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Notes to Accounts of Royal Cushion Vinyl Products Ltd.
Mar 31, 2024
4.1) The Company has made an investment of ^.259.31 lacs ( £ 450.200) in Euroroyal Floors Ltd.( "ERF") wholly owned subsidiary in U.K.The subsidiary also owes ^ 2333.76 lacs ( Net of commission payable ^ 106.19 lacs ) towards supply of goods made to it. The principal customers of ERF in Russia did not honour the debts, Due to this ERF in turn, could not pay its creditors. The Company has been informed by the ex-local Directors of ERF that one of the creditors had filed a suit for winding-up of ERF pursuant to which the High Court of Justice of U.K.made a winding-up order dated 11th June,2001 against ERF and the official receiver has been appointed to liquidate the assets of ERF. Thereafter order dated 12/03/2002 was passed and ERF is dissolved. Under the circumstances , the Management had provided for diminution in value of investment made in ERF in the year 2000-01.As also, provision against the debt of ^ 2333.76 lacs due from ERF had been made during the earlier year.
12.1) Rights of Equity Shareholders
The Company has only one class of equity share of ^ 10/- per share, Each Shareholder of equity shares is entitled to one vote per share.
The Company has completed preferential issue of i) 66,21,250 equity shares of the Company having face value of INR 10/-each, to the members of the Promoters and Promoter Group at an issue price of INR 40/- per equity share including premium of INR 30/- per equity share and, ii) 1,79,00,000 equity shares of the Company having face value of INR 10/- each at par, to private investors (non- Promoters) on preferential basis ,Further these shareholders will have voting rights at par with existing shareholders.
Nature and Purpose of each reserve
a) Capital reserve - During amalgamation, the excess of net assets taken, over the consideration paid, if any, is treated as capital reserve.
b) Securities premium reserve - The amount received in excess of face value of the equity shares is recognised in Securities Premium Reserve. This reserve will be utilised in accordance with the provisions of the Companies Act ,2013.
c) Investment allowance reserve - Investment Allowance Reserve was created under the provisions of Income tax , when new machineries were purchased. In the current year this reserve has been transferred to General Reserve, on completion of the required number of years.
d) General Reserve is created on transfer of accumulated balance from Investment allowance reserve.
e) Revaluation Reserve is created during the year, on revaluation of Land based on report issued by an independent Valuer.
14.A. The original lenders of the Company namely IDBI, Bank of India, Oriental Bank of Commerce and EXIM Bank had assigned their dues to Asset Reconstruction Company of India Limited (''ARCIL'') in the year 2006-07 and thereafter ARCIL assigned its rights in dues of the Company to SICOM Limited in the year 2011-12. During the financial year 2017-18, SICOM Limited assigned its rights in the dues outstanding from the Company to Finquest Financial Solutions Private Limited (''Finquest''). Similarly, during the financial year 2017-18, Saraswat Co-op Bank Ltd. assigned its rights in the dues outstanding from the Company to Finquest, interest of Rs. 1291.31 lacs was not provided in accounts in the pervious year. Pursuant to time to time deliberations and negotiations with FFSPL, the Company has finally negotiated with FFSPL to make a full and final payment of Rs. 860.00 lacs ("Settlement Amount") towards settlement of all outstanding dues and accordingly, completed the full payment of the entire Settlement Amount during July 2023. Pursuant thereto, the Company has received the No Dues Certificate dated July 14, 2023 from FFSPL confirming no outstanding dues in the loan accounts of the Company with FFSPL. Accordingly, the said loan accounts stands settled in the books of the Company and outstanding balance amount lying in books, which is not payable, Rs. 22860.45 lacs has been written back in the books.
B .Historically, the Company was under revival / rehabilitation under the provisions of the SICA 1985 and it''s reference was pending before Hon''ble BIFR. In spite of the requisite financial support from certain members of the promoters and promoter group of the Company, the Company was in pressing need of financial support for its working capital requirements and in order to ensure its continuity and survival. However, due to sick status, it was not able to raise funds from banks / FIs on its own. In view thereof, the Company through its directors had requested the directors of the Company and other family members and group companies / entities including specifically Natroyal Industries Private Limited ("NIPL"), which are part of same family business group ("Promoter Group Personsâ), to extend requisite support in securing financial support from banks / FIs. In view thereof, the Promoters Group Persons, by giving personal/family properties as collateral security, arranged Loans from banks / FIs on behalf of and for the sole benefit of the Company and such loan funds were initially disbursed to NIPL, as NIPL was a key party to such loan arrangement. As part of agreed arrangement between the Promoter Group Persons and the Company, such loan funds were transferred by NIPL to the Company and accordingly, the said loan / borrowed funds are shown in the name of NIPL and since then, the Company has been discharging all obligations in relation to said loan funds including payment of EMIs, principal repayment, interest and all other charges to the said banks / FIs. As part of agreed arrangement, the Company and Promoter Group Persons are primarily responsible for ensuring fulfilment of all obligations in relation to such loan funds including in case of default in repayment by the Company. Therefore, the Company remains primarily responsible for ensuring discharge of all obligations in relation to such loan funds availed from banks / FIs and standing in the name of NIPL.
Under the Duty Exemption Scheme of Advance License (as well as similar other license scheme) pursuant to Import & Export Policy of Government of India, duty free imports of raw materials were permitted, and they are required to be used in manufacturing of goods for export and export of goods has to be effected within the time allowed in terms of such scheme. In the past ( Prior to year 2000), the Company had availed benefit of such licenses from time to time and it had also fulfilled its export obligations as per the conditions of such scheme in many of the licenses but in some cases such exports were not done . The said matter relates back to the period of more than 25 years and as such, the management of the company, based on an expert opinion , evaluated its specific obligations which may still subsists, if any. Based on the comprehensive evaluation and expert opinion, the provision made in earlier years Rs. 5683.95 lacs has been written back .
Borrowing from Others in Previous year represents outstanding amount payable to Promoters & Promoters Group entities including LLPs, which were earlier Private Limited Companies. The same were advanced earlier due to the company being sick & was referred to BIFR etc . During the year loan outstanding of Rs.1398.50 Lacs has been converted into equity @Rs.40 per share and Rs.269.44 Lacs has been w/back, as no longer payable and Rs.621.53 lacs has been repaid. The balance outstanding as on 31.03.2024 represents amount payable to Ex-Directors.
This section explains the judgments and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, it has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments that have quoted price. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting period.
Level 2: Such inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset and liability, either directly or indirectly.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities included in level 3.
Notes on Financial Statements for the Year ended 31st March, 2024
The investments included in Level 3 of fair value hierarchy have been valued using the cost approach to arrive at their fair value. The cost of unquoted investments approximates the fair value because there is wide range of possible fair value measurements and the costs represents estimate of fair value within that range.
The Management considers that the carrying amount of financials assets and financial liabilities carried at amortised cost approximates their fair values.
Note 30 - Financial Risk Management
The Company''s activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Company''s risk management assessment and policies and processes are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk assessment and management policies and processes are reviewed regularly to reflect changes in market conditions and the Company''s activities.
Credit risk is the risk of financial loss to the Company if a customer fails to meet its contractual obligations. a) Cash and Cash Equivalents
Credit risk from balances with banks and financial institutions is managed by the Company''s treasury department in accordance with the Company''s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the Board. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments.
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to managing liquidity is to ensure as far as possible that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed condition, without incurring unacceptable losses or risking damage to the Company''s reputation. The Company''s objective is to maintain a balance between continuity of funding and flexibility through the use of surplus funds, bank overdrafts, bank loans, debentures and inter-corporate loans.
The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. The Company has access to a sufficient variety of sources of funding.
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in market rates and prices (such as interest rates, foreign currency exchange rates and commodity prices) or in the price of market risk-sensitive instruments as a result of such adverse changes in market rates and prices. Market risk is attributable to all market risk-sensitive financial instruments, all foreign currency receivables and payables and all short term and longterm debt. The Company is exposed to market risk primarily related to commodity prices and the market value of its investments.
Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates. Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s debt obligations with floating interest rates.
The company''s objectives when managing capital are to:
> Safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and
> Maintain an optimal capital structure to reduce the cost of capital.
The Company monitors capital on the basis of the carrying amount of debt less cash and cash equivalents as presented on the face of the financial statements. The Company''s objective for capital management is to maintain an optimum overall financial structure.
Consistent with others in the industry, the group monitors capital on the basis of the following gearing ratio:
The company is engaged in manufacture of PVC products (PVC Flooring, Leather Cloth). Based on the information reported to the chief operating decision maker (CODM) for the purpose of resource allocation and assessment of performance, there are no reportable segments in accordance with the requirements of Indian Accounting Standard 108-''Operating Segment Reporting'', notified under the Companies (Indian Accounting Standards) Rules, 2015.
34.1 Written back of outstanding dues of Rs. 22860.44 lacs : Finquest Financial Solutions Private Limited ("FFSPL") , FFSPL had taken over the loans from SICOM & Saraswat Co-op bank. Pursuant to time to time deliberations and negotiations with FFSPL, the Company has finally negotiated with FFSPL to make a full and final payment of Rs. 860.00 lacs ("Settlement Amount") towards settlement of all outstanding dues and accordingly, completed the full payment of the entire Settlement Amount during July 2023. Pursuant thereto, the Company has received the No Dues Certificate dated July 14, 2023 from FFSPL confirming no outstanding dues in the loan accounts of the Company with FFSPL. Accordingly, the said loan accounts stands settled in the books of the Company and outstanding balance amount lying in books, which is not payable has been written back in the books. The required forms CHG-4 are filed with Registrar of Companies and current charges outstanding against above is nil.
34.2 Written back of outstanding Provisions for Custom Duty including interest of Rs. 5683.95 lacs : Under the Duty Exemption Scheme of Advance License (as well as similar other license scheme) pursuant to Import & Export Policy of Government of India, duty free imports of raw materials were permitted, and they are required to be used in manufacturing of goods for export and export of goods has to be effected within the time allowed in terms of such scheme. In the past (Prior to year 2000), the Company had availed benefit of such licenses from time to time and it had also fulfilled its export obligations as per the conditions of such scheme in many of the licenses but in some cases such exports were not done . The said matter relates back to the period of more than 25 years and as such, the management of the company, based on an expert opinion , evaluated its specific obligations which may still subsists, if any. Based on the comprehensive evaluation and expert opinion, the provision made in earlier years has been written back .
