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Notes to Accounts of N R Agarwal Industries Ltd.

Mar 31, 2015

Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs 10 per share. Each equity shareholder is entitled to one vote per share.

1 Term loan from Bank of Baroda, balance outstanding amounting to ' 3924.38 Lacs (March : 2014 Rs 9025.00 Lac) is secured by way of first pari passu charge (i) on movable assets including plant and machinery and immovable assets at Unit I at Vapi and excluvise first charge on movable assets including plant and machinery and immovable assets at Unit II, III and IV at Vapi and Unit V at Sarigam (excluding vacant non-agricultural land of 37.61 acres at Sarigam, Gujarat) (ii) second pari passu charge on current assets of the Company, (iii) pledge of entire unencumbered shares of the company held by Shri R.N. Agarwal, Shri Raunak Agarwal and Smt. Reena Agarwal on pari passu basis and (iv) personal guarantees of Shri R. N. Agarwal, Shri Raunak Agarwal and Smt. Reena R. Agarwal.

Repayble in 32 quarterly installments starting from 30.1 1.2014. Last installment due on 31.08.2022. Rate of interest 14.00% p.a. as at year end. (Previous year 11.50% p.a.)

2 Term loan from Bank of Baroda, balance outstanding amounting to Rs 2071.87 Lacs (March : 2014 Rs 3516.39 Lac) is secured by way of first pari passu charge (i) on movable assets including plant and machinery and immovable assets at Unit I at Vapi and excluvise first charge on movable assets including plant and machinery and immovable assets at Unit II, III and IV at Vapi and Unit V at Sarigam (excluding vacant non-agricultural land of 37.61 acres at Sarigam, Gujarat) (ii) second pari passu charge on current assets of the Company, (iii) pledge of entire unencumbered shares of the company held by Shri R.N. Agarwal, Shri Raunak Agarwal and Smt. Reena Agarwal on pari passu basis and (iv) personal guarantees of Shri R. N. Agarwal, Shri Raunak Agarwal and Smt. Reena R. Agarwal.

Repayble in 32 quarterly installments starting from 30.1 1.2014. Last installment due on 31.08.2022. Rate of interest 11.00% p.a. as at year end. (Previous year 11.00% p.a.)

3 Term loan from Bank of Baroda, balance outstanding amounting to ' 6562.50 Lacs (March : 2014 Rs 4838.61 Lac) is secured by way of first pari passu charge (i) on movable assets including plant and machinery and immovable assets at Unit I at Vapi and excluvise first charge on movable assets including plant and machinery and immovable assets at Unit II, III and IV at Vapi and Unit V at Sarigam (excluding vacant non-agricultural land of 37.61 acres at Sarigam, Gujarat) (ii) second pari passu charge on current assets of the Company, (iii) pledge of entire unencumbered shares of the company held by Shri R.N. Agarwal, Shri Raunak Agarwal and Smt. Reena Agarwal on pari passu basis and (iv) personal guarantees of Shri R. N. Agarwal, Shri Raunak Agarwal and Smt. Reena R. Agarwal.

Repayble in 32 quarterly installments starting from 30.1 1.2014. Last installment due on 31.08.2022. Rate of interest 13.00% p.a. as at year end. (Previous year 13.00% p.a.)

4 Funded Interest Term Loan (FITL)from Bank of Baroda, balance outstanding amounting to Rs 2189.38 Lacs (March : 2014 Rs 1809.88 Lac) is secured by way of first pari passu charge (i) on movable assets including plant and machinery and immovable assets at Unit I at Vapi and excluvise first charge on movable assets including plant and machinery and immovable assets at Unit II, III and IV at Vapi and Unit V at Sarigam (excluding vacant non-agricultural land of 37.61 acres at Sarigam, Gujarat) (ii) second pari passu charge on current assets of the Company, (iii) pledge of entire unencumbered shares of the company held by Shri R.N. Agarwal, Shri Raunak Agarwal and Smt. Reena Agarwal on pari passu basis and (iv) personal guarantees of Shri R. N. Agarwal, Shri Raunak Agarwal and Smt. Reena R. Agarwal.

Repayble in 16 quarterly installments starting from 30.1 1.2014. Last installment due on 31.08.2018. Rate of interest 10.50% p.a. as at year end. (Previous year 10.50% p.a.)

5 Foreign Currency Non-Resident (FCNR-B-Loan) from Bank of Baroda, as part conversion of term loans, balance outstanding amounting to Rs 6337.50 Lacs (March : 2014 Rs 0.00 Lac) is secured by way of first pari passu charge (i) on movable assets including plant and machinery and immovable assets at Unit I at Vapi and excluvise first charge on movable assets including plant and machinery and immovable assets at Unit II, III and IV at Vapi and Unit V at Sarigam (excluding vacant non-agricultural land of 37.61 acres at Sarigam, Gujarat) (ii) second pari passu charge on current assets of the Company, (iii) pledge of entire unencumbered shares of the company held by Shri R.N. Agarwal, Shri Raunak Agarwal and Smt. Reena Agarwal on pari passu basis and (iv) personal guarantees of Shri R. N. Agarwal, Shri Raunak Agarwal and Smt. Reena R. Agarwal.

