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Notes to Accounts of K G Denim Ltd.

Mar 31, 2015

1. Terms and Conditions of Equity Shares :

The Company has only one class of Equity Shares having a par value of Rs.10 per share. Each shareholder is eligible for one vote per share.

In the event of liquidation the Equity Shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts in proportion of their shareholding.

There are no shares allotted as fully paid without payments being received in cash, bonus shares or shares bought back.

2. Security Clause

Bank borrowings of Term Loan

Term loans from Indian Bank (IB), Bank of India (BOI) and Indian Overseas Bank (IOB) are secured by first pari passu charge on (a) all immovable properties situated in (i) 102.1897 acres of land at Jadayampalayam, Alangombu and Karamadai villages in Mettupalayam Taluk, Coimbatore District, Tamil Nadu and (ii) 2155.62 sq. meters of land at Amdha Village, Dharampur Taluk, Valsad District, Gujarat through equitable mortgage created with Indian Bank and (b) all plant and machineries including machineries and other movable fixed assets (excluding vehicles charged to financiers, Peelamedu property & Mumbai property) acquired for the Expansion cum Diversification Scheme (ECDS) and New Capex Plan through Deed of Hypothecation.

3. Term loan II from State Bank of India is secured by a first pari passu charge on all plant and machineries acquired for the Modernisation cum Expansion Scheme (MCES) through Deed of Hypothecation.

4. Power Plant Term Loan from Indian Bank Rs.1480 lakhs, Bank of India Rs.1480 lakhs & The South Indian Bank Limited Rs.1470 lakhs are secured by pari passu first charges on Assets relating to power plant project and pari passu second charges on current assets of the companies.

5.Indian Bank is holding the original title deeds on its own behalf and on behalf of other Banks. Term loans are also guaranteed by Shri KG Baalakrishnan, Executive Chairman.

6.The company has availed Two Term loan & One Corporate Loan from Indian Bank and loan outstanding is - Term Loan III Rs.555.08 Lakhs and Term Loan IV Rs.1084.32 lakhs & Corporate Loan Rs.666.64 lakhs (Previous year Rs.770.07 lakhs,Rs.226.73 lakhs & Rs.Nil). Term Loan III is repayable in 60 monthly installments commencing from 01.09.2013. Last installment is due on 01.08.2018. Rate of Interest 13.00% p.a.as at year end. (Previous year 14.00% p.a). Term Loan IV is repayable 72 monthly installments commencing from 03.10.2015. Last installment is due on 03.10.2021.Rate of Interest 12.25% p.a as at year end. (Previous year 12.25% p.a.). Corporate Loan is repayable in 12 equal quarterly installments commencing from 01.06.2015. Last installment is due on 01.03.2018 Rate of interest 12.30% p.a. as at year end.

7. The company has availed Two term loans from Bank of India and loan outstanding is - Term Loan III Rs.738.56 Lakhs & Term Loan IV Rs. 1117.32 (Previous year Rs.908.56 lakhs & Rs.238.28 lakhs). Term Loan III is repayable in 60 monthly installments commencing from 01.07.2014. Last installment is due on 01.06.2019. Rate of Interest 14.00% p.a as at year end.(Previous year 14.50% p.a). Term Loan IV is repayable 96 monthly installments commencing from 25.12.2015. Last installment is due on 25.12.2023. Rate of Interest 12.25% p.a as at year end (Previous Year 12.25% p.a.).

8. The company has availed one term loan from State Bank of India and loan outstanding is - Term Loan II for Rs.609.33 lakhs (Previous year Rs.849.34). Term Loan II is repayable in 60 monthly installments commencing from 01.04.2013. Last Installment is due on 01.03.2018. Rate of Interest 13.60% p.a. as at year end.(Previous year 14.40% p.a).

