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Notes to Accounts of Kallam Spinning Mills Ltd.

Mar 31, 2015

1. The Company has only one class of Equity shares having a par value of Rs. 10/- each. Each holder of equity share is entitled to one vote per share on poll and have one vote on show of hands. In the event of liquidation, the equity share holders are eligible to receive the remaining assets of the company in proportion to their shareholding after distribution of payments to preferential creditors.

3. The company in neither a holding company nor a subsidiary company to any other company.

4. Reconciliation of number of Equity shares :

5. The company has not issued any bonus shares during the last fve financial years.

6. None of the shares were allotted in pursuant to contract without payment being received in cash.

I) HYDAL POWER PLANT:

i) IREDA:

a) Term loan from IREDA is secured by first charge on all the movable and immovable assets of the company's power division of 0.8 MW small hydro project at Nandigama branch canal at mile # 3, Kotha Kothuru of Nela konda palli village, Khammam Dist., Telangana. Further guaranteed by six promoter directors of the company and corporate guarantee of two companies.

b) The above loan carries interest @10%.

c) The above loan is repayble in following manner.

2016-17 Rs. 2355792/- : 2017-18

Rs. 2355792/-: 2018-19

Rs. 2355792/-: 2019-20 Rs. 588950/-:

d) There are no defaults in repayment of above loan.

ii) ANDHRA BANK :

a) Term loans from Andhra Bank is secured by way of charge on movable and immovable assets of power plant at Kotha Kothuru excluding those assets specifically charged to IREDA and Bhairavanipalli of Khammam Dist., A.P. which are exclusively created out of said loan. The said loan is further guaranteed by two directors in their personal capacities.

b) The above loans carries interest @13.75%.

c) The above loans are repayable in following manner.

2016-17 Rs. 11472000/-: 2017-18 Rs. 15145000/-: 2018-19 Rs. 22300000/-: 2019-20 Rs. 31100000/-:

d) There are no defaults in repayment of above loan.

II SPINNING UNIT: i) ANDHRA BANK:

a) Term loans from Andhra Bank is secured on pari passu basis by way of first charge on all the movable and immovable assets of spinning division (all units at Chowdavaram, Guntur Dist.) of the company. Further guaranteed by two directors in their personal capacities.

b) The above loans carries interest @ 12%, 12.50%, 13.25% and 13.75%.

c) The above loans are repayble in following manner.

2016-17 Rs. 23366595/-: 2017-18 Rs. 7300000/-: 2018-19 Rs. 10700000/-: 2019-20 Rs. 21800000/-: 2020-21 Rs. 71300000/-: 2021-22 Rs. 88267030/-: 2022-23 Rs. 74000000/-:and 2023-24Rs.31455149/-.

d) There are no defaults in repayment of above loan.

ii) INDIAN BANK:

a) Term loans from Indian Bank is secured on pari passu basis by way of first charge on all the movable and immovable assets of spinning division (all units at Chowdavaram, Guntur Dist.) of the company. Further guaranteed by two directors in their personal capacities.

b) The above loans carries interest @ 12.45 and 13.45%.

c) The above loans are repayble in following manner.

2016-17 Rs. 66820000/-: 2017-18 Rs. 65425000/-: 2018-19 Rs. 52218798/-: 2019-20 Rs. 50000000/-: 2020-21 Rs. 62500000/-:

d) There are no defaults in repayment of above loan.

III WEAVING UNIT :

- INDIAN BANK:

a) Term loans from Indian Bank is secured by exclusive charge on all the movable and immovable assets of weaving division at Kunkupadu Village, Addanki Mandal, Prakasam Dist. of the company. Further guaranteed by two directors in their personal capacities.

b) The above loans carries interest @12.45% and 12.25%.

c) The above loans are repayble in following manner.

22016-17 Rs. 54000000/-: 2017-18 Rs. 82000000/-: 2018-19 Rs. 122000000/-:

2019-20 Rs. 154000000/-: 2020-21 Rs. 196000000/-: 2021-22 Rs. 127000000/-: 2022-23 Rs.

172000000/-: and 2023-24 Rs. 179827820/-:

d) There are no defaults in repayment of above loan.

IV DYEING UNIT :

- BANK OF BARODA:

a) Term loan from Bank of Baroda is secured by way of first charge on fixed assets of Company's proposed Dyeing Unit at Kunkupadu Village, Addanki Mandal, Prakasam Dist. of the company. Further guaranteed by two directors in their personal capacities.

b) The above loan carries interest @12.75%.

c) The above loans are repayble in following manner.

2016-17 Rs. 4000000/-: 2017-18 Rs. 5000000/-: 2018-19 Rs. 6000000/-: 2019-20 Rs. 20000000/-: 2020-21 Rs. 27500000/-: and 2021-22 Rs.31500000/- d) There are no defaults in repayment of above loan

V) INTEREST FREE SALES TAX LOAN:

a) The Company availed interest free sales tax loan for the period from 1995-96 to 2008-09 aggregating to Rs. 25475992/-. The said loan is repayable within a period of 10/14 years from each year of availment. The Company has to pay an amount of Rs 44,26,741/- as on 31.03.2015 of which an amount of Rs. 3,79,230/- is due for payment during financial year 2015-16.

VI) Loans accepted from promoters are interest free and are accepted as per the conditions of sanction of term loans from Andhra Bank and shall not be repayable during the currency of term loans. As per the Companies Act, 2013 any amount received from relatives of Promoter(s)/Director(s) will be treated as deposit. So, during the year, unsecured loan took from relatives of Promoter(s)/Director(s) before the commencement of Companies Act, 2013, were repaid on 30-03-2015.

