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Notes to Accounts of Regency Ceramics Ltd.

Mar 31, 2015

1. Regency Ceramics Limited was incorporated in 1983. The company manufactures ceramic floor and wall tiles suitable to domestic and international markets. The company introduced glazed vitrified tiles, parking tiles and heavy duty tiles for high traffic areas.

2. The company is operating from its Registered cum Corporate office in Hyderabad and operates through various Depot network across the country. The plant is located at Yanam, Union Territory of Puducherry. The Company delcared lock-out of its plant on 31st January, 2012 and since then, there is no production.

3. The company has recorded a Net Loss of Rs.1341.06 Lakhs for the year and has accumulated loss of Rs.9455.42 Lakhs as on 31.03.2015 resulting in erosion of the net worth. Further, there were no cash flows from the existing business activities. The company has defaulted in payment of dues to banks/financial institution and could not comply with the terms of sanction and/or repayment schedules of the lenders. Consequently, the lenders recalled the loans and initiated legal proceedings for recovery of the debts. However, the company is of the opinion that One Time Settlement package already sanctioned by the lenders where part amount is already paid and the promoters are in the process of arranging the balance amount, will be fulfilled shortly.

4. The matter was referred to Board for Industrial and Financial Reconstruction (BIFR) and the case was registered. The management is hopeful that BIFR will declare the company sick and grant an acceptable and viable rehabilitation package to the company.

5. Further, the company is confident of an amicable settlement with the agitating workers and is also hopeful of receiving insurance claim for refurbishing the plant and to recommence the plant operations. In view of the above, the financial statements have been prepared by the company on a "going concern" basis.

6. The company paid 28.93% of loan Outstanding as One time Settlement (OTS) amount as a compromise towards settlement of dues to the lenders and requested for extension of time for balance payment. However, the lenders issued a Demand Notice under section 13(2) of SARFAESI Act. State Bank of India on behalf of its bank, Corporation Bank and State Bank of Travancore issued a Possession Notice (Symbolic) under Rule 8(1) of Security Interest (Enforcement) Rules, 2002 stating that the undersigned has taken possession of the properties in exercise of powers conferred on him under section 13(4) of the SARFAESI Act on 04.03.2015 State Bank of Bikaner & Jaipur assigned and transferred the facilities sanctioned by them together with all underlying securities interests thereto to Phoenix ARC Private Limited (Trustee of Phoenix Trust - FY15-5). The lenders filed an application under section 19 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 in the Debts Recovery Tribunal, Hyderabad for recovery of their dues.

7. In view of the above, the Long Term Borrowings are considered as current maturities of long term borrowings and shown under Note No.10 (Other Current Liabilities). Hypothecation / Hire purchase loans under (D) are repayable within one year and shown under Note No.10 (Other Current Liabilities)

8. Terms of Repayment and Security

The Short term borrowings are repayable on demand, secured by first charge on current assets of the company, ranking paripassu with other member banks and further secured by second charge on the company's fixed assets ranking paripassu with other member banks of the consortium. These Borrowings are further secured by i) pledge of 10% equity shares of the company held by the promoters, ii) tangible collateral security provided by the promoters equivalent to 15% of the share capital of the company and iii) personal guarantee of 3 promoter directors of the company on paripassu basis to all the lenders. Interest is payable on monthly basis.

9. The company paid 28.93% of loan Outstanding as One Time Settlement (OTS) amount as a compromise towards settlement of dues to the lenders and requested for extension of time for balance payment. However, the lenders issued a Demand Notice under section 13(2) of SARFAESI Act. State Bank of India on behalf of its bank, Corporation Bank and State Bank of Travancore issued a Possession Notice (Symbolic) under Rule 8(1) of Security Interest (Enforcement) Rules, 2002 stating that the undersigned has taken possession of the properties in exercise of powers conferred on him under section 13(4) of the SARFAESI Act on 04.03.2015 State Bank of Bikaner & Jaipur assigned and transferred the facilities sanctioned by them together with all underlying securities interests thereto to Phoenix ARC Private Limited (Trustee of Phoenix Trust - FY15-5). The lenders filed an application under section 19 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 in the Debts Recovery Tribunal, Hyderabad for recovery of their dues.

