MODI INDUSTRIES LIMITED
82nd Annual Report and Accounts 2015-16
CONTENTS Page No.
Board of Directors, CFO, CS, 2 Bankers, Auditors and Registered Office Notice 3 Directors’ Report 9 Auditors’ Report 45 Accounts 55 Notes to the Accounts 59 Auditors’ Report on Consolidated 89 Financial Statements Consolidated Financial Statements 96 Notes to the Consolidated 100 Financial Statements
MODI INDUSTRIES LIMITED (1) BOARD OF DIRECTORS
MANAGING DIRECTORS Shri Mahendra Kumar Modi Shri Umesh Kumar Modi
DIRECTORS Shri Krishan Kumar Modi Shri Vinay Kumar Modi Shri Rakesh Kumar Modi Shri Manish Kumar Modi Shri Abhishek Modi Shri Santosh Kumar Aggarwal
CHIEF FINANCIAL OFFICER Shri Narayan Prakash Bansal
COMPANY SECRETARY Shri Vimal Prasad Gupta
BANKERS Allahabad Bank Punjab National Bank State Bank of India
STATUTORY AUDITORS M/s. P.R. Mehra & Co., Chartered Accountants, (Firm Regn No. 000051N) 56, Darya Ganj, New Delhi-110002.
COST AUDITORS M/s. M.K. Singhal & Co., Cost Accountants (Firm Regn.No. 00074) ‘Panchvati’, Opp. M.M. College, Modinagar-201204. (U.P.)
SECRETARIAL AUDITORS M/s. A.N. Jaiswal & Co., Company Secretaries, (CP No. 14629) RZ-38, FF, South Extention Part II, Near Jagaran Chowk, Uttam Nagar (W), New Delhi 110059.
REGISTERED OFFICE Modinagar District Ghaziabad (U.P.)-201204.
NAME OF UNITS Modi Sugar Mills Modi Vanaspati Mfg. Co. Modi Paint & Varnish Works Modi Gas & Chemicals Modi Distillery Modi Arc Electrodes Co. Modi Steels
(2) MODI INDUSTRIES LIMITED MODI INDUSTRIES LIMITED CIN - L15429UP1932PLC000469 Regd. Office : Modinagar - 201204. (U.P.) Tel: 01232-231755, 243115 Email : [email protected] Website : www.modiindustries.net
NOTICE
NOTICE is hereby given that the 82nd Annual General Meeting of Modi Industries Limited will be held on Thursday, the 29th September, 2016, at 12:30 P.M., at Modi Industries Transit House (Modi Industries Complex), Modinagar, to transact the following business :
ORDINARY BUSINESS:
1. To receive, consider and adopt:
(a) the Audited Financial Statements of the Company for the financial year ended March 31, 2016, the Reports of the Board of Directors and the Auditors thereon; and
(b) the Audited Consolidated Financial Statements of the Company for the financial year ended March 31, 2016 and the Auditors Report thereon.
2. To appoint Directors, who retire by rotation at this Annual General Meeting and being eligible, offer themselves for re-appointment and to consider and, if thought fit, to pass, with or without modification(s), the following resolutions as Ordinary Resolutions:
(a) “RESOLVED that pursuant to Section 152(6) and all other applicable provisions, if any, of the Companies Act, 2013 and the rules made thereunder (including any statutory modification(s) and re-enactment thereof for the time being in force), Shri Vinay Kumar Modi (DIN 00274605), who retires by rotation at this Annual General Meeting and is eligible for re-appointment, be and is hereby re-appointed as Director of the Company.”
(b) “RESOLVED that pursuant to Section 152(6) and all other applicable provisions, if any, of the Companies Act, 2013 and the rules made thereunder (including any statutory modification(s) and re-enactment thereof for the time being in force), Shri Rakesh Kumar Modi (DIN 00022386), who retires by rotation at this Annual General Meeting and is eligible for re-appointment, be and is hereby re- appointed as Director of the Company.”
3. To appoint Statutory Auditor and to fix their remuneration and, to consider and, if thought fit, to pass, with or without modification(s), the following resolution as an Ordinary Resolution:
“RESOLVED that pursuant to the provisions of Section 139 and all other applicable provisions, if any, of the Companies Act, 2013 and the rules made thereunder (including any statutory modification(s) and re-enactment thereof for the time being in force), M/s. P.R. Mehra & Co., Chartered Accountants (FRN 000051N), New Delhi, the retiring Auditors, be and are hereby re-appointed as Statutory Auditors of the Company to hold office from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting, on such remuneration as may be determined by the Board of Directors of the company.”
SPECIAL BUSINESS:
4. To consider and if thought fit, to pass, with or without modification(s), the resolution for approving the remuneration payable to Cost Auditors as an Ordinary Resolution:
“RESOLVED that pursuant to the provisions of Section 148(3), and all other applicable provisions, if any, of the Companies Act, 2013 and rules made there under, (including any statutory modification(s) or re-enactment thereof for the time being in force), the consent of the members be and is hereby accorded for payment of total remuneration of Rs. 40,000/- (including all expenses) + applicable Service Tax payable to M/s. M.K. Singhal & Co., (Firm’s Regn. No. 00074) Cost Accountants, Modinagar, to conduct the audit of Cost Accounts maintained by Sugar and Distillery units of the Company for the financial year 2016-17.”
5. To consider and if thought fit, to pass, with or without modification(s) the related party transactions & agreements for renewal of rent/lease/ hire agreements as an Ordinary Resolution:
“RESOLVED that pursuant to the provisions of Section 188 and all other applicable provisions of the Companies Act, 2013 read with the rules made there under (including any statutory modification(s) or re-enactment thereof for the time being in force) the consent of the
MODI INDUSTRIES LIMITED (3) members be and is hereby accorded for ratification of the rent/lease/hire agreements and transactions for Cylinders/Flat/D.G. SET as already entered by the Company exceeding the threshold limits as specified in Rule 15 (3) of the Companies (Meetings of Board and its Powers) Rules, 2014 with the respective related parties as mentioned herein below:
Sl. Directors / KMP who is related Related Party (RP) Effective date of Rent / Amount No. and nature of relation Lease / Hire Agreement (` )
1. Shri Manish Kumar Modi is common Weld Excel India Limited Renewed w.e.f. 1st June, 2015 for five 45/- per director and Shri Mahendra Kumar years for 2200 Cylinders taken/to be Cylinder per Modi as relative of director. taken on operating lease rent against Month. security deposit @ Rs. 2000/- per cylinder.
2. Shri Umesh Kumar Modi and Win Medicare Private Ltd. With effect from 15th March, 2016 8,000/- Shri Abhishek Modi are common for eleven months for lease rent income Per Month directors. of Flat No. A-1, Suresh Park, Modinagar.
3. Shri Umesh Kumar Modi and SBCE Bio Energy Limited. D.G. SET (500KVA/400KW Electric 67,000/- Shri Abhishek Modi are common Generating Set) taken on hire w.e.f. Per Month directors. 2nd November, 2015 for five years.
RESOLVED FURTHER that Shri Mahendra Kumar Modi (DIN-00014594), Managing Director of the company be and is hereby authorized to execute and/or renew Rent/Lease Agreement as mentioned at Serial No.1 above, further time to time, on same terms and conditions, or cancel the agreement, and to do all acts, deeds, things and to take all such steps as may be necessary. RESOLVED FURTHER that Shri Umesh Kumar Modi (DIN-00002757), Managing Director of the company be and is hereby authorized to execute and/or renew Rent/Lease/Hire Agreements as mentioned at Serial No. 2 & 3 above, further time to time, on same terms and conditions, or cancel the agreement, and to do all acts, deeds, things and to take all such steps as may be necessary
By Order of the Board of Directors For Modi Industries Limited
Vimal Prasad Gupta Company Secretary Place : Delhi (FCS – 6380) Dated: 22nd August, 2016
Regd. Office: Modinagar - 201204. (U.P.) Tel: 01232-231755, 243115 CIN - L15429UP1932PLC000469 Email : [email protected] Website: www.modiindustries.net
NOTES :
1 A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE ON POLL ON HIS / HER BEHALF AND THE PROXY NEED NOT BE A MEMBER OF THE COMPANY. Pursuant to Section 105 of the Companies Act, 2013, a person can act as a Proxy on behalf of not more than fifty members holding in aggregate, not more than ten percent of the total share capital of the Company. Members holding more than ten percent of the total share capital of the Company may appoint a single person as Proxy, who shall not act as a Proxy for any other Member. The instrument of Proxy, in order to be effective, should be deposited at the Registered Office of the Company, duly completed and signed, not later than 48 hours before the commencement of the meeting. A Proxy Form is annexed to this Report. Proxies submitted on behalf of limited companies, societies, etc. must be supported by an appropriate resolution/authority, as applicable.
2. SEBI vide its Circular No. CIR/MRD/DSA/5/2015 Dated 17th April, 2015 provides that the exclusively listed companies which fail to obtain listing in any other nationwide stock exchange will cease to be a listed company and will be moved to the Dissemination Board by the existing stock exchange. Now your Company has been moved to the Dissemination Board of NSE, hence become/deemed to be unlisted Company. Therefore the Listing Agreement/Obligations are not mandatorilly applicable to your Company, for the time being till the further guidelines are issued by the SEBI in this regard.
(4) MODI INDUSTRIES LIMITED 3. An Explanatory Statement pursuant to Section 102 of the Companies Act, 2013 relating to the Special Business to be transacted at the Annual General Meeting is annexed hereto.
4. Brief resume of Directors seeking reappointment at the Annual General Meeting are annexed hereto.
5. The Register of Members of the Company will remain closed from 23rd September, 2016 to 29th September 2016 (both days inclusive).
6. All documents referred to in the accompanying Notice are open for inspection at the Registered Office of the Company on all working days, except Saturday, Sunday and Holidays, between 9.00 A.M. to 11.00 A.M. upto the date of the Annual General Meeting.
7. Shareholders are requested to intimate change in their address, if any, to the company.
8. Share-holders can also register their email ID with the Company for communication through electronic mode.
9. The Securities and Exchange Board of India (SEBI) has mandated submission of Permanent Account Number (PAN) by every participant in securities market. Members holding shares in physical form can submit their PAN details to the Secretarial Department of the Company.
10. For convenience of the Members and proper conduct of the meeting, entry to the meeting venue will be regulated by Attendance Slip, which is enclosed with this Annual Report. Members are requested to sign at the place provided on the Attendance Slip and hand it over at the Registration Counter at the venue.
11. Members desiring any information relating to the accounts are requested to write to the Company well in advance so as to enable the management to keep the information ready.
12. In case of joint holders, attending the meeting, only such joint holder who is higher in the order of names, will be entitled to vote at the Meeting.
13. Pursuant to Section 108 of the Companies Act, 2013, Rule 20 of the Companies (Management and Administration) Rules, 2014, the Company is pleased to provide the facility to Members to exercise their right to vote on the resolutions proposed to be passed at AGM by electronic means. The Members, whose names appear in the Register of Members as on Thursday, the 22nd September, 2016, i.e. the date prior to the commencement of book closure, are entitled to vote on the Resolutions set forth in this Notice. The members may cast their votes on electronic voting system from place other than the venue of the meeting (remote e-voting). The remote e-voting period will commence at 9.00 a.m. on Monday, the 26th September, 2016 and will end at 5.00 p.m. on Wednesday, the 28th September, 2016. The Members attending the AGM who have not cast their vote by remote e-voting shall be eligible to vote at the AGM. The Company has appointed Shri Amar Nath Jaiswal, Practicing Company Secretary, to act as the Scrutinizer, to scrutinize the entire e-voting process in a fair and transparent manner. The Members desiring to vote through remote e-voting are requested to refer to the detailed procedure given hereinafter.
PROCEDURE FOR REMOTE E-VOTING:
I. The Company has entered into an arrangement with National Securities Depository Limited (NSDL) for facilitating remote e-voting for AGM. The instructions for e-voting are as under:
On receipt of the physical copy of the Notice of AGM and Attendance Slip by the Shareholders:
(i) Initial Password is provided, as follows, on the Attendance Slip.
EVEN (Remote E-Voting Event Number) USER ID PASSWORD NO. OF SHARES
(ii) Launch an internet browser and open https://www.evoting.nsdl.com/
(iii) Click on Shareholder - Login.
(iv) Insert ‘User ID’ and ‘Initial Password’ as noted in step (i) above and click on ‘Login’.
(v) Password change menu will appear. Change the Password with a new Password of your choice with minimum 8 digits/characters or combination thereof. Please keep a note of the new Password. It is strongly recommended not to share your Password with any person and take utmost care to keep it confidential.
(vi) Home page of remote e-voting will open. Click on e-Voting - Active Voting Cycles.
MODI INDUSTRIES LIMITED (5) (vii) Select ‘EVEN’ of Modi Industries Limited.
(viii) Now you are ready for remote e-voting as ‘Cast Vote’ page opens.
(ix) Cast your vote by selecting appropriate option and click on ‘Submit’. Click on ‘Confirm’ when prompted.
(x) Upon confirmation, the message ‘Vote cast successfully’ will be displayed.
(xi) Once you have confirmed your vote on the resolution, you cannot modify your vote.
(xii) Institutional shareholders (i.e. other than individuals, HUF, NRI, etc.) are required to send scanned copy (PDF/JPG Format) of the relevant Board Resolution/ Authority Letter, along with attested specimen signature of the duly authorized signatory(ies) who are authorised to vote, to the Scrutinizer by an e-mail at [email protected] with a copy marked to [email protected].
II. In case of any queries, you may refer to the ‘Frequently Asked Questions’ (FAQs) and ‘ remote e-voting user manual’ available in the downloads section of NSDL’s remote e-voting website https://evoting. nsdl.com.
III. The voting rights shall be as per the number of equity shares held by the Member(s) as on Thursday, the 22nd September, 2016, being the cut off date. Members are eligible to cast vote electronically only if they are holding shares as on that date.
IV. Members who have acquired shares after the dispatch of the Annual Report and before the book closure may obtain the user ID and Password by sending a request at [email protected] or RTA for e-voting purpose M/s MAS Services Limited.
However, if you are already registered with NSDL for e-voting, then you can use your existing user ID and password for casting your vote. If you have forgotten your password, you can reset your password by using “Forgot User Details/Password” option available on www.evoting.nsdl.com or contact NSDL at the following toll free no. 1800-222-990.
V. A member may participate in the AGM even after exercising his right to vote through remote e-voting but shall not be allowed to vote again at the AGM.
VI. Shri Amar Nath Jaiswal, Practicing Company Secretary (Membership No. ACS-19000 & CP No. 14629) proprietor of M/s A. N. Jaiswal & Co., has been appointed for as the Scrutinizer for providing facility to the members of the Company to scrutinize the voting and remote e-voting process in a fair and transparent manner.
VII. The Chairman shall, at the AGM, at the end of discussion on the resolutions on which voting is to be held, allow voting with the assistance of scrutinizer, by use of “Ballot Paper” for all those members who are present at the AGM but have not cast their votes by availing the e-voting facility.
VIII. The Scrutinizer shall after the conclusion of voting at the AGM, will first count the votes cast at the meeting and thereafter unblock the votes cast through remote e-voting in the presence of at least two witnesses not in the employment of the Company and shall make, not later than three days of the conclusion of the AGM, a consolidated scrutinizer’s report of the total votes cast in favour or against, if any, to the Chairman or a person authorized by him in writing, who shall countersign the same and declare the result of the voting forthwith.
IX. The Results declared alongwith the report of the Scrutinizer shall be placed on the website of the Company www.modiindustries.net and on the website of NSDL immediately after the declaration of result by the Chairman or a person authorized by him in writing.
INFORMATION OF DIRECTOR RETIRING BY ROTATION SEEKING REAPPOINTMENT AT THIS ANNUAL GENERAL MEETING ARE GIVEN HEREUNDER:
BRIEF RESUME, EXPERIENCE AND OTHER DIRECTORSHIP:
ITEM NO. 2(a)
Shri Vinay Kumar Modi
Shri Vinay Kumar Modi (DIN 00274605) has been a director of the Company since 29th April, 1967. He is a first class Bechelor of Technology (Chemical Engineering) from the Indian Institute of Technology, Kanpur. He is a leading industrialist and has vast experience in various industries. He holds directorship/ membership of Committees of the Board in the following other Public Limited Companies: 1. Gujarat Guardian Limited. 2. Modi Rubber Limited The Company has received from Shri Vinay Kumar Modi (i) consent in writing to act as Director in Form DIR-2 pursuant to Rule 8 of Companies (Appointment & Qualification of Directors) Rules, 2014, (ii) intimation in Form DIR-8 in terms of Companies (Appointment &
(6) MODI INDUSTRIES LIMITED Qualification of Directors) Rules, 2014 to the effect that he is not disqualified under sub section (2) of section 164 of the Companies Act, 2013.
He holds 25,477 Equity Shares and 8 Redeemable Cumulative Preference Shares of the Company in his name.
None of the Directors, Key Managerial Personnel (KMP) and their relatives except Shri Vinay Kumar Modi (himself) and his real brothers Shri Krishan Kumar Modi and Shri Umesh Kumar Modi are, in any way concerned or interested in passing of the said resolution.
On recommendation of Nomination and Remuneration Committee, the Board of Directors commends the resolution, as set out for approval of the shareholders as an ordinary resolution.
ITEM NO. 2(b)
SHRI RAKESH KUMAR MODI
Shri Rakesh Kumar Modi (DIN 00022386) has been a Director of the Company since 30th January, 1996. He is a Commerce Graduate and has extensive industry experience. He is not a Director / Committee Member of any other Public Limited Company.
The Company has received from Shri Rakesh Kumar Modi (i) consent in writing to act as Director in Form DIR-2 pursuant to Rule 8 of Companies (Appointment & Qualification of Directors) Rules, 2014, (ii) intimation in Form DIR-8 in terms of Companies (Appointment & Qualification of Directors) Rules, 2014 to the effect that he is not disqualified under sub section (2) of section 164 of the Companies Act, 2013.
He holds 48901 equity shares and 10 Redeemable Cumulative Preference Shares of the company in his name.
None of the Directors, Key Managerial Personnel (KMP) and their relatives except Shri Rakesh Kumar Modi (himself) are, in any way concerned or interested in passing of the said resolution.
On recommendation of Nomination and Remuneration Committee, the Board of Directors commends the resolution, as set out for approval of the shareholders as an ordinary resolution.
EXPLANATORY STATEMENT IN RESPECT OF THE SPECIAL BUSINESS PURSUANT TO SECTION 102(1) OF THE COMPANIES ACT, 2013
ITEM NO. 4
On recommendation of Audit Committee, Board has appointed M/s. M.K. Singhal & Co., (Firm’s Regn. No. 00074) Cost Accountants, Modinagar, as Cost Auditors for the financial year 2016-17 to conduct the audit of Cost Accounts in respect of Sugar and Distillery units of the company subject to approval of remuneration by share holders.
Proposed remuneration for the financial year 2016-17 is mentioned below:
Name of the unit Proposed remuneration (including all expenses) Plus Service Tax to be paid to Cost Auditors. (`) (1) (2)
Sugar 25,000.00
Distillery 15,000.00
Total 40,000.00
Pursuant to the provisions of Section 148(3) of the Companies Act, 2013 remuneration of Cost Accountants will be finally determined by the members of the company in the General Meeting.
Your directors recommend the resolution for your approval as an Ordinary Resolution.
None of the directors of the Company are concerned or interested in the Resolution as set out in item no. 4.
ITEM NO. 5
Section 188(1) of the Companies Act, 2013 read with MCA General Circular No. 30/2014 regarding clarification on related party transactions and vide Notification GSR 590(E) dated 14-08-2014 provides that the agreement to be entered into with companies, in which Director or Relative of Director are Director or otherwise interested, could be entered into only with the consent of the Board and in some cases with the approval of the members.
MODI INDUSTRIES LIMITED (7) Your directors have approved the lease/rent/hire agreements and transactions in their meeting held on 22nd August, 2016 subject to approval of the shareholders. Your directors recommend the resolution for your approval as an Ordinary Resolution.
The particulars of the transactions and agreements pursuant to the provisions of Section 188 and the Companies (Meetings of Board and its Powers) Rules, 2014 are given in the resolution no. 5 of the notice. The respective agreements & transactions are entered on arm’s length basis and all factors relevant to the respective agreements & transactions have been considered by the Board.
It is further informed that members who are interested as related parties in the resolution as set out at item no. 5 shall not be entitled to vote on this resolution. Directors recommend the resolution set forth at item no. 5 for approval of the Members.
Except directors as mentioned in the resolution no. 5 and their relatives, no other director or Key Managerial Personnel or their relatives, are concerned or interested, financially or otherwise, in passing of this resolution.
By Order of the Board of Directors For Modi Industries Limited
Vimal Prasad Gupta Company Secretary Place : Delhi (FCS – 6380) Dated: 22nd August, 2016
Regd. Office: Modinagar - 201204. (U.P.) Tel: 01232-231755, 243115 CIN - L15429UP1932PLC000469 Email : [email protected] Website: www.modiindustries.net
(8) MODI INDUSTRIES LIMITED DIRECTORS’ REPORT To The Members, The Directors of your Company hereby present the 82nd Annual Report together with the Audited Financial Statement of the Company along with Auditors’ Report thereon for the year ended on 31st March, 2016.The working results of the year are summarized as under: (` in Lac) DESCRIPTION Standalone Consolidated
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 31.03.2016 31.03.2015 31.03.2016 31.03.2015
Revenue from operations (net of excise duty) 30,872.63 33,779.84 30,872.63 33,779.84 Other Income 549.90 640.33 552.13 642.51 Total Revenue 31,422.53 34,420.17 31,424.76 34,422.35 Loss before Depreciation, Finance Costs, Exceptional Items & Tax 6.78 841.19 17.95 840.14 Add: Finance Costs 644.04 1,228.39 644.04 1,228.39 Depreciation 334.51 435.92 334.51 435.92 Loss before Exceptional Item & Tax 985.33 2,505.50 996.50 2,504.45 Exceptional items: (a) Refund of Commission on Sugar cane purchase for 2012-13. (249.18) - (249.18) - (b) Provision for Diminution in the value of Long Term Investment. 148.80 - 148.80 - Tax Expenses (Net) - - 0.28 0.28 Minority Interest - - (0.02) - Loss for the period 884.95 2,505.50 896.38 2,504.73
DIVIDEND: Directors regret their inability, in view of the losses, to recommend any dividend for the year. PERFORMANCE OF THE UNITS FOR THE YEAR UNDER REPORT: (a) SUGAR UNIT: The cane crushing in the year under review was 58.59 lacs qtls as against 71.40 lacs qtls in previous financial year. Sugar recovery in the year under review increased from 9.469% to 10.178%. Sugar Cane Price remained same as of last Season of Rs.280/- per qtl. Working results of the unit are better as compared to last year on account of sugar price realization and increase in sugar recovery. (b) DISTILLERY UNIT: During the year under review, the production of Rectified Spirit was 3148 Kl. as compared to last year 4328 Kl. In the year under review, there was significant improvement in production of Indian Made Foreign Liquor (IMFL) from 106990 cases to 196740 cases, which has contributed in improvement in profit of the unit. (c) ELECTRODE UNIT: Our contribution is better in comparison with the previous year, however bottom line is declined. As decision has been taken not to supply material on credit, our sale has declined but we have drastically reduced our over dues. In the long run we are hopeful that cash sale will help us to maintain healthy financial condition. (d) PAINT UNIT: The unit registered increase in turnover by 15% compared to last year. The EBIDT is better compared to last year. (e) GAS UNIT: We are managing to keep our figures positive even after the tough competition from the market and with lack of resources. But we still have a scope to do even better than this. FIXED DEPOSITS: The deposits of 1184 depositors amounting to ` 75.20 Lac including interest thereon till the date of maturity was claimed, but remained unpaid as on 31st March, 2016. However, the company made attempts in the past to make payment to all depositors but could not succeed in certain cases, since the depositors were not traceable at the recorded addresses with the Company as were provided by the depositors themselves.
MODI INDUSTRIES LIMITED (9) The deposits of 160 depositors amounting to ` 9.72 Lac including interest thereon till the date of maturity remained unclaimed as on 31st March, 2016. During the year under review, company has paid ` 0.21 Lac to 3 depositors towards their deposits, this includes interest upto the date of maturity as per the conditions laid down in the scheme of acceptance of public deposits. Company has not accepted any fresh deposits during the year under review, The Company is a sick industrial company as declared by the Hon’ble BIFR vide their order dated 14th March, 1991 in terms of Section 3(1)(o) of SICA. The rehabilitation scheme of the company is still pending and the payment to depositors will be made as per final orders of Hon’ble BIFR/AAIFR. With regard to payment of public fixed deposits, as per Section 74 of the Companies Act, 2013, deposits accepted before the commencement of the Act (i.e. 1st April, 2014) shall be repaid within one year from the commencement of the Act. The Company had filed a petition with the Company Law Board on 31st March, 2015 seeking extension of time for repayment of public fixed deposits. Company Law Board vide its order dated 21st April, 2016 dismissed the Company’s petition against which Company has filed an appeal with Hon’ble High Court of Allahabad on 23rd July, 2016. The matter is still pending before the Hon’ble High Court of Allahabad. DEBENTURES: Debentures worth `535.21 Lac are due for payment as on 31st March, 2016. The Company will repay to debenture-holders as per final orders of Hon’ble BIFR/AAIFR that may be passed. DIRECTORS’ RESPONSIBILITY STATEMENT: Pursuant to the requirement under Section 134(3)(c) of the Companies Act, 2013, in respect of all units of the company, (excluding Balance Sheet of Steel Unit - refer Note 27(4) of Annual Accounts) it is hereby confirmed: ( i) that in the preparation of the annual accounts, the applicable accounting standards have been followed and wherever required proper explanations relating to material departures have been given; ( ii) that the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the losses of the company for that period; (iii) that the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; (iv) that the annual accounts have been prepared on a going concern basis. (v) Even though the Company has in place adequate internal audit system which is commensurate with the operations of the Company, the testing and evaluation of internal financial control over financial reporting as mentioned in the guidance note of Institute of Chartered Accountants of India is yet to be undertaken. However no material weakness was observed by the internal auditors of the Company. (vi) that the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. DIRECTORS: In accordance with the provisions of Section 152 of the Companies Act, 2013 and the Article 95 of the Company’s Articles of Association, Shri Vinay Kumar Modi (DIN-00274605) and Shri Rakesh Kumar Modi (DIN-00022386), both the directors are due to retire by rotation this year and being eligible, offer themselves for re-appointment. On recommendation of Nomination and Remuneration Committee, the Board has commended to re-appoint the Directors retiring by rotation. During the year under review no Director has resigned from the Board of Directors. KEY MANAGERIAL PERSONNEL (KMP): In pursuance of the compliance of Section 203 of the Companies Act, 2013 the following persons were designated as Whole Time Key Managerial Personnel of the Company:- 1. Shri Mahendra Kumar Modi - Managing Director 2. Shri Umesh Kumar Modi- Managing Director 3. Shri N P Bansal – Chief Financial Officer 4. Shri V P Gupta – Company Secretary There has been no change in Key Managerial Personnel of your Company during the year under review.
(10) MODI INDUSTRIES LIMITED SUBSIDIARY COMPANIES: The Company have two subsidiaries namely, Your Investment (India) Limited and Own Investment (India) Limited. In compliance with the Rule 8(1) of the Companies (Accounts) Rules, 2014 the performance and financial position of both the subsidiaries are as under: (i) Your Investment (India) Limited – The company registered a net loss of ` 5.13 Lac during the year under review (Previous Year- Profit of ` 0.49 Lac). (ii) Own Investment (India) Limited- The company registered a net loss of ` 6.31 Lac during the year under review (Previous Year- Profit of ` 0.29 Lac). The annual accounts of the subsidiary companies and the related detailed information shall be made available to the shareholders of the holding and subsidiary companies seeking such information. The annual accounts of the subsidiary companies shall be kept for inspection by any shareholders at Registered Office of the holding company and of the subsidiary companies concerned. A statement containing salient features of the financial statements of your Company’s subsidiaries in Form AOC-1 is attached as Annexure-‘A’. CONSOLIDATED FINANCIAL STATEMENTS: In compliance with the Accounting Standards 21 and 23 issued by the Institute of Chartered Accountants of India and pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the consolidated financial statements form a part of this Annual Report. STOCK EXCHANGE LISTING: The Securities of the Company were listed with U.P. Stock Exchange Limited*, Kanpur as a Regional Stock Exchange and Delhi Stock Exchange Limited**, New Delhi. * SEBI had issued exit order of UPSE on 09th June, 2015. **SEBI had derecognized the DSE on 19th November, 2014. SEBI vide its circular No. CIR/MRD/DSA/5/2015 Dated 17th April, 2015 provides that the exclusively listed companies which fail to obtain listing in any other nationwide stock exchange will cease to be a listed company and will be moved to the Dissemination Board by the existing stock exchange. The Listing criteria of nationwide stock exchanges are generally out side the present status/situation of the Company because your Company is a sick industrial company as declared by the Hon’ble BIFR vide their order dated 14th March, 1991 in terms of Section 3(1)(o) of SICA. The rehabilitation scheme of the company is still pending. Company has huge losses and negative net-worth. U.P. Stock Exchange Limited, Kanpur as a Regional Stock Exchange of the Company had referred the Company to the Dissemination Board of National Stock Exchange of India Limited (NSE) and NSE had also confirmed by its Circular Ref. No. 07/2015 (Download Ref. No. NSE/CML/ 29461) dated 16th April, 2015 to its members. Therefore your Company is now shifted as per above SEBI Circular in the category of unlisted company. MANAGEMENT DISCUSSION & ANALYSIS REPORT: In terms of Regulation 34(2)(e) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Management Discussion & Analysis Report (MD&AR) forms part of this report and is attached as Annexure- ‘B’. CORPORATE GOVERNANCE: As per the requirement of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 compliance of Corporate Governance Report is not mandatory for the Company, however Corporate Governance Report for the year under review, prepared on the basis of old Clause 49 of the listing agreement and as per applicable provisions of the Companies Act, 2013, is attached as Annexure-‘C’. All Board Members and Senior Management Personnel have affirmed compliance with the Code of Conduct for the year under review. EXTRACT OF ANNUAL RETURN: Pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, the required extract of Annual Return in prescribed form MGT-9 is attached as Annexure-‘D’ with this Board Report. MATERIAL CHANGES AND COMMITMENTS: No material Changes or commitments affecting the financial position of the Company occurred between the end of the financial year to which the financial statements relate and the date of the report except the Company had declared lay off in its Sugar Unit w.e.f. 17th June, 2015 which was lifted on 31st August, 2015.
MODI INDUSTRIES LIMITED (11) NUMBER OF BOARD AND COMMITTEE MEETINGS:
The details of the number of meetings of the Board and its Committees held during the Financial Year 2015-16 are given in report on Corporate Governance attached as mentioned above. CORPORATE SOCIAL RESPONSIBILITY (CSR):
The provision relating to Corporate Social Responsibility under the Companies Act, 2013 is not applicable to the Company in view of negative net-worth and losses etc. hence no CSR Committee is constituted.
BUSINESS RESPONSIBILITY REPORTING:
The Business Responsibility Reporting as required by the Regulation 34(f) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is not applicable to the Company for the financial year under review. WHISTLE BLOWER POLICY:
The Company has a Whistle Blower Policy, including vigil mechanism to report genuine concerns of grievances, providing direct access to the Chairperson of the Audit Committee in appropriate and exceptional cases. The Whistle Blower Policy has been posted on the website of the Company (www.modiindustries.net).
