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Notes to Accounts of Parrys Sugar Industries Ltd.

Mar 31, 2015

1. Contingent Liabilities not provided for on account of : Rsin Lakhs

Particulars 2014-15 2013-14

a) Bank Guarantees 4,665.79 4,301.65

b) Corporate Guarantees given by the Company to banks in respect of crop loans to farmers 22.42 1,768.32 and H & T loan

c) Arrears of fixed cumulative dividends of Preference shares 145.01 0.77

d) Claims made by Government Departments against the Company not acknowledged as debts: Excise Duty/Service Tax under appeal 338.17 225.38

e) Preference Dividend attributable to Cumulative Preference Shares 435.73 144.24

f) Sugar Cane Price payable (FY 2013-14) 495.73 -

2. a) The Ministry of Corporate Affairs, Government of India has vide its Notification No GSR 225(E) dated March 31, 2009 has announced Companies Accounting Standards (Amendment) Rules 2009 prescribing changes to Accounting Standard 11 on 'The Effects of Changes in Foreign Exchange Rates', till 31-03-2020.

The Company has, pursuant to the adoption of such principles of Companies (Accounting Standards) Amendment Rules 2009, exercised the option of recognising the exchange differences arising on reporting of foreign currency monetary items at rates different from those at which they were recorded earlier, in the original cost of such depreciable fixed assets in so far such exchange differences arose on foreign currency monetary items relating to the acquisition of a depreciable asset as below: Exchange differences aggregating to Rs.NIL Lakhs arising during the year ended March 31,2015 (2014: Rs1.77 Lakhs) have been adjusted to the cost of the depreciable assets.

3. OPERATING LEASES

i. The Company has entered in to a non cancellable operating lease agreement with Shri Dhanalaxmi Sahakari Sakkare Karkhane Niyamit, Ramdurg for the lease of sugar factory together with the specified assets on Built, Own, operate and Transfer basis (BOOT) for a period of 25 years. Lease rentals of Rs816.73 Lakhs (2014: Rs792.94 Lakhs) in respect of the obligation under such lease agreement have been recognized in the Statement of Profit and Loss.

Future obligations of lease rentals applicable to the above lease agreement aggregate to Rs11,858.88 Lakhs (2014: Rs12,675.61 Lakhs) and are due:

4. As per the information available with the Management, there are no suppliers falling under the Micro, Small and Medium Enterprise registered with the Company.

5. (a) The following table sets forth the status of the Gratuity Plan of the Company and the amount recognized in the Balance Sheet and Statement of Profit and Loss.

Based on the above allocation and the prevailing yields on these assets, the long-term estimate of the expected rate of return on fund assets has been arrived at. Assumed rate of return on assets is expected to vary from year to year reflecting the returns on matching government bonds.

The estimates of future increase in compensation levels, considered in the actuarial valuation, have been taken on account of inflation,seniority,promotion and other revelant factors such as supply and demand in the employment market.

As per the best estimates of the management, contribution of Rs2.00 lakhs is expected to be paid to the plan during the year ending March 31,2016

(b) Provision made during the year for other long-term employee benefits based on the actuarial valuation report amounted to Rs0.74 Lakhs (2014: Rs5.51 Lakhs).

(c) During the period, the Company has recognised the following amounts in the Statement of Profit and Loss, which are included in 'Contribution to Provident and Other Funds.

6. SEGMENT REPORTING

The Company has identified two business segments viz. Sugar and Power. Segments have been identified and reported taking into account the nature of the products, the differing risks and returns, the organizational structure and internal business reporting system.

(a) Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on a reasonable basis have been disclosed as "Un-allocable".

(b) Segment Assets and Segment Liabilities represent assets and liabilities of respective segment. Investments, tax related assets and other assets and liabilities that cannot be allocated to a segment on a reasonable basis have been disclosed as "Un- allocable"

(c) The Company generally accounts for inter segment sales/transfer as if the sales/transfers were to external parties at prevailing average market price on the date of transfer.

