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Bell Ceramics Ltd.

You can view the entire text of Notes to accounts of the company for the latest year
Market Cap. (₹) 14.37 Cr. P/BV 0.17 Book Value (₹) 70.68
52 Week High/Low (₹) 0/0 FV/ML 10/1 P/E(X) 10.84
Bookclosure 29/05/2012 EPS (₹) 1.09 Div Yield (%) 0.00
Year End :2010-12 
1) where, as a result of past events, there is a present obligation that probably requires an outflow of resources and reliable estimates' can be made of the amount of obligation-an appropriate provision is created and disclosed;

2) where as result of past events, there is a possible obligation that may, but probably will not require an outflow of resources-no provision is recognised but appropriate disclosure made as contingent liability unless the possibility of outflow is remote.

                                               As at              As at
                                            31.12.10          31 Mar 10
                                       (Rs in lakhs)      (Rs in lakhs)

1 Contingent Liabilities

1(a)   Letters of credit opened in 
       favour of overseas/inland suppliers    256.80             210.35

1(b)   Outstanding Bank guarantees              1.88               1.88

1(c)   Arrears of fixed cumulative 
       preference dividend *                    0.00           1,804.51
1(d) Tax Demands under appeal, not provided for (excluding interest and penalties, if any)

(i)    Income Tax demands                      51.83              51.83

(ii)   Sales tax demands                       27.03               9.61

(iii) Excise demands                           32.75              28.98
* As per the scheme of arrangement & restructuring approved by Hon'ble High Court of Gujarat vide it's order dated 2nd July 2010, the accumulated amount of unpaid preference dividend till the effective date of scheme i.e 15th July 2010, stands cancelled.

2 The Scheme of Arrangement and Restructuring has been approved by the Hon'ble Gujarat High Court vide it's order dated 2nd July 2010.

Further, the Scheme has been made effective from 15th July 2010, the day formal order sanctioning the scheme was filed with the Registrar of Companies, Ahmedabad.

Upon the scheme becoming effective, the existing 21,521,425 equity shares of Rs. 10/- each aggregating to Rs.2152.14 lakhs of the Company has been reduced to 21,521,425 equity shares of Rs.3.33 each aggregating to Rs.717.38 lakhs and further consolidating in the ratio of 3 equity shares of Rs.3.33 each into 1 equity share of Rs.10/- each. The said credits on Capital reduction amounting to Rs.1434.76 lakhs after adjusting expenses relating to reduction Rs.10.37 lakhs, and the general reserve balance of Rs.1460.75 lakhs has been utilized to write off the accumulated losses of the Company as at 31st March 2008 amounting to Rs.2838.18 lakhs, thus leaving a balance of Rs. 46.96 lakhs in Capital Restructuring Reserve Account.

Further in terms of the said scheme, 8%, 1,50,00,000 Redeemable Cumulative Preference Shares of Rs 10/- each fully paid up aggregating to Rs 1500 lakhs have also been converted into 50,00,000 Equity shares of Rs 10/- each fully paid up at a premium of Rs 20/- per share. The accumulated amount of preference dividend payable to preference shareholders till the effective date of the scheme i.e. 15th July 2010 stands cancelled.

3 Pursuant to the Share Purchase Agreement dated 20.09.10 entered into between Shri Shiv Kumar Jatia (one of the promoters of the Company), Orient Ceramics and Industries Limited (OCIL) and Bell Ceramics Limited (the Company), 62.33% of the equity capital held by Shri Shiv Kumar Jatia in the Company has been acquired by OCIL. Further, pursuant to Regulation 10 & 12 of the SEBI(SAST) Regulation 1997, by an offer made to the public shareholders of the Company, OCIL has acquired further 5.30% Equity shares of Rs.10/- each fully paid up.

With the above acquisition of Equity shares in the Company by OCIL, the Company has become a subsidiary of OCIL w.e.f 29.12.2010.

