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Notes to Accounts of Pranavaditya Spinning Mills Ltd.

Mar 31, 2015

1 Terms/rights attached to equity shares

(i) 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.

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

A Contingent Liabilities

Particulars Amount Rs. in lac) As at 31.03.2015 Asat31.03.2014

(a) i) Bank Guarantees * 89.12 4.12 Includes a bank guarantee of Rs.0.42 lac given by Holding Company to the Commissioner of Customs for duty free import of machines

ii) Excise duty demands disputed in appeals 1.00 1.00

(b) i) The Board for Industrial and Financial Reconstruction (BIFR) in its order dated 16th Setember 2010 has directed that the

Company ceases to be a sick industrial Company within the meaning of section 3 (1) (o) of the SICA as its net worth has turned positive for the year ended 31.03.2010 and its revival is sustainable. It is therefore discharged from the purview of SICA/BIFR.

ii) The unimplemented provisions of SS-07 as may be there would be implemented by theCompany/promoters and the concerned agencies and implementation would be monitored by the Board of Directors of the Company.

iii) The Company would complete necessary formalities with the concerned Registrar of Companies as may be required.

iv) Aggrieved with the impugned order of BIFR directed to implement the unimplemented provisions of SS-07, The Director General of Income Tax (DGIT) has filed an appeal with the Appellate Authority of Industrial and Financial reconstruction (AAIFR) requesting to set aside the BIFR order dated 16.09.2010.

(c) The Company has not made any provision of MAT/ Income Tax on the basis of scheme of rehabilitation sanctioned by the BIFR. In their order dated 16.09.2010, the " Board" has stated that the unimplemented provisions of SS-07 would be implemented by the company/ promoters and concerned agencies. Against this order DGIT had filed an appeal before AAIFR challenging the validity of the order. The Company is confident that the directions of BIFR will be upheld and no liability towards MAT/ Income Tax will arise. In case any liability arises, the same will be accounted for as and when arises/ determined.

(d) The term loans and working capital loans obtained by Indo Count Industries Limited are to be secured by way of pari-passu charge of the existing fixed assets of the company.

B Commitments

Particulars Amount Rs. in lac) Asat 31.03.2015 Asat31.03.2014

Estimated amount of contracts (net of advances) remaining to be 18.23 - executed on capital account and not provided for

3 RELATED PARTY DISCLOSURE:

Related party disclosures as required by AS -18 "Related Party Disclosures" are given below:-

A. Holding Company :

i) Indo Count Industries Ltd.

B. Directors :

i) Shri Anil Kumar Jain

ii) Shri Kamal Mitra

C. Associates :

i) Margo Finance Ltd.

4 Effective 1s April, 2014, the company has revised its estimated useful life of fixed assets, wherever appropriate, on the basis of useful life specified in Schedule II of the Companies Act, 2013. The carrying amount as on 1st April, 2014 is depreciated over the revised remaining useful life. As a result of these changes, the depreciation charged for the year ended 31st March, 2015 is higher by Rs. 0.06 lac and the effect relating to the period prior to 1st April, 2014 is Rs. 2.71 lac (net of deferred tax asset of Rs. 1.30 lac) which has been adjusted against opening balance of retained earnings

5 In the opinion of the management, the current assets, loans and advances are expected to realize at least the amount at which they are stated, if realized in the ordinary course of business. Provision for all known liabilities have been adequately made in the accounts.

6 It is the management's perception that since the company is exclusively engaged in the activity of manufacture of cotton yarn which are governed by the same set of risks and returns the same are considered to constitute a single reportable segment in the context of Accounting Standard on " Segment Reporting" issued by the Institute of Chartered Accountants of India.

7 Figures have been rounded off to the nearest Rs. in lac and have been regrouped/rearranged wherever considered necessary.


Mar 31, 2013

1. CONTINGENT LIABILITIES AND COMMITMENTS

(to the extent not provided for)

(a) Contingent Liabilities

Particulars Amount in Rs.

As at 31.03.2013 As at 31.03.2012

i) Bank Guarantees * 411,913 411,913

Includes a bank guarantee of Rs. 411,913 given by Holding Company to the Commissioner of Customs for duty free import of machines

(b) Commitments

Particulars Amount in Rs.

As at 31.03.2013 As at 31.03.2012 Estimated amount of contracts (net of advances) - 1,389,650 remaining to be executed on capital account and not provided for

(c) i) The Board for Industrial and Financial Reconstruction (BIFR) in its order dated 16th Setember 2010 has directed that the Company ceases to be a sick industrial Company within the meaning of section 3 (1) (o) of the SICA as its net worth has turned positive for the year ended 31.03.10 and its revival is sustainable. It is therefore discharged from the purview of SICA/BIFR.

ii) The unimplemented provisions of SS-07 as may be there would be implemented by the Company/promoters and the concerned agencies and implementation would be monitored by the Board of Directors of the Company.

iii) The Company would complete necessary formalities with the concerned Registrar of Companies as may be required.

iv) Aggrieved with the impugned order of BIFR directed to implement the unimplemented provisions of SS-07, The Director

General of Income Tax (DGIT) has fled an appeal with the Appellate Authority of Industrial and Financial reconstruction (AAIFR) requesting to set aside the BIFR order dated 16.09.2010.

