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Notes to Accounts of Kanco Enterprises Ltd.

Sep 30, 2014

(i) Nature of Security

(A) Secured against joint equitable mortgage of all immovable properties both present and future ranking pari passu inter se and Hypothecation of all movable properties both present and future (Save and Except Book Debts) including movable machinery machinery spares, tools and accessories, subject to prior charge created and/or to be created in favour of Company''s Bankers for Working Capital Facilities.

(iv) During the previous year State Bank of India and IDBI bank has recalled the loan on account of breach of loan covenant, while, so the same loans have been classified as current maturities of long term borrowings for the current year. Interest has been provided as per last communicated rates or at the rate debited by Bank.

(v) Includes Rs. 25,000/- (Previous Year Rs. 25,000/-) payable to Director.

(1) Valued at cost or net realizable value whichever is lower

(2) Valued at cost

(3) At Net realisable value

(a) Excludes inventory of cotton Rs. 5,37,18,385/- (net of VAT Rs. 26,66,596/-) [P.Y. Rs. 6,82,80,224/- (net of VAT Rs. 34,14,0121-)] for the current year, lying with the Company in respect of which, as per the terms of purchase agreement, the property in and title of goods shall continue with the suppliers until and to the extent payment is not made to them.

(b) in view of (a) above, unpaid suppliers of cotton as at September 30, 2014 amounting ^5,99,99,140/- (P.Y. Rs.6,98,03,788/-)whose material have been consumed on or before September 30, 2014 have lien over the work- in-progress and finished goods produced out of consumption of those cotton, to the extent of the outstanding amount due to them.

2. OTHER NOTES TO ACCOUNTS

(a) Contingent Liabilities and Commitments (to the extent not provided for) (Amount in Rs.)

As at 30.09.2014 As at 30.09.2013

(i) Contingent Liabilities

(a) Claims against the Company not acknowledged as debt - Labour Matters 10,27,271 5,65,877

(b) Losses on account of foreign exchange difference, excluding interest, 11,78,81,338 11,78,81,338 if any, on unilateral cancellation of Forward Contract by State Bank of India without authorisation form the Company for which the Company has filed a suit in the Hon''ble High Court at Calcutta against the Bank. The said suit has been transfered to the City Civil Court in Ahmedabad pursuant to the order dated 18th day of August 2014 of Calcutta High Court.

11,89,08,609 11,84,47,215 (ii) Commitments

Estimated amount of contracts remaining to be executed on 15,00,000 - Capital Account and not provided for

15,00,000 -

12,04,08,609 11,84,47,215



(b) As of the Balance Sheet date, the Company''s net foreign currency exposures that are not hedged by a derivative instrument or otherwise is Rs. Nil (PY Rs. Nil)

(c) Segment Reporting

In accordance with the requirements of Accounting Standard 17 - ''Segment Reporting'' the Company has determined its business segment as Textile Products. Since 100% of the Companys'' business is from Textile Products, there are no other primary reportable segments. Thus the segment revenue, segment results, total carrying amount of segment liabilitites, total cost incurred to acquired segment assets, the total amount of charge for depreciation and amortisation during the year are all as reflected in the financial statements for the year ended September 30, 2014 and as on that date. Also there being no business outside India, the entire business has been considered as single geographic segment.

(g) Disclosure pursuant to Accounting Standarad -15 (Revised) "Employee Benefits": a. Defined Contribution Plans :

Amount of Rs. 66,99,302/- (Previous year Rs. 63,53,416/-) is recognised as expense and included in "Employee Benefits Expenses" in Note - 21 to the Statement of Profit & Loss.

(h) Related Party Disclosures

Related party disclosures, as required by AS-18 "Related Party Disclosures", are given below:

1. Relationships:

(i) Key Management Personnel and their relatives :

Mr. Umang Kanoria Ms. Stuti Kanoria

Mrs. Anuradha Kanoria Master Satvik Kanoria (ii) Enterprises over which the key management personnel and/or their relatives have significant influence :

B.T. Investments Pvt. Ltd. Innova Properties Pvt. Ltd.

Cosmos Resources Pvt. Ltd. Milan Agencies Pvt. Ltd.

Kanco Tea & Industries Ltd. Nidhi Pvt. Ltd.

E.T. Resources Pvt. Ltd. OCL Investments & Leasing Ltd.

Facitcon Investments Pvt. Ltd. ST. Investment Pvt. Ltd.

Suryasakti Commodities Pvt. Ltd.

