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Notes to Accounts of Ruby Mills Ltd.

Mar 31, 2015

1.1 Balance with Central Excise Authorities represents the amount of unutilised credit of additional duty of Central Excise claimed as refund by the Company. The Central Excise Department rejected the refund of this amount against which the Company filed an appeal before the High Court of Bombay on March 29, 2007 which was subsequently admitted by the Honorable High Court on March 25, 2008.

1.2a. In an earlier year, the Company entered into a Development Agreement ("the DA") with a Developer whereby the Company granted the development rights to develop approximately 36,000 square metres of constructed area ("the Development Rights") on 12,204 square metres out of its Freehold Land at Dadar("the said property").

b. In terms of the DA and further agreements / understandings between the Company and the Developer, any cost of construction incurred by the Company and such further costs (including interest on borrowings for the said construction) that may be incurred by the Company forthe development ofthe above referred to area is to be reimbursed by the Developer. Accordingly, the costincurred by the Company upto March 31,2015 for the construction (net of amounts received from the developer in terms of the DA) amounting toRs. 461,92,99,493 (PreviousYearRs. 459,04,42,120)isshownas"Duefromdeveloper"underNote14andRs. 225,00,00,000(Previous YearRs. 220,00,00,000)is shown as "Advances recoverable in cash or in kind orfor value to be received" under Note 19.

c. Subsequently, the Company has received from the Government of Maharashtra, the approval for the development of additional constructed area of approximately 5,000 square metres over and above the area covered under the DA ; the Developer and the Company have agreed that such additional area is to be owned by the Company. The related cost of such area to be owned by the Company is mutually agreed upon with the Developer on an appropriate basis.Ason March 31,2015, the Company has capitalised the cost (which includes the cost of common area facilities) ofRs. NIL (Previous YearRs. NIL), under the head "Buildings" based on receipt of the Occupation Certificate for such additional area and has entered into a Leave and License Agreement with a party in respect of the said constructed area. The Company has also carried forward the amount of Rs. 23,24,88,599 (Previous YearRs. 23,18,47,025) in Capital Work-in-progress. The said cost may be adjusted / increased when the Developer completes the construction ofthe total area including the construction of the common areas.

d. The proportionate carrying cost of 12,204 square meters of land of Rs. 92,912 (Previous YearRs. 92,912), in respect of which the Development Rights are granted, is shown as "Freehold Land (underdevelopment)" under "Fixed Assets" in Note 12.

e. Further, the consideration forthe Grant ofthe Development Rights is based on the specified percentage ofthe revenue received by the Developer (in terms ofthe DA in force), irrespective ofthe completion of construction / handing overthe possession ofthe said constructed area to the Purchasers/Licensees and reflected as "Grant of Development Rights" in the Statement of Profit and Loss. The DA does not contemplate a transfer or an intention to transfer the ownership or possession ofthe said property at present and the same continuesto remain with the Company.

1.3 Other Loans and Advances are in the nature of Advances recoverable in cash or in kind or for the value to be received which include

Sales tax setoff receivable, PF paid under protest and Prepaid expenses.

2.1 During the year, the Company has paid in aggregate Rs. 4,74,00,000 as Managerial Remuneration to its executive Chairman, Managing Director, Joint Managing Director and Executive Director.The Company has been legally advised that the said payment is within the limit prescribed under the provisions of section 197 and 198 read with Schedule V to the Companies Act, 2013. However, out of abundant caution, the Company has applied for the approval of the Central Government, which is pending.

3.1 Contingent Liabilities : (to the extent not provided for)

I. Matters under disputes / appeals :

a. Claims against the Company by Ex-employees pending in Labour Court not acknowledged as debts

unascertainable unascertainable

b. Income Tax 8,46,51,302 8,50,71,817

c. Excise Duty / Service Tax 3,65,36,454 3,66,86,454

d. Amount paid under protest in respect of Employees' PF under section 8F of EPF Act, 1952 15,65,934 15,65,934

e. Property Tax under dispute 4,34,52,348 3,87,72,467

ii. Bank Guarantees 2,22,93,745 2,38,86,800 ( In Lieu of Cash Deposits)

4. While making the Provision for Current Tax, the Company has relied on the opinion of an expert for the tax treatment of gains earned from the Grant of Development Rights and availability of certain tax benefits in respect of the capital expenditure incurred on shifting of the industrial undertaking, asperthe provisions of the Income-tax Act, 1961.

