Parasrampuria Synthetics Ltd. के अकाउंट के लिये नोट

Mar 31, 2015

1. DEFFEREDTAX

In accordance with Accounting standard 22, Companies (Accounting Standard) Rules, 2006, in view of the fact that the company is incurring huge losses as well as have preferred for CDR & protection under BIFR, hence deferred tax asset has not been accounted for in the books since it is not virtually certain whether the company will be able to take advantage of such items.

2. Non-convertible Redeemable Debentures of series A,B,C,D & E are secured by English mortgage of the properties situated at Village Dhanot, Taluka Kalol Distt. Mehsana, in the State of Gujarat.

3. Debentures of all series had fallen due for redemption but due to financial crunch, the Company could not redeem the same. Total amount of redemption due upto March 31,2015is Rs.5930.65 Lacs.

4. All the debentures and term loans from financial institutions/banks are secured by a first mortgage of all the immovable properties, both present and future. The term loans are further secured by hypothecation of all the movab!es(save and except book debts)including movable machinery, spares, tools and accessories, present and future, subject to prior charge created/to be created in favour of the bankers on the stock of raw materials, semi-finished goods, consumables stores and book debts and such other movables agreeable for securing the borrowing for working capital in the ordinary course of business.The mortgage and charges shall rank pari-passu.The term loans are also secured by personal guarantees of two Directors.

5. Working Capital facilities from banks are secured against hypothecation of Stock of raw materials, stock in process, finished goods, packing materials, book debts and goods with processing agents and further secured by personal guarantees of three Directors of the Company. These facilities are further secured by mortgage by way of deposit of title deeds of some of the properties purchased from debtors in the earlier years.

6. Short term loans from IRBI (secured) and working capital loan from IDBI which is unsecured are also secured by pledge of shares of promoters.

7. In view of continuing heavy losses, the Company has not created Debenture redemption reserve during the year.

8. NOTES TO ACCOUNTS (Rs. in Lacs)

As at 31-Mar-15 As at 31-Mar-14

Contingent Liabilities

a) Letter of Credit for Plant & Machinery for capital goods 507.45 507.45

b) Guarantees given by banks for which company has Given counter guarantees 25.00 25.00

c) Bonds executed in favor of Excise/ Custom authorities for Terry 694.00 694.00 Towel Project

d) Demurrage levied by Mumbai Port authorities not acknowledged by 133.12 133.12 the company

e) Guarantees given on behalf of 497.44 497.44 third parties

f) Additional Demand on account of Counter-Veiling Duty on DTA Sales 606.34 606.34

g) Other claims not acknowledged 341.23 341.23 as debts by Company

h) Dividend payable on cumulative preference Shares including 11943.18 11322.72 dividend for earlier years

i) Demand cum show cause notice issued by DGCEI under Central 3628.39 3628.39 Excise

j) Towards Entry Tax/ Sales Tax (net of advance of Rs.Nil Lacs previous 493.75 499.91 year Rs.Nil Lacs)

k) Demand for non-fulfillment of Export Obligation 57.20 57.20

l) Penalty under section 11 AC of Central Excise Act 122.04 122.04

m) Demand under FERA, 1973 for non submission of Bill of Entry 1081.60 1081.60

n) Demand for Short payment of duty on Terry Towel 829.68 829.68

m) Demand under Central Custom & Excise Act 1944 (for Modvat, Cenvat disputes) 693.10 693.10

I) Demand for violation of Cenvat Credit Rules 17.72 17.72

9. Estimated amount of contracts remaining to be executed on capital account and not provided for (excluding already considered for (a) above. 4296.47 4296.47

10. Insurance Policies on Fixed Assets and Current Assets, which expired in the financial year 1996-97, are not renewed.

11. The Company is in default in payment of Gratuity premium to Life Insurance Corporation of India (LIC). . The policy is in lapsed state due to non-payment of premium, however, the company continues to pay gratuity to retiring employees on cash basis. After settlement of liabilities including gratuity in the closed units of the company, the management is of the view that liability already provided for in the books upto the year end is sufficient to meet the obligation.

12. Pre-lease charges amounting to Rs. 8888.91 lacs (previous year Rs. 7405.34 lacs) on account of lease transactions has not been provided for during the period. In view of prolonged delay in commissioning of these leased equipments & following other pronouncements of Institute of Chartered Accountants of India, pre-lease charges are to be charged to revenue account. Hence loss for the year, capital expenditure and corresponding liabilities are under stated by Rs. 8888.91 lacs & Rs. 51336.62 lacs & Rs.53669.97 lacs respectively.

13. No provision has been made on account of letter of credit of Rs.507.45 lacs established with one of the Company's Banker in favour of one of the foreign supplier relating to Plant & Machinery of abandoned project which had already expired. This has resulted in understatement of capital work in progress and its liabilities for the same amount.

