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Notes to Accounts of KG Petrochem Ltd.

Mar 31, 2014

1. OVERVIEW

The Company was originally incorporated on 29.2.1980 under Companies Act, 1956 as KG Petrochem Private Limited .The name of the company changed to KG Petrochem Limited as per fresh Certificate of Incoporation dated 24.8.1995 issued by Registrar of Compaies, Rajasthan, Jaipur.

Presently the Company is engaged in the business of manufacutuing and services as under:-

(i) Textile Division:- Manufactuiring and marketing of terry towels, made-ups etc. in the domestic and inter-national market.

(ii) Agency Division : Consigment Stockiest of GAIL (India) Ltd. for marketing and distribution of polymers in Rajasthan and

(iii) Garment Division : Manufacturing & marketing of readymade garment like bathrobes, babyhood towels, pillows etc.

2. The previous year figures have been reworked, regrouped, rearranged and reclassified wherever necessary. Accordingly amounts and other disclosure for the preceding years are included as an integral part of the current year financial statement and are to be read in relation to the amounts and other disclosure relating to the current year.

3. Accounting Standard :- "Provisions , Contingent Liabilities and Contingent Assets" : Movement of Provisions:

Provision Provision made Short Provision outstanding at during the year charged to Nature of Provision the beginning Statement of of the year Profit and Loss

Provision for Taxation 17,348.51 27,946.58 581.61

Provision utilized Provision during the year outstanding at the Nature of Provision end of the year of the year

Provision for Taxation 17,930.13 27,946.58

NOTE NO. 4 : CONTINGENT LIABILITIES (AS-29)

Contingent liabilities not provided in respect of:

Gaurantees given by the bank Rs.28000.00 (Previous year Rs. 30000.00) for which Company has provided Counter Gaurantee to bank and also secured by the securities as mentioned in Note No. 2.3 Long Term Borrowings.

Disputed excise duty of Rs. 243.19 (Previous year Rs. 243.19) for the period F.Y. 2001-02 to 2004-05 (Upto Feb.05) for which appeal is pending before CESTAT

Disputed Service Tax of Rs. 3375.73 (Previous year Rs. 3375.73) for the year 2005-06 to 2008-09 for which appeal is pending before CESTAT.

Estimated cost of contract remaining to be executed on capital account Rs. 290693.62 (Previous year nil).

5. As per Accounting Standard 15 - "Employee Benefits", the disclosure of Employee Benefits as defined in the accounting standard are given below:

a) Defined Contribution Plan : Employer''s contribution to provident fund provided Rs. 556.72 (Previous year Rs. 439.07) has been recognized as expenses for the year.

b) Defined Benefit Plan : Present value of grutuity is determined based on actuarial valuation using the projected unit credit method.

6. Related party Disclosure (AS-18)

The company has identified all the related parties as per details given below.

Relationship:

a) Key Management Personnel and their enterprises

Shri G.S Kandoi

Shri Manish Singhal

Shri Ramesh Chand Maheshwari

b) Relative of Key Management Personnel and their enterprises

1. Shri Vivek Singhal

a) Chrome International Co Ltd

b) Bhavish Infravest & Devlopers Pvt Ltd

2. Shri Baldevdas Gauri Shanker HUF

3. Smt. Savitri Kandoi

4. Smt. Prity Singhal

5. Shri Manish Singhal HUF

7. Export obligation against EPCG License Rs.552694.72 (Previous year Rs 68260.82) is outstanding as on 31.3.2014.

8. The company is engaged mainly in textile business and it has no Geographical Segment. Thus disclosure under As-17 segment reporting is not required.

9. Accounting Standard 28- "Impairment of Assets"-

The company assessed potential generation of economic benefits from its business units and is of the view that assets employed in continuing businesses are capable of generating adequate returns over their useful lives in the usual course of business, there is no indication to the contrary and accordingly the management is of the view that no impairment provision is called for in these accounts.

10. Financial and Derivatives Instruments

Company has entered into following foreign exchange financial instruments

a) The company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments on forecasted as transactions as approved by Board of Directors. The company does not use forward contracts for speculation purpose.

