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Notes to Accounts of Shalimar Wires Industries Ltd.

Mar 31, 2015

1. SHARE CAPITAL

a) In terms of the Order dated 10th June,2010 of the BIFR(SS-10), 5,950,000 fully paid Equity Shares of Rs.2/-have been issued at par during 2013-14 to ARCIL towards conversion of part of the term loan due to them for Rs. 11,900,000/- without payment being received in cash. Further the company is liable to issue In future 5,150,000 Equity Shares at par to the lenders as per Clause 11.5(b) of the BIFR Order(SS-10).

b) Rights, Preferences and Restrictions attached to shares :

i) Each Equity Share holder holding shares of Rs. 2/- each is eligible for one vote per share held and are entitled to receive dividends as declared from time to time. In the event of liquidation the equity shares holder are eligible to receive the remaining assets of the Company after distribution of all preferential creditors in proportion to their Shareholdings.

ii) 8% Cumulative Redeemable Preference shares issued as per IDBI sanction dated 13th June 2006 by way of converting their overdue interest and is redeemable in sixteen instalments commencing from 1st April 2017 and ending on 1st January 2021. Cumulative Preference dividend is expected to be paid annual over a period of four years commencing from the financial years 2017-18, based on the projected profitability and cashflows of the Company.

2014-15 Rs. Rs.

2. Other Disclosures

Contingent Liabilities and Commitments

(To the extent not provided for)

i) Contingent Liabilities

a) Claim against the company not 9,008,000 acknowledged as debt

b) Guarantees 6,006,157

c) Other money for which the company is contingently liable

Sale Tax Demands 215,077,937

Excise Demands 195,704,512

Municipal Tax Demands 1,857,305

Non fulfillment of Export 57,324,691 Obligation under DEEC Scheme

Non fulfillment of Export - 469,964,445 Obligation under ISIL Scheme

Total 484,978,602

ii) Commitments

a) Estimated amount of Contracts remaining to be executed on 37,354,109 Capital Account and not provided for (Net of Advance)

b) Uncalled liability on shares and other investments partly - paid

c) Other Commitments -

Total 37,354,109

2013-14 Rs. Rs. i) Contingent Liabilities

a) Claim against the company not 9,008,000 acknowledged as debt

b) Guarantees 7,692,844

c) Other money for which the company is contingently liable

Sale Tax Demands 212,784,725

Excise Demands 193,516,528

Municipal Tax Demands 1,857,305

Non fulfillment of Export 57,324,691 Obligation under DEEC Scheme

Non fulfillment of Export - 465,483,249 Obligation under ISIL Scheme

Total 482,184,093

ii) Commitments

a) Estimated amount of Contracts remaining to be executed on 73,900,107 Capital Account and not provided for (Net of Advance)

b) Uncalled liability on shares and other investments partly - paid

c) Other Commitments -

Total 73,900,107

Note :

1 The above contingent liability in respect of Sale Tax includes an amount of Rs.179166738/- (Previous Year Rs.179166738/-) being tax demand by the Sale Tax Authorities on sale of synthetic fabric manufactured by the Company for the year 1993-94, 1995-96 to 2001-02, 2003-04 and 2004-05 consequent upon the treatment of such fabric as a taxable item which the Company claims to be non-taxable. The Company's appeal in respect of the aforesaid demand is pending before various authorities. In respect of demand for disputed Sales Tax in Synthetic of Rs.78061149/- for the year 1993-94,1995-96,1997-98,1999-2000 and 2003-04,orders in favour of the Company have been issued by W.B.Commercial Taxes Appellate and Revision Board and Sr.Joint Commissioner as well as Hon'ble High Court of Kolkata. The Sales Tax department is yet to issue revised orders and has not yet filed review petition before the Hon'ble Appex Court.

Proceeding have also been initiated by the Sales Tax authorities to re-open assessment in respect of certain other years, though no demand has been raised by the Department in respect of above years. The company is contesting the same and has been legally adviced that the above is not taxable

As against above demands the Company has deposited Rs.3,012,293/- under protest.

2) The above Contingent Liabilities for Excise Demands includes demands made by Central Excise Authorities from time to time on some alleged intermediate product ( Grey Fabric ) of Synthetic Wire Cloth for the financial years 1987-88 to 2010-11.The Company is contesting the same before CESTAT and Supreme Court simultaneously and has been legally advised that no duty is payable on the same intermediate product.

As against above demands the Company has deposited Rs.2,250,000/- under protest.

3) The Company has deposited Rs. 928,760/- under protest against the demands for Municipal Tax.

4) As against the demands for non-fulfilment of Export Obligation under DEEC Scheme, Rs.11,118,251/- has been deposited under protest and disclosed under Export Entitlements as Other Non-Current Assets.

5) The Contingent Liabilities representing dues to various Government Authorities as stated in (c) above, have been arrived at after considering the reliefs granted by BIFR vides its Order dated 10.06.2010.

6) A sum amounting to Rs.15,847,644/-has been paid as advance in respect of above contracts remaining to be executed on Capital Account and not provided for.