Note : The above loans are secured by way of hypothecation of Inventories and book debts. Further secured by way of second charge on pari passu basis on fixed assets of the company other than those exclusively charged to IREDA. Further guaranteed by two directors in their individual capacities.

The working capital loans from Andhra bank carries interest @10.25% and 12.50% and from Indian bank carries interest @10.25% and 12.50%. No amounts were overdrawn during the year by the company than the limits sanctioned.

Disclosures required under the Micro, Small and Medium Enterprises Development Act, 2006.

Based on and to the extent of information available with the company regarding the status of their creditors under Micro, Small and Medium enterprises development Act, 2006 on which the auditors have relied upon, the disclosure requirement under the said Act,with regard to the payment made/due to Micro, Small and medium enterprises are given below.

* The Unclaimed Dividends represent those relating to the years 2007-08 to 2013-14 and no part thereof has remained unpaid or unclaimed for a period of 7 years or more from the date they become due for payment requiring transfer to the investor education and protection fund.

** Other liabilities include liablility towards electricity charges, FSA charges etc.,

Note :

a) Sale of power includes Rs.37,65,913/- as part payment received being the differential sale price for the period 01.04.2004 to 31.03.2012 as per final judgment of Appellate Tribunal for electricity.

b) The above sales includes Rs. 64,35,514/- being gain on Foreign exchange rate fluctuations. (Pr.Year gain Rs.45,86,478/-)

c) FOB value of export made during the year Rs.41,09,75,193/- (Pr. Year Rs. 39,05,27,520/-)

7. a) Balances in personal accounts of various parties are subject to confirmation by and reconciliation with the said parties.

b) In the opinion of the management, all the amounts stated under Current Assets, Loans and Advances are recoverable at the values at which they are stated.

c) Interdivisional stock transfers are made at market prices.

8. Pursuant to the provision of Schedule II of companies Act, 2013 effective from 01.04.2014, the company has Provided deprecation on fixed assets based on useful lives as prescribed said schedule. As per transitional provisions, the WDV of assets as on 31.03.2014 whose life is already exhausted amounting to Rs. 28.63 lakhs has been charged to General Reserves. Had the company followed the method of providing depreciation on its fixed assets as followed up to previous year, the depreciation change for the current year would have been higher by Rs. 203.48 lakhs.

(i) The Weaving division of the company commenced commercial production on 01.09.2014.

(ii) Revenue expenditure capitalized to fixed assets/ Capital works under progress during the year and details of expenses included under unallocated capital expenditure incurred and pending allocation as on the date of balance sheet:

9. DISCLOSURE REQUIREMENTS PURSUANT TO "ACCOUNTING STANDARD – 18 RELATED PARTY DISCLOSURES"

A) List of Related Parties:

1) Key Management Personnel:

1. P. Venkateswara Reddy, Managing Director

2. G.V. Krishna Reddy, Joint Managing Director

3. M.V. Subba Reddy, Whole Time Director

2) Relatives of Key management Personnel:

1. Kallam Venkata Subbayamma Sister of P. Venkateswara Reddy

2. Poluri Siva Nagendramma Wife of P. Venkateswara Reddy

3. Movva Uma Sankara Reddy Brother of M.V.Subba Reddy

4. Poluri Govardhan Reddy Son of P. Venkateswara Reddy

5. Poluri Venugopal Reddy Son of P. Venkateswara Reddy

6. Gurram Nitin Son of G.V. Krishna Reddy

7. Movva Kavitha Wife of M.V. Subba Reddy

8. M. Srinivasa Nagarjuna Reddy Son of M.V. Subba Reddy

9. M. Murali Sairam Krishna Reddy Son of M.V. Subba Reddy

3) Companies controlled by Key management personnel/Relative of Key Management Personnel :

1. Kallam Agro products & Oils Private Limited, Guntur.

2. Kallam Brothers Cottons Pvt Ltd, Guntur.

NOTES :

33. The Andhra Pradesh Electricity regulatory commission issued orders refxing the purchase price of power purchased from the company at Rs 2.52/unit w.e.f 01.04.2004. The company contested the said order in High Court of A.P along with the other members of small hydro power developers association, the High Court issued an interim order directing APTRANSCO to pay 50% of the differential between the revised rate and previous rate in force up to 31.03.2004 subsequently the High Court transferred the case to the Appellate Tribunal for electricity, New Delhi. The Appellate Tribunal for electricity decided the matter in favour of company vide its order dated 02.06.2006 and ordered the APTRANSCO to pay the difference amount between the revised rate and the and the previous rate in force up to 31.03.2004. However the APTRANSCO preferred an appeal before the Supreme Court against the order of Appellate Tribunal for matter to APERC with a direction that APERC shall hear the non conventional energy generators afresh and determine the tariff expeditiously for purchase of electricity in accordance with law. APERC has ordered the APPCC to make payment @ Rs 2.66/unit up to the completion of 10th year i.e. March 2012 APERC has also set out guide lines to APPCC for fixing the rate per unit after 10 years as follows:

a) Balance loan repayment period

b) Fixed cost determination based on O&M expenditure

c) Return on equity

d) Variable cost and

e) Residual depreciation if any,

However the APTRANSCO is settling the bills @ Rs.2.39 per unit as per the APERC revised order.

