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Notes to Accounts of Lakshmi Energy & Foods Ltd.

Mar 31, 2015

NOTE -1 COMPANY INFORMATION

Lakshmi Energy and Foods Limited (LEAF) is a widely held Public Limited Company engaged in processing of Rice of various varieties and grades, Edible oil, whole Wheat Flour and Green Power generation. The Company was incorporated on 20-07-1990.

Its shares are listed on National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE). The Registered Office of the Company is at Chandigarh and its plant is located in VPO Khamanon on the Chandigarh-Ludhiana National Highway, Distt. Fatehgarh Sahib, Punjab, India.

NOTE -2 SHARE CAPITAL

(A) Terms/ rights attached to ordinary shares

The Company has issued only one class of ordinary equity shares having a par value of Rs. 2/- per share. Each holder of ordinary shares is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting During the year ended 31/03/2015, the amount of dividend per share recognised for distribution to ordinary shareholders is Rs.Nil.

(Previous year: Rs' 0.30/-per share interim).

NOTE -3 OTHER NOTES TO ACCOUNTS

1. Current Financial Condition and restructuring of Loans.

During the year, the rice industry faced major slowdown and market prices fell down sharply (almost 50 % as compared to Previous Year Market prices) of rice and paddy. Consequently, the Net realizable value of rice/paddy went below the cost of production/procurement.

As per the Accounting Standard-2"Valuation of Inventories" and company's accounting policy, Inventory was valued at lower of Cost and Net Realizable Value (NRV).The company valued its inventory of Raw material and Finished goods at NRV and booked a loss of Rs. 2370.56 millions which considering its nature is shown as an exceptional item in the financial statements. Loss on Inventory Valuation includes Rs. 582.76 million on account of packing material (Bardana) being written off during the financial year. Thus, total loss on inventory valuation stands at Rs.2953.32 millions.

Consequently, there was shortfall in DP in respect of CC/PC limits availed from different Banks in consortium. During the course of series of consortium / joint lenders forum (JLF) meetings 'restructuring of debt' emerged as the only acceptable corrective action plan by consensus. A scheme for restructuring of debt was proposed by the Company to the lenders in the consortium. The restructuring scheme entails carving out of the outstanding balances in cash credit and packing credit accounts, over and above the DP and conversion of the same into WCTL. The said WCTL is envisaged to be repaid over a period of eight years in structured installments with moratorium of two years of repayment of interest and installments, with funding of interest during moratorium. To ascertain the techno-economic viability of the proposed debt restructuring scheme a study was carried out by M/s Dun & Brad street who after a detailed study of the production units of the Company viewed that the said debt restructuring scheme was techno - economically viable. Valution of land, building and machinery was done by Bank's empanelled valuers and the valuation was on higher side. The final report of the restructuring scheme alongwith reports of independent Bank's empanelled valuers, as approved by the lenders, was subjected to evaluation by Independent Evaluation Committee (IEC) as per RBI guidelines, which has been approved.

Mitigating factors

The management believes that as the demand for rice rises and price stabilization in both domestic and international market takes place, financial condition of the company would improve.

In view of the above said mitigating factors the company is positively looking at the scenario as "going concern".

2. In the opinion of the company's management, the current assets, loans and advances are an approximation of the value stated, if realized in the ordinary course of business. The provision for all the known liabilities has been made and is adequate and not in excess of the amount considered reasonably necessary.

3. The balance outstanding as the debit and credit to the parties / persons / agencies are subject to confirmation by the parties / persons agencies concerned.

4. Figures of previous year have been regrouped and rearranged wherever necessary.

Further, previous year figures are for 18 months as against the current year figures which are for 12 months on the Company has extended its financial year by 6 months in the last financial period.

5. Contingent Liabilities:

a. Income-tax demand raised for the earlier years is Rs.83.50 millions (Previous year - Rs.91.20 million). Appeal is pending before ITAT and Punjab & Haryana High Court and the Management is expecting a favourable decision.

b. Claims amounting to Rs.804.21 millions (Previous year - Rs.804.21 millions) by various creditors, suppliers, agents, various state procurement agencies etc. are pending before various Courts and quasi-judicial authorities.

7. Forward cover contracts outstanding as at March 2015 for USD 20 Millions. The company has taken these forward covers for export transactions.

8. Earning per share is calculated by dividing the profit after provision for income tax by the weighted average number of equity shares outstanding during the period.

