Accounting Policies of Modipon Ltd. Company

Mar 31, 2018

A. Basis of Preparation

Ministry of Corporate Affairs notified roadmap to implement Indian Accounting Standards (‘Ind AS’) notified under the Companies(Indian Accounting Standards) Rules 2015 as amended by the Companies (Indian Accounting Standards) (Amendments) Rules , 2016. As per the said roadmap, the Company is required to apply Ind AS starting from the financial year beginning on or after 1^st April, 2015. Accordingly, the financial statements of the Company have been prepared in accordance with Ind AS.

For all the periods up to and including the year ended 31^st March, 2016, the Company has prepared its financial statements in accordance with the Accounting Standards notified under the Section 133 of the Companies Act 2013, read together with Companies (Accounts) Rules 2014 (Indian GAAP). These financial statements for the year ended 31^st March, 2018 are the first the company has prepared in accordance with Ind AS.

The financial statements have been prepared on historical cost basis, except as stated otherwise.

Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

The financial statements are presented in INR and all values are rounded to the nearest lacs (INR ), except when otherwise stated.

B. Use of Estimates

The preparation of financial statements is in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

C. Property, plant and equipment

Property, plant and equipment are stated at original cost net of tax/ duty credit availed, less accumulated depreciation and accumulated impairment losses. Likewise when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance cost are recognised in the statement of the profit and loss as incurred. The present value of the expected cost for the decommissioning of the asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met.

Capital work in progress including Property plant & equipment under installation/under development as at the balance sheet date

Capital expenditure on tangible assets for research and development is classified under property and equipment and is deprecated on the same basis as other property, plant and equipment.

Property, plant and equipment eliminated from the financial statement, either on disposal or when retired from the active use. Losses arising in the case of retirement of property, plant and equipment and gain or losses arising from disposal of property, plant and equipment are a recognised in the statement of the profit and loss in the year of occurrence.

D. Depreciation and amortization

The assets’ residual values, useful lives and methods of depreciation are reviewed each financial year end and adjusted prospectively, if applicable.

Depreciation on Property, plant and equipment is provided over the useful life of assets as specified in schedule II to the Companies Act,2013. Depreciation on Property, plant and equipment which are added / disposed off during the year is provided on pro-rata basis with reference to the date of addition / deletion.

Depreciation on Property, plant and equipment is calculated on a straight line basis.

E. Intangible Assets

Capital expenditure on purchase and development of identifiable assets without physical substance is recognized as intangible assets in accordance with principles given under indas-38 -intangible assets.

Intangible assets are amortised on written down value method over useful life not exceeding four years.

F. Cash and cash equivalents

Cash and cash equivalents include cash on hand and at bank.

For the purpose of the Statement of Cash Flows, cash and cash equivalents consists of cash and short term deposits, as defined above, net of outstanding bank overdraft as they being considered as integral part of the Company’s cash management.

G. Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all potential dilutive equity shares.

H. Provisions, Contingent liabilities, Contingent assets and Commitments: General

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the outflow of resources embodying economic benefits will be required to settled the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to provision presented in the statement of profit & loss net of any reimbursement.

If the effect of the time value of money is material, Provisions are disclosed using a current pre-tax rate that reflects when appropriate, the risk specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as finance cost.

Contingent liability is disclosed in the case of:

- There is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.

- A present obligation arising from past event, when it is not probable that as outflow of resources will be required to settle the obligation

- A present obligation arises from the past event, when no reliable estimate is possible

- A present obligation arises from the past event, unless the probability of outflow is remote.

Commitments include the amount of purchase order (net of advances) issued to parties for completion of assets.

Provisions, contingent liabilities, contingent assets and commitments are reviewed at each balance sheet date.

Contingent assets

Contingent assets are not recognised. However, when the realisation of income is virtually certain, then the related asset is no longer a contingent asset, but it is recognised as an asset.

I. Taxes

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.

Current tax assets and current tax liabilities are off set, and presented as net.

Minimum alternate tax

Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. The Company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as “MAT Credit Entitlement.” The Company reviews the “MAT credit entitlement” asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period.

Deferred Tax

Deferred tax is provided using the balance sheet approach on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purpose at reporting date. Deferred income tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date and are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of changes in tax rates on deferred income tax assets and liabilities is recognized as income or expense in the period that includes the enactment or the substantive enactment date. A deferred income tax asset is recognized to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilized.

