A Primary Security & Collateral
- Secured by Exclusive Charge on Plant & Machinery situated at Plot No. 64/1, Village: Chubadak, Taluka: Bhuj, Dist: Kutchh.
B Collateral Security
a Secured by Equitable Mortgage of Factory Land & Building situated at R.S. No. 52/1-2, 53/1-2, Village Sukhpar, Tal.: Halvad, Dist.:Surendranagar.
b Secured by Equitable Mortgage of Office Premises at D-702, Ganesh Meridian, S.G. Road, Ahmedabad.
c Secured by Equitable Mortgage of Plot of Land at Survey No. 55, Village Sukhpar, Taluka Halvad, District: Surendranagar.
d Secured by Equitable Mortgage of Plot of Land at Survey No. 54, Village Sukhpar, Taluka Halvad, District: Surendranagar.
e Factory Land Situated at Survey No. 49/1 & 50 Village Sukhpar, Tah.: Halvad, Dist.: Morbi.
f Plant & Machineries (Unit II), Village Sukhpar, Tal: Halvad, Dist: Surendranagar.
g Secured by Equitable Mortgage of Office Premises at D-704, Ganesh Meridian, S.G. Road, Ahmedabad.
h Secured by Factory Land situated at Survey No. 51-1, 51-2 & 51-3, 49-2 Village Sukhpar, Tal.: Halvad, Dist.:Surendranagar.
i Secured by Land & Building situtated at Survey No. 64/1, Village: Chubdak, Bhuj.
Common Collateral Security for all of the Credit Facilities Including Working Capital Facilities ** Entire Term Loans secured by personal guarantees of the following persons/parties.
Mr. Kiritbhai G. Patel Mr. Ramakant K. Patel Mr. Karshanbhai H. Patel
* * *
Term Loan from UBI of Rs. 9.00 Crores (For Bhuj Plant) to be repaid by 20 Quarterly Instalment of Rs. 45 Lacs and Instalment to Commence from 31/10/2018.
* Nature of Security A Primary Security
Working Capital secured by way of First Pari Passu charge on all the current assets of the company including raw material, stock-inprocess, finished goods, stores & spares, receivables, packing materials, Book Debts, Stock Procured under LC & Book Debts raised thereto and other current assets both present and future (For Halvad Unit I, Unit II and Bhuj Unit).
Common Collateral Security for all of the Credit Facilities Including Term Loans:
** Outstanding balances of working capital secured by personal guarantees of the following:
- Directors
*** For Default in payment/repayment of loans refer to Note No. 17 **** Working capital loans repayable on demand.
$ The Company had been sanctioned working capital limits from banks in earlier years on the basis of security of current assets. As the loan accounts have been declared NPA by banks, the company has not filed monthly and quarterly statements and returns with bank since August-2024.
Note: Changes in Liabilities have been disclosed in the statement of cash flow as financing activities.
NOTE NO. 31 : CONTINGENET LIABILITIES
[Amount ' In Lakhs]
SR.
NO.
P A R T I C U L A R S
AS AT
31st MARCH, 2024
31st MARCH, 2019
I.
Bank Guarantee to PGVCL As Security Deposit for Electricity Supply
332.17
II.
Corporate Guarantee to Canara Bank, Mehsana for Working Capital Loan and Term Loan Availed by Subsidiary Company Balaram Papers Private Limited
1,495.00
III.
Excise/Service Tax Liability-Audit Objection-RCM Liability on Ocean Freight -Office of the Commissioner of Central Goods and Service Tax, Audit Commissionerate, Rajkot dated 30.01.2019
30.59
IV.
Income Tax Liabilities on account of Income Tax Assessement Order dated 30/12/2022 under section 143(3) for A.Y. 2021-22 passed by Deputy Commissioner of Income, Central Circle 1(1), Ahmedabad in respect of which the Company has preferred an appeal before CIT-(A) [Demand Amount Included in Order Passed Under Section 147 dated 24/03/20245]
36.15
V.