9. The company has availed two term loan from Indian Overseas Bank and loan outdtanding is- Term loan I Rs.85.50 lakhs & Term Loan II Rs.113.54 lakhs (Previous year Rs.187.54 Lakhs & Rs.256.43 lakhs) Term Loan I is repayable in 20 quarterly installments commencing from 19.06.2012. Last Installment is due on 19.03.2017. Rate of Interest 14.00% p.a. as at year end.(Previous year 14.00% p.a..) and Term loan II is repayable in 60 monthly installments commencing from 28.04.2012. Last Installment is due on 28.03.2017. Rate of Interest 14.25% p.a. as at year end.(Previous year 14.25% p.a.)

10. The company has availed a term loan from The South Indian Bank Ltd and loan outstanding is- Rs. 1119.82 (Previous year Rs.238.30 lakhs). Term Loan is repayable in 84 quarterly installments commencing from 25.12.2015. Last Installment is due on 25.12.2022. Rate of Interest 12.25% p.a. as at year end (Previous year 12.25% p.a.).

11. Term Loan from others :

HDFC Ltd Loan Rs.230 lakhs for Mumabi Office Premises - mortgage of the property - Office space in mumbai.

12. The company has availed a term Loan from HDFC Ltd and loan outstanding is Rs.172.04 lakhs (Previous year Rs.198.55 lakhs). Term Loan is repayable in 84 monthly installments commencing from 20.11.2014. Last Installment is due on 20.11.2021. Rate of Interest 13.50% p.a. as at year end (Previous year 13.50% p.a.).

13. Working capital facilities from Indian Bank Consortium (Indian Bank, Bank of India, Allahabad Bank, State Bank of India and The South Indian Bank Limited) are secured by a first pari passu charge on the whole of the current assets through Deed of Hypothecation and second pari passu charge on (a) all the immovable properties situated in (i) 102.1897 acres of land at Jadayampalayam, Alangombu and Karamadai Villages in Mettupalayam Taluk, Coimbatore District, Tamil Nadu and (ii) 2155.62 sq. meters of land at Amdha Village, Dharampur Taluk, Valsad District, Gujarat through equitable mortgage created with Indian Bank and (b) all plant and machineries (excluding vehicles charged to financiers, Peelamedu property & Mumbai property) through Deed of Hypothecation. The entire working capital facilities are also guaranteed by Shri KG Baalakrishnan, Executive Chairman.

14. CONTINGENT LIABILITIES AND COMMITMENTS (to the extent not provided for)

2014 - 2015 2013 - 2014

(Rs.in Lakhs)

(i) Contingent Liabilities

a) Claims against the company not acknowledged as debt: Disputed Excise / Customs duties 476.63 981.25 Disputed Income Tax 154.00 154.00

In respect of disputed excise / custom duties and Income tax demands, the company feels that there will be no financial impact, based on legal opinions obtained.

b) Guarantees

Guarantees given to Bank for loan to subsidiary 651.00 651.00 Guarantees given on behalf of Associates for fulfillment of their Export obligation under EPCG Scheme 193.00 300.00

c) Other Money for which the company is contingently liable Bills discounted with banks 4544.93 228.74

(ii) Commitments

Estimated amount of contracts remaining to be executed in capital 257.00 2089.74 account and not provided for

15. The Company has investment of Rs.200 lakhs in the shares of M/s Trigger Apparels Limited (TAL), a wholly owned subsidiary of the company. Further the company has receivables to the extent of Rs.1129 lakhs recoverable from TAL. The networth of TAL has eroded due to trading losses, However, considering the fact that the investment is strategic in nature and steps being taken by the company to improve the performance of TAL, no provision is considered necessary by the management for both diminution in value of shares and receivable.

16. Subsidiary Trigger Apparels Limited

KG Denim (USA) Inc

Other Related Party Sri Kannapiran Mills Limited Sri Balamurugan Textile Processing Limited KG Fabriks Limited Enterprise Telesys Limited

Key Management Personnel Shri KG Baalakrishnan Shri B Sriramulu Shri B Srihari Shri S Muthuswamy Shri A Velusamy Shri M Balaji

Relative of Key Management Smt T Anandhi Personnel (Daughter of Shri KG Baalakrishnan)

17. Segment Reporting: The Company operates as single reportable segment as Textiles. Hence, no separate segment reporting arises.