The carrying amount of deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax assets to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow deferred tax assets to be recovered.

The company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

J. Non-current assets held for sale

Non current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. This condition is regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

K. Revenue Recognition

i. Revenue in respect of sale of scrap is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer.

ii. Indirect costs are treated as “period costs” and are charged to the Statement of profit & loss in the year in which they are incurred.

iii. Interest income on fixed deposit with banks is recognized on time proportion basis taking into account the amount outstanding and the rates applicable.

iv. Dividend income is recognized when right to receive the payment is established.

L. Borrowings

Borrowings are initially recognized at cost.

M. Borrowing costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.

Other borrowing costs are expensed in the period in which they are incurred.

N. Employee Benefits

Expenses and liabilities in respect of employee benefits are recorded in accordance with Indian Accounting Standard (Ind AS)-19 - ‘Employee Benefits’.

O. Financial Instruments

The company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognized at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities that are not at fair value through profit or loss are added to the fair value on initial recognition.

1. Reclassification offinancial assets

The company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The company’s senior management determines change in the business model as a result of external or internal changes which are significant to the Company’s operations. Such changes are evident to external parties. A change in the business model occurs when the company either begins or ceases to perform an activity that is significant to its operations. If the company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.

ii. Offsetting offinancial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

iii. Current and non-current classification

The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is treated as current when it is:

- Expected to be realized or intended to be sold or consumed in normal operating cycle

- Held primarily for the purpose of trading

- Expected to be realized within twelve months after the reporting period, or

- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period

All other assets are classified as non-current.

A liability is current when:

- It is expected to be settled in normal operating cycle

- It is held primarily for the purpose of trading

- It is due to be settled within twelve months after the reporting period, or

- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period

All other liabilities are classified as non-current.

The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents.

The Company has identified twelve months as its operating cycle.

P. Critical accounting estimates, assumptions and judgements

In the process of applying the Company’s accounting policies, management has made the following estimates, assumptions and judgements, which have significant effect on the amounts recognised in the financial statement:

a. Property, plant and equipment

On transition to IND AS, the Company has adopted optional exemption under IND AS 101 for considering carrying cost as deemed cost on the date of transition for property, plant and equipment

b. Income taxes

Management judgment is required for the calculation of provision for income taxes and deferred tax assets and liabilities. The Company reviews at each balance sheet date the carrying amount of deferred tax assets. The factors used in estimates may differ from actual outcome which could lead to significant adjustment to the amounts reported in the standalone financial statements.

c. Contingencies

Management judgement is required for estimating the possible outflow of resources, if any, in respect of Contingencies / claim/ litigations against the Company as it is not possible to predict the outcome of pending matters with accuracy.

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Mar 31, 2016

Note 1: Corporate Information

Modipon Limited (the company) is a public limited company incorporated in the year 1965 under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange.

Note 2: Significant Accounting Policies

a. Basis of Accounting

These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis except for certain financial instruments which are measured at fair values. GAAP comprises mandatory accounting standards as prescribed under Section 133 of the Companies Act, 2013 (''the Act'') read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly-issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

b. Uses of Estimates

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

c. Fixed Assets and Depreciation

Fixed assets are stated at cost of acquisition inclusive of freight, duties & taxes and incidental expenses related to acquisition up to the date of installation. Cost of Fixed assets are further adjusted by the amount of MODVAT/CENVAT credit availed and VAT credit wherever applicable. Interest and finance charges incurred are allocated to the respective fixed assets on installation. Fixed assets under construction, and cost of assets not put to use before year end are shown as capital work in progress while advance paid towards acquisition of fixed assets are shown as capital advance under the head long term loans & Advances.

Depreciation is provided as per useful life specified in schedule II to the Companies Act, 2013. Depreciation is calculated on a pro-rata basis from the date of additions. On assets sold, discarded, etc. during the year, depreciation is provided up to the date of sale/discard.

d. Revenue recognition

Interest Income is recognized on time proportion basis taking into account the amount outstanding and the applicable interest rate.