3. Upto 31st March, 2014 the Company, for the purpose of charging Depreciation on Tangible Fixed Assets, had been calculating the same at the rates prescribed in the erstwhile Schedule XIV of the Companies Act, 1956. Consequent upon the introduction of the Companies Act, 2013 with effect from 1st April, 2014 the Company has changed the method of calculating depreciation based on the estimated useful life of each Asset as specified in Schedule II of the Companies Act, 2013. Accordingly depreciation for the year amounted to Rs.70,236,604/-, (inclusive of Rs.34,888,864/- relating to Discontinued Operation), which includes Rs.9,207,832/- (inclusive of Rs.2,342,321/- relating to Discontinued Operation) pertaining to assets having no future estimated useful life. As per Schedule II, the amount of Rs.9,207,832/- should have been adjusted against Retained Earnings. In absence of any positive Retained Earnings of the Company, this amount has been disclosed as Extraordinary Item - Rs.6,865,511/- under Continuing Operation and Rs. 2,342,321/- under Discontinued Operation. Had the depreciation been calculated as per erstwhile Schedule XIV, depreciation for the year would have been Rs. 71,971,668/- (including Rs. 1,789,692/- relating to Discontinued Operation). This change in the basis of calculating depreciation has resulted in. Understatement of loss for the year by Rs. 1,735,064/-, understatement of negative balance under Reserves & Surplus as also overstatement of Net Block of Tangible Fixed Assets as on 31st March, 2015 by like amount as compared to previous year.

4. Amounts due in respect of Trade Receivable,Loans & Advance given (Non Current and Current Assets) which are considered good and amounts due to parties (under Non Current Liabilities and Trade Payable) are subject to confirmation from the respective parties.

5. Debenture Redemption) Reserve has not been created in view of brought forward loss.

6. No provision for taxation has been made in the accounts in view of carry forward loss. Also Minimum Alternate Tax ( MAT ) provision has not been made since this is not applicable, the Company being a Sick Industrial Company.

7. Related Party Disclosures under Accounting Standared-18 :

(a) Key Management Personnel :

Mr. Sunil Kumar Khaitan

(b) Relatives of Key Management Personnel :

Mr. Vedant Khaitan (Son of Mr. Sunil Kumar Khaitan)

(c) Enterprises over which key management personnel and their relatives are able to exercise significant influence :

Shalimar Industries Limited

Anil Special Steel Industries Ltd

Details of transactions between the Company and related parties and the status of outstanding balances as on 31st March, 2015 :

8. The Financial Statements of the Company have been prepared on a going concern basis as the accumulated losses of the Company exceeded its net worth and the Company was declared as a Sick Industrial Company as per the Sick Industrial Companies (Special Provision) Act, 1985 by the Board of Industrial and Financial Reconstruction ( BIFR ) vide its Order dated 30.01.2006. The said Board has accorded its approval as conveyed vide its Order dated 10.06.2010 to the Draft Rehabilitation Scheme ( DRS ) submitted by the Company and which was received the Company on 24.06.2010. The effect of the above has been duly given in the financial statement.

9. Discontinued Operation :

a) The Company has discontinued its Nasik Unit from 2nd July 2003 onwards.

Based on the guiding principles given in Accounting Standard 17 'Segment Reporting' ,the Company's primary business segments are (a) Paper Mill Product and (b) Strip & Wire.

10. As per Accounting Standard - 15 " Employee Benefits",the disclosure Employee Benefits as defined in the Accounting Standard are as follows

a) Defined Contribution Plan :

i) Employee benefits in the form of Providend Fund, Superannuation Fund, Employee State Insurance Scheme and Labour Welfare Fund are considered as defined contribution plan except that Providend Fund in respect of certain employees is contributed to a fund set up by the Company which is treated as a Defined Benefit Plan since the Company has to meet the interest shortfall.

ii) The contributions to the funds are made in accordance with the relevant statute and are recognized as an expense when employees have rendered service entitling them to the contributions. The contribution to Defined Contribution Plan, recognized as expense for the year are as under :

b) Defined Benefit Plan :

i) Post employment and other long-term employee benefits in the form of gratuity and leave encashment are considered as Defined Benefit Obligation. The present value of obligation is determined based on acturial valuation using projected unit credit method as at the Balance Sheet date. The amount of defined benefits recognized in the Balance Sheet represent the present value of the obligation as adjusted for unrecognized past service cost and as reduced by the fair value of plan assets.

ii) Providend Fund in respect of certain employees is contributed to a fund set up by the Company which is treated as a Defined Benefit Plan since the Company has to meet the interest shortfall. There is no interest shortfall as at the year end. As advised by an independent actuary, it is not practical or feasible to actuarially value the liability considering that the rate of interest is notified by the Government . Accordingly other related disclosures in respect of Providend Fund have not been made.

iii) Any asset resulting from this calculation is limited to the discounted value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan. The amount recognized in the Profit and Loss Account for the year in respect of Employees Benefit Schemes based on acturial reports is as follows :

c) Basis used to determine the expected Rate of return on Plan Assets :

The basis used to determine the expected rate of return on Plan Assets is Deep Discount Interest rate of R.B.I. or average interest rate of R.B.I. Long Term Instrument.

d) Other disclosures :

i) 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 above information is certified by the actuary.

ii) The Gratuity expenses have been recognized in " Contribution To Provident & Other Funds" and Leave Encashment in "Salaries/Wages and Bonus" under Note No -24

iii) The amount of the present value of obligations, fair value of Plan Assets, surplus/deficit in the plan and experience adjustment arising on plan liabilities and plan assets for the previous three annual periods are not available and therefore, not disclosed.

Note : Above information have been compiled on the basis of Certificates issued by the Actuaries.

11. The previous year's figures have been reworked, regrouped, rearranged and reclassified wherever necessary and practicable. Amounts and other disclosures for the preceding year are included as an integral part of the current year financial statements and are to be read in relation to the amounts and other disclosures relating to the current year.


