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Notes to Accounts of Rainbow Denim Ltd.

Mar 31, 2015

1.1 Term Loans from Financial Institutions and Banks are secured by First Charge ranking parri-passu on all movable and immovable assets, present and future (Subject to charge on specified movables created/to be created in favour of Company's Bankers to secure Working Capital) and personal guarantee of Managing Director and erstwhile Director of the Company. Further, Term Loans are also secured by Corporate guarantee and First Charge on immovable properties of Rama Petrochemicals Limited. Maturity profile and Rate of interest of Term Loans are as set out below :

1.2 Loans taken from Export Import Bank of India assigned to Edelweiss Asset Reconstruction Company Limited (EARC) and Loans taken from Bank of India assigned to Assets Care & Reconstruction Enterperise Limited (ACRE) are secured by First Charge ranking parri-passu on all movable and immovable assets, present and future (Subject to charge on specified movables created/to be created in favour of Company's Bankers to secure Working Capital) and personal guarantee of Managing Director and erstwhile Director of the Company. Further, the loan is also secured by Corporate guarantee and First Charge on immovable properties of Rama Petrochemicals Limited. Maturity profile and Rate of interest of Term Loan are as set out below :

1.3 Loan taken from Industrial Investment Bank of India assigned to Assets Care & Reconstruction Enterprise Limited (ACRE) is secured by First Charge ranking parri-passu on all movable and immovable assets, present and future (Subject to charge on specified movables created/to be created in favour of Company's Bankers to secure Working Capital) and personal guarantee of Managing Director and erstwhile Director of the Company. Further, the loan is also secured by Corporate guarantee and First Charge on immovable properties of Rama Petrochemicals Limited. The loan carries interest @ 20% p.a.

The Company has defaulted in payment of Principal and Interest of Rs. Nil (Previous Year - Rs. 15,43,547) with reference to Current Maturities referred in Note 8.

1.4 Loans taken from Financial Institutions, Banks and liabilities assigned to Edelweiss Asset Reconstruction Company Limited (EARC) and Assets Care & Reconstruction Enterprises Limited (ACRE), are further secured by pledge of investments by other companies.

1.5 Loan from Dhawalgiri Properties Private Limited is repayable in single instalment on September 30, 2016 and carries interest @ 9% p.a. (Previous Year @ 9% p.a.). The loan is secured by equitable mortgage over Office Premises of the Company and personal guarantees of erstwhile Directors of the Company.

1.6 Loans from HDFC Bank Limited are payable in the year 2015-16 and carry interest @ 11.50% p.a. The loans are secured by hypothecation of motor vehicles purchased there against.

2.1 Work-in-progress are valued at the lower of cost or net realizable value. The cost is computed on weighted average method and includes cost of materials, cost of conversion and other costs incurred in acquiring the inventory and bringing them to their present location and condition.

2.2 Finished Goods are valued at the lower of cost or net realizable value. The cost is computed on weighted average method and includes cost of materials, cost of conversion and other costs incurred in acquiring the inventory and bringing them to their present location and condition.

2.3 Raw Materials and other inventories of Colours, Dyes, Chemicals, Stores, Spares and Packing Materials etc. are valued at the lower of cost or net realizable value. Raw materials and other supplies held for use in production of inventories are not written down below cost except in cases where material prices have declined, and it is estimated that the cost of the finished products will exceed their net realizable value. The cost of Raw Materials is computed on specific identification basis and other inventories of Colours, Dyes, Chemicals, Stores, Spares and Packing Materials etc. is computed on FIFO basis.

2.4 Stock of Waste and Scrap is valued at estimated net realizable value.

3.1 Due to inadequacy of profits, no commission is payable to Directors. Hence computation of Net Profit U/S 198 of The Companies Act, 2013 is not required.

