అకౌంట్స్ గమనికలుIndu Nissan Oxo Chemicals Industries Ltd.

Mar 31, 2014

1. A) The Company had been declared as a sick Company under the provisions of clause (o) of Sub section (1) of section 3 of Sick Industrial Companies (Special Provisions) Act,1985 (1 of 1986) by the Honorable Board For Industrial And Financial Reconstruction vide order dated 26th September, 2005. BIFR had ordered for change in management in the Company against this appeal was filed with AAIFR, who has passed a judgment in Company''s favour and matter has been reverted back to BIFR.

B) The Labour Union has filed a case against the Company under Payment of Wages Act, for recovery of wages for the period from July''05 to Nov'' 05 before the Hon Labour Court, Baroda. The Court has issued order dated 17/2/2006 for attaching certain Plant and machinery at its factory in Baroda. The order was executed on 20th February, 2006.

Since the Plant & Machinery was attached, the Company could not continue the production and the management had issued notice to employees that the employees would be called upon for work as and when required and that no salary is payable from 20th February, 2006 till the time the production is restarted. Accordingly the Company had provided the salary for its employees in factory till 20th February, 2006.

2. Contingent liabilities not provided for:

(a) A civil suit has been filed by one of the parties for recovery of unsecured loans. On the basis of legal advice, the Company disputes the said liability of Rs. 10,340,450/- claimed by the party as the same is time barred. The Company has not provided any interest till date. In this respect the Company has a contingent liability of Rs. 1,88,23,000/- inclusive of interest & principal.

(b) The Company has filed a counter claim against Union Bank of India for Rs. 7,200,000 and interest there on which approximately is Rs. 43,800,000 as on 31st March 07. The amount payable to the ARCIL (UBI) as on 31st March, 2011 on principle basis is Rs. 12,566,944. Interest payable till March 31,2010 was Rs. 4,92,99,845. The Company has written back interest on working capital loan amounting to Rs. 4,92,99,845. The Company has not provided for any interest payable on this account during the year. In past the Company has settled working capital loan of one of the financial institutions at much below the principle amount and without interest. The Company is in negotiation with other Financial Institutions also to settle the remaining working capital loan below the principle amount. In view of this, the Company does not anticipate any interest liability of past as well as for the current year. Hence, no provision for current year''s interest is made, and the past liability has been written back to Statement of Profit and Loss.

(c) The Customs Department is in appeal before High court of Gujarat against the order of CESTAT for waiver of penalty levied by the customs department amounting to Rs. 10,00,00,000 which was reduced to Rs.7,00,00,000. As per the CESTAT order and on merit the Company does not expect this liability to materialize and accordingly Rs.7,00,00,000 is a contingent liability and the same has not been provided in the books. The Company has deposited Rs. 2,20,00,000 with Customs Authorities as deposit against the said disputed penalty. At present, The Honorable High court of Gujarat has given a stay on the matter.

(d) The Trustees of Debenture holders as well as some debenture holders have filed suit against the Company for recovery of principle amount of debentures as well as interest based on compounded rests. As per records available with the Company, the amount demanded approximately is Rs. 85,800,000 inclusive of interest by on of the debenture holders. The Company had provided for interest including penal interest of 16% only on simple interest earlier. The Company has reached to settlement with the debenture holders post year end. The debenture holders have agreed to settle the amount payable @ 30% of principal amount outstanding subject to certain terms and conditions. The Company is in process of liquidating some of its assets and pay off the debenture holders. In case the Company is not able to pay the settled amount within stipulated period, the settlement may be cancelled by the debenture holders. The Company has approached BIFR for the permission to sell the assets, and is confident of getting the permission. The Company in anticipation of liquidating the assets and paying off the debenture holders has written back the balance amount not payable to capital reserve. Since the event, in opinion of Company, is occurring after the balance sheet date that requires adjustment to the amount payable on balance sheet date, this adjustment is carried out. The Company, following to settlement, does not anticipate additional interest liability as demanded by the debenture holders due to which Company has not provided interest for the current year as well as company has written back the interest of RS. 133,401,338 provided in the earlier years.