34.3 Unclaimed Liabilities/Balances written back Rs. 329.44 lacs : This represents balances of various parties ,which are no longer payable, have been Written back.
34.4 Total of all above is Rs. 28873.83 lacs
Capital expenditure contacted for ,at the end of the reporting period but not recognised as liabilities is Rs. 1.59 lacs ( Previous year Nil)
Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the parent by the weighted average number of Equity shares outstanding during the year. Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the parent (after adjusting for interest on the convertible preference shares) by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares.
c) Consequently, for all leases (other than short-term leases and leases of low-value assets), a right-of-use asset was recognized on the balance sheet for an amount equal to the liability for future lease payments, adjusted by the amount of any prepaid or accrued lease payments.
Note: This information has been determined to the extent such parties have been identified on ths basis of information available with the Company. Further interest is not provided, as Company is incurring continues losses and it is not in position to pay interest.
Note 43: The Company has suffered substantial losses in past and due to this, the entire net worth has been eroded. Operations are Continued and the accounts of the Company have been prepared on the basis that, the Company is a going concern. The Promoters are bringing funds required for working capital in order to have smooth operations. Further the Promoters of the Company has given a Letter to provide continious support to the Company , as and when required.
Note 44: The Board of the Directors of the Company in its Board Meeting held on 04th January, 2022, has considered and approved draft Scheme of Arrangement ("Scheme") in the nature of merger / amalgamation of , Royal Spinwell and Developers Private Limited, a group company with the Company (Royal Cushion Vinyl Products Limited ), , with effect from the Appointed Date of October 1, 2021 under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013. The Company received the NOC letter from BSE Ltd as required under Regulation 37 of SEBI, LODR and company had filled the application in NCLT in Oct 2023. Pursuant to the order dated December 15, 2023 read with the addendum order dated December 22, 2023 from Hon''ble National Company Law Tribunal, Mumbai Bench, Mumbai ("NCLT") , the Company had called meeting of it''s Shareholders and Unsecured Creditors on 12.02.2024 .The coming into effect of the Scheme is subject to receipt of necessary statutory, regulatory and contractual approvals, permissions, consents, sanctions, exemption as may be required under applicable laws, regulations or guidelines in relation to the Scheme. Pending the coming into effect of the Scheme, these financial statements are prepared without giving effect to the provisions of the Scheme and as such, these financial statements are subject to revision / modification upon coming into effect of the Scheme.
Note 50 -The Ministry of Corporate Affairs (MCA) has prescribed a new requirement for companies under the proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 inserted by the Companies (Accounts) Amendment Rules 2021 requiring companies, which uses accounting software for maintaining its books of accounts, shall use only such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in the books of accounts along with the date when such changes were made and ensuring that the audit trail cannot be disabled. The Company uses the accounting software SAP for maintaining books of account. During the year ended 31 March 2024, the Company had not enabled the feature of recording audit trail (edit log) at the database level for the said accounting software SAP to log any direct data changes on account of recommendation in the accounting software administration guide which states that enabling the same all the time consume storage space on the disk and can impact database performance significantly. Audit trail (edit log) is enabled at the application level.
Note 51 - Other regulatory information:
a. The Company do not have any Benami property and no proceedings have been initiated or pending against the Company for holding any Benami property, under the Benami Transactions (Prohibitions) Act, 1988 (45 of 1988) and the rules made thereunder.
b. The Company do not have any transactions with struck off companies under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956.
c. The Company does not have any charge which is yet to be registered / satisfied with ROC beyond the statutory period.
d. he Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Group (Ultimate Beneficiaries) or provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
e. The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Group shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party(Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
f. The Company has not undertaken any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
g. The Company has not traded or invested in Crypto currency or Virtual Currency during the current or previous year.
h. The Company has not been declared as a ''Wilful Defaulter'' by any bank or financial institution (as defined under the Companies Act, 2013) or consortium thereof, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.
i. The company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017.
Note 52: The figures of previous year have been regrouped / reclassified wherever necessary to compare with the current year''s figures. Figures in brackets in the schedules and Notes pertain to previous year.
Mar 31, 2023
l) Provisions and contingent liabilities
Provisions
The Company recognizes a provision when: it has a present legal or constructive obligation as a result of past events; it is likely that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognized for future operating losses. Provisions are reviewed at each balance sheet and adjusted to reflect the current best estimates.
Contingent Liability and Contingent Assets
A contingent liability recognised in a business combination is initially measured at its fair value. Subsequently, it is measured at the higher of the amount that would be recognised in accordance with the requirements for provisions above or the amount initially recognised less, when appropriate, cumulative amortization recognised in accordance with the requirements for revenue recognition.
A contingent asset is not recognised unless it becomes virtually certain that an inflow of economic benefits will arise. When an inflow of economic benefits is probable, contingent assets are disclosed in the financial statements. Contingent liabilities and contingent assets are reviewed at each balance sheet date.
Onerous Contract
A provision for onerous contracts is measured at the present value of the lower expected costs of terminating the contract and the expected cost of continuing with the contract. Before a provision is established, the Company recognizes impairment on the assets with the contract.
m) Earnings Per Share (EPS)
Basic earnings per Share is computed by dividing the net profit or loss for the year attributable to equity share holders, by the weighted average number of equity share outstanding during the period.
Diluted earning per share is computed by dividing the net profit or loss for the year attributable to equity shareholders, by the weighted number of equity and equivalent diluted equity shares outstanding during the year except where the results would be antidilutive.
n) Government Grants
The Company recognizes government grants only when there is reasonable assurance that the conditions attached to them will be complied with, and the grants will be received. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed.
When the grant relates to an asset, it is recognised as deferred revenue in the balance sheet and transferred to profit or loss on a systematic basis over the expected useful life of the related asset.
o) Cash and cash equivalents
Cash and cash equivalents include cash at bank and deposit with banks having original maturity of not more than three months. Bank deposit with original maturity period of more than three months but less than twelve months are classified as other bank balances.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and fixed deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company''s cash management.
p) Investments in the nature of equity in subsidiaries, joint venture and associates
The Company has elected to recognise its investments in equity instruments in subsidiaries, joint venture and associates at cost in the separate financial statements in accordance with the option available in Ind AS 27, ''Separate Financial Statements''.
q) Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
Initial recognition and measurement-
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.
Financial assets are classified, at initial recognition, as financial assets measured at fair value or as financial assets measured at amortized cost.
Subsequent measurement-
For purposes of subsequent measurement, financial assets are classified in Three categories:
i. Financial assets measured at amortized cost
ii. Financial assets measured at fair value through other comprehensive income (FVTOCI)
iii. Financial assets measured at fair value through profit or loss (FVTPL)
i. A financial asset that meets the following two conditions is measured at amortized cost.
⢠Business Model test: The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
⢠Cash flow characteristics test: Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
ii. A financial asset that meets the following two conditions is measured at fair value through OCI:-
⢠Business Model test: The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and
⢠Cash flow characteristics test: The contractual terms of the instrument give rise on specified dates to cash flows that are SPPI on the principal amount outstanding.
iii. All other financial assets are measured at fair value through profit and loss.
Equity instruments
All equity instruments in scope of Ind AS 109 - [â¢] are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable election to present subsequent changes in the fair value in OCI. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, including foreign exchange gain or loss and excluding dividends, are recognised in the OCI. There is no recycling of the amounts from OCI to profit or loss, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognised in the profit or loss.
Derecognition-
A financial asset is primarily derecognized (i.e. removed from the Company''s balance sheet) when:
⢠The contractual rights to receive cash flows from the asset have expired, or
⢠The Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset but has transferred control of the asset.
On derecognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in OCI and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset.
Impairment of financial assets-
In accordance with Ind AS 109, The company assesses impairment based on expected credit losses (ECL) model at an amount equal to: -
⢠12 months expected credit losses, or
⢠Lifetime expected credit losses
depending upon whether there has been a significant increase in credit risk since initial recognition.
The Company follows ''simplified approach'' for recognition of impairment loss allowance on trade receivables or any contractual right to receive cash or another financial asset.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
Financial liabilities-
Initial recognition and measurement-
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
Subsequent measurement-
All financial liabilities are subsequently measured at amortized cost using the effective interest method or at FVTPL. Financial liabilities at fair value through profit or loss-
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or is designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred principally for the purpose of repurchasing in the near term or on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking. This category also includes derivative entered into by the Company that are not designated and effective as hedging instruments in hedge relationships as defined by Ind AS 109. Gains or losses on liabilities held for trading are recognised in the profit or loss.
Derecognition-
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognised in profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognize amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
r) Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for leasing transactions that are within the scope of Ind AS 17, and measurements that have some similarities to fair value but are not fair value, such as net realizable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorized into level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
⢠Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
⢠Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
⢠Level 3 inputs are unobservable inputs for the asset or liability.
The Company has consistently applied the following accounting policies to all periods presented in these financial statements.
s) Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker of the Company is responsible for allocating resources and assessing performance of the operating segments and accordingly is identified as the chief operating decision maker.
t) Recent pronouncements
On March 24, 2021, the Ministry of Corporate Affairs ("MCA") through a notification, amended Schedule III of the Companies Act, 2013. The amendments revise Division I, II and III of Schedule III and are applicable from April 1, 2021. Key amendments relating to Division II which relate to companies whose financial statements are required to comply with Companies (Indian Accounting Standards) Rules 2015 are:
(i) Balance Sheet:
⢠Lease liabilities should be separately disclosed under the head ''financial liabilities'', duly distinguished as current or non-current.
⢠Certain additional disclosures in the statement of changes in equity such as changes in equity share capital due to prior period errors and restated balances at the beginning of the current reporting period.
⢠Specified format for disclosure of shareholding of promoters.
⢠Specified format for ageing schedule of trade receivables, trade payables, capital work-in-progress and intangible asset under development.
⢠If a company has not used funds for the specific purpose for which it was borrowed from banks and financial institutions, then disclosure of details of where it has been used.
⢠Specific disclosure under ''additional regulatory requirement'' such as compliance with approved schemes of arrangements, compliance with number of layers of companies, title deeds of immovable property not held in name of company, loans and advances to promoters, directors, key managerial personnel (KMP) and related parties, details of benami property held etc.
(ii) Statement of profit and loss:
⢠Additional disclosures relating to Corporate Social Responsibility (CSR), undisclosed income and crypto or virtual currency specified under the head ''additional information'' in the notes forming part of consolidated financial statements.