Mar 31, 2014

NOTE : 1 Other Disclosures

Contingent Liabilities and Commitments

(To the extent not provided for)

i) Contingent Liabilities

a) Claim against the company not 9,008,000 9,008,000 acknowledged as debt

b) Guarantees 7,692,844 7,705,344

c) Other money for which the company is contingently liable

Sale Tax Demands 212,784,725 211,743,068 Excise Demands 193,516,528 193,516,528 Municipal Tax Demands 1,857,305 1,857,305 Non fulfillment of Export 57,324,691 57,324,691 Obligation under DEEC Scheme

Non fulfillment of Export - 465,483,249 3,399,219 467,840,811

Total 482,184,093 484,554,155

ii) Commitments

a) Estimated amount of Contracts remaining to be executed on Capital 73,900,107 43,024,083

Account and not provided for

b) Uncalled liability on shares and other investments partly paid - —

c) Other Commitments - —

Total 73,900,107 43,024,083

Note :

1) The above contingent liability in respect of Sale Tax includes an amount of Rs.179166738/- ( Previous Year Rs.179166738/- ) being tax demand by the Sale Tax Authorities on sale of synthetic fabric manufactured by the Company for the year 1993-94, 1995-96 to 2001-02, 2003-04 and 2004-05 consequent upon the treatment of such fabric as a taxable item which the Company claims to be non-taxable. The Company''s appeal in respect of the aforesaid demand is pending before various authorities. In respect of demand for disputed Sales Tax in Synthetic of Rs.78061149 /- for the year 1993-94,1995-96,1997-98,1999-2000 and 2003-04,orders in favour of the Company have been issued by W.B.Commercial Taxes Appellate and Revision Board and Sr.Joint Commissioner as well as Hon''ble High Court of Kolkata. The Sales Tax department is yet to issue revised orders and has not yet filed review petition before the Hon''ble Apex Court.

Proceeding have also been initiated by the Sales Tax authorities to re-open assessment in respect of certain other years, though no demand has been raised by the Department in respect of above years. The company is contesting the same and has been legally advice that the above is not taxable.

As against above demands the Company has deposited Rs.3,012,293/- under protest.

2) The above Contingent Liabilities for Excise Demands includes demands made by Central Excise Authorities from time to time on some alleged intermediate product (Grey Fabric) of Synthetic Wire Cloth for the financial years 1987-88 to 2010-11.The Company is contesting the same beforeCESTAT and Supreme Court simultaneously and has been legally advised that no duty is payable on the same intermediate product.

As against above demands the Company has deposited Rs.2,250,000/- under protest.

3) The Company has deposited Rs. 928,760/- under protest against the demands for Municipal Tax.

4) As against the demands for non-fulfillment of Export Obligation under DEEC Scheme, Rs.11,118,251/- has been deposited under protest and disclosed under Export Entitlements as Other Non-Current Assets.

5) The Contingent Liabilities representing dues to various Government Authorities as stated in (c) above, have been arrived at after considering the reliefs granted by BIFR vides its Order dated 10.06.2010.

6) A sum amounting to Rs.14,359,743/-has been paid as advance in respect of above contracts remaining to be executed on Capital Account and not provided for.

7 Amounts due in respect of Trade Receivable, Loans & Advance given (Non Current and Current Assets) which are considered good and amounts due to parties (under Non Current Liabilities and Trade Payable) are subject to confirmation from the respective parties.

8 Debenture Redemption Reserve has not been created in view of brought forward loss.

9 No provision for taxation has been made in the accounts in view of carry forward loss. Also Minimum Alternate Tax ( MAT ) provision has not been made since this is not applicable, the Company being a Sick Industrial Company.

10 Related Party Disclosures under Accounting Standared-18 :

(a) Key Management Personnel :

Mr. Sunil Kumar Khaitan

(b) Relatives of Key Management Personnel :

Mr. Vedant Khaitan (Son of Mr. Sunil Kumar Khaitan)

(c) Enterprises over which key management personnel and their relatives are able to exercise significant influence :

Sunil Healthcare Limited

Shalimar I ndustries Limited Anil Special Steel Industries Ltd

Note : a) An amount of '' Nil (Previous year - '' 1,67,017/-) has been written back during the year in respect of due to related parttes.

b) No amount has been written off during the year in respect of due from related parttes.

c) No provision for doubtful debts in respect of dues from related parttes has been made.

* Ceased to be related party w.e.f. 01.04.2012

11 The Accounts of the Company have been prepared on a going concern basis as the accumulated losses of the Company exceeded its net worth and the Company was declared as Sick Industrial Company as per the Sick Industrial Companies ( Special Provision ) Act, 1985 by the Board of Industrial and Financial Reconstruction ( BIFR ) vide its Order dated 30.01.2006. The said Board has accorded its approval as conveyed vide its Order dated 10.06.2010 to the Draft Rehabilitation Scheme ( DRS ) submitted by the Company and which was received the Company on 24.06.2010. The effect of the above has been duly given in the financial statement.

12 Discontinued Operation :

a) The Company has discontinued its Nasik Unit from 2nd July 2003 onwards.

The results of the discontinued business during the year where as under;

b) As per the demerger order passed by the Hon''ble Calcutta High Court long back the Company is liable to pay stamp duty under Bombay Stamp Act, 1958 for registration of its immovable properties located in Maharashtra and accordingly has made estimated provision of Rs,210.32 lakhs on account of stamp duty. Pursuant to the said order, Rs.210.32 lakhs is receivable from Jhagadia Copper Ltd ( Formerly SWIL Ltd ) which will be accounted for as and when received.

c) The above operation has been disclosed under "Strip & Wires" business segment.

d) The discontinuance is expected to be completed within 1 Year.