TThe Company received Rs 37,65,913/- as part payment during the financial year 2014-15 towards arrears in unit rate difference as per the instruction of Appellate Tribunal for electricity, New Delhi. Hon'ble Appellate Tribunal for electricity also directed DISCOMS that interest on arrears should also be paid at the rate of 12% to be compounded on quarterly. DISCOMS are allowed to pay the arrears & interest to the hydel power developers in 6 monthly installments commencing from july 2013. TSTRANSCO has preferred an appeal in Hon'ble Supreme Court against the orders of appellate tribunal for electricity & the same is pending with Hon'ble Supreme Court.

Moreover TSTRANSCO filed a petition in Hob'ble Supreme Court requesting for permission to waive the balance arrears in unit rate difference without payment to small hydel power projects and the same is pending with Hon'ble Supreme Court.

More over small hydro power developers association again approached Appellate Tribunal for Electricity to fx the rate per unit and Appellate Tribunal for Electricity instructed the APERC to re-fx the rate keeping in view of its own guidelines.

10. The Andhra Pradesh Electricity Regulatory Commission vide its order dated 23.02.2004 has increased the wheeling charges from 2% to 12.81% on the electricity wheeled from the power plants of the company by the APTRANSCO. The company has fled writ petition in the Hon'ble High Court of AP & the said court has transferred the case to the Appellate Tribunal for Electricity New Delhi. The Appellate Tribunal for Electricity passed the final order on 08.09.2005 directing the APTRANSCO to continue to collect the wheeling charges only at 2%. However the APTRANSCO preferred on appeal before the Supreme Court against the orders of the Appellate Tribunal for Electricity, New Delhi in view of the order passed by the Appellate Tribunal for Electricity, the company has accounted wheeling charges only @ 2% pending final orders in the matter.

11. After the division of Andhra Pradesh State, NPDC of Telangana Ltd had not adjusted generated units during the months of August 2014 and thereafter, since the company requested the NPDCTSL for captive utilization as the production facilities of power are situated in Telangana State and spinning mill is situated in New Andhra Pradesh State. The company has not made payment of electricity bills relating to captive power utilization. However NPDCTSL has requested the company to enter fresh interstate open access agreement by taking prior approvals from the nodal agency as the existing intra state open access/ wheeling agreement entered by the company shall be deemed to be cancelled. The company filed a suit in Hon'ble High Court to issue orders requesting the adjustment of generated power for captive consumption of the company situated in New Andhra Pradesh State. The Hon'ble High Court stayed the disconnection of power supply to the company service connection for the month of September, 2014 to the spinning production located at Dasaripalem in Guntur district, New Andhra Pradesh State. The company again filed a petition in the Hon'ble High court, Hyderabad to issue a direction to AP Transco and Telangana State Transmission Corporation Ltd for allowing the 70% of the generated power units for captive consumption.

The Hon'ble High court, Hyderabad in its final judgement held that power generated by the company shall be treated as banked energy and allowed a period of 3 months to obtain open access licences. The company made an amendment in the agreement adding M/s Sagar Cements Ltd, Nalgonda as its consumer in Telangana state and submitted all the required documents to TSSPDCL. However the TSSPDCL has not yet appropriated the generated power to M/s Sagar Cements Ltd, Nalgonda and the company has not received any intimation from TSSPDCL till date pertaining to the generated power up to February, 2015.

Northern Power Distribution Company of Telangana State Limited has also conformed that the company has banked power of 54,80,405 units as on 28.02.2015.

12. General :

Previous year figures have been regrouped where ever necessary.

Paise have been rounded off to the nearest rupee.


Mar 31, 2014

1. CONTINGENT LIABILITIES NOT PROVIDED FOR:

As at 31.03.2014 As at 31.03.2013

a) Counter guarantees given 4,52,13,866 15,75,20,325 to bank in respect of Bank guarantees and letter of credit issued in favour of various constituents.

b) Estimated amounts of 8,54,75,273 13,76,35,803 contracts remaining to be executed on Capital accounts, and not provided for

c) State levies on Electricity 28,03,957 60,22,398

2. a) Balances in personal accounts of various parties are subject to confirmation by and reconciliation with the said parties.

b) In the opinion of the management, all the amounts stated under Current Assets, Loans and Advances are recoverable at the values at which they are stated.

3. a) Details of Expenses included under unallocated capital expenditure incurred and pending allocation as on the date of balance sheet:

4. The Andhra Pradesh Electricity regulatory Commission issued orders refixing the purchase price of Power purchased from the company at Rs.2.52 per unit w.e.f 01.04.2004. The company contested the said order in High Court of Andhra Pradesh along with the other members of small hydro power developers Association. The High Court issued an interim order directing APTRANSCO to pay 50% of the differential between the revised rate and the previous rate in force up to 31.03.2004. Subsequently the High Court transferred the case to the Appellate Tribunal for Electricity, New Delhi. The Appellate tribunal for Electricity decided the matter in favour of the company vide its order dated 02.06.06 and ordered the APTRANSCO to pay the difference amount between the revised rate and the previous rate in force up to 31.03.2004. However the APTRANSCO preferred an appeal before the Supreme Court against the order of the Appellate Tribunal for Electricity. The Supreme Court set out guidelines and remanded the matter to APERC with a direction that APERC shall hear the non-conventional energy generators afresh and determine the tariff expeditiously for purchase of electricity in accordance with law. APERC has ordered the APPCC to make payment @ 2.66 per unit upto the completion of 10th year i.e. March, 2012. APERC has also set out guidelines to APPCC for fixing the rate per unit after 10 years as follows:

a) Balance loan repayment period

b) Fixed cost determination based on O&M expenditure

c) Return on equity

d) Variable cost and

e) Residual depreciation if any,

However the APTRANSCO is settling the bills @ Rs.2.48 per unit instead of billing rate of Rs.2.74 per unit ignoring the APERC guidelines.

