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Notes to Accounts of Swadeshi Polytex Ltd.

Mar 31, 2014

1 Contingent Liabilities & Commitments (To the extent not provided for)

Claims against the Company not acknowledged as debts including excise, sales tax, Income Tax, Labour Disputes, Legal and other Disputes Rs. 8,42,21,964 Previous year Rs. 8,72,25,982).

Current Year Previous Year

(a) PF Cases pending at 2,00,02,286 2,00,02,286 various forums

(b) Labour Matters relating 16,46,109 56,12,277 settlement pending at various forums

(c) Revenue collection charges 2,09,46,436 1,99,84,286 by Tehsil & other authorities pending at Hon''able High Court

(d) Sales tax demand pending at 1,49,37,402 1,49,37,402 various forums

(e) Excise demand for unauthorised 1,65,21,748 1,65,21,748 removal of goods pending with CESTAT

(f) Other Matters 1,01,67,983 1,01,67,983

2 Based on the confirmations from the suppliers, who have registered themselves under the Micro, Small and Medium Enterprises Development Act, 2006, received so far with the company, no balance is due to Micro & Small Enterprises as defined under the Micro, Small and Medium Enterprises Development Act, 2006 as on 31st March 2014. Further during the year no interest has been paid or payable under the terms of the said Act.

3 Balances appearing for few inoperative bank accounts, Trade Receivable and Payables, loans & advances and Short term unsecured borrowing are subject to confirmation, reconciliation and adjustments, if any.

4 During the year company has signed a Memorandum of Understanding concluding the renegotiation proceedings with both the secured lenders and necessary accounting effect arising out of the same has been shown under the Interest on borrowings in the note 2.18 of financial cost. Independent year end confirmations are awaited from the lenders.

5 Company has started developing the Plots as per the approved plan of UPSIDC and accordingly has incurred an expediture of Rs. 19,70,444 (excluding write back of Rs. 31,37,718) (Previous year Rs. 57,44,738), which is allocated proportionately on the saleable area and unallocated portion made a part of stock in Trade.

6 Considering the development agreement and the provisions as specified in the Accounting Standard-22 "Accounting for taxes on Income" issued by the Institute of Chartered Accountants of India, the company has recognised Deferred Tax assets (DTA) based on the principle of virtual certainty.

7 The Company has claimed losses in the return filed for subsequent years till Assessment years 2013 -2014 and is of the view that the same will be available for set off against future profits. In view of the losses and unabsorbed depreciation and based on the legal opinion obtained by the company, no provision for tax has been considered necessary in the accounts.

8 Segment Information

The primary segment reporting format is determined to be the business segment as the company''s risks and rate of return are affected predominantly by difference in business line. Based on these lines, company has identified Trading of fabric, Sale of leasehold plots rights and discontinued business as business segments. The details of the segment revenue, expenses, assets, liabilities and capital employed are given here under:

9 The figures reported in financial statements have been rounded off to the nearest rupee and have been regrouped and rearranged where ever necessary.


Mar 31, 2013

1.1 PROFIT/(LOSS) FROM DISCONTINUING OPERATIONS

In view of the Economic/Financial non-viability and on-going labour problems etc., the Company had discontinued its operations of manufacturing of Polyester Fibres and Chips in the earlier year. Last year, company had entered into a binding sale agreement for disposal of its entire Plant & Machinery and Building related to the discontinued operations and sold the significant part thereof. Further, as part of the closure process of the discontinued business, company had provided for all the doubtful debtors, advances and other recoverables and written back the unclaimed liabilities. The following statement shows the revenue and expenses of the discontinuing operations:

(i) Provisions are made herein for medium risk oriented issues including old assets as a measure of abundant precaution.

(ii) Company presumes remote risk possibility of further cash outflow pertaining to contingent liabilities listed in note 2.21 above

1.2 Based on the confirmations from the suppliers, who have registered themselves under the Micro, Small and Medium Enterprises Development Act, 2006, received so far with the company, no balance is due to Micro & Small Enterprises as defined under the Micro, Small and Medium Enterprises Development Act, 2006 as on 31st March, 2013. Further during the year no interest has been paid or payable under the terms of the said Act.

1.3 The Company has claimed losses in the return filed for subsequent years till Assessment years 2012 - 2013 and is of the view that the same will be available for set off against future profits. In view of the losses and unabsorbed depreciation and based on the legal opinion obtained by the company, no provision for tax has been considered necessary in the accounts.

1.4 Balances appearing for few inoperative bank accounts, Trade Receivable and Payables, loans & advances are subject to confirmation, reconciliation and adjustments, if any.

