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Notes to Accounts of Ravi Kumar Distilleries Ltd.

Mar 31, 2015

1. Term Loan from Banks:

Term Loan from Banks includes Term Loan from HDFC Bank of Rs. 32.75 Lacs (Outstanding as on 31-03-2015 Rs. 3.84 Lacs) which is secured against hypothecation of vehicles. The same is repayable by way of 48 monthly installments of Rs. 0.95 Lacs each.

AsonSl-OS-lOW the company has defaulted in payment of installment for the month of March low amounting

2. Long Term Liabilities of Finance Lease Obligations:

The Company has availed Term Loan from 'Sundaram Finance Limited' a Non Banking Financial Corporation amounting to Rs. l,268.741akhs for expansion off abilities. The Finance Lease obligations are secured against leased assets.-

Ason31-03-2015,the company has defaulted in Payment of installments aggregating to RsA62Lacs.

3. Deferred Payment Liabilities

Manufacture of MFL Brands owned by other Corporate

The Company manufactures and sells its own brand of liquors and also uses the brand of others. For the purpose of manufacture and sales of liquor brands not owned by the company the company has entered into arrangement / agreement with the respective brand owners. The terms of the Agreement / Arrangement with such brand owners provide for payment of consideration for use of Trade Mark / for the additional services rendered by the brand owners / other amount due to the Trade Mark owners in the agreed proportion. The payment towards use of Trade Mark / for the additional service rendered by the Trade Mark owners / other amounts due to the Trade Mark Owners are grouped as "Operational Support Cost". The Operational Support Cost is included under the head" Other Manufacturing Expenses"

Further the Agreements / Arrangements with other Brand owners provide a facility of Deferred Payment of the amount due under the agreement. These payables, as per the Terms, which are payable after a period exceeding 12 months are classified as "Deferred Credit from Corporate Suppliers" and are grouped under "Non Current Long Term Borrowings".

Other Long Term Liabilities represent 'Deposits' received from 'Tie Up Parties' which are not expected to be repaid back within aperiodofl2monthsfromthedateoffinancialstatements.

4. Working Capital Loans are secured by hypothecation of present and future stock of raw materials, Stock in Process, Finished Goods, Spares, Book Debts, Outstanding monies, receivables, claims, materials in transit etc.

5. Term Loan from Banks:

5.1 Term Loan from State Bank of lndia is collaterally secured by Equitable Mortgage of Factory and Building at RS No. 89 / 4A and 89 / 1, Katterikuppam, Mannadipet Commune, Pondicherry The collateral security as mentioned above is Common security for all facilities granted by the bank viz. Cash Credit, Term Loan, Bank Guarantee etc.

5.2 The promoters, directors and shareholders of the company have also given their personal assets as collateral security for Entire facilities sanctioned by State Bank of media. The disclosure of the same is given below:

5.3 Overdue Facilities with State Bank of India:

State Bank of India has classified entire facilities as 'Non Performing Assets' as on 31-03-2015 (Outstanding Rs. 2874 Lacs) (Principal Overdue Rs. 2386.37 Lacs and Interest Overdue Rs. 487.63 Lacs). Further, State Bank of India has initiated action under' SERFAESI Act'for recovery of dues outstanding amounting to Rs.2615.08Lacs.

The company has submitted a proposal in March 2015 for 'One Time Settlement (OTS) for repayment of over dues to Financial Institution which is under consideration. The company expects to derive economic benefit out of the above OTS in the form of waiver of overdue interest. Therefore, provision for interest amounting to Rs. 153.41 Lacs for the quarter ended March 2015 has not been made in the accounts.

The company has not received intimation from all the "Suppliers" regarding their status under Micro, Small and Medium Enterprises Development Act, 2006, and hence, the disclosure relating to amounts unpaid as at March 31, 2015 together with Interest paid/payable as required under the said Act has been provided only to the extent of intimations received.

6. During the Financial Year 2011-2012, the Company acquired 38.43% stake in 'Liquors India Limited'. However, due to various issues with Mr. Anil Agrawal, Managing Director of 'Comfort Securities Limited' (the Merchant Banker to the Initial Public Offerings of the Company) and M/s Comfort Intech Limited, the Company entered into an agreement with Mr. Anil Agrawal and'Lemonade Shares and Securities Private Limited' for sale of the entire undertaking. The agreement has been challenged and Civil Suit has been filed before Ilnd Additional District Judge, Ranga Reddy District, L. B. Nagar, Hyderabad with prayers in ter-aliatorescind the agreements as being voidandrestorethepartiesbacktothepositionprior to MOU dated 05-09-2012. Pending the outcome of the Suit, the amount received from 'M/s Lemonade Shares and Securities Private Limited' is shown under 'Other Current Liabilities'.

7. During the Financial Year 2011-2012, the Company acquired 38.43% stake in 'Liquors India Limited'. However, due to various issues with Mr. Anil Agrawal, Managing Director of 'Comfort Securities Limited' (the Merchant Banker to the Initial Public Offerings of the Company) and M/s Comfort Intech Limited, the Company entered into an agreement with Mr. Anil Agrawal and'Lemonade Shares and Securities Private Limited' for sale of the entire undertaking. The agreement has been challenged and Civil Suit has been filed before Ilnd Additional District Judge, Ranga Reddy District, L. B. Nagar, Hyderabad with prayers inter-alia to rescind the agreements as being void and restore the parties back to the position prior to MOU dated 05-09-2012. Pending the outcome of the Suit, the amount received from 'M/s Lemonade Shares and Securities Private Limited' is shown under' Other Current Liabilities'.

8. As on 31-03-2015,the company holds 49% stake of' SVD is toiletries Private Limited' amounting toRs.477Lacs.

9. In Financial Year 2010-2011, the Company made total investment of Rs. 1,311 Lacs in 'Liquor India Limited' and Rs. 2,423 Lacs in'SV Distilleries Private Limited'. Out of the above, investment in shares of Liqur India Limited' is Rs. 826 Lacs and in 'S V Distilleries Private Limited' is Rs. 477 Lacs respectively and investment in the form of acquisition cost of respective companies is Rs. 485 Lacs in 'Liquor India Limited' and Rs. 1,946 Lacs in 'S V Distilleries Private Limited' respectively. During the current Financial Year, the investment is Shares of above companies has been classified under the head 'Non Current investments' and other acquisition cost have been classified under the head' Short Term Loans and Advances'.

10. Other Loans and advances includes amounts transferred to various parties post IPO amounting to Rs. 2,900 Lacs given as advances to suppliers during Financial Year 2010-2011. However, since, the capital commitments were not acted upon by the parties, the management has decided to recall the advances paid. During the financial year 2013-2014, the company has sent legal notices to parties for refund of advances lying with them The management expects to get the advances back in due course. Hence, no provision has been made in the accounts for doubtful recovery of above advances. Further, the Company has also Filed a complaint with Economic Offences Wing,Unit-V,Mumbai,En for cement Director ate and other forums for Recovery

# "During the Financial Year 2014-2015, the High Court of Madras has dismissed the pending petitions of the Company regarding "Turnover Tax" payable to Financial Year 1999-2000, to Financial Year 2006-2007. The High Court has directed the Company to pay total demand of Rs. 119.72 to Department of Sales Tax. Accordingly, the Company has made provision in the accounts during the year for Turnover Tax payable and disclosed the same under the head "Exceptional Items"

The Balances of trade receivables are subject to confirmation and reconciliation. In the opinion of management, there would not be any substantial differences on reconciliation.

