Home  »  Company  »  JCT Ltd.  »  Quotes  »  Notes to Account
Enter the first few characters of Company and click 'Go'

Notes to Accounts of JCT Ltd.

Mar 31, 2015

1. No amount has been remitted during the year in foreign currency on account of dividend.

2. Prior period expenses aggregating Rs. 131.83 lakhs (net debit) have been accounted for in the respective heads of account [Previous period: Rs. 49.84 lakhs (net debit)]

3. Corporate guarantee of Rs. 3,580.00 lakhs given to a Financial Institution for term loan availed by JCT Electronics Ltd. was invoked in earlier years before the rehabilitation scheme was sanctioned by the "Board for Industrial and Financial Reconstruction" (BIFR). JCT Electronics Limited made quarterly payments to Institutions in terms of the sanctioned scheme till 31.3.2011. Thereafter at the request of the said Company, the said institution with the consent of all other secured lenders filed a Modified Debt Restructuring Scheme (MDRS) before the BIFR for deferment of over-due quarterly instalments. The invocation of corporate guarantee is under abeyance till the BIFR decides on the same.

4. (a) The Company has not recorded cumulative deferred tax assets on account of timing differences as stipulated in Accounting Standard 22 on "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India in view of uncertainty of future taxable income.

(b) In view of no taxable profits under Income Tax Act, 1961 including section 115JB for fiscal year 2014-15, no provision for income tax is considered necessary. Adequate provision in respect of Wealth tax has been made in the Accounts.

5. In view of accumulated losses:

(i) No commission is payable to whole time directors.

(ii) No capital redemption reserve has been created during the year.

6. Leases:

The Company has taken premises on lease under cancellable and non cancellable operating lease arrangements with lease terms ranging from 1 to 3 years, which are subject to renewal thereafter at mutual consent. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expense recognized during the year amounts to Rs. 194.93 lakhs (Previous period: Rs. 92.27 lakhs). The future lease payments in respect of non- cancellable operating leases for a period later than one year but not later than 3 years is Rs. 65.50 lakhs as at 31st March, 2015 (Previous period: Rs.184.90 lakhs).

7. Disclosure of Derivative Instruments :

(a) There are no outstanding forward exchange contracts used for hedge against currency exposures as at 31st March, 2015.

(b) Foreign currency exposures that have not been specifically hedged by a derivative instrument or otherwise as at 31st March, 2015 are given below:

8. Going Concern:

Accumulated losses have resulted in erosion of substantial net worth of the Company. However, the financial statements have been prepared on a going concern basis on the strength of continued support from promoters', bankers / other lenders. Further, the Company is in the process of disposing off some of its non-core fixed assets to reduce its debt and improve its liquidity. The management, considering the future plans for operations and support of the promoters, lenders, business associates and workmen, is hopeful of improved profitability leading to further improvement in its financial position.

9. CNLT, Malaysia:

The Company had given an advance of US$ 890,000 to a related company, CNLT, Malaysia in December 2006 for supply of yarn. As CNLT, Malaysia could not supply the material within the stipulated time, the Company suffered losses and claimed compensation of US$ 360,000 which was paid alongwith advance in June 2007. On a petition filed by the ex-employees of CNLT, Malaysia (under liquidation), the Hon'ble court of Malaya at Kuala Lumpur in its order dated 13.06.2014 directed the Company to return the entire money. The Company also deposited US$ 34,250 during the year towards security to the Company's local advocate as per their legal requirement. The Company has filed an appeal against the said Order with the Courts of Appeals at Malaysia, which is pending disposal. The Company has been legally advised that provision for said contingency of Rs. 788.25 lakhs is not necessary as the appeal against the said Order will most likely be allowed.

10. Discontinued Operations:

11. In earlier years, operations of both the Units at Sriganganagar Textile Mill were discontinued. The identified asset being land in both the Units, having net book value of Rs. 134.58 lakhs (Previous period: Rs. 134.58 lakhs) is being carried at book value as expected net realizable value is higher, and is disclosed in Note no. 19 as "Land held for disposal".

12. Company has recognised loss of Rs. 101.61 lakhs (Previous period : Rs. 51.08 lakhs) as 'Loss from discontinuing operations' and disclosed it separately in the 'Statement of Profit and Loss'.

13. The letters have been sent to most of the parties for confirmation of the balances under trade receivables, advances and trade payables. However, due to non receipt of the response from some of the parties, the balances from them are subject to confirmations/reconciliation. The impact,if any,subsequent to the confirmation/ reconciliation will be taken in the year of confirmation/reconciliation.

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

15. Related party disclosures (AS-18):

A. List of Related Parties and relationships

(a) Key Management Personnel : Mr. Samir Thapar - Chairman & Managing Director

(b) Associates : JCT Electronics Ltd.

India International Airways Ltd.

Provestment Securities Pvt. Ltd.

KCT Textiles Ltd.

JCT Sports Pvt. Ltd.

(c) Relatives of Key management Personnel:

Mr. M. M. Thapar : Father of Mr. Samir Thapar

Ms. Priya Thapar : Whole Time Director & Sister of Mr. Samir Thapar

Note: Related party relationship is as identified by the Company and relied upon by the Auditors.

16. Segment Reporting:

(a) Identification of segments

i) Primary Segments

Business segment: The Company's operating businesses are organized and managed separately according to the nature of products, with each segment representing a strategic business unit that offers different products. Two identified segments are Textiles and Filament yarn. The products considered as a part of Textile segment are cloth and yarn. The products considered as a part of Filament segment are nylon yarn and chips.

ii) Secondary Segment

Geographical Segment: The analysis of geographical segment is based on the geographical location of the customers.

(b) Inter Divisional transfers of goods, as marketable products produced by separate divisions of the Company, for captive consumption are made as if sales were made to third parties at current market prices and are included in turnover.

(c) Unallocable Items:

Corporate income, corporate expenses, interest, capital and reserves are considered as part of unallocable items which are not identifiable to any business segment.

17. Employee Benefits:

(a) Defined Benefit Plan

Gratuity: Payable on separation as per the Employees Gratuity Act @ 15 days pay for each completed year of service to eligible employees who render continuous service of 5 years or more.