(e) The Company has entered into finance lease transactions i.e. purchase and lease back of the assets with Rajasthan State Electricity Board (RSEB) dated 30.09.1995 and 30.03.1996. As per the terms of the agreements there was a Deferred Payment arrangement (DPA) payable in installments towards payment of purchase consideration by the Company to RSEB, and the lease rentals are being receivable from RSEB over a period from 1995-2004. The Company had defaulted in payment of installments of DPA payable to RSEB and RSEB has withheld the lease amount payable by them to the Company.

The Company has received a notice from Rajasthan Rajya Vidyut Prasaran Nigam Ltd.(Formerly known as RSEB) raising a demand of approximately Rs.71,590,000 and interest @ 20% p.a based on monthly rests. The Company has raised a claim for lease rental receivable of approximately Rs. 40,800,000 on RSEB after adjusting all balance purchase price of leased assets. The Company has filed a suit in the Rajasthan High Court for recovery of Lease Rentals from R.S.E.B of approximately Rs. 96,492,000 including Interest @ 20%p.a., after adjusting the DPA amount. The Company does not expect any liability on this account.

(f) Other Disputed Statutory liabilities:

Sr. Name of the Forum where dispute Period to which Unpaid Amt No Statutory Dues is pending amount relates

1 Income Tax Assessing Officer (Set Aside by 1996-97 1,661,022 hon''ble lTAT)

2 Income Tax Assessing Officer (Set Aside by 1997-98 1,414,267 hon''ble lTAT)

3 Income Tax ITAT-Ahmedabad 1999-00 63,000

4 Income Tax ITAT-Ahmedabad 2000-01 55,000

5 Income Tax Penalty ITAT-Ahmedabad 2007-08 1,801,250

(g) Income-tax matters of the Company for Assessment Year 1996-97 and 1997-98 were pending before hon''ble ITAT, Ahmedbad. Hon''ble ITAT has decided some issues in favour of the Company, some against the Company, and some are sent back to the Assessing Officer for re-verification. In the light of this, the Company is uncertain as to the income-tax liability involved in these matters as the appeal efect is yet to be given by the Income-tax Authorities. Further to this, The Revenue had preferred appeal before hon''ble Gujarat High Court. Hon''ble High Court dismissed appeals of Revenue except upholding disallowance on account of travel expenses. Appeal effect for this is yet to be given by the Revenue, and is likely to be decided along with other set aside matters to the Assessing Officer. The Company is not able to quantify the liability on this account following to non availability of necessary information on an overall basis.

(h) Hon''ble Labour Court, Baroda under the Payment of Wages Act has directed the Company to pay RS. 129,961,108 to various workers. The Company has filed Miscellaneous Application before the hon''ble Court to review its decision as according to the Company, it has already settled some of the labour dues.

(i) The Company has preferred an appeal before hon''ble Customs, Excise, and Service Tax Appellate Tribnual for a penalty of RS. 41,424 levied and confirmed by the lower authorities for the period 2004-05 to 2007-08.

(j) Indo Nippon Chemical co Ltd (INCC) has filed a L.E. & C.Suit No.97/126 of 2000 in hon''ble Small Causes Court of Mumbai against the Company to vacate leased premises that the Company has been using, and as per the Court order dated 08.05.2013, the Company was directed to deliver possession of suit premises to INCC. The Company has filed an appeal with the Revision Bench which stayed the above order subject to the Company depositing Rs 2,00,000 over and above the Rs 30,000 that it continues to deposit in the Small causes court as rent The Company accepted this order partly and continued to deposit the Rs. 30,000 rent per month in court; however went into appeal against the other part of the order in High Court of Mumbai which allowed the company to pay arrears at the rate of Rs. 1,00,000 per month which was to be deposited by the company within two weeks from the order date 17th Feb 2014 which has been complied with, and the Company has paid Rs. 10 lacs for 10 months for the period May 2013 to Feb 2014 and Rs. 30,000 per month for 8 months amounting to Rs. 2,40,000 for the period May 2013 to Dec 2013 and continues to pay Rs 30,000 per month as rent. Hence the contingent liability of the company could be Rs. 1,00,000 per month from March2014 till the matter is heard and finally decided by the Revision Bench of Small Causes Court, Mumbai.