Income Tax Liabilities on account of Income Tax Assessement Order dated 30/03/2024 under section 143(3) for A.Y. 2022-23 passed by Deputy Commissioner of Income, Central Circle 1(1), Ahmedabad in respect of which the Company has preferred an appeal before CIT-(A) [As per Notice Under Section 156 Without Any Interest as the Income Tax Department may have levied]
5,177.21
[Rs. 38,81,09,281/- Added to Total Income on Protective Basis]
VI.
Income Tax Liabilities on account of Income Tax Assessement Order dated 24/03/2025 under section 147 for A.Y. 2020-21 passed by Deputy Commissioner of Income, Central Circle 1(1), Ahmedabad in [As per Notice Under Section 156 Without Any Interest as the Income Tax Department may have levied]
772.86
VII.
Income Tax Liabilities on account of Income Tax Assessement Order dated 24/03/2025 under section 147 for A.Y. 2021-22 passed by Deputy Commissioner of Income, Central Circle 1(1), Ahmedabad in respect of which the Company has preferred an appeal before CIT-(A) [As per Notice Under Section 156 Without Any Interest as the Income Tax Department may have levied]
6,528.77
TOTAL...............
14,336.60
7,071.12
The company has initiated legal proceedings/taken actions for recovery against the doubtful debtors amounting to Rs. 58.26/-(Previous Year Rs. 58.26/-). In respect of debts of Rs. 58.26/-, though the company has initiated legal proceedings/taken actions for the recovery, the company had made provision for doubtful debts against that in the books of account pending outcome of the litigation in respect of each of the debtor.
In pursuance of various notices, the assessment proceedings for A.Y. 2021-22 relevant to financial year 2020-21 were completed by the office of Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad on 30/12/2022 by passing an assessment order under section 143(3) of the Income Tax Act, 1961. Vide assessment order dated 30/12/2022 under section 143(3), the Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad made an addition of Rs. 84.40/- to taxable income for A.Y. 2021-22 on account of demurrage, detention and other related charges incurred by the company in respect of import of raw materials treating the same as being penal in nature as per section 37(1) of the Income Tax Act, 1961 and raised demand of Rs. 36.15/-.
The charges were in the nature of storage/container facilities availed by the company beyond the time allowed to lift the materials from the port pending clearance of documents/compliance of procedure on account of various factors like late receipt of documents from the suppliers, late release of shipment etc. and were paid to various shipping line companies/agencies for availing their facilities. The charges incurred not being in the nature of penalty within the meaning of section 37(1) and hence the additions of Rs. 84.40/- have been considered by the company as inappropriate based on legal advice and has preferred an appeal before Commissioner of Income Tax-(Appeal). The matter was pending for adjudication before Commissioner of Income Tax-(Appeal) as on the date of approval of financial statements by the Board of Directors.
Considering the nature of expenses incurred, provisions of section 37(1) of the Income Tax Act, 1961 and the legal advice, it is more likely that the addition so made by the Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad will be reversed and hence no provision has been made for such liability in the books of account for the financial year 2024-25. However, such the same has been disclosed as contingent liabilities in notes to the accounts (Refer Note No. 31(IV).
Since, the assessment proceedings for A.Y. 2021-22 were subject to re-assessment under section 147, the demand amounts as above raised vide order under section 143(3) have been included in demand raised under section 156 vide order under section 147 dated 24th March, 2025. [Refer to Para 4 below]
The Income Tax Authorities had carried out search operations from 26th May, 2022 to 29th May, 2022 at the registered office of the company and had seized certain documents relating to the company during the course of search. The post-search proceedings were carried out during the preceding as well as current financial years and the company has complied with notices and instructions from the Income Tax Department as issued from time to time. In pursuance of various notices, the assessment proceedings for A.Y. 2022-23 relevant to financial year 2021-22 were completed by the office of Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad on 31/03/2024 by passing an assessment order under section 143(3) of the Income Tax Act, 1961. Vide assessment order dated 31/03/2024 under section 143(3), the Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad made an addition of Rs. 5,321.92/- to taxable income for AY. 2022-23 on account of various grounds and raised demand of Rs. 5,177.21/- vide notice issued under section 156 of the Income Tax Act, 1961.
