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Notes to Accounts of Trend Electronics Ltd.

Dec 31, 2014

1.1 Secured Loans

a) Rupee Term Loan from Banks

The Company alongwith 12 other affiliates/entities (collectively referred to as ''Obligors'' and individually referred to as ''Borrower'') executed facility agreement with consortium of existing domestic rupee term lenders, in the obligor/co-obligor structure, wherein all the Rupee Term Loans of the Obligors are pooled together. The Borrower entities covered are Videocon Industries Limited (VIL), Value Industries Limited, Trend Electronics Limited, KAIL Limited, Millennium Appliances India Limited, Applicomp (India) Limited, Sky Appliances Limited, Techno Electronics Limited, Century Appliances Limited, PE Electronics Limited, Techno Kart India Limited (formerly Next Retail India Limited), Evans Fraser and Co. (India) Limited and Videocon International Electronics Limited.

Rupee Term Loans from Banks are secured by first pari-passu charge on all present and future tangible/intangible assets (excluding the Identified Properties) of each of the Borrower, first pari-passu charge on the Trust and Retention Accounts of the Borrowers, second pari-passu charge on Identified Assets of Videocon Hydrocarbon Holdings Limited''s (VHHL) subsidiaries through pledge of entire shareholding of VHHL in these overseas subsidiaries, second charge on pledge of 100% shares of Videocon Oil Ventures Limited and VHHL, second pari-passu charge on VHHL''s share of cash flows from Identified Assets and second pari- passu charge over current assets of each of the Borrowers. The Rupee Term Loans are also secured by first ranking pledge over specified numbers of equity shares of Videocon Industries Limited, Trend Electronics Limited and Value Industries Limited held by the promoters, the personal guarantee of Mr. Venugopal N. Dhoot, Mr. Pradipkumar N. Dhoot, Mr. Rajkumar N. Dhoot and first pari-passu charge on ''Videocon'' brand (Also refer Note No. 33).

b) Vehicle Loan from Banks are secured by way of hypothecation of vehicles acquired out of the said loan.

1.2 The Company has availed interest free Sales Tax Deferral under package incentive scheme of 1993. The sales tax collected during the deferral period is payable in five annual installments, after completion of ten years from the year in which the tax was collected.

2.1 Working Capital Loans from Banks are secured against hypothecation of the Company''s stock of raw materials, packing materials, stock-in-process, finished goods, stores and spares, book debts and all other current assets of the Company. The loans are further secured by corporate guarantee of Videocon Industries Limited and personal guarantee of Mr. Venugopal N. Dhoot, Mr. Rajkumar N. Dhoot and Mr. Pradipkumar N. Dhoot.

Note: This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006, has been determined to the extent such vendors/parties have been identified on the basis of information available with the Company.

3. As required by Accounting Standard 29 "Provisions, Contingent Liabilities and Contingent Assets" issued by the Institute of Chartered Accountants of India, the disclosure with respect to Provision for Warranty and Maintenance Expenses is as follows:

4. EMPLOYEE BENEFITS:

Disclosure pursuant to Accounting Standard (AS) 15 (Revised):

A) Defined Contribution Plans:

Amount of Rs. 5.86 Million (Previous year Rs. 6.71 Million) is recognised as an expense and shown under the head "Employee Benefits Expense" (Note No. 24) in the Statement of Profit and Loss.

V) Actuarial Assumptions

a) Discount Rate - 8% per annum

b) Mortality - Indian Assured Lives Mortality (2006-08) Ultimate

c) Turnover Rate - 5% at younger ages reducing to 1% at older ages

d) Future Salary Increase - 5% per annum

5. RELATED PARTY DISCLOSURES:

As required under Accounting Standard 18 on "Related Party Disclosures", the disclosure of transaction with related parties as defined in the Accounting Standard are given below:

A) List of Related Parties where control exists and related parties with whom transactions have taken place and relationship:

Key Management Personnel: Mr. J. L. Bangad - Head Operations

B) Material Transactions with Related Parties during the year are:

Remuneration paid to the Key Management Personnel - Rs. 4.69 Million (Previous year Rs. 3.08 Million)