3. Revaluation of Fixed Assets

(i) Based on the valuation report of M/s.Bahulikar Assoicates, Chartered Engineers and environmental Consultants and in order to reflect replacement cost of buildings and Plants & Machineries originally installed and Plants & Machineries acquired on expansion in 1990-91, the Company had revalued the same as on 31.03.1997. As a result of such revaluation the value of building has been increased by Rs. 3,04,33,000. (Net) {Gross block Rs. 33,047,000 lacs Less: accumulated depreciation till 31.3.97 Rs. 2,614,000} and value of Plant & Machinery has been increased by Rs. 356,635,000 (net), {gross block Rs. 412,148,000, less accumulated depredation upto 31.3.97 of Rs. 55,513,000}. The resultant increase in value as on 31.3.97 of Rs. 3,870,68,000, thus had been Transferred to revaluation reserve.

(ii) Depreciation provided up to last year included depreciation on difference between the revalued cost of the assets and original WDV of the said assets. However, since depreciation on revalued plant and machinery has been fully adjusted against revaluation reserve, there is no additional depreciation as such during the year as compared to the previous year. The balance amount of Revaluation Reserve standing to the credit on this account is credited to Statement of Profit and Loss by reduction in dpreciation charge.

4. As a part of restructuring package, the Company had entered into an agreement with one of the creditors to restructure the Company''s liabilities of US $ 66,31,140.27 equivalents amounting to Rs.290,121,000 as on 31.3.2000 due and payable to them as under

(a) Out of the total amount payable Rs. 60,000,000 have been waived by the said creditor.

(b) The Company''s liability in terms of US dollars payable to the said creditor has been converted in terms of Rupee at prevailing exchange rate as on 31.3.2000.

(c) The said creditor has deferred an amount of Rs. 230,100,000 due and payable to it. Subsequent, to the agreement, the Company had paid Rs. 23,500,000, and the balance outstanding payable is Rs. 206,619,439.

Since the amount is fixed in Rupee terms, the amount is not revalued at exchange rate prevailing at the year end.

4. In the opinion of the management, the current assets, loans and advances are approximately of the value stated if realized in the ordinary course of business. The provision for all known liabilities is adequate and is made on the basis of information available and not in excess of the amount reasonably necessary.

5. Except in few cases where balance confirmations are available, the remaining balances under the heads Secured Loans, Unsecured Loans, Sundry Debtors, Sundry Creditors, Other Liabilities, Loans & Advances and Deposits are shown as appearing in books of account and are subject to reconciliation / adjustment, if any.

6 A. Payment of remuneration to Managing director prescribed under Schedule XIII to the Companies Act, 1956. The Company proposed to its Chairman & Managing Director to consider waiver of salary in view of the difficult financial position of the Company. Accordingly, the Chairman & Managing Director accepted the proposal and agreed for not to provide salary for year ending on March 31,2014.

B. In the absence of operating profit during the year, no commission is payable to the Managing Director and hence computation of net profit u/s 349 has not been given.

7. (i) Income Tax assessments are completed up to Assessment Year 2011 -12.

(ii) In view of carry forward losses, no provision for tax has been provided for the current year. The Company has decided not to make any provisions for deferred tax assets based on principle of Prudence, which requires Company to make provision for deferred tax assets only if it expects to realize them in future. However the Company doesn''t expect to have taxable income in the near future against which the deferred Tax assets can be realized. Consequently the Company has not made provisions for deferred tax assets arising due to timing difference in the books of account as required by the Accounting Standard 22 - Taxes on Income.

8. The Company has written off unrealizable Investments to the tune of Rs. 0 during the year (Previous year Rs.8300).

The Company has written back liabilities not payable during the year to the extent of Rs. 1,82,240 (Previous year Rs. 13,34,01,338) that had significantly improved the bottom line at end of the year.

9. Debenture Redemption Reserve is brought at par with outstanding debentures on the balance sheet date by transfering the necessary amount Profit and Loss Appropriation. The said outstanding balance is considered as per the letter from the Debentureholders.