18. Trade payables referred under Current Liability to Small Scale Industrial Units is complied on the information made available to the Company. (includes dues of Rs.54.26 lakhs of more than 30 days and exceeding Rs.1 lakh to the following parties; Sri Abirami Tubes Rs.18.83 lakhs, Nava Bharath Packaging Rs.6.52 lakhs, Acme Textiles Rs.7.11 lakhs, Asmaco Industries Rs.5.90 lakhs, Harini Packs Rs.9.94 Lakhs and Sri Guhan Packs Rs.5.96 Lakhs. b. In the absence of necessary information with the company, relating to the registration status of suppliers under the Micro, Small and Medium Enterprises Development Act, 2006 the information required under the said Act could not be complied and disclosed.

19. The Company has assessed the recoverable value of its assets and which is higher than the carrying value, hence provision for impairment does not arise for the period.

20. The company has opted for full excise duty exemption on its products. Hence no liability for duty arises and no Cenvat benefit claimed on inputs for such goods.The opening and closing stock consequently does not bear any liability for excise duty for such goods.

21. Previous year's figures have been regrouped wherever necessary.

22. Figures have been rounded off to the nearest Lakhs.


Mar 31, 2014

NOTE 1

CONTINGENT LIABILITY

2013 - 2014 2012 - 2013 (Rs.in Lakhs)

a) Bills discounted with banks 4228.74 4047.88

b) Estimated amount of contracts remaining to be executed in capital account and not provided for 2089.74 958.48

c) Disputed Excise / Customs Duties 981.25 631.05

d) Disputed Income Tax 154.00 154.00

e) Guarantees given to Bank for 651.00 651.00 loan to subsidiary

f) Guarantees given on behalf of Associates for fulfillment of their Export obligation under EPCG Scheme 300.00 300.00

NOTE 2

The Company has investment of Rs.200 lakhs in the shares of M/s Trigger Apparels Limited (TAL), a wholly owned subsidiary of the company. Further the company has receivables to the extent of Rs.1459 lakhs recoverable from TAL. The networth of TAL has eroded due to trading losses, However, considering the fact that the investment is strategic in nature and steps being taken by the company to improve the performance of TAL, no provision is considered necessary by the management for both diminution in value of shares and receivable.

3 Segment Reporting: The Company operates as single reportable segment as Textiles. Hence, no separate segment reporting arises.

4 Pursuant to the Accounting Standard (AS-29) - Provisions, Contingent Liabilities and Contingent Assets, the disclosure relating to provisions made in the accounts for the year ended 31st March 2014 is as follows:

5 a. Trade payables referred under Current Liability to Small Scale Industrial Units is complied on the information made available to the Company. (includes dues of Rs.96.08 lakhs of more than 30 days and exceeding Rs.1 lakh to the following parties; Sri Abirami Tubes Rs.22.11 lakhs, Nava Bharath Packaging Rs.9.73 lakhs, Acme Textiles Rs.7.23 lakhs, Asmaco Inds Rs.28.00 lakhs, Shree Traders Rs.1.53 lakhs, Coimbatore Sewing Machine Rs.1.51 Lakhs, Harini Packs Rs.4.59 Lakhs, Sri Guhan Packs Rs.19.35 Lakhs and Thirumalai & Co.Rs.2.03 lakhs).

b. In the absence of necessary information with the company, relating to the registration status of suppliers under the Micro, Small and Medium Enterprises Development Act, 2006 the information required under the said Act could not be complied and disclosed.

6 The Company has assessed the recoverable value of its assets and which is higher than the carrying value, hence provision for impairment does not arise for the period.

7 The company has opted for full excise duty exemption on its products. Hence no liability for duty arises and no Cenvat benefit claimed on inputs for such goods. The opening and closing stock consequently does not bear any liability for excise duty for such goods.