(b) Defined Contribution Scheme

Company's employees are covered by Provident Fund, Employees State Insurance and Superannuation scheme etc. to which the Company makes a defined contribution measured as a fixed percentage of salary. During the year, amount of Rs. 1312.77 lakhs (Previous period : Rs. 579.53 lakhs) have been charged to the Statement of Profit & Loss towards contribution to the above schemes/benefits.

(c) Other Long term Benefits

Employees of the Company are entitled to accumulate their earned/privilege leave up to a maximum of 30 days for workers and 300 days for other employees which is payable/encashable as per the policy on their separation.

18. Current year figures are not comparable with the figures of the previous period being of six months.

Figures of the previous period have been rearranged and regrouped, wherever necessary, to conform to current year classification.


Mar 31, 2014

1. GENERAL INFORMATION

JCT Limited (the Company) is primarily a manufacturer of cloth and nylon filament yarn. The Company''s manufacturing facilities are located at Phagwara and Hoshiarpur.

2.1 During the period, the Company alloted 11,59,54,059 equity shares at par @ Rs.2.50 per share aggregating to Rs. 2,898.86 lakhs to Foreign Currency Convertible Bond holders in settlement of Foreign currency Convertible Bonds (FCCBs) liability of US$ 12.93 million on preferential basis with a lock in period of 1 year. Out of such shares so allotted, 4,41,95,092 equity shares shall be dematerialised on receipt of post allotment listing approval from Bombay Stock Exchange Limited.

2.2 In the previous period ended 30.09.2013, the Company allotted 8,17,60,000 equity shares at par @ Rs.2.50 per share aggregating to Rs. 2,044 lakhs (Rs. 1,022 lakhs each to a related Company and to secured lending bankers) on preferential basis with a lock in period of 1 year w.e.f. 30.05.2013 in terms of the Corporate Debt Restructuring (CDR) Scheme.

2.3 10,00,000 OPCPS of Rs. 1,000 lakhs are redeemable on 31.12.2016 (date extended from 31.12.2011). 20% of the face value is optionally convertible into equity shares during the currency of OPCPS. They are neither entitled to dividend nor carry any voting right.

2.4 14,00,000 OPCPS of Rs. 1,400 lakhs are redeemable on 26.12.2015 (date extended from 26.12.2010) with the option to convert before that the whole amount into equity shares at a rate to be determined and as permissible under the SEBI guidelines. They are neither entitled to dividend nor carry any voting right.

3.1 During the period, the Company settled FCCBs of US $ 12.93 million by issue of equity shares (Refer note 3.1). Premium of Rs. 1,641.52 lakhs payable on such redemption has been written back and added to share premium account.

3.2 Redemption premium of US$ 2.51 million (Previous period: US$ 5.08 million) equivalent to Rs. 1,133.90 lakhs (Previous period: Rs. 2,294.92 lakhs) provided in share premium account on matured 2.5% FCCB of US$ 12.49 millions (Previous period: US$ 25.42 millions) in the earlier years has been reinstated at Rs. 1,516.71 lakhs (Previous period: Rs. 3,227.18 lakhs) and the resultant exchange fluctuation of Rs. 68.95 lakhs thereon has been adjusted in the share premium account.

4.1.1 Term Loans from Banks :

a. Rs.14,522.08 lakhs (Previous period: Rs. 15,149.61 lakhs) and interest accrued & due of Rs. 175.26 lakhs (Previous period: Rs. 112.76 lakhs):

Secured by hypothecation of all the moveable properties including plant & machinery and accessories etc. (both present & future) and also equitable mortgage, by deposit of title deeds, of all the immoveable properties (both present & future) including land, factory buildings, structures, erections, constructions and/or further constructions to be made thereon pertaining to Textile and Filament Units. Further, these loans are additionally secured by the personal guarantees of Chairman and Managing Director and Sh. M.M.Thapar. Term loans from Allahabad Bank are additionaly secured by first charge by way of an equitable mortgage over the land admeasuring around 9 acres and structures thereon at Phagwara.

b. Rs. 934.76 lakhs (Previous period: Rs. 918.82 lakhs) and interest accrued & due of Rs. 9.55 lakhs (Previous period : Rs.5.78 lakhs):

Secured by hypothecation of specific plant & machinery and the personal guarantees of Chairman and Managing Director and Sh. M.M.Thapar.

c. Working capital term loans- Rs. 3,436.31 lakhs (Previous period: Rs. 3,520.78 lakhs) and interest accrued & due of Rs. 40.47 lakhs (Previous period: Rs. 24.51 lakhs):

Secured by first charge ranking pari-passu inter-se amongst member banks on all the stocks of raw materials, stock in process, semi-finished and finished goods, stores & spares, bills receivable and books debts and all other moveables current assets both present and future pertaining to Company''s Textile and Filament Units.These are also secured by second charge over the fixed assets pertaining to abovesaid Units and by personal guarantees of Chairman and Managing Director and Shri M M Thapar. Working capital term loans from Allahabad Bank are additionaly secured by first charge by way of an equitable mortgage over the land admeasuring around 9 acres and structures thereon at Phagwara.

d. Rs. 26.45 lakhs (Previous period Rs. 21.66 lakhs):

Secured against hypothecation of specific vehicles.

4.1.2 Term Loans from Others :

Rs. 0.46 lakhs (Previous period: Rs. 2.23 lakhs) Secured against hypothecation of specific vehicles etc.

