Home  »  Company  »  SBEC Sugar Lt  »  Quotes  »  Notes to Account
Enter the first few characters of Company and click 'Go'

Notes to Accounts of SBEC Sugar Ltd.

Mar 31, 2015

Note:1. BASIS OF PREPARATION

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP).The financial statements have been prepared to comply in all material respects with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended and as applicable from time to time) and the relevant provisions of the Companies Act 2013& Companies Act 1956 as applicable as on the date. The financial statements have been prepared on an accrual basis and under the historical cost convention on going concern basis.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

2. During the year 2006-2007, a One Time Settlement (OTS) dated 22nd January, 2007 was signed between the Company, Punjab National Bank (PNB), Mr. Umesh K. Modi (as Guarantor of MIL) and Modi Industries Limited (MIL) on the terms as contained in the PNB letter dated 28th September, 2006. In terms of this settlement, the Company has agreed to make payment of Rs. 2,810.60 lacs together with interest to PNB. In consideration of the same, PNB has agreed to assign all its claims, interest and charges against the Steel Section of MIL in favour of the Company. The Company has made full payment of the settlement amount together with interest aggregating Rs. 3,351.21 lacs to PNB. As per expert legal opinion, during the year interest amounting to Rs. 417.63lacs (previous year Rs. 417.63 lacs for the period from 22nd January, 2007 to 31st March, 2012) has been allocated to the cost of "Debt Assignment" acquired by the company from PNB, since in the opinion of the management the borrowing of the company were raised to pay for Debt Assignment. PNB thereafter executed a "Deed of Assignment" on 15th May, 2012(an event occurring after the date of the Balance Sheet) in favour of the company by which PNB assigned all its claim together with all securities and charges created by MIL in its favour to the company. The company thereafter executed a "Deed of Assignment" on 31st December, 2012 in favour of its subsidiary M/s SBEC Bioenergy Limited by which the company assigned all its claim together with all securities and charges created by MIL in its favour for a consideration of Rs. 12,500.00 Lacs. A sum of Rs. 4,200.00 lacs has been paid simultaneously with the execution of this deed and the remaining sum of Rs. 8,300.00 lacs shall be payable as per the mutually agreed instalments within a period of five years from the date of execution of this deed.

3. Segment Reporting (AS-17)

The Company is a single product, single location company and hence the requirements of Accounting Standard-17 on 'Segment Reporting' are not relevant.

4. Impairments of Assets (AS-28)

Carrying amounts of the Assets were reviewed at the Balance sheet date and no internal or external indications were noticed that could have necessitated any provision towards impairment of assets.

5. Lease (AS-19)

Operating Lease

The company has entered into operating leases for its Office and for employee's residence that are renewable on a periodic basis and cancellable at Company's option. The Company has not entered into sublease agreements in respect of these leases. Further, the Company has not entered into any non-cancellable leases.

6. Deferred Taxation (AS-22)

Deferred taxes arise because of difference in treatment between financial accounting and tax accounting, known as "Timing differences". The tax effect of these timing differences is recorded as "deferred tax assets" (generally items that can be used as a tax deduction or credit in future periods) and "deferred tax liabilities" (generally items for which the company has received a tax deduction, but has not yet been recorded in the statement of income).

7. The company in terms of Board of Director's resolution dated 6th July 2013 has flled a reference with the Board for Industrial and financial Reconstruction (BIFR) U/S 15(1) of the Sick Industrial companies (Special provisions) Act 1985 (SICA) vide its letter dated 24th July 2013 and as per communication received from BIFR vide its letter No. 3/(S-22)/BC/2013 dated 21st August 2013, The said reference has been registered by BIFR as case No. 58/2013. The BIFR has declared the company as Sick u/s 3(1)(0) of SICA and appointed IDBI as operating agency u/s 17(3) of the Act. in its hearing held on dated 04.02.2014& the Draft Rehabilitation Scheme is under compilation. Since the Company has continued its normal manufacturing operations during the season 2014-15 therefore the accounts are prepared on a "Going Concern Basis".

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The actuary certifies the above information.

Actuarial valuation of Leave Encashment for period ended 31st March, 2015 and 31st March, 2014 pertain to only Seasonal Wage-board grade employees, therefore there is difference in expense recognized in statement of Profit & Loss and amount as mentioned in Actuarial certificate. However the expenses have been provided on Accrual Basis.

