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Notes to Accounts of Ponni Sugars (Erode) Ltd.

Mar 31, 2015

(1) Contingent Liabilities and Commitments:

31.03.2015 31.03.2014

Contingent Liabilities:

* Claims against the company not acknowledged as debts

* Tax demands contested 161 199

* Interest on Electricity consumption tax 97 95 contested

Commitments

* Estimated value of contracts remaining to be executed on capital account and not provided for - 81

* Contracts for purchase of sugar cane 9065 7213

(2) The Company has changed the method of providing depreciation from 1st April 2014 as required by the Companies Act, 2013. Accordingly depreciation has been provided in accordance with Schedule II thereof for the current year as against the rates specified in Schedule XIV to the Companies Act, 1956 adopted in the previous year. As a result, depreciation for the current year is lower by Rs. 277 lakhs.

Further, in respect of assets whose remaining useful life is nil, their carrying amounts as on 1st April 2014, after retaining the residual value, have been charged to the Statement of Profit and Loss and disclosed as an exceptional item.

(3) The Company has filed Writ Petitions before High Court of Madras in respect of the disallowance of depreciation claim on the transfer value of assets in terms of Scheme of Arrangement by treating the same as Demerger within the meaning of Income Tax Act, 1961 and obtained interim stay for consequent demand of Rs. 1308 lakhs. The Company has been legally advised that probability of outflow of resources arising out of aforesaid legal issues would be remote. Accordingly, no provision or disclosure of contingent liability is required for same in terms of Accounting Standard 29.

(4) Consistent with the Accounting Policy No.1(b) and pursuant to the developments during the year which have a material bearing, the related trade payables have been revised, resulting in write down of trade payables by Rs.1026 lakhs.

(5) Considering the cyclical nature of sugar industry and favourable order obtained from an appellate authority facilitating an upward revision in regulatory power tariff, the management is of the opinion that the company will have adequate taxable income in the near future and there exists virtual certainty for taking benefit of Deferred Tax Asset and MAT credit and accordingly these have been duly recognized in these Financial Statements.

(6) Sugar Development Fund (SDF) has withheld eligible subsidies of Rs. 690 lakhs (previous year Rs. 690 lakhs) holding the company liable for the loans due from erstwhile Ponni Sugars and Chemicals Ltd (PSCL) amounting to Rs. 1339 lakhs as of 31st March 2013. On the Writ Petition filed by the company,the High Court of Madras by its order dated 9th November 2010 held that the loans due from PSCL cannot be recovered from the company and directed release of withheld subsidies. Writ Appeal filed by SDF before the Division Bench of the High Court of Madras has since been dismissed.

SDF had also withheld the issue of ''No Due Certificate'' for the company to claim levy sugar price differential of Rs. 220 lakhs (previous year Rs. 220 lakhs) in respect of 2009-10 sugar season. SDF has during the year issued the requisite ''No Due Certificate'' and the company is in pursuit for recovery of this claim.

(7) South Indian Sugar Mills Association, Tamil Nadu has filed a Writ Petition in the High Court of Madras on behalf of private sector sugar mills in the State, challenging the power of State Govt to fix State Advised Price (SAP) for sugarcane. Since the Hon''ble Supreme Court has already held in 2004 that SAP is only recommendatory in Tamil Nadu, the company does not foresee any adverse impact on its financial position.

(8) Employee Benefits:

(i) Defined Contribution Plans:

Contribution of Rs.105 lakhs (previous year Rs. 92 lakhs) to defined contribution plans is recognized as expense and included in Employee benefits expense in the Statement of profit and loss.

(9) Related Party Disclosures

a) List of Related Parties where control exists : None

b) Transaction between Related Parties:

i) Names of the transacting

Related Parties : Seshasayee Paper and Boards Ltd

Esvi International (Engineers &

Exporters) Ltd

ii) Description of relationship : Presumption of significant influence

iii) Description of Transactions :

(10) Figures for the previous year have been regrouped, wherever necessary.


Mar 31, 2014

(1) The company was providing depreciation under written down value method for the assets of Co- generation Segment and straight line method for other assets at respective rates specified in Schedule XIV to the Companies Act, 1956. The Companies Act, 2013 coming into force from 1st April 2014 provides for reckoning depreciation based on useful life for plant & machinery in lieu of specific rates and has prescribed 25 years of useful life for continuous process plant. Having regard to the need for switchover to the prescribed methodology under the new Company Law, the company has adopted straight line method of providing Depreciation uniformly for all its assets including cogen assets from the current year.

