Notes to Accounts of Katare Spinning Mills Ltd.

Mar 31, 2015

1. Corporate Information

The company is engaged in the business of manufacturing of cotton yarn and is also engaged in hospitality business. The cotton yarn manufacturing unit is situated at Tamalwadi, Taluka Tuljapur District Osmanabad. It's Hotel viz. Hotel Tripursundari is situated at Civil Lines, Solapur.

2. Segment Reporting:

The company operates in two segments viz. Spinning Mill segment and Hotel segment.

Contingent Liabilities:

A provision is recognized when the company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at Balance Sheet Date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes.

3. Share Capital

a. Terms/rights attached to shares

The company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity share is entitled to one vote per share. The company declares and pays dividends in Indian Rupees.

In the event of liquidation of the company, the holders of equity shares will be entitled to receive the remaining assets of the company after distribution of all preferential amounts. The distribution will be in proportion to number of equity shares held by the shareholders.

b. Shares reserved for issue under options Nil

c. Employees Stock Option Scheme Nil

d. Bonus shares/Buy Back/Shares for consideration other than Nil cash issued during past five years

4. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.

5. Balances of Trade payables,Loans & advances & trade receivables have been taken as per books awaiting respective confirmation & reconciliation.

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Mar 31, 2014

1. Corporate information

The company is engaged in the business o; manufacturing of cotton yarn and is also engaged in hospitality business. The cottcn yarn manufacturing unit is situated at Tamalwadi, Taluka -Uilfcpur, District - Osman aba d and its hotel via1. Hotel Tripursundan is situated at solpur.

2. Term rights attached to shares

The tompa ny has on I y one ^tass 0 f eq li ity shares havi ng a pc r Lti per share, iath holder of equity share b'entitltiU tuunevoleper ihary. Theounpaiiy declares and pdysdivicterd ir TndMn Rupees. The dividend proposed by the Board of Drectcrs is subject to approval oh the soareiofders on the ensuing Anrual Gene'ai Meetirg. In th e even t -of I iqu 1 dat 0 n of the company, th e h oic ers of equity 1 ha res will be e ntitled to receive th e remaining assets of thin curnpar y after d strip jtiori uf all preferential amounts, Trre distributiun will be i n pm portion to num her of equity shares he d by th e sh amholders.

3 Additional nformation to Secured / Uosecured Bomowbg

The to-ig term ponton of term loans are shown under long term borrowing & current maturities of long term borrowing are shown jnd-cr the current liability, as per the disclosure lequircmcnts of the revised schedule VI

4 Details of Securities?! Termsof Repayment

a) Loan from Life Insurance Corporation of India is secured by an assignment of Director's Key-man Life insurance policies in their favor.

b) The cash cxed it I na n f t m oa nt of India i s secured by hypothication of all stock raw material stores work in progress finishing goods book debts.

Details of Securities^ Terms of Reoaymert

a. The cash credit loan fron Bank of India is secured by bypathLOCA on of ell stock of raw material, stones, wot tn process, finished goods, book debts, equitable mortgage of Hotti property & second charge on the immovable properties of the company situated a: Vi I age - Tamaiwadlj District -Osmanabad together with all buildings and structes thereon & all Plant & Machinery and joint aid several guarantee of the Directors 5 hri. V.T, Kata re. 5hn. K,T, katareand Shri 5, T Kata re.

b. Overd raft from ka mala Ca - op Bank is secu red against fh-i ed Deposi t with the sa id Bank.

Note 5 Contingent Liabilities:

a) Fpinnated amount of contracft. remainhlj to at? evecubed on Capital Account and not provided for amount worthofRs. N.L (Previous Year R5. NIl)

U] Provision fur gratuity is nvi made urt actuarial basis tier ice Vi liability till .tie erid or the yea' under aud t could not be ascertained.

Note 6 Disclosure of transactions with related parties :

The nones of related porbes

A. Key Management Personnel

Mr. VIjayT. Katane- Chairman StEvecutive Director

Mr KkhrrT Karar managing director

Mr. Subhash T. Kata re - Director

B. Re l£ Lives or K2y Ma na gemen c Personnel:

Mr. Sachm S. Katare

Mr. Rakc5h V, Katare

C. ALSuciaLe Euler |jt iscs.

Kamala Marketing Pnvate Li-mitec

M/s Katane Cotton Waste Spinn.ng Mills

Company has made provision for defe-red tax dab lity as above

Note 7 Previous year's figures have been negrerupcd/rcclsssificd wherever necessary to corrcspen d wth the cu rrent yea r 5 classfication discloure.

Note 8: Balances otTrade payables, Loans & advances & trade receivaoles nave been taken as per hocks awartirg respective conFi rmatisn & reconciliation

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Mar 31, 2013

1.0 Corporate information

The company is engaged in the business of manufacturing of cotton yam and is also engaged in hospitality business. The cotton yarn manufacturing unit is situated at Tamalwadi, Taluka - Tuljapur, District - Osmanabad and its hotel viz. Hotel Tripursundari is situated at Solapur.

