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Notes to Accounts of Pasupati Spinning & Weaving Mills Ltd.

Mar 31, 2015

1 The company(Pasupati) has w.e.f. 1.4.2013 entered into joint venture with Star Cotspin Limited(Star) for the purpose of getting cotton yarn manufactured on job work basis from any outside party for sale. As per terms of joint venture agreement dated 1.4.2013, the profit sharing ratio between Star and Pasupati is 75:25 respectively. All the income, expenses, assets and liabilities of joint venture operations are included in the accounts of Pasupati as per the terms of joint venture agreement and amount of share of profit of Star Rs.(-)1480680 (previous year Rs.16876733) for the year has been adjusted in the accounts of Pasupati, the details of which are as under: -

2 Related Party Disclosure:

Names of related parties and description of relationship

i) Key Management Personnel and their relatives

Mr. Ramesh Kumar Jain - CMD

Mr. Vidit Jain - ED

Mr. Ram Karan Bhardwaj, WTD

Mr. S.K.Chhajer, WTD (ceased to be a director from 1.7.2014)

Mrs. Vrinda Jain, Director

Mr. Praveen Paliwal, Director

Mr. Ghanshyam Das Gupta, Director

Mr. Ashwani Kumar Rathore

Mr. Anil Gupta, Director

Mrs. Sangeeta Chhajer, Relative of Director

Mrs. Vimal Bhardwaj, Relative of Director

Mrs. Anubha Bhardwaj, Relative of Director

Mr. Aditya Bhardwaj, Relative of Director

ii) Associate

Shivani Textiles Limited

Pasupati Olefn Limited

Sulabh Impex Limited

3 The company's business activity falls within a single primary reportable segment viz. Textiles and Textile Articles. Accordingly, pursuant to Accounting standard (AS-17) "Segment Reporting" issued by the Institute of Chartered Accountants of India segmental information is not required to be given

Note : Mr. Ramesh Kumar Jain, Chairman & Managing Director has not been paid salary w.e.f. 1.4.2011. Other benefits are being paid.

4 In view of the accumulated losses incurred by the company exceeding its net worth, the company made a reference under Section 15(1) of Sick Industrial Companies (Special provisions) Act, 1985 to the Board for Industrial and Financial Reconstruction (BIFR). The company was declared a sick Industrial company within the meaning of section 3(1)(o) of the said Act by BIFR on 14.7.2005 and Bank of Baroda was appointed as the operating agency (OA) to examine viability of the company and formulate rehabilitation scheme. The OA fled a draft rehabilitation scheme with BIFR which was approved by BIFR vide its order dated 17.2.2012. The company has substantially implemented the scheme sanctioned by BIFR and taken credit for relief and concessions granted by BIFR in the accounts resulting in positive net worth. Application for de-registration has been made to BIFR.

5 In pursuance of Accounting Standard on Impairment of Assets (AS28) issued by The Institute of Chartered Accountants of India the company had identified and impaired certain assets / cash generating units. There is no further impairment / reversal during the year.

6 Balance of sundry creditors, sundry debtors, investments and loans and advances are subject to confirmation and reconciliation

7 Previous year figures have been regrouped and / or re-arranged wherever considered necessary

8 Paise have been rounded off to the nearest rupee

9 OPERATING LEASE

As Lessee

The Company has taken generators on hire for which total rent of Rs.1169850 (previous year Rs. 1260365) has been paid, which is being recognized as an expense in the statement of profit & loss account. The period of hire in not contracted and hence future lease payments are not determinable. The assets have not been subleased


Mar 31, 2014

1. SHARE CAPITAL

a) Authorised

b) Issued, Subscribed and Paid up

Board for Industrial and Financial Reconstruction (BIFR) had sanctioned a rehabilitation scheme for the company vide its order dated 17.2.2012. In terms of the said scheme, on 1.5.2012, 5964466 equity shares of Rs.10 each have been allotted to promoters / associates at par against promoters'' contribution received from them and 1000000 equity shares of Rs. 10 each have been allotted to

J.M. Financial Asset Reconstruction Company Private Limited (JMFARC) at a price of Rs. 40 per share (Rs. 10 towards face value and Rs. 30 towards premium) on conversion of part dues of financial assistance given by IDBI to the company and later transferred / assigned to Stressed Assets Stabilization Fund (SASF), which was further assigned by SASF in favour of JMFARC.

