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Notes to Accounts of Kesar Petroproducts Ltd.

Mar 31, 2015

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Mar 31, 2014

1. CONTINGENT LIABILITIES

Details of Contingent Liabilities As at 31st March

2014 2013

Rupees Rupees in Lacs in Lacs

a. Guarantee given by the company''s Bankers and Counter guaranteed by the company Nil Nil

b. Claims against the company not acknowledged as Debts Nil Nil

c. Service Tax demand under dispute Nil 83.43

d. Custom Duty payable in respect of goods imported against Advance License pending Export Obligations** Nil 967.00

e. Interest and penalties under Employees PF & Misc Provisions Act, 1952 3.64 3.64

f. Claim by one of the erstwhile Director as Salary 18.00 18.00

g. Income Tax demand under appeal*** 200.29 282.44

** During the previous year the company has been served with an intimation by the DGFT for a claim pending in respect of goods imported against Advance License pending Obligation amounting to Rs. 967.00 Lacs. The management has informed that the matter stands dissolved and the claim stands withdrawn.

*** During the earlier years the company had been served with an order u/s 271 (1) (c) & subsequent demand u/s 156 under the Income Tax Act, 1961 for the aforementioned periods; AY 2002-03 for Rs. 4,42,098/-, AY 2003-04 for Rs. 3,72,195/-, AY 2007-08 for Rs. 1,92,07,921/-. The company has preferred an appeal with the Income tax appealte Tribunal for AY 2002-03 and 2003-04 and appeal is pending with commissioner of Income - Tax(Appeals) for AY 2007-08.

1. The Company has been declared out of the purview of the Sick Company''s definition

During the year, the company has been declared out of the purview of the Sick Companies definition as per BIFR Order No: 215/2004 dated 09/12/2013. Accordingly the Net worth of the company has been restored and turned positive and also during the current and the previous year, the company has reported substantial profits from operations.

2. Secured Loans

a. Loans from Financial Institutions assigned to the New Promoters are secured by equitable mortgage of immovable assets (excluding Housing Colony), hypothecation of all the company''s moveable assets, (except Book Debts), both present & future, personal guarantees of the then Managing Director and a charge upon the assets of the company as per the Deeds of Assignment duly entered into by the company which exceed over Rs. 6500.00 Lacs in favour of the Secured Lenders per se.

b. Other Secured Loans from M/s. Malvika Harbopharma (P) Ltd are secured by a 1st charge upon all the Fixed Assets including the Housing Colony.

c. Loans from M/s. Invent Assets Reconstruction Company Limited are secured by a 2nd charge upon all the Fixed Assets.

M/s. Invent Assets Reconstruction Company Limited (IARCL) has initiated recovery procedure under the provisions of the Securitization &Reconstruction Of Financial Assets &Enforcement Of Security Interest Act, 2002 wherein it has taken possession of the Residential Colony located at Lote, Ratnagiri. The possession by IARCL has been in consultation with the 1st charge holders M/s. Malvika Harbopharma Private Limited who retain the say in all the settlement of dues of the said loans.

d. Loans from Canara Bank is secured by a 2nd charge upon all the Fixed Assets which is to the tune of approx 3.93 Crores including the interest and by personal guarantee of the Director, Mr. Sanjay Bagrodia

3. The Company follows Accounting Standard (AS22) "Accounting for Taxes on Income" as notified by Companies Accounting Standard Rules, 2006. The Company has deferred tax liability with difference in depreciation in block of fixed assets as per tax books and financial books. The calculations of deferred tax liability is as under.

4. The balances reflected in the accounts of Sundry Debtors, Loans and Advances, secured loans from financial institutions and bank and sundry creditors are subject to confirmation/reconciliation and the consequential adjustment, if any. As the company''s Account/facilities with balance confirmation for the period thereafter from such lenders under secured loan is not yet received.

5. There are no dues to enterprise as defined under clause (m) of section 2 of the Micro, Small & Medium Enterprises Development Act, 2006 remaining outstanding for more than 45 days as at 31st March, 2014 which having been identified by the management and relied upon by the auditors.

6. As the company''s business activities fall within a single segment i.e. Chemicals, the disclosure requirement of Accounting Standard - 17 on Segment Reporting as issued by the Institute of Chartered Accountants of India is not applicable. During the year the company has undertaken trading and manufacturing of Chemical & Intermediates Goods, which are within the above described segment.

7. Disclosure regarding parties and transactions as required by AS - 18 issued by the Institute of Chartered Accountants of India are as under:-

A. NAME OF RELATED PARTY AND THEIR RELATIONSHIP

i) Associate Company

Nil

ii) Directors

Shri Nazirsaheb M. Sayyed Shri. Mohit Kaushik Shri Sunil Sawant

iii) Relatives of Key Managerial Personnel

Nil

B. TRANSACTIONS WITH RELATED PARTY:

The company has not entered into any transactions with related party within the meaning of Accounting Standard 18 "Related Parties Disclosure".

8. Test as required under Accounting Standard - 28 relating to Impairment of Assets have been carried out. The Company assessed at the Balance Sheet date, the value of the Fixed Assets in order to comply with the provisions of A.S - 28. The Company is of the opinion that the assets of the Company will generate adequate benefits in future. The Company has arrived to this opinion considering the present condition of the assets and its withstanding capacity even for increased capacity by four times to that of present capacity. The Company has also considered net cash flow before tax and also present value of future cash flow. The future cash flows were taken into account based on the budgeted turnovers fixed for future years in recent budget meeting.

In view of expected continuous profits the Company has felt that the "Value in use" of the Fixed Assets is more than carrying cost of the fixed assets, hence no provision for impairment of Loss of Fixed Assets has been made.

