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Notes to Accounts of Kalyanpur Cement Ltd.

Mar 31, 2015

1. Redemption of Preference Shares: In terms of the Scheme of Compromise approved by the Hon'ble Calcutta High Court, the Preference shares were to be redeemed in three annual installments i.e. 2009-10,2010-11 and 2011 -12 @ Rs. 2.21 Crs. every year. The Companies Act, 1956, however, provides that the Preference shares can be redeemed either out of the profit available for distribution of dividend or out of the fresh proceeds of shares issued for the said purpose. Since the company did not either have profit available for distribution of dividend or any fresh proceed ol shares, a legal opinion was obtained from M/s. Khaitan & Co., Advocates & Solicitors, Kolkata whether the preference shares could be redeemed by the company. They have opined that the Preference shares of the company could not be redeemed under the present circumstances.

2. There is no change in the number of shares at the end of the reporting period as compared to the same at the beginning of the reporting period.

3. The Company does not have any holding company or ultimate holding company.

4. The Preference Shares carry the preferential rights as provided in the Companies Act, 1956. There is no restriction on distribution of dividends and repayment of Capital with respect to any shares and the same would be governed by the provisions of the Companies Act,1956.

5. No Shares have been reserved for issue under options and contracts /commitments for the sale of shares / disinvestments.

6. No shares have been allotted as fully paid up pursuant to contracts without payment being received in cash.

7. No bonus shares have been issued and no shares have been bought back.

8. No convertible securities are outstanding at the end of the reporting period nor any calls are unpaid.

9. The Non-Convertible Debentures (NCDs) have been secured by creating mortgage on land at Chimur, district Chandrapur, Maharastra in favour of Debenture Trustees namely IDBI Trusteeship Services Ltd., Mumbai besides mortgage on all other immovable properties.

10. The NCDs were transferred in favour of ACRE pursuant to an MOU, with a provision of buy back of NCDs, by Vivid Colors Pvt. Ltd. on clearing the dues of Rs.15.65 Crores by KCL to ACRE Ltd. The transaction; would be concluded as per the MOU dated 28th June, 2013.

11. As per Scheme of Compromise, approved by the Hon'ble Calcutta High Court no interest is payable on the Non-Convertible Debentures.

12. As per the Scheme sanctioned by BIFR, the unsecured loans of Rs,200 lacs [Rs.100 lacs at 3.1 (c )(1) and Rs.100 lacs included in 3.1 (c )(2)] are convertible into equity sharl^at par with a lock-in period of 3 years from the date of allotment.

13. Loans from Banks (Si.No.(i)(a) include the loans of Rs.33.96 Lacs (Prev.Yr.Rs.31.95 Lacs) against Fixed Deposits and overdraft of Rs.39.78 Lacs (Prev. Yr. Rs.0.00 Lacs).

14. Method of valuation of inventory

Inventory has been valued as under

a) Raw Materials & Work in Progress - At weighted average cost or net realisable value, whichever is lower.

b) Finished Goods - At lower of the cost or realisable market value.

c) Stores & Spares - At average cost.

15. The Excise Duty amounts related to the closing and opening stock of Finished Goods amounting respectively to Rs. 21.28 lacs and Rs. 15.58 lacs have been included in the respective value of stocks in Silo, at depots and in transit and recognized separately under Note 14 forming part of the Profit & Loss Statement in terms of the provisions of the Ac wanting Standard (AS)-9.

16. The Excise Duty amounts related to the closing and opening stock of Finished Goods amounting respectively to Rs. 21.28 lacs and Rs. 15.58 lacs have been included in the respective value of stocks in Silo, at depots and in transit and recognized separately in the Profit & Loss Statement in terms of the provisions of the Accounting Standard (AS)-9.


Mar 31, 2014

1. Contingent Liabilities :

Claims against the Company not acknowledged as debt:

2. In respect, of 33KV power connection: Prior to August''93 whereafter the company started drawing power on 132 KV line consequent upon enhancement in contract demand from 10.5 MVA to 15.0 MVA, the company used to draw power on 33 KV line. In respect of the power supplied by BSEB through 33 KV line, there were some disputes between the company and BSEB on account of difference between the enhanced tariff claimed by BSEB and the tariff admitted by the company for the period upto 31.03.1994. The total amount under dispute aggregated to Rs. 336.53 lacs against which the company advanced Rs. 272.85 lacs till 31.12.1982 under the Court Order.

