| 1. SHARE CAPITAL
1.1 Each Shareholder of Equity Share is entitled to one vote per share
on a poll.
1.2 In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive any of the remaining assets of
company, after distribution of all preferential amounts. The
distribution will be in proportion to the number of Equity shares held
by the shareholder.
1.3 The Company has not paid any dividend on Cumulative Redeemable
Preference Share since 1996-1997. Dividend on Cumulative Redeemable
Preference Shares amounting to Rs. 110.75 lacs, (upto the period Rs.
1772.00 lacs) have not been provided in view of accumulated losses. The
company expects waiver/relief under rehabilitation scheme being
submitted to BIFR.
1.4 The Cumulative Redeemable Preference Share holder are entitled to
cumulative dividend at the rates specified. Each holder of Cumulative
Redeemable Preference Share is entiteld to one vote per share only on
resolution placed before the company which directly affects rights
attached to Cumulative Redeemable Preference Share. Since the dividend
in respect of Cumulative Redeemable Preference Share, has not been paid
for more than 2 years, Cumulative Redeemable Preference Share holder
have rights to ten votes per share on every resolution placed before
the company in a meeting.
1.5 In the event of liquidation of the Company, the holder of
Cumulative Redeemable Preference Share will have priority over Equity
share holder in the payment of dividend and repayment of capital.
2. LONG TERM BORROWINGS
2.1 Debentures, Secured Term Loans and accrued interest are secured by
way of joint equitable mortgage of fixed assets both present and future
and hypothecation of all movable assets of the company ranking
pari-pasu subject to prior charge on the specific assets as referred to
in Note no. 6.1 below. Debentures for Rs. 332.37 lacs, Secured Term
Loan for Rs. 740.93 lacs and Accrued Interest there on for Rs. 538.76
lacs are further guaranteed by some of the Directors and Ex-directors.
2.2 Provision for interest amounting to Rs. 30.38 lacs (up to the year
Rs. 410.18 lacs) on Optionally Fully Convertible Debentures and accrued
interest convertible into 16% optionally fully convertible debentures
(OFCDs) have not been made as the Company expects waiver/relief under
rehabilitation scheme being submitted to BIFR.
2.3 Provision for interest amounting to Rs. 80.33 lacs (up to the year
Rs. 486.01 lacs) on public retail 17% non-convertible debentures have
not been provided as the Company expects waiver/relief under
rehabilitation scheme being submitted to BIFR.
2.4 Debentures:
i. 17% Non Convertible Debentures (other then Retail) amounting to Rs.
459.23 lacs were redeemable in yearly (staggering) installments over a
period of 8 years commencing from April 1,2001. Over the first three
years from April 1, 2001, 10% of the value of NCDs were to be redeemed
each year and thereafter from April 1,2004 the balance 70% of the value
of NCDs were to be redeemed in equal installments over five years.
Interest in respect of the same has remained unpaid since 1998-99.
ii. 16% Optionally Fully Convertible Debentures of Rs. 98.14 lacs
issued were redeemable in 32 quarterly installments commencing from the
quarter beginning April 1,2001 along with interest accrued thereon. The
OFCDs holders have right to convert OFCDs in full/part thereof into
equity shares of the company at par at any time during the currency of
repayment period. Interest in respect of the same has remained unpaid
since 1999-2000.
iii. 17% Non Convertible Debentures (Retail) amounting to Rs. 518.19
lacs were redeemable on completion of 6th, 18th, 30th, 42nd and 54th
months from maturity date i.e. 28th December, 1998 @ 30%, 15%, 15%, 20%
and 20% of face value respectively, as per decision taken in the
meeting of the debenture holders along with interest accrued thereon.
Interest in respect of the same has remained unpaid since 1998-99.
2.5 Secured Term loan from Financial Institutions carry interest rate
of 14% p.a. Out of total outstanding, Rs. 1316.66 lacs paid towards
restructring/settlement, which has been shown as "Advance against
settlement" (refer note no. 10) and Rs. 333.38 lacs repayable in
2013-14 & Rs. 399.96 lacs repayable in 2012-13.
2.6 Secured Term loan from others carry interest rate of 14% p.a. Out
of total Outstanding, Rs. 918.00 lacs paid towards
restructring/settlement, which has been shown as "Advance against
settlement," (refer note no. 10) and balance Rs. 542.00 lacs repayable
in 2012-13.
2.7 Unsecured Term Loan from Financial Institutions carry interest @ 19
% p.a. and were repayable from 1998-99 in 30 monthly installments.
Interest in respect of the same has remained unpaid since 1998-99. It
is guaranteed by some of Directors.
2.8 Public Fixed Deposits carry interest rate of 14 % p.a.
2.9 Company Law Board has passed the order on 21.12.2001 that "The
repayment of fixed deposits shall be made by the company in accordance
with the revival scheme as and when approved by BIFR under the
provisions of SICA'. In view of the above, the Company has been advised
that as the repayment of the matured fixed deposits including interest
thereon are covered by above referred order and the Draft
Rehabilitation Scheme (DRS) is pending for consideration before the
Hon'ble Board for Industrial and Financial Reconstruction (BIFR), the
same have not remained unclaimed and unpaid within the meaning of
section 205C of the Companies Act, 1956, However payment on
compassionate grounds are continued to be made as per decision of the
committee formed by Hon'ble Company Law Board for this purpose.
2.10 The Company is under Rehabilitation with Hon'ble BIFR under
provisions of "SICA" 1985. The Company is in process of submitting
Draft Revival Scheme (DRS) with Hon'ble BIFR for its approval to make
the payment to public debenture holders as per DRS in full & final
settlement of their entire dues on surrender of Original Debenture
Certificates to the Company. In view of above the Company has been
advised that Company is not required to deposit unclaimed & unpaid
redemption amount of debentures and accrued interest thereon to
Investor Education & Protection Fund under section 205C of the
Companies Act, 1956.