The amendments are extensive, and the Company will evaluate the same to give effect to them as required by law.
(b) The original lenders of the Company namely IDBI, Bank of India, Oriental Bank of Commerce and EXIM Bank had assigned their dues to Asset Reconstruction Company of India Limited (''ARCIL'') in the year 2006-07 and thereafter ARCIL assigned its rights in dues of the Company to SICOM Limited in the year 2011-12. During the financial year 2017-18, SICOM Limited assigned its rights in the dues outstanding from the Company to Finquest Financial Solutions Private Limited (''Finquest''). Similarly, during the financial year 2017-18, Saraswat Co-op Bank Ltd. assigned its rights in the dues outstanding from the Company to Finquest. Therefore, the outstanding loan balance of all these original lenders has been presented to the credit of Finquest. The Company has not provided interest on loan outstanding to the credit of Finquest. Had the Company provided interest as per practice followed in earlier years, loss would have been higher by ^.1291.31 lacs (P.Y.^ 1296.87 lacs). During the year the Company had done one time settlement with Baroda City Co-op Bank and outstanding due of principal Rs.32.68/-lacs and interest Rs.73.05/- lacs paid during the year.
(c) The Directors/Promoters of the Company along with their family members and group companies/associates have arranged loans from Deutsch Bank (DB) and Capital First Limited (Now merged with IDFC Bank Ltd) (IDFC), by giving their personal property as collateral security. These loans are released by DB and IDFC to Natroyal Industries Private Limited (''NIPL''). Pursuant to the arrangement / understanding between NIPL, Directors/Promoters, associates and the Company, the said loan amount were transferred by NIPL to the Company and the Company has treated the same as Loan from NIPL. The installments including interest is paid on the said Loan by the Company. The principal loan repayment amount is debited to NIPL Loan Account and interest thereon is debited to interest account in the Company''s Books of Accounts. The loan outstanding as on 31.03.2023 for DB is ^ 916.99 lacs and IDFC is ^ 939.68 lacs.
15.1) Under the Duty Exemption Scheme of Advance License (as well as similar other license scheme) pursuant to Import & Export Policy of Government of India,duty free imports of raw materials are permitted and they are required to be used in manufacturing of goods for export,as well as, export of goods has to be effected within the time allowed, in terms of the scheme. The Company has availed of such licenses from time to time. In the past, it had fulfilled its export obligations. The Company had imported duty free raw material under certain licenses, however it could not effect export within the time allowed due to circumstances beyond the control of the Company. The Company has evaluated its obligations under the scheme and it has been advised that in view of non fulfillment of export obligations, the authorities can recover the import duty and mandatory interest thereon. From 01.04.2014 the Company has stopped providing interest on custom duty liability. Had the company provided interest as per practice followed in earlier years loss would have been higher by ^ 278.66 lacs and reserve and surplus would have been lower to that extent during the year.
15.2) BIFR''s Order dated 11/06/2015 includes various reliefs from DFGT such as extension of Export Obligation Period, Waiver of Penalties and also refund from Customs against Advance Licenses and EPCG Licenses once the export obligation is extended and completed. The company has already got extension of export obligation for various Licenses and is in the process of getting extension of Export Obligation of Advance Licenses and EPCG Licenses. In the year 2000, 2001 and 2006, the Customs Dept. has encashed Bank Guarantees provided by Union Bank of India and Global Trust Bank. The total amount of these Guarantees is ^ 4.35 Crores. The company is in the process of consolidating all the documents and will file the claim with Customs Dept. for refund of the Bank Guarantees amount etc. As the application is yet to be filed, this amount is not shown as "Receivable" in the Balance Sheet.
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments that have quoted price. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting period.
Level 2: Such inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset and liability, either directly or indirectly.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities included in level 3.
The investments included in Level 3 of fair value hierarchy have been valued using the cost approach to arrive at their fair value. The cost of unquoted investments approximates the fair value because there is wide range of possible fair value measurements and the costs represents estimate of fair value within that range.
The Management considers that the carrying amount of financials assets and financial liabilities carried at amortised cost approximates their fair values.
Note 27 - Financial Risk Management
The Company''s activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Company''s risk management assessment and policies and processes are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk assessment and management policies and processes are reviewed regularly to reflect changes in market conditions and the Company''s activities.
A) Credit Risk
Credit risk is the risk of financial loss to the Company if a customer fails to meet its contractual obligations. a) Cash and Cash Equivalents
Credit risk from balances with banks and financial institutions is managed by the Company''s treasury department in accordance with the Company''s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the Board. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments.
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to managing liquidity is to ensure as far as possible that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed condition, without incurring unacceptable losses or risking damage to the Company''s reputation. The Company''s objective is to maintain a balance between continuity of funding and flexibility through the use of surplus funds, bank overdrafts, bank loans, debentures and inter-corporate loans.
Market risk
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in market rates and prices (such as interest rates, foreign currency exchange rates and commodity prices) or in the price of market risk-sensitive instruments as a result of such adverse changes in market rates and prices. Market risk is attributable to all market risk-sensitive financial instruments, all foreign currency receivables and payables and all short term and long-term debt. The Company is exposed to market risk primarily related to commodity prices and the market value of its investments.
Interest rate risk
Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates. Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s debt obligations with floating interest rates.
Note 38: The Company has suffered substantial losses and due to this, the entire net worth has been eroded. However, operations are Continued and the accounts of the Company have been prepared on the basis that the Company is a going concern. The Promoters are bringing funds required for working capital in order to have smooth operations.
Note 39: The Board of the Directors of the Company in its Board Meeting held on 04th January, 2022, has considered and approved draft Scheme of Arrangement ("Scheme") in the nature of merger / amalgamation of , Royal Spinwell and Developers Private Limited, a group company with the Company (Royal Cushion Vinyl Products Limited ), , with effect from the Appointed Date of October 1, 2021 under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013. The Company received the NOC letter from BSE Ltd as required under Regulation 37 of SEBI, LODR and company is in the process of filing the application in NCLT.The coming into effect of the Scheme is subject to receipt of necessary statutory, regulatory and contractual approvals, permissions, consents, sanctions, exemption as may be required under applicable laws, regulations or guidelines in relation to the Scheme. Pending the coming into effect of the Scheme, these financial statements are prepared without giving effect to the provisions of the Scheme and as such, these financial statements are subject to revision / modification upon coming into effect of the Scheme.
Note 40: Exceptional items in the Statement of Profit and Loss account for FY 21-22 represent written back of outstanding due of Rs. 6261.23 lacs payable to Natroyal Industries Private Limited (NIPL). NIPL, one of the group companies being a related party, had supported the Company through various means in its efforts to revive the Company from the sick company status during the time Company''s reference for revival was pending before the erstwhile Board for Industrial and Financial Reconstruction (BIFR). As such, there was an aggregate amount of (INR 6261.23 lacs) payable to NIPL consisting of INR 3390.23 lacs as advance/deposit received under a manufacturing support and supply agreement and INR 2870.94 lacs as trade payables towards purchases of goods, pertaining to the period prior to the filing of fully tied-up draft rehabilitation scheme (DRS) with BIFR in the year 2013 (''DRS Cut-off Date''). Since then, the said amount payable to NIPL has remained outstanding, and the Company has been endeavouring to keep the ledger account of NIPL regular in respect of transactions undertaken post the DRS Cut-off Date, though as on date, there has been a substantial outstanding amount for the same as well. NIPL has already written off the said amount of INR 6261.23 lacs recoverable from the Company in its books of account and currently, NIPL has not been pursuing any active recovery efforts or measures knowing the state of affairs of the Company. At the same time, the Company has been contemplating and initiating various efforts including monetisation of surplus assets , to strengthen its financial position and operations, however various adverse circumstances including the onset of Covid-19 pandemic and prevalent weak domestic and global environment due to multitude of factors, are causing several limitations to the effective revival measures. Therefore, the management doesn''t foresee that the Company will be in position to pay this outstanding amount of INR 62.61 Crores payable to NIPL pertaining to the period prior to the DRS Cut-off Date and has accordingly, decided to write-back the said payable amount.
Note 42: Income Tax Expenses
Due to substantial brought forward losses, there would not be taxable income in the near future. The deferred tax assets is recognised only to the extent of deferred tax liability.
Note 43 : Sundry Debtors & Creditors (Including foreign suppliers) are subject to confirmation.
Note 44: The Directors / employees of the Company have acquired motor cars in their names from and out of the loans obtained by them from the banks, pursuant to an arrangement between the Directors / employees for use of the Company. Accordingly, the Company has accounted the said cars & the said loans in the name of the Directors / employees, as the assets & the liabilities of the Company, including the transactions in respect of repayment and payment of interest and principal etc.
Note 47 - Other regulatory information:
a. The Company do not have any Benami property and no proceedings have been initiated or pending against the Company and its Indian subsidiaries for holding any Benami property, under the Benami Transactions (Prohibitions) Act, 1988 (45 of 1988) and the rules made thereunder.
b. The Company do not have any transactions with struck off companies under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956.
c. The Company does not have any charge which is yet to be registered / satisfied with ROC beyond the statutory period.
d. The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Group (Ultimate Beneficiaries) or provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
e. The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Group shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party(Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
f. The Company has not undertaken any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
g. The Company has not traded or invested in Crypto currency or Virtual Currency during the current or previous year.
h. The Company has not been declared as a ''Wilful Defaulter'' by any bank or financial institution (as defined under the Companies Act, 2013) or consortium thereof, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.
i. The company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017.
Note 48: The figures of previous year have been regrouped / reclassified / recast wherever necessary to compare with the current year''s figures. Figures in brackets in the schedules and Notes pertain to previous year.
As per our report of even date For and on behalf of Board of Directors
For BIPIN & CO.