Rs in Million As at As at 31st Dec.2014 31st Dec2013

6. CONTINGENT LIABILITIES NOT PROVIDED FOR:

i) Letters of Credit opened 1,107.23 1,181.29

ii) Letters of Guarantees 4.96 3.76

iii) Claims against the Company not acknowledged as debts

a) Custom Duty demands and penalties under dispute 0.75 4.06

b) Excise Duty and Service Tax demands and penalties under dispute 15.46 15.70

c) Sales Tax demands and penalties under dispute 51.29 62.18

[Amount paid under protest 18.27 Million (Previous year Rs. 17.17 Million)]

iv) Income Tax matters in respect of which appeals are pending 8.21 8.21

7. The Company alongwith 12 other affiliates/entities (collectively referred to as ''Obligors'' or individually as ''Borrower'') executed Facility Agreement with the consortium of existing domestic rupee term lenders, under the obligor/co-obligor structure, wherein all the Rupee Term Loans of the Obligors are pooled together. The Borrower entities are Videocon Industries Limited, Value Industries Limited, Trend Electronics Limited, KAIL Limited, Millennium Appliances India Limited, Applicomp (India) Limited, Sky Appliances Limited, Techno Electronics Limited, Century Appliances Limited, PE Electronics Limited, Techno Kart India Limited (formerly Next Retail India Limited), Evans Fraser and Co. (India) Limited and Videocon International Electronics Limited. As the Company is a co-obligor, it is contingently liable in respect of the borrowings of other Obligors/Borrowers to the extent of outstanding balance of Rupee Term Loans as on 31st December, 2014 of Rs. 195,264.92 Million (Previous year Rs. 192,416.49 Million).

8. The Directorate of Revenue Intelligence, Mumbai Zonal Unit (''DRI''), has on 30th December, 2014, issued a Show Cause Notice (''SCN'') in connection with import of Colour Picture Tubes (''CPTsRs.) by the Company and other concerns. The DRI has alleged that the Company has resorted to over-valuation of CPTs, for High Sea Sales made by the Company, leading to evasion of anti-dumping duty. Vide SCN, the Company was called upon, amongst others, as to why the penalty should not be imposed on them under Section 112(a) of the Customs Act, 1962.

The Company has denied the allegation made by DRI for alleged evasion of duty and/or imposition of penalty. The Company has been advised by its counsels that as the goods in question are not domestically produced or manufactured in India, the question of levy of anti-dumping duty is untenable and, accordingly, there is no question of penalty thereon.

9. The Company is primarily engaged in manufacturing and trading of Electrical and Electronic Appliances and there is no other reportable segment as defined in Accounting Standard 17 on "Segment Reporting".

10. The outstanding balances of certain Trade Receivables, Trade Payables, Deposits, Advances and Other Current Assets/ Liabilities are subject to confirmation and reconciliation, if any. However, in the opinion of the management, adjustment, if any, will not be material.

11. In the opinion of the Board, the value on realisation of Current Assets, Loans and Advances in the ordinary course of the business would not be less than the amount at which they are stated in the Balance Sheet and the provision for all known and determined liabilities is adequate and not in excess of the amount reasonably required.

12. There are no amounts due and outstanding, to be credited to the Investor Education and Protection Fund.

13. Figures of previous year have been reclassified, restated, recasted to conform to the classification of the current year.


Dec 31, 2013

1. Rights, preference and restrictions:

a) The Company has only one class of equity shares having par value of Rs. 10/- per share. Each holder of equity shares is entitled to equal right of voting and dividend.

b) In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

c) The preference shares do not have voting rights. They have preference over equity shareholder as to dividend and in case of liquidation.

2. Secured Loans

a) Rupee Term Loan from Banks

The Company along with 12 other affiliates/entities (collectively referred to as ''Obligors'' and individually referred to as ''Borrower'') executed facility agreement with consortium of existing domestic rupee term lenders, in the obligor/co-obligor structure, wherein all the Rupee Term Loans of the Obligors are pooled together. The Borrower entities covered are Videocon Industries Limited (VIL), Value Industries Limited, Trend Electronics Limited, KAIL Limited, Millennium Appliances India Limited, Applicomp (India) Limited, Sky Appliances Limited, Techno Electronics Limited, Century Appliances Limited, PE Electronics Limited, Next Retail India Limited, Evans Fraser and Co. (India) Limited and Videocon International Electronics Limited.