5.1.3 Securities specified above in respect of term loans, working capital term loans and funded interest on term loans approved in the previous period under the Corporate Debt Restructuring (CDR) Scheme have already been modified in terms of the Master Restructuring Agreement and other agreements executed on 18.01.2013. However, charge has not been filed due to restrainment order of the Hon’ble High Court of Punjab & Haryana at Chandigarh. (refer note 31.8)

4.2 Default in repayment of FCCBs (included under current maturities as on 31.03.2014 in note no.10)

"The Company raised US$ 30 million through issue of unsecured Foreign Currency Convertible Bonds (FCCBs) on 08.04.2006 to part finance the capital expenditure. FCCBs of US$ 4.58 million were converted into equity shares during the tenure and US$ 12.93 million were settled by issue of equity shares during the period ended 31.03.2014. The balance outstanding of US$ 12.49 million (equivalent to Rs. 7,555.20 lakhs) along with premium of 20.075% (US$ 2.51 million equivalent to Rs. 1,516.71 lakhs) became due for redemption on 08.04.2011. The Company has not been able to redeem such matured FCCBs due to paucity of cash funds. Further, provision of Rs. 1,622.36 lakhs towards yield protection on the unpaid amount is not considered necessary as this will not be payable once the restructuring/settlement of FCCBs is completed."The Bank of New York, trustees of the FCCBs, filed a winding up petition in the Hon’ble High Court of Punjab & Haryana on 29th September, 2012, on behalf of the FCCBs holders, which is pending for disposal. During the period, the Company has settled US$ 12.93 million FCCBs by issue of 115,954,059 equity shares of Rs. 2.50 each at par. Based on legal opinion, the capital gain of Rs. 5,082.50 lakhs has been shown in Capital Reserve under ''Reserves & Surplus''." "Other bondholders of FCCBs are pursuing the matter in the court for winding up of the Company for non payment of the dues. The Company has been advised that the merit of the case do not warrant winding up.

Status of Fixed deposits as at 31st March, 2014

Since 01.10.2012 the Company is not accepting and renewing public deposits u/s 58A of the Companies Act, 1956 and repaying the existing deposits as and when they became due and claimed. However during the period, there have been some delays including of clearance of cheques aggregating to Rs. 328.46 lakhs as at 31st March, 2014 which have since been cleared.

5 Security deposits includes Rs. 1,948 lakhs (Previous period:Rs. 1,948 lakhs) against ''Leave & License'' of certain properties with licensees'' option to buy at an agreed price in which eventuality the security deposit would be adjusted against the sale proceeds.

6 Secured Working Capital Loans have been taken from consortium of scheduled banks and are secured by first charge ranking pari-passu inter-se amongst member banks on all the stocks of raw materials, stock in process, semi-finished and finished goods, stores & spares, bills receivable and books debts and all other moveables current assets both present and future pertaining to Company''s Textile and Filament Units. These are also secured by second charge over the fixed assets pertaining to abovesaid Units and by personal guarantees of Chairman and Managing Director and Shri M M Thapar. Working capital loans from Allahabad Bank are additionaly secured by first charge by way of an equitable mortgage over the land admeasuring around 9 acres and structures thereon at Phagwara.(Refer note 5.1.3 - for creation of charge).

7 There is no amount outstanding to suppliers under Micro, Small and Medium Enterprises Development Act, 2006 based on available information with the Company.

8.1 There is no amount due and outstanding to be credited to Investors Education & Protection Fund.

8.2 Includes for machinery and civil works Rs. 42.57 lakhs (Previous period : Rs. 31.61 lakhs)

9.1 (a) The Company had revalued its certain freehold land held at Tehsil Phagwara on 01.04.2005 and the resultant revalued amount of Rs. 10,417.70 lakhs was substituted for the historical cost in the gross block of land, net block as at 31.03.2014 is Rs. 10,417.70 lakhs.(Previous period: Rs. 10,417.70 lakhs.)

(b) The Company had revalued its freehold land at Village Chohal, Hoshiarpur on 15.03.2010 and the resultant revalued amount of Rs. 4,403.91 lakhs was substituted for the historical cost in the gross block of land, net block as at 31.03.2014 is Rs. 4,326.35 lakhs (Previous period: Rs. 4,326.35 lakhs)

(c) The Company had revalued its building at Tehsil phagwara on 30.04.1985 and the resultant revalued amount of Rs. 738.41 lakhs was added to the historical cost in the gross block of building of Rs. 1,077.32 lakhs.

"The aforesaid revaluations were done based on reports of external valuers at replacement / market value which resulted in net increase of Rs. 15,560.02 lakhs (Previous period: Rs. 15,560.02 lakhs) in the gross block of fixed assets."

9.2 (a) Government grant of Rs. 416.54 lakhs received in 2008-09 was reduced against the cost of specific plant and machinery.

(b) The Company has continued to adjust the foreign currency exchange variation on amounts borrowed (FCCBs) for acquisition of fixed assets to the carrying cost of fixed assets as the related borrowings originated in the year 2006, which is in accordance with provision of the Company''s Act 1956, read with notification of the Government of India. This has resulted in decrease in fixed assets by Rs. 539.05 lakhs (Previous period: increase of Rs. 2976.68 lakhs), with corresponding decrease (Previous period: increase) in FCCBs borrowing during the period.

10.1 In respect of the Company''s investment in JCT Electronics Ltd.:

(a) The Company has given an undertaking to a financial institution and a bank of JCT Electronics Ltd. that the Company would not dispose off, pledge, charge, or create any lien, assign 39,33,000 equity shares having face value of Re. 1 each.

(b) The Company has pledged 42,87,000 equity shares having a face value of Re. 1 each with a financial institution for financial facility availed by JCT Electronics Ltd.

10.2 In respect of the Optionally Convertible Zero Rate Debentures, the Company has given moratorium of 5 years on repayment and they are redeemable as under:

(a) Redeemable in two equal annual instalments starting from 31.03.2019 instead of 31.03.2014.

(b) Redeemable in seven equal annual instalments starting from 31.03.2019 instead of 31.03.2014.

11 Includes Rs. 3.85 lakhs (Previous period: Rs. 3.85 lakhs) earmarked for redemption of preference shares and Rs. 2.58 lakhs (Previous period: Rs. 4.03 lakhs) against employees'' security deposits.

12.1 The Company had revalued its freehold land at Sriganganagar on 30.4.1985 and the resultant revalued amount of Rs. 134.58 lakhs was substituted for the historical cost in the gross block of land, net block as at 31.03.2014 is Rs. 134.58 lakhs (Previous period: Rs. 134.58 lakhs)

12.2 Others comprise receivables on account of export incentives, CER receivable, DEPB receivable, interest receivable, rent receivable, claims etc.