14. The Company has not made the following provisions:

a) Rs. 11742.94 lacs (previous year Rs. 11496.91 lacs) of interest on Non Convertible Debentures.

b) Rs. 432.34 lacs (previous year Rs.432.34 lacs) of interest on Inter Corporate Deposits taken by the company.

c) Rs. 265.50 lacs (previous year Rs.265.50 lacs) of interest on supplier's outstanding.

d) Rs. 523.15 lacs (previous year Rs.523.15 lacs) of interest on Lease Rentals dues during the year.

This has resulted in understatement of losses for the year by Rs. 12963.93 lacs and under- statement of corresponding liabilities by Rs. 138902.08 lacs including that of earlier years Rs. 125938.15 lacs.

15. Provision of Import duty of Rs.534.63 lacs (previous year Rs.534.63 lacs) on account of duty free raw material imported against advance licenses and Rs.246.02 lacs (previous year Rs.246.02 lacs) on account of EPCG Scheme have not been made. Accordingly, liability as on date of balance sheet is understated by Rs.780.65 lacs.

16. In respect of total fixed assets taken on lease amounting to Rs.3631.71 lacs (previous year Rs.3631.71 lacs) against which, the future obligation towards lease rentals as on 31.03.2015 is Rs. Nil (previous year Rs.Nil lacs). Further for equipments of Rs.1624.00 lacs which had been taken under lease finance in earlier years, the lease did not commence.

17. Investment include land amounting to Rs. 10524.15 lacs (previous year Rs. 10524.15 lacs) and Fixed Assets include Land & Building amounting to Rs.3030.61. Lacs (previous year Rs.3030.61 lacs) valued by a Government approved valuer at the time of acquisition, which the Company had to purchase from its debtors in consideration of part recovery of debts, major part of the same has been given as collateral security by way of deposit of title deeds/transfer documents to the Banks. The Company has not transferred the title of properties in its name yet.

18. a) As reported in earlier year accounts, the Company had abandoned the expansion programme of Rs.53500.00 lacs, as appraised by Financial Institutions against which certain Plant and Machinery and other Equipments have already been imported amounting to Rs. 17316.08 lacs (Previous Year Rs.17316.08 lacs) which are lying at Customs Warehouse. These Machinery and equipment have been valued at cost of acquisition and are grouped under the head Capital work in progress in note 6. They are under the charge of Court Receiver appointed by the Hon'ble Bombay High Court. Central Warehousing Corporation (CWC) have informed the company about accidental fire occurred on 23.10.2005 wherein part of the machinery lying at port has been damaged.

b) In view of the above, the expenses relating to above project upto the end of year ending 31 st March 2003 of Rs. 40677.10 lacs were charged to revenue under respective heads of account. No such provisioning has been done thereafter. This treatment was in line with Accounting Standard AS-16 issued by Company (accounting standard) rules,2006.

c) Capital work in progress of Rs.20941.82 lacs (previous year 21217.39 lacs) including Pre-operative Expenditure of Rs. 1522.50 lacs and Capital Advances of Rs.730.86 lacs relating to the above project have been carried forward as such. The Management is unable to ascertain the losses due to such fire.

19. Plant and Machinery of abandoned expansion project, as mentioned in 20.11 above, is lying at CWC, customs bounded warehouse and under the charge of Court receiver appointed by the Hon'ble Bombay High Court. Further, the Polyester Plant at Bhiwadi is not operational. The management is unable to ascertain the impact of impairment of these assets as required by Accounting Standard AS- 28 issued by the Institute of Chartered Accountants of India in view of inability in determining the value in business and / or net realizable values.

20. In view of non-implication of any financial liability in various court cases pending against/for the company, no provision has been considered necessary. Liability in future, if any, would be accounted for in the year of demands.

21. Balances with customers, suppliers, other creditors, recoverable advances, loans from Financial Institutions & Banks and working capital facilities from various banks have been taken as per books, are subject to confirmation/reconciliation.

22. In the opinion of the management, current assets, loans & advances have a value on realisation at least equal to the amount at which they are stated in the Balance Sheet and provision for all known liabilities has been made except such assets and liabilities to the extent as appearing in other Notes

23. Loans & Advances include Rs.1840.61 Lacs paid by the Company to one of the NBFC towards settlement of loan liabilities pertaining to ICICI and PNB.The NBFC has already entered in an agreement with ARCIL for assignment of theses liabilities in its favour, whereas the final payments are yet to be made by them

24. Fixed Deposit Receipts amounting to Rs. 48.04 Lacs which includes Rs.48.04 Lacs for maintenance of liquid assets under the requirement of Rule 3A of Companies (Acceptance of Deposits) Rules, 1975 were handed over to the bank for renewal but the same have not been received back after renewal.

25. Sales include Rs 394.01 Lacs (Previous year Rs. 353.47 Lacs) on account of sale of raw material and corresponding purchases have been charged to revenue under the head consumption of raw materials.