The additions to income have been made without consideration of facts and submissions made and hence the additions of Rs. 5,321.92/- have been considered by the company as inappropriate based on legal advice and has preferred an appeal before Commissioner of Income Tax-(Appeal). The matter was pending for adjudication before Commissioner of Income Tax-(Appeal) as on the date of approval of financial statements by the Board of Directors.
Considering the nature of additions made and the legal advice, it is more likely that the addition so made by the Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad will be reversed and hence no provision has been made for such liability in the books of account for the financial year 2024-25. However, such the same has been disclosed as contingent liabilities in notes to the accounts (Refer Note No. 31(V).
The Income Tax Authorities had carried out search operations from 26th May, 2022 to 29th May, 2022 at the registered office of the company and had seized certain documents relating to the company during the course of search. The post-search proceedings were carried out during the current financial year and the company has complied with notices and instructions from the Income Tax Department as issued from time to time. In pursuance of various notices, the assessment proceedings for A.Y. 2020-21 relevant to financial year 2019-20 were completed by the office of Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad on 24/03/2025 by passing an assessment order under section 147 of the Income Tax Act, 1961. Vide assessment order dated 24/03/2025
under section 147, the Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad made an addition of Rs. 1,179.90/- to taxable income for A.Y. 2020-21 on account of various grounds and raised demand of Rs. 772.86/- vide notice issued under section 156 of the Income Tax Act, 1961.
The additions to income have been made without consideration of facts and submissions made and hence the additions of Rs. 1,179.90/- have been considered by the company as inappropriate based on legal advice and has taken actions to prefer an appeal before Commissioner of Income Tax-(Appeal).
Considering the nature of additions made and the legal advice, it is more likely that the addition so made by the Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad will be reversed and hence no provision has been made for such liability in the books of account for the financial year 2024-25. However, such the same has been disclosed as contingent liabilities in notes to the accounts (Refer Note No. 31(VI).
The Income Tax Authorities had carried out search operations from 26th May, 2022 to 29th May, 2022 at the registered office of the company and had seized certain documents relating to the company during the course of search. The post-search proceedings were carried out during the current financial year and the company has complied with notices and instructions from the Income Tax Department as issued from time to time. In pursuance of various notices, the assessment proceedings for A.Y. 2021-22 relevant to financial year 2020-21 were completed by the office of Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad on 24/03/2025 by passing an assessment order under section 147 of the Income Tax Act, 1961. Vide assessment order dated 24/03/2025 under section 147, the Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad made an addition of Rs. 5,595.71/- to taxable income for A.Y. 2020-21 on account of various grounds in addition of disallowance of Rs. 84.40/- already made vide order passed under section 143(3) and raised demand of Rs. 6,528.77/- vide notice issued under section 156 of the Income Tax Act, 1961.
The additions to income have been made without consideration of facts and submissions made and hence the additions of Rs. 5,595.71/- have been considered by the company as inappropriate based on legal advice and has preferred an appeal before Commissioner of Income Tax-(Appeal).
Considering the nature of additions made and the legal advice, it is more likely that the addition so made by the Deputy Commissioner of Income Tax, Central Circle 1(1), Ahmedabad will be reversed and hence no provision has been made for such liability in the books of account for the financial year 2024-25. However, such the same has been disclosed as contingent liabilities in notes to the accounts (Refer Note No. 31(VI) & 31(IV).
In the course of audit by the Office of the Commissioner of Central Goods and Service Tax, Audit Commissionerate, Rajkot dated 30th January, 2019, it had raised audit objections regarding non-payment of RCM on Ocean Freight amounting to Rs. 30.59/- and requested the company to provide suitable explanations/clarifications in case of disagreement by the company. The company did not concur with the audit objections raised by the office of Commissioner of Central Goods and Service Tax, Audit Commissionerate, Rajkot since the similar matter in cases of other parties were going on for adjudication at the jurisdictional Hon’ble High Court of Gujarat. However, upto the date of authorization of Standalone Financial Statements for issue by the Board of Directors i.e. 29th May, 2025, the company has paid Rs. 30.59/- under protest. There has been no further proceeding in the matter subsequent to the date of initial report upto the date of authorization of Financial Statements for issue by the Board of Directors i.e. 29th May, 2025.
