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Notes to Accounts of MITCON Consultancy & Engineering Services Ltd.

Mar 31, 2015

A) Rights, preferences and restrictions attached to shares:

The company has one class of equity shares having a par value of INR 10/- (Previous Year INR 10/-) per share. Each equity holder is entitled to one vote per share and have a right to receive dividend as recommended by Board of Directors subject to necessary approval from the shareholders.

In the event of liquidation of the Company, the holders of 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 equity shares held by the shareholders.

NOTE NO.

1 Utilisation of Incubatee Grant

Technology Development Board (TDB), Govt. of India has approved scheme 'Seed Support System for Start-ups in Incubators' for providing financial assistance as seed support for start-ups in the MITCON incubator as growth oriented initiative between the TDB and MITCON. The scheme is to make available early stage financial assistance as seed support for start-up units located at the MITCON incubator for further development and pre-commercialization of technologies. Accordingly MITCON has received grant of INR 4,000,000/- form TDB till 31st March, 2015. Financial assistance by way of Term Loan to two incubatees aggregating to INR 2,283,606/- is outstanding as on 31st March, 2015. Disbursement against this grant has not been deducted from Grant received, but separately disclosed under Loans and Advances.

2 Contingent liability not provided for

Year ended Particulars 31st March, 2015 31st March, 2014 INR INR

a) Guarantees given by bankers to customer on behalf of 1,73,02,347.00 1,58,57,573.00 the Company

b) Service Tax Demand (see Note No. 38) 3,21,90,826.00 3,21,90,826.00

c) Claims against the company not acknowledged as -- -- debt - Arbitration petition in respect of money claim is pending before Artbitration Tribunal. The company has made counter claims against the claimant before the said Tribunal. Pending completion of Arbitration proceedings, the liability (if any) is not ascertainable.

d) An ex-employee has filed a claim before First Labour 1,64,000.00 1,64,000.00 Court, Pune. The company has filed written statement for dismisal of the claim.

3 Based on the available documents / information, the Company has no suppliers covered under The Micro, Small and Medium Enterprises Development Act 2006 (MSMED Act).

4 Disclosure pursuant to Accounting Standard (AS 15) - Revised 2005 "Employee benefits"

a) defined contribution plans:

The company has recognized the following amounts in the Statement of Profit & Loss for the year :

i) Contribution to employees provident fund INR 7,338,903/- (P.Y. INR 6,977,195/- )

ii) Contribution to employees family pension Fund INR. 2,497,470/- (P.Y. INR 1,450,405/-)

b) defined benefit plans - Gratuity

The company makes annual contribution to the Life Insurance Corporation of India, a funded defined benefit plan for qualifying employees. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part there of in excess of 6 month. Vesting occurs only upon completion of 5 years of service except in case of death or permanent disability. The present value of defined benefit obligation and the related current service cost are measured using the Projected Unit Credit Method with actuarial valuation being carried out at the balance sheet date.

c) The company provides for accumulation of compensated absences by its employees. The employees can carry forward a portion of the unutilised compensated absences and utilise it in future periods to receive cash in lieu thereof as per company policy. The company records an obligation for compensated absences in the period in which the employee renders the service that increases this entilement. The total liability recorded by the company towards this benefit as at 31st March, 2015 is INR 8,280,382/- (Previous Year INR 6,452,379/-).

5 The Company has entered into operating lease arrangements for office space. Lease arrangements provide for cancellation by either of the parties and also contain a clause for renewal of the lease agreement. Lease payments on cancellable operating lease arrangements debited to Statement of Profit and Loss are as under.

6 Balances of trade receivables and trade payables are subject to reconciliation and confrmation by respective parties

7 An amount of INR 21,273,260/- is receivable from MITCON Foundation, a Trust promoted by the Company, against sale of land. The Company has given undertaking to Bank of Baroda that the said receivable shall not be recovered by the Company until the Term Loan availed of by MITCON Foundation from the Bank is repaid in full. In the opinion of the Management this receivable is good and fully recoverable.