11. All assets and liabilities are presented as Current and Non current as per the criteria set out in the Revised Schedule VI of The Companies Act 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realisation, the company has ascertained its operating cycle less than 12 months, accordingly 12 months period has been considered for the purpose of Current/ Non-current classification of assets and liabilities.


Mar 31, 2013

OVERVIEW

The Company was originally incorporated on 29.2.1980 under Companies Act, 1956 as KG Petrochem Private Limited The name of the company changed to KG Petrochem Limited as per fresh Certificate of Incoporation dated 24.8.1995 issued by Registrar of Compaies, Rajasthan, Jaipur.

"Presently the Company is engaged in the business of manufacutuing and services as under:- (i) Textile Division:- Manufactuiring and marketing of terry towels, made-ups etc. in the domestic and inter-national market, (ii) Agency Division : Consignment Stockiest of GAIL (India) Ltd. for marketing and distribution of polymers in Rajasthan.(iii) Woven Sack Division : Manufacturing and marketing of PP/HDPE Woven Sacks till 30.4.2012 and (iv) Garment Division : Manufacturings marketing of readymade garment like bathrobes, babyhood towels, pillows etc."

"The previous year figures have been reworked, regrouped, rearranged and reclassified wherever necessary. Accordingly amounts and other disclosure for the preceding years are included as an integral part of the current year financial statement and are to be read in relation to the amounts and other disclosure relating to the current year."

NOTE NO. 1.1: CONTINGENT LIABILITIES (AS-29)

Contingent liabilities not provided in respect of:

Gaurantees given by the bank Rs.300,00,000 ( Previous year Rs. 230,00,000) for which Company has provided Counter Gaurantee to bank and also secured by the securities as mentioned in Note No. 2.3 Long Term Borrowings.

Disputed excise duty of Rs. 243,190 (Previous year Rs. 243,190) for the period F.Y. 2001-02 to 2004-05 (UptoFeb.05)for which appeal is pending before CESTAT

Disputed Service Tax of Rs. 3,375,730 (Previous year Rs. 3,375,730) for the year 2005-06 to 2008-09 for which appeal is pending before CESTAT.

2.1 Related party Disclosure (AS-18)

The company has identified all the related parties as per details given below. Relationship:

a) Key Management Personnel and their enterprises Shri G.S Kandoi

Shri Manish Singhal

Shri Ramesh Chand Maheshwari

b) Relative of Key Management Personnel and their enterprises Shri Vivek Singhal

Shri BaldevdasGauri Shanker HUF

Smt. Savitri Kandoi

Smt. Prity Singhal

Shri Manish Singhal HUF

2.2 Export obligation against EPCG License Rs. 6,82,60,824 (Previous year Rs 2,47,51,999)

2.3 Segment Information Information About Business Segment

As required by Accounting Standard-17 on segment reporting

a) The company is collectively organized into two major business segments namely Textile Division

Woven Sacks Division

Segments have been identified and reported taking into account the nature of the product and services, the organization structure and internal financial reporting system.

b) Information based on primary segment (Business Segment)

2.4 Accounting Standard 28- "Impairment of Assets"-

The company assessed potential generation of economic benefits from its business units and is of the view that assets employed in continuing businesses are capable of generating adequate returns over their useful lives in the usual course of business, there is no indication to the contrary and accordingly the management is of the view that no impairment provision is called for in these accounts.

2.5 Financial and Derivatives Instruments

Company has entered into following foreign exchange financial instruments

a) The company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments on forecasted as transactions as approved by Board of Directors. The company does not use forward contracts for speculation purpose.

Outstanding forward exchange financial instruments entered into by the company.

2.6 All assets and liabilities are presented as Current and Non current as per the criteria set out in the Revised Schedule VI of The Companies Act 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realisation, the company has ascertained its operating cycle less than 12 months, accordingly 12 months period has been considered for the purpose of Current/ Non-current classification of assets and liabilities.


Mar 31, 2012

OVERVIEW

The company was originally incorporated on 29.2.1980 under Companies Act, 1956 as KG Petrochem Private Limited .The name of the company changed to KG Petrochem Limited as per fresh Certificate of Incoporation dated 24.8.1995 issued by RegistrarofCompaies, Rajasthan, Jaipur.