During the year under report, the Company has engaged in business only within India and not in any other country. The conditions prevailing in India being uniform, no separate geographical segment disclosure is considered necessary.

7. Previous year's figures have been regrouped/reclassified to conform to Current year's classification.


Mar 31, 2013

1. seCureD Loans

(i) Term Loan & Short Term (Bridge) Loan extended by State Bank of India is primarily secured by Pari-passu frst charge on fxed assets of the Company and collaterally secured by second charge on the current assets of the company.

(ii) Term Loan extended by ICICI Bank Ltd. is secured by Pari-passu second charge on fxed assets of the company.

(iii) Sugar Development Fund (SDF) Loan for Cane development at the Ramdurg Unit is secured by a Bank Guarantee.

(iv) Cash Credit facility extended by State Bank of India is secured by way of hypothecation of entire current assets of the company and further secured by second charge on company’s fxed assets.

(v) Specifc Loans pertaining to the Sankili & Haliyal Units and a portion of the general purpose borrowings have been transferred to E.I.D. Parry (India) Ltd. pursuant to the scheme of Arrangement (Demerger) with efect from April 1, 2012. Refer to Note No. 37.

The above loans extended by SDF & banks carry interest rates ranging from 4.00% p.a. to 12.60% p.a. The loans extended by banks are linked to their Base Rate.

2. unseCureD Loans

(i) Loan extended by Indusind Bank Ltd. is unsecured in nature.

(ii) Loans extended by Holding Company, EID Parry (India) Ltd. are unsecured in nature. These loans cannot be withdrawn during the tenancy of the loans extended by SBI & ICICI Bank Ltd. and hence classifed as Long Term Borrowings.

The above loans extended by EID Parry (India) Ltd. and bank carries interest rates ranging from 8.75% p.a. to 11.75% p.a.

3. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) of Rs.84.70 Lakhs (2012: Rs.1,819.03 Lakhs).

4. ContInGent LIaBILItIes not proVIDeD for on aCCount of :

Rs. in Lakhs

particulars 2013 2012

a) Bank Guarantees 122.23 254.00

b) Corporate Guarantees given by the Company to banks in respect of crop loans to farmers and H&T loan 2,344.85 4,599.07

c) Arrears of fxed cumulative dividends of Preference shares 1.64

d) Claims made by Government Departments against the Company not acknowledged as debts:

i. Excise/Service tax claims under appeal 225.38 309.04

ii. Sales tax & Commercial taxes appeal under various states 13.18 61.08

e) Preference Dividend attributable to Cumulative Preference Shares 0.77 568.31

5. a) The Ministry of Corporate Afairs, Government of India has vide its Notifcation No. GSR 225(E) dated

March 31, 2009 has announced Companies Accounting Standards (Amendment) Rules 2009 prescribing changes to Accounting Standard 11 on ‘The Efects of Changes in Foreign Exchange Rates’ extended till 31-03-2020.

The Company has, pursuant to the adoption of such principles of Companies (Accounting Standards) Amendment Rules 2009, exercised the option of recognising the exchange diferences arising on reporting of foreign currency monetary items at rates diferent from those at which they were recorded earlier, in the original cost of such depreciable fxed assets in so far such exchange diferences arose on foreign currency monetary items relating to the acquisition of a depreciable asset.

Exchange diferences aggregating to Nil arising during the year ended March 31, 2013 (2012: Nil) have been adjusted to the cost of the depreciable assets.

6. operatInG Leases

i. The Company has entered in to a non-cancellable operating lease agreement with Shri Dhanalakshmi Sahakari Sakkare Karkhane Niyamit, Ramdurg for the lease of sugar factory together with the specifed assets on Built, Own, operate and Transfer basis (BOOT) for a period of 25 years. Lease rentals of Rs. 769.85 Lakhs (2012: Rs. 560.57 Lakhs) in respect of the obligation under such lease agreement have been recognised in the Statement of Proft and Loss.