Repayble in 32 quarterly installments starting from 30.1 1.2014. Last installment due on 31.08.2022. Rate of interest 6.328% p.a. as at year end. (Previous year 0.00% p.a.)

6 Corporate Loan from The Saraswat Co-Operative Bank Ltd., balance outstanding amounting to Rs 2257.13 Lacs (March : 2014 Rs 2315.00 Lac) is secured by way of first pari passu charge on movable assets including plant and machinery and immovable assets at Unit I at Vapi. The loan is further secured on exclusive basis (i) Directors residential bunglow at Lokhandwala, Andheri (W), Mumbai 400053, (ii) the non agricultural land admeasuring 37.61 acres at Sarigam, Gujarat (iii) pledge of entire unencumbered shares of the company held by Shri R.N. Agarwal, Shri Raunak Agarwal and Smt. Reena Agarwal on pari passu basis and (iv) personal guarantees of Shri R. N. Agarwal, Shri Raunak Agarwal and Smt. Reena R. Agarwal .

Repayble in 32 quarterly installments starting from 30.1 1.2014. Last installment due on 31.08.2022. Rate of interest 13.50% p.a. as at year end. (Previous year 13.50% p.a.)

7 Funded Interest Term Loan(FITL) from The Saraswat Co-Operative Bank Ltd., balance outstanding amounting to Rs 539.87 Lacs (March : 2014 Rs 487.34 Lac) is secured by way of first pari passu charge on movable assets including plant and machinery and immovable assets at Unit I at Vapi. The loan is further secured on exclusive basis (i) Directors residential bunglow at Lokhandwala, Andheri (W), Mumbai 400053, (ii) the non agricultural land admeasuring 37.61 acres at Sarigam, Gujarat (iii) pledge of entire unencumbered shares of the company held by Shri R.N. Agarwal, Shri Raunak Agarwal and Smt. Reena Agarwal on pari passu basis and (iv) personal guarantees of Shri R. N. Agarwal, Shri Raunak Agarwal and Smt. Reena R. Agarwal .

Repayble in 16 quarterly installments starting from 30.1 1.2014. Last installment due on 31.08.2018. Rate of interest 10.50% p.a. as at year end. (Previous year 10.50% p.a.)

8 Mortgage Loan from India Infoline Finance Ltd., balance outstanding amounting to Rs 900.00 Lacs (March : 2014 Rs 0.00 Lac) is secured by exclusive charge on office premises situated at Office No. 1101, 11th Floor, Fortune Terraces, Mahashree Compound, New Link Road, Oshiwara, Andheri - West, Mumbai - 400 053 and personal guarantees of Shri R. N. Agarwal, Shri Raunak Agarwal and Smt. Reena R. Agarwal .

Repayble in 120 monthly installments starting from 05.04.2015. Last installment due on 05.03.2025. Rate of interest 14.00% p.a. as at year end. (Previous year 0.00% p.a.)

9 Vehical Loan from HDFC Bank Ltd., balance outstanding amounting to Rs 9.05 Lacs (March : 2014 Rs 16.02 Lacs) is secured by hypothecation of Motor Car.

Repayble in 36 monthly installments starting from 07.06.2013. Last installment due on 07.05.2016. Rate of interest 10.00% p.a. as at year end. (Previous year 10.00% p.a.)

10 Vehical Loan from HDFC Bank Ltd., balance outstanding amounting to Rs 0.53 Lacs (March : 2014 Rs 3.51 Lacs) is secured by hypothecation of Forklift.

Repayble in 35 monthly installments starting from 20.07.2012. Last installment due on 20.05.2015. Rate of interest 11.00% p.a. as at year end. (Previous year 11.00% p.a.)

11 Vehical Loan from HDFC Bank Ltd., balance outstanding amounting to Rs 0.53 Lacs (March : 2014'3.51 Lacs) is secured by hypothecation of Forklift.

Repayble in 35 monthly installments starting from 20.07.2012. Last installment due on 20.05.2015. Rate of interest 11.00% p.a. as at year end. (Previous year 11.00% p.a.)

12 Vehical Loan from HDFC Bank Ltd., balance outstanding amounting to Rs 0.53 Lacs (March : 2014 Rs 3.51 Lacs) is secured by hypothecation of Forklift.

Repayble in 35 monthly installments starting from 20.07.2012. Last installment due on 20.05.2015. Rate of interest 11.00% p.a. as at year end. (Previous year 11.00% p.a.)

13 Vehical Loan from HDFC Bank Ltd., balance outstanding amounting to Rs 1.03 Lacs (March : 2014 Rs 6.85 Lacs) is secured by hypothecation of Forklift.

Repayble in 35 monthly installments starting from 20.07.2012. Last installment due on 20.05.2015. Rate of interest 11.00% p.a. as at year end. (Previous year 11.00% p.a.)

14 Vehical Loan from HDFC Bank Ltd., balance outstanding amounting to Rs 0.82 Lacs (March : 2014 Rs 5.43 Lacs) is secured by hypothecation of JCB.

