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:
1. Relationship
(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.
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