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Notes to Accounts of Mysore Paper Mills Ltd.

Mar 31, 2014

1. Share capital

* The Company in its 77th AGM held on 31.12.2012 has approved the enhancement of Authorised Capital from 150.00 Crores to Rs 500.00 Crores. The Company has obtained exemption from BIFR for payment of stamp duty towards issue of share certificate to GOK and also towards filing fees to MCA. However, exemption for payment of stamp duty is sought from GOK. Due to above, formalities for enhancement of authorised capital is pending and consequently amount received from GOK which is pending allotment is shown under Share Application Money pending allotment to the extent within the authorised capital and under current liabilities over and above the authorised share capital.

** Includes 9,00,000 shares allotted by way of Bonus Shares by capitalisation of Share Premium and General Reserve

2. Borrowings

i) The mortgage and first charge on the company''s present and future immovable properties, plant and machinery, spares, tools, accessories and certain other movable properties and second charge on other assets offered as security to banks for cash credit facility, rank pari- passu in respect of term loans from financial institutions and banks. Similarly hypothecation of present and future current assets together with second charge on present and future assets of of the company secured for cash credit facility rank pari-passu among the consortium of bankers.

ii) Loan repayable on demand includes Working Capital facilities such as Cash credit, Over drafts and overdue loans obtained from banks and financial institutions are secured by hypothecation of company''s present and future stock of raw materials, consumable stores, finished goods, materials in process and book debts and by second charge on the present and future assets of the company, which are offered by way of first charge as security to Financial Institutions (IFCI) and Debenture Trustees.

iii) (a) Term loans from Financial Institutions and Banks are secured by a First charge on the company''s present and future immovable properties, Plant and Machinery, Spares, Tools, accessories and certain other movable properties and Second charge on the other assets offered as security to banks for cash credit.

(b) Interest free term loan sanctioned by banks are governed by the terms and conditions as set out in "Scheme for extending financial assistance to sugar undertaking" in accordance with notification dated 07.12.2007 issued by Government of India. These loans are secured in favour of concerned banks by residual pari - passu charge on the company''s current and fixed assets (movable and immovable properties) both present and future. The company has repaid the said loan to the extent of Rs. 404.20 Lakhs (Rs. 404.20 Lakhs) and Rs. 7.04 Lakhs outstanding as on 31.03.2014 is grouped under short term borrowings secured.

iv) (a) 12.75 % Optionally Fully Convertible Debentures issued to IFCI on conversion of entire overdue interest & funded interest term loan aggregating to Rs.677.02 lakhs were redeemable in three equal annual installments during FY 2010 to FY 2012 with earliest redemption due on 01.01.2010. Two installments were due to the extent of Rs. 451.35 Lakhs and interest accrued thereon was due to the extent of Rs. 211.13 lakhs was outstanding as on 31.03.2014.

(b) IFCI has approved One Time Settlement (OTS) of Loan repayment for an amount of Rs. 339 Lakhs towards Principal and Interest vide letter Ref IFCI/BLRO/MPMML/2014 - 311 dated 21.07.2014, which has BIFR consent, IFCI has waived principal amount of Rs. 112.35 Lakhs. The accrued Interest upto 31.03.2014 amounting to Rs. 211.13 Lakhs has also become non payable. With this OTS amount payable towards IFCI to the extent of Rs.339 Lakhs is disclosed under short term secured loan. Income Recognised on account of Principal and Interest amount waived on OTS is disclosed under Exceptional Items - Income to the extent of Rs. 239.98 Lakhs and reversal of current year interest to the extent of Rs. 83.50 Lakhs in accordance with the requirement of Accounting Standard 4 "contingencies and events occurring after the balance sheet date".

v) a) 8.27% Unsecured redeemable Non convertible bonds:

8.27% Unsecured redeemable non convertible bonds of Rs. 2625 Lakhs (Rs. 3500 lakhs) guaranteed by Government of Karnataka are redeemable in 4 equal installments from financial year 2013-14 onwards. During the FY 2013-14 the company has repaid an amount of Rs. 875 Lakhs towards 1st Installment. Amount repayable less than one year to the extent of Rs. 875 Lakhs (Rs. 875 lakhs) have been shown under short term borrowings.

b) 8.49% Unsecured redeemable Non convertible bonds:

During 2010-11 the Company had raised Rs 5000 lakhs by issue of 8.49 % Unsecured redeemable Non convertible bonds Guaranteed by Government of Karnataka towards implementation of augmentation of power plant, installing wet lap machine and implementing energy conservation measures, which are redeemable in 4 equal installments from financial year 2017-18 onwards. Due to non feasibility of the project part of the amount to the extent of 4130.97 Lakhs have not been utilised for the purpose, out of which amount including accumulated interest to the extent of Rs.3433 lakhs (Rs.3146.93 lakhs) is deposited in a scheduled bank is grouped/shown under cash and bank balances schedule No. 2.14.