The Company received part payment of Rs. 16,60,604/- in the financial year 2012-13 and Rs. 39,92,119/-in the financial year 2013-14 towards arrears in unit rate difference as per the instruction of Appellate Tribunal for Electricity, New Delhi. Hon''ble Appellate Tribunal for electricity also directed DISCOMS that interest on arrears should also be paid at the rate of 12% to be compounded on quarterly. DISCOMS are allowed to pay the arrears and interest to the hydel power developers in 6 monthly installments commencing from July,2013. APTRANSCO has preferred an appeal in Hon''ble Supreme Court against the orders of Appellate Tribunal for Electricity and the same is pending with Hon''ble Supreme Court.

More over small hydro power developers association again approached Appellate Tribunal for Electricity to fix the rate per unit and Appellate Tribunal for Electricity instructed the APERC to re-fix the rate keeping in view of its own guidelines.

5. The Andhra Pradesh Electricity Regulatory Commission vide its order dated 23.02.2004 has increased the wheeling charges from 2% to 12.81 % on the Electricity wheeled from the Power Plants of the Company by the AP TRANSCO. The Company has filed writ petition in the Hon''ble High Court of Andhra Pradesh and the said Court has transferred the case to the Appellate Tribunal for Electricity, New Delhi. The Appellate Tribunal for Electricity passed the final order on 08.09.2005 directing the AP TRANSCO to continue to collect the wheeling charges only at 2%. However the APTRANSCO preferred an appeal before the Supreme Court against the orders of the Appellate Tribunal for Electricity, New Delhi. In view of the order passed by the Appellate Tribunal for Electricity, the company has accounted wheeling charges only at 2% pending final orders in the matter.

6. General :

Previous year figures have been regrouped where ever necessary.

Paise have been rounded off to the nearest rupee.

e-voting instructions

Pursuant to provisions of Section 108 of the Companies Act, 2013, read with the Companies (Management and Administration) Rules, 2014, the Company is pleased to offer e-voting facility to the members to cast their votes electronically on all resolutions set forth in the Notice convening the 22nd Annual General Meeting to be held on Saturday, 27th September 2014, at 3.00 PM IST. The Company has engaged the services of Central Depository Services Limited (CDSL) to provide the E-Voting facility.

The instructions for members for voting electronically are as under :-The E-Voting Event Number and period of E-voting are set out below :

EVEN (E-VOTING EVENT NUMBER) : 140820005

COMMENCEMENT OF E-VOTING : 22 September 2014 at 9.00 A.M

END OF E-VOTING : 24 September 2014 at 6.00 P.M

STEPS FOR E-VOTING :

(A) In case of members receiving e-mail:

i) If you are holding shares in Demat form and had logged on to www.evotingindia.com and casted your vote earlier for EVSN of any Company, then your existing login id and password are to be used.

ii) Log on to the e-voting website www.evotingindia.com.

iii) Click on "Shareholders" tab to cast your votes.

iv) Now, select the Electronic Voting Sequence Number - "EVSN" along with "COMPANY NAME" from the drop down menu and click on "SUBMIT"

v) Now, fill up the following details in the appropriate boxes:

For Members holding shares For Members holding shares in in Demat Form Physical Form

User ID For NSDL: 8 Character DP ID Folio Number registered followed by 8 Digits with the Company Client ID For CDSL: 16 digits beneficiary ID PAN*

Enter your 10 digit alpha-numeric *PAN issued by Income Tax Department when prompted by the system while e-voting (applicable for both demat shareholders as well as physical shareholders)

DOB#

Enter the Date of Birth as recorded in your demat account or in the company records for the said demat account or folio in dd/mm/yyyy format.

Dividend Bank Details#

Enter the Dividend Bank Details as recorded in your demat account or in the company records for the said demat account or folio.

Members who have not updated their PAN with the Company/Depository Participant are requested to use the default number: in the PAN field.

# Please enter any one of the details in order to login. Incase either of the details are not recorded with the depository please enter the value in the DOB column or the in the Dividend Bank details field.

vi) After entering these details appropriately, click on "SUBMIT" tab.

vii) Members holding shares in physical form will then reach directly the EVSN selection screen. However, members holding shares in demat form will now reach ''Password Creation'' menu wherein they are required to mandatorily enter their login password in the new password field. The new password has to be minimum eight characters consisting of at least one upper case (A-Z), one lower case (a-z), one numeric value (0-9) and a special character(@ # $ %& *). Kindly note that this password is to be also used by the demat holders for voting for resolutions of any other company on which they are eligible to vote, provided that company opts for e-voting through CDSL platform. It is strongly recommended not to share your password with any other person and take utmost care to keep your password confidential. Kindly note that this changed password is to be also used by the Demat holders for voting for resolutions for the Company or any other Company on which they are eligible to vote, provided that Company opts for e-voting through CDSL platform.

viii) Click on the relevant EVSN on which you choose to vote.

ix) On the voting page, you will see Resolution Description and against the same the option "YES/NO" for voting. Select the option YES or NO as desired. The option YES implies that you assent to the Resolution and option NO implies that you dissent to the Resolution.

x) Click on the "Resolutions File Link" if you wish to view the entire Resolutions.

xi) After selecting the resolution you have decided to vote on, click on "SUBMIT". A confirmation box will be displayed. If you wish to confirm your vote, click on "OK", else to change your vote, click on "CANCEL" and accordingly modify your vote.

xii) Once you "CONFIRM" your vote on the resolution, you will not be allowed to modify your vote.