Due to suspension of operations at plants and closure of business operations during the year, most of the employees have either been relieved or discontinued their services to the company and hence no provision has been made towards gratuity liabilities for the year.
Financial Risk Management:
The company activities are exposed various financial risks: credit risk, liquidity risk and foreign exchange fluctuation risk. The Company’s primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance.
Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss to the Company. The maximum exposure to the credit risk as at the reporting date is primarily from trade receivables. Trade receivables are unsecured and are derived from revenue earned from customers from sale of goods. Trade receivables generally are impaired after three years when recoverability is considered doubtful based on general trend. The Company considers that trade receivables stated in the financial statements are not impaired and past due for each reporting dates under review are of good credit quality subject to outcome of the litigations where the company has initiated legal proceedings for recovery.
Credit risk relating to cash and cash equivalents is considered negligible since the counterparties are banks which are majorly owned by Government of India and have oversight of Reserve Bank of India. The Company considers the credit quality of term deposits with banks to be good and the company reviews these banking relationships on an ongoing basis.
The Company considers all other financial assets as at the financial statement dates to be of good credit quality.
The company’s principal sources of liquidity are from Short Term Bank Borrowings, Cash and Cash Equivalents and Cash generated from operations.
The Short- term liquidity requirements consist mainly of Trade Payables, Expense Payables, Employee Dues, Servicing of Interest on Short -Term and Long -Term Borrowings and payment of instalments of term loans and vehicle loans and other payments arising during the normal course of business.
The Company undertakes transactions denominated in foreign currency mainly for purchase of raw materials and sale of goods which are subject to the risk of exchange rate fluctuations. Financial assets and liabilities denominated in foreign currency are also subject to reinstatement risks. Hedging is regularly carried out to mitigate the risks of exchange rate fluctuations.
i) In the opinion of the Board of Directors, Current Assets & Loans and Advances have a value on realisation in the ordinary course of business equal to the amount at which they are stated in the balance sheet. In the opinion of the Board of Directors, claims receivable against property/goods are realizable as per the terms of the agreement and/or other applicable relevant factors and have been stated in the financial statements at the value which is most probably expected to be realized.
j) The company has obtained balance confirmation from some of the parties for Trade Payables, Trade Receivables and parties to whom loans/advance have been granted. All other balances of debtors and creditors and loans and advances are subject to confirmation and subsequent reconciliation, if any.
Expenses in foreign currency:
CIF Value of Imports:
Raw Materials ' 5,499.96/- (Previous Year ' 15,225.16/-)
Foreign Travelling:
' NIL/- (Previous Year ' NIL /-)
Income in Foreign Currency:
FOB Value of Exports:
' 213.45/- (Previous Year ' 219.67/-)
The Income Tax Authorities had carried out search operations from 26th May, 2022 to 29th May, 2022 at the registered office of the company and had seized certain documents relating to the company during the course of search. The post-search proceedings were carried out during the current financial year as well as in the preceding financial year and the company has complied with notices and instructions from the Income Tax Department as issued from time to time. Subsequent to search operations, the Income Tax Department issued notices for assessment for the Assessment Years 2023-24, 2020-21 and 2021-22 under section 147. The assessment in case of AY. 2022-23 was completed by the Income Tax Department by the end of preceding financial year raising demand of Rs. 51,77,20,750 vide notice issued under section 156 [of Rs. addition of Rs. 3,881.09 made on protective basis] by making various adjustments and additions to the income for A.Y. 2022-23. Further to above, the re-assessment proceedings for AY. 2023-24, 2020-21 and 2021-22 have also been completed vide order passed under section 147 dated 24th March, 2025 by making various additions and raising demand as per note number 31(VI) & 31(VII). Further to above, the Income Tax Department has also issued notices under section 148 for A.Y. 2016-17 & 201819 upto the end of the current financial years. The proceedings in these matters were pending for re-assessment before the Income Tax Department upto the approval of financial statements for the financial year 2024-25 by the Board of Directors.
The income tax department has also issued notices for penalty proceedings in respect of assessment/re-assessment years for which orders have been passed. The proceedings in these matters were also pending before the Income Tax Department upto the approval of Standalone financial statements for the financial year 2024-25 by the Board of Directors as the company has preferred appeals against the orders.