3.2 Consequent to the adoption of Accounting Standard 15 on Employee Benefits issued by the Institute of Chartered Accountants of India, the following disclosures have been made as required by the standards :

a. Short Term Employee Benefits :

All employee benefits falling due wholly within twelve months of rendering the service like salaries, wages, short term compensated absences etc. and the expected cost of bonus are recognized on accrual basis.

b. Post-Employment Benefits : Defined Contribution Plans :

The Company has recognized the following amounts in the Statement of Profit and Loss for Defined Contribution Plans :

4. Bond for Rs. 27,00,00,000 was issued against export obligation of US$ 7,75,98,359 which is to be fulflled by January 12, 2019 or such further extension as may be granted. The company has fulflled export obligation of US$ 7,33,49,464 upto March 31, 2015.

5. No Debts or Loans and Advances are due from Directors or Officers of the Company or from Firms or Private Companies in which any Director is a Partner, Director or Member.

6. Consequent to the enactment of the Companies Act, 2013 (the Act) and its applicability for accounting periods commencing after April 01, 2014, the Company has re-worked depreciation with reference to the estimated economic lives of fixed assets prescribed by Schedule II to the Act or actual useful life of assets, whichever is lower. In case of any asset, whose life has been completed as above, the carrying value, net of residual value, as at April 01, 2014 has been adjusted to the opening balance of retained earnings/brought forward loss and in other cases, the carrying value has been depreciated over the remaining of the revised life of the assets and recognized in the Statement of Profit and Loss. If there had not been any change in the useful life of the assets, depreciation for the year would have been Rs. 9,14,40,218 consequently loss would have been lower by Rs. 1,97,65,512.

7. The Company is a Sick Industrial Company within the meaning of Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985. BIFR has approved Rehabilitation Scheme vide order dated December 27, 2012.

8. The management is taking various steps to reduce costs, improve efficiencies to make its operations profitable and to arrange sufficient funds for its operations. In view of these, financial statements have been prepared on the basis that the Company will continue as a "going concern".

9. Segment wise details, as required by AS 17 Segment Reporting, are not furnished as the management is of the opinion that it does not have any geographical/business segment that is subject to different kind of risk, return or opportunities.

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

11. Previous Year figures have been re-grouped/re-arranged, wherever necessary, to make them comparable.


Mar 31, 2014

1 SHARE CAPITAL :

The Board for Industrial and Financial Reconstruction (BIFR) has, vide its order dated December 27, 2012, sanctioned a Rehabilitation Scheme, which inter alia, provides for reduction of Paid up Equity Share Capital of the Company by 60%. Accordingly, the Paid up Equity Share Capital of the Company, in the previous year, stands reduced from Rs. 18,20,93,590 divided into 1,82,09,359 Equity Shares of Rs. 10 each to Rs. 7,28,37,430 divided into 72,83,743 Equity Shares of Rs. 10 each and consequent to this, accumulated losses had been reduced to the extent of Rs. 10,92,56,160.

2 LONG TERM BORROWINGS :

2.1 Loan taken from Industrial Investment Bank of India assigned to Assets Care & Reconstruction Enterprises Limited (ACRE) is secured by First Charge ranking parri-passu on all movable and immovable assets, present and future (Subject to charge on specifi ed movables created/to be created in favour of Company''s Bankers to secure Working Capital) and personal guarantee of Managing Director and erstwhile Director of the Company. Further, the loan is also secured by Corporate guarantee and First Charge on immovable properties of Rama Petrochemicals Limited. The loan carries interest @ 20% p.a. The Company has defaulted in payment of Principal and Interest of Rs. 15,43,547 (Previous Year - Rs. Nil) with reference to Current Maturities rederred in Note 8.

2.2 Loans taken from Financial Institutions, Banks and liabilities assigned to Edelweiss Asset Reconstruction Company Limited (EARC) and Assets Care & Reconstruction Enterprises Limited (ACRE), are further secured by pledge of investments by other companies.

2.3 Loan from Dhawalgiri Properties Private Limited is repayable in single installment on September 30, 2016 and carries interest @ 9% p.a. (Previous Year @ 9% p.a.). The loan is secured by equitable mortgage over Offi ce Premises of the Company and personal guarantees of erstwhile Directors of the Company.