According to an agreement between the company and BSEB dated 30.06.1986, a Retired Judge of Patna High Court was appointed as "Arbitrator Sole" to settle the disputes between BSEB and the company and submit his Award. While the arbitration proceedings were in progress, the "Arbitrator Sole" died and the new Arbitrator was to be appointed. However, even though the arbitration proceedings were in progress and unfortunately the "Arbitrator Sole" died, an Award, allegedly signed by the Arbitrator, was filed by BSEB in the Civil Court, Patna for making the same the Rule of the Court. Under the situation, the company has not accepted the award and has challenged its veracity.

3. Other disputes in respect of 33 KV and 132 KV lines : The company had been representing before BSEB for resolving various disputes and after reconciliation of accounts between the company as well as BSEB, the dues payable by the company were determined as Rs. 40.75 Crs as on 31st March, 2008. The said amount included Rs. 27.10 Crs towards AMG/MMG/DPS. The company was eligible for relief of Rs. 27.10 Crs pursuant to Industrial Incentive Policy, 2006 whereunder a sick unit was exempted from payment of AMG/MMG/DPS for a period of five years from the date of sickness and therefore the company''s actual liability was Rs. 13.65 Crs only.

however, at the time of issuing the revised Energy Bill, BSEB wrongly levied DPS of Rs. 6.27 Crs on the ground that since the dues were reconciled as on 31st March, 2008, the company was liable to pay the said amount soon after reconciliation and since the same was not paid, the company was liable to pay DPS thereon. The Company''s argument that DPS cannot be levied in terms of the Tariff Order till the revised Energy Bill was issued was not accepted by BSEB and the company, under duress, had to agree to pay the DPS amount of Rs. 6.27 Crs to avoid disconnection of the electricity line. Aggrieved by the order of BSEB to levy the DPS of Rs. 6.27 Crs even though the correct energy bill after reconciliation had not been issued, the company has approached the Hon''ble Patna High Court.

In the meanwhile, BSEB levied AMG/MMG/DPS of Rs. 27.10 crores in the Company''s energy bill for the past period besides levying DPS of Rs. 15.72 crores on the said dues of Rs. 27.10 crores. The Company, challenging these two levies, filed an Inter-locutory Application (IA) in the earlier writ petition in the Hon''ble Patna High Court as these levies were contrary to the decision of the State government as well as the Revival scheme sanctioned by BIFR. The Hon''ble Patna High Court has now disposed of the case vide its order and judgement dated 12.8.2013 wherein the Court has pronounced the following orders:-

4. The AMG/MMG/DPS of Rs. 27.10 crores and the interest thereon are not leviable against the company.

5. In case of levy of DPS of Rs. 6.27 crores on the reconciled dues of Rs. 13.65 crores, a Committee has been constituted by the Hon''ble Patna High Court, comprising the Industrial Development Commiissioner as Chairman and Secretary, Energy as well as the Chairman, BSEB as its members, to examine the facts related to the stand taken by BSEB and the Company before BIFR with regard to levy of DPS of Rs. 6.27 crores. The committee however, is yet to meet and decide the matter.

On the basis of the documents, evidences and the stand taken by BSEB before the State Level Empowered (APEX) Committee as well as BIFR, the company is confident that it will not be liable to pay the DPS of Rs. 6.27 crs. as this levy was not correct and was contrary to the approval of the State Govt, and the BIFR and therefore the same continues to be treated as contingent liability.

6. The company had entered into a Fuel Supply Agreement (FSA) with Central Coalfields Ltd. (CCL), a subsidiary of Coal India Ltd. (CIL) for supply of coal to meet its requirement under a Long Term Coal Linkage issued by the Govt, of India, Ministry of Energy, Deptt. of Coal. The first FSA was executed on 30.1.2004 which was valid for three years. The second FSA was executed on 25.4.2008 and the same was valid for five years which was to expire on 30.4.2013. Pursuant to the provisions of FSA, the company had furnished to CCL, a Security Deposit of Rs. 123.94 lacs by way of Bank Guarantee. The FSA provided for lifting of an Annual Contractual Quantity (ACQ) with a provision for review thereof on expiry of 3 years from the date of FSA. After substantial increase in pit head price of Coal effective from February, 2011 and in view of technical aspects of the Plant''s operation, the company on expiry of three years from the date of FSA requested CCL for review of ACQ which request was followed up subsequently by the Company at the highest level.