26. Exceptional item includes loss of Rs. 413.77 lacs on account of acquisition by Silvassa Land Authority pertaining to land at Silvassa and building structures thereon as referred in Note No. 20.22.

27. (a) The Company's Lead Financial Institution ICICI approached the Hon'ble AAIFR against the order of Hon'ble BIFR and the Hon'ble AAIFR after accepting the appeal reversed the order as passed by the Hob'ble BIFR declaring the Company as Sick Industrial Company, under SICA based on Annual Accounts as on 30th June.'l 997. The Company thereafter approached the Hon'ble BIFR with a fresh , reference on the basis of the accounts for the year ended March 2000 and the case was registered vide Case No,180/2001 dated 16th May,2001 .The Hon'ble BIFR had declared the company as Sick Industrial Company vide order dated 07/11/2006 and ARCIL filed a Miscellaneous Application (MA) No. 675 requesting the Hon'ble BIFR to abate the company's reference in view of the fact the secured creditors have taken action against the company under SARFAESI. The Hon'ble BIFR in its hearing held on 06 December 2010 abated the reference of the company under the third proviso of Section 15 (1) of SICA. The Company thereafter approached Hon'ble AAIFR against the order of Hon'ble BIFR and also filed a fresh reference based upon audited balance sheet for the year ended March 2010, with Hon'ble BIFR on 20th December 2010 which was registered as Case no 12/2011, and this reference was rejected by Hon'ble BIFR on 26.09.2012 on the ground that the balance sheet of the Company is not modified appropriately. The Company as per the directions of the AAIFR modified its balance sheet for the year 2012-13 and filed a fresh reference and the same was registered as Case no. 67/2013 and the matter is pending before Hon'ble BIFR.

(b) Customs & Excise department has issued attachment order dated 02/04/2013 on the" Land, Building, Excisable goods, Raw Material, Plant & Machinery lying at factory premises at Bhiwadi, in respect of their dues worth Rs.4561.62 lacs. The company has not acknowledged the same and has been reflected under para no 20.01- contingent liabilities. The major portion of which has already been disputed by the company in higher appellate forums and the matters are under consideration of these forums. -

28. (a) Khushkhera Plant of the company in the physical possession of ARCIL through an act of SARFASEI u/s 13(4) since 2008, has been dispose off by them and the final sale certificate was issued by them in Oct 2012. In view of such sale certificate, during thefinancial year2012-13, the Company has removed the assets of Khushkhera unit carrying gross block & CWIP amounting to Rs. 3422.65 lacs, depreciation reserve of Rs. 2976.93 lacs, net block of Rs. 445.72 lacs as per the books and corresponding liabilities by Rs. 2006.92 lacs (The total amount received by ARCIL as per the sale certificate) This has resulted into reduction of secured liabilities by the same amount.

(b) Bhiwadi Plant of the Company continues to remain closed during the year. In earlier years despite receiving notice from some of its lenders under the Securitization Act, the company had liquidated marginally the term loan liabilities from lenders.

(c) The Company's reference is pending before BIFR and (refer para 20.20).The company in expectancy of relief and concessions in the form of restructuring of term loan liabilities, interest waivers etc., the management is of the view that financial position of the company will improve by improvement in asset liability mismatch on one hand and profitability on the other. Therefore, the accounts have been prepared on a going concern basis.

(d) In view of the factors mentioned in (a),(b) & (c) above, the management have decided not to provide further liabilities, on account of interest on loan liabilities, demurrage and insurance charges on imported machinery lying at port. This has resulted in understatement of losses for the year by Rs. 280774.94 Lacs, Rs. 106.97 Lacs and Rs. 118.34 Lacs respectively and understatement of corresponding liabilities by Rs. 281000.25 lacs.

29. Silvassa Land Authority had notified the acquisition of land belonging to the Company at Silvassa. The Company had raised objections to the said Authority on the grounds that the Company's case is lying with Hon'ble BIFR; the Authority requires permission from Hon'ble BIFR u/s 22 of SICA. The company had made its reservation in this matter and about compensation thereof, which Silvassa Land Authority has subsequently deposited the compensation for the part of the acquired land in the Court which was released to the company.

30. Related Party Disclosure as required by Accounting Standard AS-18

Name Rajasthan Texfabs Ltd.