10. The Company has written and requested the Income Tax Department to adjust refunds of past years against Unpaid undisputed dues on account of direct taxes. The Company is awaiting the reply barring one case where adjustment is made by the IT Department and reduced liability of the Company.

11. The Company has to its credit unclaimed dividends and debenture money to the tune of Rs. 16,26,188 which is due to be transferred to Investors'' Protection Fund of the Government of India. The Bankers are refusing to transfer these sums in view of non availability of names of the beneficiaries. The Company is attempting to its level best to sort the issue out.

12. All the expenses debited to Statement of Profit and Loss are incurred for the purpose of business or revival of operations of the Company. The amounts paid to or incurred by the directors and employees of the Company are paid / incurred under contractual agreement or customary, and according to the management, none of the expenses of personal nature are debited to stetement of profit and loss.

13. Information pursuant to Schedule VI to the Companies Act 1956 is given in these accounts to the extent applicable in view of the Management.

14. Previous year''s figures have been regrouped and rearranged wherever necessary so as to make them comparable with that of the current year.

15. "The Micro, Small and Medium Enterprise Development Act, 2006" has repealed the provision of interest on delayed payment to small scale and ancillary industrial undertaking Act, 1993. The management does not find it necessary to provide for interest on delayed payments to the suppliers covered by the said Act in view of insignificant amount and probability of its outgo.

16. The Company has only one reportable business segment hence no further disclosure is required under Accounting Standard-17 on "Segment reporting".

17. Disclosures required under Accounting Standard-19 on "Leases".

Finance Lease - Assets Given on Lease

The Company has dispute With RSEB [Note 2 (e)] above, and the matter is pending before hon''ble Court, the Company is not receiving any payment from the Lessee. The Company has depreciated entire amount of assets given on lease to RSEB amounting to Rs. 188,270,340.

18. Notes "1" to "29" form an integral part of the accounts and have been duly authenticated.

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Mar 31, 2013

A) The Company had been declared as a sick Company under the provisions of clause (o) of Sub section (1) of section 3 of Sick Industrial Companies (Special Provisions) Act,1985 (1 of 1986) by the Honorable Board For Industrial And Financial Reconstruction vide order dated 26th September,2005. BIFR had ordered for change in management in the Company against this appeal was filed with AAIFR, who has passed a judgment in Company''s favour and matter has been reverted back to BIFR.

B) The Labour Union has filed a case against the Company under Payment of Wages Act, for recovery of wages for the period from July''05 to Nov''05 before the Hon .Labour Court, Baroda. The Court has issued order dated 17/2/ 2006 for attaching certain Plant and machinery at its factory in Baroda. The order was executed on 20th February, 2006.

Since the Plant & Machinery was attached, the Company could not continue the production and the management had issued notice to employees that the employees would be called upon for work as and when required and that no salary is payable from 20th February, 2006 till the time the production is restarted. Accordingly the Company had provided the salary for its employees in factory till 20th February, 2006.

1. Contingent liabilities not provided for:

(a) A civil suit has been filed by one of the parties for recovery of unsecured loans. On the basis of legal opinion, the Company disputes the said liability of Rs.10,340,450/- claimed by the party as the same is time barred. The Company has not provided any interest till date. In this respect the Company has a contingent liability of Rs.1,60,70,200/-.

(b) The Company has filed a counter claim against Union Bank of India forRs. 7,200,000 and interest there on which approximately is Rs. 43,800,000 as on 31 st March 07. The amount payable to the ARCIL (UBI) as on 31 st March, 2011 on principle basis is Rs. 12,566,944. Interest payable till March 31,2010 was Rs. 4,92,99,845. The Company has written back interest on working capital loan amounting to Rs. 4,92,99,845. The Company has not provided for any interest payable on this account during the year. In past the Company has settled working capital loan of one of the financial institutions at much below the principle amount and without interest The Company is in negotiation with other Financial Institutions also to settle the remaining working capital loan below the principle amount. In view of this,,the Company does not anticipate any interest liability of past as well as for the current year. Hence, no provision for current year''s interest is made, and the past liability has been written back to Statement of Profit and Loss.

