1. Net Loss on account of foreign exchange fluctuation Rs. 71.78 lakhs (Previous Year Net Gain Rs. 38.03 lakhs) has been accounted for in the Statement of Profit & Loss.
2. Based on information / documents available with the Company, Sundry Creditors include -
3. The Company is engaged in manufacturing of engineering goods only and therefore, there is only one reportable segment in accordance with Accounting Standard (AS 17).
4. Net Deferred Tax Asset / Liability of Rs. (224.78) lakhs has been recognized for the year to the statement of Profit and Loss on account of Employees benefits and Depreciation.
5. (a) Operating Lease Obligations :
Where the Company is a Lessee :
The Company has taken various commercial premises under operating lease or leave and license agreements. Lease Payments are recognized in the Profit & Loss Account.
6. (a) The accounts of Trade Receivables, Trade Payables and Advances are subject to reconciliation/confirmation. The Management does not expect any material difference affecting the financial statements on reconciliation.
7. In the opinion of the Company, Current Assets and Non-Current Assets, Loans and Advances have values on realization in the ordinary course of business at least equal to the amount at which they are stated.
8. There are no amounts due and outstanding to be credited to Investor Education & Protection Fund as at 31st March, 2016, except Dividend amounting to Rs. 2.00 lakhs, which is sub judice.
9. As per CDR Guidelines, Promoters have brought necessary contribution amounting to Rs. 1980 lakhs by way of Share Application Money which will be converted into Share Capital subject to approval of appropriate authorities.
10. The infrastructure industry, particularly in water and power segments, has not recovered as expected, resulting in delay in completion of projects and the recovery of dues. The company has assessed and provided for doubtful debts and advances amounting to Rs. 386.44 lakhs. The Company is optimistic of improvement in these industry sectors which will help in speedy execution of projects and resultant collection of its dues.
As on 31st March, 2016, the overdue amount on account of interest on various Term Loans, Working Capital Demand Loans, Letters of Credit and Installment of Term Loan was Rs. 12,379.19 lakhs.
11. In view of erosion of the Net Worth of the Company as at 31.03.2014, the Company filed a reference application u/s 15 (1) of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) with Hon. Board for Industrial and Financial Reconstruction (BIFR) for determination of measures which may be adopted with respect to the Company. The said reference was registered as Case No. 62/2014.
The Hon. BIFR, in the hearing held on 05.10.2015, declared the Company a Sick Industrial Company in terms of Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 and appointed the lead bank, Central Bank of India as Operating Agency (OA) under section 17(3) of the Act to examine the viability of the Company and for formulating a Draft Rehabilitation Scheme (DRS) for revival of the Company with a Cut Off Date of 31.03.2016.
As per the directions of the Hon. BIFR, the Company has submitted the DRS to the OA, other consortium member banks/lenders and Hon. BIFR. Company’s Techno Economic Viability Study (TEV) has also been carried out by a leading agency and a positive TEV has been submitted to the banks. The DRS is presently under consideration of the banks.
As the DRS is still to be approved by the lenders and Hon. BIFR, no effect of the restructuring proposal is considered in the books of account.
12. The Company is very positive about its viability, in lines with the DRS proposal and TEV submitted to the lenders. The Company is optimistic about its future and in view of the Company’s ability to continue to execute its orders, despite adversities, it expects that Company’s financials will show a marked improvement once the DRS proposal is accepted and implemented by the lenders and the Hon. BIFR. In view thereof, the Financial Statements have been prepared by the Management on a ‘Going Concern’ basis. No adjustment is considered necessary to the recorded assets, recorded liabilities, contingent liabilities and other commitments for the reasons and perception of the Management.
13. The efforts of the Board of Directors to realize business value from DRS achieved progress with a formal submission of scheme in February 2016. Pending its final approval by the lenders and the Hon. BIFR, the Board of Directors believes, the DRS when implemented will alleviate the current resource crunch and help the Company to achieve robust financial health.
The Board of Directors is of the view that a deferred tax asset of Rs. 6390 lakhs would be available to the company for adjustment against future tax liability as may accrue and would be applicable to the Company. This has been envisaged in the said DRS proposal. Such a deferred tax asset does not consider tax demand of Rs. 3026 lakhs arising out of disallowances made in the assessment order recently received for Assessment Year 2013-14. The Board of Directors is of the view that such a tax demand is reversible during ongoing appeal proceedings, as per merits of the same, as advised to the company. However, as a prudent accounting policy, the said Deferred Tax Asset of Rs. 6390 lakhs has not been recognized in the books of account.
14. The figures of previous year are regrouped / rearranged wherever necessary.
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