11. Balance with banks include unclaimed dividend of Rs.0.44Lacs (Previous Year Rs.0.44Lacs).

12. Fixed Deposits of Rs.lLacsarepledged with Electricity Departments as Deposit.

13. Margin onBankFacilitiesofRs.24.72 Lacs are pledged with State Bank of India for Non Funded Facilities granted.

14. Loans and Advances to related parties includes, working capital advance given to 'Liquor India Limited' (Also Refer Note No. 13.1 and Note No. 13.3) of Rs. 1,640 Lacs and'S V Distilleries Private Limited' (Also Refer Note No. 13.2 and Note No. 13.3) of Rs. 3,387Lacs. No interest has been charged on these loan on prudence basis.

15. During the Financial Year 2011-2012, the Company acquired 38.43% stake in 'Liquors India Limited'. However, due to various issues with Mr. Anil Agrawal, Managing Director of' Comfort Securities Limited' (the Merchant Banker to the Initial Public Offerings of the Company) and M/s Comfort Intech Limited, the Company entered into an agreement with Mr. Anil Agrawal and 'Lemonade Shares and Securities Private Limited' for sale of the entire undertaking. The agreement has been challenged and Civil Suit has been filed before Ilnd Additional District Judge, Ranga Reddy District! L. B. Nagar, Hyderabad with prayers inter-alia to rescind the agreements as being void and restore the parties back to the position prior to MOU dated 05-09-2012. Pending the outcome of the Suit, the amount received from 'M/s Lemonade Shares and Securities Private Limited' is shown under' Other Current Liabilities'.

The liability for Gratuity to employees as at the Balance Sheet date is determined on the basis of actuarial valuation based on Projected Unit Credit method and is funded to a Gratuity fund administered by the trustees and managed by Life Insurance Corporation of India. The contribution there of paid/ payable is charged in the books of accounts.

The employees and the Company make monthly fixed contributions to a Provident Fund Trust, equal to a specified percentage of the covered employee's salary: The interest rate payable by the Trust to the beneficiaries is being notified by the Government every year. The Company has an obligation to make good the shortfall, if any, between the return from the investments of the trust and the notified interstate.

In the absence of adequate information, the status of the Gratuity plan and the Superannuation and the other Pension Plans of The Company and the amount recognized in the Balance Sheet and Profit and Loss Account could not be disclosed.

16. Impairment of Assets:

Assets of the Company are being tested for impairment. Considering the internal and external sources of information, there was No indication of potential impairment loss, and hen estimation of recoverable amount does not arise.

17. Segment Reporting:

The company operates only in one reportable business segment namely manufacture and sale of Indian Manufactured Foreign Liquor. The liquor business;-incorporates the product groups (viz) IMFL and others, which have similar risks and returns. Hence Segment reporting is not applicable.

18. Exceptional Items: "DuringtheFinancialYear2014-2015,theHigh Court of Madras has dismissed the pending petitions of the Company regarding "Turnover Tax" payable to Financial Year 1999-2000, to Financial Year 2006-2007. The High Court has directed the Company to pay total demand of Rs. 119.72 to Department of Sales Tax. Accordingly, the Company has made provision in the accounts during the year for Turnover Tax payable and disclosed the same under the head "Exceptional Items"

19. Taxation Matters:

The Company has received a Demand Notice from Income Tax Department regarding Appeals filed by with the Commissioner of Income Tax (Appeals) against the orders of the Assessing Officer; in respect of the Assessment Year 2010-2011; on account of disallowance of expenditure under section 40 a (ia) of the Income Tax Act, 1961. The Department has raised a demand of Rs.138.94 Lacs for the said assessment year. The Company has decided to file an appeal with the Income Appellate Tribunal against the Appeal Orders issued by the Commissioner-of Income Tax (Appeals). Further, the Company has received a Demand Notice from Income Tax Department regarding Assessment Proceedings for the Assessment Year 2012-2013. The Department has raised a demand of Rs. 1,209.99 Lacs for the said assessment year. The Company has filed an appeal with the Commissioner of Income Tax (Appeals) against the Appeal Orders issued by the Assessing Officer: The Company is confident of succeeding in the said petition and the Company has also taken favorable opinion from legal experts. Hence no provision has been made in the books of accounts and the demand raised by the Department has been shown under "Contingent Liabilities".

In respect of other disputed liabilities pertaining to earlier years such as Turnover Tax, Bank Guarantee amount, the amounts Have been shown under" Contingent Liabilities" in there specie years.

Legal Cases Pertaining To The Company

The company's performance was also severely affected due to various issues and fraudulence committed by Mr. Anil Agrawal, Managing Director of M/s. Comfort Securities Limited, M/s. Comfort Intech Limited and his associates against the Company

Your Company has filed complaints against Mr. Anil Agrawal, M/s. Comfort Securities Ltd., Merchant Bankers, M/s. Comfort Intech Ltd. And rioter group companies with the foUowmg authorities.

1. A Civil Suit OS No. 103/2013 and LA. No. 405/2013 before 2nd Additional District Judge, Ranga Reddy District, L.B. Nagar, Hyderabad with prayers:

a. To rescind the agreements as being void and restore the parties back to the position prior to the MOU dated 05.09.2012.

b. To declare the notice for EGM dated 05.02.2013 as null and void and illegal. The court has passed an order restraining Mr. Anil Agrawal from holding the EGM till further orders in the case of M/s. Liquors India Ltd.,

c. LA. No. 1453 of 2013 filed with Ilnd Additional District Judge, Ranga Reddy District, L.B. Nagar, Hyderabad praying not to alienate, encumber assets of M/s. Liquors India Ltd.

d. LA. No. 1452 of 2013 filed with Ilnd Additional District Judge, Ranga Reddy District, L.B. Nagar, Hyderabad praying not to alter the Board.

i. The Court has passed interim order in IA No.1452 & 1453, not to alienate, encumber assets of LIL and not to alter the Board.

ii. Mr. Anil Agrawal filed appeal in High Court, Hyderabad and HC permitted to sub-lease with third parties.

iii. Aggrieved by this order, your company filed SLP with the Supreme Court of India against the above order. The Supreme Court has stayed the High Court Order till further hearings.

e. LA. No. 654of 2015 inOSno. 103/2013 filed with Ilnd Additional District Judge, Ranga Reddy District, L.B.Nagar, Hyderabad praying to appoint Official Receiver conferring powers on the receiver for the management, protection, collection of profits and improvement of M/s. Liquors India Limited. Thecase is in argument stage.

20. Writ Petition No. 12713 of 2014 with the Hon'ble High Court, Andhra Pradesh praying License of Liquors India Limited issued by the Excise Department should be cancelled and sub-lease agreement also be cancelled. The order has been passed that all transactions including financial transactions between Mr. Anil Agrawal and Tilaknagar Industries Limited shall be booked and recorded faithfully pending further consideration of this W.PM.PNo.l5944of2014inW.PNo.l2713of2014.Mr.AnilAgrawal and Tilaknagar Industries Limited shall not create any charge or third party interest relating to the assets of Liquors India Limited.

