Notes to Accounts of Gwalior Polypipes Ltd.

Mar 31, 2014

1 General Information

Gwalior PoJyPipes Limited was incorporated on October 19, 1982 and is engaged in the manufacturing of Rigid PVC Pipes & Fittings and PVC and HDPE Corrugated Pipes & Fittings.

2 Additional Notes To Financials statements

2.1 Reference to BIFRand appelastoAAIFR

"The Company was declared as a sick industrial company in terms of Section 3(1 )(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) vide BIFR order dated September 9, 2009. IFCI was appointed as the Operating Agency for formulating the scheme of rehabilitation. Subsequently, BIFR vide its order dated October 11, 2010 had ordered for issue of an advertisement for change of management of the Company, against which the Company preferred an Appeal with Appellate Authority for Industrial and Financial Reconstruction (AAIFR).

In the meantime, BIFR passed an order dated March 15,2012 that since Kotak Mahjndra Bank Ltd. has taken symbolic possession of the factories of the Company under section 13 (4) of SARFAESI Act, 2002, the Company''s reference No. 02/2008 stands under third proviso to the sub-section (1) of section 15 of SICA. Consequently, the Appeal with AAIFR became infructuous and dismissed vide AAIFR order dated March 22,2013. The Company has filed a writ petition before the Hon''ble M.P. High Court against the abatement of reference by BIFR/AAIFR."

2.2 Unsecured Loans

Working Capital facilities were originally sanctioned by State Bank of India (SBI), Gwalior. The said loans were secured by a first charge on the current assets of the company anda personal guarantee by Managing Director, Whole time Director & two former Directors of the Company. The said working capital facilities were further secured by mortgage of land, building and plant & machinery of the units of the Company.

During August 2003, SBI had cancelled the limits and recalled the loans and filed a suit before Debt Recovery Tribunal (DRT), Jabalpur for recovery of the amount due. Subsequently, SBI had assigned the said loan to Kotak Mahindra Bank Limited (KMBL), pursuant to the execution of a deed of assignment on January 16,2006.

The loan payable to KMBL has been consistently considered as unsecured, as no charge on the assets has ever been created / registered in their favour. KMBL had issued a notice dated July 6, 2007 to the Company u/s 13 (2) of SARFAESI Act, 2002, despite being an unsecured creditor, against which the Company filed a Writ Petition before the Hon''ble High Court qf Judicature Jabalpur Bench at Gwalior on the ground that the bank being assignee of the debt is not a secured creditor and hence can not take action under SARFAESI Act, 2002. During the pendency of the case for final hearing, KMBL took an action on 28th and 29th November 20.11 purportedly u/s 13(4) SARFAESI Act, 2002 and took the symbolic possession of the assets of the Company.

On being approached by the Company against the said action of KMBL, an order dated December 7,2011 was passed by the Hon''ble High Court of Madhya Pradesh-directing KMBL that no coercive action be taken against the Company. Later, the Hon''ble High Court of Madhya Pradesh directed the Company to file appropriate application before the Debt Recovery Tribunal (DRT), against the action of KMBL taken under SARFAESI Act, 2002. The Company has filed the Application before the DRT Jabalpur, which is being heard.

Interest on unsecured loans payable to KMBL has not been provided for the year as the liability amount and transfer of security interest with KMBL has been disputed. Further, the Directors are of the view that the existing provision in the books made earlier as a matter of prudence, is considered sufficient to cover the interest liability, if held otherwise, and the shortfall, if any, shall be dealt with on cash basis at the time of settlement.

2.3 Provisions

No provision of interest on various overdue outstanding liabilities on account of Sales Tax/VAT/CST/Entry Tax aggregating to Rs. 121.05 Lac (including that disputed amounting Rs.90.55 Lac) has been made in the accounts as the management is hopeful of getting the waiver of interest in full or in part at the time of the settlement of the dues particularly in vjew of the huge losses suffered by the Company in the past and hence the liability is not expected to be material and shall be dealt with on cash basis.

