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Notes to Accounts of Ritesh Properties & Industries Ltd.

Mar 31, 2015

1. Contingent Liabilities

Bank Guarantee Rs. Nil (Previous Year Rs.183.66 Lacs)

2. Debit & Credit balances of the parties are subject to confirmation & reconciliation.

3. Insurance claims of Rs. NIL (Previous Year Rs. 21675/-) are being accounted for on receipt basis.

4. In the opinion of the Board, all the Current Assets, Loans & Advances have a value on realization in the ordinary course of business equivalent to the amount at which they are stated except as expressly stated otherwise.

5. Segment Reporting

Segment reporting is not given as the company deals mainly in one segment and the disclosure requirements of Accounting Standards (AS)-17 on "Segment Reporting", issued by The Institute of Chartered Accountants of India are not applicable.

6. Related Parties Disclosure

A) Related parties where control exists or with whom transactions have taken place during the year.

SUBSIDIARY COMPANIES

* Femella Fashions Private Limited

* Catalina Bay USA Inc.

ASSOCIATED/ALLIED COMPANIES

* Ritesh International Limited- up to 25.07.2013

* Ritesh Spinning Mills Limited

* Kamal Oil & Allied Industries (P) Ltd- w.e.f 04.05.2013

* Ritesh Impex Private Ltd

* H.B. Fibres Limited

* KP Advisors(Realty) Pvt Ltd

KEY MANAGERIAL PERSONNEL (KM P) REPRESENTED ON THE BOARD

* Sh. Sanjeev Arora Chairman-cum-Managing Director

* Sh. Rajiv Arora Director*

* Sh. Roop Kishore Executive Director

Fathepuriya

* Sh. Kavya Arora Director

* Sh. Surendar K Sood Director

* Sh. Gurpreet Singh Brar Director * Up to 25.07.2013

OTHERS

* Mrs. Guneet Arora Wife of Sh. Kavya Arora, Director and Daughter in Law of Sh. Sanjeev Arora, Chairman-cum-Managing Director.

7. The Udyog Sahayak, Chandigarh has allotted 40 Acres of Land vide Letter No. US/337-U Dt. 22/04/94 in the name of the company. The sale deeds & possession of the above said land is with the company and its associate companies. Collector Land Acquisition, Department of Industries and Commerce, Punjab, Chandigarh had issued various demand notices being the enhanced compensation to be paid to the Land Owners. The farmers had filed the petition for price enhancement before the Hon'ble High Court of Punjab and Haryana, which had fixed the basic compensation of Rs.6.70 Lacs per Acre vide order dated 25.08.2005 instead of Rs.4.50 Lacs per Acre as awarded by reference court.

The farmers and Collector Land Acquisition, Punjab contested the above order of the Hon'ble High Court of Punjab and Haryana before the Hon'ble Supreme Court. The Hon'ble Supreme Court vide its order dated 25.03.2015 has decided the above matter and had affirmed the order of the Hon'ble High Court of Punjab and Haryana.

As soon as the demand will be raised against the company by the Collector Land Acquisition, Punjab, it shall be accounted for in the Books of Accounts.

8. Expenditure in Foreign Currency on Travelling is Rs. 83,189/- (P.Y Rs. 3,58,977/-).

9. Corresponding figures of previous year have been regrouped / rearranged wherever deemed necessary.


Mar 31, 2014

1. CONTINGENT LIABILITIES

Bank GuaranteeRs.183.66 Lacs (Previous Year Rs.183.66 Lacs) (Refer Note No.37)

2. Debit & Credit balances of the parties are subject to confirmation & reconciliation.

3. Insurance claims of Rs. 21675/-(Previous Year Rs.484240/-) are being accounted for on receipt basis.

32. In the opinion of the Board, all the Current Assets, Loans & Advances have a value on realization in the ordinary course of business equivalent to the amount at which they are stated except as expressly stated otherwise.

4. Segment Reporting

Segment reporting is not given as the company deals mainly in one segment and the disclosure requirements of Accounting Standards (AS)-17 on "Segment Reporting", issued by The Institute of Chartered Accountants of India are not applicable.

5. RELATED PARTIES DISCLOSURE

A) Related parties where control exists or with whom transactions have taken place during the year.

SUBSIDIARY COMPANIES

* Femella Fashions Limited.