Details of shares in the company held by each shareholder holding more than 5% of shares is as under :

2. RESERVES & SURPLUS

* Represents premium on shares allotted to JMFARC as explained in note no. 2 above

Add : Additions during the year

Add : Transferred from Debenture Redemption Reserve Less : Reduction during the year At the end of the year Total

* Represents premium on shares allotted to JMFARC as explained

Notes :

i) Term loan are secured on pari-passu basis by way of joint equitable mortgage of fixed assets of the company alongwith personal guarantee of the chairman & managing director (CMD).

ii) Vehicle loans are secured against hypothecation of vehicle financed out of the loan amount.

iii) The above loans are repayable as follows :

iv) There is no default in repayment of loans and interest thereon on balance sheet date.

Deferred tax assets in respect of additions which are in appeal has not been considered.

3. OTHER LONG TERM LIABILITIES

4. LONG TERM PROVISIONS

Secured loans are secured against hypothecation of raw materials, finished goods, semi-finished goods, stores and spare parts, book debts, etc. together with second charge on all immovable / movable fixed assets of the company both present and future alongwith personal guarantee of CMD and two outsiders. The loans are further secured against pledge of 699115 equity shares of the company held by promoters / associates.

* Includes borrowing of Rs. 102.56 lacs (previous year Rs. 71.17 lacs) in excess of the limits / overdue. 9. TRADE PAYABLES

The company is in the process of identifying suppliers covered under the Micro, Small and Medium Enterprises Development Act, 2006. Hence, information thereto has not been provided.

5. OTHER CURRENT LIABILITIES

Notes :

a) No unclaimed amounts were outstanding to be credited to investor education & protection fund as on 31.03.2014.

b) Interest accrued on borrowings include amount accrued and due Nil (previous year Rs. 5636383).

6. TANGIBLE FIXED ASSETS

The company has received compensation of Rs. 4812500 (previous year Rs. 1348213) on acquisition of part of its factory land at Dharuhera. Representation has been made before Sub Divisional Magistrate, Gurgaon cum competent authority (LA) of National Highway Authority of India for payment of compensation at a higher rate. Additional compensation of Rs. 61464287 (previous year Rs. 24276787) demanded in the representation will be accounted for as and when received.

7. LONG TERM LOANS & ADVANCES (Unsecured - considered good)

Bank Deposits with more than 12 months maturity Nil (previous year Rs. 3190249)

8. INVENTORIES (As taken, valued and certified by the management)

9. TRADE RECEIVABLES (Unsecured -considered good)

In the opinion of the management the diminution in the value of long term investments is temporary in nature and hence provision for the same is not required.

10. SHORT TERM LOANS & ADVANCES (Unsecured - Considered good unless stated otherwise)

11. OTHER CURRENT ASSETS (Unsecured-Considered good)

12. CONTINGENT LIABILITIES AND COMMITMENTS (to the extent not provided for)

13. The company (Pasupati) has w.e.f. 1.4.2013 entered into joint venture with Star Cotspin Limited (Star) for the purpose of getting cotton yarn manufactured on job work basis from any outside party for sale. As per terms of joint venture agreement dated 1.4.2013, the profit sharing ratio between Star and Pasupati is 75 : 25 respectively. All the income, expenses, assets and liabilities of joint venture operations are included in the accounts of Pasupati as per the terms of joint venture agreement and amount of share of profit of Rs.16876733 for the period 1.4.2013 to 31.3.2014 paid/payable to Star has been debited in the accounts of Pasupati as an expense, the details of which are as under :

The assets and liabilities of the joint venture at the year end included in the assets and liabilities of Pasuapti are as under :

14. RELATED PARTY DISCLOSURE :

Names of related parties and description of relationship

i) Key Management Personnel and their relatives Shri Ramesh Kumar Jain - CMD Shri Vidit Jain - ED Shri S.K.Chhajer, WTD Smt. Vrinda Jain, Relative of Director Smt. Sangeeta Chhajer, Relative of Director

ii) Associate

Shivani Textiles Limited Pasupati Olefin Limited Sulabh Impex Limited

15. The company''s business activity falls within a single primary reportable segment viz. Textiles and Textile Articles. Accordingly, pursuant to Accounting Standard (AS-17) "Segment Reporting" issued by the Institute of Chartered Accountants of India segmental information is not required to be given.