Rental Income is accounted for on cash basis where there is unascertainty in realization.

e. Borrowing Cost

Borrowing costs that are attributable to the acquisition for construction of qualifying asset are capitalized as part of the cost of such asset. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue. Borrowing Cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings to the extent they are regarded as an adjustment to the interest cost.

f. Investments

Investments, which are readily realizable and intended to be held for less than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as Non-Current Investments. Current Investments are carried in the financial statements at lower of cost and fair value. Non-Current Investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the Investments.

g. Taxes on Income

Tax expense comprises current and differed tax Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss.

Deferred income taxes (asset/ liability) reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and deferred taxes relate to the same taxable entity and the same taxation authority.

h. Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognized in the accounts in respect of present probable obligations arising as a result of past events and it is probable that there will be an outflow of resources, the amount of which can be reliably estimated.

Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company.

Contingent Assets are neither recognized nor disclosed in the financial statements.

i. Earning per share

Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the year. For the purpose of calculating Diluted Earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

j. Cash Flow Statement

Cash flows are reported using the indirect method as specified in Accounting Standard (AS-3) "Cash Flow Statement".

k. Retirement Benefit to Employees

(a) Company''s contribution to provident/pension is charged to the Statement of Profit and Loss on accrual basis.

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Mar 31, 2014

1. REVENUE RECOGNITION

Rental Income is accounted for on cash basis where there is unascertainty in realization.

2. INVESTMENTS

Investments, being long term, are carried at cost less provision for diminution, other than temporary, in the value of such investments.

3. RETIREMENT BENEFITS TO EMPLOYEES

(a) Company''s contribution to provident/pension is charged to the Statement of Profit and Loss on accrual basis.

(b) Provision for leave encashment benefits and gratuity of the continuing employees is provided on accrual basis based on actual computation instead of computing on actuarial basis as the company has only two employees at the year end.

B. CONTINGENT LIABILITIES AND NOTES

1. (a) Claims against the company not acknowledged as debts (excluding unascertainable amounts) in respect of :

As at As at 31st March, 31st March, 2014 2013

Rs. Lakhs Rs. Lakhs

(i) Income Tax (See note 1(c) below) 816.93 870.24

(ii) Sales Tax/Excise/CustomsDuty 218.54 206.11

(iii) Water Tax 7.11 7.11

(iv) Others 156.28 157.08

(v) The following are the particulars of above Dues on account of Sales Tax, Excise Duty, Customs Duty, Water Tax and Income Tax as at 31st March, 2014 that have been disputed by the Company in Appeals pending before the Appellate Authorities:

Nature Nature Period Forum of the Statue of the Dues to which where Dispute is the Amount Pending relates

Sales Tax Laws Sales Tax 1991-92 High Court

Sales Tax Laws Sales Tax 2005-06 & Asst. Comissioner 06-07

Sales Tax Laws Sales Tax 2006-07 Addl. Commissioner

Sales Tax Laws Sales Tax 2005-06 & Addl. Commissioner 06-07

Sales Tax Laws Sales Tax 2004-05 Dy. Commissioner (Asst)

Sales Tax Laws Sales Tax 2007-08 Addl. Commissioner

Customs Law Customs Duty 1982-83 Asst. Commissioner

2002-03 Appellate Tribunal

The Uttar Water Tax 1997-98 & Additional Civil Judge Pradesh Water 1998-99 Supply and Sewerage (Amendment) Act, 1999

Central Excise Duty 1983-84 Commissioner (Appeal) Excise Law (on-account payment of Rs. 125.00 lakhs)

Income tax Act, Non-Deduction 2006-07 to High Court 1961 of TDS 2008-09 ITAT/Commissioner (Appeal)

Nature Amount of of the Statue Disputed Dues (Rs. Lakhs)

Sales Tax Laws 1.41

Sales Tax Laws 1.35 Sales Tax Laws 7.00

Sales Tax Laws 8.00 Sales Tax Laws 94.30

Sales Tax Laws 12.43

Customs Law 74.66

19.39

The Uttar 7.11 Pradesh Water Supply and Sewerage (Amendment) Act, 1999

Central 115.75 Excise Law (on-account payment of Rs. 125.00 lakhs)

Income tax Act, 207.33 1961 609.60 (b) There is a balance sales tax liability of Rs. 183.90 lakhs (plus interest/penalty, if any) imposed by Commercial Tax Authorities, Modinagar on Punjab National Bank on account of tax payable on auction held by the bank for old plant & machinery of the company. The company has undertaken to reimburse the same to Punjab National Bank, in case the bank is required to pay the same to the sales tax authorities. In the meantime, the Company shall continue to keep mortgage/charge over the administrative block(with land) of the Company, as security, in favour of the bank till final disposal of the above tax case.