Chartered Accountants MAHESH K. SHAH JAYESH A MOTASHA
Firm Reg. No. 101509W Chairman & Managing Director Director
DIN:00054351 DIN:00054236
AMIT SHAH DEEPTI PAREKH VIVEK MOTASHA
(Partner) Company Secretary Chief Financial officer
Membership No. 126337 ACS60978
Place : VADODARA Place : MUMBAI
Date: 29/05/2023 Date: 29/05/2023
Mar 31, 2015
1. CONTINGENT LIABILITIES NOT PROVIDED FOR IN RESPECT OF:
31.03.2015 31.03.2014
(Amount in Rs) (Amount in Rs)
a) Guarantee/Letter of credit given by Refer note Refer note
Company's Bankers below below
b) Foreign Bills Discounted with Banks Refer note Refer note
below below
c) Showcause/Demand raised /Appeal 3,103,796 15,883,989
filed to the Various Authorities
& disputed by the Company
d) Penalty Imposed by FERA& disputed 10,000,000 10,000,000
by the Company
e) Custom duty payable on Import of amounts amounts
duty free capital goods unascer unascer
tainable tainable
f) Penalties, if any, in respect of amounts amounts
custom duty liabilities for import unascer unascer
of raw materials under advance tainable tainable
licence scheme and of Capital
goods under EPCG Scheme.
g) Suits filed against the Company amounts amounts
for recovery of dues unascer unascer
tainable tainable
Note: Not ascertained by the Company as the relevant details are not
received from the respective authorities.
2. The Company has made an investment of Rs. 25,931,404 ( £ 450.200)
in Euroroyal Floors Ltd.( "ERF") wholly owned subsidiary in U.K. The
subsidiary also owes Rs. 233,375,543 ( Net of commission payable Rs.
10,619,234 ) towards supply of goods made to it. The principal
customers of ERF in Russia did not honour the debts, Due to this ERF in
turn, could not pay its creditors. The Company has been informed by the
ex-local Directors of ERF that one of the creditors had filed a suit
for winding-up of ERF pursuant to which the High Court of Justice of
U.K. made a winding-up order dated 11th June,2001 against ERF and the
official receiver has been appointed to liquidate the assets of ERF.
Thereafter order dated 12/03/2002 was passed and ERF is dissolved.
Under the circumstances, the Management had provided for diminution in
value of investment made in ERF in the year 2000-01. As also, provision
against the debt of Rs. 233,375,543 due from ERF had been made during
the earlier year.
3. Under the Micro, Small and Medium Enterprise Development Act, 2006
("MSMED Act") which came into force effective from 2nd October
2006,certain disclosures relating to amounts due to micro, small and
medium enterprises and remained unpaid after the appointed date etc. of
principal and interest amounts are required to be made. The Company is
in the process of compiling the relevant information. As the relevant
information is not yet readily available and / or not given or
confirmed by such enterprises, it is not possible to give required
information in the accounts. However, in view of the management, the
impact of interest, if any, which may subsequently become payable to
such enterprises in accordance with the provisions of the Act, would
not be material and the same, if any payable, would be disclosed in the
year of payment of interest.
4. The Company has suffered substantial losses and due to this, the
entire net worth has been eroded. However, operations are Continued,
the accounts of the Company have been prepared on the basis that the
Company is a going concern.
5. Sundry Debtors & Creditors (Including foreign suppliers) are subject
to confirmation
6. Segment Reporting:
The Company has one segment of activity namely PVC products (PVC
Laminated Sheet/Tiles, PVC Leather Cloth).
7. Accounting for Taxes on Income:
In view of Loss in current year as well as having substantial brought
forward losses and the fact that there would not be taxable income in
the near future, the deferred tax assets is not recognized. Deferred
tax liability, if any would arise in the year in which the claim giving
rise to timing difference is made. Accordingly, deferred tax
asset/liability is not recognized.
8. The Directors / employees of the Company have acquired motor cars in
their names from and out of the loans obtained by them from the banks,
pursuant to an arrangement between the Directors / employees for use of
the Company. Accordingly, the Company has accounted the said cars & the
said loans in the name of the Directors/ employees, as the assets & the
liabilities of the Company, including the transactions in respect of
repayment and payment of interest etc.
9. The useful life of fixed assets has been revised in accordance with
Schedule - II to the Companies Act-2013 which is applicable for
accounting periods commencing on or after 01/04/2014. Consequently an
amount of Rs. 14,84,02,188 representing assets beyond their useful life
as of 01/04/2014 has been charged to retained earning in other cases
carring amount has been depreciated/amortised over the remaining useful
life of the assets.
10.. NAME OF RELATED PARTIES AND RELATIONS
1 (A) SUBSIDIARY COMPANY
a) Euro royal Floors Ltd.
(B) ASSOCIATES CONCERN / TRUST
a) Natroyal Industries Pvt. Limited
b) Royal Spin well Pvt Limited
c) Samsons Leather cloth Manufacturing Co. LLP
d) Royal Jerfeb Pvt Limited
e) Shreedaha Trading & Consultancy Services LLP
f) Shreeshaha Trading & Consultancy Services LLP
g) Bhaktavatsala Trading & Consultancy Services LLP
h) Trilokesh Trading & Consultancy Services LLP
i) Vishwamurti Trading Consultancy Services LLP
j) Sumukh Trading & Consultancy Services LLP
k) Lokwami Trading &Cosultancy Services LLP
l) Sahishnu Trading & Consultancy Services LLP
m) Sughosh Trading & Consultancy Services LLP
n) Trilokatma Trading & Consultancy Services LLP
o) M. V. Trust Properties
p) Nityanand Overseas Trading
(C) KEY MANAGEMENT
a) Mahesh KantilalShah
b) Vinod KantilalShah
11. The amount of Excise Duty disclosed as deduction from turnover is
the Excise duty for the year, except the excise duty related to the
difference between the closing stock and opening stock and excise duty
paid but not recovered, which has been disclosed in the (Increase) /
decrease in stock and the other expenses respectively. (Increase) /
decrease in stock includes excise duty on finished goods (net)Rs.
71,10,354 (Previous year Rs. 79,22,277)
12. The figures of previous year have been regrouped / reclassified /
recast wherever necessary to compare with the current year's figures.
Mar 31, 2014
1. Share Capital
1.1) Rights of Equity Shareholders
The Company has only one class of equity share of Rs. 10/- per share.
Each Share holder of equity shares is entitled to one vote per share.
1.2) Reconciliation of the shares outstanding and amount of share
capital
2. SHARE APPLICATION MONEY
The Company has been registered with The Board For Industrial and
Financial Reconstruction (BIFR) since Sep,2002. The Promoters of the
Company are required to bring additional funds as per Draft
Rehabilitation Scheme filed before BIFR. Accordingly the Promoters have
brought funds as share application money and also brought share
application money from business associates. The shares will be issued
to Promoters & others associates in the manner approved by BIFR and
subject to other approval as may be required.
3. Long Term Loans & Advances
Including rent deposit of Rs. 60,00,000 (P.Y. Rs. 60,00,000) given to
MV Trust Properties in which directors are interested.
4. CONTINGENT LIABILITIES NOT PROVIDED FOR IN RESPECT OF:
31.03.2014 31.03.2013
(Amount in Rs.) (Amount in Rs.)
a) Guarantee/Letterof credit
given by Company''s Bankers Refer note below Refer note below
b) Foreign Bills Discounted
with Banks Refer note below Refer note below
c) Showcause/Demand raised/
Appeal filed to the Various
Authorities & disputed by
the Company 15,883,989 15,912,551
d) Penalty Imposed by FERA &
disputed by the Company 10,000,000 10,000,000
e) Custom duty payable on Import of duty free capital goods, amounts
unascertainable.
f) Penalties, if any, in respect of custom duty liabilities for import
of raw materials under advance licence scheme and of capital goods
under EPCG Scheme amount unascertainable.
g) Suits filed against the Company for recovery of dues,amount
unascertainable.
Note: Not ascertained by the Company as the relevant details are not
received from the Banks.
5. The Company has made an investment of Rs. 25,931,404 ( £ 450.200)
in Euroroyal Floors Ltd. ("ERF") wholly owned subsidiary in U.K. The
subsidiary also owes Rs. 233,375,543 (Net of commission payable Rs.
10,619,234) towards supply of goods made to it. The principal customers
of ERF in Russia did not honour the debts, Due to this ERF in turn,
could not pay its creditors. The Company has been informed by the
ex-local Directors of ERF that one of the creditors had filed a suit
for winding-up of ERF pursuant to which the High Court of Justice of U.
K. made a winding-up order dated 11th June,2001 against ERF and the
official receiver has been appointed to liquidate the assets of ERF.
Thereafter order dated 12/03/2002 was passed and ERF is dissolved under
the circumstances, the Management had provided for diminution in value
of investment made in ERF in the year 2000-01.As also, provision
against the debt of Rs. 233,375,543 due from ERF had been made during
the earlier year.
6. The Company is a partner in M/s.Creative Investment, the details of
the partners, their share in profit/loss and total capital of the
partners of the firm as on 31.03.2014areas under.
a)
Sr. Name of Partners Share (%)
No.
i. Shri P.C. Raval 0.50
ii. Shri S.P. Jariwala 0.50
iii. M/s. Royal Cushion Vinyl Products Ltd. 99.00
100.00
b) The total Capital of the Partnersis Rs. 16,66,376 (net)
c) The above details about investment and names of partners are based
on the information, certified by a partner
7. Under the Micro, Small and Medium Enterprise Development Act, 2006
("MSMED Act") which came into force effective from 2nd October
2006,certain disclosures relating to amounts due to micro, small and
medium enterprises and remained unpaid after the appointed date etc. of
principal and interest amounts are required to be made. The Company is
in the process of compiling the relevant information. As the relevant
information is not yet readily available and/or not given or confirmed
by such enterprises, it is not possible to give required information in
the accounts. However, in view of the management, the impact of
interest, if any, which may subsequently become payable to such
enterprises in accordance with the provisions of the Act, would not be
material and the same, if any payable, would be disclosed in the year
of payment of interest.
8. Under the Duty Exemption Scheme of Advance Licence (as well as
similar other licence scheme) pursuant to Import & Export Policy of
Government of India, duty free imports of raw materials are permitted
and they are required to be used in manufacturing of goods for export,
as well as, export of goods has to be effected within the time allowed,
in terms of the scheme. The Company has availed of such licences from
time to time. In the past, it had fulfilled its export obligations.
However, although the Company had imported duty free raw material under
certain licences, hence it could not effect export within the time
allowed due to circumstances beyond the control of the Company. The
Company has evaluated its obligations under the scheme and it has been
advised that in view of non fulfilment of export obligations, the
authorities are bound to recover the import duty and mandatory interest
thereon. The liability for such duty & interest as on 31.03.2014 is
estimated at Rs. 769,234,686 (P.Y. Rs. 731,409,612) In terms of
accounting policy followed by the Company, the sum of Rs. 731,409,612
had been provided in earlier years & the balance sum of Rs. 37,825,074
being interest on custom duty has been provided in the current year.
