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Notes to Accounts of Runeecha Textiles Ltd.

Mar 31, 2015

1. Background

Runeecha Textiles Limited (herein referred to as "the Company") is a manufacturer of 100% cotton yarn and grey fabric. Mr. Pradeep Jain and his Associates are the promoters of the Company. The Company's manufacturing facilities are located at Jagdishpur (Uttar Pradesh). The accompanying financial statements reflect results of activities undertaken by the Company during the year ended March 31, 2015. The shares of the Company are listed at The Bombay Stock Exchange Limited and The Calcutta Stock Exchange Limited.

2. Terms/rights attached to equity share Equity shares

Voting

Each holder of equity share is entitled to one vote per share held.

Dividends

The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in ensuing Annual General Meeting, except in the case where interim dividend is distributed. The company has not declared any dividend in current and previous financial year.

Liquidation

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

3.Preference shares

Voting

Prefrence share holders do not carry any voting right.

Dividend

The Company shall pay preferential dividend @ 16% per annum on the optionally convertible cumulative preference shares subscribed by the investor from the date of allotment. The investor shall have the option to convert (either fully, partly or none) the accumulated unpaid dividend into equity shares at par in the ratio of 1:1.

Liquidation

In the event of liquidation of the Company, the holders of preference shares shall be entitled to receive all of the remaining assets of the Company, after distribution of all preferential amounts, if any and before payment to equity shareholders. Such distribution amounts will be in proportion to the number of preference held by the shareholders upto the extent of agreed conversion amount of such shares.

4.Term loan from Bank

i) Secured against -

a) First charge on land situated at A-3, Sector-22, Jagdishpur Industrial Area, Jagdishpur, Distt. Amethi-227 817 (UP).

b) Entire fixed assets situated at A-3, Sector-22, Jagdishpur Industrial Area, Jagdishpur, Distt. Amethi-227 817 (UP).

c) Personal Guarantee of Mr. Pradeep Jain (Managing Director) and Mrs. Usha Jain (Director).

d) Collateral security: Equitable mortgage of house property in the name of Mr. Pradeep Jain (Manging Director) valued around Rs.30.2 million and second pari-passu charge over the entire current assets of the Company including raw material, WIP, FG, Chemicals, stores/ spares not relating to plant both present and future.

ii) Term loan from bank carries interest rate of Allahabad bank base rate 0.25% ranging from 10.20% to 10.50%. The loan is repayable in pre-scheduled 28 quarterly instalments commencing from quarter ending December 31, 2013.

iii) For current maturities of long term borrowings refer note 8

5. (i)Secured against charge over entire current assets of the Company including stock of raw material, work in process, finished goods, stores and spares, book debts, receivables and other current assets of the Company, both present and future.Collateral security: Equitable mortgage of house property in the name of Mr. Pradeep Jain (Manging Director) valued around Rs. 30.2 million and Second Pari-passu charge on the entire factory land/ Building (33673 sq meter), other fixed assets of the Company, both present and future.

ii) Working capital loan from bank carries interest rate of Allahabad Bank base rate 0.25% per annum. ranging from 11.25% to 11.50%.

iii) The unsecured loans taken from various parties including related parties are interest free. The said loans are payable on demand.

6. Contingent liabilities

Amount in Rs. Year ended Year ended March 31, 2015 March 31, 2014

Claims against the Company not acknowledged as debts Nil Nil

7. Commitments

There are no outstanding capital commitments and other material commitments as at date of the Balance Sheet for the year ended March 31, 2015 and March 31, 2014.

8. The Company has settled the litigation with State Trading Corporation (STC) for outstanding loan amount of Rs. 5,634,829 which was pending before Honorable High Court of Mumbai. The court has ordered the settlement at Rs. 10,000,000 including interest. Accordingly, the company has made payment for outstanding loan amount of Rs.5,634,829 along with the interest amounting Rs.4,365,171.

