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Notes to Accounts of Pentamedia Graphics Ltd.

Mar 31, 2015

A. CORPORATE INFORMATION

Pentamedia Graphics Limited (PMGL) is a Public Limited Company incorporated in the state of Tamilnadu and listed on the BSE Limited (BSE). The company has been mainly in the following business during the year:

a. Pre&Post production of digital contents for animation&Visual effects for Film, TV & Internet.

b. Consultancy on multimedia & Software

c. Training and maintenance of media & Software products.

1. CLAIMS AGAINST THE COMPANY NOT ACKNOWLEDGE AS LIABILITY :

Pentasoft Technologies Limited has obtained a direction/stay order dated 18.12.2009 (W.P.No.25120/2009) from the High Court of Madras to dispose off all the issues and appeals pertaining to the Assessment Year 1998-99 to 2006-07 where Pentasoft Technologies Limited has claimed refunds. Also vide WP No.5174 / 2015 the company was able to lift the attachment on its properties during February 2015 by IT Department.

The particulars of dues of Income Tax For Pentamedia Graphics Limited and Pentasoft Technologies which have not been deposited on account of a dispute for the following years as follows.

Pentamedia Graphics Limited has obtained a direction/order dated 15.07.2010 (W.P.No.2357/10) from the High Court of Madaras to dispose off all the issues and appeals pertaining to the Assessment Year: 1997-98 to 2007-2008 within 8 weeks where the company has claimed refunds.

For the AY 2005-06 a case against Pentamedia Graphics Limited was reopened by Income tax Department on 21/10/2014 u/s 144 r.w.s 147 of Income tax Act demanding an amount of Rs.25,38,54,740.The above said case was under dispute stay has been obtaining company and the appeal was pending in supreme court.

Consequent to the modified composite scheme of Amalgamation arrangement and compromise between Pentamedia Graphics Ltd, Media Dreams Ltd, Kris.Srikkanth Sports Entertainment Ltd, Intelevision and Mayajaal Entertainment Ltd and their respective creditors and shareholders.

The company filed its Revised return as per the Madras High Court Order dated 17th December 2007 wherein Rs.690Cr of imparied assets has been written off and the matter is still pending with the department.This being not takenup immediately the company vide COMP.APPLN.No.330 to 333/2009 sought direction from Madras High Court and the same was given while order dated 11th January 2010.

SERVICE TAX CLAIMS

A case against M/s.Pentasoft Technologies Ltd (stay order No.823/12 dt 10.12.12) is pending in CST, Chennai. Demand amount of which is Rs.11,38,904 out of which Rs.8,00,000 was deposited by the company on 11th January 2013. And the said case is still in process.

2. EXCEPTIONAL ITEMS REPRESENTS:

(I) PRODUCTS RIGHTS

Pentasoft Technologies Limited was in the development and export of software like Hospital Management Software, Banking and Financial Software, Insurance Software ERP solutions etc.

Consequent to the merger of Pentasoft Technologies Limited with Pentamedia Graphics Limited on 01.10.2008 high end software products along with its rights came into Pentamedia Graphics Limited.

The above softwares being used only on main frame machines and these machines being not in use at present, they are no longer marketable hence these products amounting to Rs.32.70 crores are written off as per the advice of the management.

(II) CAPITAL WORK IN PROGRESS

Animation contents for Film, TV & Internet comprising of characters, properties & backgrounds are no longer relevant due to the present technology changes on picture quality and resolution such as 4K, Digital 3D etc. and a portion of Rs.62.61 Crores has been written off as per the advice of the management

(III) LOANS AND ADVANCES

The following items pertaining to Pentasoft Technologies which has come in due to merger with Pentamedia Graphics w.e.f 1.10.2008

A. Pentasoft Franchisee

Pentasoft Technologies Limited appointed over 150 franchisees during the year 2000 - 2001. Upon merger of Pentasoft Technologies Limited, the amounts receivable from franchisees were taken as advances in Pentamedia Graphics Limited.

Due to economic slowdown and increase in competitors most of the franchisees discontinued the business and hence the advances amounting to Rs.6.50 crores became irrecoverable. In spite of sincere efforts taken by the management to recover the same, they could not recover it and hence written off.

