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Notes to Accounts of Sportking India Ltd.

Mar 31, 2014

NOTE - 1 :

CORPORATE INFORMATION

Sportking India Limited (The Company) is a public company incorporated under the provisions of the Companies Act, 1956 on 15 February 1989. The company is engaged in manufacturing of Cotton yarn, Synthetic yarn and Blended Yarn and of dyeing activity. The Company has three manufacturing units at Ludhiana and one at Bathinda.

NOTE - 2 :

a) Each holder of Equity share is entitled to one vote per share. In the event of liquidation of the company, the holders are entitled to receive any of the remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

b) Prefrence shares are having preference over equity shares in respect of payment of 5% dividend and repayment of capital over equity shareholders and is entitled to voting rights in the resolutions directly affecting their interest and on all resolution at every meeting of the company on the dividends to them are in arrears for the two financial years immediately preceeding the last meeting or for any three years during the period of six years ending with the financial years preceeding the last meeting. Preference shares are redemable within 20 years from the date of allotment.

c) The amount remaining unpaid on account of calls in arrear of public issue 9,28,500 Equity Shares of Rs.10/ - each for cash at a premium of Rs. 25/- per share have been apportioned between Share Capital (Rs. 19,68,000/ - PY. Rs. 19,68,000/-) and Share Premium Account (Rs. 45,92,000/- PY Rs. 45,92,000/-) in the ratio of three to seven.

NOTE - 3 :

i) The term loans from State Bank of India, State Bank of Patiala, Punjab National Bank, Central Bank of India, Punjab & Sind Bank and Allahabad Bank are secured against a) first pari-pasu charge on hypothecation and mortgage of all present and future Plant & Machinery and Land/Building of all the works of the Company situated at Village Meharban, Ludhiana, Village Kanech, Ludhiana, Village Barmalipur, Ludhiana, Village Jida, Bathinda. b) second pari-pasu charge on hypothecation of current assets ofthe company and c) equitable mortgage of commercial land & building situated at Village Barmalipur, Ludhiana owned by Sh. Raj Kumar Avasthi (Chairman & Managing Director)& Sh. Munish Avasthi (Managing Director) These term loans are further guaranteed by Sh. Raj Kumar Avasthi (Chairman & Managing Director) & Sh. Munish Avasthi (Managing Director).

ii) The term loans from HDFC Bank Limited/ ICICI Bank Limited is secured against hypothecation of respective vehicles.

iii) The Loan of Rs. 1,00,00,000/- from Sh. Munish Avasthi (Managing Director) carry NIL interest and is not repayable before 31.03.2015

v) The Company has not defaulted in repayment of loans and interest.

) Terms of repayment of term loans including acceptance payable/ buyer credit forming part of term loans.

NOTE - 4 :

i) The Working capital borrowings (Cash Credit / Export Packing Credit) and Acceptances Payable/ Buyer Credit/ Letter of Credit/ Letter of Comfort/ Bank Guarantee Limit from consortium member banks viz. State Bank of India, State Bank of Patiala, Punjab & Sind Bank, Central Bank of India and Punjab National Bank are secured against first pari-pasu charge on all the current assets of the company including raw material, consumable stores & spares, stock in process, finished goods, bills, book debts and receivables and further collatelly secured against second charge on the fixed assets of the company at Village Meharban, Ludhiana, Village Kanech, Ludhiana, Village Barmalipur, Ludhiana, Village Jida, Bathinda and equitable mortgage of commercial land & building situated at Village Barmalipur, Ludhiana owned by Sh. Raj Kumar Avasthi (Chairman & Managing Director)& Sh. Munish Avasthi (Managing Director).

ii) The working capital borrowings (Pledge of Warehouse Receipts) from Punjab National Bank and Punjab & Sind Bank is secured against pledge of warehouse receipts of the raw cotton bales stored in approved warehouse.

These working capital borrowings are further guaranteed by Sh. Raj Kumar Avasthi (Chairman & Managing Director) & Sh. Munish Avasthi (Managing Director).

iii) Working capital loans are repayable on demand.

