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Notes to Accounts of Pokarna Ltd.

Mar 31, 2014

1.1.2Terms / rights attached to equity shares:

The company has only one class of equity shares having a par value of Rs.10/- per share. Each holder of equity shares 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 31 March 2014 the amount of per share dividend recognised as distribution to equity shareholders was Rs.2/- ( previous year -Nil-)

In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

2.3.1 Term Loans &Working capital facilities from Union Bank of India, Hyderabad, are secured by hypothecation of first charge on all immovable and movable properties including machineries, current assets such as inventories, book debts and other receivables of the company, both present and future besides personal guarantee / security of the Directors (other than independent directors) and their relative.

2.3.2 External Commercial Borrowings from Union Bank of India, Hong Kong Branch are secured by way of extension of charge on fixed assets of the company. USD 7.81 million has been utilised out of total loan sanctioned of USD 10.80 million.

2.3.4 Hire Purchase loans are secured by hypothecation of respective assets purchased out of finance, and personal guarantee of some of the Directors (other than independent directors).

2.5.1 Zero coupon Foreign Currency Convertible Bonds (12,000 Bonds of USD 1000 each), which were matured for payment on 29th March,2012, the company has redeemed 9539 bonds as on date and the balance 2461 bonds are under negotiation for redemption with the Bond Holders as on date of Balance Sheet.

2.5.2 The repayment of installment ofTerm Loan of Rs.59.87 lacs and interest of Rs.5.01 lacs for the last two months are overdue as on the date of Balance Sheet, the company has since repaid the same as on date.

2.7.2 Provision has been retained towards premium payable on redemption of FCCB''s which were matured on 29.03.2012 as per the subsisting terms and conditions. As on date bonds have been redeemed to the extent of 9539 bonds as per the negotiated terms with the said bond holders. The gain / benefit, cost, charges including foreign exchange gain / loss at the close of the year are transferred to Pokarna Engineered Stone Limited (subsidiary) as per the Scheme of Arrangement sanctioned by Hon''ble Andhra Pradesh High Court and agreement thereto.The corresponding receivable arising thereof is disclosed under the head''Loans and Advances to Subsidiary''. The company expects no further liability other than provided for in the books.

2.9.1 During the year 4,85,36,832 Optionally Convertible Unsecured Debentures of Rs.10/- each of Pokarna Engineered Stone Limited, have been converted into Series-II Optionally convertible Unsecured Debentures of Rs.10/- each on certain terms and conditions w.e.f 1st January, 2014, refer note no.2.9.3

2.9.2 Optionally Convertible Debentures

a. The aforesaid Optionally Convertible Debentures were acquired for net consideration in terms of order of the Hon''ble High Court of Andhra Pradesh sanctioning Scheme of Arrangement between the Company and Pokarna Engineered Stone Limited for transfer of assets, liabilities and expenses.

b. Terms and Conditions: Debentures are for tenor of 7 years from the date of allotment, during this period the option to convert / redeem shall vest solely with the Company. Upon maturity, failing the exercise of option by the debenture holder, the OCDs shall stand redeemed.

c. Variable coupon / interest on debentures is computed as equivalent to all costs / expenditure incurred or income / gains / benefits earned including foreign exchange gain / loss associated with the FCCBs, which belong to and to be borne by Pokarna Engineered Stone Limited. Consequently, no interest is chargeable in respect of the OCDs after the date of redemption / conversion of the FCCBs.

d. If OCDs are opted for redemption anytime before they are due for redemption, interest shall be payable in respect of the OCDs at the rate of 8% per annum. The coupon / interest on the OCDs shall accrue and be payable at the time of redemption of the OCDs.

e. Conversion obligation: 15 (Fifteen) OCDs shall be convertible into 1 (One) equity share of Rs.10/- each of Pokarna Engineered Stone Limited.

2.9.3 Optionally Convertible Debentures - Series - II

a. Optionally Convertible Debentures - Series-II have been issued on account of part conversion of earlier debentures.

b. Terms and Conditions: Debentures are for tenor of 7 years from the date of allotment, during this period the option to convert / redeem shall vest solely with the Company.

c. Interest on debentures shall be payable @ 3% p.a.

d. Redemption obligation: Redeemable at par in cash

e. Conversion obligation: 15 (Fifteen) OCDs shall be convertible into 1 (One) equity share of Rs.10/- each of Pokarna Engineered Stone Limited.

2.16.1 Gain / Benefit on redemption of FCCB''s:

Gain / benefit has arisen due to part redemption of 5839 ( previous year 3700 ) FCCB''s at discounted price and the same has been reimbursed to Pokarna Engineered Stone Limited as pe the Scheme of Arrangement and agreement thereto.

2.23.1 Variable coupon / interest on debentures has been computed as equivalent to all costs / expenditure incurred including foreign exchange gain / loss associated with the FCCBs, which belong to and to be borne by Pokarna Engineered Stone Limited and accordingly the same has been transferred.