13 Represents the difference between excise duty on opening and closing stock of finished goods.

14.1 No amount has been remitted during the period in foreign currency on account of dividend.

14.2 Prior period expenses aggregating Rs. 49.84 lakhs (net debit) have been accounted for in the respective heads of account [Previous period: Rs. 50.54 lakhs (net debit)]

15 Additional notes to the financial statements for the period ended 31 st March, 2014.

15.1 Contingent liabilities and commitments not provided for: (Rs. in lakhs)

Particulars As at As at 31.03.2014 30.09.2013 (I) Contingent Liabilities (a) Claims against the Company not acknowledged as debts 76.87 20.78 (b) Guarantees given by the bankers on behalf of the Company 284.92 336.31 (c) Unutilised letter of credit - 28.40 (d) Disputed liabilities not adjusted as expenses in the Accounts for various years being in appeals towards: * Sales tax 1,241.48 1,681.30 * Excise Duty 4,207.70 4,265.38 * Stamp Duty 187.72 187.72 * Custom Duty 186.05 186.05 * Entry Tax 1,934.14 1,488.08 * Others 217.04 212.24 Total 7,974.13 8,020.77

(II) Commitments (a) Estimated amount of contracts remaining to be executed on Capital Account and not provided for in the accounts (net of advances) 514.56 332.06 (b) Export obligation against import of machinery under EPCG Scheme 198.24 1,583.56

15.2 Corporate guarantee of Rs. 3,580.00 lakhs given to a Financial Institution for term loan given to JCT Electronics Ltd. was invoked in earlier years. JCT Electronics Limited was making quarterly payments to Institution in terms of the Scheme sanctioned by the "Board for Industrial and Financial Reconstruction" (BIFR) till 31.3.2011. Thereafter the said institution with the consent of all the secured lenders whose interest were effected had filed a Modified Debt Restructuring Scheme (MDRS) before the BIFR covering the deferment of over-due quarterly instalments. The invocation of corporate guarantee is under abeyance till the approval of the MDRS.

15.3 (a) The Company has not recorded cumulative deferred tax assets on account of timing differences as stipulated in Accounting Standard 22 on "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India in view of uncertainty of future taxable income.

(b) In view of no taxable profits for fiscal year 2013-14, no provision for Income Tax as per the provisions of the Income tax Act, 1961 is considered necessary. Adequate provision in respect of Wealth tax has been made in the Accounts.

15.4 In view of accumulated losses:

(i) No commission is payable to whole time directors.

(ii) No capital redemption reserve has been created during the period.

15.5 Leases:

The Company has taken premises on lease under cancellable and non cancellable operating lease arrangements with lease terms ranging from 1 to 3 years, which are subject to renewal thereafter at mutual consent. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expense recognized during the period amounts to Rs.92.27 lakhs (Previous period: Rs.242.96 Lakhs). The future lease payments in respect of non-cancellable operating leases for a period later than one year but not later than 3 years is Rs. 184.90 lakhs as at 31 st March, 2014 (Previous period: Rs.89.46 lakhs).

15.6 Disclosure of Derivative Instruments :

(a) There are no outstanding forward exchange contracts used for hedge against currency exposures as at 31 st March, 2014.

(b) Foreign currency exposures that have not been specifically hedged by a derivative instrument or otherwise as at 31 st March, 2014 are given below:

15.7 Going Concern:

Accumulated losses have resulted in erosion of substantial net worth of the Company. However, the financial statements have been prepared on a going concern basis on the strength of continued support of the promoters, bankers/ other lenders. Further,with the implementation of restructuring of Company''s debt with its lending bankers under the Corporate Debt Restructuring Cell (CDR), the performance of the Company is expected to continue to improve.In addition,release of additional working capital fund sanctioned under CDR Scheme would further improve the liquidity position and operations of the Company. The management, considering the future plan for operations and support of the promoters, lenders, business associates and workmen is hopeful of improved profitability leading to improvement in its financial position.

15.8 Corporate debt restructuring (CDR)

The restructuring of the Company''s debts with its lending bankers under the Corporate Debt Restructuring (CDR) Scheme mechanism have been implemented by the banks. The promoters and the Company have complied with the conditions of the scheme.

However, additional working capital funds of Rs. 4,577 lakhs have not yet been released by the banks as stipulated in the CDR Scheme due to order dated 17.10.2012 of the Hon''ble High Court of Punjab & Haryana at Chandigarh and upheld by the Hon''ble Supreme Court restricting creation of charge on the assets of the Company on the petition filed by the Trustee of Foreign Currency Convertible Bond holders to wind up the Company due to default in repayment of their dues.

15.9 Discontinued Operations:

15.9.1 In earlier years, operations of both the Units at Sriganganagar Textile Mill were discontinued. The identified asset being land in both the Units, having net book value of Rs. 134.58 lakhs (Previous period: Rs. 134.58 lakhs) is being carried at book value as expected net realizable value is higher, and is disclosed in ''Note no. 20'' as "Land held for disposal".

15.9.2 Company has recognised loss of Rs. 51.08 lakhs (Previous period: Rs. 673.59 lakhs) as ''Loss from discontinuing operations'' and disclosed it separately in the ''Statement of Profit & Loss''.

15.9.3 Disclosures as required under ''Accounting Standard 24 - Discontinuing Operations'' in respect of Sriganganagar Unit I and II are as under:

15.10 The letters have been sent to most of the parties for confirmation of the balances under trade receivables, advances and trade payables. However, due to non receipt of the response from some of the parties, the balances from them are subject to confirmations/reconciliation. The impact,if any, subsequent to the confirmation/ reconciliation will be taken in the year of confirmation/reconciliation.

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

15.12 Related party disclosures (AS-18):

List of Related Parties and relationships

(a) Key Management Personnel : Mr. Samir Thapar - Chairman & Managing Director

(b) Associates : JCT Electronics Ltd. India International Airways Ltd. Provestment Securities Pvt. Ltd. KCT Textiles Ltd. JCT Sports Pvt. Ltd.

(c) Relatives of Key management Personnel:

Mr. M. M. Thapar : Father of Mr. Samir Thapar Ms. Priya Thapar : Sister of Mr. Samir Thapar

Note: Related party relationship is as identified by the Company and relied upon by the Auditors.