The Company have received various demand notes amounting to Rs.
358,080,677 from DGFT towards pending export obligation. These order
are challenged by the Company with the concerned authorities and matter
for recovery of dues is pending due to BIFR status of the Company.
9. The Company has suffered substantial losses and due to this, the
entire net worth has been eroded. However, since operations are
Continued, the accounts of the Company have been prepared on the basis
that the Company is a going concern.
10. Sundry Debtors & Creditors (Including foreign suppliers) are
subject to confirmation.
11. (a) As in the past, in current year also, due to non-receipt of the
Bank statements/Bank advices/Balance certificates from the financial
institutions/banks, book entries pertaining to banks and financial
institutions, transactions could not be reconciled. Further, in absence
of such details and information, the amount payable also could not be
estimated or ascertained. Thus, bank balances and balances of such
financial Institutions as on 31.03.2014 are subject to adjustments if
any, to be carried out on receipt of the relevant statements/Bank
Advices/Certificates from banks/financial institutions.
(b) Many Banks/financial Institutions have not charged interest for the
year. However, the Company has provided interest at the normal rate
applicable on the closing balance of loan amount appearing in the books
of accounts (except on outstanding Loan balance of IDBI, Oriental Bank
of Commerce (OBC) Exim Bank and Bank of India (Refer Note No.37 (a))
and shown as interest payable under the head other current liabilities.
(c) Pursuant to the arrangement/understanding between Natroyal
Industries Private Limited (erstwhile Vijayjyot Seats Pvt. Ltd.) and
the company, NIPL has arranged/obtained a Term Loan of Rs. 900 Lakhs
from ICICI Bank for the Company. Subsequently, the said Loan amount was
transferred by NIPL to the company and the company has treated the same
as Loan from NIPL. The instalments including interest is paid on the
said Loan by the company to ICICI directly accordingly the Principal
amount is debited to NIPL Loan Account and interest thereon is debited
to interest account in the company''s Books of Accounts.
12. Segment Reporting:
The Company has one segment of activity namely PVC products (PVC
Laminated Sheet/Tiles, PVC Leather Cloth).
13. Accounting for Taxes on Income:
In view of Loss in current year as well as having substantial brought
forward losses and the fact that there would not be taxable income in
the near future, the deferred tax assets is not recognized. Deferred
tax liability, if any would arise in the year in which the claim giving
rise to timing difference is made. Accordingly, deferred tax
asset/liability is not recognized.
14. BIFR Status and Merger
(a) BIFR STATUS
The Company has been registered with The Board For Industrial and
Financial Reconstruction (BIFR) since Sept. 2002. The Company''s Scheme
for Reconstruction and other related matters are pending before BIFR.
The Company Obtained various loans secured or otherwise, from banks and
financial institutions in the course of its business including loans
from IDBI, BOI, Exim Bank and OBC (IDBI, BOI, Exim Bank and OBC are
hereinafter collectively referred as :"the said lenders" and loans from
the said lenders are referred as the said loans") In past Assets
Reconstruction Company (I) Ltd.(ARCIL) acquired said loan from the said
lenders then outstanding at about Rs. 58,00,00,000 excluding Interest.
ARCIL had suggested certain restructuring, Mean while during the year
2011-12 SICOM Ltd acquired, the said loans from ARCIL for an aggregate
consideration of Rs. 14,00,00,000. The Company has paid Rs.
9,32,00,000 to SICOM Limited on this account, which is debited to its
account in books of the Company.
The Company has continued to show the said loans along with interest in
the name of the said lenders at the same values as reported in the
earlier financial years, pending any understanding/approval of BIFR
about the obligation in relation thereto. The consideration paid by
SICOM Ltd. forms part of and is to be treated as term loan sanctioned
by SICOM Ltd to the Company, It is included in the said loans, as it is
consideration of the said loans. The Company has provided/paid
interest on the said amount of Rs. 14,00,00,000 paid by SICOM to Arcil
(after considering said payment of Rs. 9,32,00,000) treated as loan to
the Company and forming part of the said loans, As stated in Note
No.33(b) on the balance amount of the said loans interest is not
paid/provided.
(b) MERGER
"The Company had submitted the revised Draft Rehabilitation Scheme
("DRS") containing proposal for revival of the Company with the Hon''ble
Board of Industrial and Financial Reconstruction ("BIFR") whereby it is
proposed to demerge two of its undertaking viz. Units I & II of the
Company and merging them with Natroyal Industries Pvt Ltd.(Erstwhile
Vijayjyot Seats Private Limited) (one of the Promoter Group Company)
with effect from the Appointed Date being January 1, 2013 subject to
approval from Hon''ble BIFR and other concerned Parties. The said
proposed demerger will be effective after the receipt of the required
approvals. Accordingly the given financial results are without giving
the effect of said demerger."
15. The Directors/employees of the Company have acquired motor cars in
their names from and out of the loans obtained by them from the banks,
pursuant to an arrangement between the Directors/employees for use of
the Company. Accordingly, the Company has accounted the said cars & the
said loans in the name of the Directors/employees, as the assets & the
liabilities of the Company, including the transactions in respect of
repayment and payment of interest etc.
16. In respect of the staff gratuity, under the group gratuity scheme
with Life Insurance Corporation of India (LIC) for the payment of
Gratuity in respect of its several employees, the Company has
discontinued effecting the payment in respect of periodical premium
contribution towards the said scheme from accounting year 2005-06
onwards. The present liability for future payment of gratuity as on
31st March, 2014 is not actuarially determined and has not been
provided in the accounts. The liability in respect of uncovered
employees/unfunded or short fall amount would be accounted in the year
of payment.
17. The operations of Unit III of the Company for manufacturing of 4
mtr floor covering have been discontinued from 2001-2002 due to excess
rejections. The Company has used the services of a marketing firm
''Drashti Strategic Research Services Pvt. Ltd'' and obtained market
survey report in May 2008 with an objective to explore the market in
India. The last production trial was taken in April'' 08 to explore
commercial possibilities. There has been no commercial production since
2001-2002, the Company has not carried out assessment of assets
particularly plant & machinery having book value of Rs. 11,28,66,168 as
on 31st March'' 14 and ascertained recoverable amount of assets of the
above Unit III and accordingly has not ascertained impairment loss. The
same would be carried out in the ensuing financial years & impairment
loss, if any will be accounted in that year.
18. The amount of Excise Duty disclosed as deduction from turnover is
the Excise duty for the year, except the excise duty related to the
difference between the closing stock and opening stock and excise duty
paid but not recovered, which has been disclosed in the
(Increase)/decrease in stock and the other expenses respectively.
(Increase)/decrease in stock includes excise duty on finished goods
(net) Rs. 79,22,277 (Previous year Rs. 42,35,998)
19. (1) NAME OF RELATED PARTIES AND RELATIONS:
(A) SUBSIDIARY COMPANY:
a) Euro royal Floors Ltd.
(B) ASSOCIATES CONCERN/TRUST:
a) Natroyal Industries Pvt. Limited
b) Royal Spinwell Pvt Limited
c) Samsons Leather cloth Manufacturing Co. Pvt. Ltd.
d) Royal Jerfeb Pvt Limited
e) Nityanand Overseas Trading
f) Shreedaha Trading & Consultancy Services Pvt Limited
g) Shreeshaha Trading & Consultancy Services Pvt Limited
h) Bhaktavatsala Trading & Consultancy Services Pvt Limited
i) Trilokesh Trading & Consultancy Services Pvt Limited
j) Vishwamurthy Trading Consultancy Services Pvt Limited
k) Sumukh Trading & Consultancy Services Pvt Limited
l) Lokwami Trading & Consultancy Services Pvt Limited
m) Sahishnu Trading & Consultancy Services Pvt Limited
n) Sughosh Trading & Consultancy Services Pvt Limited
o) Trilokatma Trading & Consultancy Services Pvt Limited
p) M.V. Trust Properties
(C) KEY MANAGEMENT:
a) Mahesh Kantilal Shah
b) Vinod Kantilal Shah
(2) RELATED PARTY TRANSACTIONS:
Note:
Disclosure in respect of material related parties transactions during
the year
* In respect of above parties, there is no provision for doubtful debts
as on 31st March'' 2014 except Rs. 233,375,543 provided in respect of
due by the Subsidiary Company in earlier year.
# Material/Goodssold to Natroyal Industries Pvt. Ltd. Rs. 159,798,692
(P.Y. Rs. 113,561,549)
# Material Purchase from Natroyal Industries Pvt. Ltd. Rs. 471,617,700
(P.Y. Rs. 71,574,707)
20. Special land acquisition officer of Govt. of Gujarat, by common
award acquired the part of the factory land belonging to the Company
for the purpose of Vadodara Halol khandiwada 4 track road and fixed the
amount of compensation payable to the Company. However the Company has
not accepted the price fixed for the acquisition of land and the matter
is in dispute. Accordingly the entry for said acquisition shall be
passed on the actual receipt of payment of compensation finally
decided.
21. The figures of previous year have been
regrouped/reclassified/recast wherever necessary to compare with the
current year''s figures.
Mar 31, 2013
1. CONTINGENT LIABILITIES NOT PROVIDED FOR IN RESPECT OF:
31.03.2013 31.03.2012
(Amount In t) (Amount in t)
a) Guarantee / Letter of credit
given by Refer note Refer note
Company''s Bankers below below
b) Foreign Bills Discounted with
Banks Refer note Refer note
below below
c) Show cause / Demand raised /
Appeal 15812551 15,883,989
to the various authorities &
disputed by the Company
d) Penalty Imposed by FERA &
disputed by the Company 10,000,000 10,000,000
e) Custom duty payable on Import of duty free capital goods, amounts
unascertainable.
f) Penalties, if any, in respect of custom duty liabilities for import
of raw materials under advance licence scheme and of capital goods
under EPCG Scheme amount unascertainable.
g) Suits filed against the Company for recovery of dues, amount
unascertainable.
Note: Not ascertained by the Company as the relevant details are not
received from the Banks.
2. The Company has made an investment of Rs. 25,931,404 (£ 450.200) in
Euroroyal Floors Ltd.("ERF") wholly owned subsidiary in U.K.The
subsidiary also owes Rs. 233,375,543 (Net of commission payable Rs.