The company had legal consultation in this regard and based on the legal advices from various experts in the matter, the management of the company has decided to challenge the assessments being unreasonable and without any basis and therefore preferred appeals before the Commissioner of Income Tax, [Appeals] being the appropriate appellate authority upto the date of approval Standalone financial statement by the Board of Directors i.e. 29th May, 2025.
Considering the legal opinions with regard to the demand for A.Y. 2022-23, 2020-21 and 2021-22 no provisions have been made for such liabilities in the books of account but disclosed as contingent liabilities in the standalone financial statements. As no liabilities have been determined by the Income Tax Department for A.Y. 2020-21 and 2021-22 since the assessment proceedings were in process, the liability of any nature has not been envisaged by the management of the company. Based on the legal consultations and the documents seized and proceedings carried out during the course of search as well as post search proceedings, in the opinion of the management of the company it is more likely that the company may not be required to incur any liability towards income tax on completion of the applicable income tax proceedings for A.Y. 2020-21 and A.Y. 2021-22 and hence no provision of income tax liability could either be determined or made or disclosed.
The previous financial year ratios have been restated considering the effects of prior period errors and omission applied as per Ind-AS-8. @ Substantial operational losses incurred during the year, reduction in value of inventories due to revaluation, delay in payment to suppliers and statutory liabilities due to liquidity and plant shutdown during the year resulted into lower current ratio compared to the preceding financial year.
# Substantial operational losses resulted into erosion of net-worth of the company. Further due to closure of plants, the company could not honour its liabilities towards banks. These factors had negative impact on debt equity ratio of the company for the year.
$ Substantial operational losses coupled with inability of the company to discharge its liabilities towards banks resulted into debt service ratio of the company being substantially lower than the previous financial year and being negative.
a Substantial operational losses and consequent substantial reduction in average capital employed in the business resulted into substantial negative return on equity of the company.
& Closure of plants and subsequent non-resumption of manufacturing upto the closure of financial year resulted into lower inventory turnover ratio compared to the preceding financial year.
* Substantial Reduction in turnover on account of closure of plants, non-resumption of business and substantial outstanding balance of trade receivables vis-a-vis operating turnover had negative impact on trade receivable turnover ratio.
! Substantial operational losses, closure of plants, non-availability of liquid sources of funds and subsequent inability of the company to discharge its liabilities towards trade payables resulted into trade payable ratio being lower than preceding financial year.
!! Substantial operational losses, closure of plants and erosion of capital employed in the business adversely affected net capital turnover ratio.
@@ Continuous losses in the business over the last three financial years impacted the liquidity of the company adversely which resulted into closure of business during the year. Further due to non-utilisation of inventories of raw materials, coal and chemicals for the substantial period of time the quality of the same deteriorated and hence they had to be revalued at their respective realizable values. In addition to this though the plants remained non-operational for the substantial period of time during the year, the company had incurred some costs being fixed in nature and also finance cost increased due to additional levies by banks for accounts becoming NPA. These factors had impacted the profitability substantially and resulted into substantial losses for the year.
## Substantial losses over the past three years and resultant reduction in net-worth coupled with inability of the company to discharge liabilities towards bank borrowings resulted into substantial negative return on capital employed for the year.
* Investments includes Investment in Securities, Balance in Fixed Deposit Accounts with Bank, Investment Properties only.
Income On Investment includes Interest on Bank Fixed Deposits, Rental Income on Investment Property and Gain/(Loss) on Investment Held or Sold.
The company had made an application for grant of subsidy to Industrial Commissionerate, Gandhinagar for grant of subsidy under the Scheme for Incentive to Industries in the form of reimbursement of Net VAT-Gujarat/Net GST-Gujarat based on gross investments in property, plant & equipment (referred to as Fixed Assets) and subject of compliance of the conditions as specified for eligibility of the grant of subsidy in the financial year 2021-22. The company had been issued Provisional Eligibility Certificates under Scheme for Incentive to Industries by the Industrial Commissionerate, Gandhinagar during the financial year 2021-22. Based on the consideration of such Provisional Eligibility Certificates and on the basis of consideration of compliance of terms and conditions of grant of subsidy and possibility of further compliance as may be required, the company had accounted an amount of Rs. 825.25/- as subsidy income for the financial year 2021-22 as an operational income and had classified the same as income from operations in the standalone financial statements.