8 a) Service Tax

i) The company has received Service Tax refund aggregating to INR 89,48,928/- against Service Tax paid by the company for the period 1st August,2010 to 30th June, 2011 in terms of Order passed in favour of the company by Commissioner (Appeals III) Central Excise Pune. However the Service Tax Department is in further appeal with Customs, Central Excise and Service Tax Appelate Tribunal against the said Order. Pending disposal of Appeal with Customs, Central Excise and Service Tax Appelate Tribunal, the Commisioner Central Excise Pune III. has issued on 26th February, 2014 show cause cum demand notice for recovery of service tax amount refunded. The company has refuted demand of recovery of Service Tax amount refunded.

ii) The Company has received show cause cum demand notices dated 16th April 2013 and 29th April, 2014 from the Commissioner of Central Excise Pune - III, calling upon the Company to Show cause as to why an amount of INR 1,46,40,244/- should not be charged / demanded and recovered from it for the period from 01st July 2011 to 31st March 2012 and a further amount of INR 86,01,654/- should not be charged / demanded and recovered from it for the period 1st April, 2012 to 30th June 2012 (being periods for which Company did not pay service tax). This claim is disputed and being contested by the Company by fling written submission before The Commissioner, Central Excise & Service Tax, Pune III Authorities.

Status of the issues enumerated in i) & ii) above remained unchanged during the year

b) Income Tax

Tax for A.Y.2009-10 amounting to INR 22,560/-, for A.Y.2011-12 amounting to INR 2,77,58,980/- and for A.Y.2013-14 amounting to INR 3,17,17,480/- shown by the Department as outstanding are without taking due cognizance of prepaid taxes. In fact, the Company is entitled to receive refund of income tax as per return of income fled for these years. Rectifcation proceedings for these years are pending before the Assessing officer.

9 Tuition fees received from MKCL

MITCON is a Training provider to Maharashtra Knowledge Corporation Limited (MKCL) for their MS-CIT and other courses. Fees of these training courses are directly collected by MKCL. On completion of these training programmes Tuition fees are shared by MKCL with the Company as per the Terms of Agreement. However as the Company's share of fees is not independently determinable by the Company prior to actual receipt thereof, these are accounted for on receipt basis.

10 Change in Accounting Policy

Consequent to applicability of the Schedule II of the Companies Act, 2013, read with "Application Guide on the Provisions of Schedule II of the Companies Act, 2013" issued by Institute of Chartered Accountants of India, depreciation on revalued portion of the fixed asset has been charged to Statement of Profit and Loss instead of being recouped from revaluation reserve. Consequently depreciation for the year is higher by INR 402,031/- and Profit for the year is lower by said amount. Further in accordance with the said application guide, equivalent amount has been transferred from revaluation reserve to general reserve.

11 Segment Reporting

Based on the guiding principle given in the Accounting Standard-17 "Segment Reporting" issued by the Institute of Chartered Accountants of India, the company's Primary Segments are

1 Consultancy and Training

2 Wind Power Generation

The above business segments have been identified considering:

a. The nature of the products/ operation

b. The related risks and returns

c. The internal financial reporting systems of the organization.

Segment revenue, results, assets and liabilities have been accounted for on the basis of their relationship to the operating activities of the segment and amounts allocated on a reasonable basis.

12 Utilization of money raised through Initial Public Offer

During the year ending 31st March, 2014 the company has made a public offer of 4,100,000 shares, which were fully subscribed.

13 Previous years figures have been re-grouped, reclassified wherever necessary to make them comparable with current year's figures.

Signatures to the Notes 1 to 44, forming part of the Financial Statements.


Mar 31, 2014

1. Rights, preferences and restrictions attached to shares:

The company has one class of equity shares having a par value of INR 10/- (Previous Year INR 100/-) per share. Each equity holder is entitled to one vote per share and have a right to receive dividend as recommended by Board of Directors subject to necessary approval from the shareholders.

In the event of liquidation of the Company, the holders of 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 equity shares held by the shareholders.

2. Utilisation of Incubatee Grant

Technology Development Board (TDB), Govt. of India has approved scheme ''Seed Support System for Start-ups in Incubators'' for providing financial assistance as seed support for start-ups in the MITCON incubator as growth oriented initiative between the Board and MITCON. The scheme is to make available early stage financial assistance as seed support for start-up units located at the MITCON incubator for further development and pre-commercialization of technologies. Accordingly MITCON has received grant of INR 40 lacs form TDB. INR 25 lacs were sanctioned to one incubatee towards Term Loan @ 5.50% interest rate with moratorium of one year and repayable within 5 years , out of which INR 11.12 lacs were disbursed during the year. This disbursement has not been deducted from Grant received, but separately disclosed under Loans and Advances.