10,619,234) towards supply of goods made to it. The principal customers
of ERF in Russia did not honor the debts, due to this ERF in turn,
could not pay its creditors. The Company has been informed by the
ex-local Directors of ERF that one of the creditors had filed a suit
for winding-up of ERF pursuant to which the High Court of Justice of
U.K.made a winding-up order dated 11th June,2001 against ERF and the
official receiver has been appointed to liquidate the assets of ERF.
Thereafter order dated 12/03/2002 was passed and ERF is dissolved under
the circumstances, the Management had provided for diminution in value
of investment made in ERF in the year 2000-01 .As also, provision
against the debt of Rs. 233,375,543 due from ERF had been made during the
earlier year.
3. Under the Micro, Small and Medium Enterprise Development Act, 2006
("MSMED Act") which came into force effective from 2"dOctober
2006,certain disclosures relating to amounts due to micro, small and
medium enterprises and remained unpaid after the appointed date etc. of
principal and interest amounts are required to be made. The Company is
in the process of compiling the relevant information. As the relevant
information is not yet readily available and / or not given or
confirmed by such enterprises, it is not possible to give required
information in the accounts. However, in view of the management, the
impact of interest, if any, which may subsequently become payable to
such enterprises in accordance with the provisions of the Act, would
not be material and the same, if any payable, would be disclosed in the
year of payment of interest.
4. Under the Duty Exemption Scheme of Advance Licence (as well as
similar other licence scheme) pursuant to Import & Export Policy of
Government of India, duty free imports of raw materials are permitted
and they are required to be used in manufacturing of goods for export,
as well as, export of goods has to be effected within the time allowed,
in terms of the scheme.
The Company has availed of such licences from time to time. In the
past, it had fulfilled its export obligations. However, although the
Company had imported duty free raw material under certain licences,
hence it could not effect export within the time allowed due to
circumstances beyond the control of the Company. The Company has
evaluated its obligations under the scheme and it has been advised that
in view of non fulfilment of export obligations, the authorities are
bound to recover the import duty and mandatory interest thereon. The
liability for such duty & interest as on 31.03.2013 is estimated at Rs.
731,409,612 (P.Y.Rs. 693,584,538) In terms of accounting policy followed
by the Company, the sum of Rs. 693,584,538 had been provided in earlier
years & the balance sum of Rs. 37,825,074 being interest on custom duty
has been provided in the current year.
The Company have received various demand notes amounting to Rs.
358,080,677 from DGFT towards pending export obligation.
These order are challenged by the Company with the concerned
authorities and matter for recovery of dues is pending due to BIFR
status of the Company
5. The Company has suffered substantial losses and due to this, the
entire net worth has been eroded. However, since operations are
Continued, the accounts of the Company have been prepared on the basis
that the Company is a going concern.
6. Sundry Debtors & Creditors (Including foreign suppliers) are
subject to confirmation.
7. (a) As in the past, in current year also, due to non - receipt of
the Bank statements/Bank advices/Balance certificates from the
financial institutions/banks, book entries pertaining to banks and
financial institutions, transactions could not be reconciled. Further,
in absence of such details and information, the amount payable also
could not be estimated or ascertained. Thus, bank balances and balances
of such financial Institutions as on 31.03.2013 are subject to
adjustments if any, to be carried out on receipt of the relevant
statements/ Bank Advices/Certificates from banks/ financial
institutions.
(b) Many Banks / financial Institutions have not charged interest for
the year. However, the Company has provided interest at the normal rate
applicable on the closing balance of loan amount appearing in the books
of accounts (except on outstanding Loan balance of IDBI, Oriental Bank
of Commerce (OBC) Exim Bank and Bank of India (Refer Note No.37 (a))
and shown as interest payable under the head other current liabilities.
8. Segment Reporting:
The Company has one segment of activity namely PVC products (PVC
Laminated Sheet/Tiles, PVC Leather Cloth).
9. Accounting for Taxes on Income:
In view of Loss in current year as well as having substantial brought
forward losses and the fact that there would not be taxable income in
the near future, the deferred tax assets is not recognized. Deferred
tax liability, if any would arise in the year in which the claim giving
rise to timing difference is made. Accordingly, deferred tax
asset/liability is not recognized.
10. BIFR Status and Merger
(a) BIFR STATUS
The Company has been registered with The Board For Industrial and
Financial Reconstruction (BIFR) since Sept. 2002. The Company''s Scheme
for Reconstruction and other related matters is pending before BIFR.
The Company Obtained various loans secured or otherwise, from banks and
financial institutions in the course of its business including loans
from IDBI,BOI,Exim Bank and OBC (IDBI,BOI,Exim Bank and OBC are
hereinafter collectively referred as: "the said lenders" and loans from
the said lenders are referred as: the said loans") Sometime in the year
Assets Reconstruction Company (I) Ltd (ARCIL) acquired the said loans
from the said lenders, then outstanding at about Rs. 580,000,000
excluding Interest. ARCIL had suggested certain restructuring,
Meanwhile and during the previous year SICOM Ltd acquired, the said
loans from ARCIL for an aggregate consideration of Rs. 14,00,00,000.
During the year, the Company has paid Rs.9,32,00,000 to SICOM Limited
on this account, which is debited to its account in books of the
Company.
The Company has continued to show the said loans along with interest in
the name of the said lenders at the same values as reported in the
earlier financial years, pending any understanding/approval of BIFR
about the obligation in relation thereto. The consideration paid by
SICOM Ltd. forms part of and is to be treated as term loan sanctioned
by SICOM Ltd to the Company, It is included in the said loans, as it is
consideration of the said loans.
The Company has provided/paid interest on the said amount of Rs.
14,00,00,000 paid by SICOM to Arcil (after considering said payment of
Rs.9.32,00,000) treated as loan to the Company and forming part of the
said loans, As stated in Note No.33 (b) on the balance amount of the
said loans interest is not paid/provided.
(b) MERGER
''The Company had submitted the revised Draft Rehabilitation Scheme
("DRS") containing proposal for revival of the Company with the Hon''ble
Board of Industrial and Financial Reconstruction ("BIFR") whereby it is
proposed to demerge two of its undertaking viz.Unit I & II of the
Company and merging them with Vijayjyot Seats Private Limited (one of
the Promoter''s Group Company) with effect from the Appointed Date being
January 1, 2013 subject to approval from Hon''ble BIFR and other
concerned Parties. The said proposed demerger will be effective after
the receipt of the required approvals. Accordingly the given financial
results are without giving the effect of said demerger."
11. The Directors / employees of the Company have acquired motor cars
in their names from and out of the loans obtained by them from the
banks, pursuant to an arrangement between the Directors / employees for
use of the Company. Accordingly, the Company has accounted the said
cars & the said loans in the name of the Directors/ employees, as the
assets & the liabilities of the Company, including the transactions in
respect of repayment and payment of interest etc.
12. In respect of the staff gratuity, under the group gratuity scheme
with Life Insurance Corporation of India (LIC) for the payment of
Gratuity in respect of its several employees, the Company has
discontinued effecting the payment in respect of periodical premium
contribution towards the said scheme from accounting year 2005-06
onwards. The present liability for future payment of gratuity as on 31
St March,2013 is not actuarially determined and has not been provided
in the accounts. The liability in respect of uncovered
employees/unfunded or shortfall amount would be accounted in the year
of payment.
13. The operations of Unit III of the Company for manufacturing of 4
mtr floor covering have been discontinued from 2001-2002 due to excess
rejections. The Company has used the services of a marketing firm
''Drshti Strategic Research Services Pvt. Ltd'' and obtained market
survey report in May 2008 with an objective to explore the market in
India. The last production trial was taken in April''08 to explore
commercial possibilities. There has been no commercial production since
2001-2002, the Company has not carried out assessment of assets
particularly plant & machinery having book value of Rs. 14,21,34,086 as
on 31s" March''13 and ascertained recoverable amount of assets of the
above Unit III and accordingly has not ascertained impairment loss. The
same would be carried out in the ensuing financial years and impairment
loss, if any will be accounted in that year.
14. The amount of Excise Duty disclosed as deduction from turnover is
the Excise duty for the year, except the excise duty related to the
difference between the closing stock and opening stock and excise duty
paid but not recovered, which has been disclosed in the
(lncrease)/decrease in stock and the other expenses respectively.
(Increase) / decrease in stock includes excise duty on finished goods
(net) Rs. 42,35,998 (Previous year Rs. 24,72,091 lakhs).
15. Special land acquisition officer of Govt, of Gujarat, by common
award acquired the part of the factory land belonging to the Company
for the purpose of Vadodara Halol khandiwada 4 track road and fixed the
amount of compensation payable to the Company. However the Company has
not accepted the price fixed for the acquisition of land and the matter
is in dispute. Accordingly the entry for said acquisition shall be
passed on the actual receipt of payment of compensation finally
decided.
16. The figures of previous year have been regrouped / reclassified /
recast wherever necessary to compare with the current year''s figures.
Mar 31, 2012
1.1) The Company has only one class of equity share of Rs. 10/- per
share. Each Share holder of equity shares is entitled to one vote per
share.
2.1) The Company has been registered with The Board For Industrial and
Financial Reconstruction (BIFR) since Sep.2002. The Promoters of the
Company are required to bring additional funds as per Draft
Rehabilitation Scheme filed before BIFR. Accordingly the Promoters have
brought funds as share application money and also brought share
application money from business associates. The shares will be issued
to Promotors in the manner approved by BIFR and subject to other
approval as may be required.
During the year, SICOM Ltd has sanctioned financial assistance of Rs. 40
crs to the Company vide letter dtd. June 10, 2011, As per the terms of
sanction, SICOM/ SIFL have a right to subscribe to equity share capital
of the Company.Vide letter dtd.Dec13,2011 Accordingly, SIFL has
subscribed for 13,50,000 equity shares of the Company at a price of '
10/- per share and paid aggregate amount of Rs. 135 lacs. The shares for
the same will be issued by the Company on approval of Draft
Rehabilitation Scheme by BIFR.
2. CONTINGENT LIABILITIES NOT PROVIDED FOR IN RESPECT OF:
31.03.2012 31.03.2011
(Amount in Rs.) (Amount in Rs.)
a) Guarantee / Letter of credit
given by Refer note Refer note
Company's Bankers below below
b)Foreign Bills Discounted with
Banks Refer note Refer note
below below
c) Show cause / Demand raised / Appeal15,883,989 15,883,989
filed by Excise Authorities &
disputed by the Company
d) Penalty Imposed by FERA & disputed
by the Company 10,000,000 10,000,000
e) Custom duty payable on Import of duty free capital goods, amounts
unascertainable.
f) Penalties, if any, in respect of custom duty liabilities for import
of raw materials under advance licence scheme and of capital goods
under EPCG Scheme amount unascertainable.
g) Suits filed against the Company for recovery of dues, amount
unascertainable.