4.1 Relationships :

I Key Managerial Personnel :

i. Shri Manaharlal C. Shah (Executive Chairman)

ii. Shri Hiren M. Shah (Managing Director)

iii. Shri Bharat M. Shah (Jt. Managing Director)

iv. Shri Viraj M. Shah (Executive Director)

v. Shri Purav H. Shah (President)

vi. Shri Rishabh V. Shah (Vice President)

II Relatives of Key Managerial Personnel :

i. Smt. Aruna M. Shah

ii. Shri Rishabh V Shah

III Enterprise on which Key Managerial Personnel has Control :

i. Manubhai & Sons Investment Co. Pvt. Ltd.

ii. Hiren Bros. Investment Co. Pvt. Ltd.

iii. M.C. Shah & Sons Investment Co. Pvt. Ltd.

iv. Risha Dying & Printing Pvt. Ltd

v. Ruby Sales & Services Pvt. Ltd.

5. Disclosure in accordance with Accounting Standard (AS 19) on Accounting for Leases :

5.1 Where the company is a Lessee :

i. The Company has taken motor cars under operating leases. These are generally cancellable and range between three and five years and are renewable by mutual consent on mutually agreeable terms.

ii. Lease / Rent payments are recognised in the Statement of Profit and Loss as 'Rent' under 'Other Expenses' in Note 27.

iii. Future minimum lease rental payable is as under :


Mar 31, 2013

1.1 Where the Company is a Lessor :

i. The Company has given premises under leave and licence agreements under operating lease. These are generally cancellable and are for 14 months to 9 years and are renewable by consent on mutually agreeable terms. Licence Fees are recognised in the Statement of Profit and Loss under Note 21.

ii. Future minimum lease rental receivable is as under :

2. Previous year''s figures, wherever necessary, have been regrouped / reclassified to conform to the current year''s presentation.


Mar 31, 2012

1. Share Capital:

1.1 Rights, preferences and restrictions :

i. The Company has only one class of shares referred to as equity shares having par value of Rs. 10. Each holder of equity shares Is entitled to one vote per share.

ii. The Company declares and pays dividend In Indian Rupees. The dividend proposed by the Board of Directors Is subject to the approval of the Shareholders In the ensuing Annual General Meeting. The Board of Directors, In their meeting on August 14,2012, proposed a final dividend of Rs. 5 per equity share. The proposal is subject to the approval of shareholders at the Annual General Meeting. The total dividend appropriation for the year ended March 31,2012 amounted to Rs. 2,42,90,000 including corporate dividend tax of Rs. 33,90,000. During the year ended March 31, 2011, the amount of per share dividend recognised as distribution to equity shareholders is Rs. 5. The Dividend appropriation for the year ended March 31, 2011 amounted to Rs. 2,43,71,229 including corporate dividend tax of Rs. 34,71,229.

iii. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

2. Long-term Borrowings :

2.1 Nature of Security and Terms of Repayment of Long-term Borrowings (including of Current maturities shown in Note 10):

3. Short-term Borrowings:

3.1 Cash Credit Facilities are secured by :

i. Bank of India - Rs. 11,96,75,067

a. First pari passu charge on Current Assets (including Stock and Book Debts)

b. Second pari passu charge on residual value of Fixed Assets.

c. Personal guarantee of Directors of the Company.

ii. State Bank of India - Rs. 90774092 : Bank of Baroda Rs. 305,82,455

a. First pari passu charge on entire Current Assets, both present and future of the Company.

b. Second pari passu charge on Land and Building and Plant and Machinery on Company's Assets at Dhamini and Kharsundi.

c. Personal guarantee of Directors of the Company.

4. Short-term Provisions :

4.1 While making the Provision for Current Tax, the Company has relied on the opinion of an expert for the tax treatment of the gains earned from the grant of the Development Rights and availability of certain tax benefits in respect of the capital expenditure incurred on shifting of the industrial undertaking, as per the provisions of the Income- tax Act, 1961.