Repayble in 35 monthly installments starting from 20.07.2012. Last installment due on 20.05.2015. Rate of interest 11.00% p.a. as at year end. (Previous year 11.00% p.a.)

15 Vehical Loan from HDFC Bank Ltd., balance outstanding amounting to Rs 1.03 Lacs (March : 2014 Rs 6.85 Lacs) is secured by hypothecation of Bolero.

Repayble in 35 monthly installments starting from 20.07.2012. Last installment due on 20.05.2015. Rate of interest 11.00% p.a. as at year end. (Previous year 11.00% p.a.)

16.(a) In accordance with the provisions of Schedule II of the Companies Act, 2013 in case of fixed assets which have completed their useful life as at April 1,2014, the carrying value (net of residual value) amounting to Rs 90.33 lacs (net of deferred tax of Rs 40.39 lacs) as a transitional provision has been recognised in the Retained Earnings.

(b) Further in case of assets acquired prior to 1st April, 2014, the carrying value of assets (net of residual value) is depreciated over the remaining useful life as determined effective 1st April, 2014

(c) Depreciation expenses for the year would have been higher by '197.35 lacs had the Company continued with the previous assessment of useful life of such assets.

17. RELATED PARTY DISCLOSURES

Key Management Personnel & Relatives

1 Shri. R N Agarwal

2 Shri. Raunak Agarwal

3 Shri Mangilal Suthar

4 Smt. Reena R Agarwal

5 Shri Gopal Uchil

6 Smt. Hemali Shah

7 Shri RHK Sinha

8 Ms Pooja Daftary

18. Notes:

a. Loans to Employees as per Company's policy are not considered

b.Related party relationship is as identified by the Company and relied upon by the auditors.

19. CONTINGENT LIABILITIES AND PROVISIONS

(a) Guarantees and counter guarantees ' 32,00,000/- (Previous Year Rs 1,200,000/-)

(b) Excise duty demands and penalties Rs 2,21,16,306/- (Previous Year Rs 17,05,071/-)

(c) Custom duty demands and penalties Rs 34,90,152/- (Previous Year Rs NIL)

(d) Claims against the Company not acknowledged as debts - Rs 9,03,286/-- (Previous year Rs 7,79,936/-)

(e) Letters of Credit outstanding Rs 22,90,88,107/- (Previous Year Rs 9,16,79,769/-)

(f) The Company has imported capital goods under "Export Promotion Capital Goods" scheme for which the company has an given export obligation of Rs 42,00,26,154/- (Previous Year Rs 2,60,38,382 /-)

(g) Income tax matters disputed in appeal Rs 18,67,30,693/- (previous year Rs 15,36,77,003/-)

The Income tax assessments of the Company have been completed upto Assessment Year 2012-13

The total demand outstanding as on 31.03.2015 on account of income tax dues for Assessment Year 2007-08 to Assessment Year 2012-13 is Rs 18,67,30,693/- (previous year Rs 15,36,77,003). The Income Tax Appellate Tribunal, Ahmedabad disposed off the appeals filed by the Company for the disputed tax demand of Rs 108,445,192 for the Assessment Years 2007-08 to 2010-11 by remitting back the mater to CIT(A) for disposal on merits and law. The proceedings are under progress.

The income tax department is in appeal before the Hon'ble High Court of Ahmedabad on various grounds decided by the Income Tax Appeallate Tribunal

The Company has preferred an appeal to the Commissioner of Income Tax (Appeals), Ahmedabad for the demand notice of Rs 4,52,31,811/- received from the Income Tax Department for the Assessment Year 2011-12 The matter is pending for disposal. The Management is of the opinion that the Company is entitled to deduction under Section 80-IA(4)(iv) of the Income Tax Act, 1961 and hence, no provision for aforesaid demand/notices has been made in the books of accounts.

The Company has preferred an appeal to the Commissioner of Income Tax (Appeals), Ahmedabad for the demand notice of Rs 3,30,53,690/- received from the Income Tax Department for the Assessment Year 2012-13 The matter is pending for disposal. The Management is of the opinion that the Company is entitled to deduction under Section 80-IA(4)(iv) of the Income Tax Act, 1961 and hence, no provision for aforesaid demand/notices has been made in the books of accounts.

20. Estimated amount of Contracts remaining to be executed on capital account and not provided for (net of advances) Rs 1,35,47,265/- (Previous year Rs 6,83,44,674/-).

21. The Company had entered into an MOU dated February 3, 2011 with Damanganga Recycling Resources LLP (DRR) for availing the services of conversion of waste to energy. In terms of the MOU, the Company has paid Rs 1,20,00,000 as interest free deposit adjustable against the tipping bills. However, the said project has not materialized and the amount of Rs 1,20,00,000 paid by the Company as Deposit has been forfeited by DRR. Consequently, the Company has initiated legal proceedings. The management is confident that the outcome would be decided in the Company's favour and hence, no provision for the said amount has been made in the books of accounts.

22. Sundry Debtors, Sundry Creditors, Unsecured Loans and Loans and Advances balances are subject to confirmation and reconciliation.