NOTE - 5 :

Defined Benefit Plan

The Employees' Gratuity Fund Scheme managed by Life Insurance Corporation of India 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's considered in actuarial valuation and other factors such as inflation, seniority, promotion and other relevant factors including supply and demands in the employment market have been taken into account. The above information is certified by the actuary.

The expected rate of return on plan assets is determined considered several applicable factors, mainly the composition of plan asset held, assessed risk, historical results of return on plan asset and the company's policy for the plan asset management.

NOTE - 6 :

CONTINGENT LIABILITIES

(Rs. in Lacs)

Sr. Particulars As at As at No. 31.03.2014 31.03.2013

a) Letter of Credit(s)/Bank Guarantee(s) issued by banks 63.00 63.00

b) Bills discounted with banks 12031.18 7780.09

c) Committments on account of capital account remaining to be executed (Net of Advances) out of which Letter of Credits/Bank Guarantee of Rs. 368.91 Lacs (Pr.Year Rs. 1362.50 Lacs) net of margin. 1312.03 7430.65

d) Bonds against un-fulfilled export obligations under Export Promotion Capital Goods/Duty Exemption scheme. 974.24 670.65

e) Disputed Income Tax Liabilities of cases pending with appellate authorities. 99.58 99.58

f) Provident Fund dispute pending with High Court. (Net of Margin) 8.58 8.58

g) Disputed Sales Taxes liabilities of cases pending with appellate authorities. 11.19 11.19

h) Disputed Service Taxes liabilities of cases pending with appellate authorities. 13.86 -

i) Disputed Excise Taxes liabilities of cases pending with appellate authorities. 44.87 -

j) Disputed Electricity Taxes liabilities of cases pending with appellate authorities. 415.00 -

NOTE - 7

The working capital borrowings and current account balances are net of cheques issued but not presented for payment of Rs.116194348.54 (Previous year Rs. 63568645.57/-) and that of cheques deposited but not credited of Rs. 30636899/- (Previous year Rs. 38831/- ) with net amount of Rs. 85557449.54/- (Previous Year Rs. 63529814.57/-). Accordingly, the trade payables and trade receivables are understated to the extent of Rs.116194348.54/- and Rs. 30636899/- (Previous year Rs. 63568645.57/- and Rs. 38831/-) respectively and working capital borrowings have been overstated to the extent of Rs. 85557449.54/- (Previous Year Rs. 63529814.57) and current account balances of bank are overstated to the extent of Rs. Nil /- (Previous year Nil)

NOTE - 8

Details pertaining to related party transactions in compliance of Accounting Standard-18 "Related Parties Disclosure" issued by the Institute of Chartered Accountants of India, are as under

1) Names of Related Parties and the Nature of Relationship :

a) Associate Concerns

* M/s N.R.S. Knitwear's * M/s Sportking Knitwears

* M/s Sobhagia Clothing Co. * M/s Darling Demons

* M/s Fashionable Attire * M/s Nagesh Classic

* M/s. Sobhagia Sales (P) Ltd. * M/s. Classic Wears (P) Ltd.

* M/s. Aradhana Fabrics (P) Ltd. * M/s.Marvel Dyers & Processors (P) Ltd.

* M/s. N.T.M. Shawls (P) Ltd. * M/s. Namokar Capital Services (P) Ltd.

b) Key Management Personnel

Sh. Raj Kumar Avasthi Chairman & Managing Director

Sh. Munish Avasthi Managing Director

Sh. Naresh Jain Executive Director

NOTE - 8

Accounting for leases has been done in accordance with Accounting Standard -19 issued by the Institute of Chartered Accountants of India. The details of Lease transactions for the year are as follows:

a) Finance Lease :

The Company does not have any finance lease arrangement.

b) Operating Lease;

i) Lease rentals charged in the Profit and Loss account for the year net of rent received is Rs. 12,88,000/ - (Previous year Rs. 13,73,428/-).

ii) The company has entered into operating leases for its godowns, land and machinery that are renewable on a periodic basis and cancellable at company's option. The company has not entered into sub-lease agreements in respect of these leases.