5. Long-term Loans and Advances :

5.1 The balance with Central Excise Authorities Includes Rs. 96,37,761 (Previous Year Rs. 96,37,761), being the amount of unutilised credit of additional duty of Central Excise claimed as refund by the Company. The Central Excise Department rejected the refund of this amount against which the Company filed an appeal before the Honourable High Court of Bombay on March 29,2007 which is subsequently admitted by the Honourable High Court on March 25,2008.

5.2

a. "In an earlier year, the Company entered into a Development Agreement ("the DA") with a Developer whereby the Company granted the development rights to develop approximately 36,000 square metres of constructed area ("the Development Rights") on 12,204 square metres out of its freehold land at Dadar ("the said property").

b. In terms of the DA and further agreements/understandings between the Company and the Developer, any cost of construction incurred by the Company and such further costs (including interest on borrowings for the said construction) that may be incurred by the Company for the development of the above referred to area is to be reimbursed by the Developer. Accordingly, the cost incurred by the Company upto March 31,2012 for the construction (net of amounts received from the developer in terms of the DA) amounting to Rs. 576,13,19,136 (Previous Year Rs. 478,97,16,403) is shown as "Due from developer" under Long-term Loans and Advances (Refer Note 14).

c. Subsequently, the Company has received from the Government of Maharashtra, the approval for the development of additional constructed area of approximately 5,000 square metres over and above the area covered under the DA; the Developer and the Company have agreed that such additional area is to be owned by the Company. The related cost of such area to be owned by the Company is mutually agreed upon with the Developer on an appropriate basis. As on March 31,2012, the Company has capitalised the cost (which includes the cost of common area facilities) of Rs. NIL (Previous Year Rs. 40,04,63,254), under the head "Buildings" based on receipt of the Occupation Certificate for such additional area and has entered into a Leave and License Agreement with a party in respect of the said constructed area. The Company has also carried forward the amount of Rs. 18,99,75,613 (Previous Year Rs. 15,38,88,533) in Capital Work In Progress. The said cost may be adjusted/increased when the Developer completes the construction of the total area including the construction of the common areas.

d. The proportionate carrying cost of 12,204 square meters of land of Rs. 92,912 (Previous Year Rs. 92,912), in respect of which the Development Rights are granted, is shown as "Freehold Land (under development)" under "Fixed Assets" in Note 10.

e. Further, the consideration for the Grant of the Development Rights is based on the specified percentage of the revenue received by the Developer (in terms of the DA) from the Purchasers/Licensees, etc. irrespective of the completion of construction/handing over the possession of the said constructed area to the Purchasers/Licensees and reflected as "Grant of Development Rights" in the Statement of Profit and Loss. The DA does not contemplate a transfer or an intention to transfer the ownership or possession of the said property at present and the same continue to remain with the Company.

5.3 Other Loans and Advances are in the nature of Advances recoverable in cash or in kind or for the value to be received which include Duty Drawback, Export Incentives receivable, Sales tax set off receivable, PF paid under protest and Prepaid expenses.

6. Short-term Loans and Advances :

6.1 Other Loans and Advances are in the nature of Advances recoverable in cash or in kind or for the value to be received which include Prepaid expenses and Advances to Employees.

7. Revenue From Operations :

7.1 During the year under review, the Company has provided services of giving part of Office Building on Leave and Licence basis.

8. Other Income:

8.1 The Company has relied on the opinion of an expert for the tax treatment of the gains earned from the Grant of Development Rights and availability of certain tax benefits in respect of the capital expenditure incurred on shifting of the industrial undertaking, as per the provisions of Income-tax Act, 1961. The provision for Current tax is made in accordance thereof.

9. Finance Costs:

9.1 Interest on Term Loans - Under TUFS is after reducing:

a. Interest Subsidy of Rs. 4,28,99,474 (Previous Year Rs. 5,25,48,120)

b. Reimbursement of excess interest charged of Rs. 1,93,22,362 (Previous Year Rs. NIL)

10. Contingent Liabilities and Commitments:

As At As At March 31, 2012 March 31, 2011 Rs. Rs.

