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Notes to Accounts of U T Ltd.

Mar 31, 2013

1 Corporate information

UT Limited (''the Company''), is a Public Limited Company and is engaged in the manufacture of Hydraulic Equipments mainly used in Earth Moving / Construction Machines e.g. Excavators, Dumpers, Dozers, Scrappers etc. The Company also manufactures Hydraulic and Traction Elevators. The Company was promoted in the year 1965 by late Mahendra Kumar Jhawar. The Company is listed in Bombay Stock Exchange (BSE Limited). The Company has presently two plants, one at Budge-Budge (West Bengal) and the other at Hosur (Tamil Nadu).

2.1 Defined Contribution Plans

During the period an amount of Rs.18,24 (Previous year Rs. 43,73) has been recognised as expenditure towards Defined Contribution Plans of the Company.

2.2 Post Employment Defined Benefit Plans

I. Gratuity ( Funded)

The Company provides for gratuity, a defined benefit retirement plan covering eligible employees. As per the scheme, the Gratuity Trust Fund, managed by the Life Insurance Corporation of India (LIC) and another insurance company, makes payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount equivalent to the respective employee''s eligible salary for fifteen days for each year of completed service subject to a maximum limit as laid down under the Payment of Gratuity Act,1972. Vesting occurs upon completion of five years of service. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as set out in Note 2.10, based upon which, the Company makes contributions to the Gratuity Fund.

The following Table sets forth the particulars in respect of the aforesaid Gratuity Fund of the Company for the six months ended 31 March, 2013:

Notes:

(i) The estimate of future salary increases take into account inflation, seniority, promotion and other relevant factors.

(ii) The expected return on plan assets is determined after taking into consideration composition of the plan assets held, assessed risks of asset management, historical results of the return on plan assets, the Company''s policy for Plan asset management and other relevant factors.

II. Certain employees of the Company receive benefits from provident fund, which is a defined benefit plan and administered by the Trust set up by the Company. Aggregate contributions along with interest thereon are paid at retirement, death, incapacitation or termination of employment. Both the employees and the Company make monthly contributions at specified percentage of the employee''s salary to such Provident Fund Trust. The Company has an obligation to fund any shortfall in return on plan assets over the interest rates prescribed by the authorities from time to time. In keeping with the guidance on implementing Accounting Standards (AS) 15 on Employee Benefits issued by the Accounting Standards Board of the Institute of Chartered Accountants of India, a provident fund set up by the Company is treated as a defined benefit plan since the Company is obligated to meet interest shortfall, if any. However, as at period end, no shortfall remains unprovided for. The Actuary has opined that the fund will remain in a comfortable position to meet the interest liability in respect of members in service over the next five years and the fund may be treated as to have no interest liability as at 31 March,2013. During the period, the Company has contributed Rs.1,80 (Previous year Rs. 4,36 ) to the said Provident Fund. [ included under line item " Contribution to Provident and Other Funds " on Note 25].

3.1 In earlier years, the Company was negotiating with its Consortium Bankers for an One Time Settlement (OTS) of its dues. Accordingly, in anticipation of an OTS, the Company did not provide for any interest on its dues to its Consortium Bankers and SICOM in the financial year 2010-11. However, as indicated in Note 3, the OTS did not materialise and accordingly as a matter of prudence, the Company has provided for the interest for the financial year 2010-11 in the financial year 2011-12, although negotiations are on with the Consortium Banks and SICOM for a fresh settlement of the dues.

The management believes that the ultimate outcome of these proceedings will not have a material adverse effect on the Company''s financial position and result of operations. The Company does not expect any reimbursements in respect of the above contingent liabilities.

4 The figures for the current period (six months ended 31 March, 2013) are not comparable with the figures of the previous year, as the previous Financial Statements had been prepared for Twelve months ended 30 September, 2012.