23. Segment Reporting

The Company operates in Single Business Segment of 'Manufacturing of Paper Boards & Newsprint'. Therefore, the Company is of the view that the disclosure requirement of Accounting Standard AS-17 issued by the Institute of Chartered Accountants of India is not applicable to the Company.

24. Bank of Baroda has issued a counter guarantee (DPG) to Deutsche Bank AG, amounting to Rs Nil to fulfill certain contractual payment obligations for the import of certain capital goods. However, the company has provided the full liability of the said contract and same is included under Sundry Creditors (Previous Year Rs 1,27,61,925/-).

25. Remuneration to the Chairman and Managing Director (CMD)

(a) For the year 2012-13 the Central Government vide approval dated July 22, 2014 has approved waiver of excess remuneration paid to the Chairman and Managing Director over the limits prescribed under Section 198 read with Schedule XIII of the Companies Act, 1956.

(b) In view of the inadequacy of profit for the year 2013-14 remuneration paid to the Chairman and Managing Director was in excess of the limit prescribed under Section 198 read with Schedule XIII of the Companies Act, 1956. Pending approval by the Central Government, the Chairman and Managing Director holds the excess remuneration paid amounting to Rs 19,50,000/- in trust for the Company.

26. Previous year's figures have been regrouped wherever necessary to conform to this year's classification.


Mar 31, 2014

1. Notes:

Corporate Loan from Saraswat Co-operative Bank Ltd. is secured by a first pari passu charge on the plant and machinery situated at Unit I at Vapi and further secured by extension of existing security on immovable properties at Unit I, Vapi. It is also further secured by exclusive charge by way of equitable mortgage of Directors residential bunglow at Lokhandwala, Andheri (W), Mumbai 400053 along with an exclusive charge by way of legal mortgage on non agricultural land admeasuring 37.61 acres at Sarigam, Gujarat. The loan is further secured by personal guarantees of Shri R. N. Agarwal, Shri Raunak Agarwal and Smt. Reena Agarwal.

The Project Loan from Bank of Baroda is secured by first pari passu charge by way of hypothecation of plant and machinery situated at Vapi and at Sarigam and first pari passu charge on immovable properties (Unit I, II, III, IV and V) situated at Vapi and Sarigam, together with buildings and other structures thereon (excluding vacant non-agricultural land of 37.61 acres at Sarigam, Gujarat) and second pari passu charge on current assets of the Company. It is further secured by the personal guarantees of Shri. R N Agarwal, Shri Raunak Agarwal and Smt. Reena Agarwal.

All the above loans are further secured by pledge of entire unencumbered shares of the Company held by Shri R. N. Agarwal, Shri Raunak Agarwal and Smt. Reena Agarwal.

The New office premises Loan from Bank of India is exclusively secured by equitable mortgage on the said property and further secured by the personal guarantee of Shri. R N Agarwal.

Term loan is inclusive of the loan availed from HDFC Bank against hypothecation of forklift, Loader and Terex.

2. The Cash Credit from Banks are secured by hypothecation of present and future stock of raw materials, steam coal, goods in process, finished goods and books debts etc. ranking pari passu inter-se and second charge on Company''s movable and immovable fixed assets (excluding non-agricultural land admeasuring 37.61 acres situated at Sarigam, Gujarat) and office premises situated at Mumbai which are exclusively charged to other lenders. It is further secured by personal guarantees of Shri. R N Agarwal, Shri Raunak Agarwal and Smt. Reena Agarwal. The Cash Credit from Banks is additionally secured by pledge of entire unencumbered shares of the Company held by Shri R. N. Agarwal, Shri Raunak Agarwal and Smt. Reena Agarwal.

3. Out of the said amount Rs. 4,436,416 (March 31,2013 : Rs. 6,678,921) pertains to micro, small and medium enterprises as defined under Micro, Small, and Medium Enterprises Development Act, 2006 based on the information available with the Company. There is no interest payable to such parties as at March 31,2014 (March 31,2013: Rs. Nil).

4. Capital work in progress includes Rs. 2,775,440,244/- pertaining to Unit V. The Company has received approval from the Ministry of Environment & Forest, New Delhi and from the state government for the co-generation plant and the project is under implementation.

Capital work in progress includes Rs. 118,371,544/- under construction of new office premises at Fortune Terraces. According to the sale agreement dated January 20, 2010 the possession of the said premises were agreed to be given on March 31,2011. However, due to delay in obtaining of the occupation certificate by the developer possession of the said premises further delayed. As per the Sale Agreement, Company has to pay 18 months outgoing charges of Rs. 1,730,600/- alongwith other charges on taking the possession for which Company has not made provision in the accounts.