8 Previous year''s figures have been regrouped wherever necessary.

9 Figures have been rounded off to the nearest Lakhs.


Mar 31, 2013

NOTE 1

CONTINGENT LIABILITY

2012 – 2013 2011 – 2012 (Rs.in Lakhs)

a) Bills discounted with banks 4047.88 3315.97

b) Estimated amount of contracts remaining to be executed in capital account and not provided for 958.48 735.52

c ) Disputed Excise / Customs Duties 631.05 641.82

d) Disputed Income Tax 154.00 154.00

e) Guarantees given to Bank for loan to subsidiary 651.00 651.00

f) Guarantees given on behalf of Associates for fulfillment of their Export obligation under EPCG Scheme 300.00 300.00

NOTE 2

The Company has investment of Rs.200 lakhs in the shares of M/s Trigger Apparels Limited (TAL), a wholly owned subsidiary of the company. Further the company has receivables to the extent of Rs.1398 lakhs recoverable from TAL. The networth of TAL has eroded due to trading losses, However, considering the fact that the investment is strategic in nature and steps being taken by the company to improve the performance of TAL, no provision is considered necessary by the management for both diminution in value of shares and receivable.

3 Segment Reporting: The Company operates as single reportable segment as Textiles. Hence, no separate segment reporting arises.

4 a. Trade payables referred under Current Liability to Small Scale Industrial Units is complied on the information made available to the Company. (includes dues of Rs.40.39 lakhs of more than 30 days and exceeding Rs.1 lakh to the following parties; Sri Abirami Tubes Rs.13.90 lakhs, Nava Bharath Packaging Rs.5.76 lakhs, Acme Textiles Rs.4.59 lakhs, Asmaco Inds Rs.13.80 lakhs, Royal Packaging Rs.2.34 lakhs & Sapphire Packaging Rs.0.40 lakhs).

b. In the absence of necessary information with the company, relating to the registration status of suppliers under the Micro, Small and Medium Enterprises Development Act, 2006 the information required under the said Act could not be complied and disclosed.

5 The Company has assessed the recoverable value of its assets and which is higher than the carrying value, hence provision for impairment does not arise for the period.

6 The company has opted for full excise duty exemption on its products except garments. Hence no liability for duty arises and no Cenvat benefit claimed on inputs for such goods.The opening and closing stock consequently does not bear any liability for excise duty for such goods. Excise Duty has been paid on local sale of garments bearing excise duty liability is there as on Balance Sheet date.

7 Previous year’s figures have been regrouped wherever necessary.

8 Figures have been rounded off to the nearest Lakhs.


Mar 31, 2012

Terms and Conditions of Equity Shares :

The Company has only one class of Equity Shares having a par value of Rs.10 per share. Each shareholder is eligible for one vote per share.

In the event of liquidation the Equity Shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts in proportion of their shareholding.

There are no shares allotted as fully paid without payments being received in cash, bonus shares or shares bought back.

Dividend proposed to be distributed to Equity Shareholders is Rs.0.75 (Previous Year - Nil) per Equity Share.

* Arrears of Preference Dividend (10%) for the period from 01.04.2005 to 31.03.2007 to be distributed to ertswhile Preference Shareholders on value of Rs.10 Crores.

Bank borrowings of Term Loan and Working Capital Limits

Term loans from Indian Bank (IB), Bank of India (BOI) and Indian Overseas Bank (IOB) are secured by first pari passu charge on (a) all immovable properties situated in (i) 102.1897 acres of land at Jadayampalayam, Alangombu and Karamadai villages in Mettupalayam Taluk, Coimbatore District, Tamil Nadu and (ii) 2155.62 sq. meters of land at Amdha Village, Dharampur Taluk, Valsad District, Gujarat through equitable mortgage created with Indian Bank and (b) all plant and machineries including machineries and other movable fixed assets (excluding vehicles charged to financiers) acquired for the Expansion cum Diversification Scheme (ECDS) and New Capex Plan through Deed of Hypothecation.