9. During the financial year 2008-09, the Company revalued its land and factory buildings on the basis of report on Techno Economic Feasibility conducted by Northern India Textile Research Association (NITRA) in May 2008 in which the value of these fixed assets have been taken on the basis of its valuation report of assets of the Company conducted by NITRA which was also relied upon by the banks for the purpose of One Time Settlement (OTS). The original cost of land Rs.1,374,859 has been revalued at Rs.74,833,000 and the factory building with original cost ofRs. 69,396,490 has been revalued at Rs. 81,198,366. The difference between the revalued figures and the book value of the revalued assets amounting Rs. 73,458,141 was transferred to Revaluation Reserve in respect of Land and Rs.11,801,876 in respect of factory buildings, totalling to Rs.85,260,017. In the financial year 2012-13, the Company revalued its land and factory building. The revaluation has been carried out by Government approved independent valuer, M/s Karuna Associates, through its report dated May 10, 2012 issued to Allahabad Bank. The land has been revalued to Rs.168,365,000 and the factory building has been revalued to Rs. 82,059,200. The difference between the revalued figures and the net book value of the revalued assets amounting Rs.93,532,000 was transferred to Revaluation Reserve in respect of land and Rs. 48,053,507 in respect of factory building, totalling to Rs. 141,585,507.

In the financial year 2013-14, the Company revalued its plant and machinery. The revaluation has been carried out by Government approved independent valuer, Anmol Sekhri Consultant Private Limited, through its report dated November 5, 2014. The plant and machinery was revalued at Rs. 391,863,925. The difference between the revalued figures and the net book value amounting Rs.299,337,149 was transferred to revaluation reserve.

Further, in accordance with the provisions of AS-10 and guidance note on Schedule II issued by ICAI, the amount equivalent to additional depreciation on account of revaluation of building and plant and machinery amounting Rs. 1,889,248 and Rs. 22,532,761 respectively has been transfered to general reserve from revaluation reserve.

For the financial year 2013-2014, depreciation was provided with reference to the total value of the fixed assets as appearing in the accounts after the revaluation. Additional depreciation as a consequence to the revaluation of buildings amounting Rs.1,999,170 had been adjusted against Revaluation Reserve. (Refer note 9A regards Tangible asset and note 4.1 with regards to revaluation reserve)

10. Employee benefit obligations

The Company has in accordance with the Accounting Standard-15 'Employee Benefits' has calculated the various benefits provided to employees as under:

11. Segment reporting

The disclosure as required under Accounting Standard-17 "Segment Reporting" as notified under section 133 of the Companies Act, 2013 read with rule 7 of the Company (Accounts) Rules, 2014 has not been provided as the company deals in one business segment, namely manufacturing of grey cloth and fabric. Currently, there are no reportable geographical segments.

12. Leases

The company is a lessee under the cancellable operating lease in respect of its office premises. Rental expense for operating lease for the year ended March 31, 2015 and March 31, 2014 was Rs.1,446,020 and Rs. 1,365,480. The Company has not executed any non-cancellable operating leases.

13. Related party disclosure

The disclosure as required by the Accounting Standard -18 (Related Party Disclosure) are given below:

(a) Names of related parties:

(i) Key Management Personnel ('KMP') Mr. Pradeep Jain

Mrs. Pooja Sabharwal

(ii) Other directors with whom there are transations Mrs. Usha Jain

(Wife of Mr. Pradeep Jain)

(ii) Relative of KMP Mrs. Prerna Jain

(Daughter of Mr. Pradeep Jain)

14. As at March 31,2015, the accumulated losses of the Company have exceeded the net worth of the Company (excluding revaluation reserves), operation of the company has been minimal in last one year, there have been defaults in repayment of loan and interest thereon to bank and delays in the payment of statutory dues. There has been cash crunch in the financial year for which the company is in advance stage of discussion with certain investors for working capital assistance and equity infusion in near future for which in principle approval is in place and the formalities of creation of charge, documentation is in progress. The company has orders from customers and post execution of necessary formalities the company will be able to start its operations. Accordingly, the management believes that the Company will have sufficient funds to meet its operational requirements and sufficient business in future and accordingly, the financial statements for the year ended March 31, 2015 have been prepared on a going concern basis.

15. During the year, the Company had written back trade payables of Rs. 112,722 (previous year Rs. 2,166,570 ) and salary payable of Rs. 30,048 (Rs. 2,594,969 previous year) as the same were outstanding for a long duration and in the opinion of management the same were not considered to be payable by the Company. The amount of liabilities written back in this regard have been included as a part of other income in the Statement of Profit and loss. In the opinion of the management other liabilities were good and considered payable in the normal course of business. (Refer note 17 with regards to other income ( Liabilities no longer required written back)

