs as per agreed rate at the time of settlement. In the absence of any further information and in the opinion of management the validity of terms of settlement is not changed and no provision of penal interest is required.

b) As regards the old debtors amounting to Rs. 247.10 lacs, since the Company is in process of recovering these amount, no provision has been made for doubtful debtors.

5. The Company has paid ESIC dues upto the date of closure of Ankleshwar Plant as per demand received and written back balance outstanding amount of Rs. 18.95 lacs and management expects no further liability in respect of the same.

6. In the opinion of the Board, the current assets, loans and advances are approximately of the value stated, if realized in the ordinary course of business. The provision for depreciation, and all known liabilities are adequate and not in excess of the amounts considered reasonably necessary. No personal expenses have been charged to revenue accounts.

7. In the absence of necessary information relating to the suppliers registered as Micro, Small and Medium Enterprises under the Micro, Small and Medium Enterprises Development Act, 2006, the Company has not been able to identify such suppliers and disclose the information required under the said Act relating to them..

8. In the opinion of the management no provision for impairment in the value of fixed assets of Ankleshwar factory is necessary considering excess of realizable value of such fixed assets as against its carrying amounts in the books of accounts on overall basis.

9. In view of continuous losses, no provision has been made for Deferred Tax Asset (Net) arising out of carry forward losses, depreciation etc. as per prudential norms for recognition as specified in Accounting Standard No 22 on Accounting for taxes on income as issued by the Institute of Chartered Accountants of India

10. Interest paid on Loans includes a sum of Rs. 63.37 Lacs (Rs. 28.96 lacs) paid to Directors.

11. Related Party Disclosure: (Details restricted to transactions during the year only) (A) Particulars of Subsidiary / Associate Companies

Name of the Related Party Nature of Relationship

1 Refnol Resin and Chemicals Ltd. Associate Company

2 Khatau Leasing and Finance Co. Pvt. Ltd. Associate Company

3 Vindhyapriya Holdings Pvt. Ltd. Associate Company

4 Emerald Capital Services Pvt. Ltd. Associate Company

5 Priyanilgiri Holdings Pvt. Ltd. Associate Company

6 Khatau Holdings & Trading Co. Pvt. Ltd. Associate Company

7 MKK Holdings Pvt. Ltd. Associate Company

8 Indokem Exports Ltd. Associate Company

9 Indokem Overseas Ltd. Associate Company

10 Priyamvada Holdings Ltd. Associate Company

11 Asha Marine Products Pvt. Ltd. Associate Company

Name of the Related Party Nature of Relationship

12 Prerana Leasing and Finance Pvt. Ltd. Associate Company

13 Prism Plantations Pvt. Ltd. Associate Company

(B) Key Management Personnel and their relatives

1. Mr. M. K. Khatau Chairman and Managing Director

2. Mrs. Leela K Khatau Mother of Mr. M. K. Khatau and

Director of the Company

3. Mrs. Asha M Khatau Spouse of Mr. M. K. Khatau and

Director of the Company

4. Mr. Manish M Khatau Son of Mr. M. K. Khatau

12. Previous period''s figures have been regrouped / rearranged wherever necessary.


Mar 31, 2013

Corporate Information

The Company deals in dyes, sizing chemicals and auxiliaries used in Textile industry. It has Head Offce at Mahim, Mumbai and branch offces at Ahmedabad Delhi and Coimbatore. It has godown at Dahisar Mori near Mumbai and at Ahmedabad and Coimbatore locations.

1. Contingent Liabilities:

a) Disputed Income Tax demand on appeal Rs. 115.41 lacs (Rs..21.89 lacs).

b) Sales Tax demand amounting to Rs. 30.49 lacs (Rs. 30.49 lacs), under appeal.

c) Interest demand on Service Tax Rs. 2.78 lacs (Rs. 2.78 lacs)

d) Claims against the Company not acknowledged as debts Rs. 84.25 lacs (Rs. 90.16 lacs )

e) Guarantees given by the Company:

i) On account of guarantee given on behalf of Indokem Exports Limited, Rs. Nil (Rs. 230.00 lacs) in respect of facilities availed from a bank. Amount outstanding as at 31st March, 2013 was Rs. Nil (Rs. 131.43 lacs).