9. The Sales Tax incentives Scheme 1993 of SICOM provides that the unit should work for 35 years or during the currency of the Sales Tax Benefits/other benefits drawn/availed of under the 1993 Scheme by way of incentives there under, whichever longer. Accordingly, the Sales Tax benefits of Rs. 264.97 Lacs (PY Rs. 264.97 Lacs) availed till 30/09/2003 by the company is subject to compliance of the terms and conditions of the said scheme. The company has opted for Deferral Scheme of Sales Tax liability w.e.f. 01/07/2003. Accordingly the sales tax liability of Rs. 31.20 Lacs (PY Rs. 31.20 Lacs) shall be repayable after Ten years in five equal annual installments.

10. The figures of the previous years have been regrouped/rearranged wherever necessary and the figures are rounded off to the nearest rupee.


Mar 31, 2013

1. CONTINGENT LIABLILITIES

As at 31st March

Details of Contingent Liabilities 2013 2012

Rupees in Lacs Rupees in Lacs

a. Guarantee given by the company''s Bankers and Counter guaranteed by the company Nil Nil b. Claims against the company not acknowledged as Debts* Nil Nil

c. Service Tax demand under dispute** 83.43 83.43

d. Custom Duty payable in respect of goods imported against Advance License pending Export 967.00 58.65 Obligations***

e. Interest and penalties under Employees PF & Misc Provisions Act, 1952 '' 3.64 3.64

f. Claim by one of the Erstwhile Directors as Salary**** 18.00 18.00

g. Income Tax demand under appeal***** 282.44 282.44

* A claim appealed against by the company is pending in the High Court in respect of ECB Dues. In the absence of the detailed records and evidences, we are unable to provide a view on the quantum and volume of the Contingent Liabilities of the company, however in the opinion of the management, the same does not qualify for reporting hereunder.

** Against the order passed by the CESTAT in favor of the company, the revenue has preferred an Appeal before the High court challenging the said order. '' -

*** During the year the company has been served with an intimation by the DGFT for a claim pending in respect of goods imported against Advance License pending Obligation amounting to Rs. 967.00 Lacs. The company is in the process of quantifying and assessing its obligations with regards to the same.

**** The erstwhile directors claim remains pending disposal with the BIFR.

***** During the earlier years the company had been served with an order u/s 271 (1) (c) & subsequent demand u/s 156 under the Income Tax Act, 1961 for the aforementioned periods; AY 2002-03 for Rs. 48,54,045/-, AY

2003-04 for Rs. 9,09,236/-, AY 2004-05 for Rs. 32,73,733/-, AY 2007-08 for Rs. 1,92,07,921 /-. The company has preferred an appeal with the Commissioner of Income Tax (Appeals) challenging the above penal levies.

1. Absence of Detailed Books of Accounts and documents prior to January 2008

As at 31st March, 2004, the company''s Net Worth was completely eroded and it had become a sick industrial unit within the meaning of clause (o) of sub section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, (SICA) 1985. A reference was made to the Board for Industrial and Financial Reconstruction (BIFR) in 2004 and the company has been declared sick on 23,a December, 2005. A proposal for revival of the company along with the settlement of the dues of the creditors and change in management was duly made to the Board of Industrial & Financial Restructuring. The Honourable bench of BIFR has in its meeting held on 26"'' March, 2007 sanctioned a Rehabilitation Scheme. The BIFR has issued a final order (SS-07) dated 17"''August, 2007.

However the earlier management had withheld the statutory records on the company and refused to hand over the administrative office of the company situated at 7, NaginMahal, Church gate, Mumbai which was the administrative office of the company since 1992 or earlier and existed as the office when the reference was made to the BIFR under Form A. Due to the above circumstances, the records prior to January 2008 could not be acquired by the management and the management remains unable to ascertain whether any valuable assets have been lost by the company, exception being the factory premises and the staff colony at Lote, the control and possession thereof being retained by the current management. The Church gate office premises has been illegally held back by the old managers and the company has sought legal recourse and has made an application to the BIFR for acquiring the rightful possession and claim to the above premises. The appeal hearing remains awaited as on date.

With respect to its dues, Canara Bank has refuted the jurisdiction of the BIFR and has disputed the awarded rebate in claims as sanctioned by the BIFR in its order dated 17th August 2007. The company has preferred a plea with the High Court of Mumbai for the same and the above disputed amounts have not been considered by the management in the preparation of the accounts.

2. Secured Loans

a. Loans from Financial Institutions assigned to the New Promoters are secured by equitable mortgage of immovable assets (excluding Housing Colony), hypothecation of all the company''s moveable assets, (except Book Debts), both present & future, personal guarantees of the then Managing Director and a charge upon the assets of the company as per the Deeds of Assignment duly entered into by the company which exceed over Rs. 6500.00 Lacs in favour of the Secured Lenders perse. ''

b. Cash Credits including FCNR (B) Loans, Export Packing Credit, Letter of Credit, Guarantee Facilities and Working Capital Term Loans are secured by hypothecation of stocks, book debts and personal guarantees of the then Managing Director, all ranking pari-passu with each other. Substantial proportion of the loans have been paid off by the company.

B. TRANSACTIONS WITH RELATED PARTY:

The company has not entered into any transactions with related party within the meaning of According Standard 18 "Related Parties Disclosure".

2. Test as required under Accounting Standard - 28 relating to Impairment of Assets have been carried out, however the values of the Fixed Assets have been revalued and the carrying costs of the Fixed Assets have been duly reduced as per the schedule of Restructuring as sanctioned by the Honourable Bench of BiFR during the earlier years. The values so arrived are equivalent to the recoverable values of the assets in accordance with the AccountingStandafd—28-reteting to Impairment of Assets(Refer Note: B-1,2 & 3of Note 24)

3. The Sales Tax incentives Scheme 1993 of SICOM provides that the unit should work for 35 years or during th-3 currency of the Sales Tax Benefits/other benefits drawn/availed of under the 1993 Scheme by way of incentives there under, whichever longer. Accordingly, the Sales Tax benefits of Rs. 264.97 Lacs (PY Rs. 264.97 Lacs) availed till 30/09/2003 by the company is subject to compliance of the terms and conditions of the said scheme. The company has opted for Deferral Scheme of Sales Tax liability w.e.f. 01/07/2003. Accordingly the sales tax liability of Rs. 31.20 Lacs (PY Rs. 31.20 Lacs) shall be repayable after Ten years in five equal annual installments.