2.11 Provision for interest amounting to Rs. 120.96 lacs (upto the year
Rs. 783.90 lacs) on public fixed deposit has not been made as the
company expects waiver/relief under rehabilitation scheme being
submitted to BIFR.
2.12 Loans from Corporate bodies do not carry any interest and are
repayable in 2014-15.
2.13 Compound interest, penal interest & liquidated damages have not
been considered on all borrowings, amount of which is unascertainable,
pending confirmation/reconciliation. The Company expects waiver/relief
under rehabilitation scheme being submitted to BIFR.
2.14 Balances of secured and unsecured lenders have been taken as per
books and are subject to reconciliation/confirmation pending settlement
with respective lenders.
3. TRADE PAYABLES
3.1 The company has not received information from vendors regarding
their status under the Micro, Small and Medium Enterprises Development
Act, 2006 hence disclosures relating to amounts unpaid as at year end
together with interest paid/payable under this Act have not been given.
3.2 Balances of Trade Payable have been taken as per books and are
subject to reconciliation/confirmation and consequential adjustments,
if any.
4. TRADE RECEIVABLES
4.1 Trade Receivable includes Rs. 165.40 lacs under litigation
(Previous year Rs. 336.60 lacs) for which adequate provision has been
made,
4.2 Balances of Trade Receivable have been taken as per books, are
subject to reconciliation/confirmation and consequential adjustments,
if any.
5. TAX EXPENSES
5.1 In view of accumulated losses, provision for taxation for the
current year has not been made.
5.2 The Company is entitled for set off of carried forward losses and
unabsorbed depreciation against the future income under the Income Tax
Act. However as a matter of prudence, the Company is not recognizing
the deferred tax assets as provided in the Accounting Standard 22
issued by The Institute of Chartered Accountants of India.
6. Contingent liabilities not provided for:
a) Guarantee given by the Bank on behalf of the Company Rs. 3.32 lacs
(Previous year Rs. 3.32 lac).
b) Excise/Custom duty demand disputed by the Company Rs. 41.94 lacs
(Previous year Rs. 41.94 lacs) against which amount paid Rs. 0.45 lacs
(Previous year Rs. 0.45 lacs).
c) Value added tax/Central sales tax demand disputed by the Company Rs.
NIL (Previous year Rs. 6.28 lacs).
d) Claims and liabilities against the Company not acknowledged as debts
Rs. 198.13 lacs (Previous year Rs. 3.01 lacs).
e) Income tax demand disputed by the Company Rs. 128.09 lacs (Previous
year Rs. 128.09 lacs) against which appeal is pending.
f) Certain pending labour cases against the Company, for which amount
is not ascertainable.
g) In respect of restructured debts, future payment obligation are to
be fulfilled as stipulated, failing which the original liability will
fall back with interest and penal interest amount of which is not
ascertainable.
7. An amount of Rs. 3.81 lacs (net credit) on account of exchange
difference consequent to the realignment of rupee value in terms of
foreign currency values of revenue nature is credited/debited to
respective heads of accounts in Statement of Profit & Loss (Previous
year Rs. 1.83 lacs).
8. The Company is a sick company within the meaning of section 3 (1)
(o) of the Sick Industrial Companies (Special Provision) Act 1985
(SICA). The Board for Industrial and Financial Reconstruction (BIFR)
has declared the Company as a sick Company. Accordingly, pending
approval of rehabilitation proposal, the accounts of the Company have
been prepared on a going concern basis.
9. Profit for the year has been arrived at after adjusting prior
period debits on account of Material cost Rs. 5.07 lacs (Previous year
Rs. NIL), Administrative expenses Rs. 0.97 lacs (Previous year Rs.
NIL), Financial expenses Rs. NIL (Previous year Rs. 0.04 lacs) and
Credits on account of Material cost Rs. NIL (Previous year Rs. 8.24
lacs).
10. The Company has only one business segment and catering mainly to
the domestic market. Its revenue from overseas operations does not
exceed 10% of the total revenue therefore, the disclosure as per
Accounting Standard 17 is not applicable to the Company.
11. Related party disclosure as per Accounting Standard 18:
(i) Related party relationships:
(a) Where controls exist: Modern Terry Towels Ltd.
Modern Insulators Ltd.
(b) Key management personnel: Shri Sachin Ranka
(Chairman & Managing
Director)
(c) Relatives of key management
personnel and their
enterprises Where
transactions have taken place: NIL
(d) Other Associates : Shubham Corporate Advisory
Services Pvt. Ltd.
12. The Company has identified the integrated plant for manufacturing
the fabric as its sole Cash Generating Unit (CGU). There are primary
indications that the recoverable amount of CGU is less than its
carrying cost, however no provision has been made for impairment of
assets as required by Accounting Standard 28 "Impairment of assets"
issued by The Institute of Chartered Accountants of India as the
management is of the view that the recoverable amount is expected to
improve in due course.
13. Previous year's figures have been regrouped and rearranged wherever
necessary, to make them comparable with those of current year. Till the
year ended 31st March 2011, the company was using pre-revised Schedule
VI to the Companies Act, 1956, for preparation and presentation of its
financial statements. During the year ended 31st March, 2012, the
revised schedule VI notified under the Companies Act, 1956, has become
applicable to the company. The Company has reclassified previous year
figures to conform to this classification. The adoption of revised
schedule VI does not impact recognition and measurement principles
followed for preparation of financial statement. However, it
significantly impacts presentation and disclosures made in the
financial statements, particularly presentation of Balance Sheet.
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