c) 9.65% Unsecured redeemable Non convertible bonds:

During the FY 2012-13 the company had raised 9.65% unsecured Redeemable Non-Convertible Unsecured Taxable Bonds Guaranteed by Government of Karnataka to the extent of Rs. 5000 lakhs for a tenure of 10 years with call option at the discretion of the company from 7th Year and Redemption in 4 equal installments from F.Y. 2019-2020 onwards.

d) 8.95% Unsecured redeemable Non convertible bonds:

During the FY 2013-14 the company had raised 8.95% unsecured Redeemable Non-Convertible Unsecured Taxable Bonds Guaranteed by Government of Karnataka to the extent of Rs. 4000 lakhs for a tenure of 10 years with call option at the discretion of the company from 7th Year and Redemption in 4 equal installments from F.Y. 2020-2021 onwards.

vi) Short Term Loan from M/s Axis Bank Limited to the extent of Rs. 800 lakhs (Rs.800 lakhs) is due for repayment and the same is outstanding as on 31.03.2014.

3. Trade payables

Note: The company has not received any intimation from the suppliers regarding status under the Micro, Small and Medium Enterprises Development Act, 2006. Hence no disclosure is made in respect of ;

i) Amount due and outstanding to suppliers as at the end of the accounting year.

ii) Interest paid during the year.

iii) Interest payable at the end of the accounting year, and

iv) Interest accrued and unpaid at the end of the accounting year.

4. Tangible assets

a) Fixed assets include building, plant and machinery, furniture and fittings, office equipments, vehicles and earth moving equipments relating to captive forest plantation.

b) Based on the Verification and management assessment there are no impairment of assets as at 31st March, 2014.

c) The company has leased 4 acres of land for 20 years to M/s Anudeep Corbonates (P) Ltd, for setting up of an ancillary unit for manufacture of Burnt Lime and the same is governed by the Lease agreement dtd. 15.11.1997.

5. Loans and advances

* Loans and Advances (Unsecured considered good) includes an amount of Rs. 85.12 Lakhs (Rs. 90.51 Lakhs) paid towards special advance to employees and the same is classified under long term.

6. Other non-current assets - Unsecured, considered good

i. Expenditure relating to Captive Forest plantation other than fixed assets are grouped under other current assets and is shown at note 2.11 and will be charged to profit & loss account as per Accounting Policy No.1.02 (vii).

ii. Government of Karnataka has leased 30,000 hectares of degraded forest land and C and D class of lands to the company for raising captive plantations and use it for meeting pulp wood requirement.

iii. Out of total leased area, the company has surrendered 4665.30 hectares of wild life areas to the Government as per the orders of the Hon''ble Supreme Court. Further, as per the interim order of the Hon''ble High Court, 3813 hectares of non-forestry land has to be surrendered to the Government after extracting the yield from such areas in respective maturity years and 1121 hectares have been surrendered so far.

iv. Phase-I of the Captive Forest Plantation Programme has been financed by Overseas Development Agency, London, through Govt. of Karnataka, partly by Grant and partly by Loan and Equity. Government grants are accounted as per accounting Policy No. 1.10.

v. Company has received 201195.130 MT (194596.880 MT) of Wood from Captive Forest Plantations during the year out of 2994.65 hectares (2986.45 hectares) of land & has provided Rs.256.29 Lakhs (Rs. 174.94 Lakhs) towards 12.5% royalty/lease rental payable to Government of Karnataka.

vi. Farm forestry expenditure is charged-off to the profit and loss account.

7. Inventories (valued at cost or lower of net realisable value)

The company is in the process of identifying the Non-Moving items of Stores & Spares, pending which the company has retained the provision towards Non Moving Stores & Spares to the extent of Rs 640.86 Lakhs as on 31.03.2014 which is adequate.

8. Trade receivables

a) Confirmation of balances received/to be received from debtors are required to be reconciled wherever necessary and suitably adjusted.

b) During the year company has written back Rs 56 lakhs (Rs 62 lakhs) for which the provision for bad and doubtful debts was made during earlier years.

c) Doubtful debts includes an amount of Rs. 546.61 Lakhs (Rs. 454.72 Lakhs) being Interest provided on defaulted outstanding upto 31.03.2014. The same has been provided in full and accounted under Provision for bad & doubtful debts.