ii) On account of guarantee given to a bank on behalf of Indokem Overseas Limited for Credit facility of Rs. Nil (Rs. 225.00 lacs).

iii) The Company has given Corporate guarantee for Rs. 570.00 lacs (Rs. 570.00 lacs) as counter guarantee against the facilities availed by M/s. Khatau Leasing & Finance Co. Pvt. Ltd and M/s. Khatau Holdings & Trading Co. Pvt. Ltd towards working capital facilities from Bank.

iv) To Sales Tax Authorities (New Delhi) towards registration of Shubhlabh Chemicals Pvt. Ltd. and Khatau Agrotech Ltd. amount totaling to Rs. Nil (Rs. 5.00 lacs).

f) Custom Duty, if any payable in the event of non-fullflment of export obligations in respect of Advance License availed amounting to Rs. 36.77 lacs (Rs. 33.91 lacs).

2. The audited fnancial result for the accounting period is for 6 months and that of previous year is for 18 months and hence not comparable.

3. a) The written down value of Factory Building and Plant at Ankleshwar held for disposal is Rs. 481.23 lacs as against the scrap value remaining to be adjusted amounting to Rs. 353.60 lacs. The Company has discontinued providing depreciation on these fxed assets from the date they have been held for disposal.

b) Inventories at Ankleshwar Plant could not be physically verifed and has been valued at Rs. 412.17 lacs after writing off a sum of Rs. 45.11 lacs for obsolescence on the basis of technical evaluation by management. The said plant is under process of dismantalation.

4. a) Secured Loan represents amount of Rs. 14.10 crores due to bank pursuant to One Time Settlement reached last year. The Company has not repaid any amount during the year and provided interest of Rs. 74.02 lacs as per agreed rate at the time of settlement. In the absence of any further information and in the opinion of management the validity of terms of settlement is not changed and no provision of penal interest is required.

b) As regards the old debtors amounting to Rs. 346.19 lacs , since the Company is in process of recovering these amounts, no provision has been made for doubtful debtors.

5. In the opinion of the Board, the current assets, loans and advances are approximately of the value stated, if realized in the ordinary course of business. The provision for depreciation, and all known liabilities are adequate and not in excess of the amounts considered reasonably necessary. No personal expenses have been charged to revenue accounts.

6. In the absence of necessary information relating to the suppliers registered as Micro, Small and Medium Enterprises under the Micro, Small and Medium Enterprises Development Act, 2006, the Company has not been able to identify such suppliers and disclose the information required under the said Act relating to them.

7. In the opinion of the management no provision for impairment in the value of fxed assets of Ankleshwar factory is necessary considering excess of realizable value of such fxed assets as against its carrying amounts in the books of accounts on overall basis.

8. In view of continuous losses, no provision has been made for Deferred Tax Asset (Net) arising out of carry forward losses, depreciation etc. as per prudential norms for recognition as specifed in Accounting Standard No 22 on Accounting for taxes on income as issued by the Institute of Chartered Accountants of India.

9. Interest paid on loans includes a sum of Rs. 28.96 Lacs (Rs. 80.77 lacs) paid to Directors.

10. Related Party Disclosure: (Details restricted to transactions during the year only)


Sep 30, 2012

Corporate Information

The Company deals in dyes, sizing chemicals and auxiliaries used in textile industry. It has head office at Mahim, Mumbai and branch offices at Ahmedabad, Delhi and Coimbatore. It has godowns at Dahisar Mori - Mumbai, Ahmedabad and Coimbatore locations.