INTERNAL FINANCIAL CONTROL:
Even though the Company has in place adequate internal audit system which is commensurate with the operations of the Company, the testing and evaluation of internal financial control over financial reporting as mentioned in the guidance note of Institute of Chartered Accountants of India is yet to be undertaken.
ANNUAL EVALUATION:
The Board has carried out the Annual Performance Evaluation of its own, its Committees and individual Directors based on the Performance Evaluation Report submitted by the Nomination & Remuneration Committee, as per Performance Evaluation Policy of the Company.
NOMINATION & REMUNERATION POLICY: Nomination & Remuneration Policy of the company, as formulated and approved by Nomination and Remuneration Committee in its meeting held on 14th August, 2014, governs Directors’ appointment including criteria for determining their qualifications, positive attributes, their independence and remuneration for the Directors, KMPs and other employees. The Nomination and Remuneration Policy is attached as Annexure-‘E’ with this Board Report.
RISK MANAGEMENT POLICY:
The Company has taken out various policies to cover risk against Plant & Machinery, Building, Godowns, Computers, Vehicles, Cash in hand/in transit and to reduce the financial risk etc.. Various units of the company also identify the elements of risk & requirement of policies, if any, related to their units and submits report periodically to the Board.
PARTICULARS OF LOAN, GUARANTEES OR INVESTMENTS:
Details of loan(s), guarantee and investments are given in the notes to Financial Statements.
RELATED PARTY DISCLOSURE:
The related party transactions that were entered into during the financial year were generally on an arm’s length basis. These transactions were generally in the nature of ordinary course of business as per very old set up and structure of the Company except some related party transactions, as mentioned in this 82nd Annual General Meeting notice, for your approval. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.
Since the provisions of the revised Corporate Governance Clause 49 / Regulation of the Listing Agreement/LODR was/is not applicable to the Company, no policy has been formulated for dealing with related party transactions. All related party transactions are placed before the Audit Committee and Board of Directors for their approval on quarterly basis.
Your directors draw attention of members to Note No. 27(38) to the standalone financial statements which sets out related party disclosures.
PERSONNEL: Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is applicable only on listed companies while your company has ceased to be a listed company in view of SEBI circular No. CIR/MRD/DSA/5/2015 Dated 17th April, 2015. Your
(12) MODI INDUSTRIES LIMITED company has been forwarded by UPSE to the Dissemination Board of the NSE hence presently your Company not comes under the category of listed Company, therefore details under above said rule are not being given. Details as required pursuant to MCA Notification G.S.R. 646(E) dated 30th June, 2016 Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, none of the employee was in receipt of remuneration of Rs. One Crore and Two Lakh or more per year throughout the year or Rs. Eighty Lakh and Fifty Thousand per month for the part of the year. Further, none of the employees is in receipt of remuneration which is in excess of the remuneration drawn by Managing Director or Whole-time Director or any manager of the Company and holds by himself or along with his/ her spouse and dependent children, not less than 2% of equity shares of the Company. AUDITORS AND THEIR REPORTS: STATUTORY AUDITORS: M/s. P.R. Mehra & Co., Chartered Accountants, (FRN 000051N), who are Statutory Auditors of the Company to hold office up to the conclusion of the ensuing Annual General Meeting and are recommended for re-appointment to audit the accounts of the Company for the financial year 2016-17. As required under the provisions of Section 139 of the Companies Act, 2013. The company has obtained written confirmation from M/s. P.R. Mehra & Co. that their appointment, if made, would be in conformity with the limits specified in the said section. The appointment of auditors has to be done by an Ordinary Resolution. With reference to the qualifications contained in the Auditors’ Report, the Directors wish to state that the Notes referred to by the auditors in their report are self-explanatory and hence do not call for any further comments. COST AUDITORS: As per the requirement of the Central Government and pursuant to the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, your Company has to get done audit of cost records relating to Sugar and Distillery Units for the financial year 2016-17. The Board of Directors, on the recommendation of Audit Committee, have appointed M/s. M.K. Singhal & Co., Cost Accountants, (Firm’s Regn. No. 00074) of Modinagar, as Cost Auditors to conduct the audit of Cost Accounts maintained by Sugar and Distillery units of the Company at a total remuneration of Rs. 40,000/- (including all expenses) + applicable Service Tax payable to them for the financial year 2016-17. Members’ approval for the remuneration payable to the Cost Auditors has to be obtained by an Ordinary Resolution. The Cost Audit Report for the audited accounts for the financial year ended 31st March, 2015 was filed by the Cost Auditors with respect to the sugar, industrial alcohol, and steel (electrode), the products of units of the company, on 30th September, 2015. SECRETARIAL AUDITORS: Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Rules made thereunder, the Company had appointed Shri Amar Nath Jaiswal, Practicing Company Secretary (ACS No. 19000, CP No. 14629) of New Delhi, as Secretarial Auditor of the Company. Shri Amar Nath Jaiswal has submitted his Secretarial Audit Report, for the Financial Year 2015-16, which is attached herewith as Annexure–‘F’. With reference to the observations contained in the Secretarial Auditors Report, the Directors wish to state that the Notes on Accounts are self-explanatory and hence do not call for any further comments. For the Financial Year 2016-17 Company has appointed M/s A. N. Jaiswal & Co., Practicing Company Secretaries (ACS No. 19000, CP No. 14629) of New Delhi, as Secretarial Auditors of the Company. INTERNAL AUDITORS: Pursuant to Section 138 of the Companies Act, 2013, Board has appointed Internal Auditors namely M/s. Sarat Jain & Associates, Chartered Accountants, (Firm Regn. No. 014793C) of New Delhi for Sugar & Distillery units & M/s. Makkar & Co., Chartered Accountants, (Firm Regn. No. 005958C) of Delhi for MD Office, Electrode, Paint & Gas units of the Company for the financial year 2016-17 as recommended by the Audit Committee of the Company. CONSERVATION OF ENERGY: The Company is a sick industrial unit within the meaning of Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 vide BIFR order dated 14th March, 1991. Since long no modernization of Plant & Machinery of the Units of the Company could be undertaken due to huge losses in the Company and non-availability of funds from Banks/Financial Institutions. However, the Management is making possible efforts for the conservation of energy. Company has implemented energy conservation measures for saving of quantitative consumption of power & fuel etc. Company has replaced some old lighting system with LED etc., adoption of more star rated electronic equipments, timely repairing & maintenance of
MODI INDUSTRIES LIMITED (13) electronic items. As a result of this sugar unit of the company Electricity KWH PMT in production reduced this year to 270.52 from 272.77 last year. During the year under review total expenses on power and fuel was Rs. 341.34 lac (in previous year Rs. 467.93 lac). TECHNOLOGY ABSORPTION: Requisite information in prescribed form is given in Annexure-‘G’ to this report. FOREIGN EXCHANGE EARNINGS AND OUTGO: Your Company earned during the year Foreign Exchange is Nil (previous year – Rs. 35.24 Lac) while Foreign Exchange outgo during the year amounted to Rs. 295.35 Lac (previous year - Rs. 348.01 Lac). POLLUTION CONTROL: Relevant and necessary effluent treatment measures for control of water, air and environmental pollution are in place and steps have been taken to further strengthen and consolidate pollution control measures. LABOUR RELATIONS: The labour management relations generally remained harmonious. GENERAL: The Company became a sick industrial company within the meaning of Section 3(1)(o) of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) due to erosion of its net worth and the Company was declared a sick industrial company by BIFR vide its order dated 14th March, 1991. The rehabilitation scheme of the company as submitted by the IDBI the Operating Agency (OA) to BIFR is still pending. BIFR had passed an order dated 28th October, 2013 issuing show cause notice for winding up of the company against which appeals have been filed before AAIFR. Matter is stayed by AAIFR and final orders are still pending. In view of this, no impact is foreseen on the going concern status of the Company and the Company’s operations in future. The matter is pending before the Hon’ble BIFR/AAIFR. No complaint during the year under review was received by the Company under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. CAUTIONARY STATEMENT: The statement in the Director’s report and MD&AR, detailing the Company’s objectives and expectations, may contain ‘forward looking statements’ within the meaning of applicable securities laws and regulations. The actual results inter-alia may differ materially from those expressed or implied, depending upon changes in global and Indian demand-supply conditions as well as changes in government regulations, tax regimes, economic and market developments, movements. ACKNOWLEDGMENT: The Directors wish to thank the Central Government, Government of Uttar Pradesh, Financial Institutions and the Company’s Bankers for all the help and encouragement they extended to the Company. Your Directors gratefully acknowledge the continued trust and confidence; you have placed in the Company. The Directors also wish to place on record their deep appreciation for the services rendered by the officers, staff and workers of the Company at all levels and for their dedication and loyalty. For & on behalf of the Board
Mahendra Kumar Modi Abhishek Modi Place : Delhi (DIN-00014594) (DIN-00002798) Dated : 22nd August, 2016 Managing Director Director
(14) MODI INDUSTRIES LIMITED ANNEXURE-‘A’ TO DIRECTORS’ REPORT
FORM AOC-1
{Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 of Companies (Accounts) Rules, 2014}
Statement containing salient features of the financial statement of subsidiaries/associate companies/joint ventures.
Part ‘A’ : Subsidiaries ` in lacs Particulars Name of the Subsidiary Own Investment (India) Limited Your Investment (India) Limited 1. Reporting period for the subsidiary concerned, if different from the holding company’s reporting period. Not Applicable Not Applicable 2. Reporting currency and Exchange rate as on the last date of the relevant Financial Year in the case of foreign subsidiaries. Not Applicable Not Applicable 3. Share Capital (Paid-up) 13.22 21.47 4. Reserves & Surplus 4.64 11.10 5. Total Assets 18.11 32.90 6. Total Liabilities 0.25 0.33 7. Investments (net) 5.22 14.79 8. Turnover - - 9. Profit before taxation (6.23) (4.93) 10. Provision for taxation 0.08 0.20 11. Profit after taxation (6.31) (5.13) 12. Proposed dividend NIL NIL 13. % of shareholding 99.89 99.93 Part ‘B’ : Associates and Joint Venture
Statement pursuant to Section 129(3) of the Companies Act, 2013 related to Associate Companies and Joint Ventures.
(Not applicable) 1. There are no subsidiaries / associates / joint ventures which are yet to commence operations. 2. There are no subsidiaries / associates / joint ventures which have been liquidated or sold during the year.
For Modi Industries Limited
Mahendra Kumar Modi Rakesh Kumar Modi Manish Kumar Modi Abhishek Modi (DIN 00014594) (DIN 00022386) (DIN 00030036) (DIN 00002798) Managing Director Director Director Director
N.P. Bansal V P Gupta (PAN AAOPB7869G) (FCS-6380) Place : Delhi Chief Financial Officer Company Secretary Dated : 22nd August, 2016.
MODI INDUSTRIES LIMITED (15) ANNEXURE-‘B’ TO DIRECTORS’ REPORT
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
(a) INDUSTRY SCENARIO:
SUGAR UNIT: India is the second largest producer of sugar in the world. The sugar industry is the largest agro-processing sector in India. It is dominated by the co-operative sector in terms of number of units. The industry is regulated by the Central and State Governments by way of cane growing area, sugarcane pricing, import-export policy. The major sugarcane producers are Uttar Pradesh, Maharashtra, Tamilnadu and Karnataka. Sugar cane is the only source of sugar production in India unlike many other countries, which produce sugar from sugar beet.
The cane price continuously remains closely controlled by the Central and State Governments. The Central Government announced Fair and Remunerative Price (FRP) remains operative in some states like Karnataka, Maharashtra and State Advised Price (SAP) is followed in states like Uttar Pradesh & Tamil Nadu. The Sugar production in the country is expected to be 25.6 million tones in the sugar season 2015-16 and domestic consumption of 26.0 million tones, export of 1.5 million tones and closing stock would be 7.0 million tones.
The production in 2016-17 is expected to be further down to 24.0 million tones. The consumption of sugar is likely to 26.5 million tones during 2016-17.
DISTILLERY UNIT: The industry continues to be regulated at various levels by government. The potable alcohol policy of last year has been continued by Uttar Pradesh Government. In the policy the whole sale rights of Country Liquor have been given to one party.
ELECTRODE UNIT: There has been no significant change in the economic environment in the current financial year but in the coming year 2016-17, positive indications are visible in the power, steel production as well as in infrastructure development. As consumption of welding consumables is directly linked with steel consumption and Modi Arc is strong in power projects so we feel that industrial scenario is favorable for Modi Arc in the time to come.
PAINT UNIT: Paint Industry in last year has not shown much growth due to slow down in real estate and housing. The consumption however in domestic market is likely to remain at same pace.
GAS UNIT: Gas business is completely dependent upon industry growth and mainly on steel industry. At present in our area of business steel industry is facing a downfall due to government policies in Uttar Pradesh. The steel fabrication business is also in bad shape because of that many units in our business area have been locked out.
Freight is a major factor in Gas cylinders business and because of that the area of operation gets limited.
(b) OPPORTUNITIES AND THREATS:
SUGAR UNIT:
Opportunities:
z Potential to increase cane productivity by varietal change to increase sugar recovery.
z Technology up-gradation in sugar and by product utilization.
z Higher value by-products.
Threats:
z Unfortunately draught in Maharashtra and Karnataka is expected to drag the production by 3.0 million tones.
z Rising cane payment arrears may force farmers shifting their preference to other crops or even diverting their cane to other mills/kohlus resulting in lower cane availability.
DISTILLERY UNIT: With the likely decrease in production of sugar output, resulting decrease in production and availability of Molasses, the production of Rectified Spirit will be lesser as compare to last year.
ELECTRODE UNIT: Steel Industries are being modernized/ expended, a large number of new Steel Plants are also coming up in different parts of the country based on modern, cost effective, state of the art technologies.
India emerged as the 3rd largest producer of crude steel in the world as per ranking released by the WSA. The country is expected to
(16) MODI INDUSTRIES LIMITED become the 2nd largest producer of crude steel in the world soon, provided all requirements for creation of fresh, capacity are adequately met. As consumption of welding consumables are directly linked with the Steel consumption in the country, welding industries will have good business opportunity in the time to come.
In power generation sector Government has set 1,18,537 MW power generation capacity addition target for the 12th plan period ending 2016-17. We are well equipped with product range and approvals to supply in the power and steel plants.
Global developments and competitors with international standing continue to focus heavily on the Indian market and this can pose challenges on pricing and margins. Competition from smaller and unorganized players is still a threat to address.
PAINT UNIT: India is the fastest growing market in Asia Pacific.
z India’s paint industry size is growing sluggishly due to slump in real Estate.
z The decorative paints to industrial paints ratio is 70:30 both in value and volume.
z The demand in the paint industry is seasonal to some extent while the demand dips in the monsoon season.
GAS UNIT: We have opportunities in the untapped market like of Uttarakhand and Himachal Pradesh, where we can get good price and in that particular area lots of industrial development is happening. We have good opportunities in Hydrogen business if we do it at large scale by making some investment for it.
For Gas Business major threat are unorganized dealers and traders. Apart from this LPG is giving us tough competition in market as it is cheap and readily available. Customers who have good consumption of gases are moving toward more convenient option that is VIST (Vacuum Insulated Storage Tank) or Liquid Gaseous Storage tank.
(c) OPERATIONAL PERFORMANCE:
SUGAR UNIT: The cane crushing in the year under review was 58.59 lacs qtls as against 71.40 lacs qtls in previous financial year. Sugar recovery in the year under review increased from 9.469% to 10.178%. Sugar Cane Price remained same as of last Season of Rs.280/- per qtl. Working results of the unit are better as compared to last year on account of sugar price realization and increase in sugar recovery.
DISTILLERY UNIT: During the year under review, the production of Rectified Spirit was 3148 Kl. as compared to last year 4328 Kl. In the year under review, there was significant improvement in production of Indian Made Foreign Liquor (IMFL) from 106990 cases to 196740 cases, which has contributed in improvement in profit of the unit.
ELECTRODE UNIT: Our contribution is better in comparison with the previous year, however bottom line is declined. As decision has been taken not to supply material on credit, our sale has declined but we have drastically reduced our over dues. In the long run we are hopeful that cash sale will help us to maintain healthy financial condition.
PAINT UNIT: The unit registered increase in turnover by 15% compared to last year. The EBIDT is better compared to last year.
GAS UNIT: We are managing to keep our figures positive even after the tough competition from the market and with lack of resources. But we still have a scope to do even better than this.
(d) FUTURE OUTLOOK:
SUGAR UNIT: With an expected carryover stock of 7.0 million tons as on 1st October, 2016 and estimated sugar production of 24 million tons in the country during 2016-17 and expected consumption of 26.5 million tones, the closing stock will be 4.5 million tones, which will be equal to approx. 2 months’ consumption, hence there will be need to import sugar in 2016-17.
Sugar analysts opinion that lower-than-average rainfall will adversely affect sugarcane production in 2016-17 in major parts of Maharashtra and Karnataka. But this shortage is likely to be well compensated by higher production from Uttar Pradesh and Tamil Nadu. Uttar Pradesh has increased acreage under CO 0238 variety, which gives a much higher yield and sugar recovery.
DISTILLERY UNIT: The molasses production is expected to be lessor in the year 2016-17 which will be resulted in decrease of production of rectified spirit. The operation of scotch blended whisky will further increase in the next year.
In the light of India’s growing fuel demand, the Government of India is keen to promote admixing of ethanol with petrol. Keeping this in view and the normal growth in the Chemicals and Potable sectors, the demand for alcohol is expected to remain strong in the future.
ELECTRODE UNIT: India’s GDP growth is at 7.6% despite slow down in Global economy from 3.4% to 3.1%. Governmental push on
MODI INDUSTRIES LIMITED (17) of infrastructure & industrial development through ‘Make in India’ campaign has also got the attention of several infrastructure and engineering multi nationals in the country. The liberalization of industrial policy and other initiatives taken by the Government have given a definite impetus for entry, participation and growth of the private sector in the steel industry.
PAINT UNIT: Indian GDP is expected to grow 7-8% annually for next few years. Because of the high correlation between GDP and Paint volume growth, decorative paints are expected to grow on the back of strong economic momentum. Real estate boom in the past few years will lead to strong demand for repainting.
GAS UNIT: The future for gas business is promising in view of continued industrial development and growth. We are aiming to do tie up with the principal suppliers of Hydrogen so that we can reduce our costing and increase our business. We are aiming to increase our sales and profitability in this financial year.
(e) RISKS & CONCERNS:
The company is a Sick Industrial Company within the meaning of Section 3(1)(o) of Sick Industrial Companies (Special Provisions) Act, 1985. Hence, fresh funds both for working capital requirement and/or long term requirements are not made available by Banks/ Financial Institutions.
Price Risk:
Sugar price is susceptible to fluctuations on account of international demand and supply, government pricing for cane as well as sugar, variance in production capacities of peers. Any change may affect the margins of the Company.
(f) INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:
The key features of the Internal Control Systems are given below : 1. Well defined organization structure, documented policy guidelines, predefined authority levels ensures optimal utilization and protection of resources. 2. Assets are adequately maintained and protected against Theft, Burglary and other Losses. 3. Transactions are properly recorded and accounted for. 4. Accounting records are maintained complying with all the statutory laws and reflect true and fair view. 5. There are adequate Management reporting systems for control and monitoring of performance. 6. Budgetary control system is in place. 7. Periodical review by the Management is being done. 8. Periodical review of system, procedures and transactions by internal Auditors is conducted.
(g) MATERIAL DEVELOPMENT IN HUMAN RESOURCES/
INDUSTRIAL RELATIONS FRONT:
The underlying rule of company’s policy towards human resource development is that competent and motivated manpower is the most important factor in achieving business goals. The policies in this regard are evolved and pursued to achieve this objective. Industrial relations remained cordial throughout the year.
As on 31st March, 2016 the total number of employees on the payrolls of the company were 885.
(18) MODI INDUSTRIES LIMITED ANNEXURE-‘C’ TO DIRECTORS’ REPORT CORPORATE GOVERNANCE REPORT CORPORATE GOVERNANCE AS REQUIRED BY OLD CLAUSE 49 OF THE LISTING AGREEMENT AND AS PER APPLICABLE PROVISIONS OF THE COMPANIES ACT, 2013: 1. COMPANY’S PHILOSOPHY: Your company firmly believes in good corporate governance. Towards this end, the company consistently evaluates and defines its management practices aimed at enhancing its commitment and delivery of the basic tenets of the corporate governance. 2. BOARD OF DIRECTORS: (a) COMPOSITION OF BOARD : ( i) The Board consists of eight directors as on the date of report. Out of these eight directors, six are non-executive directors. The Company did not have any material pecuniary relation or transaction with non-executive directors during the year under review. (ii) Presently the company has not complied with the requirement of independent directors and women director in the composition of the Board and various Board Committee(s), wherever required. The Company is a sick industrial company within the meaning of Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 as declared by the Hon’ble BIFR vide their order dated 14th March, 1991. The Hon’ble Supreme Court in SLP (Civil) Nos. 23095 – 23097 of 2010 (M.K. Modi vs. U.K. Modi) has passed an order dated 27th August, 2010 directing the parties therein to maintain “status quo” with regard to the management of the company. In view of the above order of Hon’ble Supreme Court, Board of Directors are unable to appoint any new director under provisions of Companies Act, 2013 and/or Listing Agreement to comply with the composition of Board and/or various Board Committees. (b) BOARD/ SHAREHOLDERS’ MEETINGS : During the year under review, four Board meetings were held on 18th June, 2015, 14th August, 2015, 14th November, 2015 and 9th February, 2016. None of the directors is a member of more than ten Committees or acting as Chairman of more than five Committees across all companies in which he is a director. The attendance at the Board meetings during the year 2015-16 and at the last 81st Annual General Meeting held on 29th September, 2015 and also number of other directorship are given herein below: Name Category No.of Board Attendance No. of Directorship(s) and Committee meetings at previous Membership(s)/Chairmanship(s) of Attended AGM other Indian Public Limited Companies Other Committee Committee Director- Member- Chairman- ship(s) ship(s) $ ship(s) $ Shri Mahendra Kumar Modi MD 4 Yes 3 1 1 Shri Umesh Kumar Modi MD 3 Yes 5 - - Shri Krishan Kumar Modi NED 2 No 6 1 1 Shri Vinay Kumar Modi NED 2 No 2 1 1 Shri Rakesh Kumar Modi NED 4 Yes - - - Shri Manish Kumar Modi NED 3 No 2 - - Shri Abhishek Modi NED 4 Yes 4 - - Shri Santosh Kumar Aggarwal NED 4 No - - - MD: Managing Director,NED: Non-Executive Director $Represents Audit Committee and Stakeholders Relationship Committee.
(c) BOARD PROCEDURE : As per Corporate Policy, statutory and material information is placed before the Board with a view to enable it to discharge efficiently its responsibilities in formulating the strategies and policies for the growth of the Company. The Agenda and other relevant papers are circulated prior to the scheduled dates of the meetings. The day to day affairs of the Six Units (viz. Electrode, Gas, Paint, Vanaspati, Lantern and Soap Units) and Three Units (viz. Sugar, Distillery and Steel Units) are managed by Shri Mahendra Kumar Modi, Managing Director and Shri Umesh Kumar Modi, Managing Director respectively and Corporate Office by both the Managing Directors subject to supervision and control of the Board of Directors. Opinion and advice of Non-Executive Directors are considered valuable guidance. For specific matters, the various Committees of the Directors deliberate in detail, analyze situations, information and firm up views and advise the Board on decision making and follow up actions as may be considered appropriate. (d) RELATIONSHIP AMONGST DIRECTORS : Shri Krishan Kumar Modi, Non-Executive Director, Shri Vinay Kumar Modi, Non-Executive Director and Shri Umesh Kumar Modi, Managing Director are real brothers. Shri Manish Kumar Modi, Non-Executive Director, is son of Shri Mahendra Kumar Modi, Managing Director and Shri Abhishek Modi, Non-Executive Director, is son of Shri Umesh Kumar Modi, Managing Director.
MODI INDUSTRIES LIMITED (19) 3. AUDIT COMMITTEE: (a) COMPOSITION: The ‘Audit Committee’ of the Company, as on the date of report, consists of four Non-Executive Directors, namely, (1) Shri Rakesh Kumar Modi, (2) Shri Manish Kumar Modi, (3) Shri Abhishek Modi and (4) Shri Santosh Kumar Aggarwal, as members. The Company Secretary acts as Secretary to the Committee. During the year, four Audit Committee Meetings were held on 18th June, 2015, 14th August, 2015, 14th November, 2015 and 9th February, 2016. All the four meetings were attended by all its members except the meeting held on 14th August, 2015 which was not attended by Shri Manish Kumar Modi. (b) ROLE & TERMS OF REFERENCE OF AUDIT COMMITTEE: In terms of Section 177(4) of the Companies Act, 2013, and Regulation 18(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Role / Terms of Reference of Audit Committee are defined as under : The Audit Committee shall have powers, which should include the following: 1. To investigate any activity within its terms of reference. 2. To seek information from any employee. 3. To obtain outside legal or other professional advice. 4. To secure attendance of outsiders with relevant expertise, if it considers necessary. The role of the Audit Committee shall include the following: 1. Oversight of the company’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible; 2. Recommendation for appointment, remuneration and terms of appointment of auditors of the company; 3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors; 4. Reviewing, with the management, the annual financial statements and auditor’s report thereon before submission to the board for approval, with particular reference to: a. Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s report in terms of clause (c) of sub-section 3 of section 134 of the Companies Act, 2013 b. Changes, if any, in accounting policies and practices and reasons for the same c. Major accounting entries involving estimates based on the exercise of judgment by management d. Significant adjustments made in the financial statements arising out of audit findings e. Compliance with listing and other legal requirements relating to financial statements f. Disclosure of any related party transactions g. Modified Opinion(s) in the draft audit report 5. Reviewing, with the management, the quarterly financial statements before submission to the board for approval; 6. Reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document / prospectus / notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter; 7. Reviewing and monitoring the auditor’s independence and performance, and effectiveness of audit process; 8. Approval or any subsequent modification of transactions of the company with related parties; 9. Scrutiny of inter-corporate loans and investments; 10. Valuation of undertakings or assets of the company, wherever it is necessary; 11. Evaluation of internal financial controls and risk management systems; 12. Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems; 13. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit; 14. Discussion with internal auditors of any significant findings and follow up there on; 15. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board; 16. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern;
(20) MODI INDUSTRIES LIMITED 17. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors; 18. To review the functioning of the Whistle Blower mechanism; 19. Approval of appointment of Chief Financial Officer after assessing the qualifications, experience and background, etc. of the candidate; 20. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee. The Board has established a vigil mechanism and framed a policy under the name “Whistle Blower Policy” for its Directors and employees to report genuine concerns or frauds and no personnel has been denied access to the Audit Committee. The policy is uploaded on the website of the Company where full information is provided. 4. NOMINATION AND REMUNERATION COMMITTEE AND REMUNERATION OF DIRECTORS : The Nomination and Remuneration Committee, as on the date of report, consists of four Non-Executive Directors, namely, (1) Shri Rakesh Kumar Modi, (2) Shri Manish Kumar Modi, (3) Shri Abhishek Modi and (4) Shri Santosh Kumar Aggarwal, as members. The decisions regarding remuneration of executive, non-executive directors and Key Managerial Personnel are taken by the entire Board on recommendation of the Nomination and Remuneration Committee subject to such approvals from the Shareholders or Central Government as may be necessary. The Company does not pay any remuneration to the non-executive directors except payment of Sitting Fees for attending Board/ Committee meetings. ROLE AND TERMS OF REFERENCE OF NOMINATION AND REMUNERATION COMMITTEE: In terms of Section 178(2), (3) and (4) of the Companies Act, 2013 and Rules made thereunder and Regulation 19(4) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The role and terms of Reference of Nomination and Remuneration Committee are defined as under: 1. Formulation of the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board a policy, relating to the remuneration of the directors, key managerial personnel and other employees; 2. Formulation of the criteria for evaluation of performance of Independent Directors and the Board of Directors; 3. Devising a policy on diversity of Board of Directors; 4. Identifying persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, and recommend to the Board of Directors their appointment and removal. 5. Whether to extend or continue the term of appointment of the Independent Director, on the basis of the report of performance evaluation of Independent Directors. The Committee shall ensure that: (a) The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the Company successfully; (b) Relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and (c) Remuneration to directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of the company and its goals. Nomination & Remuneration Policy of the Company forms part of the Annual Report. Details of remuneration paid to the directors during the year under review are given below: (a) Executive Directors : No remuneration has been paid to Shri Umesh Kumar Modi, Managing Director during the year under review. The Central Government has accorded its approval for payment of remuneration to Shri Mahendra Kumar Modi as Managing Director for the period from 1st November, 2014 to 31st October, 2017 and accordingly the Company has made a payment of `18.00 Lacs to him for the period from 1st April, 2015 to 31st March, 2016. (b) Non-Executive Directors :
Name Sitting Fee Shares held (` in thousands) Equity Preference Shri Krishan Kumar Modi 4.0 9664 8 Shri Vinay Kumar Modi 4.0 25477 8 Shri Rakesh Kumar Modi 12.0 48901 10 Shri Manish Kumar Modi 7.5 22050 - Shri Abhishek Modi 10.5 100 - Shri Santosh Kumar Aggarwal 10.5 100 -
MODI INDUSTRIES LIMITED (21) 5. STAKEHOLDERS RELATIONSHIP COMMITTEE: The Stakeholders Relationship Committee, consisting of three members i.e. Shri Mahendra Kumar Modi & Shri Umesh Kumar Modi, Managing Directors, and Shri Rakesh Kumar Modi, Non-Executive Director, has been entrusted with the work of Share/Debenture Transfer and dealing with Investors grievances. Shri Rakesh Kumar Modi chaired all meetings of the Committee held during the year under review. The Company Secretary acts as Secretary to the Committee and its Compliance Officer under Clause 49 of the Listing Agreement. All transfers, transmissions etc. of Shares and Debentures were effected within the stipulated period by the Company. All 5 Shareholders / Debentureholders / Investors complaints, received directly from them or through SEBI/Stock Exchanges and other authorities during the year under review, have been replied by the company and none remained outstanding at the end of the year under review. The status of Shareholders/Debentureholders/Investors complaints received during the year under review were reported to the Stakeholders Relationship Committee by the Company Secretary. 6. COMMITTEE OF DIRECTORS: The Committee of Directors, presently consisting of three members i.e. Shri Mahendra Kumar Modi & Shri Umesh Kumar Modi, Managing Directors and Shri Rakesh Kumar Modi, Non-Executive Director. During the year under review no meeting of Committee of Directors was held. 7. GENERAL BODY MEETINGS : The last three Annual General Meetings were held at Modi Industries Transit House (Modi Industries Complex), Modinagar, Distt. Ghaziabad (U.P.), on the following dates and time: Financial year Date Time 2014-15 29.09.2015 12.30 P.M. 2013-14 29.09.2014 12.30 P.M. 2012-13 13.11.2013 12.30 P.M. Special resolutions for re-appointment of Statutory Auditors of the Company were passed in Annual General Meetings of the Company held on 13th November, 2013 and 29th September, 2014. However, Special Resolutions for appointment and remuneration payable to Shri Mahendra Kumar Modi and Shri Umesh Kumar Modi as Managing Directors of the Company and for renewal of lease agreement in favour of Modi Rubber Limited and for borrowing money from time to time under Section 180(1)(c) of the Companies Act, 2013 were passed in the Annual General Meeting of the Company held on 29th September, 2014 and special resolution for entering into ‘Manufacturing Sub Licensing Agreement’ between Modi Arc Electrode Co. (a unit of Modi Industries Limited) and Weld Excel India Limited (a related party) was passed in the Annual General Meeting of the Company held on 29th September, 2015. No postal ballot was conducted during the Financial Year 2015-16. There is no immediate proposal for passing any resolution through Postal Ballot. None of the businesses proposed to be transacted at the ensuing Annual General Meeting require passing a resolution through Postal Ballot. 8. DISCLOSURES : There were no transactions of the company of material significance with its directors or the management, their subsidiaries or relatives during the year which may have potential conflict with interest of the company. There was no material non-compliance during the last three years by the company on any matters related to capital markets. Consequently, neither any penalties were imposed nor any strictures order passed on the company by Stock Exchanges, SEBI or any Statutory Authority. The company has generally complied with almost all the mandatory requirements of old Clause 49 of the listing agreement, till the date of its applicability i.e., upto 30th September, 2014, after that Company is voluntarily complying the old Clause 49 of the listing agreement to the extent possible. 9. MEANS OF COMMUNICATION : The Quarterly results of the Company are generally published in English and local language news-papers as required under the Listing Agreement. All financial and other vital information are generally communicated to the Stock Exchanges on which company’s shares were listed. Company’s Financial Results and Shareholding Pattern for each quarter and Annual Accounts of the Company are being uploaded on the Company’s Website – www.modiindustries.net. Management discussion and analysis form a part of annual report and is given in a separate chapter thereto.