Relationship Control through major Share-holding of Directors/ Promoters

Key Management Personnel

Shri Omprakash Parasrampuria Remuneration Nil Nil

Shri Alok Parasrampuria Remuneration Nil Nil

Secondary Segment Reporting (by Geographical Segments)

The following is the distribution of the company's consolidated sales by geographical market, regardless of where the goods were produced

31. Includes spares for repair of plant and machinery of Rs. 22.63 lacs (Previous year Rs.26.11 lacs)

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Mar 31, 2011

1. As at 31-Mar-11 As at 31-Mar-10 (Rs.inLacs) (Rs. In Lacs)

Contingent Liabilities

a) Letter of Credit for Plants Machinery for capital goods 507.45 507.45

b) Guarantees given by banks for which company has Given counter guarantees 25.00 25.00

c) Bonds executed in favor of Excise / Custom authorities for Pithampur Unit and Terry Towel Project 694.00 694.00

d)Demurrage levied by Mumbai Port authorities not acknowledged by the company 133.12 133.12

e)Guarantees given on behalf of third parties 497.44 497.44 Additional Demand on account of Counter Vailing

Duty on DTA Sales 554.20 567.00

g) Other claims not acknowledged as debts by Company 341.23 341.23

h) Dividend payable on cumulative preference Shares including dividend for earlier years 9460.62 8840.16

i) Demand cum show cause notice issued by DGCEI under Central Excise 3571.24 3571.24

j) Towards Entry Tax/ Sales Tax (net of advance of Rs.Nil Lacs previous year Rs.Nil Lacs) 579.13 608.65

k) Demand for non-fulfillment of Export Obligation 57.20 57.20

I)Penalty under section 11 AC of Central Excise Act 122.04 122.04

m) Demand under FERA, 1973 for non submission of Bill of Entry 1081.60 1081.60

n) Additional demand of Custom duty on EOU Year 0.00 10.44

o)Demand for Short payment of duty on Terry Towel 829.68 0.00

2 Estimated amount of contracts remaining to be executed on capital account and not provided for (excluding already considered for (a) above. 4296.47 4296.47

3. In view of continuing heavy losses, the Company has not created Debenture redemption reserve during the year.

4. a) In the absence of taxable income during the year and in view of brought forward losses, no provision for current income-tax has been made.

b) Deferred tax assets of Rs.9396.00 lacs as on 01/04/2001 have not been accounted for in the absence of virtual certainty in realisation of these amounts, such assets arising on account of unabsorbed depreciation and brought forward business losses, pursuant to the requirements of Accounting AS-22 Accounting Standard for Taxes on Income' issued by the Institute of Chartered Accountants of India. However, deferred tax liabilities have been recognised as under:-

5. Insurance Policies on Fixed Assets and Current Assets, which expired in the financial year 1996-97, are not renewed.

6. The Company is in default in payment of Gratuity premium to Life Insurance Corporation of India (LIC). No provision on this account is made in the current year (Previous yeaV no provision was made) The policy is in lapsed state due to non-payment of premium, however, the company continues to pay gratuity to retiring employees. Aftersettlement of liabilities including gratuity in the closed units of the company, the management is of the view that liability provided for in the books upto the year end is sufficient for the existing operations of the company. The Company is in the process of adopting Accounting Standard AS-15 (revised), any implications arising there from including the valuation of future liability on actuarial basis and determination of plan assets will be done in due course.

7. Pre-lease charges amounting to Rs.4328.52 lacs (previous year Rs. 3636.42 lacs) on account of lease transactions has not been provided for during the period. In view of prolonged delay in commissioning of these leased equipments & following other pronouncements of Institute of Chartered Accountants of India, pre-lease charges are to be charged to revenue account. Hence loss for the year, capital expenditure and corresponding liabilities are under stated by Rs. 4328.52 & Rs. 23697.17 lacs & Rs.26030.52 lacs respectively.

8. No provision has been made on account of letter of credit of Rs.507.45 lacs established with one of the Company's Banker in favour of one of the foreign supplier relating to Plant & Machinery of abandoned project which had already expired. Resulting this balance of capital work in progress and its liabilities are understated.

9. The Company has not made the following provisions:

a) Rs. 10758.81 lacs (previous year Rs. 9469.37 lacs) of interest on Non Convertible Debentures and premium on redemption of debentures becoming due for payment amounting to Rs. nil (Previous Year Rs. Nil)

b) Rs. 432.34 lacs (previous year Rs.432.34) of interest on Inter Corporate Deposits taken by the company.

c) Rs. 265.50 lacs (previous year Rs.265.50) of interest on supplier's outstanding.

d) Rs. 523.15 lacs (previous year Rs.523.15) of interest on Lease Rentals dues during the year,

This has resulted in under statement of losses for the year by Rs. 11979.80 lacs and under statement of corresponding liabilities by Rs. 88492.18 lacs including that of earlier years Rs. 76512.38 lacs

10. Provision of Import duty of Rs.534.63 lacs (previous year Rs.534.63 lacs) on account of duty free raw material imported against advance licenses and Rs.246.02 lacs (previous year Rs.246.02 lacs) on account of EPCG Scheme have not been made. Accordingly, liability as on date of balance sheet is understated by Rs.780.65 lacs.

11. In respect of total fixed assets taken on lease amounting to Rs.3631.71 lacs (previous year Rs.3631.71 lacs) against which, the future obligation towards lease rentals as on 31.03.2011 is Rs. Nil (previous year Rs.Nil lacs). Further for equipments of Rs.1624.00 lacs which had been taken under lease finance in earlier years, the lease is yet to commence.