The company has realized subsidy amount of Rs. 263.56 during the current financial year and the balance amount of Rs. 561.69/- was pending to be recovered as at the end of the current financial year on account of ongoing procedural compliances. Based on the legal consultation it is expected that the company may realize stage-wise or in instalments or period-wise subsidy amount in the coming year(s) of the balance amount and hence the balance of subsidy of Rs. 561.69/- has been carried as Current Financial Assets as Claims Receivable in the Financial Statements.
On periodical basis and as and when required, the Company reviews the carrying amount of its assets vis-a-vis net realisable value of respective asset or group of assets. In the Financial Year 2023-24, the Company has reviewed the carrying amount of its assets and observed that there is no indication that those assets or group of assets have expected net realisable value below the carrying amount resulting into any impairment loss. On account of expected realisable value of asset or group of assets not being lower than their respective carrying values as at the end of the financial year no such impairment loss has been provided.
Though the wholly owned subsidiary of the company i.e. Balaram Papers Private Limited has incurred losses over the years and has not carried out any operational activities during the financial year 2023-24, the management of the company has assessed the carrying value of its investment in subsidiary and estimated that in all likely possibilities it is expected that realizable value of its investment either through operations by subsidiary and in case if required to be disposed off will not be lower than the carrying value and hence the investment in subsidiary has been carried at cost of acquisition without any provision for impairment if any. The management will continue to assess the realizable value of its investment in the subsidiary if any event occurs which indicates that the realizable value of investment in the subsidiary will not higher than the carrying value then the company will provide for impairment losses.
Though the company had to suspend business operations and discontinue to operate plants, the management expects the assets other than investment in subsidiary and loans to subsidiary to be used on availability of liquidity of funds and does not intend either to discontinue the business use of such assets or intends to sell the assets within one year from the end of the current financial year and hence no assets have been recognised as held for sale as at the end of the current financial year. The management expects to use such assets in the business operations and it is estimated that in all likely possibilities it is expected that realizable value of all other assets either through resumption of business operations and in case if required to be disposed off will not be lower than the carrying value and all other assets have been carried at cost of acquisition without any provision for impairment if any.
The company did not have any transaction with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956, during the current year and in the previous year.
The company has availed working capital and other loans from various banks for an amount as outstanding as reported in the standalone financial statements (Refer to Note No. 17 & 19) against the security of its assets including current assets. As a part of terms of sanction with various banks, the company is required to submit various monthly, quarterly and periodical statements including stock statements and statement of various assets charged for availing loans including working capital loans. Due to substantial business losses and nonavailability of liquidity, the company could not discharge its liabilities towards bank borrowings and hence subsequently the bank loan accounts from all banks have been declared as NPA and no drawing power was available against the outstanding bank loan accounts as at March 31, 2025.
The management of the company has been making all efforts to resume the production and business operations so as to regularize bank accounts and discharge its liabilities as are due or become due.
The company has shut down its plants at Halved since 8th of September, 2024 and has not resumed the production since the closure upto the date of approval the standalone financial statements for the current financial year i.e. 29th May, 2025. The other plant of the company at Bhuj has also been non-operational.
Though the company has been facing financial stress and has defaulted in payment to creditors including bank creditors in the financial year 2024-25, the management of the company has been taking all appropriate measures to maintain plant & machineries, operating PPE and operating production facilities so as to commence the normal course of production and business on availability of sufficient sources of funds. Considering the past market presence of the company, operational activities carried out by the company over the years, profits generated in the past, profitable nature of the business, operational capacities available, management efforts to revive the plant operations & business and management experience in the line of business, the management of the company expects to resume normal course of production and business and for that actively making all efforts including efforts to arrange for sources of funds. On resumption of the plant operations & business, the management of the company expects to discharge all of its liabilities towards bank, suppliers and other creditors and continue to operate for foreseeable future.