Rupee Term Loans from Banks are secured by first pari-passu charge on all present and future tangible/intangible assets (excluding the Identified Properties) of each of the Borrower, first pari-passu charge on the Trust and Retention Accounts of the Borrowers, second pari-passu charge on Identified Assets of Videocon Hydrocarbon Holdings Limited''s (VHHL) subsidiaries through pledge of entire shareholding of VHHL in these overseas subsidiaries, second charge on pledge of 100 ACU- shares of Videocon Oil Ventures Limited and VHHL held by VIL, second pari-passu charge on VHHL''s share of cash flows from Identified Assets and second pari-passu charge over current assets of each of the Borrowers. The Rupee Term Loans are also secured by first ranking pledge by the promoters over equity shares of Videocon Industries Limited, Trend Electronics Limited and Value Industries Limited held by them, the personal guarantees of Mr. Venugopal N. Dhoot, Mr. Pradipkumar N. Dhoot, Mr. Rajkumar N. Dhoot and first pari-passu charge on ''Videocon'' brand. However, charge has not been created in favor of such Consortium of banks (A) for the credit facility to the Obligors on the assets by way of pledge of shares of the subsidiaries of VIL viz. Videocon Mauritius Energy Limited and Videocon Mozambique Rovuma 1 Limited (VMRL), which have been pledged to Standard Chartered Bank for the loans avalied by VHHL ADs- (B) for any other receivables from VMRL ADs- and (C) on any assets of VMRL. (Also refer

b) Vehicle Loans from Banks are secured by way of hypothecation of vehicles acquired out of the said loan.

3. The Company has availed interest free Sales Tax Deferral under package incentive scheme of 1993. The sales tax collected during the deferral period is payable in five annual installments, after completion of ten years from the year in which the tax was collected.

4. Working Capital Loans from Banks are secured against hypothecation of the Company''s stock of raw materials, packing materials, stock-in-process, finished goods, stores and spares, book debts and all other current assets of the Company and personal guarantees of Mr. Venugopal N. Dhoot and Mr. Pradipkumar N. Dhoot.

5. RELATED PARTY DISCLOSURES:

As required under Accounting Standard 18 on ACI-Related Party Disclosures ACI-, the disclosure of transaction with related parties as defined in the Accounting Standard are given below :

A) List of Related Parties where control exists and related parties with whom transactions have taken place and relationship: Key Management Personnel: Mr. J. L. Bangad - Head Operations

B) Material Transactions with Related Parties during the year are:

Remuneration paid to the Key Management Personnel -Rs.3.08 Million (Previous yearRs. 3.15 Million)

(Rs. in Million)

As at As at 6. CONTINGENT LIABILITIES AND COMMITMENTS 31st Dec, 2013 31st Dec, 2012

A) Contingent Liabilities not provided for:

i) Letters of Credit opened 1,181.29 788.88

ii) Letters of Guarantees 3.76 11.00

iii) Claims against the Company not acknowledged as debts

a) Custom Duty demands and penalties under dispute 4.06 8.09

b) Excise Duty and Service Tax demands and penalties under dispute 15.70 12.30

c) Sales Tax demands and penalties under dispute 62.18 95.82 AFs-Amount paid under protestRs. 17.17 Million (Previous yearRs.7.17 Million) AF0-

iv) Income Tax matters in respect of which appeals are pending 8.21 2.84

B) Commitments

Estimated amount of contract remaining to be executed on capital account and not provided for (net of advances) - 1.89

7. The Company is a Co-guarantor in respect of borrowings of group companies. The aggregate amount of said guarantees, extended along with 8 other Co-guarantors are Rs. 1,245.20 Million (Previous year Rs. 5,240.20 Million). The said guarantees are extended on the basis of support in the form of undertaking provided by certain other Group Companies to the extent of the amount of the guarantees.