"Presently the company is engaged in the business of manufacutuing and services as Under:- (i) Textile Division:- Manufactuiringand marketing of terry towels, made-ups etc. in the domestic and inter-national market, (ii) Woven Sack Division : Manufacturing and marketing of PP/HDPE Woven Sacks and (iii) Agency Division : Consigment Stockiest of GAIL (India) Ltd. for marketing and distribution of polymers in Rajasthan."

"The previous year figures have been reworked, regrouped, rearranged and reclassified wherever necessary. Accordingly amounts and other disclosure for the preceding years are included as an integral part of the current year financial statement and are to be read in relation to the amounts and other disclosure relating to the current year."

The Company has only one class of shares referred to as equity shares having a par value of Rs. 10 each. Holder of equity shares is entitled to one vote per share and Dividend as and when declared by the Company.

In case of partly paid up share the shareholder shall be entitled to dividend only on the paid up share capital.

In case any shareholder makes any default in payment of any call he shall notbe entitled to vote in annual general meeting.

In the event of liquidation of the company, the holders of equity shares will be entitled to receive any of the remaining assets of the company, after distribution of all preferential amounts.

i) The receipt of capital subsidy is for the processing machinery under the Technology Up gradation Fund Scheme (TUFS) circular no. 2 (2005-06 series) of Govt, of India Ministry of Textiles, office of the Textile commissioner, Mumbai.lt is credited to Capital Subsidy under the head Reserve & Surplus subject to fulfillment of conditions.

ii) As mentioned above the Company has availed Capital Subsidy forming part of cost of process Machinery.

Proportionate amount of such capital subsidy is being withdraw from Capital Reserve (Capital Subsidy) equal to relative depreciation. During the year Rs.1,502,031 (Previous year Rs.960,633) has been withdrawn from Capital Subsidy and for the prior period relevant amount of Rs NIL (Previous year Rs.3,233,676) of such capital subsidy is being withdrawn from Capital Reserve.

1. The term loan of Rs.336,434,950 from Bank of Baroda is secured by way of equitable mortgage in favour of bank against all existing and future assets of the Company's textile division named as Bhavik Terryfab and further guaranteed by Mr. G. S. Kandoi and Mr. Manish Singhal, Directors of the company in their personal capacity.

2. Car Loan from HDFC Bank Ltd is secured by way of hypothecation of vehicle financed by HDFC Bank.

Net current deferred tax liability of Rs. 9,547,658 (Previous year Rs. 6,110,185) has been charged to Statement of Profit & Loss besides current tax of Rs.7,402,418 (Previous year Rs. 2,356,580) as per Income Tax Act, 1961.

"Loans payable on demand from Bank of Baroda are secured by way of hypothecation of stock of Raw Material, Finished goods,Work in process,Store & spares, Book Debts and First charge on Fixed assets of the company. The loan is further personal guaranteed of Mr. G. S. Kandoi and Mr. Manish Singhal Directors of the company .Overdraft Limit from State Bank of Bikaner & Jaipur is secured by pledge of FDR of Rs.100,000 and Bill purchased limit is secured against Letter of Credit."

"Margin against Bank Guarantee of Rs.23,000,000 (Previous year Rs 20,000,000) issued by Bank of Baroda and overdrat limit of Rs 85,000 with SBBJ (Previous year NIL)

"Deposit account with more than 12 months maturity Rs.100,000 (Previous year NIL)

-Balance with bank held as margin money Rs.1,180,631 (Previous year Rs. 902,101)

NOTE NO. 3.1: CONTINGENT LIABILITIES (AS-29J

Contingent liabilities not provided in respect of:

Gaurantees given by the bank Rs.230,00,000 ( Previous year Rs. 200,00,000) for which Company has provided Counter Gaurantee to bank and also secured by the securities as mentioned in Note No. 2.3 Long Term Borrowings.

Disputed excise duty of Rs. 243,190 (Previous year Rs. 243,190) for the period F.Y. 2001-02 to 2004-05 (Upto Feb.05) for which appeal is pending before CESTAT

Disputed Service Tax of Rs. 3,375,730 (Previous year NIL) for the year 2005-06 to 2008-09 for which appeal is pending before CESTAT.