16. In accordance with Accounting Standard (AS) 22, "Accounting for Taxes on Income" the Company has evaluated deferred tax assets/liabilities on the balance sheet date. No net deferred tax assets have been recognised as at the balance sheet date as no conclusive evidence of future profits is available. Deferred tax on brought forward losses/unabsorbed depreciation has not been recognized in absence of virtual certainty of future taxable profits. 17. The Company in 2008 had issued 2,500,000 optionally convertible cumulative preference shares to SIDBI Venture Capital Limited ("SIDBI") for a consideration of Rs.25,000,000. In terms of the Shareholders' Subscription Agreement dated July 22, 2008, SIDBI had the option to either redeem such preference shares at agreed value or have these converted into equity shares. Such redemption or conversion was to be completed in 8 equal installments commencing from September 1, 2010. The Company has approached SIDBI for evaluating various exit options. Subsequent to the balance sheet date, SIDBI has informed that they have extended the time period of settlement of OCCPs upto 30th September 2015 on the same terms and conditions as approved earlier via their letter no. 48/SGF(RTL) dated February 7, 2013 . (Refer note 3 with regards to share capital).

18. During the year, pursuant to a resolution passed by the Board in its meeting held on December 11, 2013 and approval of Calcutta Stock Exchange Limited via Letter No. CSE/LD/8536/2014 dated April 11, 2014 the company has forfeited 481,400 equity shares.

19. Previous year's figures have been regrouped/reclassified where necessary to conform to this year's classification.






Mar 31, 2014

1. Background

Runeecha Textiles Limited (herein referred to as "the Company") is a manufacturer of 100% cotton yarn and grey fabric. Mr. Pradeep Jain and his Associates are the promoters of the Company. The Company''s manufacturing facilities are located at Jagdishpur (Uttar Pradesh). The accompanying financial statements reflect results of activities undertaken by the Company during the year ended March 31, 2014. The shares of the Company are listed at The Bombay Stock Exchange Limited and The Calcutta Stock Exchange Limited.

2. Contingent liabilities

Amount in Rs. Year ended Year ended March 31, 2014 March 31, 2013

Claims against the Company not acknowledged as debts Nil Nil

3. Commitments

There are no outstanding capital commitments and other material commitments as at date of the Balance Sheet for the year ended March 31, 2014 and March 31, 2013.

4. The Company has settled the litigation with State Trading Corporation (STC) for outstanding loan amount of Rs. 5,634,829 which was pending before Honorable High Court of Mumbai. The court has ordered the settlement at Rs. 10,000,000 including interest. Accordingly, the amount of interest payable by the Company has been provided in the book of accounts of current year as an adjusting event.

5. During the financial year 2008-09, the Company revalued its land and factory buildings on the basis of report on Techno Economic Feasibility conducted by Northern India Textile Research Association (NITRA) in May 2008 in which the value of these fixed assets have been taken on the basis of its valuation report of assets of the Company conducted by NITRA which was also relied upon by the banks for the purpose of One Time Settlement (OTS). The original cost of land Rs. 1,374,859 has been revalued at Rs. 74,833,000 and the factory building with original cost of Rs. 69,396,490 has been revalued at Rs. 81,198,366. The difference between the revalued figures and the book value of the revalued assets amounting Rs. 73,458,141 was transferred to Revaluation Reserve in respect of Land and Rs. 11,801,876 in respect of factory buildings, totalling to Rs. 85,260,017. In the previous financial year, the Company revalued its land and factory building.The revaluation has been carried out by Government approved independent valuer, M/s Karuna Associates, through its report dated May 10, 2012 issued to Allahabad Bank. The land has been revalued to Rs. 168,365,000 and the factory building has been revalued to Rs. 82,059,200. The difference between the revalued figures and the net book value of the revalued assets amounting Rs. 93,532,000 was transferred to Revaluation Reserve in respect of land and Rs. 48,053,507 in respect of factory building, totalling to Rs. 141,585,507. Further in the current financial year, the Company revalued its plant and machinery. The revaluation has been carried out by Government approved independent valuer, Anmol Sekhri Consultant Private Limited, through its report dated November 5, 2014. The plant and machinery has been revalued at Rs. 391,863,925. The difference between the revalued figures and the net book value amounting Rs. 299,337,149 has been transferred to revaluation reserve. Depreciation is provided with reference to the total value of the fixed assets as appearing in the accounts after the revaluation. Additional depreciation as a consequence to the revaluation of buildings amounting Rs. 1,999,170 (Previous year Rs. 1,599,022) has been adjusted against Revaluation Reserve. (Refer note 9A regards Tangible asset and note 4.1 with regards to revaluation reserve)

B. Defined employee benefits schemes:

Gratuity

Liability in respect of gratuity is ascertained annually based on actuarial valuation carried out by independent actuary.