(II) In case of members receiving the physical copy of Notice of AGM [for members whose e-mail IDs are not registered with the company/ depository participant(s) or requesting physical copy]:

(B) Please follow all steps from sl. no. (ii) to sl. no. (xii) above, to cast vote.

(C) Institutional shareholders (i.e. other than individuals, HUF, NRI etc.) are required to log on to https://www.evotingin-dia.co.in and register themselves, link their account which they wish to vote on and then cast their vote. They should upload a scanned copy of the Board Resolution in PDF format in the system for the scrutinizer to verify the vote.

(D) The voting period begins on 22 September 2014 (9.00 A.M IST) and ends on 24 September 2014 (6.00 P.M IST). During this period shareholders'' of the Company, holding shares either in physical form or in dematerialized form, as on the cut-off date (record date) of 22nd August 2014, may cast their vote electronically. The e-voting module shall be disabled by CDSL for voting thereafter. Once the vote on a resolution is cast by the shareholder, the shareholder shall not be allowed to change it subsequently.

(E) In case you have any queries or issues regarding e-voting, you may refer the Frequently Asked Questions ("FAQs") and e-voting manual available at www.evotingindia.com under help section or write an email to helpdesk.evoting@ cdslindia.com.

(F) M/s K.Srinivasa Rao & Co., Company Secretaries Guntur (Entity ID: 34721) has been appointed as the Scrutinizer to Scrutinize the e-voting process in a fair and transparent manner.


Mar 31, 2013

1. CONTINGENT LIABILITIES NOT PROVIDED FOR:

As at As at 3103 2013 3103 2013

a) Counter guarantees given to bank in respect of Bank guarantees and letter of credit issued in favour of various constituents. 15,75,20,325 4,09,46,170

b) Estimated amounts of contracts remaining to be executed on Capital accounts, and not provided for 13,76,35,803 3,98,525

c) State levies on Electricity 60,22,398 38,47,661



2. a) Balances in personal accounts of various parties are subject to confirmation by and reconciliation with the said parties. b) In the opinion of the management, all the amounts stated under Current Assets, Loans and Advances are recoverable at the values at which they are stated

3. a) Revenue expenditure capitalized to fixed assets/ Capital works under progress during the year Includes:

4. DISCLOSURE REQUIREMENTS PURSUANT TO "ACCOUNTING STANDARD 18 RELATED PARTY DISCLOSURES":

A) List of Related Parties:

1) Key Management Personnel:

1. K.HaranadhaReddy, Non Executive Chairman

2. PVenkateswara Reddy, Managing Director

3. G.V.Krishna Reddy, Joint Managing Director

4. M.V.Subba Reddy, Whole Time Director

2) Relatives of Key management Personnel:

1. Kallam Venkata Subbayamma Wifeof K.HaranadhaReddy

2. Poluri Siva Nagendramma WifeofP.VenkateswaraReddy

3. Movva UmaSankaraReddy BrotherofM.V.SubbaReddy

4. Poluri Govardhan Reddy Son of P.Venkateswara Reddy

5. Poluri Venugopal Reddy Son of P.Venkateswara Reddy

6. GurramNitin Son of G.V.Krishna Reddy

7. Movva Kavitha Wife of M.V.Subba Reddy

8. Kallam Mohan Reddy Son of K.HaranadhaReddy

9. M.Srinvivasa Nagarjuna Reddy Son of M.V.Subba Reddy

10. M.Murali Sai Ramakrishna Reddy Son of M.V.Subba Reddy ''11. G.Vijayalakshmi Wifeof G.V.Krishna Reddy

12.G.AppiReddy Fatherof G.V.Krishna Reddy

3) Companies controlled by Key management personnel/Relative of Key Management Personnel:

1. Kallam Agro products SOils Private Limited, Guntur

2. Kallam Brothers Cottons Pvt Ltd, Guntur

5. The Andhra Pradesh Electricity regulatory Commission issued orders refixing the purchase price of Power purchased from the company at Rs.2.52 per unit w.e.f 01.04.2004. The company contested the said order in High Court of Andhra Pradesh along with the other members of small hydro power developers Association. The High Court issued an interim order directing APSPDCL to pay 50% of the differential between the revised rate and the previous rate in force up to 31.03.2004. Subsequently the High Court transferred the case to the Appellate Tribunal for Electricity, New Delhi. The Appellate tribunal for Electricity decided the matter in favour of the company vide its order dated 02.06.06 and ordered the AP TRANSCO to pay the difference amount between the revised rate and the previous rate in force up to 31.03.2004.

However the APTRANSCO preferred an appeal before the Supreme Court against the order of the Appellate Tribunal for Electricity. The Supreme Court set out guidelines and remanded the matter to APERC with a direction that APERC shall hear the non-conventional energy generators afresh and determine the tariff expeditiously for purchase of electricity in accordance with law APERC has ordered the APPCC to make payment @ 2.66 per unit upto the completion of 10''" year i.e. March, 2012. APERC has also set out guidelines to APPCC for fixing the rate per unit after 10 years as follows:

a) Balance loan repayment period

b) Fixed cost determination based on 0 & M expenditure

c) Return on equity

d) Variable cost and

e) Residual depreciation if any,

However the APSPDCL is settling the bills @ Rs.2.48 per unit instead of billing rate of Rs.2.74 per unit ignoring the APERC guidelines.

