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Notes to Accounts of Kothari Fermentation & Biochem Ltd.

Mar 31, 2015

A) CORPORATE INFORMATION

Kothari Fermentation and Biochem Limited ("The Company") is a public limited company incorporated in 1990 under the provisions of the Companies Act, 1956. The Company is engaged in the business of manufacturing of Yeast and its derivatives.

The equity shares of the Company are presently listed on Bombay Stock Exchange (BSE). The Company is headquartered at New Delhi and the works of the Company is situated at Village Rajarampur, Industrial Area Sikandrabad, Distt. Bulandshahr in the State of U.P.

2.1 Term Loan of Rs.65.00 lacs taken from Punjab National Bank during the current financial year carries interest @ 11.75% p.a. and repayable in 35 monthly installment from the due date of repayment viz. Dec. 2014. The aforesaid loans are secured by hypothecation of a Machinery and other fixtures required for its operation (i.e. German Separator Machine) and security hypothecated for CC limit i.e. stock and book debts.

2.2 Term Loan of Rs.452.00 lacs taken from Religare Finvest Limited during the financial year 2010-11 has been repaid during the current financial year.

2.3 Term Loan of Rs.497.00 lacs taken from TATA Capital Financial Services Limited during the current financial year carries interest @ 12.00% p.a., repayable in 84 monthly installment from the due date of repayment viz. 9th June 2014.

The aforesaid loans are secured by immovable property belonging to a director and one of the promoters of the company and guaranteed by the other promoters.

2.4 Vehicle loans are secured against hypothecation of motor vehicles purchased thereunder which are repayable on different dates.

3.1 Cash Credit facilities from banks together with interest and other charges thereon are secured by way of hypothecation of stock (raw material , stock in process, semi finished and finished goods) and book debts The same is aslo secured by equitable mortgage on the immova ble properties of the Company situated at Village Rajarampur Industrial Area, Sikandrabad, Bulandshahar (U.P.) and by way of hypothecation charge ove r all moveable assets forming part of fixed/block of assets of the company. The facility is also guaranteed by the directors of the Company. The same are repayable on demand and carries interest @ BR 2.25%-0.75% on monthly rest.

4. Pursuant to the enactment of Companies Act, 2013, the Company has applied the estimated useful lives as specified in Schedule II, except in respect of certain assets as disclosed in Accounting Policy on Depreciation, Amortisation and Depletion. Accordingly the unamortised carrying value is being depreciated/ amortised over the revised/ remaining useful lives. The written down value of fixed assets whose live; have expired as at 1st April 2014 have been adjusted net of deferred tax, in the opening balance of Profit and Loss Account amounting to Rs.6.75 lacs.

5. (i) Contingent Liabilities not provided for (As certified by the Management):

(a) Claims against the company towards listing fee for one (Previous Year two) stock exchange not acknowledged as debt is Rs.1.36 Lacs (Previous Year Rs. 3.29 Lacs) as company has sought delisting from the concerned stock exchanges.

(b) Outstanding Bank Guarantees for Rs.90.69 lacs (Previous Year Rs.43.42 lacs)

(ii) Capital Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for:

(Rs. In Lakhs) 2014-15 2013-14

Fixed Assets ( net of advances ): 197.31 63.12

6. Amount recoverable from Statutory Authorities shown under schedule "Short Term Loans & Advances" of the balance sheet includes a sum of Rs.46,13,849/- for which the company filed a claim before the trade tax authorities during the F.Y.2009-10 for refund of Trade Tax paid on purchases and stock transfer in respect of Molasses for the earlier years in view of the decision of the Hon'ble Allahabad High Court in the case of M/s. SAF Yeast Company Private Limited vs. State of U.P. and Another. Further, against the Special Leave Petition (SLP) preferred by the State of U.P. in this matter, Hon'ble Supreme Court has stayed the payment of refund till final hearing of the matter and the SLP is still pending before the Court.

7. The Company has not received any information from suppliers or service providers, whether they are covered under the "Micro, Small and Medium Enterprises (Development) Act, 2006". Therefore, it is not possible to give the information required under the Act.

