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Notes to Accounts of Kwality Ltd.

Mar 31, 2016

Notes:

1) Vehicle loans taken from various banks are secured by hypothecation of Vehicles. Rate of Interest varies between 10.25% to 12.75%. Period of maturity for loans varies between 3 year to 5 year and number of repayment installments is ranging between 36 to 60 months. The repayment obligation in future of above loans is as under:-

2) External commercial Borrowings (ECB) taken from Union Bank of India (U.K) Limited amounting to USD 9 million (§ 5969.96 lacs). The loan is secured by way entire project assets of the Company and personal guarantee of Mr Sanjay Dhingra Managing Director of the Company. It is further collaterally secured by way of first pari passu charge on existing land 3.195 acres at Palwal on which the proposed project is located and additional 1.88 acres adjacent to the existing unit at Palwal (Haryana). Till the creation of the charge, the Company has provided additional security in form of pledge of shares of Kwality Limited in the name of Mr Sanjay Dhingra to the extent that market value of the Equity shares will be USD 4.5 millions. Present rate of Interest on loan is 3 months LIBOR plus 450 bps. The repayment obligation in future of above loans is as under:-

3 a) Term Loan from Bank includes loan taken from IDBI Bank Limited. The loan is secured by way of exclusive charge on Immovable property held in the name of director & other party situated at Golden Park, Rampura Road, Basai Darapur, New Delhi and the land / properties held in the name of JTPL Townships Pvt Ltd situated at JTPL City, Sector-115 Mohali (Punjab). The loan is further secured by personal / Corporate guarantee of Mr.Sanjay Dhingra, Managing Director of Company and property owners. Present rate of Interest on loan is 11.5%.

4 b) Term Loan from Bank includes loan taken from Karur Vysya Bank Limited. The loan is secured by way of fresh Equitable Mortgage on land/ properties in the name of JTPL Townships Pvt Ltd situated at JTP City, Sector-115 Mohali (Punjab). The loan is further secured by personal / Corporate guarantee of Mr.Sanjay Dhingra, Managing Director of Company and property owners. Present rate of Interest on loan is 12%.

5) Term Loans from Other party are from IFCI Ltd '' 10000.00 lacs (previous year '' 10000.00 lacs), from DMI Finance Pvt Limited '' 3080.00 lacs (previous year '' 3500.00 lacs), from Aditya Birla Finance Limited '' 3500.00 lacs (previous year '' Nil) and Hero Fincorp Limited '' 3500.00 lacs (previous year '' Nil).

a) Loan from IFCI Limited is secured by way of Exclusive mortgage on the immovable property in the name of JTPL Townships Pvt Limited. situated at JTPL City, Sector-115 Mohali (Punjab) and pledge of shares of Kwality Limited in the name of Mr. Sanjay Dhingra and further secured by personal guarantee of Mr. Sanjay Dhingra, Managing Director of Company and Corporate Guarantee of JTPL Townships Pvt Limited. The present rate of Interest on loan is 13.25%.

b) Loan from DMI Finance Pvt Limited is secured by way of pledge of equity shares of Kwality Limited in the name of Mr. Sanjay Dhingra. Also the loan is secured by personal guarantee of Mr. Sanjay Dhingra, Managing Director of Company. Rate of interest on loan is 14.60%.

c) Loan from Aditya Birla Finance Limited was secured by way of equitable mortgage on land/ property in the name of JTPL Townships Pvt Limited. situated in Mohali (Punjab), and further secured by personal guarantee of Mr. Sanjay Dhingra, Managing Director of company and corporate guarantee of JTPL Townships Pvt Limited. The rate of Interest on loan is ranging from 12.50% to 12.75%.

d) Loan from Hero Fincorp Limited was secured by way of pledge of shares of Kwality Limited held in the name of Mr. Sanjay Dhingra. Loan was further secured by exclusive charge over residential/commercial plots situated in Chandigarh and personal guarantee of Mr. Sanjay Dhingra, Managing Director of Company and corporate guarantee of JTPL Townships Pvt Limited. Rate of interest on loan was 12.75%.