16. In view of the accumulated losses incurred by the company exceeding its net worth, the company made a reference under Section 15(1) of Sick Industrial Companies (Special provisions) Act, 1985 to the Board for Industrial and Financial Reconstruction (BIFR). The company was declared a sick Industrial company within the meaning of Section 3(1 )(o) of the said Act by BIFR on 14.7.2005 and Bank of Baroda was appointed as the operating agency (OA) to examine viability of the company and formulate rehabilitation scheme. The OA filed a draft rehabilitation scheme with BIFR which was approved by BIFR vide its order dated 17.2.2012. The company has substantially implemented the scheme sanctioned by BIFR and taken credit for relief and concessions granted by BIFR in the accounts resulting in positive net worth. Application for de-registration has been made to BIFR.

17. In pursuance of Accounting Standard on Impairment of Assets (AS28) issued by The Institute of Chartered Accountants of India the company had identified and impaired certain assets / cash generating units. There is no further impairment / reversal during the year.

18. The company has not made any provision for Income Tax for the year as there is no taxable income / book profit under the provisions of the Income Tax Act, 1961.

19. Balance of sundry creditors, sundry debtors, investments and loans and advances are subject to confirmation and reconciliation.

20. Previous year figures have been regrouped and / or re-arranged wherever considered necessary.

21. Paise have been rounded off to the nearest rupee.


Mar 31, 2013

1. TRADE PAYABLES

The company is in the process of identifying suppliers covered under the Micro, Small and Medium Enterprises Development Act, 2006. Hence, information thereto has not been provided.

2. CONTINGENT LIABILITIES AND COMMITMENTS (to the extent not provided for)

Particulars Amount (Rs.)

As at As at 31.03.2013 31.03.2012

A. Contingent Liabilities

Bank Guarantees 6,095,500 5,124,354

Letters of Credit outstanding 45,200,000

Claims not acknowledged as debts 16,114,198 16,114,198

Excise Duty demands disputed by the company 27,555,087

Sales Tax demands disputed by the company 4,507,602 4,513,602

Service Tax demands disputed by the company 229,316

Income tax demands disputed by the company 16,364,611

B. Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) 43,702,520 —

3. The company had provided for excise duty demands of Rs. 27555087 (net of payment of Rs. 3734000), which were disputed in appeals. The management has been legally advised that no liability on account of these demands is likely to arise and therefore provision for the same is not required. Accordingly, provision outstanding of Rs. 27555087 as on 31.3.2012 has been written back in these accounts as extraordinary item.

4. In the opinion of the board the assets other than fixed assets have a value on realization in the ordinary course of business at least equal to the amount at which they are stated.

5. RELATED PARTY DISCLOSURE :

Names of related parties and description of relationship

i) Key Management Personnel and their relatives Shri Ramesh Kumar Jain - CMD Shri Vidit Jain - ED Shri S.K.Chhajer, WTD Smt. Vrinda Jain, Relative of Director Smt. Sangeeta Chhajer, Relative of Director

ii) Associate

Shivani Textiles Limited Pasupati Olefin Limited Sulabh Impex Limited

6. The company''s business activity falls within a single primary reportable segment viz. Textiles and Textile Articles. Accordingly, pursuant to Accounting Standard (AS-17) "Segment Reporting" issued by the Institute of Chartered Accountants of India segmental information is not required to be given.

7. In view of the accumulated losses incurred by the company exceeding its net worth, the company made a reference under Section 15(1) of Sick Industrial Companies (Special provisions) Act, 1985 to the Board for Industrial and Financial Reconstruction (BIFR). The company was declared a sick industrial company within the meaning of section 3(1)(o) of the said Act by BIFR on 14.7.2005 and Bank of Baroda was appointed as the operating agency (OA) to examine viability of the company and formulate rehabilitation scheme. The OA filed a draft rehabilitation scheme with BIFR which was approved by BIFR vide its order dated 17.2.2012. The company has substantially implemented the scheme sanctioned by BIFR and taken credit for relief and concessions granted by BIFR in these accounts resulting in positive net worth. Application for de-registration is to be made to BIFR.