8. Considering the adverse economic/sector conditions and current financial instability the Management of the company vide their resolution dated 05th March, 2013 has decided to dispose-off its Chandil Power Plant (under implementation). The company has formed a committee to negotiate with potential buyers. The management expects that the assets will be realized to the extent as stated & does not call for any provision as on the date of the Balance Sheet. Therefore, the Capital Work in Progress, Capital Advances and other related accounts of the Chandil Power Project have been shown as assets held for disposal.

9. The State Government of Utter Pradesh has, as per PNCM Cabinet Decision dated 12th November 2014, inter alia, announced cash subsidy upto Rs. 28.60 per Qtl of cane purchased for the sugar industry, linked to the average selling price of sugar and it's by products. During the period 1st October 2014 to 31st March2015,the prices being remained below the threshold limit provided in the notification. Since the Management is virtually certain regarding realisation of subsidy, the Company has accounted for cash subsidy of Rs. 28.60 per Qtl of cane purchased by it aggregating to Rs. 25,66,05,990.

10. Previous year figures have been regrouped/ rearranged wherever considered necessary. Previous year figures are given in the bracket wherever applicable.


Mar 31, 2014

Note:1. BASIS OF PREPARATION

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP).The financial statements have been prepared to comply in all material respects with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended and which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention on going concern basis.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

2. a) Terms/rights attached to Equity Shares

Company has only one class of equity shares having a par value of Rs.10/-. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend, if any,proposed by the Board of Directors is subject to approval of shareholders, in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive 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.

3. Sundry Creditors for goods and expenses include dues to Small Scale Industrial Undertakings aggregating to Rs. NIL (previous period Rs. 4.78 lacs).

4. Followings are the relevant disclosures as required under the Micro, Small and Medium Enterprises Development Act, 2006:

a) Sundry creditors include a sum aggregating Rs.1.12 Lacs (Previous Year Rs. 1.46), due to Micro and Small Enterprises.

b) The amount of interest paid by the Company in terms of Section 16, along with the amount of payments made to the Micro and Small Enterprise beyond the appointed date during the year - Nil (Previous Year Rs. Nil)

c) The amount of interest accrued and remaining unpaid Rs.0.10 Lacs (Previous Year Rs. 0.04 Lac)

The above mentioned outstanding are in normal course of business and the information regarding Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information available with the Company.

5. Contingent Liabilities not provided for in respect of: (Rs. in lacs)

Particulars As at As at 31.03.2014 31.03.2013 i) Corporate Guarantee given to Government of Jharkhand against Soft loan 6,301.45 5,834.67 (incl. interest) given to Bihar Sponge Iron Ltd.

ii) Outstanding against Guarantee given on behalf of SBEC Bio-energy Ltd. 2,000.00 2,660.95

iii) Duties and Tax liabilities disputed by the Company 1,679.00 361.11

iv) Interest and R C Charges on cane arrear payment as recovered by DCO, Baghpat, 35.99 35.99 case is pending with Alahabad High Court.

iv) Interest and R C Charges on cane arrear from the season 2012-13 3,193.92 Nil

6. During the year 2006-2007, a One Time Settlement (OTS) dated 22nd January, 2007 was signed between the Company, Punjab National Bank (PNB), Mr. Umesh K. Modi (as Guarantor of MIL) and Modi Industries Limited (MIL) on the terms as contained in the PNB letter dated 28th September, 2006. In terms of this settlement, the Company has agreed to make payment of Rs. 2,810.60 lacs together with interest to PNB. In consideration of the same, PNB has agreed to assign all its claims, interest and charges against the Steel Section of MIL in favour of the Company. The Company has made full payment of the settlement amount together with interest aggregating Rs. 3,351.21 lacs to PNB. As per expert legal opinion, during the year interest amounting to Rs. 417.63lacs (previous year Rs. 2,148.47 lacs for the period from 22nd January, 2007 to 31st March, 2012) has been allocated to the cost of "Debt Assignment" acquired by the company from PNB, since in the opinion of the management the borrowing of the company were raised to pay for Debt Assignment.

PNB thereafter executed a "Deed of Assignment" on 15th May, 2012(an event occurring after the date of the Balance Sheet) in favour of the company by which PNB assigned all its claim together with all securities and charges created by MIL in its favour to the company.