13 Segment Reporting Disclosures under Accounting Standard-17 :

Based on the guiding principles given in Accounting Standard 17 ''Segment Reporting'' ,the Company''s primary business segments are (a) Paper Mill Product and (b) Strip & Wire.

Segment wise Revenue, Results and Capital Employed for the year ended 31st March, 2014 :

Note : a) The Company has disclosed business segment as the primary segment.

b) Transactions between segments are for materials which are transferred at cost.

c) Segment revenue and expense include items directly attributable to the segment and common costs, apportioned on a reasonable basis. They do not include investment income, interest income from Inter-corporate deposits and loans given, dividend income and interest expense.

d) All Segment assets and liabilities are directly attributable to the segment. Segment assets include all operating assets used by the segment and consists principally of net fixed assets, inventories, sundry debtors, loans and advances and operating cash and bank balances. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities. Segment assets and liabilities do not include investments, loans given, interest accrued and due/ but not due, share capital, reserves and surplus and loans.

e) Fixed Assets used in Company''s business or liabilities contracted have not been identified to any of the reportable geographical segments, as the fixed assets and services are used interchangeably between segments. Accordingly, no disclosure relating to total segment assets and liabilities are made.

(b) The Contingent Liabilities & Liabilities are dependent upon Court decision / out of Court Settlement/ Disposal of appeals, etc.

(c) No reimbursement is expected in the case of Contingent Liabilities & Liabilities.

14 Employees Benefits under Accounting Standard-15 :

As per Accounting Standard - 15 " Employee Benefits" , the disclosure of Employee Benefits as defined in the Accounting Standard are as follows: a) Defined Contribution Plan :

i) Employee benefits in the form of Provident Fund, Superannuation Fund, Employee State Insurance Scheme and Labour Welfare Fund are considered as defined contribution plan except that Provident Fund in respect of certain employees is contributed to a fund set up by the Company which is treated as a Defined Benefit Plan since the Company has to meet the interest shortfall.

ii) The contributions to the funds are made in accordance with the relevant statute and are recognized as an expense when employees have rendered service entitling them to the contributions. The contribution to Defined Contribution Plan, recognized as expense for the year are as under :

b) Defined Benefit Plan :

i) Post employment and other long-term employee benefits in the form of gratuity and leave encashment are considered as Defined Benefit Obligation. The present value of obligation is determined based on actuarial valuation using projected unit credit method as at the Balance Sheet date. The amount of defined benefits recognized in the Balance Sheet represent the present value of the obligation as adjusted for unrecognized past service cost and as reduced by the fair value of plan assets.

ii) Provident Fund in respect of certain employees is contributed to a fund set up by the Company which is treated as a Defined Benefit Plan since the Company has to meet the interest shortfall. There is no interest shortfall as at the year end. As advised by an independent actuary, it is not practical or feasible to actuarially value the liability considering that the rate of interest is notified by the Government. Accordingly other related disclosures in respect of Provident Fund have not been made.

iii) Any asset resulting from this calculation is limited to the discounted value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan. The amount recognized in the Profit and Loss Account for the year in respect of Employees Benefit Schemes based on actuarial reports is as follows :

c) Basis used to determine the expected Rate of return on Plan Assets :

The basis used to determine the expected rate of return on Plan Assets is Deep Discount Interest rate of R.B.I. or average interest rate of R.B.I. Long Term Instrument.

d) Other disclosures :

i) 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 above information is certified by the actuary.

ii) The Gratuity expenses have been recognized in " Contribution To Provident & Other Funds" and Leave Encashment in "Salaries/Wages and Bonus" under Note No -24

iii) The amount of the present value of obligations, fair value of Plan Assets, surplus/deficit in the plan and experience adjustment arising on plan liabilities and plan assets for the previous three annual periods are not available and therefore, not disclosed.

Note : Above information have been compiled on the basis of Certificates issued by the Actuaries.

15 Earning Per Shares :

16 The previous year''s figures have been reworked, regrouped, rearranged and reclassified wherever necessary and practicable. Amounts and other disclosures for the preceding year are included as an integral part of the current year financial statements and are to be read in relation to the amounts and other disclosures relating to the current year.


Mar 31, 2013

1 Amounts due in respect of Trade receivables, Loans & advance given which are considered good and the amounts due to parties are subject to confirmation from the respective parties.

2 Debenture Redemptiom Reserve has not been created during the year in view of brought forward loss.

3 No provision for taxation has been made in the accounts in view of carry forward loss. Also Minimum Alternate Ta x (MAT) provision has not been made since this is not applicable as the Company is a Sick Industrial Company.

4 Related Party Disclousers under Accounting Standared-18 :

(a) Key Management Personnel : Mr. Sunil Kumar Khaitan

(b) Relatives of Key Management Personnel :

Mr. Vedant Khaitan (Son of Mr.Sunil Kumar Khaitan)

(c) Enterprises over which key management personnel and their relatives are able to exercise significant influence:

Sunil Healthcare Limited *

Shalimar Industries Limited *

Anil Special Steel Industries Ltd. *

5. The accumulated losses of the Company exceeded its net worth and the Company was declared as Sick Industrial Company as per the Sick Industrial Companies ( Special Provision ) Act, 1985 by the Board of Industrial and Financial Reconstruction ( BIFR ) vide its order dated 30.01.2006. The said Board has accorded its approval as conveyed vide its Order dated 10.06.2010 to the Draft Rehabilitation Scheme ( DRS ) submited by the Company and which was received the Company on 24.06.2010 the effect of the above has been duly given in the accounts.