(c) The Customs Department is in appeal before High court of Gujarat against the order of CESTAT for waiver of penalty levied by the customs department amounting to Rs. 10,00,00,000 which was reduced to Rs.7,00,00,000. As per the CESTAT order and on merit the Company does not expect this liability to materialize and accordingly Rs.7,00,00,000 is a contingent liability and the same has not been provided in the books. The Company has deposited Rs. 2,20,00,000 with Customs Authorities as deposit against the said disputed penalty. At present, The Honorable High court of Gujarat has given a stay on the matter.

(d) The Trustees of Debenture holders as well as some debenture holders have filed suit against the Company for recovery of principle amount of debentures as well as interest based on compounded rests. As per records available with the Company, the amount demanded approximately is Rs. 85,800,000 inclusive of interest by on of the debenture holders. The Company had provided for interest including penal interest of 16% only on simple interest earlier. The Company is trying to negotiate with the debenture holders and settle their amount at some percentage of principle amount. The Company does not anticipate additional interest liability as demanded by the debenture holders due to which Company has not provided interest for the current year as well as company has written back the interest of 7.133,401,338 provided in the earlier years.

(e) The Company has entered into finance lease transactions i.e. purchase and lease back of the assets with Rajasthan State Electricity Board (RSEB) dated 30.09.1995 and 30.03.1996. As per the terms of the agreements there was a Deferred Payment arrangement (DPA) payable in installments towards payment of purchase consideration by the Company to RSEB, and the lease rentals are being receivable from RSEB over a period from 1995-2004. The Company had defaulted in payment of installments of DPA payable to RSEB and RSEB has withheld the lease amount payable by them to the Company.

The Company has received a notice from Rajasthan Rajya Vidyut Prasaran Nigam Ltd.(Formeriy known as RSEB) raising a demand of approximately Rs.71,590,000 and interest @ 20% p.a based on monthly rests. The Company has raised a claim for lease rental receivable of approximately 7.40,800,000 on RSEB after adjusting all balance purchase price of leased assets. The Company has filed a suit in the Rajasthan High Court for recovery of Lease Rentals from R.S.E.B of approximately Rs. 96,492,000 including Interest @ 20%p.a., after adjusting the DPAamount. The Company does not expect any liability on this account.

(g) Income-tax matters of the Company for Assessment Year 1996-97 and 1997-98 were pending before hon''ble ITAT, Ahmedbad. Hon''ble ITAT has decided some issues in favour of the Company, some against the Company, and some are sent back to the Assessing Officerfor re-verification. In the light of this, the Company is uncertain as to the income-tax liability involved in these matters as the appeal efect is yet to be given by the Income-tax Authorities.

(h) Hon''ble Labour Court, Baroda under the Payment of Wages Act has directed the Company to pay 7.129,961,108 to various workers. The Company has filed Miscellaneous Application before the hon''ble Court to review its decision as according to the Company, it has already settled some of the labour dues.

(i) The Company has preferred an appeal before hon''ble Customs, Excise, and Service Tax Appellate Tribnual for a penalty of Rs. 41,424 levied and confirmed by the lower authorities for the period 2004-05 to 2007-08.

2. Revaluation of Fixed Assets

(i) Based on the valuation report of M/s.Bahulikar Assoicates, Chartered Engineers and environmental

Consultants and in order to reflect replacement cost of buildings and Plants & Machineries originally installed and Plants & Machineries acquired on expansion in 1990-91, the Company had revalued the same as on 31.03.1997. As a result of such revaluation the value of building has been increased by Rs.3,04,33,000. (Net) {Gross blockRs. 33,047,000 lacs Less: accumulated depreciation till 31.3.97 Rs. 2,614,000} and value of Plant & Machinery has been increased by Rs. 356,635,000 (net), {gross block Rs. 412,148,000, less accumulated depreciation upto 31.3.97 of Rs.55,513,000}. The resultant increase in value as on 31.3.97 ofRs. 3,870,68,000, thus had been Transferred to revaluation reserve.