The company thereafter executed a "Deed of Assignment" on 31st December, 2012 in favour of its subsidiary M/s SBEC Bioenergy Limited by which the company assigned all its claim together with all securities and charges created by MIL in its favour for a consideration of Rs. 12,500.00 Lacs. A sum of Rs. 4,200.00 lacs has been paid simultaneously with the execution of this deed and the remaining sum of Rs. 8,300.00 lacs shall be payable as per the mutually agreed installments within a period of five years from the date of execution of this deed.

7. Segment Reporting (AS-17)

The Company is a single product, single location company and hence the requirements of Accounting Standard-17 on ''Segment Reporting'' are not relevant.

8. Impairments of Assets (AS-28)

Carrying amounts of the Assets were reviewed at the Balance sheet date and no internal or external indications were noticed that could have necessitated any provision towards impairment of assets.

9. Lease (AS-19)

Operating Lease

The company has entered into operating leases for its office and for employee''s residence that are renewable on a periodic basis and cancellable at Company''s option. The Company has not entered into sublease agreements in respect of these leases. Further, the Company has not entered into any non-cancellable leases.

10. Deferred Taxation (AS-22)

Deferred taxes arise because of difference in treatment between financial accounting and tax accounting, known as "Timing differences". The tax effect of these timing differences is recorded as "deferred tax assets" (generally items that can be used as a tax deduction or credit in future periods) and "deferred tax liabilities" (generally items for which the company has received a tax deduction, but has not yet been recorded in the statement of income).

11. The company in terms of Board of Director''s resolution dated 6th July 2013 has filled a reference with the Board for Industrial and financial Reconstruction (BIFR) U/S 15(1) of the Sick Industrial companies (Special provisions) Act 1985 (SICA) vide its letter dated 24th July 2013 and as per communication received from BIFR vide its letter No. 3/(S-22)/BC/2013 dated 21st August 2013, The said reference has been registered by BIFR as case No. 58/2013. The BIFR has declared the company as Sick u/s 3(1)(0) of SICA and appointed IDBI as operating agency u/s 17(3) of the Act. in its hearing held on dated 04.02.2014. Since the Company has continued its normal manufacturing operations during the season 2013-14 therefore the accounts are prepared on a "Going Concern Basis".

12. Defined Benefit Plan

The employees'' gratuity fund scheme is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in the same manner as gratuity.

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The actuary certifies the above information.

Actuarial valuation of Leave Encashment for period ended 31st March, 2014 and 31st March, 2013 pertain to only Seasonal Wage-board grade employees, therefore there is difference in expense recognized in statement of profit & Loss and amount as mentioned in Actuarial certificate. However the expenses have been provided on Accrual Basis.

13. Considering the adverse economic/sector conditions and current financial instability the Management of the company vide their resolution dated 05th March, 2013 has decided to dispose-off its Chandil Power Plant (under implementation). The company has formed a committee to negotiate with potential buyers. The management expects that the assets will be realized to the extent as stated & does not call for any provision as on the date of the Balance Sheet. Therefore, the Capital Work in Progress, Capital Advances and other related accounts of the Chandil Power Project have been shown as assets held for disposal.

14. Previous year figures have been regrouped/ rearranged wherever considered necessary.

Previous year figures are given in the bracket wherever applicable


Mar 31, 2013

Note : 1. BASIS OF PREPARATION

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP).The financial statements have been prepared to comply in all material respects with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended and as applicable from time to time) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention on going concern basis. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

2 (a) Contingent Liabilities not provided for in respect of:

(Rs. in lacs)

Particulars As at 31.03.2013 As at 31.03.2012

i) Corporate Guarantee given to Government of Jharkhand against Soft loan

(incl. interest) given to Bihar Sponge Iron Ltd. 5,834.67 5,402.47

ii) Outstanding against Guarantee given on behalf of SBEC Bio- energy Ltd. 2,660.95 3,320.41

iv) Duties and Tax liabilities disputed by the Company 361.11 1,360.26

v) Interest and R C Charges on cane arrear payment as recovered by DCO, Baghpat, case is pending with Allahabad High Court. 35.99 35.99

2(b) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances is Rs Nil lacs (Previous Year Rs.132.23 lacs).