10. Term Loans under A,B and C above are repayable in quarterly instalments. Interest is payable on monthly basis.These loans are secured by first paripasu charge by way of mortgage and hypothecation over all the fixed assets of the company, both existing and future, further securedby second paripassu hypothecation charge over current assets of the company both present and future. These loans are further secured by i) pledge of 10% equity shares of the company held by the promoters, ii) tangible collateral security provided by the promoters equivalent to 15% of the share capital of the company and iii) personal guarantee of 3 promoter directors of the company on paripassu basis to all the lenders. Hypothecation / Hire Purchase loans under (A) above are secured by hypothecation of vehicles and guaranteed by the promoter directors of the company.

11. The Interest on Term Loans and Working Capital Loans for the year 2014-15 amounting to Rs.1021.93 lakhs (Previous Year Rs.978.11 Lakhs) calculated @ interest rates as per sanction was not provided in the books in line with the treatment made by the banks. The actual interest liability shall vary depending upon the actual date of payment.

12. Creditors for Other Finance and Creditor for Expenses include dues payable to the Statutory Authorities. The liability towards Interest and Penalities payable on account of Statutory Dues were not provided in the books expecting waiver in the current situation.

13. Terms of Repayment and Security:

Term Loans under A,B and C above are repayable in quarterly instalments. Interest is payable on monthly basis.These loans are secured by first paripasu charge by way of mortgage and hypothecation over all the fixed assets of the company, both existing and future, further secured by second paripassu hypothecation charge over current assets of the company both present and future. These loans are further secured by i) pledge of 10% equity shares of the company held by the promoters, ii) tangible collateral security provided by the promoters equivalent to 15% of the share capital of the company and iii) personal guarantee of 3 promoter directors of the company on paripassu basis to all the lenders. Hypothecation / Hire Purchase loans under (A) above are secured by hypothecation of vehicles and guaranteed by the promoter directors of the company.

14. The Interest on Term Loans and Working Capital Loans for the year 2014-15 amounting to Rs.1021.93 lakhs (Previous Year Rs.978.11 Lakhs) calculated @ interest rates as per sanction was not provided in the books in line with the treatment made by the banks. The actual interest liability shall vary depending upon the actual date of payment.

15. The company paid 28.93% of the OTS amount under settlement to all the banks. Corporation Bank had shown the same in the No-lien Account, State Bank of India had shown part of this amount in the No-Lien Account while others have adjusted against the regular Term loan Accounts. The Company made similar treatment in the books in line with the treatment made by the respective banks.

16. The unprecedented industrial violence on 27.1.2012 had resulted in deaths of personnel and destruction of buildings and equipment in the factory. Consequently, a lock-out was declared at the factory from 31.01.2012. The Salary, Wages and other benefits to employees were not considered as provisional liability and not taken in the books under "No Work - No Pay" principle pending orders / judgment of the Industrial Tribunal.

As at As at 31.03.2015 31.03.2014 (Rs. in lakhs) (Rs. in lakhs) 17. Estimated Amount of contracts remaining to be executed on Capital Accounts and not provided for - -

18. Contingent Liabilities not provided for:

i) On account of Letters of Credit and Bank Guarantees given by Bankers. - -

ii) Demand from Directorate of Enforcement, disputed by the Company pending in Appellate Tribunal for Foreign Exchange. 5.50 5.50

iii) Demand from Customs & Central Excise (Service Tax Cell), disputed by the company, Pending in appeal before CESTAT, Bangalore. 35.04 35.04

iv) Demand from Yanam Municipality (Property Tax-With retrospective effect) disputed by the company- pending with commissioner, Yanam Municipality 32.35 32.35

v) Demand from The Deputy Commissioner of Income Tax, Hyderabad, disputed by the Company. Appeal allowed by ITAT,

Hyderabad. DCIT modified the demand to Rs.90.98 Lakhs after giving partial effect to ITAT orders.. The company again requested DCIT to set aside the modified order by giving effect to the entire ITAT orders. 90.98 101.17

19. The company suffered extensive damage to the Buildings, Plant & Machinery and other assets situated at Factory, Yanam due to unprecedented violence, occurred on 27th January, 2012. Stocks of Finished goods, Raw materials, stores and spares, stocks-in-process and other inventories were damaged / looted to a large extent. The Company declared lock-out of the Plant from 31st January 2012.

20. The extent of loss/damage to Plant & Machinery, Buildings and other assets of the company were not considered in the books pending assessment and disclosed at book value after providing depreciation without considering 5% residual value on account of efflux of time. The company could not estimate the condition of the existing fixed assets & its realizable value. As such, the machinery & buildings could not be insured.