(c) For Assessment years 2006-07 to 2008-09, a demand of Rs. 816.93 lakhs was raised by Income Tax department towards non-deduction of TDS Rs. 260.77 lakhs plus interest and penalty amounting to Rs. 556.16 lakhs. On an appeal filed by the Company,Hon''ble Allahabad High court has stayed recovery of demand of Rs. 181.87 lakhs along with interest of Rs. 25.46 lakhs and the matter is pending. Company has also filed appeals before Commissioner of Income Tax (Appeals) which are pending. The Commissioner (Appeal), GZB had reduced penalty amount by Rs. 53.21 lakhs and conformed the penalty Rs. 335.55 lakhs vide order dated 09.02.2012. Company had filed appeal before ITAT, New Delhi against the said order and matter is still pending. During the previous year ITO (TDS & Survey) GZB had rejected our application under section 154 of IT Act. Against the said order, we had filed appeal before the Commissioner (Appeal) GZB, which is pending

(d) Guarantees executed in favour of Banks and Government Authorities on behalf of the following Companies against their Counter Guarantees:

(i) Modi Industries Limited, a Company under the same Management Rs. 10.63 lakhs (Previous year Rs. 10.63 lakhs);

(ii) Other Corporate Body Rs. 28.00 lakhs (Previous year Rs. 28.00 lakhs).

The amounts outstanding against these Guarantees are not available.

2. Balance confirmation certificates from Creditors, house/ shop security depositors, and Banks (for cash credit, certain current accounts & fixed deposits including interest accrued with one bank) etc. as on 31st March, 2008 and onwards were not obtained and consequently adjustment required on reconciliations, if any, will be carried out subsequently as and when reconciled/confirmed.

3. The Accounts of the Company have not been prepared on a going concern basis in view of Closure of Manufacturing Operations of the Company during the year ended 30th September, 2007 and sale of all moveable assets including Plant & machinery during the year 2009-10. However, once the liabilities of the Company towards secured creditors are cleared, the Company will start business operations.

4. Claims from a supplier towards Interest on late payments etc. amounting to Rs. 1000.54 lakhs upto 31st March, 2008, has not been provided in the Books of Account as the same are being disputed by the Company. The amount of interest for the 72 month period ended 31st March, 2014 is not ascertainable.

5. The members of the Company have, in their meeting held on 27th September 2013, approved payment of remuneration to Mr. Manish K. Modi Managing Director for a period of five years w.e.f. 1st June, 2013. The approval of the Central Government to the above remuneration is awaited. The estimated amount as per the above approval of members for the year ended 31.03.2014 amount to Rs. 27.83 lakhs which will be accounted for/charged to revenue in the books on receipt of approval from the central government.

6. No Provision for Income Tax under the Income Tax Act, 1961 is considered necessary for current financial year on account of unabsorbed depreciation, unabsorbed business losses and capital loss.

7. Under the Micro, Small and Medium Enterprises Development Act, 2006, which came into force on 2nd October, 2006, certain disclosures are required to be made relating to Micro, Small and Medium Enterprises. The Company has not collected the relevant information. Since the information is not readily available, no disclosures/provision for interest has been made in the Books of Account.

8. In view of Unabsorbed Depreciation, carry forward business losses incurred by the Company in the previous year, sale of Fibers Division and Closure of Manufacturing Operations of the Company in the year 2007, the recognition of Deferred Tax Assets (Net) has been postponed on consideration of prudence.

9. The Manufacturing Operations of the Company have been closed with effect from 19th May, 2007. In terms of the provisions of the Uttar Pradesh Industrial Disputes Act, 1947, the Closure has become operative from the date of expiration of the period of 90 days from the date of application i.e. on 8th September, 2007.

10. (A) Exceptional Items in Statement of Profit and Loss includes :

(a) For the year ended 31st March, 2014:

Profit on sale of Non factory building Rs. 339.95 lakhs being excess of amount received over cost Rs. 30.08 lakhs.

(b) For the year ended 31st March, 2013:

(i) Income received Rs. 423.73 lakhs being excess of amount received over cost of land of Rs. 1.27 lakhs sold on "As is where is" basis.

