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Notes to Accounts of Sharad Fibres & Yarn Processors Ltd.

Mar 31, 2014

A. Accounts are not authenticated by the whole time Company Secretary, as required by section 215(1) of the Companies Act, 1956, as the company is facing acute financial crunch no whole time company secretary was available for appointment, for due compliances.

b. CONTINGENT LIABILITIES:

Contingent Liabilities are disclosed after a careful evaluation of the facts and legal aspects of the matter involved.

Contingent Liabilities not provided for:-

i) In respect of demand raised by the Central Excise Department amounting to Rs. 1,76,04,797/-, the company preferred an appeal which was won by the company. However, the Central Excise Department, Mumbai has preferred an appeal before the Supreme Court and the case is being protested suitably. The Central Excise department has filed further complaint in this regard before the court of Honorable Chief Judicial Magistrate, at Silvassa.

ii) Recron Synthetics Limited has filed case against the Company before the High Court, Mumbai for a claim of Rs.4,49,38,266/- and interest thereon Rs.2,99,41,821/- and other claims of Rs. 32,,87,546/-. However the same is being suitably defended by the company.

iii) An Appeal Filed by the Company before the commissioner of Central Excise (Appeal) the order on the same has been passed in favour of the Company against demand of Rs. 3,61,537/- (already Paid) plus Rs. 16,32,382/- (already paid) and imposed penalty of Rs. 3,61,537/- and Rs. 1,00,000/- and Interest thereon. However the Excise Department has filed appeal before the CEGAT (case No. 103/adi/2001 ADC dated 31.10.2001). The Case is being defended by the company.

c. As per Accounting Standard-18 issued by the Institute of Chartered Accountants of India, the disclosure of transactions with related parties as defined in the Accounting Standard are given below.


Mar 31, 2011

1. NATURE OF SECURITY FOR SECURED LOANS:

A) Working Capital Loan from Central Bank of India.

1) By hypothecation of all the present and future stock of Raw Materials, Stock in process, Finished Goods, Stores & Spares and Book debts of the company.

2) Personal guarantee of Mr. Ravi Dalmia, Mr. Shashi Dalmia, Mr. Aditya Dalmia, Mrs. Anita Dalmia, Mrs. Shardadevi Dalmia, Mrs. Pratibha Dalmia, M/s. Pratik Overseas Corporation, Dalmia Exim Corpn. M/s. Ravi International and Corporate Guaratee from M/s. Dalmia Exim Ltd.

B) Term Loan from Central Bank of India.

Secured by Equitable mortgage and first charged on present and future Fixed Assets situated at 110/111 Govt. Indl. Estate Masat, Silvassa and Sr.No. 218/1/1/ at Dadra Village and Hypothecation of Machinery and other assets acquired or to be acquired by the company.

2. Balance of unsecured loans and sundry debtors, creditors, loans and advances and deposits and bank loans taken /paid and bank balances are subject to confirmation.

3. Sundry Advances include Rs. 14,75,000/- (Rs. 14,75,000/-), paid as deposit to a firm in which directors are interested, for taking premises on rent.

4. Loans and advances includes amount due from associated concern where Directors are interested Rs. 11,35,556/- (Rs. 11,66,721/-).

5. Additional information pursuant to the provision of paragraph 3, 4C & 4D of part II of Schedule VI of the Companies Act, 1956 is applicable and the copy of stock statement is attached.

6 During the year, the company has provided Rs.Nil/-(Rs.Nil /-) in respect of borrowing from Central bank of India. The reasonable quantum and calculation of is taken as certified by the management as the necessary evidence regarding the exact amount isn't in the possession of the management. The company has requested the bank to waive all uncharged / unpaid interest in its proposal for compromise arrangement. The request is pending before the bank for concurrence. The losses during the year are understated to the extent of unprovided interest as borrowings from the bank. However the company has written back interest expenses claimed earlier to the extent of Asst Year 2003-04 amounting to Rs.5.26 Crores as the loss thereof would not be allowed to be carried forward.

7. On 8.4.97 while implementing plans for expansion of the manufacturing facilities the company had an MOU with M/s. Raymond Synthetics Ltd. (RSL) interalia providing terms for supply for uninterrupted raw material. It was also agreed to suitably revise the job charges on revision in cost of power, labour, oil etc. Raymond Synthetics Ltd. (RSL) has failed to fulfill its obligation under the said MOU and reported to have become a sick company under provisions of SIC (SP) ACT. The company is seeking for remedial action against Raymond Synthetics Ltd. (RSL) for losses resulted due to its failure in honoring terms of the MOU.