21. Similarly, the condition of the raw materials, stores & spares and its realizable value could not be estimated by the company, not insured and disclosed at book value.

22. The Company could not obtain confirmation of balances in respect of Sundry Debtors & Sundry Creditors, loans and advances, other current assets and other liabilities.

23. The company has not provided the provisional liability towards salary, wages and other benefits to its factory employees pending orders/judgment of the industrial Tribunal. Further, the company has not provided for its liability towards Gratuity and leave encashment as per AS-15 due to loss of employee records in the factory during the violent incidence occurred on 27th January, 2012.

24. The company paid part of One Time Settlement (OTS) amount to the lenders and requested for extension of time for balance payment. However, the lenders issued a Demand Notice under section 13(2) of SARFAESI Act. State Bank of India on behalf of its bank, Corporation Bank and State Bank of Travancore issued a Possession Notice (Symbolic) under Rule 8(1) of Security Interest (Enforcement) Rules, 2002 stating that the undersigned has taken possession of the properties in exercise of powers conferred on him under section 13(4) of the SARFaESI Act on 04.03.2015 State Bank of Bikaner & Jaipur assigned and transferred the facilities sanctioned by them together with all underlying securities interests thereto to Phoenix ARC Private Limited (Trustee of Phoenix Trust - FY15-5). The lenders filed an application under section 19 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 in the Debts Recovery Tribunal, Hyderabad for recovery of their dues.

In view of the above, the Long Term Borrowings are considered as current maturities of long term borrowings and shown under Other Current Liabilities. Hypothecation / Hire purchase loans are repayable within one year and shown under Other Current Liabilities.

25. The company filed a reference under section 15(1) of Sick Industrial Companies (Special Provisions) Act, 1985 with the Board for Industrial and Financial Reconstruction. The reference made by the company has been registered in the BIFR as Case No.19/2014.

26. Remittance in foreign currency on account of Dividend:

There is no remittance in foreign currency on account of Dividend during the year 2014-15.

27. There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.

28.Segment Reporting : The entire operations of the Company relate only to one segment.

29.Related Party Disclosure:

Name of the party Nature of relationship:

1) Regma Ceramics Limited : Company under the same management:

2) Regency Educational Society : Other entities where Directors/their relatives are interested

3) Dr. G.N. Naidur

4) Smt. Bindu G Naidu } Key Management Personnel

5) Sri. N. Satyendra Prasad

30. The Scheduled III to the Companies Act, 2013 has become effective from 1st April, 2014 for the pereparation of Finacial Statements and accordingly, disclosure and presentation have been made in the financial statements.

31. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosere.

32. Members may fill up the Ballot Form printed overleaf and submit the same in a sealed envelope to Mr. K.V.Chalama Reddy, Practicing Company Secretary, Flat No.301, Madhava Apartments, Hill Colony, Khairtabad, Hyderabad-500004, so as to reach by 5.00 pm on September 29, 2015. Ballot Form received thereafter will strictly be treated as if not received.

33. The Company will not be responsible if the envelope containing the Ballot Form is lost in transit.

34. Unsigned, incomplete or incorrectly ticked forms are liable to be rejected and the decision of the Scrutinizer on the validity of the forms will be final.

35. In the event member casts his votes through both the processes i.e. E-voting and Ballot Form, the votes in the electronic system would be considered and the Ballot Form would be ignored.

36. The right of voting by Ballot Form shall not be exercised by a proxy.

37. To avoid fraudulent transactions, the identity/signature of the members holding shares in electronic/demat form is verified with the specimen signatures furnished by NSDL/CDSL and that of members holding shares in physical form is verified as per the records of the share transfer agent of the Company (i.e. XL Softech Systems Pvt Ltd.). Members are requested to keep the same updated.

38. There will be only one Ballot Form for every Folio/DP ID/CLIENT ID irrespective of the number of joint members.

39. In case of joint holders, the Ballot Form should be signed by the first named shareholder and in his/her absence by the next named shareholders. Ballot Form signed by a joint holder shall be treated valid if signed as per records available with the Company and the Company shall not entertain any objection on such Ballot Form signed by other joint holders.

40. representative of the Body Corporate/Trust/Society, etc. a certified copy of the relevant authorization/ Board resolution to vote should accompany the Ballot Form.

41. The voting rights of shareholders shall be in proportion to their shares of the paid up equity share capital of the Company as on the cut-off date 25th September, 2015.