(22) MODI INDUSTRIES LIMITED 10. GENERAL SHAREHOLDERS’ INFORMATION :
(a) Annual General Meeting :
Date : 29th September, 2016
Time : 12.30 P.M.
Venue : Modi Industries Transit House (Modi Industries Complex) Modinagar, Distt. Ghaziabad (U.P.).
(b) Financial Calendar :
(i) Financial year : April to March
(ii) First quarter results : Upto 14th Aug., 2016
(iii) Second quarter results : Upto 14th Nov., 2016
(iv) Third quarter results : Upto 14th Feb., 2017
(v) Fourth quarter results (Audited) : Upto 30th May, 2017
(vi) Annual General Meeting : End of September, 2017 for the year 2016-17.
(c) Date of Book Closure :
23rd September, 2016 to 29th September, 2016 (both days inclusive).
(d) Dividend payment date :
The Directors have not recommended any dividend on shares in view of accumulated losses.
(e) Stock Exchange Listing and Stock Code:
Shares of the Company are/were listed on:
*U.P. Stock Exchange Limited, Kanpur.
(Stock Code Z-493)
**Delhi Stock Exchange Limited, New Delhi.
(Stock Code 013154)
* SEBI had issued exit order of UPSE on 9th June, 2015.
**SEBI had derecognized the DSE on 19th November, 2014.
U.P. Stock Exchange Limited, Kanpur as a Regional Stock Exchange of the Company has referred the Company to the Dissemination Board of National Stock Exchange of India Limited (NSE) and NSE has also confirmed by its Circular Ref. No. 07/2015 (Download Ref. No. NSE/CML/29461) dated 16th April, 2015 to its members.
(f) Market Price Data : High/Low during each month in the year 2015-16:
The Company is a Sick Industrial Unit. There have been no transactions of Company’s shares on the Stock Exchanges, where the shares of the Company were listed, since long.
(g) Registrar and Transfer Agents :
Company has not appointed any Registrar for Shares/ Debenture Transfer. All such work is done in-house at Company’s Share Department.
(h) Share Transfer System :
Shares lodged with the Company for transfer are processed and returned to the Shareholders within the stipulated time, provided transfer documents are complete and valid in all respect.
MODI INDUSTRIES LIMITED (23) (i) Distribution of Shareholding as on 31.03.2016 :
Distribution of Number of No. of %age of shareholding Shareholders Shareholding
Equity shares of Pref. shares of Equity shares Pref. shares Equity Pref. `10 each `100 each shares shares
Upto 500 680401 248 8929 20 20.56 0.61
501 - 1000 95152 - 126 - 2.87 -
1001 - 2000 100655 - 67 - 3.04 -
2001 - 3000 44945 - 18 - 1.36 -
3001 - 4000 19580 3520 6 1 0.59 8.64
4001 - 5000 32294 9005 7 2 0.98 22.10
5001 – 10000 115779 14344 16 2 3.50 35.21
10001 and above 2220408 13624 51 1 67.10 33.44
Total 3309214 40741 9220 26 100.00 100.00
(j) Dematerialisation of Shares and Liquidity :
The Company is a Sick Industrial Company within the meaning of Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 and all its shares are held in physical form.
(k) Outstanding GDRs/ADRs/Warrants or any Convertible Instruments, Conversion date and likely impact on Equity :
The Company has no GDRs/ADRs/or any convertible instrument.
(l) Plant Location :
At Modinagar, District Ghaziabad (U.P.) 201204.
(m) Address for Correspondence :
Modi Industries Limited Registered Office, P.O. Modinagar, District Ghaziabad (U.P.) Pin 201204.
(24) MODI INDUSTRIES LIMITED ANNEXURE-‘D’ TO DIRECTORS’ REPORT
Form No. MGT-9 Extract of Annual Return As on the financial year ended on 31st March, 2016
[Pursuant to Section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014] I. REGISTRATION AND OTHER DETAILS:
(i) CIN L15429UP1932PLC000469
(ii) Registration Date 18.11.1932
(iii) Name of the Company Modi Industries Limited
(iv) Category/Sub-Category of the Company Company Limited by Shares/Indian Non-Government Company
(v) Address of the Registered Office and contact details P.O. Modinagar (U.P.) 201204. Tel.: 01232-231755, 243115
(vi) Whether listed Company Yes/No* * Now Ceased as listed Company as per SEBI Circular No. CIR/MRD/DSA/5/2015 Dated 17th April, 2015
(vii) Name, Address and Contact details of Registrar and Company has not appointed any Registrar for Shares/Debentures Transfer Agent, if any. transfer. All such work is done in house at Company’s Share Department (Registered Office of the Company).
II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY:
All the business activities contributing 10% or more of the total turnover of the Company shall be stated:
Sl. No. Name and Description of main NIC Code of the % to total turnover products / services Product / service of the Company
1. Sugar (manufacture of sugar from sugar cane) 10721 58.98%
2. Distillery (distilling, rectifying & blending of sprits) 11019 26.78%
III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES:
Sl. No. NAME AND ADDRESS CIN/GLN HOLDING/ % of shares held Applicable OF THE COMPANY SUBSIDIARY/ Section ASSOCIATE
1. Own Investment (India) Limited U74899DL1981 Subsidiary 99.89 2(87)(ii) PLC012017
2. Your Investment (India) Limited U74899DL1981 Subsidiary 99.93 2(87)(ii) PLC012003
MODI INDUSTRIES LIMITED (25) IV. SHAREHOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity). (i) Category-wise Share Holding: Category of No. of shares held at the beginning No. of Shares held at the end % change Shareholders of the year (as on 01.04.2015) of the year (as on 31.03.2016) during the year 2015-16 Demat Physical Total % of Demat Physical Total % of total total Shares Shares A. Promoters (1) Indian a) Individual/HUF - 689306 689306 20.83 - 689306 689306 20.83 No change b) Central Govt. ------c) State Govt(s) ------d) Bodies Corporate - 1279329 1279329 38.66 - 1279329 1279329 38.66 No change e) Bank/FI ------f) Any other ……… ------Sub Total (A)(1) - 1968635 1968635 59.49 - 1968635 1968635 59.49 No change (2) Foreign a) NRI’s Individuals ------b) Other Individuals ------c) Bodies Corporate ------d) Bank/FI ------e) Any other ……….. ------Sub Total (A)(2) ------Total Shareholding of Promoters - 1968635 1968635 59.49 - 1968635 1968635 59.49 No change (A)=(A)(1) + (A)(2) B. Public Shareholdings 1 Institutions a) Mutual Funds ------b) Bank/FI - 1799 1799 0.05 - 1799 1799 0.05 No change c) Central Govt. ------d) State Govt(s) ------e) Venture Capital Funds ------f) Insurance Companies - 351378 351378 10.62 - 351378 351378 10.62 No change g) FIIs ------h) Foreign Venture Capital Funds ------i) Other (Specify) ------Sub Total (B)(1) - 353177 353177 10.67 - 353177 353177 10.67 No change 2. Non-Institutions a) Bodies Corporate i) Indian - 47259 47259 1.43 - 47259 47259 1.43 No change ii) Overseas ------b) Individuals i) Individual Shareholders holding nominal - 881177 881177 26.63 - 893210 893210 26.99 (+)0.36* share capital upto Rs.1.00 Lakh. ii) Individual Shareholders holding nominal - 58966 58966 1.78 - 46933 46933 1.42 (-)0.36* share capital in excess of Rs.1.00 Lakh c) Others (Specify) ------Sub Total (B)(2) - 987402 987402 29.84 - 987402 987402 29.84 No change Total Public Share-holdings - 1340579 1340579 40.51 - 1340579 1340579 40.51 No change (B) = (B)(1) + (B)(2) C. Shares held by Custodian for GDRs & ADRs ------Grand Total (A+B+C) - 3309214 3309214 100.00 - 3309214 3309214 100.00 No change *It is on account of re-grouping. (26) MODI INDUSTRIES LIMITED (ii) Shareholding of Promoters :
Sl.No. Shareholder’s Name Shareholding at the beginning of the year Shareholding at the end of the year % Change (as on 01.04.2015) (as on 31.03.2016) in share No. of % of total % of Shares No. of % of total % of shares holding Shares shares of pledged/ Shares shares of pledged/ during the the encumbered the encumbered year Company to total Company to total shares* shares* PROMOTERS/PERSONS HAVING CONTROL OVER THE COMPANY: 1. Dr. Mahendra Kumar Modi 21461 0.65 0.65 21461 0.65 0.65 2. Smt. Veena Modi 37742 1.14 37742 1.14 3. Shri Manish Kumar Modi 22050 0.67 22050 0.67 4. Smt. Aparna Goenka 2565 0.08 2565 0.08 5. Ms. Ruchika Modi 2830 0.09 2830 0.09 6. Dr. Kedar Nath Modi 140 0.00 0.00 140 0.00 0.00 7. Dr. Devendra Kumar Modi 17640 0.53 17640 0.53 8. Smt. Renu Modi 1555 0.05 1555 0.05 9. Shri Umesh Kumar Modi 104200 3.15 3.15 104200 3.15 3.15 10. Smt. Kum Kum Modi 16526 0.50 16526 0.50 11. Shri Abhishek Modi 100 0.00 100 0.00 12. Shri Krishan Kumar Modi 9664 0.29 0.29 9664 0.29 0.29 13. Shri Vinay Kumar Modi 25477 0.77 0.77 25477 0.77 0.77 14. Dr. Bhupendra Kumar Modi 18753 0.57 18753 0.57 15. Smt. Bina Modi 9947 0.30 9947 0.30 16. Smt. Chander Bala Modi 13108 0.40 13108 0.40 17. Smt. Abha Rani Modi 20980 0.63 20980 0.63 18. Smt. Raj Kumari Agarwal 9555 0.29 9555 0.29 19. Smt. Rajesh Gupta 136 0.00 136 0.00 Sub Total (A) 334429 10.11 4.86 334429 10.11 4.86 PROMOTER GROUP/PERSONS ACTING IN CONCERT : (Individual) 20. Shri Lalit Kumar Modi 24244 0.73 24244 0.73 21. Shri Samir Kumar Modi 24244 0.73 24244 0.73 22. Shri Alok Kumar Modi 350 0.01 350 0.01 23. Smt. Ritika Modi 24671 0.75 24671 0.75 24. Shri Karan Modi 17274 0.52 17274 0.52 25. Shri Dalip Kumar Modi 3180 0.10 3180 0.10 26. Ms. Bindu 125 0.00 125 0.00 27. Ms. Anuradha Modi 94 0.00 94 0.00 28. Master Prashant Kumar Modi u/g/o Shri Y.K. Modi 11475 0.35 11475 0.35 29. Ms. Anupma Modi 3261 0.10 3261 0.10 30. Ms. Prarthana Modi 3261 0.10 3261 0.10 31. Master Kapil N. Modi u/g/o Dr. D.K. Modi 12651 0.38 12651 0.38 32. Master Manav Kumar Modi u/g/o Dr. D.K. Modi 10252 0.31 10252 0.31 33. Smt. Sunder Devi 427 0.01 427 0.01 34. Smt. Lajwanti Devi 846 0.03 846 0.03 35. Smt. Kamla Devi 382 0.01 382 0.01 36. Shri Rakesh Kumar Modi 48901 1.48 48901 1.48
MODI INDUSTRIES LIMITED (27) Sl.No. Shareholder’s Name Shareholding at the beginning of the year Shareholding at the end of the year % Change (as on 01.04.2015) (as on 31.03.2016) in share No. of % of total % of Shares No. of % of total % of shares holding Shares shares of pledged/ Shares shares of pledged/ during the the encumbered the encumbered year Company to total Company to total shares* shares* 37. Shri Man Mohan Modi 19338 0.59 19338 0.59 38. Shri Mahesh Kumar Modi 30398 0.92 0.04 30398 0.92 0.04 39. Smt. Bharti Modi 18482 0.56 18482 0.56 40. Smt. Kiran Modi 42900 1.30 0.10 42900 1.30 0.10 41. Shri Harmukh Rai Modi 644 0.02 644 0.02 42. Shri Suresh Kumar Modi 687 0.02 687 0.02 43. Shri Sudarshan Kumar Modi 17346 0.52 17346 0.52 44. Smt. Rani Devi Modi 9803 0.30 9803 0.30 45. Shri Sanjiv Kumar Modi 5459 0.16 5459 0.16 46. Shri Tarun Kumar Modi 4941 0.15 4941 0.15 47. Shri Suraj Parkash Modi 870 0.03 870 0.03 48. Shri Om Prakash Modi 13 0.00 13 0.00 49. Shri Chandra Prakash Modi 60 0.00 60 0.00 50. Smt. Kavita Modi 700 0.02 700 0.02 51. Smt. Shakuntla Modi 18 0.00 18 0.00 52. Shri Aditya Kumar Modi 300 0.01 300 0.01 53. Shri Praveen Kumar Modi 100 0.00 100 0.00 54. Shri Vijay Modi 18 0.00 18 0.00 55. Smt. Sumitra Devi 173 0.01 173 0.01 56. Shri Devi Dayal Modi 300 0.01 300 0.01 57. Shri Anil Modi 100 0.00 100 0.00 58. Smt. Misri Devi 40 0.00 40 0.00 59. Smt. Shanti Devi 74 0.00 74 0.00 60. Shri Matru Mal Maskara 500 0.02 500 0.02 61. Shri Kailash Chand Maskara 5 0.00 5 0.00 62. Shri Krishan Gopal Maskara 50 0.00 50 0.00 63.. Shri Sharat Prakash 139 0.00 139 0.00 64. Shri Kamal Kumar Modi 2593 0.08 2593 0.08 65. Shri Jaswant Kumar Modi 1300 0.04 1300 0.04 66. Shri Naresh Kumar Modi 151 0.00 151 0.00 67. Shri Shiv Kumar Modi 1907 0.06 1907 0.06 68. Smt. Anju Modi 20 0.00 20 0.00 69. Smt. Prem Modi 100 0.00 100 0.00 70 Smt. Prem Modi & Shri Gaurav Modi 108 0.00 108 0.00 71. Smt. Manju Modi 100 0.00 100 0.00 72. Shri Gaurav Modi 250 0.01 250 0.01 73. Shri Pankaj Modi 1166 0.04 1166 0.04 74. Smt. Lachhmi Devi 300 0.01 300 0.01 75. Birg. S.P.S. Shrikent 100 0.00 100 0.00 76. Shri Santosh Kumar Aggarwal 100 0.00 100 0.00 77. Shri Krishna Kumar Jain 100 0.00 100 0.00
(28) MODI INDUSTRIES LIMITED Sl.No. Shareholder’s Name Shareholding at the beginning of the year Shareholding at the end of the year % Change (as on 01.04.2015) (as on 31.03.2016) in share No. of % of total % of Shares No. of % of total % of shares holding Shares shares of pledged/ Shares shares of pledged/ during the the encumbered the encumbered year Company to total Company to total shares* shares* 78. Modi Charitable Foundation 3204 0.10 3204 0.10 79. Shri KK Modi & Smt. Bina Modi 1000 0.03 1000 0.03 80. Shri KK Modi & Smt. Bina Modi 1360 0.04 1360 0.04 81. Shri KK Modi & Smt. Bina Modi 1300 0.04 1300 0.04 82. Shri YK Modi, Dr. BK Modi & Shri Raghunath Rai 500 0.02 500 0.02 83. RS Seth Tara Chand Modi Charity Fund 122 0.00 122 0.00 Sub Total ‘B’ 354877 10.73 0.14 354877 10.73 0.14 PROMOTER GROUP/PERSONS ACTING IN CONCERT (Bodies Corporate) 84. M/s. Rajputana Fertilizers Ltd 1700 0.05 1700 0.05 85. M/s. Modi Trading & Industrial Syndicate Pvt.Ltd. 32022 0.97 32022 0.97 86. M/s. Patiala Flour Mills Co. Ltd. 168 0.01 168 0.01 87. M/s. Quick Investment India Ltd. 5580 0.17 5580 0.17 88. M/s. Spice Corp Ltd. (now known as Spice Enfotainment Ltd.) 30034 0.91 30034 0.91 89. M/s. Daisy Investment Pvt. Ltd. 103825 3.14 103825 3.14 90. M/s. KK Modi Investment & Financial Services Pvt.Ltd. 231751 7.00 231751 7.00 91. M/s. Laolean Investment Pvt. Ltd. 16407 0.50 16407 0.50 92. M/s. Longwell Investment Pvt. Ltd. 5321 0.16 5321 0.16 93. M/s. Momentum Investment Pvt. Ltd. 10779 0.33 10779 0.33 94. M/s. Motto Investment Pvt. Ltd. 10823 0.33 10823 0.33 95. M/s. Mod Fashions & Securities Pvt. Ltd. 54339 1.64 54339 1.64 96. M/s. Uniglobe Mod Travels Pvt. Ltd. 32121 0.97 32121 0.97 97. M/s. Pink Flower Investment Pvt. Ltd. 2000 0.06 2000 0.06 98. M/s. Carefree Merchants Pvt. Ltd. 36115 1.09 36115 1.09 99. M/s. Mahavir Export & Import Company Pvt. Ltd. 100 0.00 100 0.00 100. M/s. MMB Sales (India) Pvt. Ltd. 9000 0.27 9000 0.27 101. M/s. Shubh Credits Pvt.Ltd. 5916 0.18 5916 0.18 102. M/s. Status Mark Finvest Ltd. 227844 6.89 6.89 227844 6.89 6.89 103. M/s. Utility Holdings Pvt.Ltd. 39339 1.19 39339 1.19 104. M/s. Ujala Holding Pvt.Ltd. 12909 0.39 12909 0.39 105. M/s. Meghla Investment Pvt. Ltd. 79605 2.40 79605 2.40 106. M/s. ABC Holding Pvt. Ltd. 116036 3.51 116036 3.51 107. M/s. Chowmukhi Finance & Investment Pvt. Ltd. 1300 0.04 1300 0.04 108. M/s. First Choice Enterprises Pvt. Ltd. 77235 2.33 77235 2.33 109. M/s. Ashoka Mercantile Ltd. 129455 3.91 129455 3.91 110. M/s. Modipon Ltd. 5580 0.17 5580 0.17 111. M/s. Net Across Holdings & Investment Pvt. Ltd. 2025 0.06 2025 0.06 Sub Total ‘C’ 1279329 38.66 6.89 1279329 38.66 6.89 ** Total (A+B+C) 1968635 59.49 11.89 1968635 59.49 11.89
*Undertakings for Non-disposal of Shareholding are given to FIs/Banks. **Number of persons in category of Promoter and Promoter Group are 111 only having 121 folios.
MODI INDUSTRIES LIMITED (29) (iii) Change in Promoters’ Shareholding (please specify, if there is no change):
Sl Shareholding at the beginning of the year Cumulative Shareholding during the year No. (as on 1st April, 2015) (as on 1st April, 2015 to 31st March, 2016) No. of shares % of total shares No. of shares % of total shares of the Company of the Company At the beginning of the year Date wise Increase/Decrease in Promoters Shareholding during the year specifying the reasons for Increase/Decrease There were no changes in shareholding of promoters during the year 2015-16. (e.g. allotment/ transfer/bonus/sweat equity etc.) At the end of the year.
(iv) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs):
SI. Name Shareholding Date Increase/ Reason Cumulative Shareholding No. Decrease in during the year Shareholding (01-04-2015 to 31-03-2016) No. of Shares % of total No. of % of total at the beginning shares of the Shares shares of (01-04-2015)/ Company the Company end of the year (31-03-2016)
1. Life Insurance Corpn of India 159256 4.81 01.04.2015 - Nil movement during the year. 159256 4.81 31.03.2016 - 159256 4.81 2. The Oriental Insurance 59555 1.80 01.04.2015 - Nil movement Company Limited during the year. 59555 1.80 31.03.2016 - 59555 1.80 3. General Insurance Corpn of India. 46562 1.41 01.04.2015 - Nil movement during the year. 46562 1.41 31.03.2016 - 46562 1.41 4. The New India Assurance Co. Ltd. 45403 1.37 01.04.2015 - Nil movement during the year. 45403 1.37 31.03.2016 - 45403 1.37 5. Shri Mahendra Girdhari Lal 37888 1.14 01.04.2015 - Nil movement during the year. 37888 1.14 31.03.2016 - 37888 1.14 6. National Insurance Co. Ltd. 25990 0.79 01.04.2015 - Nil movement during the year. 25990 0.79 31.03.2016 - 25990 0.79 7. United India Insurance Co. Ltd. 14612 0.44 01.04.2015 - Nil movement during the year. 14612 0.44 31.03.2016 - 14612 0.44 8. 3A Capital Services Ltd. 13163 0.40 01.04.2015 - Nil movement during the year. 13163 0.40 31.03.2016 - 13163 0.40 9. Shri Shailesh Dolatrai Shah 11325 0.34 01.04.2015 - Nil movement during the year. 11325 0.34 31.03.2016 - 11325 0.34 10 3A Financial Services Ltd. 5529 0.17 01.04.2015 - Nil movement during the year. 5529 0.17 31.03.2016 - 5529 0.17
(30) MODI INDUSTRIES LIMITED (v) Shareholding of Directors and Key Managerial Personnel:
SI. Name Shareholding Date Increase/ Reason Cumulative Shareholding No. Decrease in during the year Shareholding (01-04-2015 to 31-03-2016) No. of Shares % of total No. of % of total at the beginning shares of the Shares shares of (01-04-2015)/ Company the Company end of the year (31-03-2016)
A. DIRECTORS 1. Mahendra Kumar Modi, 21461 0.65 01.04.2015 - Nil movement Managing Director during the year 21461 0.65 31.03.2016 - 21461 0.65 2. Umesh Kumar Modi, 104200 3.15 01.04.2015 - Nil movement Managing Director during the year 104200 3.15 31.03.2016 - 104200 3.15 3. Krishan Kumar Modi, 9664 0.29 01.04.2015 - Nil movement Non-Executive Director during the year 9664 0.29 31.03.2016 - 9664 0.29 4. Vinay Kumar Modi, 25477 0.77 01.04.2015 - Nil movement Non-Executive Director during the year 25477 0.77 31.03.2016 - 25477 0.77 5. Shri Rakesh Kumar Modi, 48901 1.48 01.04.2015 - Nil movement Non-Executive Director during the year 48901 1.48 31.03.2016 - 48901 1.48 6. Manish Kumar Modi, 22050 0.67 01.04.2015 - Nil movement Non-Executive Director during the year 22050 0.67 31.03.2016 - 22050 0.67 7. Shri Abhishek Modi, 100 0.00 01.04.2015 - Nil movement Non-Executive Director during the yearr 100 0.00 31.03.2016 - 100 0.00 8. Santosh Kumar Aggarwal, 100 0.00 01.04.2015 - Nil movement Non-Executive Director during the year 100 0.00 31.03.2016 - 100 0.00 B. Key Managerial Personnel (KMP’s) 1. Narayan Prakash Bansal, Nil 0.00 01.04.2015 - Nil movement Chief Financial Officer during the year Nil 0.00 31.03.2016 - Nil 0.00 2. Vimal Prasad Gupta, Nil 0.00 01.04.2015 - Nil movement Company Secretary during the year
Nil 0.00 31.03.2016 - Nil 0.00
MODI INDUSTRIES LIMITED (31) V. INDEBTEDNESS: Indebtedness of the Company including interest outstanding/accrued but not due for payment.
(` in thousands) Indebtedness at the beginning of the financial year Secured Loans Unsecured Loans Deposits Total (as on 01.04.2015) excluding deposits Indebtedness i) Principal Amount 377303 589967 6436 973706 ii) Interest due but not paid 475995 7271 28089 511355 iii) Interest accrued but not due 11 6145 - 6156 Total (i+ii+iii) 853309 603383 34525 1491217 Change in Indebtedness during the financial year ● Addition 7345 53236 - 60581 ● Reduction (2987) (63416) (21) (66424) Net Change 4358 (10180) (21) (5843) Indebtedness at the end of the financial year (as on 31.03.2016) i) Principal Amount 383655 581963 6419 972037 ii) Interest due but not paid 474003 5095 28085 507183 iii) Interest accrued but not due 9 6145 - 6154 Total (i+ii+iii) 857667 593203 34504 1485374
VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL: A. Remuneration to Managing Director, Whole-time Directors and/or Manager: (` in thousands) Sl. No. Particulars of Remuneration Name of Managing Directors Total Amount Mahendra Kumar Modi Umesh Kumar Modi 1. Gross Salary (a) Salary as per provisions contained in Section 17(1) 1500.00 - 1500.00 of the Income Tax Act, 1961. (b) Value of perquisites u/s 17(2) of the I.T.Act, 1961 300.00 - 300.00 (c) Profits in lieu of salary u/s 17(3) of the I.T. Act, 1961. - - - 2. Stock Option - - - 3. Sweat Equity - - - 4. Commission: - as % of profit - - - - others, specify……… - - - 5. Others, please specify…… - - - Total (A) 1800.00 - 1800.00 Ceiling as per Act i. Modi Industries Limited, being a sick Company, has heavy losses. Hence approval of Central Government is obtained for payment of remuneration to the Managing Director, Shri Mahendra Kumar Modi. ii. Considering the financial position of the Company Shri Umesh Kumar Modi, re-appointed as Managing Director with remuneration, had requested for waiver of his remuneration. Accordingly the Central Government approved his appointment as Managing Director without remuneration.
(32) MODI INDUSTRIES LIMITED B. Remuneration to other Directors: (` in thousands) Sl. No. Particulars of Remuneration Name of Directors Total Amount Krishan Kumar Vinay Kumar Rakesh Kumar Manish Kumar Abhishek Santosh Kumar Modi Modi Modi Modi Modi Aggarwal 1. Independent Directors #
z Fee for attending board / ------committee meetings
z Commission ------
z Others, please specify ------Total (1) ------2. Other Non-Executive Directors
z Fee for attending board / 4.0 4.0 12.0 7.5 10.5 10.5 48.5 committee meetings
z Commission ------
z Others, please specify ------Total (2) 4.0 4.0 12.0 7.5 10.5 10.5 48.5 Total (B)=(1+2) 4.0 4.0 12.0 7.5 10.5 10.5 48.5 Total Managerial Remuneration (A+B) *1848.5 Overall Ceiling as per the Act Modi Industries Limited, being a sick Company, has heavy losses. Hence only sitting fees is paid to Non- Executive Directors. * Total remuneration to Managing Director and other Directors (being the total of A and B) # Presently the Company has no independent directors. The Company is a sick industrial Company within the meaning of Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 as declared by the Hon’ble BIFR vide their order dated 14th March, 1991. The Hon’ble Supreme Court in SLP (Civil) Nos. 23095 – 23097 of 2010 (M.K. Modi vs. U.K. Modi) has passed an order dated 27th August, 2010 directing the parties therein to maintain “status quo” with regard to the management of the Company. In view of the above order of Hon’ble Supreme Court, Board of Directors are unable to appoint any new director under provisions of Companies Act, 2013 and Listing Agreement/obligations to comply with the composition of Board and/or various Board Committees.