* Catalina Bay USA Inc.

ASSOCIATED/ALLIED COMPANIES

* Ritesh International Ltd.- up to 25.07.2013

* Ritesh Spinning Mills Ltd.

* Kishan Chand & Co Oil Industries Ltd.-up to 25.07.2013

* Kamal Oil & Allied Industries (P) Ltd-w.e.f. 04.05.2013

* Ritesh Impex Private Ltd.

* H.B. Fibres Ltd.

6. The Udyog Shahik, Chandigarh has allotted 40 Acres of Land vide Letter No. US/337-U Dt. 22/04/94 in the name of the company. The sale deeds & possession of the above said land is with the company and its associate companies. However, there are pending cases against the company and its associate companies for increase in acquisition cost. If any payment has to be made by the company on this account, the same shall be accounted for on payment basis.

Collector Land Acquisition, Department of Industries and Commerce, Punjab, Chandigarh had issued various demand notices being the enhanced compensation to be paid to the Land Owners. The company had already made an appeal against this order and the matter has been decided by the arbitrator in favour of the company but the State Government has filed an appeal against the Arbitrator decision. However, if any liability arises on this account and payment has to be made by the company, the same will be accounted for on cash basis. However, the company has already given bank guarantee of Rs.181.66 Lacs (Previous year Rs.181.66 lacs) in favour of the Government of Punjab on this account.

The charges, if any for the conversion of land into mega project scheme will be accounted for on cash basis.

7. Expenditure in Foreign Currency on Travelling is Rs. 3,58,977/- (P.Y Rs. 4,89,751/-).

8. Corresponding figures of previous year have been regrouped / rearranged wherever deemed necessary.


Mar 31, 2013

1. CONTINGENT LIABILITIES

Bank Guarantee Rs. 181.66 Lacs (Previous Year Rs. 181.66 Lacs)

2. Debit & Credit balances of the parties are subject to confirmation & reconciliation.

3. Insurance claims of Rs. 484240/- (Previous Year Rs.NIL) are being accounted for on receipt basis.

4. During the previous year, the company had written off Rs. 6494815/- as "expenses amortization" being the deferred revenue expenditure as carried over from previous year.

5. The payment of remuneration made to the Mg. Director, Executive Director and other Directors are as under:

6. The Udyog Shahik, Chandigarh has allotted 40 Acres of Land vide Letter No. US/337-U Dt. 22/04/94 in the name of the company. The sale deeds & possession of the above said land is with the company and its associate companies. However, there are pending cases against the company and its associate companies for increase in acquisition cost. If any payment has to be made by the company on this account, the same shall be accounted for on payment basis.

Collector Land Acquisition, Department of Industries and Commerce, Punjab, Chandigarh had issued various demand notices being the enhanced compensation to be paid to the Land Owners. The company had already made an appeal against this order and the matter has been decided by the arbitrator in favour of the company but the State Government has filed an appeal against the Arbitrator decision. However, if any liability arises on this account and payment has to be made by the company, the same will be accounted for on cash basis. However, the company has already given bank guarantee of Rs.181.66 Lacs (Previous year Rs. 181.66 lacs) in favour of the Government of Punjab on this account.

The charges, if any for the conversion of land into mega project scheme will be accounted for on cash basis.

7. RELATED PARTIES DISCLOSURE

A) Related parties where control exists or with whom transactions have taken place during the year.

SUBSIDIARY COMPANIES

Femella Fashions Private Ltd. CatalinaBayUSAInc.

ASSOCIATED/ALLIED COMPANIES

o Ritesh International Ltd.

o Ritesh Spinning Mills Ltd.

o Kishan Chand & Co Oil Industries Ltd.

o Ritesh Impex Private Ltd.

o H.B. Fibres Ltd.

KEY MANAGERIAL PERSONNEL REPRESENTED ON THE BOARD

o Mr. Pran Arora Ex-Chairman*

o Mr. Sanjeev Arora Chairman cum

Managing Director o Mr. Rajiv Arora Director

o Mr. Roop Kishor Fathepuria Executive Director o Mr. Kavya Arora Director

o Mr. Surinder K Sood Director

*upto 09-10-2011 OTHERS

o Anita Arora Maximum Prop.-Mrs. Anita

Discount Retail Medical Arora, Wife of

Store Mr. Rajiv Arora,

Director

8. SEGMENT REPORTING

Segment reporting is not given as the company deals mainly in one segment and the disclosure requirements of Accounting Standards (AS)-17 on "Segment Reporting", issued by The Institute of Chartered Accountants of India are not applicable.