B. Other Advances

The new provisions pertaining to governance, compliance etc has also necessitated in writing off Rs. 14.27 crores of various advances which were given during establishing offices/ branches all over India by Pentasoft Technologies. Since all the branches/ offices have been closed long back and the advances being not recoverable till now the management has decided to write them off in line with the new provisions.

C. Advance pertaining to IT

Advances amounting to Rs. 31.75 crores which standing on the above mentioned account for more than 7 years have been written off in line with new provisions after some of the appeals pertaining certain key issues have been disposed off by the department

3. The company has recognized deferred tax liability (Net) Rs.1.05 crores as per the requirements of Accounting standard 22

4. DISCLOSURES IN RESPECT OF RELATED PARTIES PURSUANT TO ACCOUNTING STANDARD 18: List of Related Parties:

Related parties/Promoters : Pentafour Software Employees Welfare Foundation Mayajaal Entertainment Ltd.

Key Management personnel : Mr.VChandrasekaran, Managing Director

5. COMPUTER SOFTWARE FOR MULTIMEDIA

The company is mainly engaged in Multimedia business of consultancy, training, sale of digital content, service for pre-post production, special/visual effects and distribution is not capable of being expressed in any generic units.

6. DUES TO SMALL SCALE INDUSTRIAL UNDERTAKINGS

As of 31 st March 2014 the company has no outstanding exceeding Rs.100 thousands to Small scale industrial undertakings as defined under the Industrial Development Regulation Act, 1951.

7. PREVIOUS YEAR COMPARATIVES

Previous year's figures have been regrouped/reclassified wherever necessary to correspond with the current year's classifications/ disclosures.


Mar 31, 2014

A. CORPORATE INFORMATION

Pentamedia Graphics Limited (PMGL) is a Public Limited company incorporated in the State of Tamilnadu and listed on the BSE Limited (BSE). The company has been mainly in the following business during the year:

a. Pre & Post production of digital contents for animation& visual effects for Film, TV &Internet

b. Consultancy on multimedia & software

c. Training and maintenance of media & software products.

1. CLAIMS AGAINST THE COMPANY NOT ACKNOWLEDGE AS LIABILITY :

i. Income Tax

Pentamedia Graphics Limited has obtained a direction/order dated 15.07.2010 (W.P No.2357/10) from the High court of Madras to dispose off all the issues and appeals pertaining to the Assessment Year : 1997-98 to 2007-2008 where the company has claimed refunds. The issues and appeals are on various stages with the Income Tax department. Pentasoft Technologies Limited has obtained a direction/order dated 18.12.2009 (W.P.No.25120/2009) from the High Court of Madras to dispose off all the issues and appeals pertaining to the Assessment Year : 1998-99 to 2006-07 where Pentasoft Technologies Limited has claimed refunds. The issues and appeals are on various stages with the Income Tax department.

The volume of claims / refunds cannot be quantified.

ii. DAL, Ireland

The company''s appeal on Dallah Albaraka (DAL) claim against the guarantor Pentasoft Technologies Ltd which is being claimed on Pentamedia Graphics Ltd is in progress at High Court of Madras.

2. EXEPTIONAL ITEMS REPRESENTS :

(i) Writing off of Investments in overseas subsidiaries

Num TV Limited, Mauritius (100% Subsidiary of Pentamedia Graphics Limited) and Esoftcom (Mauritius) Limited (100% Subsidiary of Pentasoft Technologies Limited) were formed with the approval of Reserve Bank of India during May 2000. Consequent to the merger of Pentasoft Technologies Limited with Pentamedia Graphics Limited from 01.10.2008 Esoftcom (Mauritius) Limited also came under the fold of Pentamedia Graphics Limited.

The onset of sunset clause for STPs/EHTPS, increase in the cost of operation, high competition and general economic slowdown all over the world forced the company to windup the subsidiaries.

The company informed The Reserve Bank of India during Nov 2011 for the write off of investments amounting to Rs.92.73 crores in subsidiaries and RBI in turn vide their letter dated 06.01.2012 asked the company to approach through the authorized dealers for further compliance.