9. Deffered Tax Liability mentioned in note no.6 is the net of deferred tax asset and deferred tax liability. As per the books of accounts opening balance of DTL Rs.505.18 millions, during the period due to timing difference on account of depreciation and provisions Rs.64.11 millions provided as deffered tax asset. Thus, the net DTL at the end of period on 31.03.2015 remains Rs.441.06 millions.

10. The figures of 'Sales' appearing in the statement of profit & loss account is the consolidated figure of sales effected through different offices of the company.

11. The information given below is in respect of the transactions entered into by the company during the Year with the related parties as per the requirement of Accounting Standard 18.

A. Names of related parties and description of relationship:

i) Name of Promoter Group Companies

* Ganeshay Overseas Industries Limited

* LOIL Health Foods Limited

* LOIL Overseas Foods Limited

* LOIL Continental Foods Limited

ii) Name of Subsidiary Companies

* Punjab Greenfield Resources Limited

* Lakshmi Green Power Ltd

* Green Energy and Foods Pte. Ltd. Singapore

iii) Name of Companies over which Directors having significant influence

* BVM Logistics Pvt. Ltd.

* Victor Foods India Ltd.

* LOIL International Foods Limited

iv) Name of Key Managerial Personnel

* Mr. Balbir Singh Uppal Chairman Cum Managing Director

* Mr. Janak Raj Singh Joint Managing Director

* Mr. I. S. Gumber Director

* Mr. Ajay Ratra Company Secretary

* Mr. Sukhdeep Singh Chief Financial Officer

12. Land measuring 49 Kanal & 5 Marla situated at Village Khamanon, Tehsil & District Fatehgarh Sahib, Punjab has been leased by the company from S.Janak Raj Singh, the Joint Managing Director of the company for the purpose of setting up its power plant thereon.

13. The information given below is about the segment reporting as per AS-17 issued by the Institute of Chartered Accountants of India.

14. As per the Accounting Standard (AS)-4 "Events Occurring after the Balance Sheet Date". Events occurring after the balance sheet date under review, which do not affect the figures as stated in the financial statements normally do not require any disclosure, in the financial statements although they may be of such significance that may require a disclosure in the report of the approving authority to enable the users of the financial statements to make proper evaluations and decisions. Since the board of directors of the company is the approving authority for the financial statements, accordingly, if any such disclosure has been made by the management of company in the report of the board of directors of company and hence no disclosure has been made herein.






Mar 31, 2014

COMPANY INFORMATION

Lakshmi Energy and Foods Limited (LEAF) is a widely held Public Limited Company engaged in manufacturing of Rice of various varieties and grades, Edible oil, whole Wheat Flour and Green Power. The Company was incorporated on 20-07-1990.

Its shares are listed on National Stock Exchange of India Limited (NSE) Bombay Stock Exchange Limited (BSE), Delhi Stock Exchange Limited (DSE) and Ludhiana Stock Exchange Limited (LSE). The Registered Office of the Company is at Chandigarh and its plant is located in VPO Khamanon on the Chandigarh-Ludhiana National Highway, Distt. Fatehgarh Sahib, Punjab, India. The company is among the largest food and biomass power producers.

(A) Terms/ rights attached to ordinary shares

The Company has issued only one class of ordinary equity shares having a par value of Rs. 2/- per share. Each holder of ordinary shares is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees.

During the year ended 31/03/2014, the amount of dividend per share recognised for distribution to ordinary shareholders is Re. 0.30 per share (Interim) - (Previous year: Rs Rs. 0.20/- per share).

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

Notes :

(i) Term loans from Banks are secured by equitable mortgage of Properties of the company and pari-passu charge over fixed assets , both present and future of the company.

(ii) The interest on the above term loans from banks are linked to the respective banks base rates which are floating in nature. As of March 31, 2014 the interest rates 14.00% per annum.

(i) Working capital facilities (fund based & non fund based limits) are secured by first pari passu charge over stocks, stores, raw materials, inventories, work in progress, finished goods and also book debts, bills and moneys receivable of the Company by way of hypothecation.

(ii) The interest on the above term loans from banks are linked to the respective banks base rates which are floating in nature. As of March 31, 2014 the interest rates on cash credit ranges from 12.25 to 13.50% per annum. Packing credit INR from 11.00% to 12.75% per annum Packing credit foreign currency from 4.00% to 4.50% per annum.

