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Notes to Accounts of Zenith Fibres Ltd.

Mar 31, 2015

I) CONTINGENT LIABILITIES AND COMMITMENTS :

(a) CONTINGENT LIABILITIES : Bank Guarantee Rs. 30,60,000/- (Rs. 51,86,122/-)

(b) Claims against the Company not acknowledged as debts:- Excise department has raised demand of Rs. 90,48,505/- ( Including Penalty of Rs. 59,74,353/-) pertaining to period 01/04/2010 to 31/03/2011 vide order of Commissioner, Central Excise and Customs dated 28/08/2014. No provision for the same is made as the Company has contested the same before the higher authority and as per the legal advice received is hopeful of favourable decision.

In previous year the company has received show cause notice from the Central Excise department for demand of Rs. 3,60,80,795/- which has been reduced to Rs. 90,48,505/- by order referred above.

(c) COMMITMENTS :

Estimated amount of contracts remaining to be executed and not provided for in respect of Capital purchases (Net of Advance) NIL (Rs. 1,12,500 /-).

(ii) In the opinion of the Board, Current Assets, Loans and Advances are approximately of the value stated if realized in the ordinary course of business and provision for all known liabilities is adequate.

(iii) No interest is payable on account of amount outstanding to Micro, Small and Medium Enterprises. The identification of Vendor as a "Supplier" under the Micro, Small and Medium Enterprise Development Act, 2006 has been done on the basis of information available with the Company. This has been relied upon by the Auditors.

(iv) Company's operations comprise of only one segment i.e. "Manufacturing of Man-made Fibres" in terms of the guidelines stated in AS-17 issued by the Institute of Chartered Accountants of India.

(v) The amount of lease payment in respect of operating (cancellable) leases recognized in the profit and loss account was Rs. 23,94,010/- (Rs. 21,90,399/-) and future minimum lease payments are as follows :

(vi) Amount of Rs. 62.74 Lacs against prior period items is in respect of excess provision of depreciation on fixed assets of earlier year written back.

(vii) Pursuant to the provisions of the Companies Act, 2013, and based on Technical Advise, the Company has reviewed and revised the estimated useful lives of the fixed assets, primarily Plant & Machinery, effective April 1, 2014. The useful lives of certain machines have been reassessed at 20 years (earlier 25 years) and other Plant & Machinery at 10 years (earlier 25 years).

In respect of assets having completed their useful life, as a 1st April, 2014 depreciation has been recalculated and amount of Rs. 11.24 Lacs (net of tax) has been adjusted against the opening balance of the retained earnings in accordance with the transitional provisions provided in Note 7 of Schedule II of the Companies Act, 2013.

(viii) Advances Recoverable in Cash or kind includes

a) MOT charges of Rs. 1,41,625/- (Rs. 1,41,625/-) deposited under protest with Central Excise Authority on account of overtime charge demanded by Excise Authorities for Export Clearances during normal working hours. As per advise of legal expert the company is hopeful of getting refund of this amount and hence no provision made.

b) Short term Loans and Advances include Cenvat Credit of Service Tax charged by commission agents Rs. 14,02,998/- (Rs. 9,59,451/-), which could not be availed of in view of decision of Hon. Gujarat High Court in the case of Cadila Health Care Ltd. However, as per advise of legal expert appeal of Cadila Health Care Ltd. is pending before the Hon. Supreme Court of India and favourable decision is expected. The Company would make adjustment of Cenvat Credit once the issue is decided

(ix) The Company has invested Rs. 1,00,00,000/- in equity shares of Rainy Properties Pvt.Ltd. in earlier year. The said investment is of long term strategic nature. Financial Results of the said company for the year ended March 31, 2015 are yet not finalized. However, as per the latest audited financial results for the year ended March 31,2014 available, the accumulated losses were Rs. 56,85,720/- against paid up share capital of Rs. 3,23,22,000/-. However, this being long term and strategic investment and also in view of the projected profitable operations of the investee company, the management is of the view that there is no diminution other than temporary in the value of this investment.

x) a) Defined Contribution Plan - Provident Fund :

During the year, the company has recognized the Company's Contribution to Employees Provident Fund amounting to Rs. 11,64,152/- (Rs. 8,56,298/-) as part of Remuneration and other benefits to the employees.

b) Defined Benefit Plan

The benefit of gratuity is Funded Defined Benefit Plan. For this purpose the company has obtained qualifying insurance policy from Life Insurance Corporation of India.

The company provides benefits to its employees under the leave encashment pay plan which is a noncontributory defined benefit plan


Mar 31, 2013

(i) CONTINGENT LIABILITIES AND COMMITMENTS :

(a) CONTINGENT LIABILITIES : Bank Guarantee 51,86,122/- (NIL)

(b) COMMITMENTS : Estimated amount of contracts remaining to be executed and not provided for in respect of capital purchases (Net of Advance) Rs. 3,12,750/- ( Rs. 14,27,591 /-)

(ii) In the opinion of the Board, Current Assets, Loans and Advances are approximately of the value stated if realized in the ordinary course of business and provision for all known liabilities is adequate.

(iii) No interest is payable on account of amount outstanding to Micro, small and Medium Enterprises. The identification of vendor as a "Supplier" under the Micro, Small and Medium Enterprise Development Act, 2006 has been done on the basis of information available with the company. This has been relied upon by the Auditors,

(iv) Company''s operations comprise of only one segment i.e. "manufacturing of manmade fibres" in terms of the guidelines stated in AS-17 issued by the Institute of Chartered Accountants of India.