As per Accounting Standard 15 - "Employee Benefits", the disclosure of Employee Benefits as defined in the accounting standard are given below:

a) Defined Contribution Plan : Employer's contribution to provident fund provided Rs. 752,964 (Previous year Rs. 1,478,532) has been recognized as expenses for the year.

b) Defined Benefit Plan : No employees has rendered a service for a period of 5 years. No provision is required under Payment of Gratuity Act, 1972. Company has not made any rules for gratuity payable to employees other then covered by Payment of Gratuity Act 1972.

4) OTHER NOTES

4.1 Related party Disclosure (AS-18)

The company has identified all the related parties as per details given below. Relationship:

a) Key Management Personnel and their enterprises

Shri G.S Kandoi

Shri Manish Singhal

Shri Ramesh Chand Maheshwari

b) Relative of Key Management Personnel and their enterprises

Shri Vivek Singhal

Shri Baldevdas Gauri Shanker HUF

Smt. Savitri Kandoi

Smt. Preety Singhal

Shri Manish Singhal HUF

Miss Mantika Singhal

4.2 Export obligation against EPCG License Rs. 24,751,999 (Previous year Rs 8,63,84,391)

4.3 Segment Information Information About Business Segment

As required by Accounting Standard-17 on segment reporting

a) The company is collectively organized into two major business segments namely Textile Division

Woven Sacks Division

Segments have been identified and reported taking into account the nature of the product and services, the organization structure and internal financial reporting system.

b) Information based on primary segment (Business Segment)

Note:-The Company's manufacturing operation are only in india. Hence there is no geographical segment.

4.4 Accounting Standard 28- "Impairment of Assets"-

The company assessed potential generation of economic benefits from its business units and is of the view that assets employed in continuing businesses are capable of generating adequate returns over their useful lives in the usual course of business, there is no indication to the contrary and accordingly the management is of the view that no impairment provision is called for in these accounts.

4.5 Financial and Derivatives Instruments

Company has entered into following foreign exchange financial instruments

a) The company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments on forecasted as transactions as approved by Board of Directors. The company does not use forward contracts for speculation purpose. Outstanding forward exchange financial instruments entered into by the company.

Foreign currencies exposure that are not hedged by financial instruments or forward contracts as at 31st March,2012 amounting to NIL (Previous Year Japanees Yen 160,00,000 equivalent to Rs. 89,33,000 and USD 6,29,000 equivalent to Rs 2,79,26,000 for import of machinery).

Company has also converted its CC limit into FCNR loan, in this arrangement company have to pay NIL (Previous year $657,606.31.)

4.6 All assets and liabilities are presented as Current and Non current as per the criteria set out in the Revised Schedule VI of The Companies Act 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realisation, the company has ascertained its operating cycle less than 12 months, accordingly 12 months period has been considered for the purpose of Current/ Non-current classification of assets and liabilities.

4.7 The Revised Schedule VI became effective from April 1, 2011 for the preparation of Financial Statements. Hence, current year Financial Statements are prepared in accordance with Revised Schedule VI. Since previous year presentation was made as per Old Schedule VI, the previous year figures have been regrouped/reclassified wherever neccessary to correspond with the current year,s classification/disclosure.


Mar 31, 2010

1) Contingent liabilities not provided in respect of:

a) Outstanding Bank Guarantee of Rs. 100.00 lacs (Previous year Rs. 105.84 lacs) There is no reimbursement possible on account of contingent liabilities.

b) Disputed income tax demand of Rs. 2,05,340/- on a/c of penalties levies u/s 271 (1) (c) of Income Tax Act, 1961 forA.Y 99-00 & 03-04 for which appeals are pending before CommissionAppeals.

c) Disputed excise duty of Rs. 2,43,190/- forthe period FY. 2001-02 to 2004-05 (Upto Feb. 05) forwhich appeal is pending before CESTAT.

