NOTE 1 : CORPORATE INFORMATION
Modipon Limited (“the Company’’), was incorporated in the year 1965 under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange. The Company has closed its manufacturing operations since May 19, 2007 (closure of factory w.e.f. September 8, 2007) on account of huge losses incurred and sale of entire plant & machinery during the year ended March 31, 2010.
The registered office of Modipon Limited is situated at Hapur Road, Modinagar-201204. District: Ghaziabad(U.P), India.
These financial statements were approved and adopted by board of directors of the Company in their meeting dated 28th May, 2018. Registration details:-
Registration No. CIN No.:L65993UP1965PLC003082 State code : UP
a. Terms/rights attached to equity shares
The company has only one class of equity shares having par value of $ 10 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholde’
b. Terms/rights attached to preference shares
The company has 15% Redeemable Cumulative Preference Share of $ 100 per share. Preference Share due for redemption since 31st March, 1996.
e. Details of Equity Shares held by each shareholder holding more than 5 percent shares in the company
1) Cash Credit/WCDL from banks and loan from Ashoka Mercantile Limited and Modi Intercontinental Private limited are secured by charge by way of pari passu charge on block assets of the company.
2)(a) Cash Credit/Working Capital Demand Loans (including interest Accrued and Due) taken from Punjab National Bank was out of order and classified by Bank as Non-Performing Assets since calender year 2007. Also company has defaulted into the loan replayment amount of N 65 Lakhs excluding interest. (Refer note 43 (b))
(b) The PunjabNational Bank issued notice to the company under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) for the recovery of its dues and has also issued notice under section 13(4) of the SARFAESI to the company for taking possession of the secured assets of the company.
(c ) Borrowings from related parties includes loan from Ashoka Mer-chantile Limited,Status Mark Finvest Ltd and Modi Intercontinental Private Limited.
-During the year Company has provided interest @ 10.25 % p.a. on the loan amount from Ashoka Merchantile Limited and @ 9.50% on the loan amount from Status Mark Finvest Ltd. However, the terms of repayment are yet to be entered into with the said parties.
Note No. 2: In view of the management, the current assets, loans and advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the balance sheet as at 31st March, 2018.
Note No. 3: Sundry debtors, creditors, loans and advances are subject to confirmation.
(a) For Assessment Years 2006-07 to 2008-09, the demand towards nondeduction of TDS inclusive of interest and penalty of A 816.93 Lacs raised earlier has been rectified by the Income Tax Department and reduced to A 217.55 Lacs. On an appeal filed by the company, Hon’ble Allahabad High Court had stayed recovery of demand (after rectification) of A 107.71 Lacs while the penalty of A 93.67 Lacs thereon has been stayed by the Additional Commissioner of Income Tax (TDS) Ghaziabad and the matter is pending for disposal. For the rest amount of A 16.17 Lacs the company has filed appeals before Commissioner of Income Tax (Appeals), Ghaziabad/ Income Tax Appellate Tribunal, New Delhi which are also pending adjudication.
(c) Suppliers Interest on outstanding dues (Gujarat State Fertilizers and Chemical Company Limited-GSFC) amounting to A 1000.54 lakhs upto 31st March, 2008, has not been provided in the Books of Account as the same are being disputed by the company. The amount of interest for the 120 month period ended 31st March, 2018 is not ascertainable.
(d) Singhal Transport filed a suite for recovery of A 95.08 lacs (comprising of the principal amount of Rs. 70 lacs and interest due till 19.05.2009) along with claim for pendente- lite and future interest and costs against Modipon Limited. The total sum due as on 31st March, 2018 amounts to 171 lacs including interest for which the company has not made any provision.
(e ) The Punjab National Bank (PNB) had approved one time settlement of its outstanding dues vide its approval letters dated April 02, 2014 and April 12, 2014 respectively. In terms of the settlement, OTS amount of A 1710 lakhs (Net of upfront payment of A 190 lakhs) was to be paid by the company in four quarterly installments with interest during financial year 2014-15. However, the company was able to manage the payment of A 630 lakhs up to March 31, 2015 and at the request of the Company, PNB had condoned the delay and revived the OTS vide its letter dated July 02, 2015 requiring the Company to make payment of residual OTS amount of A 1270 lakhs by March 31, 2016 and total interest on OTS payment @ 10.25% (simple) by June 30, 2016. The Company has paid A 1205 lakhs upto March 31, 2018 and balance A 65 lakhs along with outstanding interest remain to be paid. Due to non compliance of revived OTS, the bank has demanded interest @ 10.25% from the inception and hence the interest outstanding is A 285.89 upto 31st march,2018 out of which provision of only A 17.60 has been made in the books.