2.4 Fixed Assets

The Sales Tax Authorities of M.P. at Gwalior had attached and sealed the company''s manufacturing unit at Malanpur and attached its Kota unit for realization of its dues. The company had disputed the action of sales tax authorities before Hon''ble High Court of Madhya Pradesh, Gwalior Bench. The matter is sub-judice.

As stated above, KMBL took symbolic possession of factories of the company under section 13 (4) of SARFAESI Act, 2002, on 28th and 29th November, 2011. The matter is under adjudication before the DRT, Jabalpur, as directed by the Hon''ble High Court of Madhya Pradesh.

2.5 Current assets, loans & advances

In the opinion of the board, current assets, loans and advances have a value on realisation in the ordinary course of business, at least equal to the amount at which they are stated. No provision has been made against the dues of Rs. 65.9 Lacs from Mr. H.K. Sahu, ex Managing Director of the company, A criminal suit has been filed against him for recovery of this amount, which is pending in the couri.

Letter of confirmation of balances have not been received and hence the balances (debit/credit) are subject to adjustments, if any, on reconciliation/settlement of accounts.

2.6 Accounts Payable

The Company is in the process of identification of Micro and Medium suppliers as defined in and for the purpose of payment of interest on overdues to them as required by The Micro, Small and Medium Enterprises Development Act, 2006. Responses from suppliers are awaited till the time of preparation of these accounts and therefore, prescribed disclosures under Section - 22 of the Act could not be given.

b. Terms/rights attached to equity shares

The company has only one class of shares referred to as equity shares having par value of Rs. 10 each. Each holder of equity shares is entitled to one vote per fully paid up share held. The dividend proposed, if any, by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.

Note 3 Previous year''s figures

Previous year figures have been regrouped and re-arranged so as to confirm to current year''s classification.

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Mar 31, 2013

1 General Information

Gwalior PolyPipes Limited was incorporated on October 19, 1982 and is engaged in the manufacturing of Rigid PVC Pipes & Fittings and PVC and HOPE Corrugated Pipes & Fittings.

Note 2 Previous year''s figures

Previous year figures have been regrouped and re-arranged so as to confirm to current year''s classification.

Note 3 form an integral part of the financial statements for the year ended 31 March 2013.

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Mar 31, 2012

1. General Information

Gwalior PolyPipes Limited was incorporated on October 19, 1982 and is engaged in the manufacturing of Rigid PVC Pipes & Fittings and PVC and HDPE Corrugated Pipes & Fittings.

2.1 Reference to BIFR and appelas to AAIFR

"The Company has been declared as a sick industrial company in terms of Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) vide BIFR order dated September 9,2009. IFCI was appointed as the Operating Agency for formulating the scheme of rehabilitation. Subsequently, BIFR vide its order dated October 11,2010 had ordered for issue of an advertisement for change of management of the Company, against which the Company preferred an Appeal with Appellate Authority for Industrial and Financial Reconstruction (AAIFR). AAIFR vide its order dated December 20,2010 directed the parties to maintain status quo with regard to change of management subject to deposit of Rs. 25 lakhs by Company in an interest bearing no-lien account with IFCI. Accordingly, the Company has deposited Rs. 25 lakhs with IFCI. No provision for interest income on the deposit has been made in the absence of any information from iFU and the same shall be dealt with on receipt of credit/payment from IFCI. In the meantime, BIFR passed on order dated March 15, 2012 that since Kotak Mahindra Bank Ltd. has taken possession of the assets of the Company under section 13 (4) of SARFAESI Act, 2002, the Company's reference No. 02/2008 is abated under third proviso to the sub-section (1) of section 15 of SICA. Consequently, the Appeal with AAIFR became infructuous and dismissed vide AAIFR order dated July 2, 2012."

The Company has filed another appeal with AAIFR on June 28, 2012, against the BIFR order dated March 15,2012, which has been registered and being heard.