C. Remuneration to Key Managerial Personnel other than MD: (` in thousands)
Sl. No. Particulars of Remuneration Key Managerial Personnel Chief Financial Officer Company Secretary Total (Narayan Prakash Bansal) (Vimal Prasad Gupta) 1. Gross Salary (a) Salary as per provisions contained in Section 17(1). 2693.32 1309.10 4002.42 of the Income Tax Act, 1961 (b) Value of perquisites under Section 17(2) of the 368.46 61.63 430.09 Income Tax Act, 1961. (c) Profits in lieu of salary under Section 17(3) of the - - - Income Tax Act, 1961. 2. Stock Option - - - 3. Sweat Equity - - - 4. Commission - - as % of profit - - - - others, please specify…….. - - - 5. Others, please specify …………. - - - Total 3061.78 1370.73 4432.51
MODI INDUSTRIES LIMITED (33) VII. PENALTIES/PUNISHMENT/COMPOUNDING OF OFFENCES:
Type Section of the Brief Details of Authority[RD / Appeal made, Companies Act Description Penalty /Punishment NCLT/ COURT] if any Compounding/ fees imposed (give Details)
A. COMPANY Penalty Punishment Compounding B. DIRECTORS Penalty Punishment NIL Compounding C. OTHER OFFICERS IN DEFAULT Penalty Punishment Compounding
(34) MODI INDUSTRIES LIMITED ANNEXURE - ‘E’ TO DIRECTORS’ REPORT NOMINATION AND REMUNERATION & BOARD DIVERSITY POLICY
Introduction: In compliance with Section 178 of the Companies Act, 2013 (‘Act’) read with the Rules made there under and Clause 49 of the Listing Agreement, the policy known as ‘Nomination and Remuneration & Board Diversity Policy’ for inter-alia setting up the criteria of nomination and policy for remuneration of Directors, Key Managerial Personnel, Senior Management Personnel and other employees has been formulated and approved by the ‘Nomination and Remuneration Committee’* and initialed by the Chairman of the Committee. * Note: The Company, ‘Modi Industries Limited’, is a sick company within the meaning of Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 declared by the Hon’ble BIFR vide their order dated 14th March, 1991. The Hon’ble Supreme Court in SLP (Civil) Nos. 23095- 23097 of 2010 (M.K. Modi Vs. U.K. Modi) has passed an order dated 27th August, 2010 directing the parties therein to maintain “status quo” with regard to the Management of the company. In view of the said order of the Hon’ble Supreme Court, it has been advised to maintain the existing strength of Directors on the Board and reconstitute the composition of minimum number of members/directors of various Board Committees, from within the existing Directors to comply with the provisions of the Companies Act, 2013 and various Clause(s) of the Listing Agreement. The above policy will always be subject to the final order of Hon’ble Supreme Court and/or Hon’ble BIFR/AAIFR. Definitions For the purpose of this Policy: z ‘Act’ shall mean the Companies Act, 2013; z ‘Board’ shall mean the Board of Directors of MODI INDUSTRIES LIMITED; z ‘Committee’ shall mean the Nomination and Remuneration Committee (NCR) of the Company, constituted and re-constituted by the Board from time to time; z ‘Company’ shall mean MODI INDUSTRIES LIMITED; z ‘Directors’ shall mean the directors of the Company; z ‘Independent Director’ shall mean a director referred to in Section 149 (6) of the Companies Act, 2013; z ‘Key Managerial Personnel (KMP)’ shall mean the following: (i) Executive Chairman and / or Managing Director (MD) and/or Manager (ii) Whole-time Director (WTD); (iii) Company Secretary (CS); (iv) Chief Financial Officer (CFO); (v) Such other officer as may be prescribed. z ‘Senior Management Personnel (SMP)’ shall mean personnel of the company who are members of its core management team excluding the Board of Directors. This would also include all members of management one level below the executive directors including the functional heads. OBJECTIVE & PURPOSE The objective and purpose of this Policy are as follows: z To lay down criteria and terms and conditions with regard to identifying persons who are qualified to become Directors (Executive and Non-Executive) and persons who may be appointed as Senior Management and Key Managerial Personnel (KMP) and to determine remuneration of Directors, KMP and Senior Management Personnel (SMP). z To determine remuneration based on the Company’s size and financial position and trends and practices on remuneration prevailing in peer companies in the same industry. z To provide them reward linked directly to their efforts, performance, dedication and achievement relating to the Company’s operations. z To retain, motivate and promote talent and to ensure long term sustainability of talented managerial persons and create competitive advantage. SCOPE OF THE POLICY The policy shall be applicable to the following in the Company: z Directors z Key Managerial Personnel (KMP) z Senior Management Personnel (SMP) z Other employees of the Company
MODI INDUSTRIES LIMITED (35) CONSTITUTION The Board of Directors of the Company has constituted the ‘Nomination and Remuneration Committee’ with the following members:-
S. No. Name Designation Profile 1 Shri Rakesh Kumar Modi Member Non Executive Director 2 Shri Manish Kumar Modi Member Non Executive Director 3 Shri Abhishek Modi Member Non Executive Director 4 Shri Satosh Kumar Aggarwal Member Non Executive Director
The Board of the Company may re-constitute / make any changes in the Committee from time to time in order to fall in line with the Company’s policy and / or applicable statutory requirement and / or subject to the final order of Hon’ble Supreme Court and/or Hon’ble BIFR/AAIFR as and when necessary. 1. Appointment criteria and qualifications: A. General 1.1 The Committee shall identify and ascertain the integrity and probity, qualification, expertise and experience for appointment to the position of Directors, KMPs & SMPs and accordingly recommend to the Board his/her appointment. 1.2 The Director/ Independent Director/ KMP/ SMP shall be appointed as per the procedure laid down under the provisions of the Companies Act, 2013, rules made thereunder, Listing Agreement or any other enactment for the time being in force. 1.3 The other employees shall be appointed and removed as per the policy and procedure of the Company. 1.4 Letter of appointment shall be issued based on the basis of the guidelines for the same under the Companies Act, 2013 or as per the internal policy of the Company. B. Directors 1.5 The Committee shall determine the suitability of appointment of a person to the Board of Directors of the Company by ascertaining the ‘fit and proper criteria’ of the candidate. The candidate shall, at the time of appointment, as well as at the time of renewal of directorship, fill in such form as approved by the Committee to enable the Committee to determine the ‘Fit and Proper Criteria’. The indicative form to be filled out is placed as Annexure 1 to this Policy. 1.6 The Company shall not appoint or re-appoint the employment of any person as Managing Director / Whole Time Director who has attained the age of seventy years, Provided that appointment of a person who has attained the age of seventy years may be made subject to by passing a special resolution in which case the explanatory statement annexed to the notice for such motion shall indicate the justification for appointing such person. 1.7 The potential candidate to be appointed as Director/Independent Director/KMPs/ SMPs has not been disqualified under the Companies Act, 2013, Rules made there under, Listing Agreement or any other enactment for the time being in force. 2. Term / Tenure: 2.1 Managing Director / Whole-time Director: The Company shall appoint or re-appoint any person as Managing Director, or Whole-time Director with or without remuneration for a term not exceeding five years at a time subject to approval of Central Government, if required. No re-appointment shall be made earlier than one year before the expiry of term of the Director appointed. 2.2 Independent Director* An Independent Director shall hold office for a term up to five years on the Board of the Company and will be eligible for re-appointment on passing of a special resolution by the Company and disclosure of such appointment in the Board’s report. No Independent Director shall hold office for more than two consecutive terms, but such Independent Director shall be eligible for re-appointment in the Company as Independent Director after the expiry of three years from the date of cessation as such in the Company. The Committee shall take into consideration all the applicable provisions of the Companies Act, 2013 and the relevant rules, as existing or as may be amended from time to time. 2.3 Key Managerial personnel / Senior management or Other Employees. The Term/ Tenure of the KMP’s/ Senior Management Personnel and other employees shall be as per the companies prevailing internal policy.
(36) MODI INDUSTRIES LIMITED 3 Removal Due to reasons for any disqualification mentioned in the Companies Act, 2013 and rules made thereunder or under any other applicable Act, rules and regulations, or any other reasonable ground, the Committee may recommend to the Board for removal of a Director, KMP or SMP subject to the provisions and compliance of the Act, rules and regulations. 4 Retirement (a) The Director shall retire as per applicable provisions of the Companies Act, 2013 along with the Rules made thereunder. (b) The KMPs & SMPs shall retire on attaining the age of 60 (sixty) years or later as may be so decided by the concerned Managing Director Shri Mahendra Kumar Modi and / or Shri Umesh Kumar Modi for their related units. (c) Existing KMPs and or SMPs who are of over 60 years of age shall continue in service of the Company till such time as may be decided by concerned Managing Director Shri Mahendra Kumar Modi and / or Shri Umesh Kumar Modi for their related units. (d) Any new appointment of KMP(s) and SMP(s) who are 60 years of age or above can be made by the concerned Managing Director Shri Mahendra Kumar Modi and / or Shri Umesh Kumar Modi for their related units and such person(s) shall retire as may be decided by the aforesaid MDs. 5 Diversity on the Board of the Company The Company aims to enhance the effectiveness of the Board by diversifying it and obtain the benefit out of it by better and improved decision making. In order to ensure that the Company’s board room has appropriate balance of skills, experience and diversity of perspectives that are imperative for the execution of its business strategy, the Company shall consider a number of factors, including but not limited to skills, industry experience, background, race and gender. The Policy shall conform with the following two principles for achieving diversity on its Board:
z Decisions pertaining to recruitment, promotion and remuneration of the directors will be based on their performance and competence; and
z For embracing diversity and being inclusive, best practices to ensure fairness and equality shall be adopted and there shall be zero tolerance for unlawful discrimination and harassment of any sort whatsoever. In order to ensure a balanced composition of executive, non-executive and independent directors on the Board*, the Company shall consider candidates from a wide variety of backgrounds, without discrimination based on the following factors:
z Gender- The Company shall not discriminate on the basis of gender in the matter of appointment of director on the Board.
z Age- Subject to the applicable provisions of Companies Act, 2013, age shall be no bar for appointment of an individual as director on the Board of the Company.
z Nationality and ethnicity - The Company shall promote having a board room comprising of people from different ethnic backgrounds so that the directors may efficiently contribute through their knowledge, sources and understanding for the benefit of Company’s business;
z Physical disability - The Company shall not discriminate on the basis of any immaterial physical disability of a candidate for appointment on Company’s Board, if he/she is able to efficiently discharge the assigned duties.
z Educational qualification- The proposed candidate shall possess desired team building traits that effectively contribute to his/ her position in the Company. The Directors of the Company shall have a mix such as of finance, legal and management background, that taken together, provide the Company with considerable experience in a range of activities including varied industries, education, government, banking, and investment. 6 Remuneration In discharging its responsibilities the Committee shall have regard to the following Policy objectives: (a) The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors, KMPs, SMPs and other employees of the quality, required to run the Company successfully; (b) The remuneration to Directors, KMPs SMPs & other employees will be by way of fixed pay as per current policy of the Company and as per the provisions of Companies Act, 2013 and rules made there under. Company will introduce incentive pay as and when feasible depending upon its revival. The payment structure of remuneration will be as follows: 6.1 Non-Executive / Independent Directors : The Independent Directors will be paid remuneration by way of sitting fee for attending meeting of the Board or any Committee thereof, provided that such amount shall be subject to the ceiling of the limit as prescribed under the Companies Act, 2013 or Rules made there under or any other enactment for the time being in force and the same is to be approved by the Board of Directors as recommended by the Committee.
MODI INDUSTRIES LIMITED (37) 6.2 Managing Director (MD) / Whole-time Director (WTD) : The remuneration / compensation payable to MD / WTD shall be governed by the provisions of Companies Act, 2013 and Rules made there under or any other enactment for the time being in force and will be subject to approval of the Board of Directors, shareholders and the Central Government wherever required and shall be in compliance with Schedule V of the Companies Act. 2013. 6.3 Key Managerial Personnel (KMP)/Senior Management Personnel (SMP) : Since the Company is a Sick Industrial Company registered with the Hon’ble Board for Industrial and Financial Reconstruction (“BIFR”) under the provisions of Section 15 (1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (“SICA”), the remuneration policy for KMPs & SMPs has been designed to provide multiple options inter-alia for the purpose of operational convenience and requirement. (a) The existing KMPs & SMPs, if any, shall be eligible for a monthly fixed and/or variable remuneration as per their terms of employment. (b) For any appointment of new KMP/SMP, the remuneration will be as decided by the Board on receipt of recommendation by the NRC. However, Managing Director, Shri Mahendra Kumar Modi and / or Shri Umesh Kumar Modi for their related units, may approve the appointment of any new KMP(s)/SMP(s) which shall be done by the Company and such appointment will be intimated to the Committee for their consideration and recommendation to the Board for their confirmation. (c) Annual increment will be made by the concerned Managing Director, Shri Mahendra Kumar Modi and / or Shri Umesh Kumar Modi for their related units and jointly by both the Managing Directors in respect of Corporate Office. (d) Any increment which is beyond the above increment policy of the Company to the existing remuneration / compensation of the KMPs/SMPs will be recommended by the Committee to the Board for their approval based on performance evaluation. (e) The above both the MDs shall have power to approve that the Company grants and pays any ex-gratia amount not exceeding 100% of any person’s annual remuneration and / or upto 50% increase in the person’s annual remuneration to KMP(s)/SMP(s) depending upon their performance. (f) The said increment and or ex-gratia approved by the MD beyond the above policy mentioned at point (e) above will be intimated to the Committee at its subsequent meeting. 6.4 Other Employees The power to decide / determine structure of remuneration for other employees has been delegated to the concerned Managing Director, Shri Mahendra Kumar Modi and / or Shri Umesh Kumar Modi or through their representatives in consultation with the concerned MD for their related unit. 7 Evaluation 7.1 Criteria for evaluation of Managing Director(s): (i) The Managing Director(s) shall be evaluated on the basis of targets / Performance of the Company / any other Criteria as may be given to them by the Board from time to time. (ii) The Managing Director(s) shall be evaluated by the Independent Directors* in their separate meeting where the performance of non–independent director(s) and the Board as a whole shall be considered. 7.2 Criteria for evaluation of Non-Executive Directors: The performance evaluation of Non-Executive Directors and / or Independent Directors* shall be done by the entire Board of Directors excluding the Director being evaluated. The Non-Executive Directors shall be evaluated on the basis of the following criteria i.e. whether they : (a) act objectively and constructively while exercising their duties; (b) exercise their responsibilities in a bona fide manner in the interest of the company; (c) devote sufficient time and attention to their professional obligations for informed and balanced decision making; (d) do not abuse their position to the detriment of the company or its shareholders or for the purpose of gaining direct or indirect personal advantage or advantage for any associated person; (e) refrain from any action that would lead to loss of his independence (f) inform the Board immediately when they lose their independence, (g) assist the company in implementing the best corporate governance practices. (h) strive to attend all meetings of the Board of Directors, the Committees and the general meetings of the Company; (i) participate constructively and actively in the committees of the Board in which they are chairpersons or members;
(38) MODI INDUSTRIES LIMITED (k) keep themselves well informed about the company and the external environment in which it operates; (l) do not to unfairly obstruct the functioning of an otherwise proper Board or committee of the Board; (m) moderate and arbitrate in the interest of the company as a whole, in situations of conflict between management and shareholder’s interest. (n) abide by Company’s Memorandum and Articles of Association, Companies Act, rules made thereunder and Listing agreement, company’s policies and procedures including code of conduct, insider trading guidelines etc. (o) Any other factor that the Independent Director(s) / Board of Directors may consider necessary for such evaluation. (p) Safeguarded the confidentiality. 7.3 Criteria for evaluating performance of Key Managerial Personnel and Senior Management Personnel: Criteria for evaluating performance of KMP’s and Senior Management Personnel shall be as per the assignments given to them at the beginning of/during the year by their respective reporting heads. 7.4 Criteria for evaluating performance of Other Employees: The power to decide the criteria for evaluating performance of other employees has been delegated to HR Department/head of respective units of the Company. MINUTES OF COMMITTEE MEETING Proceedings of all meetings must be recorded as minutes and signed by the Chairman of the Committee within the prescribed period, and the said Minutes of the Committee meetings will be tabled at the subsequent Board and Committee meeting. The company should prepare the minutes and get it signed in such manner as prescribed in Companies Act, 2013 and Secretarial Standards issued by Institute of Company Secretaries of India. DISCLOSURE OF THIS POLICY The policy shall be disclosed in the Annual Report of the Company, as required under Companies Act, 2013, rules made there under and the Listing Agreement, as amended from time to time and as may be required under any other law for the time being in force. REVIEW The Committee as and when required shall assess the adequacy of this Policy and make any necessary or required amendments to ensure it remains consistent with the Board’s objectives, current law and best practice. Annexure to the policy Criteria for determination of the ‘Fit and Proper Criteria’ Name of Company: Modi Industries Limited Declaration and Undertaking I. Personal details of the Candidate/ Director a. Full name b. Date of Birth c. Educational Qualifications d. Relevant Background and Experience e. Permanent Address f. Present Address g. E-mail Address/ Telephone Number h. Permanent Account Number under the Income Tax Act i. Relevant knowledge and experience j. Any other information relevant to Directorship of the Company. II. Relevant Relationships of Candidate / Director a. List of Relatives if any who are connected with the Company [w.r.t. the Section 2(76) & 2(77) of the Companies Act, 2013] b. List of entities, if any, in which he/she is considered as being interested [w.r.t. Section 184 of the Companies Act, 2013] c. Names of other Companies in which he/ she is a member of the Board. III. Records of professional achievements a. Relevant Professional achievements
MODI INDUSTRIES LIMITED (39) IV. Proceedings, if any, against the Candidate/ Director a. If the person is a member of a professional association/ body, details of disciplinary action, if any, pending or commenced or resulting in conviction in the past against him/her or whether he/she has been banned from entry of at any profession/ occupation at any time. b. Whether the person attracts any of the disqualifications envisaged under Section 164 of the Companies Act, 2013? c. Whether the person in case of appointment as Managing Director, Whole- time Director attracts any of the disqualification envisaged under Schedule V of Companies Act, 2013 ? d. Whether the person at any time come to the adverse notice of a regulator such as SEBI, IRDA, MCA ?
V. Any other explanation/ information in regard to items I to III and other information considered relevant for judging fit and proper. Undertaking 1. I confirm that the above information is to the best of my knowledge and belief true and complete. I undertake to keep the Company fully informed, as soon as possible, of all events which take place subsequent to my appointment/re-appointment which are relevant to the information provided above. 2. I also undertake to execute the deed of covenant required to be executed by all directors of the Company.
(40) MODI INDUSTRIES LIMITED ANNEXURE - ‘F’ TO DIRECTORS’ REPORT SECRETARIAL AUDIT REPORT (FORM NO. MR. 3) FOR THE FINANCIAL YEAR ENDED ON 31st MARCH, 2016 [Pursuant to Section 204(1) of the Companies Act, 2013 and rule No. 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.] To, The Members, Modi Industries Limited, Modinagar-201204. I have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by Modi Industries Limited (hereinafter called the Company or MIL). Secretarial Audit was conducted in a manner that provided me a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing my opinion thereon. Based on my verification of the Company’s books, papers, minute books, forms and returns filed and other records maintained by the Company, the information provided by the Company, its officers, agents and authorised representatives during the conduct of secretarial audit, the explanations and clarifications given to me and the representations made by the Management, I hereby report that in my opinion, the Company has, during the audit period covering the financial year ended on March 31, 2016 generally complied with the statutory provisions listed hereunder and also that the Company has proper Board processes and compliance mechanism in place to the extent, in the manner and subject to the reporting made hereinafter: I have examined the books, papers, minute books, forms and returns filed and other records made available to me and maintained by the Company for the financial year ended on March 31, 2016 according to the provisions of: (i) The Companies Act, 2013 (the Act) and the rules made thereunder; (ii) The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made thereunder; (iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder; (to the extent as applicable to the Company during the Audit Period); (iv) Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment, Overseas Direct investment and External Commercial Borrowings; (not applicable to the Company during the Audit Period); (v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’): (a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011; (b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 (from 1st April, 2015 to 14th May, 2015) and Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (from 15th May, 2015 to 31st March, 2016); (c) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009; (not applicable to the Company during the Audit Period); (d) The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and The Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014; (Not applicable to the Company during the audit period); (e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008; (not applicable to the Company during the Audit Period); (f) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with the clients; (Not applicable to the Company during the audit period); (g) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; (not applicable to the Company during the Audit Period) and (h) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998. (not applicable to the Company during the Audit Period). Other laws which are specifically applicable to the Company and its industrial units or have an impact thereon: 1) Factories Act, 1948. 2) The Payment of Wages Act, 1936. 3) The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. 4) Air (Prevention and Control of Pollution) Act, 1981 and the rules and standards made thereunder. 5) Water (Prevention and Control of Pollution) Act, 1974 and Water (Prevention and Control of Pollution) Rules,1975.
MODI INDUSTRIES LIMITED (41) 6) Environment Protection Act, 1986 and the rules, notifications issued thereunder. 7) Excise Act. 8) Finance Act,1994 ( Service Tax ). 9) State Laws governing Sales Tax/VAT. 10) Food Safety And Standards Act, 2006. I have also examined compliance with the applicable clauses of the following: (i) Secretarial Standards issued by the Institute of Company Secretaries of India with respect to Board and general meetings and adopted as per Section 205 of Companies Act, 2013 (as applicable to the Company since 1st July, 2015 during the audit period). (ii) The Listing Agreements entered into by the Company with U.P. Stock Exchange Limited, (UPSE) Kanpur and Delhi Stock Exchange Limited, (DSE) New Delhi. SEBI had issued exit order of UPSE on 09th June, 2015 and also SEBI had derecognized the DSE on 19th November, 2014. SEBI vide its circular No. CIR/MRD/DSA/5/2015 Dated 17th April, 2015 provides that the exclusively listed Companies which fail to obtain listing in any other nationwide stock exchange will cease to be a listed Company and will be moved to the Dissemination Board by the existing stock exchange. However, the Company has tried voluntarily to comply with, to the extent generally possible, the disclosures norms given in Listing Agreements/Obligations. (iii) As regards compliance of other general laws, Competition Law, Environmental Laws and Financial Laws like Tax Laws and Customs Act, Intellectual Properties Laws (Patents, Copyright and Trademarks) etc which have impact on/applicable to the Company or its Industrial Units. I have relied upon the representation given by the management. During the period under review and as per the representations and clarifications made, the Company has generally complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards, etc. mentioned above except as specifically pointed out by the Management into the ‘Notes to Accounts’ forming part of Financial Statements of Financial Year 2015-16. I further report that t he Board of Directors of the Company is constituted with composition of Executive Directors & Non-Executive Directors. The Hon’ble Supreme Court in SLP (Civil) No. 23095-23097 of 2010 (M.K. Modi Vs. U.K. Modi) has passed an order dated 27th August, 2010 directing to maintain ‘status quo’ with regard to the management of the Company. In view of this order, the Company could not have appointed independent & women directors and hence could not maintain proper composition of Board of Directors and various Board Committees. The Nomination and Remuneration Committee as well as Audit Committee consists of 4 Non-Executive Directors namely (i) Shri Rakesh Kumar Modi,(ii) Shri Manish Kumar Modi, (iii) Shri Abhishek Modi and (iv) Shri Santosh Kumar Aggarwal as members. The decisions regarding nomination and remuneration of executive and non-executive directors are taken by the entire Board on recommendation of Nomination and Remuneration Committee subject to such approvals from the Shareholders or Central Government as may be necessary. Adequate notice was given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting. All decisions at Board Meetings and Committee Meetings were carried out unanimously in general and duly recorded in the minutes of the meetings of Board of Directors or Committees thereof, as the case may be. I further report that there are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines. I further report that during the audit period the Company had following events which had bearing on the Company’s affairs in pursuance of the above referred laws, rules, regulations, guidelines, standards etc. 1. The Company is a Sick Industrial Company as declared by the BIFR vide their order dated 14th March, 1991 in terms of Section 3(1)(o) of Sick Industrial Companies (Special Provisions) Act, 1985. The IDBI was appointed as Operating Agency, who have forwarded draft rehabilitation scheme of the Company to BIFR on 9th July, 2013 for their consideration, which is still pending for approval. On 28th October, 2013, Hon’ble BIFR passed an order; inter-alia holding that the Company is not likely to make its net worth positive as a result whereof, it is not likely to become viable on a long term basis. Hence, it would be just, equitable and in public interest that the Company be wound up under Section 20(1) of SICA. Pursuant to the order dated 28th October, 2013, the BIFR published an advertisement on 9th November, 2013 in ‘Times of India’ in relation to the Notice under Section 20(1) of the SICA and BIFR Regulations for proposed winding up of the Company (MIL), thereby inviting shareholders, creditors and others to file respective objections or suggestions. Shri U.K. Modi and Shri M.K. Modi have preferred an appeal before the AAIFR challenging the aforesaid order of BIFR. The AAIFR has granted an unconditional stay and the Matter is still pending for decision. 2. With regard to payment of Fixed Deposits, as per Section 74 of the Companies Act, 2013, deposits accepted before the commencement of the Companies Act, 2013 (i.e. 1st April, 2014) shall be repaid within one year from the commencement of the Act. The Company has filed an application with Company Law Board on 31st March, 2015 seeking extension of time for repayment of Public Deposits under Section 74(2) of the Act. The Company Law Board in order No. CA10/12/2015 dated 21st April, 2016 have dismissed the aforesaid application and refused to extend the period of repayment of deposits and Interest thereon. The Company has filed an Appeal before the Hon’ble Allahabad High
(42) MODI INDUSTRIES LIMITED Court on 23rd July, 2016 against aforesaid Order of the Company Law Board. The matter is referred for hearing by Hon’ble High Court and next date of hearing is fixed on 30th August, 2016. This report is to be read with my letter of even date which is annexed and forms an integral part of this report. It is advised that to ensure compliance of all applicable laws to the Company for good governance and as required by Secretarial Standards on Meetings of Board of Directors, a list of Laws applicable to the Company and status of compliance thereof be placed as an item of agenda at the first meeting of the Board in each of the financial year.
Amar Nath Jaiswal Company Secretary Place: Delhi (C.P. No. 14629) Dated : 22-08-2016 ( M. No. ACS-19000)
ANNEXURE TO SECRETARIAL AUDIT REPORT To, The Members Modi Industries Limited Modinagar-201204.
My Report of even date is to be read along with this letter.
.1 Maintenance of secretarial record is the responsibility of the management of the Company. My responsibility is to express an opinion on these secretarial records based on my audit.
2. I have followed the audit practices and process as were appropriate to obtain reasonable assurance about the correctness of the contents of the Secretarial records. The verification was done on test basis to ensure that correct facts are reflected in Secretarial records. I believe that the process and practices, I followed provide a reasonable basis for my opinion.
3. I have not verified the correctness and appropriateness of financial records and books of accounts of the Company.
4. Where ever required, I have obtained the management representation about the compliance of laws, rules and regulations and happening of events etc.
5. The Compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards is the responsibility of management. My examination was limited to the verification of procedure on test basis.
6. The Secretarial Audit Report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company.
Amar Nath Jaiswal Company Secretary Place: Delhi (C.P. No. 14629) Dated : 22-08-2016 ( M. No. ACS-19000)
MODI INDUSTRIES LIMITED (43) ANNEXURE - ‘G’ TO DIRECTORS’ REPORT DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION:
DESCRIPTION PAINT UNIT
RESEARCH & DEVELOPMENT (R & D) :
1. Specific areas in which R&D 1. Development of exterior emulsion basis. carried out by the Company 2. Stoving Enamel for Medium Packaging. 2. Benefits derived as a result Contribution has increased by 1%. of the above R&D. 3. Future Plan of Action 1. Development of exterior emulsion basis. 2. Development of Bases for Satina Brand Product. EXPENDITURE ON R&D :
a. Capital (`) - b. Recurring (`) 21,08,041.44 TOTAL (`) 21,08,041.44 c. R&D Expenditure 1.00% percentage of total turnover
TECHNOLOGY ABSORPTION, ADAPTATION & INNOVATION :
1. Efforts in brief made towards N.A. technology absorption, adaptation and innovation. 2. Benefits derived as a result of N.A. the above efforts e.g. product improvement cost reduction, product development, import substitution etc. . 3. In case of imported technology (imported during the last five years reckoned from the beginning of the financial year) following information may be furnished : a. Technology imported N.A. b. Year of Import N.A. c. Has Technology been fully absorbed. N.A.. d. If not fully absorbed areas, where this has not taken place, reasons therefore and future plan of action. N.A.