8. In the opinion of the Board, the Current Assets, Loans and Advances including Sundry Debtors are of the value as stated in financial statement in the ordinary course of business. The provision of all known liabilities has been made. The accounts of certain debtors, creditors, other liabilities and advances are subject to confirmation and reconciliation.

9. The arbitration cases relating to supply of rice to Govt. of Bangladesh during 1995-96 pending in Bangladesh have been awarded in favour of company allowing the claim of USD 427,021.89 against Govt. of Bangladesh. The arbitration awards has been made rule of law by the Bangladesh Courts. The appeal before the Hon'ble Supreme Court of Bangladesh filed by the Govt. of Bangladesh has been dismissed by the Hon'ble Court on 13th February, 2014. Any claims/amount receivable in this matter to the company from the Govt. of Bangladesh will be recognized in the books of accounts of the company on receiving of the same.

10. As the Company's business activity falls within a single primary business segment viz. "Manufacturing of Yeast" and there is no reportable secondary segment i.e. geographical segment, the disclosure requirement of Accounting Standard-17 "Segmental Reporting" as notified by the Companies (Accounting Standards) Rules, 2006 (as amended) is not applicable.

11. Defined Benefit Plan:

The employees' gratuity fund scheme of the Company managed by Life Insurance Corporation of India (LIC) is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognized each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

12. Previous year's figures have been re-grouped/reclassified wherever necessary, to make them comparable


Mar 31, 2013

1. Contingent Liabilities not provided for (As certified by the Management)

(a) Claims against the company towards listing fee for three stock exchanges not acknowledged as debt is Rs. 4.80 Lacs (Previous Year Rs. 4.59 Lacs) as company has sought delisting from these stock exchanges.

(b) Outstanding Bank Guarantees for Rs.15.55 lacs (Previous Year Rs.31.03 lacs)

(c) Demand of excise duty amounting to Rs. 2.52 Lacs (Previous Year Rs. 2.52 Lacs) due to non- allowability of certain expenses by the department. Against the appeal of the company, the Custom, Excise & Service Tax Appellate Tribunal (CESTAT) remanded the matter to original adjudicating authority to decide the said issue and the matter is pending before the appropriate authority.

2. Amount recoverable from Statutory Authorities shown under schedule "Short Term Loans & Advances" of the balance sheet includes a sum of Rs.46,13,849/- for which the company filed a claim before the trade tax authorities during the F.Y.2009-10 for refund of Trade Tax paid on purchases and stock transfer in respect of Molasses for the earlier years in view of the decision of the Hon''ble Allahabad High Court in the case of M/s. SAF Yeast Company Private Limited vs. State of U.P. and Another. Further, against the Special Leave Petition (SLP) preferred by the State of U.P. in this matter, Hon''ble Supreme Court has stayed the payment of refund till final hearing of the matter and the SLP is still pending before the Court.

3. The Company has not received any information from suppliers or service providers, whether they are covered under the "Micro, Small and Medium Enterprises (Development) Act, 2006". Therefore, it is not possible to give the information required under the Act.

4. In the opinion of the Board, the Current Assets, Loans and Advances including Sundry Debtors are of the value as stated in financial statement in the ordinary course of business, although, some of them are outstanding for a long period. The provision of all known liabilities has been made. The accounts of certain debtors, creditors, other liabilities and advances are subject to confirmation and reconciliation.

5. The arbitration cases relating to supply of rice to Govt. of Bangladesh during 1995-96 pending in Bangladesh have been awarded in favour of company allowing our claims of USD 427,021.89 against Govt. of Bangladesh. The arbitration awards have been filed with the appropriate court in Bangladesh and the Court has made the award as rule of law. In this matter the appeal filed by the Govt. of Bangladesh before the hon''ble High Court at Bangladesh has been dismissed in July, 2012. However, the Govt. of Bangladesh preferred an appeal before the Hon''ble Supreme Court of Bangladesh, which is pending yet before the Court.