(f) There is a balance sales tax liability of A 183.90 lakhs (plus interest/ penalty, if any) imposed by Commercial Tax Authorities, Modinagar on Punjab National Bank on account of tax payable on auction held by the bank for old plant & machinery of the company. The company has undertaken to reimburse the same to Punjab National Bank, in case the bank is required to pay the same to the sales tax authorities. In the meantime, the company shall continue to keep mortgage/ charge over the administrative block (with land) of the company, as security, in favour of the bank till Anal disposal of the above tax case. No provision of interest has been made on the sales tax liability of A 183.90lakhs.
Note No. 4: Balance confirmation certificates were NOT obtained by the Company from creditors, house/shop security depositors, in-operative current accounts with banks and loan account with Punjab National Bank (PNB) and consequently adjustments required, if any, has not been carried out in the financial results.
Note No. 5: The Accounts of the Company have NOT been prepared on a going concern basis in view of Closure of Manufacturing Operations of the Company during the year ended 30th September, 2007 and sale of all moveable assets including Plant & machinery during the year 2009-10. However, once the liabilities of the company towards secured creditors are cleared, the company will start business operations. The Manufacturing Operations of the Company have been closed with effect from 19th May, 2007. In terms of the provisions of the Uttar Pradesh Industrial Disputes Act, 1947, the Closure has become operative from the date of expiration of the period of 90 days from the date of application i.e. on 8th September, 2007.
Note No. 6: The members of the company have, in their meeting held on 27th September 2013, approved payment of remuneration to Shri Manish K. Modi Managing Director for a period of five years w.e.f. 1st June, 2013. The Central Government approval for managing director’s remuneration had been received on 28th July, 2014 for the period of ten months falling under the the provisions of Companies Act, 1956 i.e. upto 31st March, 2014. For the remaining period of four years and two months, the members, in their meeting held on 30th September, 2015, reaffirmed payment of remuneration to Shri Manish K. Modi and an application seeking Central Government approval to the same was moved. The Central Government has vide its letter dated 18th April, 2016 confirmed that that the proposed remuneration is within the limit of the Companies Act, 2013.
Note No. 7: No Provision for Income Tax under the Income Tax Act, 1961 is considered necessary for current financial year on account of unabsorbed depreciation, unabsorbed business losses and capital loss. The recognition of Deferred Tax Assets (Net) has been postponed on consideration of prudence.
Note No. 8: Under the Micro, Small and Medium Enterprises Development Act, 2006, which came into force on 2nd October, 2006, certain disclosures are required to be made relating to Micro, Small and Medium Enterprises. The Company has not collected the relevant information. Since the information is not readily available, no disclosures/provision for interest has been made in the Books of Account.
Note No. 9: Exceptional Items in Statement of Profit and Loss includes :
During the year Compensation received from Kirloskar Pneumetic Company of A 61.17 Lacs on account of non supply of air compresor equipment within time limit for which the company had Ailed suit against Kirlosker Pneumetic Company.
Note No. 10: (a)Since the Net Book value of Land, Residential buildings at Modinagar, Office premises outside Modinagar and factory/ administrative building in Modinagar are lower than the Net Realisable Value as per Valuer’s Report / Management’s estimate, no provision for diminution is required to be made and the net book Value of A 230.88 lakhs as on 31st March 2018 .
(b) The company has sold 65,743 sq. yds. and 2299 sq. yds. of its vacant land at Modinagar for A 986.15 lakhs (original cost A 1.88 lakhs) and A 35.00 lakhs (original cost A 0.07lakhs) respectively which resulted in Profit on Sale of Land amounting to A 1019.20 lakhs during the year ended March 31, 2009. Approval of banks to whom immovable properties of the company, including the above Land, are charged is pending.
Note No. 11: (a) Cash credit/Working Capital Demand Loans (including interest accrued and due) taken from Punjab National Bank was out of order and has been classified by Bank as Non-Performing Assets. The Bank issued notice to the company under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) for the recovery of its dues and has also issued notice under section 13(4) of the SARFAESI to the company for taking possession of the secured assets of the company.
(b) The Punjab National Bank (PNB) had approved one time settlement of its outstanding dues vide its approval letters dated April 02, 2014 and April 12, 2014 respectively. In terms of the settlement, OTS amount of A 1710 lakhs (Net of upfront payment of A 190 lakhs) was to be paid by the company in four quarterly installments with interest during financial year 2014-15. However, the company was able to manage the payment of A 630 lakhs up to March 31, 2015 and at the request of the Company, PNB condone the delay and revived the OTS vide its letter dated July 02, 2015 requiring the Company to make payment of residual OTS amount of A 1270 lakhs by March 31, 2016 and total interest on OTS payment @ 10.25% (simple) by June 30, 2016. The Company has paid A 1205 lakhs upto March 31, 2018 and balance A 65 lakhs along with interest remain to be paid. The Company is making efforts to pay the balance OTS amount and the matter is under negotiation with PNB. The balance of PNB as per books of account of the Company was A 2083.90 lakhs and excess amount of A 183.90 lakhs would be dealt with upon final payment of the OTS amount. In view of the pending implementation of OTS as above, no provision for interest has been considered necessary for the year ended March 31, 2016 amounting to A 491.15 lakhs (1867.45 lakhs for the period from April 01, 2009 to March 31, 2016). However, interest on OTS amount has been provided as per the agreement amounting to A 7.35 lakhs for the year ended March 31, 2018 (Previous year: A 10.25 lakhs).