The ACQ however, was not reviewed despite explicit provision to that effect in the FSA and CCL unilaterally terminated the same on 30.4.2013 on the ground of lifting of coal quantity which was lower than the ACQ. CCL also levied damage of Rs. 4.96 crores for not lifting the coal as per ACQ even though such damage was not leviable as the ACQ was liable to be reviewed and CCL did not review the same. They subsequently forfeited the security deposit by invoking the Bank Guarantee of Rs. 123.94 Lacs

The Company has filed a writ petition in the Hon''ble Jharkhand High Court against the unilateral and arbitrary action of CCL and considering its strong position, the company is hopeful of refund of the security amount by CCL and accordingly, the amount forfeited by them has not been considered as expenditure. The Company is confident of waiver of the damages also and this is why the same has not been acknowledged as liability.

7. Unexecuted Capital Commitments : Estimated amount of Contracts remaining to be executed on Capital Account and not provided for amount to Rs. 26.70 Lacs (Previous Year Rs. 26.53 Lacs ).

8. Cummulative Dividend on Preference Shares : On approval of the scheme of compromise by the Hon''ble Calcutta High Court, the Preference share capital was reduced by 85%. The Preference shares, after reduction of the share capital have face value of Rs. 15/- each. The said Preference shares carry a coupon rate of 0.1%. The cumulative dividend on such shares with effect from the date of approval of the scheme of compromise i.e. 21st November,2006 till 31st March''14 amounted to Rs. 4.87 lacs.

Guarantees

9. Counter-guarantees given by the Company : Counter Guarantees to Banks in respect of Guarantees given by them amount to Rs.11.60 Lacs (Previous Year Rs.135.34 Lacs ).

10. As per the Rehabilitation Scheme sanctioned by BIFR, the deferred sales tax dues amounting to Rs. 700.16 lacs have been rescheduled to be paid during 2014-15.

11. The declaration filed under Urban Land (Ceiling and Regulation) Act,1976 in respect of the Company''s holding in excess of the Ceiling prescribed under the Act and the application to retain these lands were made for consideration of the concerned authority. The company at present is contesting a case filed by the Appropriate authority.

12. Documents and papers relating to all the immovable properties including land at Banjari are deposited with IFCI Ltd. which assigned its loan earlier granted to the Company to Arcil - Kalyanpur Cements Ltd. Trust.

13. In view of erosion of its Net Worth , the company was registered with Board for Industrial & Financial Reconstruction (BIFR) as Sick Company under the provisions of Sick Industrial Companies (Special Provisions) Act,1985. BIFR circulated a Draft Rehabilitation Scheme (DRS) to all the concerned parties for consent, suggestions and objections. On the basis of the approval of the Govt of Bihar and objections and suggestions received from various parties, BIFR sanctioned the scheme in the hearing held on 24.10.2011 and issued the same vide letter dt. 3.2.2012. The Scheme is under implementation.

Due to unsatisfactory performance during 2011-12 caused by downturn in cement industry, the company suffered financial loss and as a result, the statutory dues accumulated. In order to clear the statutory dues, the company has, with the approval of BIFR sold its surplus land at Dehri-on-Sone and the dues pertaining to the Central Excise Duty have been cleared. The Scheme was also modified for Sale of surplus Land as well as issue of Equity Shares on Rights basis. The Modified Scheme was sanctioned by BIFR vide order dated 5.03.2013.

14. In view of carry forward losses, in drawing up the Accounts, the Company has not considered the impact of deferred tax liability arising out of timing difference. For the same reason Deferred Tax Assets have been ignored.

15. The Company has claimed from BSEB Rs.2574.25 Lacs (Previous year Rs.2574.25 Lacs) on account of reduction in maximum demand charges, damages to machinery, etc. and loss of profit due to restricted and erratic power supply for the past periods.

16. Figures of the Previous Year have been recast and/or regrouped wherever necessary to bring them in line with the figures of the current year.