6 Segment Reporting Disclosures under Accounting Standard-17 :

Based on the guiding principles given in Accounting Standard 17 ''Segment Reporting'' , the Company''s primary business segments are

(a) Paper Mill Product and (b) Strip & Wire.

Segment wise Revenue, Results and Capital Employed for the year ended 31st March, 2013 :

b) Transactions between segments are for materials which are transferred at cost.

c) Segment revenue and expense include items directly attributable to the segment and common costs, apportioned on a reasonable basis.

They do not include investment income, interest income from Inter-corporate deposits and loans given, dividend income and interest expense.

d) All Segment assets and liabilities are directly attributable to the segment.

Segment assets include all operating assets used by the segment and consists principally of net fixed assets, inventories, sundry debtors, loans and advances and operating cash and bank balances. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilties. Segment assets and liabilities do not include investments, loans given, interest accrued and due/ but not due, share capital, reserves and surplus and loans.

e) Fixed Assets used in Company''s business or liabilities contracted have not been identified to any of the reportable geographical segments, as the fixed assets and services are used interchangably between segments. Accordingly, no disclousure relating to total segment assets and liabilities are made.

7 The previous year''s figures have been reworked, regrouped, rearranged and reclassified wherever necessary . Amounts and other disclosures for the preceding year are included as an integral part of the current year financial statements and are to be read in relation to the amounts and other disclosures relating to the current year.


Mar 31, 2012

A) Rights, Preferences and Restrictions attached to shares

i) Each Equity Share holder holding shares of Rs.2/- each is eligible for one vote per share held and are entitled to receive dividends as declared from time to time. In the event of liquidation, the equity shares holders are eligible to receive the remaining assets of the Company after distribution of all preferential creditors in proportion to their Shareholdings.

ii) 8% Cumulative Redeemable Preference shares issued as per IDBI sanction dated 13th June 2006 by way of converting their overdue interest and redeemable in sixteen instalments commencing from 1st April 2017 and ending on 1st January 2021. Cumulative Preference dividend is expected to be paid annualy over a period of four years commencing from the financial years 2017-18, based on the projected profitability and cashflows of the company.

Notes :

General reserve is primarily created to comply with the requirements of section 205 (2A) of the Companies Act, 1956. This is a free reserve and can be utilised for any general purpose like for issue of bonus shares, payment of dividend, buy back of shares etc.

Nature of Security :

The aforesaid debentures have been secured by a Second mortgage and charge (by execution of Debenture Trust Deed on certain immovable and movable properties of the Company.They are also secured by a second mortgage and charge on the immovable and movable assets of the Company at Uttarpara and Nasik (save and except book debts) both present and future but excluding assets purchased/to be purchased under Deferred Payment Scheme, Asset Credit Scheme and equipments purchased/to be purchased against Rupee and Foreign Currency Loans granted / to be granted by Financial Institutions subject, however, to prior charges created/to be created in favour of the Company's bankers on stocks and receivables for securing borrowings for working capital requirements.

Terms of repayment :

(i) Unsecured loans relating to promoters & body corporates are repayable after the repayment of all settled dues of the secured creditors are made pursuaint to the rehabilitation scheme sanctioned by BIFR vide its Order dated 10th June,2010.

(ii) Loans from SICOM & Sale Tax Loan (Under Sales Tax Deferral Scheme) are repayable over a period of five Years after cut off date (31.03.2009) in equal annual instalments pursuaint to the rehabilitation scheme sanctioned by BIFR vide its Order dated 10th June,2010.

Nature of Security :

(i) Term Loans from Financial Institutions and Banks except term loans of Rs.50,681,935/- ( Previous Year Rs.110,681,935/- ) as stated herein after are secured / to be secured by pari passu first charge by deposit of title deeds of all the immovable and movable properties, both present and future subject, however, to prior charges to created / to be created in favour of the Company's bankers on stocks and receivables for securing borrowings for working capital requirements.

(ii) Term Loans of Rs.50,681,935 /- (Previous Year Rs.110,681,935/-) under various Schemes of Financial Institution ( IDBI ) are secured by exclusive charge on Fixed Assets purchased as hereafter stated.

Notes :

(i) Period of redemption of Debentures in respect of (i) to (iii) above : At par on the expiry of 7th, 8th and 9th years from the date of allotment i,e.4th Feb' 1992.

(ii) Nature of Security : Refer Note No.2.4

(iii) Period and amount in continuing default : These loans could not be repaid even as per the restructuring terms (refer Note no. 2.19(2). The company has reclassified them from long term borrowings under non-current liabilities and short term borrowing under current liabilities to Other current liabilities :

* As confirmation regarding waiver of interest and penalty as per BIFR Scheme has not been received by us from SICOM and Sales tax Loan (Under Sales Tax Defrral Scheme) department Govornment of Maharastra the amount as above could not be repaid.

(i) Contingent Liabilities and Commitments (To the extent not provided for)

i) Contingent Liabilities

(a) Claims against the company 12,200,831 53,723,591 not acknowledged as debt

(b) Guarantees 7,415,258 8,134,491

(c) Sale Tax Demands 211,368,516 215,730,802

(d) Excise Demands 193,611,551 190,859,573

(e) Municipal Tax Demands 1,168,750 1,168,750 (f) Non fulfilment of Export Obligation 57,324,691 57,324,691 under DEEC Scheme

(g) Non fulfilment of Export Obligation 6,590,672 470,064,180 6,590,672 471,674, 488 under ISIL Scheme

Total 489,680,269 533,532, 570

ii) Commitments.

a) Estimated amount of Contracts remaining to be executed on

Capital Account and not provided for. 58,396,355 13,804, 048

b) Advance paid against above 29,005,323 3,857, 781

Note :