6. Segment reporting

The disclosure as required under Accounting Standard-17 "Segment Reporting" as notified in the Companies (Accounting Standards) Rules 2006 has not been provided as the company deals in one business segment, namely manufacturing of grey cloth and fabric. Currently, there are no reportable geographical segments.

7. Leases

The company is a lessee under the operating lease in respect of its office premises. Rental expense for operating lease for the year ended March 31, 2014 and March 31, 2013 was Rs. 1,365,480 and Rs. 1,690,848. The Company has not executed any non-cancellable operating leases.

8. Related party disclosure

The disclosure as required by the Accounting Standard -18 (Related Party Disclosure) are given below:

a. Names of related parties:

(i) Key Management Personnel (''KMP'') Mr. Pradeep Jain

Mrs. Pooja Sabharwal (ii) Other directors with whom there are transations Mrs. Usha Jain

(iii) Relative of KMP Mrs. Prerna Jain (Daughter of Mr. Pradeep Jain)

9. As at March 31, 2014, the accumulated losses of the Company have exceeded the networth of the Company (excluding revaluation reserves). However,the principal bankers of the Company have accorded approval for enhancement of limits of existing loans and grant of additional loans and the Company is in the process of complying with the conditions for disbursement of loan.Also the Company is negotiating with various potential buyers and hopeful for getting good business from them. Accordingly, the management believes that the Company will have sufficient funds to meet its operational requirements and sufficient business in future and accordingly, the financial statements for the year ended March 31, 2014 have been prepared on a going concern basis.

10. During the year, the Company has written back trade payables of Rs. 2,166,570 and salary payable of Rs. 2,594,969 as the same was outstanding for a long duration and in the opinion of management the same was not considered to be payable by the Company. The amount of liabilities written back in this regard have been included as a part of other income in the Statement of Profit and loss. In the opinion of the management other liabilities are good and considered payable in the normal course of business. (Refer note 17 with regards to other income ( Liabilities no longer required written back))

11. In accordance with Accounting Standard (AS) 22, "Accounting for Taxes on Income" the Company has evaluated deferred tax assets/liabilities on the balance sheet date. No net deferred tax assets have been recognised as at the balance sheet date as no conclusive evidence of future profits is available. Deferred tax on brought forward losses/ unabsorbed depreciation has not been recognized in absence of virtual certainty of future taxable profits.

12. The Company in 2008 had issued 2,500,000 optionally convertible cumulative preference shares to SIDBI Venture Capital Limited ("SIDBI") for a consideration of Rs. 25,000,000. In terms of the Shareholders'' Subscription Agreement dated July 22, 2008, SIDBI had the option to either redeem such preference shares at agreed value or have these converted into equity shares. Such redemption or conversion was to be completed in 8 equal installments commencing from September 1, 2010. However, the Company has approached SIDBI for evaluating various exit options and pending such decision the Company continues to classify these preference shares as shareholders'' funds in accordance with the Guidance Note on Revised Schedule VI issued by the Institute of Chartered Accountants of India. (Refer note 3 with regards to share capital).

13. With regards to calls in arrear amounting Rs. 2,407,000 which are outstanding as on balance sheet date, the Company has passed a resolution in its Board meeting held on December 11, 2013 in respect of the forfeiture of the shares against which the there were outstanding calls in arrears. As subsequent to balance sheet date the Company has received confirmation from The Calcutta Stock Exchange Limited about noting of such shares. The Company is in the process of forfeiture of such equity shares. (Refer note 3 with regards to share capital)

14. Previous year''s figures have been regrouped/reclassified where necessary to conform to this year''s classification.


Mar 31, 2013

1. Background

Runeecha Textiles Limited (herein referred to as "the Company") is a manufacturer of 100% cotton yarn and grey fabric. Mr. Pradeep Jain and his Associates are the Promoters of the company. The company''s manufacturing facili- ties are located at Jagdishpur (Uttar Pradesh). The accompanying financial statements reflect results of activities undertaken by the Company during the year ended March 31, 2013.

2. Contingent Liabilities

Claims against the Company not acknowledged as debts (Amount in Rs.)