More over small hydro power developers association again approached Appellate Tribunal for Electricity to fix the rate per unit and Appellate Tribunal for Electricity instructed the APERC to re-fix the rate Keeping in view of its own guidelines.

6. The Andhra Pradesh Electricity Regulatory Commission vide its order dated 23.02.2004 has increased the wheeling charges from 2% to 12.81 % on the Electricity wheeled from the Power Plants of the Company by the AP TRANSCO. The Company has filed writ petition in the Hon''ble High Court of Andhra Pradesh and the said Court has transferred the case to the Appellate Tribunal for Electricity, New Delhi. The Appellate Tribunal for Electricity passed the final order on 08.09.2005 directing the AP TRANSCO to continue to collect the wheeling charges only at 2%. However the APTRANSCO preferred an appeal before the Supreme Court against the orders of the Appellate Tribunal for Electricity, New Delhi. In view of the order passed by the Appellate Tribunal for Electricity, the company has accounted wheeling charges only at 2% pending final orders in the matter.

7. General:

Consequent to the amendments made to Schedule-VI of the Companies Act, 1956, the financial statements for the year ended 31s1 March, 2013 are prepared under revised Schedule-VI. Accordingly, the previous year figures have also been reclassified to confirm to this year''s classification.


Mar 31, 2012

1. The company has only one class of Equity shares having a par value of Rs. 10/- each. Each holder of equity share is entitled to one vote per share on poll and have one vote on show of hands. In the event of liquidation, the equity share holders are eligible to receive the remaining assets of the company in proportion to their shareholding after distribution of payments to preferential creditors

2. The company has not issued any bonus shares during the last five financial years.

3. None of the shares were allotted in pursuant to contract without payment being received in cash.

i. IREDA:

a. Term loan from IREDA is secured by first charge on all the movable and immovable assets of the company's power division of 0.80MW small hydro project at Nandigama branch canal at mile #3, Kotha Kothuru of Nela kondapalli village, Khammam dist., A.P. Further guaranteed by six promoter directors ofthe company and corporate guarantee of two companies.

b. The above loan carries interest @10%

c. the above loan is repayable in following manner.

2013-14 Rs. 3455320/-: 2014-15 Rs. 3455320/-: 2015-16 Rs. 2285984/-: 2016-17 Rs. 2355792 : 2017-18 Rs. 2355792:2018-19 Rs. 2355792/- and 2019-20 Rs. 588950/-

d. There are no defaults in repayment of above loan.

ii. Andhra Bank:

- Power unit:

a. Term loan from Andhra Bank is secured by way of charge on movable and immovable assets of power plant at Kotha Kothuru and Bhairavanipalli of Khamma Dist., A.P. which are exclusively created out of said loan. Also secured by way of second charge on fixed assets of spinning mill unit. The said loan is further guaranteed by two directors in their personal capacities.

b. The above loans carries interest @ 13.5% and 14%

- Spinning Unit: ,

a. Term loan from Andhra Bank is secured on paripassu basis by way of first charge on all the movable and immovable assets of spinning division of the company. Further guaranteed by two Directors in their personal capacities.

b. The above loans carries interest® 12.75/- 13.5%and 14%

c. The above loans are repayable in following manner.

2013-14 Rs. 90016000/-: 2014-15 Rs. 84990992: 2015-16 Rs. 83026542/-: 2016-2017 Rs. 31838595: 2017-18 Rs. 19445000/-: 2018-19 Rs. 29000000/-: 2019-20 Rs. 47900000/-: 2020-21 Rs. 65274689: and 2021-22 Rs. 15299954/-

d. There are no defaults in repayment of above loans.

iii. Indian Bank:

a. Term loan from Indian Bank is secured on paripassu basis by way of first charge on all the movable and immovable assets of spinning division of the company. Further guaranteed by two directors in their personal capacities.

b. The above loans carries interest @13% and 14%

c. The above loans are repayable in following manner,

2013-14 Rs. 28770000/-: 2014-15 Rs. 35038400:2015-16 Rs. 39670000/-: 2016-17 Rs. 66820000: 2017-18 Rs. 65425000/-: 2018-19 Rs. 52218798/-: 2019-20 Rs. 50000000/-: 2020-21 Rs. 47010240

d. There are no defaults in repayment of above loans

iv. Bank of Baroda:

a. Term loan from Bank of Baroda is secured by way of first charge on fixed assets of company's proposed Dyeing unit and further guaranteed by two directors in their personal capacities. However, the loan proceeds are not yet availed by the company.

b. The above loan carries interest @ 13.25%

v. Interest free sales tax loan:

a. The company availed interest free sales tax loan for the period from 1995-96 to 2008-09 aggregating to Rs. 25475992/- The said loan is repayable within a period of 10/14 years from each year of availment

4. CONTINGENT LIABILITIES NOT PROVIDED FOR

As at As at 31-03-2012 31-03-2011

i. Counter Guarantees given to Bank in respect of Bank guarantees and letter of credit issued in favor of various constituents 4,09,46,170 7,05,67,634

ii. Estimated amounts of contracts remaining to be executed on Capital Accounts, and not provided for. 3,98,525 3,66,94,573

iii. State levies on Electricity 38,47,661 37,38,227

5. a. Balances in personal accounts of various parties are subject to confirmation by and reconciliation with the said parties.

b. In the opinion of the Management, all the amounts stated under Current Assets, Loans and Advances are recoverable at the values at which they are stated.