4. The figures of the previous years have been regrouped/rearranged wherever necessary and the figures are rounded off to the nearest rupee


Mar 31, 2012

1) CONTINGENT LIABILITIES

As at 31st March

Details of Contingent Liabilities 2012 2011 Ruppes Ruppes

a. Guarantee given by the company's Bankers and Counter guaranteed by the company Nil Nil

b. Claims against the company not acknowledged as Nil Nil Debts*

c. Service Tax demand under dispute** 83'43'444 83'43'444

d. Custom Duty payable in respect of goods imported against Advance License pending Export Obligations 58'65'191 58'65'191

e. Interest and penalties under Employees PF & Misc

Provisions Act' 1952 3'64'405 3'64'405 f. Claim by one of the Erstwhile Directors as Salary*** 18'00'000 18'00'000

g. Income Tax demand under appeal**** 2'82'44'935 Nil

* A claim appealed against by the company is pending in the High Court in respect of ECB Dues as detailed in Note 4 above. In the absence of the detailed records and evidences' we are unable to provide a view on the quantum and volume of the Contingent Liabilities of the company' however in the opinion of the management' the same does not qualify for reporting hereunder.

** Against the order passed by the Commissioner of Central Excise (Appeals) in favour of the company' the revenue has gone into Appeal before the CESTAT challenging the said order and for restoring the order of the Additional Commissioner' Central Excise.

*** The erstwhile directors claim remains pending disposal with the BIFR.

**** During the year the company has been served with an order u/s 271 (1) (c) & subsequent demand u/s 156 under the Income Tax Act' 1961 for the aforementioned periods; AY 2002-03 for Rs. 48'54'045/-' AY 2003-04 for Rs. 9'09'236/-' AY 2004-05 for Rs. 32'73'733/-' AY 2007-08 for Rs. 1'92'07'921/-. The company has preferred an appeal with the Commissioner of Income Tax (Appeals) challenging the above penal levies.

1. Absence of Detailed Books of Accounts and documents prior to January 2008

As at 31 st March' 2004' the company's Net Worth was completely eroded and it had become a sick industrial unit within the meaning of clause (o) of sub section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act' (SICA) 1985. A reference was made to the Board for Industrial and Financial Reconstruction (BIFR) in 2004 and the company has been declared sick on 23rd December' 2005. A proposal for revival of the company along with the settlement of the dues of the creditors and change in management was duly made to the Board of Industrial & Financial Restructuring. The Honourable bench of BIFR has in its meeting held on 26th March' 2007 sanctioned a Rehabilitation Scheme. The BIFR has issued a final order (SS-07) dated 17th August' 2007.

However the earlier management had withheld the statutory records on the company and refused to hand over the administrative office of the company situated at 7' Nagin Mahal' Churchgate' Mumbai which was the administrative office of the company since 1992 or earlier and existed as the office when the reference was made to the BIFR under Form A. Due to the above circumstances' the records prior to January 2008 could not be acquired by the management and the management remains unable to ascertain whether any valuable assets have been lost by the company exception being the factory premises and the staff colony at Lote' the control and possession thereof being retained by the current management. The Churchgate office premises has been illegally held back by the old managers and the company has sought legal recourse and has made an application to the BIFR for acquiring the rightful possession and claim to the above premises. The appeal hearing remains awaited as on date.

With respect to its dues' Canara Bank has refuted the jurisdiction of the BIFR and has disputed the awarded rebate in claims as sanctioned by the BIFR in its order dated 17th August 2007. The company has preferred a plea with the High Court of Mumbai for the same and the above disputed amounts have not been considered by the management in the preparation of the accounts.

2. Secured Loans

a. Loans from Financial Institutions assigned to the New Promoters are secured by equitable mortgage of immovable assets (excluding Housing Colony)' hypothecation of all the company's moveable assets' (except Book Debts)' both present & future' personal guarantees of the then Managing Director and a charge upon the assets of the company as per the Deeds of Assignment duly entered into by the company which exceed over Rs. 6500.00 Lacs in favourof the Secured Lenders perse.

b. Cash Credits including FCNR (B) Loans' Export Packing Credit' Letter of Credit' Guarantee Facilities and Working Capital Term Loans are secured by hypothecation of stocks' book debts and personal guarantees of the then Managing Director' all ranking pari-passu with each other. Substantial proportion of the loan has been paid off by the company during the year.

c. Other Secured Loans from M/s. Malvika Harbopharma (P) Ltd are secured by a 1 st charge upon all the Fixed Assets including the Housing Colony which is to the tune of approx 200 Crores including the interest & revocation of OTS amount' if any and by personal guarantee of the Director' Mr. Sanjay Bagrodia.

d. Loans from M/s. Invent Assets Reconstruction Company Limited is secured by a 2nd charge upon all the Fixed Assets which is to the tune of approx 10 Crores including the interest and by personal guarantee of the Director' Mr. Sanjay Bagrodia

e. Loans from Canara Bank is secured by a 2nd charge upon all the Fixed Assets which is to the tune of approx 3.93 Crores including the interest and by personal guarantee of the Director' Mr. Sanjay Bagrodia

3. Unsecured Loans

The company has taken External Commercial Borrowings (ECB) of Rs.18'03'24'250/-. However under the scheme of restructuring as sanctioned by the honourable bench of BIFR' the total outstanding amount of the ECB was revised and a rebate of 95% on the outstandings totaling to Rs. 17'13'08'250/- has been availed by the company thereby reducing the ECB dues to Rs. 90'16'000/-

The ECB Lenders had approached the Appellate Authority for Industrial & Financial Reconstruction (AAIFR) and an order was duly passed by the AAIFR dated 29/04/2008 directing the company to reduce the waiver from 95% to 80% of the outstanding amounts thereby reducing the rebates by and the dues enhancing by Rs. 2'70'48'650/-. The company has preferred an appeal with the High Court against the said order with the contention that the said sums due payable to the ECB to be borne exclusively by the erstwhile management on its own account. The management has not provided for the above reduction in the waivers awarded by the AAIFR in respect of the ECB Dues in the preparation of the Financial Statements and the outstanding in respect of ECB remains understated by the same to the tune of Rs. 270.48 Lacs. In the absence of the relevant supporting documents and evidences' it is not possible for us to verify the said dues payable to the ECB by the company.

