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Notes to Accounts of TTK Healthcare Ltd.

Mar 31, 2013

(1) Contingent Liabilities And Commitments Not Provided For: 2012-13 2011-12 (Rs. in Lakhs) (Rs. in Lakhs)

A) Contingent Liabilities:

Guarantees against letters of credit opened 85.29 134.71

Other Guarantees 199.86 183.20

Disputed Taxes/Claims, not acknowledged as debts 1,373.75 1,505.58

1,658.90 1,823.49

B) Commitments:

Estimated amount of contracts remaining to be executed on capital account and not provided for 1,881.25

(2) The Company has created a Trust which has taken a Group Gratuity Policy with the Life Insurance Corporation of India for future payment of gratuity to the retired/ resigned employees. Based on the actuarial valuation, provision has been made for full value of the gratuity benefits as per the requirements of Accounting Standard 15 (AS-15).

(3) The Company contributes to a Superannuation Fund covering specified employees. The contributions are by way of annual premia payable in respect of a superannuation policy issued by the Life Insurance Corporation of India, which confers benefits to retired/resigned employees based on policy norms. No other liabilities are incurred by the Company in this regard.

(4) Leave Encashment benefit has been charged to Profit & Loss Statement on the basis of actuarial valuation as at the year end in line with the Accounting Standard 15 (AS-15).

Defined Benefit Plan :

The Employees'' Gratuity Fund Scheme managed by a Trust is a Defined Benefit Plan.

The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method which recognises 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 as per para 65 of the Accounting Standard 15 (AS-15).

(5) Your Company availed certain Carry Forward benefits u/s.72A of the Income-Tax Act, 1961 relating to TTK Biomed Ltd., consequent to its merger with your Company. For availing these benefits, certain conditions have to be fulfilled under Rule 9C of the Income-Tax Rules, 1962.

Your Company could not fulfill one of the conditions and hence an application was made to CBDT for relaxation of the condition under the said Rule 9C.

The CBDT while disposing of the application had advised your Company to refer the matter to the Specified Authority. Subsequently, your Company has filed neces- sary application with the Specified Authority. Upon receipt of the decision from the Specified Authority, the matter will be suitably dealtwith.

(6) Your Company availed certain Carry Forward benefits u/s.72A of the Income-Tax Act, 1961, relating to TTK Medical Devices Ltd., consequent to its merger with your Company.

For availing these benefits, certain conditions have to be fulfilled under Rule 9C of the Income Tax Rules, 1962.

Your Company could not fulfill certain conditions and hence an Application / Review Petition was filed with CBDT for relaxation of these conditions. The said Ap- plication/ Review Petition for relaxation of the condition was rejected by CBDT. Against this, your Company already filed a Writ Petition in the Hon''ble High Court of Judicature at Madras last year. Upon receipt of the decision from the Hon''ble High Court, the matter will be suitably dealt with.

(7) During the year, the Company has written off non-recoverable debts to the extent of Rs.12,57,460/-.

(8) During the year 2010-11, your Company had invested Rs.600 Lakhs in 27-Month Nifty-Linked Secured Redeemable Non-Convertible Debentures (NCDs) (100% Prin- cipal protected) in Citi Corp Finance (India) Ltd. During the year, these Debentures have been sold to Trust Capital Services Pvt. Ltd. for a consideration of Rs.697.62 Lakhs and the gain on the sale of these Debentures amounting to Rs.97.62 Lakhs has been included in Other Income.

(9) Your Company was allotted 1.642 acres of land by Kerala Industrial Infrastructure Development Corporation (KIIDC) at Trivandrum for setting up the Heart Valve manufacturing facility in 2005.

During the year, there was a demand amounting to Rs. 27.47 Lakhs from KIIDC towards the additional compensation payable on the above land allotted to the Com- pany which has been accepted and the same has been considered as addition under Leasehold Land.

(10) The Pre-owned Pellet (Pappad) Manufacturing Line acquired from M/s.Mcfills Enterprises Pvt. Ltd., Ahmedabad has been commissioned and the commercial produc- tion started from October-2012 at Foods Division''s Factory at Hosakote, Bengaluru. The expenditure incurred on this project amounting to Rs.726.07 Lakhs has been capitalised.