1) The above contingent liability in respect of Sales Tax includes an amount of Rs.1,79,166,738/- ( Previous Year Rs.1,79,166,738/-) being tax demand by the Sales Tax Authorities on sale of synthetic fabric manufactured by the Company for the year 1993-94,1995-96 to 2004- 05 consequent upon the treatment of such fabric as a taxable item which the Company claims to be non-taxable. The Company's appeal in respect of the aforesaid demand is pending before various authorities. In respect of demand for disputed Sales Tax in Synthetic of Rs.78,061,140 /- for the year 1993-94,1995-96,1997-98,1999-2000 and 2003-04,orders in favour of the Company have been issued by W.B.Commercial Taxes Appellate and Revision Board and Sr.Joint Commissioner. The Sales Tax department has filed review petition before the West Bengal Commercial Taxes appeallate and Revision Board for the year 1995-96,1997-98 and 2003-04 against their aforesaid order which is pending.

Proceedings have also been initiated by the Sales Tax authorities to re-open assesment in respect of certain other years, though no demand has been raised by the Department in respect of above years. The company is contesting the same and has been legally adviced that the above is not taxable.

2) The above Contingent Liabilities for Excise Demands includes demands made by Central Excise Authorities from time to time on some alleged intermediate product ( Grey Fabric ) of Synthetic Wire Cloth for the following periods -

From September' 1987 to June' 1997 Rs.36,362,543 /- and From July'1992 to January' 1996 & 2000 to March'2010 Rs.1,52,798,363 /-. The Company is contesting the same before CESTAT and Supreme Court simultaneously and has been legally advised that no duty is payable on the same intermediate product.

3) The Contingent Liabilities representing dues to various Government Authorities as stated in ( i ) ( a ) to ( i ) ( c ) above have been arrived at after considering the reliefs granted by BIFR vides its Order dated 10.06.2010. however, the figure for fulfilment of export obligation under ISIL does not include interest / penalty, demand etc.amounting to Rs.34398564 /- as the export obligation has been extended by the appropriate authority vide Order no.01/94/180/142/AM11/PC-4/606 dated 02.07.2010 for certain years as according to the Company obligations of the same have been extended and is pending for fulfilment.

(i) Amounts due in respect of Trade receivables, Loans & advance given which are considered good and the amounts due to parties are subject to confirmation from the respective parties.

(ii) Debenture Redemptiom Reserve has not been created during the year in view of brought forward loss.

(iii) No provision for taxation has been made in the accounts in view of carry forward loss. Also Minimum Alternate Tax ( MAT ) provision has not been made since this is not applicable as the Company is a Sick Industrial Company.

(iv) Related Party Disclousers under Accounting Standared - 18 :

(a) Key Management Personnel :

Mr. Sunil Kumar Khaitan

(b) Relatives of Key Management Personnel :

Mrs. Sita Devi Khaitan (Mother of Mr. Sunil Kumar Khaitan)

Mr. Anil Kumarr Khaitan (Brother of Mr.Sunil Kumar Khaitan)

Mr. Umaesh Khaitan (Brother of Mr. Sunil Kumar Khaitan)

(c) Enterprises over which key management personnel and their relatives are able to exercise significant influence :

Sunil Healthcare Limited

Shalimar Industries Limited ASIL Industries Limited Satya Sons Services Limited

NOTES:

a) No amount has been written back / written off during the year in respect of due to / from related parties except write back of Inter Corporate Deposit payable of Rs. Nil (Previous year Rs.15,075,000/-) and Sundry creditor balances of Rs.Nil (Previous year Rs.123,253/-) as per BIFR order.

b) No provision for doubtful debts has been made in respect of dues from related parties.

(v) The accumulated losses of the Company exceeded its net worth and the Company was declared as Sick Industrial Company as per the Sick Industrial Companies ( Special Provision ) Act, 1985 by the Board of Industrial and Financial Reconstruction ( BIFR ) vide its order dated 30.01.2006. The said Board has accorded its approval as conveyed vide its Order dated 10.06.2010 to the Draft Rehabilitation Scheme ( DRS ) submited by the Company and which was received the Company on 24.06.2010 the effect of the above has been duly given in the accounts.

b) As per the demarger order passed by the Hon'ble Calcutta High Court long back the Company is liable to pay stamp duty under Bombay Stamp Act, 1958 for registration of its immovable properties located in Maharastra and accordingly has made estimated provision of Rs. 210.32 lakhs on accout of stamp duty. Pursuant to the said order, Rs. 210.32 lakhs is receivable from Jhagadia Copper Ltd (Formerly SWIL Ltd.) which will be accounted for as and when received.

(vi) Segment Reporting Disclosures under Accounting Standard - 17 :

Based on the guiding principles given in Accounting Standard 17 'Segment Reporting', the Company's primary business segments are

(a) Paper Mill Product and (b) Strip & Wire.

Note :

a) The Company has disclosed business segment as the primary segment.

b) Transactions between segments are for materials which are transferred at cost.

c) Segment revenue and expense include items directly attributable to the segment and common costs, apportioned on a reasonable basis. They do not include investment income, interest income from Inter-corporate deposits and loans given, dividend income and interest expense.

d) All Segment assets and liabilities are directly attributable to the segment.

Segment assets include all operating assets used by the segment and consists principally of net fixed assets, inventories, sundry debtors, loans and advances and operating cash and bank balances. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilties. Segment assets and liabilities do not include investments, loans given, interest accrued and due/ but not due, share capital, reserves and surplus and loans.