1.5 In view of the conditions beyond the control of the parties, Plot booking got delayed, resulting into collapse of full & final settlement with the secured lenders achieved in the previous year. Management of the company is in process of renegotiation with the secured lenders. However, pending any conclusion on the same, differential Interest of Rs. 10,57,86,111 to one of the lender, Paharpur Cooling Towers Limited (PCTL) has been provided as per original sanctioned terms . With respect to Interest to other Secured Lender, Pranajal

Vyapaar Private Limited (PVPL), no provision for interest has been made in respect to outstanding loan due to fact that the management is under re-negotiation with PVPL considering the corresponding delay in receipt of assured sale consideration from PVPL, under the deed of assignment. Differential interest amount, if any will be recognised on the conclusion of negotiation process. However, independent confirmation from respective lenders is yet to be received.

1.6 The Company has lost the appeal in Hon''able Supreme Court against the order of Hon''able National Consumer Disputes Redressal Commission, New Delhi (NCDRC) in respect of on-going case against a debtor in the previous year. Accordingly, it has to refund the amount of Rs. 148.60 Lacs (including Interest Rs. 83.40 Lacs), which was received in the previous years. The amount due from Debtor has since been written off as Bad debts as shown in Discontinued operations.

1.7 Company has started developing the Plots as per the approved plan of UPSIDC and accordingly has incurred an expediture of Rs. 57,44,738 (Previous year Rs. 7,05,33,542), which is allocated proportionately on the saleable area and unallocated portion made a part of stock in Trade.

1.8 Related Party disclosure in accordance with the Accounting Standard-18, issued by the Institute of Chartered Accountants of India is given below:

(1) Associates : National Textile Corporation Ltd. (Holding more than 20% shareholding in the company)

Nature of Transactions :

Unsecured Loan taken and outstanding : Rs. 2,30,21,497 (Previous Year Rs. 2,30,21,497) as on 31.03.2013

1.9 Considering the development agreement and the provisions as specified in the Accounting Standard-22 "Accounting for taxes on Income" issued by the Institute of Chartered Accountants of India, the company has recognised Deferred Tax assets (DTA) based on the principle of virtual certainty.

1.10 The figures reported in financial statements have been rounded off to the nearest rupee.


Mar 31, 2012

* Rupee term loans are secured by way of pari-passu negative lien on the land & building situated at Kavi Nagar, Ghaziabad, UP.

Details of the default amount is as follow :

(i) Loan from related Party - Principal Rs. Nil (Previous Year Rs. 12,42,76,100) , Interest Nil (Previous Year Rs. 3,10,50,000)

(ii) Loan from other Body Corporate - Principal Nil (Previous Year 14,00,00,000), Interest Nil (Previous Year Rs. 14,62,00,892)

1.1 Profit/(Loss) from discontinuing operations

In view of the Economic/Financial non-viability and on-going labour problems etc., the Company had discontinued its operations of manufacturing of Polyester Fibres and Chips in the earlier year. However, during the year, the company has entered into a binding sale agreement for disposal of its entire Plant & Machinery and Building related to the discontinued operations and accordingly sold the significant part thereof. Further, as part of the closure process of the discontinued business, company has provided for ail the doubtful debtors, advances and other recoverables and written back the unclaimed liabilities. The following statement shows the revenue and expenses of the discontinuing operations:

The carrying amount of total assets and liabilities to be disposed off at 31st March are as follows. Comparative information for the discontinuing operations is included in accordance with AS-24, Discontinuing Operations:

1.2 Contingent Liabilities & Commitments (To the extent not provided for)

Claims against the Company not acknowledged as debts including excise, sales tax, Income Tax, Labour Disputes, Legal and other Disputes Rs. 8,61,73,840 (Previous year Rs. 13,88,20,328).

Particulars Current Year Previous Year

(a) PF Cases pending at various forums 20,002,286 20,000,286

(b) Labour Matters relating settlement pending at various forums 5,409,813 6,471,566

(c) Revenue collection charges by Tehsil & other authorities pending at Hon’able High Court 19,98.4,286 19,984,286

(d) Sales tax demand pending at various forums 14,937,402 13,386,265

(e) Excise demand for unauthorised removal of goods pending with CESTAT 16,521,748 19,021,748

(f) Interest on the Secured loan from Body corporate - 49,671,756

(g) Other Matters 9,318,305 10,284,421

(i) Provisions are made herein for medium risk oriented issues including old assets as a measure of abundant precaution.

(ii) Company presumes remote risk possibility of further cash outflow pertaining to contingent liabilities listed in note 2.21 above

1.3 The Company is in the process of obtaining confirmations from the suppliers who have registered themselves under the Micro, Small and Medium Enterprises Development Act, 2006. Based on the information available with the Company, no balance is due to Micro & Small Enterprises as defined under the Micro, Small and Medium Enterprises Development Act, 2006 as on 31s1 March, 2012. Further during the year no interest has been paid or payable under the terms of the said Act.

