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Notes to Accounts of Zenith Computers Ltd.

Mar 31, 2015

Term Loan and Working Capital Borrowings (Cash Credit) from Indian Bank

The Term Loan of Rs.2000 lakhs due in March 2013 and the interest accrued and due thereon up to 31.3.2015 amounting to Rs.596.47 lakhs is outstanding as on 31.3.2015 - Refer Note no.9 and 34.

The Company has a Cash Credit outstanding of Rs.21.19 crores (comprised in the total short-term borrowing of Rs.37.35 crores - Note 7) along with interest thereon Rs.3.39 crores (Note 9) are payable to Indian Bank Nariman Point, Mumbai. Also, refer Note 34 on Contingent Liabilities in relation to Interest payable.

The said bank has, as part of recovery process, issued Demand Notice dated 4.12.2013 under SARFAESI Act, 2002 and has taken in April 2015 physical possession of the properties and inventories of the running Unit at Goa including factory, resulting in cessation of business and factory operations. The said bank has also taken in May 2015/ June 2015, physical possession of the Company's properties and inventories at Mahape, Navi Mumbai. Valuation of the said properties and inventories are yet to be determined by the said Bank.

The Company has filed an Appeal with the Debt Recovery Appellate Tribunal (DRAT), Mumbai which is pending for disposal. If the outcome of the said litigation goes against the Company, it may adversely affect its financial position.

FCCBs and Interest thereon

The 0.50% Foreign Currency Convertible Bonds (due 2011), appearing under Note 3, are yet to be paid and the same is not restated as at the Balance Sheet date (AS11).

The value accreted thereon appearing under Note no.3 and 34 has not been restated as at the Balance Sheet date (AS11)

The interest payable on FCCB-coupon rate for the period 4.2.2011 to 4.8.2011 amounting to Rs.9.14 lakhs appearing under Note no.9 has not been restated as at the Balance Sheet date (AS11)

A petition has been filed in the Bombay High Court by State Bank of India for recovery of their part of the alleged investment in the said FCCB, which is disputed, as State Bank of India is not the bondholder.

The said petition is pending for admission. In case the petitioner succeeds in the said litigation, it will affect adversely the financial position and the Going Concern status of the Company.

Reference to BIFR

The financial statements indicate that the Company has accumulated losses of Rs.80.13 crores as on 31.3.2015 and its net worth has been fully eroded

The Company has incurred a net loss of (-) Rs.31.91 crores and net cash loss of (-) Rs.30.49 crores during the current year (previous year's net loss (-) Rs.42.94 crores and net cash loss of (-) Rs.41.91 crores, respectively)

The Company has filed an application with the Board for Industrial and Financial Reconstruction (BIFR), New Delhi registered at sr.no.44/2014.

The Company's current liabilities exceeded its current assets as at the balance sheet date. These conditions indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern. However, the financial statements of the Company have been prepared on a going concern basis in view of the continuance of the business operations of the Company in respect of Maintenance and servicing of Computer systems.


Mar 31, 2014

1 (Note 26 of Unabridged Accounts)

The Term Loan of Rs.2000 lakhs due in March 2013 and the interest accrued thereon upto 31.3.2014 amounting to Rs.332.47 lakhs is outstanding as on 31.3.2014 - Refer Note no.9 (of unabridged accounts)

2 (Note 27 of Unabridged Accounts)

FCCBs and Interest thereon

The 0.50% Foreign Currency Convertible Bonds (due 2011), appearing under Note 3 (of unabridged accounts), are yet to be paid and the same is not restated as at the Balance Sheet date (AS11).

The value accreted thereon appearing under Note no.3 and 34 (of unabridged accounts) has not been restated as at the Balance Sheet date (AS11)

The coupon interest for the period 4.2.2011 to 4.8.2011 amounting to Rs.9.14 lakhs appearing under Note no.9 (of unabridged accounts) has not been restated as at the Balance Sheet date (AS11)

A petition has been filed in the Bombay High Court by State Bank of India for recovery of their part of the alleged investment in the said FCCB, which is disputed, as State Bank of India is not the bondholder.

3 (Note 42 of Unabridged Accounts)

The figures of Previous Year have been regrouped and reclassified wherever necessary.


Mar 31, 2013

NOTE 1

Contingent liability

Bank guarantees 53538 126240

Unexpired Letters of Credit 6492 16517

Accreted value on FCCB principal 85616 85616

Claims against the Company, not acknowledged as debt:

Sales tax 16839 20356

Custom duty 30572 30572

Excise duty 51715 51715

Municipal property tax 1983 1983

Others 3417 3417

(Income tax assessments have been completed upto Assessment Year 2010-11)

NOTE 2

Related Party Disclosures:

List of Related Parties:

Zenith Infotech Ltd.

Vu Technologies Pvt. Ltd.

Zeal Communications Pvt. Ltd.

Zenith Controls and Systems Pvt. Ltd.