6. As the Company''s business activity falls within a single primary business segment viz. "Manufacturing of Yeast" and there is no reportable secondary segment i.e. geographical segment, the disclosure requirement of Accounting Standard-17 "Segmental Reporting" as notified by the Companies (Accounting Standards) Rules, 2006 (as amended) is not applicable.

7. a) Provision for tax under Income Tax Act, 1961 has not been made in view of the adjustable brought forwarded accumulated losses/unabsorbed depreciation.

b) No provision for minimum alternative tax (MAT) on book profit has been made in the accounts in light of the direction of Board for Industrial and Financial Reconstruction (BIFR) in the sanctioned scheme and the matter is under consideration with the appropriate authority.

8. Defined Benefit Plan:

The employees'' gratuity fund scheme of the Company managed by Life Insurance Corporation of India (LIC) is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognized each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to built up the final obligation.

9. Related Party Disclosures (AS- 18):

Related party disclosures as required by AS-18 are given below

(a) Key Managerial Personnel & their Relatives

(i) Mr. Moti Lal Kothari Managing Director

(ii) Mr. Pramod Kothari Managing Director

Note: 1. Mr. Pramod Kothari is the son of Mr. Moti Lal Kothari. 2. Mr. Moti Lal Kothari deceased on 03.09.2012.

Entities over which company or managerial personnel or their relatives exercise significant influence

- Chaudhry Bros.Traders and Builders Pvt. Ltd.

- Kothari Thermoplast Pvt. Ltd.

10. Previous year''s figures have been re-grouped/reclassified wherever necessary, to make them comparable


Mar 31, 2012

1. Contingent Liabilities not provided for (As certified by the Management)

(a) Claims against the company towards listing fee for three stock exchanges not acknowledged as debt is Rs. 3.63 Lacs (Previous Year Rs. 3.11 Lacs) as company has sought delisting from these stock exchanges.

(b)Outstanding Bank Guarantees for Rs.31.03 lacs (Previous Year Nil)

(c) The company has filed an appeal before The Custom, Excise & Service Tax Appellate Tribunal (CESTAT) in the matter of excise duty involving disputed amount of Rs. 2.52 Lacs (Previous Year Rs. 2.52 Lacs). The case is in progress and the company is likely to succeed. The matter being sub-judice, no provision has been made in the books of accounts.

(d) Demand of entry tax amounting to Rs.4.36 Lacs (Previous Year Rs. 4.36 Lacs) under U. P. VAT Act disputed in Appeal. However, the same has been deposited with department under protest.

2. Amount recoverable from Statutory Authorities shown under schedule "Short Term Loans & Advances" of the balance sheet includes a sum of Rs.46,13,849/- for which the company filed a claim before the trade tax authorities during the F.Y.2009-10 for refund of Trade Ta x paid on purchases and stock transfer in respect of Molasses for the earlier years in view of the decision of the Hon'ble Allahabad High Court in the case of M/s. SAF Yeast Company Private Limited vs. State of U.P. and Another. The claim of the company before the appropriate authorities is still pending.

3. The Company has not received any information from suppliers or service providers, whether they are covered under the "Micro, Small and Medium Enterprises (Development) Act, 2006". Therefore, it is not possible to give the information re- quired under the Act.

4. In the opinion of the Board, the Current Assets, Loans and Advances including Sundry Debtors are of the value as stated in financial statement in the ordinary course of business, although, some of them are outstanding for a long period. The provision of all known liabilities has been made. The accounts of certain debtors, creditors, other liabilities and advances are subject to confirmation and reconciliation.

5.The arbitration cases relating to supply of rice to Govt. of Bangladesh during 1995-96 pending in Bangladesh have been awarded in favour of company allowing our claims of USD 427,021.89 against Govt. of Bangladesh. The arbitration awards have been filed with the appropriate court in Bangladesh and the Court has made the award as rule of law. However, the Govt. of Bangladesh filed an appeal against the same before the Hon'ble High Court at Bangladesh, which is pending yet.