Future obligations of lease rentals applicable to the above lease agreement aggregate to Rs.13,468.55 Lakhs (2012: Rs. 14,238.40 Lakhs) and are due:

ii. The Company has certain operating leases for ofce facilities and residential premises under a cancellable operating lease agreement. Such agreements are generally with the option of renewal against increased rent and premature termination of agreement. The charge on account of lease rentals under such agreements to the Statement of Proft and Loss for the year is Rs. 4.92 Lakhs (2012: Rs. 22.58 Lakhs).

7. There are no suppliers falling under the Micro, Small and Medium Enterprise registered with the company.

Pursuant to the Scheme of Arrangement (Demerger) becoming efective, the Gratuity as on 31.3.2013 has been Provided only for Ramdurg unit.

“Based on the above allocation and the prevailing yields on these assets, the long term estimate of the expected rate of return on fund assets has been arrived at. Assumed rate of return on assets is expected to vary from year to year refecting the returns on matching government bonds.

The estimates of future increase in compensation levels, considered in the actuarial valuation, have been taken on account of infation, seniority, promotion and other relevant factors such as supply and demand in the employment market. As per the best estimate of the management, contribution of Rs.2.00 lakhs is expected to be paid to the plan during the year ending March 31, 2013.”

(b) Provision made during the year for other long term employee benefts based on the actuarial valuation report amounted to Nil (2012: Nil)

(c) During the period, the Company has recognised the following amounts in the Statement of Proft and Loss, which are included in ‘Contribution to Provident and Other Funds

8. sCHeme of arranGement( DemerGer)

The Scheme of Arrangement (Demerger) between the Company and the Holding Company, .E.I.D.-Parry (India) Ltd., (EID Parry) under Sections 391 to 394 of the Companies Act, 1956 for transfer and vesting of the Company’s manufacturing facilities located at Haliyal and Sankili, to and into EID Parry, with appointed date of April 1, 2012 has been approved by the order of the Hon’ble High Court of Karnataka dated February 1, 2013 and Order of the Hon’ble High Court of Judicature, Madras dated February 18, 2013. The Scheme as approved by the High Courts, has become efective from March 18, 2013 pursuant to fling of the orders of the Hon’ble High Courts of Karnataka and Madras with the Registrar of Companies, Bangalore and Registrar of Companies, Chennai, respectively. The broad details of Assets and Liabilities transferred and vested with EID Parry w.e.f. April 1, 2012 are as below:

9. Pursuant to the announcement of partial decontrol of Sugar Industry on April 4, 2013, the Company does not

have any obligation to ear mark any part of production towards levy stock from the sugar season 2012-13 onwards and hence the entire sugar stock arising from production in the 2012-13 sugar season is valued at Cost or NRV whichever is lower.

10. seGment reportInG

The Company has identifed two business segments viz. Sugar and Power. Segments have been identifed and reported taking into account the nature of the products, the difering risks and returns, the organisational structure and internal business reporting system.

(a) Revenue and expenses have been identifed to a segment on the basis of relationship to operating activities of the segment. Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on a reasonable basis have been disclosed as “Un-allocable”.

(b) Segment Assets and Segment Liabilities represent assets and liabilities of respective segment. Investments, tax related assets and other assets and liabilities that cannot be allocated to a segment on a reasonable basis have been disclosed as “Un-allocable”.

(c) The Company generally accounts for inter segment sales/transfer as if the sales/transfers were to external parties at prevailing average market price on the date of transfer.

11. The Scheme of Arrangement (Demerger) involving the demerger of the Sankili and Haliyal Units of the company into EID Parry (India) Ltd. became efective from March 18, 2013 with April 1, 2012 as the Appointed date.