Notes 1 to 9 and 19 are the Notes annexed to and forming part of the Balance Sheet and Note 18 contains the accounting policies followed in preparation of the Balance Sheet as at 31.3.2014.

17. With a view to ensuring proper disclosure, a separate line in respect of Freight & Selling Expenses has been added in the Profit & Loss Statement.

18. A separate note to the Profit & Loss Statement namely Note 13 comprising various manufacturing expenses has been provided in the Financial Statement for the year under report.

19. As per the Revival Scheme sanctioned by the Hon''ble Board for Industrial & Financial Reconstruction (BIFR), the company is eligible for relief on account of VAT reimbursement to the tune of Rs. 165.04 Crs. Out of this, the relief amount of Rs. 87.55 Crs. was accounted for in the accounts of the company for the financial year 2010- 11 on the basis of the Draft Rehabilitation Scheme circulated by BIFR and in anticipation of the approval of the State Government which was subsequently received. The company accounts for / will account for the balance relief amount of Rs. 77.49 Crs. on the basis of the actual VAT reimbursement amount received from the state Government as reduced by the refund to be made to them on account of the sales tax exemption amount retained by the company. At the end of the scheme period, the total VAT reimbursement amount would be Rs. 165.04 Crs.

The company received Rs. 21.87 Crs. towards Vat reimbursement during the financial year 2013-14. As per BIFR approved scheme, sales tax exemption related dues of Rs. 9.48 Crs. was to be paid by the company to the Commercial Taxes Deptt. Since only Rs. 71 Lacs could be paid to the State Government on account of Sales Tax exemption related dues, Rs. 8.77 Crs. out of the total VAT reimbursement amount received has been treated in the books as liability and the balance amount of Rs. 12.39 Crs. (Rs. 21.87 Crs. - Rs. 9.48 Crs.) has been considered under "other income" in the P & L Statement.

20. The Micro, Small and Medium Enterprises Development Act, 2006 stipulates payment of interest to the "Supplier" defined in the said Act by the buyers. In terms of the said Act, the "Supplier" means a Micro or Small Enterprise which files a Memorandum with any of the five authorities provided therein. The company has sent communications to such parties to ascertain their status regarding filing of Memorandum. No response has, however, been received from the parties following which the company is not in a position to ascertain its statutory liability under the said Act. However, as a measure of abundant precaution, the company based on its judgment, has made provision for interest on dues over 45 days as required under the said Act.

21. Pursuant to BIFR''s approval and the Modified Revival Scheme sanctioned by BIFR in March,2013, the Company has sold its surplus land situated at Dehri-on-sone in Rohtas district of Bihar. The land was sold by plotting the same and while "agreements to sell" have been executed for entire land, the Deeds of absolute sale have been executed only for a part of the total land. The sale of land has been accounted for on the basis of Sale Deeds registered on or before 31.3.2014. The Sale of balance land will be accounted for after execution of remaining Sale deeds.

22. Figures of the Previous Year have been recast and/or regrouped wherever necessary to bring them in line with the figures of the current year.

Notes 10 to 17 and Note 20 are the Notes annexed to and forming part of the Profit & Loss Statement and Note 18 contains the accounting policies followed in preparation of the Profit & Loss Statement for the year ended 31.03.2014.


Mar 31, 2013

1.0 Contingent Liabilities :

Claims against the Company not acknowledged as debt:

1.1 In respect of 33KV power connection : Prior to August'' 93 whereafter the company started drawing power on 132 KV line consequent upon enhancement in contract demand from 10.5 MVAto 15.0 MVA, the company used to draw power on 33 KV line. In respect of the power supplied by BSEB through 33 KV line, there were some disputes between the company and BSEB on account of difference between the enhanced tariff claimed by BSEB and the tariff admitted by the company for the period upto 31.03.1994. The total amount under dispute aggregated to Rs. 336.53 lacs against which the company advanced Rs. 272.85 lacs till 31.12.1982 under the Court Order.

According to an agreement between the company and BSEB dated 30.06.1986, a Retired Judge of Patna High Court was appointed as "Arbitrator Sole" to settle the disputes between BSEB and the company and submit his Award. While the arbitration proceedings were in progress, the "Arbitrator Sole" died and the new Arbitrator was to be appointed. However, even though the arbitration proceedings were in progress and unfortunately the "Arbitrator Sole" died, an Award, allegedly signed by the Arbitrator, was filed by BSEB in the Civil Court, Patna for making the same the Rule of the Court. Under the situation, the company has not accepted the award and has challenged its veracity.