As the management of the company expects to resume plant operations & business in the coming financial year that is financial year 2025-26, the company has operated plants and continued normal business operations upto 8th September, 2024, expects to discharge all of its liabilities towards bank, suppliers and other creditors, expects to continue to operate the normal course of business and management assessment to derive revenue from continued use of operational capacities and not liquidate them in the foreseeable future, the standalone financial statements for the financial year 2024-25 have been prepared assuming company’s status as going concern.
The company has been using more than 80.00% of its raw materials i.e. waste paper from imports over the years since the commencement of production. The plants of the company at Halvad were operating upto 8th September, 2024. Before the operations at plants at Halvad were shut down, the company had placed orders for import of raw materials i.e. waste papers from various suppliers. To secure import purchases and negotiate better terms for import and as per prevailing standards on import of goods, the company has been following the system of making advance payment through the bank facilities in the form of Letter of Credit (LC)/Buyer’s Credit (BC) to import suppliers. Accordingly, as the operations of the company were going on the company had made advance payments to suppliers of imported raw materials pending receipt of goods. However, in the meantime, the company had to close down its operational activities due to non-availability of liquid sources of funds on account of continuous business losses. As result of this the company could not make further payment to import suppliers if any pending as well to the all service providers as involved in the entire cycle of import of goods including shipping lines and hence the company could not lift materials from the port. The management of the company made all possible efforts to revive the operational activities and to make payment to suppliers so that imported raw materials could be lifted from the port. However, the position of the company deteriorated further over the period of time and all bank accounts of the company then were declared as NPA by banks effective from December-2024. Because of the factors stated above, the company could not lift raw materials from the ports for extended period of time and hence the company had been issued notices for auction of raw materials. However, for reasons of non-availability of sufficient manpower and sources of funds the company could not respond to such notices. The management of the company made possible efforts to get the details of materials sold through auction from various sources including shipping lines. However, due to non-payment of outstanding dues and other factors affecting the business of the company, the company could not get appropriate documentary evidence with regard to materials lying at port at 31st March, 2025 as well as goods disposed of through auction and in absence of documentary evidence, the company could not account for purchase of imported goods
and liabilities thereagainst, inventory held at port, sale of goods through auction and give appropriate accounting treatment to amounts paid as custom duty against such import and amounts paid to import suppliers. Accordingly, the company continued to carry amounts paid to import suppliers and custom duties paid as amount recoverable in the books of account as at 31st March, 2025. On availability of appropriate documentary evidences, appropriate treatment of above matters will be given in the books of account.
Due to shut down of the plants and non-utilisation of raw materials and other items and also holding of inventory including finished goods as such over the period from 8th September, 2024 upto 31st December, 2024, the management of the company considered it appropriate to physically verify the materials as lying at factories with a view to determine realizable values or values in use of various items of inventories including raw materials, packing materials, coal, finished goods, stock-in-process and also stores items. Accordingly, physical verification of inventories was carried out at Halvad Plant by technical persons and it was reported to the management that:
i. The quality of raw materials of various grades i.e. waste paper has been degraded such that it will give low yields and low strength due to water mixing in paper fiber, moisture, fungal growth, environmental effects and other factors relating to storage and natural effects.
ii. The quality of various items of chemical deteriorated due to self-life and other factors affecting the chemical composition of respective items.
iii. The packing material quality deteriorated due to damage to material on account of non-use and time factor.
iv. The quality of coal deteriorated due to moisture, non-use and natural effects.
However, considering the effects of assessment as already given to the valuation of inventories in December-2024 and on further assessment of quality as at 31st March, 2025 for the financial year ended 31st March, 2025 no further write down was deemed appropriate by the management in respect of various items of inventories.
The standalone financial statements for the year ended includes the above effect of inventories write-down off Rs. 973.64 under the respective heads of expenses
v) The Standalone Financial Statements were authorised for issue by the Board of Directors on 29th May, 2025.
x) The previous year’s figures have been reworked, regrouped and reclassified wherever necessary so as to make them comparable with those of the current year.
The Standalone Financial Statements have been presented in Indian Rupee (?) in Lakhs rounded off to two decimal points as per amendment to Schedule III to the Companies Act, 2013.
The figures wherever shown in bracket represent deductions.