21. You company has filed a Complaint with the Commissioner of Police, Hyderabad against the fraud and cheating committed by Mr. Anil Agrawal. The Police has registered the FIR No.248/2013 dated 23.08.2013 against Mr. Anil Agrawal and others under Section406-IPC, 420-IPC, 447-IPC, 385-IPC, 386-IPC, 467-IPC, 468-IPC, 469-IPC, 471-IPC, 120B-IPC, 34-IPC.

a) Mr. Anil Agrawal has filed C.P No. 11292 of 2013 in the High Court of Hyderabad against FIR No. 248/2013 dated 23.08.2013 and High Court passed order to complete the investig ation with out arresting Mr. Anil Agrawal and others.

22. Your company has filed a Complaint with EOW, Mumbai for cheating and money laundering to recover company's money of Rs. 33.73crores. EOW has registered FIR No.34/14 dated 21.01.2014 under section 409,420,465,467,468,471,474,120(B).

a. Mr. Anil Agrawal filed W.P No. 2059 of 2014 in High Court of Mumbai and the Court has declared that the FIR registered by EOW is not maintain able since Nacharam Police Station has registered the FIR first.

i. Aggrieved by delay in investigation by the Hyderabad Police and order by the High Court, Mumbai, Your company has filed.

a. Two SLPs with the Supreme Court of India against High Court of Mumbai order and delay in investigation by Hyderabad Police. These SL Ps have been taken by the Supreme Court and the next hearing is onl4.09.2015.

23. Your company has filed a Complaint with SEBI, Mumbai against BRLM M/s. Comfort Securities Ltd., (DP) promoted by Mr. Anil Agrawal for violations of SEBI Regulations and others.

24. Your company has filed a Recovery suits No. SL/1135, 1136, 1137, 1138 and 1139 of 2013 filed against M/s. Ranisati Dealer PvtLtd., M/s. Vibhuti Multi Trade Pvt. Ltd., M/s. Gulistan Vanijya Pvt.Ltd., M/s. Sukusama Trading and Investments Pvt.Ltd. andM/s.BLC Trading and Agencies Pvt. Ltd. in the High Court of Mumbai. Matter pending before the court.

25. Your company has filed a Complaint with Enforcement Directorate, Mumbai to investigate the frauds committed by Mr. Anil Agrawal and his companies. Enforcement Directorate has initiated enquiries against Mr. Anil Agrawal, his companies and others under the provisions of prevention of Money aundering Act 2002 on the basis of the FIR No.34/14 dated 21.01.2014.

26. Your company has filed a Complaint with RBI and Ministry of Finance to appoint officer to investigate the affair of CIL and cancel the License to act as NBFC for violating the guidelines. RBI has cancelled the NBFC License of Comfort Intech Limited based on forgery and mis-representation by CIL in some other different matter for forging and fabricating RBI documents.

27. Your company has filed a Complaint with The Police Commissioner of Chennai against the fraud and cheating committed by Mr. Anil Agrawal. Mr. Anil Agrawal filed Writ Petition No. 32829 of 2013 with High Court of Chennai to direct the Police, Chennai not to proceed further with the investigation. The matter is pending before the Court.

28. Your company has filed a Petition Under section 111 A r/w 111(4) of the Companies Act filed before the Company Law Board, Chennai in the matter of Liquor lndia Limited, Mr. Anil Agrawal and others. Matter is pending before the CLB.

Mr. Anil Agrawal has filed complaints against the company with the following authorities:

1. The Company Law Board, Chennai under section 397, 398, 235(2) and 237(b) of the Companies Act, 1956. The Company has filed counter and the matter is pending before the CLB.

2. Mr. Anil Agrawal filed a Counter Complaint with Hyderabad Police against Mr. R.V. Ravikumar. The Hyderabad Police have not considered the complaint since there was no substance. Aggrieved, Mr. Anil Agrawal filed W.P No. 7956 of 2014 filed with Hon'ble High Court, Andhra Pradesh to register the complaint filed by him against Mr. R.V. Ravikumar with Hyderabad Police. The Police have submitted their report to the High Court, Hyderabad stating that there is no substance in the Complaint. The matter is pending before the court without further date.

3. Mr. Anil Agrawal has filed a Counter Complaint with Malad Police Station, Mumbai against the company and its Directors. Preliminary enquiry was conducted by the Malad Police and since there was no substance in the Complaint, Malad Police Did not pursue further.

4. M/s. First Financial Services Limited, Chennai has filed O.S. No. 6602 of 2013 alleging mis-management of the company. The court has rejected the suit.

5. M/s. Tilaknagar Industries Limited - accused A7, A8 and A9 in the Hyderabad Police FIR, filed W.P. No. 4945 of 2014 with the Hon'ble High Court, Andhra Pradesh to stay all further proceedings of the FIR. The W.P. is pending for admission.

29. Previous Year Figures:

The financial statements for the year ended March 31,2015 have been prepared as per Schedule III of the Companies Act, 2013. The figures for the previous year have been regrouped, reclassified or rearranged to meet the recognition and measurement principles followed for preparation of financial statements.


Mar 31, 2014

1. General Information:

The Company was incorporated during the year 1993 and is engaged in the business of manufacture and sale of Indian Manufactured Foreign Liquor (IMFL). The Company has its manufacturing unit at Pondicherry.

1.2 Contingent Liabilities and Provisions:

Provisions are recognized only when there is a present obligation as a result of past events and when a reliable estimate of the amount of obligation can be made.

Contingent Liability is disclosed for

a. Possible obligation which will be confirmed only by future events not wholly with in the control of the company or

b. Present obligations arising from the past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation can not be made.

c. Contingent Assets are not recognized in the financial statements since this may result in the recognition of income that may never be realized.

1.3 Earnings Per Share:

In determining the Earnings Per share, the company considers the net profit after tax including any post tax effect of any extraordinary / exceptional item. The number of shares used in computing basic earnings per share is the Weighted average number of shares outstanding during the period. The number of shares used in computing Diluted earnings per share comprises the Weighted average number of shares considered for computing Basic Earning per share and also the weighted number of equity shares that would have been issued on conversion of all potentially dilutive shares.

In the event of issue of bonus shares, or share split the number of equity shares outstanding is increased without an increase in the resources. The number of Equity shares outstanding before the event is adjusted for the proportionate change in the number of equity shares outstanding as if the event had occurred at the beginning of the earliest period reported.

1.4 Leases:

Finance Lease

Leases which effectively transfer to the company all the risks and benefits incidental to ownership of the leased item, are classified as Finance Lease. Lease rentals are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return.

Operating Lease

Lease where the lessor effectively retains substantially all risks and benefits of the asset are classified as Operating lease. Operating lease payments are recognized as an expense in the Profit & Loss account on a Straight Line Basis over the Lease term.

1.5 Segment Reporting:

The generally accepted accounting principles used in the preparation of the financial statements are applied to record revenue and expenditure in individual segments.

Segment revenue and segment results include transfers between business segments. Such transfers are accounted for at the agreed transaction value and such transfers are eliminated in the consolidation of the segments.

Expenses that are directly identifiable to segments are considered for determining the segment result. Expenses, which relate to the company as a whole and are not allocable to segments are included under unallocated corporate expenses.

Segment assets and liabilities include those directly identifiable with the respective segments. Unallocated corporate assets and liabilities represent the assets and liabilities that relate to the company as a whole and not allocable to any segment.

2.1 Term Loan from Banks:

Term Loan from Banks includes Term Loan availed from HDFC Bank of Rs. 32.75 Lacs (Outstanding as on 31-03-2014 Rs. 14.07 Lacs) which is secured against hypothecation of vehicles. The same is repayable by way of 48 monthly installments of Rs. 0.95 Lacs each. As on 31-03-2014, the company has defaulted in payment of installment for the month of March 2014 amounting to Rs. 0.98 Lacs.