In the meantime Corporate and Business Registration Department of Mauritius also informed the company vide their letter 13.11.2013 their intention to strike off the names of the companies due to the inactive status of the subsidiaries.

In view of the above, the company decided to close the operations and hence the investments of Rs. 92.73 crores are written off.

(ii) PRODUCTS RIGHTS

Pentasoft Technologies Limited was in the development and export of software like Hospital Management Software ( Care Cure), Banking and Financial Software, Insurance Software ERP solutions etc.

Consequent to the merger of Pentasoft Technologies Limited with Pentamedia Graphics Limited on 01.10.2008 high end software products along with its rights came into Pentamedia Graphics Limited.

The above softwares being used only on main frame machines and these machines being not in use at present, these products to the tune of Rs.10.24 crores are written off as per the advice of the management.

(iii) CAPITAL WORK IN PROGRESS

The capital work in progress consists of digital assets related to film, Television and internet content in the category of high, medium and low complexities.

Since most of the low complexity items have become obsolete due to high end technology, the company wrote off to the extent of Rs.8.25 crores as per the advice of the management.

(iv) LOANS AND ADVANCES

Pentasoft Technologies Limited appointed over 150 franchisees during the year 2000 - 2001. Upon merger of Pentasoft Technologies Limited, the amounts receivable from franchisees were taken as advances in Pentamedia Graphics Limited.

Due to economic slowdown and increase in competitors most of the franchisees discontinued the business and hence the advance amounts to the tune of Rs.19.58 crores became irrecoverable. In spite of sincere efforts taken by the management to recover the same, they could not recover it and hence written off.

(v) SUNDRY DEBTORS

In spite of best efforts, the company could not recover the debtors to the tune of Rs.0.57 crores and as such the same is written off.

(vi) INVENTORIES

Due to rapid change in digital technology, a few of the inventory items totaling to Rs.8.01 crores became obsolete and hence written off.

3. Confirmation of balances/Reconciliation is pending in respect of certain Banks/Long Term & Short Term Loans and Advances/ Trade Receivables/ Trade Payables unclaimed dividend and other liabilities. Adjustments if any which may arise upon completion of confirmation/reconciliation will be dealt with upon confirmation/completion of reconciliation.

4. Income Tax: As the Company has incurred losses during the current year no provision for Taxation is made.

5. The Company has recognized deferred tax liability (Net) Rs.1.67 crores as per the requirements of Accounting Standard 22.

6. DUES TO SMALL SCALE INDUSTRIAL UNDERTAKINGS

As of 31st March 2014 the Company has no outstanding exceeding Rs.100 thousands to Small Scale Industrial Undertakings as defined under the Industrial Development Regulation Act, 1951.

7. PREVIOUS YEAR COMPARATIVES

Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classifications / disclosures.

8. All figures are rounded off to nearest in thousands


Mar 31, 2013

A. CORPORATE INFORMATION

Pentamedia Graphics Limited (PMGL) is a Public Limited company incorporated in the State of Tamilnadu and listed on the Bombay Stock Exchange (BSE). The company has been mainly in the following business during the year:

a. Pre & Post production of digital contents for animation& visual effects for Film, TV &Internet

b. Consultancy on multimedia & software

c. Training and maintenance of media & software products.

B. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The fi nancial statements are prepared to comply in all material aspects with all the applicable accounting principles in India, the applicable Accounting Standards notifi ed u/s 211 (3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956. The accounting policies adopted in the preparation of the fi nancial statements are consistent with those followed in the previous year.

Claims against the Company not acknowledge as Liability:

a. Income Tax:

Pentamedia Graphics Limited has obtained a direction/order dt. 15.07.2010 (W.P. No.2357/10) from the High Court of Madras to dispose off all the issues and appeals pertaining to the AYs 1997-98 to 2007-08 where the Company have claimed refunds. The issues and appeals are on various stages with the Income Tax department. Pentasoft Technologies Limited has obtained a direction/order dt. 18.12.2009 (W.P. No.25120/2009) from the High Court of Madras to dispose off all the issues and appeals pertaining to the AYs 1998-99 to 2006-07 where Pentasoft have claimed refunds. The issues and appeals are on various stages with the Income Tax department.