9. As per Collaboration Agreement dated 14.07.2006 read along with the addendum dated 11.01.2010 entered into with Ansal Properties & Infrstructure Ltd (herein after referred to as API L for joint development of land on Chandigarh Ludhiana Road. The company in lieu of various obligations under agreement entitled to agreed share of the built up area and of the plotted area. Under the agreement, the entire development and marketing expenses of the project was the responsibility of APIL Accordingly, expenses incurred in discharge of the obligation under the agreement and agreed share of revenue was, hitherto, recognised as expense/income. As per agreement dated 11.04.2012 read with the memorandum of understanding dated 28.01.2012 entered into between the company and APIL, the entire project with effect from 01.02.2012, Viz "Cut-off date" has been taken over by the company for agreed consideration comprising of reimburssement of expenses incurred by APIL on the development of project and the compensation amount. Accordingly from the "Cut-off date" entire revenue/ expenses from the project, including amount paid to APIL has been recognised in the books of accounts by the company as per percentage completion method.

10. In the opinion of the Board, all the Current Assets, Loans & Advances have a value on realization in the ordinary course of business equivalent to the amount at which they are stated except as expressly stated otherwise.

11. Expenditure in Foreign Currency on Travelling is Rs. 4,89,751/-(P.YRs. 5,72,167/-).

12. Corresponding figures of previous year have been regrouped / rearranged wherever deemed necessary.


Mar 31, 2012

1. CONTINGENT LIABILITIES

Bank Gurantee Rs.181.66 Lacs (Previous year Rs. 181.66 Lacs)

2. Debit & Credit balances of the parties are subject to confirmation & reconciliation.

3. Insurance claims of NIL (Previous Year Rs.24,998/-) are being accounted for on receipt basis.

4. During the year, the company had written off Rs. 6,494,815/- as "expenses amortization" being the deferred revenue expenditure as carried over from previous year.

5. The payment of remuneration made to the Mg. Director, Executive Director and other Directors are as under:-

6. The Udyog Shahik, Chandigarh has allotted 40 Acres of Land vide Letter No. US/337-U Dt. 22/04/94 in the name of the company and its associate companies. The sale deeds & possession of the above said land is with the company and its associate companies. However, there are pending cases against the company and its associate companies for increase in acquisition cost. If any payment has to be made by the company on this account, the same shall be accounted for on payment basis.

Collector Land Acquisition, Department of Industries and Commerce, Punjab, Chandigarh had issued various demand notices being the enhanced compensation to be paid to the Land Owners. The company had already made an appeal against this order and the matter has been decided by the arbitrator in favour of the company but the State Government has filed an appeal against the Arbitrator decision. However, if any liability arises on this account and payment has to be made by the company, the same will be accounted for on cash basis. However, the company has already given bank guarantee of Rs. 181.66 Lacs (Previous year Rs.181.66 lacs) in favour of the Government of Punjab on this account.

The charges, if any for the conversion of land into mega project scheme will be accounted for on cash basis.

7. RELATED PARTIES DISCLOSURE

A) Related parties where control exists or with whom transactions have taken place during the year.

SUBSIDIARY COMPANIES

Femella Fashions Private Ltd. Catalina Bay USA Inc.

ASSOCIATED/ALLIED COMPANIES

o Ritesh International Ltd.

o Ritesh Spinning Mills Ltd.

o Kishan Chand & Co Oil Industries Ltd.

o Ritesh Impex Private Ltd.

o H.B. Fibres Ltd.

KEY MANAGERIAL PERSONNEL REPRESENTED ON THE BOARD

o Sh. Pran Arora Ex.-Chairman*

o Sh. Sanjeev Arora Chairman-Cum-

Managing Director

o Sh. Rajiv Arora Director

o Sh. Roop Kishor Fathepuria Executive Director

o Sh. Surinder K Sood Director

o Sh. Kavya Arora Director

*Up to 09.10.2011

OTHERS

o Anita Arora Maximum Prop.-Mrs. Anita

Discount Retail Arora, Wife of

Medical Store Sh. Rajiv Arora,

Director

8. SEGMENT REPORTING

Segment reporting is not given as the company deals mainly in one segment and the disclosure requirements of Accounting Standards (AS)-17 on "Segment Reporting", issued by The Institute of Chartered Accountants of India are not applicable.