3. During the year 2006-2007, a One Time Settlement (OTS) dated 22nd January, 2007 was signed between the Company, Punjab National Bank (PNB), Mr. Umesh K. Modi (as Guarantor of MIL) and Modi Industries Limited (MIL) on the terms as contained in the PNB letter dated 28th September, 2006. In terms of this settlement, the Company has agreed to make payment of Rs. 2,810.60 lacs together with interest to PNB. In consideration of the same, PNB has agreed to assign all its claims, interest and charges against the Steel Section of MIL in favour of the Company. The Company has made full payment of the settlement amount together with interest aggregating Rs. 3,351.21 lacs to PNB. As per expert legal opinion, during the year interest amounting to Rs. 417.63lacs (previous year Rs. 2,148.47 lacs for the period from 22nd January, 2007 to 31st March, 2012) has been allocated to the cost of "Debt Assignment" acquired by the company from PNB, since in the opinion of the management the borrowing of the company were raised to pay for Debt Assignment.

PNB thereafter executed a "Deed of Assignment" on 15th May, 2012(an event occurring after the date of the Balance Sheet) in favour of the company by which PNB assigned all its claim together with all securities and charges created by MIL in its favour to the company. The company thereafter executed a "Deed of Assignment" on 31st December, 2012 in favour of its subsidiary M/s SBEC Bioenergy Limited by which the company assigned all its claim together with all securities and charges created by MIL in its favour for a consideration of Rs. 12,500.00 Lacs. A sum of Rs. 4,200.00 lacs has been paid simultaneously with the execution of this deed and the remaining sum of Rs. 8,300.00 lacs shall be payable as per the mutually agreed installments within a period of five years from the date of execution of this deed.

4. Segment Reporting (AS-17)

The Company is a single product, single location company and hence the requirements of Accounting Standard-17 on ''Segment Reporting'' are not relevant.

5. Impairments of Assets (AS-28)

Carrying amounts of the Assets were reviewed at the Balance sheet date and no internal or external indications were noticed that could have necessitated any provision towards impairment of assets.

6. Lease (AS-19)

Operating Lease

The company has entered into operating leases for its office and for employee''s residence that are renewable on a periodic basis and cancellable at Company''s option. The Company has not entered into sublease agreements in respect of these leases. Further, the Company has not entered into any non-cancellable leases.

7. Deferred Taxation (AS-22)

Deferred taxes arise because of difference in treatment between financial accounting and tax accounting, known as "Timing differences". The tax effect of these timing differences is recorded as "deferred tax assets" (generally items that can be used as a tax deduction or credit in future periods) and "deferred tax liabilities" (generally items for which the company has received a tax deduction, but has not yet been recorded in the statement of income).

8. In accordance with the company policy a sum of Rs.19.69 lacs (previous year Rs.19.69 lacs) has been shown as MAT Credit entitlement under other non-current assets.

9. As on 31st March 2013 accumulated losses exceed the paid-up capital and free reserves and since total erosion of net worth has taken place the company has become a ''Sick Industrial Company'' within the meaning of Section 3(1)(0) of the Sick Industrial Companies (Special Provisions) Act, 1985 ("The Act") as provided by Section 15 of ''The Act'' a reference to the Board for Industrial and Financial Reconstruction will be made by the Company within the stipulated period for determination of measures which may be adopted. Since the Company has continued it''s normal manufacturing operations during the season 2012-13 therefore the accounts are prepared on a "Going Concern Basis".

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The actuary certifies the above information.

Actuarial valuation of Leave Encashment for period ended 31st March, 2013 and 31st March, 2012 pertain to only Seasonal Wage- board grade employees, therefore there is difference in expense recognized in statement of profit & Loss and amount as mentioned in Actuarial certificate. However the expenses have been provided on Accrual Basis.

10. Considering the adverse economic/sector conditions and current financial instability the Management of the company vide their resolution dated 05th March, 2013 has decided to dispose-off its Chandil Power Plant (under implementation). The company has formed a committee to negotiate with potential buyers. The management expects that the assets will be realized to the extent as stated & does not call for any provision as on the date of the Balance Sheet. Therefore, the Capital Work in Progress, Capital Advances and other related accounts of the Chandil Power Project have been shown as assets held for disposal.

11. Previous year figures have been regrouped/ rearranged wherever considered necessary. Previous year figures are given in the bracket wherever applicable


Mar 31, 2012

A) Terms/rights attached to Equity Shares

Company has only one class of equity shares having a par value of Rs.10/-. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend, if any,proposed by the Board of Directors is subject to approval of shareholders.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive 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.