5. CONTINGENT LIABILITIES AND PROVISIONS

(a) Guarantees and Counter Guarantees Rs. 1,200,000/- (Previous Year Rs. 1,200,000/-)

(b) Excise Duty Demands and Penalties Rs. 1,705,071/- (Previous Year Rs. 1,705,071/-)

(c) Claims against the Company not acknowledged as Debts - Rs. 779,936/- (Previous year Rs. 642,524/-)

(d) Letters of Credit Outstanding Rs. 91,679,769/- (Previous Year Rs. 152,371,620/-)

(e) Custom Penalties on Imports - Rs. NIL (Previous year Rs. NIL)

(f) The Company has imported capital goods under "Export Promotion Capital Goods" scheme for which the Company has an given export obligation of Rs. 26,038,382 /- (Previous Year Rs. 537,114,937/-)

(g) Income tax matters disputed in appeal Rs. 153,677,003/- (Previous Year Rs. 108,445,192/-)

The Income tax assessments of the Company have been completed upto Assessment Year 2011-12.

The total demand outstanding as on 31.03.2014 on account of income tax dues for Assessment Year 2007-08 to Assessment Year 2011-12 is Rs. 153,677,003/- (Previous year Rs. 108,445,192). During the year the Income Tax Appellate Tribunal, Ahmedabad disposed off the appeals filed by the Company for the disputed tax demand of Rs. 108,445,192 for the Assessment Years 2007-08 to 2010-11 by remitting back the matter to CIT(A) for disposal on merits and law. The proceedings are under progress.

The income tax department is in appeal before the Hon''ble High Court of Ahmedabad on various grounds decided by the Income Tax Appeallate Tribunal The Company has preferred an appeal to the Commissioner of Income Tax (Appeals), Ahmedabad for the demand notice of Rs. 45,231,811/- received from the Income Tax Department for the Assessment Year 2011-12. The matter is pending for disposal. The Management is of the opinion that the Company is entitled to deduction under Section 80-IA(4)(iv) of the Income Tax Act, 1961 and hence, no provision for aforesaid demand/notices has been made in the books of accounts.

6. Estimated amount of Contract remaining to be executed on capital account and not provided for (net of advances) Rs. 68,344,674/- (Previous year Rs. 445,464,403/-).

7. The Company had entered into an MOU dated February 3, 2011 with Damanganga Recycling Resources LLP (DRR) for availing the services of conversion of waste to energy. In terms of the MOU, the Company has paid Rs. 12,000,000 as interest free deposit adjustable against the tipping bills. However, the said project has not materialized and the amount of Rs. 12,000,000 paid by the Company as Deposit has been forfeited by DRR. Consequently the Company has initiated legal proceedings.

8. Sundry Debtors, Sundry Creditors, Unsecured Loans and Loans and Advances balances are subject to confirmation and reconciliation.

9. SEGMENT REPORTING:

The Company operates in Single Business Segment of ''Manufacturing of Paper Boards & Newsprint''. Therefore, the Company is of the view that the disclosure requirement of Accounting Standard AS-17 issued by the Institute of Chartered Accountants of India is not applicable to the Company.

10. Bank of Baroda has issued a counter guarantee (DPG) to Deutsche Bank AG, amounting to Rs. 12,761,925/- to fulfill certain contractual payment obligations for the import of certain capital goods. However, the Company has provided the full liability of the said contract and same is included under Sundry Creditors (Previous Year Rs. 21,712,165/-).

11. Remuneration to the Chairman and Managing Director (CMD)

(a) Remuneration paid by the Company to the CMD for FY 2011-12 over and above the the limit prescribed under Section 198 read with Schedule XIII to the Companies Act, 1956, amounting to Rs. 3,392,838/- has since been refunded to the company by the CMD.

(b) In view of inadequacy of profit for FY 2012-13, remuneration paid by the Company to the CMD was in excess of the limit prescribed under Section 198 read with Schedule XIII to the Companies Act, 1956. Pending approval by the Central Government, the CMD holds the excess remuneration paid amounting to Rs. 5,276,035/- in trust for the Company.

(c) In view of inadequacy of profit for FY 2013-14, remuneration paid by the Company to the CMD was in excess of the limit prescribed under Section 198 read with Schedule XIII to the Companies Act, 1956. The Company is in the process of making application to the Central Government u/s 309(5B) of the Companies Act, 1956 to waive the recovery of the said excess remuneration. Pending approval of the Central Government, the CMD holds the excess remuneration paid amounting to Rs. 1,950,000/- in trust for the Company.

12. Previous year''s figures have been regrouped wherever necessary, to conform to current year''s classification.


Mar 31, 2013

NOTE 1 CONTINGENT LIABILITIES AND PROVISIONS

(a) Guarantees and counter guarantees given by the Company Rs. 1,200,000/- (Previous Year Rs.NIL)

(b) Excise duty demands and penalties Rs. 1,705,071/- (Previous Year Rs. 1,705,071/-)

(c) Claims against the Company not acknowledged as debts - Rs. 642,524/- (Previous year Rs. 538,758/-)

(d) Letter of Credit outstanding Rs.152,371,620/- (Previous Year Rs. 139,665,667/-)

(e) Custom penalties on Imports - Rs. NIL (Previous year Rs. NIL)

(f) The Company has imported capital goods under "Export Promotion Capital Goods" scheme for which the Company has given export obligation of Rs. 537,114,937 /- (Previous Year Rs. 698,177,456/-)

(g) Income tax matters disputed in appeal amount Rs. 108,445,192/- (previous year Rs. 119,756,754)

The Company has received a demand from Income TaBc Department for Rs. 189,448,031 reduced subsequently by rectification order to Rs. 119,756,754/- in respect of Assessment Years 2007-08 to 2010-11 mainly on account of 80-IA(4)(iv) of Income Tax Act, 1961. The Commissioner of Income Tax (Appeals) vide their order dated June 12, 2012 further reduced the demand to Rs.108,445,192/-.