1. Contingent Liabilities:

a) Disputed Income Tax demand on appeal Rs. 21.89 lacs (Rs. 197.02 lacs).

b) Sales Tax demand amounting to Rs. 30.49 lacs (Rs. 120.37 lacs), under appeal.

c) Interest demand on Service Tax Rs. 2.78 lacs (Rs. 2.78 lacs).

d) Claims against the Company not acknowledged as debts Rs. 90.16 lacs (Rs. 96.21 lacs).

e) Guarantees given by the Company:

i) On account of guarantee given on behalf of Indokem Exports Limited, Rs. 230.00 lacs (Rs. 230.00 lacs) in respect of facilities availed from a bank. Amount outstanding as at 30th September, 2012 Rs. 131.43 lacs (T131.43 lacs).

ii) On account of guarantee given to a bank on behalf of Indokem Overseas Limited for Credit facility of Rs. 225.00 lacs (Rs. 225.00 lacs), total outstanding as at September 30, 2012 was Rs. 131.43 lacs (Rs.131.43 lacs). In this regard, the Company has availed counter guarantee from Indokem Overseas Limited.

iii) The Company has given counter guarantee for Rs. 570.00 lacs (Rs. 570.00 lacs) against the guarantee availed from M/s. Khatau Leasing & Finance Co. Pvt. Ltd and M/s. Khatau Holdings & Trading Co. Pvt. Ltd. towards working capital facilities from Bank.

iv) To Sales Tax Authorities (New Delhi) towards registration of Shubhlabh Chemicals Pvt. Ltd. and Khatau Agrotech Ltd. amount totaling to Rs. 5.00 lacs (Rs. 5.00 lacs).

f) For bills discounted with the bankers and outstanding guarantees issued by them amounting to Rs. Nil (Rs. 410.15 lacs).

g) Custom Duty, if any payable in the event of non-fullfilment of export obligations in respect of advance license availed amounting to Rs. 33.91 lacs (Rs. 39.70 lacs).

2. The Company has taken extension for closing its current accounting period to 30th September, 2012 instead of 31s' March, 2012. Hence audited financial results for the current accounting period is for 18 months. Figures of previous year are for 12 months and not comparable.

3. The accounts of the Company has been prepared on the basis of Revised Schedule VI of the Companies Act, 1956 and figures of previous year have been regrouped accordingly.

4. The Company has disposed off its entire investment in its erstwhile subsidiary company viz. Kapsales Electricals Ltd. on 6th April, 2011, and hence consolidated accounts are not given.

5. a) Factory Building and Plant at Ankleshwar has been dismantled and agreed to be sold for lump sum value of scrap amounting to Rs. 848.90 Lacs as against its book value of Rs. 1155.41 Lacs. Loss on the sale of such fixed assets amounting to Rs. 178.88 lacs has been booked on the basis of scrap generated and sold. Being lump sum contract, item wise details of scrap value sold is not available and the same has been adjusted against written down value of the class of the fixed assets proportionately. Total written down value is adjusted in the proportion of scrap sold to the total scrap value received. The Company has discontinued provision of depreciation on such fixed assets from the date the same are held for disposal. At the end of the period, written down value of relevant fixed assets is Rs. 481.23 lacs as against scrap value remaining to be adjusted amounting to Rs. 353.60 lacs.

b) Inventories at Ankelshwar Plant could not be physically verified and has been continued to be valued at Rs. 457.28 lacs based on its opening value. In the absence of any other evidence, the quantum and value of the said inventories is accepted as certified by the management only.

6. Pursuant to One Time Settlement with Bank, the Company has provided for total liability of Rs. 1410.00 lacs and adjusted existing book balance of Rs. 924.60 lacs under various facilities and created debtors unrealised amounting to Rs. 346.19 lacs for bills discounted through bank on the basis of statement from bank in the past. Accordingly balance sum of Rs. 139.21 lacs has been written off to finance costs. As per information and explanation given by the management, the Company is in process of realizing the said debtors and no provision for doubtful debts is required to be created. However, till date, the Company has not paid the agreed amount of first installment of Rs. 13.50 crores by its due date as per the terms of the One Time Settlement.

7. Based on the Report Dt. 29/10/2012 of valuer, the amount of the office premises at Khatau House acquired by the Company pursuant to the scheme of amalgamation with M/s Radio Components and Transistors Co. Ltd. in the previous year has been bifurcated into Land Value of Rs. 503.25 lacs and value of building as Rs. 43.76 lacs as against total value of Rs. 547.01 lacs towards building only in previous year. The balance opening value of the building has been bifurcated into land and building proportionately based on this report and excess depreciation provided in the earlier year amounting to Rs. 7.26 lacs has been written back.