3. Contingent liability not provided for

Year ended

Particulars 31st March, 2014 31st March, 2013

INR INR

Corporate Guarantee to Bank - - 78,820,000.00 given on behalf of MITCON Foundation

(Outstanding loan against this bank guarantee as on 31/03/2014 INR Nil PY INR 31.23 lacs)

Guarantees given by bankers to 15,857,573.00 9,772,975.00 customer on behalf of the Company

Service Tax Demand 32,190,826.00 14,640,244.00 (see Note No. 38)

4, The Company has no suppliers covered under The Micro, Small and Medium Enterprises Development Act 2006 (MSMED Act).

5. Disclosure pursuant to Accounting Standard (AS 15) - Revised 2005 "Employee Benefits"

A Defined contribution plans:

The company has recognized the following amounts in the Statement of Profit & Loss for the year :

i Contribution to employees provident fund INR 69,77,195/- (P.Y. INR 59,45,399 )

ii Contribution to employees family pension Fund INR. 14,50,405/- (P.Y. INR 14,93,461)

B Defined benefit plans - Gratuity

The company makes annual contribution to the life insurance corporation of india, a funded defined benefit plan for qualifying employees. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part there of in excess of 6 month. Vesting occurs only upon completion of 5 years of service except in case of death or permanent disability. The present value of defined benefit obligation and the related current service cost are measured using the Projected Unit Credit Method with actuarial valuation being carried out at the balance sheet date.

6. The Company has entered into operating lease arrangements for office space. Lease arrangements provide for cancellation by either party or by the Company and also contain a clause for renewal of the lease agreement. Lease payments on cancellable operating lease arrangements are debited to Statement of Profit and Loss.

7. Balances of trade receivables and trade payables are subject to reconciliation and confirmation by respective parties

8. An amount of INR 21,273,260/- is receivable from MITCON Foundation, a Trust promoted by and under the same management of the Company, against sale of land. The Company has given undertaking to Bank of Baroda that the said receivable shall not be recovered by the Company until the Term Loan availed of by MITCON Foundation from the Bank is repaid in full. In the opinion of the Management this receivable is good and fully recoverable.

9. A Service Tax

i) The company has received Service Tax refund aggregating to INR 89,48,928/- against Service Tax paid by the company for the period 1st August,2010 to 30th June, 2011 in terms of Order passed in favour of the company by Commissioner (Appeals III) Central Excise Pune. However the Service Tax Department is in further appeal with Customs, Central Excise and Service Tax Appelate Tribunal against the said Order. Pending disposal of Appeal with Customs, Central Excise and Service Tax Appelate Tribunal, the Commisioner Central Excise Pune III. has issued on 26th February, 2014 show cause cum demand notice for recovery of service tax amount refunded. The company has refuted demand of recovery of Service Tax amount refunded.

ii) The Company has received show cause cum demand notices dated 16th April 2013 and 29th April, 2014 from the Commissioner of Central Excise Pune - III, calling upon the Company to Show cause as to why an amount of INR 1,46,40,244/- should not be charged / demanded and recovered from it for the period from 01st July 2011 to 31st March 2012 and a further amount of INR 86,01,654/-should not be charged / demanded and recovered from it for the period 1st April, 2012 to 30th June 2012 (being periods for which Company did not pay service tax). This claim is disputed and being contested by the Company by filing written submission before The Commissioner, Central Excise & Service Tax, Pune III Authorities.

B Income Tax

Tax for A.Y.2009-10 amounting to Rs.22,560/-, for A.Y.2011-12 amounting to Rs. 2,77,58,980/- and for A.Y.2012-13 amounting to Rs.3,35,24,011/- shown by the Department as outstanding are without taking due cognizance of prepaid taxes. In fact, the Company is entitled to receive refund of income tax as per return of income filed for these years. Rectification proceedings for these years are pending before the Assessing Officer.