5 Segment information for the six months ended 31 March, 2013 in accordance with Accounting Standard (AS) 17 on Segment Reporting prescribed under the Companies Act,1956 (the ''Act'')

(I) Primary Segment (Business)

6.1 Remuneration to the Whole Time Director for the period 27th February, 2013 to 31st March, 2013 of Rs.1,61 is awaiting Central Government''s approval.

7 Operating Lease Commitments

The Company has entered into cancellable operating lease transactions for office space, employee''s residential accommodations etc. Tenure of leases generally vary between one and three years. Terms of these leases include operating term for renewal, increase in rent for future periods, of cancellation etc. Related lease rentals aggregating Rs.10,95 (2011-2012 Rs.14,77) have been debited to Statement of Profit and Loss for the period (included in Rent- Note 27).

8 In view of the loss during six months ended 31 March, 2013 no provision for current income tax has been considered necessary. However, the ultimate income tax liability, if any, for the assessment year 2013-14 will be determined based on the financial results for the year ended 31 March, 2013.

9 Disclosure pursuant to SEBI''s circular No SMD/POLICY/CIR-02/2003 :

In view of voluminous data furnishing of particulars such as name, amount outstanding at the period end and maximum amount outstanding during the period in respect of loans and advances in the nature of loan given to employees for medical, housing etc. with interest rate varying from 0 - 4 per cent and repayment terms varying from 1 - 5 years is not considered practicable. Aggregate amount of such advances and loans outstanding at the period end is Rs.1,66 (30 September 2012 ; Rs. 2,37).

10 Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current period''s classification / disclosure.


Sep 30, 2012

1 Corporate information

UT Limited ( ''the Company'' ), is a Public Limited Company and is engaged in the manufacture of Hydraulic Equipments mainly used in Earth Moving / Construction Machines e.g. Excavators, Dumpers, Dozers, Scrappers etc. The Company also manufactures Hydraulic and Traction Elevators. The Company was promoted in the year 1965 by late Mahendra Kumar Jhawar. The Company is listed in Bombay Stock Exchange (BSE Limited). The Company has presently two plants, one at Budge-Budge (West Bengal) and the other at Hosur (Tamil Nadu).

2 In view of acute fund shortage resulting primarily from sluggish business conditions, the Company has defaulted in servicing its debt obligations to its consortium banks and a Financial Institution. Consequently, the consortium banks [i.e. Allahabad Bank (being the Lead Bank), Bank of India and Axis Bank] have termed the Company''s accounts with them as Non Performing Assets (NPA). Subsequent to the declaration of NPA, the said banks have issued notices to the Company under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).

In the meanwhile, the Company had initiated talks with a Strategic Investor (in order to meet its short term and long term obligations) and also with the banks for One Time Settlement (OTS) of the dues. However, the talks with the Strategic Investor could not be concluded and as a result the OTS with the banks also fell through as the Company was unable to pay the OTS amounts.

Allahabad Bank (lead banker) has taken possession of the Company''s immoveable properties situated at Budge Budge and Hosur under section 13(4) of the SARFAESI Act. The said bank has also published a notice under the SARFAESI Act, inviting bids for sale of the Company''s immoveable properties to realise their dues. The Company has initiated legal proceedings to nullify the said sale notice.

The Financial Institution (SICOM) has initiated proceedings against the Company under Recovery of Debts due to Banks and Financial Institutions Act, 1993 and has also issued notice under section 434 of the Companies Act, 1956 for winding up the Company. The Company has taken appropriate steps to nullify the said legal proceedings.

There are legal proceedings pending before various forums like Debt Recovery Tribunals, Debt Recovery Appellete Tribunal and High Court, Kolkata filed by Banks and Financial Institution against the Company and vice versa regarding recovery of the dues, the quantum of dues, etc.

At the Balance Sheet date, the net worth of the Company has become negative, since the accumulated losses of Rs. 60,19,82 exceeds the Shareholders Funds of Rs. 11,10,17 (excluding Revaluation Reserve of Rs. 1,24,22). The intimation about the erosion of the entire networth had already been made to the Board for Industrial and Financial Reconstruction (BIFR) and necessary compliance as per the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) will be made in due course.