(a) Identification of segments

i) Primary Segments

Business segment: The Company''s operating businesses are organized and managed separately according to the nature of products, with each segment representing a strategic business unit that offers different products. Two identified segments are Textiles and Filament yarn. The products considered as a part of Textile segment are cloth and yarn. The products considered as a part of Filament segment are nylon yarn and chips.

ii) Secondary Segment

Geographical Segment: The analysis of geographical segment is based on the geographical location of the customers.

(b) Inter Divisional transfers of goods, as marketable products produced by separate divisions of the Company, for captive consumption are made as if sales were made to third parties at current market prices and are included in turnover.

(c) Unallocable Items:

Corporate income, corporate expenses, interest, capital and reserves are considered as part of unallocable items which are not identifiable to any business segment.

15.13 Employee Benefits:

(a) Defined Benefit Plan

Gratuity: Payable on separation as per the Employees Gratuity Act @ 15 days pay for each completed year of service to eligible employees who render continuous service of 5 years or more.

(b) Defined Contribution Scheme

Company''s employees are covered by Provident Fund, Employees State Insurance and Superannuation scheme etc. to which the Company makes a defined contribution measured as a fixed percentage of salary. During the period, amount of Rs. 579.53 lakhs (Previous period : Rs. 1,485.96 lakhs) have been charged to the Statement of Profit & Loss towards contribution to the above schemes/benefits.

(c) Other Long term Benefits

Employees of the Company are entitled to accumulate their earned/privilege leave up to a maximum of 30 days for workers and 300 days for other employees which is payable/encashable as per the policy on their separation.

(d) Other disclosures as required under Accounting Standard-15 (Revised 2005) on "Employee Benefits"

16. Current period''s figures being for six months are not comparable with the figures of the previous period being of eighteen months. Figures of the previous period have been rearranged and regrouped,wherever necessary, to conform to current period classification.


Sep 30, 2013

1. GENERAL INFORMATION

JCT Limited (the Company) is primarily a manufacturer of cloth and nylon filament yarn. The Company''s manufacturing facilities are located at Phagwara and Hoshiarpur.

2.1 No amount has been remitted during the period in foreign currency on account of dividend.

2.2 Prior period expenses aggregating Rs.50.54 lakhs (net debit) have been accounted for in the respective heads of account [Previous Year: Rs. 52.75 lakhs (net debit)]

2.3 Corporate guarantee of Rs. 3,580.00 lakhs given to a Financial Institution for term loan given to JCT Electronics Ltd. was invoked in earlier years. JCT Electronics Limited was making quarterly payments to Institution in terms of the Scheme sanctioned by the "Board for Industrial and Financial Reconstruction" (BIFR) till 31.3.2011.Thereafter the said institution with the consent of all the secured lenders whose interest were effected had filed a Modified Debt Restructuring Scheme (MDRS) before the BIFR covering the deferment of over-due quarterly instalments. The invocation of corporate guarantee is under abeyance till the approval of the MDRS.

2.4 (a) The Company has not recorded cumulative deferred tax assets on account of timing differences as stipulated in Accounting Standard 22 on "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India in view of uncertainty of future taxable income.

(b) In view of no taxable profits, no provision for Income Tax as per the provisions of the Income tax Act, 1961 is considered necessary. Adequate provision in respect of Wealth tax has been made in the Accounts.

2.5 In view of accumulated losses: (i) No commission is payable to whole time director. (ii) No capital redemption reserve has been created during the period.

2.6 Leases:

The Company has taken premises on lease under cancellable and non cancellable operating lease arrangements with lease terms ranging from 1 to 3 years, which are subject to renewal thereafter at mutual consent. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expense recognized during the period amounts to Rs.242.96 lakhs (Previous Year: Rs.117.64 Lakhs). The future lease payments in respect of non-cancellable operating leases for a period later than one year but not later than 5 years is Rs.89.46 lakhs as at 30th September, 2013 (Previous year: Rs.100.85 lakhs).

2.7 Going Concern:

Continuing and accumulated losses have resulted in entire erosion in net worth of the Company. However, the financial statements have been prepared on a going concern basis on the strength of continued support of the promoters, bankers/ other lenders. Further, during the period the restructuring of Company''s debt with its lending bankers has been partially implemented under the Corporate Debt Restructuring (CDR) mechanism. Once the CDR Scheme is fully implemented, liquidity position and the operations of the Company are likely to improve. The management, considering the future plan for operations and support of the promoters, lenders, business associates and workmen is hopeful of improved profitability leading to improvement in its financial position.

2.8 Corporate debt restructuring (CDR)

During the period,Restructuring of the Company''s debts with its lending bankers was approved under the Corporate Debt Restructuring (CDR) Scheme mechanism. The Scheme has been implemented by most of the banks and the impact thereof has been taken in the Accounts to the extent as advised by such banks. Further, in terms of the Scheme;

– one of the Promoter companies, namely Provestment Securities Private Limited, contributed additional Rs.1022 lakhs in the form of equity capital and Rs.578 lakhs as subordinate debt.

– Mr. Samir Thapar - Chairman & Managing Director, Provestment Securities Private Limited and KCT Textiles Limited (Promoter companies) pledged their entire shareholdings in the Company to the lenders.

– Mr. Samir Thapar and Mr. M M Thapar have given their personal guarantees to the lenders. – Lenders'' sacrifice of Rs.1622 lakhs has been settled by way of issuance of equity shares of Rs.1022 lakhs at par and the balance amount of Rs.600 lakhs through funding to make the CDR Scheme Net Present Value protected.

However, additional working capital funds of Rs. 4577 lakhs have not been provided by the banks as stipulated in the CDR Scheme due to order dated 17.10.2012 of the Hon''ble High Court of Punjab & Haryana at Chandigarh and upheld by the Hon''ble Supreme Court restricting creation of charge on the assets of the Company on the petition filed by the Trustee of Foreign Currency Convertible Bond Holders to wind up the Company due to default in repayment of their dues.

2.9 Discontinued Operations:

2.9.1 In earlier years, operations of both the Units at Sriganganagar Textile Mill were discontinued. The identified asset being land in both the Units, having net book value of Rs.134.58 lakhs (Previous year: Rs.301.24 lakhs) and is being carried at book value as expected net realizable value is higher, and is disclosed in Note 20.1 as "Asset held for disposal".