(d) The Company has not made any provision of MAT/ Income Tax on the basis of scheme of rehabilitation sanctioned by the BIFR. In their order dated 16.09.2010, the " Board" has stated that the un implemented provisions of SS-07 would be implemented by the company/ promoters and concerned agencies. Against this order DGIT had fled an appeal before AAIFR challenging the validity of the order. The Company is confdent that the directions of BIFR will be upheld and no liability towards MAT/ Income Tax will arise. In case any liability arises, the same will be accounted for as and when arises/ determined.

(e) The term loans and working capital loans obtained by Indo Count Industries Limited are to be secured by way of pari-passu charge of the existing fxed assets of the company, subject to company obtaining necessary approvals.

2. Related Party Disclosure:

Related party disclosures as required by AS - 18 "Related Party Disclosures" are given below:-

A. Holding Company :

i) Indo Count Industries Ltd.

B. Directors :

i) Shri Anil Kumar Jain ii) Shri Kamal Mitra

C. Associates :

i) Margo Finance Ltd.

3. In the opinion of the management, the current assets, loans and advances are expected to realize at least the amount at which they are stated, if realized in the ordinary course of business. Provision for all known liabilities have been adequately made in the accounts.

4. It is the management''s perception that since the company is exclusive engaged in the activity of manufacture of cotton yarn which are governed by the same set of risks and returns the same are considered to constitute a single reportable segment in the context of Accounting Standard on " Segment Reporting" issued by the Institute of Charted Accountants of India.

5. Figures have been rounded off to the nearest Rupee and have been regrouped/rearranged wherever considered necessary.


Mar 31, 2012

(a) The company has not received any intimation from suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures, if any, relating to amounts unpaid as at the year end together with interest paid/payable as required under the said Act have not been given.

b) The company revalued its land, building and plant & machinery as on 01-04-2009 based on the the valuation made by an approved valuer. Accordingly, the original cost of such assets resulted in gross increase in the value of assets over their original cost by Rs. 2,055.14 lac, increase in depreciation upto 31-03-2012 on revaluation by Rs. 238.97 lac and thereby net revaluation reserve as at 31-03-2012 is Rs. 1,816.17 lac.

1. CAPITAL WORK IN PROGRESS

Capital work in progress does not include capital advances Rs. 750,850 (Previous period Rs. Nil).

* Including amount receivable from holding company Rs. 3,856 (Previous year Rs. Nil)

** Including amount receivable from holding company Rs. Nil (Previous year Rs. 8,673,096)

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

(a) Contingent Liabilities

Particulars [Rs. ]

As at 31-03-2012 As at 31-03-2011

i) Bank Guarantees * 411,913 411,913

Includes a bank guarantee of Rs. 411,913 given by Holding Company to the Commissioner of Customs for duty free import of machines

(b) Commitments

Particulars [Rs. ]

As at 31-03-2012 As at 31-03-2011

Estimated amount of contracts (net of 1,389,650 - advances) remaining to be executed on capital account and not provided for

(c) i) The Board for Industrial and Financial Reconstruction (BIFR) in its order dated 16th September 2010 has directed that the company ceases to be a sick industrial company within the meaning of section 3 (1) (o) of the SICA as its net worth has turned positive for the year ended 31.03.10 and its revival is sustainable. It is therefore discharged from the purview of SICA/BIFR.

ii) The unimplemented provisions of SS-07 as may be there would be implemented by the company/ promoters and the concerned agencies and implementation would be monitored by the Board of Directors of the Company.

iii) The company would complete necessary formalities with the concerned Registrar of Companies as may be required.

iv) Aggrieved with the impugned order of BIFR directed to implement the unimplemented provisions of SS-07, The Director General of Income Tax (DGIT) has filed an appeal with the Appellate Authority of Industrial and Financial reconstruction (AAIFR) requesting to set aside the BIFR order dated 16.09.2010.

(d) The company has not made any provision of MAT/ Income Tax on the basis of scheme of rehabilitation sanctioned by the BIFR. In their order dated 16.09.2010, the " Board" has stated that the unimplemented provisions of SS-07 would be implemented by the company/ promoters and concerned agencies. Against this order DGIT had filed an appeal before AAIFR challenging the validity of the order. The company is confident that the directions of BIFR will be upheld and no liability towards MAT/ Income Tax will arise. In case any liability arises, the same will be accounted for as and when arises/ determined.

