Mar 31, 2010
1. Previous Years Figures have been regrouped, reallocated or reclassified wherever necessary to conform to this years classification.
2. Closing stock has been taken, valued and certified by the Management.
3. Balances in respect of Secured Loans, Unsecured Loans, Current Liabilities, Bank Fixed Deposits, Sundry Debtors, and Loans & Advances are subject to confirmation and reconciliation, if any.
4. In the opinion of the Management, Current Assets, Loans and Advances are of the value stated, if realised in the ordinary course of business. Provisions for all known liabilities are made and the same are adequate and not in excess of the amount reasonably considered necessary.
5. The accumulated losses of the Company as at 31.12.2003 exceeded the net worth of the Company and accordingly the Company is a "Sick Industrial Company" within the meaning of Section 3(1 )(o) of the Sick Industrial Companies (Special Provisions) Act, 1985. The Companys reference to the Board of Industrial and Financial Reconstruction (BIFR) as per the requirements of Section 15(1) of the said Act has however, been rejected. Further even the appeal filed against this order of the BIFR before the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) has also been rejected. The Company filed a writ petition before the Honourable Mumbai High Court against this order of AAIFR which has been admitted and the matter is in progress.
6. The Company has defaulted in the payment of interest and repayment of installments in respect of its borrowings from Banks and Financial Institutions. These lenders have initiated proceedings in the Debts Recovery Tribunal. Further, seven banks have filed complaints with the Central Bureau of Investigation. The investigating agency has filed charge-sheets against the Company and the Promoter-Directors. Further, some of the banks have assigned their loans/credit facilities in favour of other banks/institutions. The Company has disputed some of these assignments in the appropriate court of law. A financial institution (IFCI Ltd.) representing the consortium of lenders initiated action against the Company under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests (SARFESI) Act, 2002. During the quarter ended September, 2009, IFCI Ltd took forceful physical possession of the Companys manufacturing plant at Gandhinagar including the land, building, plant & machinery. It had issued a public notice for auction of these assets and eventually sold off some of the said assets. The Company has objected to the action under SARFESI Act by IFCI Ltd. in the DRT, Ahmedabad. The Income tax department had already attached the property at Bhat, Gandhinagar against tax demands. The IT department has filed a writ petition against IFCI Ltd. and the Company objecting to the takeover/sale of assets. This petition is pending for disposal. Further, one of the assignees have initiated action against a guarantor under SARFESI Act and have obtained symbolic possession of property at Andheri, Mumbai. The Guarantor filed a petition against this action and the same is pending disposal before DRT, Ahmedabad. The Company has made provisions for interest (including penal interest) only till 31.3.2005, on the basis of sanctioned terms.
7. The Company had sought extension of time for holding of the Annual General Meeting due to non completion of books of accounts on account of non availability of records in respect of Ganadhinagar plant in view of action taken by IFCI Ltd..
8. Though the Company does not have access to its plant at Gandhinagar and the operations there have ceased, the products of the Company continued to be manufactured at Mumbai from leased assets upto 5th November 2010 when the company declared a lock out in view of labour unrest. The products have good acceptance in the market and therefore the Management is confident of continued operations of the Company on lifting of lock out. Hence the accounts are prepared on a going concern basis.
9. The Company had a long standing dispute with one of its customer, M/s. Rashtriya Chemicals & Fertilizers Ltd. (RCF) in respect of bank guarantees wrongly invoked. The total amount invoked was Rs. 703.80 lakhs and hitherto was shown under the head Loans & Advances as "Advances recoverable in cash or in kind or for value to be received". The matter had gone into arbitration and claims and counter claims were made. An interim sward in favour of the Company was made which was appealed against by RCF in the Mumbai High Court. In the meanwhile, the Arbitrator in the matter, had resigned and later, expired. An application for appointment of a new Arbitrator was filed but this was dismissed by the honourable Court. The matter thus stands terminated due to the dismissal of the said application. During the year under consideration, the Company has recovered the precious metal from the material it was holding and has written off the balance amount of Rs. 583.92 lakhs due from RCF Ltd., after adjusting the value of the precious metal retrieved.
10. Sundry Debtors, Loans & Advances and Deposits include debts due from individuals, firms and companies in which the Directors are interested (related parties) aggregating Rs. 11.97 Lakhs (Rs.37.49 Lakhs), Rs.6468.40 Lakhs ( Rs.6460.05 Lakhs) and Rs. 1500.00 lakhs (Rs. 1500.00 Lakhs) respectively. No provision has been made in the accounts for any possible loss arising on account of erosion in the net worth of these related parties due to losses suffered by them and doubtful nature of their debts and loans and advances as in the opinion of the management these entities have substantial value of tangible/intangible assets due to which these Debtors, Loans & Advances and Deposits are fully recoverable at the value stated in the accounts.