8. In pursuance of Accounting Standard on Impairment of Assets (AS28) issued by The Institute of Chartered Accountants of India the company had identified and impaired certain assets / cash generating units. There is no further impairment / reversal during the year.

9. The company has not made any provision for Income Tax for the year as there is no taxable income / book profit under the provisions of the Income Tax Act, 1961.

10. Balance of sundry creditors, sundry debtors, investments and loans and advances are subject to confirmation and reconciliation.

11. Previous year figures have been regrouped and / or re-arranged wherever considered necessary.

12. Paise have been rounded off to the nearest rupee.


Mar 31, 2012

I) On 31.3.2011, debentures were due for payment and hence the amount outstanding for payment on that date has been grouped in other current liabilities-current maturity of long term debts. During the year BIFR vide its order dated 17.2.2012 has approved payment of 75% of principal amount due to the debentureholders in 24 equal monthly instalments. Accordingly, amount payable after 31.3.2013 has been included under long term borrowings.

ii) Term loan and debentures are secured on pari-passu basis by way of joint equitable mortgage of immovable properties both present and future and hypothecation of all movables subject to prior charge in favour of the company's bankers for working capital requirements alongwith personal guarantee of the chairman & managing director (CMD).

14% and 15% Debentures are also secured by exclusive first charge on the properties at Gujarat.

iii) Vehicle loans are secured against hypothecation of vehicle financed out of the loan amount.

v) IDBI had assigned / transferred to Stressed Assets Stabilisation Fund (SASF) the financial assistance granted by it to the company. Subsequently, SASF has assigned its outstanding dues of Rs. 3145 Lacs in favour of J.M. Financial Assets Reconstruction Company Pvt. Ltd. (JMFARC) on 19th March, 2010. On request of the company, JMFARC has agreed for restructuring of outstanding dues of Rs. 3145 lacs on certain proposed terms and conditions which has now been approved by BIFR vide its order dated 17.2.2012. As the company is still in the process of implementing the terms and conditions as finalised in the rehabilitation scheme sanctioned by BIFR, these accounts have been prepared as follows :- a) Interest @ 23% p.a. payable monthly has been provided / paid on debt portion of Rs. 15 Crore of which Rs. 10 Crore has already been repaid. There is no default on the balance sheet date.

b) Interest for the year amounting to Rs. 32494366 (previous year Rs. 25795758) has not been provided on an amount of Rs. 10 Crore which is proposed to be converted into Equity / Optionally Cumulative Convertible Debentures. Total unpaid / unprovided interest upto 31.03.2012 is Rs. 59109302 (previous year Rs. 26614936). Conversion as aforesaid is still pending.

c) The balance amount of Rs. 6.45 Crore proposed to be waived off has not been written back as the terms and conditions finalised by BIFR has not been fully implemented.

vi) There is no default in repayment of vehicle loans and interest thereon on balance sheet date.

vii) (a) Part B of Rs. 125 each out of the 14% secured redeemable partly convertible debentures of Rs. 250 each were to be redeemed at par in three equal instalments on expiry of 7th, 8th and 9th year from the date of allotment of the debentures i.e. 21.12.1991.

(b) Part B of Rs. 25 each out of the 15% secured redeemable partly convertible debentures of Rs. 50 each were to be redeemed at par in three instalments of Rs. 8, Rs. 8 and Rs. 9 on expiry of 7th, 8th and 9th year respectively from the date of allotment of the debentures i.e. 09.12.1993.

(c) 19% secured redeemable non-convertible debentures of Rs. 100 each were to be redeemed at par in three equal instalments on expiry of 6th, 7th and 8th year from the date of allotment of debentures i.e. 03.01.1994.