6. a. Revenue expenditure capitalized to fixed assets / capital works under progress during the year

includes borrowing costs as per As-16- 2011-12 2010-11

Interest paid on term loans and processing charges 10,05,790 72,46,984

(Net after interest subsidy received under TUF Scheme)

7. Interest paid is net after crediting subsidy received under TUf Scheme 3,20,59,084 3,33,27,632

8. Sales includes an amount of Rs. 9,03,020/- being gain on exchange fluctuation, (previous year Rs. 27,01,789/-)

9. The Andhra Pradesh Electricity regulatory Commission issued orders refixing the purchase price of power purchased from the company at Rs.2.52 per Unit w.e.f. 01-04-2004. The Company contested the said order in High Court of Andhra Pradesh along with the other members of Small Hydro Power Developers Association. The High Court issued an interim order directing APSPDCLto pay 50% of the differential between the revised rate and the previous rate in force up to 31-03-2004. Subsequently the High Court transferred the case to the Appellate Tribunal for Electricity, New Delhi. The Appellate Tribunal for Electricity decided the matter in favour of the Company vide its order dated 02-06-06 and ordered the APTRANSCO to pay the difference amount between the revised rate and the previous rate in force up to 31 -03-2004. However the APTRANSCO preferred an appeal before the Supreme Court against the order of the Appellate Tribunal for Electricity. The Supreme Court set out guidelines and remanded the matter to APERC with a direction that APERC shall hear the non-conventional energy generators afresh and determine the tariff expeditiously for purchase of Electricity in accordance with Law and pending the orders of APERC, APSPDCL is making payment of Rs. 1.92 per unit w.e.f. September, 2010, instead of billed rate of Rs. 2.74 per unit.

10. The Andhra Pradesh Electricity regulatory commission vide its order dated 23-02-2004 has increased the wheeling charges from 2% to 12.81% on the Electricity wheeled from the Power Plants of the Company by the APTRANSCO. The company has filed writ petition in the Hon'ble High Court of Andhra Pradesh and the said Court has transferred the case to the Appellate Tribunal for Electricity, New Delhi. The Appellate tribunal for Electricity passed the final order on 08-09-2005 directing the APTRANSCO to continue to collect the wheeling charges only at 2%. However the APTRANSCO preferred an appeal before the Supreme Court against the orders of the Appellate Tribunal for Electricity, New Delhi. In view of the order passed by the Appellate Tribunal for Electricity, the Company has accountant for wheeling charges only at 2% pending final orders in the matter.

The above details were prepared based on information furnished by the respective suppliers and available with the company regarding the status under Micro, Small & Medium Enterprises Development Act, 2006. The said information to the extent furnished by the suppliers has been relied upon by the Company and its Auditors for the said purpose.

11. Group Gratuity:

The Company has a defined benefit Gratuity Plan. Every Employee who has completed 5 years or more of service gets gratuity on departure at 15days salary (last drawn) for each completed year of sen/ice subject to limits as per Payment of Gratuity Act 1972. The Company has not contributed to any fund of its Gratuity Liability.

1. Companies controlled by Key Management personnel / relatives of Key Management personnel

1. KallamAgro Products & Oils Private Limited, Guntur

2. Kallam Brothers Cottons Private Limited, Guntur

12. General:

Consequent to the amendments made to Schedule-VI of the Companies Act, 1956, the Financial statements for the year ended 31 st March, 2012 are prepared under revised schedule - VI. Accordingly, the previous year figures have also been reclassified to confirm to this year's classification.


Mar 31, 2010

1. SECURED LOANS : SPINNING DIVISION

A. Term Loans from banks are secured on parri passu basis by way of charge on all the immovable and movable assets of the Spinning division of the company. Further guaranteed by the Chairman, Managing Director and Joint Managing Director individually in their personal capacity.

B. Short Term Loan from banks are secured by hypothecation of stocks of raw-materials, work-in progress, finished goods, stores & spares, book debts, etc, Also secured by second charge on all the fixed assets of the company excluding assets financed by IREDA for power division. Further guaranteed by the Chairman, the Managing Director and the Joint Managing Director of the company in their personal capacity.

POWER DIVISION:

C. Term Loan from Indian Renewable Energy Development Agency Limited (IREDA) is secured by first charge on all the immovable and movable assets of Companys Power Division of 0.80 MW Small Hydro Project at Nandigama branch canal at mile # 3, Kotha Kothuru of Nelakonda Palli Village, Khammam (Dist) in the State of Andhra Pradesh under Project Financing Scheme (Project NO. 1349). Further guaranteed by K.Haranadha Reddy, G.V.Krishna Reddy, M.V.Subba Reddy, K.Nagi Reddy, N.Prabhakara Rao and M.R.Naik in their personal capacity. The said loan is further guaranteed by two companies Kallam Agro Products & Oil Products Limited and Janapadu Hydro Power Projects Limited.

D. Term Loan from Andhra Bank is secured by first charge on all movable and immovable properties both present and future pertaining to 1.60MW capacity of Hydro Project at Nandigama Branch Canal at drop No.5-5-600 at Kotha Kothuru of Nelankondapalli Village in Khammam district Andhra Pradesh and further secured by second charge on fixed assets of Spinning Division. Further guaranteed by the Chairman, the Managing Director and the Joint Managing Director individually in their personal capacity.