8. The Company has changed method of depreciation on assets pertaining to manufacturing division (except for Ankleshwar Plant) from straight line method to written down value method and accordingly additional depreciation amounting to Rs. 7.23 Lacs due to change in the method has been provided in the accounts.

9. The Company has updated its fixed assets register during the year and written off net values of non existing fixed assets amounting to Rs. 17.08 lacs.

10. In the opinion of the Board, the current assets, loans and advances are approximately of the value stated, if realized in the ordinary course of business. The provision for depreciation, and all known liabilities are adequate and not in excess of the amounts considered reasonably necessary. No personal expenses have been charged to revenue accounts.

11. In the absence of necessary information relating to the suppliers registered as Micro, Small and Medium Enterprises under the Micro, Small and Medium Enterprises Development Act, 2006, the Company has not been able to identify such suppliers and disclose the information required under the said Act relating to them.

12. In the opinion of the management no provision for impairment in the value of fixed assets of Ankleshwar factory is necessary considering excess of realizable value of such fixed assets as against its carrying amounts in the books of accounts on overall basis.

13. In view of continuous losses, no provision has been made for Deferred Tax Asset (Net) arising out of carry forward losses, depreciation etc. as per prudential norms for recognition as specified in Accounting Standard No. 22 on Accounting for taxes on income as issued by the Institute of Chartered Accountants of India.

14. Interest paid on Loans includes a sum of Rs. 80.77 Lacs (Rs. 51.47 lacs) paid to directors.

15. Previous year's figures have been regrouped / rearranged wherever necessary.


Mar 31, 2010

1. Contingent Liabilities:

a) Disputed Income Tax demand on appeal Rs.11.88lacs (Rs.11.90lacs).

b) Disputed demand for various dues of Gujrat Industrial Development Corporation amounting to Rs. NIL (Rs.49.35 Lacs)

c) Sales Tax demand amounting to Rs.100.94 lacs (Rs. 125.05 lacs), under appeal.

d) Interest demand on Service Tax Rs. 2.78 lacs (Rs. NIL)

e) Claims against the Company not acknowledged as debts Rs 82.25 lacs (Rs. 72.25 lacs)

f) Guarantees given by the Company:

i) On account of guarantee given on behalf of Indokem Exports Limited, Rs.230.00 lacs (Rs.280.00 lacs) in respect of facilities availed from a bank. Amount outstanding as at 31 st March 2010 was Rs. 120.95 lacs (Rs. 175.50 lacs).

ii) On account of guarantee given to a bank on behalf of Indokem Overseas Limited for Credit facility of Rs. 275.00 lacs (Rs.225.00 lacs), total outstanding as at March 31, 2010 was Rs. 127.42 lacs (Rs.204.03 lacs). In this regard, the Company has availed counter guarantee from Indokem Overseas Limited.

iii) The Company has given guarantee to a Bank amounting to Rs.786.00 lacs on behalf of its subsidiary: Kapsales Electricals Ltd for working capital facility. Total outstanding as at 31st March 2010 was Rs. 804.00 lacs (Rs. 379.69 lacs).

iv) The Company has given counter guarantee for Rs.570.00 lacs against the guarantee availed from M/s. Khatau Leasing & Finance Co. Pvt. Ltd and M/s. Khatau Holdings & Trading Co. Pvt. Ltd towards working capital facilities from Bank.

v) To Sales Tax Authorities (New Delhi) towards registration of Shubhlabh Chemicals Pvt. Ltd. and Khatau Agrotech Ltd. amount totaling to Rs. 5.00 lacs (Rs. 5.00 lacs).

g) For bills discounted with the bankers and outstanding guarantees issued by them amounting to Rs. 495.51 lacs (Rs. 801.15 lacs). h) Custom Duty, if any payable in the event of non-fullfilment of export obligations in respect of Advance License availed amounting to Rs.38.36lacs (Rs.26.15lacs).