2.2 Long Term Liabilities of Finance Lease Obligations:

The Company has availed Term Loan from ''Sundaram Finance Limited'' a Non Banking Financial Corporation amounting to Rs. 1,268.74 lakhs for expansion of facilities. The Finance Lease obligations are secured against leased assets. Outstanding as on 31-03-2014 Rs. 442.20 lacs.

As on 31-03-2014, the company has defaulted in payment of installments aggregating to Rs. 278.39 Lacs.

2.3 Deferred Payment Liabilities Manufacture of IMFL Brands owned by other Corporates

Manufacture of IMFL Brands owned by other Corporates

The Company manufactures and sells its own brand of liquors and also uses the brand of others. For the purpose of manufacture and sales of liquor brands not owned by the company, the company has entered into arrangement / agreement with the respective brand owners. The terms of the Agreement / Arrangement with such brand owners provide for payment of consideration for use of Trade Mark / for the additional services rendered by the brand owners / other amount due to the Trade Mark owners in the agreed proportion. The payment towards use of Trade Mark / for the additional service rendered by the Trade Mark owners / other amounts due to the Trade Mark Owners are grouped as "Operational Support Cost". The Operational Support Cost is included under the head "Other Manufacturing Expenses"

Further the Agreements / Arrangements with other Brand owners provide a facility of Deferred Payment of the amount due under the agreement. These payables, as per the Terms, which are payable after a period exceeding 12 months are classified as "Deferred Credit from Corporate Suppliers" and are grouped under "Non Current Long Term Borrowings". The Balances of tie up parties are subject to confirmation and reconciliation. In the opinion of management, there would not be any substantial differences on reconciliation.

3.1 Working Capital Loans are secured by hypothecation of present and future stock of raw materials, Stock in Process, Finished Goods, Spares, Book Debts, Outstanding monies, receivables, claims, materials in transit etc.

3.2 Term Loan from Banks:

3.2.1 Term Loan from State Bank of India is collaterally secured by Equitable Mortgage of Factory Land and Building at RSNo. 89 / 4A and 89 / 1, Katterikuppam, Mannadipet Commune, Pondicherry. The collateral security as mentioned above is common security for all facilities granted by the bank viz. Cash Credit, Term Loan, Bank Guarantee etc.

3.2.3 Overdue Facilities with State Bank of India:

State Bank of India has classified entire facilities as ''Non Performing Assets'' as on 31-03-2014 (Outstanding Rs. 2650 Lacs) (Principal Overdue Rs. 2386.37 Lacs and Interest Overdue Rs. 264.02 Lacs). Further, State Bank of India has initiated action under ''SERFAESI Act'' for recovery of dues outstanding amounting to Rs. 2615.08 Lacs.

4.1 During the financial year 2011-12, the Company acquired 38.43% stake in Liquors India Limited. However due to various issues with Mr. Anil Agrawal, Managing Director of ''Comfort Securities Ltd.'', (the Merchant Banker to the Initial Public Offering of the company) and ''M/s. Comfort Intech Ltd.'', the company entered into agreement with Mr. Anil Agrawal and ''Lemonade Shares & Securities Private Limited'' for sale of entire undertaking. The agreement has been challenged and Civil suit has been filed before Ilnd Additional District Judge, Ranga Reddy District, L.B. Nagar, Hyderabad with prayers inter-alia to rescind the agreements as being void and restore the parties back to the position prior to the MOU dated 05.09.2012. Pending the outcome of the suit, the amount received from M/s. Lemonade Shares and Securities Private Limited is shown under "Other Current Liabilities".

5.1 During the financial year 2011-12, the Company acquired 38.43% stake of Liquors India Limited. However due to various issues with Mr. Anil Agrawal, Managing Director of Comfort Securities Ltd., (the Merchant Banker to the IPO) and M/s. Comfort Intech Ltd., the company entered into agreement with Mr. Anil Agrawal and Lemonade Shares & Securities Private Limited for sale of entire undertaking. The agreement has been challenged and Civil suit has been filed before Ilnd Additional District Judge, Ranga Reddy District, L.B. Nagar, Hyderabad with prayers inter-alia to rescind the agreements as being void and restore the parties back to the position prior to the MOU dated 05.09.2012. Pending the outcome of the suit, the investment in shares of "Liquor India Ltd." is considered as disputed and shown under "Non-Current Investments."

5.2 As on 31-03-2014, the company holds 49% stake of''S V Distilleries Private Limited'' amounting to Rs. 2,422.49 Lacs.

6.1 Other Loans and advances amounts transferred to various parties post IPO includes of Rs. 2,900 Lacs given as advances to suppliers during Financial Year 2010-2011. However, since, the capital commitments were not acted upon by the parties, the management has decided to recall the advances paid. During the financial year 2013-2014, the company has sent legal notices to parties and has also filed Recovery Suits for refund of advances lying with them. The management expects to get the advances back in due course. Hence, no provision has been made in the accounts for doubtful recovery of above advances. The company has also filed complaint with Economic Offence Wing, Unit-V, Mumbai for recovery.

7.1 Balance with banks include unclaimed dividend of Rs. 0.44 Lacs (Previous Year Rs. 0.44 Lacs).

7.2 Fixed Deposits of Rs. 1 Lacs are pledged with Electricity Departments as Deposit.

7.3 Fixed Deposits of Rs. 47.63 Lacs with Axis Bank are pledged as security against deposit given to BSE.

7.4 Fixed Deposits of Rs. 25.74 Lacs are pledged with State Bank of India for Non Funded Facilities granted.

8.1 Loans and Advances to related parties includes, working capital advance given to ''Liquor India Limited'' (Associate Enterprises - Also Refer Note No. 13.1) of Rs. 1,155 Lacs and''S V Distilleries Private Limited'' (Associate Enterprises - Also Refer Note No. 13.2) of Rs. 1,458 Lacs. No interest has been charged on these loan on prudence basis.

8.2 During the financial year 2011-12, the Company acquired 38.43% stake of Liquors India Limited. However due to various issues with Mr. Anil Agrawal, Managing Director of Comfort Securities Ltd., (the Merchant Banker to the IPO) and M/s. Comfort Intech Ltd., the company entered into agreement with Mr. Anil Agrawal and Lemonade Shares & Securities Private Limited for sale of entire undertaking. The agreement has been challenged and Civil suit has been filed before Ilnd Additional District Judge, Ranga Reddy District, L.B. Nagar, Hyderabad with prayers inter-alia to rescind the agreements as being void and restore the parties back to the position prior to the MOU dated 05.09.2012. Pending the outcome of the suit, the advances given to "Liquors India Ltd." is considered as disputed and shown under "Short Term Loans and Advances to Related Parties."

9. Gratuity and Other Post Employment Benefit Plans:

As per Accounting Standard 15 "Employee Benefits", the disclosures of Employee benefits as defined in the Accounting Standard are given below

Gratuity

The liability for Gratuity to employees as at the Balance Sheet date is determined on the basis of actuarial valuation based on Projected Unit Credit method and is funded to a Gratuity fund administered by the trustees and managed by Life Insurance Corporation of India. The contribution thereof paid/payable is charged in the books of accounts.

The employees and the Company make monthly fixed contributions to a Provident Fund Trust, equal to a specified percentage of the covered employee''s salary. The interest rate payable by the Trust to the beneficiaries is being notified by the Government every year. The Company has an obligation to make good the shortfall, if any, between the return from the investments of the trust and the notified interest rate.