(11) The Board of Directors at their meeting held on 30.04.2013 approved the Scheme of Amalgamation of TTK Protective Devices Ltd. (TTKPD) (formerly TTK-LIG Ltd.) and its Wholly Owned Subsidiary TSL Techno Services Ltd. (TSL) with your Company, the appointed date being 01.04.2012. Under the Scheme, the Shareholders of TTKPD would be allotted 9 Equity shares of Rs. 10/- each fully paid-up of the Company for every 2 Equity shares of Rs.10/- each fully paid-up held by them in TTKPD. No shares would be allotted to the Shareholders of TSL as its value having been considered as part of the valuation of TTKPD.

The Scheme would be effective after the approval of the Regulatory Authorities, Shareholders and the Hon''ble High Court of Judicature at Madras.

(12) The Public Works Department increased the water charges for the water drawn by the Paper Division from the river Bhavani from Rs.60/- per 1000 Cu. Mtr. to Rs.500/- per 1000 Cu. Mtr. on the contracted quantity of water, with effect from 09.05.1991. The Company filed a writ petition in the Hon''ble High Court of Judicature at Madras and as per the interim order dated 09.07.1991, passed by the Hon''ble Court, the Company was paying water charges @ Rs.200/- per 1000 Cu. Mtr. of water on the actual quantity of water drawn and with effect from 01.04.1993 on the contracted quantity. The Writ was disposed off by the Hon''ble High Court by remanding the matter to the Public Works Department.

After series of litigations, the Public Works Department confirmed the water charges @ Rs.500/- per 1000 Cu. Mtr. on the contracted quantity. The Company has moved the Hon''ble High Court challenging the validity of payment on the contracted quantity instead of actual quantity of water drawn and this matter is pending before the Hon''ble High Court.

As against the demand of Rs.175.39 Lakhs consisting of Rs.49.66 Lakhs towards the arrear water charges and Rs.125.73 Lakhs towards interest upto the period 31.12.2008, the Company has fully paid the principal amount of Rs.49.66 Lakhs.

Further, the Company has also made a request for waiver of the interest charges to PWD and the request is pending before them. J

Since the Paper Division has been disposed off, the liability, if any, on this account upto the date of sale (i.e. 14.11.1999), will have to be borne by the Company. As a matter of prudence, the Company has made a provision of Rs.12 Lakhs during the year and the cumulative provision available on this account as on 31.03.2013 was Rs.67.85 Lakhs.

(13) Related Party disclosures as per Accounting Standard 18 (AS-18): (a) The Company had transactions with the following related parties: Associates/ Others:

T T Krishnamachari & Co., Pharma Research & Analytical Laboratories, TTK Prestige Ltd., TTK Protective Devices Ltd. (formerly TTK-LIG Ltd.),

Packwell Packaging Products Ltd., SSL-TTK Ltd.

Key Management Personnel:

Mr T T Raghunathan and Mr K Vaidyanathan

Relatives of Key Management Personnel:

Mr T T Lakshman

(14) Previous year''s figures have been regrouped and reclassified wherever necessary to conform to the current year''s presentation. Figures have been rounded off to the nearest rupee.


Mar 31, 2012

(1) Contingent Liabilities not provided for: 2011-12 201011

(Rs.in Lakhs) (Rs.in Lakhs)

Guarantees against letters of credit opened 134.71 59.77

Other Guarantees 183.20 126.25

Disputed Taxes/Claims, not acknowledged as debts 1,505.58 1,803.28

1,823.49 1,989.30

(2) The Company has created a Trust which has taken a Group Gratuity Policy with the Life Insurance Corporation of India for future payment of gratuity to the retired/resigned employees. Based on the actuarial valuation, provision has been made for full value of the gratuity benefits as per the requirements of Accounting Standard 15 (AS-15) (Revised) issued by The Institute of Chartered Accountants of India.

(3) The Company contributes to a Superannuation Fund covering specified employees. The contributions are by way of annual premia payable in respect of a superannuation policy issued by the Life Insurance Corporation of India, which confers benefits to retired/resigned employees based on policy norms. No other liabilities are incurred by the Company in this regard.

(4) Leave Encashment benefit has been charged to Profit & Loss Statement on the basis of actuarial valuation as at the yearend in line with the Accounting Standard 15 (AS-15) (Revised) issued by The Institute of Chartered Accountants of India.