Mar 31, 2014

Terms of Repayment and Security:

Term Loans under A,B and C above are repayable in quarterly instalments. Interest is payable on monthly basis.These loans are secured by first paripasu charge by way of mortgage and hypothecation over all the fixed assets of the company, both existing and future, further secured by second paripassu hypothecation charge over current assets of the company both present and future. These loans are further secured by i) pledge of 10% equity shares of the company held by the promoters, ii) tangible collateral security provided by the promoters equivalent to 15% of the share capital of the company and iii) personal guarantee of 3 promoter directors of the company on paripassu basis to all the lenders. Hypothecation / Hire Purchase loans under (A) above are secured by hypothecation of vehicles and guaranteed by the promoter directors of the company

The Interest on Term Loans and Working Capital Loans for the year 2013-14 amounting to Rs.978.11 lakhs (Previous Year Rs.1114.23 Lakhs) calculated @ interest rates as per sanction was not provided in the books in line with the treatment made by the banks. The actual interest liability shall vary depending upon the actual date of payment.

Creditors for Other Finance and Creditor for Expenses include dues payable to the Statutory Authorities. The liability towards Interest and Penalities payable on account of Statutory Dues were not provided in the books expecting waiver in the current situation.

02. The company has not provided the provisional liability towards salary, wages and other benefits to its factory employees pending orders/judgment of the industrial Tribunal. Further, the company has not provided for its liability towards Gratuity and leave encashment as per AS-15 due to loss of employee records in the factory during the violent incidence occurred on 27th January, 2012.

03. The lenders opted for settlement of dues under OTS as a compromise. The company paid part amount and requested for extension of time. The company has not provided interest on term loans, working capital loans to the extent of Rs.978.11 Lakhs (Previous Year Rs.1114.23 Lakhs) calculated @ interest rates as per sanction in line with the treatment given by the banks.

04. The lenders, however, issued a Demand Notice under SARFAESI Act for recovery of their dues.

05. The company filed a reference under section 15(1) of Sick Industrial Companies (Special Provisions) Act, 1985 with the Board for Industrial and Financial Reconstruction (BIFR). The reference made by the company has been registered in the BIFR as Case No.19/2014.

06. Remittance in foreign currency on account of Dividend:

There is no remittance in foreign currency on account of Dividend during the year 2013-14.

07. There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.

08. Segment Reporting :

The entire operations of the Company relate only to one segment.

09. Related Party Disclosure:

Name of the party Nature of relationship:

1) Regma Ceramics Limited : Company under the same management:

2) Regency Educational Society : Other entities where Directors/their relatives are interested

3) Dr. G.N. Naidu

4) Smt. Bindu G Naidu Key Management Personnel

5) Sri. N. Satyendra Prasad


Mar 31, 2013

01. The company suffered extensive damage to the Buildings, Plant & Machinery and other assets situated at Factory, Yanam due to unprecedented violence, occurred on 27th January, 2012. Stocks of Finished goods, Raw materials, stores and spares, stocks-in-process and other inventories were damaged / looted to a large extent. The Company declared lock-out of the Plant from 31st January 2012.

The financial results for the year ended 31st March 2013 were prepared considering the effect of the loss / damage to FG stocks, Raw Materials, stores and spares, stocks-in-process and other inventories in the books of accounts. However, the value of loss/damage to Plant & Machinery, Buildings and other assets of the company and also, claim under loss of profit were not considered in the books pending assessment.

02. The Company has not obtained confirmation of balances from Sundry Debtors and Sundry Creditors and is in the process of obtaining confirmation of balances from Sundry Debtors, Sundry Creditors, other liabilities and advances.

03. The company extended "Letter of Comfort" to ICICI Bank aggregating to Rs.23.70 Lakhs with an undertaking to convert the same into Corporate Guarantee in line with terms and conditions of the sanction to M/s. Regma Ceramics Ltd., a Body Corporate under the same management.

04. Gratuity provision as per AS-15 was not provided in the books due to loss of employee records in the factory during the voilent incidence occurred on 27h January,2012.