1.2 Other disputes in respect of 33 KV and 132 KV lines : The company had been representing before BSEB for resolving various disputes and after reconciliation of accounts between the company as well as BSEB, the dues payable by the company were determined as Rs 40.75 Crs as on 31st March, 2008. The said amount included Rs. 27.10 Crs towards AMG/MMG/DPS. The company was eligible for relief of Rs. 27.10 Crs pursuant to Industrial Incentive Policy, 2006 whereunder a sick unit was exempted from payment of AMG/MMG/DPS for a period of five years from the date of sickness and therefore the company''s actual liability was Rs. 13.65 Crs only.

However, at the time of issuing the revised Energy Bill, BSEB wrongly levied DPS of Rs. 6.27 Crs on the ground that since the dues were reconciled as on 31st March, 2008, the company was liable to pay the said amount soon after reconciliation and since the same was not paid, the company was liable to pay DPS thereon. The Company''s argument that DPS cannot be levied in terms of the Tariff Order till the revised Energy Bill was issued was not accepted by BSEB and the company, under duress, had to agree to pay the DPS amount of Rs. 6.27 Crs to avoid disconnection of the electricity line. Aggrieved by the order of BSEB to levy the DPS of Rs. 6.27 Crs even though the correct energy bill after reconciliation had not been issued, the company has approached the Hon''ble Patna High Court. Therefore, the company has not provided for the DPS amount of Rs. 6.27 Crs. although the same is being paid under protest as a part of the total dues in monthly installments.

1.3 Unexecuted Capital Commitments: Estimated amount of Contracts remaining to be executed on Capital Account and not provided for amount to Rs. 26.53 Lacs (Previous Year Rs. 26.53 Lacs).

1.4 Cummulative Dividend on Preference Shares: On approval of the scheme of compromise by the Hon''ble Calcutta High Court, the Preference share capital was reduced by 85%. The Preference shares, after reduction of the share capital have face value of Rs. 15/- each. The said Preference shares carry a coupon rate of 0.1%. The cumulative dividend on such shares with effect from the date of approval of the scheme of compromise i.e. 21st Novem- ber,2006 till 31st March''13 amounted to Rs. 4.21 lacs.

Guarantees

1.5 Counter-guarantees given by the Company : Counter Guarantees to Banks in respect of Guarantees given by them amount to Rs. 135.34 Lacs (Previous Year Rs. 136.84 Lacs).

2.0 As per the Rehabilitation Scheme sanctioned by BIFR, the deferred sales tax dues amounting to Rs. 1200.16 lacs have been rescheduled to be paid (beyond 12 months) over a part of the period of the scheme i.e. 2013-14 to 2014- 15

3.0 The declaration filed under Urban Land (Ceiling and Regulation) Act, 1976 in respect of the Company''s holding in excess of the Ceiling prescribed under the Act and the application to retain these lands were made for consideration of the concerned authority. The company at present is contesting a case filed by the Appropriate authority.

4.0 Documents and papers relating to all the immovable properties including land at Banjari are deposited with IFCI Ltd. which assigned its loan earlier granted to the Company to Arcil - Kalyanpur Cements Ltd. Trust.

5.0 In view of erosion of its Net Worth , the company was registered with Board for Industrial & Financial Reconstruction (BIFR) as Sick Company under the provisions of Sick Industrial Companies (Special Provisions) Act,1985. BIFR circulated a Draft Rehabilitation Scheme (DRS) to all the concerned parties for consent, suggestions and objections. On the basis of the approval of the Govt of Bihar and objections and suggestions received from various parties, BIFR sanctioned the scheme in the hearing held on 24.10.2011 and issued the same vide letter dt. 3.2.2012. The Scheme is under implementation.

6.0 Due to unsatisfactory performance during 2011-12 caused by downturn in cement industry, the company suffered financial loss and as a result the statutory dues accumulated. In order to clear the statutory dues, the company has, with the approval of the Hon''ble Board for Industrial and Financial Reconstruction (BIFR) taken steps for sale of its surplus land at Dehri-on-Sone and the sale is in process.