Consequent to the above change in policy, the depreciation and loss for the year before exceptional item is lower by Rs. 822 lakhs. The surplus of Rs. 541 lakhs on recalculation of depreciation from the date of Co-generation segment assets coming into use in accordance with the new method is credited to the Statement of Profit and Loss under Exceptional items.

(2) The Company has filed Writ Petitions before High Court of Madras in respect of the disallowance of depreciation claim on the transfer value of assets in terms of Scheme of Arrangement by treating the same as Demerger within the meaning of Income Tax Act, 1961 and obtained interim stay. The Company has been legally advised that probability of outflow of resources arising out of aforesaid legal issues would be remote. Accordingly, no provision or disclosure of contingent liability is required in terms of Accounting Standard 29 of the Companies (Accounting Standards) Rules, 2006.

(3) Sugar Development Fund (SDF) has withheld eligible subsidies of Rs. 690 lakhs (previous year of Rs. 690 lakhs) and ''No Due Certificate'' for levy sugar price differentials of Rs. 220 lakhs (previous year Rs. 220 lakhs) to the Company. This was to recover loans due from the erstwhile Ponni Sugars & Chemicals Ltd (PSCL) for Rs. 1339 lakhs as of 31st March 2013.

The Company had challenged the above in Writ Petition. The High Court of Madras by its order dated 9/11/2010 held that the loans due from PSCL can not be recovered from the Company and directed release of withheld subsidies. SDF has filed appeal before the Divisional Bench of High Court of Madras.

(4) Employee Benefits:

(i) Defined Contribution Plans:

Contribution of Rs. 92 lakhs (previous year Rs. 88 lakhs) to defined contribution plans is recognized as expense and included in Employee benefits expense in the Statement of profit and loss.

(ii) Defined Benefit Plans:

(5) Related Party Disclosures

(a) List of Related Parties where control exists None

(b) Transaction between Related Parties :

i) Names of the transacting Related Parties Seshasayee Paper and Boards Ltd

Esvi International (Engineers & Exporters) Ltd

ii) Description of relationship Presumption of significant influence

(6) Figures for the previous year have been regrouped, wherever necessary.


Mar 31, 2013

(1) Contingent Liabilities and Commitments: (Rs. in Lakhs)

31.03.20131 31.03.2012

Contingent Liabilities: - Claims against the company not acknowledged as debts

- Indirect tax demands contested 156 151 Commitments

- Estimated value of contracts remaining to be executed on capital account 267 497 and not provided for

- Contracts for purchase of sugar cane 7476 13366

(2) The Company has filed Writ Petitions before High Court of Madras in respect of the disallowance of depreciation claim on the transfer value of assets in terms of Scheme of Arrangement by treating the same as Demerger within the meaning of Income Tax Act, 1961 and obtained interim stay. The Company has been legally advised that probability of outflow of resources arising out of aforesaid legal issues would be remote. Accordingly, no provision or disclosure of contingent liability is required in terms of Accounting Standard 29 of the Companies (Accounting Standards) Rules, 2006.

(3) Sugar Development Fund (SDF) has withheld eligible subsidies of Rs. 690 lakhs (previous year Rs. 690 Lakhs) and ''No Due Certificate'' for levy sugar price differentials of Rs. 220 lakhs (previous year Rs. 220 lakhs) to the Company. This was to recover loans due from the erstwhile Ponni Sugars & Chemicals Ltd (PSCL) for Rs. 1274 lakhs as of 31st December 2011.

The Company had challenged the above in Writ Petition. The High Court of Madras by its order dated 9/11/2010 held that the loans due from PSCL can not be recovered from the Company and directed release of withheld subsidies.

SDF has filed appeal before the Division Bench of High Court of Madras and obtained interim order staying the order of Single Judge.

(4) Employee Benefits:

(i) Defined Contribution Plans:

Contribution of Rs. 88 lakhs (previous year Rs. 82 lakhs) to defined contribution plans is recognized as expense and included in Employee benefits expense in the profit and loss statement.

(ii) Defined Benefit Plans:

(5) Taxation

(i) Current tax

Provision for Minimum Alternate Tax (MAT) is made on book profits in accordance with Sec. 115JB of the Income Tax Act, 1961, there being no taxable income under normal computation due to increased depreciation allowance available on the commissioning of Cogeneration project.

MAT credit is recognized having regard to expected profitable operations and availability of sufficient future taxable income against which it can be set off within permissible time limit.