2.2 Unsecured Loans

Working Capital facilities were originally sanctioned by State Bank of India (SBI), Gwalior. The said loans were secured by a first charge on the current assets of the company and a personal guarantee by Managing Director, Whole time Director & two former Directors of the Company. The said working capital facilities were further secured by mortgage of land, building and plant & machinery of the units of the Company.

During August 2003, SBI had cancelled the limits and recalled the loans and filed a suit before Debt Recovery Tribunal (DRT), Jabalpur for recovery of the amount due. ^Subsequently, SBI had assigned the said loan to Kotak Mahindra Bank Limited (KMBL), pursuant to the execution of a deed of assignment on January 16,2006. The loan payable to KMBL has been consistently considered as unsecured, as no charge on the assets has ever been created/registered in their favour. KMBL had issued a notice dated July 6,2007 to the Company u/s 13 (2) of SARFAESI Act, 2002, despite being an unsecured creditor, against which the Company filed a Writ Petition before the Hon'ble High Court of Judicature Jabalpur Bench at Gwalior on the ground that the bank being assignee of the debt is not a secured creditor and hence can not take action under SARFAESI Act, 2002. During the pendency of the case for final hearing, KMBL took an action on 28th and 29th November 2011 purportedly u/s 13(4) SARFAESI Act, 2002 and took the symbolic possession of the assets of the Company.

On being approached by the Company against the said action of KMBL, an order dated December 7, 2011 was passed by the Hon'ble High Court of Madhya Pradesh directing KMBL that no coercive action be taken against the Company. Later, the Hon'ble High Court of Madhya Pradesh directed the Company to file appropriate application before the Debt Recovery Tribunal (DRT), against the action of KMBL taken under SARFAESI Act, 2002. The Company has filed the Application before the DRT Jabalpur, which is being heard. Interest on unsecured loans payable to KMBL has not been provided for the year as the liability amount and transfer of security interest with KMBL has been disputed. Further, the Directors are of the view that the existing provision in the books made earlier as a matter of prudence, is considered sufficient to cover the interest liability, if held otherwise, and the shortfall, if any, shall be dealt with on cash basis at the time of settlement.

2.3 Fixed Assets

The Sales Tax Authorities of M.P at Gwalior had attached and sealed the company's manufacturing unit at Malanpur and attached its Kota unit for realization of its dues. The company had disputed the action of sales tax authorities before Hon'ble High Court of Madhya Pradesh, Gwalior Bench. The matter is sub-judice.

As stated above, KMBL took symbolic possession of assets of the company under section 13(4) of SARFAESI Act, 2002, on 28th and 29th November, 2011. The matter is under adjudication before the DRT, Jabalpur, as directed by the Hon'ble High Court of Madhya Pradesh.

2.4 Current assets, loans & advances

In the opinion of the board, current assets, loans and advances have a value on realisation in the ordinary course of business, at least equal to the amount at which they are stated. No provision has been made against the dues of Rs. 65.9 Lacs from Mr. H.K. Sahu, ex Managing Director of the company. A criminal suit has been filed against him for recovery of this amount which is pending in the court

Letter of confirmation of balances have not been received and hence the balances (debit/credit) are subject to adjustments, if any, on reconciliation/settlement of accounts.

2.5 Accounts Payable

The Company did not have any dues to micro, small & medium undertakings both during the year under report and during the previous year.

2.6 Provision for Service Tax

The Company had made a provision of Rs.5.8J Lac during the previous year for the service tax liability, if any, anticipated on the works contract related to sub-surface drainage executed for KBJNL in Karnataka. The Company has carried out the similar work during the year. The Company has sought expert opinion from M/s. A.K. Batra & Associates on the applicability of Service Tax on such works contract executed by it and has been advised that me services provided by the Company in connection with the said contract are out of the purview of the definition of 'Services' under the Finance Act Based on the expert opinion, the Directors are of the view that the said provision for service tax is not required and hence the provision made in the previous year has been reversed.