9. As per collaboration agreement dated 14.07.2006 read along with the addendum dated 11.01.2010 entered into with Ansal Properties & Infrastructure Ltd (hereinafter referred to as APIL for joint development of land on Chandigarh Ludhiana Road. The company in lieu of various obligations under agreement entitled to agreed share of the built up area and of the plotted area. Under the agreement, the entire development and marketing expenses of the project was the responsibility of APIL. Accordingly, expenses incurred in discharge of the obligation under the agreement and agreed share of revenue was, hitherto, recognized as expense/income. As per agreement dated 11.04.2012 read with the memorandum of understanding dated 28.01.2012 entered into between the company and APIL, the entire project with effect from 01.02.2012, Viz "Cut-off date" has been taken over by the company for agreed consideration comprising of reimbursement of expenses incurred by APIL on the development of project and the compensation amount. Accordingly from the "Cut-off date" entire revenue/ expenses from the project, including amount paid to APIL has been recognized in the books of accounts by the company as per percentage completion method.

10. In the opinion of the Board, all the Current Assets, Loans & Advances have a value on realization in the ordinary course of business equivalent to the amount at which they are stated except as expressly stated otherwise.

11. Expenditure in Foreign Currency on Traveling is Rs.5,72,167/-(Previous Year Rs.2,97,140/-).

12. Corresponding figures of previous year have been regrouped / rearranged wherever deemed necessary.

13. Till the year ended 31.03.2011, the company was using pre-revised Schedule VI to the Companies Act, 1956 for the preparation and presentation of its financial statements. During the year ended 31.03.2012, the revised Schedule

I notified under Companies Act, 1956, has become applicable to Company. The company has reclassified previous year figures to confirm to this year's classification. The adoption of revised Schedule VI does not impact recognition and measurement principles followed by preparation of financial statements. However, it significantly impacts presentation and disclosures made in the financial statements, particularly presentation of balance Sheet.


Mar 31, 2011

1. Insurance claims of Rs.24,998/- are being accounted for on receipt basis.

2. Debit & Credit balances of the parties are subject to confirmation & reconciliation.

3. During the previous year, the company had written off Personnel and Administrative Expenses related to ongoing Real Estate Project over a period of three years which in aggregate comes to Rs.1,29,89,630/- out of which 50% have been written off during the year as "expenses amortization" and balance carried forward.

4. The Earning per Share (EPS) in accordance with Accounting Standards (AS)-20 on "Earning per Share" issued by The Institute of Chartered Accountants of India is as under:

5. The Udyog Shahik, Chandigarh has allotted 40 Acres of Land vide Letter No. US/337-U Dt. 22/04/94 in the name of the company and its associate companies. The sale deeds & possession of the above said land is with the company and its associate companies. However, there are pending cases against the company and its associate companies for increase in acquisition cost. If any payment has to be made by the company on this account, the same shall be accounted for on payment basis.

Collector Land Acquisition, Department of Industries and Commerce, Punjab, Chandigarh had issued various demand notices being the enhanced compensation to be paid to the Land Owners. The company had already made an appeal against this order and the matter has been decided by the arbitrator in favor of the company but the State Government has filed an appeal against the Arbitrator decision. However, if any liability arises on this account and payment has to be made by the company, the same will be accounted for on cash basis. However, the company has already given bank guarantee of Rs.181.66 Lacs (Previous year Rs.181.66 lacs) in favor of the Government of Punjab on this account.

The charges, if any for the conversion of land into mega project scheme will be accounted for on cash basis.

6. Related Parties Disclosure

A) Related parties where control exists or with whom transactions have taken place during the year.

SUBSIDIARIES COMPANIES

· Femella Fashions Private Ltd.

· Catalina Bay USA Inc.