In the absence of adequate information, the status of the Gratuity plan and the Superannuation and the other Pension Plans of the Company and the amount recognized in the Balance Sheet and Profit and Loss Account could not be disclosed.

10. Impairment of Assets:

Assets of the Company are being tested for impairment. Considering the internal and external sources of information, there was no indication of potential impairment loss, and hence estimation of recoverable amount does not arise.

11. Segment Reporting:

The company operates only in one reportable business segment namely manufacture and sale of Indian Manufactured Foreign Liquor. The liquor business incorporates the product groups (viz) IMFL and others, which have similar risks and returns. Hence segment reporting is not applicable.

12. Taxation Matters:

The Company has received a Demand Notice from Income Tax Department regarding Appeals filed by with the Commissioner of Income Tax (Appeals) against the orders of the Assessing Officer; in respect of the Assessment Year 2010-2011; on account of disallowance of expenditure under section 40 a (ia) of the Income Tax Act, 1961. The Department has raised a demand of Rs.138.94 Lacs for the said assessment year. The Company has decided to file a petition in High Court against the Appeal Orders issued by the Commissioner of Income Tax (Appeals). The Company is confident of succeeding in the said petition and the Company has also taken favorable opinion from legal experts. Hence no provision has been made in the books of accounts and the demand raised by the Department has been shown under "Contingent Liabilities".

In respect of other disputed liabilities pertaining to earlier years such as Turnover Tax, Bank Guarantee amount, the amounts have been shown under "Contingent Liabilities" in the respective years.

13. Contingent Liabilities: (Rs.inLacs)

Contingent Liability not Year Ending March Year Ending March provided for in the books 31,2014 31,2013

Turnover Tax 222.55 222.55

Guarantee given to a bank 1.00 1.00

Counter Guarantee provided by the Bank on behalf of the Company 120.00 120.00

Counter Guarantee in favour of Bank of Baroda, Barkatpura Branch, Hyderabad against credit facilities sanctioned to'' SV Distilleries Private Limited'' 8,385.00 8,385.00

Income Tax matters 142.19 562.58

Claims against the company not acknowledged as debt Nil Nil

Legal cases filed by and against the company are as follows:

1. A Civil Suit OS No. 103/2013 and I.A. No. 405/2013 before 2nd Additional District Judge, Ranga Reddy District, L.B. Nagar, Hyderabad with prayers (i) to rescind the agreements as being void and restore the parties back to the position prior to the MOU dated 05.09.2012. (ii) To declare the notice for EGM dated 05.02.2013 as null and void and illegal. The court has passed an order restraining Mr. Anil Agrawal from holding the EGM till further orders.

2. I.A. No. 1452 of 2013 filed with Ilnd Additional District Judge, Ranga Reddy District, L.B. Nagar, Hyderabad praying Not to alienate, encumber assets of M/s.Liquors India Ltd. Judgement is reserved.

3. I.A. No. 1453 of 2013 filed with Ilnd Additional District Judge, Ranga Reddy District, L.B. Nagar, Hyderabad praying Not to alter the Board. Judgement is reserved.

4. Writ petition No. 12960 of 2013 filed with the Hon''ble High Court, Andhra Pradesh requesting not to transfer the excise license of M/s. Liquors India Limited, Nacharam, Hyderabad to Mr. Anil Agrawal. Case disposed off directing the Excise Commissioner of Prohibition & Excise, Hyderabad to consider Mr. R.V. Ravikumar''s representation dated 23.01.2013 and 05.02.2013 before considering the application of Mr. Anil Agrawal for transfer of the license of Liquor India Limited. Mr. Anil Agrawal has filed a Writ Petition No. 34448 of 2013. The court as orderd to dispose the petition in accordance with law.

5. Complaint with Excise Commissioner of Prohibition and Excise, Hyderabad stating that the Company has filed several complaints / petitions and the same are pending before the Courts and Authorities and therefore the Excise License of Liquors India Limited should not be transferred until all our cases / complaints are resolved. License not transferred in the name of Mr. Anil Agrawal. The Excise Department has renewed the License of Liquors India Limited in the name of the company.

6. Complaint with the Commissioner of Police, Hyderabad against the fraud and cheating committed by Mr. Anil Agrawal. The

Police has registered the FIR No.248/2013 dated 23.08.2013 against Mr. Anil Agrawal and others under Section 406-IPC, 420-IPC, 447-IPC, 385-IPC, 386-IPC, 467-IPC, 468-IPC, 469-IPC, 471-IPC, 120B-IPC, 34-IPC.

i. Mr. Anil Agrawal has filed C.P. No. 11292 of 2013 in the High Court of Hyderabad against FIR No. 248/2013 dated 23.08.2013 filed with the Police Department, Hyderabad and order was passed to the concerned police to complete the investigation without arresting Mr. Anil Agrawal and others.

ii. Mr. Anil Agrawal has also filed C.P. No. 3389 of 2013 in the High Court of Bombay against the same FIR No. 248/2013 dated 23.08.2013 of Police Department, Hyderabad and the same was withdrawn by him, after objection by the Government of Andhra Pradesh.

iii. M/s. Tilaknagar Industries Limited - accused A7, A8 and A9 filed W.P. No. 4945 of 2014 with the Hon''ble High Court, Andhra Pradesh to stay all further proceedings of FIR No. 248/2013 of Andhra Police. The W.P. is pending for admission.

7. Writ Petition No. 12713 of 2014 with the Hon''ble High Court, Andhra Pradesh praying License of Liquors India Limited issued by the Excise Department should be cancelled and sub-lease agreement also be cancelled. The order has been passed that all transactions including financial transactions between Mr. Anil Agrawal and Tilaknagar Industries Limited shall be booked and recorded faithfully pending further consideration of W.P.M.P. No. 15944 of 2014 in W.P. No. 12713 of 2014. Mr. Anil Agrawal and Tilaknagar Industries Limited shall not create any charge or third party interest relating to the assets of Liquors India Limited.

8. Complaint with SEBI, Mumbai against BRLM M/s. Comfort Securities Ltd., & Comfort Intech Ltd. (DP) promoted by Mr. Anil Agrawal for violations of SEBI Regulations.

9. Complaint with EOW, Mumbai for cheating and money laundering to recover company''s money of Rs. 33.72 crores. EOW has registered FIR No.34/14 dated 21.01.2014 under section 409, 420, 465, 467, 468, 471, 474, 120(B) and the case is under active investigation.

i. Mr. Anil Agrawal has filed application for Anticipatory Bail vide Petition No. 148 of 2014. Bail Application is pending before the Session Court, Mumbai.

ii. Mr. Anil Agrawal has also filed quash petition No. 2059 of 2014 with High Court of Mumbai for quash of EOW-FIR. The same is pending before the court.

iii. M/s. Sukusama Trading & Investment Pvt.Ltd., M/s. Rani Sati Dealers Pvt.Ltd., M/s. Gulistan Vanijiya Pvt.ltd., Gangor Suppliers Pvt.Ltd., and M/s. B.L.C. Trading Agencies Pvt.Ltd. have filed C.W.P. Nos. 811, 812, 861, 863 & 913 of 2014 in the High court of Mumbai praying to direct EOW to record their statements as true facts without insisting on additions / alterations. The cases were dismissed.