4 During the financial year 2008-09, IDBI Bank Ltd.(IDBI) had considered Restructuring proposal of the Company and converted the entire outstanding liabilities of the Company as at 31.03.2008 towards the Rupee Loan and the Non convertible Debentures privately placed with IDBI Bank Ltd by the Company into a fresh Rupee Term Loan. The repayment schedule of the principal was revised and the rate of interest on the entire outstanding was reduced from 11% p.a to 8% p.a. One of the conditions of the said sanction was reserving a right for IDBI to recompense the loss of interest in future. Accordingly, while granting approval to the proposal of the change in the management control of the Company from Shri Shiv Kumar Jatia to Orient Ceramics and Industries Limited as referred to in note 3 above, IDBI Bank Limited has intimated the Company to pay the recompense amount of Rs 5,25,44,690/-, being the differential interest amount on account of reduction in the rate of interest from 11% p.a to 8% p.a for the period from 01.04.08 to 01.08.11. Accordingly the diferential interest amount of Rs.4,40,96,499/- for the period 01.04.08 till 31.12.10 has been provided in the accounts as "Interest on Fixed Loans" under Schedule 15.

5 During last 3 years, due to shortage in the working capital assistance, the Company had borrowed by way of short term loans (Inter Corporate Deposits) from WEL Intertrade Private Limited (WEL). On account of recurring financial losses, the Company was not able to meet its commitments towards this liability. During the year, at the request of the Company, WEL has entered into One Time Settlement agreement (OTS) with the Company and confirmed the settlement of the entire dues, including interest at Rs.785.61 Lakhs as against Rs.1311.06 lakhs due and further agreed not to charge any further interest effective 01.01.11. Accordingly, the Company has written back the amount waived to the extent of Rs.525.45 Lakhs, which has been included under "Credit Balances written Back".

6 Loans

6(a) Loan from IDBI Bank Ltd (IDBI) is secured by first mortgage and charge on immovable properties, present and future and hypothecation of all movables (save and except book debts) subject to prior charges created in favour of Company's bankers for working capital requirements. This loan is further secured by a letter of comfort and Personal Guarantee given to IDBI by Mr.Shiv Kumar Jatia, one of the erstwhile promoters of the Company. IDBI has agreed to replace personal guarantee of Shri Shiv Kumar Jatia against a corporate guarantee to be executed by Orient Ceramics and Industries Limited(OCIL), the holding Company.

6(b) Loan from Bank of India (BOI) is secured by hypothecation of all the present and future plant and machinery, stocks, book debts, receivables, etc. and first pari passu mortgage and charge on the block of assets of the Company and secured by Personal Guarantee of Shri Shiv Kumar Jatia and Shri Ramesh Jatia, the erstwhile promoters of the Company. BOI has agreed to replace personal guarantees of Shri Shiv Kumar Jatia and Shri Ramesh Jatia against a corporate guarantee to be executed by OCIL, the holding Company.

6(c) Hire purchase loans are secured by hypothecation of the assets acquired out of the loans.

6(d) Short term loans from Banks are secured against hypothecation of movable assets, including stock of raw materials, finished goods, stock in process, store and spares, book debts, receivables, etc. and by way of a second pari passu mortgage and charge on all the immovable properties of the company. Further secured by a Personal Gurantee given to BOI and Bank of Bahrain & Kuwait by Shri Shiv Kumar Jatia and to Punjab National Bank by Shri Ramesh Jatia, the erstwhile promoters of the Company. All the three banks have agreed to replace personal gurantees of Shri Shiv Kuamr Jatia and Shri Ramesh Jatia as above against a corporate guarantee to be executed by OCIL, the holding company.

7 Acceptances given to suppliers amounting to Rs.14.80 lakhs (Previous Year Rs.90.93 lakhs) represent the bills discounted by the suppliers with the Small Industries Development Bank of India under the bill discounting facilities granted by SIDBI to the company secured by a second hypothecation charge on movable assets/book debts and collaterally secured by a second pari passu charge on all the immovable properties of the Company, present and future.

8 Capital Reserve represents :

Central & State Subsidy Rs 25.00 lakhs (Previous Year Rs 25.00 lakhs) ; and Profit on Reissue of Forfeited Shares Rs 0.57 lakhs (Previous Year Rs 0.57 lakhs)

9 Balances of sundry debtors, loans and advances and sundry creditors to the extent not confirmed as on 31.12.2010 are subject to reconciliation and adjustment, wherever necessary.