The volume of claims /refunds cannot be quantified.

b. DAL, Ireland

The Company’s appeal on Dallah Albaraka (DAL) claim against the guarantor M/s.Pentasoft Technologies Limited which is being claimed on Pentamedia Graphics Ltd. is in progress.

1. Confi rmation of balances/Reconciliation is pending in respect of certain Banks/Long Term & Short Term Loans and Advances/ Trade Receivables/ Trade Payables unclaimed dividend and other liabilities. Adjustments if any which may arise upon completion of confi rmation/reconciliation will be dealt with upon confi rmation/completion of reconciliation.

2. The Company has recognized deferred tax liability (Net) Rs. 1.76 cores as per the requirements of Accounting Standard 22.

3. Segmental Reporting Primary Business Segmental Results.

As the assets (Computers and software’s) are being used interchangeably by different segments, segment wise capital employed is not ascertainable.

4. Disclosures in respect of related parties pursuant to Accounting Standard 18:

List of Related Parties:

Subsidiaries: NumTV Limited, Mauritius

Esoftcom (Mauritius) Limited,

Key Management personnel: Mr.V.Chandrasekaran,

Chairman & Managing Director

5. Computer Software for Multimedia.

The Company is mainly engaged in Multimedia business of consultancy, training, sale of digital content, service for pre-post production, special / visual effects and distribution is not capable of being expressed in any generic units.

6. DUES TO SMALL SCALE INDUSTRIAL UNDERTAKINGS

As of 31st March 2013 the Company has no outstanding exceeding Rs.100 thousands to Small Scale Industrial Undertakings as defi ned under the Industrial Development Regulation Act, 1951.

7. PREVIOUS YEAR COMPARATIVES

Previous year’s fi gures have been regrouped / reclassifi ed wherever necessary to correspond with the current year’s classifi cations / disclosures.

8. All fi gures are rounded off to nearest in thousands.


Mar 31, 2012

1(a) Secured Loans:

The settlement due to EXIM Bank (CP No. 243 of 2008), Dhanalakshmi Bank assigned to Pridhvi Assets Reconstruction vide O.A No. 95 of 2003 and AXIS Bank assigned to Phoenix Assets Recovery Construction vide OA Nos. 7 of 2004 & 76 of 2005 which is pending before the Debt Recovery Tribunal (DRT) have been settled by using the proceeds from the dis-investment of Mayajaal Entertainment Ltd equity shares as per the order of Company Law Board, Chennai, dated 01.03.2011 and said shares have been extinguished vide corporate action taken by the company through NSDL on 21.04.2011.

1(b) Claim against the company not acknowledged as Liability:

Dallah Albaraka, Ireland

Dallah Albaraka, Ireland (DAL) obtained an exparte decree before the High Court of Justice Queen's Bench Division London against M/s. Pentasoft Technologies Limited for the corporate guarantee issued by them. Company Petition seeking an order of winding up (No.134 of 2008) filed by DAL was dismissed by a single judge in the High Court of Madras vide order dated 16.12.2008 for want of merits. DAL appealed against the single judge order (OSA Bo. 27 of 2009& M.P. No. 1 of 2010 Pentamedia Graphics Ltd was made respondent as Pentasoft Technologies Limited merged with Pentamedia Graphics Limited during October 2008) and the same was also dismissed by the bench of the High Court of Madras vide their order dated 07.07.2010 on same lines of the single judge order. DAL also filed an unnumbered petition under Regulation 44 of Company Law Board Regulation seeking to set aside order pertaining to the buyback of Mayajaal Entertainment Ltd shares. This petition too was rejected by the Company Law Board vide their order dated 11.01.2012 stating that there is no merit in the DAL's application, also due to the fact that the applicant is yet to establish its status as creditor of Pentamedia Graphics Ltd and cannot be held with certainty that it will be entitled to any reliefs even if the company petition is dismissed. After DAL moved Execution Petitions (No. 299 & 300 0f 2011) seeking attachment and sale of moveable and immovable property of Pentamedia Grapics Ltd. However both the Execution Petitions were dismissed by the Master Court of Chennai, vide their order dated 20.01.2012 stating that both of them are not maintainable and not executable with the decree obtained by them which is not on merits and without the prior permission from Reserve Bank of India or Central Government of India. DAL filed a review petition and got the case heard once again and also got the order that Executive Petitions are maintainable against the assets of Pentamedia Graphics Ltd. Now Pentamedia Graphics Ltd has appealed (Appeal No. 2801 of 2012) against this order and DAL has sought time for reply.