(e) The term loans and working capital loans obtained by Indo Count Industries Limited are to be secured by way of pari-passu charge of the existing fixed assets of the company, subject to company obtaining necessary approvals.

* Includes purchase from holding company Rs. 262,595 (previous year Rs. 674,294) 23. Includes purchase from holding company Rs. 2,047,677 (previous year Rs. Nil)

3. Related Party Disclosure:

Related party disclosures as required by AS - 18 "Related Party Disclosures" are given below:-

A. Holding Company :

i) Indo Count Industries Ltd.

B . Directors :

i) Shri Anil Kumar Jain

ii) Shri Kamal Mitra

C. Associates :

i) Margo Finance Ltd.

4. In the opinion of the management, the current assets, loans and advances are expected to realize at least the amount at which they are stated, if realized in the ordinary course of business. Provision for all known liabilities have been adequately made in the accounts.

5. It is the management's perception that since the company is exclusive engaged in the activity of manufacture of cotton yarn which are governed by the same set of risks and returns the same are considered to constitute a single reportable segment in the context of Accounting Standard on "Segment Reporting" issued by the Institute of Chartered Accountants of India.

6. Figures have been rounded off to the nearest Rupee and have been regrouped/rearranged wherever considered necessary.

7. Additional Information (Pursuant to the provisions of Part II and Part IV of Schedule VI to the Companies Act, 1956.

a) The Ministry of Corporate Affairs, Government of India vide its General Notification No.S.O.301(E) dated 8th February,2011 issued under Section 211 (3) of the Companies Act,1956 has exempted certain classes of companies from disclosing certain information in their profit and loss account.The Company being an 'export oriented company ' is entitled to the exemption. Accordingly,disclosures mandated by paragraph 3(i)(a), 3(ii)(b) and 3(ii)(d) of Part II, Schedule VI to the Companies Act,1956 have not been provided.


Mar 31, 2010

1. Contingent liabilities not provided for in respect of -

(i) Amount outstanding in respect of export bills discounted under Export Letters of Credit (Since realized Rs.1,401.71 lac,

previous year Rs. 1,128.56 lac) 2,641.38 2,457.48

(ii) Bank Guarantees 389.79 213.03

(iii) Claims not acknowledged as debts 10.78 12.35

(iv) Income tax/Custom Duty demands disputed in appeals 30.69 58.31

(v) Export obligation against import of capital goods under

EPCG Scheme NIL 19,367.77

(vi) Corporate guarantee given to a bank for securing

financial assistance to subsidiary Company. 100.00 NIL

2.(a) In terms of EPCG Licence issued, the Company has undertaken an export obligation for Rs. 32,820.19 lac,

which is to be fulfilled over a period of 8 years.

(b) In terms of advance licence obtained for import of raw cotton the Company has undertaken an export obligation for Rs.24.00 lac which is to be fulfilled upto 01 -05-2009. The Company has already completed this obligation and necessary application for redemption of license is being made to DGFT.

3. Under the package scheme of incentives of Government of Maharashtra for Mega Projects , the Company is eligible for VAT and Electricity duty refund benefits for its home textiles and consumer durable goods divisions. However, if it contravenes any of the conditions of the scheme or eligibility certificate or certificate of entitlement or agreement, it shall repay forthwith the entire benefits drawn / availed along with interest thereon together with costs, charges and expenses thereon.

4. The shareholders of the Company in their extra ordinary general meeting held on 25.03.2010 accorded their approval for allotment of 2166667 equity shares of Rs.10/- each at a premium of Rs.5/- per share on preferential basis to promoter group companies. However, allotment will be made on receipt of approval for the same from NSE. Pending approval, the amount received has been reflected under Share Application Money pending allotment.

5. The 10% (Previous year 8.50%) Privately Placed Secured Redeemable Non-Convertible Debentures are redeemable in 36 quarterly installments beginning from 30-06-2009.

6. In respect of Rupee Term Loan of Rs. 750 lac availed from SICOM Ltd. (SICOM) under Technology Upgradation Fund Scheme (TUFS) SICOM has stipulated that the Company shall not declare any dividend unless it has paid to SICOM installments of interest and principal amount and SICOM shall have the right to restrain the Company from declaring any equity dividend more than 15% or the average of dividend paid in three preceding years, whichever is higher.

7. Based on reference of Union Bank of India, the Lead Bank, a financial restructuring package was approved by Empowered Group of Corporate Debt Restructuring (CDR-EG).

While the Company had given effect of the restructuring package in its books of accounts, banks are continuing to raise demand notices for interest payment at the rate of interest charged prior to the sanction of restructuring package.