10.1 Contingent Liabilities : (to The Extent Not Provided For)

I. Matters under disputes/appeals :

a. Claims against the Company by Ex-employees pending in Labour Court not acknowledged as debts Amount Amount unascertainable unascertainable

b. Amount claimed by Bank as Term Loan Pre-payment charges including interest thereon not acknowledged as debt. 1,85,24,585 NIL

c. Income Tax (Amount deposited Rs. 20 lakhs (Previous Year Rs. NIL)) 6,76,69,000 6,96,69,000

d. Excise Duty/Service Tax 3,67,63,000 3,67,63,000

e. Amount paid under protest in respect of Employees' PF under section 8F of EPF Act, 1952 15,65,934 15,65,934

f. Water Charges under dispute 38,37,075 27,25,369

ii. Bank Guarantees (In Lieu of Cash Deposits) 1,21,10,300 1,32,09,100

10.2 Commitments :

i. Related to contracts :

a. Estimated amount of contracts remaining to be executed on capital account 13,32,88,641 11,54,30,347

Less: Advances 4,12,36,764 1,11,98,853

Net Estimated Amount 9,20,51,877 10,42,31,494

b. In addition, commitment of share of construction costs and related expenses for 13,000 square feet under a project. Amount Amount unascertainable unascertainable

ii. Other Commitments NIL NIL

11. Disclosure In Accordance With Accounting Standard (as 15) On Employee Benefits:

11.1 The estimate of future competation increases considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors.

11.2 Relationships:

I Key Managerial Personnel:

i. Shri Manaharlal C. Shah (Executive Chairman)

ii. Shri Hiren M. Shah (Managing Director)

iii. Shri Bharat M. Shah (Jt. Managing Director)

iv. Shri Viraj M. Shah (Executive Director)

v. Shri PuravH. Shah (President)

II Relatives of key Managerial Personnel:

i. Smt. Aruna M. Shah ii. Shri Rishabh V. Shah

III Enterprise on which key Managerial Personnel has Control:

i. Manubhai & Sons Investment Co. Pvt. Ltd.

ii. Hiren Bros. Investment Co. Pvt. Ltd.

iii. M C Shah & Sons Investment Co. Pvt. Ltd.

iv. Risha Dying & Printing Pvt. Ltd

v. Ruby Sales & Services Pvt. Ltd.

12. Disclosure in Accordance with Accounting Standard (as 19) on Accounting for Leases :

12.1 Where the Company is a Lessee:

i. The Company has taken motor cars under operating leases. These are generally cancellable and range between three and five years and are renewable by mutual consent on mutually agreeable terms.

ii. Lease/Rent payments are recognised in the Statement of Profit and Loss as 'Rent' under 'Other Expenses' in Note 27.

12.2 Where the Company is a Lessor:

i. The Company has given premises under leave and licence agreements under operating lease. These are generally cancellable and are for 14 months to 9 years and are renewable by consent on mutually agreeable terms. Licence Fees are recognised in the Statement of Profit and Loss under Note 21.

13. The balances of Trade Receivables and Trade Payables as at March 31st, 2012 are subject to confirmation/reconciliation wherever applicable.


Mar 31, 2011

As at As at

March 31, 2011 March 31, 2010

Rupees Rupees

b) Contingent Liabilities not provided for :

i) Bank Guarantees (In Lieu of Cash Deposits) 1,32,09,100 1,31,49,675

ii) Disputed liability in respect of Income Tax demand (including interest) matters under appeal. 6,96,69,000 6,31,26,000

iii) Disputed liability in respect of Excise Duty matters under appeal (Amount deposited Rs. NIL) 3,67,63,000 3,67,63,000

iv) Claims by Ex-employees pending in labour court Amount unascertainable Amount unascertainable

v) Disputed Liability paid under protest in respect of Employees' PF under section 8F of EPF Act, 1952 15,65,934 NIL

2) The balance of Sundry Debtors and Sundry Creditors as at March 31, 2011 are subject to confirmation / reconciliation, where applicable.