(ii) Payment to PF Trust for deficit for earlier year Rs. 11.01 lakhs.

11. (a) Since the Net Book value of Land, Residential buildings at Modinagar, Office premises outside Modinagar and factory/ administrative building in Modinagar are lower than the Net Realisable Value as per Valuer''s Report / Management''s estimate, no provision for diminution is required to be made and the net book Value of Rs. 292.49 lakhs as on 31st March 2014 has been clubbed with "Fixed Assets held for Disposal" on the face of the Balance Sheet.

(b) The Company has sold 65,743 sq. yds. and 2299 sq. yds. of its vacant land at Modinagar for Rs. 986.15 lakhs (original cost Rs. 1.88 lakhs) and Rs. 35.00 lakhs (original cost Rs. 0.07 lakhs) respectively which resulted in Profit on Sale of Land amounting to Rs. 1019.20 lakhs during the year ended 31st March 2009. Approval of banks to whom immovable properties of the Company, including the above Land, are charged is pending.

12. In view of Valuation of fixed assets at lower of cost and net realizable value, no provision for Depreciation has been made since 1st April, 2007, except for office equipment.

13. (a) Cash credit/Working Capital Demand Loans (including interest accrued and due) taken from Punjab National Bank was out of order and has been classified by Bank as Non-Performing Assets.The Bank issued notice to the Company under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) for the recovery of its dues and has also issued notice under section 13(4) of the SARFAESI to the company for taking possession of the secured assets of the company.

(b) The Punjab National Bank has approved one time settlement of its outstanding dues vide its approval letters dated 02.04.2014 and 12.04.2014. In terms of the settlement, OTS amount of Rs. 1710 lakhs (Net of upfront payment of Rs. 190 lakhs) shall be paid by the Company in four quarterly installments with interest during financial year 2014-15. The balance of PNB as per books of accounts of the Company is Rs. 2083.90 lakhs and the excess amount of Rs. 183.90 lakhs would be dealt with upon final payment of the OTS amount. In view of the OTS as above, no provision for interest has been made for the current year ended 31.03.2014. Further in terms of the OTS, consent decree has been passed by Hon'' ble Debt Recovery Tribunal, Delhi on 29th April, 2014 incorporating there in the terms of settlement.

(c) In view of the above, pending implementation of the OTS with PNB, simple interest @ 10 % on the balance outstanding of the year end, after taking into account the amounts received by banks from sale of movable assets of the Company, has been provided for till the previous year and has been credited to the cash credit accounts of banks. Has the interest been provided as per past practice followed upto 31st March 2009, interest expenses for the current year would have been higher by Rs. 304.93 lakhs (upto 31st March, 2014 Rs. 1004.95 lakhs)

(d) (i) Loan liability of Rs. 749.20 lakhs to Karnatka Bank has been discharged by the Company under OTS (one time settlement), in arrangement with Ashoka Mercantile Limited paying the settled sum of Rs. 410 lakhs to the said bank. The settlement resulted into remission of liability by Rs. 339.20 lakhs. As per the terms approved by the Board of Directors of the Company on 16th August,2012 with Ashoka Mercantile Ltd, they shall be entitled to so much of the waived-off amount under OTS as agreeable, but to the extent such sum does not exceed the sum as worked out by applying the ratio of waiver agreed by the Company for settlement under OTS with Punjab National Bank (PNB). Pending the successful implementation of OTS with PNB as stated in para 13(b) above, the amount of Rs. 339.20 lakhs being the subject matter of OTS arrangement with Ashoka Mercantile Limited and liable to be dealt with later has been kept aside and shown in Balance Sheet under the head "Short term borrowings".

No provision of interest has been made on loan repaid by Ashoka Mercantile Limited, pending finalization of Debt Assignment Agreement under this OTS deal and/or successful implementation of the OTS with Punjab National Bank.

(ii) Loan liability of Rs. 832.04 lakhs to Bank of Baroda has been discharged by the company under OTS (one time settlement), in arrangement with Ashoka Mercantile Limited and Asset Reconstruction Company paying Rs. 95 lakhs being part of the settled sum of Rs. 600 lakhs to the said bank. The settlement resulted into remission of liability by Rs. 232.04 lakhs. As per the terms approved by the Board of Directors of the Company on 11th February, 2013 with Ashoka Mercantile Ltd., they shall be entitled to so much of the waived-off amount under OTS as agreeable, but to the extent such sum does not exceed the sum as worked out by applying the ratio of waiver agreed by the company for settlement under OTS with Punjab National Bank (PNB). Pending the successful implementation of OTS with PNB as stated in para 13(b) above, the amount of Rs. 232.04 lakhs being the subject matter of OTS arrangement with Ashoka Mercantile Limited and liable to be dealt with later has been kept aside and shown in Balance Sheet under the head "Short term borrowings".