As per Accounting Standard 15 (AS-15) (Revised) for Employee Benefits, the disclosures as defined in the Accounting Standard are given below: Defined Contribution Plan:

Contributions to Defined Contribution Plan, recognized as expense for the year are as under:

Defined Benefit Plan :

The Employees Gratuity Fund Scheme managed by a Trust is a Defined Benefit Plan.

The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method which recognises 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 as per para 65 of the Accounting Standard 15 (AS 15) (Revised) issued by The Institute of Chartered Accountants of India.

The estimate of rate of escalation in salary considered in actuarial valuation, takes into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market.

(5) During the year, the Company has accounted for Deferred Tax in accordance with the Accounting Standard 22 (AS-22) 'Accounting for Taxes on Income" issued by The Institute of Chartered Accountants of India. As a result of the adoption of this Standard, the Profit is less by Rs.21.91 Lakhs for the year 2011-12 as detailed below:-

Deferred Tax Asset on account of unabsorbed depreciation and others have been recognized, as the Company is of the opinion that there is virtual certainty of realization of the same in view of the future profits of the Company.

(6) Your Company availed certain Carry Forward benefits u/s.72A of the Income-Tax Act, 1961, relating to TTK Biomed Ltd., consequent to its merger with your Company.

For availing these benefits, certain conditions have to be fulfilled under Rule 9C of the Income-Tax Rules, 1962.

Your Company could not fulfill one of the conditions and hence an Application was made to CBDT for relaxation of the condition under the said Rule 9C.

The CBDT while disposing of the Application had advised your Company to refer the matter to the Specified Authority. Subsequently, your Company has filed necessary Application with the Specified Authority. Upon receipt of the decision from the Specified Authority, the matter will be suitably dealt with.

(7) Your Company availed certain Carry Forward benefits u/s.72A of the Income-Tax Act, 1961, relating to TTK Medical Devices Ltd., consequent to its merger with your Company.

For availing these benefits, certain conditions have to be fulfilled under Rule 9C of the Income Tax Rules, 1962.

Your Company could not fulfill certain conditions and hence an Application / Review Petition was filed with CBDT for relaxation of these conditions. The said Application / Review Petition for relaxation of the condition was rejected by CBDT. Against this, your Company has already filed a Writ Petition in the Hon'ble High Court of Judicature at Madras during the year. Upon receipt of the decision from the Hon'ble High Court, the matter will be suitably dealt with.

(8) During the year, the Company has written off non-recoverable debts to the extent of Rs. 15,37,231.

(9) During the year 2010-11, your Company had invested Rs.6 Crores in 27-Month Nifty-Linked Secured Redeemable Non-Convertible Debentures (NCDs) (100% Principal protected) in Citi Corp Finance (India) Ltd. The investment is for a period of 27 months with an average yield of 7.44% p.a. and is linked to Nifty performance. The interest on these debentures will be accounted at the time of redemption of these debentures, as the interest thereon has not accrued as per the terms of the Contract.

(10) Your Company was holding an Investment of Rs.70.23 Lakhs in Kotak Indo World Infrastructure Fund at the beginning of the year.

During the year, this Fund was closed and the redemption amount was determined at Rs.63.44 Lakhs. The loss on redemption amounting to Rs.6.79 Lakhs has been duly accounted.

The Company invested the aforesaid amount of Rs.63.44 Lakhs in Kotak Select Focus Fund.

(11) The Capital Work-in-progress amounting to Rs.593.57 Lakhs represents the cost of Pre-owned Pellet (Pappad) Manufacturing Line bought from M/s.Mc fills Enterprises Pvt. Ltd. Ahmadabad and the Civil and Electrical works carried out for the Project in progress at the Foods Division. This will be capitalized after completion of the Project.

(12) The Public Works Department increased the Water Charges for the water drawn by the Paper Division from the river Bhavani from Rs.60/- per 1000 Cu. Mtr to Rs.500/- per 1000 Cu. Mtr on the contracted quantity of water, with effect from 09.05.1991. The Company filed a writ petition in the Hon'ble High Court of Judicature at Madras and as per the interim order dated 09.07.1991, passed by the Hon'ble High Court, the Company was paying water charges @ Rs.200/- per 1000 Cu. Mtr of water on the actual quantity of water drawn and with effect from 01.04.1993 on the contracted quantity. The Writ was disposed off by the Hon'ble Court by remanding the matter to the Public Works Department.