(ii) Depreciation provided up to last year included depreciation on difference between the revalued cost of the assets and original WDV of the said assets. However, since depreciation on revalued plant and machinery has been fully adjusted against revaluation reserve, there is no additional depreciation as such during the year as compared to the previous year. The balance amount of Revaluation Reserve standing to the credit on this account is credited to Statement of Profit and Loss.

3. As a part of restructuring package, the Company had entered into an agreement with one of the creditors to restructure the Company''s liabilities of US $ 66,31,140.27 equivalents amounting to Rs.290,121,000 as on 31.3.2000 due and payable to them as under.

(a) Out of the total amount payable Rs. 60,000,000 have been waived by the said creditor.

(b) The Company''s liability in terms of US dollars payable to the said creditor has been converted in terms of Rupee at prevailing exchange rate as on 31.3.2000.

(c) The said creditor has deferred an amount of Rs. 230,100,000 due and payable to it. Subsequent, to the agreement, the Company had paid Rs.23,500,000, and the balance outstanding payable isRs. 206,619,439.

Since the amount is fixed in Rupee terms, the amount is not revalued at exchange rate prevailing at the year end.

4. In the opinion of the management, the current assets, loans and advances are approximately of the value stated if realized in the ordinary course of business. The provision for all known liabilities is adequate and is made on the basis of information available and not in excess of the amount reasonably necessary.

5. Except in few cases where balance confirmations are available, the remaining balances under the heads Secured Loans, Unsecured Loans, Sundry Debtors, Sundry Creditors, Other Liabilities, Loans & Advances and Deposits are shown as appearing in books of account and are subject to reconciliation / adjustment, if any.

6 A. Payment of remuneration to Managing director prescribed under Schedule XIII to the Companies Act, 1956. The

Company proposed to its Chairman & Managing Director to consider waiver of salary in view of the difficult financial position of the Company. Accordingly, the Chairman & Managing Director accepted the proposal and agreed for not to provide salary for year ending on March 31,2013.

B. In the absence of operating profit during the year, no commission is payable to the Managing Director and hence computation of net profit u/s 349 has not been given.

7 (i) Income Tax assessments are completed up to Assessment Year 2011-12.

(ii) In view of carry forward losses, no provision for tax has been provided for the current year. The Company has decided not to make any provisions for deferred tax assets based on principle of Prudence, which requires Company to make provision for deferred tax assets only if it expects to realize them in future. However the Company doesn''t expect to have taxable income in the near future against which the deferred Tax assets can be realized. Consequently the Company has not made provisions for deferred tax assets arising due to timing difference in the books of account as required by the Accounting Standard 22 -Taxeson Income.

8. As required by SEBI circular no.2/2003 of 10th January, 2003 the following disclosures have been made: (i)Loans and advances in the nature of Loans to subsidiaries: Rs. NIL. (ii)Loans & Advances in the nature of Loans to Associates: Rs. NIL. (iii)Loans and advances in the nature of loans where there is no repayment schedule, no interest or interest below Section 372Aof the Companies Act, 1956: Rs. NIL

9. The Company has written off unrealizable Investments to the tune of Rs.8,300 during the year (Previous year 7. 0). Similarly, the fixed assets that had exhausted in life or destroyed over a period of time amounting to Rs. 0 on Net Block basis after considering the depreciation effect have been written off during the year (Previous year Rs. 0).

The Company has written back liabilities not payable during the year to the extent of Rs.13,34,01,338 (Previous year Rs. 2,83,66,752) that has significantly improved the bottom line at end of the year. At the same time, the Company has written off unrealizable current assets to the extent of 0 (previous year Rs.22,04,400).

10. Debenture Redemption Reserve is brought at par with outstanding debentures on the balance sheet date by writing back the necessary amount through Statement of Statement of Profit and Loss during the earlier year.

11. The Company has written and requested the Income Tax Department to adjust refunds of past years against Unpaid undisputed dues on account of direct taxes. The Company is awaiting the reply barring one case where adjustment is made by the IT Department and reduced liability of the Company.

12. The Company has to its credit unclaimed dividends and debenture money to the tune ofRs. 16,26,188 which is due to be transferred to Investors'' Protection Fund of the Government of India. The Bankers are refusing to transfer these sums in view of non availability of names of the beneficiaries. The Company is attempting to its level best to sort the issue out.