6. As the Company's business activity falls within a single primary business segment viz. "Manufacturing of Yeast" and there is no reportable secondary segment i.e. geographical segment, the disclosure requirement of Accounting Standard-17 "Seg- mental Reporting" as notified by the Companies (Accounting Standards) Rules, 2006 (as amended) is not applicable.

7.a) Provision for tax under Income Tax Act, 1961 has not been made in view of the adjustable brought forwarded accumu- lated losses/unabsorbed depreciation.

b) No provision for minimum alternative tax (MAT) on book profit has been made in the accounts in light of the direction to the appropriate authority by order of Board for Industrial and Financial Reconstruction (BIFR) as "To consider to grant exemption from the levy of MAT under section 115JB of the Income Tax Act, 1961 for a period upto 31.03.08 or till the accumulated losses are wiped out as per Income Tax Act, 1961, whichever is later". The matter is yet to be confirmed for exemption by the appropriate authority.


Mar 31, 2011

1. CONTINGENT LIABILITIES :

(a) Claims against the company towards listing fee for three stock exchanges not acknowledged as debt is Rs. 3.11 Lacs (Previous Year Rs. 2.91 Lacs) as company has sought delisting from these stock exchanges.

(b) The company has filed an appeal before The Custom, Excise & Service Tax Appellate Tribunal (CESTAT) in the matter of excise duty involving disputed amount of Rs. 2.52 Lacs. The case is in progress and the company is likely to succeed. The matter being sub-judice, no provision has been made in the books of accounts.

(c) Demand of entry tax amounting to Rs.4.36 Lacs under U P VAT Act disputed in Appeal. How ever the same has been deposited with department under protest.

(d) Demand of service tax amounting to Rs.5.34 Lacs and demand of penalty amounting to Rs.5.34 Lacs under section 76 of Finance Act, 1994 for service tax disputed in Appeal.

2. Secured Loan

i) Working capital loan from Punjab National Bank is secured by way of hypothecation of inventories and book debts, equitable mortgage of factory land and building, first charge on block of assets of the company for plant & machinery and Effluent Treatment Plant and all so personally guaranteed by the directors of the company.

ii) Loan from Religare Finvest Limited is secured by immovable property situated at C-4A and 4B, N-122, Panchsheel Park, New Delhi belonging to the relatives of directors of the Company and also guaranteed by the Directors of the company and their Associate concern.

iii) Vehicle loans are secured against respective vehicles.

3. In the opinion of the Board, the Current Assets, Loans and Advances including Sundry Debtors are of the value as stated in financial statement in the ordinary course of business, although, some of them are outstanding for a long period. The provision of all known liabilities has been made. The accounts of certain Sundry Debtors, Creditors, banks and loans & Advances are subject to confirmation and reconciliation.

4. Balance with taxation departments shown under schedule "Loans & Advances" of the balance sheet includes a sum of Rs. 46,13,849/- for which the company filed a claim before the trade tax authorities during the F.Y.2009-10 for refund of Trade Tax paid on purchases and stock transfer in respect of Molasses for the earlier years in view of the decision of the Hon'ble Allahabad High Court in the case of M/s. SAF Yeast Company Private Limited vs. State of U.P. and Another. The claim of the company before the appropriate authorities is still pending.

5. In view of the order of Board for Industrial and Financial Reconstruction (BIFR) and brought forwarded accumulated losses/unabsorbed depreciation, no provision for income tax/ MAT for the year has been made in the accounts.

6. In view of the accumulated business losses & unabsorbed depreciation and since there is no reasonable certainty of realization, the company has not recognized the deferred tax liability/asset arising on account of timing difference as stipulated in Accounting Standard (AS-22), "Accounting for taxes of Income" issued by the Institute of Chartered Accoun- tants of India by way of prudence.

7. The Company has not received any information from suppliers or service providers, whether they are covered under the "Micro, Small and Medium Enterprises (Development) Act, 2006". Therefore, it is not possible to give the information required under the Act.