Term loan from State Bank of Hyderabad and Term loan I from State Bank of India are secured by a first pari passu charge on (a) immovable properties in 48.5872 acres of land at Jadayampalayam, Alangombu and Karamadai Village in Mettupalayam Taluk, Coimbatore District, Tamilnadu and (b) all plant and machineries and other movable assets (excluding vehicles charged to financiers) acquired for the Expansion cum Diversification Scheme (ECDS) through Deed of Hypothecation.

Term loan II from State Bank of India is secured by a first pari passu charge on all plant and machineries acquired for the Modernizations cum Expansion Scheme (MCES) through Deed of Hypothecation.

Indian Bank is holding the original title deeds on its own behalf and on behalf of other Banks. Term loans are also guaranteed by Shri KG Baalakrishnan, Executive Chairman.

Indian Bank has two Term loans outstanding - Term loan I for Rs.751.22 lakhs & Term loan II for Rs.224.27 lakhs (Previous year Rs.1032.89 lakhs & Rs.299.71 lakhs). Term loan I is repayable in 32 quarterly installments commencing from 05.04.2007. Last Installment is due on 05.01.2015. Rate of Interest 14.00 % p.a. as at year end. (Previous year 12.25 % p.a.). Term Loan II is repayable in 90 monthly installments commencing from 15.10.2007. Last Installment is due on 15.03.2015. Rate of Interest 14.75 % p.a. as at year end. (Previous year 13.25 % p.a.).

Bank of India has two Term loans outstanding : Term loan I for Rs.685.45 lakhs & Term loan II for Rs. 195.72 lakhs (Previous year Rs.957.10 lakhs Et Rs.281.81 lakhs). Term loan I is repayable in 32 quarterly installments commencing from 07.04.2007. Last Installment is due on 07.01.2015. Rate of Interest 14.75% p.a. as at year end. (Previous year 13.25% p.a.). Term loan II is repayable in 87 monthly installments commencing from 15.10.2007. Last Installment is due on 15.12.2014. Rate of Interest 14.75% p.a. as at year end. (Previous year 13.75% p.a.).

State Bank of India has two Term loans outstanding: Term loan I for Rs.539.79 lakhs & Term loan II for Rs.524.63 lakhs (Previous year Rs.793.24 lakhs & Nil). Term loan I is repayable in 31 quarterly installments commencing from 08.09.2007. Last Installment is due on 08.03.2015. Rate of Interest 14.5% p.a. as at year end.(Previous year 12.25% p.a.).Term loan II is repayable in 60 monthly installments commencing from 01.04.2013. Last Installment is due on 01.03.2018. Rate of Interest 14.5% p.a. as at year end. (Previous year Nil).

State Bank of Hyderabad has One Term loan for Rs.539.59 lakhs (Previous year Rs.785.38 lakhs). Term loan is repayable in 29 quarterly installments commencing from 21.09.2007. Last Installment is due on 21.03.2015. Rate of Interest 15.5% p.a. as at year end.(Previous year 12.5% p.a.).

Indian Overseas Bank has two Term loans: Term loan I for Rs.400 lakhs (Previous year is Nil) is repayable in 20 quarterly installments commencing from 19.06.2012. Last Installment is due on 19.03.2017. Rate of Interest 14.75% p.a. as at year end.(Previous year Nil.) and Term loan II for Rs.559.60 lakhs (Previous year is Nil) is repayable in 60 monthly installments commencing from 28.04.2012. Last Installment is due on 28.03.2017. Rate of Interest 14.75% p.a. as at year end.(Previous year Nil).