13. All the expenses debited to Statement of Profit and Loss are incurred for the purpose of business or revival of operations of the Company. The amounts paid to or incurred by the directors and employees of the Company are paid / incurred under contractual agreement or customary, and according to the management, none of the expenses of personal nature are debited to stetement of profit and loss.

14. Information pursuant to Schedule VI to the Companies Act 1956 is given in these accounts to the extent applicable in view of the Management.

15. Previous year''s figures have been regrouped and rearranged wherever necessary so as to make them comparable with that of the current year.

16. "The Micro, Small and Medium Enterprise Development Act, 2006" has repealed the provision of interest on delayed payment to small scale and ancillary industrial undertaking Act, 1993. The management does not find it necessary to provide for interest on delayed payments to the suppliers covered by the said Act in view of insignificant amount and probability of its outgo.

17. The Company has only one reportable business segment hence no further disclosure is required under Accounting Standard-17 on "Segment reporting".

18. Disclosures required under Accounting Standard-19 on "Leases". Finance Lease - Assets Given on Lease

The Company has dispute with RSEB [Note 2 (e)] above, and the matter is pending before hon''ble Court, the Company is not receiving any payment from the Lessee. The Company has depreciated entire amount of assets given on lease to RSEB amounting to X. 188,270,340.

19. Notes "1" to "29" form an integral part of the accounts and have been duly authenticated.

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Mar 31, 2010

1. A) The company has been declared as a sick company under the provisions of clause (o) of Sub section (1) of section 3 of Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) by the Honorable Board For Industrial And Financial Reconstruction vide order dated 26th September,2005. BIFR has ordered for change in management in the company against this appeal has been filed with AAIFR, who has asked to keep the status quo till the further hearing.

B) The Labour Union has filed a case against the company under Payment of Wages Act, for recovery of wages for the period from July05 to Nov05 before the Hon . Labour Court, Baroda. The court has issued order dated 17/2/2006 for attaching certain Plant and machinery at its factory in Baroda. The order was executed on 20th . February, 2006.

Since the Plant & Machinery was attached the company could not continue the production and the management had issued notice to employees that the employees would be called upon for work as and when required and that no salary is payable from 20th February, 2006 till the time the production is restarted. Accordingly the company had provided the salary for its employees in factory till 20lh February, 2006.

C) The Bank of India to whom company owes Rs 161.31 Lakhs had initiated action against the Company under the Securitization Act, 2002. Subsequently Bank of India vide deed of assignment dated 31st March, 2008 assigned the total debts due from company to ARCIL. Which is settled through OTS.

2. Contingent liabilities not provided for:

(a) In respect of Sales Tax demand for the year 1990-91, 1991-92 and 1992-93 disputed before Appellate Authority for Rs.24.43 lacs. (Previous Year Rs. 16.92 lacs)

(b) A civil suit has been filed by one of the parties for recovery of unsecured loans. On the basis of legal opinion, the company disputes the said liability of Rs. 103,40,450/- claimed by the party as the same is time barred. The company has not provided any interest till date. In this respect the company has a contingent liability of Rsl,49,09,200/-.

(c) The company has disputed the liability raised by Gas Authority of India Limited (GAIL) of Rs.360.53 Lacs towards the MGO (Minimum Guarantee Obtained) charges for the period of Sept 99 to Sept 01. The company has given a conditional undertaking to M/s GAIL that in the event M/s ONGC Ltd. does not agree to waive these MGO charges on GAIL, the company will be liable to pay Rs.360.53.lacs to GAIL. However the company does not expect this liability to arise.

(d) The company has filed a counter claim against the Union Bank of India for Rs. 72 lacs and interest there on which approximately is Rs.438 Lacs as on 31st March 07. The amount payable to the ARCIL (UBI) as on 31st March, 2010 is Rs.565.69 Lacs.

(e) The company is in appeal before CESTAT against penalty levied by the customs department amounting to Rs. 1000 Lacs. The company on merit does not expect this liability to materialize and accordingly Rs.1000 lakhs is a contingent liability and the same has not been provided in the books. The Company has deposited Rs. 220 Lacs with Customs Authorities as deposit against the said disputed penalty.