(ii) Deferred Tax

Deferred Tax Liability recognized on timing differences relating to depreciation is net of Rs.1122 lakhs in respect of timing differences expected to reverse during the tax holiday period of Cogen project in accordance with Paragraph 13 of AS22 - Taxes on Income.

Deferred Tax Asset on account of unabsorbed depreciation is recognized, having regard to profitable operations and availability of sufficient taxable income in future against which it can be realized.

(6) Related Party Disclosures

(a) List of Related Parties where control exists : None

(b) Transaction between Related Parties:

i) Names of the transacting Related Parties : Seshasayee Paper and Boards Ltd

Esvi International (Engineers & Exporters) Ltd

ii) Description of relationship : Presumption of significant influence

(7) Figures for the previous year have been regrouped, wherever necessary.


Mar 31, 2012

(1) Contingent Liabilities and Commitments:

31.03.2012 31.03.2011

Contingent Liabilities: - Claims against the company not acknowledged as debts

- Indirect tax demand contested 151 115 Commitments

- Estimated value of contracts remaining to be executed on capital account and not provided for 497 6747

- Contracts for purchase of sugar cane 13366 12157

The Company had challenged the above in Writ Petition. The High Court of Madras by its order dated 9/11/2010 held that the loans due from PSCL cannot be recovered from the Company and directed release of withheld subsidies.

SDF has filed appeal before the Divisional Bench of High Court of Madras and obtained interim order staying the order of Single Judge.

(2) Employee Benefits:

(i) Defined Contribution Plans

Contribution of Rs 82 lakhs (previous year Rs 75 lakhs) to defined contribution plans is recognized as expense and included in Employee benefits expense in the profit and loss statement.

(ii) Defined Benefit Plans

(3) The Company is engaged in a single business and geographical segment.


Mar 31, 2011

I Contingent Liabilities

Claims against the Company not acknowledged as debts Rs. 3907.77 Lakhs (2010 - Rs. 267.19 Lakhs). These comprise -

a. Tax demands disputed by the Company relating to disallowances/additions of fiscal benefits, pending at various stages of appeal, aggregating to Rs. 3894.40 Lakhs (2010 - Rs. 149.00 Lakhs).

b. Land disputes representing claims towards land grabbing cases pending before Honble Special Court aggregating to Rs. Nil (2010 - Rs. 103.16 Lakhs).

c. Other matters relating to labour cases etc. aggregating to Rs. 13.37 Lakhs (2010 - Rs. 15.03 Lakhs).

II Future lease obligations

The Company has entered into various operating lease agreements and the amounts paid under such agreements have been charged to revenue as Rent under Schedule 17. All these agreements are cancellable in nature.

III Disclosures regarding Derivative Instruments

The Company uses forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The use of these foreign exchange forward contracts reduces the risk or cost to the Company and the Company does not use the foreign exchange forward contracts for trading or speculation purposes.

IV Amalgamation of VST Distribution, Storage & Leasing Company Private Limited (DSL) with the Company

Pursuant to the scheme of amalgamation of erstwhile wholly owned subsidiary DSL with the Company, as sanctioned by the Honble High Court of Andhra Pradesh on 16th March, 2011, the assets and liabilities of the erstwhile DSL were transferred to and vested in the Company, pending mutation, with effect from 1st April, 2010. The scheme has accordingly been given effect to in these accounts.

The amalgamation has been accounted for under the pooling of interest method prescribed by the Accounting Standard on Amalgamation (AS-14).

The assets and liabilities and other reserves of the erstwhile DSL as at 1st April, 2010 have been taken over at their book values.

Consequently, the investment of the Company in DSL and the Equity Share Capital of DSL stands cancelled.

In veiw of the aforesaid amalgamation with effect from 1st April, 2010, the figures for the current year are not comparable to those of the previous year.

V Micro and small scale business entities

There are no micro and small enterprises, to whom the Company owes dues, which are outstanding as at 31st March, 2011. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company.