Zenith Software Ltd.

Zenith Technology Pvt. Ltd.

NOTE 3

Current and Deferred Taxation in accordance with AS22

a) Current tax is not provided for, in view of the loss during the current accounting year.

b) Deferred tax for the current year is not provided for due to the expected adverse market conditions

NOTE 4

Provision for Bonus for current year has been made in the Accounts.

The 0.50% Foreign Currency Convertible Bonds (due 2011), appearing under Note 3, are yet to be paid and the consequent value accreted thereon has not been restated.

NOTE 5

In the opinion of the Board, the Assets other than fxed assets are approximately of the value, if realized, during the ordinary course of business.

NOTE 6

The amounts in the Balance Sheet and Proft and Loss Account are rounded off to the nearest thousands.

NOTE 7

The fgures of Previous Year have been regrouped and reclassifed wherever necessary.


Mar 31, 2012

1) Fixed Assets and Depreciation

a) Fixed Assets are stated at cost of acquisition or construction and include amounts added on revaluation less accumulated depreciation and impairment loss, if any. All costs, including financing costs till commencement of commercial production, net charges on foreign exchange contracts and adjustments arising out of exchange rate variations attributable to the fixed assets are capitalized.

b) Depreciation on Fixed Assets is provided on the basis of Straight Line Method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956. No depreciation is charged on the appreciation on revaluation of the fixed assets.

c) The depreciation on Computer Systems has been charged @4% as against 16.21%, consequently, the total depreciation on fixed assets amounts to Rs. 160.10 lakhs for the year as against Rs. 466.50 lakhs.

2) Foreign Currency Transactions

a) Transactions denominated in Foreign Currencies are normally recorded at the exchange rate prevailing at the time of the transactions or that exchange rate which approximates the actual rate at the date of the transaction.

b) Gains and losses on Foreign Exchange Transactions other than those relating to fixed assets are charged to the Profit and Loss account.

c) Monetary items denominated in foreign currencies at the year end are restated at year end rates as per AS11.

3) The 0.50% Foreign Currency Convertible Bonds, a part of which is outstanding, and the consequent value accreted thereon has not been restated.

4) Inventories

Items of inventory are valued at cost or net realizable value, whichever is lower, after providing for obsolescence, if any, and on a first-in, first-out (FIFO) basis. Cost of inventories comprises of cost of purchase, costs of conversion and other costs incurred in bringing them to their respective present location and condition.

5) Contingent Liability

20011-12 2010-11 Rs.000's Rs.000's

Bank guarantees 126240 129062

Unexpired Letters of Credit 16517 NIL

Claims against the Company, not acknowledged as debt:

Sales tax 20356 18339

Custom duty 30572 30572

Excise duty 51715 NIL

Municipal property tax 1983 1483

Others 3417 3417

6) The figures of Previous Year have been regrouped and reclassified wherever necessary.


Mar 31, 2010

1. Deferred Taxation

No provision for Deferred Taxation under AS 22 issued by ICAI has been made in the annual accounts, due to the tax holiday available to the Company under Section 80IB of the Income tax Act, 1961.

2 Contingent Liabilities Current Year Previous Year Rs.000s Rs.000s

a) Bank Guarantees 162914 170329

c) Unexpired Letters of Credit 30429 12221

b) Claims against the Company not acknowledged as debts (disputed):

(i) Sales tax 16786 24681

(ii) Excise duty 34502 32500

3. Provision for Bonus for current year has been made in the Accounts.

4. Sundry Debtors include Rs. NIL, due from companies under the same management as per section 370IB of the Companies Act, 1956 (Previous year Rs. NIL).

5. Out of the FCCB issue of US$ 12 million, the Company bought back FCCB of US$ 2 million during the year.

6. Related Party Disclosures a) List of Related Parties:

(i) Zenith Infotech Ltd.

(ii) Vu Technologies Pvt. Ltd.

(iii) Free Systems Technology Labs Pvt. Ltd.

7. Disclosure under the Micro, Small and Medium Enterprises Act, 2006:

For compliance with MSMED Act, 2006, requisite information was sought from the Vendors. As per the information available with the Company, the amounts payable under the MSMED Act, 2006 is NIL.

8. While making provision for taxation for current year, deduction has been claimed under section 80 IB of the Income Tax Act, 1961 in respect of a New Industrial Unit at Goa. The provision for taxation for the current year has been made on MAT basis.

9. In the opinion of the Board, the Current Assets, Loans and Advances are approximately of the value, if realized, during the ordinary course of business.

10. Income Tax Assessments have been completed up to Assessment Year 2007-2008.

11. Sales Tax/VAT Assessments have been completed up to Accounting Year 2007-08 (Goa).

12. The amounts in the Balance Sheet and Profit and Loss Account are rounded off to the nearest thousands.

13. The figures of Previous Year have been regrouped and reclassified wherever necessary.

 
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