2.4 Loans from HDFC Bank Limited are payable in the year 2015-16 and carry interest @ 11.50% p.a. The loans are secured by hypothecation of motor vehicles purchased there against.

3 TRADE PAYABLES

On the basis of information available with the Company of vendors'' status being Micro, Small and Medium Enterprises, as defi ned under The Micro, Small and Medium Enterprises Development Act, 2006, no amount of principal and interest is overdue.

4 INVENTORIES

4.1 Work-in-progress are valued at the lower of cost or net realizable value. The cost is computed on weighted average method and includes cost of materials, cost of conversion and other costs incurred in acquiring the inventory and bringing them to their present location and condition.

4.2 Finished Goods are valued at the lower of cost or net realizable value. The cost is computed on weighted average method and includes cost of materials, cost of conversion and other costs incurred in acquiring the inventory and bringing them to their present location and condition.

4.3 Raw Materials and other inventories of Colours, Dyes, Chemicals, Stores, Spares and Packing Materials etc. are valued at the lower of cost or net realizable value. Raw materials and other supplies held for use in production of inventories are not written down below cost except in cases where material prices have declined, and it is estimated that the cost of the fi nished products will exceed their net realizable value. The cost of Raw Materials is computed on specifi c identifi cation basis and other inventories of Colours, Dyes, Chemicals, Stores, Spares and Packing Materials etc. is computed on FIFO basis.

5 EMPLOYEE BENEFITS EXPENSE :

5.1 Due to inadequacy of Profits, no commission is payable to Directors. Hence computation of Net Profit U/S 349 of The Companies Act, 1956 is not required.

5.2 Consequent to the adoption of Accounting Standard 15 on Employee Benefi ts issued by the Institute of Chartered Accountants of India, the following disclosures have been made as required by the standards :

a. Short Term Employee Benefi ts :

All employee benefi ts falling due wholly within twelve months of rendering the service like salaries, wages, short term compensated absences etc. and the expected cost of bonus are recognized on accrual basis.

6. Bond for Rs. 27,00,00,000 was issued against export obligation of US$ 7,75,98,359 which is to be fulfi lled by January 12, 2019 or such further extension as may be granted. The company has fulfi lled export obligation of US$ 6,42,24,478 upto March 31, 2014.

7. No Debts or Loans and Advances are due from Directors or Offi cers of the Company or from Firms or Private Companies in which any Director is a Partner, Director or Member. There are no Companies under the same management within the meaning of section 370 (1-B) of the Companies Act, 1956.

8. The Company is a Sick Industrial Company within the meaning of Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985. BIFR has approved Rehabilitation Scheme vide order dated December 27, 2012.

9. Segment wise details, as required by AS 17 Segment Reporting, are not furnished as the management is of the opinion that it does not have any geographical/business segment that is subject to different kind of risk, return or opportunities.

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

11. Previous Year fi gures have been re-grouped/re-arranged, wherever necessary, to make them comparable.


Mar 31, 2013

1.1 Managerial Remuneration under Section 198 of the Companies Act, 1956 paid or payable during the financial year to the Directors is subject to approval of the Central Government.

Due to inadequacy of profits, no commission is payable to Directors. Hence computation of Net Profit U/S 349 of The Companies Act, 1956 is not required.

1.2 Consequent to the adoption of Accounting Standard 15 on

Employee Benefits issued by the Institute of Chartered Accountants of India, the following disclosures have been made as required by the standards :

a. Short Term Employee Benefits :

All employee benefits falling due wholly within twelve months of rendering the service like salaries, wages, short term compensated absences etc. and the expected cost of bonus are recognized on accrual basis

2.1 Amount received from Rainbow Agri Industries Limited in the earlier years has been converted/regrouped as Share Application Money Pending Allotment in terms of the order issued by The Board for Industrial and Financial Reconstruction (BIFR) dated December 27, 2012.