VI Employee Benefits

a. The Employee Benefit Schemes are as under:

i. Provident Fund

Eligible employees of the Company receive benefits under the Provident Fund which are defined contribution/benefit plans wherein both the employee and the Company make monthly contributions equal to a specified percentage of the covered employees salary. These contributions are made to the Funds administered and managed by the Government of India/Companys own Trust. The Companys monthly contributions are charged to revenue in the period they are incurred.

ii. Gratuity

In accordance with the Payment of Gratuity Act, 1972 of India, the Company provides for gratuity, a defined retirement benefit plan (the Gratuity Plan) covering eligible employees. Liabilities with regard to such Gratuity Plan are determined by actuarial valuation and are charged to revenue in the period determined. The Gratuity Plan is a funded plan administered by Companys own Trust which has subscribed to Group Gratuity Scheme of Life Insurance Corporation of India.

iii. Pension Fund

The Company has a defined contribution pension scheme to provide pension to the eligible employees. The Company makes monthly contributions equal to a specified percentage of the covered employees salary. These contributions are administered by the Companys own Trust which has subscribed to Group Pension Scheme of Life Insurance Corporation of India. The Companys contributions of Rs. 103.66 Lakhs (2010 - Rs. 100.64 Lakhs) are charged to revenue in the period they are incurred.

In addition to the above, the Company has a funded defined benefit pension scheme for its employees in the workmen category. Liabilities with regard to such defined benefit plan are determined by actuarial valuation and are charged to revenue in the period determined. The plan is administered by the Companys own Trust which has subscribed to Group Pension Scheme of Life Insurance Corporation of India.

iv. Leave Encashment

The accrual for unutilised leave is determined for the entire available leave balance standing to the credit of the employees at period-end. The value of such leave balance eligible for carry forward, is determined by actuarial valuation and charged to revenue in the period determined. The scheme is fully funded by way of subscription to the Leave Encashment Scheme of Life Insurance Corporation of India.

(I) Directors Remuneration

(II) Exceptional items represents expense incurred under Voluntary Retirement Scheme for employees for the year ended 31st March, 2010 - Rs. 1241 Lakhs.

(V) Segment Reporting

The Companys business activity primarily falls within a single primary business segment viz. Tobacco and related products and hence no business segment information is provided.

The entire activity pertaining to sales outside India is carried out from India, hence all segment assets are considered entirely to be in India.

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

a. CLASS OF GOODS, CAPACITY AND PRODUCTION

* The figure of Registered/Licenced Capacity is as re-endorsed on the Certificate of Registration as on 30th September, 1985 and is exclusive of an additional 25 per cent of the approved Registered/Licenced Capacity available to the Company under the Central Governments Liberalised Industrial Policy.


Mar 31, 2010

1. Outstanding litigations

(i) The Company has contested the claim of Sugar Development Fund (SDF) towards loans due from erstwhile Ponni Sugars and Chemicals Ltd for Rs 949 72 lakhs as of 3rd October 2005

(ii) SDF authorities have withheld eligible subsidies of Rs 690 30 lakhs (Previous year Rs 690 30 lakhs) due to the Company.

(iii) The Assessing Officer has disallowed depreciation claim of the Company on the transfer value of assets in terms of Scheme of Arrangement by treating same as Demerger within the meaning of Income Tax Act 1961

The Company has filed Writ Petitions before High Court of Madras in respect of above matters and has obtained interim stay in respect of Income Tax matters The Company has been legally advised that probability of outflow of resources arising out of aforesaid legal issues would be remote Accordingly no provision or disclosure of contingent liability is required in terms of Accounting Standard 29 of the Companies (Accounting Standards) Rules, 2006.

31.03.2010 31.03.2009

(Rs. in Lakhs) (Rs.in Lakhs)

3 a) Contingent liabilities not provided for - Indirect Tax demands contested - 8.91

b) Estimated value of contracts remaining to be executed on capital account 19.70 17.25

2. Employee Benefits

(i) Defined Contribution Plans

Contribution of Rs. 65.33 lakhs (Previous year Rs. 60.52 lakhs) to defined contribution plans is recognized as expense and included in Employee Cost ( Schedule 16 ) in the profit and loss account.

3 Related Party Disclosures

(a) List of Related Parties where control exists None

(b) Transaction between Related Parties:

i) Names of the transacting Related Parties Seshasayee Paper and Boards Ltd (SPB)

High Energy Batteries (India) Ltd (HEB) SPB Projects & Consultancy Ltd Esvi International (Engineers & Exporters) Ltd

ii) Description of relationship Presumption of significant influence

4 Micro enterprises and Small enterprises under the Micro Small and Medium Enterprises Development Act 2006 have been determined to the extent such parties have been identified on the basis of information available with the company. There are no overdues to parties on account of principal amount and/or interest and accordingly no additional disclosures have been made.

5. The Company is engaged in a single business and geographical segment.

6. Figures for the previous year have been regrouped, wherever necessary.

 
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