7.0 Related Party disclosures

The disclosure of related party relationship and transactions with the related parties are given as under: A. Related Party relationships:

8.0 In view of carry forward losses, in drawing up the Accounts, the Company has not considered the impact of deferred tax liability arising out of timing difference. For the same reason Deferred Tax Assets have been ignored.

9.0 The Company has claimed from BSEB Rs.2574.25 Lacs (Previous year Rs.2574.25 Lacs) on account of reduction in maximum demand charges, damages to machinery, etc. and loss of profit due to restricted and erratic power supply for the past periods.

With effect from the Financial Year 2011-12, the Cost Audit Report was also required to be filed in XBRL mode. Since this was the first year for filing the Cost Audit Report in XBRL Format, there was some delay due to technical problems relating to Taxonomy etc.

13.0 Figures of the Previous Year have been recast and/or regrouped wherever necessary to bring them in line with the figures of the current year.

1.0 With a view to ensuring proper disclosure, a separate line in respect of Freight & Selling Expenses has been added in the Profit & Loss Statement.

2.0 A separate note to the Profit & Loss Statement namely Note 13 comprising various manufacturing expenses has been provided in the Financial Statement for the year under report.

3.0 As per the Rehabilitation Scheme sanctioned by the Hon''ble Board for Industrial & Financial Reconstruction (BIFR), the company is eligible for relief on account of VAT reimbursement to the tune of Rs. 165.04 Crs. Out of this, the relief amount of Rs. 87.55 Crs. was accounted for in the accounts of the company for the financial year 2010-11 on the basis of the Draft Rehabilitation Scheme circulated by BIFR and in anticipation of the approval of the State Government which was subsequently received. The company accounts for / will account for the balance relief amount of Rs. 77.49 Crs. on the basis of the actual VAT reimbursement amount received from the state Government as reduced by the refund to be made to them on account of the sales tax exemption amount retained by the company. At the end of the scheme period, the total VAT reimbursement amount would be Rs. 165.04 Crs.

Three Managerial Personnel namely (i) a wholetime director designated as Executive Chairman, (ii) Managing Director and (iii) Joint Managing Director were appointed by the Board of Directors for a period of three years w.e.f. 23.2.2010. Their tenure ended on 22nd February 2013. The remuneration payable to the Executive Directors for the period upto 31.3.2012 has been approved by the appropriate authorities. The approval of the Central Government has been sought for payment of remuneration for the period 1.4.2012 to 22.2.2013, the terminal date of the period of reappointment. The Central Government''s approval is awaited.

The Board of Directors and the Shareholders have reappointed the above mentioned Executive Directors for a further period of 3 years w.e.f. 23rd February 2013. The approval of the Central Government has been sought for their reappointment as well as payment of remuneration during the tenure of reappointment.

4.0 The Micro, Small and Medium Enterprises Development Act, 2006 stipulates payment of interest to the "Supplier" defined in the said Act by the buyers. In terms of the said Act, the "Supplier" means a Micro or Small Enterprise which files a Memorandum with any of the five authorities provided therein. The company has sent communications to such parties to ascertain their status regarding filing of Memorandum. No response has, however, been received from the parties following which the company is not in a position to ascertain its statutory liability under the said Act. However, as a measure of abundant precaution, the company based on its judgment, has made provision for interest on dues over 45 days as required under the said Act.

5.0 Figures of the Previous Year have been recast and/or regrouped wherever necessary to bring them in line with the figures of the current year.


Mar 31, 2012

1.1 Redemption of Preference Shares : In terms of the Scheme of Compromise approved by the Hon ble Calcutta High Court, the Preference shares were to be redeemed in three annual installments i.e. 2009-10, 2010-11 and 2011-12 @ Rs. 2.21 Crs. every year. The Companies Act, 1956, however, provides that the Preference shares can be redeemed either out of the profit available for distribution of dividend or out of the fresh proceeds of shares issued for the said purpose. Since the company did not either have profit available for distribution of dividend or any fresh proceed of shares, a legal opinion was obtained from M/s. Khaitan & Co., Advocates & Solicitors, Kolkata whether the preference shares could be redeemed by the company. They have opined that the Preference shares of the company could not be redeemed under the present circumstances.