12. Investment include land amounting to Rs.10524.15 lacs (previous year Rs.10524.15 lacs) and Fixed Assets include Land & Building amounting to Rs.3030.61 Lacs (previous year Rs.3030.61 lacs) valued by a Government approved valuer at the time of acquisition, which the Company had to purchase from its debtors in consideration of part recovery of debts, major part of the same has been- given as collateral security by way of deposit of title deeds/transfer documents to the Banks. The Company has not transferred the title of properties in its name yet.

13. a) As reported in earlier year accounts, the Company had abandoned the expansion programme of Rs.53500.00 lacs, as appraised by Financial Institutions against which certain Plant and Machinery and other Equipments have already been imported amounting to Rs. 17316.08 lacs (Previous Year Rs.17316.08 lacs) which are lying at Customs Warehouse. These Machinery and equipment have been valued at cost of acquisition and are grouped under the head Capital work in progress in Schedule 4. They are under the charge of Court Receiver appointed by the Hon'ble Bombay High Court. CWC have informed the company about accidental fire occurred on 23.10.2005 wherein part of the machinery lying at port has been damaged.

b) In view of the above, the expenses relating to above project upto the end of year ending 31 st March 2003 were charged to revenue under respective heads of account. No such provisioning has been done thereafter. This treatment was in line with Accounting Standard AS-16 issued by the Institute of Chartered Accountants of India. Impact of such charging off upto the year end is Rs.40677.70 lacs.

c) Capital work in progress of Rs.21217.39 lacs (previous year 21217.39 lacs) including Pre-operative Expenditure of Rs.1522.50 lacs and Capital Advances of Rs.730.86 lacs relating to the above project have been carried forward as such. The Management is unable to ascertain the losses due to such fire.

14. Plant and Machinery of abandoned expansion project, as mentioned in 13(a) above, is lying at customs warehouse and under the charge of Court receiver appointed by the Hon'ble Bombay High Court. Further, the Polyester Plant at Bhiwadi and Terry Towel Plant at Khushkhera are not operational. The management is unable to ascertain the impact of impairment of these assets as required by Accounting Standard AS-28 issued by the Institute of Chartered Accountants of India in view of inability in determining the value in business and / or net realizable values.

15. The company holds investments of Rs.52.00 lacs in Rajasthan Polyester Ltd and Rajasthan Texfabs Ltd. Net-worth of both companies has been wiped out upto the year end. Since the investment in these companies and other investees is not held for immediate sale and is for long term strategic purposes, diminution in value between cost of investment and market/break up value has not been considered in accounts at this stage.

16. Balances with customers, suppliers, other creditors, recoverable advances, loans from Financial Institutions & Banks and working capital facilities from various banks have been taken as per books, are subject to confirmation/reconciliation.

17. Loans & Advances includes Rs.911.06 Lacs paid by the Company to one of the NBFC towards settlement Of loan liabilities pertaining to ICICI and PNB. The NBFC has already entered in an agreement with ARCIL for assignment of theses liabilities in its favour.

18. Fixed Deposit Receipts amounting to Rs. 48.04 Lacs which includes Rs.48.04 Lacs for maintenance of liquid assets under the requirement of Rule 3A of Companies (Acceptance of Deposits) Rules, 1975 were handed over to the bank for renewal but the same have not been received back after renewal.

19. In the opinion of the management, current assets, loans & advances have a value on realisation at least equal to the amount at which they are stated in the Balance Sheet and provision for all known liabilities has been made except to the extent as appearing in other Notes.

20. Exceptional items for the current year nil previous year Rs. 273.16 lacs

21. Sales include Rs 361.54 Lacs (Previous year NIL Lacs) on account of sale of raw material and stores. Therefore, figures given in additional information are not comparable to that extent.

22. (a) The Company's Lead Financial Institution ICICI approached the Hon'ble AAIFR against the order of Hon'ble BIFR and the Hon'ble AAIFR after accepting the appeal reversed the order as passed by the Hob'ble BIFR declaring the Company as Sick Industrial Company, under SICA based on Annual Accounts as on 30th June,'1997. The Company thereafter approached the Hon'ble BIFR with afresh reference on the basis of the accounts for the year ended March 2000 and the case was registered vide Case No,180/2001 dated 16th May,2001. The Hon'ble BIFR had declared the company as Sick Industrial Company vide order dated 07/11 /2006. During the year the hearings have taken place and ARCIL filed a Miscellaneous Application (MA) No. 675 requesting the Hon'ble BIFR to abate the company's reference in view of the fact the secured creditors have taken action aginst the company under SARFAESI. The Hon'ble BIFR in its hearing held on 06 December 2010 abated the reference of the company underthe third proviso of Section 15(1) of SICA. The Company thereafter approached Hon'ble AAIFR against the order of Hon'ble BIFR and also filed a fresh reference based upon audited balance sheet for the year ended March 2010, with Hon'ble BIFR on 20th December 2010 which was registered as Case no 12/2011, and the matter is pending before Hon'ble BIFR.