Tuition fees received from MKCL

MITCON is a Training provider to Maharashtra Knowledge Corporation Limited (MKCL) for their MS-CIT and other courses. Fees of these training courses are directly collected by MKCL. On completion of these training programmes Tuition fees are shared by MKCL with the Company as per the Terms of Agreement. However as the Company''s share of fees is not independently determinable by the Company prior to actual receipt thereof, these are accounted for on receipt basis.

10. Segment Reporting

Based on the guiding principle given in the Accounting Standard-17 "Segment Reporting" issued by the Institute of Chartered Accountants of India, the company''s Primary Segments are

1 Consultancy and Training

2 Wind Power Generation

The above business segments have been identified considering:

a. The nature of the products/ operation

b. The related risks and returns

c. The internal financial reporting systems of the organization.

Segment revenue, results, assets and liabilities have been accounted for on the basis of their relationship to the operating activities of the segment and amounts allocated on a reasonable basis.

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


Mar 31, 2013

1 Contingent liability not provided for

Year ended Particulars 31st March, 2013 31st March, 2012 INR INR

1) Corporate Guarantee to Bank given on behalf of MITCON 78,820,000.00 78,820,000.00 Foundation (Outstanding loan against this bank guarantee as on 31/03/2013 is Rs.31.23 lacs)

2) Guarantees given by bankers to customer on behalf of the 9,772,975.00 14,636,845.00 Company

3) Show Cause cum Demand Notice received from 14,640,244.00 - Commissioner of Central Excise, Pune - III, pertaining to the period 01/07/2011 to 31/03/2012. This claim is disputed by the Company and is being contested before the Service Tax Authorities.

2. The Company has no suppliers covered under The Micro, Small and Medium Enterprises Development Act 2006 (MSMED Act).

3. Disclosure pursuant to Accounting Standard (AS 15) - Revised 2005 "Employee Benefits" A Defined contribution plans:

The company has recognized the following amounts in the Statement of Profit & Loss for the period :

i Contribution to employees provident fund INR 59,45,399/- (P.Y. INR 52,95,250 )

ii Contribution to employees family pension Fund INR. 14,93,461/- (P.Y. INR 14,58,320)

B Defined benefit plans - Gratuity

The company makes annual contribution to the insurance corporation of India, a funded defined benefit plan for qualifying employees. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of 6 month. Vesting occurs only upon completion of 5 years of service except in case of death or permanent disability. The present value of defined benefit obligation and the related current service cost are measured using the Projected Unit Credit Method with actuarial valuation being carried out at the balance sheet date.

C The liability for the Leave Encashment as defined in AS 15 (revised 2005) has been provided on actuarial basis. Para 132 of AS 15 (revised 2005) does not require any specific disclosure except where the expense resulting from compensated absences is of such size, nature of incidence that its disclosure is relevant under other accounting standard. In the opinion of the management, the expenses resulting from leave encashment pertaining to current year is not significant and hence no disclosure is prepared under various paragraph of AS 15 (revised 2005). Unfunded liability as at 31 March, 2013 is INR 84,32,010/- Previous Year INR 63,28,784/-.

4 The Company has entered into operating lease arrangements for office space. Lease arrangements provide for cancellation by either party or by the Company and also contain a clause for renewal of the lease agreement. Lease payments on cancellable operating lease arrangements are debited to Statement of Profit and Loss.

5. Confirmation of balances from some trade receivables and trade payables are awaited.

6. An amount of INR 2,12,73,260/- is receivable from MITCON Foundation, a Trust promoted by and under the same management of the Company, against sale of land. The Company has given undertaking to Bank of Baroda that the said receivable shall not be recovered by the Company until the Term Loan availed of by MITCON Foundation from the Bank is repaid in full. In the opinion of the Management this receivable is good and fully recoverable.

7. Service Tax Refund

Central Board of Excise and Customs (CBEC) issued notification number 03/ 2010 dated 27th February 2010 withdrawing exemption from levy of service tax on Vocational Training Programmes. Consequently the Company paid service tax without charging the same for such programmes.

The Company had sought clarification from CBEC on applicability of Service Tax on Vocational training programmes conducted under centrally sponsored schemes. As per CBEC communication these services fall under commercial training and coaching services and are liable to levy of Service tax.