(i) The Company''s appeal filed on 18/01/2013 in Appellate Authority for Industrial and Financial Reconstruction u/s 25(1) of the Sick Industrial Companies (Special Provisions) Act,1985 (SICA, 1985) for reference bearing no.3/2012 filed u/s 15(1) of the SICA, 1985 against the order passed by the Board of Industrial and Financial Reconstruction (BIFR) is pending. The Company''s reference bearing no.6/2014 filed u/s 15(1) of SICA, 1985 filed with BIFR is also pending.

Q) The Company has accumulated losses of Rs. 76,31,01,034/- as on September 30, 2014, resulting in complete erosion of its net worth. The Company has no specific plan to wind up its operations in the near future. The management is of the view that long term prospects of the Company appear better with overall turnaround in the textile industry, stability in the cotton price. In view of this the financial statement have been prepared on a going concern basis.

In addition to this management also expect reliefs/concessions on sanction of rehabilitation/ revival package by the Board of Industrial and Financial Reconstructions ( BIFR) as company is already involved in discussion with its lenders for this purpose which will help the Company to run its operations in coming years.

(k) The previous period figures have been regrouped/reclassified, wherever necessary to conform to the current year presentation.


Sep 30, 2013

(1) The Company has not received any intimation from the suppliers regarding status under the Micro, Small & Medium Enterprises Development Act, 2006 (The Act) and hence disclosures regarding : a) Amount due and outstanding to suppliers as at the accounting period, b) Interest paid during period, c) Interest payable at the end of the accounting period and d) Interest accrued at the end of accoutning period, has not been disclosed or provided.

2. OTHER NOTES TO ACCOUNTS

(a) Contingent Liabilities and Commitments (to the extent not provided for)

(Amount in Rs.)

As at 30.09.2013 30.09.2012

(i) Contingent Liabilities

(a) Claims against the Company not acknowledged as debt Labour Matters 5,65,877 3,35,231

(b) Losses on account of foreign exchange difference, excluding interest, 11,78,81,338 11,78,81,338 if any, on unilateral cancellation of Forward Contract by State Bank of

India without authorisation form the Company for which the Company has filed a suit in the Hon''ble High Court at Calcutta against the Bank.

11,84,47,215 11,82,16,569

(ii) Commitments

Estimated amount of contracts remaining to be executed on 4,23,45,734 Capital Account and not provided for 4,23,45,734

11,84,47,215 16,05,62,303

(b) As of the Balance Sheet date, the Company''s net foreign currency exposures that are not hedged by a derivative instrument or otherwise is Rs. Nil (PY Rs. Nil)

(c) Segment Reporting

In accordance with the requirements of Accounting Standard 17 ''Segment Reporting'' the Company has determined its business segment as Textile Products. Since 100% of the Companys'' business is from Textile Products, there are no other primary reportable segments. Thus the segment revenue, segment results, total carrying amount of segment liabilitites, total cost incurred to acquired segment assets, the total amount of charge for depreciation and amortisation during the year are all as reflected in the financial statements for the year ended September 30, 2013 and as on that date.

SIGNIFICANT ACCOUNTING POLICIES AND OTHER NOTES TO ACCOUNT (Contd.)

(a) The Company''s appeal filed on 18/01/2013 in Appellate Authority for Industrial and Financial Reconstruction u/s 25(1) of the Sick Industrial Companies (Special Provisions) Act,1985 (SICA, 1985) for reference bearing no.3/2012 filed u/s 15(1) of the SICA, 1985 against the order passed by the Board of Industrial and Financial Reconstruction (BIFR) is pending. The Company''s reference bearing no.6/2013 filed u/s 15(1) of SICA, 1985 filed with BIFR is also pending.

The Company has accumulated losses of Rs. 66,45,49,107/ as on September 30, 2013, resulting in complete erosion of its net worth. The Company has no specific plan to wind up its operations in the near future. The management is of the view that long term prospects of the Company appear better with overall turnaround in the textile industry, stability in the cotton price. In view of this the financial statement have been prepared on a going concern basis.

In addition to this management also expect reliefs/concessions on sanction of rehabilitation/ revival package by the Board of Industrial and Financial Reconstructions ( BIFR) as company is already involved in discussion with its lenders for this purpose which will help the company to run its operations in coming years.

(B) The previous period figures have been regrouped/reclassified, wherever necessary to conform to the current year presentation.