NOTE - 9

In Feburary 2014, the Hon'ble Supreme Court of India up held the order of the Hon'ble Bombay High Court and Arbitrator's award for payment of prinicipal amount of Rs. 5.94 Crs thereon with interest @ 8% p.a. from June,2008 till payment there of and arbitration cost/expenses of Rs.0.12 Crs by the company to HDFC Bank Limited in respect of the certain foreign currency option contracts purported to be entered by the bank with the company. The amount of interest due upto 31.03.2014 is Rs.2.73 Crs and the total amount of Rs.8.79 Crs due to them has now been provided in the books of accounts. The company had already paid a part amount of Rs. 4.72 Crs. to them during March 2014 and balance principal amount of Rs. 4.07 Crs alongwith further interest due will be paid in 16 monthly instalments beginning from April 2014.

NOTE - 10

a) In the opinion of the Board of Directors, the Current Assets and Loans & Advances have been stated at the realizable values.

b) The balance due to or from the parties, on whatever account, are subject to reconciliation & confirmation.

NOTE - 11

As the company is dealing only in textiles, the operations of the company are considered as a single business segment hence segment reporting under AS-17 of ICAI is not applicable.

NOTE - 12

Previous year figures have been regrouped/restated wherever necessary.


Mar 31, 2013

1. CORPORATE INFORMATION

Sportkmg India Limited (The Company) is a public company incorporated under the provisions of the Companies Act. 1956 on 1& February 1969 The company is engaged in manufacturing of Colton yarn, Synthetic yarn and Blended Yarn and of dyeing activity. The Company has threee manufacturing units at Ludhiana and one at Bathnda

a) Eacn holder of Equity share is entitled to one vde per share. In the event of liquidtion of the company, theholders are entitled to receive ary of the remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number Of equity st a ei held by the shareholders

b) Prefrenoe shares gre having preference ever equity shares in respect of payment of 5% dividend and repayment of capital over equity shareholders and is entitled to voting rrghls in the 'esolutinns cineclly affecting their interest or besides where the dividends to them ere in arrears for the two financial years immediately preced ng the meeting or far any three years during (he period of sm years ending with the financial years preceding the meeting, on all resolution at every meeting of the company Preference shares are redemable within 20 years from the dalu ol allotment

2. Defined Benefit Plan

The Employees' Gratuity Fund Scheme menaced by Life Insurance Corporation of India is a defined benefil plan. The present value of obligation is determined based on actuansl valuanan using he Projected Unit Credit Method, which recognizes each period of service as giving rtee IP adddional unit of employee benefit entitlement and measures each unit separately to but d up the 'insl obligation The oc icsl on lor leave encashment is recognized in the tame manner as graftiity

3. CONTINGENT LIABILITIES

(Rs. in Lacs)

Sr. No. Particulars As at As at 31.03.2013 31.03 2012

a) Letter of credit (s) bank Guarantee issued by banks 63.00 2.00

b) Bills discounted with banks 7780.09 7036.05

c) committments account of capital account remaining to be executed (Net of Advances) out of whith Latter pf Credit Bank Guarantee of T 1362.52 Lacs (pr year Rs. 3797 Lacs) net of margin. 7430.55 9529.90

d) Bonds against un fulfilled export obligation under Export Promotion capital goodscds.'Dut-j1 exemption scheme. 670.65 3288.55

e) Disputed income Tax liabilities of cases pending with appellate authorities. 99.58 140.42

f) Provident Fund dispute pending with High Court. (Net of Margin) 8.58 8.58

g) Disputed Sales Taxes liabilities of cases pending with appellate authorities. 11.19 11.19

Details pertaining to related party transactions in compliance of Accounting Standard-16 "Related Parties Disclosure1 issued by the- Institute of Chartered Accountants of India, are as under 1) Names of Related Parties and tho Nature of Relationship : a) Associate Concerns

* M/s MRS Knitwear's * M/s Spooking Knitwears

* M/s Sobhagia Clothing Co * M's Darting Demons

* M/S Fashionable Attire * M/s Nagesh Classic

* M/s Sobhagia Sales (P} Ltd * M.'s. Classic Wears (P) Ltd

* M/s. Aradhana Fabrics (Pi Ltd. * M/s.Marval Dyers & Processors (P) Ltd

* M/s. N.T.M. Shawls (P) Ltd. * M/S- Namgkar Cspitel Services(p)Ltd

b) Kay Management Personnel

Sh Raj Kumar Avasthi Chairman & Managing Director

Sh. Murnsh Avastni Managing Director

Sh Naresh Jam Executive Director

Accounting for leases has been done in accordance with Accounting standard -19 issued by the institute of Chartered Accountants of India. The-details ol Lease Iran sections for the year are as follows.