(d) Majority of the debenture holders holding debentures detailed in (a), (b) & (c) above and Life Insurance Corporation of India (LIC) in respect of its unsecured loan of Rs. 10000000 has agreed to one time settlement (OTS) proposal of the company to settle their dues and payment of the settled amount in monthly instalments subject to following main terms and conditions :- i) In the event of any delay in payment of OTS instalments on due dates, the company shall pay interest at the agreed rate for the period of delay.

ii) If the company offers better proposal to any other creditor, the same shall be offered to these settlers also.

(e) During the year individual public debenture holders holding 14% debenture of face value of Rs. 125 each aggregating to Rs.20000 (outstanding amount Rs. 15834) and 15% debentures of face value of Rs. 25 each aggregating to Rs. 28000 (outstanding amount Rs.28000) have consented to settlement on similar terms and conditions as detailed in (d) above. Consequently, principal and interest amounting to Rs. 10959 has been written back in these accounts as extraordinary items.

f) The debenture holders which have not agreed to OTS as detailed in (d) above are :- i) New India Assurance Co. Ltd. holding 19% debentures of face value of Rs. 100 each aggregating to Rs. 5000000 (outstanding amount Rs. 5000000).

ii) ICICI holding 14% debentures of face value of Rs. 125 each aggregating to Rs. 65000 (outstanding amount Rs. 20068) and 15% debentures of face value of Rs. 25 each aggregating to Rs. 70000 (outstanding amount Rs. 70000).

iii) Individual public debenture holders holding 14% debentures of face value of Rs. 125 each aggregating to Rs. 5234250 (outstanding amount Rs. 4795509) and 15% debentures of face value of Rs. 25 each aggregating to Rs. 8831350 (outstanding amount 8735454).

The rehabilitation scheme sanctioned by BIFR vide its order dated 17.2.2012 has approved settlement of the debentureholders which have not agreed to OTS on the terms and conditions similar to the OTS. The compnay is in the process of repaying the debentureholders as per the terms and conditions finalised by BIFR. Any gain will be adjusted in the accounts only after the debentureholders are fully paid as per order of BIFR. As the payments are now being made as directed by BIFR, there is no default on the balance sheet date.

g) The company has not provided and paid interest amounting to Rs. 23939987 (Rs. 21944988 upto 31.3.2011) on 14% and 15% Redeemable partly convertible debentures as the same will not be payable after the scheme sanctioned by BIFR vide its order dated 17.2.2012 is fully implemented.

1. TRADE PAYABLES

The company is in the process of identifying suppliers covered under the Micro, Small and Medium Enterprises Development Act, 2006. Hence, information thereto has not been provided.

2. Related Party Disclosure :

Names of related parties and description of relationship

i) Key Management Personnel and their relatives

Shri Ramesh Kumar Jain - CMD

Shri Vidit Jain - ED

Shri S.K.Chhajer, WTD

Smt. Vrinda Jain, Relative of Director

Smt. Sangeeta Chhajer, Relative of Director

ii) Associate

Shivani Textiles Limited

Pasupati Olefin Limited

Sulabh Impex Limited

3. The company's business activity falls within a single primary reportable segment viz. Textiles and Textile Articles. Accordingly, pursuant to Accounting standard (AS-17) "Segment Reporting" issued by the Institute of Chartered Accountants of India segmental information is not required to be given

Note :

a) Shri Ramesh Kumar Jain, Chairman & Managing Director has not been paid salary w.e.f. 1.4.2011. Other benefits are being paid.

b) Remuneration of Rs. 1187496 (including Rs. 579606 for previous year) paid to Shri Vidit Jain, Executive Director for the period from 1.4.2010 to 31.3.2012 is subject to approval of the Central Government.

4. In view of the accumulated losses incurred by the company exceeding its net worth, the company has made a reference under Section 15(1) of Sick Industrial Companies (Special provisions) Act, 1985 to the Board for Industrial and Financial Reconstruction (BIFR). The company was declared a sick Industrial company within the meaning of section 3(1)(o) of the said Act by BIFR on 14.7.2005 and Bank of Baroda was appointed as the operating agency (OA) to examine viability of the company and formulate rehabilitation scheme. The OA has filed a draft rehabilitation scheme with BIFR which has been approved by BIFR vide its order dated 17.2.2012. The company has started implementation of the scheme sanctioned by BIFR. Consequently, the accounts of the company for the year ended 31.03.2012 have been prepared on basis that the company is a going concern and credit for relief and concessions granted by BIFR will be taken when the said scheme will be fully implemented.