The Management has taken steps to revive the Company including but not limited to cost control by various means, streamlining of fund management, restructuring and realignment of manpower, concentrating on core products, development of new products etc. Also, discussions are on with the lenders for amicable settlement of dues.

Considering the above, these Financial Statements have been drawn up as per the Going Concern assumption, which is appropriate in the opinion of the management.

3 The operation of the Hosur plant has been suspended with effect from 24 July 2012 as part of cost control measures indicated in Note 3 above.

4.1 Rights, Preferences and Restrictions attached to Equity Shares

The Company has one class of Equity Shares having a par value of Rs 10/- per share. Each shareholder is eligible for one vote per share held. The Dividend proposed by the Board of Director is subject to the approval of the Shareholders in the ensuing Annual General Meeting, except in case of Interim Dividend. In the event of liquidation, the Equity shareholders are eligible to receive the remaining assets of the Company after distribution of all Preferential amounts, in proportion to their shareholding.

4.2 Change in Authorised Share Capital

The Company in its 46th Annual General Meeting held on 24 March, 2012 had passed an Ordinary Resolution to increase Authorised Share Capital from Rs. 25,00,00 (divided into 1,47,50,000 number of Equity Shares of Rs. 10 each and 10,25,000 number of Redeemable Preference Shares of Rs. 100 each) to Rs. 50,00,00 (divided into 3,97,50,000 number of Equity Shares of Rs. 10 each and 10,25,000 number of Redeemable Preference Shares of Rs. 100 each). The same has been rescinded on 21 December, 2012 vide Ordinary Resolution passed through postal ballot.

5.1 The Overdraft/ Cash Credit facility is secured by hypothecation of current assets of the Company , both present and future and second charge over the movable/immovable fixed assets of the Company with other banks and pledge of 169,700 shares and 40,979 shares by two Bodies Corporate respectively and also guaranteed by two Directors and two Bodies Corporate.

During the year Rs. 2,95,63 was repaid by the Company which includes Rs. 2,58,00 being Loan from Corporate Body as part of One Time Settlement (OTS) offer, Rs. 33,37 being the amount realised by the Bank from Fixed Deposits matured and Rs. 4,26 being realisation from debtors, etc.

5.2 The Overdraft/ Cash Credit facility is secured by hypothecation of entire stocks, book debts and all other current assets of the Company both present and future and second charge over fixed assets of the Company with other banks and equitable mortgage of a flat in Mumbai belonging to a Body Corporate pledge of 101,799 and 8600 shares by two Directors (invoked by Bank) and also guaranteed by two Directors and a Body Corporate.

During the year Rs. 52 being amount realised by the Bank from Fixed Deposits matured, was repaid by the Company.

5.3 Secured by hypothecation of entire stocks, book debts and all other current assets of the Company, both present and future and second charge over the movable/immovable fixed assets of the Company and pledge of 71,991 shares and 69,678 shares by a Director and a Body Corporate respectively and also guaranteed by two Directors and a Body Corporate.

During the year Rs. 425 being amount realised by the Bank from Fixed Deposits matured, was repaid by the Company.

5.4 Due to matters disclosed in Note 3, the above facilities from Allahabad Bank, Bank of India and Axis Bank aggregating Rs. 31,72,67 along with Interest aggregating to Rs. 8,23,92 are in default on the Balance Sheet date.

5.5 The Term Loan, from the body corporate, was repaid during the year and the Company is in the process of releasing the charges created on specified Plant and Machineries to secure the said loan.

6.1 Loans to the extent of Rs.1,14,92 (2010-11 - Rs. 1,14,92) is secured by exclusive charge on plant and machinery pertaining to Lift Division at Budge-Budge and guaranteed by two Bodies Corporate and two Directors, First charge created on immovable and movable fixed assets of the Company''s unit at Budge Budge, Putkhali and Hosur both present and future ranking pari passu with other banks and second charge on current assets with other banks.