The Company preferred an appeal with the Income Tax Appellate Tribunal, Ahmedabad for stay of demand and the other reliefs. The tribunal while disposing of the stay application of the Company, had ordered to make payment by installment of Rs.15,00,000/- per month. The Company has remitted Rs. 47,712,514/- so far. The other matter of reliefs is pending for disposal. The Management is of the opinion that the Company is entitled to deduction under Section 80-IA(4)iv) of the Income Tax Act, 1961 and hence, no provision for aforesaid demand/notices has been made in the books of accounts.

NOTE 2

Estimated amount of Contract remaining to be executed on capital account and not provided for (net of advances) Rs. 445,464,403/- (Previous year Rs.395,907,291/-).

NOTE 3

The Company had entered into an MOU dated February 3, 2011 with Damanganga Recycling Resources LLP (DRR) for availing the services of conversion of waste to energy. In terms of the MOU, the Company has paid Rs. 12,000,000 as interest free deposit adjustable against the tipping bills. However, the said project has not materialized and the amount of Rs. 12,000,000 paid by the Company as deposit has been forfeited by DRR. Consequently the Company has initiated legal proceedings.

NOTE 4

Sundry Debtors, Sundry Creditors, Unsecured Loans and Loans and Advances balances are subject to confirmation and reconciliation.

NOTE 5 SEGMENT REPORTING:

The Company operates in Single Business Segment of ''Manufacturing of Paper Boards & Newsprint''. Therefore, the Company is of the view that the disclosure requirement of Accounting Standard AS-17 issued by the Institute of Chartered Accountants of India is not applicable to the Company.

NOTE 6

Bank of Baroda has issued a counter guarantee (DPG) to Deutsche Bank AG, amounting to Rs. 21,712,165/- to fulfill certain contractual payment obligations for the import of certain capital goods. However, the Company has provided the full liability of the said contract and same is included under Sundry Creditors (Previous Year Rs. 32,304,759/-).

NOTE 7

During the financial year under consideration, due to factors affecting economies at macro-economic level and industry downturn and delay in implementing the project at Sarigam, the Company was facing liquidity crunch and to fulfill its repayment obligations. In order to overcome debt repayment obligations, Bank of Baroda has made a reference to the Corporate Debt Restructuring (CDR) cell for restructuring of the debts of the Company through CDR Mechanism. The final restructuring package was approved by CDR Empowered Group on March 28, 2013. The Master Restructuring Agreement has also been signed with the lenders participating in the CDR package (''CDR Lenders'') on March 30, 2013.

The approved CDR package, inter-alia envisages the following;

(a) The restructuring of principal outstanding in respect of Term Loan of Bank of Baroda and Saraswat Bank as on cut-off date September 1, 2012 and rephasement of said Loan (Rs. 149.65 Crs) to be repaid in 32 quarterly installments commencing from November 30, 2014.

(b) Funding of interest on the above loans from cut-off date September 1, 2012 to August 31, 2014 and the said Funded Interest of Rs. 31.50 Crs to be repaid over 16 quarterly installments commencing from November 30, 2014, bearing interest 10.50% per annum.

(c) Re-fixing the interest on the above Term Loan on step-up basis ranging from 11% per annum to 20% per annum.

(d) Sanctioning of additional Term Loan of Rs.70 Crs by Bank of Baroda bearing interest at 13% per annum for completion of the ongoing project at Sarigam and need based additional working capital of Rs. 37.50 Crs. by working capital lenders.

(e) Infusion of Rs. 1.60 crs by the Promoters to support the packages over and above the margin for fresh term loan and additional Working Capital limits.

(f) Apart from the existing securities, furnishing of personal guarantee by Shri. Raunak Agarwal, Director and Smt. Reena Agarwal and pledging of shares held by Shri. R N Agarwal, CMD, Smt. Reena Agarwal and Shri. Raunak Agarwal.

NOTE 8

Remuneration of Rs. 9,000,000/- paid to the Managing Director and debited to the Statement of Profit and Loss for the financial year 2012-13 includes Rs. 5,276,035/- in excess of the limits specified in Section 309 of the Companies Act, 1956. The excess payment is as a result of lower profits in the wake of adverse market conditions. The Company is in the process of making application to Central Government u/s 309(5B) of the Companies Act, 1956 to waive the recovery of the said excess remuneration. Pending such approval the Managing Director holds the excess remuneration paid in trust for the Company.


Mar 31, 2012

Terms/rights attached to equity shares .......

The Company has only one class of equity shares having a par value of Rs 10 per share. Each equity shareholder 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 March 31, 2012, the amount of dividend, per share, recognized as distributions to equity shareholders is Rs 1.20 (year ended March 31, 2011, Rs 1.80) .