Note 2: Contingent Liabilities:

a) Estimated amount of contracts remaining to be executed on Capital Account and not provided for amount worth of Rs. NIL (Previous Year Rs. NIL).

b) Provision for gratuity is not made on actuarial basis hence its liability till the end of the year under audit could not be ascertained.

Note 3: Disclosure of transactions with related parties : »

The names of related parties are,

A. Key Management Personnel

Mr. Kishor T. Katare (Managing Director)

Mr. Vijay T. Katare (Executive Director)

B. Relatives of Key Management Personnel

Mr. Sachin S Katare ''

Mr. Rakesh V Katare

C. Associate Enterprises Kamal Marketing Private Limited

M/s Katare Cotton Waste Spinning Mills

Company has made provision for deferred tax liability as above

Note 4: The revised schedule VI has become effective from 1st April 2011 for the preparation of financial statements. This has significantly impacted the disclosure & presentation made in financial statements. Previous year''s figures have been regrouped/reclassified wherever necessary to correspond with the current year''s classification/disclosure.

Note 5: Balances of Trade payables, Loans & advances & trade receivables have been taken as per books awaiting respective confirmation & reconciliation.

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Mar 31, 2012

1 Corporate information

The company is engaged in the business of manufacturing of cotton yarn and is also engaged in hospitality business. The cotton yarn manufacturing unit is situated at Tamalwadi, Taluka - Tuljapur, District - Osmanabad and its hotel viz. Hotel Tripursundari is situated at Solapur.

a. Terms/rights attached to shares

The company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity share is entided to one vote per share. The company declares and pays dividends in Indian Rupees. The dividend propsoed by die Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the company, the holders of equity shares will be entided to receive the remaining assets of die company after distribution of all preferential amounts. The distribution will be in proportion to number of equity shares held by the shareholders.

2.1 Additional information to Secured/Unsecured Borrowings

The long term portion of term loans are shown under long term borrowings & current maturities of long term borrowings are shown under the current labia. as per the disclosure requirements of the revised schedule VI.

2.2 Details of Secunities & Terms of Repayment

a. The term loan from Bank of India is secured by hypothecation of all stock of raw material, stores, work in process, finished goods, book debts, equitable mortgage of Hotel property & second charge on the immovable properties of the company situated at Village - Tamalwadi, District - Omarabad together with all buildings and striates thereon & all Plant & Machinery and joint and several guarantee of the Directors Shri V.T. Katare, Shri K. T. Katare and Shri S T Kotare.

b. Loan from Life Insurance Corporation of India is secured by an assignment of Director's Key-man Life insurance policies in their favor.

Details of Securities & Terms of Repayment

a. The cash credit loan from Bank of India is secured by hypothecation of all stock of raw material, stores, work in process, finished goods, book debts, equitable mortgage of Hotel property & second charge on the immovable properties of the company situated at Village - Tamalwadi, District - Osmanabad together with all buildings and structes thereon & all Plant & Machinery and joint and several guarantee of the Directors Shri V.T. Katare, Shri K. T. katare and Shri S T Katare.

Note 3: Contingent Liabilities:

a) Estimated amount of contracts remaining to be executed on Capital Account and not provided for amount worth of Rs. NIL (Previous Year Rs. NIL)

b) Provision for gratuity is not made on actuarial basis hence its liability till the end of the year under audit could not be ascertained.

c) The company had availed term loan from ICICI Bank Ltd. for which company's proposal of One Time Settlement at Rs. 350 lacs was accepted against which company made part payments. Meantime ICICI Bank Ltd. assigned the said account to Kotak Mahindra Bank Ltd. and as per the order of Hon. High Court Mumbai, the company deposited Rs. 316 lacs with the High Court, Mumbai. According to company there is no outstanding balance of ICICI Bank Ltd. In the meantime Kodak Mahindra Bank Ltd. filed an application with Debt Recovery Tribunal, Pune for balance payment and DRT issued an order against the company. Company has filed review petition before Debt Recovery Appellate Tribunal, Mumbai which is pending. Kodak Mahindra Bank Ltd. again filed winding up petition with High Court, Mumbai for recovery and the Hon. High Court Mumbai has ordered the company to deposit Rs. 325 lacs against the case in Debt Recovery Appellate Tribunal, Mumbai and has set aside the winding up. The company has deposited the said amount of Rs. 325 lacs in stipulated time.

d) Based on the OTS as acceded in principal by ICICI at Rs. 350 lacs, interest payable till 31.03.2002 was written off and the balance amount of principal loan was transferred to Capital Reserve. In view of the above total dues payable are not ascertained and No provision is made for dues comprising of principle amount of Term Loan and interest payable thereon for the financial year ending on 31.03.2002 to 31.03.2012.

Note 4: Disclosure of transactions with related parties:

The names of related parties are,

A. Key Management Personnel

Mr. Kishor T. Katare - Managing Director Mr. Vijay T. Katare - Executive Director

B. Relatives of Key Management Personnel: Mr. Sachin S Katare

Mr. Rakesh V Katare

C. Associate Enterprises:

Kamal Marketing Private Limited

M/s K atare Cotton Waste Spinning Mills

Company has made provision for deferred tax liability as above.