Note.-6

Loans from Bank towards working capital are secured by way of :-

a) First pari passu charge on the entire current assets of the company.

b) 1st paripassu charge on entire movable and immovable fixed assets including equitable mortgage of factory land and building of the company situated at village Softa ,Palwal ( Haryana) and at Village Mumrejpur, Tehsil Dibai, District- Bulandsahar (U.P).

c) 1st paripassu charge on entire fixed assets of M/s Pashupati Dairies Pvt. Limited. including Equitable mortgage of Land and Building situated at village Kumarhera, Saharanpur (UP).

d) Corporate guarantee of M/s Pashupati Dairies Pvt Limited.

e) Negative lien for non disposal/ non transfer of 51 % of equity share held by Mr. Sanjay Dhingra.

f) Personal guarantee of Mr. Sanjay Dhingra, Managing Director of Company .

g) 10% Cash margin for LC in the form of Fixed Deposits.

h) The outstanding Buyers credit facility amounting to USD 1,35,402.25 is against 100% margin from Corporation Bank

7 RELATED PARTY DISCLOSURES

As per Accounting Standard 18 disclosures of transactions with the related parties are given below: Relationships

1 Subsidiary Company Kwality Dairy Products FZE

2 Key managerial personnel (KMP) Rattan Sagar Khanna

Sanjay Dhingra Manjit Dahiya

S.K. Bhalla Sidhant Gupta

Arun Srivastava

Pinky Singh(Upto 23/01/2016)

Ankita Mehrotra Sunit Shangle

Deepa Kapoor (Upto 16/05/2015) Pradeep Kumar Srivastava

3 Enterprises on which Key Managerial person having significant JTPL Townships Pvt Limited influence Pashupati Dairies Pvt Limited

Kwality Dairy Investments Pvt Limited Sahyogi Foundation

4 Relative of Key Managerial Person Kanika Dhingra

Ved Parkash Gupta Sonika Gupta Sidhaant and Sons (HUF)

The estimates of future salary increases, inflation, seniority, promotion and other relevant factors, considered in actuarial valuation such as supply and demand in the employment market. The rate used to discount post employment benefit obligations (both funded and unfunded) should be determined by reference to market yields at the balance sheet date on government bonds. The currency and term of the government bonds should be consistent with the currency and estimated term of the post employment benefit obligations.

An amount of Rs,63.05 Lacs /- (PY. Rs,74.44 Lacs) as contribution towards defined contribution plan is recognized as expense in the Profit & Loss Statement

8. CSR EXPENDITURE

During the year, the company spent Rs, 297.90 lakhs (previous year Rs, 283.36 lacs) toward CSR under section 135 of the companies act 2013 and rules there under in terms of policy framed Board of Directors.

9. OTHER NOTES

a) Disclosure as per Clause 32 of the Listing Agreements with the Stock Exchanges

Loans and advances in the nature of loans given to subsidiaries, associates and others and investment in shares of the Company by such parties:

b) Previous year figure have been regrouped/reclassified wherever necessary to correspond with the current year classification/ disclosure.


Mar 31, 2014

1) Contingent Liabilities and other Commitments:

Particulars As At 31 March, As At 31 March, 2014 2013 (INR In Lacs) (INR In Lacs)

Contingent liabilty (to the extent not provided for) Claim against the company not acknowledged as debts Milk cess disputed by the company relating to issue of applicability against which the company has preferred an SLP against the order 1,193.03 1,166.03 of Punjab & Haryana High Court before Hon''ble Supreme Court of India. A liablity of Cess principal amounting Rs. 326.59 lacs (from which a sum of Rs. 131.96 lacs (pre. Yr Rs. 98.06 lacs) deposited under protest ) and a sum of Rs. 866.44 lacs on account of interest liability raised by Semen Bank officer, of Haryana Livestock Development Board for which the matter is already before Hon''ble Supreme Court.