After series of litigations, the Public Works Department confirmed the water charges @ Rs.500/- per 1000 Cu. Mtr on the contracted quantity. The Company has moved the Hon'ble High Court challenging the validity of payment on the contracted quantity instead of actual quantity of water drawn and this matter is pending before the Hon'ble High Court.

As against the demand of Rs.175.39 Lakhs consisting of Rs.49.66 Lakhs towards the arrear water charges and Rs.125.73 Lakhs towards interest up to the period 31.12.2008, the Company has fully paid the principal amount of Rs.49.66 Lakhs.

Further, the Company has also made a request for waiver of the interest charges to PWD and the request is pending before them.

Since the Paper Division has been disposed off, the liability, if any, on this account up to the date of sale (i.e. 14.11.1999), will have to be borne by the Company. As a matter of prudence, the Company has made a provision of Rs.12 Lakhs during the year and the cumulative provision available on this account as on date is Rs.55.85 Lakhs.

Notes:

The disputed Income Tax/ Fringe Benefit Tax liabilities amounting to Rs.802.53 Lakhs have not been acknowledged as debts and have been classified under Contingent Liabilities.

Similarly, Rs.603.13 Lakhs being the disputed Central Excise/Customs/Sales Tax liabilities have not been acknowledged as debts and have been classified under Contingent Liabilities.

Other Contingent Liabilities mainly include disputed liability towards water charges amounting to Rs.69.88 Lakhs as per the details given in Point No.19 of the Notes on Accounts.

Necessary Appeals have been filed with the authorities concerned against the disputed liabilities.

(13) Previous year's figures have been regrouped and reclassified wherever necessary to conform to the current year's presentation and also to be in conformity with Revised Schedule VI. Figures have been rounded off to the nearest rupee.


Mar 31, 2010

I. CONTINGENT LIABILITIES NOT PROVIDED FOR: 2009-10 2008-09 (Rs. in lakhs) (Rs. in lakhs)

Guarantees against letters of credit opened 122.78 -

Other Guarantees 107.00 14.23

Disputed Taxes/Claims, not acknowledged as debts 1,448.89 508.76

1,678.67 522.99

II. The Company has created a Trust which has taken a group Gratuity Policy with the Life Insurance Corporation of India for future payment of gratuity to the retired/resigned employees. Based on the actuarial valuation, provision has been made for full value of the gratuity benefits as per the requirements of Accounting Standard 15 (AS-15) (Revised) issued by The Institute of Chartered Accountants of India.

III. The Company contributes to a Superannuation Fund covering specified employees. The contributions are by way of annual premia payable in respect of a superannuation policy issued by the Life Insurance Corporation of India, which confers benefits to retired/resigned employees based on policy norms. No other liabilities are incurred by the Company in this regard.

IV. Leave Encashment benefit has been charged to Profit & Loss Account on the basis of actuarial valuation as at the year end in line with the Accounting Standard 15 (AS-15) (Revised) issued by The Institute of Chartered Accountants of India.

DEFINED BENEFIT PLAN :

The Employees Gratuity Fund Scheme managed by a Trust is a Defined Benefit plan.

The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method which recognises 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 as per para 65 of the Accounting Standard 15 (AS-15) (Revised) issued by The Institute of Chartered Accountants of India.

V Your Company availed Carry Forward benefits u/s.72A of the Income-Tax Act 1961, relating to TTK Biomed Ltd, consequent to its merger with your Company. For availing these benefits, certain conditions have to be fulfilled under Rule 9C of the Income-Tax Rules, 1962. Your Company could not fulfil one of the conditions and hence an application was made to CBDT for relaxation of the condition under the said Rule 9C. The CBDT while disposing of the application had advised your Company to refer the matter to the Specified Authority. Subsequently, your Company has filed necessary application with the Specified Authority. Upon receipt of the decision from the Specified Authority, the matter will be suitably dealt with.

VI Your Company availed certain Carry Forward benefits u/s.72A of the Income-Tax Act, 1961 relating to TTK Medical Devices Ltd., consequent to its merger with your Company. For availing these benefits, certain conditions have to be fulfilled under Rule 9C of the Income Tax Rules,1962. Your Company could not fulfil certain conditions and hence an Application/ Review Petition has been made to CBDT for relaxation of these conditions. Upon receipt of the decision from CBDT, the matter will be suitably dealt with.