4. Finance Lease:

The Company does not have any finance tease arangement.

5. Operating Lease;

i) Lease rentals charged in the Profit and Loss account for the year net of rent received is Rs 13, 73,428- (Previcus year T 13. 44.975/-h

ii) The company has entered into operating leases for its godawns. land and machinery thal are renewable on a periodic basis and cancellable at companys option. The company has no! entered into sub-lease agreements in respect of these leases

There was a dispute / itigation in respect of carta in foreign currency opton contracts purporled to be entered by HDFC Bank Limited with the Company The Ld Arbilrator Has awarded in favour of the bank for payment of principal amount of Rs 5 94 Cm and interest ( cost of Rs. 1.31 Crs (based @ p a upfo 21.07.2010) and failing which payment of further interest @ 8% p.a. will be applicable for tbe delayed period, vide order dated 30th September 2010 which have bean upheld by Hon'ble High Court of Judicature al Bombay (Singly Judge) on 06lh July, 2012 The Company has Hied an appeal ago nst the said order with the division bench al the Hon'ble High Court of Jud.cature at Bombay, relying on Rtil guidelines issued to commercial banks and the bank has alsofilad a petition wrilhe HoiYble High Court of Delhi under Sec-hon 433 of the Companies Act,1956 which are Si ill pending. Based on legal advice! praceedngs in simi at mailers, the company has opted hot Ip make any provision of the 3aid amount as .

a) In the opinion of me Board of Directors the Current Assets and Loans Advances have been stated at 1he realzable values

b) The balance due lo or from the parties, onwhaieveraccount, are subject to reconciliation & confirmotion

As Ihe company s dealing Only ir teenies, theoperat ons of the company are considered as a single business segmeni hence segment report,ng under AS-17 ol ICAI ,s not applicable

6. Previous year figures have beeri regnoupedi reslated wherever necessary.


Mar 31, 2012

NOTE -1

1. CORPORATE INFORMATION

Sportking India Limited (The Company) is a public company incorporated under the provisions of the Companies Act, 1956 on 15 February 1989. The company is engaged in manufacturing of Cotton yarn, Synthetic yarn and Blended Yarn and of dyeing activity. The Company has three manufacturing units at Ludhiana and one at Bathinda.

NOTE -2 SHARE CAPITAL

a) Each holder of Equity share is entitled to one vote per share. In the event of liquidation of the company, the holders are entitled to receive any of the remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

b) Prefrence shares are having preference over equity shares in respect of payment of 5% dividend and repayment of capital over equity shareholders and is entitled to voting rights in the resolutions directly affecting their interest or besides where the dividends to them are in arrears for the two financial years immediately preceding the meeting or for any three years during the period of six years ending with the financial years preceeding the meeting, on all resolution at every meeting of the company. Preference shares are redemable within 20 years from the date of allotment.

c) The amount remaining unpaid on account of calls in arrear of public issue 9,28,500 Equity Shares of Rs. 10/- each for cash at a premium of Rs. 25/- per share have been apportioned between Share Capital (Rs. 19,69,200/-) and Share Premium Account ( Rs. 45,94,800/-) in the ratio of three to seven.

NOTE -3 Defined Benefit Plan

The Employees' Gratuity Fund Scheme managed by Life Insurance Corporation of India 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.

