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)
(d) Other Associates : Shubham Corporate Advisory Services Pvt. Ltd.
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.