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Notes to Accounts of Kanchan International Ltd.

Mar 31, 2012

(i) Terms & Rights attached to equity shares

i) The company has only one class of shares referred to as equity shares having a par value of Rs. 10. Each holder of equity shaes is entitled to one vote per share

ii) The Company declares and pays dividends in Indian Rupees. The dividend propsed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting if any.

iii) In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remining assets of the company after distribution of all preferential amount In proportion to their shareholding

(ii) The company has neither alloted shares pursuant to a contract without receiving cash. Byway of bonus shares nor it has bought back shares during the immediately preceeding five years from the date of balance sheet.

a) At the Annual General Meeting held on 24th September,2010, the shareholders authorised the Board of Directors to issue warrants on preferential basis to Promoters and Independent Investors at Rs. 26 each pursuant to conversion of fully convertible Equity Shares of of Rs. 10 each at a premium of Rs. 16 per share

b) In the Board meeting held on 31st March,2012 the Company had allotted 4,76,300 Equity Shares of Rs. 10/- each bealloted at Rs. 26/- per share oursuant to conversion of fully convertible equity shares warrants out of total outdtanding 25,00,000 fully convertible equity share warrants issued to the Promoters and Independent Investors

c) In the Board meeting held on 9th May,2012 the Company had allotted 13,42,608 Equity Shares of Rs. 10/- each be alloted at Rs. 26/- per share oursuant to conversion of fully convertible equity shares warrants out of total outdtanding 25,00,000 fully convertible equity share warrants issued to the Promoters and Independent Investors

c) For the currrent maturities of long term borrowings, refer item (a) in Note 10 Other current liabilities

d) Secured by Directors personal guarantee and corporate Guarantee of M/s Marlex Appliance PvtLtd. And Kahchan Kitchenaid Pvt.Ltd.

e) Car loans are secured against hypothecation of Car

a) Primary Security: Hypothection of entire existing as well as future current assets including raw material, stars & Spares, semi finished & finished goods and book debts etc. of the cmpany

b) Collateral Security: rge on the entire fixed assets viz. land, building, plant & machinery of the company situated t plot No 41/42 unit - II S. NO. 653/1, Somnath Estate, Somnath Road, Dabhel, Daman and Plant and Machinery lying at plot no 9 & 10 Unit - III, somnath Estate, Somnath Road, Dabhel, Daman.

1. Sundry Creditors, Debtors & Loans & advances and Deposits are subject to confirmation & Reconciliation. During the year Company have not sent any letter of confirmation to the parties. The management, however ,does not expect any material changes.

2. There was no employee, getting salary in excess of Rs. 5 lacs per month or more throughout or part of the financial year under review.

3. Sundry Creditors include amount due to Small Scale and ancillary industrial Undertaking Rs 430.31 Lacs (Previous year Rs. 327.74 Lacs) to the extent such parties have been identified from available information with the Company.

4. Contingent Liabilities

Rs.in Lacs

Particulars 2011-12 2010-11

(I) Bank Guarantees 84.93 4.90

(II) Preference shares Dividend 10.26 10.26 (in)Income tax Liability(A.Y.2006-07) (excluding interest) 1.15 1.15

5. Segment information

The Company deals in home appliances and is treated as the only segment.

6. Related Party Information

Relationship

(a) Individuals Controlling the Enterprise and Key Management Personnel

1. Mr. Dinesh C. Khimavat - Managing Director

2. Mr. Ashok Khimavat - Director

(b) Relative of key Management personnel

1. Mrs. UshaD. Khimavat - Wife of Mr. Dinesh Khimavat

2. Mishal Khimavat - Son of Mr. Dinesh Khimavat

(c) Subsidiary Company

Kanchan International Middle East F.Z.E. (100% Subsidiary)

7. Disclosure as required by Accounting Standard 19,"Leases". Issued by the institute of Chartered Accountants of India are given below:

(i) The Company has taken various Residential Flats & Other Premises under Operating lease or leave & license agreements. These are generally cancelable after giving notice to party and contracts are for for 11 month under leave and license or longer for other leases and are renewable by mutual consent on mutually agreeable terms.

(ii) Lease payments are recognized in the statement of Profit & Loss Account under "Rent" in Note 27 Other Expenses. All Operating Leases entered into by the Company are cancelable on giving a notice of 1 to 3 months.

8. During the year, the company has reviewed its fixed assets for impairment loss as required by accounting standards 28-" Impairment of Assets". In the opinion of management no provision for impairment is considered necessary.

9. . As per Opinion of Management, the debtors are considered as good hence no provision for doubtful debts have been made in current year, also provision made in earlier year are considered adequate.

10. The Management has taken appropriate steps for Claiming outstanding export benefits amounts to Rs 67,77,972/- which are outstanding from long period which were considered as doubtful during the F.Y.2010- 11 .The management is hopeful of realizing the export benefits and hence the management has decided not to Write off the balances during the year.