Loans to the extent of Rs.13,12,56 (2010-11 - Rs. 13,12,56) is secured by pari passu first charge on movable/immovable fixed assets of the Company, both present and future, pari passu first charge created on current assets of the Company, both present and future with other banks and pledge of 169,700 and 40,979 shares by two Bodies Corporate respectively and also guaranteed by two Directors and two Bodies Corporate. Also refer Note 3

6.2 Loans to the extent of Rs.1,98,57 (2010-11 - Rs. 1,98,57) is secured by first Charge created on movable/immovable fixed assets of the Company''s Units at Budge Budge, Putkhali and Hosur,both present and future ranking pari- passu with other banks and second charge on current assets with other banks and equitable mortgage of a flat in Mumbai belonging to a Body Corporate and pledge of 101,799 and 8,600 shares by two Directors (invoked by Bank) and also guaranteed by two Directors and a Body Corporate.

Loans to the extent of Rs.3,24,23 (2010-11 - Rs. 3,32,66) is secured by pari passu first charge on movable/immovable fixed assets of the Company, both present and future, and further charge to be created on current assets of the Company,both present and future and equitable mortgage of a flat in Mumbai belonging to a Body Corporate and pledge of 101,799 and 8,600 shares by two Directors (invoked by Bank) and also guaranteed by two Directors and a Body Corporate. Also refer Note 3

During the year Rs. 8,43 was repaid by the Company and includes Rs. 6,85 being the amount realised by the bank from sale of shares pledged with them. The amount is included under ''Loan from Related Parties'', Note 10.

6.3 Secured by pari passu first charge on movable/immovable fixed assets of the Company''s unit at Budge Budge, Putkhali and Hosur, both present and future (except for plant & machinery of Lift Division at Budge Budge under exclusive charge of Allahabad Bank) and second charge on current assets with other banks. In addition, the above loan is also guaranteed by a Body Corporate and two Directors. Also refer Note 3

Note - 7.1

Depreciation is charged in the Statement of Profit and Loss on the revalued amount of the assets, where applicable. The excess depreciation so charged in the Financial Statements over and above the depreciation calculated on original cost of assets as provided at the rates prescribed in Schedule XIV to the Companies Act, 1956 on straight line method for the year ended 30 September, 2012 amounts to Rs.1,12 (2010-2011 Rs.1,62) and an amount equivalent to this excess charge has been transferred to Statement of Profit and Loss from Revaluation Reserve.

8.1 Defined Contribution Plans

During the year an amount of Rs.43,73 (Previous period Rs. 73,12) has been recognised as expenditure towards

Defined Contribution Plans of the Company.

8.2 Post Employment Defined Benefit Plans

I. Gratuity (Funded)

The Company provides for gratuity, a defined benefit retirement plan covering eligible employees. As per the scheme, the Gratuity Trust Fund, managed by the Life Insurance Corporation of India (LIC) and another insurance company, makes payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount equivalent to the respective employee''s eligible salary for fifteen days for each year of completed service subject to a maximum limit as laid down under the Payment of Gratuity Act,1972. Vesting occurs upon completion of five years of service. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as set out in Note 2.10, based upon which, the Company makes contributions to the Gratuity Fund.

Notes:

(i) The estimate of future salary increases take into account inflation, seniority, promotion and other relevant factors.

(ii) The expected return on plan assets is determined after taking into consideration composition of the plan assets held, assessed risks of asset management, historical results of the return on plan assets, the Company''s policy for Plan asset management and other relevant factors.