(v) The amount of lease payment in respect of operating (cancellable) leases recognized in the profit and loss account was f 20,43,065/- ( Rs. 19,30,878/-) and future minimum lease payments are as follows :

Current Year Previous Year (Rs.) (Rs.)

Not later than one year. , 11,86,064/- 19,39,508/

Later than one year but not later than five years 14,96,736/- 26,76,620/

Later than five years and above NiL Nil

vi) The Company has paid MOT charges of Rs. 1,41,625/- (Rs. 1,41,625/-) during earlier years to the Central Excise Authority under protest. The Company is hopeful of getting the refund of this amount as per advise of the expert. Similarly, during the year the Company has reversed Cenvat Credit of Service Tax, charged by the Commission Agent Amounting to Rs. 4,05,026/- availed of, under protest and also paid interest ofRs. 33,857/- on such reversal as per the directions of the Central Excise Authority in view of decision of Honorable Gujarat High Court in the case of Cadila Healthcare Limited. The Company has not accounted these as expenses but disclosed the same as advance recoverable as per the advise of expert and pending appeal of Cadila Healthcare Ltd. before the Honorable Supreme Court of India.

vii) a) Defined Contribution Plan - Provident Fund :

During the year the company has recognized the Company''s Contribution to Employees Provident Fund amounting to Rs. 7,92,529/- (Rs. 7,76,422/-) as part of Remuneration and other benefits to the employees.

b) Defined Benefit Plan

The benefit of gratuity is Funded Defined Benefit Plan. For this purpose the company has obtained qualifying Insurance policy from Life Insurance Corporation of India.

The company provides benefits to its employees under the leave encashment pay plan which is a non contributory defined benefit plan.


Mar 31, 2012

I) CONTINGENT LIABILITIES AND COMMITMENTS :

(a) CONTINGENT LIABILITIES: NIL (NIL)

(b) COMMITMENTS : Estimated amount of contracts remaining to be executed and not provided fori n respect of capital purchases (Net of Advance) Rs. 14,27,591/- (Rs. NIL)

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

iii) In the opinion of the Board, Current Assets, Loans and Advances are approximately of the value stated if realized in the ordinary course of business and provision for all known liabilities is adequate.

iv) No interest is payable on account of amount outstanding to Micro and small Enterprises. The identification of vendor as a "Supplier" under the Micro, Small and Medium Enterprise Development Act, 2006 has been done on the basis of information available with the company. This has been relied upon by the Auditors.

v) Company's operations comprise of only one segment i.e. " manufacturing of man made fibres" in terms of the guidelines stated in AS-17 issued by the Institute of Chartered Accountants of India.

vi) The Company has deposited MOT charges of t 1,41,625/- {I 101260/-)with Excise Authority Under Protest, hence the same is not Accounted as expense.

vii) a) Defined Contribution Plan - Provident Fund :

During the year,the company has recognized the Company's Contribution to Employees Provident Fund amounting to Rs. 776422/- (Rs. 751405/-) as part of Remuneration and other benefits to the employees.

b) Defined Benefit Plan

The benefit of gratuity is Funded Defined Benefit Plan. For this purpose the company has obtained qualifying insurance policy from Life Insurance Corporation of India.

The company provides benefits to its employees under the leave encashment pay plan which is a non contributory defined benefit plan.

viii) The following table sets out the funded status of the gratuity plan and unfunded status of leave encashment plan. The amount recognized in the company's financial statement as at 31st March, 2012.


Mar 31, 2010

1 CONTINGENT LIABILITIES:

Capital Commitments Nil (Previous year Rs. Rs.50000/-)

2 Figures for the previous year are regrouped wherever considered necessary.

3 In the opinion of the Board, Current Assets, Loans and Advances are approximately of the value stated if realised in the ordinary course of business and provision for all known liabilities is adequate.

4 Amount Due to Micro and Small Enterprises Nil (Rs.27820/-)

No interest is payable on account of amount outstanding to Micro and small scale Enterprises.

The identification of vendor as a"Supplier" under the Micro, Small and Medium Enterprises Development Act, 2005 has been done on the basis of information avilable with the company .This has been relied upon by the Auditors.

5 Managerial Remuneration : Sitting Fees to Directors Rs.31,000/-(Rs.31,000/-).

6 Companys operations comprise of only one segment i.e." manufacturing of man made fibres" in terms of the guidelines stated in AS-17 issued by the Institute of Chartered Accountants of India.

7 Taxation

i) Provision for Fringe Benefit Tax Rs.17327/- is for earlier year. (Rs.42654/-)

ii) Provision for Taxation includes Rs. 478948/- for earlier year. (Rs.302762/-)

iii) Demand of Rs.1,14,136/-(Rs.1,14,136/-) has been raised by Income Tax Authority for A.Y. 2004-05. However no provision has been made in the Books of Accounts as the Company has preferred second Appeal before Income Tax Appellate Tribunal and is hopeful of getting favourable decision in view of decision on similar issue in earlier years.

8 The Company has deposited MOT charges of Rs.49780/- (Nil) with Excise Authority Under Protest, hence the same is not Accounted as expense.

9 Employee Benefits AS 15 (Revised)

i) Defined Contribution Plan - Provident Fund :

During the year, the company has recognized the Companys Contribution to Employees Provident Fund amounting to Rs. 748917/- (Previous Year Rs 694673/-) as part of Remuneration and other benefits to the employees.

ii) Defined Benefit Plan

The benefit of gratuity is Funded Defined Benefit Plan. For this purpose the company has obtained qualifying insurance policy from Life Insurance Corporation of India.

The company provides benefits to its employees under the leave encashment pay plan which is a non contributory defined benefit plan.

 
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