10 The Company has during the year created deferred tax asset of Rs. 267.65 lakhs (Previous Year deferred tax asset Rs 202.57 lakhs ) resulting in net deferred tax asset of Rs. 516.27 lakhs as at balance sheet date in respect of temporary differences as per the details hereunder:

The Company has created deferred tax assets on the Unabsorbed Depreciation as calculated under the provisions of the Income Tax Act, 1961. As confirmed by the Board and Audit Committee and based on the current performance of the Company, the Management is virtually certain that there will be sufficient profits in future to write off such deferred tax asset. The future business projections made by the Management and its commitment to the same is the basis to support the recognition of the deferred tax asset.

11 Aggregate Directors' remuneration Rs.59.32 lakhs (Previous Year Rs.76.31 lakhs) includes Company's contribution to Provident Fund and other funds Rs. 6.93 lakhs (Previous Year Rs 7.77 lakhs). The remuneration of Rs.79.06 lacs for the period 1.1.10 to 31.12.10 paid/payable to Managing Director and Executive Director is pending approval of Central Govt as per the provision of Section 311 read with Schedule XIII of Companies Act 1956. Gratuity and Leave Encashment entitlements based on acturial valuation are not considered above.

12 Show cause notices have been received from Excise department amounting to Rs 4.83. lakhs (Previous Year Rs.6.16) as regards Cenvat which in the opinion of legal experts and Management are frivolous and liable to be quashed.

13 The Company is a single segment Company engaged in the business of production and sale of "Ceramic Glazed Tiles". In the opinion of the Management the risks and rewards associated with the different manufacturing units of the Company are identical, hence no further disclousures other than those already provided in the financial statements are required as per Mandatory Accounting Standard 17 (AS-17) on "Segment Reporting".

14 Subsequent to the Balance Sheet date, the Board of Directors of the Company has approved to amalgamate its business with that of its holding Company, i.e., Orient Ceramics and Industris Limited (OCIL), both the Companies being in similar line of business and in order to make the Company a financially viable unit. The Appointed Date for such amalgamation of the Company with OCIL done on the basis of Purchase method as prescribed in Accounting Standard 14 on Accounting for Amalgamations shall be January 1, 2011.

Note : The basic and diluted earning per share of the Company, as shown above, is after implementation of the Scheme of Arrangement approved by the Hon'ble High Court of Gujarat,leading to conversion of Preference Shares into Equity Shares, waiver of arrears of preference dividend and reduction of equity share capital (refer note 2 above).

15. Disclosures under Accounting Standard 15 on Employee Benefits:

During the year, based on actuarial valuation, the Company has created a liability for Rs.53 lakhs (Net of Plan Assets) (Previous year Rs.40.61 lakhs) for Gratuity and Rs.99.89 lakhs (Previous Year Rs.96.99 lakhs ) for the Leave Encashment.

Disclosures in respect of Defined benefit obligations in respect of Gratuity & Leave Encashment pursuant to Accounting Standard 15:

16 (A) Related party disclosures:

(i) Names of Related Parties where control exists at various times during the year:

Indian Promoters         Mr.S.K.Jatia                (Part of the year)

                         Orient Ceramics & Ind. Ltd. (Part of the year)
(ii) Key Management Personnel : Mr. K M Pai -Managing Director

                                   Mr. S R Vyas -Executive Director
(iii) Holding Company Orient Ceramics & Industries Ltd

(iv) Associate Parties / Relatives of Directors of the Promoter Company which significantly influence/ are influenced by the Company (either individually or with others) with whom the Company had transactions during the year / previous year : Mr Ramesh Jatia Asian Hotels (North) Limited (formerly Asian Hotels Limited) Renown Pharmaceuticals Pvt. Ltd. (Formerly Renown Ceratek Pvt. Ltd.) WEL Intertrade Private Limited Ascent Hotels Private Limited

17. The Assets of the Company have not been impaired during the year as certified by the management of the Company. The management has conducted the test of impairment of of Assets using the Value-in-use method in accordance with the Mandatory Accounting Standard -28 (AS - 28) on Impairment of Assets. For calculation of value -in-use, discount rate of 8% per annum is used by the Management.

18 Previous Year figures have been regrouped wherever necessary to make them comparable with those of the current year.

19 Current period figures are for a period of nine months from 1.04.2010 to 31.12.10. whereas those for the previous period are from 1.04.2009 to 31.3.2010, hence not comparable.

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