3. Revaluation of Fixed Assets

(i) Based on the valuation report of M/s. Bahulikar Assoicates, Chartered Engineers and environmental Consultants and in order to reflect replacement cost of buildings and Plants & Machineries originally installed and Plants & Machineries acquired on expansion in 1990-91, the company has revalued the same as on 31.3.97. As a result of such revaluation the value of building has been increased by Rs.304.33 lacs. (Net) {Gross block Rs.330.47 lacs Less: accumulated depreciation till 31.3.97 Rs.26.14 lacs} and value of Plant & Machinery has been increased by rs.3566.35 lacs (net), {gross block Rs.4121.48 lacs, less accumulated depreciation upto 31.3.97 of Rs.555.13 lacs}. The resultant increase in value as en 31.3.97 of Rs.3870.68 lacs, thus had been Transferred to revaluation reserve.

(ii) Depreciation provided up to last year included depreciation on difference between the revalued cost of the assets and. original WDV of the said assets. However, since depreciation on revalued asset has been fully adjusted against revaluation reserve, there is no additional depreciation as such during the year as compared to the previous year.

4. As a part of restructuring package, the Company had entered into an agreement with one of the creditors to restructure the Companys liabilities of US $ 66,31,140.27 equivalents amounting to Rs.2901.21 lacs as on 31.3.2000 due and payable to them as under:

(a) Out of the total amount payable Rs.600 lacs have been waived by the said creditor.

(b) The Companys liability in terms of US dollars payable to the said creditor has been converted in terms of Rupee at prevailing exchange rate as on 31.3.2000.

(c) The said creditor has deferred an amount of Rs.2301 lacs due and payable to it, Subsequent, to the agreement, the company had paid Rs.235Lacs, and the balance outstanding payable is Rs.2066 Lacs.

5. In the opinion of the management, the current assets, loans and advances are approximately of the value stated if realised in the ordinary course of business. The provision for all known liabilities is adequate and is made on the basis of information available and not in excess of the amount reasonably necessary.

6. Except in few cases where balance confirmations are available, the remaining balances under the heads Sundry Debtors, Sundry Creditors, Other Liabilities, Loans & Advances and Deposits are shown by books of accounts and are subject to reconciliation / adjustment, if any.

7. A. Payment of remuneration to Managing director prescribed under Schedule XIII of the companys Act, 1956.

The company proposed to its Chairman & Managing Director to consider waiver of salary in view of the difficult financial position of the company. Accordingly, the Chairman & Managing Director accepted the proposal and agreed to forego the salary from 1st April 2009 to 31st March, 2010

B. In the absence of operating profit during the year, no commission is payable to the Managing Director and hence computation of net profit u/s 349 has not been given.

8 (i) Income Tax assessments are completed up to Assessment Year 2007-08.

(ii) In view of carry forward losses, no provision for tax has been provided for the current year. The company has decided not to make any provisions for deferred tax assets based on principle of Prudence, which requires

Company to make provision uereneu TAX ASSERS ONLY EXOERS LEDNZE RURURE. NOWEVER ME

company doesnt expect to have taxable income in the near future against which the deferred Tax assets can be realised. Consequently the company has not made provisions for deferred tax assets arising due to timing difference in the books of account as required by the Accounting Standard 22 - Taxes on Income.

9. In view of the Accounting Standard 18 -"Related Party Disclosures" issued by the Institute of Chartered Accountants of India, the followina is details of transactions and nature of relationships.

10. As required by SEBI circular no. 2/2003 of 10th January, 2003 the following disclosures have been made : (i) Loans and advances in the nature of Loans to subsidiaries : Rs. NIL.

(ii) Loans & Advances in the nature of Loans to Associates : Rs. NIL.

(iii) Loans and advances in the nature of loans where there is no repayment schedule, no interest or interest below Section 372A of the Companies Act, 1956 : Rs. NIL.

11. Previous years figures have been regrouped wherever necessary so as to make them comparable wth that of the current year