14. Recovery suits No. SL/1135, 1136, 1137, 1138 and 1139 of 2013 filed against M/s. Ranisati Dealer Pvt.Ltd., M/s. Vibhuti Multi Trade Pvt.Ltd., M/s. Gulistan Vnijya Pvt.Ltd., M/s. Sukusama Trading and Investments Pvt.Ltd. and M/s. BLC Trading and Agencies Pvt.Ltd. in the High Court of Bombay. Matter pending before the court.

15. Complaint with Enforcement Directorate, Mumbai to investigate the frauds committed by Mr. Anil Agrawal and his companies. Enforcement Directorate has initiated enquiries against Mr. Anil Agrawal, his companies and others under the provisions of prevention of Money Laundering Act 2002 on the basis of the FIR No. 34/14 dated 21.01.2014.

16. Complaint with SEBI for Cancellation of BRLM License. The complaint has been registered by SEBI in its site www.scores.gov.in vide Complaint Registration No. SEBIP/MH14/0003906/1 dated 07.08.2014.

17. Complaint with SEBI and CDSL for Cancellation of DP License. The complaint has been registered with SEBI in its site www.scores.gov.in vide Complaint Registration No. SEBIP/MH14/0003325/1 dated 07.07.2014.

18. Complaint with RBI and Ministry of Finance to appoint officer to investigate the affair of CIL and cancel the License to act as NBFC for violating the guidelines. The matter is under process.

19. Complaint with The Police Commissioner of Chennai against the fraud and cheating committed by Mr. Anil Agrawal. Mr. Anil Agrawal filed Writ Petition No. 32829 of 2013 with High Court of Chennai to direct the Police, Chennai not to proceed further with the investigation. The matter is pending before the Court without further date since December 2013.

20. Petition Under section lllAr/w 111(4) of the Companies Act 1956 filed before the Company Law Board, Chennai in the matter of Liquor India Limited, Mr. Anil Agrawal and others. Matter is pending before the CLB.

Mr. Anil Agrawal has filed complaints against the company with the following authorities:

1. The Company Law Board, Chennai under section 397, 398, 235(2) and 237(b) of the Companies Act, 1956. The Company has filed counter and the matter is pending before the CLB.

2. W.P. No. 7956 of 2014 filed with Hon''ble High Court, Andhra Pradesh to register the complaint filed by him against Mr. R.V. Ravikumar. The matter is pending before the court without further date.

3. Complaint with Malad Police Station, Mumbai against the company. Preliminary enquiry by the Malad Police Station is in progress.

One Mr. Anand Agrawal, Director of M/s.Comfort Intech Limited has filed a complaint with RoC under Investor''s Complaint and ROC has closed the complaint after verification and proper scrutiny.

M/s. First Financial Services Limited, Chennai has filed O.S. No. 6602 of 2013 at City Civil Court, Chennai alleging mis-management of the company. The matter is pending before the court.

21. Previous Year Figures:

The financial statements for the year ended March 31,2014 have been prepared as per Revised Schedule VI. The figures for the previous year have been regrouped, reclassified or rearranged to meet the recognition and measurement principles followed for preparation of financial statements.


Mar 31, 2013

1. General Inf ormation:

The Company was incorporated during the year 1993 and is engaged in the business of manufacture and sale of Indian Made Foreign Liquor (IMFL). The Company has its manufacturing unit at Pondicherry.

2.1 Capital Advances:

The Company had entered into an Agreement with one of the group companies for purchase of immovable properties in Tamilnadu. The Company had submitted all the necessary documents to the Government Authorities for getting the manufacturing licence. The advance paid in respect of the same amounted to Rs. 3,290 lakhs and was shown as ''Capital Work in Progress'' during the previous financial year. Since, the company could not initiate the obligations under the said agreement, the same is cancelled during the current financial year and accordingly an amount of Rs. 2,713 Lakhs was repaid by the company. Outstanding balance of Rs. 557 Lakhs as on 31-03-2013 is shown under ''Short Term Loans and Advances to Related Parties since the same is immediately receivable.

2.2 Other Loans and Advances

Other Loans and advances of Rs. 2,932 Lacs represent advances to suppliers paid during Financial Year 2010-2011. However, since, the capital commitments were not acted upon by the parties, the management has decided to recall the advances paid. During the financial year 2012-2013, the company has sent legal notices to parties for refund of advances lying with them. The management expects to get the advances back in due course. Hence, no provision has been made in the accounts for doubtful recovery of above advances.

3.1 Balance with banks include unclaimed dividend of Rs. 0.44 Lacs (Previous Year Rs. 0.45 Lacs).

3.2 Fixed Deposits of Rs. 1 Lacs are pledged with Electricity Departments as Deposit.

3.3 Fixed Deposits of Rs. 43 Lacs with Axis Bank are pledged as security against deposit given to BSE.

3.4 Fixed Deposits of Rs. 41 Lacs are pledged with State Bank of India for Non Funded Facilities granted.

3.5 Fixed Deposit of Rs. 5 Lacs is pledged with HDFC Bank for Term Loan facility.

4. Impairment of Assets:

Assets of the Company are being tested for impairment. Considering the internal and external sources of information, there was no indication of potential impairment loss, and hence estimation of recoverable amount does not arise.

5. Segment Reporting:

The company operates only in one reportable business segment namely manufacture and sale of Indian Made Foreign Liquor. The liquor business incorporates the product groups (viz) IMFL and others, which have similar risks and returns. Hence segment reporting is not applicable.

6. Taxation Matters:

The Company has received a Demand Notice from Income Tax Department in respect of the Assessment year 2005-2006, Assessment Year 2007-2008, Assessment Year 2009-2010 and Assessment Year 2010-2011; on account of disallowance of exemption under section-80 IB of the Income Tax Act, 1961 and disallowance of expenditure under section 40 a (ia) of the Income Tax Act, 1961. The Department has raised a demand of Rs. 562.58 lakhs for all the assessment years. The Company has filed appeals with the Commissioner of Income Tax (Appeals) against the orders of the Assessing Officer. The Company is confident of succeeding in both the appeals and the Company has also taken favorable opinion from legal experts. Similar disallowance of deduction under Section 80 IB has been made by the Department which has been contested and favorable decisions have been received from the First Appellate Forum. Hence no provision has been made in the books of accounts and the demand raised by the Department has been shown under "Contingent Liabilities".

In respect of other disputed liabilities pertaining to earlier years such as Turnover Tax, Compounding Fees under the Company Law, Bank Guarantee amount, the amounts have been shown under "Contingent Liabilities" in the respective years.

7. Contingent Liabilities: (Rs. in Lacs)

Contingent Liability not provided for in the books Year Ending March 31,2013 Year Ending March 31,2012

Turnover Tax 222.55 222.55

Company law Matters-Compounding Fee Nil Nil

Guarantee given to a bank 1.00 1.00

Counter Guarantee provided by the Bank on behalf of the Company 120.00 120.00

Counter Guarantee in favour of Bank of Baroda,

Barkatpura Branch, Hyderabad against credit facilities sanctioned to'' S V Distilleries Private Limited'' 8,385.00 0.00

income Tax matters 562.58 400.13

Claims against the company not acknowledged as debt Nil Nil

8. Previous Year Figures:

The financial statements for the year ended March 31, 2013 have been prepared as per Revised Schedule VI. The figures for the previous year have been regrouped, reclassified or rearranged to meet the recognition and measurement principles followed for preparation of financial statements.