1.2 There is no change in the number of shares at the end of the reporting period as compared to the same at the beginning of the reporting period.

1.3 The Company does not have any holding company or ultimate holding company.

1.4 The Preference Shares carry the preferential rights as provided in the Companies Act 1956. There is no restriction on distribution of dividends and repayment of Capital with respect to any shares and the same would be governed by the provisions of the Companies Act, 1956.

1.5 No shares have been reserved for issue under options and contracts /commitments for the sale of shares / disinvestments.

1.6 No shares have been allotted as fully paid up pursuant to contracts without payment being received in cash.

1.7 No bonus shares have been issued and no shares have been bought back.

1.8 No convertible securities are outstanding at the end of the reporting period nor any calls are unpaid.

2.1 The Non-Convertible Debentures (NCDs) have been secured by creating mortgage on land at Chimur, district Chandrapur, Maharastra in favour of Debenture Trustees namely IDBI Trusteeship Services Ltd., Mumbai besides mortgage on all other immovable properties.

2.2 The Non-Convertible Debentures held by Allahabad Bank and IIBI Ltd.have been additionally guaranteed to the full extent by Sri Satyadeva Prakash Sinha and Sri Shailendra Prakash Sinha, the promoters of the Company.

2.3 The Interest free Central Excise Loan from Govt, of India disbursed through IFCI Ltd. has been secured by creating mortgage on immovable properties of the Company.

2.4 As per Scheme of Compromise, approved by the Hon ble Calcutta High Court no separate interest is payable on the Non-Convertible Debentures.

2.5 As per the Scheme sanctioned by BIFR, the unsecured loans of Rs. 200 lacs are convertible into equity shares at par with a lock-in period of 3 years from the date of allotment.

2.6 Loans from Banks (SI.No.(i) (a) include the loans of Rs. 22.43 Lacs (Prev.Yr. Rs. 237.39 Lacs) against Fixed Deposits and overdraft of Rs.7.77 Lacs (Prev. Yr. Rs.163.38 Lacs).

2.7 Method of valuation of inventory

Inventory has been valued as under:

a) Raw Materials & Work-in-Progress - At weighted average lost or net realisable value, whichever is lower.

b) Finished Goods - At lower of the cost or realisable market value.

c) Stores & Spares - At average cost.

2.8 The Excise Duty amounts related to the closing and opening stock of Finished Goods amounting respectively to Rs. 27.17 lacs and Rs. 63.70 lacs have been included in the respective value of stocks in Silo, at depots and in transit and recognized separately under Note 14 forming part of the Profit & Loss Statement in terms of the provisions of the Accounting Standard (AS)-9.

2.9 Loans & Advances due by Directors or other officers of the Company or by specified class of firms or private companies.

2.10 The Excise Duty amounts related to the closing and opening stock of Finished Goods amounting respectively to Rs. 27.17 lacs and Rs. 63.70 lacs have been included in the respective value of stocks in Silo, at depots and in transit and recognized separate'y in terms of the provisions of the Accounting Standard (AS)-9.

1.0 Contingent Liabilities :

Claims against the Company not acknowledged as debt:

1.1 In respect of 33 KV power connection : Prior to August '93 whereafter the Company started drawing power on 132 KV line consequent upon enhancement in contract demand from 10.5 MVAto 15.0 MVA, the Company used to draw power on 33 KV line. In respect of the power supplied by BSEB through 33 KV line, there were some disputes between the Company and BSEB on account of difference between the enhanced tariff claimed by BSEB and the tariff admitted by the Company for the period upto 31.03.1994. The total amount under dispute aggregated to Rs. 336.53 lacs against which the Company advanced Rs. 272.85 lacs till 31.12.1982 under the Court Order.

According to an agreement between the Company and BSEB dated 30.06.1986, a Retired Judge of Patna High Court was appointed as œArbitrator Sole  to settle the disputes between BSEB and the Company and submit his Award. While the arbitration proceedings were in progress, the œArbitrator Sole  died and the new Arbitrator was to be appointed. However, even though the arbitration proceedings were in progress and unfortunately the œArbitrator Sole  died, an Award, allegedly signed by the Arbitrator, was filed by BSEB in the Civil Court, Patna for making the same the Rule of the Court. Under the situation, the Company has not accepted the award and has challenged its veracity.