2.9.2 Company has recognised loss of Rs.673.59 lakhs (Previous Year: Rs. 142.89 lakhs) as ''Loss from discontinuing operations'' and disclosed it separately in the ''Statement of Profit & Loss''.

2.10 Pursuant to the losses in the current accounting period, accumulated losses as on 30th September,2013 stood at Rs 25,795.69 lakhs resulting in erosion of entire net worth of the Company thereby attracting provisions of ''Sick Industrial Companies (Special Provisions) Act 1985''. Accordingly, requisite steps are being taken as envisaged under the said Act. However as the Company, has approval to convert 51% of the value of its Foreign Currency Convertible Bonds (FCCBs) into equity capital, made profits during the last quarter ended 30th September, 2013 and there is no default in the repayment of its financial obligations to Banks, the Company is confident that its net worth will exceed its accumulated losses within a reasonable time.

2.11 The letters have been sent to almost all the parties for confirmation of the balances under trade receivables, advances and trade payables. However, due to non receipt of the response from the parties, the balances are subject to confirmations/reconciliation in some cases.The impact,if any,subsequent to the confirmation/ reconciliation will be taken in the year of confirmation/reconciliation.

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

2.13 Segment Reporting:

(a) Identification of segments

i) Primary Segments

Business segment: The Company''s operating businesses are organized and managed separately according to the nature of products, with each segment representing a strategic business unit that offers different products. Two identified segments are Textiles and Filament yarn. The products considered as a part of Textile segment are cloth and yarn. The products considered as a part of Filament segment are nylon yarn and chips.

ii) Secondary Segment

Geographical Segment: The analysis of geographical segment is based on the geographical location of the customers.

(b) Inter Divisional transfers of goods, as marketable products produced by separate divisions of the Company, for captive consumption are made as if sales were made to third parties at current market prices and are included in turnover.

2.14 Employee Benefits:

(a) Defined Benefit Plan

Gratuity: Payable on separation as per the Employees Gratuity Act @ 15 days pay for each completed year of service to eligible employees who render continuous service of 5 years or more.

(b) Defined Contribution Scheme

Company''s employees are covered by Provident Fund, Employees State Insurance and Superannuation scheme etc. to which the Company makes a defined contribution measured as a fixed percentage of salary. During the period , amount of Rs.1485.96 lakhs (Previous year: Rs.832.34 lakhs) have been charged to the Statement of Profit & Loss towards contribution to the above schemes/benefits.

(c) Other Long term Benefits

Employees of the Company are entitled to accumulate their earned/privilege leave upto a maximum of 30 days for workers and 300 days for other employees which is payable /encashable as per the policy of on their separation.

Other disclosures as required under Accounting Standard-15 (Revised 2005) on ''Employee Benefits'' are as under:

3. Current period figures being 18 months are not comparable with the figures of the previous year.

Figures of the previous year have been rearranged and regrouped,wherever necessary, to conform to current period classification.


Mar 31, 2012

1. GENERAL INFORMATION

JCT Limited (the Company) is primarily a manufacturer of cloth and nylon filament yarn. The Company's manufacturing facilities are located in Phagwara and Hoshiarpur.

2.1 10,00,000 OPCPS of Rs.1,000 lakhs are redeemable on 31.12.2016 (date extended from 31.12.2011). 20% of the face value is optionally covertible into equity shares during the currency of OPCPS.They are neither entitled to dividend nor carry any voting right.

2.2 1,400,000 OPCPS of Rs.1,400 lakhs are redeemable on 26.12.2015 (date extended from 26.12.2010) with the option to convert before that the whole amount into equity shares at a rate to be determined and as permissble under the SEBI guidelines.They are neither entitled to dividend nor carry any voting right.

3.1 "Redemption premium of US$ 5.08 million equivalent to Rs.2294.92lakhs (Previous year:Rs.2294.92 lakhs) fully provided in share premium account on 2.5% FCCB of US $ 25.42 millions has been reinstated at Rs 2619.79 lakhs as at 31.03.12 and the resultant exchange fluctuation has been adjusted in the share premium account.

(b) FCCB

Company raised US$ 30 million through issue of 2.5% unsecured FCCBs on 8.4.2006. FCCBs of US$ 4.58 million stood converted into equity shares in earlier years and the balance of US$ 25.42 million (equivalent to Rs.13,098.93 lakhs) became due for redemption on 08-04-2011 alongwith premium of 20.075% (US$ 5.08 million equivalent to Rs.2,619.79 lakhs). The Company could not redeem the same due to paucity of cash funds. Further, provision of Rs.924.78 lakhs towards yield protection on the unpaid amount is not considered necessary as this will not be payable once the restructuring is completed considering the changes in economic scenario. In the meantime, the Bank of New York Mellon, Trustee has filed winding up petition before the Hon'ble High Court of Punjab and Haryana at Chandigarh on 29th September,2012, which is pending hearing /disposal. In the light of ongoing talks with some of the major bond holders and the merit of the petition,The Company does not anticipate any adverse outcome of the said litigation.

4.1 Secured Working Capital Loans have been taken from consortium of scheduled banks and are secured by first charge ranking pari-passu inter-se amongst member banks on all the stocks of raw materials, stock in process, semi-finished and finished goods, stores and spares, bills receivable and books debts and all other movables current assets both present and future pertaining to Company's Textile and Filament Units. These are also secured by second charge over the fixed assets pertaining to abovesaid Units and by personal guarantees of Chairman and Managing Director and Sh. M M Thapar. Working Capital Loans from Allahabad Bank are additionally secured by First Charge by way of an equitable mortgage over the land admeasuring around 9 acres and structurres thereon at Phagwara.

4.2 Secured loans from other is secured against pledge of shares held under Current Investments of the company - Refer Note 15(a)i.

5.1 There is no amount due and outstanding to be credited to Investors Education & Protection Fund.

5.2 Includes for machinery and civil works Rs.4.53 lakhs (Previous Year : Rs. 36.40 lakhs)

6.1 (a) The Company had revalued its certain freehold land held at Tehsil Phagwara on 01.04.2005 and the resultant revalued amount of Rs. 10,417.70 lakhs was substituted for the historical cost in the gross block of land,net block as at 31.03.12 is Rs 10,417.70 lahks.