(b) In view of non-implication of any financial liability in various court cases pending against/for the company, no provision has been considered necessary. Liability in future, if any, would be accounted for in the year of demands.

23. (a) The Company's Pithampur unit has been operating on job work basis at normal capacities, However, the Khushkhera Plant of the Company remained inoperative during the financial year 2010-11 as ARCIL in whose favour the liabilities of this unit were assigned by Banks and Financial Institutions, had taken possession of the unit by invoking section 13(4) under SARFAESI Act.

(b) Whereas no further information is being provided by them after their takeover of the unit, therefore the assets & liabilities are being continued as it was being shown in the earlier years.

(c) Bhiwadi Plant of the Company remained close during the financial year 2010-11. Despite receiving notice from some of its lenders under the Securitization Act, the company had liquidated marginally the term loan liabilities from lenders during the earlier years. The earlier reference of the company was abated by the Hon'ble BIFR and the fresh reference of the Company is pending with the Hon'ble BIFR, which has to take a view on measures to be adopted with respect to the company and in expectancy of relief and concessions in the form of restructuring of term loan liabilities, interest waivers etc., the management is of the view that financial position of the company will improve by improvement in asset liability mismatch on one hand and profitability on the other. Therefore, the accounts have been prepared on a going concern basis.

(d) In view of the factors mentioned in (a) & (c) above, the management have decided not to provide further liabilities, on account of interest on loan liabilities, demurrage and insurance charges on imported machinery lying at port. This has resulted in under statement of losses for the year by Rs. 131711.71 Lacs, Rs.106.97 Lacs and Rs.118.34 Lacs respectively and under statement of corresponding liabilities by Rs. 131937.02 lacs.

24. Silvassa Land Authority had notified the acquisition of land belonging to the Company at Silvassa. The Company has raised objections to the said Authority on the grounds that the Company's case is lying with Hon'ble BIFR; the Authority requires permission from Hon'ble BIFR u/s 22 of SICA. The company has made its reservation in this matter and about compensation thereof.

25. The previous year figures have been rearranged/reclassified wherever considered necessary.

26. Schedules 1 to 15 are annexed to and form an integral part of Balance Sheet as at 31st March, 2011 and Profit and Loss account for the year ended on that date.

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Mar 31, 2010

As at 31-Mar-10 As at 31-Mar-09

(Rs.in Lacs) (Rs. In Lacs)

1 Contingent Liabilities

a) Letter of Credit for

Plant & Machinery for capital goods 507.45 507.45

b) Guarantees given by banks for which company has Given counter guarantees 25.00 25.00

c) Bonds executed in favor of Excise / Custom authorities for Pithampur Unit and Terry Towel Project 694.00 694.00

d) Demurrage levied by Mumbai Port authorities not acknowledged by the company 133.12 133.12

e) Guarantees given on behalf of third parties 497.44 497.44

f) Additional Demand on account of Counter Vailing Duty on DTA Sales 567.00 567.00

g) Other claims not acknowledged as debts by Company 341.23 341.23

h) Dividend payable on cumulative preference Shares including dividend for earlier years 8840.16 8219.69

As at 31-Mar-10 As at 31-Mar-09

(Rs.in Lacs) (Rs. In Lacs)

i) Demand of Excise Duty against Cenvat taken by company. 0 125.33

j) Demand cum show cause notice issued by DGCEI under Central Excise 3571.24 1785.62

k) Towards Entry Tax/Sales Tax (net of advance of Rs.Nil Lacs previous year Rs.Nil Lacs) 608.65 303.33

I) Demand for non-fulfillment of Expert Obligation 57.20 69.20

m) Penalty under section 11 AC of Central Excise Act 122.04 122.04

n) Additional demand of custom duty on EOU Yarn 10.44 10.44

o) Demand under FERA, 1973 for non submission of Bill of Entry 1081.60 1081.60

2 Estimated amount of contracts remaining to be executed on capital account and not provided for (excluding already considered for B(l) (a) above. 4296.47 4296.47

3. In view of continuing heavy losses, the Company has not created Debenture redemption reserve during the year.

4. a) In the absence of taxable income during the year and in view of brought forward losses, no provision for current income-tax has been made.

b) Deferred tax assets of Rs.9396.00 lacs as on 01/04/2001 have not been accounted for in the absence of virtual certainty in realisation of these amounts, such assets arising on account of unabsorbed depreciation and brought forward business losses, pursuant to the requirements of Accounting AS-22 Accounting Standard for Taxes on Income issued by the Institute of Chartered Accountants of India. However, deferred tax liabilities have been recognised as under:-

Element of As on During the Year As on

Deferred Tax 01/04/2009 31/03/2010

Liability 1985.55 (80.73) 1904.82

5. Insurance Policies on Fixed Assets and Current Assets, which expired in the financial year 1996-97, are not renewed.

6. The Company is in default in payment of Gratuity premium to Life Insurance Corporation of India (LIC). No provision on this account is made in the current year (Previous year no provision was made) The policy is in lapsed state due to non-payment of premium, however, the company continues to pay gratuity to retiring employees. After settlement of liabilities including gratuity in the closed units of the company, the management is of the view that liability provided for in the books upto the year end is sufficient for the existing operations of the company. The Company is in the process of adopting Accounting Standard AS-15 (revised), any implications arising there from including the valuation of future liability on actuarial basis and determination of plan assets will be done in due course.