No provision of interest has been made on loan repaid by Ashoka Mercantile Limited, pending finalization of Debt Assignment Agreement under this OTS deal and/or successful implementation of the OTS with Punjab National Bank.

(iii) Pending finalisation of terms of loan agreements with Ashoka Mercantile Limited (AML) who has given unsecured loans of Rs. 1131.80 lakhs for payment of OTS dues of banks, no provision of Interest on loan taken of Rs. 410 lakhs has been made for the year ended 31st March, 2011 to 31st March, 2014, on loan taken of Rs. 540 lakhs, for the years ended 31st March, 2012 to 31st March, 2014 and on loan taken of Rs. 100 lakhs for the year ended 31st March, 2013 and on loan taken (net)of Rs. 81.80 lakhs for the year ended 31st March,2014.

(e) (i) The Abu Dhabi Commercial Bank Limited has settled its Dues of Rs. 351.05 lakhs under One Time Settlement (OTS) as conveyed vide its letter dated 23rd September,2008. Since the Company did not have funds to pay the settled dues, it had approached M/s Ashoka Mercantile Limited (AML) for making payment of settled dues to the Banks. Further, it has also been agreed with AML that it shall not be entitled to settlement of its claim better than what is agreed by the Company with PNB.

(ii) Since successful implementation of settlement of dues of PNB is still pending, the amount paid towards OTS by AML of Rs. 157.13 lakhs (net of Rs. 40 lakhs paid to AML upto 31st March,2011) is shown as secured loan in Note 5 i.e. as on 31st March, 2014 and the balance amount of Rs. 153.92 lakhs (Rs. 351.05 lakhs - Rs. 197.13 lakhs) outstanding in the books of accounts has also been shown as unsecured loan, to be written back or credited to AML at the time of OTS with PNB as stated in (i) above.

(iii) As the OTS with PNB as stated above is yet to be implemented as on date, no interest has been provided on the balances mentioned in the 13 (e) (ii) above during the current year as well as in the previous years, amount unascertained.

14. Debts Recovery Tribunal (DRT) has, vide its order dt. 19th May,2011, confirmed/approved sale of a piece of agricultural land admeasuring 40827sq. mtr., owned by the Company to M/s GDC Buildcon Pvt. Ltd., Mumbai for a consideration of Rs. 425.00 lakhs (Estimated cost Rs. 1.27lakhs)to be deposited with DRT. Consequent upon finalization of OTS with Bank of Baroda, the balance amount of the purchase consideration was directly paid to Bank of Baroda against OTS and accordingly an affidavit to this effect was filed with DRT on 03.03.2013. The sale of the said land stands concluded and accounted for during the year ended 31st March, 2013.

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Mar 31, 2012

1. REVENUE RECOGNITION

(a) Rental Income is accounted for on cash basis where there is unascertainty in realization.

2. INVESTMENTS

Investments, being long term, are carried at cost less provision for diminution, other than temporary, in the value of such investments.

3. RETIREMENT BENEFITS TO EMPLOYEES

(a) Company's contribution to provident/pension is charged to the Profit & Loss Account on accrual basis.

(b) Provision for leave encashment benefits and gratuity of the continuing employees is provided on accrual basis based on actual computation instead of computing on actuarial basis as the company has only two employees at the year end.

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Mar 31, 2010

1. REVENUE RECOGNITION

Interest Income on Refunds from Income Tax/Sales Tax Department(s) is accounted for in the year of receipt of the Order(s) of the Assessing Authority.

2. INVESTMENTS

Investments being Long Term are carried at Cost less Provision for Diminution, other than temporary, in the Value of such Investments.

3. RETIREMENT BENEFITS TO EMPLOYEES

(a) Companys Contribution to Provident/Pension Funds is charged to the Profit & Loss Account.

(b) Provision for Leave Encashment Benefits and Gratuity of the continuing employees is provided on accrual basis based on actual computation.