8. A) The Company along with 12 other affiliates/entities (collectively referred to as ''Obligors'' or individually as ''Borrower'') executed Facility Agreement with the consortium of existing domestic rupee term lenders, under the obligor/co-obligor structure, wherein all the Rupee Term Loans of the Obligors are pooled together. The Borrower entities are Videocon Industries Limited, Value Industries Limited, Trend Electronics Limited, KAIL Limited, Millennium Appliances India Limited, Applicomp (India) Limited, Sky Appliances Limited, Techno Electronics Limited, Century Appliances Limited, PE Electronics Limited, Next Retail India Limited, Evans Fraser and Co. (India) Limited and Videocon International Electronics Limited. As the Company is a co-obligor, it is contingently liable in respect of the borrowings of other Obligors/Borrowers to the extent of outstanding balance of Rupee Term Loans as on 31st December, 2013 of Rs. 192,416.49 Million (Previous year Rs. 141,630.61 Million).

B) The Company is a co-obligor along with 12 other affiliates/entities in respect of Term Loans amounting to Rs. 1,875.00 Million (Previous year Rs. 44,250.00 Million) granted to Videocon Industries Limited. The same is secured by subservient charge on entire movables and current assets, both present and future of the Company and 12 other co-obligors/borrowers except for the assets of Ravva Oil Field. The loans are further secured by subservient charge on ''Videocon'' and ''Kenstar'' brands and irrevocable and unconditional personal guarantees of Mr. Venugopal N. Dhoot and Mr. Pradipkumar N. Dhoot.

9. The Company is primarily engaged in manufacturing and trading of Electrical and Electronic Appliances and there is no other reportable segment as defined in Accounting Standard 17 on ACI-Segment Reporting ACI-

10. The outstanding balances of certain Trade Receivables, Trade Payables, Deposits, Advances and Other Current Assets/ Liabilities are subject to confirmation and reconciliation, if any. However, in the opinion of the management, adjustment, if any, will not be material.

11. In the opinion of the Board, the value on realisation of Current Assets, Loans and Advances in the ordinary course of the business would not be less than the amount at which they are stated in the Balance Sheet and the provision for all known and determined liabilities is adequate and not in excess of the amount reasonably required.

12. There are no amounts due and outstanding, to be credited to the Investor Education and Protection Fund.

13. Figures of previous year have been reclassified, restated, recasted to conform to the classification of the current year.


Dec 31, 2011

(Rs.in Million)

1. Contingent Liabilities not provided for in respect of:

As at As at

31st Dec., 2011 31st Dec., 2010

a) Letters of Guarantees 56.42 56.92

b) Letters of Credit opened 758.92 542.09

c) Customs Duty demands and penalty under dispute 8.09 8.09

d) Excise Duty demands under dispute 4.26 1.56

e) Service Tax demands under dispute 8.04 7.88

f) Sales Tax demands under dispute (Amount paid under protest Rs 7.15 Million, Previous period Rs 1.14 Million) 95.78 35.75

2. The Company is a Co-guarantor in respect of borrowings of group companies. The aggregate amount of said guarantees, extended along with 8 other Co-guarantors are Rs 8,311.10 Million (Previous period Rs 9,056.00 Million). The said guarantees are extended on the basis of support in the form of undertaking provided by certain other group companies to the extent of the amount of the guarantees. Further, the Company is a Co-guarantor along with 14 other Co-guarantors in respect of borrowings of group companies amounting to Rs 3,500.00 Million (Previous period Rs 3,500.00 Million).

3. Secured Loans:

a) Working Capital Loans from Banks are secured against hypothecation of the Company's stock of raw materials, packing materials, stock-in-process, finished goods, stores and spares, book debts and all other current assets of the Company and personal guarantees of Mr. Venugopal N. Dhoot and Mr. Pradipkumar N. Dhoot.

b) Vehicle Loans from Banks are secured by way of hypothecation of vehicles acquired out of the said loan.

4. The Company has availed interest free Sales Tax Deferral under package incentive scheme of 1993. The sales tax collected during the deferral period is payable in five annual installments, after completion of ten years from the year in which the tax was collected. The next such installment is due on 1st May, 2012.