11. During the year, Company has written-back Sundry Balances of Rs. 74.71 Lacs(NET) out of various Creditors and Provisions which are not payable as decided by the Management which are shown in Other Income due to which losses are reduced by Rs.74.71 Lacs

12. The company had incurred large advertisement expenses for promotion of products and its brand building during the year 2009-10 and accounted the same as deferred revenue expenses. Balance outstanding as on 31.03.2012 is Rs. 70.60 Lacs and shown as other noncurrent assets. As per AS 26 the company should have written off the expense in the year it is incurred.

13. Non Provision of Liabilities in respect of Non- Compliance of Statutory obligation is not made as amount is not ascertained.

14 The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.


Mar 31, 2010

1. Contingent Liabilities

Rs. In Lacs Rs. In Lacs

2009-10 2008-09

(I) Bank Guarantees 13.05 44.25

(III) Excise Duty (F. Y. 2006-07) 3.07 3.07

10.Disclosure as required by Accounting Standard 19,"Leases". Issued by the institute of Chartered Accountants of India are given below:

(i) The Company has taken various Residential Flats & Other Premises under Operating lease or leave & license agreements. These are generally not non-cancelable and range between 11 month and 3years under leave and license or longer for other leases and are renewable by mutual consent on mutually agreeable terms. (ii) Lease payments are recognized in the statement of Profit & Loss Account under "Rent" in Schedule M. (Ill) The future minimum lease payments under non-cancelable operating lease-not later than one year. Rs. 16.64 Lacs. — Later than one year and not later than five years: Rs33.90 Lacs.

2. The Management has taken appropriate steps for recovery of debts which were considered as doubtful during the F.Y.2008-09.The Board has reviewed its decision during the year and its hopeful of recovering the dues from the debtors and hence the management has decided not to make any further provision for doubtful debts during the year.apart from the provisions made in the earlie year.

3. During the year.Company has written-off Sundry Balances of Rs.67,91,720/-(NET) out of various Creditors and Provisions which are not payable as decided by the Management which are shown in Other Income due to which losses are reduced by Rs.67,91,720/-

4. During the year company has issued 8,55,000, 6% cumulative redeemable preference shares of Rs. 10/- each to Kanchan Kichtenaid pvt. Ltd.and application money has been obtained during the year to the extent of Rs. 38.35 lacs towards preference shares which are allotted subsequently.


Mar 31, 2009

1. Contingent Liabilities

Rs. In Lacs Rs. In Lacs 2008-09 2007-08

(I) Bank Guarantees 44.25 40.16

(II) Disputed Income Tax Liabilities (AY 2006-07 ) 97.62 NIL

(III) Excise Duty (F.Y. 2006-07) 3.07 3.07

2. Related Party Information

(i) Relationship

(a) Individuals Controlling the Enterprise and Key Management Personnel

1. Mr.Dinesh C.Khimavt Managing Director

2. Mr.Bharat H.Pipalia Whole Time Director

3. Mr.C.S.Khimavat Non Executive Director

(b) Relatives of key Management Personnel

Mrs.Usha D.Khimavat Wife of Managing Director

(c) Subsidiary Company

Kanchan International Middle East F.Z.E. (100% Subsidiary)

(D) Enterprises in which key management Personnel & their Relatives are interested 1.Kanchan Kitchenaid Pvt.Ltd. 2.Kanchan Engineering Pvt.Ltd. 3.Marlex Appliances Pvt.Ltd. 4.Marlex Products Ltd.

3.Disclosure as required by Accounting Standard 19,"Leases". Issued by the institute of Chartered Accountants of India are given below:

(I) The Company has taken various Residential Flats & Other Premises under Operating lease or leave & license agreements. These are generally not non-cancelable and range between 11 month and 3years under leave and license or longer for other leases and are renewable by mutual consent on mutually agreeable terms.

(ii) Lease payments are recognized in the statement of Profit & Loss Account under "Rent" in schedule N.

(iii) The future minimum lease payments under non-cancelable operating lease-not later than one year. Rs. 16.98 Lacs. -Later than one year and not later than five years: Rs84.90 Lacs.

4. The Management has taken appropriate steps for recovery of debts which were considered as doubtful during the F.Y. 2007-08. The Board has reviewed its decision during the year and is hopeful of recovering the dues from the debtors, the response from the respective debtor is positive and the company has also recovered an amount of Rs. 64,65,426/- during the year. In view of the above the entire debts are considered as good debts and the management has decided not to make any further provision for doubtful debts during the year, apart from the provisions made in the earlier year.

5.Capital WIP capitalized to Furniture & fixtures pertains to capital expenses incurred on the leasehold premises occupied by the Company. Since item wise amount spent on respective assets are not available, all the capital expenditure is capitalized under the head of "Furniture & Fixture" and Depreciation has been provided accordingly.

6.The Authorised Share capital has been reclassified into equity and preference shares during the year. Share application money has been obtained during the year to the extent of Rs. 54.50 lacs towards preference shares which are allotted subsequently.

7. The Depreciation of earlier year wrongly provided excess in the books has been reversed during the year and transferred to prior period items.

8. Figures of the previous year have been regrouped, rearranged and recasted so as to make them comparable with the figures of the current year.

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