9. Other income

a) Interest on Deposits and Advances include interest earned on Fixed Deposits to the extent of Rs. 441.13 Lakhs (Rs. 306.63 Lakhs).

b) Provision no longer required-written back Includes withdrawal of Provision for Bad & Doubtful Debts provided during earlier years withdrawn on collection from debtors to the extent of Rs.56 Lakhs.

10. Finance costs

Interest on others includes:

a) Rs. 248.82 Lakhs towards interest on VAT, CST & Entry tax delayed payments.

b) Rs. 7.18 Lakhs (Rs. 29.41 Lakhs) being interest on delayed payment to Provident Fund Trust.

11.

i) Share Application Money grouped under Sch - 2.06 - other current liabilities to the extent of Rs. 11710.55 Lakhs includes the following:

a) Government of Karnataka had accorded sanction of conversion of entire GOK loan as on 31.03.2012 to the extent of Rs. 10102.50 Lakhs into Equity vide GO NO.CI 86/CPM/2011 Dated 31.03.2012 and had made Cash Equity Infusion to the extent of Rs.500 Lakhs vide GO NO. CI 86/CPM/2011 Dated 12.01.2012. The allotment of shares were approved by members in the 77th AGM held on 31.12.2012. Due to pending formalities at the Ministry of Corporate Affairs the amount of Rs. 7491.84 Lakhs is disclosed under "Share application money pending allotment" Grouped under Other Current Liabilities and an amount of Rs. 3110.66 Lakhs to the extent of unallotted authorised capital is disclosed under Share Application Money Pending Allotment and disclosed in the face of the Balance Sheet.

b) During FY 2012-13 Government of Karnataka had converted outstanding Guarantee Commission Payable as on 31.03.2013 as Investment to the extent of Rs. 218.71 Lakhs vide its order No. CI 86 CPM 2011 Dt. 30.03.2013. The same is grouped under Share Application Pending Allotment and grouped under Other Current Liabilities till further approval from members and SEBI.

c) The Government of Karnataka has infused capital under Head of Account 4860 - Capital outlay- investments in Public and other under taking in the form equity has been accounted accordingly for the following capital infusions:

During 2012-13:

i) G.O. NO : CI.131.CPM Dated 2.11.2012 Rs. 1000 lakhs

ii) G.O. NO : CI.131.CPM Dated 8.02.2013 Rs.1000 lakhs

During 2013-14:

i) G.O. NO : CI.99.CPI.2013 Dated 19.10.2013 Rs.1000 lakhs

ii) G.O. NO : CI.99.CPI.2013 Dated 19.03.2013 Rs.1000 lakhs

During the FY 2013-14, the above equity infusion of Rs.4000 lakhs which is over and above authorised capital is grouped under other current liabilities as share application money.

ii) During the FY 2013-14, GOK has granted working capital assistance to the extent of Rs.2000 Lakhs vide G.O. No.: CI.99.CPI.2013 Dated 04.01.2014. the Amount later was converted into working capital loan vide GO No. : CPM:2014 Dated 23.03.2014. However, terms and conditions of the working capital loan was prescribed in the GO.

12. Outstanding forward contract as at the balance sheet date is as given below:

a) The company has recognised Rs.75.83 Lakhs as Net Foreign Currency liability on forward contracts disclosed under other current liabilities.

b) The difference between the spot rate and the forward rate is recognised as deferred premium and amortised over the period of the contract. During the FY 2013-14 the company has amortised an amount of Rs. 20.95 Lakhs towards premium on forward contracts.

c) The fair value of the foreign currency assets on the above forward contracts have been restated as at the year end and foreign exchange loss to the extent of Rs.32.74 Lakhs have been recognised in the profit and loss account.

13. Contingent liabilities and commitments

31.03.2014 31.03.2013 Rs. In Lakhs Rs. In Lakhs

a) Claims against the company not acknowledged as debt 1342.80 977.88

b) Letters of Credit and Guarantees 800.00 800.00

c) Estimated amount of contracts remaining to be executed on capital account and not provided for 1306.75 1177.43

3449.55 2955.31

14. An amount of Rs. 201.47 Lakhs (Rs. 124.16 Lakhs) interest payable upto March-2014 towards purchase tax has not been provided as the company has requested the Government for waiver of Purchase Tax payable and the proposal is under active consideration of the Government.

15. Pending Legal Dispute on Forest Field Workers under the ''Karnataka Daily Wage Workers Welfare Rules 2012'', no provision is made in the books of account. As the matter is subjudice, quantification of financial liability is not ascertainable.