7. Pre-lease charges amounting to Rs.3636.42 lacs (previous year Rs.3064.44 lacs) on account of lease transactions has not been provided for during the period. In view of prolonged delay in commissioning of these leased equipments & following other pronouncements of Institute of Chartered Accountants of India, pre-lease charges are to be charged to revenue account. Hence loss for the year, capital expenditure and corresponding liabilities are under stated by Rs.3636.42 & Rs. 19368.65 lacs & Rs.21702.00 lacs respectively.

8. No provision has been made on account of letter of credit of Rs.507.45 lacs established with one of the Companys Banker in favour of one of the foreign supplier relating to Plant & Machinery of abandoned project which had already expired. Resulting this balance of capital work in progress and its liabilities are understated.

9. The Company has not made the following provisions:

a) Rs. 9469.37 lacs (previous year Rs. 8350.36 lacs) of interest on Non Convertible Debentures and premium on redemption of debentures becoming due for payment amounting to Rs. nil (Previous Year Rs. nil)

b) Rs. 432.34 lacs (previous year Rs.432;34) of interest on Inter Corporate Deposits taken by the company.

c) Rs. 265.50 lacs (previous year Rs.265.50) of interest on suppliers outstanding.

d) Rs. 523.15 lacs (previous year Rs.523.15) of interest on Lease Rentals dues during the year,

This has resulted in under statement of losses for the year by Rs. 10690.36 lacs and under statement of corresponding liabilities by Rs.76512.38 lacs including that of earlier years Rs.65822.02 lacs

10. Provision of Import duty of Rs.534.63 lacs (previous year Rs.534.63 lacs) on account of duty free raw material imported against advance licenses and Rs.246.02 lacs (previous year Rs.246.02 lacs) on account of EPCG Scheme have not been made. Accordingly, liability as on date of balance sheet is understated by Rs.780.65 lacs.

11. a) The Company has certain production equipment operating at various locations under short term operating lease arrangements renewable further for short term periods. The total amount of Nil (previous year Rs. 20.92 lacs) of such lease rent have been charged to revenue by debiting lease rent expenses.

b) In respect of total fixed assets taken on lease amounting to Rs.3631.71 lacs (previous year Rs.3631.71 lacs) against which, the future obligation towards lease rentals as on 31.03.2010 is Rs. Nil (previous year Rs.Nil lacs). Further for equipments of Rs.1624.00 lacs which had been taken under lease finance in earlier years, the lease is yet to commence.

12. Investment include land amounting to Rs.10524.15 lacs (previous year. Rs.10524.15 lacs) and Fixed Assets include Land & Building amounting to Rs.3030.61 Lacs (previous year Rs.3030.61 lacs) valued by a Government approved valuer at the time of acquisition, which the Company had to purchase from its debtors in consideration of part recovery of debts, major part of the same has been given as collateral security by way of deposit of title deeds/transfer documents to the Banks. The Company has not transferred the title of properties in its name yet.

13. a) As reported in earlier year accounts, the Company had abandoned the expansion programme of Rs.53500.00 lacs, as appraised by Financial Institutions against which certain Plant and Machinery and other Equipments have already been imported amounting to Rs. 17316.08 lacs (Previous Year Rs. 17316.08 lacs) which are lying at Customs Warehouse. These Machinery and equipment have been valued at cost of acquisition and are grouped under the head Capital work in progress in Schedule 4. They are under the charge of Court Receiver appointed by the Honble Bombay High Court. CWC have informed the company about accidental fire occurred on 23.10.2005 wherein part of the machinery lying at port has been damaged.

b) In view of the above, the expenses relating to above project upto the end of year ending 31 st March 2003 were charged to revenue under respective heads of account. No such provisioning has been done thereafter. This treatment was in line with Accounting Standard AS-16 issued by the Institute of Chartered Accountants of India. Impact of such charging off upto the year end is Rs.40677.70 lacs.

c) Capital work in progress of Rs.21217.39 lacs (previous year 21217.39 lacs) including Pre-operative Expenditure of Rs.1522.50 lacs and Capital Advances of Rs.730.86 lacs relating to the above project have been carried forward as such. The Management is unable to ascertain the losses due to such fire.

14. Plant and Machinery of abandoned expansion project, as mentioned in 13(a) above, is lying at customs warehouse and under the charge of Court receiver appointed by the Honble Bombay High Court. Further, the Bhiwadi Plant is lying closed. The management is unable to ascertain the impact of impairment of these assets as required by Accounting Standard AS-28 issued by the Institute of Chartered Accountants of India in view of inability in determining the value in business and / or net realizable values.