1. Amounts payable against vehicle loans are secured against the hypothecation of specific assets acquired.

2. Excise Loan from The Shamrao Vittal Co-operative Bank Ltd. was secured by residual charge on Fixed Assets, since adjusted.

3. Vehicle loan from HDFC Bank Ltd., Kotak Mahindra Prime Ltd., and ICICI Bank Ltd. carry interest @ 10.00-12.00% and Hire Purchase from First Leasing company of India Ltd carry interest @ 17.92%

4. Fixed Deposits carry interest @10.50-11.00 % and repayable within one to three Years from the date of Deposits.

1 Sundry Creditors for goods and expenses include dues to Small Scale Industrial Undertakings aggregating to Rs. NIL (previous period Rs. 4.78 lacs).

2 Followings are the relevant disclosures as required under the Micro, Small and Medium Enterprises Development Act, 2006:

a) Sundry creditors include a sum aggregating Nil, due to Micro and Small Enterprises.

b) The amount of interest paid by the Company in terms of Section 16, along with the amount of payments made to the Micro and Small Enterprise beyond the appointed date during the year - Nil

c) The amount of interest due and payable For the Year of delay in making payment which have been paid but beyond the appointed day during the year but without adding the interest specified under this Act. - Nil.

d) The amount of interest accrued and remaining unpaid - Nil.

e) Amount of further interest remaining due and payable even in succeeding years - Nil

The above mentioned outstanding are in normal course of business and the information regarding Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information available with the Company.

1(A) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) is Rs.132.23 lacs (Previous Year Rs. 415.71 lacs).

2. During the year, Hon''ble Supreme Court has rejected the Special Leave Petition, filed by the company for differential cane price for the crushing season 2007-08 vide its order dated 17th January, 2012.

In compliance with the above order, Company has accounted for Rs. 1483.32 lacs during the year and shown as exceptional items in the Statement of Profit and Loss.

3. During the year 2006-2007, a One Time Settlement (OTS) dated 22nd January, 2007 has been signed between the Company, Punjab National Bank (PNB), Mr. Umesh K. Modi (as Guarantor of MIL) and Modi Industries Limited (MIL) on the terms as contained in the PNB letter dated 28th September, 2006. In terms of this settlement, the Company has agreed to make payment of Rs. 2810.60 lacs together with interest to PNB. In consideration of the same, PNB has agreed to assign all its claims, interest and charges against the Steel Section of MIL in favour of the Company. The Company has made full payment of the settlement amount together with interest aggregating Rs. 3351.21 lacs to PNB. As per expert legal opinion, during the year interest amounting to Rs. 370.64 lacs (previous year Rs. 1777.83 lacs for the period from 22nd January, 2007 to 31st March, 2011) has been allocated to the cost of "Debt Assignment" acquired by the company from PNB, since in the opinion of the management the borrowing of the company were raised to pay for Debt Assignment. The company has shown the total amount paid for Debt Assignment and interest thereon of Rs. 5499.68 lacs under the head "Other Non-Current Assets".

PNB thereafter executed a "Deed of Assignment" on 15th May, 2012(an event occurring after the date of the Balance Sheet) in favour of the company by which PNB assigned all its claim together with all securities and charges created by MIL in its favour to the company. The registrar of the company has registered the modification to the charges in the favour of the company. In view of the above, the said secured debt is now payable by MIL to the company.

4. The management has decided to value stocks of free sugar at cost price in lieu of the average market price for the season 2011-12, in view of continuous increase in market price thereafter.

5. Segment Reporting (AS-17)

The Company is a single product, single location company and hence the requirements of Accounting Standard-17 on ''Segment Reporting'' are not relevant.

6. Impairments of Assets (AS-28)

Carrying amounts of the Assets were reviewed at the Balance sheet date and no internal or external indications were noticed that could have necessitated any provision towards impairment of assets.

7. Related Parties Disclosers (AS-18)

{A} Name of related parties and description of relationship:

1. Subsidiaries

(i) SBEC Bioenergy Limited.