Notes to the financial statements

Note 3A Share capital

b) Rights, preferences and restrictions attached to shares:

Equity Shares: The company has one class of equity shares having a par value of Rs. 10 per share. Each shareholder is eligible for one vote per fully paid up share held. The dividend proposed, if any, by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.

c) Shares held by holding company and subsidiary of holding company: NIL

d) Details of shares held by shareholders holding more than 5% of the aggregate shares in the company.

None of the Shareholders is holding more than 5% of the aggregate shares in the company.

Note 3 Previous year's figures

Particulars

The financial statements for the period ended March 31, 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended March 31, 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles.

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Mar 31, 2010

1. Unsecured loans

Working capital facilities were originally sanctioned by State Bank of India (SBI), Gwalior. The said loans are secured by a first charge on the current assets of the company and a personal guarantee by Managing Directors, whole time Director & two former directors of the company. The said working capital facilities were further secured by mortgage of land, building and plant & machinery of the units of the Company.

During August 2003, SBI had cancelled the limits and recalled the loans and filed a suit before Debt Recovery Tribunal (DRT), Jabalpur for recovery of the amount due. Subsequently, SBI had assigned the said loan to Kotak Mahindra Bank Limited, pursuant to the execution of a deed of assignment on January 16,2006.

DRT has passed an order on March 15,2007, issuing interim recovery certificate, which was subsequently stayed by Debt Recovery Appellate Tribunal (DRAT)

The Secured Loan from State Bank of India and interest thereon had been provided on the basis of statement of account received from the bank and as per the accounting policies, being disputed, not admitted as liability by the management.

Interest on Cash Credit from State Bank of India has not been provided for the year as the Directors are of the view that the provisions made till the last year as a matter of prudence, and more than sufficient to cover the interest, if held otherwise.

2. Details in Terms of Sick Companies

The company has been declared as a sick industrial company in terms of Section 3( IXO) of Sick Industrial Companies (Special Provisions) Act, 1985 vide BIFR order dated 9th September, 2009 and IFCI has been appointed as the operating agency for formulating the scheme of rehabilitation.

3. Fixed assets

The Sales Tax authorities have sealed the companys manufacturing unit at Malanpur and attached its Kota unit for realization of its dues. The company has disputed the action of sales tax authorities in Madhya Pardesh High Court, Gwalior Bench. The matter is sub-judice.

4. Investments

Investments are unquoted and are stated at cost. Present value of such investments has not been assessed. In the opinion of the management, the diminution in the value of investments, if any, is considered as temporary, at this stage and hence no provision for diminution, if any, in the value has been made.

5. Current assets, loans and advances

In the opinion of the board, current assets, loans and advances have a value on realisation in the ordinary course of business, at least equal to the amount at which they are stated.

No provision has been made against the dues of Rs. 65.9 Lakhs from Mr. H.K. Sahu, ex Managing Director of the company. Acriminal suit has been filed against him for recovery of this amount, which is pending in the court.

Letters of confirmation of balances have not been received and hence the balances (debit/credit) are subject to adjustments, if any, on reconciliation /settlement of accounts.

6. Accounts payable

The Company did not have any dues to micro, small & medium undertakings both during the year under report and during the previous year •

7. Directors1 remuneration

The remuneration paid to Mr. Anil P. Sahu, Managing Director, includes salary of Rs. 6,91,000 (previous year Rs. 6,79,000).

The remuneration paid to Mr. Sanil P. Sahu, Whole time Director, includes salary of Rs. 7,34,000 (previous year Rs. 7,10,000).

8. Provisions for Taxation

-Nil provision has been made during this year.

9. Deferred Tax

The provision for deferred tax assets (net) for the year ended March 31, has not been recognized on a prudent basis in accordance with the Accounting Standard (AS -22), issued by the Institute of Chartered Accountants of India.

10. Contingent Liabilities not provided for: Nil

11. The company had transactions with the following related parties: Associates: Nisha Polymers Industries Ltd.

12. Previous year figures have been regrouped and reclassified, wherever necessary, to facilitate comparison to the current years figures.

13. Figures have been rounded off to the nearest rupee.