(44) MODI INDUSTRIES LIMITED INDEPENDENT AUDITOR’S REPORT To the Members of MODI INDUSTRIES LIMITED Report on the Standalone Financial Statements (1) We have audited the accompanying standalone financial statements of Modi Industries Limited (“the Company”), which comprise the Balance Sheet as at 31st March, 2016, the Statement of Profit and Loss, Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information. The attached Balance Sheet does not include Assets and Liabilities including Contingent Liabilities and other additional information of Steel Unit as at 31st March, 2016 but includes balances as on 31st March, 1992, except for reduction of: (i) unsecured loan by ` 323.95Lac in view of write-back of ` 278.95Lac during the financial year 2004-05 and payment of ` 45Lac during the financial year 2005-06 on account of one-time settlement of dues of a bank and (ii) net fixed assets by ` 696.19Lac (Previous year ` 689.38Lac) on account of provision for depreciation for the period 1st April, 1993 to 31st March, 2016 on fixed assets as stated in Note 27(4)(c) of the standalone financial statements. The Statement of Profit and Loss does not include: (i) certain provisions as stated in Note 27(4)(f) and (ii) loss, amount unascertained, of the Steel Unit for the year 1992-93 in view of non-incorporation of the financial statements of the Steel Unit for the above year. The Cash Flow Statement, except for certain adjustments made as stated in foot-note 2 of cash flow statement, does not include adjustments for Cash Flows from investing / financing activities and changes in assets and liabilities of Steel Unit in view of non-availability of audited Balance Sheets of the Unit as on 31st March, 2015 and 31st March, 2016 {Refer Note 27(4)}. (2) Management’s Responsibility for the Standalone Financial Statements The Company’s Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance ` and cash flows of the Company in accordance with the Accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. (3) Auditor’s Responsibility Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our adverse audit opinion on the standalone financial statements. (4) Basis for Adverse Opinion (A) The books of accounts, vouchers and other documents of the Steel Unit for 1992-93 were not made available to us and consequently audit could not be conducted in respect of the same. {Note 27(4)}. Therefore, as stated in Paragraph 1 above, the attached Balance Sheet, Statement of Profit and Loss and Cash Flow Statement does not include: (a) the financial data / impact of working results and of declaration of closure / post-closure transactions, which includes realization of depot sales / dues from debtors, provision / payment of final dues of employees and payments to various parties and manufacturing / personnel / administration expenses etc., of the Steel Unit for the year 1992-93 during which the Unit had operated for ten months the exclusion of which, in our opinion, substantially impairs the presentation of above standalone financial statements of the Company especially in view of the fact that (i) the assets and liabilities of Steel Unit constituted 28% and 43% respectively of the total Assets & Liabilities of the Company as at 31st March, 1992 and the Income & Expenditure of the Steel Unit constituted 30% and 32% respectively of the total Income & Expenditure of the Company for the said year which resulted in a loss of ` 787.22Lac for the Unit and (b) impact on assets, liabilities and cash flows on account of non- incorporation of transactions / balance sheets for the years 1993-94 to 2015-16 as stated in Note 27(4)(c). (B) Further to our comments in paragraphs 1 and 4(A) above and in the Annexure referred to in paragraph 6(i) below, we report that: i. Understatement of accumulated losses on account of non-incorporation of impact of operational / working results / declaration of
MODI INDUSTRIES LIMITED (45) closure and post closure transactions of Steel Unit for the year 1992-93, amount / impact unascertained. {Refer Note 27(4) and Paragraph 4(A) above}. ii. Though the Company has been incurring huge losses continuously (losses for the five years i.e. 2011-12 to 2015-16 are ` 4,276.10Lac, ` 3,489.48Lac, ` 4,289.92Lac, ` 2,505.50Lac and ` 884.95Lac respectively which aggregates to loss of ` 15,445.95Lac for 5 years), accumulated losses of ` 22,335.47Lac as on 31st March, 2016 are far in excess of paid-up capital & reserves (excluding revaluation reserve) of ` 1,006.98Lac as on that date and the Company has been declared a sick Company on 14th March, 1991 and was also issued a show cause notice for winding up by the Board for Industrial & Financial Restructuring on 28th October, 2013 (presently the winding up order has been stayed by the Appellate Authority for Industrial & Financial Restructuring), the accounts have been prepared by the management on a going concern basis for the reason stated in Note 27(17). In our opinion, these events / conditions cast significant doubt on the ability of the Company to continue as a going concern and the appropriateness of the said basis is inter-alia mainly dependent on the vacation of the winding-up order, sanction and implementation of the rehabilitation scheme, Government support / incentives / subsidy for paying huge amount of farmers dues towards cane purchases for sugar season 2015-16 and waiver off interest liability since sugar seasons 2013-14 to 2015-16 on dues paid / payable to farmers and also the Company’s ability to infuse requisite funds by sale of unproductive assets or otherwise for meeting substantial financial obligations including dues of farmers towards cane purchases. iii. Understatement of losses on account of non-provision of interest on loans, obsolete inventories, doubtful debtors / loan and advances and impairment loss, and not conducting physical verification of inventories and fixed assets etc. in Steel Unit as stated in Notes 27(4)(f)(i) to (vii) and 27(5) of the standalone financial statements. Amount of non-provision not ascertained by the management. iv. Non-provision of impairment loss, amount unascertained by the management, of assets of Sugar and Electrode Units as stated in Note 27(41). v. Impact of componentization of fixed assets and ascertaining useful life and original cost / estimated value of such components as on April 01, 2015, as required by the amended Schedule II of the Companies Act, 2013, is pending. Impact, if any, on the depreciation expense for the year ended March 31, 2016 is yet to be ascertained by the management. [Note 27(42)]. vi. (1) Non-provision of late payment surcharge / recovery charges ` 302.66Lac (Previous year ` 302.66Lac) {Note 27(9)} and Non- provision of demands of U.P. Power Corporation Ltd ` 1311.49Lac (Previous year ` 1311.49Lac) {Note 27(4)(f) (viii)(c)}; (2) Non-provision of ESI demand ` 64.68Lac (previous year ` 63.51Lac) {Note 27(10)}; (3) Non-provision of House-tax demand ` 188.63Lac (Previous year `188.63Lac) {Note 27(11)}; (4) Non-provision of simple, penal and compound interest of ` 38,164.17Lac (for the year ` 5,414.65Lac) on term loans / debentures and public deposits {Note 27(18)(a) and (f)} and interest / bank charges ` 4,124.37Lac (for the year ` 596.33Lac) on cash credit from banks {Note 27(18)(d) & (e)}; (5) Non-provision of Wages ` 27.46Lac (Previous year ` 27.46Lac) for the lock-out period {Note 27(21)}; (6) Non-provision of recovery charges of ` 413.50Lac (Previous Year ` 413.50Lac) for sugar season 2007-08 and ` 1,703.95Lac (Previous Year ` Nil) for sugar season 2014-15{Note 27(35)(b) & (g)}; (7) Non-provision of interest upto 31st March, 2016 on cane dues for sugar season 2014-15 and 2015-16 amounting to ` 2,010.87Lac and ` 341.88Lac respectively. {Notes 27(35)(g) & (h)}; (8) Accounting for amount recoverable of ` 1,147.70Lac as on 31st March, 2016 towards financial assistance for sugar season 2015-16 by way of reimbursement of part of sugar cane price by State Govt. whereas the amount to be reimbursed, if any, is yet to be notified by the State Govt. for this purpose. Had the above financial assistance not accounted for in the books of account, there would be net increase in expenses by ` 964.10Lac (net of increase in closing stock by ` 183.60Lac) as stated in Note 27(24} and (9) Debit advice of ` 2.63 Lac of Sugar Unit toward certain expenses has not been accounted for in the books of accounts of other units of the Company as stated in Note 43 resulting in under-statement of expenses / loss and over-statement of debit balance of inter-unit balances by the same amount. Further, no provision has been made for electricity expenses also by certain units amounting to ` 7.43 Lac as stated in Note 43 resulting in under-statement of expenses / loss and liabilities. (C) Accounting treatment given to the manufacture and sale of Vodka and whisky by the Distillery unit (“Unit”) of Company in its books of account is not proper even though the same has no impact on the net profit of the Unit for the year in view of the reasons stated in Note 27(16). (D) Confirmation of Debit / Credit balances of debtors / creditors and of certain banks were not obtained. Impact on the standalone financial statements is not ascertainable. {Note 27(27)}. (E) Our audit observations under sections 143(1) & 186 of The Companies Act, 2013 are as under: The Company had given unsecured interest free security deposits amounting to: (i) ` 1,100Lac during May 2011 against temporary possession of 59 houses to Ashoka Mercantile Limited (“AML”), a related party, and (ii) ` 147.63Lac during the earlier years against temporary possession of 9 houses to Modipon Limited (“MPL”), also a related party. The outstanding amounts as on 31st March, 2016 in the books of account of the Company are ` 798.30Lac (43 houses) (Previous year ` 867.80Lac & 47 houses) and ` 147.63Lac
(46) MODI INDUSTRIES LIMITED (9 houses) (Previous year ` 147.63Lac for 9 houses) in respect of AML and MPL respectively. These houses are not occupied by any of the employees of the Company till date. In our opinion, the above unsecured loans given by the Company {i.e. a sick Company as mentioned in Note 27(17)} to two related parties amounting to ` 945.93Lac (As on 31st March, 2015 ` 1,015.43Lac) have been shown as deposits by the Company since date of payment on which interest @ 8.5% has been charged w.e.f. 1st April, 2014 from AML since it expressed its inability to refund the amount and no interest has been charged from MPL since inception. {Refer Note 27(38)(4)(B) and Foot-note 7 of Note 27(38)}. (F) As stated by the management in Note 27(36), the Electrode Unit of the Company has incurred expenditure for advertisement of products amounting to ` 115.64Lac (previous year ` 153.12Lac) by way of advertisement in newspapers through agents. In the absence of sufficient appropriate audit evidence regarding prevailing market rates / charges paid to newspaper publishers by agents, we are unable to verify and express our opinion on these rates/charges paid by the Company to agents. Observations & suggestions of Internal Auditors in this regard need to be also looked into & implemented. (G) (i) As per the bottling contract mentioned in Note 27(16), the Distillery Unit (“the Unit”) of the Company has agreed for blending, manufacturing and bottling of the products for MI Spirit India Private Limited (MI Spirit) and MI Spirit will, either itself or through “Modi Illva India Private Limited (Modi Illva), a Company in which a director of the Company is also a director, market the products and in case MI Spirit requests the bottler to directly undertake any promotion of the products, then expenses incurred by the bottler in connection with the promotion of the products shall be reimbursed by MI Spirit, against the debit notes raised by the bottler. (ii) We note that the Unit has accounted for sale promotion expenses {cost of gift items ` 805.58Lac and trade scheme amount `183.40Lac which is claimed as reimbursement from the Unit by sale promotion agents (SPAs) on secondary sales i.e. on sale made by the State corporations to their customers} {Previous year: Cost of gifts ` 250.99Lac & trade scheme amount ` Nil}. In view of the facts stated in sub-paragraph (i) above, in our opinion, the accounting for these expenses in the books of account of the Unit is not proper since the same is to be debited to MI Spirit and also in view of the opinion given by the Expert advisory Committee of the Institute of Chartered accountants of India on the similar arrangement as stated in Note 27(16). Further, we could not verify / audit these expenses as the sale promotion policy, records / supporting documents relating to receipt and / or distribution of these gifts and proof / confirmation of customers for having received gifts and trade scheme amounts (from SPAs) are not available with the Unit. (iii) However, the accounting of these sale promotion expenses in the books of account of the Unit had no impact on the net profit of the Unit as the Unit is entitled to only fixed manufacturing margin of ` 281.90Lac for the year ended March 31, 2016 as per the agreement stated above which is actually represented by way of net profit earned from manufacture and sale of Vodka and whisky by the Unit as stated in note 27(16) i.e. instead of sale promotion expenses, the trade mark license & marketing fee expenses would have been accounted for in the books of account of the Unit resulting in no impact on net profit earned by the Unit. (H) We further report that, without considering items mentioned at 4 (B) (i) to (v), 4(D) to 4(F) above, the possible effects of which could not be determined, had the observations made by us in paragraphs 4(B) (vi), and 4(C & G) above been considered, the loss for the year would have been ` 50,512.77Lac (as against the reported loss of ` 884.95Lac), negative balance of Reserves and Surplus in Note 2 would have been ` 69,315.46Lac (as against the reported negative figure of ` 19,687.64Lac), current assets would have been ` 13,215.70Lac (as against the reported figure of ` 18,017.97Lac), debit balance of inter-unit balances in Note 17 would have been ` 1,026.73Lac (as against the reported figure of ` 1,029.36Lac), current liabilities would have been ` 83,450.73Lac (as against the reported figure of ` 35,874.19Lac), long-term borrowings would have been ` 2,971.75Lac (as against the reported figure of ` 5,722.74Lac), gross revenue (including other income) would have been ` 27,833.70Lac (as against the reported figure of ` 36,534.30Lac), trade mark license and marketing fees expense would have been ` 1,137.35Lac (as against the reported figure of ` 148.37Lac), discount and sales promotion expense would have been ` 86.32Lac (as against the reported figure of ` 1,075.30Lac) and total expenses (including excise-duty) for the year would have been ` 78,628.37Lac (as against the reported figure of ` 37,419.25Lac). (I) In view of the significance of our audit observations in paragraphs 1 and 4(A) to (H) above and especially in view of the fact that the state of affairs would change substantially in case the Statement of Profit and Loss for the financial year 1992-93 and Balance Sheet as on 31st March, 2016 of Steel Unit were included, which we are unable to quantify, we are of the opinion that the said standalone financial statements DO NOT give a true and fair view: (a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2016, (b) in the case of Statement of Profit and Loss, of the loss for the year ended 31st March, 2016 and (c) in the case of Cash Flow Statement, of the cash flows for the year ended on that date. 5. Emphasis of Matter (i) The Company has not deposited unpaid unclaimed public deposits and interest accrued thereon amounting to ` 9.72Lac with Investor Education & Protection Fund. Further, unpaid amount of such unclaimed debentures, if any, as on 31.03.2016 has not been identified. {Note 27(30)}. (ii) Cars costing ` 82.62Lac (Previous Year `96.62Lac) purchased in the name of employees / others are yet to be transferred to the name of the Company. However, these persons have given disclaimer in favor of the Company. (Refer Foot-Note D of Note 10). (iii) We invite attention to Note 27(33) regarding entering into agreements to sell 215 (previous year 215) residential quarters, Note 27(34)(a) regarding entering into lease, including perpetual lease, agreements for 27,954.86 Sq. Meters of factory land & buildings and Note 27(34)(b) regarding entering into perpetual lease agreement for 1584 Sq. Mtrs. of factory land for which the approvals of
MODI INDUSTRIES LIMITED (47) financial institutions, to whom these quarters and factory land & buildings are mortgaged, were not obtained. (iv) We invite attention to Foot-notes 5, 9 & 10 of Note 27(38) regarding post-facto approval of shareholders to be obtained by the Company in the ensuing annual general meeting for leasing agreements for premises and machinery entered into with related parties whereas all these agreements requires prior approval of shareholders. (v) We invite attention to Note 27(19)(a) regarding reasons for not making provision for disputed Sales-tax demand of `2,455.78Lac excluding interest (Previous year ` 2,455.78Lac) of closed Vanaspati Unit. (vi) We invite attention to Note 27(35)(a), (c), (e) and (f) regarding demands of recovery charges of ` 2,659.71Lac (Previous Year ` 2,659.71Lac) on account of non-payment of cane price / commission / interest as the same are disputed by the Company / obtained stay order as stated therein. We also invite attention to Note 27(35)(f) regarding issue of notification by the State Government for waiver off interest for sugar season 2013-14 amounting to ` 2,138.58Lac which is still awaited. (vii) We invite attention to Note 27(31) regarding provision made for diminution in market value of one of its long-term investment in a group Company of ` 148.80Lac for the year ended March 31, 2016 in view of the reasons stated in the Note and is disclosed in the Statement of Profit and Loss as an ‘Exceptional Item’. Our opinion is not qualified in respect of the matters mentioned in paragraph 5 above. 6. Report on Other Legal and Regulatory Requirements (i) As required by the Companies (Auditors’ Report) Order, 2016 issued by the Central Government of India in terms of Sub-Section (11) of Section 143 of the Companies Act, 2013, and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us,we enclose in Annexure 1 a statement on the matters specified in paragraphs 3 and 4 of the said order except for certain matters relating to Steel Unit of the Company in view of non-availability of information / details on account of non-incorporation of: (i) financial statements of the Steel Unit for the year 1992- 93 and (ii) balance sheets for the years 1993-94 to 2015-16 as stated in note 27(4)(c) . (See Paragraph 4(A) above). (ii) As required by section 143(3) of the Act, we report that: a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit except in respect of Steel Unit as mentioned above and the matters referred in paragraphs 4(F) & (G) above. In case of Steel Unit, no details, information and explanations are available for the opening and closing assets and liabilities as on 1st April, 2015 and 31st March, 2016 respectively and for contingent liabilities and additional information etc. as on 1st April, 2015 and 31st March, 2016 in view of non-incorporation of: (i) the financial statements of Steel Unit for 1992-93 and (ii) Balance Sheets for the years 1993-94 to 2015-16 as stated in note 27(4)(c).{(See paragraphs 1 and 4(A) above}; b. In our opinion, proper books of accounts as required by law have been kept by the Company so far as appears from our examination of those books except: (i) in respect of Steel Unit, where audited balances of opening and closing assets, liabilities, contingent liabilities and additional information etc. as on 1st April, 2015 and 31st March, 2016 respectively were not available and consequently not incorporated in the books of account and (ii) for the effects of other matters described in the ‘Basis for Adverse Opinion’ paragraph 4 above. c. The Balance Sheet referred to in this report is in agreement with the books of accounts of all units and accounting centres taken together, other than Steel Unit, as on 31st March, 2016 as consolidated with the Balance Sheet of Steel Unit as stated in Note 27(4) (c) & (d) of the standalone financial statements and hence is not in agreement with the books of account of the Company as a whole. Further, the Cash Flow Statement for the year ended on that date, which does not include adjustments for Cash Flows from investing / financing activities and changes in assets and liabilities in view of non-availability of audited Balance Sheet of Steel Unit as on 31st March, 2015 & 31st March, 2016, is also not in agreement with the books of account. (Refer foot-note 2 of cash flow statement). Except for non-incorporation of Statement of profit and loss of Steel Unit for the year 1992-93, the Statement of Profit and Loss is in agreement with the books of accounts. d. Subject to our observations in paragraph 4(B) above, in our opinion, the Statement of Profit and Loss and Balance Sheet, so far as they relate to the remaining units i.e. other than Steel Unit, comply with the requirements of the Accounting Standards referred to in Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. However, in view of non-availability and consequently non-incorporation of audited (i) opening and closing balances as on 1st April, 2015 and 31st March, 2016 respectively of assets, liabilities, contingent liabilities and other additional information etc. and (ii) Statement of Profit and Loss for 1992-93 of Steel Unit {Refer Paragraph 4(A) above}, the aforesaid standalone financial statements do not comply with the requirements of Accounting Standards referred to in Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 for the Company as a whole. e. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements, so far as they relate to the remaining Units i.e. other than Steel Unit, give the information required by the Act in the manner so required except for non-disclosure of information relating to micro, small and medium enterprises {Refer note 27(14)}. In the case of Steel Unit, in view of non-incorporation of Balance Sheets of Steel unit as on 31st March, 2016 and 31st March, 2015 on account of non-availability and consequently non-incorporation of audited opening balances as on 1st April, 2015 and 1st April, 2014 respectively of assets, liabilities, contingent liabilities and other additional information etc., the standalone financial statements do not give the information required by the Companies Act, 2013 in the manner so required for the Company as a whole. {Refer Note 27(4)}.
(48) MODI INDUSTRIES LIMITED f. The matters described in the Basis for Adverse Opinion paragraph above, in our opinion, can have an adverse effect on the functioning of the Company. g. On the basis of the written representations received from the directors as on 31st March, 2016, taken on record by the Board of Directors, none of the directors is disqualified, as on 31st March, 2016, from being appointed as a director in terms of Section 164(2) of the Act. Further, the Company was legally advised earlier that provisions of Section 274(1)(g) of the Companies Act, 1956, which corresponds to section 164(2) of the Companies Act, 2013, are prospective in nature and the defaults made by it prior to 13th December, 2000, for non-payment of deposits/interest on deposits on due dates and non-redemption of debentures on due dates, are not covered by Section 274(1)(g) of the Companies Act, 1956, on which we have relied upon. h. The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the ‘Basis for Adverse Opinion’ paragraph above. i. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to Annexure 2. j. With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us: i. The Company has various pending litigations which could impact its financial position and the same has been suitably disclosed under contingent liability / notes to accounts under Note 27. ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses. iii. An amount of ` 9.72Lac being unclaimed deposits and interest accrued till date of maturity of deposit are yet to be transferred to the Investor Education and Protection Fund by the Company. Amount of unclaimed debentures and interest accrued till maturity is not yet quantified by the management. for P.R. MEHRA & CO., CHARTERED ACCOUNTANTS ( Regn. No. 000051N )
Ramesh Chand Goyal Place: Delhi PARTNER Dated: 22nd August, 2016 Membership No.012628
Annexure 1 to the Independent Auditors’ Report Annexure referred to in our report of even date to the members of Modi Industries Limited on the financial statements for the year ended March 31, 2016 As required by the Companies (Auditors’ Report) Order, 2016 and on the basis of such checks as were considered appropriate and according to the information and explanations given to us, we further report as under: (A) The following matters reported at paragraphs {(B) (iii to v), (vii) a(ii) & b, viii, x and xiii} do not cover matters relating to closed Steel Unit of the Company since: (i) the financial statements of the Steel Unit for the year 1992-93 have not been prepared and incorporated and consequently the audit of which has not been carried out and (ii) the Balance Sheets of Steel Unit for 1993-94 to 2015-16 have not been incorporated in the respective financial years due to non-availability of audited opening balances as on 1st April,1993. {Refer Note 27(4) and paragraphs 1 & 4(A) of our audit report on standalone financial statements}. (B) Subject to our comments in paragraph (A) above and paragraphs 4(F & G) in our audit report of even date, we further report as under: (i) (a) Company’s Sugar Unit since inception and other Units since November, 1968, have generally maintained proper records including quantitative details and situation of their major fixed assets except for : (i) locations in case of furniture and fixture and (ii) recording of additions / deletions of certain previous years. Fixed asset register of Steel Unit has not been produced to us. (b) No physical verification of assets has been conducted by the Management since 1989 in Sugar, Steel and Distillery Units and of Corporate Office and since 2001-02 in respect of other units. (c) We are informed that the original title deeds of immovable properties of the Company are mortgaged with the lenders by deposit of these title deeds. Confirmation of lenders stating that the title deeds are held in the name of the Company as on March 31, 2016 has been sought by the Company which is yet to be received. Accordingly we are unable to comment on the same. (ii) The inventory of the Company has been physically verified during the year by the management except for inventory of closed Steel Unit and inventory of stores and spare-parts of all the units. No material discrepancies were noticed. In respect of stocks lying with C&F / consignee agents, these have substantially been confirmed by these parties. (iii) The Company has not given any loans, secured or unsecured to companies, firms, limited liability partnerships or other parties covered
MODI INDUSTRIES LIMITED (49) in the register maintained under section 189 of the Companies Act, 2013 except for unsecured interest free loan given to a Company, presently a sick Company, of ` 4.04Lac (net) during the previous financial years. Entire amount is overdue for more than 90 days and the Company is yet to take steps for its recovery. Further, as stated in paragraph 4(E) of our audit report, the Company had given unsecured security deposits to related parties amounting to: (i) ` 1,100Lac during May 2011 against temporary possession of 59 houses to Ashoka Mercantile Limited (“AML”), a related party, and (ii) ` 147.63Lac interest free during the earlier years against temporary possession of 9 houses to Modipon Limited (“MPL”), also a related party. The outstanding amounts as on 31st March, 2016 in the books of account of the Company are ` 798.30Lac (43 houses) and ` 147.63Lac (9 houses) in respect of AML and MPL respectively. In our opinion, the above unsecured loans given by the Company {i.e. a sick Company as mentioned in Note 27(17)} to two related parties amounting to ` 945.93Lac (As on March 31, 2015 ` 1,015.43Lac) are overdue for more than 90 days as on date and reasonable steps for recovery of the principal amounts are yet to be initiated by the Company. {Refer Note 27(38)(4)(B) and Foot-note 7 of Note 27(38)}. (iv) The Company has not granted any loans or given any guarantee and security to parties covered under Section 185 and 186 of the Companies Act, 2013 during the current financial year. (v) In our opinion and according to the information and explanations given to us, the Company has complied with the directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevant provisions of the Companies Act and the Rules framed there under except that the matured/claimed deposits of earlier years of ` 54.47Lac have not been paid before 31st March, 2016 and unclaimed deposits and interest due amounting to ` 9.72Lac outstanding as on 31st March, 2016 have not been deposited with the Investor Education and Protection Fund. Company Law Board vide its order dated April 21, 2016 has dismissed the petition filed by the Company seeking extension of time for repayment of principal amount as per the orders which may be passed by BIFR / AAIFR and payment of interest up to date of maturity. The Company has filed a petition against the above order in the Hon’ble Allahabad High Court on July 23, 2016. {Refer paragraph 5 (i) of our audit report and Note 27(30) (b)}. (vi) The Central Government has prescribed maintenance of cost records by the Company in respect of manufacture of Sugar, Electrode and Distillery Units and such accounts and records have been made and maintained. (vii) (a) (i) During the current financial year, the Company was regular in depositing with the appropriate authorities un-disputed statutory dues except in following cases: Sugar, Steel and Distillery units of the Company were generally not regular in deposit of Provident Fund (PF) dues throughout the year and there were minor delay in deposit of PF dues in Gas unit and M. D. Office. There were also delays in almost all the months in deposit of FPS dues by the Company. In respect of excise-duty dues, there have been delays in deposit of dues of 3 months in Sugar Unit and there were few days delay in most of the months in deposit of dues in Electrode and Paint units. In respect of tax deducted at source dues, these have been deposited in time except for few delays in case of Sugar, Steel, Paint, Gas & Electrode units. In respect of tax collection at source, there have been few delays in three months in Distillery Unit. In respect of sales-tax/ vat, these have been regularly deposited though there has been a slight delay in few cases in certain depots of Gas, Paint & Electrode Units. In respect of service-tax, there have been general delays in deposit till September 2015 in Corporate Office, delays in deposit of 2 months dues by Steel Unit, delays in deposit of dues of few months in Gas, Electrode, Sugar and Distillery Units. In respect of entry-tax, there have been minor delays in deposit of dues of certain months by one depot each of Paint and Electrode Units. (ii) On the basis of such checks as were considered appropriate and according to the information and explanations given to us, Statement of Arrears of unpaid undisputed Statutory Dues (excluding of Steel Unit) outstanding for more than six months as on March 31,2016 as per books of account are as under : Nature of dues (` in Lac) U.P. Trade Tax/CST 1,110.90 FPS 0.06 Service-tax 0.05 Commission on Cane purchases 0.10 Interest on Provident Fund/FPS 101.18 Tax deducted at source/Tax collection source (Including interest on dues) 15.20 Excise-duty including interest 4.28 House-tax 54.89
(50) MODI INDUSTRIES LIMITED (b) According to the records of the Company and based on information and explanations furnished to us, the following custom duty, Excise duty, Income-tax and value added tax / sales-tax dues (excluding unascertainable amounts and of Steel Unit for the period 1992-93 to 2015-16) were not deposited on account of disputes pending at various forums: Name of Nature of the dues Amount of Amount deposited Period to which the Forum where statute dues under protest amount relates disputes is pending (` in Lac) (` in Lac)
U.P.VAT VAT Tax, Penalty, Interest, 2584.59 5.98 1987-88, 1990-91 & Allahabad High Court. Act Exemption to New Units. 1991-92, May 91 to March 96 VAT Tax and Penalty @ 345.78 123.04 1982-83 to 1986-87, Commercial Tax 1988-89, 1992-93, 2000-01 Tribunal, Ghaziabad to 2001-02, 2007-08 VAT Tax and Penalty 455.26 254.28 1986-87, 1994-95 to Joint Commissioner (A), 99-2000 Ghaziabad. VAT Tax 0.12 - 2005-06 Deputy Commissioner. (Assessment), Modinagar. Penalty under VAT Tax 4.37. 0.45 2008-09 Trade Tax Tribunal, Ghaziabad. Central Central Sales Tax, 162.09 16.10 1985-86, 1988-89, Commercial Tax Sales 1992-93, 1999-2000 Tribunal, Ghaziabad. Tax Act & 2000-01 Central Sales Tax 51.04 20.30 1994-95 to 1996-97 Joint Commissioner Sales Tax, Ghaziabad Central Sales Tax 1.01 - 2005-06 Deputy Commissioner (A),Modinagar State Sales State Tax 10.56 0.20 1992-93 Additional Tax Act Commissioner, Sales Tax, Delhi. Sales Tax 5.97 2.00 1985-86, 1997-98, State Tax 2002-03, 2004-05 & 2005-06 Sales Tax 0.82 0.05 2014-15 State Tax Penalty (HGST) 0.30 - 1991-92 Tribunal Sales Tax, Chandigarh. State Tax 15.79 1.79 1989-90 to 1993-94, Deputy Commissioner 1998-99 and 2006-07 (A), States Central Central Sales Tax 1.92 0.29 1988-89 to 1992-93. Appellate Authority/DC Sales Tax (Appeals), Delhi Act (States) Central Custom Duty *43.91 - 1.3.2001 to 25.4.2001 Civil Court Excise & Ghaziabad Custom Act Excise Duty 0.70 - 2002-03 and 2003-04 Supreme Court of India Excise Duty 167.43 50.00 1985-86 Delhi High Court 0.49 0.25 2004-05 Allahabad High Court 0.74 0.20 1996-97 Commissioner of Central Excise, Ghaziabad **169.17 - February 1981 to CESTAT February, 1987, 2002-03 to 2010-11 5.00 - Information not available. Information not available. 6.34 6.34 2009 onwards Supreme Court of India Income Tax Penalty 209.59 - 2007-08 and 2008-09 CIT (appeal) New Delhi
@ Provided for ` 82.60 Lac in the Accounts. *Provided for in the Accounts. **Provided for ` 32.20 Lac in the Accounts.
MODI INDUSTRIES LIMITED (51) (viii) The Company has defaulted in repayment of dues to Financial Institutions, banks and debenture-holders of the Company. The details of defaults and period of defaults are as under: ( ` in Lac) Particulars Loan Interest Total Period of default of principal amount Amount including dues* unprovided interest Loans from Financial 23.13 22,288.57 22,711.70 Loan amounts due since 1991-92. Institutions Loan from banks 40.55 4,141.98 4,182.53 Entire amount due. Refer note 27(18) (c). (Allahabad Bank) Debentures 535.21 19,428.30 19,963.51 ` 53 Lac due since August, 1990, ` 30 Lac due since December, 1994 & ` 452.21 Lac due since February,1995 to February, 1997. Total 998.89 45,858.85 46,857.74
# Dues of IFCI, IDBI, ICICI, LIC, GIC and its subsidiaries. Refer Foot-note 1 of Note 8. * excluding amounts relating to Steel Unit but including dues of IDBI/IFCI relating to other units. Refer Note no. 27(5) regarding assignment of debts by bank and financial institutions and paragraph (A) above. (ix) During the current financial year, no money was raised by way of public offer or further public offer (including debt instruments) and term loans. (x) According to the information and explanations given to us and as represented by the management and based on our examination of the books and records of the Company and in accordance with generally accepted auditing practices in India, we have been informed that no case of fraud committed by the Company or any fraud on the Company by its officers or employees has been noticed or reported during the year. (xi) During the current financial year, the managerial remuneration has been paid or provided in accordance with the requisite approval of the Central Government as mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013. (xii) The provisions of clause 3 (xii) of the Order regarding “Nidhi Company” are not applicable to the Company. (xiii) Except for certain transactions reported in paragraph 5(iv) of our audit report on standalone financial statements wherein approval of shareholders is being sought post-facto in the ensuing annual general meeting of the Company, the Company has complied with the provisions of Sections 177 and 188 of the Companies Act, 2013 w.r.t. transactions with the related parties, where applicable. Details of the transactions with the related parties have been disclosed in the standalone financial statements as required by the applicable accounting standards. (xiv) The Company has not made any preferential allotment or private allotment of shares or fully or partly convertible debentures during the current financial year under review. Accordingly, provisions of clause 3 (xiv) of the Order are not applicable to the Company. (xv) The Company has not entered into any non-cash transactions with the directors or persons connected with him. for P.R. MEHRA & CO., CHARTERED ACCOUNTANTS ( Regn. No. 000051N )
Ramesh Chand Goyal Place : Delhi PARTNER Dated : 22nd August, 2016 Membership No.012628
(52) MODI INDUSTRIES LIMITED Annexure 2 referred to in paragraph 6(i) under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date on the standalone financial statements of Modi Industries limited for the year ended March 31, 2016 Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”) We were engaged to audit the internal financial controls over financial reporting of Modi Industries limited (“the Company”) as of March 31, 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date. 1. Management’s Responsibility for Internal Financial Controls The Company’s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company and the components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013. 2. Auditors’ Responsibility Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit conducted in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, to the extent applicable to an audit of internal financial controls, both issued by the ICAI. Because of the matter described in Disclaimer of Opinion paragraph below, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on internal financial controls system over financial reporting of the Company. 3. Meaning of Internal Financial Controls over Financial Reporting A Company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. 4. Inherent Limitations of Internal Financial Controls over Financial Reporting Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 5. Disclaimer of opinion According to the information and explanations given to us, the Company has neither established nor evaluated its internal financial controls over financial reporting on criteria based on or considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. Mainly because of this reason and also our comments in paragraph 4 of statutory audit report of even date on standalone financial statements of the Company, we are unable to obtain sufficient appropriate audit evidence to provide a basis for our opinion whether the Company had adequate internal financial controls over financial reporting and whether such internal financial controls were operating effectively as at March 31, 2016. However, according to the information and explanations given to us and based on our audit of the financial statements, the following material weaknesses have been noticed as at March 31, 2016 for which remedial action by the management is yet to be initiated: a) No physical verification of fixed assets has been conducted by the Management since 1989 in Sugar, Steel and Distillery Units and of Corporate Office and since 2001-02 in respect of other units. Fixed asset register needs to be updated for: (i) locations in case of furniture and fixture and (ii) recording of additions / deletions of certain previous years. b) The inventory of stores and spare-parts of all units during the year and inventory of the closed Steel Unit since the year 1992-93 has not been physically verified by the management.