Mar 31, 2012

1. General Information:

The Company was incorporated during the year 1993 and is engaged in the business of manufacture and sale of Indian Manufactured Foreign Liquor (IMFL). The Company has its manufacturing unit at Pondicherry.

a. The Company issued 55 Lacs Shares as bonus shares during the Financial Year 2007-2008 and 2009-2010.

c. Out of the above, 25 Lacs shares were issued for consideration other than cash during the financial year 2007-2008.

1.1 Term Loan from Banks :

1.1.1 Term Loan from Banks include Term Loan from State Bank of India of Rs. 1.000 Lacs (Outstanding as on 31-03-2012 Rs. 1,033.88 Lacs) which is secured against Plant and Machinery, Building and other assets belonging to 'Liquor India Limited' which was proposed to be acquired by the company. The same is repayable by way of 72 monthly installments of Rs. 12.50 Lacs each commencing from April 2012.

1.1.2 Term Loan from State Bank of India is collaterally secured by Equitable Mortgage of Factory Land and Building at R S No. 89 / 4A and 89/1, Katterikuppam, Mannadipet Commune, Pondicherry and Term Deposit Receipts in the name of Company. The collateral security as mentioned above is common security for all facilities granted by the bank viz. Cash Credit. Term Loan, Bank Guarantee etc.

1.1.4 Term Loan from Banks include Term Loan from HDFC Bank of Rs. 22.40 Lacs (Outstanding as on 31-03-2012 Rs. 18.85 Lacs) which is secured against hypothecation of vehicle. The same is repayable by way of 48 monthly installments of Rs. 0.59 Lacs each.

1.2 Long Term Liabilities of Finance Lease Obligations :

The Company has availed Term Loan from "Sundaram Finance Limited' a Non Banking Financial Corporation amounting to Rs. 958.74 lakhs for expansion of facilities. The Finance Lease obligations are secured against leased assets.

1.3 Deferred Payment Liabilities

Manufacture of IMFL Brands owned by other Corporates

The Company manufactures and sells its own brand of liquors and also uses the brand of others. For the purpose of manufacture and sales of liquor brands not owned by the company, the company has entered into arrangement / agreement with the respective brand owners.

The terms of the Agreement / Arrangement with such brand owners provide for payment of consideration for use of brand name / for the additional services rendered by the brand owners / other amount due to the brand owners in the agreed proportion. The payment towards use of Brand name is accounted in the books as "Royalty". Other dues / payments along with Royalty are grouped as "Operational Support Cost". The Operational Support Cost is included under the head "Other Manufacturing Expenses"

Further the Agreements / Arrangements with other Brand owners provide a facility of Deferred Payment of the amount due under the agree- ment. These payables, as per the Terms, which are payable after a period exceeding 12 months are classified as "Deferred Credit from Corporate Suppliers" and are grouped under "Non Current Long Term Borrowings".

1.4 Other Loans and Advances :

'Other Loans and advances' represents an amount due to 'ETK Investment and Finance Limited' of Rs. 8.27 Lacs and an amount of Rs. 7.20 lacs maintained as deposit with State Bank of India represents the amount withheld by the Bank as per the specific direction of the Madras High Court towards the Income Tax due by 'ETK Investment and Finance Limited'. The same is treated as 'Non Current Borrowings'.

2.1 Working Capital Loans are secured by hypothecation of present and future stock of raw materials. Stock in Process, Finished Goods. Spares, Book Debts, Outstanding monies, receivables, claims, materials in transit etc.

2.2 Out of the above Working Capital Demand Loan of Rs. 1,889 Lacs are secured against pledge of Term Deposits of Rs. 1,987 Lacs.

2.3 Loans and advances from related parties includes short term loans received from Mr. R V Ravikumar of Rs. 39 Lacs (Previous Year Rs. 2 Lacs) for temporary working capital purposes.

The company has not received intimation from all the "Suppliers" regarding their status under Micro, Small and Medium Enterprises Develop- ment Act, 2006, and hence, the disclosure relating to amounts unpaid as at March 31, 2012 together with interest paid /payable as required under the said Act has been provided only to the extent of intimations received.

3.1 Capital Advances :

The Company had entered into an Agreement with one of the group companies for purchase of immovable properties and Capital equipments for expansion of manufacturing operations in Tamilnadu. The Company had submitted all the necessary documents to the Government Authorities for getting the manufacturing licence. The advance paid in respect of the same amounted to Rs. 3,290 lakhs and was shown as 'Capital Work in Progress' during the previous financial year. Since, the company could not initiate the obligations under the said agreement, the same is cancelled during the current financial year and accordingly an amount of Rs. 2,708 Lakhs was repaid by the company. Outstanding balance of Rs. 832 Lakhs as on 31-03-2012 is shown under 'Short Term Loans and Advances to Related Parties since the same is immediately receivable.

4.1 Investment includes short term investment in SBI-SHF-Ultra Short Term Fund of Rs. Nil Lacs (Previous Year Rs. 400 Lacs).

5.1 Balance with banks include unclaimed dividend of Rs. 0.45 Lacs (Previous Year Rs.NIL).

5.2 Fixed Deposits with Banks include an amount of Rs. 7.20 Lacs maintained as deposit with State Bank of India which is withheld by Bank as per the specific direction of the Madras High Court towards the Income Tax due by 'ETK Investment and Finance Limited'. (Also Refer Note No. 5.4)

5.3 Fixed Deposits of Rs. 1 Lacs are pledged with Electricity Departments as Deposit.

5.4 Fixed Deposits of Rs. 55 Lacs are pledged as security for Non Funded Facilities granted by State Bank of India.

5.5 Fixed Deposits of Rs. 37 Lacs with Axis Bank are pledged as security against deposit given to BSE.

6.1 The above includes an amount of Rs. 1257.97 Lacs as an advance given for acquisition of shares of 'Liquor India Limited' (Rs. 761.22 Lacs) and "S V Distilleries Private Limited' (Rs. 496.75 Lacs) during the Financial Year 2011-2012. However, no share purchase agreement has been entered into till date. The company could not acquire entire shareholding of the target companies. In view of the above, the above advance is immediately receivable and accordingly shown as 'Advance for Purchase of Shares' under 'Short Term Loans and Advances'.

6.2 The Company had entered into an Agreement with one of the group companies for purchase of immovable properties and Capital equipments for expansion of manufacturing operations in Tamilnadu. The Company had submitted all the necessary documents to the Government Authorities for getting the manufacturing licence. The advance paid in respect of the same amounted to Rs. 3,290 lakhs and was shown as 'Capital Work in Progress' during the previous financial year. Since, the company could not initiate the obligations under the said agreement, the same is cancelled during the current financial year and accordingly an amount of Rs. 2,708 Lakhs was repaid by the company. Outstand- ing balance of Rs. 832 Lakhs as on 31-03-2012 is shown under 'Short Term Loans and Advances to Related Parties'.

7. Impairment of Assets :

Assets of the Company are being tested for impairment. Considering the internal and external sources of information, there was no indication of potential impairment loss, and hence estimation of recoverable amount does not arise.

8. Segment Reporting :

The company operates only in one reportable business segment namely manufacture and sale of Indian Manufactured Foreign Liquor. The liquor business incorporates the product groups (viz) IMFL and others, which have similar risks and returns. Hence segment reporting is not applicable.