4. As the company's plant remains under closure for most of the year' physical verification of inventory and Fixed assets have not been undertaken.

5. The company has Deferred Tax Liabilities (DTL) on account of Unabsorbed Depreciation and Brought Forward Business Losses and amount claimable u/s 43B of the Income Tax Act' 1961. In view of the management' the above DTL would materialized in the year in which the company realized taxable profits and no tax would be due on account of setoff of the DTL. Hence no provisions have been made for additional DTL during the year.

6. The balances reflected in the accounts of Sundry Debtors' Loans and Advances' secured loans from financial institutions and bank and sundry creditors are subject to confirmation/reconciliation and the consequential adjustment' if any. As the company's Account/facilities with balance confirmation for the period thereafter from such lenders undersecured loan is not yet received.

7. There are no dues to enterprise as defined under clause (m) of section 2 of the Micro' Small & Medium Enterprises Development Act' 2006 remaining outstanding for more than 45 days as at 31st March' 2012 which having been identified by the management and relied upon by the auditors.

8. As the company's business activities fall within a single segment ie. Chemicals' the disclosure requirement of Accounting Standard -17 on Segment Reporting as issued by the Institute of Chartered Accountants of India is not applicable. During the year the company has undertaken trading and manufacturing of Chemical & Intermediates Goods' which are within the above described segment.

9. Disclosure regarding parties and transactions as required by AS - 18 issued by the Institute of Chartered Accountants of India are as under: -

A. NAME OF RELATED PARTY AND THEIR RELATIONSHIP i). Associate Company

Nil ii). Directors

Shri Nazirsaheb M.Sayyed

ShriAjaySharma

Shri Sunil Sawant iii). Relatives of Key Managerial Personnel

Nil

B. TRANSACTIONS WITH RELATED PARTY:

The company has not entered into any transactions with related party within the meaning of Accounting Standard 18 "Related Parties Disclosure".

10. Test as required under Accounting Standard - 28 relating to Impairment of Assets have been carried out' however the values of the Fixed Assets have been revalued and the carrying costs of the Fixed Assets have been duly reduced as per the schedule of Restructuring as sanctioned by the Honourable Bench of BIFR during the earlier years. The values so arrived are equivalent to the recoverable values of the assets in accordance with the Accounting Standard - 28 relating to Impairment of Assets (Refer Note: B-1' 2 & 3of Note24)

11. The Sales Tax incentives Scheme 1993 of SICOM provides that the unit should work for 35 years or during the currency of the Sales Tax Benefits/other benefits drawn/availed of under the 1993 Scheme by way of incentives there under' whichever longer. Accordingly' the Sales Tax benefits of Rs. 264.97 Lacs (PY Rs. 264.97 Lacs) availed till 30/09/2003 by the company is subject to compliance of the terms and conditions of the said scheme. The company has opted for Deferral Scheme of Sales Tax liability w.e.f. 01/07/2003. Accordingly the sales tax liability of Rs. 31.20 Lacs (PY Rs. 31.20 Lacs) shall be repayable after Ten years in five equal annual installments.

The Management has not made any provision for the same in the accounts during the year under consideration. In our opinion the short term liabilities and the losses for the year remain understated by the amount of such pro-rata installment due on account of the repayment of the Deferred Sales Tax benefit availed by the company in the earlier years.

12. The figures of the previous years have been regrouped/rearranged wherever necessary and the figures are rounded off to the nearest rupee


Mar 31, 2011

1. Absence of Detailed Books of Accounts and documents prior to January 2008 As at 31st March, 2004, the company's Net Worth was completely eroded and it had become a sick industrial unit within the meaning of clause (o) of sub section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, (SICA) 1985. A reference was made to the Board for Industrial and Financial Reconstruction (BIFR) in 2004 and the company has been declared sick on 23rd December, 2005. A proposal for revival of the company along with the settlement of the dues of the creditors and change the management was duly made to the Board of Industrial & Financial Restructuring. The Honourable bench of BIFR has in its meeting held on 26th March, 2007 sanctioned a Rehabilitation Scheme. The BIFR has issued a final order (SS-07) dated 17th August, 2007.

However the earlier management had withheld the statutory records on the company and refused to hand over the administrative office of the company situated at 7, Nagin Mahal, Churchgate, Mumbai which was the administrative office of the company since 1992 or earlier and existed as the office when the reference was made to the BIFR under Form A. Due to the above circumstances, the records prior to January 2008 could not be acquired by the management and the management remains unable to ascertain whether any valuable assets have been lost by the company exception being the factory premises and the staff colony at Lote, the control and possession thereof being retained by the current management. The Churchgate office premises has been illegally held back by the old managers and the company has sought legal recourse and |has made an application to the BIFR for acquiring the rightful possession and claim to the above premises. The appeal hearing remains awaited as on date.

Canara Bank has refuted the jurisdiction of the BIFR and have disputed the awarded rebate in claims as sanctioned by the BIFR in its order dated 77th August 2007. The company has preferred a plea with the High Court of Mumbai for the same and the above disputed amounts have not been considered by the management in the preparation of the accounts..