VII During the year, the Company has written off non-recoverable debts to the extent of Rs.29,94,720/-.

VIII During the year under review, your Company has acquired the Orthopaedic Implants Manufacturing Undertaking from M/s. Invicta Meditek Ltd. at a consideration of Rs.4.16 crores (including taxes).

IX During the year under review, 3,21,514 shares were extinguished which were bought under the Buy-back Scheme and reduced the same from the Share Capital (Out of this, 4,577 shares were bought back during the previous year and extinguished during the current year).

X For the previous year 2008-09, the Company made a provision of Rs.242.62 lakhs towards Dividend @ Rs.3/- (30%) per share on 80,87,497 Equity Shares at Rs.10/- each as on 31.3.2009. Subsequently, the Company bought back 3,21,514 Equity Shares during the period 1.4.2009 till 27.8.2009 (the record date for the payment of Dividend). Consequently, the Dividend was actually paid only in respect of 77,65,983 Equity Shares of Rs.10/- each which formed the Paid-up Share Capital as on that date. The excess provision amounting to Rs.9,64,542/- has been reduced from provision for Dividend and added to the General Reserve.

XI The Capital Work-in-Progress amounting to Rs.631.98 lakhs represents the cost of the Pre-owned Pellet Manufacturing Line imported from Italy which is under erection and the cost of Civil and Electrical Works, carried out for the Foods Project during the year. This will be capitalised after the completion of the Project.

XII During the year 2008-09, your Company had invested Rs.5 Crores in 24 Month Nifty-linked Non Convertible Debentures (NCDs) (100% Principal protected) of Citi Financial Consumer Finance India Ltd. The investment is for a period of 24 months with an average yield of 9.5% p.a. and is linked to the Nifty performance. The interest on these debentures will be accounted at the time of redemption of debentures as the interest has not accrued as per the terms of the contract.

XIII The Public Works Department increased the Water Charges for the water drawn by the Paper Division from the river Bhavani from Rs.60/- per 1000 Cu. Mtrto Rs.500/-per 1000 Cu. Mtron the contracted quantity of water, with effect from 9.5.1991. The Company filed a writ petition in the Madras High Court and as per the interim order dated 9.7.1991, passed by the Court, the Company was paying water charges @ Rs.200/- per 1000 Cu. Mtr of water on the actual quantity of water drawn and with effect from 1.4.1993 on the contracted quantity. The Writ was disposed off by the Court by remanding the matter to the Public Works Department.

After series of litigations, the Public Works Department confirmed the water charges @ of Rs.500/- per 1000 Cu. Mtr on the contracted quantity. The Company has moved the High Court challenging the validity of payment on the contracted quantity instead of actual quantity of water drawn and this matter is pending before the Honble High Court of Judicature at Madras.

As against the demand of Rs.175.39 lakhs consisting of Rs.49.66 lakhs towards the arrear water charges and Rs.125.73 lakhs towards interest upto the period 31.12.2008, the Company started paying the principal amount of Rs.49.66 lakhs in 12 equated monthly instalments without prejudice to its rights and contentions. Out of this, two instalments amounting to Rs.8.27 lakhs have already been paid during the year 2009-10.

Further, the Company has also made a request for waiver of the interest charges to PWD and the request is pending before them.

Since the Paper Division has been disposed off, the liability, if any, on this account upto the date of sale (i.e. 14.11.1999), will have to be borne by the Company. As a matter of prudence, the Company has made a provision of Rs.12 lakhs during the year and the cumulative provision available on this account as on date after adjusting the two instalments already paid is Rs.73.24 lakhs.

XIV Related Party disclosures as per Accounting Standard 18 (AS-18):

List of Related Parties with whom transactions have taken place during the year:

Related Parties/ Firms

T.T.Krishnamachari & Co

Pharma Research & Analytical Laboratories

TTK Prestige Limited

TTK LIG Limited

Packwell Packaging Products Limited

SSL TTK Limited

Key Management Personnel

Mr. T T Raghunathan, Executive Vice Chairman

Mr. K Vaidyanathan, Executive Director

XV Previous years figures have been regrouped and reclassified wherever necessary to conform to the current years presentation. Figures have been rounded off to the nearest rupee.



 
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