2 CONTINGENT LIABILITIES NOT PROVIDED FOR

i) Counter guarantees given to bank in respect of Bank guarantees and letter of credit issued in favour of various 1,42,02,480 1,64,98,026 constituents.

ii) Minimum guarantee repurchase amount promised to teak -- 17,550

plantation Unit holders. iii) Estimated amounts of contracts remaining to be executed 5,13,71,500 2,56,95,913 on Capital accounts, and not provided for.

iv) State levies on Electricity 37,33,908 37,33,908

3. Balances with Scheduled Banks in Fixed Deposits represents Rs. 56,45,923/- held as Margin Money Deposit against Bank Guarantee and letter of credits issued by them. (Previous year 75,36,941/-).

4. Balances in personal accounts of various parties are subject to confirmation by and reconciliation with the said parties.

5. In the opinion of the management, all the amounts stated under Current Assets, Loans and Advances are recoverable at the values at which they are stated.

6. Sales includes an amount of Rs.5,69,201/- being gain on exchange fluctuation.

7. The Andhra Pradesh Electricity regulatory Commission issued orders refixing the purchase price of Power purchased from the company at Rs.2.52 per Unit w.e.f 01.04.2004. The company contested the said order in High Court of Andhra Pradesh along with the other members of Small Hydro Power Developers Association The High Court issued an interim order directing AP Transco to pay 50% of the differential between the revised rate and the previous rate in force upto 31.03.2004. Subsequently the High Court transferred the case to the Appelleate Tribunal for Electricity, New Delhi. The Applleate tribunal for Electricity decided the matter in favour of the company vide its order dated 02.06.06 and ordered the AP TRANSCO to pay the difference amount between the revised rate and the previous rate in force up to 31.03.2004. However the APTRANSCO preferred an appeal before the Supreme Court against the order of the Applleate Tribunal for Electricity and pending the orders of the Supreme Court, the Company billed theAPTRANSCO at the rate of Rs.2.785 per Unit.

8. The Andhra Pradesh Electricity Regulatory Commission vide its order dated 23.02.2004 has increased the wheeling charges from 2% to 12.81 % on the Electricity wheeled from the Power Plants of the Company by the AP TRANSCO. The Company has filed writ petition in the Honble High Court of Andhra Pradesh and the said Court has transferred the case to the Appellate Tribunal for Electricity, New Delhi. The Appellate Tribunal for Electricity passed the final order on 08.09.2005 directing the AP TRANSCO to continue to collect the wheeling charges only at 2%. However the APTRANSCO preferred an appeal before the Supreme Court against the orders of the Appellate Tribunal for Electricity, New Delhi. In view of the order passed by the Appellate Tribunal for Electricity, the company has accounted for wheeling charges only at 2% pending final orders in the matter.

9. In compliance with the treatment prescribed in Accounting Standard -11 "The Effects of Changes in Foreign Exchange Rates" notified in Companies (Accounting Standards) Rules, 2006, the company has recognized the foreign currency exchange differences, in respect of restatement of its liability incurred towards Fixed Assets acquired from a Country outside India, as an expense amounting to Rs Nil in Profit and Loss account. (Previous year Rs. 18,08,573/-)

The above details were prepared based on information furnished by the respective suppliers and available with the company regarding their status under Micro, Small & Medium Enterprises Development Act, 2006. The said information to the extent furnished by the suppliers has been relied upon by the Company and its auditors for the said purpose.

10. GROUP GRATUITY:

The Company has a defined benefit gratuity plan. Every employee who has completed 5 years or more of service gets gratuity on departure at 15 days salary (Last drawn) for each completed year of service subject to limits as per Payment of Gratuity Act, 1972. The company has not contributed to any fund of its gratuity Liability.

11. DISCLOSURE REQUIREMENTS PURSUANT TO "ACCOUNTING STANDARD -18 RELATED PARTY DISCLOSURES".

A) List of Related Parties :-

(1) Key Management Personnel:

1. K. Haranadha Reddy , Chairman

2. P. Venkateswara Reddy, Managing Director

3. G.V. Krishna Reddy, Joint Managing Director

4. M.V.Subba Reddy, Whole Time Director

(2) Relatives of Key management Personnel:

1. Kallam Venkata Subbayamma Wife of K. Haranadha Reddy

2. Poluri Siva Nagendramma Wife of P.Venkateswara Reddy

3. Movva Uma Sankara Reddy Brother of M.V.Subba Reddy

4. Poluri Govardhana Reddy Son of P.Venkateswara Reddy

5. Poluri Venugopal Reddy Son of P. Venkateswara Reddy

16. Gurram Nitin Son of G.V.Krishna Reddy

7. Gurram Namratha Daughter of G.V.Krishna Reddy

8. Movva Kavitha Wife of M.V.Subba Reddy

9. Kallam Mohan Reddy Son of K.Haranadha Reddy

10. M.Srinvivasa Nagarjuna Reddy Son of M.V.Subba Reddy

11. M.Murali Sairam Krishna Reddy Son of M.V.Subba Reddy

12. G. Vijayalakshmi Wife of G.V. Krishna Reddy

13. G. Appi Reddy Father of G.V. Krishna Reddy

(3) Companies Controlled by Key Management Personnel/Relatives of Key Management Personnel

1. Kallam Agro Products & Oils Private Limited

2. Kallam Brothers Cottons Pvt Ltd.,

12 General

(a) Paise have been rounded off to nearest Rupee

(b) Figures for the previous year have been regrouped wherever necessary.

 
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