ASSOCIATED/ALLIED COMPANIES

o Ritesh International Limited

o Ritesh Spinning Mills Limited

o Kishan Chand & Co Oil Industries Limited

o Ritesh Impex Private Ltd

o H.B. Fibres Limited

7. Segment Reporting

Segment reporting is not given as the company deals mainly in one segment and the disclosure requirements of Accounting Standards (AS)-17 on "Segment Reporting", issued by The Institute of Chartered Accountants of India are not applicable.

8. In the opinion of the Board, all the Current Assets, Loans & Advances have valued on realization in the ordinary course of business equivalent to the amount at which they are stated except as expressly stated other wise.

9. The company has not received information from suppliers regarding their status under the Micro, Small and Medium Enterprises Development

Act, 2006 and hence disclosure relating to amounts unpaid as at the year end together with interest paid / payable under this Act have not been given.

10. Corresponding figures of previous year have been regrouped / rearranged wherever deemed necessary.

11. Additional information pursuant to Para 3 & 4 of part II of Schedule VI of the Companies Act, 1956.


Mar 31, 2010

1. Contingent Liabilities-

a) Bank guarantee of Rs.181.66 Lacs (P.Y. Rs. 170 Lacs)

b) Capital contract (net of Advance) Rs. NIL (P.Y. Rs. 3.32 Crore)

2. During the year under review, the company had forfeited a sum of Rs. 136.07 Lacs being the share application money received on convertible warrants and transfers the same to the Capital Reserve, being the option for conversion of warrants into equity shares of the company had not exercised by the warrant holders on the due date.

3. Insurance claims are being accounted for on receipt basis, if any.

4. Debit & Credit balances are subject to confirmation & reconciliation, if any.

5. During the year under review, the company has decided to write off the Personnel and Administrative Expenses related to ongoing Real Estate Project over a period of three years and transfer a sum of Rs. 1,29,89,630/- to Deferred Revenue Expenditure, effecting the profitability accordingly.

6. The Udyog Shahik, Chandigarh has allotted 40 Acres of Land vide Letter No. US/337-U Dt. 22/04/94. The sale deeds & possession of the above said land is with the company and its associate companies. However, there are pending cases against the company for increase in acquisition cost. If any payment has to be made by the company on this account, the same will be accounted for on cash basis.

Collector Land Acquisition, Department of Industries and Commerce, Punjab, Chandigarh had issued various demand notices being the enhanced compensation to be paid to the Land Owners. The company had already made an appeal against this order and the matter has been decided by the arbitrator in favour of the company but the State Government has filed an appeal against the Arbitrator decision. However, if any payment has to be made by the company on this account, the same will be accounted for on cash basis. However, the company has already given bank guarantee of Rs.181.66 Lacs (Previous year Rs.170.00 lacs).

The charges, if any for the conversion of land into mega project scheme will be accounted for on cash basis.

7. Related Parties Disclosure

A) Related parties where control exists or with whom transactions have taken place during the year.

SUBSIDIARIES COMPANIES

Femella Fashions Private Ltd. Catalina Bay USA Inc. ASSOCIATED/ALLIED COMPANIES

o Ritesh International Limited

o Ritesh Spinning Mills Limited

o Pentagon Finance Limited

o Kishan Chand & Co Oil Industries Limited

o Ritesh Impex Private Ltd

KEY MANAGERIAL PERSONNEL REPRESENTED ON THE BOARD

o Sh. Pran Arora Chairman

o Sh. Sanjeev Arora Managing Director

o Sh. Rajiv Arora Director

o Sh. Roop Kishor Fathepuria Director

o Sh. Surinder K Sood Director

8. Segment Reporting

Segment reporting is not given as the company deals mainly in one segment and the disclosure requirements of Accounting Standards (AS)-17 on "Segment Reporting", issued by The Institute of Chartered Accountants of India are not applicable.

9. The Company is not complying with the provisions of Section 383A of the Companies Act, 1956 regarding the appointment of Company Secretary.

10. The company has revised/modified the Income tax returns for the financial year 2006-07 and 2007-08. The tax already deposited by the company on the basis of revised income tax returns will be treated as advance tax deposited by the company.

11. In the opinion of the Board, all the Current Assets, Loans & Advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated except as expressly stated other wise.

12. The company has not received information from suppliers "regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosure relating to amounts unpaid as at the year end together with interest paid / payable under this Act has not been given.