Working capital facilities from Indian Bank Consortium (Indian Bank, Bank of India, Allahabad Bank and State Bank of India) are secured by a first pari passu charge on the whole of the current assets through Deed of Hypothecation and second pari passu charge on (a) all the immovable properties situated in (i) 102.1897 acres of land at Jadayampalayam, Alankombu and Karamadai Villages in Mettupalayam Taluk, Coimbatore District, Tamil Nadu and (ii) 2155.62 sq. meters of land at Amdha Village, Dharampur Taluk, Valsad District, Gujarat through equitable mortgage created with Indian Bank and (b) all plant and machineries (excluding vehicles charged to financiers) through Deed of Hypothecation. The entire working capital facilities are also guaranteed by Shri KG Baalakrishnan, Executive Chairman.

Note : Building includes Prayer Hall and Gold Plating thereon of Rs. 132.69 lakhs in Gross Block, Rs. 11.90 lakhs in Depreciation Block and Rs. 120.79 lakhs in Net Block (Previous Year Rs.71.97 lakhs in Gross Block, Rs.10.17 lakhs in Depreciation Block and Rs.61.80 lakhs in Net Block) Furniture £t Fittings includes Prayer Hall of Rs.13.89 lakhs in Gross Block, Rs.3.63 lakhs in Depreciation Block and Rs.10.26 lakhs in Net Block (Previous Year Rs.13.89 lakhs in Gross Block, Rs.2.75 lakhs in Depreciation Block and Rs. 11.14 lakhs in Net Block)

NOTE 1

The financial statements for the year ended 31st March, 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification under the Companies Act, 1956, the financial statements for the year ended 31st March, 2012 are prepared under revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification.

NOTE 2

CONTINGENT LIABILITY

2011 - 2012 2010 2011 (Rs.in Lakhs)

a) Bills discounted with banks 3315.97 2453.59

b) Arrears of dividend on 10% Cumulative Redeemable Preference - 200.00 Shares ( for the period 1st April 2005 to 31st March 2007)

c) Estimated amount of contracts remaining to be executed in capital account and not provided for 735.52 340.43

d) Disputed Excise Duties 641.82 631.05

e) Disputed Income Tax 154.00 154.00

f) Disputed Sales Tax - 10.18

g) Guarantees given to Bank for loan to subsidiary 651.00 601.46

h) Guarantees given on behalf of Associates for fulfillment of their Export obligation under EPCG Scheme 300.00 300.00

NOTE 3

The Company has investment of Rs.200 lakhs in the shares of M/s Trigger Apparels Limited (TAL), a wholly owned subsidiary of the company. Further the company has receivables to the extent of Rs.728.55 lakhs recoverable from TAL. The net worth of TAL has eroded due to trading losses, However, considering the fact that the investment is strategic in nature and steps being taken by the company to improve the performance of TAL, no provision is considered necessary by the management for both diminution in value of shares and receivable.

3 a. Trade payables referred under Current Liability to Small Scale Industrial Units is complied on the information made available to the Company, (includes dues of Rs.67 lakhs of more than 30 days and exceeding Rs.1 lakh to the following parties; Sri Abirami Tubes Rs.10 lakhs, Nava Bharath Packaging Rs.4 lakhs, Acme Textiles Rs.13 lakhs, Asmaco Inds Rs.20 lakhs, Royal Packaging Rs.18 lakhs & Sapphire Packaging Rs.2 lakhs).

b. In the absence of necessary information with the company, relating to the registration status of suppliers under the Micro, Small and Medium Enterprises Development Act, 2006 the information required under the said Act could not be complied and disclosed.

4 The Company has assessed the recoverable value of its assets and which is higher than the carrying value, hence provision for impairment does not arise for the period.

5 The company has opted for full excise duty exemption on its products except garments. Hence no liability for duty arises and no Cenvat benefit claimed on inputs for such goods. The opening and closing stock consequently does not bear any liability for excise duty for such goods. Excise Duty has been paid on local sale of garments bearing excise duty. No liability is there as on Balance Sheet date.

6 Previous year's figures have been regrouped wherever necessary.

7 Figures have been rounded off to the nearest Lakhs.

 
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