5. The Company has made a provision of Rs 10.20 Million towards current Income Tax (Previous period Rs 53.10 Million), after taking into consideration, the benefits admissible under the provisions of the Income Tax Act, 1961 and the same is, in the opinion of the Management, adequate.

6. The Minimum Alternate Tax (MAT) paid by the Company is entitled to be carried forward and utilized in subsequent years. In the opinion of the Management, on the basis of projections and the estimates of future taxable income, the Company would have normal tax liability within the specified period to avail such MAT credit. Consequently, the Company has recognized the MAT credit entitlement of Rs 10.13 Million in respect of current year (Previous period Rs 17.18 Million).

7. Estimated amounts of contracts remaining to be executed on capital account and not provided for (net of advances) Rs 2.36 Million (Previous period Rs 5.14 Million).

8. Capital Work-in-Progress includes advances for capital assets of Rs 1.22 Million (Previous period Rs 3.57 Million).

9. The Company is primarily engaged in manufacturing of Electrical and Electronic Appliances and there is no other reportable segment as defined in Accounting Standard 17 on Segment Reporting".

10. The Balance of some of the Debtors, Creditors, Deposits, Advances and Other Current Assets/Liabilities are subject to confirmation.

11. There are no amounts due and outstanding, to be credited to Investor Education and Protection Fund.

12. In the opinion of the Board, the value on realization of Current Assets, Loans and Advances in the ordinary course of the business would not be less than the amount at which they are stated in the Balance Sheet and the provision for all known and determined liabilities is adequate and not in excess of the amount reasonably required.

Note: The information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006, has been determined to the extent of such vendors/parties identified from the available information.

13. Employee Benefits:

i) Defined Contribution Plans:

Amount of Rs 8.01 Million (Previous period Rs 9.30 Million) is recognised as an expense and shown under the head "Salary, Wages and Employees Benefits" (Schedule-11) in the Profit and Loss Account.

* It is not practicable to furnish quantitative information of components consumed in view of considerable number of items, of diverse in size and numbers. Note: The industrial licensing has been abolished in respect of products of the Company.

14. The figures for the current year are for a period of 12 months as against 15 months in previous period and hence, are not comparable. Figures in respect of previous period have been regrouped, reclassified and recanted wherever necessary to make them comparable with those of current year.


Dec 31, 2010

(Rs. Million)

As at As at 31st Dec., 2010 30th Sept., 2009

1. Contingent Liabilities not provided for in respect of:

a) Letters of Guarantees 56.92 16.78

b) Letters of Credit opened 542.09 440.12

c) Customs Duty demands and penalty under dispute 8.09 4.06

d) Excise Duty demands under dispute 1.56 9.45

e) Service Tax demands under dispute 7.88 5.60

f) Sales Tax demands under dispute (Amount paid under protest Rs. 1.14 million, Previous year Rs. 0.75 million) 35.75 36.12

2. The Company is a Co-guarantor in respect of borrowings of Group Companies. The aggregate amount of said guarantees, extended alongwith 8 other Co- guarantors are Rs. 9,056.00 million (Previous year Rs. 9,694.00 million). The said guarantees are extended on the basis of support in the form of undertaking provided by certain other Group Companies to the extent of the amount of the guarantees. Further, the Company is a Co-guarantor along with 14 other Co-guarantors in respect of borrowings of Group Companies amounting to Rs. 3,500.00 million (Previous year Nil).

3. Secured Loans:

a) Working Capital Loans from Banks are secured against hypothecation of the Company’s stock of raw materials, packing materials, stock-in-process, finished goods, stores and spares, book debts and all other current assets of the Company and personal guarantees of Mr. Venugopal N. Dhoot and Mr. Pradipkumar N. Dhoot.

b) Vehicle Loans from Banks are secured by way of hypothecation of vehicles acquired out of the said loan.

4. The Company has availed interest free Sales Tax Deferral under package incentive scheme of 1993. The Sales Tax collected during the deferral period is payable in five annual installments, after completion of ten years from the year in which the tax was collected. The second such installment is due on 1st May, 2011.