Hence the fgures for the fnancial year ended March 31, 2013 relates to the post demerged company and are therefore not comparable with that of previous year.

12. Previous year’s fgures have been regrouped/reclassifed to conform to Current year’s classifcation.


Mar 31, 2012

1. Secured Loans

(i) Term Loan & Short Term (Bridge) Loan extended by State Bank of India is primarily secured by Pari-passu first charge on fixed Assets of the Company and collaterally secured by second charge on the current assets of the Company.

(ii) Term Loan extended by Axis Bank Ltd. is primarily secured by Pari-passu first charge on fixed Assets of the Haliyal & Sankili Units.

(iii) Term Loan extended by ICICI Bank Ltd. is secured by Pari-passu second charge on fixed Assets of the Company. The process of charge creation in favour of ICICI Bank Ltd. is pending.

(iv) Loans extended by Sugar Development Fund, Government of India (SDF) for Modernisation/Expansion/Cane Development at the Sankili Unit is secured by Pari-passu first charge on movable & immovable properties of Sankili Unit.

(v) Loans extended by SDF for Congeneration Project/Raw-sugar processing/Cane development at the Haliyal Unit are secured by Pari-passu first charge on the movable & immovable properties of Haliyal Unit.

(vi) Loans extended by SDF for Cane development at the Ramdurg Unit is secured by Bank Guarantee.

(vii) Short term Loan extended by Bank of India is secured by Pari-passu first charge on fixed Assets of the Haliyal Unit.

(viii) Cash Credit facility extended by State Bank of India is secured by way of hypothecation of entire current assets of the Company and further secured by second charge on Company's fixed assets.

The above loans extended by SDF & Banks carry interest rates ranging from 4.00% p.a. to 13.50% p.a. The loans extended by banks are linked to their Base Rate.

2. Unsecured Loans

(i) Loan extended by L & T Finance Ltd. is unsecured in nature.

(ii) Loan extended by Dena Bank is unsecured in nature

(iii) Loan extended by Axis Bank Ltd. is unsecured in nature.

(iv) Loans extended by the Holding Company, EID Parry (India) Ltd. are unsecured in nature.

These loans cannot be withdrawn during the tenancy of the loans extended by SBI, Axis Bank Ltd. & ICICI Bank Ltd. and hence Classified as Long Term Borrowings.

The above loans extended by EID Parry (India) Ltd. & Banks carries interest rates ranging from 9.50% p.a. to 13.50% p.a. The loans extended by banks are linked to their Base Rate.

3. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) of Rs 1819.03 Lakhs (2011: Rs 1,587.95 Lakhs).

4. Contingent Liabilities not provided for on account of :

Rs in Lakhs

Particulars 2012 2011

a) Bank Guarantees 254.00 247.42

b) Letter of Credit - -

c) Corporate Guarantees given by the Company to banks in respect of crop 4599.07 1291.70 loans to farmers and H&T loan

d) Arrears of fixed cumulative dividends of Preference shares 1.64 -

e) Claims made by Government Departments against the Company not acknowledged as debts:

i. Excise claims under appeal 309.04 263.79

ii. Sales tax & Commercial taxes appeal under various states 61.08 79.76

iii. Other claims - -

f) Preference Dividend attributable to Cumulative Preference Shares 568.31 1.64

5. a) The Ministry of Corporate Affairs, Government of India has vide its Notification No. GSR 225(E) dated March 31, 2009 has announced Companies Accounting Standards (Amendment) Rules 2009 prescribing changes to Accounting Standard 11 on 'The Effects of Changes in Foreign Exchange Rates' extended till 31-03-2020.

The Company has, pursuant to the adoption of such principles of Companies (Accounting Standards) Amendment Rules 2009, exercised the option of recognizing the exchange differences arising on reporting of foreign currency monetary items at rates different from those at which they were recorded earlier, in the original cost of such depreciable fixed assets in so far such exchange differences arose on foreign currency monetary items relating to the acquisition of a depreciable asset.