(c) (i)Loan liability of A 749.20 lakhs to Karnatka Bank has been discharged by the company under OTS (one time settlement), in arrangement with Ashoka Mercantile Limited paying the settled sum of A 410 lakhs to the said bank. The settlement resulted into remission of liability by A 339.20 lakhs. As per the terms approved by the Board of Directors of the company on August 16,2012 with Ashoka Mercantile Ltd, they shall be entitled to so much of the waived-off amount under OTS as agreeable, but to the extent such sum does not exceed the sum as worked out by applying the ratio of waiver agreed by the company for settlement under OTS with Punjab National Bank (PNB). Pending the successful implementation of OTS with PNB as stated in para 43(b) above, the amount of A 339.20 lakhs being the subject matter of OTS arrangement with Ashoka Mercantile Limited and liable to be dealt with later has been kept aside and shown in Balance Sheet under the head “Non Current borrowings (Unsecured)”.
During the financial year 2017-18, interest of A 42.02 lakhs has been provided on loan repaid by Ashoka Mercantile Limited under this OTS deal.
(ii) Loan liability of A 832.04 lakhs to Bank of Baroda has been discharged by the company under OTS (one time settlement), in arrangement with Ashoka Mercantile Limited who has paid the settled sum of A 600 Lakhs to the said bank. The settlement resulted into remission of liability by A 232.04 Lakhs. As per the terms approved by the Board of Directors of the company on February 11, 2013 with Ashoka Mercantile Ltd., they shall be entitled to so much of the waived-off amount under OTS as agreeable, but to the extent such sum does not exceed the sum as worked out by applying the ratio of waiver agreed by the company for settlement under OTS with Punjab National Bank (PNB). Pending the successful implementation of OTS with PNB as stated in para 31(b) above, the amount of A 232.04 lakhs being the subject matter of OTS arrangement with Ashoka Mercantile Limited and liable to be dealt with later has been kept aside and shown in Balance Sheet under the head “Non current borrowings (Unsecured)”.
During the financial year 2017-18, interest of A 20.67 lakhs has been provided on loan repaid by Ashoka Mercantile Limited under this OTS deal.
(iii) Pending finalisation of terms of loan agreements with Ashoka Mercantile Limited (AML) who has outstanding amount of secured and unsecured loans of A 882.29 lakhs and A 1125.57 lakhs respectively for payment of OTS dues of banks. No provision of Interest on loan have been provided till the March 31, 2014. However, from April 01, 2014, interest has been provided on unsecured loan on reducing balance method @ 10.25% per annum equivalent to the rate of interest agreed with PNB in OTS.
(d)(i)The Abu Dhabi Commercial Bank Limited has settled its Dues of A 351.05 lakhs under One Time Settlement (OTS) as conveyed vide its letter dated September 23, 2008. Since the Company did not have funds to pay the settled dues, it had approached M/s Ashoka Mercantile Limited (AML) for making payment of settled dues to the Banks. Further, it has also been agreed with AML that it shall not be entitled to settlement of its claim better than what is agreed by the Company with PNB.
(ii) Since successful implementation of settlement of dues of PNB is still pending, the amount paid towards OTS by AML of A 157.13 lakhs (net of A 40 lakhs paid to AML upto March 31, 2011) is shown as secured loan in Note 18 and the balance amount of A 153.92 lakhs (A 351.05 lakhs - A 197.13 lakhs) outstanding in the books of accounts has also been shown as unsecured loan in Note 14, to be written back or credited to AML at the time of OTS with PNB as stated in (i) above.
During the financial year 2017-18, interest of A 16.11 lakhs has been provided on loan repaid by Ashoka Mercantile Limited under this OTS deal.
Note No. 12: The Company has not been able to repay the loan as shown above given by Ashoka Mercantile Limited (AML), a related party. During the month of May 2011, the Company has given temporary physical possession with right of user of 59 residential houses owned by it at Modinagar to AML. Out of which possession of 13 houses has since been returned by AML.
Note No. 13: In view of the management, the current assets, loans and advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the balance sheet as at 31st March, 2018.
Note No. 14: Sundry debtors, creditors , loans and advances are subject to confirmation.
Note No. 15: Figures of previous year have been re-grouped and re-arranged wherever found necessary.
Note No. 16: Figures have been rounded off to the nearest Lakh.
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