*There are no Micro, Small and Medium Enterprises, (P.Y. NIL) to whom the Company owes dues, which are outstanding for more than 45 days as at 31th March 2014. This information, required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006, has been determined to the extent such parties have been identified on the basis of information available with the Company. Moreover, the Company primarily deals in procurement of agri-products which are sourced from the Farmers and Aartias (Commission Agents) who are not covered under the provisions of the Micro, Small and Medium Enterprises Development Act, 2006

2. In the opinion of the company''s management, the current assets, loans and advances are an approximation of the value stated, if realized in the ordinary course of business. The provision for all the known liabilities has been made and is adequate and not in excess of the amount considered reasonably necessary.

3. The balance outstanding as the debit and credit to the parties / persons / agencies are subject to confirmation by the parties / person/ agencies concerned.

4. Figures of previous year have been regrouped and rearranged wherever necessary.

5. Contingent Liabilities:

a. Income-tax demand raised for the earlier years is Rs.91.20 millions (Previous year – Rs.600.10 million). Appeal is pending before ITAT and Punjab & Haryana High Court and the Management is expecting a favourable decision.

b. Claims amounting to Rs.804.21 millions (Previous year – Rs.303.53 millions) by various creditors, suppliers, agents, various state procurement agencies etc. are pending before various Courts and quasi-judicial authorities.

6. Forward cover contracts outstanding as at March 2014 for USD 18 Millions. The company has taken these forward covers for export transactions.

7. Earning per share is calculated by dividing the profit after provision for income tax by the weighted average number of equity shares outstanding during the year.

The calculation of Earnings per share (EPS) as disclosed in the Profit and Loss Account has been made in accordance with Accounting Standard (AS)-20 on "Earning per Share" issued by the Institute of Chartered Accountants of India.

8. Deffered Tax Liability mentioned in note no.6 is the net of deffered tax asset and deffered tax liability. As per the books of accounts opening balance of DTL Rs.667.69 Millions, during the period due to timing difference on account of depreciation and provisions Rs.162.51 Millions provided as deffered tax asset. Thus the net DTL at the end of period on 31.03.2014 remains Rs.505.18 Millions.

9. The figure of ''Sales'' appearing in the Statement of profit & loss is the consolidated figure of sales effected through different offices of the company and does not denote sales effected through Khamanon office alone.

Note:-

1. Transaction is considered from the effective date of rent agreement.

2. On expiration of the above stated lease agreements, the same can be renewed on the basis of mutual consent of the lessor and lessee.

3. The Company''s significant leasing arrangements are in respect of storage of material and the arrangements range between 6 months and 1 year generally and are usually renewable by mutual consent of lessor and lessee.

10. The information given below is in respect of the transactions entered into by the company during the period with the related parties as per the requirement of Accounting Standard 18.

11. Land measuring 49 Kanal & 5 Marla situated at Village Khamanon, Tehsil & District Fatehgarh Sahib, Punjab has been leased by the company from S.Janak Raj Singh Uppal, the Joint Managing Director of the company for the purpose of setting up its power plant thereon.

12. As per Accounting Standard (AS)-6 "Depreciation Accounting" issued by the Institute of Chartered Accountants of India, the company has adjusted depreciation amount of Rs.29.06 million on revalued assets with the revaluation reserve account.

13. As per the Accounting Standard (AS)-4 "Events Occurring after the Balance Sheet Date". Events occurring after the balance sheet date under review, which do not affect the figures as stated in the financial statements normally do not require any disclosure, in the financial statements although they may be of such significance that may require a disclosure in the report of the approving authority to enable the users of the financial statements to make proper evaluations and decisions. Since the board of directors of the company is the approving authority for the financial statements, accordingly, if any such disclosure has been made by the management of company in the report of the board of directors of company and hence no disclosure has been made herein.


Sep 30, 2012

(a) Terms/ rights attached to ordinary shares

The Company has issued only one class of ordinary Equity shares having a par value of Rs. 2/- per share. Each holder of ordinary shares is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees.The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting

During the year ended 30/09/20l2, the amount of dividend per share recognised for distribution to ordinary shareholders is Rs. 0.20/- (Previous year: Rs. 0.20/-).

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

*There are no Micro, Small and Medium Enterprises, (PY. NIL) to whom the Company owes dues, which are outstanding for more than 45 days as at 30th September 2012.This information, required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006, has been determined to the extent such parties have been identified on the basis of information available with the Company. Moreover, the Company primarily deals in procurement of agri-products which are sourced from the Farmers and Aartias (Commission Agents) who are not covered under the provisions of the Micro, Small and Medium Enterprises DevelopmentAct,2006

1. In the opinion of the company''s management, the current assets, loans and advances are an approximation of the value stated, if realised in the ordinary course of business. The provision for all the known liabilities has been made and is adequate and not in excess of the amount considered reasonably necessary.