NOTE - 4

CONTINGENT LIABILITIES

(Rs. in Lacs)

As at As at Sr. No. Particulars 31.03.2012 3103 2011

a) Letter of Credit(s)/Bank Guarantee(s) 2.00 617.43 issued by banks

b) Bills discounted with banks 7036.05 5182.49

c) Committments on account of capital account remaining to be executed (Net of Advances) out of which Letter of Credits/Bank Guarantee of Rs. 3797.97 Lacs (Pr. Year Rs. 4109.28 Lacs) net of margin. 9529.90 18166.35

d) Bonds against un-fulfilled export 3288.55 3971.94 obligations under Export Promotion Capital Goods/Duty Exemption scheme.

e) Disputed Income Tax Liabilities of cases 144.57 41.83 pending with appellate authorities.

f) Provident Fund dispute pending with 8.58 8.58 High Court

g) Disputed Excise duty penalties/liabilities Nil 56.27 of cases pending with authorities.

h) Disputed Sales Tax Liabilities of cases 11.19 49.12 pending with appellate authorities.

i) Disputed Service Tax Liabilities of cases Nil 22.16 pending with appellate authorities.

NOTE - 5

The working capital borrowings and current account balances are net of cheques issued but not presented for payment of Rs. 18970797/-(Previous year Rs. 119823676.30) and that of cheques deposited but not credited of Rs. 8857/-(Previous year Rs. 16645097/-) with net amount of Rs. 18961940/-(Previous Year Y103178579.30). Accordingly, the trade payables and trade receivables are understated to the extent of Rs. 18970797/- and Rs. 8857/- (Previous year Rs. 119823676.36 & Rs. 16645097/-) respectively and working capital borrowings have been overstated to the extent of Rs. 18551044/-(Previous Year Rs. 93548874.30) and current account balances of bank are overstated to the extent of Rs. 410896/- (Previous year Rs. 9629705/-)

NOTE - 6

Details pertaining to related party transactions in compliance of Accounting Standard-18 "Related Parties Disclosure" issued by the Institute of Chartered Accountants of India, are as under

1) Names of Related Parties and the Nature of Relationship :

a) Associate Concerns

M/s N.R.S. Knitwear's M/s. Sobhagia Sales (P) Ltd.

M/s Sportking Knitwears M/s. Classic Wears (P) Ltd.

M/s Sobhagia Clothing Co. M/s. Aradhana Fabrics (P) Ltd.

M/s Darling Demons M/s.Marvel Dyers & Processors (P) Ltd.

M/s Fashionable Attire M/s. N.T.M. Shawls (P) Ltd.

M/s Nagesh Classic M/s. Namokar Capital Services (P) Ltd.

b) Key Management Personnel

Sh. Raj Kumar Avasthi Chairman & Managing Director

Sh. Munish Avasthi Managing Director

Sh. Naresh Jain Executive Director

NOTE - 7

a) In the opinion of the Board of Directors, the Current Assets and Loans & Advances have been stated at the realizable values.

b) The balance due to or from the parties, on whatever account, are subject to reconciliation & confirmation.

NOTE - 8

As the company is dealing only in yarns, the operations of the company are considered as a single business segment.

NOTE - 9

Accounting for leases has been done in accordance with Accounting Standard -19 issued by the Institute of Chartered Accountants of India. The details of Lease transactions for the year are as follows:

a) Finance Lease: The Company does not have any finance lease arrangement.

b) Operating Lease;

i) Lease rentals charged in the Profit and Loss account for the year is Rs. 13,44,975/- (Previous year Rs. 4,43,230/-).

ii) The company has entered into operating leases for its godowns, land and machinery that are renewable on a periodic basis and cancellable at company's option. The company has not entered into sub-lease agreements in respect of these leases.

There was a dispute / litigation in respect of certain foreign currency option contracts purported to be entered by HDFC Bank Limited with the Company. The Ld. Arbitrator has awarded in favour of the bank for payment of prinicipal amount of Rs. 5.94 Crs and interest / cost of Rs. 1.31 Crs (based @ 8% p.a. upto 21.07.2010) and failing which payment of further interest @ 8% p.a. will be applicable for the delayed period, vide order dated 30th September, 2010 which have been upheld by Hon'ble High Court of Judicature at Bombay (Singly Judge) on 06th July, 2012. The Company has filed an appeal against the said orders with the division bench of the Hon'ble High Court of Judicature at Bombay, relying on RBI guidelines issued to commercial banks and similar cases of various business houses where recovery proceedings have been stayed by the various courts as well as legal proceedings/advice on similar matters, the company has opted not to make any provision of the said amount as awarded/upheld.

NOTE -10

Previous year figures have been regrouped/restated wherever necessary.



 
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