Notes:

Corporate Loan from IDBI Bank is secured by hypothecation of plant and machinery and extension of existing security on immovable properties situated at Vapi and at Sarigam on pari pasu basis with other term lenders.

The Corporate Loan of Saraswat Co-operative Bank Ltd. is secured by a first pari passu charge on the plant and machinery situated at Unit I at Vapi and further secured by extension of existing security on immovable properties at Unit I, Vapi. It is also further secured by exclusive charge by way of equitable mortgage of Directors residential bunglow at Lokhandwala, Andheri (W), Mumbai 400053 and also an exclusive charge by way of legal mortgage on non agricultural land admeasuring 37.61 acres at Sarigam, Gujarat. The loan is further secured by personal guarantee of Shri R N Agarwal.

The Term loan from Kotak Mahindra Bank Ltd., is secured by exclusive charge on Unit 415-418, situated at Janki Centre, 4th Floor, 29 Shah Industrial Estate, Off. Veera Desai Road, Andheri (W), Mumbai 400053. The loan is further secured by personal guarantee of Shri R N Agarwal

The Project Loan from Bank of Baroda is secured by first pari passu charge by hypothecation of plant and machinery situated at Vapi and at Sarigam and first pari passu charge on immovable properties (Unit I, II, III, IV and V)situated at Vapi and Sarigam, together with buildings and other structures thereon excluding vacant land of 37.61 acres at Sarigam and second pari passu charge on current assets of the Company and further secured by the personal guarantee of Shri R N Agarwal.

The New office Loan of Bank of India is exclusively secured by equitable mortgage on the said property and further secured by the personal guarantee of Shri R N Agarwal.

Out of the said amount, Rs 4,228,228 (March 31, 2011: Rs 1,775,517) pertains to micro, small and medium enterprises as defined under Micro, Small, and Medium Enterprises Development Act, 2006 based on the information available with the Company. There is no interest payable to such parties as at March 31, 2012 (March 31, 2011: Rs Nil).

NOTE 1.1

Capital Work in Progress includes Rs 1,729,032,658 pertaining to Sarigam Project (Unit V). The commencement of Unit -V has been delayed due to pending approval of the Ministry of Environment and Forest which resulted in the rescheduling of the Term Loan exposure by Bank of Baroda Capital Work in Progress includes Rs 110,204,851 under construction of new office premises at Fortune Terraces, According to the sale agreement dated January 20,2010 the possession of the said premises were agreed to be given on March 31,2011. However, due to delay in obtaining of the Occupation Certificate by the developer possession of the said premises further delayed. As per the Sale Agreement, Company has to pay 18 months outgoing charges of Rs 1,730,600 alongwith other charges on taking the possession for which Company has not made provision in the accounts.

NOTE 2 CONTINGENT LIABILITIES AND PROVISIONS

(a) Guarantees and counter guarantees given by the Company on behalf of the Group Companies Rs NIL (Previous Year Rs NIL)

(b) Excise duty demands and penalties Rs 1,705,071 (Previous Year Rs 1,705,071)

(c) Claims against the Company not acknowledged as debts - Rs 538,758 (Previous year X 359,512)

(d) Letter of Credit outstanding Rs 139,665,667 (Previous Year Rs 182,487,068)

(e) Custom penalties on imports - Rs NIL (Previous year Rs NIL)

(f) The Company has imported capital goods under "Export Promotion Capital Goods" scheme for which the Company has an given export obligation of Rs 698,177,456 (Previous Year Rs 864,583,512)

(g) Income tax matters disputed in appeal amount Rs 119,756,754 (previous year Rs NIL)

The Company has received demand from Income Tax Department for Rs 189,448,031 reduced subsequently by rectification order to Rs 119,756,754 in respect of Assessment Years 2004-05 to 2010-11 mainly on account of 80-IA(4)(iv) of Income Tax Act, 1961. The Company has disputed the above demands and the matter is pending at appellate stage with appropriate authorities. The Management is of the opinion that the Company is entitled to deduction under section 80-IA(4) (iv) of the Income Tax Act, 1961 and hence, no provision for the aforesaid demand/notices has been made in the books of accounts.

In the meantime, the Income Tax Department has frozen some of the Bank Accounts of the Company. The Company has filed a Writ Petition in the Hon'ble High Court of Gujarat for releasing the Bank Accounts of the Company. While disposing the Writ Petition the Hon'ble Court has directed the Company to pay Rs 3.00 Cr and furnish security for the balance amount of Rs 9.00 Cr to release the Bank Accounts, which is pending to be fulfilled. The Hon'ble High Court has also directed the Commissioner of'lncome Tax (Appeals) to dispose of the appeal as expeditiously as possible but not beyond two months from April 2, 2012.

NOTE 3

Estimated amount of Contract remaining to be executed on capital account and not provided for (net of advances) Rs 395,907,291 (Previous year Rs 479,477,224).

NOTE 4

The Company had entered into an MOU dated February 3, 2011 with Damanganga Recycling Resources LLP (DRR) for availing the services of conversion of waste to energy. In terms of the MOU, the Company has paid Rs 12,000,000 as interest free deposit adjustable against the tipping bills. However, the said project has not materialized and the amount of Rs 12,000,000 paid by the Company as Deposit has been forfeited by DRR. Consequently the Company has initiated legal proceedings.