2. Secured Loans

a. Loans from Financial Institutions assigned to the New Promoters are secured by equitable mortgage of immovable assets (excluding Housing "Colony), hypothecation of all the company's moveable assets, (except Book Debts), both present & future, personal guarantees of the then Managing Director and a charge upon the assets of the company as per the Deeds of Assignment duly entered into by the company which exceed over Rs. 6500.00 Lacs in favor of the Secured Lenders per se.

b. Cash Credits including FCNR (B) Loans, Export Packing Credit, Letter of Credit, Guarantee Facilities and Working Capital Term Loans are secured by hypothecation of stocks, book debts and personal guarantees of the then Managing Director, all ranking pari-passu with each other. Substantial proportion of the loan has been paid off by the company during the year.

c. Other Secured Loans from M/s. Malvika Harbopharma (P) Ltd and M/s. Sheri's Intermediates Limited are secured by a 1st charge upon all the Fixed Assets including the Housing Colony which is to the tune of approx 200 Crores including the interest & revocation of OTS amount, if any and by personal guarantee of the Director, Mr. Sanjay Bagrodia.

d. Loans from M/s. Invent Assets Reconstruction Company Limited is secured by a 2nd charge upon all the Fixed Assets which is to the tune of approx 10 Crores including the interest and by personal guarantee of the Director, Mr. Sanjay Bagrodia

e. Loans from Canara Bank is secured by a 2nd charge upon all the Fixed Assets which is to the tune of approx 3.93 Crores including the interest and by personal guarantee of the Director, Mr. Sanjay Bagrodia

3. Unsecured Loans

The company has taken External Commercial Borrowings (ECB) of Rs. 18,03,24,250/-. However under the scheme of restructuring as sanctioned by the honourable bench of BIFR, the total outstanding amount of the ECB was revised and a rebate of 95% on the outstanding totaling to Rs. 17,13,08,250/- has been availed by the company thereby reducing the ECB dues to Rs. 90,16,000/-

The ECB Lenders had approached the Appellate Authority for Industrial & Financial Reconstruction (AAIFR) and an order was duly passed by the AAIFR dated 29/04/2008 directing the company to reduce the waiver from 95% to 80% of the outstanding amounts thereby reducing the rebates by and the dues enhancing by Rs. 2,70,48,650/-. The company has preferred an appeal with the High Court against the said order with the contention that the said sums due payable to the ECB to be borne exclusively by the erstwhile management on its own account. The management has not provided for the above reduction in the waivers awarded by the AAIFR in respect of the ECB Dues in the preparation of the Financial Statements and the outstanding in respect of ECB remains understated by the same to the tune of Rs. 270.48 Lacs. In the absence of the relevant supporting documents and evidences, it is not possible for us to verify the said dues payable to the ECB by the company.

4. Contingent Liabilities

As at 31st March 2011 2010 Rupees Rupees .

a. Guarantee given by the company's Bankers and Counter guaranteed by the company Nil Nil

b. Claims against the company not acknowledged as Nil Nil Debts*

c. Service Tax demand under dispute** 83,43,444 83,43,444

d. Custom Duty payable in respect of goods imported against Advance License pending Export Obligations 58,65,191 58,65,191

e. Interest and penalties under Employees PF& Misc Provisions Act,1952 3,64,405 3,64,405

f. Claim by one old director for his salary 18,00,000 18,00,000

* A claim appealed against by the company is pending in the High Court in respect of ECB Dues as detailed in Note 4 above. In the absence of the detailed records and evidences, we are unable to provide a view on the quantum and volume of the Contingent Liabilities of the company, however in the opinion of the management, the same does not qualify for reporting hereunder.

"Against the order passed by the Commissioner of Central Excise (Appeals) in favor of the company, the revenue has gone into Appeal before the CESTAT challenging the said order and for restoring the order of the Additional Commissioner, Central Excise.

The erstwhile directors claim remains pending disposal with the BIFR.

5. As the company's plant remains under closure for most of the year, physical verification of inventory and Fixed assets have not been done.

6. The company has Deferred Tax Liabilities (DTL) on account of Unabsorbed Depreciation and Brought Forward Business Losses and amount claimable u/s 43B of the Income Tax Act, 1961. In view of the management, the above DTL would materialized in the year in which the company realized taxable profits and no tax would be due on account of setoff of the DTL. Hence no provisions have been made for additional DTL during the year.

7. The balances reflected in the accounts of Sundry Debtors, Loans and Advances, secured loans from financial institutions and bank and sundry creditors are subject to confirmation/reconciliation and the consequential adjustment, if any. As the company's Account/facilities with balance confirmation for the period thereafter from such lenders under secured loan is not yet received.

8. As the company's business activities fall within a single segment ie. Chemicals, the disclosure requirement of Accounting Standard -17 on Segment Reporting as issued by the Institute of Chartered Accountants of India is not applicable. During the year the company has undertaken trading and manufacturing of Chemical & Intermediates Goods, which are within the above described segment.

9. Disclosure regarding parties and transactions as required by AS - 18 issued by the Institute of Chartered Accountants of India are as under:-

B. TRANSACTIONS WITH RELATED PARTY:

The company has not entered into any transactions with related party within the meaning of Accounting Standard 18 "Related Parties Disclosure".

10. Test as required under Accounting Standard - 28 relating to Impairment of Assets have been carried out, however the values of the Fixed Assets have been revalued and the carrying costs of the Fixed Assets have been duly reduced as per the schedule of Restructuring as sanctioned by the Honourable Bench of BIFR during the earlier year. The values so arrived are equivalent to the recoverable values of the assets in accordance with the Accounting Standard - 28 relating to impairment of Assets (Refer Note: B-1 & 2 of Schedule Q)

10. The Sales Tax incentives Scheme 1993 of SICOM provides that the unit should work for 35 years or during the currency of the Sales Tax Benefits/other benefits drawn/availed of under the 1993 Scheme by way of incentives there under, whichever longer. Accordingly, the Sales Tax benefits of Rs.264.97 Lacs (PY Rs.264.97 Lacs) availed till 30/09/2003 by the company is subject to compliance of the terms and conditions of the said scheme. The company has opted for Deferral Scheme of Sales Tax liability w.e.f. 01/07/2003. Accordingly the sales tax liability of Rs.31.20 Lacs (PY Rs.31.20 Lacs) shall be repayable after Ten years in five equal annual installments.