8. Figures in brackets indicate the figures pertaining to the previous year.

9. Figures are rounded off to the nearest rupee.

10. Figures pertaining to the previous year have been regrouped and rearranged where necessary to make them comparable with figures of the Current Year.

11. No deferred Tax Assets are created in the books of the company as in the opinion of the management, they are not reasonably certain that there will be sufficient future income to recover such Deferred Tax Assets.

12. Expenditure in foreign currency in respect of traveling amounted to Rs. Nil/- (Rs. Nil /-) and Export Commission of Rs. Nil/-(Rs. Nil/-). FOB Value of Exports is Rs. Nil/- (Rs. Nil /-).

13. Unpaid amount due as on 31.03.2011, to MICRO, Small and Medium enterprise suppliers on account of principal amount together with the interest thereon under the Micro, Small and Medium enterprise Development Act, 2006 could not be ascertained by the company in the absence of information relating to the status of the suppliers and has not disclosed in the Financial Statements.

14. No provision has been made in the books of accounts of the Company on account of retirement benefits of the employees, in accordance with the AS-15 issued by the ICAI, as the same is made on cash basis and shall be provided in the books of the company as and when paid.

15. In the opinion of the management AS-17 of segmental reporting is not applicable to the company as the company has only one segment, hence no separate reporting is made.

16. In Compliance with AS-20 Earning per Share issued by the I.C.A.I, the disclosure are as under:

Earning per share - Rs. 11.42/- (Rs.-1.56/-)

Earning per share is calculated on Basis Earning per Share Method i.e. by dividing the net profit for the period attributed to equity shareholders by the weighted average number of equity share outstanding during the period.

17. As per Accounting Standard-18 issued by the Institute of Chartered Accountants of India, the disclosure of transactions with related parties as defined in the Accounting Standard are given below:

18. Accounts are not authenticated by the whole time Company Secretary, as required by section 215(1) of the Companies Act, 1956, as the company is facing acute financial crunch no whole time company secretary was available for appointment, for due compliances.

19. Central Bank of India has initimated proceedings under SARFAESI Act, 2002 and taken symbolic possession of the plant assets. The company is exploring possibilities of amicable settlement and accordingly submitted proposal for One Time Settlement along with No Lien Deposit of Rs. 43.00 Lac. The OTS proposal is under consideration by bank. The company is contemplating to resume its manufacturing activities therefore, the accounts are prepared assuming "Going Concern" concept.

20. As informed by the management, Central Bank of India exercising powers u/s 13(4) of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 has during the year 2007-2008 disposed off collateral security of residential house and office premises owned by guarantors for aggregate consideration of Rs.196.00 lac. However, the bank has not yet provided the details regarding appropriation of sale proceeds from disposal of the guarantor assets. Therefore, the company has not made any accounting entries in respect of these transactions.


Mar 31, 2008

A) Working Capital Loan from Central Bank of India.

1) By hypothecation of all the present and future stock of Raw Materials, Stock in process, Finished Goods, Stores & Spares and Bookdebts of the company.

2) Personal guarantee of Mr. Ravi Dalmia, Mr. Shashi Dalmia, Mr. Aditya Dalmia, Mrs. Anita Dalmia, Mrs. Shardadevi Dalmia, Mrs. Pratibha Dalmia, M/s. Pratik Overseas Corporation, Dalmia Exim Corpn. M/s. Ravi International and Corporate Guarantee from M/s. Dalmia Exim Ltd.

B) Term Loan from Central Bank of India.

Equitable mortgage and first charged on present and future Fixed Assets situated at 110/111 Govt. Indl. Estate Masat, Silvassa and Sr.No. 218/1/1/ at Dadra Village and Hypothecation of Machinery and other assets acquired or to be acquired by the company.

1. Balance of unsecured loans and sundry debtors, creditors, loans and advances and deposits and bank loans taken /paid are subject to confirmation.

2. The company has made provisions for debts doubtful of recovery Rs. 2,90,77,392/- (Rs.2,90,77,392/-) as the management is not hopeful of recovering the same.