II. Certain employees of the Company receive benefits from provident fund, which is a defined benefit plan and administered by the Trust set up by the Company. Aggregate contributions along with interest thereon are paid at retirement, death, incapacitation or termination of employment. Both the employees and the Company make monthly contributions at specified percentage of the employee''s salary to such Provident Fund Trust. The Company has an obligation to fund any shortfall in return on plan assets over the interest rates prescribed by the authorities from time to time.In keeping with the guidance on implementing Accounting Standards (AS) 15 on Employee Benefits issued by the Accounting Standards Board of the Institute of Chartered Accountants of India, a provident fund set up by the Company is treated as a defined benefit plan since the Company is obligated to meet interest shortfall, if any. However, as at year end, no shortfall remains unprovided for. The Actuary has opined that the fund will remain in a comfortable position to meet the interest liability in respect of members in service over the next five years and the fund may be treated as to have no interest liability as at 30 September, 2012.

During the year, the Company has contributed Rs.4,36 (Previous period Rs. 9,38 ) to the said Provident Fund. [included under line item " Contribution to Provident and Other Funds " on Note 26.].

8.2 In the earlier year, the Company was negotiating with its Consortium Bankers for an One Time Settlement (OTS), of its dues. Accordingly, in anticipation of an OTS, the Company did not provide for any interest on its dues to its Consortium Bankers and SICOm in the financial year 2010-11. However, as indicated in Note 3, the OTS did not materialise and accordingly as a matter of prudence, the Company has provided for the interest for the financial year 2010-11 in the current year, although negotiations are on with the Consortium Banks and SICOM for a fresh settlement of the dues.

9 The figures for the current year ended 30 September, 2012 are not comparable with the figures of the previous period, as the previous Financial Statements had been prepared for Eighteen months period ended 30 September, 2011, based on the permission granted under Section 210(4) of the Companies Act, 1956 by the Registrar of Companies, West Bengal.

10 Segment information for the year ended 30 September, 2012 in accordance with Accounting Standard (AS) 17 on Segment Reporting prescribed under the Companies Act, 1956 (the ''Act'')

11 In terms of AS28 ''Impairment of Assets'', the management has carried out an impairment test during the period. The carrying value of each Cash Generating Unit (CGU) is lower than their respective recoverable value, arrived at based on their ''Net Selling Price'' and hence, no impairment charge has been recongnised in the Financial Statements. The ''Net Selling Price'' is computed based on the valuation reports submitted by Valuers appointed by the management for this purpose.

12 In view of the loss during year ended 30 September, 2012 no provision for current income tax has been considered necessary. However, the ultimate income tax liability, if any, for the assessment year 2013-14 will be determined based on the financial results for the year ending 31 March, 2013.

13 The decision to divest/hive off the Lift Division of the Company was taken by the Board and subsequently approval of Members was taken with a view to generate cash for its existing Core Hydraulic Business. The Lift is a low value add business and has no synergy with Company''s core strengths of manufacturing Hydraulic Cylinders and Hydraulic Tipping Gears and this business has not been consistently profitable. At present,there is no binding agreement for sale of Lift Division with any buyer and accordingly, the Operation of the division shall be continued and be part of segment reporting of the Company until and unless a suitable offer commensurate to its value is received.

14 The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous period''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.


Mar 31, 2010

A1. Depreciation is charged in the Profit and Loss Account on the revalued amount of the assets, where applicable.

The excess depreciation so charged in the Accounts over and above the depreciation calculated on original cost of assets as provided at the rates prescribed in Schedule XIV to the Companies Act, 1956 on straight line method for the year ended 31st March, 2010 amounts to Rs.54 (2008-2009 Rs.86) and an amount equivalent to this excess charge has been transferred to Profit and Loss Account from Fixed Assets Revaluation Reserve.

2. On 30th March, 2009, the Company allotted on preferential basis to Mrs. Vandana Khaitan (Promoter) 8,00,000 convertible share warrants at a price of Rs.12.38 per share (including premium of Rs. 2.38 per share) and received the entire consideration of Rs. 99,04 within 31st March,2010.The share warrants shall be convertible into equity shares of the Company (at the option of the share warrant holder) at any time within a period of 18 months from the date of allotment of the share warrants in one or more tranches and on such terms and conditions as the Board of Directors and the share warrant holder decide (3,90,000 warrants converted on 29th May, 2009). The shares on conversion shall be subject to lock in period of three years from the date of conversion.