According to the information and explanation given to us there are no dues of income tax, wealth tax, sales tax, custom duty, excise duty and cess which have not been deposited on account of any dispute except in the following cases.

Income Tax:

The Company has obtained stay orders against Income Tax demands and have been in touch with the Income Tax Department to settle the issues regarding demands and refunds. The volume of claims/refunds cannot be quantified now.

2. Confirmation of balances/Reconciliation is pending in respect of certain Banks/Loans and Advances/Sundry Debtors/ Sundry creditors' unclaimed dividend and other liabilities. Adjustments if any which may arise upon completion of confirmation/reconciliation will be dealt with upon confirmation/completion of reconciliation.

3. The Company has recognized deferred tax liability (Net) Rs. 1.97 cores as per the requirements of Accounting Standard 22.

4. DUES TO SMALL SCALE INDUSTRIAL UNDERTAKINGS

As of 31st March 2012 the Company has no outstanding exceeding Rs.100 thousands to Small Scale Industrial Undertakings as defined under the Industrial Development Regulation Act, 1951.

5. PREVIOUS YEAR COMPARATIVES

Schedule VI to the Companies Act, 1956 is revised effective from 1 April 2011 and has significantly impacted the disclosures and presentation made in the financial statements. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classifications / disclosures.

6. All figures are rounded off to nearest in thousands.


Mar 31, 2011

1. Confirmaton of balances/Reconciliation is pending in respect of certain Banks/ Loans and Advances/Sundry Debtors/ Sundry creditors' unclaimed dividend and other liabilities. Adjustments if any which may arise upon completion of confirmation/reconciliation will be dealt with upon confirmation/completion of reconciliation.

2. The Reconciliation of subsidiary records with General Ledger is in progress relating to Fixed Assets / Capital Work in Progress and Inventories. Adjustment if any which may arise upon confirmation/reconciliaton of above items are unascertainable at this stage, and are not provided for.

3. The Company has recognized deferred tax liability (Net) Rs. 2.02 cores as per the requirements of Accounting Standard 22.

4. Segmental Reporting Primary Business Segmental Results.

As the assets (Computers and software's) are being used interchangeably by different segments, segment wise capital employed is not ascertainable.

5. Disclosures in respect of related partes pursuant to Accountng Standard 18: List of Related Partes:

1. Subsidiaries : NumTV Ltd, Mauritius, Esoftcom (Mauritius) Ltd

2. Key Management personnel : Mr. V. Chandrasekaran Chairman and CEO

3. Related partes : Mayajaal Entertainment Ltd & MAYAs Food Court Advance received and outstanding as on 31.03.2011 Rs. 21,95,33,452/- & Rs.5,93,112/- respectvely

6. Computer Software for Multimedia.

The Company is mainly engaged in Multimedia business of consultancy, training, sale of digital content, service for pre-post production, special / visual effects and distribution is not capable of being expressed in any generic units.

Hence it is not possible to furnish the quantitative details and the information required under paragraphs 3, 4c and 4 d of part II of Schedule VI of the Companies Act, 1956 of India.

7. DUES TO SMALL SCALE INDUSTRIAL UNDERTAKINGS

As of 31st March 2011 the Company has no outstanding exceeding Rs. 100 thousands to Small Scale Industrial Undertakings as defined under the Industrial Development Regulaton Act, 1951.

8. PREVIOUS YEAR COMPARATIVES

The previous year figures have been reclassified, wherever necessary to conform to current year's classificaton.