1.4 Based on the information available on records, excess provision for Income Tax & FBT relating the past more than 5 years has been reversed and disclosed as Income Tax provision no longer required, in the Profit & Loss Statement. Further, the Company has claimed losses in the return filed for subsequent years till Assessment years 2011 - 2012 and is of the view that majority of the losses will be available for set off against future profits. In view of the losses and unabsorbed depreciation and based on the legal opinion obtained by the company, no provision for tax has been considered necessary in the accounts.

1.5 Balances appearing for few inoperative bank accounts, Trade Receivable and Payables, loans & advances are subject to confirmation, reconciliation and adjustments, if any.

1.6 During the year, company has entered into a Developer Agreement with Adarsh Cement Products Private Limited (ACPPL) to develop the requisite infrastructure at the leasehold land of the Company and to sale the plots of the land, as per the subdivision letter received from UPSIDC. for a undertaking consideration.

This agreement was subsequently assigned in favour of the secured lender, Pranajal Vyapaar Private Limited (PVPL) through deed of assignment and the Memorandum of Understanding entered between the company and secured lenders.

1.7 During the year company has entered into a Memorandum of Understanding with its secured lenders PVPL and Paharpur Cooling Towers Limited (PCTL) for agreeing the full & final settlement of their claims as on the cut-off date i.e. 1st Dec., 2011 for an amount of Rs. 34,13,12,614/- and Rs. 24,60,45,432/- respectively. Besides this, Company, subject to the approval of the Shareholders in the general meeting, has agreed to allot 1,50,000/-, 9.5% cumulative Redeemable Preference Shares of Rs. 100/- each to be redeemed on or before 30m Sept. 2012 along with one detachable warrant to each preference share, which entitle them to get 15,00,000/- equity shares of Rs. 10/- each at a price determined in accordance SEBI regulations. Accordingly, Company has provided the differential interest of Rs. 12,23,92,821/- in the current year. Further, the aforesaid agreed amount is payable out of proceeds received from PVPL under the aforesaid Developer agreement and deed of assignment. However, independent confirmation from respective lenders is yet to be received.

1.8 The Company has lost the appeal in Hon’able Supreme Court against the order of Hon’able National Consumer Disputes Redressal Commission, New Delhi (NCDRC) in respect of on-going case against a debtor in the previous year. Accordingly, it has to refund the amount of Rs. 148.60 Lacs (including Interest Rs. 83.40 Lacs), which was received in the previous years. The amount due from Debtor has since been written off as Bad debts as shown in Discontinued operations.

1.9 Revaluation of Factory Building was carried out during the year 1986-87 and accordingly increase in values due to revaluation had been credited to Revaluation Reserve. Since then, each year’s withdrawal amount has been credited to Profit & Loss Account. During the year, majority of the Building got dismantled and sold at a profit. Accordingly the proportionate amount of Rs. 74,13,606/- has been transferred to General Reserve from the Revaluation Reserve in accordance with the Provisions of Accounting Standard, AS-10, Accounting for Fixed Assets.

1.10 Company has started developing the Plots as per the approved plan of UPSIDC and accordingly has incurred an expediture of Rs. 7,05,33,542/- which is allocated proportionately on the saleable area and unallocated portion made a part of stock in Trade.

1.11 Considering the development agreement as specified in note no. 2.28 here in above and the provisions as specified in the Accounting Standard-22 "Accounting for taxes on Income" issued by the Institute of Chartered Accountants of India, the company has recognised Deferred Tax assets (DTA) based on the principle of reasonable certainty. However, in the absence of virtual certainty with regards to realisation of DTA in the foreseeable future, DTA has not been recognised on carried forward losses and unabsorbed depreciation.

1.12 Till the year end 31st March, 2011, the company was using pre-revised Schedule VI to the Companies Act, 1956, for preparation and presentation of its financial statements. During the year ended 31st March, 2012, the revised schedule VI notified under the Companies Act, 1956, has become applicable to the company. The Company has reclassified previous year figures to conform to this year’s classification. The adoption of Revised schedule VI does not impact recognition and measurement principles followed for preparation of financial statements.

