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NOTES TO ACCOUNTS

Scindia Steam Navigation Company Ltd.

You can view the entire text of Notes to accounts of the company for the latest year
Market Cap. (₹) 7.77 Cr. P/BV -0.02 Book Value (₹) -382.84
52 Week High/Low (₹) 10/8 FV/ML 20/50 P/E(X) 0.00
Bookclosure 14/09/2012 EPS (₹) 0.00 Div Yield (%) 0.00
Year End :2011-03 
1. Contingent Liabilities:

a. As a member of Indian Register of Shipping, a Company Limited by Guarantee. Rs. 1,000 {Previous Year Rs. 1,000).

b. Claims against the Company, not acknowledged as debts -

(i) In respect of sale deficit claim made by Mumbai Port Trust of Rs. 7,80,747.44 (previous year Rs. 7,80,747.44),

(ii) In respect of 15 suits filed by Mumbai Port Trust in High Court at Bombay amounting to Rs. 101,40,648.44 (previous year NIL) and

(iii) In respect of short landing/damage to cargo claimed by Food Corporation of India amounting to Rs. 6,08,010.05 (previous year Rs. 6,08,010.05).

2. The Shipping Development Fund Committee (SDFC) has been abolished in terms of the Shipping Development Committee (Abolition) Act, 1986. During the pendency of the loan of Rs. 33,88,07,286/- (previous year Rs. 33,88,07,286) from erstwhile SDFC/Government of India (GOI), they have the option and power to convert the whole or any part of the loan as may be outstanding at any time, into Equity Shares at par or at the rates as may be determined at their sole discretion.

3. (a) A sum of Rs.33,88,07,286 (previous year Rs. 33,88,07,286) is due to GOI

as on 31.03.2011 in respect of loan installments which fell due to erstwhile SDFC/GOI from May 1982 to date. Interest outstanding as at 31.03.2011 is Rs. 165,84,55,849 (previous year Rs. 154,85,38,678).

(b) The outstanding balance as at 31.03.2011 under guarantee obligations is Rs. 971,61,740 (previous year Rs. 971,61,740). Interest of Rs. 219,61,696 was paid to Government of India during the year. Balance interest amounting to Rs. 60,98,53,060 (previous year Rs. 60,09,50,553) for the period up to March 2011 on the above borrowings though charged in the accounts has not been paid

(c) In respect of working capital loan principal amount outstanding is Nil (previous year Nil). No interest has been paid during the year (previous year Nil).Balance interest amounting to Rs. 43,37,07,371 (previous year Rs. 40,43,10,307) for the period up to March 2011 though charged in the accounts, has not been paid.

4. (i) The immovable properties mortgaged to Government of India having been

sold, the loans of Rs. 313,79,85,306 (previous year Rs. 298,97,68,564) outstanding to the Government of India have been shown as unsecured loans. (ii) The outstanding balance against cash credit facility from a Bank amounting to Rs. 27,62,81,639 (Rs. 23,84,41,224 as at March 31, 2010) has been shown as unsecured as the facility does not have any security against the said balance.

Against the above cash credit facility, Bank of India was having a second equitable charge on the Company's property - Scindia Colony at Andhefi. The Government of India, the first charge-holder as mortgagee sold the said property after obtaining necessary consent of Bank of India and the charge created earlier was vacated. Form No. 17 dated 19.02.2007 duly signed by the Bank and the Company was filed with the Registrar of Companies. However, the Company has received a certificate of registration modifying the charge based on an Assignment agreement dated 31.12.2008 executed between the Bank and ASREC (India) Ltd. In fact, the Company has not entered into any such mortgage/assignment agreement with ASREC (India) Ltd. Therefore, the Company is contesting the said modification with ASREC (India) Ltd., Bank of India and the Registrar of Companies.

5. Shipping operations of the company stand suspended, the net worth of the company is totally eroded and substantial loss of Rs. 342,57,18,160 is carried forward in the books. The shareholders at the last AGM held on July 28, 2010 passed a resolution for winding up of the company, and winding up petition was filed in the High Court at Bombay on February 28, 2011. Despite this, the Accounts are continued to be prepared on a 'going concern basis' in the absence of adequate necessary data for compilation on an alternative basis. Consequently, no adjustments are made in the accounts relating to the recoverability of recorded asset amounts and in respect of recorded liabilities and contingent liabilities that might devolve on the Company, for compilation of accounts on an alternative basis.