Sep 30, 2012

(a) Terms/Rights attached to Equity Shares

The Company has one class of equity shares having a par value of f 10 per share. Each shareholder is eligible for one vote per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

(i) Nature of Security

(A) Secured againstjoint equitable mortgage of all immovable properties both present and future ranking pari passu inter se and Hypothecation of all movable properties both present and future (Save and Except Book Debts) including movable machinery, machinery spares, tools and accessories, subject to prior charge created and/or to be created in favour of Company''s Bankers for Working Capital Facilities.

(B) Loans are guaranteed by the Manging Director.

(C) Secured by Hypothecation of Motor Cars purchased against said loans.

(a) Contingent Liabilities and Commitments

(to the extent not provided for) (Amount in Rs.) As at 30.09.2012 30.09.2011

(i) Contingent Liabilities

(a) Claims against the Company not acknowledged as debt - Labour Matters 3,35,231 2,28,950

(b) Bills Discounted (Since Realised) 8,03,00,066

3,35,231 8,05,29,016

(ii) Commitments

Estimated amount of contracts remaining to be executed on

Capital Account and not provided for 4,23,45,734 4,14,95,104

4,23,45,734 4,14,95,104

4,26,80,965 12,20,24,120

(b) As of the Balance Sheet date, the Company''s net foreign currency exposures that are not hedged by a derivative instrument or otherwise is as follows :

Trade Receivable USD 6,22,847

INR 3,06,25,986

(c) Segment Reporting

In accordance with the requirements of Accounting Standard 17 - "Segment Reporting" the Company has determined its business segment as Textile Products. Since 100% of the Companys'' business is from Textile Products, there are no other primary reportable segments. Thus the segment revenue, segment results, total carrying amount of segment liabilitites, total cost incurred to acquire segment assets, the total amount of charge for depreciation and amortisation during the year are all as reflected in the financial statements for the year ended September 30, 2012 and as on that date.

(D) Disclosure pursuant to Accounting Standarad -15 (Revised) "Employee Benefits": a. Defined Contribution Plans :

Amount of f54,35,295/- (Previous period f28,77,557/-) is recognised as expense and included in "Employee Benefits Expenses" in Note - 21 to the Statement of Profit & Loss.

(E) The Company has decided to file an appeal u/s 25(1) the Sick Industrial Companies (Special Provisions) Act,1985 against the order passed by the Board of Industrial and Financial Reconstruction (BIFR) for reference bearing no.3/2012 filed u/s 15(1) of the SICA,1985 on 13/01/2012.

(F) The Company has incurred accumulated loss of f65,34,55,528/- as on September 30, 2012, which has resulted in erosion of its net worth by more than 100%. The Company will make a fresh reference u/s 15(1) of the SICA,1985 along with a rehabilitation scheme to the BIFR.The Company has no specific plan for windup operations in the near future. The Management, on the basis of Techno Economic Viability study conducted by an approved consultant, looking into the stability in the cotton price and overall turnaround in the Textile Industry, believes that it will have sufficient funds to meet its liability for the next twelve months and hence continue to present its financial statements on going concern basis.

(G) During the year ended 30th September, 2012, State Bank of India(SBI) has unilaterally cancelled the forward contracts and debited f 11,78,81,338/-, being the losses on account of foreign exchange difference, excluding interest, if any, into our Cash Credit Account without any authorization from us. The Company is not in agreement with the action taken by the SBI and have already lodged its objection with SBI. The Company therefore disputes the forex losses and has not recognized the same in its Books of Accounts.

(H) The previous period figures have been regrouped/reclassified, wherever necessary to conform to the current year presentation. The figures for the previous period are for the period of six months and are thus not comparable with current year figures.


Mar 31, 2011

31st March, 2011 31st March, 2010

(1) Contingent Liabilities not provided for: Rs (000) Rs (000)

a) Claims against the Company not acknowledged as debts - Labour Matters 27,89 2,32

b) i) Bills discounted 3,36,72 10,16,40

ii) Since realised 1,72,42 8,52,87

(2) The Company has not received any intimation from the suppliers regarding status under the Micro, Small & Medium Enterprises Development Act, 2006 (The Act) and hence disclosures regarding : a)Amount due and outstanding to suppliers as at the accounting year, b)Interest paid during year, c) Interest payable at the end of the accounting year and d) Interest accrued at the end of accoutning year, has not been disclosed or provided.

The Company is making efforts to get the confirmations from the suppliers as regards their status under the Act.