(b) The Contingent Liabilities & Liabilities mentioned at SI. No. 1 & 24 (a) repectively are dependent upon Court decision/out of Court Settlement/ Disposal of appeals, etc.

(c) No reimbursement is expected in the case of Contingent Liabilities & Liabilities shown respectively under SI. No. 1 & 24(a) above.

Basis used to determine the expected Rate of return on Plan Assets :

The basis used to determine the expected rate of return on Plan Assets is Deep Discount Interest rate of R.B.I. or average interest rate of R.B.I. Long Term Instrument.

Other disclosures :

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

The Gratuity expenses have been recognized in "Contribution to Providend & Other Funds"and Leave Encashment in "alaries/Wages and Bonus"under Note No 30.

The amount of the present value of obligations, fair value of Plan Assets, surplus/deficit in the plan and experience adjustment arising on plan liabilities and plan assets for the previous two annual periods are not available and therefore, not disclosed.

(vii)The Revised Schedule VI has become effective from 1st April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped/reclassified wherever necessary to correspond with the current year' classification/disclosures.


Mar 31, 2010

As at 31st As at 31st

March, 2010 March, 2009

(Rs.) (Bs.)

1. (Note No. B -1 of Schedule O of Financial Statements)

Contingent Liabilities not provided for 579,077,201 551,195,142

2. (Note No. B - 2 of Schedule O of Financial Statements) Estimated amount of Contracts remaining to be executed on Capital Account and not provided for 25,038,912 27,468,135

350,000 19% Redeemable Non-Convertible Debentures of Rs.100/- each privately placed with the New India Assurance Co.Ltd. (NIA) was redeemable in three equal instalments starting from the end of the 6th year till the end of the 8th year from the date of allotment i.e. 19th June, 1993.

100,000 19% Non-Convertible Debentures of Rs. 100/- each privately placed with The Oriental Insurance Co. Ltd.

(OIC) are redeemable in three equal annual instalments on the expiry of 6th, 7th and 8th years from the date of allotment I.e. 30th May, 1996.

100,000 20% Non-Convertible Debentures of Rs.100/- privately placed with NIA are redeemable in three equal annual instalments on the expiry of 4th, 5th and 6th year from the date of allotment I.e.3rd December, 1996.

1,000,000 18% Non Convertible Debentures of Rs.100/- each privately placed with Industrial Development Bank of India (IDBI) are redeemable in sixteen instalments commencing from 1st April, 2005.

375,000 14% Non-Convertible Debentures of Rs.100/- each privately placed with Industrial Investment Bank of India (IIBI) are redeemable in 24 equal quarterly instalments commencing from 1st October, 2003. Out of the above the whole of Rs. 37,500,000/- due to IIBI has been transferred to Asset Reconstruction Company India Ltd.(ARCIL) during the year 2009-10 in full.

The Debentures and term loans from Financial Institutions and Banks except term loans of Rs.110,681,935/- • (Previous Year: Rs. 110,681,935/-) as stated herein after are secured/ to be secured by pari passu first charge by deposit of title deeds of all the immovable properties, and movable properties, both present and future subject, however, to prior charges created/ to be created in favour of the Companys bankers on stocks and receivables for securing borrowings for working capital requirements.

Term Loans of Rs.110,681,935/- (Previous Year: Rs. 110,681,935/-) under various schemes of Financial Institutions (IDBI) are secured by exclusive charge on Fixed Assets purchased thereunder.

380,982 14% Secured Redeemable Debentures of Rs.30/- each (Non-Convertible Portion)

249,37514% Secured Redeemable Debentures of Rs.20/- each (Non-Convertible Portion) and 10,30014% Secured Redeemable Debentures of Rs.10/- each (Non-Convertible Portion) were redeemable at par on the expiry of the 7th, 8th, and 9th years from the respective dates of allotment i.e., 4th February, 1992 and 18th February, 1992.

The aforesaid debentures have been secured by a second mortgage and charge (by execution of Debenture Trust Deed) on certain immovable and movable properties of the Company. They are also secured by a second mortgage and charge on the immovable and movable assets of the Company at Uttarpara and Nasik (save and except book debts) both present and future but excluding assets purchased/ to be purchased under Deferred Payment Scheme, Asset Credit Scheme and equipments purchased/to be purchased against Rupee and Foreign Currency Loans granted/to be granted by Financial Institutions subject, however, to prior charges created/to be created in favour of the Companys bankers on stocks and receivables for securing borrowings for working capital requirements.

Various series of Debentures other than those restructured during the year as above which have matured/ partly matured for redemption before 31st March, 2010 could not be repaid due to liquidity constraint. The company has, however, applied to the Financial Institutions for One Time Settlement (OTS).

In respect of the Debentures held by the public, the company has since redeemed, in full, such Debentures the certificates for which were surrendered within 31st March, 2010.

Principal amount of Rs. 734,681,568/- together with Interest accrued and Due upto 31.12.09 amounting to Rs. 1,658,727,033/- in respect of dues to Bank of India , Allahabad Bank, Indian Overseas Bank, NIC, Canara Bank, SBI and IIBI has been transferred on assignment to Asset Reconstruction Company India Ltd.(ARCIL). Subsequent to assignment, ARCIL has restructured the loan.

3. (Note No. B-6 of Schedule O of Financial Statements)

Sundry Debtors and Advances include Rs.2,875,455/- (Previous Year: Rs.2,875,455/-) outstanding since a long period.

However, no provision against the same has been considered necessary.

4. (Note No. B-7 of Schedule O of Financial Statements)

Amount due from Sundry Debtors, Loans & Advances given, which are considered good and dues to Sundry Creditors are subject to confirmation of the parties.