(b) The Company had revalued its freehold land at Village Chohal, Hoshiarpur on 15.03.2010 and the resultant revalued amount of Rs.4,403.91 lakhs was substituted for the historical cost in the gross block of land,net block as at 31.3.12 is Rs 4359.66 lakhs.

(c) The Company had revalued its certain freehold land at Sriganganagar on 30.4.85 and the resultant revalued amount of Rs.134.58 lakhs was substituted for the historical cost in the gross block of land, net block as at 31.3.12 is Rs. 50.19 lakhs.

(d) During the year ended 31.3.2012, the company had adjusted Rs.44.09 lakhs relating to Filament unit, Hoshiarpur from revaluation reserve against sale of land.

(e) The company had revalued its building at Tehsil phagwara on 30.4.85 and the resultant revalued amount of Rs.738.41 lakhs was added to the historical cost in the gross block of building of Rs.1077.32 lakhs.

"The aforesaid revaluations were done based on reports of external valuers at replacement / market value which resulted in net increase of Rs.15694.60 lakhs in the gross block of fixed assets."

6.2 (a) Government grant of Rs. 416.54 lakhs received in 2008-09 was reduced against the cost of specific plant and machinery.

(b) The Company has continued to adjust the foreign currency exchange variation on amounts borrowed(FCCBs) for acquisition of fixed assets to the carrying cost of fixed assets as the related borrowings originated in the year 2006, which is in accordance with provisions of the company's Act 1956, read with notifications of the Government of India. This has resulted in increase in fixed assets by Rs.1624.33 lakhs (previous year decrease of Rs 111.85 lakhs), with corresponding increase in FCCBs borrowings during the year.

6.3 Capital work in progress includes under noted pre-operative expenditure pending allocation on commencement of commercial production:

7.1 In respect of the Company's investment in JCT Electronics Ltd.:

(a) The Company has given an undertaking to a financial institution and a bank of JCT Electronics Ltd. that the Company would not dispose off, pledge, charge, or create any lien, assign 39,33,000 equity shares having face value of Re.1 each.

(b) The company has pledged 42,87,000 equity shares having a face value of Rs.1/- each with a financial institution for financial facility availed by JCT Electronics Ltd.

7.2 Though Rs.597.60 lakhs was redeemable on 31.03.2012, however moratorium of 2 years has been given for repayment of whole amount which is now redeemable from 31.03.2014 onwards in two annual equal instalments.

7.3 Though Rs.287.24 lakhs was redeemable on 31.03.2012, however a moratorium of 2 years has been given for repayment of whole amount which is,now redeemable from 31.03.2014 onwards in seven annual equal instalments.

7.4 Provision for shortfall of Rs. 199.38 Lakhs (previous year Rs. 127.09 lakhs) in the aggregate market value of quoted investments as compared to the book value is not considered necessary as in the view of the management, there is no permanent diminution in value of investment except to the extent for which adequate provision is already made in the accounts.

8.1 Includes Rs.3.79 lakhs (Previous Year: Rs.3.80 lakhs) earmarked for redemption of preference shares and Rs.6.08 lakhs ( Previous Year: Rs 7.31 lakhs) against employees' security deposits.

8.2 Includes fixed deposits of Rs.75 lakhs maturing on 20.03.2013 (Previous year: Rs.150 lakhs maturing on 20.03.2012)

9.1 Others comprise receivables on account of export incentives, CER receivable, DEPB receivable, interest receivable, rent receivable, claims etc.

10.1 No amount has been remitted during the year in foreign currency on account of dividend.

10.2 Prior period expenses aggregating Rs. 52.75 lakhs (net debit) have been accounted for in the respective heads of account (Previous Year: 15.30 lakhs (net debit.)

11. Additional notes to the financial statements for the year ended 31st March, 2012.

11.1 Contingent liabilities and commitments not provided for:

(Rs. In Lakhs)

Particulars 31.03.2012 31.03.2011

(I) Contingent Liabilities

(a) Claims against the Company not acknowledged as debts. 19.38 18.47

(b) Guarantees given by the bankers on behalf of the Company 205.28 229.21

(c) Unutilised letter of credit 24.80 166.31

(d) Disputed liabilities not adjusted as expenses in the Accounts for various ( years being in appeals towards:

- Sales tax 735.02 454.46

- Income tax 83.04 120.87

- Excise Duty 2,422.80 2,363.51

- Stamp Duty 187.72 187.72

- Custom Duty 186.05 186.05

- Entry Tax 351.82 16.37

- Others 228.46 218.70

- Total 4,194.91 3,547.68

(II) Commitments

(a) Estimated amount of contracts remaining to be executed on Capital 154.59 483.76 (Account and not provided for in the accounts (net of advances)

(b) Export obligation against import of machinery under EPCG Scheme 13,590.00 6,151.12





11.2 Corporate guarantee of Rs. 3,580.00 lakhs given to a Financial Institution for term loan given to JCT Electronics Ltd. was invoked in earlier years. JCT Electronics Limited was making quarterly payments to Institution in terms of the Scheme sanctioned by the "Board for Industrial and Financial Reconstruction" (BIFR) till 31.3.2011. Thereafter the said institution with the consent of all the secured lenders whose interests were effected had filed a Modified Debt Restructuring Scheme (MDRS) before the BIFR covering the deferment of over-due quarterly instalments. The invocation of corporate guarantee is under abeyance till the approval of the MDRS.

11.3 (a) The Company has not recorded cumulative deferred tax assets on account of timing differences as stipulated in Accounting Standard 22 on "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India in view of uncertainty of future taxable income.

(b) In view of no taxable profits, no provision for Income Tax as per the provisions of the Income tax Act, 1961 is considered necessary. Adequate provision in respect of Wealth tax has been made in the Accounts.

11.4 In view of accumulated losses:

(i) No commission is payable to whole time directors.

(ii) No capital redemption reserve has been created during the year.