Note: Not ascertained by the Company as the relevant details are not
received from the Banks.
3. The Company has made an investment of Rs. 25,931,404 (ã 450.200) in
Euroroyal Floors Ltd.("ERF") wholly owned subsidiary in U.K.The
subsidiary also owes Rs. 233,375,543 (Net of commission payable Rs.
10,619,234) towards supply of goods made to it. The principal customers
of ERF in Russia did not honor the debts, due to this ERF in turn,
could not pay its creditors. The Company has been informed by the
ex-local Directors of ERF that one of the creditors had filed a suit
for winding-up of ERF pursuant to which the High Court of Justice of
U.K.made a winding-up order dated 11th June,2001 against ERF and the
official receiver has been appointed to liquidate the assets of ERF.
Thereafter order dated 12/03/2002 was passed and ERF is dissolved under
the circumstances, the Management had provided for diminution in value
of investment made in ERF in the year 2000-01 .As also, provision
against the debt of Rs. 233,375,543 due from ERF had been made during the
earlier year.
b) The total Capital of the Partners is Rs. 1328777 (Net)
c) The above details about investment and names of partners are based
on the information, certified by a partner.
4. The Company had incurred, during the previous years, revenue
expenditure on fees to IDBI, ARCIL and legal consultant for
restructuring of financial debt with bank, financial institution and
creditors; and lease line charges for internet facilities, which was
considered, will give long term benefits. The Company had decided to
treat the same as deferred revenue expenditure and to write off the
same over a period of five years including the year of incurrence of
such expenditure in equal installment, and accordingly a sum of Rs.
18,48,194 incurred during the previous years is written off during the
year.
5. Under the Micro, Small and Medium Enterprise Development Act, 2006
("MSMED Act") which came into force effective from 2ndOctober
2006,certain disclosures relating to amounts due to micro, small and
medium enterprises and remained unpaid after the appointed date etc. of
principal and interest amounts are required to be made. The Company is
in the process of compiling the relevant information. As the relevant
information is not yet readily available and / or not given or
confirmed by such enterprises, it is not possible to give required
information in the accounts. However, in view of the management, the
impact of interest, if any, which may subsequently become payable to
such enterprises in accordance with the provisions of the Act, would
not be material and the same, if any payable, would be disclosed in the
year of payment of interest.
6. Under the Duty Exemption Scheme of Advance Licence (as well as
similar other licence scheme) pursuant to Import & Export Policy of
Government of India, duty free imports of raw materials are permitted
and they are required to be used in manufacturing of goods for export,
as well as, export of goods has to be effected with in the time
allowed, in terms of the scheme.
The Company has availed of such licences from time to time. In the
past, it had fulfilled its export obligations. However, although the
Company had imported duty free raw material under certain
licences,hence it could not effect export within the time allowed due
to circumstances beyond the control of the Company. The Company has
evaluated its obligations under the scheme and it has been advised that
in view of non fulfillment of export obligations, the authorities are
bound to recover the import duty and mandatory interest thereon. The
liability for such duty & interest as on 31.03.2012 is estimated at Rs.
693,584,538 (P.Y.Rs. 655,759,464). In terms of accounting policy followed
by the Company, the sum of Rs. 6,55,759,464 had been provided in earlier
years & the balance sum of Rs. 37,825,074 being interest on custom duty
has been provided in the current year.
The company have received various demand notes amounting to Rs.
358,080,677 from DGFT towards pending export obligation.
These order are challenged by the company with the concerned
authorities and matter for recovery of dues is pending due to BIFR
status of the company
7. The Company has suffered substantial losses and due to this, the
entire net worth has been eroded. However, since operations are
continued, the accounts of the Company have been prepared on the basis
that the Company is a going concern.
8. Sundry Debtors & Creditors (Including foreign suppliers) are
subject to confirmation.
9. a) As in the past, in current year also, due to non - receipt of
the Bank statements/Bank advices/Balance certificates from the
financial institutions/banks, book entries pertaining to banks and
financial institutions,transactions could not be reconciled.Further,
in absence of such details and information, the amount payable also
could not be estimated or ascertained. Thus, bank balances and
balances of such financial Institutions as on 31.03.2012 are subject
to adjustments if any, to be carried out on receipt of the relevant statements / Bank Advices / Certificates from banks/ financial
institutions.
b) Many Banks / financial Institutions have not charged interest for
the year. However, the Company has provided interest at the normal rate
applicable on the closing balance of loan amount appearing in the books
of account and shown as interest payable under the head other current
liabilities.
10. Segment Reporting:
The Company has one segment of activity namely PVC products (PVC
Laminated Sheet/Tiles, PVC Leather Cloth).
11. Accounting for Taxes on Income:
In view of Loss in current year as well as having substantial brought
forward losses and the fact that there would not be taxable income in
the near future, the deferred tax assets is not recognized. Deferred
tax liability, if any would arise in the year in which the claim giving
rise to timing difference is made. Accordingly, deferred tax
asset/liability is not recognized.
12. Accounting for Lease:
The Company has entered Into agreements/arrangements for taking certain
assets on leave and licence basis. The special disclosure in respect of
these arrangements is given below:
13 BIFR Status and Share Application:
The Company has been registered with The Board For Industrial and
Financial Reconstruction (BIFR) since Sept. 2002 The Company's Scheme
for Reconstruction and other related matters is pending before BIFR.
The Company Obtained various loans secured or otherwise,from banks and
financial institutions in the course of its business including loans
from IDBI,BOI,Exim Bank and OBC (IDBI,BOI,Exim Bank and OBC are
hereinafter collectively referred as: "the said lenders" and loans
from the said lenders are referred as: "the said loans").
Sometime in the year Assets Reconstruction Company (I) Ltd (ARCIL)
acquired the said loans from the said lenders, then outsatnding at
about Rs. 580,000,000 excluding Interest. ARCIL had suggested certain
restructuring, Meamwhile and during the year SICOM Ltd acquired,the
said loans from ARCIL for an aggregate consideration of Rs. 14,00,00,000.
The Company has continued to show the said loans along with interest in
the name of the said lenders at the same values as reported in the
earlier financial years, pending any understanding/approval of BIFR
about the obligation in relation thereto. The consideration paid by
SIcOm Ltd.forms part of and is to be treated as term loan sanctioned by
SICOM Ltd to the company, It is included in the said loans, as it is
consideration of the said loans.
The Company has provided/paid interest on the said amount of Rs.
14,00,00,000 paid by SICOM to Arcil treated as loan to the company and
forming part of the said loans, As stated in Note No.10 (b) on the
balance amount of the said loans interest is not paid provided.
14. The Directors / employees of the Company have acquired motor cars
in their names from and out of the loans obtained by them from the
banks, pursuant to an arrangement between the Directors / employees for
use of the company. Accordingly, the Company has accounted the said
cars & the said loans in the name of the Directors/ employees, as the
assets & the liabilities of the Company, including the transactions in
respect of repayment and payment of interest etc.
15. In respect of the staff gratuity, under the group gratuity scheme
with Life Insurance Corporation of India (LIC) for the payment of
Gratuity in respect of its several employees, the Company has
discontinued effecting the payment in respect of periodical premium
contribution towards the said scheme from accounting year 2005-06
onwards. The present liability for future payment of gratuity as on
31st March, 2012 is not actually determined and has not been provided
in the accounts. The liability in respect of uncovered
employees/unfunded or shortfall amount would be accounted in the year
of payment.
16. The operations of Unit III of the Company for manufacturing of 4
mtr floor covering have been discontinued from 2001-2002 due to excess
rejections. The Company has used the services of a marketing firm
'Drshti Strategic Research Services Pvt. Ltd' and obtained market
survey report in May 2008 with an objective to explore the market in
India. The last production trial was taken in April'08 to explore
commercial possibilities. There has been no commercial production since
2001-2002, the Company has not carried out assessment of assets
particularly plant & machinery having book value of Rs. 17,14,02,004 as
on 31st March'12 and ascertained recoverable amount of assets of the
above Unit III and accordingly has not ascertained impairment loss. The
same would be carried out in the ensuing financial years and impairment
loss, if any will be accounted in that year.
17. The amount of Excise Duty disclosed as deduction from turnover is
the Excise duty for the year, except the excise duty related to the
difference between the closing stock and opening stock and excise duty
paid but not recovered, which has been disclosed in the ( Increase) /
decrease in stock and the other expenses respectively. (Increase)/
decrease in stock includes excise duty on finished goods (net) Rs.
24,72,091 (Previous year Rs. 28,80,056 lakhs).
Notes:
Disclosure inrespect of material related parties transations during the
year
* In respect of above parties, there is no provision for doubtful debts
as on 31st March' 2012 except Rs. 233,375,543 provided in respect of
due by the Subsidiary Company in earlier year.
# Material/Goods sold to Viny Royal Plasticoates Ltd. Rs. 182,437,105
(P.Y. Rs. 100,033,094)
18. These Financial statements have been prepared in the format
prescribed by the revised Schedule VI to the Companied Act.
The figures of previous year have been regrouped / reclassified /
recast wherever necessary to compare with the current year's figures.
Mar 31, 2010
01. CONTINGENT LIABILITIES NOT PROVIDED FOR IN RESPECT OF:
31.03.2010 31.03.2009
(Rs.in Lacs) (Rs.in Lacs)
a) Guarantee/Letter of credit given
by Companys Bankers Refer note Refer note
below below
b) Foreign Bills Discounted with Banks Refer note Refer note
below below
c) Show cause/Demand raised/Appeal filed
by Excise Authorities & 158.84 150.42
disputed by the Company
d) Custom duty payable on Import of duty free capital goods, amounts
unascertainable.
e) Penalties, if any, in respect of custom duty liabilities for import
of raw materials under advance licence scheme and of capital goods
under EPCG Scheme amount unascertainable.
f) Income Tax demand disputed by the Company Rs.Nil (P.Y.Rs.17.24 Lacs)
g) Suits filed against the Company for recovery of dues, amount
unascertainable.
Note: Not ascertained by the Company as the relevant details are not
received from the Banks.