Notes :

(i) Segment revenues are net of excise duty.

(ii) Inter-segment prices are normally negotiated amongst the Segments with reference to the cost, market prices and business risks, within and overall optimisation objective of the Company.

b) Reconciliation of Reportable Segments with the Financial Statements.

3. Related Party Disclosures in keeping with AS-18 prescribed under the Act :

(I) Related Parties*

Name Relationship

Mrs. Vandana Khaitan (Vice Chairperson and Managing Director) Key Management Personnel (KMP)

ATI Ltd. An enterprise in which relative of a KMP

exercises significant influence

UT Bondioli & Pavesi Hydraulics Private limited An enterprise in which KMP

exercises significant influence

Smt. Lakshmi Devi Jhawar Relative of KMP

Lakshmi Devi Jhawar Jankalyan Trust An enterprise in which KMP exercises significant influence

(b) Weighted average number of equity shares for computing diluted loss per share is arrived at after considering 41,007 shares,being weighted average number of dilutive potential equity shares outstanding (taking into consideration fair value an issue price per share) during the year relating to the convertible equity warrants outstanding (referred to in note 15 above), with the weighted average number of equity shares outstanding during the year.

4. (a) Operating Lease Commitments :

The Company has entered into cancellable operating lease transactions for office space, employees residential accommodations etc. Tenure of leases generally vary between one and three years. Terms of these leases include operating term for renewal, increase in rent for future periods, of cancellation etc. Related lease rentals aggregating Rs.13,29 (2008-2009 Rs.21,46) have been debited to Profit and Loss Account for the year ( included in Rent-Schedule-4 ).

5. None of the Companys fixed assets are considered impaired as on 31st March, 2010.

6. In view of carried forward losses/ unabsorbed depreciation no provision for current tax is considered necessary.

7. Employee Benefits

7.1 Post Employment Defined Contribution Plans

During the year an amount of Rs. 40,50 (Previous Year Rs. 38,98) has been recognised as expenditure towards Defined Contribution Plans of the Company.

7.2 Post Employment Defined Benefit Plans

A. Gratuity ( Funded)

The Company provides for gratuity, a defined benefit retirement plan covering eligible employees. As per the scheme, the Gratuity Trust Fund, managed by the Life Insurance Corporation of India (LIC) and another insurance company makes payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount equivalent to the respective employees eligible salary for fifteen days for each year of completed service subject to a maximum limit as laid down under the Payment of Gratuity Act, 1972.. Vesting occurs upon completion of five years of service. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as set out in Note A(i) of Schedule 18 above, based upon which, the Company makes contributions to the Gratuity Fund.

B. Certain employees of the Company receive benefits from provident fund, which is a defined benefit plan and administered by theTrust set up by the Company. Aggregate contributions along with interest thereon are paid at retirement, death, incapacitation or termination of employ -ment. Both the employees and the Company make monthly contributions at specified percentage of the employees salary to such Provident Fund Trust. The Company has an obligation to fund any shortfall in return on plan assets over the interest rates prescribed by the authorities from time to time. In keeping with the guidance on implementing Accounting Standards (AS) 15 on Employee Benefits issued by the Accounting Standards Board of the Institute of Chartered Accountants of India, a provident fund set up by the Company is treated as a defined benefit plan since the Company is obligated to meet interest shortfall, if any. However, as at year end, no shortfall remains unprovided for. The Actuary has expressed his inability to provide an actuarial valuation of the provident fund liability as at the year end in the absence of any guidance from the Actuarial Society of India. Accordingly, complete information required to be considered in this regard are not available and the same could not be disclosed. During the year, the Company has contributed Rs. 7,27 (Previous Year Rs. 11,90 ) to the said Provident Fund. [ Included under line item " Contribution to Provident and Other Funds " on Schedule 4.].

8. Previous years figures are regrouped/rearranged where necessary to make the same comparable with current years figures.

 
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