11. Current Liabilities include amounts aggregating Rs.3371.66 Lakhs (Rs.3272.39 Lakhs) being amounts due to Individuals, Firms and Companies in which the Directors are interested.
12. In view of accumulated losses, during the year under consideration the Company has not transferred any amount to the Debenture Redemption Reserve.
13. The Company has failed to redeem its Debentures on due date. However the Company has obtained legal opinion from a practicing Company Secretary stating that privately placed debentures cannot be construed as "debentures" for the purpose of section 274(1 )(g) of the Companies Act, 1956. Accordingly the Company maintains that none of the Directors are disqualified as at 31st March 2010 from being appointed as Directors.
14. Insurance claim made by the Company for compensation against assets damaged by flood on 12th July, 2000 at its Mumbai Plant remains to be finally settled The Company has preferred a petition before the National Consumer Disputes Redressal Commission, New Delhi. Pending disposal, the Company has continued to show the amount of Rs. 1550.75 lakhs (Rs. 1550.75 lakhs) under the head Loans & Advances as "advances recoverable in cash or in kind or for value to be received." No provision for doubtful debts has accordingly been made in this respect, as the same is considered "Good" by the management.
15. During the year consideration the management has determined sums aggregating Rs. 2068.60 Lakhs ( Rs.4994.43) lacs in respect of long outstanding current liabilities as no longer payable and have accordingly written back the same and disclosed it separately under the head other Income. These writes backs are as determined and certified by the Management.
16. The Provident Fund Authorities had, in the past, initiated action against the Company and its Directors in respect of defaults of payments due. The Company had since made the said payments and filed a petition for discharge which has now been allowed.
17. The Company does not presently have a full time Company Secretary.
18. CONTINGENT LIABILITIES NOT PROVIDED FOR
i. (a) Taxation matter under appeal (by the Company) Rs. 24099.60 Lakhs (Rs. 24209.27 Lakhs) comprising of Income Tax Rs.23988.17 lakhs (Rs.23988.17 Lakhs), Sales tax Rs. 111.43 lakhs (Rs. 111.43 lakhs) and Excise Duty Rs. Nil (Rs. 109.67 lakhs)
(b) Income Tax matter under appeal (by the Department) Rs. 47.05 Lakhs (Rs. 47.05)
ii. Claims against the Company not acknowledged as debts Rs. 9.16 Lakhs (Rs.531.23 Lakhs ).
iii (a) Bond for availing duty exemption under EPCG Scheme for Rs. 2676.73 Lakhs (Rs.2676.73 Lakhs) issued in favour of Assistant Commissioner of Customs. Against this bond ,the export commitment was for Rs. 38514.93 lakhs, of which, the Company has fulfilled export commitment of Rs. 35040.84 lakhs. Thus the balance unfulfilled export commitment is Rs. 3504.09 lakhs.
(b) Further liability of the Company towards its export obligations in respect of duty-free import of raw materials, is unascertainable since the records have been destroyed in the floods in the Companys premises in July, 2005.
19. An amount of 7.10 lakhs (Rs 7.10 lakhs) is due and outstanding to be credited to investor Education and Protection Fund. The Company is unable to transfer the amount since the bank account has been frozen by the Income tax authorities.
20. The Company has not received any intimation from suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act 2006 and hence disclosures if any relating to amounts unpaid as at 31s1 March, 2010 together with interest paid/payable as required under the said Act has not been given.
21. As required by Accounting Standard 22 (Accounting for taxes on income) issued by the Institute of Chartered Accountants of India, during the year under consideration the Company has recognized Deffered Tax Assets (DTA) in the Profit & Loss Account at Rs. 114.09 lakhs (Rs. 91.65 lakhs) on account of timing difference due to depreciation. The year end balance is Rs. 1556.35 lakhs (Rs. 1670.45 Lakhs). The Company, during the current year has not recognized Deferred Tax Asset (DTA) on other constituents as at the year end in view of uncertainty of future profits.
22. RELATED PARTY DISCLOSURES:
(a) Key Management Personnel
Rajesh J.Parekh Rajnikant J.Parekh
(b) Other Related Parties
Jyoti Refinery Mehnik Enterprises Private Limited
Parekh Industries Limited Koshek Enterprises Private Limited
Chokshi Navnitlal & Sons Assay Office of India Limited
Nainraj Enterprises Private Limited Jewellery World Dot Com (India) Limited
Shilpgeet Enterprises Private Limited Pooja R.Parekh
Note: Related Party relationship is as identified by the Company and relied upon by the auditors.