02 The Company has made an investment of Rs.259.31 Lacs (ã 450.200) in
Euroroyal Floors Ltd. ("ERF") wholly owned subsidiary in U.K.The
subsidiary also owes Rs.2,333.75 Lacs (Net of commission payable
Rs.106.19 Lacs) towards supply of goods made to it.
The principal customers of ERF in Russia did not honour the debts.
Due to this ERF in turn, could not pay its creditors. The Company has
been informed by the ex-local Directors of ERF that one of the
creditors had filed a suit for winding-up of ERF pursuant to which the
High Court of Justice of U.K.made a winding-up order dated 11th
June,2001 against ERF and the official receiver has been appointed to
liquidate the assets of ERF. Thereafter order dated 12/03/02 was passed
and ERF is dissolved Under the circumstances, the Management had
provided for diminution in value of investment made in ERF in the year
2000- 01. As also, provision against the debt of Rs.2333.75 Lacs due
from ERF had been made during the earlier year.
03. The Company had incurred, during the previous years, revenue
expenditure on fees to IDBI, ARCIL and legal consultant for
restructuring of financial debt with bank, financial institution and
creditors; and lease line charges for internet facilities, which was
considered, will give long term benefits.The Company had decided to
treat the same as deferred revenue expenditure and to write off the
same over a period of five years including the year of incurrence of
such expenditure in equal installment, and accordingly:
a) A sum of Rs.50,14,447 lacs being 1/5th of expenditure towards legal
fees to IDBI and ARCIL for restructuring of financial debts with bank,
and lease line charges for internet facilities incurred during the
previous years is written off during the year.
b) The balance of Rs.62,28,194 is carried forwarded as deferred revenue
expenditure and shown under the head Miscellaneous Expenditures.
04 Under the Micro, Small and Medium Enterprise Development Act, 2006
("MSMED Act") which came into force effective from 2ndOctober
2006,certain disclosures relating to amounts due to micro,small and
medium enterprises and remained unpaid after the appointed date etc. of
principal and interest amounts are required to be made. The Company is
in the process of compiling the relevant information. As the relevant
information is not yet readily available and / or not given or
confirmed by such enterprises, it is not possible to give required
information in the accounts. However, in view of the management, the
impact of interest, if any,which may subsequently become payable to
such enterprises in accordance with the provisions of the Act, would
not be material and the same, if any payable, would be disclosed in the
year of payment of interest.
05 Under the Duty Exemption Scheme of Advance Licence ( as well as
similar other licence scheme) pursuant to Import & Export Policy of
Government of India, duty free imports of raw materials are permitted
and they are required to be used in manufacturing of goods for export,
as well as, export of goods has to be effected with in the time
allowed, in terms of the scheme.
The Company has availed of such licences from time to time. In the
past, it had fulfilled its export obligations. However, although, the
Company had imported duty free raw material under certain licences,
hence it could not effect export within the time allowed due to
circumstances beyond the control of the Company. Company has evaluated
its obligations under the scheme and it has been advised that in view
of non fulfillment of export obligations, the authorities are bound to
recover the import duty and mandatory interest thereon. The liability
for such duty & interest as on 31.03.2010 is estimated at Rs. 6,179.34
Lacs.(P.Y.Rs.5,801.09 Lacs) In terms of accounting policy followed by
the Company, the sum of Rs.5,801.09 Lacs had been provided in earlier
years & the balance sum of Rs.378.25 Lacs being interest on custom duty
has been provided in the current year.
The company have received various demand notes amounting to Rs. 3580.81
lacs from DGFT towards pending export obligation. These order are
challenged by the company with the concerned authorities and matter for
recovery of dues is pending due to BIFR status of the company.
06 A. Loans & Advance includes:
a) Rs 21.47 Lacs (P.Y Rs.21.23 Lacs) due from a Company under the same
management. (Maximum outstanding during the year is Rs.21.47)
b) Rs.20.00 Lacs (P.Y Rs.43.00 Lacs) due from other parties.
B. Sundry Debtors include Rs Nil.(P.Y Rs.19.12 Lacs) due from company
under same management.
07 The Company has suffered substantial losses and due to this, the
entire net worth has been eroded. However,since operations are
continued, the accounts of the Company have been prepared on the basis
that the Company is a going concern.
08 Sundry Debtors & Creditors (Including foreign suppliers) are subject
to confirmation.
09 a) As in the past, in current year also, due to non - receipt of the
Bank statements/Bank advices/Balance
certificates from the financial institutions/banks, book entries
pertaining to banks and financial institutions, transactions could not
be reconciled. Further, in absence of such details and information, the
amount payable also could not be estimated or ascertained.Thus, bank
balances and balances of such financial Institutions as on 31.03.2010
are subject to adjustments if any, to be carried out on receipt of the
relavant statements / Bank Advices / Certificates from banks/ financial
institutions.
b) Many Banks / financial Institutions have not charged interest for
the year. However, the Company has provided interest at the normal rate
applicable on the closing balance of loan amount appearing in the books
of account (except on outstanding Loan balance of IDBI, Exim Bank and
Bank of India, (Ref. Note no. 15) and shown as interest payable under
the head current liabilities.
10 Segment Reporting:
The Company has one segment of activity namely Calender products (PVC
Laminated Sheet/Tiles, PVC Leather Cloth).
11 Accounting for Taxes on Income:
In view of loss in current year as well as having substantial brought
forward losses and the fact that there would not be taxable income in
the near future, the deferred tax assets is not recognized. Deferred
tax liability, if any would arise in the year in which the claim giving
rise to timing difference is made.Accordingly, deferred tax asset/
liability is not recognized.
12 BIFR status and advance share application money:
The Company has been registered with Board for Industrial and Financial
Reconstruction (BIFR) since September, 2002. Assets Reconstruction
Company India Ltd.(ARCIL) vide letter dated 12/09/2006, has agreed to
restructure the debts acquired by them from IDBI, Exim Bank and Bank of
India. The Company has submitted a Draft rehabilitation schemes (DRS)
dated 05.10.2007 to BIFR and others and has initiated negotiation with
other bankers for one time settlement. As per restructuring package the
Company has to pay to ARCIL an amount aggregating to Rs. 37.75 crores
by September, 28th 2009.Out of this company has paid Rs. 2.61 crores
till 31/03/2010. The company is re-negotiating debts with Arcil, who
holds 80 % of secured debts . BIFR vide order dated 23.02.10 directed
for Change of Management, against which the company has filed an appeal
in AAIFR, the next hearing at AAIFR is scheduled on 20.07.10
The promoters of the Company is also required to bring additional fund.
Accordingly the promoters have started contributing fund as advance
share application money and unsecured Loan. The shares in the company
shall be issued in the manner approved by BIFR and subject to and other
approval that may be required. As the IDBI, BOI and Exim bank have
transfered their debts to ARCIL. No provision for interest has been
made for Rs.7025.78 lacs(P.Y Rs.2708.06 Lacs) on outstanding balance of
Loan of the said banks.
13 The Directors / employees of the Company have acquired motor cars in
their names from and out of the loans obtained by them from the banks,
pursuant to an arrangement between the Directors / employees for use of
the company. Accordingly, the company has accounted the said cars & the
said loans in the name of the Directors / employees, as the assets &
the liabilities of the Company, including the transactions in respect
of repayments, payment of interest etc.
14 In respect of the staff gratuity, under the group gratuity scheme
with Life Insurance Corporation of India (LIC) for the payment of
Gratuity in respect of its several employees,the Company has
discontinued effecting the payment in respect of periodical premium
contribution towards the said scheme from accounting year 2005-06
onwards.The present liability for future payment of gratuity as on 31st
March,2010 is not actuarially determined and has not been provided in
the accounts. The liability in respect of uncovered employees/unfunded
or shortfall amount would be accounted in the year of payment.
15 The operation of Unit-III of the Company for manufacture of 4 Metre
Floor Covering has been discontinued from 2001-02. The Company has not
carried out assessment of assets particularly plant and machinery
having book value of Rs.2300.18 Lacs as on 31.03.2010 and ascertained
recoverable amount of assets of the above Unit-III and accordingly has
not ascertained impairment loss. The same would be carried out in the
ensuing financial years and impairment loss, if any will be accounted
in that year.
16. NAME OF RELATED PARTIES AND RELATIONS
(A) SUBSIDIARY COMPANY
a) Euro royal Floors Ltd.
(B) ASSOCIATES CONCERN/TRUST
a) Vinyroyal Plasticoates Ltd.
b) Vijay Knitting Pvt. Ltd.
c) Vijay Jyot Seats Pvt. Ltd.
d) Samsons Leathercloth Manufacturing Co. Pvt. Ltd.
e) Royal Knitting Pvt Ltd
f) Royal Spinwell Pvt.Ltd.
g) Royal Jerfeb Pvt.Ltd h) Nityanand Overseas Trading
i) Shreeshah Trading & Consultancy Services Pvt. Ltd.
j) Trilokesh Trading & Consultancy Services Pvt. Ltd.
k) Vishwamurthy Trading Consultancy Services Pvt. Ltd
l) Sumukh Trading & Cosultancy Services Pvt. Ltd.
m) Lokswami Trading & Cosultancy Services Pvt. Ltd.
n) Sahishnu Trading & Cosultancy Services Pvt. Ltd.
o) Sughosh Trading & Cosultancy Services Pvt. Ltd.
p) Trilokamata Trading & Cosultancy Services Pvt. Ltd.
q) M.V.Trust Properties
r) Royal Wellknit Pvt. Ltd.
(C) KEY MANAGEMENT PERSONNEL
a) Mahesh Kantilal Shah
b) Vinod Kantilal Shah
c) Mukesh Amrutlal Motasha
17 Sales and operating Income included Rs.2,41,87,087 (P.Y. Finance
Charges Includes Rs.4,82,20,765) being ex- change rate differance in
respect of advances received from customers for exports of goods
through third party.
18 The amount of Excise Duty disclosed as deduction from turnover is
the Excise duty for the year, except the excise duty related to the
difference between the closing stock and opening stock and excise duty
paid but not recovered, which has been disclosed in the (Increase) /
decrease in stock and the other expenses respectively. (Increase) /
decrease in stock includes excise duty on finished goods (net) Rs.
25.97 lakhs (Previous year Rs. 23.66 lakhs).
19. COMPARATIVE FIGURES:
The figures of previous year have been regrouped / reclassified /
recast wherever necessary to compare with the current yearÃs figures.
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