11. The Company does not have a full time secretary as required under section 383A of the Companies Act, 1956.

12. The figures of the previous years have been regrouped/rearranged wherever necessary and the figures are rounded off to the nearest rupeeII

Note : 1. A member entitled to attend and vote at the meeting is entitled to appoint a proxy and vote instead of himself.

2. A proxy need not be a member.

3. This proxy form duly completed should be deposited at the Registered Office of the Company not less than 48 (Forty Eight) hours before the Commencement of the meeting.


Mar 31, 2010

1. Absence of Detailed Books of Accounts and documents prior to January 2008

As at 31st March, 2004, the companys Net Worth was completely eroded and it had become a sick industrial unit within the meaning of clause (o) of sub section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, (SICA) 1985. A reference was made to the Board for Industrial and Financial Reconstruction (BIFR) in 2004 and the company has been declared sick on 23rd December, 2005. A proposal for revival of the company along with the settlement of the dues of the creditors and change in management was duly made to the Board of Industrial & Financial Restructuring. The Honourable bench of BIFR has in its meeting held on 26* March, 2007 sanctioned a Rehabilitation Scheme. The BIFR has issued a final order (SS-07) -dated 17th August, 2007.

However the Old management withheld the old statutory records of the Company and refused to hand over the administrative office of the Company situated at 7, Nagin Mahal, Churchgate, Mumbai which was the office of the Company since 1992 or earlier and existed as the office whne reference was made to the BIFR under Form A. Due to this old records prior to Januray 2008 could not be got and the Company does not know whether valuable assets are lost or not except the factory premises and the Colony which is under the control of the Company. The old management continues to sit in the old office and refuse to hand over the same to the Company. The Company has made several appeals to the BIFR and is trying to get the possession of the said office. The outcome of the exercise is awaited.

2. Secured Loans

a. Loans from Financial Institutions having first charge over the assets at Lote are assigned to the New Promoters Companies and are secured by equitable mortgage of immovable assets, hypothecation of all the companys moveable assets, (except Book Debts), both present & future, personal guarantees of the then Managing Director and a charge upon the assets of the company as per the Deeds of Assignment duly entered into by the company. Thefirt charges exceed over Rs. 6500.00 Lacs in favour of the Secured Lenders per se.

b. Some creditor having second charge over the assets have refuted the jurisdiction of the BIFR and have disputed the awarded mbatemdaims as sancttoned by the BIFR in Hs order dated 17th August 2007. The above disputed amounts have not been considered by the management in the preparation of the accounts The case is pending in the High Court of Mumbai.

c. Cash Credits including FCNR (B) Loans, Export Packing Credit, Letter of Credit. GuaranteeFacifities and Working Capital Term Loans are secured by hypothecation of stocks, book debts and personal guarantees of the then Managing Director, all ranking pari-passu with each other. Substantial proportion the loan has been paid off by the company duiring the year.

3. Unsecured Loans

The company has taken External Commercial Borrowings (ECB) of Rs. 18,03,24,250/-. However under the scheme of restructuring as sanctioned by the honourable bench of BIFR, the total outstanding amount of the ECB was revised and a rebate of 95% on the outstandings totaling to Rs. 17,13,08,250/- has been availed by the company thereby reducing the ECB dues to Rs. 90,16,000/-

The ECB Lenders had approached the Appellate Authority for Industrial & Financial Reconstruction (AAIFR) and an order was duly passed by the AAIFR dated 29AW2008 directing the company to reduce the waiver from 95% to 80% of the outstanding amounts thereby reducing the rebates by and the dues enhancing by Rs. 2,70,48,650/-. The company has preferredan appeal with the High Court against the said orderwiththe contention that the said sums due payable to the ECB to be borne exclusively by the erstwhile management on its own account The management has not provided for the above reduction in the waivers awarded by the AIFR in respect of the ECB Dues in the preparation of the Financial Statements and the outstanding in nsspect of ECB remains understated by the same to the tune of Rs. 270.48 Lacx in case the liability becomes that of the Company. In the absence of the relevant supporting documents and evidences. His not possible for us to venty the said dues payable to the ECB by the company.

4. Contingeht Libilities As at 31st Mareh

2010 2009

Rupees Rupees

a.Guarantee given by the companys Bankers and

Counter guaranteed by the company Nil Nil

b. Claims against the company not acknowledged as Nil Nil Debts*

c. ServiceTax demand under dispute** 83,43,444 83,43,444

d. Custom Duty payable in respect of goods imported -

against Advance License pending Export Obligations 58,65,191 58,65,191

e. Interest and penalties under Employees PF&Misc

Provisions Act, 1952 3,64.405 3,64,405

f Claim by one old directorfor his salary 18,00,000 18,00,000

* A claim appealed against by the company is pending in the High Court in respect of ECB Dues as detailed in Note 4 above. In the absence of the detailed records and evidences, we are unable to provide a view on the quantum and volume of the Contingent Liabilities of the company, however in the opinion of the management, the same does not qualify for reporting hereunder. The Old Directors case is pending before the BIFR.

** Against the order passed by the Commissioner of Central Excise (Appeals) in favour of the company, the revenue has gone into Appeal before the CESTAT challenging the said order and for restoring the order of the Additional Commissioner, Central Excise.

5. The balances reflected in the accounts of Sundry Debtors, Loans and Advances, secured loans from financial institutions and bank and sundry creditors are subject to confirmation/reconciliation and the consequential adjustment, if any. As the companys Account/facilities with balance confirmation for the period thereafter from such lenders under secured loan is not yet received.