5. The Company has made a provision of Rs. 53.10 million towards Income Tax (Previous year Rs. 8.92 million), after taking into consideration, the benefits admissible under the provisions of the Income Tax Act, 1961 and the same is, in the opinion of the Management, adequate.

6. The Minimum Alternate Tax (MAT) paid by the Company is entitled to be carried forward and utilized in subsequent years. In the opinion of the Management, on the basis of projections and the estimates of future taxable income, the Company would have normal tax liability within the specified period to avail such MAT credit. Consequently, the Company has recognised the MAT credit entitlement of Rs. 17.18 million in respect of current period.

7. Estimated amounts of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 5.14 million (Previous year Nil).

8. Capital Work in Progress includes advances for capital assets Rs. 3.57 million (Previous year Nil).

9. The Company is primarily engaged in manufacturing of Electrical and Electronic Appliances and there is no other reportable segment as defned in Accounting Standard 17 on “Segment Reporting”.

10. The Balance of some of the Debtors, Creditors, Deposits, Advances and Other Current Assets/Liabilities are subject to confirmation.

11. There are no amounts due and outstanding, to be credited to Investor Education and Protection Fund.

12. In the opinion of the Board, the value on realisation of Current Assets, Loans and Advances in the ordinary course of the business would not be less than the amount at which they are stated in the Balance Sheet and the provision for all known and determined liabilities is adequate and not in excess of the amount reasonably required.

13. The figures for the current period are for a period of 15 months as against 12 months in previous period and hence, are not comparable. Figures in respect of previous year have been regrouped, reclassified and recasted wherever necessary to make them comparable with those of current period.


Sep 30, 2009

(Rupees in Million)

As at As at 30th Sept., 30th Sept., 2009 2008

1. Contingent Liabilities not provided for in respect of:

a) Letters of Guarantees including Bank 16.78 2.06 Guarantees

b) Letters of Credit issued by the Bank 440.12 126.07

c) Customs Duty Demand and Penalty under 4.06 3.31 dispute

d) Excise Duty Demand under dispute 9.45 3.97

e) Service Tax Demand under dispute 5.60 5.50

f) Sales Tax Demand (Amount paid under protest 36.12 43.76 Rs. 0.75 million, Previous year Rs. 2.04 million)

2. The Company is a Co-guarantor in respect of borrowings of a Group Company. The aggregate amount of said guarantee, extended alongwith 8 other co-guarantors is Rs. 9,694.00 million (Previous year Rs. 9,464.00 million). The said guarantee is extended on the basis of support in the form of undertaking obtained from certain other group companies to the extent of the amount of the guarantee.

3. The Company has made a provision of Rs. 8.92 million towards Income Tax (Previous year Rs. 4.13 mllion), after taking into consideration, the benefits admissible under the provisions of the Income Tax Act, 1961 and the same is, in the opinion of the Management, adequate.

4. Related Party Disclosures :

As required under Accounting Standard 18 on "Related Party Disclosure", the disclosure of transaction with related parties as defined in the Accounting Standard are given below :

a) List of Related Parties i) Subsidiary

Videocon VCR Securities Limited (upto 31st March, 2009) ii) Key Management Personnel

Mr. J. B. Bangad - (Head - Operations)

b) Transactions/outstanding Balances with Related Parties :

The Company has entered into transactions with related parties as listed below. The Board considers such transactions to be in normal course of business.

5. The outstanding balances of certain Debtors, Creditors, Deposits, Advances and Other Current Assets/Liabilities are subject to confirmation.

6. There are no amounts due and outstanding, to be credited to Investor Education and Protection Fund.

7. In the opinion of the Board, the value on realisation of Current Assets, Loans and Advances in the ordinary course of the business would not be less than amount at which they are stated in the Balance Sheet and the provision for all known and determined liabilities is adequate and not in excess of the amount reasonably required.

8. Employee Benefits:

i) Defined Contribution Plans:

Amount ot Rs. 3.88 million, (Previous year Rs. 3.06 million) is recognised as an expense and shown under the head "Salary, Wages and Employees Benefits" (Schedule-11) in the Profit and Loss Account.

9. Figures of the previous year have been regrouped/reclassified, wherever necessary.