11.5 Leases:

The Company has leased facilities under cancellable and non cancellable operating lease arrangements with a lease terms ranging from 1 to 3 years, which are subject to renewal thereafter at mutual consent. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expense recognized during the year amounts to Rs. 117.64 lakhs (Previous Year: Rs. 84.73 Lakhs). The future lease payments in respect of non- cancellable operating leases for a period later than one year but not later than 5 years is Rs. 100.85 lakhs as at 31st March, 2012 (Previous year Rs.103.80 lakhs).

11.6 Going Concern:

Accumulated losses have resulted in substantial erosion in net worth of the Company. However, the financial statements have been prepared on a going concern basis on the strength of continued support of the promoters, bankers/ other lenders. Further, the restructuring of Company's debts with its bankers has been approved under Corporate Debt Restructuring Cell (CDR) mechanism in its meeting held on 12/09/2012 as per LOA dated 21/09/2012 which shall be implemented after completing all the conditions stipulated therein and the impact thereof as such shall be given in the accounts on its fulfilment of all the formalities/conditions. The management, considering the future plans for operations and support of the promoters, lenders, business associates and workmen is hopeful of improved profitability leading to improvement in its financial position.

11.7 Discontinued Operations:

11.7.1 The operations at Unit-I of Sriganganagar Textile Mill were discontinued since 16.11.2009. The identified asset being land having net book value of Rs. 84.65 lakhs is carried at the net book value as expected net realizable value is higher, and is disclosed in Note No.20.1 as 'Assets held for disposal'. Advances of Rs. 421.50 lakhs received from the buyers of the asset are included in other Current Liabilities to be adjusted pending completion of legal formalities.

11.7.2 During the year, operations at Unit-II of Sriganganagar Textile Mill were discontinued. The Company entered into an agreement with the workers unions pursuant to which full and final dues of some of the workers have been settled and paid off. Company also entered into agreement for disposal of the assets of the Unit except Land and Building. The identified fixed assets pending disposal having net book value of Rs. 216.59 lakhs and inventory of Rs.61.52 lakhs are carried at the net book value, expected net realizable value being higher, and are disclosed in Note No.20.1 and 16.2 respectively as 'Assets held for disposal'. Advances of Rs.180 lakhs received from a buyer of these assets are included in other Current Liabilities to be adjusted on sale of assets.

11.7.3 Company has recognised loss of Rs. 142.89 lakhs as 'Loss from discontinuing Operations' and disclosed it separately in the 'Statement of Profit & Loss'. In earlier years results of the Unit were included under 'Textile Segment'.

11.8 During the year the Company sold its entire shareholding in its subsidiary company Rajdhani Trading Company Limited for a total consideration of Rs. 5.01 lakhs. Loss of Rs. 60.70 lakhs thereon has been shown separately in the 'Statement of Profit & Loss' as an Exceptional Loss.

11.9 Pursuant to the losses in the current year, accumulated losses as on 31.03.2012 exceed fifty percent of the peak net worth of the Company during preceding four financial years attracting provisions of 'Sick Industrial Companies (Special Provisions) Act, 1985'. Accordingly, requisite steps are being taken as envisaged under the said Act including intimation to the 'Board for Industrial and Financial Reconstruction'.

11.10 The letters have been sent to almost all the parties for confirmation of the balances under trade receivables, advances and trade payables, however, due to non receipt of the response from the parties, the balances are subject to confirmations/reconciliation in some cases. The impact, if any, subsequent to the confirmation/reconciliation will be taken in the year of confirmation/ reconciliation.

11.11 During the year, the company made an interest-free security deposit of Rs. 1150 lakhs to an associate company. The said deposit was made due to the non-fulfillment of a specific obligation stipulated in an agreement entered into by the Company in the year 2008 with the said Associate Company. Subsequent to the year end, the deposit has been repaid in full to the company by the said associate company. With respect to the applicability of the provisions of section 295 and/or 372A of the Companies Act, 1956, the Company has been legally advised that considering the nature of transaction and the fact that the entire deposit has been repaid, any applicable enabling penal clauses of the aforesaid sections, if any, are unlikely to be material.

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

Note: Figures in respect of Rajdhani Trading Company Limited have not been given since it ceased to be a wholly owned subsidiary company w.e.f.14th March 2012.

11.13 Segment Reporting:

(a) Identification of segments

i) Primary Segments

Business segment: The Company's operating businesses are organized and managed separately according to the nature of products, with each segment representing a strategic business unit that offers different products. Two identified segments are Textiles and Filament yarn. The products considered as a part of Textile segment are cloth and yarn. The products considered as a part of Filament segment are nylon yarn and chips.

ii) Secondary Segment

Geographical Segment: The analysis of geographical segment is based on the geographical location of the customers.

(b) Inter Divisional transfers of goods, as marketable products produced by separate divisions of the Company, for captive consumption are made as if sales were made to third parties at current market prices and are included in turnover.

(c) Unallocable Items:

Corporate income, corporate expenses, interest, capital and reserves are considered as part of unallocable items which are not identifiable to any business segment.

The Company has common fixed assets for producing goods for domestic and overseas markets. Hence, separate figures for fixed assets/additions to fixed assets cannot be furnished.

11.14 Employee Benefits:

(a) Defined Benefit Plan

Gratuity: Payable on separation as per the Employees Gratuity Act @ 15 days pay for each completed year of service to eligible employees who render continuous service of 5 years or more.

(b) Defined Contribution Scheme

Company's employees are covered by Provident Fund, Employees State Insurance and Superannuation scheme etc. to which the Company makes a defined contribution measured as a fixed percentage of salary. During the year amount of Rs.832.34 lakhs (Previous year Rs.728.68 lakhs) have been charged to the Statement of Profit & Loss towards contribution to the above schemes/benefits.

(c) Other Long term Benefits

Employees of the Company are entitled to accumulate their earned/privilege leave upto a maximum of 30 days for workers and 300 days for other employees which is payable /encashable as per the policy of on their separation.

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

12. The financial statements for the year ended 31.03.2011 were prepared as per then applicable Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule Vi under the Companies Act, 1956, the financial statements for the year ended 31.03.12 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year classification.

 
Subscribe now to get personal finance updates in your inbox!