5. (Note No. B-11 of Schedule O of Financial Statements)

Capital Work-In-Process includes advance on Capital Account 1,437,733 11,375,194

6. (Note No. B-17 of Schedule O of Financial Statements)

No provision for taxation has been made in the accounts in view of carry forward loss. Also Minimum Alternate Tax (MAT) provision has not been made since this is in applicable, the Company being a Sick Industrial Company.

7. (Note No. B-20 of Schedule O of Financial Statements) Consolidated Financial Statements under Accounting Standard 21 :

The Company has a wholly owned subsidiary in Singapore in the name and style of SWIL International Pte Ltd. In view of huge accumulated losses of the subsidiary as on 31st March, 2010, the subsidiary is under severe financial constraints which significantly impairs its ability to transfer funds to the holding company. As such, the management is of the view that preparation of Consolidated Financial Statement of the Company and its above named subsidiary is not required as per para 11 (b) of Accounting Standard 21.

8. (Note No. B-21 of Schedule O of Financial Statements) Related party disclosures under Accounting Standard 18 :

A. Names of related parties and nature of related party relationship :

(a) Subsidiary companies :

SWIL International Pte Ltd.

(b) Key Management Personnel:

Mr. Sunil Kumar Khaitan

(c) Relatives of Key Management Personnel:

Mrs. Sita Devi Khaitan (Mother of Mr. Sunil Kumar Khaitan)

Mr. Anil Kumarr Khaitan (Brother of Mr. Sunil Kumar Khaitan)

Mr. Umaesh Khaitan (Brother of Mr. Sunil Kumar Khaitan)

(d) Enterprises over which key management personnel and their relatives are able to exercise significant influence :

Sunil Healthcare Limited

Shalimar Industries Limited

ASIL Industries Limited

Satya Sons Services Limited

9. (Note No. B-22 of Schedule O of Financial Statements)

The accumulated losses of the Company exceeded its net worth and the Company was declared as Sick Industrial Company as per The Sick Industrial Companies(special provisions) Act, 1985 by the Board of Industrial and Financial Reconstruction(BIFR) vide its order dated 30.01.2006. The said Board has accorded its approval as conveyed vide its order dated 10.06.2010 to the Draft Rehabilitation Scheme (DRS) submitted by the Company.and which was received by the company on 24.06.2010 the effect of which will be given in the accounts in totality in the succeeding accounting year after receiving requisite approval from various authorities in respect of the reliefs and concessions provided in the scheme.

NOTE:

i) The Company has disclosed business segment as the primary segment.

ii) Transactions between segments are for materials which are transferred at cost.

iii) Segment revenue and expense include items directly attributable to the segment and common costs, apportioned on a reasonable basis.

They do not include investment income, interest income from Inter-corporate deposits and loans given, dividend income and interest expense.

iv) All Segment assets and liabilities are directly attributable to the segment.

Segment assets include all operating assets used by the segment and consists principally of net fixed assets, inventories, sundry debtors, loans and advances and operating cash and bank balances. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilties. Segment assets and liabilities do not include investments, loans given, interest accrued and due/ but not due, share capital, reserves and surplus and loans.

10. (Note No. B-31 of Schedule O of Financial Statements)

Employee benefits(Revised Accounting Standard 15)

As per Accounting Standard -15 " Employee Benefits", the disclosure of Employee Benefits as defined in the Accounting Standard are as follows :

The Company has with effect from 1st April, 2007 adopted Accounting Standard -15 (revised 2005), "Employee Benefits".

Defined Contribution Plan :

Employee benefits in the form of Providend Fund, Superannuation Fund, Employee State Insurance Scheme and Labour Welfare Fund are considered as defined contribution plan except that Providend Fund in respect of certain employees is contributed to a fund set up by the Company which is treated as a Defined Benefit Plan since the Company has to meet the interest shortfall.

Defined Benefit Plan :

Post employment and other long-term employee benefits in the form of gratuity and leave encashment are considered as Defined Benefit Obligation. The present value of obligation is determined based on acturial valuation using projected unit credit method as at the Balance Sheet date. The amount of defined benefits recognized in the Balance Sheet represent the present value of the obligation as adjusted for unrecognized past service cost and as reduced by the fair value of plan assets.

Providend Fund in respect of certain employees is contributed to a fund set up by the Company which is treated as a Defined Benefit Plan since the Company has to meet the interest shortfall. There is no interest shortfall as at the year end. As advised by an independent actuary, it is not practical or feasible to actuarially value the liability considering that the rate of interest is notified by the Government. Accordingly other related disclosures in respect of Providend Fund have not been made.

Any asset resulting from this calculation is limited to the discounted value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan. The amount recognized in the Profit and Loss Account for the year in respect of Employees Benefit Schemes based on acturial reports is as follows:

IX. Basis used to determine the expected Rate of return on Plan Assets:

The basis used to determine the expected rate of return on Plan Assets is Deep Discount Interest rate of R.B.I, or average interest rate of R.B.I. Long Term Instrument.

X. Other Disclosures

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

The Gratuity expenses have been recognized in" Contribution To Providend & Other Funds" and Leave Encashment in "Salaries/Wages and Bonus" under Schedule- L of Financial Statement

The amount of the present value of obligations, fair value of Plan Assets, surplus/deficit in the plan and experience adjustment arising on plan liabilities and plan assets for the previous three annual periods are not available and therefore, not disclosed.

11. (Note No. B-33 of Schedule 0 of Financial Statements)

Previous years figures have been regrouped/rearranged wherever considered necessary.

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