8. Managerial Remuneration under Section 198 of the Companies Act, 1956:

i) Remuneration to Mr. M L Kothari (Managing Director): Rs.2,70,000/- (Previous year Rs. 2,15,000/-) ii) Remuneration to Mr. Pramod Kothari (Managing Director): Rs.3,30,000/- (Previous year Rs. 2,25,000/-)

9. The arbitration cases relating to supply of rice to Govt. of Bangladesh during 1995-96 pending in Bangladesh have been awarded in favour of company allowing our claims of USD 427,021.89 against Govt. of Bangladesh. The arbitration awards have been filed with the appropriate court in Bangladesh and the Court has made the award as rule of law. However, the Govt. of Bangladesh filed an appeal against the same before the Hon'ble High Court at Bangladesh, which is pending yet.

10. RELATED PARTY DISCLOSURE (AS- 18) (a) Key Personnel & Relatives

(i) Mr. Moti Lal Kothari Chairman & Managing Director

(ii) Mr. Pramod Kothari Managing Director

Note: Mr. Pramod Kothari is the son of Mr. Moti Lal Kothari.

(c) There is no amount written off or written back in respect of debts due from or to related parties.

Note:

(i) The amount of loan/advances received and given have been paid and received back in full during the year itself.

(ii) Related party relationship is as identified by the management and relied upon by the Auditors.

11. Previous year's figures have been re-grouped/reclassified wherever necessary, to make them comparable.

12. Schedule A to M form integral part of the Balance Sheet and Profit & Loss Account.


Mar 31, 2010

1. CONTINGENT LIABILITIES:

(a) Claims against the company towards listing fee for three stock exchanges not acknowledged as debt is Rs. 2.91 Lacs (Previous Year Rs. 2.71 Lacs) as company has sought delisting from these stock exchanges.

(b) The company has filed an appeal before The Custom, Excise & Service Tax Appellate Tribunal (CESTAT) in the matter of excise duty involving disputed amount of Rs. 2.52 Lacs. The case is in progress and the company is likely to succeed. The matter being sub-judice, no provision has been made in the books of accounts. (c) Demand of entry tax amounting to Rs.4.36 Lacs and demand of penalty amounting to Rs.1.28 Lacs for incomplete entries in statutory form under U P VAT Act disputed in Appeal.

2. In the opinion of the Board, the Current Assets, Loans and Advances including Sundry Debtors are of the value as stated in financial statement in the ordinary course of business, although, some of them are outstanding for a long period. The provision of all known liabilities has been made. The accounts of certain Sundry Debtors, Creditors and Loans & Advances are subject to confirmation and reconciliation.

3. In view of the order of Board for Industrial and Financial Reconstruction (BIFR) and brought forwarded accumulated losses/ unabsorbed depreciation, no provision for income tax/ MAT for the year has been made in the accounts.

4. In view of the accumulated business losses & unabsorbed depreciation and since there is no reasonable certainty of realization, the company has not recognized the deferred tax liability/asset arising on account of timing difference as stipulated in Accounting Standard (AS-22), "Accounting for taxes of Income" issued by the Institute of Chartered Accountants of India by way of prudence.

5. The Company has not received any information from suppliers or service providers, whether they are covered under the "Micro, Small and Medium Enterprises (Development) Act, 2006". Therefore, it is not possible to give the information required under the Act.

6. Managerial Remuneration under Section 198 of the Companies Act, 1956:

i) Remuneration to Mr. M L Kothari (Managing Director): Rs.2,15,000/- (Previous year Rs.1,80,000/-) ii) Remuneration to Mr. Pramod Kothari (Managing Director): Rs.2,25,000/- (Previous year Rs.1,20,000/-)

7. The arbitration cases relating to supply of rice to Govt. of Bangladesh during 1995-96 pending in Bangladesh have been awarded in favour of company allowing our claims of USD 427,021.89 against Govt. of Bangladesh. The arbitration awards have been filed with the appropriate court in Bangladesh and the Court has made the award as rule of law. However, the Govt. of Bangladesh filed an appeal against the same before the Honble High Court at Bangladesh, which is pending yet.

8. Previous years figures have been re-grouped/reclassified wherever necessary, to make them comparable.

9. Schedule A to M form integral part of the Balance Sheet and Profit & Loss Account.

 
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