1.2 Other disputes in respect of 33 KV and 132 KV lines : The Company had been representing before BSEB for resolving various disputes and after reconciliation of accounts between the Company as well as BSEB, the dues payable by the Company were determined as Rs. 40.75 Crs as on 31s1 March, 2008. The said amount included Rs. 27.10 Crs towards AMG/MMG/DPS. The Company was eligible for relief of Rs. 27.10 Crs pursuant to Industrial Incentive Policy, 2006 whereunder a sick unit was exempted from payment of AMG/MMG/DPS for a period of five years from the date of sickness and therefore the Company s actual liability was Rs. 13.65 Crs only.

However, at the time of issuing the revised Energy Bill, BSEB wrongly levied DPS of Rs. 6.27 Crs on the ground that since the dues were reconciled as on 31st March, 2008, the Company was liable to pay the said amount soon after reconciliation and since the same was not paid, the Company was liable to pay DPS thereon. The Company s argument that DPS cannot be levied in terms of the Tariff Order till the revised Energy Bill was issued was not accepted by BSEB and the Company, under duress, had to agree to pay the DPS amount of Rs. 6.27 Crs to avoid disconnection of the electricity line. Aggrieved by the order of BSEB to levy the DPS of Rs. 6.27 Crs even though the correct energy bill after reconciliation had not been issued, the Company has approached the Hon ble Patna High Court. Therefore, the Company has not provided for the DPS amount of Rs. 6.27 Crs although the same is being paid as a part of the total dues in monthly installments.

1.3 Unexecuted Capital Commitments : Estimated amount of Contracts remaining to be executed on Capital Account and not provided for amount to Rs. 26.53 Lacs (Previous Year Rs. 135.10 Lacs).

1.4 Cummulative Dividend on Preference Shares : On approval of the scheme of compromise by the Hon ble Calcutta High Court, the Preference share capital was reduced by 85%. The Preference shares, after reduction of the share capital have face value of Rs. 15/- each. The said Preference shares carry a coupon rate of 0.1%. The cumulative dividend on such shares with effect from the date of approval of the scheme of compromise i.e. 21st November, 2006 till 31st March'12 amounted to Rs. 3.55 Lacs.

1.5 Guarantees

Counter-guarantees given by the Company : Counter Guarantees to Banks in respect of Guarantees given by them amount to Rs. 136.84 Lacs (Previous Year Rs.132.24 Lacs ).

2.0 As per the Rehabilitation Scheme sanctioned by BIFR, the deferred sales tax dues amounting to Rs. 1710.16 Lacs have been rescheduled to be paid (beyond 12 months) over the period of the scheme i.e. 2012-13 to 2014-15.

3.0 The declaration filed under Urban Land (Ceiling and Regulation) Act. 1976 in respect of the Company's holding in excess of the Ceiling prescribed under the Act and the application to retain these lands were made for consideration of the concerned authority. The Company at present is contesting a case filed by the Appropriate authority.

4.0 Documents and papers relating to all the immovable properties including land at Banjari are deposited with IFCI Ltd. which assigned its loan earlier granted to the Company to Arcil - Kalyanpur Cements Ltd. Trust.

5.0 In view of erosion of its Net Worth, the Company was registered with Board for Industrial & Financial Reconstruction (BIFR) as Sick Company under the provisions of Sick Industrial Companies (Special Provisions) Act,1985. BIFR circulated a Draft Rehabilitation Scheme (DRS) to all the concerned parties for consent, suggestions and objections. On the basis of the approval of the Govt, of Bihar and objections and suggestions received from various parties, BIFR sanctioned the scheme in the hearing held on 24.10.2011 and issued the same vide letter dt. 3.2.2012. The Scheme is under implementation.

6.0 In view of carry forward losses, in drawing up the Accounts, the Company has not considered the impact of deferred tax liability arising out of timing difference. For the same reason Deferred Tax Assets have been ignored.

7.0 The Company has claimed from BSEB Rs. 2574.25 Lacs (Previous year Rs. 2574.25 Lacs) on account of reduction in maximum demand charges, damages to machinery, etc. and loss of profit due to restricted and erratic power supply for the past periods.

8.0 Figures of the Previous year have been recast and/or regrouped wherever necessary to bring them in line with the figures of the current year.

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