A civil recovery suit has been filed by M/s S.M. Milkose Ltd. 156.97 156.97 regarding dispute in supply of material which is disputed by the Co. & is pending before The Hon''ble High Court of Delhi.

Sales Tax Matters in Appeallate 175.72 0.00 Authorities

Contingent Liability for Bills 0.00 67.97 Discounted

Contingent Liability under 922.18 511.07 Bank Guarantee

Contingent Liability under 315.42 3,597.54 Letter of Credit

Contingent Liability under 99.58 0.00 EPCG Licence

Corporate Gurantee given on behalf 16,226.95 5,438.93 of wholly owned subsidiary

Commitments

Estimated amount of Contracts 965.56 1,114.43 remaining to be executed on capital account and not provided for

2) The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosure relating to amounts unpaid as at the year end together with interest paid / payable under this Act have not been given.

3) RELATED PARTY DISCLOSURES

As per Accounting Standard 18 disclosures of transactions with the related parties are given below: Relationships

1 Subsidiary Company Kwality Dairy Products FZE

2 Key managerial personnel (KMP) Sh. Sanjay Dhingra Sh. Sidhant Gupta

3 Enterprises on which Key Managerial JTPL Townships Pvt Ltd person having significant influence Pashupati Dairies Pvt Ltd Kwality Dairy Investments Pvt Ltd.

4 Relative of Key Managarial Person Ms. Kanika Dhingra Dr Ved Parkash Gupta

4) EMPLOYEE BENEFITS :

Employee Benefits

The Company has made provisions for employee benefits in accordance with the Accounting Standard (AS) 15 "Employee Benefits". During the year, the Company has recognised the following amounts in its financial statements based on actuarial valuation done as per Projected Unit Credit Method.

The estimates of future salary increases, inflation, seniority, promotion and other relevant factors, considered in actuarial valuation such as supply and demand in the employment market. The rate used to discount post employment benefit obligations (both funded and unfunded) should be determined by reference to market yields at the balance sheet date on government bonds. The currency and term of the government bonds should be consistent with the currency and estimated term of the post employment benefit obligations.

An amount of Rs.22.08 Lacs /-(PY. - Rs. 30.80 Lacs) as contribution towards defined contribution plan is recognized as expense in the Profit & Loss Statement


Mar 31, 2013

1.1).The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosure relating to amounts unpaid as at the year end together with interest paid / payable under this Act have not been given.


Mar 31, 2012

1) The Loan from related party is unsecured and there is no interest payable on the loan The loan is payable within 3 to 5 year.

2) The Loan from other party is unsecured and there is no interest payable on the loan The loan is payable within 3 to 5 year.

3) Contingent Liabilities : (Rs. In Lacs)

As at 31 March, 2012 As at 31 March, 2011

Claim against the company not acknowledged as debts

Milk Cess disputed by the company relating to issue of applicability, against which the company has filed an appeal with Supreme Court 271.81 246.60 of India (A sum of Rs.79.22 lacs(Previous.Yr. Rs.72.96 Lacs) deposited under protest)

Demand by Dy. Excise and Taxation Commissioner relating to Sales Tax A/at exemption /deferment with interest, against which company has filed an appeal before Joint Excise and Taxation 32.73 Nil Commissioner (Appeals), Faridabad.

A civil suit filed by M/s S.M. Milkose Ltd. for disputed supply of 156.97 156.97 material aginst Co. pending before Delhi High Court.

Contingent Liability for Bills Discounted Nil 1,701.47

Liability under Bank Guarantee 147.05 13.46

Estimated amount of Contracts remaining to be executed on 84.83 77.83 capital account and not provided for

4)The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosure relating to amounts unpaid as at the year end together with interest paid / payable underthis Act have not been given.