3) The balance with Central Excise Authorities includes Rs.96,37,761 being the amount of unutilised credit of additional duty of Central Excise claimed as refund by the Company. The Central Excise Department had rejected the refund of this amount against which the company had filed an appeal before the Honourable High Court of Bombay on March 29, 2007 which is subsequently admitted by the Honourable High Court on March 25, 2008.

b) The estimate of future compentation increases considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors

4) a) i) The Company has entered into a Development Agreement ("the DA") with a Developer whereby the Company has granted the development rights to develop approximately 36,000 square metres of constructed area ("the Development Rights") on 12,204 square metres out of its freehold land at Dadar ("the said property").

ii) In terms of the DA and further agreements/undertakings between the Company and the Developer, since the Developer is to reimburse the cost of construction incurred by the Company and such further costs (including interest on borrowings for the said construction) that may be incurred by the Company, the cost incurred upto March 31, 2011 for construction of Information Technology ("IT/ITES") Park (net of amounts received from the developer in terms of DA) amounting to Rs.478,97,16,403 (Previous year Rs. 398,88,53,108 ) is shown as "Due from developer" under "Loans and Advances" in Schedule 11.

iii) The proportionate carrying cost of 12,204 square metres of land of Rs. 92,912 (Previous year Rs. 92,912), in respect of which the Development Rights are granted, is shown as "Freehold Land (under development)" under "Fixed Assets" in Schedule '5'.

iv) Further, the consideration for the Grant of the Development Rights is based on the specified percentage of the revenue received by the Developer (in terms of the DA) from the Purchasers/Licencees, etc. irrespective of the completion of construction/handing over of the possession of the said constructed area to the Purchasers / Licensees and reflected as "Grant of Development Rights" in the Profit and Loss Account. The DA does not contemplate a transfer or an intention to transfer the ownership or possession of the said property at present and the same continue to remain with the Company.

b) The Company has received from the Government of Maharashtra the approval for the development of an additional constructed area of approximately 5000 square metres over and above the area covered under the DA; the Devel- oper and the Company have agreed that such additional area shall be owned by the Company. The related cost of such area to be owned by the Company is mutually agreed upon with the Developer on an appropriate basis. As on March 31, 2011, the Company has capitalised the cost of Rs. 40,04,63,254 (which includes the cost of common area facilities) under the head "Buildings" based on receipt of the Occupation Certificate and has entered into a Leave and License Agreement with a party in respect of the said constructed area. The Company has also carried forward an amount of Rs. 15,38,88,533 in Capital Work In Progress. The said cost shall be increased when the Developer completes the construction of the total area including the construction of the common areas.

5) While making the Provision for Current Tax, the Company has relied on the expert opinion for the tax treatment of the gains earned from the grant of the Development Rights and availability of certain tax benefits in respect of the capital expenditure incurred on shifting of the industrial undertaking, as per the provisions of the Income Tax Act, 1961.

6. Disclosure on Lease as per Accounting Standard 19 on "Accounting for Leases":

a Where the company is the lessee:

i) The Company has taken residential & office premises under leave & licence agreements and car under oper- ating lease. These are generally not non-cancellable and are for 11 to 18 months and are renewable by mutual consent on mutually agreeable terms.

ii) Lease/Rent payments are recognised in the Profit & Loss Account under 'Rent Account' in Schedule 19.

iv) Under all the agreements, refundable interest free deposit has been given.

v) Such agreement provide for increase in rent.

vi) All the agreements provide for an termination by either party with a notice which varies from month to six months.

b. Where the Company is a Lessor:

i) The Company has given premises under leave and licence agreements under operating lease. These are generally not non-cancellable and are for 11 to 33 months and are renewable by consent on mutually agreeable terms.

iii) Under all the agreements, refundable interest free deposit has been taken.

iv) Such agreement provide for increase in rent.

v) All the agreements provide for early termination by either party with a notice period which varies from 1 month to 6 months.

7) The Company has entered into an agreement on May 27, 2011 with the workers in Processing, Folding and Engineering Departments at Dadar Unit for the purposes of Voluntary Retirement. The total commitment on this account is Rs.12,60,45,615/-.

8) Figures for the previous year have been regrouped to confirm with current year's grouping.

 
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