2. The balance outstanding as the debit and credit to the parties / persons / agencies are subject to confirmation by the parties / persons/ agencies concerned.

3. Figures of previous year have been regrouped and rearranged wherever necessary.

4. Contingent Liabilities:

i. Income-tax demand raised for the earlier years is Rs. 600.10 Millons(Previous year - Rs. 630.24 million)]. Appeal is pending before CIT (Appeal) and the Management is expecting a favourable decision.

ii. Claims [Rs.303.53 million (Previous year - Rs. 352.24 million)] by various creditors, suppliers, agents, various procurement agencies etc. are pending before various Courts and quasi-judicial authorities.

5. Forward cover contracts outstanding as at September 2012 for USD 22.00 Millions.The company has taken these forward covers for export transactions.

6. During the year, the company has accounted for deferred tax liability in accordance with the Accounting Standard (AS)-22 "Accounting forTaxes on Income" issued by the Institute of Chartered Accountants of India.

Provision for income tax has been reviewed as on the balance sheet date and has been adjusted to reflect the current best estimate in accordance with the Accounting Standard (AS)-29 "Provisions, Contingent Liabilities and Contingent Assets" issued by the Institute of Chartered Accountants of India.

7. The company has examined the indications listed in Accounting Standard (AS)-28 on "Impairment of Assets" as issued by the Institute of Chartered Accountants of India and it has been found that none of the indications as listed in the said accounting standard are present in the case of the company

8. Earning per share is calculated by dividing the profit after provision for income tax by the weighted average number of equity shares outstanding during the year.

9. Interest costs on specific borrowings attributable to qualifying assets are capitalized. Other interest and borrowing costs are charged to revenue.

10. The figure of ''Sales'' appearing in the Profit & Loss account is the consolidated figure of sales effected through different offices of the company and does not denote sales effected through Khamano office alone. The sale includes export sale, trading sale, domestic sale and sale to Government agencies.

Note:-

1. Transaction is considered from the effective date of rent agreement.

2. On expiration of the above stated lease agreements, the same can be renewed on the basis of mutual consent of the lessor and lessee.

3. The Company''s significant leasing arrangements are in respect of storage of material and the arrangements range between 6 months and l year generally and are usually renewable by mutual consent of lessor and lessee.

11. Land measuring 49 Kanal & 5 Marla situated at Village Khamanon,Tehsil & District Fatehgarh Sahib, Punjab has been leased by the company from S. Janak Raj Singh the Joint Managing Director of the company for the purpose of setting up its power plant thereon.

12. As per Accounting Standard (AS)-6 issued by the Institute of Chartered Accountants of India, the company has adjusted depreciation amount of Rs. 35.80 million on revalued assets with the revaluation reserve account.

13. Previous year''s excess provision for Income Tax has been reversed during theYear.

14. As per the Accounting Standard (AS)-4 "Events Occurring after the Balance Sheet Date". Events occurring after the balance sheet date under review, which do not affect the figures as stated in the financial statements normally do not require any disclosure, in the financial statements although they may be of such significance that may require a disclosure in the report of the approving authority to enable the users of the financial statements to make proper evaluations and decisions. Since the board of directors of the company is the approving authority for the financial statements, accordingly, if any such disclosure has been made by the management of company in the report of the board of directors of company and hence no disclosure has been made herein.

15. During the year Company has recognized MAT Credit Entitlement of Rs. 34,84,50,762.73 as per its stand before appellate authorities, though the department has not recognized any MAT credit entitlement. Provision for Tax and Mat Credit Entitlement has been calculated as in the earlier years. The matter is presently in Appeal.

16. Till the year ended 30th September 2011, the company was using pre- revised Schedule VI of the Companies Act, 1956 for preparation and Presentation of its financial statement. During the year ended 30th September 2012, the revised Schedule VI notified under the Companies Act, 1956 is applicable to the company. The company has reclassified and regrouped previous year figure in conformity with revised Schedule-VI Of the Companies Act, 1956 and wherever necessary.


Sep 30, 2010

1. In the opinion of the companys management, the current assets, loans and advances are an approximation of the value stated, if realised in the ordinary course of business. The provision for all the known liabilities has been made and is adequate and not in excess of the amount considered reasonably necessary.