2) Export obligation against EPCG License Rs. 2379.84 lacs (Previous year Rs 160.23 lacs)

3) In terms of accounting policy no. 2 Borrowing cost Rs 41,41,986/- (Previous year Rs. NIL) and Salary and wages Rs. 17,60,328/- (Previous year Rs. NIL) incurred during the construction / installation of fixed assets have been capitalized.

4) Excise duty shown under the head expenditure represents the provision made for excise duty on closing stock of finished goods.

5) The receipt of capital subsidy for the processing machinery under the Technology Up gradation Fund Scheme (TUFS) is treated as promoters contribution vide circular no. 2 (2005-06 series) of Govt, of India Ministry of Textiles, office of the Textile commissioner, Mumbai and credited to Capital Subsidy Account underthe head Reserve & Surplus subjectto fulfillment of conditions.

6) Disclosure as required by Accounting Standards:-

A. Accounting Standard 15 "Employee Benefits", the disclosure of Employee Benefits as defined in the accounting standard are given below:

a) Defined Contribution Plan

Employers contribution to provident fund provided Rs. 8,32,016/- (Previous year 6,47,050/-) has been recognized as expenses for the year.

b) Defined Benefit Plan

No employees has rendered a service for a period of 5 years. No provision is required under Payment of Gratuity Act, 1972. Company has not made any rules for gratuity payable to employees other then covered by Payment of Gratuity Act 1972.

B. Segment Information

Information About Business Segment As required by Accounting Standard-17 on segment reporting

1. The company is collectively organized into two major business segments namely Terry Towel Division Woven Sacks Division

Segments have been identified and reported taking into account the nature of the product and services, the organization structure and internal financial reporting system.

2. Information based on primary segment (Business segment)

C. Accounting Standard 18 -"Related party Disclosure"

The company has identified all the related parties as per details given below. 1. Relationship:

a) Associate Concerns

Chrome International Co. Ltd.(Relationship Ceased on 11.07.2009)

b) Key management Personnel and their enterprises

ShriG.S.Kandoi

Shri Manish Singhal

c) Relative of key Management Personnel and their enterprises where transaction have taken Place

Shri Vivek Singhal

Shri Vivek Singhal HUF

Shri Baldevdas Gauri Shanker HUF

Smt. Savitri Kandoi

Smt.Ritu Singhal

Smt. Preety Singhal

Shri Bhavik Singhal

Shri Manish Singha lHUF

Miss Mantika Singhal

Chrome International Co. Ltd. (From 12.07.2009)

Note: Related party relationship is as identified by the company and relied upon by the Auditors

E. Accounting Standard 22 " Taxes on Income"

Considering accounting procedure prescribed by the standard, the following amounts have been worked out and provided in books:

Major components of deferred tax balances

Particulars (Rs. In Lacs)

Deferred tax liabilities 31st March, 2010 31st March, 2009

Difference between

accounting and tax WDV 806.47 710.97

Net current deferred tax liability of Rs 34,71,884/- has been charged to Profit and Loss Account besides current tax Rs 19,47,171/- as per Income Tax Act, 1961.

G. Accounting Standard 28- "Impairment of Assets"-

The company assessed potential generation of economic benefits from its business units and is of the view that assets employed in continuing businesses are capable of generating adequate returns over their useful lives in the usual course of business, there is no indication to the contrary and accordingly the management is of the view that no impairment provision is called for in these accounts.

7 Financial and Derivatives Instruments

Company has entered into following foreign exchange financial instruments

a) The company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments on forecasted as transactions as approved by Board of Directors. The company does not use forward contracts for speculation purpose. Outstanding forward exchange financial instruments entered into by the company.

b) During the year company has incurred a loss of Rs 1,26,00,000/- in a foreign exchange it derivatives transaction .This item has been shown as Extraordinary item.

8) Advance includes due from directors Rs. Nil (Previous Year Rs. Nil) with maximum debit balance Rs. 8,63,556/-(Previous year Rs. Nil) to Chairman & Managing Director and Whole Time Director.

9) Fixed monthly remuneration to the Chairman & Managing Directors has been paid within the limits specified in schedule XIII of the companies Act, 1956 Rs. 10.84 Lacs (previous year Rs. 8.40 Lacs).

 
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