2. The Companys manufacturing plant at Ankleshwar was not in operation w.e.f. 16th July 2009 due to sealing of entire Factory premises by Gujarat Industrial Development Corporation Ltd.(GIDC), for recovery of their dues. The Company was unable to recover its inventory lying at the Factory premises and other relevant records due to this sudden closure and labour unrest prevailing thereafter. However the company had paid entire dues of GIDC on 31st March 2010 and recovered possession of the factory premises on 15th April, 2010. On acquiring possession it was found that most of the records of the inventories and items of the inventory were found to be stolen/deteriorated in quality or unidentifiable due to closure of factory for prolonged time. Some of the inventories were salvaged and brought to Dahisar Mori godown at Mumbai. Inventory available as on date of possession were reviewed and inspected technically by the technical staff of the Company and the same has been considered and valued at Rs.6.25 crore as certified by management. The process of testing and verification is still in progress and subsequent diminution in value if any shall be accounted for in current year. Due to non availability of the stores records , the quantity of inventories cannot be reconciled and relevant details of finished goods and Raw material consumption as required to be given in Schedule 18 cannot be given.

3. For the reasons mentioned in Note No 2. above, the Company has suspended all its manufacturing activity at Ankleshwar and started buying Crude Dyes directly from outside for further standardization and Mixing operation process to be carried out at Dahisar Mori Godown at Mumbai. As such the Company has discontinued reporting on Segment results of Manufacturing activity.

4. Purchase / Sales during the year include purchase aggregating to Rs. 2,811.52 lacs (prev. year Rs.3,074.76 lacs) and sales aggregating to Rs.2,810.96 lacs (prev. year. Rs. 3,074.15 lacs) respectively on account of goods re-purchased and resold on trading account. The loss on this account for the year is Rs. 0.56 lacs (prev. year loss of Rs. 0.61 lacs).

5. In the opinion of the Board, the current assets, loans and advances are approximately of the value stated, if realized in the ordinary course of business. The provision for depreciation, and all known liabilities are adequate and not in excess of the amounts considered reasonably necessary. No personal expenses have been charged to revenue accounts.

6. Other liabilities includes liabilities for expenses amounting to Rs.212.04 lacs.(Prv.Year Rs. 224.60 Lacs)

7. In the absence of necessary information relating to the suppliers registered as Micro, Small and Medium Enterprises under the Micro, Small and Medium Enterprises Development Act, 2006, the Company has not been able to identify such suppliers and disclose the information required under the said Act relating to them..

8. In the opinion of the management no provision for impairment in the value of fixed assets of Ankleshwar factory is necessary considering excess of realizable value of such fixed assets as against its carrying amounts in the books of accounts on overall basis.

9. Unsecured Loans includes Rs. 300.00 lacs transferred from Sundry Creditors based on the supporting letter received from the respective party.

10. Interest paid on Loans includesa sum of Rs.31.60 Lacs (Rs.32.34 lacs) paid to Director.

11. Segment Reporting Segmental Information is not reported for the year under review as per reasons given in Note no 3. above

12. Related Party Disclosure: (Details restricted to transactions during the year only)

(A) Particulars of Subsidiary /Associate Companies

Name of the Related Party Nature of Relationship

1 Kapsales Electricals Limited Subsidiary Company

2 Radio Components and Transistors Company Limited Subsidiary Company

3 Refnol Resin and Chemicals Ltd Associate Company

4 Khatau Leasing and Finance Co. Pvt. Ltd Associate Company

5 Vindhyapriya Holdings Pvt. Ltd Associate Company

6 Emerald Capital Services Pvt. Ltd Associate Company

7 Priyanilgiri Holdings Pvt. Ltd Associate Company

8 Khatau Holdings & Trading Co. Pvt. Ltd Associate Company

9 MKK Holdings Pvt. Ltd Associate Company

10 Indokem Exports Ltd Associate Company

11 Khatau Agrotech Ltd. Associate Company

(B) Key Management Personnel and their relatives Nature of relationship

1 Mr. M. K. Khatau Chairman and Managing Director

2 Mrs. Leela K. Khatau Mother of Mr. M. K. Khatau, and

Director of the Company

3. Mrs. Asha M. Khatau Spouse of Mr. M. K. Khatau

4. Ms. Shreya M. Khatau Daughter of Mr.M.K. Khatau

5. Mr. Manish M. Khatau Son of Mr. M. K. Khatau

13. Previous years figures have been regrouped / rearranged wherever necessary.

 
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