9. Taxation Matters :

The Company has received a Demand Notice from Income Tax Department in respect of the Assessment year 2003-04, Assessment Year 2007-2008 and Assessment Year 2009-2010 on account of disallowance of exemption under section 80 IB of the Income Tax Act, 1961 and disallowance of expenditure under section 40 a (ia) of the Income Tax Act, 1961. The Department has raised a demand of Rs. 400.13 lakhs for all the assessment years. The Company has filed appeals with the Commissioner of Income Tax (Appeals) against the orders of the Assessing Officer. The Company is confident of succeeding in both the appeals and the Company has also taken favorable opinion from legal experts.

Similar disallowance of deduction under Section 80 IB has been made by the Department which has been contested and favorable decisions have been received from the First Appellate Forum. Hence no provision has been made in the books of accounts and the demand raised by the Department has been shown under "Contingent Liabilities".

In respect of other disputed liabilities pertaining to earlier years such as Turnover Tax, Compounding Fees under the Company Law, Bank Guarantee amount, the amounts have been shown under "Contingent Liabilities" in the respective years.

10. Contingent Liabilities :

Contingent Liability not provided for in the books Year Ending March 31,2012 Year Ending March 31, 2011

Turnover Tax 222.55 222.55

Company law Matters - Compounding Fee Nil 2.80

Guarantee given to a bank 1.00 1.00

Counter Guarantee provided by the Bank on behalf of the Company 120.00 90.00

Income Tax matters 400.13 479.66

Claims against the company not acknowledged as debt Nil Nil

11. Previous Year Figures :

The financial statements for the year ended March 31, 2011 had been prepared as per the then applicable, pre revised Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended March 31, 2012 are prepared as per Revised Schedule VI. Accordingly, previous year figures have also been reclassified to conform to this year's classifi- cation. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.


Mar 31, 2009

1. General

The Company was incorporated during the. year 1993 and is engaged in the business of manufacture and sale of Indian Manufactured Foreign Liquor. The Company has its manufacturing unit at Pondichcrry.

2. Equity Share Capital

During the year the Company had increased its Authorised Capital by Rs. 10,00,00,000/- represented by 100,00,000 Equity Shares of Rs. 10/-each

3. Term Loan and Working Capital

a. The Company has availed Term Loan from Non Banking Finance Company (Financial Institutions) amounting to Rs. 4,50,00,000/- for expansion of facilities.

b. The Company had also been sanctioned Term Loan by a Bank for Rs. 1,20,00,000/- from a bank towards purchase of capital equipments and expansions.

c. The Company has availed Cash Credit from a Scheduled Bank for a sum of Rs 1852.28 lacs for Working Capital requirements.

d. The above facilities are secured by .Hypothecation of all present and future goods, book debts and all other movable assets of the Company, outstanding monies, receivables claims by way of refund of cess to excise duties under the duty draw back credit scheme or any other scheme and Companys plant and machinery and First charge on die entire assets acquired out of the term loan. Further the Facilities from the Bank are secured by the personal Guarantee of 4 Directors.

4. Manufacture of IMFL Brands owned by other Corporate

The Company manufactures and sells its own brand of liquors and also uses the brand of others For the purpose of manufacture and sales of liquor brands not owned by the company, the company has entered in to arrangement / agreement with the respective brand owners.

The terms of the Agreement / Arrangement with such brand owners provide for payment of consideration for use of brand name / for the additional services rendered by the brand owners / other amount due to the brand owners in the agreed proportion. The, payment towards use of Brand name is accounted in the books as "Royalty". Other dues / payments along with Royalty arc grouped as "Operational Support Cost". The Operational Support Cost is included under the head "Other Manufacturing Expenses"

Further the Agreements / Arrangements with other Brand owners provide a facility of Deferred Payment of the amount due under the. agreement. These payables, as per the Terms, which are payable after a period exceeding 12 months are classified as "Deferred Credit from Corporate Suppliers" and are grouped under "Unsecured Loans".

5. The amount due to ETK Investment and Finance Limited is lls.8.27 Lacs and amount of Rs.7.20 lacs maintained as deposit with State Bank of India represents the amount withheld by the Bank as per the specific direction of the Madras High Court towards the Income Tax due by ETK Investment and Finance Limited.

6. Company Law

The Company had entered into certain contracts with regard to which compliance u/s.297 of the Companies Act, have not I wen fulfilled. The Company is in the process of approaching the Company Law Board for compounding such non compliances. The Company had provided for the liability towards such compounding on the basis of estimation made by the management and supported by legal advise. The difference between total amount payable and theprovision made has been shown under contingent liability. The company has not entered into such transactions during the year.

7. Related Party transaction

A. Related patties and their relationship:

Nature of Relationship Name of the Related Party

Enterprises that directly or indirectly Ravikumar Properties Private Limited

through one or more intermediaries, Graze India Private Limited

control, or arc controlled hy or are under Ravikumar Resorts and Hotels Private Limited

common control with the reporting Ravikiimar Powerucn Private Limited

enterprises RKR Hotels Private Limited

Reality Projects & Entertai nments Private Limited

Brahmar Cellulose Products Private Limited

RV Matrix SoftwareTechnologies Private Limited

Key Management personnel R.V.Ravikumar

R.Amirthavalli

Vijayalakshmi

N R Acluin

K S M Rao

R Ramanujam

Badrinath S Gandhi

V Sivasankar

8. Current Assets / Loans and Advances

The Confirmation of Advances and Creditors are being received. In the opinion of the Management the balances under the head Current Assets, Loans & Advances are recoverable in the ordinary course at the amount stated in the Financial Statements and all known Liabilities and expenses have been provided for.

9. Others

(b) Micro Enterprises

The company has not received intimation from all the "Suppliers" regarding their status under Micro, Small and Medium Enterprises Development Act, 2006, and hence, the disclosure relating to amounts unpaid as at March 31, 2009 together with interest paid /payable as required under the said Act has been provided only to the extent of intimations received.

(b)Investmcnt:

Investment represents Unquoted - Non-Trade - at Cost value of National Saving Certificate of Rs.51,000/- (Previous Year Rs.51,000/-)

10. Employee Benefit

As per Accounting Standard 15" Employce Benefits", the disclosures of Employee benefits as defined in the Accounting Standard are given below

Gratuity

The liability for Gratuity.to employees as at the Balance Sheet date is determined on the bas of actuarial valuation based on-Projected Unit Credit method and is funded to a Cxratuity fur administered by the trustees and managed by life Insurance Corporation of India. The contribution thereof paid/payable is charged in the books of accounts.

The employees and (he Company make monthly fixed contributions to a Provident Fun Trust, equal to a specified percentage of the covered employees salary. The interest rai payable by the Trust to the beneficiaries is being notified by the Government every year, Tr Company has an obligation to make good the shortfall, if any, between the return from th investments of the trust and the notified interest rate.

The following table sets forth the stains of (lie Gratuity plan and the Superannuation and th other Pension Plans of the Company and the amount in the Balance Sheet an Profit and Loss Account

11. Segment Repotting

The company operates only in one reportable business segment namely manufacture and sale of Indian Manufactured Foreign Liquor. The liquor business incorporates the product groups (viz) IMFL and others, which have similar risks and returns. Hence segment reporting is not applicable.

12. Impairment of Asset

Assets of the Company are being tested for impairment. Considering the internal and external sources of information, there was no indication of potential impairment loss, and hence estimation of recoverable amount does not arise.

13. The figures have been rounded off to neatest rupee.

14. The figures have been regrouped / reclassified wherever necessary to conform with the current year presentation.

 
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