1.13 Segment Information

The primary segment reporting format is determined to be the business segment as the company’s risks and rate of return are affected predominantly by difference in business line. Based on these lines, company has identified Trading of fabric, Sale of leasehold plots rights and discontinued business as business segments. The details of the segment revenue, expenses, assets, liabilities and capital employed are given here under:

1.14 The figures reported in financial statements have been rounded off to the nearest rupee.


Mar 31, 2010

1. Contingent Liabilities not provided for in respect of:

Claims against the Company not acknowledged as debts including excise, sales tax, Income Tax, Labour Disputes, Legal and other Disputes Rs. 2335 lacs (Previous year Rs. 1929 lacs). ( Rs. in Lacs)

Particulars Current Year Previous Year

(a) PF Cases pending at various forums 199.43 166.42

(b) Labour Matters relating settlement pending 41.54 76.54 at various forums

(c) Revenue collection charges by Tehsil & other 199.84 199.84 authorities pending at Honable High Court

(d) Sales tax demand pending at various forums 133.74 147.46

(e) Excise demand for unauthorised removal of goods 165.22 139.18 pending with Commissioner Central Exise

(f) Interest on the Secured loan from Body corporate 1,526.86 896.60

(g) Other Matters 68.05 303.23

2. In view of the Economic/Financial non-viability and ongoing labour problems etc., the Company had discontinued its operations of manufacturing of Polyester Fibres and Chips, the resumption of which seems to be very unlikely. The Management to the extent possible has considered necessary provisions and do not anticipate any significant change in the value of its current assets and liabilities which have been shown in the Balance Sheet.

3. The Company is in the process of obtaining confirmations from the suppliers who have registered themselves under the Micro, Small and Medium Enterprises Development Act, 2006. Based on the information available with the Company, no balance is due to Micro & Small Enterprises as defined under the Micro, Small and Medium Enterprises Development Act, 2006 as on 31st March 2010. Further during the year no interest has been paid or payable under the terms of the said Act.

4. The Company had received Rs. 148.60 Lacs (including Interest Rs. 83.40 Lacs) based on the order of Honable National Consumer Disputes Redressal Commission, New Delhi (NCDRC) in respect of ongoing case against a debtor in the previous year. This amount was released on furnishing of Bank Guarantee and security in the form of company flats at Kavi Nagar. However the matter has since been remanded back by Honable Supreme Court to NCDRC for reconsideration. Accordingly, the Interest received has not been recognised and would be recognised on its final disposal.

5. Income Tax and Wealth Tax assessments have been completed upto Assessment year 1998-99 and against some of the orders, appeals are still pending. The Company has claimed losses in the return filed for subsequent years till Assessment years 2009 - 2010 and is of the view that majority of the losses will be available for set off against profits. In view of the losses and unabsorbed depreciation, no provision for tax has been considered necessary in the accounts.

6. Balances appearing for certain inoperative bank accounts, debtors, creditors, loans, advances and other parties are subject to confirmation, reconciliation and adjustments, if any, by the respective parties.

7. In respect of the secured loans taken from the bodies corporate, further provision for interest has not been considered necessary due to arbitration proceedings and ongoing discussions for one time settlement with the respective body corporate. Further Liability, if any would be provided for in the year of settlement.

8. Revaluation of fixed assets (Factory building & Plant and Machinery) was carried out during the year 1986-87 and accordingly increase in values due to revaluation had been credited to Revaluation Reserve. Since then, each years withdrawal amount has been credited to Profit & Loss Account. During the year Rs. 2.13 Lacs (Previous Year Rs. 2.13 Lacs) has been withdrawn from the Revaluation Reserve and credited to Profit & Loss Account.

9. Related Party disclosure in accordance with the Accounting Standard-18, issued by the Institute of Chartered Accountants of India is given below:

(1) Associates

National Textile Corporation Ltd.

(Holding more than 20% shareholding in the company)

Nature of Transactions

Unsecured Loan taken as on 31.03.2010 : Rs. 2,30,21,497 (Previous Year Rs. 2,30,21,497)

(2) Associates

Paharpur Cooling Towers Ltd.

(Holding indirectly more than 20% shareholding in the company)

Nature of Transactions

Reimbursement for various expenses : Rs. 11,18,712 (Previous Year Rs. 8,96,748)

Unsecured Loan taken : Nil (Previous Year Rs. 1,69,72,831)

Unsecured Loan repaid : Nil ( Previous Year Rs. 39,58,170)

Outstanding Balance as on 31.03.2010

Secured Loan Taken : Rs. 13,50,00,000 (Previous Year Rs. 13,50,00,000)

Unsecured Loan Taken : Rs. 2,92,76,100 ( Previous Year Rs. 2,92,76,100)

10. In accordance with the Accounting Standard-22 "Accounting for taxes on Income" issued by the Institute of Chartered Accountants of India, the company has certain amounts eligible to create Deferred Tax assets (DTA). However, in the absence of virtual certainty with regards to realisation of DTA in the foreseeable future, DTA has not been recognised.

11. Previous years figures have been regrouped/recast wherever considered necessary

12. The figures reported in financial statements have been rounded off to the nearest rupee.

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