5. DEFERRED TAX LIABILITIES (NET)

As recommended under the Accounting Standard (AS)22, 'Accounting for Taxes On Income', issued by the Institute of Chartered Accountants of India the company has not provided deferred tax asset as on 31st March, 2012 in view of uncertainty of realization of the amount. The details of deferred tax assets / (liabilities) are as under :

6. In pursuance of Accounting Standard on Impairment of Assets (AS28) issued by The Institute of Chartered Accountants of India the company had identified and impaired certain assets / cash generating units. There is no further impairment / reversal during the year.

7. The company has not made any provision for Income Tax for the year as there is no taxable income / book profit under the provisions of the Income Tax Act, 1961.

8. Balance of sundry creditors, sundry debtors, investments and loans and advances are subject to confirmation and reconciliation.

9. Previous year figures have been regrouped and / or re-arranged wherever considered necessary.

10. Paise have been rounded off to the nearest rupee.


Mar 31, 2010

Current Year Previous Year Rs. Rs.

1. Contingent liabilities not provided for in respect of

a) Bank Guarantees 4017148 4361707

b) Claims not acknowledged as debts 17145958 15439436

c) Excise Duty demands disputed by the company - 30548014

d) Sales Tax demands disputed by the company 4407602 4407602



2. The company had on 16.7.1994 alloted to promoters and their associates 15,00,000 equity shares of Rs. 10 each for cash at a premium of Rs. 22 each on which Rs. 3.50 was called and paid up (Rs. 1 towards Equity shares and Rs. 2.50 towards premium). Balance amount of Rs. 28.50 per share is yet to be called.

3. In view of the accumulated losses incurred by the company exceeding its net worth, the company has made a reference under Section 15(1) of Sick Industrial Companies (Special provisions) Act, 1985 to the Board for Industrial and Financial Reconstruction (BIFR). The company was declared a sick Industrial company within the meaning of section 3(1 )(o) of the said Act by BIFR on 14.7.2005 and Bank of Baroda was appointed as the operating agency (OA) to examine viability of the company and formulate rehabilitation scheme. The OA has filed a draft rehabitition scheme with BIFR which is under consideration. Consequently, the account of the company for the year ended 31.03.2010 have been prepared on basis that the company is a going concern.

4. a) In respect of loan of Rs. 567482264 the lender Industrial Development Bank of India (IDBI) has an option to convert whole of the outstanding amount of the loan or a part not exceeding 20% of the loan whichever is lower into fully paid up equity shares at par if the conditions specified in the loan agreement are contravened.

b) In respect of loan of Rs. 115000000 the lender IDBI has an option to convert a part of the loan not exceeding Rs. 23000000 at par into equity shares of the company of Rs. 10 each during the currency of the loan.

c) Besides the above, IDBI has granted Equipment Finance loan of Rs. 25735648 and has investment of Rs. 1390000 in 14% debentures of face value of Rs. 125 each and Rs. 20000000 in 15% debentures of face value of Rs. 25 each.

d) IDBI had assigned / transferred to Stressed Assets Stabilisation Fund (SASF) the financial assistance granted by it to the company. SASF vide their letter dated 18.04.2006 has agreed to a negotiated settlement of the assistance extended to the company which has been modified vide their letter dated 26.06.2008 and 30.06.2009 and the modified main terms and conditions are as under:

i) Payment of balance outstanding of Rs. 3145 lacs in monthly balloning installments commencing from 01.10.2009 till 01.03.2012.

ii) The above installments to carry interest @ 10% p.a. from 26.07.2008 payable in 12 monthly installments commencing from 01.04.2012.

iii) . SASF will be allotted equity shares equivalent to 10% of the fully paid up equity capital of the company, post derating and post fresh issue of equity capital, subject to a minimum allotment of 6 lacs equity shares of face value of Rs. 10 each, with the promoters having first right of refusal.

iv) The company / promoters shall arrange to pay the settlement amount from sources as agreed upon.