Net Deferred Tax Assets are not recognized in absence of virtual certainty that sufficient future taxable income will be available to realize the same, as per Accounting Standard 22 issued by The Institute of Chartered Accountants of India.

NOTE "3" Bond for Rs. 27,00,00,000 was issued against export obligation of US$ 7,75,98,359 which was to be fulfilled by January 12 2009 or such further extension as may be granted. The company had received a letter from Government Of India, Ministry of Commerce and Industry dated September 28, 2011 which directed the Zonal Joint Director General of Foreign Trade, Mumbai to include third party exports in the fulfillment of the obligation. Based on this, the company has complied and fulfilled the export obligation. The company has also applied for redemption certificate which is still awaited from Jt. DGFT, Mumbai.

NOTE "4" No Debts or Loans and Advances are due from Directors or Officers of the Company or from Firms or Private Companies in which any Director is a Partner, Director or Member. There are no Companies under the same management within the meaning of section 370 (1-B) of the Companies Act, 1956.

NOTE "5" The Company is a Sick Industrial Company within the meaning of Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985. BIFR has approved Draft Rehabilitation Scheme (DRS) vide order dated December 27, 2012.

NOTE "6" Segment wise details, as required by AS 17 Segment Reporting, are not furnished as the management is of the opinion that it does not have any geographical/business segment that is subject to different kind of risk, return or opportunities.

NOTE "7" Figures have been rounded off to the nearest rupee.

NOTE "8" Previous Year figures have been re-grouped/re-arranged, wherever necessary, to make them comparable.


Mar 31, 2012

1.1 Term Loans from Financial Institutions and Banks are secured by First Charge ranking parri-passu on all movable and immovable assets, present and future (Subject to charge on specified movables created/to be created in favour of Company's Bankers to secure Working Capital) and personal guarantee of Managing Director and erstwhile Director of the Company. Further, Term Loans are also secured by Corporate guarantee and First Charge on immovable properties of Rama Petrochemicals Limited. The loans are repayable in variable quarterly installments with initial terminal date of October 01, 2015 and final terminal on April 01, 2024.

1.2 Other Loans include a loan taken from Industrial Investment Bank of India assigned to Assets Care & Reconstruction Enterprises Limited (ACRE) is secured by First Charge ranking parri-passu on all movable and immovable assets, present and future (Subject to charge on specified movables created/to be created in favour of Company's Bankers to secure Working Capital) and personal guarantee of Managing Director and erstwhile Director of the Company. Further, the loan is also secured by Corporate guarantee and First Charge on immovable properties of Rama Petrochemicals Limited. The loan of ACRE is repayable in quarterly installments terminating on February 15, 2014.

1.3 The Other Loans include a loan secured by First Charge on the office premises and personal guarantees of erstwhile Directors of the Company which is repayable on September 30, 2013.

2.1 Current Maturities of Long Term Debts are secured by First Charge ranking parri-passu on all movable and immovable asse present and future (Subject to charge on specified movables created/to be created in favour of Company's Bankers to seci Working Capital) and personal guarantee of Managing Director and erstwhile Director of the Company. Further, Term Loans; also secured by Corporate guarantee and First Charge on immovable properties of Rama Petrochemicals Limited. -

2.2 In the absence of information from suppliers of their status being small scale/ancillary undertakings, amount overdue a interest payable thereon, if any, cannot be quantified. All the payments are being made by the company on mutually agre terms. The Company has written letters to get the confirmations from the suppliers as regards their status under the Small Sc: and Ancillary Industry Undertaking Ordinance 1993. However, no response has been received.

3.1 Work-in-progress are valued at the lower of cost or net realizable value. The cost is computed on weighted average method and includes cost of materials, cost of conversion and other costs incurred in acquiring the inventory and bringing them to their present location and condition.

3.2 Finished Goods are valued at the lower of cost or net realizable vahie. The cost is computed on weighted average method and includes cost of materials, cost of conversion and other costs incurred in acquiring the inventory and bringing them to their present location and condition.