However, the Company has received clarification from the Tax Research Unit (TRU), Department of Revenue, Ministry of Finance, Government of India that the Vocational Training Programmes conducted by the Company under Centrally Sponsored Schemes fall under Business Auxiliary Services. This service provided by the Company is in relation to Educational training and hence exempt from levy of Service tax under exemption notification number 14/2004 ST dated 10th September 2004. Based on this clarification, the Company did not pay service tax for the period 1st July 2011 to 30th June 2012 and has claimed refund of Service Tax paid for the period 1st August 2010 till 30th June 2011 aggregating to INR 91,17,683/-. An amount of INR 53,67,520/- pertaining to the financial year 2010-11 and INR 37,50,163/- pertaining to financial year 2011-12 (aggregating to INR 91,17,683/- as aforesaid) appears as receivable under Other Non-current Assets from the financial year 2011-12. The claim for refund was rejected by Service Tax Department, Pune. The Company has appealed against the said order to Service tax Appellate Authority. The appeal has been decided in favor of the Company by the Commissioner (Appeals - III ), Central Excise Pune on 31-03-2013.

Necessary adjustments in the books for the refund will be made only on actual receipt of refund.

However, subsequently the Company has received show cause cum demand notice dated 16th April 2013 from the Commissioner of Central Excise Pune - III, calling upon the Company to Show cause as to why an amount of INR 1,46,40,244/- should not be charged / demanded and recovered from it for the period from 01st July 2011 to 31st March 2012 (being part of the period for which Company did not pay service tax). This claim is disputed and being contested by the Company by fling written submission on 10th July 2013 before The Commissioner, Central Excise & Service Tax, Pune III Authorities.

8. Tuition fees received from MKCL

MITCON is a Training provider to Maharashtra Knowledge Corporation Limited (MKCL) for their MS- CIT and other courses. Fees of these training courses are directly collected by MKCL. On completion of these training programmes Tuition fees are shared by MKCL with the Company as per the Terms of Agreement. However as the Company''s share of fees is not independently determinable by the Company prior to actual receipt thereof, these are accounted for on receipt basis.

9. Segment Reporting

Based on the guiding principle given in the Accounting Standard-17 "Segment Reporting" issued by the Institute of Chartered Accountants of India, the company''s Primary Segments are

1 Consultancy and Training

2 Wind Power Generation

The above business segments have been identified considering:

a. The nature of the products/ operation

b. The related risks and returns

c. The internal financial reporting systems of the organization.

Segment revenue, results, assets and liabilities have been accounted for on the basis of their relationship to the operating activities of the segment and amounts allocated on a reasonable basis.

10 Material Changes / Events subsequent to the end of the Accounting Period Changes in Face Value of each equity share and increase in Authorised Share Capital At the Extra Ordinary General Meeting of the Shareholders held on April 25, 2013 the Company has effected subdivision in the face value of equity share and increase in Authorised Capital as under :

a) Each existing equity share of Company of INR 100/- has been subdivided into 10 equity shares of Face Value of INR 10/- each and consequently the authorised share capital of Company INR 5,00,00,000/- now comprises of 50,00,000 equity shares of INR 10/- each.

b) The Authorised Share Capital of the Company has been increased from INR 5,00,00,000/- divided into 50,00,000 equity share of INR 10/- each to INR 15,00,00,000/- divided into 1,50,00,000 equity shares of INR 10/- each.

ii Issue of Bonus Shares and capitalisation of Reserves 75,00,000 equity shares of INR 10/- each have been issued and allotted as fully paid up bonus shares in the proportion of 15 equity shares for every one equity share held by utilisation of balance in Accumulated Profits. Consequently the issued, subscribed and paid up capital of the Company stands increased to INR 8,00,00,000/- divided into 80,00,000 equity shares of INR 10/- each.

iii The Company has received show cause cum demand notice dated 16th April 2013 from the Commissioner of Central Excise Pune - III, calling upon the Company to Show cause as to why an amount of INR 1,46,40,244/- should not be charged / demanded and recovered from it for the period from 01st July 2011 to 31st March 2012 (being part of the period for which Company did not pay service tax). This claim is disputed and being contested by the Company before the Service Tax Authorities.

11. Previous years figures have been re-grouped , reclassified wherever necessary. Signatures to the Notes 1 to 42, forming part of the Financial Statements.

 
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