9. All figures are rounded of to nearest in thousands.


Mar 31, 2010

1(a) Secured Loans:

Though the Company has defaulted in repayment of the following dues, with interest to banks, it has contested in DRT / High Court towards settlement of Loans.

i) Dhanalakshmi Bank has approached the Debts Recovery Tribunal (DRT) to settle the dues. The claim of Dhanalakshmi Bank in respect of Pentasoft Technologies Ltd amounting to Rs. 10.80 crores are being contested by the company.

ii) The claim of Axis Bank (UTI) is Rs. 24.97 crores and Rs. 14.85 crores with regard to Pentamedia & Pentasoft Technologies Ltd respectively are being contested by the company.

iii) FIB (EXIM BANK) is claiming an amount of Rs. 19.85 crores in respect of Pentamedia Graphics Ltd.

In this connection the companys petition is pending with High Court of Madras and is being actively defended by the company.

The above amounts due to bank / Institution does not include any interest that may accrue on the principle amount due from 01.04.2005.

1 (b) Claim against the company not acknowledged as Liability:

According to the information and explanation given to us there are no dues of income tax, wealth tax, sales tax, custom duty, excise duty and cess which have not been deposited on account of any dispute except in the following cases.

Income Tax:

i. As per the notice dated 05.02.2009 issued by the Income Tax Department Chennai the total Tax demand of Pentamedia Graphics Ltd amounts to Rs.112.51 crores.-The company being an 100% EOU under STPI/EHTP scheme has contested various issues and has obtained stay order from the High Court of Madras restraining the Income Tax department from taking any action till the disposal of all issues/appeals. The company has also obtained the Court order from the High Court of Madras, directing the Income Tax department to process the revised returns filed by the company pursuant to the Court order dated 17.12.2007.

ii. As per the.notice dated 19.01.2009 issued by the Income Tax Department Chennai the total tax demand of Pentasoft Technologies Ltd amounts to Rs. 89.97 crores. The Company being an 100% EOU under STPI/EHTP scheme had gone on appeal against the various issues and has subsequently obtained stay order from the High Court of Madras restraining the Income Tax department from taking any action till the disposal of all issues/appeals. It is not possible to ascertain the contingent liability in this regard with respect to Accounting Standard 29.

2) Confirmation of balances/Reconciliation is pending in respect of certain Banks/Loans and Advances/Sundry Debtors/ Sundry creditors and other liabilities. Adjustments if any which may arise upon completion of confirmation/reconciliation will be dealt with upon confirmation/completion of reconciliation.

3) The Reconciliation of subsidiary records with General Ledger is in progress relating to Fixed Assets / Capital Work in Progress and Inventories. Adjustment if any which may arise upon confirmation/reconciliation of above items are unascertainable at this stage, and are not provided for.

4) The Company has recognized deferred tax liability Rs.1.92 cores as per the requirements of Accounting Standard 22. However, the company has not provided for deferred tax on account of depreciation in the case of EHTP Assets as required by Accounting Standard Interpretation (ASI) issued by the Institute of Chartered Accountants of India which should have been adjusted against opening reserves

As the assets (computers and softwares) are being used Interchangeably by different segments, segment wise capital employed is not ascertainable.

5. Disclosures in respect of related parties pursuant to Accounting Standard 18: List of Related Parties:

1. Subsidiaries : NumTV Limited, Mauritius

Esoftcom Limited, Mauritius

2. Key Management personnel : Mr. V. Chandrasekaran

Chairman and CEO

6. Computer Software for Multimedia.

The Company is mainly engaged in Multimedia business of consultancy, training, sale of digital content, service for pre-post production, special / visual effects and distribution is not capable of being expressed in any generic units.

Hence it is not possible to furnish trie quantitative details and the information required under paragraphs 3, 4c and 4 d of part II of Schedule VI of the Companies Act, 1956 of India.

7. DUES TO SMALL SCALE INDUSTRIAL UNDERTAKINGS

As of 31st March 2010 the Company has no outstanding exceeding Rs.100 thousands to Small Scale Industrial Undertakings as defined under the Industrial Development Regulation Act, 1951.

8. PREVIOUS YEAR COMPARATIVES

Consequent upon the implementation of the scheme of amalgamation with effect from 1st October 2008, the figures of the current year are not comparable with those of the previous year.

9. All figures are rounded off to nearest in thousands.

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