3.3 Raw Materials and other inventories of Colours, Dyes, Chemicals, Stores, Spares and Packing Materials etc. are valued at the lower of cost or net realizable value. Raw materials and other supplies held for use in production of inventories are not written down below cost except iq cases where material prices have declined, and it is estimated that the cost of the finished products will exceed their net realizable value. The cost of Raw Materials is computed on specific identification basis and other inventories of Colours, Dyes, Chemicals, Stores, Spares and Packing Materials etc. is computed on FIFO basis.

NOTE

CONTINGENT LIABILITIES NOT PROVIDED FOR :

a. Custom duty on capital goods and raw material imported under 270,000,000 270,000,000 advance Licensing/EPCG Scheme, against which export

obligation is to be fulfilled.

b. Capital Commitments (Net of advances) - 41,353,200

19.1Bond for Rs. 27,00,00,000 was issued against export obligation of US$ 7,75,98,359 which was to be fulfilled by January 12 2009 or such further extension as may be granted. The company has received a letter from Government Of India, Ministry of Commerce and Industry dated September 28,2011 which directs the Zonal Joint Director General of Foreign Trade, Mumbai to include third party exports in the fulfilment of the obligation. Based on this the company has complied and fulfilled the export obligation upto March 31, 2012. Also the company has applied for redemption certificate which is still awaited from Jt. DGFT, Mumbai.

Net Deferred Tax Assets are not recognized in absence of virtual certainty that sufficient future taxable income will be available to realize the same, as per Accounting Standard 22 issued by The Institute of Chartered Accountants of India.

NOTE "4" No Debts or Loans and Advances are due from Directors or Officers of the Company or from Firms or Private Companies in which any Director is a Partner, Director or Member. There are no Companies under the same management within the meaning of section 370(1-B) of the Companies Act, 1956.

NOTE "5" The Company is a Sick Industrial Company within the meaning of Section 3( IXo) of the Sick Industrial Companies (Special Provisions) Act, 1985. BIFR has approved the company's application vide order dated September 20, 2011.

NOTE "6" During the year, the Company's liabilities to Industrial Investment Bank of India have been settled with Assets Care & Reconstruction Enterprise Limited (ACRE) pursuant to Deed of Settlement executed between the Company and ACRE. Accordingly, the Company has reversed Principal amount of Rs. 8,72,40,365 and Interest amount of Rs. 1,26,00,954 by crediting the Capital Reserve and Profit and Loss respectively.

NOTE "7" Segment wise details, as required by AS 17 Segment Reporting, are not furnished as the management is of the opinion that it does not have any geographical/business segment that is subject to different kind of risk, return or opportunities.

NOTE"8" Figures have been rounded off to the nearest rupee.

NOTE"9" During the year ended March 31, 2012, the Revised Schedule VI notified under the Companies Act 1956, has became applicable to the Company. The Company has reclassified and regrouped the Previous Year Figures to confirm the current classification.


Mar 31, 2010

1. Contingent Liabilities not provided for:

Particulars As on As on

March 31,2010 March 31,2009

i. Service Tax - 649,035

ii. Custom duty on capital goods and raw material imported under advance Licencing/EPCG Scheme, against which export obligation is to be fulfilled. * 270,000,000 270,000,000

iii. Export Bonds executed with Customs/Excise Authorities 12,500,000 _ 12,500,000

* Bond for Rs. 270,000,000 was issued against total export obligation of US$ 77,598,359 was to be fulfilled by January 12, 2009 or such further extension as may be granted, out of which the Company has fulfilled export obligation of US$ 57,866,385 upto March 31, 2010.

2. Managerial Remuneration under Section 198 of the Companies Act, 1956 paid or payable during the financial year to the Directors as under is subject to approval of the Central Government:

Due to inadequacy of profits, no commission is payable to Directors. Hence computation of Net Profit U/S 349 of The Companies Act, 1956 is not required.

3. Related Parties Disclosure :

As per the Accounting Standard on "Related Party Disclosures" (AS 18) issued by the Institute of Chartered Accountants of India, the related parties of the Company are as follows,:

a. List of Related Parties and Relationships:

Parties Relationship

i) Domestic:

Rama Phosphate Ltd.