2. The balance outstanding as the debit and credit to the parties / persons / agencies are subject to confirmation by the parties/ person/agencies concerned.

3. Figures of previous year have been regrouped and rearranged wherever necessary.

4. Contingent Liabilities not provided for:

I. Income-tax demand raised for the earlier years is Rs. 657.68 Million. Appeal is pending before CIT (Appeal). And the management is expecting favourable decision.

ii. Claims [Rs.337.26 million (Previous year - Rs. 93.84 million)] by various creditors, suppliers, agents etc. are pending before various Courts and quasi-judicial authorities (as per certificate from Lawyers of the company).

iii. Claims [Rs. 15.15 million (Previous year - Rs. 259.51 million)] by various State procurement agencies are pending before Arbitrators (as per certificate from Lawyers of the company).

iv. The company had an export obligation of Rs. 657.68 million (Previous year Rs. 398.27 million) which was completed during the year, against the import licenses taken for import of capital goods under Export Promotion Capital Goods [EPCG] Scheme. This export obligation had to be fulfilled within period of 12 years from the date of Issue of License. The expiry date for Export Obligation period ranges between March 2018 to August 2022 for different Licenses. With respect to the aforesaid export obligation, the company has also got bank guarantee amounting Rs. 6.04 million (Previous year Rs. 18.12 million) issued to the Custom Authorities against 100% margin in the shape of FDRs.

5. Forward cover contracts outstanding as at September 2010 for USD 13.69 Million and for JPY 11.41 Million. The company has taken these forward covers for export/import transactions.

6. During the year, the company has accounted for deferred tax asset/liability in accordance with the Accounting Standard (AS-22) "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India.

Provision for income tax has been reviewed as on the balance sheet date and has been adjusted to reflect the current best estimate in accordance with the Accounting Standard (AS-29) "Provisions, Contingent Liabilities and Contingent Assets" issued by the Institute of Chartered Accountants of India.

7. The company has examined the indications listed in Accounting Standard (AS-28) on "Impairment of Assets" as issued bythe Institute of Chartered Accountants of India and it has been found that none of the indications as listed in the said accounting standard are present in the case of the company

8. Earnings per share is calculated by dividing the profit after provision for income tax by the weighted average number of equity shares outstanding during the year.

9. Interest costs on specific borrowings attributable to qualifying assets are capitalised. Other interest and borrowing costs are charged to revenue.

10. The figure of Sales appearing in the profit & loss account is the consolidated figure of sales effected through different offices of the company and does not denote sales effected through Khamano office alone. The sale includes export sale, domestic sale and sale to Government agencies. This figure also includes the sales through trading activities and job work activities.

11. The information given below is in respect of the transactions entered into by the company during the year with the related parties as per the requirement of Accounting Standard 18.

A. Names of related parties and description of relationship:

i) Particulars of Subsidiaries/Associate Parties:

Name of Related Party Nature of Relationship

Ganeshay Overseas Industries Limited Promoter Group Company

LOIL International Foods Limited Promoter Group Company

LOIL Health Foods Limited Promoter Group Company

LOIL Overseas Foods Limited Promoter Group Company

LOIL Continental Foods Limited Promoter Group Company

Punjab Greenfield Resources Limited Subsidiary Company

Lakshmi Green Power Ltd Subsidiary Company

Green Energy and Foods Pte. Ltd. Singapore Subsidiary Company

BVM Logistics Pvt. Ltd. Associate Company

Victor Foods India Pvt. Ltd. Associate Company

ii) Key Managerial Personnel:

Name of Related Party Nature of Relationship

Mr. Balbir Singh Uppal Chairman Cum Managing Director

Mr. Janak Raj Singh Joint Managing Director

Mr.I.S.Gumber Executive Director

Mr. Harwant Singh Executive Director

12. Land measuring 49 kanals and 5 marla situated at village Khamanon, Tehsil and District Fatehgarh Sahib, Punjab has been leased by the company from Janak Raj Singh Uppal, the Executive Director of the Company for purpose of setting up its Power Plantthereon.

13. As per Accounting Standard (AS-6) issued by the Institute of Chartered Accountants of India, the company has adjusted depreciation amount of Rs. 35.79 million on revalued assets with the revaluation reserve account.

14. Previous excess provision for Income tax has been reversed during the year.

15. The company does not owe any amount to any small scale industrial undertaking for more than 30 days at the end of the financial year. The above information is as identified on the basis of information available with the company and has been relied upon by the auditors.

 
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