v) In the event of part /whole of the settlement amount being financed from sale of assets, SASF would have the right to recompense to the extent of appreciation of the assets.

vi) In the event of delay in payment of settlement amount as per proposed schedule defaulted amount would carry interest at 14% p.a. from due date to clearance of such default and if the default in payment persists for 30 days. SASF shall have the right to reverse the waiver of dues and restore the original liability as per the terms of the loan agreements entered into by the company and adjust the payment received, if any towards the dues.

vii) During the pendency of loans, if any of the lenders is offered superior terms of settlement, SASF would retain the right to seek similar terms of settlement.

viii) The charge on companys assets shall be released only on realization of entire settlement amount.

ix) In the event, shares are not received in demat form within 3 months of approval of the scheme by SASF, interest at PLR would be charged on the amount proposed to be converted into equity from the date of approval.

x) All securities, guarantees and other documents shall continue to be valid till the entire settlement amount is paid and all conditions of earlier loan agreements shall apply mutatis mutandis.

SASF vide its letter dated 10.02.2010 has partial modified its letter dated 30.06.2009 and further agreed to one time settlement of the outstanding negotiated settlement dues of the company subject to:

i) Payment of Rs. 2500 lac by J.M. Financial Assets Reconstruction Company Pvt. Ltd. (JMFARC) as consideration for assignment of the outstanding negotiated settlement dues of Rs. 3145 lacs in favour of JMFARC.

ii) Payment of additional Rs. 300 lacs (Rs. 200 lacs already paid) including Rs. 100 lacs to be paid in lieu of allotment of 6 lacs equity shares of the company to SASF (since paid).

iii) All other conditions as mentioned in letter dated 30.06.2009 shall remain unchanged.

JMFARC has since paid Rs. 2500 lacs to SASF and the outstanding dues of SASF of Rs. 3145 lacs has been assigned in favour of JMFARC on 19th March, 2010. The company has approached JMFARC for restructuring of outstanding dues of Rs. 3145 lacs on certain proposed terms and conditions which are subject to approval of BIFR. The proposed terms and conditions of JMFARC has already been incorporated in the draft rehabilitation scheme submitted to BIFR (Refer note no. 4 on Schedule 21). As the said terms and conditions are to be finalized by BIFR and can be operative only on clearance by BIFR, the accounts have been prepared on the terms and conditions agreed to with SASF although the loan stands assigned to JMFARC.

5. a) Part B of Rs. 125 each out of the 14% secured redeemable partly convertible debentures of Rs. 250 each were to be redeemed at par in three equal instalments on expiry of 7th, 8th and 9th year from the date of allotment of the debentures i.e. 21.12.1991.

b) Part B of Rs. 25 each out of the 15% secured redeemable partly convertible debentures of Rs. 50 each were to be redeemed at par in three instalments of Rs. 8, Rs. 8 and Rs. 9 on expiry of 7th, 8th and 9th year respectively from the date of allotment of the debentures i.e. 09.12.1993.

c) 19% secured redeemable non-convertible debentures of Rs. 100 each were to be redeemed at par in three equal instalments on expiry of 6th, 7th and 8th year from the date of allotment of debentures i.e. 03.01.1994.

d) Majority of the debenture holders holding debentures detailed in (a)(b) & (c) above and Life Insurance Corporation of India (LIC) in respect of its unsecured loan of Rs. 10000000 has agreed to one time settlement (OTS) proposal of the company to settle their dues and payment of the settled amount in monthly instalments subject to following main terms and conditions:

i) In the event of any delay in payment of OTS instalments on due dates, the company shall pay interest at the agreed rate for the period of delay.

ii) If the company offers better proposal to any other creditor, the same shall be offered to these settlers also.

e) The debenture holders which have not agreed to OTS as detailed in (d) above are:

i) New India Assurance Co. Ltd. holding 19% debentures of face value of Rs. 100 each aggregating to Rs. 5000000 (outstanding amount Rs. 5000000).

ii) ICICI holding 14% debentures of face value of Rs. 125 each aggregating to Rs. 65000 (outstanding amount Rs. 20068) and 15% debentures of face value of Rs. 25 each aggregating to Rs. 70000 (outstanding amount Rs. 70000).