15. The company holds investments of Rs.52.00 lacs in Rajasthan Polyester Ltd and Rajasthan Texfabs Ltd. Net-worth of both companies has been wiped out upto the year end. Since the investment in these companies and other investors is not held for immediate sale and is for long term strategic purposes, diminution in value between cost of investment and market/break up value has not been considered in accounts at this stage.

16. Balances with customers, suppliers, other creditors, recoverable advances, loans from Financial Institutions & Banks and working capital facilities from various banks have been taken as per books, are subject to confirmation/reconciliation.

17. Loans & Advances includes Rs. 655 Lacs paid by the Company to one of the NBFC towards settlement of loan liabilities pertaining to ICICI and PNB. The NBFC has already entered in an agreement with ARCIL for assignment of theses liabilities in its favour.

18. Fixed Deposit Receipts amounting to Rs. 48.04 Lacs which includes Rs.48.04 Lacs for maintenance of liquid assets under the requirement of Rute 3A of Companies (Acceptance of Deposits) Rules, 1975 were handed over to the bank for renewal but the same have not been received back after renewal.

19. In the opinion of the management, current assets, loans & advances have a value on realisation at least equal to the amount at which they are stated in the Balance Sheet and provision for all known liabilities has been made except to the extent as appearing in other Notes.

20. Exceptional items this year includes Rs 136.60 lacs Sales Tax payable, Rs. 158.02 excise duty payable which are relating to the previous years and also Rs. 21.47 lacs being the amount written off on account of settlement done with the creditor of the company.

21. Sales include Rs NIL Lacs (Previous year 285.79 Lacs) on account of sale of raw material and stores. Therefore, figures given in additional information are not comparable to that extent.

22. (a) The Companys Lead Financial Institution ICICI approached the Honble AAIFR against the order of Honble BIFR and the Honble AAIFR after accepting the appeal reversed the order as passed by the Hobble BIFR declaring the Company as Sick Industrial Company, under SICA based on Annual Accounts as on 30th June,1997. The Company thereafter approached the Honble BIFR with a fresh reference on the basis of the accounts for the year ended March 2000 and the case was registered vide Case No, 180/2001 dated 16th May,2001. The Honble BIFR has declared the companies as Sick Industrial Company vide order dated 07/11/2006. During the year the hearings have taken place and The Company has filed the required information from time to time and the matter is status quo.

(b) In view of non-implication of any financial liability in various court cases pending against/for the company, no provision has been considered necessary. Liability in future, if any, would be accounted for in the year of demands.

23. (a) The Companys Pithampur unit was operating on job work basis at normal capacities, However, the Khushkhera Plant of the Company remained inoperative during the financial year 2009-10 as ARCIL in whose favour the liabilities of this unit were assigned by Banks and Financial Institutions, has taken possession of the unit by invoking section 13(4) under SARFAESI Act.

(b) Whereas no further information is being provided by them after their takeover of the unit, therefore the assets & liabilities are being continued as it was being shown in the earlier years.

(c) Bhiwadi Plant of the Company remain closed during the financial year 2009-10. Despite receiving notice from some of its lenders under the Securitization Act, the company had liquidated marginally the term loan liabilities from lenders during the earlier year. The Honble BIFR has declared the company as sick industrial company, which has to take a view on measures to be adopted with respect to the company and in expectancy of relief and concessions in the form of restructuring of term loan liabilities, interest waivers etc., the management is of the view that financial position of the company wiH improve by improvement in asset liability mismatch on one hand and profitability on the other. Therefore, the accounts have been prepared on a going concern basis.

(d) In view of the factors mentioned in (a) & (c) above, the management have decided not to provide further liabilities, on account of interest on loan liabilities, demurrage and insurance charges on imported machinery lying at port. This has resulted in under statement of losses for the year by Rs. 108568.95 Lacs, Rs. 106.97 Lacs and Rs. 118.34 Lacs respectively and under statement of corresponding liabilities by Rs. 108794.26 lacs.

24. Silvassa Land Authority had notified the acquisition of land belonging to the Company at Silvassa in previous year. The Company has raised objections to the said Authority on the grounds that the Companys case is lying with Honble BIFR; the Authority requires permission from Honble BIFR u/s 22 of SICA. The company has made its reservation in this matter and about compensation thereof.

25. The previous year figures have been rearranged/reclassified wherever considered necessary.

26. Schedules 1 to 15 are annexed to and form an integral part of Balance Sheet as at 31st March,2010 and Profit and Loss account for the year ended on that date.

Computation of profits under section 349 of the Companies Act 1956 is not applicable as no commission has been paid to managerial personnel.

# Apart form the above Job work production during the year for Cotton 1297.25 MT and Polyester/PV 8648.94.