2.24 1. Contingent Liabilities not provided for

Particulars 31.03.2014 31.03.2013

a) Bank Guarantees 1.22 1.22 b) Letter of Credits outstanding 223.39 335.01 Claims against the company / disputed liabilities not acknowledged as debts:

c) Income tax matters, pending decisions on various appeals made by the 27.76 27.76 company and by the Department. Amount deposited 12.47 Lacs (previous

year Rs.12.47 Lacs)

d) Excise matters (including service tax). Amount deposited Rs.5.57 Lacs (previous 233.60 231.67 year Rs.5.71 Lacs)

e) Customs matters, Amount deposited Rs.37.09 Lacs (previous year Rs.40.84 Lacs) 75.91 79.66

f) Sales tax matters, Amount deposited Rs.Nil (previous year Rs.Nil Lacs) - 61.50

g) Mines & Geology matters 138.20 138.20

h) Cross subsidy charges payable to Central Power Distribution Company 61.60 61.60

i) Other Matters disputed 142.15 131.05

Other Commitments:

j) Company remains exposed to liability towards fuel surcharge adjustment, which are notified by Power Distribution Companies of Andhra Pradesh pertaining to earlier years, which are being adjusted in future tariff payable for consumption. Accordingly charges are accounted in the year of payment / bill raised for the same.

k) The company is also involved in other lawsuits, claims, investigations and proceedings, including patent and commercial matters, which arise in the ordinary course of business. However, there are no material claims on such cases.

2.27 Related Party Transactions

a) Enterprises where control exits:

Pokarna Engineered Stone Limited — 100% subsidiary

b) Names of the Associate concerns:

Pokarna Fabrics Limited, Pokarna Fashions Limited, Pokarna Marketing Limited

c) Names of the Associate Firms: Southend, Southend Extension

d) Names of Key Management Personnel Gautam Chand Jain, Rahul Jain

e) Names of Relatives

Prakash Chand Jain, Ashok Chand Jain, Raaj Kumar Jain, Apurvajain, Nidhijain, Neha Jain (Arrush Creations) and Suvidh Chordia

f) Disclosure of transactions between the company and related parties and the status of Outstanding balances for the year 2013-14 (2012-13)

2.30 In accordance with AS-17 "Segment Reporting", segment information has been given in the consolidated financial statements of Pokarna Limited and therefore no separate disclosure on segment information is given in these financial statements.

Defined Benefit Plan

The employees'' gratuity fund scheme managed by aTrust ( Life Insurance Corporation of India for Granite Division of the company) is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for Compensated Absence is recognized in the same manner as gratuity.

f) The estimates of future salary increases considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors.

g) The company expects to contribute Rs.10.00 Lacs to its Gratuity plan for the next year.

2.32 Leases:

The company has operating leases for Office premises and retail outlets, that are

(a) Renewable on a periodic basis and are cancellable by giving a notice period ranging from 1 month to 6 months and

(b) Are non-cancellable for specified periods under arrangements. Rent escalation clauses vary from contract to contract.

2.35 a) The Ministry of Corporate Affairs, Government of India, vide General Circular No.2 and 3 dated 8th February

2011 and 21st February 2011 respectively has granted a general exemption from compliance with section 212 of the Companies Act, 1956, subject to fulfilment of conditions stipulated in the circular. The Company has satisfied the conditions stipulated in the circular and hence is entitled to the exemption. b) Necessary information relating to the subsidiaries has been included in the Consolidated Financial Statements.

2.36 Previous year''s figures have been regrouped, rearranged and reclassified, wherever considered necessary, in order to conform to the current year''s presentation.


Mar 31, 2013

1. Capital Commitments

Estimated Amount of contracts remaining to be executed on Capital Account not provided for (net of advances) 56.33 129.53

1.1 Financial and Derivative Instruments

Foreign currency exposure that are not hedged by derivative or forward contracts as on 31st March 2013 amounts to Rs.. 9261.13 Lacs (previous year Rs. 10588.60 Lacs).

1.2 Related Party Transactions

a) Enterprises where control exits:

Pokarna Engineered Stone Limited – 100% subsidiary

b) Names of the Associate concerns:

Pokarna Fabrics Limited, Pokarna Fashions Limited, Pokarna Marketing Limited

c) Names of the Associate Firms: Southend, Southend Extension

d) Names of Key Management Personnel Gautam Chand Jain, Rahul Jain

e) Names of Relatives

Prakash Chand Jain, Ashok Chand Jain, Raaj Kumar Jain

f) Disclosure of transactions between the company and related parties and the status of Outstanding balances for the year 2012-13 (2011-12)

1.3 In accordance with AS-17 "Segment Reporting", segment information has been given in the consolidated f nancial statements of Pokarna Limited and therefore no separate disclosure on segment information is tre given in these f nancial statements.

1.4 Leases:

The company has operating leases for Of ce premises and retail outlets, that are

(a) Renewable on a periodic basis and are cancellable by giving a notice period ranging from 1 month to 6 months and

(b) Are non-cancellable for specif ed periods under arrangements. Rent escalation clauses vary from contract to contract.

1.5 a) The Ministry of Corporate Af airs, Government of India, vide General Circular No.2 and 3 dated 8th February 2011 and 21st February 2011 respectively has granted a general exemption from compliance with section 212 of the Companies Act, 1956, subject to fulf llment of conditions stipulated in the circular. The Company has satisf ed the conditions stipulated in the circular and hence is entitled to the exemption.

b) Necessary information relating to the subsidiaries has been included in the Consolidated Financial Statements.

 
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