NOTE 5

Sundry Debtors, Sundry Creditors, Unsecured Loans and Loans and Advance Balances are subject to confirmation and reconciliation.

NOTE 6

SEGMENT REPORTING:

The Company operates in Single Business Segment of "Manufacturing of Paper Boards & Newsprint'. Therefore, the Company is of the view that the disclosure requirement of Accounting Standard AS-17 issued by the Institute of Chartered Accountants of India is not appealable to the Company.

NOTE 7

Bank of Baroda has issued a counter guarantee (DPG) to Deutsche Bank AG, amounting to t 32,304,759 to fulfill certain contractual payment obligations for the import of certain capital goods. However, the company has provided the full liability of the said contract and same is included under Sundry Creditors (Previous Year Rs 28,062,326).


Mar 31, 2011

1. CONTINGENT LIABILITIES:

(a) Guarantees and counter guarantees given by the Company on behalf of group companies Rs. NIL lacs (Previous year Rs. NIL).

(b) During the year commissioner of Central Excise raised demand of Rs. 1,643,254/- towards excise duty and interest thereon. The Company has paid the demand and preferred an appeal with CESTAT (Previous Year Rs. 1,705,071).

(c) Claims against the Company not acknowledged as debts - Rs. 359,512/- (Previous year- Rs. 333,807/-).

(d) Letter of Credit outstanding Rs. 1,824.87 lacs (Previous year Rs. 2,962.11 lacs).

(e) Customs penalties on Imports- Rs. NIL (Previous year Rs. NIL).

2. Estimated amount of Contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 4 794 77 lacs (Previous Year Rs. 4,767.96 lacs).

3. There are no Micro, Small and Medium Enterprises, to whom the Companies owes dues, which are outstanding for more than 45 days as at the Balance Sheet date. Further, the Company has neither paid nor payable any interest to any Micro, Small and Medium Enterprises on the Balance Sheet date. The above information has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors,

4. The names of the Small Scale Undertakings to whom the Company owes a sum exceeding Rs. 1.00 lac outstanding for more than 30 days as on March 31, 2011 are; Vertex Chem Pvt. Ltd, Polysol Industries, Synergy Multichem Pvt. Ltd, Vipul Chemicals (India) Pvt. Ltd, Alok Trade & Investment Pvt. Ltd, Bhavik Enterprises, Good Cast Industries and A B Engineering Industries. The Information regarding Small Scale Industrial Undertakings has been determined to the extent such parties have been identified on the basis of information available with the Company and relied upon by the auditors.

5. Advances recoverable in cash or kind or value to be received includes an amount Rs. NIL of short term advance bearing no interest (Previous Year Rs. 55.00 lacs). However it includes amount of Rs. 230 lacs bearing interest (Previous Year Rs. NIL).

6. The Company's Income Tax assessment has been completed up to A.Y 2006-07. Tax Liabilities and interest in respect thereof demanded by the Income Tax Department has been paid. However in terms of search and seizure operations u/s 132 of Income Tax Act, 1961, conducted during July, 2009, revised returns have been filed in response to notices received u/s 153A of the Income Tax Act, 1961 in respect of six Assessment years from 2004-05 to 2009-10. Assessments are yet to commence.

7. Sundry Debtors, Sundry Creditors, Unsecured Loans and Loans and Advances balances are subject to confirmation and reconciliation.

8. Sundry Creditors includes a sum of Rs. 132,007,238 (including advances received against sale of staff quarters Rs. 714,000/-) payable for Capital Goods (Previous Year Rs. 53,492,952).

9. Segment Reporting:

The Company operates in Single Business Segment of "Manufacturing of Paper Boards & Newsprint". Therefore, the Company is of the view that the disclosure requirement of Accounting Standard AS-17 issued by the Institute of Chartered Accountants of India is not applicable to the Company.

10. The Company has imported Capital Goods under Export Promotion Capital Goods' Scheme for which the Company has an export obligation of Rs. 864,583,512 (previous year Rs. 460,225,488).

11. Bank of Baroda has issued a counter guarantee (DPG) to Deutsche Bank AG, amounting to Rs. 28,062,326.00 to fulfill certain contractual payment obligations for the import of certain capital goods. However, the Company has provided the full liability of the said contract and same is included under Sundry Creditors.

12. Disclosure in respect of related parties pursuant to Accounting Standard AS-18:

Key Management Personnel & Relatives:

Shri R. N. Agarwal

Shri Raunak Agarwal

Relatives of Directors

Smt. R. R. Agarwal

Smt. Padma Chhabra

Notes:

1. Loans to Employees as per Company's policy are not considered.

2. Related party relationship is as identified by the Company and relied upon by the auditors.

13. Balance Sheet abstract and Company's general business profile as required in terms of the Part IV of the Schedule VI of the Companies Act, 1956 is attached herewith.

14. Previous year's figures have been regrouped, reworked and reclassified wherever necessary.

 
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