05. Remittance in foreign currency on account of Dividend:

There is no remittance in foreign currency on account of Dividend during the year 2012-13

06. There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.

07. Segment Reporting: The entire operations of the Company relate only to one segment.

08. Related Party Disclosure:


Mar 31, 2010

01. Secured Loans:

i) The Term Loans ( including fresh loans, Funded Interest Term Loans and Working Capital Term Loans) availed from Banks are secured by first paripassu charge by way of mortgage and hypothecation over all the fixed assets of the Company, both existing and future; further secured by second paripassu hypothecation charge over current assets of the Company both present and future ( except on the assets on which exclusive charge is created against the loans sanctioned by hypothecation/ hire purchase vendors).

ii) The working capital limits availed from banks are secured by first charge on current assets of the Company, ranking paripassu with other member banks and further secured by second charge on the Companys fixed assets ranking paripassu with other member banks of the consortium.

iii) The loans availed under (i) and (ii) above are further secured by (a) pledge of 10% Equity shares of the Company held by the promoter (b) Tangible collateral security provided by the promoters equivalent to 15% of the share capital of the Company and (c) personal guarantees of three promoter Directors of the Company on paripassu basis to all the lenders.

As at 31.03.10 As at 31.03.09 (Rs.in lakhs) (Rs.in lakhs)

02. Estimated Amount of contracts remaining to be executed on Capital Accounts and not provided for - -

03. Contingent Liabilities not provided for:

i) On account of Letters of Credit and Bank 861.92 1587.66 Guarantees given by Bankers.

ii) Demands from Sales Tax Dept., disputed - 17.89 by the Company pending in appeals, amounting to Rs. 17.89 lakhs.

iii) Demand from Directorate of Enforcement, 5.50 5.50 disputed by the Company pending in Appellate Tribunal for Foreign Exchange.

iv) Demand from Customs & Central Excise Dept. (Service Tax cell), disputed by the Company, pending in appeal, amounting to Rs.62.36 lakhs. Against these demands, the Company paid an amount of Rs.9.97 lakhs. 62.36 62.36

v) Demand from Customs & Central Excise (Service Tax Cell), disputed by the Company, Pending in appeal before CESTAT, Bangalore amounting to Rs. 35.04 Lakhs 35.04 35.04

vi) Demand from Commissioner, Central Excise (Service Tax Cell) Visakhapatnam - II disputed by the Company, pending in appeal before CESTAT, Bangalore amounting to Rs.1.22 Lakhs 1.22 1.22

vii) Demand from Yanam Municipality (Property Tax) disputed by the Company- pending with commissioner, Yanam Municipality. 32.35 32.35

viii) Demand from Regional Provident Fund Commissioner, Rajahmundry, disputed by the Company pending in appeal, amounting to Rs.46.26 Lakhs. Against this demand, the Company paid an amount of Rs. 11.57 Lakhs during the Financial Year 2009-10 46.26 46.26

ix) Demand from Dy. Commissioner of Income Tax, Hyderabad, disputed by the Company, pending in appeal before Income Tax Appellate Tribunal, Hyderabad amounting to Rs. 130.97 Lakhs 130.97 130.97

04. The Company incurred Rs.118.85 Lakhs in the earlier years on installation of 132KV electric line for getting uninterrupted power supply from Pondicherry Electricity Board. The line is the property of the Electricity board on energigation in the month of July05 and thus the expenditure is being written off in five equal annual installments from the year of energigation. Accordingly, Rs.23.77 Lakhs is charged to Revenue in the current year.

05. The Company has obtained confirmation of balances from few parties from Sundry Debtors and Sundry Creditors and is in the process of obtaining confirmation of balances from the balance parties included under Sundry Debtors, Sundry Creditors, other liabilities and advances.

06. In the opinion of the Board, the current Assets and Loans & Advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated.

07. The Company extended "Letter of Comfort" to the Banks aggregating to Rs.52 Lakhs with an undertaking to convert the Same into Corporate Guarantee in line with terms and conditions of the sanction to M/s. Regma Ceramics Ltd., a Body Corporate under the same management.

08. Remittance in foreign currency on account of Dividend:

There is no remittance in foreign currency on account of Dividend during the year 2009-10

09. There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.

10. Segment Reporting: The entire operations of the Company relate only to one segment.

11. Related Party Disclosure:

Name of the party Nature of relationship:

1) Regma Ceramics Limited : Company under the same management:

2) Regency Educational Society : Other entities where Directors/their relatives are interested:



3) Dr. G.N. Naidu ")

4) Smt. G. Radhika Key Management Personnel

5) Smt. Bindu G Naidu

6) Sri. K.C. Chandrasekhar



12. Lease rentals payable towards vehicles acquired under operating lease:

- not later than one year: - 2.83

- later than one year but not later than five years :

13. Previous years figures have been regrouped /re-arranged wherever necessary to make them comparable with the current years figures.

 
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