Exchange differences aggregating to Rs NIL arising during the year ended March 31, 2012 (2011: Rs 0.54 Lakhs) have been adjusted to the cost of the depreciable assets.

6. Operating Leases

i. The Company has entered in to a non-cancellable operating lease agreement with Shri Dhanalakshmi Sahakari Sakkare Karkhane Niyamit, Ramdurg for the lease of sugar factory together with the specified assets on Built, Own, Operate and Transfer basis (BOOT) for a period of 25 years. Lease rentals of Rs 560.57 Lakhs (2011: Rs 912.51 Lakhs) in respect of the obligation under such lease agreement have been recognized in the Profit and Loss Account.

Future obligations of lease rentals applicable to the above lease agreement aggregate to Rs14,238.40 Lakhs (2011: Rs 14,798.97 Lakhs) and are due:

ii. The Company has certain operating leases for office facilities and residential premises under a cancellable operating lease agreement. Such agreements are generally with the option of renewal against increased rent and premature termination of agreement. The charge on account of lease rentals under such agreements to the Profit and Loss Account for the year is Rs22.58 Lakhs (2011: Rs 57.41 Lakhs). The future obligations of lease rentals applicable are as under:

7. There are no suppliers falling under the Micro, Small and Medium Enterprise registered with the company.

8. With respect to receivables from Transmission Corporation of Andhra Pradesh Limited (APTRANSCO) included under

Sundry Debtors:

a) Amounts aggregating to Rs777.78 Lakhs [2011:Rs 715.87 Lakhs] relate to price difference matter in dispute where the Company has appealed before the Apellate Tribunal for Electricity (ATE) against an order of State Commission. As the matters are pending before the ATE, the Company, as a matter of prudence, has postponed the recognition of such amounts as income and a corresponding credit is retained as liability in the books of account and adjusted against Sundry Debtors as at March 31, 2012.

b) Amounts aggregating to Rs526.06 Lakhs [2011: Rs 582.64 Lakhs] relate to other matters in dispute where the Company has appealed before the ATE against the orders of State Commission. As the matters are pending before the ATE, no adjustment has been made in respect of such dues recognised as receivable as at March 31, 2012.

Based on the above allocation and the prevailing yields on these assets, the long term estimate of the expected rate of return on fund assets has been arrived at. Assumed rate of return on assets is expected to vary from year to year reflecting the returns on matching government bonds.

The estimates of future increase in compensation levels, considered in the actuarial valuation, have been taken on account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

As per the best estimate of the management, contribution of Rs5.00 lakhs is expected to be paid to the plan during the year ending March 31, 2013.

(b) Provision made during the year for other long term employee benefits based on the actuarial valuation report amounted to RsNIL (2011: Rs 41.54 Lakhs).

(c) During the period, the Company has recognised the following amounts in the Profit and Loss Account, which are included in Contribution to Provident and Other Funds.

8. The Closing Stock of Finished goods has been valued net of Excise duty payable amounting to Rs659.83 Lakhs.

10. Segment Reporting

The Company has identified three business segments viz. Sugar, Power and Distillery. Segments have been identified and reported taking into account the nature of the products, the differing risks and returns, the organizational structure and internal business reporting system.

(a) Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on a reasonable basis have been disclosed as"Un-allocable".

(b) Segment Assets and Segment Liabilities represent assets and liabilities of respective segment. Investments, tax related assets and other assets and liabilities that cannot be allocated to a segment on a reasonable basis have been disclosed as "Un-allocable".

(c) The Company generally accounts for inter segment sales/transfer as if the sales/transfers were to external parties at prevailing average market price on the date of transfer.

11. Previous year's figures have been regrouped/reclassified to conform to Current year's classification.

12. Previous financial year was for a period of fifteen months, whereas 2011-12 is for a period of nine months and hence figures are not comparable.

 
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