6. The company has deferred Tax Liabilities (DTL) on account of Depreciation. The company has also Deferred Tax Liabilities (DTL) on account of Unabsorbed Depreciation and Brought Forward Losses and amounts claimable u/s 436 of the Income Tax Act, 1961. In the view of the company in the year in which the DTL would materialize, no tax would actuary become payable on account of setoff. Hence, no provision has been made for DTL

7. As the companys business activities fall with a single segment ie Chemicals, the disclosure reqeirement of Accounting Standard-17 on Segmeant Reporting as issued by the Institute of Vhatered Accountants of India is not apolicable. During the year the company has undertaken trading and manufacturing of Chemical & Intermediates Goods, which are within the above described segment.

8. Disclosure regarding parties and transactions as required by AS -18 issued by the Institute of Chartered Accountants of India are as under-

A. NAME OF RELATED PARTY AND THEIR RELATIONSHIP

i). Associate Company

Nil ii). Directors

Shri ShankanalB. Shanma

Shri Ramgopal S. Nana

Shri Rajkumar Sharma iii). Relatives of Key Managerial Personnel

Nil

B. TRANSACTIONS WITH RELATED PARTY:

The company has not entered into any transactions with related party within the meaning of Accounting Standard 18 "Related Parties Disclosure.

9 Test as required under Accounting Standard -28 relating to Impairment of Assets have been carried out, however Hie values of the Fixed Assets have been revaluedand the carrying costs of the Fixed Assets have been duly reduced as per the schedule of Restructuring as sanctioned by the HonouraWe^Bench of BIFR during the earlier year. The values so arrived are equivalent to the recoverable values of the assets in * accordance with the Accounting Standard - 28 relating to Impairment of Assets (Refer Note: B-1,4 2 or* ScheduteQ)

10. The Sales Tax incentives Scheme 1993 of SICOM provides that the unit should work for 35 years or during the currency of the Sales Tax Benefits/other benefits drawn/availed of under the 1993 Scheme by way of incentives there under, whichever longer. Accordingly, the Sales Tax benefits of Rs. 264.97 Lacs (PY Rs. 264.97 Lacs) availed till 30/09/2003 by the company is subject to compliance of theterms and conditions of the said scheme. The company has opted for Deferral Scheme of Sales Tax liability w.e.f. 01/07/2003. Accordingly the sales tax liability of Rs. 31.20 Lacs (PY Rs. 31.20 Lacs) shall be repayable after Ten years in five equal annual instalments.

11. The Company does not have a full time secretary as required under section 383A of the Companies Act, 1956.

12. Balance Sheet abstract and Companys General Business Profile as required by Schedule - VI (Part IV) is annexed here with

13. The figures of the previous years have been regrouped/rearranged wherever necessary and the figures are rounded off to the nearest rupee


Mar 31, 2009

1. Absence of Detailed Books of Accounts and documents prior to January 2008

As at 31st March, 2004, the companys Net Worth was completely eroded and it had become a sick industrial unit within the meaning of clause (o) of sub section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, (SICA) 1985. A reference was made to the Board for Industrial and Financial Reconstruction (BIFR) in 2004 and the company has been declared sick on 23rd December, 2005. A proposal for revival of the company along with the settlement of the dues of the creditors and change in management was duly made to the Board of Industrial & Financial Restructuring. The Honourable bench of BIFR has in its meeting held on 26" March, 2007 sanctioned a Rehabilitation Scheme. The BIFR has issued a final order (SS-07) dated 17* August, 2007.

However during the year, no proper takeover of accounts or operations of the company could be effected upon and as per the managements explanations due to sabotage and personnel irresponsibility and menace the books of accounts for the periods prior to January 2008 have been lost. Hence detailed examination of the accounts and the records could not be undertaken by us and the audit has been conducted based upon the available records on hand which was presented by the management before us.

2. Secured Loans

a. Loans from Financial Institutions are secured by equitable mortgage of immovable assets (excluding Housing Colony) and hypothecation of all the companys moveable assets, (except Book Debts), both present & future, and personal guarantees of the then Managing Director. However the same have been duly paid off during the year.

b. Cash Credits including FCNR (B) Loans, Export Packing Credit, Letter of Credit, Guarantee Facilities and Working Capital Term Loans are secured by hypothecation of stocks, book debts and personal guarantees of the then Managing Director, all ranking pari-passu with each other. Substantial proportion of the loan has been paid off by the company during the year.

3. Unsecured Loans

The company has taken External Commercial Borrowings (ECB) of Rs. 18,03,24,250/-. It had been agreed by the lenders, that the amount shall be repaid in Foreign Currency equal to Rupee amount, at the time of the Original borrowings, provided the company repays the Loans and interest on due dates. Hence the Loan Liability of the ECB had been reflected at the original borrowed amounts. Further the interest payable on ECB was waived by the lender upto 31st March 2005, which had been revoked by the lenders and opted for conversion of their outstandings into equity shares of the company as per the loan agreement. The company had made a request for waiver of the interest for the year 2005-06 and 2006-07. However under the scheme of restructuring as sanctioned by the honourable bench of BIFR, the total outstanding amount of the ECB was revised and a rebate of 95% on the outstandings totaling to Rs. 17,13,08,250/- has been availed by the company thereby reducing the ECB dues to Rs. 90,16,000/-

The ECB Lenders were shareholders of the company as on the date of filing of the reference to the BIFR. Further during the procedures of the BIFR, the ECB was duly represented by Mr. Sanjay Barodia and Mr. J.C. Dargar, (erstwhile directors of the company). In March 2007, Mr. J.C. Dargar, as representative of the ECB, presented an application to the BIFR for settling the ECB dues at Rs. 360.72 Lacs as against Rs. 90.16 Lacs. However, BIFR passed the Final Rehabilitation order on 1 7th August, 2007, which has been duly given effect to in preparation of the accounts.