16. Pending reconciliation with MESCOM an amount of Rs. 1042.86 Lakhs (Rs. 677.94 Lakhs) being the disputed amount claimed is not provided in the books as on 31.03.2014. Total arrears claimed by MESCOM as on 31.03.2014 is Rs. 3933.02 Lakhs (Rs. 2779.09 Lakhs) and provision held by MPM is to the extent of Rs. 2890.16 Lakhs (Rs. 2101.15 Lakhs).

17. Figures for the previous year have been regrouped/reclassified/recast wherever necessary to conform to current year''s presentation.

18. The company has huge accumulated losses as per provisions of Income Tax Act, 1961 and as a measure of prudence the company has not recognized the deferred tax asset in financial statements.

19. EMPLOYEE BENEFITS

The fair value of the assets of the provident fund trust including the return on the assets there of as on the Balance Sheet date being greater than the obligations under the defined benefit plan, no further charge to the profit and loss account is required.

20. The Accounts for the FY 2013-14 was approved by the Board on 03.09.2014 and reported by the statuary Auditors on 03.09.2014 were revised in light of the observations of Comptroller and Auditor General of India during their supplementary Audit under section 143 (6) and (7) of the Companies Act 2013. There is no change in the profit or loss for the year due to revision.


Mar 31, 2013

1.1PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS: AS-29

(a) Provision is recognized when

i. The company has a present obligation as a result of past event.

ii. It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and iii. A reliable estimate can be made of the amount of the obligation.

(b) Contingent liabilities are disclosed by way of Notes to accounts.

(c) Contingent assets are neither recognised nor disclosed.

i) Working Capital facilities obtained from banks are secured by hypothecation of company''s present and future stock of raw materials, consumable stores, finished goods, materials in process and book debts and by second charge on the present and future assets of the company, which are offered by way of first charge as security to Financial Institutions (IFCI) and Debenture Trustees.

(ii) (a) Term loans from Financial Institutions and Banks are secured by a First charge on the company''s present and future immovable properties, Plant and Machinery, Spares, Tools, accessories and certain other movable properties and Second charge on the other assets offered as security to banks for cash credit.

(b) Interest free term loan sanctioned by banks are governed by the terms and conditions as set out in "Scheme for extending financial assistance to sugar undertaking" in accordance with notification dated 07.12.2007 issued by Government of India. These loans are secured in favour of concerned banks by residual pari – passu charge on the company''s current and fixed assets (movable and immovable properties) both present and future. During the year, the company has repaid a sum of Rs. 83.85 Lakhs (Rs.318.35 Lakhs).

iii) (a) 12.75 % Optionally Fully Convertible Debentures issued to IFCI on conversion of entire overdue interest & funded interest term loan aggregating to Rs.677.02 lakhs were redeemable in three equal annual installments during FY 2010 to FY2012 with earliest redemption due on 01.01.2010. In the event of default, IFCI have the right to convert all the defaulted amounts into equity at par. These debentures are secured by way of first charge on the fixed assets of the company present and future on pari-passu basis.

(b) The rescheduled repayment of First and Second Installment which was due on 01.01.2012 has not been paid by the company. Total amount due to IFCI as on 31.03.2013 is Rs. 451.35 Lakhs and the same is shown under short term borrowing secured, as the company had defaulted the repayment of loan Interest has been provided at band rate.

iv) The mortgage and first charge on the company''s present and future immovable properties, plant and machinery, spares, tools, accessories and certain other movable properties and second charge on other assets offered as security to banks for cash credit facility, rank pari-passu in respect of term loans from financial institutions and banks. Similarly hypothecation of present and future current assets together with second charge on present and future assets of the company secured for cash credit facility rank pari-passu among the consortium of bankers.

v) From Govt. of Karnataka

a) During the F.Y. 2012-13 the GOK has released working capital support vide GOK order (i)GO CI.131.CPM 2012 Dated 02.11.2012 for Rs 1000 lacs and (ii) CI.131.CPM 2012 Dated 8.02.2013 for Rs 1000 lacs . In the absence of terms of sanction company has disclosed the said loan under long term unsecured borrowings and has provided interest @ 9%.

vi) (i) 8.27% Unsecured redeemable Non convertible bonds:

8.27% Unsecured redeemable non convertible bonds of Rs.3500 lakhs guaranteed by Government of Karnataka are redeemable in 4 equal installments from financial year 2013-14onwards. Amount payable less then one year to the extent of Rs 875 Lakhs have been shown under short term borrowings

(ii) 8.49% Unsecured redeemable Non convertible bonds:

During 2010-11 the Company had raised Rs 5000 lakhs by issue of 8.49 % Unsecured redeemable Non convertible bonds Guaranteed by Government of Karnataka towards implementation of augmentation of power plant, installing wet lap machine and implementing energy conservation mesures, which are redeemable in 4 equal installments from financial year 2017-18 onwards. Due to non feasability of the project part of the amount to the extent of Rs. 4130.97 lakhs has not been utilised for the purpose, out of which amount to the extent of Rs.3146.93 lakhs (Rs.3307.71 lakhs) is deposited in a scheduled bank is grouped/shown under cash and bank balances schedule no. 2.14.

iii) 9.65% Unsecured redeemable Non convertible bonds:

During the F.y. 2012-13 company has raised Rs.5000 Lakhs by issue of 9.65% Unsecured Redeemable Non-Convertible Taxable Bonds Guranteed by Government of Karnataka towards working capital requirement. The Bonds are for a tenure of 10 years with call option at the discretion of the company from 7th Year and Redemption in 4 equal installments from F.Y. 2019-2020 onwards.

vii) Short Term Loan from M/s Axis Bank Limited to the extent of Rs. 800 lakhs (Rs.800 lakhs) is due for repayment and the same is outstanding as on 31.03.2013.

i. Expenditure relating to Captive Forest plantation other than fixed assets are grouped under other current assets and is shown at note 2.11 and will be charged to profit & loss account as per Accounting Policy No.1.02 (vii).

ii. Government of Karnataka has leased 30,000 hectares of degraded forest land and C and D class of lands to the company for raising captive plantations and use it for meeting pulp wood requirement.

iii. Out of total leased area, the company has surrendered 4665.30 hectares of wild life areas to the Government as per the orders of the Hon''ble Supreme Court. Further, as per the interim order of the Hon''ble High Court, 3813 hectares of non-forestry land has to be surrendered to the Government after extracting the yield from such areas in respective maturity years and 1121 hectares have been surrendered so far.

iv. Phase-I of the Captive Forest Plantation Programme has been financed by Overseas Development Agency, London, through Govt. of Karnataka, partly by Grant and partly by Loan and Equity. Government grants are accounted as per accounting Policy No. 1.10.

v. Company has received 194596.880 MT (185994 MT) of Wood from Captive Forest Plantations during the year out of 2986.45 hectares (2871.50 hectares) of land & has provided Rs.174.94 lakhs (Rs. 207.91 lakhs) towards 12.5% royalty/lease rental payable to Government of Karnataka.

vi. Farm forestry expenditure is charged-off to the profit and loss account.

(a) Government of Karnataka has released Rs.500 lacs towards fresh cash equity infusion vide G.O.No. CI 86/CPM 2011, Bangalore Dated 12.01.2012. The same is disclosed under "Share application money pending allotment" vide approval by members in the 77th AGM held on 31.12.2012. However approval from appropriate authorities is awaited for allotment of shares.

(b) During the year Government of Karnataka has converted outstanding Guarantee Commission Payable as on 31.03.2013 as Investment to the extent of Rs.218.71 Lacs vide its order No. CI 86 CPM 2011 Dt. 30.03.2013. The same is grouped under Share Application Pending Allotment till further approval from members and SEBI.

1.2 Contingent liabilities and commitments

31.03.2013 31.03.2012 Rs. In Lacs Rs. In Lacs

(a) Claims against the company not acknowledged as debt 977.88 904.42

(b) Letters of Credit and Guarantees 800.00 3271.78

(c) Estimated amount of contracts remaining to be executed on capital account and not provided for 1177.43 2061.20

2955.31 6237.40

1.3 An amount of Rs.124.16 lacs interest payable towards purchase tax for the period Sep-09 to Mar-13 has not been provided as the company has requested the Government for waiver of Purchase Tax payable and the proposal is under active consideration of the Government.

1.4 Pending reconciliation with MESCOM an amount of Rs.677.94 Lacs (Rs.369.52 lacs) being the disputed amount claimed is not provided in the books as on 31.03.2013. Total arrears claimed by MESCOM as on 31.03.2013 is Rs. 2779.09 lacs and provision held by MPM is to the extent of Rs.2101.15 lacs.

1.5 Figures for the previous year have been regrouped / reclassified/recast wherever necessary to conform to current year''s presentation.

1.6 Amounts have been rounded off to the nearest two decimal points of lakh of rupees.


Mar 31, 2010

1.1 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS : AS - 29

(a) Provision is recognised when :

i.The Company has a present obligation as a result of past event.

ii. It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and

iii. A reliable estimate can be made of the amount of the obligation.

b) Contingent Liabilities are disclosed by way of Notes on accounts.

c) Contingent Assets are neither recognised not disclosed.

 
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