(3) In accordance with the requirements of Accounting Standard 17 - "Segment Reporting" the Company has determined its business segment as Textile Products. Since 100% of the Companys business is from Textile Products, there are no other primary reportable segments. Thus the segment revenue, segment results, total carrying amount of segment liabilitites, total cost incurred to acquired segment assets, the total amount of charge for depreciation and amortisation during the year are all as reflected in the financial statements for the year ended March 31, 2011 and as on that date.

(4) Disclosure pursuant to Accounting Standard -15 (Revised) "Employee Benefits":

The Company during the year, has adopted Accounting Standard 15 (revised) "Employee Benefits" issued by the Institute of Chartered Accountants of India.

a. Defined Contribution Plans:

Amount of Rs 57,19 (Previous year Rs 51,36) is recognised as expense and included in "Payments to and Provision for Employees" in Schedule-18 to the Profit & Loss Account.

b. Defined Benefit Plans :

The Estimates ot future salary increases considered in acruanal valuation takes into account inflation, seniority, promotion and other relevant factors.

vi. Amount recognised as an expense in respect of Compensated Leave Absences is Rs 12,46.

c. Current year figures are given by LIC after giving effect of adjustment on account of demerger of Tea division of the Company during previous year and same has been adjusted from current year.

(5) Related Party Disclosures

Related party disclosures, as required by AS-18 "Related Party Disclosures" are given below :

1. Relationships :

i) Key Management Personnel and their relatives :

Mr. Umang Kanoria Miss Stuti Kanoria Mr. G. R. Basotia (upto31.12.2010) Mrs. Anuradha Kanoria Master Satvik Kanoria

ii) Enterprises over which the key management personnel and/or their relatives have significant influence :

B. T. Investments Pvt. Ltd. Innova Properties Pvt. Ltd.

Cosmos Resources Pvt. Ltd. Milan Agencies Pvt. Ltd.

Kanco Tea & Industries Limited Nidhi Pvt. Limited

(Formerly known as Dhanvaridhi Concerns Ltd.) OCL Investments & Leasing Ltd.

E.T. Resources Pvt. Ltd. S. T. Investment Pvt. Ltd.

Facitcon Investments Private Limited Suryasakti Commodities Pvt. Ltd.

(6) Deferred Tax Asset on account of unabsorbed depreciation has been recognised by the Company as prudent because Company has gone for a major expansion consisting of forward integration and increase in capacity, which would considerably increase its future profitability.

(7) Previous year figures have been regrouped / rearranged whereever necessary.


Mar 31, 2010

31st March,2010 31st March,2009

(1) Contingent Liabilities not provided for: Rs.(000) Rs.(000)

a) Claims against the Company not acknowledged as debts - Labour Matters 2,32 6,04

b) i) Bills discounted 10,16,40 7,24,55

ii) Since realised 8,52,87 2,25,44

c) Irrevocable Stand by Revolving Letter of Credit - 4,19

(2) Estimated amount of contracts remaining to be executed on capital account for Rs.4,14,95 (Previous Year Rs.4,13,33 ) but not provided for.

(3) The Company has not received any intimation from the suppliers regarding status under the Micro, Small & Medium Enterprises Development Act, 2006 (The Act) and hence disclosures regarding : a) Amount due and outstanding to suppliers as at the accounting year, b) Interest paid during year, c) Interest payable at the end of the accounting year and d) Interest accrued at the end of accoutning year, has not been disclosed or provided.

The Company is making efforts to get the confirmations from the suppliers as regards their status under the Act.

(4) In accordance with the requirements of Accounting Standard 17 - "Segment Reporting" the Company has determined its business segment as Textile Products. Since 100% of the Companys business is from Textile Products, there are no other primary reportable segments. Thus the segment revenue, segment results, total carrying amount of segment liabilitites, total cost incurred to acquired segment assets, the total amount of charge for depreciation and amortisation during the year are all as reflected in the financial statements for the year ended March 31, 2010 and as on that date.

(5) Disclosure pursuant to Accounting Standard -15 (Revised) "Employee Benefits":

a. The Company during the year, has adopted Accounting Standard 15 (revised) "Employee Benefits" issued by the Institute of Chartered Accountants of India.

b. Defined Contribution Plans : Amount of Rs. 51,36 (Previous year Rs. 88,33) is recognised as expense and included in "Employees Emoluments" in Schedule-18 to the Profit & Loss Account.