13. Corresponding figures of previous year have been regrouped / rearranged wherever deemed necessary.

14. Additional information pursuant to Para 3 & 4 of part II of Schedule VI of the Companies Act, 1956.


Mar 31, 2009

1. Contingent Liabilities-

a) Bank guarantee of Rs. 170 Lacs

b) Capital contract (net of Advance) Rs. 3.32 Crore

2. Revision of Financial Statements

a) The global economy in general and the real estate industry in particular is passing through recession, which has resulted into financial meltdown. During the year under review and also in the earlier financial years ended 31.03.2007 and 31.03.2008, the Company had entered into various agreements to sell on pre launch basis, subject to necessary approvals from Punjab State Government and development by the Developer (viz. Ansal Township & Projects Ltd., since merged with Ansal Properties & Infrastructure Limited) of its real estate project to be constructed/developed on Companys land situated on Ludhiana- Chandigarh Road at Ludhiana for the development of Industrial and Residential Township Project titled as Mega Project/ Hampton Court as Industrial township consisting of Industrial and residential. This was to be developed by the developer and the Company was entitled to its share of the sale proceeds of the area to be developed and sold as per the agreement with the Developer. In accordance with the consistently followed accounting practice of the Company, sales revenue and profit thereon were recognized at the time of entering into such agreement to sell on mercantile basis. As is the practice in real estate industry and as per the Guidelines for Mega Projects by Punjab State Government, the payments could not have been collected till such time the Company signs the agreement with Punjab State Government. Due to delay in signing of the agreement with Punjab State Government, resulting in non commencement of the development of the project, slowdown in demand, liquidity crunch in real estate and fall in prices, the parties with whom sales had been affected were pressing hard the management of the Company to cancel the agreement to sell as the proposed project had become redundant/non-operational for the time being and other force majeure circumstances beyond the control of the Management. Considering the peculiarity of business and the overall interest of the Company, the management decided to reacquire the properties by mutually terminating the agreements to sell entered into in the year under review and in the earlier financial years ended 31.03.2007 and 31.03.2008. On the doctrine of Real Income and Relation Back basis, the cancellation effect should be affected in the year in which the sales and profits were originally recognized and not in the year in which the actual cancellation has taken place (that is the financial year under review). Accordingly, the Company has revised and recasted its financial statements for financial years ended 31.03.2007 and 31.03.2008, on the above mentioned principle. Consequently during the year under review, the sales return and reversal of profits are not reflected, though the cancellation of sales occurred during the year under review. The aggregate value of gross sales/revenue returns and profit reversal as mentioned above are Rs. 900.00 lacs and Rs. 833.55 lacs respectively for the financial year ended 31.03.2007 and Rs.8524.00 lacs and Rs.1687.81 lacs respectively for the financial year ended 31.03.2008.

However, for the purposes of publication under the Listing Agreement entered with the Stock Exchanges where the equity shares of the Company are listed, financial figures for the nine months period ended 31.12.2008, duly approved by the Board of Directors in their meeting held on 30.01.2009, have already been submitted showing the gross sales/ revenue of Rs.3770.52 Lacs (out of this sales of Rs.3699.00 Lacs on the basis of agreement to sell, which was cancelled along with the sales for the previous financial year 2006- 07 and 2007-08) and profit after tax of Rs.358.63 Lacs.

The Auditors of the Company do not concur with the above view of revising the financial statements of earlier years for the financial years ended 31.03.2007 and 31.03.2008 on the principle of Relation Back and Real Income, instead are of the opinion that the sales return and its consequence on the profit and loss account should be reflected in the financial year in which such sales return takes place (cancellation of agreements to sell) and not in the earlier years as done by the Company, and treated as a separate item in the year under review and disclosed as per the requirement of AS5 (Net profit or loss for the period, Separate Items and Changes in Accounting Policies). Accordingly in the opinion of the Auditors the sales return and reversal of profit thereon should be accounted/ reflected during the year under review and not in the earlier years as done by the Company.