The Company has taken up the matter with the banks and accordingly the resultant difference in interest (which is still under reconciliation /determination) between the demand notice received from banks and as per Companys books of account, has not been provided, as the liability is not payable.

8. (a) In respect of various term loan / working capital facilities availed by the Company, the lenders have first/ second / third pari passu charge on fixed assets of the Company.

(b) The term loans are to be further secured by way of first / second charge on the existing fixed assets of Pranavaditya Spinning Mills Ltd., subject however to necessary approvals.

Pending creation of permanent security, the Company has pledged 72,16,512 equity shares held by it in Pranavaditya Spinning Mills Ltd., as per CDR stipulation.

9. In terms of master restructuring agreement dated 30-03-2009, if the Company commits a default in payment or repayment of three consecutive installment of principal amounts of the facilities or interest thereon or any combination thereof, then, the lenders shall have the right to convert, at their option, the whole of the outstanding amount of the facilities and /or 20% of rupee equivalent of the defaulted amount into fully paid-up equity shares of the Company, at par, in the manner specified in a notice in writing to be given by the lenders to the Company prior to the date on which the conversion is to take effect, which date shall be specified in the said notice.

10. (a) The Company revalued its land, buildings and plant and machinery (except for electronics division and 2 D.G. sets of spinning division) as on 01-10-2008 based on the valuation made by an approved valuer.

Accordingly, the original cost of such assets resulted in gross increase in the value of assets over their original cost by Rs. 15,092.28 lac, increase in depreciation upto the date of revaluation by Rs.504.49 lac and thereby net increase in replacement cost by Rs. 14,587.79 lac. The net increase in the value of such land, building and plant and machinery had been credited to revaluation reserve account.

(b) Revaluation of 2 D.G. sets of spinning division was carried out on 01-04-2009 by an approved valuer.The revaluation resulted in a gross increase in the value of assets over their original cost by Rs.1,238 lac. increase in depreciation up to 31-03-2010 by Rs 65.37 lac and thereby net increase in replacement cost by Rs.1,172.70 lac which has been taken as increase in the value of plant and machinery as on 01.04.2009 by creating a revaluation reserve to that extent.

11. In the opinion of the management, the current assets, loans and advances are expected to realize at least the amount at which they are stated, if realized in the ordinary course of business and provision for all known liabilities has been adequately made in the accounts.

12. Deferred tax assets has been recognized . The management is of the opinion that there will be sufficient profit in future against which the deferred tax asset will be fully realized.

13. (a) The Company has outstanding foreign currency related derivative contracts in the form of options for hedging its business related exposure which are not speculative in nature. The contracts have long dated tenor with multiple contingent/ uncertain events. As such ascertainment of fair value of these contracts is not feasible. However, banks estimate the total mark to market (MTM) of all outstanding contracts at approx Rs.1,619 lac as at 31-03-2010 ( Previous year Rs.4,835 lac).The management is of the opinion that the determination and crystallization of liability is dependent upon the outcome of uncertain future events or actions, not wholly within the control of the Company. As adoption of AS-30 is presently not mandatory, the estimated MTM loss of Rs.1,619 lac for the year ended 31-03-2010 (previous year Rs. 4,835 lac) has not been provided.

14. Operating Lease:

(a) As Lessor:

i. The Company has entered into lease arrangements , for renting specified machinery at a rent of Rs.75,000/- per month for a period of 120 months and are renewable at the option of the lessee after the end of the term.

15. Related Party Disclosures

Related party disclosures as required by AS - 18 "Related party disclosures" are given below: - A. Relationship

(i) Key management personnel

1. Shri Anil Kumar Jain - Chairman and Managing Director

2. Shri R. N. Gupta - Joint Managing Director

3. Shri D. M. Pradhan - Director (Marketing) ( upto 30.06.2009)

4. Shri Kamal Mitra - Director (Works) (ii) Relatives of key management personnel

1. Smt. G.D. Jain

2. Smt. Shikha Jain

3. Miss Neha Jain

4. Shri Mohit Jain

(iii) Parties where control exists

1. Margo Finance Ltd. (Formerly Indocount Finance Ltd.)

2. Indocount Securities Ltd.

3. Rini Investment and Finance Pvt. Ltd.

4. Pranavaditya Spinning Mills Ltd.

5. Skyrise Properties Pvt. Ltd.

6. Unic Consultants

7. Yarntex Exports Ltd.

16. a) Sundry debtors include debts due from the subsidiary Company Rs. Nil (Previous year Rs. 65.38 lac) b) Sundry creditors include amount due to the subsidiary Company Rs. 56.61 lac (Previous year Rs. Nil)

17. Additional Information (Pursuant to the provisions of Part II and Part IV of Schedule VI to the Companies Act, 1956:-

 
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