Rama Petrochemicals Ltd.

Rama Industries Ltd. Exercise of Significant Influence

Rainbow Agri Industries Ltd.

Rama Capital & Fiscal Services Pvt. Ltd.

Blue Lagoon Investments Pvt. Ltd.

ii) Overseas:

Indo-Us Investment Inc. Holding more than 20% equity in Rainbow Denim Limited

iii) Key Management Personnel:

Mr. H. D. Ramsinghani Chairman and Managing Director

Mr. S.S. Arora Whole Time Director

Note : Related party relationship is as identified by the Company and relied upon by the Auditors.

4. The recoverability of Loans and Advances of Rs. 2,280,752 referred to in Note 5 (b) above, depends upon the concerned partys capacity to raise sufficient resources. The management is of the opinion that these amounts are recoverable and do not require any provision.

5. No Debts or Loans and Advances are due from Directors or Officers of the Company or from Firms or Private Companies in which any Director is a Partner, Director or Member. There are no Companies under the same management within the meaning of section 370 (-B) of the Companies Act, 1956.

6. Employee Benefits;

Consequent to the adoption of Accounting Standard 15 on Employee Benefits issued by the Institute of Chartered Accountants of India, the following disclosures have been made as required by the standards :

a. Short Term Employee Benefits:

All employee benefits falling due wholly within twelve months of rendering the service like salaries, wages, short term compensated absences etc. and the expected cost of bonus, ex-gratia are recognized on accrual basis.

b. Post-Employment Benefits:

Defined Contribution Plans : The Company has recognised the following amounts in the Profit and Loss Account for Defined Contribution Plans :

Defined Benefit Plans: The Employees Gratuity Fund Scheme is managed by Life Insurance Corporation of India. The Company is,regular in payment of premium and does not foresee any liability in future.

c. Long Term Employee Benefits :

The obligation for long term employee benefit such as long term compensated absence and leaves is funded benefit which is covered by Group Insurance Scheme of Life Insurance Corporation of India. The Company is regular in payment of premium and does not foresee any liability in future.

7. Deferred Taxation:

The Major components of Deferred Tax Assets / (Liability), based upon tax returns filed and assessment orders received, arising on account of timing difference are as under :

8. In the absence of information from suppliers of their status being small scale/ancillary undertakings, amount overdue and interest payable thereon, if any, cannot be quantified. All the payments are being made by the company on mutually agreed terms. The Company is making efforts to get the confirmations from the suppliers as regards their status under the Small Scale and Ancillary Industry Undertaking Ordinance 1993.

9. The Company is a Sick Industrial Company within the meaning of section 3 (1) (o) of the Sick Industrial Companies (Special Provisions) Act, 1985 and the Company has fi led a reference with the Board for Industrial and Financial Reconstruction (BIFR).

10. The Company has received approval of the Corporate Debt Restructuring (CDR) Cell for the restructuring of its debts under the CDR Mechanism w.e.f. April 01,2006. None of the Institution/Bank has given effect of reliefs and concessions envisaged under the said approval. Effect of the same has neither been accounted nor quantified pending compliances and confirmations from the Institutions/Banks.

11. The Company has provided for interest on Term Loans and Working Capital based on its own workings, where no advice has been received from Institutions/Banks and has shown the same as Interest Accrued but Not Due.

12. The Company has not recognized Interest Subsidy receivable under the Technology Up-gradation Fund Scheme (TUFS) in view of default in repayment of dues to Financial Institutions and Banks. The amount will be recognised in the year of receipt.

13. Segment wise details, as required by AS-17 Segment Reporting, are not furnished as the management is of the opinion that it does not have any geographical/business segment that is subject to different kind of risk, return or opportunities.

14. Figures have been rounded off to the nearest rupee.

15. Previous Years figures have been re-grouped/re-arranged wherever necessary to make them comparable.

 
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