Note 5: The revised schedule VI has become effective from 1st April 2011 for the preparation of financial statements. This has significantly impacted the disclosure & presentation made in financial statements. Previous year's figures have been regrouped/reclassified wherever necessary to correspond with the current year's classification/disclosure.

Note 5: Balances of Trade payables, Loans & advances & trade receivables have been taken as per books awaiting respective confirmation & reconciliation.

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Mar 31, 2010

1. CONTINGENT LIABILITIES:

a) Estimated amount of contracts remaining to be executed on Capital Account and not provided for amount worth of Rs. NIL (Previous Year Rs. NIL)

b) Provision of gratuity is not made on actuarial basis hence its liability till the end of the year under audit could not be ascertained.

c) No provision for dues comprising of principle amount of Term Loan payable to ICICI and interest thereon, which ICICI Bank Limited has assigned in favour of Kotak Mahindra Bank Limited, and Debts Recovery Tribunal, Pune passed an order for Recovery Certificate in favour of it for recovery of Rs. 8.67 millieme together with interest At 10% p.a. from 8th April 2004 till the realization of amount.

The company has preferred an appeal before the Debt Recovery Appellate Tribunal, Mumbai against the said order. Therefore total dues payable are not ascertained.

2) Balances of receivables & payables are subject to confirmation and reconciliation, if any. However the Company has dispatched the confirmation letters and in a very few cases confirmations are responded.

3) a) The Term Loan from the ICICI Ltd. is secured by a first mortgage and charge on all the Companys immovable and movable properties, both present and future, save and except book debts, subject to the charges created/to be created in favour of the companys bankers on current assets for securing borrowings for Working Capital requirements, and shall rank pari-passu with the mortgages and charges created and/or to be created in favour of banks and institution, pledge of the shares of the nominal value of Rs. 171.04 lakhs held by promoters and their associates in Katare Spinning Mills Ltd. and the personal guarantee of Mr. K.T. Katare, Managing Director of the company.

b) The Cash Credit Loan, Working Capital Term Loan and FITL from Bank of India are secured by hypothecation of all stock of raw materials, stores, work in process, finished goods, book debts, equitable mortgage of Hotel Property and second charge on the immovable properties of the Company situated at Village - Tamalwadi, District -

Osmanabad together with all buildings and structures thereon and all Plant and Machinery and joint and several guarantee of the Directors Shri V. T. Katare, Shri K. T. Katare and Shri S. T. Katare.

c) Overdraft from Kamala Co-op Bank Ltd. is secured against Fixed Deposit with the said Bank.

d) Loan from Life Insurance Corporation of India is secured by an assignment of Directors key-man life insurance policies in their favour.

4) a) ICICI in principal had agreed to accept the Companys proposal of one time settlement of its dues at Rs. 35 millions which was to be paid by 31st March, 2003 and accordingly interest payable till 31.03.2002 was written off and the balance amount of principal loan was transferred to Capital Reserve and moreover no provision of interest for the financial year ending on 31.03.2002 to 31.03.2010 was made. The company has paid a sum of Rs. 350 lacs (including Rs. Nil paid during the year under audit) till financial year ending on 31.03.2010. As per judgment of Hon. High Court, Mumbai, company was to deposit Rs. 26 lacs per month till the amount of deposit aggregates to Rs. 35 millions before December 2007 and the company has paid all the stipulated installments in full.

5) In accordance with the Memorandum of Understanding, the equity shares having the face value of Rs. 11,91,400/- comprising of 119140 equity shares of Rs. 10/- each of The Rayalseema Mills Ltd. are agreed to sale to M/s. L.V. Krishna Reddy Group and received a sum of Rs. 76,00,000/- as an advance. However, these shares are not still transferred to the said group due to non-payment of the agreed consideration in full. Pending transfer in the name of the said group, those shares are given for pledge to Bank of India against security for financial assistance already granted to The Rayalseema Mills Ltd.

6) No provision for bad and doubtful debts of Rs. 1,08,80,964/- is made in the accounts against receivables, as the management is still pursuing its recovery.

7) There were no earlier years expenses written off for the year under review as well as in previous year.

I. DISCLOSURE OP TRANSACTIONS WITH RELATED PARTIES:

The name:-- of related parties are,

A. Key Management Personnel

Mr. Kishor T. Katare - Managing Director

Mr. Vijay T. Katare - Executive Director

B. Relatives of Key Management Personnel:

Mr. Sachin S Katare

Mr. Rakesh V Katare

C. Associate Enterprises:

Kamal Marketing Private Limited

M/s Katare Cotton Waste Spinning Mills

8) In the absence of particulars about listing and quoted price of shares of The Rayalseema Mills Limited, the market value of these shares could not be stated.

9) There are no dues payable to the suppliers who constitute small-scale undertakings exceeding Rs. 1 lacs, which is outstanding for more than 30 days. The information in respect of the dues to small scale industries have been determined to the extent such parties has been identified on the basis of information available with the company.

10. Figures for the previous year have been re-casted and regrouped wherever necessary.

11. Information in respect of capacity, production, consumption etc. is enclosed herewith separately.