MODI INDUSTRIES LIMITED (53) c) The books of accounts, vouchers and other documents of the Steel Unit for 1992-93 were not made available to us and consequently audit could not be conducted in respect of the same. {Note 27(4)}. Therefore, as stated in Paragraph 1 above of audit report of even date, the attached Balance Sheet, Statement of Profit and Loss and Cash Flow Statement does not include: (a) the financial data / impact of working results and of declaration of closure / post-closure transactions, which includes realization of depot sales / dues from debtors, provision / payment of final dues of employees and payments to various parties and manufacturing / personnel / administration expenses etc., of the Steel Unit of the Company for the year 1992-93 during which the Unit had operated for ten months the exclusion of which, in our opinion, substantially impairs the presentation of above standalone financial statements of the Company and (b) impact on assets, liabilities and cash flows on account of non-incorporation of transactions / balance sheets for the years 1993- 94 to 2015-16 as stated in Note 27(4)(c). d) Accounting treatment given to the manufacture and sale of Vodka and whisky by the Distillery unit (“Unit”) of Company in its books of account is not in accordance with the opinion given by the Expert Advisory Committee of the Institute of Chartered Accountants of India even though the same has no impact on the net profit of the Unit for the year in view of the reasons stated in Note 27(16). In our opinion, the accounting treatment suggested by the Expert Advisory Committee of the Institute of Chartered Accountants of India for accounting only manufacturing margin in the books of account of the Unit should be followed and accordingly, all expenses, revenue, assets and liabilities related to the manufacture and sale of Vodka and whisky by the Unit should not be recorded in the books of account of the Unit. e) As stated by the management in Note 27(36), the Electrode Unit of the Company has incurred expenditure for advertisement of products amounting to ` 115.64 Lac (previous year ` 153.12Lac) by way of advertisement in newspapers through agents. In the absence of sufficient appropriate audit evidence regarding prevailing market rates / charges paid to newspaper publishers by agents, we are unable to verify and express our opinion on these rates/charges paid by the Company to agents. Observations & suggestions of Internal Auditors in this regard need to be also looked into & implemented. f) (i) As stated in paragraph 4(G)(i) of our main report, expenses incurred by the Company i.e. bottler in connection with the promotion of the products shall be reimbursed by MI Spirit, against the debit notes raised by the bottler. We note that the Unit has accounted for sale promotion expenses {cost of gift items ` 805.58Lac and trade scheme amount `183.40Lac which is claimed as reimbursement from the Unit by sale promotion agents (SPAs) on secondary sales i.e. on sale made by the State corporations to their customers. In our opinion, the accounting for these expenses in the books of account of the Unit is not proper since the same is to be debited to MI Spirit as per the agreement and also in view of the opinion given by the Expert advisory Committee of the Institute of Chartered accountants of India on the similar arrangement as stated in paragraph (d) above, these expenses should not be accounted for in the books of account of the Unit. (ii) Further, we also could not verify / audit these expenses as the sale promotion policy, records / supporting documents relating to receipt and / or distribution of these gifts and proof / confirmation of customers for having received gifts and trade scheme amounts (from SPAs) are not available with the Unit. g) Confirmation of Debit / Credit balances of debtors / creditors are not being obtained by the Company since long. Impact on the standalone financial statements is not ascertainable. We have considered the disclaimer above in determining the nature, timing and extent of audit tests applied in our audit of the standalone financial statements of the Company and the disclaimer has affected our opinion on the financial statements of the Company and we have issued an adverse opinion on the financial statements. for P.R. MEHRA & CO., CHARTERED ACCOUNTANTS ( Regn. No. 000051N )
Ramesh Chand Goyal Place : Delhi PARTNER Dated : 22nd August, 2016 Membership No.012628
(54) MODI INDUSTRIES LIMITED Balance Sheet as at 31st March, 2016 (` in Lac)
Particulars Note As at As at no. 31.03.2016 31.03.2015 I EQUITY AND LIABILITIES : (1) Shareholders’ funds: (a) Share Capital 1 371.66 371.42 (b) Reserves & Surplus 2 (19,687.64) (18,802.69) (19,315.98) (18,431.27) (2) Non-current liabilities : (a) Long term borrowings 3 5,722.74 5,279.61 (b) Other long term liabilities 4 1,627.05 1,574.18 (c) Long term provisions 5 965.37 1,023.91 8,315.16 7,877.70 (3) Current liabilities : (a) Short term borrowings 6 1,828.97 1,880.53 (b) Trade payables 7 21,122.01 23,654.35 (c) Other current liabilities 8 12,282.06 12,878.42 (d) Short term provisions 9 641.15 679.37 35,874.19 39,092.67 TOTAL 24,873.37 28,539.10 II ASSETS (1) Non-current assets (a) Fixed assets : i) Tangible assets 10 5,897.95 6,165.96 ii) Intangible assets 11 1.58 5.20 iii) Capital work-in-progress 41.37 38.06 (b) Non-current investments 12 655.48 804.28 (c) Long term loans and advances 13 252.12 225.78 (d) Other non-current assets (Fixed Tangible) 10 (Foot note G) 6.90 - 6,855.40 7,239.28 (2) Current assets (a) Inventories 14 6,018.66 7,441.79 (b) Trade receivables 15 5,635.77 6,010.63 (c) Cash and bank balances:- (i) Cash and cash equivalents 16(i) 600.68 1,345.54 (ii) Other bank balances 16(ii) 1,280.71 1,223.35 (d) Short term loans and advances 17 2,779.07 2,821.89 (e) Other current assets 18 1,703.08 2,456.62 18,017.97 21,299.82 TOTAL 24,873.37 28,539.10 Accounting policies and other notes to financial statements 26 & 27
As per our report of even date attached. For Modi Industries Limited For P. R. Mehra & Co., Chartered Accountants Mahendra Kumar Modi Rakesh Kumar Modi Manish Kumar Modi Abhishek Modi (Regn.No.000051N) (DIN 00014594) (DIN 00022386) (DIN 00030036) (DIN 00002798) Managing Director Director Director Director Ramesh Chand Goyal Partner N.P. Bansal V P Gupta Membership No. 012628 (PAN AAOPB7869G) (FCS-6380) Place : Delhi Chief Financial Officer Company Secretary Date : 22nd August, 2016.
MODI INDUSTRIES LIMITED (55) Statement of Profit and Loss for the year ended 31st March, 2016 (` in Lac) Particulars Note For the year ended For the year ended no. 31.03.2016 31.03.2015
I Revenue from operations 19 35,735.22 36,003.85 Less:- Excise duty 4,862.59 2,224.01 30,872.63 33,779.84 II Other income 20 549.90 640.33 III Total Revenue ( I + II ) 31,422.53 34,420.17 IV Expenses:- Cost of materials consumed 27(44)(ii) 19,119.47 23,666.34 Purchases of stock-in-trade 27(44)(iv) 76.35 66.09 Changes in inventories of finished goods, 21 1,225.25 2,075.19 work-in-progress and stock-in-trade Employee benefits expense 22 3,348.35 3,337.19 Finance costs 23 644.04 1,228.39 Depreciation and amortization expense 10 & 11 334.51 435.92 Other expenses 24 7,659.89 6,116.55 Total expenses 32,407.86 36,925.67 V Loss before exceptional and 985.33 2,505.50 extra-ordinary items and tax ( IV-III ) VI Exceptional items:- (a) Refund of Commission on 35 (i) (249.18) - Sugar Cane Purchase for 2012-13 (b) Provision for Dimunition in the value of 31 148.80 - Long Term Investment VII Loss before extra-ordinary items 884.95 2,505.50 and tax ( V+VI ) VIII Extra-ordinary items -- IX Loss before tax ( VII+VIII ) 884.95 2,505.50 X Tax expenses 27(32) - - XI Loss for the period 884.95 2,505.50 XII Loss from continuing operations 681.25 2,373.92 XIII Loss from discontinuing operations 27(4)(e) 203.70 131.58 XIV Tax expense of discontinuing operations - - XV Loss from discontinuing operations 203.70 131.58 (after Tax) (XIII+XIV) XVI Loss for the period (XII+XV) 884.95 2,505.50 XVII Basic /Diluted Earnings per equity share of ` 10 each ( in Rupees) 25 (26.93) (75.90) Accounting policies and other notes to financial statements 26 & 27
As per our report of even date attached. For Modi Industries Limited For P. R. Mehra & Co., Chartered Accountants Mahendra Kumar Modi Rakesh Kumar Modi Manish Kumar Modi Abhishek Modi (Regn.No.000051N) (DIN 00014594) (DIN 00022386) (DIN 00030036) (DIN 00002798) Managing Director Director Director Director Ramesh Chand Goyal Partner N.P. Bansal V P Gupta Membership No. 012628 (PAN AAOPB7869G) (FCS-6380) Place : Delhi Chief Financial Officer Company Secretary Date : 22nd August, 2016.
(56) MODI INDUSTRIES LIMITED Cash Flow Statement for the year ended 31st March, 2016. (` in Lac)
Particulars 2015-16 2014-15
A. CASH FLOW FROM OPERATING ACTIVITES : Profit/(Loss) before Tax (884.95) (2,505.50) Less: Adjustment for : i) Interest Income 173.16 173.08 ii) Profit on Sale of Fixed Assets 5.01 10.12 iii) Profit on assets held for dosposal 4.13 - iv) Excess Provision written back 24.11 16.85 v) Unclaimed credit balances W/back 38.42 22.37 vi) Amount written back 17.89 3.21 vii) Depreciation written back 1.96 4.17 viii) Dividend Income 52.50 42.00 317.18 271.80 Add: Adjustments for : (1,202.13) (2,777.30) i) Depreciation 334.51 435.92 ii) Assets written off/Loss on sale of Assets/Stores 10.13 4.29 iii) Interest Expenses 644.04 1,228.39 iv) Provision for Doubtful Debts & Advances 199.37 119.01 v) Amounts/Claims/Bad Debts written off 8.64 9.46 vi) Provision for obsoleteRaw Material, spare-parts & stores 26.15 5.36 vii) Provision for Dimunition in the value of Long Term Investment 148.80 - 1,371.64 1,802.43 Operating Profit/(Loss) before Working Capital Changes 169.51 (974.87) Adjustments for : Trade Receivables 213.34 (1,049.47) Inventories 1,396.76 1,848.34 Trade Payable (2,645.55) 5,294.99 Loans/Advances and other assets 799.23 (1,915.91) Other bank balances (57.36) (96.50) Cash Generated from Operations (124.07) 3,106.58 Interest Paid (Foot-note 1 below) (65.93) (1,338.98) Income tax paid/ refund (Net) (25.82) (37.99) Net Cash from Operating Activities (A) (215.82) 1,729.61
(B) CASH FLOW FROM INVESTING ACTIVITIES : Purchase of Fixed Assets (124.91) (71.87) Sale of Fixed Assets 26.77 13.16 Interest Received 190.94 102.62 Dividend Received 52.50 42.00 Net Cash Flow from Investing Activities (B) 145.30 85.91
MODI INDUSTRIES LIMITED (57) (` in Lac)
Particulars 2015-16 2014-15
(C) CASH FLOW FROM FINANCING ACTIVITIES :
Secured term borrowings from bank (2.17) (3.93)
Secured borrowings from banks 67.81 45.89
Unsecured Fixed Deposits paid (0.17) (0.62)
Unsecured borrowings from others (net) (80.03) (153.90)
Interest paid on borrowings (619.84) (715.85)
Unsecured Debentures Paid (2.11) -
Net Cash from Financing Activities (C) (636.51) (828.41)
*Inter Unit Balances (Net) (D) (Foot-note 2 below) (37.83) (37.99)
Net Increase/(decrease) in cash and Cash Equivalents (A+B+C+D) (744.86) 949.12
Opening Cash and Cash Equivalents 1,345.54 396.42
Closing Cash and Cash Equivalents 600.68 1,345.54
Foot Notes : 1. Interest credited to accounts of suppliers, C & F agents and dealers etc. is treated as paid. 2. In view of non availability of audited balance sheet as on 31.03.2016 and 31.03.2015 of Steel Unit, cash flow from investing/financing activities and changes in current assets & liabilities of steel unit are not included in the Cash Flow Statement except for inclusion of net outflow of ` 37.83 Lac on account of net increase in inter unit balances appearing in Note 17 i.e. Short term loans & advances {Refer Note 27(4)}. 3. Figures in brackets represents outflows. 4. Previous Year figures have been rearranged/regrouped wherever considered necessary.
As per our report of even date attached. For Modi Industries Limited For P. R. Mehra & Co., Chartered Accountants Mahendra Kumar Modi Rakesh Kumar Modi Manish Kumar Modi Abhishek Modi (Regn.No.000051N) (DIN 00014594) (DIN 00022386) (DIN 00030036) (DIN 00002798) Managing Director Director Director Director Ramesh Chand Goyal Partner N.P. Bansal V P Gupta Membership No. 012628 (PAN AAOPB7869G) (FCS-6380) Place : Delhi Chief Financial Officer Company Secretary Date : 22nd August, 2016.
(58) MODI INDUSTRIES LIMITED Notes forming part of the financial statements for the year ended 31st March, 2016
Note no. 1 : SHARE CAPITAL (` in Lac)
Particulars As at As at 31.03.2016 31.03.2015 Authorised:- 40,00,000 Equity shares of ` 10/- each 400.00 400.00 1,00,000 15% Redeemable cumulative 100.00 100.00 Preference shares of ` 100/- each 500.00 500.00 Issued, subscribed and paid up:- 3,309,214 Equity shares of ` 10/- each fully paid-up 330.92 330.92 Less: Calls unpaid (Directors and Officers) - - Less: Calls unpaid (others)* - 0.24 330.92 330.68 40,741 15% Redeemable cumulative Preference shares of ` 100/- each fully paid-up 40.74 40.74 TOTAL 371.66 371.42
* Recovered by way of adjustment from interest payable on debentures held by these shareholders.
Foot notes: (1) (a) Details of equity shares held by each shareholder holding more than 5 percent shares as at the end of financial year are as under: As at 31.03.2016 As at 31.03.2015 Name of share holder No.of shares Percentage No.of Percentage held shares held
(i) Status Mark Finvest Limited 227844 6.89 227844 6.89 (ii) K K Modi Investment & Financial Services Pvt. Ltd. 231751 7.00 231751 7.00 (b) Details of preference shares held by each shareholder holding more than 5 percent shares as at the end of financial year are as under: As at 31.03.2016 As at 31.03.2015
Name of share holder No.of shares Percentage No.of Percentage held shares held
(i) ICICI Bank 7794 19.13 7794 19.13 (ii) The oriental insurance company limited 6550 16.08 6550 16.08 (iii) The new india assurance company limited 13624 33.44 13624 33.44 (iv) The united india insurance company limited 4093 10.05 4093 10.05 (v) General insurance corporation of india 3560 8.74 3560 8.74 (vi) National insurance company limited 4912 12.06 4912 12.06
(2) (a) Cumulative Preference Shares were due for redemption on 31st December, 2010. The company moved Misc. Application (MA) u/s 22(3) of the SICA before Hon’ble BIFR, whereby it had sought extension and suspension of obligation in relation to the 15% Preference Shares concerning Preference Shareholders for two years. The Hon’ble BIFR vide its order dated 18th January, 2011 dismissed the application of the Company. Consequent to the order, the company had written letters to the Institutional Preference Shareholders for settlement and redemption of Preference Shares. Further, negotiations are pending and preference shares are overdue for redemption as on 31st March, 2016.
(b) Arrears of dividend on Cumulative Preference Shares amounts to ` 154.28 Lac (upto 31st March, 2015 ` 148.17 Lac)
MODI INDUSTRIES LIMITED (59)
. Note no. 2 : RESERVES & SURPLUS
(` in Lac) Sl.No. Particulars Opening Balance Addition Deduction Closing Balance
(1) Capital Reserve 459.34 - - 459.34 (2) Capital Redemption Reserve 25.11 - - 25.11 (3) Shares Premium Account 22.57 - - 22.57 (4) Debenture Redemption Reserve 113.00 - - 113.00 (5) Revaluation Reserve 2,012.51 - - 2,012.51 (6) Share options outstanding accounts - -- - (7) Other Reserves/Funds:- -Storage fund for Molasses Account 10.01 5.29 - 15.30 (8) Surplus i.e. balance in Statement of Profit and Loss (21,445.23) (884.95) 5.29 (22,335.47)
TOTAL (18,802.69) (879.66) 5.29 (19,687.64)
Previous year (16,189.09) (2,500.77) 112.83 (18,802.69)
Foot-note:- 1. Storage fund for Molasses(` 5.29 lacs (previous year ` 4.73 lacs) is created @ ` 1.50 per Qtl. of Molasses sold as per the provision of “The Molasses control (Regulation of fund for erection of storage facilities) order, 1976” and is to be utilised for construction or erection of storage facilities for Molasses. 2. Deductions in previous year includes ` 108.10 Lacs being depreciation on assets whose life expired as on 31.03.2014 as per schedule II of the Companies Act, 2013.
Note no. 3 : LONG TERM BORROWINGS ( ` in Lac) Particulars As at As at 31.03.2016 31.03.2015 Secured:- Bonds/debentures -- Term loans from banks (see-foot note below ) 8.10 10.27 Term loans from others -- Loans and advances from related parties -- Unsecured:- Bonds/debentures - - Term loans from banks - - Term loans from others 2,825.99 2,193.63 Deposits -- Loans and advances from related parties -Moderate Leasing & Capital Finance Services Ltd. 2,888.65 3,075.71 Long term maturities of finance lease obligations - - TOTAL 5,722.74 5,279.61
Foot-note:- Secured by hypothecation of vehicles and is repayable in monthly installments. There are no defaults as on 31st March, 2016.
(60) MODI INDUSTRIES LIMITED Note no. 4 : OTHER LONG TERM LIABILITIES Note no. 6 : (Contd.) (` in Lac) (` in Lac) Particulars As at As at Particulars As at As at 31.03.2016 31.03.2015 31.03.2016 31.03.2015 Unsecured:- Trade payable - - Loans repayable on demand:- Others: -from banks - - Security received against houses 890.28 838.03 -from others - - Loans and advances from related parties:- Security received from others 226.03 229.75 -Moderte Leasing & Capital Services Ltd. - 170.00 Advance received against houses 504.50 504.50 -Weld Excel India Limited 45.00 - {Note 27 (33)} Deposits - - Other liabilities 6.24 1.90 Other loans and advances - - TOTAL 1,627.05 1,574.18 TOTAL 1,828.97 1,880.53 Note no. 5 : LONG-TERM PROVISIONS Foot-notes:- 1 Cash credit of 1498.19 Lac ( including interest accrued and due ( ` in Lac) ` of ` 17.61 Lac ) is secured by hypothecation of Raw Materials, Particulars As at As at Stock in Progress, Finished Goods, Stores and Spares and Book 31.03.2016 31.03.2015 Debts and guaranteed by a Managing Director.{ Refer note 27(5)(i)(a)}. Provision for employee benefits:- 2 Cash credit of ` 58.16 Lac from Allahabad Bank is in default since 1996 and ` 1440.03 Lac from PNB is in default since 1992. Interest Provision for gratuity:- payable on cash credit has not been paid since then. { Refer note As per last balance sheet 936.61 1,038.91 27(18)( c to e) and note 27(5)(i)(a)}. Add: Provided during the year (11.33) (77.39) Note no. 7: TRADE PAYABLES Less: Paid during the year 40.77 24.91 ( ` in Lac)
Sub total (A) 884.51 936.61 Particulars As at As at 31.03.2016 31.03.2015 Provision for leave encashment:- Purchase of raw material and store 20,460.13 22,957.20 As per last balance sheet 87.30 103.13 {Note 27 (14)} Add: Provided during the year 6.04 (2.46) Customers/ Agents for purchase of goods 661.88 697.15 Less: Paid during the year 12.48 13.37 TOTAL 21,122.01 23,654.35 Sub total (B) 80.86 87.30 Note no.8 : OTHER CURRENT LIABILITIES TOTAL (A+B) 965.37 1,023.91 ( ` in Lac)
Note no. 6 : SHORT TERM BORROWINGS Particulars As at As at 31.03.2016 31.03.2015 ( ` in Lac) Current maturities of Particulars As at As at long-term debts ( unsecured ) 31.03.2016 31.03.2015 -From related parties:- - A to Z Holding Pvt. Ltd. 24.89 24.89 Secured:- - Moderate Leasing & - 400.33 Loans repayable on demand:- Capital Services Ltd. -from banks -From others - - -Cash credit (including interest 1,498.19 1,498.19 Current maturities of long term debts ( secured ) accrued)(see-foot note below) -From banks 2.42 8.05 -overdraft from bank against 285.78 212.34 -From other parties (see foot-note 1) 1,506.85 1,506.85 pledge of FDR’s Current maturities of finance 79.05 120.99 -from others - - lease obligations (see foot-note 2) Deferred credits {Note 27 (40)} 35.11 35.11 Loans and advances from related parties - - Interest accrued but not due 61.45 61.45 Other loans and advances - - on borrowings (unsecured)
MODI INDUSTRIES LIMITED (61) Note no.8 : (Contd.) on fixed deposits has not been paid since 1989-90 {Also (` in Lac) refer Note No. 27(30)(b)}. (4) Debentures:- Particulars As at As at (a) (i) 2,26,105-12.5% Mortgage Debentures (Non- 31.03.2016 31.03.2015 Convertible part of ` 200/- each) redeemable in three yearly instalments of ` 65.00, ` 65.00 and ` 70.00 Interest accrued but not due 0.09 0.11 respectively commencing from the expiry of seventh on borrowings (secured) year from the date of allotment i.e. 29th February, 1988 and due for payment. Interest not paid since Interest accrued and due on 1,707.46 1,707.46 29th February, 1988. borrowings ( secured ) (ii) 30,000-15% Mortgage Debentures of ` 100/- each Interest accrued and due on redeemable at 5% premium on the expiry of seventh borrowings (unsecured) year from the date of allotment i.e. 18th December -from banks - - 1987 and due for payment. Interest not paid since -from others 50.95 72.71 1987- 88. (iii) 5,300-15% Mortgage Debentures of ` 1000/- each Income received in advances 0.07 0.13 redeemable upto 20th August, 1990 and due for Unpaid matured deposits and interest payment. 1,000 Debentures redeemed during the accrued thereon( unsecured):- year 1998-99 for which discharged debenture (see foot-note 3) certificates not yet received. Interest not paid since -Fixed deposits 64.19 64.36 1987- 88. (b) The above debentures are secured by Joint Mortgage of all -Interest accrued thereon 280.85 280.88 fixed assets present and future by hypothecation of the Unpaid matured debentures and interest said assets and by deposit of title deeds relating to accrued thereon (secured):- company’s immovable properties, floating charges on all (see foot-note 4) movable/current assets, other than assets referred in foot -Debentures (Net calls in arrears) 535.21 537.32 notes1(b,c,d) and foot note 1 of Note 6. -Interest accrued thereon 3,032.58 3,052.50 Other Payable:- Note no. 9 : SHORT-TERM PROVISIONS (` in Lac) Employees dues 963.02 839.27 Statutory liabilities 2,048.20 2,442.10 Particulars As at As at Security received from others 76.07 75.77 31.03.2016 31.03.2015 Other liabilities 1,813.60 1,648.14 Provision for employee benefits:- TOTAL 12,282.06 12,878.42 Provision for gratuity:- Foot notes:- As per last balance sheet 284.70 277.52 (1) Others:- (a) Loans aggregating to ` 1377.87 Lac (IDBI ` 627.74 Lac, Add: Provided during the year 115.09 108.49 ICICI ` 235.00 Lac, IFCI ` 287.66 Lac, LIC ` 138.97 Lac, Less: Paid during the year 122.96 101.31 GIC and its subsidiaries ` 88.50 Lac) are secured against securities as mentioned in 3(b) below. {Refer Note Sub total (A) 276.83 284.70 27(5)(i)(b) and 27(5)(ii)}. Provision for leave encashment:- (b) Loan of ` 8.08 Lac from Government of Uttar Pradesh under the Industrial Subsidised Housing Scheme is As per last balance sheet 11.09 9.60 secured by 1st Mortgage of Land and tenaments Add: Provided during the year 3.80 8.87 constructed under the Scheme.Details of default not Less: Paid during the year 6.15 7.38 available. (c) Loan from IDBI under Technical Development Fund Sub total (B) 8.74 11.09 Scheme amounting to ` 74.70 Lac is secured against Electrolyser and Copper Electrodes Machine.{Refer Note Others:- 27(5)(i)(b)(i)}. Provision for Incentive: (d) Loan taken under Equipment Finance Scheme amounting As per last balance sheet 32.47 26.09 to ` 46.20 Lac is secured against Effluent treatment plant. {Refer Note 27(5)(i)(b)(ii)} and loan repayment is in default Add: Provided during the year 9.23 7.54 prior to year 1996 and interest payable has not been paid Less: Paid / ( Recovered ) 3.28 1.16 since then. (2) Finance lease rent of ` 79.06 Lac is overdue since 1st October Sub total 38.42 32.47 2013. Provision for excise duty 317.16 351.11 (3) Fixed deposits:- (a) Fixed deposits guaranted by managing directors ` 22.98 Sub total (C) 355.58 383.58 Lac (Previous year ` 22.98 Lac ) (b) Balance outstanding in Fixed deposits and interest payable TOTAL (A+B+C) 641.15 679.37
(62) MODI INDUSTRIES LIMITED Net in Lac) in Lac) amount ` ` ` ` ` ` ` ` ` ` ( ( 31.03.2016 31.03.2016 Closing Net balance carrying Closing carrying balance amount e appreciation on revaluation 1087.85 Lac on such revaluation Addback ` adjust- Adj. on of adjustment Sold / 3.62- 100.94 1.58 49.62 Lac) purchased in the name of Employees Depreciation ` year - - 15.06 - 0.02 0.20 - 0.04 312.62 - 32.09 - - 55.88 - 14.79 3.97 0.83 - 39.43 64.12- 324.56 95.71 - 14.97 1.97- 312.89 33.58 - 234.55 160.31 5.59 8,412.07 3,345.89 - 26.11- 0.73 1,028.34 362.38 88.93 8.39- 97.32 5.20 0.72 Lac) on additions to assets of Steel Unit. of Steel 0.72 Lac) on additions to assets 97.32 ` balance year Opening For the Other {Note 27(42)} 1.52 Lac. ` 47.13 Lac (Previous year 2.25 Lac in the year 1947. ` ` 102.52 97.32 3.62- 100.94 1.58 Closing balance 55.86 14.79 8.42 Lac transfered to Gas Unit wherein these are treated and disclosed as “Non- 297.80 349.25 299.89 balance Earlier ` Opening For For the Other 8,343.42 1,002.96 0.71 Lac (Previous year ` 96.26 Lac) WDV ment ment ` Closing balance 0.03 Lac) and ` ment Year 82.62 Lac (Previous year ` 96.58 Lac) towards permanent improvement to the rented properties. ` - - - 102.52 ------59.85 15.62 - - - - - 2,023.50 - 1,390.72 ------2,023.50 0.04 Lac (Previous year ` 5.24 0.22- 344.71 1.25 2.28- 346.47 33.22 94.17- 420.27 54.93 0.32 168.48 11,757.96 24.50 Lac) being the written down value of Assets of Vanaspati Unit which is lying closed since 2002. of Vanaspati Assets 24.50 Lac) being the written down value of ` 102.52 102.52102.52 ------102.52 balance off. Written adjust- balance off. Written adjust- 96.58 Lac (Previous year Opening Additions Disposals / Other Opening Additions Disposals / Other ` 16,479.88 78.15 24.15 3.95 16,529.93 9,854.20 108.10 426.78 20.94 4.17 10,363.97 6,165.96 Land at Modinagar & Meerut was revalued as at 31st March, 1992 at Current Replacement Cost on the basis of valuation report. Th Land at Modinagar & Meerut was revalued as 31st March, 1992 Current Replacement Cost on the basis of valuation report. 15.74 Lac (Previous Year Year 15.74 Lac (Previous ` 924.66 Lac was credited to the Revaluation Reserve. The Land was previously revalued as on 31st March ,1985 and the appreciati 924.66 Lac was credited to the Revaluation Reserve. Current assets held for Disposal” net of disposal made during 2015-16 an asset having WDV Current assets also stands credited to the Revaluation Reserve. also stands who have given disclaimer in favour of the Company. ` * Includes (F)(G) of Land & Building given on operating lease has not been disclosed separately. Details plant and machinary having WDV of represent original cost of certain Other adjustments (D) ) cars costing Twelve ( Previous year Ten Includes (C) Includes a sum of (B) consideration of Buildings include Land, Furniture, Fixture & Fittings acquired for a lumpsum Water supply & drainageWater Others59.85 TOTALPrevious year Foot-notes:- (A) 16,529.93 Company’s 15.62 94.64 96.99 168.48 16,359.10 10,363.97- 330.14 226.606.36 10,461.15 5,897.95 (E) Excludes depreciation on loose tools Office EquipmentOffice 339.69 Vehicles (D)Vehicles 481.22 Furniture & Fixtures 347.50 Plant & Equipment * 11,871.83 Note no. 10 : TANGIBLE ASSETS TANGIBLE Note no. 10 : Particulars Gross ASSETS : INTANGIBLE Note no. 11 Total Previous year Particulars Gross Depreciation Land (A)Buildings ( B & C ) 1,390.72 2,023.50 Computer software
MODI INDUSTRIES LIMITED (63) Note no. 12 : NON CURRENT INVESTMENTS Note no. 13 : LONG TERM LOANS AND ADVANCES ( ` in Lac) (` in Lac) Particulars As at As at Particulars As at As at 31.03.2016 31.03.2015 31.03.2016 31.03.2015 Trade investments - - Capital advances 30.55 - Other investments (unsecured considered good ) (a) Investment in Equity Instruments:- Doubtful 1.90 1.90 In subsidiaries:- (unquoted ) Less : Allowances for Doubtful (1.90) (1.90) 21,450 fully paid-up shares of ` 100/-each in Your investment Security Deposits:- (India)Ltd. 21.45 21.45 - Secured, considered good - - 13,200 fully paid-up shares of - Unsecured, considered good ` 100/-each in Own investment - Related parties: (India)Ltd. 13.20 13.20 - Weld Excel India Limited 36.66 36.66 Others :- - Others 164.12 166.79 Unquoted:- - Doubtful - 1.00 10,50,000 fully paid-up shares Less : Allownaces for Doubtful - (1.00) of ` 10/-each in Indofil Industries Limited 437.43 437.43 Other Loans and Advances:- 1,200 partly paid-up shares (Unsecured, considered good) of ` 10/- each in Vital Chemicals (a) Prepaid expenses 1.33 2.87 Private Limited.(Transfer (b) Amount recoverable 11.46 11.46 refused by the Board-matter in (c) Loans to employees - - dispute before the Court). 0.07 0.07 (d) Loans to others 8.00 8.00 Quoted:- 7,00,000 fully paid-up shares TOTAL 252.12 225.78 of ` 10/-each in Modipon Limited. 20.00 20.00 19,99,960 fully paid-up shares Note no. 14 : INVENTORIES of ` 10/-each in Bihar Sponge (` in Lac) Iron Limited. {Note 27(31)} 200.00 200.00 Less : Provision for Diminution Particulars As at As at in value of Shares (148.80) - 31.03.2016 31.03.2015 8,00,000 fully paid-up shares of (a) Raw materials 146.46 495.93 ` 10/-each in Modi Rubber Limited. 80.00 80.00 (b) Raw materials (in transit) 220.87 60.65 62,755 fully paid-up shares of (c) Work-in-progress 185.42 335.37 ` 10/-each in Lord Chloro Alkali Limited 6.28 6.28 (d) Finished goods 4,499.71 5,575.71 4 fully paid-up shares of ` 10/-each in Mukund Limited. 0.01 0.01 (e) Stock-in-trade 1.89 1.19 (b) Investment in preference shares:- (f) Stores and spare parts 939.95 948.67 ( quoted ) (g) Loose tools 24.36 24.27 1 fully-paid preference Share of TOTAL 6,018.66 7,441.79 ` 10/-each in Mukund Limited - - (c) Investment in Government or trust securities:- ( quoted ) Note no. 15 : TRADE RECEIVABLES *75551.226 fully-paid units in UTI (` in Lac) Infrastructure Fund-Growth Plan 25.84 25.84 TOTAL 655.48 804.28 Particulars As at As at 31.03.2016 31.03.2015 * Corporate lien marked on these infrastructure fund units Trade receivables outstanding Foot Notes: (1) Carrying amount of quoted for a period exceeding 6 months:- investments 183.33 332.13 -Secured, considered good 4.56 4.54 (2) Market value of quoted investments 529.68 392.01 -Unsecured, considered good 677.21 648.06 (3) Carrying amount of unquoted investments 472.15 472.15 -Doubtful 827.89 702.58 (4) Aggregate provision for dimunition Less:- in value of investments Allowance for bad and doubtful debts (827.89) (702.58) { Note 27(31)} 148.80 -
(64) MODI INDUSTRIES LIMITED Note no. 15 : (Contd.) Note no. 17 : SHORT-TERM LOANS AND ADVANCES (` in Lac) (` in Lac) Particulars As at As at Particulars As at As at 31.03.2016 31.03.2015 31.03.2016 31.03.2015
Other Debts:- (a) Loans and advances to related parties:- -Secured, considered good 91.08 93.79 (i) -Secured considered good - - -Unsecured, considered good 4,862.92 5,264.24 -Doubtful 2.54 7.84 (ii) -Unsecured considered good Less:- -Bihar Sponge Iron Ltd. 1.47 1.36 Allowance for bad and doubtful debts (2.54) (7.84) -Win Medicare Pvt. Ltd. 1.15 1.37 TOTAL 5,635.77 6,010.63 -Modipon Limited 8.69 9.06 Note no. 16 : CASH AND BANK BALANCES -Managing Director ( ` in Lac) (Mahendra Kumar Modi) * - 0.49 Particulars As at As at (iii) -Doubtful 31.03.2016 31.03.2015 -Modi Senator Pvt. Ltd. 0.85 0.85 (i) Cash and cash equivalents:- - Technicast Engineers Ltd. 0.51 0.51 (a) Balances with banks: Less:Allowance for doubtful (1.36) (1.36) -In Current Accounts 545.78 1,257.99 (b) Others (unsecured, considered good):- -In FDR’s 2.45 35.01 (i) Unutilized balances of CENVAT/ VAT 93.93 99.87 (b) Cheques, drafts in hand 34.94 37.49 (ii) Loans & Advances to employees 8.94 12.55 (c) Cash on hand 17.51 15.04 (d) Others:- (iii) Prepaid expenses 113.05 109.77 -Postage imprest & (iv) Amount recoverable 212.56 190.86 stamps in hand - 0.01 (v) Deposits with excise / sales tax authorties 8.08 8.08 TOTAL 600.68 1,345.54 (vi) Others 204.11 189.82 (ii) Other bank balances:- (vii) Unreconciled Inter-unit balances (a) Earmarked balance with banks/post office:- { Notes 27 (4) and 43} 1,029.36 992.24 -Saving account (c) Others (doubtful):- (molasses storage fund) 0.36 0.35 -Fixed deposits (molasses (i) Loans & Advances to employees 3.00 2.97 storage fund)* 7.67 47.63 (ii) Amount recoverable 24.55 23.99 (b) Fixed deposits with banks (iii) Others 95.48 102.16 (Pledged with Excise/Sales Tax Authorities) 81.05 20.49 Less: Allowance for doubtful (123.03) (129.12) (c) Fixed deposits with banks (d) Security Deposits:- (Pledged for tender) 46.42 38.74 -Secured considered good 18.50 - (d) Fixed Deposits with Banks -Unsecured considered good 133.30 190.99 (Pledged against overdraft) 310.33 286.51 (e) Balance with banks held -Related parties as margin money against (Unsecured consider good) :- guarantees 330.00 313.26 -Ashoka Mercantile Ltd. (f) Bank deposits with upto 12 months maturity 35.88 30.37 {Foot-Note 7 of Note 27(38)} 798.30 867.80 (g) Bank Deposits with more than -Modipon Limited 147.63 147.63 12 months maturity 74.00 91.00 -Doubtful 48.84 7.13 (h) Deposits with Bank in-no lien account 395.00 395.00 Less: Allowance for doubtful (48.84) (7.13) TOTAL 1,280.71 1,223.35 Total 2,779.07 2,821.89 * These FDR’s are in the joint name of Modi Sugar Mills and Sub * Recovered Subsequently. Inspector, Molasses Excise.