(ii) SBEC Stockholding & Investment Limited.*

(iii) Modi Gourmet Limited.*

2. Associates — Nil

3. Follow Subsidiaries — Nil

4. Key Management Personnel

Mr. Abhishek Modi - Executive Director

Mr. Santosh Chand Gupta- Whole Time Director

5. Relatives of Key Management Personnel & their Enterprises:

Mr. Umesh K. Modi, Mrs. Kumkum Modi*,Mr. Jayesh Modi*, Ms. Meghna Modi*, Mrs. Himani Modi Agarwal*, Mr. Priyank Kumar Agarwal*, Mrs Suman Lata Gupta*, Modi Arts Pvt. Ltd.*, Modi Goods and Retail Services Pvt. Ltd.* (formally known as Modi Groceries Pvt. Ltd.), SBEC Systems (India) Ltd.*, Jai Abhishek Investments Pvt. Ltd.*, Kamakhya Cosmetics & Pharmaceuticals Pvt. Ltd.*, Modi Diagnostics Pvt. Ltd.*, Modi Revlon Pvt. Ltd.*, Modi Senator (India) Pvt. Ltd.*, First Move Management Services Pvt. Ltd.*, Revlon Lanka Pvt. Ltd.*, Swasth Investment Pvt. Ltd.*, Umesh Modi Corp. Pvt. Ltd., Modi Omega Pharma (India) Pvt. Ltd.*, Modi Illva India Pvt. Ltd.*, A to Z Holding Pvt.Ltd.*, Longwell Investment Pvt. Ltd., Bihar Sponge Iron Ltd., Modi Mundipharma Pvt. Ltd.*, Modiline Travel Service Pvt. Ltd., Modi Industries Ltd., Morgardshammer India Ltd., Win Medicare Pvt. Ltd, H. M. Tubes & Containers Pvt. Ltd., Modi Motors Pvt. Ltd., M.G. Mobiles India Pvt. Ltd.*, Chandil Power Limited*, Revlon Trading Bangladesh Private Limited*, Meghna Autoworks Private Limited*, Jayesh Tradex Pvt. Ltd. , Arvind Continental Pvt. Ltd.

* Indicates that during the year, there is no transaction with these enterprises.

8. Lease (AS-19)

a) Finance Lease

Followings are the details of lease transaction for the year:

The company leased boiler under finance lease for a period of four years.

b) Operating Lease

The company has entered into operating leases for its office and for employee''s residence that are renewable on a periodic basis and cancellable at Company''s option. The Company has not entered into sublease agreements in respect of these leases. Further, the Company has not entered into any non-cancellable leases.

9. Deferred Taxation (AS-22)

Deferred taxes arise because of difference in treatment between financial accounting and tax accounting, known as "Timing differences". The tax effect of these timing differences is recorded as "deferred tax assets" (generally items that can be used as a tax deduction or credit in future periods) and "deferred tax liabilities" (generally items for which the company has received a tax deduction, but has not yet been recorded in the statement of income).

Deferred tax Assets are recognized and carried forward only to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In view of continue operating losses the company has not recognized any incremental deferred tax.

''Limited to the extent Deffered Tax Asset recognized during the last year.

10. The company has diluted its investment in one of the Subsidiary company from 100 % to 70% in December, 2011 and further reduced it to 55% in March, 2012. The profit on sale of such investments has been shown in other income.

11. In accordance with the company policy a sum of Rs. 19.69 lacs (previous period Rs.19.69 lacs) including for the year Rs. NIL (previous period Rs. 6.81 lacs) has been shown as MAT Credit entitlement under other non-current assets.

12. During the year company has incurred substantial losses, resulting into substantial erosion of its net worth. The major factors for the loss during the year are

a) Additional payment of sugarcane price amounting to Rs. 1483.32 lacs for the season 2007-08 as per order of Hon''ble Supreme Court.

To enhance the profitability in the crushing season 2012-13, the management has undertaken certain steps including technical improvement in the plant, which is likely to improve the recovery by 1% in comparison to season 2011-12 and reduction in cost of production.

b) Defined Benefit Plan

The employees'' gratuity fund scheme is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in the same manner as gratuity.

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The actuary certifies the above information.

Actuarial valuation for period ended 31st March, 2012 and 31st March, 2011 pertain to only Seasonal Wage-board grade employees, therefore there is difference in expense recognized in P&L statement and amount as mentioned in Actuarial certificate. However the expenses have been provided on Accrual Basis.

13. Previous year figures have been regrouped/ rearranged wherever considered necessary.

Previous year figures are given in brackets, wherever applicable.

 
Subscribe now to get personal finance updates in your inbox!