5) Related Party Disclosures

As per Accounting Standard 18 disclosures of transactions with the related parties are given below: Relationships

1 Subsidiary Company Kwality Dairy Products FZE

2 Key managerial personnel (KMP) Sh. Sanjay Dhingra

Sh. Sidhant Gupta

3 Significant Influence(SI) Ms. Kanika Dhingra

4 Enterprises on which Key Managerial JTPL Pvt Ltd

person having significant influence Pashupati Dairies Pvt Ltd

5 Relative of Key Managerial Person Ms. Kanika Dhingra

Dr. Ved Parkash Gupta

The revised Schedule VI has become effective from April 1,2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year figure have been regrouped/reclassified wherever necessary to correspond with the current year classification/disclosure.

During the year ended March 31,2012 the company has promoted a wholly owned subsidiary Kwality Dairy Products FZE in free trade zone of Dubai in UAE. The total amount contributed on account of capital and interest free loan of Rs.199.54 lacs equivalent to AED1 Million and AED 393,393 respectively.


Mar 31, 2010

1 Contingent Liabilities:

Current Year Previous Year Rs. in Lacs Rs. in Lacs

a) Claim against the company not acknowledged as debts

i) Milk Cess disputed by the company relating to issue of applicability, against which the company has filed an appeal with High Court, Punjab & Haryana 221.39 196.18

(A sum of Rs. 72.96 lacs (Pre. Yr. Rs. 62.10 Lacs) deposited under protest)

ii) Other matters 156.97 156.97

b) Contingent Liability for Bills Discounted 3,508.23 4,163.44

c) Liability under Bank Guarantee 44.85 44.85

d) Estimated amount of Contracts remaining to be executed on capital account and not provided for 124.16 227.79

2 Segment Reporting

The Company is primarily engaged in the business of manufacture, purchase and sale of ghee, skimmed milk powder, Lactose and milk ("Dairy Products"). The other activities of the company comprise pasteurising and packing of fresh milk on job work basis and manufacturing of curd.

The income from these activities and export of dairy products is not material (less than 10%) in financial terms. Accordingly segment information as per AS-17 has not been disclosed.

3 The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosure relating to amounts unpaid as at the year end together with interest paid / payable under this Act have not been given.

4 As required by Accounting Standard- AS 18 "Related Parties Disclosure" issued by The Institute of Chartered Accountants of India is as follows :

List of Related Parties :

a) Key managerial personnel

- Sh. Sanjay Dhingra

b) Major Shareholders

- Sh. Sanjay Dhingra

- Sh. Gulshan Kumar

- Sh. Kishan Dhingra

- Sh. Naresh Dhingra

c) Relatives of Major Shareholders/Key managerial personnel

- Ms. Seema Dhingra

- Ms. Pinki Dhingra

d) Enterprises of Major Shareholder/Key Management Personnel or their relatives

- JMD Proteins Pvt. Ltd.

- Super Veg Oils Pvt Ltd

- JMD Oils Pvt Ltd

- JMD Veg Oils Pvt Ltd

- JTPL Townships Pvt Ltd

5 Detail of Security given against :

a) Secured Loans availed : Short term / Working Capital Loans from banks are secured against hypothecation of stock, book-debts, plant & Machinery and additionally secured by equitable mortgage of factory land & building. The said loans are further secured by way of personal guarantee of major shareholders and corporate guarantee of M/s. Super Veg Oils Pvt Ltd & M/s. JTPL Townships Pvt Ltd( Refer Note 10 e )

b) Unsecured Loan : Sales Tax Deferment Loan Secured by Bank Guarantee ofRs. 15.97 lacs and Surety Bond by Director of the Company.

c) Contingent Liability for Bills Discounted and Sundry Creditors (Under Trade Finance Facility) include the sum ofRs. 2750.00 Lacs and Rs. 2350.00 Lacs respectively , secured against equitable mortgage of land owned by JTPL Townships Pvt Ltd, (Refer Note 10 d )

6 In accordance with the provisions of the AS-28 issued by Institute of Chartered Accountants of India on Impairment of Assets, the Company has carried out an impairment test in respect of all assets. On the basis of such exercise the company has determined that for the year ended 31st March 2010, no impairment / reversal of loss is required.

7 Previous Years figures have been reworked, rearranged, reclassified and regrouped where considered necessary to make them comparable with the current years figure.

 
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