Year Ended Year Ended March 31, 2013 March 31, 2012

Letter of credit 13,703,000 16,879,760

13,703,000 16,879,760

3. Commitments

There are no outstanding capital commitments and other material commitments as at date of the Balance Sheet for the year ended March 31, 2013 and March 31, 2012.

4. The Company has not made provision for interest on unsecured loan from State Trading Corporation (STC), outstanding loan amounting Rs. 5,634,829 (Previous Year Rs. 5,634,829). STC had filed a winding up petition with Honorable High Court of Mumbai on grounds of non-payment dues on account of loans advanced to the Company against which the Company has filed a review petition in the Honorable High Court. The Honorable High Court of Mumbai vide its order dated April 29, 2011 has recalled its order dated December 15, 2010 on the winding up petition filed by STC and the company petition shall be heard at the stage of final hearing subject to the respondent Company depositing in court, without prejudice to its rights and contentions, a sum of Rs. 50 lacs. The Company is in the process of settling the issue with STC and is hopeful of amicable settlement.

5. During the financial year 2008-09, the Company revalued its land and factory buildings on the basis of report on Techno Economic Feasibility conducted by Northern India Textile Research Association (NITRA) in May 2008 in which the value of these fixed assets have been taken on the basis of its valuation report of assets of the company conducted by NITRA in June 2006 which was also relied upon by the banks for the purpose of One Time Settlement (OTS). The original cost of land Rs. 1,374,859 has been revalued at Rs. 74,833,000 and the factory building with original cost of Rs. 69,396,490 has been revalued at Rs. 81,198,366. The difference between the revalued figures and the book value of the revalued assets amounting Rs. 73,458,141 was transferred to Revaluation Reserve in respect of Land and Rs. 11,801,876 in respect of factory buildings, totalling to Rs. 85,260,017.

Further in the current financial year, the Company revalued its land and factory building. The revaluation has been carried out by Government approved independent valuer, M/s Karuna Associates, through its report dated May 10, 2012 issued to Allahabad Bank. The land has been revalued to Rs. 168,365,000 and the factory building has been revalued to Rs. 82,059,200. The difference between the revalued figures and net book value of the revalued assets amounting Rs. 93,532,000 was transferred to Revaluation Reserve in respect of land and Rs. 48,053,507 in respect of factory building totaling to Rs. 141,585,507.

Depreciation is provided with reference to the total value of the fixed assets as appearing in the accounts after the revaluation. Additional depreciation in consequence to the revaluation of buildings amounting Rs. 1,599,022 (Previous year Rs. 394,183) is adjusted against Revaluation Reserve.

6. Employee Benefit Obligations

A. Defined Contribution Plans

a. Provident Fund

b. Employers Contribution to Employee State Insurance

During the year, the Company has recognized the following amounts in the statement of Profit and Loss:

B. Defined employee benefits schemes:

Gratuity

Liability in respect of gratuity is ascertained annually based on actuarial valuation carried out by independent actuary.

C. Other long term employee benefits

Leave Encashment

Provision for Leave Encashment is made by the Company on basis of actuarial valuation carried out by independent actuary.

7. Segment Reporting

The disclosure as required under Accounting Standard-17 "Segment Reporting" as notified in the Companies (Accounting Standards) Rules 2006 has not been provided as the company deals in one business segment, namely manufacturing of grey cloth and fabric. Currently, there are no reportable geographical segments.

8. Leases

The company is a lessee under the operating lease. Rental expense for operating lease for the year ended March 31, 2013 and 2012 was Rs. 1,690,848/- and Rs. 1,421,126/-respectively. The Company has not executed any non-cancellable operating leases.

9. Related Party Disclosure

The Disclosure as required by the Accounting Standard -18 (Related Party Disclosure) are given below: (a) Names of related parties:

(i) Key Management Personnel (''KMP'') : Mr. Pradeep Jain

: Ms. Pooja Sabharwal

(ii) Other directors with whom there are transations : Ms. Usha Jain

(ii) Relative of KMP : Ms. Prerana Jain (Daughter of Mr. Pradeep Jain)

10. In accordance with Accounting Standard (AS) 22, "Accounting for Taxes on Income" the Company has evaluated deferred tax assets/liabilities on the balance sheet date. No deferred tax assets have been recognized as at the balance sheet date as no conclusive evidence of future profit is available. Deferred Tax on brought forward losses/ unabsorbed depreciation has not been recognized in absence of virtual certainty of future taxable profits.