No files or correspondences have been handed over to the management by the erstwhile management nor the company has ever been approached directly by the ECB at any time during the year. The ECB Lenders had approached the Appellate Authority for Industrial & Financial Reconstruction (AAIFR) and an order was duly passed by the AAIFR dated 29/04/2008 directing the company to reduce the waiver from 95% to 80% of the outstanding amounts thereby reducing the rebates by and the dues enhancing by Rs. 2,70,48,650/-. The company has preferred an appeal with the High Court against the said order with the contention that the said sums due payable to the ECB to be borne exclusively by the erstwhile management on its own account. The management has not provided for the above reduction in the waivers awarded by the AAIFR in respect of the ECB Dues in the preparation of the Financial Statements and the outstanding in respect of ECB remains understated by the same to the tune of Rs. 270.48 Lacs. In the absence of the relevant supporting documents and evidences, it is not possible for us to verify the said dues payable to the ECB by the company.

4. Contingent Liabilities As at 31st March 2009 2008 Rupees Rupees

a. Guarantee given by the companys Bankers and Counter guaranteed by the company Nil Nil

b. Claims againstthe company not acknowledged as Nil Nil Debts*

c. Service Tax demand under dispute** 83,43,444 83,43,444

d. Custom Duty payable in respect of goods imported against Advance License pending Export Obligations 58,65,191 58,65,191

e. Interest and penalties under Employees PF & Misc Provisions Act, 1952 3,64,405 3,64,405

* A claim appealed against by the company is pending in the High Court in respect of ECB Dues as detailed in Note 4 above. In the absence of the detailed records and evidences, we are unable to provide a view on the quantum and volume of the Contingent Liabilities of the company, however in the opinion of the management, the same does not qualify for reporting hereunder.

** Against the order passed by the Commissioner of Central Excise (Appeals) in favour of the company, the revenue has gone into Appeal before the CESTAT challenging the said order and for restoring the order of the Additional Commissioner, Central Excise.

5. As the companys plant is under closure, physical verification of inventory and Fixed assets have not been done.

6. The balances reflected in the accounts of Sundry Debtors, Loans and Advances, secured loans from financial institutions and bank and sundry creditors are subject to confirmation/reconciliation and the consequential adjustment, if any. As the companys Account/facilities with balance confirmation for the period thereafter from such lenders under secured loan is not yet received.

7. Due to closure of the unit, the goods could not be manufactured during the year. At this stage, the management is not in a position to ascertain the further deterioration, if any, in the value of the stock however pursuant to the scheme of Restructuring the company has revalued its Stock to Rs. 25,00,000/- to account for any depletions and deteriorations therein. (Refer Note: B-1&2 of Schedule Q)

8. The companys employees have filed cases in the Labour Court for their legal dues. The Honourable Labour "j Court had directed the company to pay dues as per the Industrial Dispute Act, which worked out to Rs. 39,97,490/-. Out of this Rs. 9,57,496/- had been paid to some of the employees and debited to the Profit & Loss Account during the earlier year. However as per the scheme of Restructuring sanctioned by the Honourable Bench of the BIFR, the company has made a provision of Rs. 31,04,000/- towards the same. The liability towards the same has been paid off in full by the company during the year. (Refer Note: B-1 & 2 of Schedule Q)

9. The company has deferred Tax Liabilities (DTL) on account of Depreciation. The company has also Deferred Tax Liabilities (DTL) on account of Unabsorbed Depreciation and Brought Forward Losses and amounts claimable u/s 43B of the Income Tax Act, 1961. In the view of the company, in the year in which the DTL would materialize, no tax would actually become payable on account of setoff. Hence, no provision has been made for DTL.

10. As the companys business activities fall within a single segment ie. Chemicals Bisphenol -A, the disclosure requirement of Accounting Standard - 17 on Segment Reporting as issued by the Institute of Chartered Accountants of India is not applicable. During the year the company has undertaken trading of Chemical & Intemediates Goods, which are within the above described segment.

11. Disclosure regarding parties and transactions as required by AS - 18 issued by the Institute of Chartered Accountants of India are as under:-

A. NAME OF RELATED PARTYANDTHEIR RELATIONSHIP

i). Associate Company

Nil

ii). Directors

Shri Shankarlal B. Sharma

Shri Ramgopal S. Naria

Shri Rajkumar Sharma

iii). Relatives of Key Managerial Personnel

Nil

B. TRANSACTIONS WITH RELATED PARTY:

The company has not entered into any transactions with related party within the meaning of Accounting Standard 18 "Related Parties Disclosure".

12 Test as required under Accounting Standard - 28 relating to Impairment of Assets have been carried out, however the values of the Fixed Assets have been revalued ahd the carrying costs of the Fixed Assets have been duly reduced as per the schedule of Restructuring as sanctioned by the Honourable Bench of BIFR during the earlier year. The values so arrived are equivalent to the recoverable values of the assets in accordance with the Accounting Standard - 28 relating to Impairment of Assets (Refer Note: B-1 &2of Schedule Q)

13. The Sales Tax incentives Scheme 1993 of SICOM provides that the unit should work for 35 years or during the currency of the Sales Tax Benefits/other benefits drawn/availed of under the 1993 Scheme by way of incentives there under, whichever longer. Accordingly, the Sales Tax benefits of Rs. 264.97 Lacs (PY Rs. 264.97 Lacs) availed till 30/09/2003 by the company is subject to compliance of the terms and conditions of the said scheme. The company has opted for Deferral Scheme of Sales Tax liability w.e.f. 01/07/2003. Accordingly the sales tax liability of Rs. 31,20 Lacs (PY Rs. 31.20 Lacs) shall be repayable afterTen years in five equal annual instalments.

14. The Company does not have a full time secretary as required under section 383A of the Companies Act, 1956.

15. Balance Sheet abstract and Companys General Business Profile as required by Schedule - VI (Part IV) is annexed herewith

16. The figures of the previous years have been regrouped/rearranged wherever necessary and the figures are rounded off to the nearest rupee