3. Sundry Advances include Rs.14,75,000/- (Rs.14,75,000/-), paid as deposit to a firm in which directors are interested, for taking premises on rent.

4. Loans and advances includes amount due from associated concern where Directors are interested Rs. Nil/- (Rs.10,745/-).

5. Additional information pursuant to the provision of paragraph 3, 4C & 40 of part II of Schedule VI of the Companies Act, 1956 is not applicable as there are no purchase and sales.

6. During the year, the company has provided Rs. Nil/-(Rs. Nil /-) in respect of borrowing from Central bank of India . The reasonable quantum and calculation of is taken as certified by the management as the necessary evidence regarding the exact amount isn't in the possession of the management. The company has requested the bank to waive all uncharged / unpaid interest in its proposal for compromise arrangement . The request is pending before the bank for concurrence . The losses during the year are understand to the extent of un provided interest as borrowings from the bank.

7. On 8.4.97 while implanting plans for expansion of the manufacturing facilities the company had an MOU with M/s. Raymond Synthetics Ltd. (RSL) interalia providing terms for supply for uninterrupted raw material. It was also agreed to suitably revise the job charges on revision in cost of power, labour, oil etc. Raymond Synthetics Ltd. (RSL) has failed to fulfill its obligation under the said MOU and reported to have become a sick company under provisions of SIC (SP) ACT. The company is seeking for remedial action against Raymond Synthetics Ltd. (RSL) for losses resulted due to its failure in honoring terms of the MOU.

8. Figures in brackets indicate the figures pertaining to the previous year.

9. Figures are rounded off to the nearest rupee.

10. Figures pertaining to the previous year have been regrouped and rearranged where necessary to make them comparable with figures of the Current Year.

11. No deferred Tax Assets are created in the books of the company as in the opinion of the management, they are not reasonably certain that there will be sufficient future income to recover such Differed Tax Assets.

12. Expenditure in foreign currency in respect of traveling amounted to Rs. Nil/- (Rs. Nil /-) and Export Commission of Rs.Nil/-(Rs. Nil /-). FOB Value of Exports is Rs.Nil/- (Rs. Nil /-).

13. Unpaid amount due as on 31.03.2008, to MICRO, Small and Medium enterprise suppliers on account of principal amount together with the interest thereon under the Micro, Small and Medium enterprise Development Act,2006 could not be ascertained by the company in the absence of information relating to the status of the suppliers and has not disclosed in the Financial Statements.

14. The BIFR in hearing held on 01.08.2005 have declared the Company as Sick Industrial Company under section 3(l)(o) of the Sick Industrial Companies (Special Provision) Act, 1985. However since Central Bank of India has initiated proceedings under SARFSIA, the reference stands abated.

15. No provision has been made in the books of accounts of the Company on account of retirement benefits of the employees, in accordance with the AS-15 issued by the ICAI, as the same is made on cash basis and shall be provided in the books of the company as and when paid.

16. In the opinion of the management AS-17 of segmental reporting is not applicable to the company as the company has only one segment, hence no separate reporting is made.

17. In Compliance with AS-20 Earning per Share issued by the I.C.A.I, the disclosure are as under:

Earning per share Rs.-2.73/- (Rs.-3.17)

- Earning per share is calculated on Basis Earning per Share Method i.e. by dividing the net loss for the period attribute4 to equity shareholders by the weighted average number of equity share outstanding during the period.

18 Accounts are not authenticated by the whole time Company Secretary, as required by section 215(1) of the Companies Act, 1956, as the company being a sick industrial company facing acute financial crunch no whole time company secretary was available for appointment, for due compliances.

19 The manufacturing activities of the company continue to be closed. The accumulated losses of the company have exceeded its net worth. The Company has made reference to the Board for Industrial and Financial Reconstruction (BIFR) and submitted proposal for rehabilitation. However, Central Bank of India has initiated proceedings under SARFESIA consequently BIFR has passed order for abetment of SICA proceedings. The bank has taken possession of plant assets. Therefore, the company is not a Going concern. The financial statement (and Notes thereto) do not disclose this fact.

20 The management is of view that as per AS-28, impairment loss is required to be recognized, as the present values of assets are lower than the carrying amount of such assets. However, since the assets are in possession of the bank, the company could not ascertain the impairment loss.

 
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