11. Previous year''s figures have been regrouped/reclassified where necessary to conform to this year''s classification.


Mar 31, 2012

1. BACKGROUND

Runeecha Textiles Limited (herein referred to as "the company") is a manufacturer of 100% cotton yarn and grey fabric. Presently, Mr. Pradeep Jain and Associates are the Promoters of the company. The company's manufacturing facilities are located at Jagdishpur (Uttar Pradesh).

*During the financial year 2008-09 as per terms of Shareholders' Subscription Agreement executed with SIDBI Venture Capital Limited on July 22, 2008, the company has allotted 2,500,000 16% Optional Cumulative Convertible Preference Shares to SIDBI Venture Capital Limited amounting Rs. 25,000,000. The dividend on these Preference shares are payable from the date of allotment @16% p.a., however in view of brought forward losses the company has not provided/paid any dividend on such shares. The corresponding entries in respect of the dividend and taxes thereon will be done in the year of payment of such dividend or in the year in which the shares are converted/ redeemed.

b) Terms/rights attached to shares Equity shares

Voting

Each holder of equity shares is entitled to one vote per share held.

Dividends

The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders in ensuing Annual General Meeting, except in the case where interim dividend is distributed.

Liquidation

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

Preference shares

Dividend

The Company shall pay preferential dividend @ 16% per annum on the optionally convertible preference shares subscribed by the investor from the date of allotment. The investor shall have the option to convert (either fully, partly or none) the accumulative dividend into equity shares at par at the ratio of 1:1.

d) Arrear of dividend on 2,500,000 16% optionally convertible preference shares Rs. 14,772,603 (Previous year Rs. 10,772,603).

e) No class of shares have been allotted as fully paid up pursuant to contract(s) without payment being received in cash, allotted as fully paid up by way of bonus shares or bought back.

* Secured against -

a) First charge on Land,

b) Entire fixed assets situated at A-3, Sector-22, Jagdishpur Industrial Area, Jagdishpur, Distt. C.S.M. Nagar- 227817 (U.P.)

c) Personal Guarantee of Mr. Pradeep Jain (Managing Director) and Mrs. Usha Jain (Director)

Term loan from bank carries interest rate ranging from Base Rate 0.25% to Base Rate 5.25%. The loan is repayable in pre-scheduled 28 quarterly instalments commencing from quarter ending December 31, 2013.

* Secured against charge over entire current assets of the company including stock of raw material, work in process, finished goods, stores and spares, book debts, receivables and other current assets of the Company, both present and future.

2. Contingent Liabilities

Claims against the Company not acknowledged as debts (Amount in Rs.)

Year Ended Year Ended 31.03.2012 31.03.2011

Letter of credit 16,879,760 5,980,000

16,879,760 5,980,000

3. Commitments

There are no outstanding capital commitments and other material commitments as at date of the Balance Sheet for the year ended March 31, 2012 and March 31, 2011.

4. The Company has not made provision for interest on unsecured loan from State Trading Corporation (STC), outstanding loan amounting Rs. 5,634,829 (Previous Year Rs. 5,634,829). During the previous year, STC had filed a winding up petition with Honorable High Court of Mumbai on grounds of non-payment dues on account of loans advanced to the Company against which the Company has filed a review petition in the Honorable High Court. The Honorable High Court of Mumbai vide its order dated April 29, 2011 has recalled its order dated December 15, 2010 on the winding up petition filed by STC and the company petition shall be heard at the stage of final hearing subject to the respondent Company depositing in court, without prejudice to its rights and contentions, a sum of Rs. 50 lacs by 30th June, 2011. However, the Company is yet to deposit the sum of Rs. 50 lacs. The Company is in the process of settling the issue with STC and is hopeful of amicable settlement.

5. During the financial year 2008-09, the Company revalued its land and factory buildings on the basis of report on Techno Economic Feasibility conducted by Northern India Textile Research Association (NITRA) in May 2008 in which the value of these fixed assets have been taken on the basis of its valuation report of assets of the company conducted by NITRA in June 2006 which was also relied upon by the banks for the purpose of One Time Settlement (OTS). The original cost of land Rs. 1,374,859 has been revalued at Rs. 74,833,000 and the factory building with original cost of Rs. 69,396,490 has been revalued at Rs. 81,198,366. The difference between the revalued figures and the book value of the revalued assets amounting Rs. 73,458,141 was transferred to Revaluation Reserve in respect of Land and Rs. 11,801,876 in respect of factory buildings, totalling to Rs. 85,260,017. Depreciation is provided with reference to the total value of the fixed assets as appearing in the accounts after the revaluation. Additional depreciation in consequence to the revaluation of buildings amounting Rs. 394,183 (Previous year Rs. 394,183) is adjusted against Revaluation Reserve.