iii) Individual public debenture holders holding 14% debentures of face value of Rs. 125 each aggregating to Rs. 5269875 (outstanding amount Rs. 4815093) and 15% debentures of face value of Rs. 25 each aggregating to Rs. 9072450 (outstanding amount Rs. 8976596).

f) During the year individual public debenture holders holding 14% debentures of face value of Rs. 125 each aggregating to Rs. 28125 (outstanding amount Rs. 24339) and 15% debentures of face value of Rs. 25 each aggregating to Rs. 1750 (outstanding amount Rs. 1750) have consented to settlement on similar terms and conditions as detailed in (d) above. Consequently, principal and interest amounting to Rs. 3979 has been written back in these accounts as extraordinary items.

g) The company has not provided and paid interest amounting to Rs. 20339120 (including Rs. 18338237 for earlier years) on 14% and 15% Redeemable partly convertible debentures due to paucity of funds and consequently TDS thereon has also not been accounted for in the books of account.

6. In pursuance of Accounting Standard on Impairment of Assets (AS28) issued by The Institute of Chartered Accountants of India the company had identified and impaired certain assets / cash generating units. There is no further impairment / reversal during the year.

7. In view of losses, Debenture Redemption Reserve of Rs. 1674150 has not been created.

8. As recommended under the Accounting Standard (AS)22, Accounting for Taxes On Income, issued by the Institute of Chartered Accountants of India the company has during the year provided for deferred tax asset to the extent of deferred tax liability as on 31st March, 2009 only in view of uncertainly of realization of the balance amount. The details of deferred tax assets / (liabilities) are as under:

Note:

Tax effect for the year is abnormally high as the remission of loan liability of Rs. 160393465 was considered as income for the year while providing deferred tax liability for the year ended 31st March, 2009 but, on legal advice, the said remission has been treated as capital receipt in the return filed for assessment year 2009-10.

9. Employee benefit obligations:

The various benefits provided to employees have been classified as under: (a) State Plans Contribution made by the company to various state plans which have been recognized as an expense in the profit & loss account are:

10. As required under the Accounting Standard (As) 18, Related partly disclouses issued by the Institute of Chartered Accountants of India, the information regarding transactions that took place between the company and its related parties are as under:

11. In the opinion of the management the diminution in the value of long term investments is temporary in nature and hence provision for the same is not required.

12. The company is in the process of identifying suppliers covered under the Micro, Small and Medium Enterprises Development Act, 2006. Hence, information thereto has not been provided.

13. The company has not made any provision for Income Tax for the year as there is no taxable income/book profit under the provisions of the Income Tax Act, 1961.

14. Balance of sundry creditors, sundry debtors, investments and loans and advances are subject to confirmation and reconciliation.

15. In the opinion of the Board the current assets, sundry debtors and loans and advances have a value on realization in the ordinary course of business, at least equal to the amount at which they are stated in the Balance Sheet.

16. The companys business activity falls within a single primary reportable segment viz. Textiles and Textile Articles. Accordingly, pursuant to Accounting standard (As-17) "Segment Reporting" issued by the Institute of Chartered Accountants of India segmental information is not required to be given.

17. Previous year figures have been regrouped and/or re-arranged wherever considered necessary.

18. Paise have been rounded off to the nearest rupee.

Note:

(i) Shri Ramesh Kumar Jain, Chairman & Managing Director, has forgone his salary w.e.f. 16.04.03. Other benefits are being availed.

(ii) The.Company has been advised that the computation of net profits for the purpose of Directors remuneration under Section .349 of the Companies Act, 1956 need not be enumerated since no commission is being paid to the directors.

(iii) Remuneration of Rs. 3090 paid to Shri S.K. Chhajer, whole time Director, for the period from 29.03.2010 to 31.03.2010 is subject to approval of the Central Government.

19. Sales include Export Incentives.

20. No unclaimed amounts were outstanding to be credited to investor education & protection fund as on 31.03.2010.

21. Information pursuant to the provisions of paragraphs 3, 4C and 4D of Part II of Schedule VI of the Companies Act, 1956.

E. Previous year figures have been given in the brackets.

 
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