MODI INDUSTRIES LIMITED (65) Note no. 18 : OTHER CURRENT ASSETS Note no. 21 : CHANGE IN INVENTORIES OF FINISHED (` in Lac) GOODS , WORK-IN-PROGRESS AND STOCK-IN-TRADE Particulars As at As at 31.03.2016 31.03.2015 (` in Lac) Tax deducted at source 111.14 85.32 Particulars For the For the Wealth tax receivable 7.37 7.37 year ended year ended Interest accrued on fixed 31.03.2016 31.03.2015 deposits with banks 39.80 50.65 Amount recoverable {Note 27(24)} 1,457.09 2,218.72 (A) Finished goods Interestreceivable on Security deposit Opening stock 4,996.84 7,035.65 with related party {Foot-Note 7 of Note 27(38)} Less: Closing stock 4,365.36 4,996.84 -Ashoka Mercantile Ltd. 64.07 71.00 Rent receivables:- Sub Total (A) 631.48 2,038.81 -Unsecured, considered good 1.87 1.82 (B) Stock in trade -Doubtful 22.78 22.78 Less:- Opening stock 1.19 1.65 Allowance for bad and doubtful debts (22.78) (22.78) Less: Closing stock 1.89 1.19 Deferred revenue expenditure 11.07 11.07 Sub Total (B) (0.70) 0.46 Stores and spare parts * 10.67 10.67 TOTAL 1,703.08 2,456.62 (C) Goods in process *Net value of Store & spare parts of Vanaspati Unit which is lying Opening stock 335.37 439.65 closed since 2002. Less: Closing stock 185.42 335.37
Note no. 19 : REVENUE FROM OPERATIONS Sub Total (C) 149.95 104.28 (` in Lac) Particulars For the For the (D) By Product year ended year ended Opening stock 578.87 510.51 31.03.2016 31.03.2015 Less: Closing stock 134.35 578.87 Sale of products 35,421.02 35,417.41 Sale of services 102.17 47.87 Sub Total (D) 444.52 (68.36) Other operating revenue 49.63 64.49 Subsidy on Cane Commission 162.40 474.08 Net (Increase) / Decrease TOTAL 35,735.22 36,003.85 in Stock (A+B+C+D) 1,225.25 2,075.19 Note no. 20 : OTHER INCOME (` in Lac) Particulars For the For the year ended year ended Note no. 22 : EMPLOYEE BENEFITS EXPENSES 31.03.2016 31.03.2015 (` in Lac) Interest income 173.16 173.08 Particulars For the For the Dividend received (gross) 52.50 42.00 year ended year ended Rental income 207.29 216.92 31.03.2016 31.03.2015 Profit on sale of fixed assets 5.01 10.12 Profit on sale of non current assets held Salary, wages, gratuity & for disposal (Refer foot note (g) of note (10) 4.13 - Excess provision written back 24.11 16.85 other allowances 2,876.37 2,833.35 Unclaimed Credit Balances W/Back 38.42 22.37 Contribution to provident and Amounts written back 17.89 3.21 Depreciation Written Back 1.96 4.17 other funds 202.11 206.48 Foreign Currency fluctuation gain (Net) - 18.86 Other non-operating income 22.92 121.71 Staff welfare expenses 269.87 297.36 Miscellaneous Income 2.51 - Claim received on fire (net) - 11.04 TOTAL 3,348.35 3,337.19 TOTAL 549.90 640.33
(66) MODI INDUSTRIES LIMITED Note no. 23 : FINANCE COSTS Note no. 24 (Contd.) (` in Lac) (` in Lac) Particulars For the For the Particulars For the For the year ended year ended year ended year ended 31.03.2016 31.03.2015 31.03.2016 31.03.2015
(a) Interest expenses:- {Note 27(4) (f) (i) & (ii), 27 (5) and 27 (18)} Less : Adjustment of provision (i) On borrowings 578.13 724.63 for doubtful (8.01) (10.58) Fixed assets written-off 0.79 0.16 (ii) On statutory dues 8.83 22.23 Provision for obsolete spare-parts & stores 16.15 5.36 (iii) On trade payables 47.62 472.92 Provision for Raw Material 10.00 - (iv) On security 5.51 5.38 Provision for doubtful debts, advances (v) On Finance Lease - - and Security Deposits 199.37 119.01 (vi) On Loan form Coporate 1.06 - Rent paid on Cylinders 8.84 - (vii) On car loans taken by Freight/ transport & forwarding 502.64 522.77 employees / corporate adviser 1.98 2.32 Commission to selling agents 490.64 308.17 (viii) On others 0.91 0.91 Discount & sale promotion 1,075.30 370.25 (b) Other borrowing costs - - Advertisement expenses 121.54 162.15 (c) Net gain/loss on foreign currency - - Travelling expenses 266.16 283.09 Legal & professional charges 290.57 183.90 transactions and translation Trade mark licensce & marketing fees 148.37 - TOTAL 644.04 1,228.39 Job work charges 46.83 11.64 Note no. 24 : OTHER EXPENSES Retainership Expenses 208.11 237.37 Net gain/loss on foreign currency (` in Lac) transactions & translaion 14.52 - Particulars For the For the Other general expenses 532.18 555.35 year ended year ended TOTAL 7,659.89 6,116.55 31.03.2016 31.03.2015
Consumption of stores & spare parts 403.73 406.46 Note:- Consumption of packing materials 1,600.38 1,284.78 Auditor’s remuneration:- Power & fuel 341.34 467.93 (a) As auditors 8.21 7.41 (b) For taxation matter (Tax Audit fee) 6.58 6.49 Packing & Filing Expenses 40.04 - (c) For company law matters - - Repairs to machinery 670.09 678.20 (d) For management services - - Repairs to building 71.05 46.19 (e) For other services including Lease rent 130.56 151.30 certification work 7.09 7.61 Rates & taxes 339.03 252.67 (f) For reimbursement of expenses 1.66 2.13 Excise duty on stock 35.89 (18.94) TOTAL 23.54 23.64 Insurance 44.39 50.54 Note no. Auditor’s remuneration 25. Earnings per Share (EPS) basic and diluted, computed in (see foot-note below) 23.54 23.64 accordance with Accounting Standard-20: Service Tax 9.09 - (` in Lac) Loss on sale of fixed assets 9.15 0.01 Particulars 2015-16 2014-15 Loss on sale of stores - 5.28 Loss for the year as Stores Written Off 0.19 - per annual accounts 884.95 2505.50 Less: Adjustment of provision Add: Dividend on for obsolete stores - (1.16) Preference Shares 6.11 6.11 Donations 0.77 0.97 Bad debts written-off 41.51 22.86 Total (A) 891.06 2511.61 Less : Adjustment of provision for Number of Equity Shares issued (B) 33,09,214 33,09,214 doubtful debts (36.74) (13.40) Earning per share (in ` ) (A)/(B) (26.93) (75.90) Claims / amounts written-off 11.88 10.58 Face Value of Equity Share in Rupees 10 10
MODI INDUSTRIES LIMITED (67) 26 ACCOUNTING POLICIES: (6) INVESTMENTS: (1) INVENTORY VALUATION Long-term investments are valued at cost less provision for (a) Stocks of raw materials and stores and spares are diminution, other than temporary, in the value of valued at weighted/moving average cost. (Net of investments. Cenvat benefits/input tax credit of U.P.VAT) or net (7) RETIREMENT BENEFITS: realizable value whichever is less. (a) Contribution to Provident Fund is made at a (b) Loose tools are valued at depreciated cost. predetermined rate to the Provident Fund Trust and (c) Cost of machinery spares, which can be used only in charged to the Statement of Profit and Loss on accrual connection with an item of fixed asset and whose use basis. is expected to be irregular, are charged to revenue (b) Gratuity Liability is accounted for on accrual basis, over useful life of the principal item. computed actuarially, except for Steel Unit upto 31st (d) Goods-in-transit are valued at cost. March, 2002 which is accounted for on cash basis. (e) Finished goods/Goods-in-Process are valued at lower (c) Leave encashment is accounted for accrual basis, of cost and net realisable value except by-product i.e. computed actuarially. molasses which is valued at net realizable value. Cost (8) OPERATING LEASE: inter-alia, includes direct cost, depreciation, excise Lease payments under an operating lease are recognized duty, lease rentals and factory overheads but excludes as an expense in Statement of Profit and Loss on a straight general administration and selling expenses, line basis over the lease term. Corporate Office administration expenses and Interest. The closing stocks out of inter divisional 27. CONTINGENT LIABILITIES AND OTHER NOTES: transfer of goods, is being treated as finished goods (` in Lac) instead of raw materials/stores and valued As at As at accordingly. 31.03.2016 31.03.2015 (2) FIXED ASSETS 1. (a) Claims against the Company (i) Major improvements to fixed assets that increases the not acknowledged as debts : future benefits from the existing assets beyond its (i) Workmen (excluding previously assessed standard of performance is unascertainable amounts) 329.76 290.24 included in the gross block and is depreciated over the (ii) Others 244.31 234.42 remaining life of the original assets. (b) Partly paid-up Equity Shares of (ii) Financing cost (upto the date the assets are ready to Vital Chemicals Private Limited 0.08 0.08 be put to use for commercial production) relating to (c) Disputed Liability for Excise- borrowed funds attributable to acquisition of duty, Sales-tax, Entry-tax construction of fixed assets are included in the gross book value of fixed assets to which they relate. matters and liquidated damages on Provident Fund (3) DEPRECIATION dues {excluding interest (a) Depreciation on Plant & Machinery is provided on unascertainable and Straight Line Method except in Corporate Office. In undisputed Sales Tax/ respect of other assets including Office Equipments, penalty demands (net of depreciation is provided on Written Down Value Method in all units except Sugar and Steel Units where provision made of it is provided on Straight Line Method. ` 62.21 Lac ) of ` 175.24 Lac} 1537.57 1378.50 (d) Income Tax 209.59 209.59 (b) Depreciation on additions/deletions is charged on prorata basis and in accordance with Schedule II of the (e) Bills discounted 148.59 200.21 Companies Act, 2013. 2. Estimated amount of contracts remaining to be executed on (c) Depreciation on assets costing upto `5,000/- has been Capital Account `337.57 Lac (Previous Year `63.12 Lac). fully depreciated in the year of purchase. 3. Guarantees given to Sales-tax/Excise Departments on behalf (4) INTANGIBLE ASSETS: of Companies in the same group amounts to `139.42 Lac Intangible assets are stated at cost of acquisition less (Previous year `139.42 Lac). Information regarding outstanding accumulated amortization. Computer Software is position is not available. This excludes guarantees of `109.63 amortized over a period of five years. Lac (Previous year `109.63 Lac) vacated by Sales Tax (5) REVENUE RECOGNITION: Department for which guarantee bonds not yet received back. ( i) Export incentives under the duty entitlement pass 4. (a) The Steel Unit is lying closed since 24th January, 1993 due book scheme is recognized on accrual basis. to strike/lock-out and thereafter closure was declared with (ii) Revenue arising by use of Company’s properties by effect from 24th November, 1993, as the Unit was found to others yielding rent is recognized when no significant be unviable. The Company has not been able to obtain uncertainty as to measurability or collectability exists. access to the accounting, financial and production records (iii) Sale of goods is recognized at the point of dispatch of of the unit necessary for updating the said books of goods to customers.
(68) MODI INDUSTRIES LIMITED accounts/compiling the data to prepare the annual (d) Assets and Liabilities of the Steel Unit incorporated in the accounts as well as for finalizing the audit for the year Balance Sheet of the Company as on 31.03.2015 and ended 31st March, 1993. Transactions subsequent to the 31.03.2016 are as under: closure of the unit could not be incorporated in the annual (` in Lac) accounts of 1992-93 and onwards in view of pending Liabilities As at As at Assets As at As at access to the earlier accounts viz., 1st April, 1992 to 24th 31.3.2016 31.3.2015 31.3.2016 31.3.2015 January, 1993, the absence of which would leave the books Secured Loans 3421.08 3421.08 Fixed Assets (Net) 429.90 436.71 still incomplete. However, the Statement of Profit and Loss Current Liabilities & Provisions 2838.28 2838.28 Investments 0.11 0.11 for the current financial year 2015-16 and from 1993-94 to AccumulatedProfits/ (1040.32) (836.62) Current Assets & 2014-15 have been incorporated in current financial year (Losses) (net): Advances: and in various previous financial years respectively. As an Inventories 1340.14 1340.14 interim measure `1026.73 Lac (Previous year `992.24 1993-94 to 1995-96 (687.81) Sundry Debtors 1199.25 1199.25 Lac) which represents: (i) `1694.81 Lac (Previous year 1996-97 and `1,463.43Lac) being net cumulative inter-unit debit 1997-98 (58.56) Cash & Bank Balance 150.78 150.78 balance on account of transactions of other units of the 1998-99 to Company with Steel Unit during 1st April, 1992 to 31st 2000-01 (29.83) 2001-02 to Loans and Advances 249.70 249.70 March, 2016, (ii) payment of unsecured loan of 45.00 Lac ` 2003-04 56.53 {Refer Note (c) below} and (iii) net loss of `623.08 Lac for 2004-05 300.90 the years 1993-94 to 2015-16 (before inter unit rental 2005-06 (36.67) Miscellaneous 11.07 11.07 income, write-back of ` 278.95 Lac and provision for 2006-07 (18.94) Expenditure 2007-08 (10.86) (to the extent not written depreciation of ` 696.19 Lac) have been clubbed with 2008-09 (24.40) off or adjusted) Current Assets of the Company as on 31st March, 2016 2009-10 172.48 and 31st March, 2015 respectively as “Inter- Unit 2010-11 (152.17) Balances” pending incorporation of (i) Annual Accounts for 2011-12 (141.82) Inter-unit Balances 1050.87 1247.76 2012-13 (167.86) the period 1st April, 1992 to 31st March, 1993 and (ii) assets 2013-14 93.97 Loss for the year 1991-92 787.22 787.22 and liabilities including inter unit balances arising on 2014-15 (131.58) account of transactions for the period 1st April, 1993 to 31st 2015-16 (203.70) March, 2016. Total 5219.04 5422.74 Total 5219.04 5422.74 (b) The financial results for the year 1992-93 would be ( e) Statement of Profit and Loss of the Steel Unit for the year incorporated as soon as the Company is able to obtain ended 31st March, 2016 and 31st March, 2015 (excluding access to/reconstruct the financial, accounting and inter-unit rental income of ` 46.12 Lac) (Previous year production records. ` 46.12 Lac) is as under: (c) In view of above, as per past practice, the audited opening (` in Lac) balances of Assets and Liabilities, quantitative details, Particulars 2015-16 2014-15 contingent liabilities {excluding old electricity dues – Refer INCOME : Note 4f(viii)} and notes of the Steel Unit as on 1st April, 1992, Rental Income 185.97 192.25 subject to (i) reduction of unsecured loans taken by Profit on sale of fixed assets - 3.54 `278.95 Lac in view of write back on account of one-time 185.97 195.79 settlement (O.T.S.) of dues with Hong Kong and Shanghai EXPENDITURE : Employees Benefit Expenses 109.23 100.07 Banking Corporation Limited (HSBC) during the year 2004- Finance Cost 232.29 179.67 05, and further reduction of ` 45.00 Lac on account of Depreciation 6.81 6.82 payment during 2005-06 of O.T.S. to H.S.B.C.; (ii) Legal and Professional Expenses 1.46 1.47 reduction of fixed assets (net) by `696.19 Lac being Other Expenses 39.88 389.67 39.34 327.37 depreciation provided during 1993-94 to 2015-16 on fixed Loss for the year 203.70 131.58 assets and (iii) decrease in Inter-Unit balance by `668.08 Lac which represents; the sum of net loss of `623.08 Lac (f) The Profit and Loss Account/Statement of Profit and Loss for the years 1993-94 to 2015-16 (before inter-unit rental of Steel Unit for the years 1993-94 to 2015-16 are subject to income, write-back of above amount of `278.95 Lac and the following notes on accounts:- provision for depreciation of `696.19 Lac) and repayment (i) In view of non-availability of book balance of liabilities of unsecured loan of `45.00 Lac. The above inter-unit towards PNB, IDBI and IFCI in the books of Steel Unit of the Company on account of non-incorporation of balance will actually represent either net increase in assets annual accounts and balance sheets of Steel Unit or net decrease in liabilities as on 31st March, 2016 over {Refer Note 27 (4) (a to c) of Annual Accounts}, the st balances as on 31 March, 1993 of the Steel Unit. difference between OTS amounts and book balances
MODI INDUSTRIES LIMITED (69) could not be ascertained. agreed to assign all its claims against Steel Unit of the (ii) No provision of interest, amount unascertained, is Company together with all securities and charges required to be made, on loans from other Financial created by the Company to SSL on payment of full Institutions as the existing amounts appearing in the settlement amount of `2810.60 Lac together with books of accounts of the Company will be more than interest. SSL made full payment to PNB of the sufficient in view of in-principle approval/discussions settlement amount together with interest. PNB being held for one time settlement of dues with the thereafter executed a Deed of Assignment on 15th Financial Institutions. May, 2012 in favour of SSL by which PNB assigned all (iii) The impact, if any, on account of non-availability and its claims together with all securities and charges conseq uently non incorporation of audited opening created by the Company in its favour to SSL. The balances of assets and liabilities of the Steel Unit as on Registrar of Companies has registered the 1st April, 2015; modification to the charges in favour of SSL. The debts (iv) Non-provision of obsolete/damaged stocks and fixed of MIL which was assigned to SSL has been further st assets, if any, in view of non-incorporation of earlier assigned to SBEC Bioenergy Limited (SBEL) on 31 year’s accounts and non-physical verification of December, 2012. In view of the above, the secured inventories and fixed assets as on 31st March, 2016; debt is now payable by the Company to SBEL. The Company proposes to enter into revised terms of (v) Non-confirmation/reconciliation of balances of debtors, payment of this secured debt with SBEL. creditors, banks, financial institutions etc. and impact, if any, on the Statement of Profit and Loss; (b) (i) With reference to the Company’s liabilities to IDBI (vi) Non-provision of doubtful debts and loans & advances, Limited, a settlement agreement was concluded amount unascertained; between the Company, IDBI Limited and SBEC Bio Energy Limited (SBEL) on 6th October, 2007. (vii) Non-provision of Impairment, if any, of the fixed assets This settlement agreement was in terms of IDBI’s as per Accounting Standard (AS 28) i.e. Impairment of letter dated 9th February, 2007. Under the said Assets, amount unascertained. agreement IDBI agreed to assign its entire debt (viii) (a) Uttar Pradesh Electricity Board (now U.P. Power due and payable by the Company to SBEL Corporation Ltd.) raised various demand notices subject to SBEL paying to IDBI its OTS claim against electricity dues and late payment amount of `1232.20 Lac. Acting on the said surcharge amounting to `2435.48 Lac on the Steel agreement, SBEL made a payment of `1232.20 unit of the Company. Lac to IDBI together with interest. The said (b) In terms of One Time Settlement with U.P. Power payment to IDBI of `1232.20 Lac along with Corporation Limited regarding arrears of electricity interest was completed on 6th October 2007. dues, the Steel unit paid during the year 2009-10 IDBI’s claim against this Company stood `563.90 Lac against the demand of `1123.99 Lac assigned to SBEL together with the securities included in (viii)(a) above. Accordingly shortfall in and charges and the said debt is now payable by provision of `243.37 Lac has been charged to this Company to SBEL. revenue during the year 2009-10. The Hon’ble BIFR vide its orders dated 12th (c) The Company filed writ petition in Allahabad High December, 2011 and 19th April, 2012 recognized Court challenging the said demand notices. The SBEL as this Company’s creditor in place of IDBI Hon’ble Allahabad High Court dismissed the writ and by an order dated 17th July, 2012 directed petition filed by the Company. The Company filed IDBI (OA) to execute the Deed of Assignment in Special Leave Petition (SLP) with the Hon’ble favour of SBEL. The Company proposes to enter Supreme Court of India, who has granted interim into fresh terms of payment of the IDBI’s assigned th stay on 14 March, 2005 for stay of recovery by debt with SBEL. way of sale of property which is still continuing. (ii) With reference to this Company’s liabilities to In view of the above and pending incorporation of IFCI Limited, a settlement agreement dated 30th annual accounts of Steel Unit for 1992-93, no December, 2009 was concluded between this provision is considered necessary against the Company, IFCI Limited and SBEC Bio-Energy balance demand of `1311.49 Lac at this stage. Limited (SBEL). This settlement agreement was 5. With respect to the assignment of debt, the views of both the in terms of IFCI’s letter dated 30th December, Managing Directors are stated herein below:- 2009. Under the said settlement agreement, IFCI (i) Shri U.K. Modi submits that:- agreed to assign to SBEL its entire debt as due “(a) During the year 2006-07, an agreement dated 22nd and payable by this Company to it subject to SBEL paying to IFCI its OTS claim of 775.00 January, 2007 for One Time Settlement (OTS) of dues ` Lac. Acting on the said settlement agreement, of Punjab National Bank (PNB) was entered into SBEL made a payment of 775.00 Lac to IFCI on between the Company, PNB, Shri U.K. Modi (as ` 30th December, 2009 and in consideration thereof Guarantor) and SBEC Sugar Limited (SSL), on the terms as contained in the PNB’s Letter dated 28th IFCI Limited executed a Deed of Assignment th September, 2006. Under the said agreement, PNB has dated 19 April, 2012 and assigned its all claims against this Company together with the securities
(70) MODI INDUSTRIES LIMITED and charges in favour of SBEL. The Registrar of aside the orders dated 22nd June 2012 and 17th Companies has registered the modification to the July 2012 and remanded the matter back to the charges in favour of SBEL. The said secured debt BIFR with directions to consider the MA No.s 224/ is payable by this Company to SBEL. The BC/2012 and 226/BC/2012 afresh after hearing Company proposes to enter into fresh terms of Shri D K Modi and proceed further in accordance payment of this debt with SBEL. with law. (iii) At the hearings before the Hon’ble BIFR and with (x) Shri U K Modi had also filed an Appeal before the the consent of Advocates for Shri U.K. Modi and AAIFR, being Appeal No. 178/12 challenging the Shri M.K. Modi, the Hon’ble BIFR passed orders order dated 17th July 2012 passed by the BIFR. and issued directions in M.A. No. 754/BC/2011 (xi) The aforesaid Appeal No. 178/2012 was heard on (filed on behalf of Shri U.K. Modi) and clarified that 20th November 2013 and the Hon’ble AAIFR, after the OA shall consider the representations from hearing the submissions of the parties, has been Shri U.K. Modi, Shri M.K. Modi, Shri D.K. Modi pleased to allow the Appeal, set aside the order and also from SBEC Bioenergy Ltd. and SBEC and remanded the matter back to BIFR with the Sugar Ltd. following directions: (iv) The Bench directed that, SBEC Bioenergy and “Since the order has already been set aside as SBEC Sugar be heard and consulted by IDBI above, we make it clear that all the matters before (OA) in connection with the preparation of the BIFR, including MA 224 of 2012 will be DRS. considered by the Board on remand afresh giving (v) In the order dated 22nd June, 2012 the Hon’ble a reasonable opportunity of hearing to all BIFR observed and noted that IFCI and PNB have concerned. It is also made clear that all the issues executed deeds of assignments in favour of raised before us in the appeals by the respective SBEC Bioenergy Ltd. and SBEC Sugar Ltd. parties are kept open and will be considered and respectively after receiving entire OTS amount adjudicated by the Board afresh. In deciding along with interest, whereas the IDBI has matters afresh, the Board, needless to mention, received the entire OTS amount along with will not be influenced by its said earlier order interest and had only entered into an agreement which, as aforesaid was set aside.” to transfer all the rights, title and interest in the The Appeal preferred by SBEC Bioenergy Ltd. Financial Assistance/ Financial Instruments and before the AAIFR was challenging the wrongful the underlying securities in respect thereof to the and arbitrary imposition of conditions on the Applicant (SBEC Bioenergy) of MA No. 224/BC/ execution of Deed of Assignment by IDBI in favour 2012 but has not executed the deed of of SBEC Bioenergy Ltd., which has since been assignment. The Bench also observed that the set aside by the AAIFR. In fact, the AAIFR has th IDBI, vide their letter dated 7 May, 2012 has clearly stated that all issues raised by SBEC approached BIFR regarding the execution of the Bioenergy Ltd. in Appeal No. 178/12 are kept assignment deed in respect of assignment of debt open and would be agitated before the BIFR. to the applicant (SBEC Bioenergy Ltd.). Therefore, in view of the above, it is clear that (vi) The BIFR by its order dated 22nd June, 2012 SBEC Bioenergy Ltd. and SBEC Sugar Ltd. are allowed MA No. 224/BC/2012 and directed that the secured creditors of MIL and continue to be so the name of Applicant (SBEC Sugar Ltd.) be as assignees of the respective debts of IDBI, IFCI substituted for PNB and the name of the Applicant and PNB. (SBEC Bioenergy Ltd.) be substituted, in place of Shri M K Modi submits that AAIFR Order dated IFCI, as the deed of assignment has since been 20th November, 2013 in Appeal No. 178/2012, executed. nowhere recognizes SBEC Bio-energy Ltd. and (vii) In the proceedings held on 17th July, 2012, the SBEC Sugar Ltd. as being Secured Creditors of Hon’ble BIFR directed IDBI to execute the deed of MIL or the assignments in their favour to be valid assignment in favour of the Applicant (SBEC and/or legal. Bioenergy Ltd.), with respect to the assignment of As per Shri U K Modi, the above contention of Shri its claims against this Company together with M K Modi is incorrect. It is a matter of record that securities and charges in favour of SBEC the Hon’ble BIFR vide its orders dated 12th Bioenergy Ltd. subject to the various other December, 2011 and 19th April, 2012 has already directions stated therein. recognized SBEC Bioenergy Ltd. and SBEC (viii) Pursuant to the order passed by AAIFR, Shri U.K. Sugar Ltd. as MIL’s secured creditor and it is in Modi and Shri M.K. Modi have now submitted this capacity, the applications for substitution their separate Draft Rehabilitation proposals to were moved before the BIFR. By virtue of the the IDBI.” order dated 20th November 2013, the AAIFR has (ix) Shri D K Modi had filed 2 Appeals before the remanded the matter back to BIFR for fresh AAIFR being Appeal No. 206/2012 and 207/2012 consideration. challenging the orders dated 22nd June 2012 and (ii) Shri M.K. Modi disagrees with the above statements and 17th July 2012 passed by the BIFR. By two orders submissions made by Shri U.K. Modi as the same are not both dated 15th April 2013, the AAIFR has set correct.