b) The revised financial statements for the years ended 31-03.2007 and 31.03.2008 have already been approved by the Board of Directors at its meeting held on 30th September 2009. However, the revised financial statements for financial years 2006-07 & 2007-08 are yet to be adopted and approved by the shareholders. It is proposed to get the said revised financial statements for financial years 2006-07 & 2007-08 considered and adopted at the forthcoming Annual General Meeting, in substitution for the financial statements already adopted by the shareholders in the earlier Annual General Meeting held on 29.09.2007 and 26.09.2008 respectively, along with the financial statements for March 31, 2009. The act of revision of the Financial Statements for financial years 2006-07 and 2007-08 is in accordance with the General Circular No. 1/2003 (No. 17/75/ 2002-CI.V) dated 13-1-2003 issued by the Ministry of Finance and Company Affairs permitting revision of financial statements. The management had relied on the interpretation of the said circular that the proposed revision of the financial statements is in accordance with the letter and spirit of the said circular, thereby the revision of financial statement is in accordance with the provisions of the Companies Act, 1956.

The auditors do not concur with the above view of revising the financial statements of the earlier financial years 2006-07 and 2007-08, that a company cannot reopen and revise the accounts once adopted by the shareholders at Annual General Meeting, which opinion is also supported by the Institute of Chartered Accountants of India.

3. Insurance claims are being accounted for on receipt basis, if any.

4. Debit & Credit balances are subject to confirmation & reconciliation, if any.

5. During the year under review, the company has changed the method of accounting from mercantile to mixed regarding the providing of interest on unsecured loan resulting in the loss has been understated to the extent of Rs. 1,10,66,776/-.

6. The Udyog Shahik, Chandigarh has allotted 40 Acres of Land vide Letter No. US/337-U Dt. 22/04/94. The sale deeds & possession of the above said land is with the company and its associate companies. However, there are pending cases against the company for increase in acquisition cost. If any payment has to be made by the company on this account, the same will be accounted for on cash basis.

Collector Land Acquisition, Department of Industries and Commerce, Punjab, Chandigarh had issued various demand notices amounting to Rs.23,414,828/- being the enhanced compensation to be paid to the Land Owners. The company had already made an appeal against this order and the matter has been decidedbythe arbitrator in favour of the company but the State Government has filed an appeal against the Arbitrator decision. However, if any payment has to be made by the company on this account, the same will be accounted for on cash basis. However, the company has already given bank guarantee of Rs.170 Lacs.

7. Related Parties Disclosure

A) Related parties where control exists or with whom transactions have taken place during the year.

SUBSIDIARIES COMPANIES

Femella Fashions Private Ltd. Catalina Bay USA Inc.

ASSOCIATED/ALLIED COMPANIES

o Ritesh International Limited

o Ritesh Spinning Mills Limited

o Pentagon Finance Limited

o Kishan Chand & Co Oil Industries Limited

o Ritesh Impex Private Ltd

o H B Fibres Ltd

KEY MANAGERIAL PERSONNEL REPRESENTED ON THE BOARD

o Sh. Pran Arora Chairman

o Sh. Sanjeev Arora Managing Director

o Sh. Rajiv Arora Director

o Sh. Roop Kishor Fathepuria Director

o Sh. Surinder K Sood Director

8. Segment Reporting

Segment reporting is not given as the company deals mainly in one segment and the disclosure requirements of Accounting Standards (AS)-17 on "Segment Reporting", issued by The Institute of Chartered Accountants of India are not applicable.

9. The Company is not complying with the provisions of Section 383A of the Companies Act, 1956 regarding the appointment of Company Secretary.

10. Unsecured loan from Corporate includes a sum of Rs. 125.00 Lacs raised against the DLF apartment allotted in the magnolias DLF Golf Link Project and also guaranteed by the Managing Director of the Company.

11. The company has yet to revise/modify the Income tax returns for the financial year 2006- 07 and 2007-08. However, the tax yet to deposit on the basis of original returns will be null and void on the filing of revised returns. The tax already deposited by the company on the basis of revised income tax returns will be treated as advance tax deposited by the company.

12. In the opinion of the Board, all the Current Assets, Loans & Advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated except as expressly stated other wise.

13. The company has not received information from suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosure relating to amounts unpaid as at the year end together with interest paid / payable under this Act has not been given.

14. During the previous year the Company has issued partly paid Convertible Warrants, which will be converted into equity within the period of 18 months from the date of its allotment.

15. Corresponding figures of previous year have been regrouped / rearranged wherever deemed necessary.

16. Additional information pursuant to Para 3 & 4 of part II of Schedule VI of the Companies Act, 1956.

 
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