6. The Company has an investment in the form of Equity Share Capital of Rs. 24,00,000 in its subsidiary company, Scindia Workshop Ltd. Provision has been made in the Accounts for the probable permanent diminution in the said Investment of Rs. 24,00,000. The Company has also sanctioned a loan of Rs. 2200 lacs (amount outstanding as at March 31, 2011 Rs. 17,07,01,479, as at March 31, 2010 Rs. 19,37,93,744).

The recoverability of the investment and the loan, in our opinion, is dependent on the outcome of the Reference made under Section 18 of the Land Acquisition Act, 1894, against the Award given by the Special Land Acquisition Officer (MHADA) for the land and buildings acquired by the Government of Maharashtra. In the reference filed, the Hon'ble High Court has passed an order for additionai compensation of Rs. 211,91,542.80 plus interest. The subsidiary, as per legal advice, has filed an appeal before the Division Bench of the Bombay High Court for enhancement of compensation. The appeal was admitted. The Division Bench directed the subsidiary to approach the High Powered Committee of Government of India by Order dated January 11, 2011 as all parties involved in the appeal are Government or Government undertakings in view of Supreme Court judgment in the case of ONGC and Another v/s Collector of Central Excise. However on February 17, 2011, in Civil Appeal no. 1883 of

2011 of ECIL v/s Union of India & Others; the Larger Bench of the Supreme Court observed that the High Powered Committee has not achieved the results for which it was constituted and in fact led to delays in litigation and loss of revenue, and under the circumstances, the Larger Bench decided to recall its earlier Order and disbanded the High Powered Committee. In view of the above developments, the subsidiary will have to file review application before the Division Bench to once again hear the case on merits. \n regard to the additional compensation plus interest thereon lying in the Court, a sum of Rs. 290,27,965 inclusive of interest was collected by the subsidiary during July/August 2010. Based on the tax advice received, tax provision of Rs. 58,14,000 was made by the subsidiary in its books, and paid Rs. 57,25,000 as advance tax before March 15, 2011. Further sum of Rs. 40,000 was paid as self assessment tax during May 2011. 7. (a) No provision for taxation has been made in view of no assessable income (previous year Rs. nil).

11. The office of Company Secretary has been vacant since October 1993. In the circumstances, authentication by Company Secretary does not appear in the Accounts.

12. As per the information available with the company, it does not have any outstanding dues to Undertakings registered under Micro, Small and Medium Enterprises Development Act, 2006.

13. As the company's shipping activities have been suspended, the company does not have any reportable Segment. Therefore, Accounting Standard 17 - Segment Reporting issued by the Institute of Chartered Accountants of India is not applicable.

15. The interest expense for the year of Rs. 20,80,33,636 (previous year Rs. 20,02,60,865) includes Rs. 17,01,78,438 (previous year Rs. 16,75,90,280) on GOI outstanding balance, and Rs. 3,7855,198 (previous year Rs. 3,26,70,585) on outstanding balance in C. C. account with Bank of India. The interest expense on GOI outstanding balance is continued to be charged as per loan covenants i.e. as interest on outstanding principal amount and as additional interest on outstanding interest amounts.

16. The Company has unabsorbed business loss of Rs. 117 crores and unabsorbed depreciation of Rs. 85 crores as per Income Tax assessment. However, in view of suspension of shipping activity and uncertainty of future operations, no deferred tax asset has been recognized in the books of account as prescribed under Accounting Standard 22, Accounting for Taxes on Income, issued by the Institute of Chartered Accountants of India.

17. The company received claim for payment of gratuity from seamen. Since the Fund with the Gratuity Trust created earlier got exhausted, the gratuity amount of Rs. 63,362 was paid by the company and is included in the office expenses.

18. Related Party Disclosures:

(a) List of Related Parties and Relationships

Party Relationship

(i) Scindia Workshop Ltd. 100 % subsidiary

(ii) Shri D.A.Biwalkar Chairman & Managing Director

(b) Related Party Transactions

(i) During the year net receipt Rs. 230,92,265 (previous year paid Rs. 17,16,770), (ii) Debit balance outstanding as on 31.03.2011 Outstanding Receivable Rs. 17,07,01,479 {as at 31.03.2010 Rs. 19,37,93,744),

(iii) Remuneration payable to Chairman & Managing Director Rs. 573,885 (salary Rs. 3,51,000, perquisite Rs.145,000 plus gratuity provision Rs. 77,885), (previous year Rs. 5,04,550).

19. Figures for the previous year have been regrouped or re-arranged wherever necessary and practicable.

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