(6) Related Party Disclosures

Related party disclosures, as required by AS-18 "Related Party Disclosures" are given below : 1. Relationships:

i) Key Management Personnel and their relatives :

Mr. Umang Kanoria Miss Stuti Kanoria Mr. G. R. Basotia

Mrs. Anuradha Kanoria Master Satvik Kanoria

ii) Enterprises over which the key management personnel and/or their relatives have significant influence :

B. T. Investments Pvt. Ltd. Milan Agencies Pvt. Ltd. Cosmos Resources Pvt. Ltd. Nidhi Pvt. Limited E.T. Resources Pvt. Ltd. OCL Investments & Leasing Ltd. Facitcon Investments Private Limited S. T. Investment Pvt. Ltd. Innova Properties Pvt. Ltd. Suryasakti Commodities Pvt. Ltd. Kanco Tea & Industries Limited (Formerly known as Dhanvaridhi Concerns Ltd.)

(7) Arrangement between Dhanvaridhi Concerns Limited (DCL) with Kanco Enterprises Limited ("the Company") : In accordance with the Scheme of Arrangement (the Scheme) between the Company with DCL as approved by the members, at a court convened meeting held on October 7, 2009, the Honorable High Court of Judicature at Calcutta, vide its Order dated, March 10, 2010, sanctioned the following :

(i) The Tea Division of the Company, being all its assets and properties, both movable and immovable, industrial and other licenses, trademarks, all other interests, rights and powers of every kind, etc., and all its debts, liabilities, duties and obligations, has been transferred to and vested in DCL with effect from April 01, 2009 (the appointed date). The Scheme has accordingly been given effect to in these accounts.

(ii) On account of the said demerger, the Company has transferred all the assets and liabilities of the Tea Division to DCL at their book values as at April 01, 2009. As stipulated in the Scheme of Arrangement, difference arising out of this transfer has been adjusted to General Reserves Account.

(iii) On account of giving the effect of the Scheme, in these accounts, current year figures do not contain figures of Tea Division and so, are not comparable with previous year figures.

(8) Deferred Tax Asset on account of unabsorbed depreciation has been recognised by the Company as prudent because Company has gone for a major expansion consisting of forward integration and increase in capacity, which would considerably increase its future profitability.

(9) Previous year figures have been regrouped / rearranged whereever necessary.


Mar 31, 2009

Disclosure pursuant to Accounting Standarad -15 (Revised) "Employee Benefits":

a. The Company during the year, has adopted Accounting Standard 15 (Revised) "Employee Benefits" issued by the Institute of Chartered Accountants of India.

b. Defined Contribution Plans :

Amount of Rs.88,33 (Previous Year Rs.85,77) is recognised as expense and included in "Payments to and Provision for Employees" in Schedule -17 to the Profit & Loss Account.

c. Defined Benefit Plans :

1. Note No. 11 of Schedule 20 Related Party Disclosures

Related party disclosures, as required by AS-18 "Related Party Disclosures" are given below : 1. Relationships:

i) Key Management Personnel and their relatives :

Mr. Umang Kanoria Miss Stuti Kanoria Mr. G. R. Basotia

Mrs. Anuradha Kanoria Master Satvik Kanoria

ii) Enterprises over which the key management personnel and/or their relatives have significant influence :

B. T. Investments Pvt. Ltd. Facitcon Investments Pvt. Ltd. OCL Investments & Leasing Ltd.

Cosmos Resources Pvt. Ltd. Innova Properties Pvt. Ltd. S. T. Investment Pvt. Ltd.

Dhanvaridhi Concerns Ltd. Milan Agencies Pvt. Ltd. Suryasakti Commodities Pvt. Ltd.

E. T. Resources Pvt. Ltd. Nidhi Pvt. Limited

C. Notes :

i) The Company is operating under two main business segments namely Tea and textile.

ii) Segment revenue in each of the business segments primarily includes sales (net of excise duty as applicable), commission and service charges and export incentives.

iii) The expenses which are not directly attributable to the business segment are shown as unallocated expenditure.

iv) Segment assets include all operating assets used by the business segment and consist principally of fixed assets, debtors and inventories. Segment liabilities primarily include creditors and other liabilities.

v) Segment revenue by geographical area is based on geographical location of customers.

2. Note No. 15 of Schedule 20

Deferred Tax Asset on account of unabsorbed depreciation has been recognised by the Company as prudent because it has gone for a major expansion consisting of forward integration and increase in capacity at its textile division, which would considerably increase its future profitability.

3. Note No. 16 of Schedule 20

Previous year figures have been regrouped / rearranged wherever necessary:-

 
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