6. During the previous year, on 23rd March, 2011, a fire occurred at the Company's factory at Jagdishpur, UP. As a consequence of fire, there was loss of certain portions of factory building having gross value of Rs. 2,867,171, loss of plant and machinery having gross value of Rs. 18,950,045 and loss of stock amounting Rs. 32,813,372. The written down value of fixed assets lost in fire amounted Rs. 4,730,981, thus resulting in a total loss of Rs. 37,544,353 in the previous year. The assets of the Company being insured under a reinstatement policy, the Company filed an insurance claim for Rs. 85,387,372 including claim for loss due to fire and for purchase of new assets as replacement of plant and machinery damaged. The insurance company had approved a total claim amounting Rs. 50,606,701 consisting of loss of inventory of Rs. 26,005,000 and balance of Rs. 24,601,701 towards claim for fixed assets. Accordingly, the total claim approved amounting Rs. 50,606,701 has been shown as Insurance claim recoverable under other current assets in Note 16 of the financial statements. Loss of stock amounting Rs. 32,813,372 has been shown as an adjustment in the change in inventories of finished goods and work in progress in Note 21 of the financial statements. Loss of stock not approved by the Insurance Company amounting Rs. 6,808,372 has been recorded as an expense under Extraordinary Items in the Statement of Profit and Loss. Rs. 19,870,720 being claim for replacement of fixed assets has been recorded as income under Extraordinary Items in the Statement of Profit and Loss. The Company had reversed the gross block of assets lost in fire and the related accumulated depreciation resulting in reversal of fixed assets having net book value of Rs. 4,730,981.

B. Defined employee benefits schemes:

Gratuity

Liability in respect of Gratuity is ascertained annually based on actuarial valuation carried out by independent actuary.

C. Other long term employee benefits Leave Encashment

Provision for Leave Encashment is made by the Company on basis of actuarial valuation carried out by independent actuary

(a) The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

(b) The Company's gratuity and leave encashment liability is entirely unfunded.

7. Segment Reporting

The disclosures as required under accounting standard 17 "Segment reporting" has not been provided as the company deals in one business segment, namely manufacturing of grey cloth. Currently, there is no reportable geographical segment.

8. Leases

The company is a lessee under the operating lease. Rental expense for operating lease for the year ended March 31, 2012 and 2011 was Rs. 1,421,126 and Rs. 1,107,174. The company has not executed any non-cancellable operating leases.

9. The company has provided for interest amounting Rs. Nil (Previous Year Rs. Nil) on delayed payments and outstanding balance of MSME Creditors as on 31st March, 2012. This information is required to be disclosed under Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the company. In terms of notification no. G.S.R. 719(E) dated November 16, 2007 issued by the Central Government of India, the disclosure of payments due to any supplier as at March 31, 2012 are as follows:

10. Related Party Disclosure

The Disclosure as required by the Accounting Standard-18 (Related Party Disclosure) are given below:-

(i) Key Management Personnel ('KMP') and their relatives : Mr. Pradeep Jain

Mrs. Pooja Sabharwal

(ii) Relative of KMP : Mrs. Prerna Jain (Daughter of Mr. Pradeep Jain)

Mrs. Usha Jain (Wife of Mr. Pradeep Jain)

11. Applying the principles of Accounting Standard (AS) 22, "Accounting for Taxes on Income" as per Companies Accounting Standards Rules, deferred tax assets are recognized only if there is virtual certainty of realization backed by convincing evidence. Deferred Tax on brought forward losses/unabsorbed depreciation has not been recognized in absence of reasonable and virtual certainty of future taxable profits.

12. The financial statements for the year ended March 31, 2011 had been prepared as per the applicable, pre-revised Schedule VI to the Companies Act, 1956 ('the Act'). During the year, the revised Schedule VI notified under the Act has become applicable to the Company. Accordingly, the Company has reclassified previous year figures to conform to the current year's classification. The adoption of revised Schedule VI does not impact recognition and measurement principle followed for preparation of financial statements. However, it has a significant impact on presentation and disclosures made in the financial statements.

 
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