MODI INDUSTRIES LIMITED (71) Shri M.K. Modi submits that – concerned, it is clarified that the matter has been (a) That the said settlements based on assignment in remanded by Hon’ble AAIFR only on the ground favour of one of the Managing Directors of the that Shri D K Modi be heard on the application. Company are neither legal nor binding and are without The setting aside of the orders dated 22.06.2012 approval of the Board. The same are also contrary to and 17.07.2012 are on a technical ground and not the 1989 Modi Family MOU, the agreement between on merits therefore the allegations that SBEC the two Managing Directors, the Board Resolution and Sugar Ltd. and SBEC Bioenergy Ltd. do not have the “Status Quo” order of Hon’ble Supreme Court of any locus standi in the BIFR proceedings or that India. they are not secured creditors are absolutely incorrect and baseless. (b) Without prejudice to what is stated in para (i) above, assignments and the terms of payment etc. shall be Thus as per Shri U.K. Modi, these liabilities will governed by the directions to be passed by Hon’ble now be quantified with the assignees of PNB, BIFR. IDBI and IFCI debts. (c) Hon’ble BIFR has, in the proceedings of the hearing Shri M.K. Modi disagrees with the above held on 19th April, 2012, already directed IDBI (OA) to statements and submissions made by Shri U.K. assess the liabilities of each unit of the Company Modi as the same are not correct. As the matter (Group wise) and while making an assignment to UKM stands today, orders dated 22.06.2012 and Group Companies, to see that the security charged to 17.07.2012 stand set aside by Hon’ble AAIFR and Banks/FIs belonging to his own units are assigned and fresh order is required to be passed by Hon’ble the security belonging to MKM Group is to be freed. It BIFR. Hence, these orders do not give rise to any is thus abundantly clear that the security pertaining to right/obligation to any party. his own units only is to be charged to SBEC Bioenergy Shri U.K. Modi disagrees with the above Ltd and SBEC Sugar Ltd. statements and submissions made by Shri M.K. (d) By virtue of AAIFR’s orders dated 15.04.2013 : Modi as the same are not correct. Though it is correct to say that the orders dated 22.06.2012 (i) BIFR’s order dated 22.06.2012, whereby SBEC and 17.07.2012 has been set aside by Hon’ble Bioenergy Ltd. and SBEC Sugar Ltd. were AAIFR but it is incorrect to say that SBEC Sugar substituted in place of IFCI and PNB respectively, and SBEC Bioenergy are not the secured has been set aside; and creditors of MIL as the order dated 12.12.2011 (ii) BIFR’s order dated 17.07.2012, whereby IDBI clearly recognizes SBEC Sugar and SBEC was permitted to execute assignment deed in Bioenergy as a Secured Creditor. Hon’ble AAIFR favour of SBEC Bioenergy Ltd., has been set has directed BIFR to conduct a rehearing on the aside. M.A’s 224 and 226 of 2012 allowing the (iii) SBEC Bioenergy Ltd. and SBEC Sugar Ltd., thus, substitution of SBEC Sugar and SBEC Bioenergy have no locus standi in the BIFR proceedings and in place of PNB and IFCI. are not recognized as creditors of MIL by BIFR. As per Shri M.K.Modi the above contention of Shri (iv) MKM Group has, without prejudice to their legal U.K. Modi is incorrect. contentions in the matter, already approached Shri U.K. Modi submits that IDBI vide its letter both IDBI and IFCI for making payment of the dated 16.01.2015 again reiterated in unequivocal dues pertaining to the six units under and unambiguous terms that their debt due from management and control of Shri M.K.Modi on MIL has been assigned in favour of SBEC assignment basis subject to certain conditions. Bioenergy Ltd on 06.10.2007. Shri U.K. Modi disagrees with the above Shri M.K. Modi stated that there is no agreement statements and submissions made by Shri M.K. between Shri M.K.Modi and Shri U.K.Modi on this Modi as the same are not correct. Shri. U.K Modi issue. has commented as below:- 6. With respect to the rehabilitation scheme of the Company, the It is clarified on the submission made by Shri M.K views of both the Managing Directors are as below:- Modi that the Hon’ble BIFR vide its order dated 12.12.2011 had directed IDBI (OA) to invite the Shri M.K.Modi stated that:- secured creditors including SBEC Bioenergy Ltd. As reported last year, Shri M.K. Modi had filed a Special Leave and SBEC Sugar Ltd. for discussions before Petition before the Supreme Court of India on 27th July, 2010 finalizing any DRS. By a subsequent order dated challenging the order dated 19th May, 2010 of Hon’ble Delhi 19.04.2012, the Hon’ble BIFR has also directed High Court. The Hon’ble Supreme Court vide its order dated that SBEC Bioenergy Ltd. and SBEC Sugar Ltd. 27th August, 2010 held that “the parties are directed to maintain be heard and consulted by IDBI (OA) while status quo with regard to the management of the Company, preparing the DRS. Therefore it is absolutely but we make it clear that this will not in any way affect the clear that SBEC Sugar Ltd. and SBEC Bioenergy proceedings pending before the Board for Industrial and Ltd. are secured creditors of MIL. This order of Financial Reconstruction and also the Appellate Authority 12.12.2011 has not been challenged by any party (AAIFR).” till date and therefore the issue stands settled by Pursuant to the order dated 22nd June, 2011 passed by Hon’ble the BIFR . In so far as the remand of the MAs is AAIFR, Shri M.K.Modi and Shri U.K.Modi had submitted their
(72) MODI INDUSTRIES LIMITED separate Draft Rehabilitation proposals to IDBI (OA). Delhi High Court in 1998 which is still pending and the orders Subsequently, BIFR has heard the matter on various dates of Hon’ble Supreme Court of India in the matter. and passed directions from time to time. The Operating Agency Shri M.K. Modi agrees that basic objective of Operating Agency (IDBI) had submitted a DRS to BIFR in July, 2013. which is is to formulate a Scheme for rehabilitation of the Company. under consideration of BIFR. The OA has in fact prepared such a scheme and submitted As per Shri M.K. Modi the said DRS had been gone through the same to BIFR. Shri M.K. Modi disagrees with Shri U.K. by BIFR Consultant, who wanted some technical corrections Modi’s proposal to formulate a rehabilitation scheme without to be carried out therein, which were duly carried out by IDBI split as being a self serving and mala-fide suggestion of Shri (OA) and the revised DRS was submitted to BIFR by the O.A. U.K. Modi. Shri U.K. Modi disagrees with the above statement made by Shri U.K. Modi disagrees with the above statements and Shri M.K Modi. It is hereby clarified that the DRS received in submissions made by Shri M.K. Modi as the same are not June, 2013 was returned by Hon’ble BIFR with a direction to correct. the IDBI (OA) to revise the said DRS after updating the Shri M.K Modi disagrees with the above statements and financials from MIL. Subsequently a revised DRS was submission made by Shri U.K. Modi as IDBI (OA) has already circulated by OA which was not acceptable. Thereafter the OA submitted the minutes of meeting to BIFR as well as to the had filed two reports on 06.09.2013 and 04.10.2013 pursuant three Modi’s and final DRS has also been submitted by IDBI to the meeting held with all the promoters of MIL on 12.08.2013. (OA) to BIFR. In the said report OA informed the BIFR that only workable Shri U.K Modi further submits: solution for revival of MIL is through sale of all unproductive assets (including Modi Bhawan) and the Company’s net worth Subsequent to the said meeting held in Mumbai on 12.08.2013, would become positive thereafter. Shri U K Modi submitted an email to IDBI on 23.08.2013 acknowledging receipt of DRS which has been filed by IDBI Shri U.K. Modi further submits that:- on 09.07.2013 as was mentioned during the meeting of the Shri U K Modi vide letter dated 25th June 2013, had informed stakeholders in order to enable him to share comments on the the Operating Agency – IDBI (OA), that the continued disputes same. By this email, it was further reiterated that Shri U K among family members has not only led to the delay in Modi will be supporting a scheme as a whole without any split rehabilitation of the Company, but have also adversely affected with the condition that the proceeds from sale of surplus assets the growth of the Company. would be utilised for payment all liabilities of the Company The basic objective of the OA is to formulate a scheme for the and no amount is distributed to any member of any group. rehabilitation of the Company and not to settle family disputes, By a letter dated 06.09.2013, IDBI informed the BIFR about and as such it is humbly requested that the OA should rather the outcome of the joint meeting held on 12.08.2013 in Mumbai. concentrate on the rehabilitation of the Company, leaving the IDBI (OA) informed the BIFR that due to extreme polarized family settlement to courts. situation between the 2 fractions, there was no consensus on Shri U. K Modi reiterated that rehabilitation scheme be the DRS. However, IDBI in its letter took note of the fact that formulated for the Company as a whole without any split, and an acceptable DRS would be possible if the disputes and with the conditions that the proceeds from sale of surplus differences between the various promoter groups are resolved. corporate assets are utilized for paying all the liabilities of the Therefore, IDBI was well aware of the fact that a DRS is Company i.e. Secured and Unsecured Loans, pressing and possible to revive MIL by sale of assets which did not involve Statutory Liabilities of the Company be fully discharged and any adjudication of disputes inter-se the promoter groups. no amount shall be distributed among any Units. By another letter dated 04.10.2013, IDBI (OA) had categorically Shri U K Modi further clarifies that in the hearing held before informed the BIFR that the only workable solution for revival the BIFR on 18th July 2013, the Board informed all the parties of MIL is sale of all unproductive assets (including Modi that it had directed IDBI to circulate the DRS to all stakeholders Bhawan) and the Company’s net worth would become positive. and conduct joint meeting of stakeholders vide their letter dated Upon the net worth becoming positive, the Company would 16th July, 2013. Pursuant to this direction, a meeting of the be de-registered from BIFR and the civil disputes can be settled Managing Directors and Shri D K Modi was called by IDBI on outside the purview of BIFR. 12th August 2013 at IDBI Towers, Mumbai. In the hearing held before the Hon’ble BIFR on 22.10.2013, In the joint meeting held at IDBI Towers in Mumbai on 12th representative of IDBI (OA) reiterated its recommendation on August 2013, Shri U K Modi submitted another letter of even DRS vide their letter dated 04.10.2013 and submitted that the date and reiterated his proposal that the distribution of only viable solution to revive the Company would be by sale of proceeds without payment of liabilities would be unethical and all unproductive assets including Modi Bhawan. Since the letter can be construed as siphoning of funds out of the Company of 04.10.2013 was not circulated by IDBI (OA) to all the parties and the issue regarding division of assets of the Company including Shri U K Modi, the counsel for Shri U K Modi as well should be left to Civil Courts. as MKM and DKM requested the Bench to direct IDBI to circulate the report / letter dated 06.09.2013 and 04.10.2013 Shri. M.K Modi submits that:- so as to enable them to comment on the same and requested The contents of Shri U.K. Modi’s letters dated 25.06.2013 and for a short date to file their respective reply. The Bench agreed 12.08.2013 travel beyond BIFR’s orders and as being against to issue the necessary directions in that regard and expressed the 1989 Modi Family MoU, 2006 Agreement of Shri U.K. Modi its views that a final opportunity would be given to comment with Shri M.K. Modi, Shri U.K. Modi’s own earlier stand before on the recommendations of IDBI (OA) and finally argue the various Forums including his own case filed before Hon’ble matter.
MODI INDUSTRIES LIMITED (73) The order of BIFR dated 22.10.2013 did not correctly reflect course of hearing on 06.02.2015, 13.03.2015, 16.03.2015, the minutes of proceedings that actually transpired during the 27.03.2015, 01.05.2015 and 20.05.2015, the bench had hearing held on 22.10.2013. During the said hearing, on the agreed to hear the all the parties including the counsel basis of submissions of all parties, the BIFR had agreed to representing Bhartiya Kisan Union, Mazdoor Congress Modi give time to the counsels for all the promoter groups to finally Steels and Karamchari Sangh Modi Steels whose presence is argue the matter on the next date of hearing. The Board had recorded in all the above mentioned orders. also agreed to give time to the parties to file their respective Shri M.K. Modi stated that there is no agreement between replies to the report / letter dated 04.10.2013. However, the Shri M.K.Modi and Shri U.K.Modi on this issue. same did not find any mention in the order dated 22.10.2013, Hon’ble AAIFR had, in its hearing held on 09.10.2015 directed rather the order records that the Bench decided to reserve the “all the concerned Respondents to file replies to the Appeals order. which will include comments on the OA’s reports as well as On 28.10.2013, the BIFR passed an order, inter-alia, holding the views/comments on the viability or otherwise of the DRS that the Company is not likely to make its net worth exceed its prepared by OA in the year 2013 along with the alternative accumulated losses within a reasonable time while meeting suggestions for revival or otherwise of the sick company, if all its financial obligations as a result whereof it is not likely to any, within 2 months.” become viable on a long term basis. Hence, it would be just, Pursuant to the above, all the Respondents filed their equitable and in public interest that the Company be wound comments and alternative suggestions in compliance of the up u/s 20(1) of SICA. The Board therefore issued a show cause above directions. The matter was last heard by AAIFR on notice to the Company in this regard and also gave final 05.08.2016 and the next date of hearing is yet to be notified. opportunity to the Company, the present promoters or a registered Workers Industrial Co-operative Society (WICS) or 7. With respect to the Contempt Application (M.A No. 412/2013) an outsider to submit a fully tied up proposal with or without filed before Hon’ble BIFR by Shri M.K.Modi , the views of both OTS and with or without co- promoters, to the OA, within 30 the Managing Directors are stated as below:- days from the date of this order. Shri M.K.Modi stated that:- Pursuant to the order dated 28.10.2013, the Bench Officer of Shri U.K. Modi has violated BIFR’s injunction order dated BIFR has published an advertisement on 09.11.2013 in Times 11.04.2013 for which Shri M.K. Modi has filed M.A.No.402/ of India in relation to the notice under Section 20 (1) of the 2013 before the BIFR. The BIFR has issued notice on the SICA and BIFR Regulations for proposed winding up of MIL, application on 12.08.2013 and also directed status quo with thereby inviting shareholders, creditors and others to file their regard to the property in question, viz. Land belonging to respective objections or suggestions with the Registrar. MIL(Steel Division) leased out to G.S.Pharmbutor Pvt. Ltd. vide Shri U K Modi has preferred an Appeal before the AAIFR lease deed dated 31.05.2013. challenging the order dated 28.10.2013 passed by the BIFR. Shri U.K. Modi disagrees with the above allegations and The said Appeal has been registered as Appeal No. 142 of statements made by Shri M.K. Modi as the same are not 2013. By an order dated 27.11.2013, the AAIFR has been correct. Shri U.K Modi has commented as below:- pleased to pass an unconditional stay of operation of order There has been no violation of any order of BIFR as there has dated 28.10.2013. By subsequent orders dated 18.12.2013, been no transfer of any asset. It is relevant to state that the 09.01.2014, 10.02.2014, 05.03.2014, 20.05.2014, 05.11.2014, same portions of the land have been leased out since 1995 to 09.01.2015, 06.02.2015, 16.03.2015, 27.03.2015, 01.05.2015 various group companies of Shri U.K Modi. This was much and on 20.05.2015 the interim order has been directed to prior to the BIFR order dated 11.04.2013 when direction were continue. It may be pertinent to note that Shri M K Modi has issued by the BIFR under Section 22A directing parties not also filed two separate Appeals being Appeal No. 11/2014 and dispose of, alienate or part with possession of the property. 22/2014 challenging the orders dated 22.10.2013 and The lease rental recovered has been utilised to pay the 28.10.2014 respectively, which are also listed for hearing on statutory liabilities of the Steel Division of MIL and also to repay the same date. On the Appeals filed by Shri M.K. Modi also, loans taken for payment of the statutory liabilities and various AAIFR has granted an unconditional stay upto the next date other dues including electricity charges, water charges, of hearing. maintenance of roads, etc. that arose owing to workers and Shri U.K. Modi submits: labourers of the Steel Division residing in the quarters of the The appeals filed by Shri U.K. Modi, Shri M.K. Modi and Shri Steel Division. The lease deed was initially executed pursuant D.K. Modi were last listed on 27.03.2015 before the Hon’ble to an understanding between the Steel Division and the various AAIFR. On the said date of hearing, the counsel for Bhartiya labour Unions relating to the settlement of their dues in order Kisan Union, Mazdoor Congress Modi Steels and Karamchari to avoid a law and order situation and to maintain peace in the Sangh Modi Steels entered appearance. The Hon’ble AAIFR area. In this context, Shri U.K Modi refers to the various agreed to hear the counsel for the abovementioned unions agreements entered into with the labour unions of the Steel before finally deciding all the appeals. Division where under the Company has agreed to employ the children of the workers/ labourers of the closed Steel Division However, Shri M.K.Modi states that no such order / direction in any new venture that is set up, depending on their skill, was passed by the Hon’ble AAIFR. ability and talent. The labour unions have entered into these Shri U K Modi submits that even though the same is not agreements to secure the future interest of their children who reflected in the said order, but he was informed by his counsels would be offered employment. Shri M.K Modi has filed who were present during the course of hearing that during the M.A.No.402/2013 before the Hon’ble BIFR making these
(74) MODI INDUSTRIES LIMITED allegations only to pressurize the management in particular, to 1986 and no provision has been made against this liability. Shri. U.K Modi to accept his terms relating to the draft scheme 11. Modinagar Municipal Committee had determined the basis/ to be submitted to BIFR. The matter is still pending before the liability of house tax payable by the Company for the years Hon’ble BIFR. Shri U.K Modi has sought time to file a reply to 1982-83 to 2006-07 at ` 213.98 Lac. The said liability/demand/ the application filed by Shri M.K Modi. Shri U K Modi will file a basis is disputed by the Company at various levels and has detailed response to the said MA. In any event, the statements deposited `16.51 Lac on account upto 31st March, 2016. and contentions made in these Notes on Accounts are not Pending final decision of the Court/settlement and after taking exhaustive and detailed objection will be read in the reply to into account the provision/ payment already made by the the MA. It is important to note that Shri M.K Modi had himself Company, there is a net liability of `188.63 Lac (upto the entered into a perpetual lease agreement for certain portion previous year `188.63 Lac), which has not been provided for of closed Soap Factory (1584 sq. mtrs.) with his group in the accounts. Company M/s Weld Excel India Limited. 12. Excise duty on uncleared manufactured finished goods and Shri M.K. Modi disagrees with the above statements and custom duty in respect of imported goods lying in bond in submissions made by Shri U.K. Modi as the same are not respect of Steel Unit amounting to ` 43.09 Lac and ` 24.35 correct as various parts (not the same portions) of the land Lac respectively is accounted for as and when such goods have been leased out by Shri U.K. Modi to his private are cleared. However, this has no impact on the loss of the companies. Area leased to TC Healthcare Pvt. Ltd. was Company. 8,231.56 Sq. Mtrs. and the area leased to G.S. Pharmbutor 13. (a) The Company has adopted Accounting Standard 15 Pvt. Ltd. is 12,531 Sq. Mtrs. The space of closed soap factory (Revised) on employees benefits with effect from 1st April, had been leased out to Weld Excel India Limited much after 2007 in respect of provision for Gratuity liability. the perpetual lease agreements executed by Shri U.K. Modi (` in Lac) with his group companies namely; TC Healthcare Pvt. Ltd. on Liability to be recognised in 05.12.2002 and Modi Revlon Pvt. Ltd. on 01.10.2005 and there As at As at Balance sheet was no restraint order operative at that time. 31.03.2016 31.3.2015 Shri U.K. Modi disagrees with the above statements and Present value of Obligations 1,075.82 1,133.73 submissions made by Shri M.K. Modi as the same are not Fair Value of Plan Assets - - correct. Net Liability (1,075.82) (1,133.73) As per Shri M.K. Modi, the above contentions of Shri U.K. Reconciliation of Opening and Closing Balances of Obligation Modi are factually incorrect. Obligation as at beginning of the year 1,133.73 1,227.94 8. In view of clear cut delineation of responsibilities of the two Current Service Cost 58.35 60.13 Managing Directors of the Company, the accounts of two Interest Cost 87.86 104.37 divisions of six units and three units of the Company are being Actuarial Losses/(Gain) (42.12) (137.01) prepared and finalized independently and accordingly Shri Benefits paid (162.00) (121.70) M.K.Modi and Shri U.K.Modi are certifying the accounts as Obligations as at the end of the year 1,075.82 1,133.73 relate to the two divisions of the Company i.e six units and Expenditure to be recognized during the year three units respectively, the management whereof is looked Current Service Cost 58.35 60.13 after by them. Interest Cost 87.86 104.37 9. The Company has entered into an agreement with U.P. Power Expected Return on Plan Assets - - Corporation Limited for its Residential Feeder SC No. 2005 Net Actuarial Losses/(Gains)Recognized during the year (42.12) (137.01) on 29th March, 2000. In pursuance of that agreement, the Total expenditure included in “Employees’ Emoluments” 104.09 27.49 Company has paid for the existing authorised occupants only Assumptions after 1st July, 1998 computed prorata based on covered area Discount Rate (per annum) 8.00% 7.75% of quarters occupied by the employees. In view of the above, Expected rate of Return on Assets (per annum) - - no provision has been made for electricity charges of ` 131.46 Salary Escalation Rate 7.00% 7.00% Lac upto the period of permanent disconnection of residential feeder SC No. 2005 i.e. 31st May, 2001 (Previous year ` 131.46 The Company has unfunded scheme for payment Lac) for the unauthorized occupants and late payment of gratuity to all eligible employees calculated at surcharge/recovery charges amounting to ` 302.66 Lac upto specified number of days of last drawn salary depending 31st May, 2001 (Previous year ` 302.66 Lac). In accordance upon tenure of service for each year of completed service with the agreement, matter regarding waiver of late payment subject to minimum five years of service payable at the surcharge and recovery charges after 1st July, 1998 will be time of separation upon superannuation or on exit referred to the Government. otherwise. 10. ESI authorities had raised a demand on the Company for ` (b) (i) The Company has adopted Accounting Standard 15 64.68 Lac (upto previous year ` 63.51 Lac) (inclusive of (Revised) on employees benefits with effect from interest) towards Company’s liability for ESI for the years 1968 1st April, 2008 in respect of Earned Leave.
MODI INDUSTRIES LIMITED (75) (ii) Details in respect of Earned Leave are as under: (i.e. 10% of the aggregate of the manufacturing expenses (` in Lac) as reduced by statutory charges, taxes and duties and selling and distribution expenses) from the above account Liability to be recognised in As at As at (vi) all payments received by the bottler for sale of Balance sheet 31.03.2016 31.3.2015 products shall be credited to the account and Present value of Obligations 92.25 100.92 manufacturing expenses incurred by the bottler, manufacturing margin shall be reimbursed by MISIP to Fair Value of Plan Assets - - bottler. Any surplus remaining in the account shall Net Liability (92.25) (100.92) therefore be paid to the MISIP as fee. Reconciliation of Opening and Closing Balances of Obligation (b) In the opinion of the management, since the products are being manufactured and sold in the name of the Obligation as at beginning of the year 100.92 114.85 bottler, the purchase invoices in respect of raw material, Current Service Cost 8.29 8.59 packing material and consumables and sales invoices Interest Cost 7.82 9.76 for the finished goods are being issued in the name of Actuarial Losses/(Gain) (8.09) (11.54) the bottler, necessary compliances under various tax laws are also being done by the bottler and special bank Benefits paid (16.69) (20.74) account is also in the name of the bottler, the transactions Obligations as at the end of the year 92.25 100.92 of the above business of manufacture and sale of “Vodka Expenditure to be recognized during the year and Whisky” have been treated as part of books of account of the bottler and these have been included in Current Service Cost 8.29 8.59 sales, expenses, assets and liabilities of the bottler as Interest Cost 7.82 9.76 stated in paragraph (c) below. Expected Return on Plan Assets - - (c) Balance Sheet and Statement of Profit and Loss of the bottler st st Net Actuarial Losses/(Gains) Recognized during the year (8.09) (11.54) for the financial year ended 31 March, 2016 and 31 March, 2015 includes the following items relating to the above activities Total expenditure included in “Employees’ Emoluments” 8.02 6.81 of manufacture and sale of “Vodka and Whisky”: Assumptions Balance Sheet Discount Rate (per annum) 8.00% 7.75%% (` in Lac) Expected rate of Return on Assets (per annum) - - Particulars As at As at Salary Escalation Rate 7.00% 7.00% 31st March, 2016 31st March 2015 14. The Company has not received information from vendors Sundry Debtors 2,796.50 1,871.91 regarding their status under the Micro, Small and Medium Bank Balances 147.13 132.03 Enterprises Development Act, 2006 and hence disclosure relating to amounts unpaid as at the year end together with Security Deposits 222.53 107.03 interest paid/payable under this act has not been given. Closing Stock 826.80 892.39 15. Government of India has issued guidelines dated 15th January, Advance Recoverable 124.48 81.37 1987 which requires companies raising resources through Total Current Assets 4,117.44 3,084.73 issue of Debentures to create a Debenture Redemption Less: Current Liabilities 1,084.55 845.33 Reserve. The Company has not created such a reserve in view of the accumulated losses. Credit Balance of MISIP 2, 750.99 3,835.54 2,093.63 2,938.96 16. (a) During the year 2010-11, the Distillery Unit of the Net Current Assets 281.90 145.77 Company (Bottler) has entered into an agreement i.e. a Recognized as net profit for “Bottling Agreement (including addendum to bottling the year instead of th agreement dated 26 April, 2012”) with MI Spirit India manufacturing margin 281.90 145.77 Private Ltd (MISIP) whereby the parties i.e. bottler and MISIP have agreed to the blending, manufacturing and IMPACT OF NET PROFIT NIL NIL bottling of the products by the bottler. Bottling agreement Statement of Profit & Loss inter-alia includes: (i) the bottler shall manufacture the (` in Lac) products in accordance with the quality standards, standard manufacturing procedures, the process and Particulars 2015-16 2014-15 other specifications laid down by MISIP from time to time Turnover (Net of discount) 8,690.28 3,190.47 and in such quantities as may be specified by MISIP from Other Income 10.32 8,700.60 27.90 3,218.37 time to time (ii) the bottler shall procure the materials i.e. Excise duty paid 3,226.11 440.12 concentrates, spirit, flavouring agents, de-mineralised water, packages and levels from MISIP or from the Cost of materials consumed 1,192.75 629.37 suppliers suggested or recommended by MISIP (iii) Change in Inventories (18.89) (125.63) products manufacturing by the bottler shall be supplied, Employees Benefits Expenses 397.27 336.75 dispatched or sold by the bottler as per the purchase Finance Costs 8.68 4.16 orders procured by MISIP and bad-debts from direct Rates & Taxes 300.95 212.16 indenters supplied on credit upon request by MISIP are Sales Promotional Expenses 999.49 296.28 to MISIP’s Account (iv) MISIP will be responsible for working capital financing. Bottler shall open a bank Other Expenses 2,312.34 1,279.39 account (“ Account” ) which is to be operated jointly by Total Expenses 8,418.70 3,072.60 the bottler and MISIP and all funds in the account shall Net Profit for the year 281.90 145.77 belong to MISIP notwithstanding that the account may Recognized as net profit for the year be in the name of the bottler (v) MISIP will reimburse the instead of manufacturing margin 281.90 145.77 manufacturing expenses and pay manufacturing margin IMPACT OF NET PROFIT NIL NIL
(76) MODI INDUSTRIES LIMITED (d) The Expert Advisory Committee of Institute of Chartered (e) No provision has been made for interest on Cash Credit Accountants of India in an almost similar case do not amounting to `413.16 Lac (for the year ` 65.13 Lac). agree with the above mentioned accounting treatment. Further, response to the proposal submitted to the Bank The opinion is governed by the substance of the for One Time Settlement (OTS) dues is awaited in transaction and not by the legal form i.e. sales, Distillery Unit in view of para (c) above. purchases, assets and liabilities relating to such business (f) Till 31st March, 2000, simple interest on matured fixed controlled by the brand owners should not be recorded deposits and interest upto date of maturity was provided in the books of account of the Company even though in the books of account. With effect from 1st April, 2000, supporting vouchers are in the name of the Company no provision has been made for interest of ` 325.10 Lac and the correct accounting treatment of the transactions upto 31st March, 2016 (for the year ` 13.97 Lac), in the books of account of the Company would be to computed as per past practice, on these fixed deposits recognize only the fixed margin/charge received by it in view of a legal opinion received by the Company to rather than to recognize sales and purchases of the the effect that as per terms and conditions of Fixed business of manufacturing IMFL and also should not Deposit Scheme, deposits do not carry any interest recognize any current asset or liabilities of the said beyond due dates unless these are renewed. Since these business in its books of account. Further, the brand deposits were never renewed after their due dates as owners entitlement paid by the Company should be such, the question of payment of interest after due dates booked as a mere cash outflow. Further the Expert does not arise at all. However, as a prudent measure, Advisory Committee had clarified that the opinion the provision made of ` 280.85 Lac in the past (net of expressed by the committee is purely from the accounting payments) has been retained in the books of account as point of view without consideration of any implication on 31st March, 2016. thereof, from the point of view of the provisions of TDS/ TCS in the Income Tax Act 1961 or any other legal/ 19. (a) The Vanaspati Unit had applied for Sales Tax Relief Exemption to U.P. Government in terms of Section 4A of statutory requirement. U.P. Sales Tax Act. Consequent to rejection, the Company 17. Consequent to the losses, the Company had been declared a has filed a writ petition in Lucknow Bench of Allahabad th Sick Industrial Company on 14 March, 1991 in terms of High Court and Court had passed an order dated 21st Section 3(1)(o) of the Sick Industrial Companies (Special February, 2013 that “the writ petition is allowed and Provisions) Act, 1985. Show Cause Notice issued by BIFR for impugned order dated 22nd April, 1992 is quashed. The th winding up pursuant to its order dated 28 October, 2013 has opposite parties are directed to reconsider the case of been stayed by AAIFR. Pending final orders of BIFR/AAIFR, the petitioner afresh, after giving personal opportunity of the accounts of the Company have been prepared on a going hearing and pass appropriate orders, in accordance with concern basis. law.” In compliance of High Court order, we had filed an 18. (a) No provision has been made for penal/delayed/simple/ application before the Secretary Level Committee compound interest amounting to ` 37839.07 Lac upto (Constituted under Section 4A of the U.P. Trade Tax Act). 31st March, 2016 (for the year ` 5400.68 Lac) on term As the matter is still pending before the authority, no borrowings of Financial Institutions and debentures provision has been made for sales tax liability of pending final order of BIFR. ` 2,455.78 Lac relating to the period May, 1991 to July, (b) Interest payable by Vanaspati Unit of the Company to 1994 (previous year ` 2,455.78 Lac). Financial Institutions since the date of disbursement of (b) The Vanaspati Unit had preferred an application for the loan on simple rate of interest basis amounts to deferment of Sales-tax with effect from July, 1994 under ` 1450.65 Lac upto 31st March, 2016 and the unit holds Section 38 of the U.P. Sales Tax Act and the same has total interest provision of ` 732.41 Lac as on 31st March, been rejected by the State Government. The Company 2016 resulting in the short provision of ` 718.24 Lac on has also filed Writ Petition against the rejection and simple interest basis. consequent to the orders of the Court, the recovery of (c) The Sugar & Distillery Units of the Company have given Sales-tax has been kept in abeyance. Accordingly, Sales- a proposal for settlement of their dues with Allahabad tax amounting to ` 440.46 Lac (previous year ` 440.46 Bank of ` 227.00 Lac against which an upfront payment Lac) relating to the period August, 1994 to March, 1996 of ` 50.00 Lac has already been made under ‘No Lien has not been deposited with the authorities. Account’ and included under “Other Bank Balances” and The above writ petition filed by the Company was listed to pay the balance amount of ` 177.00 Lac in two equal for hearing on 2nd May, 2008 at High Court, Lucknow monthly instalments after the receipt of sanction from Bench. The Company had filed an affidavit with the Court the Bank. The shortfall in interest provision amounting that BIFR had passed an order dated 26th March, 2008 to ` 168.84 Lac will be provided in the books of account by virtue of which the Bench permitted the Commercial in the year of approval of OTS proposal by the Bank Tax Department, Government of U.P. to recover its which is pending. outstanding dues, due after 30th June, 2007. The (d) The Sugar Unit of the Company has not made provision Company had also stated in the said affidavit that the for interest/bank charges amounting to ` 3711.21 Lac Hon’ble Supreme Court of India had affirmed the order (for the year `531.20 Lac) on cash credit loan taken from of the BIFR and therefore in view of the said orders of Allahabad Bank in view of para (c) above. BIFR as affirmed by the Hon’ble Supreme Court, the said
MODI INDUSTRIES LIMITED (77) Writ Petition may be dismissed as infructuous. with effect from 19th December, 1991 and 5th January, 1992 Accordingly the High Court, Lucknow Bench has respectively. The lockout has since been lifted. The U.P. dismissed the said writ petition as infructuous. Government, suo moto, has referred the matter to the Industrial (c) In accordance with the scheme announced by U.P. Tribunal to decide the legality of the lockout. Pending final Government regarding Waiver of Interest & Penalty on decision, no provision has been made for wages ` 27.46 Lac Sales Tax, the Distillery Unit of the Company has paid for the lockout period. and provided interest during 2005-06 of ` 54.77 Lac i.e. 22. Provision/payments (including value of perquisites) has been 10% of the total interest as per the scheme. No Dues made to Managing Directors for the remuneration of `80.68 Certificate of Sales Tax authorities is awaited.. Lac in terms of shareholders resolution, which is subject to 20. Operating Leases: approval of the Financial Institutions. The Company has taken following premises and Plant & 23. No provision has been made for Earned Leave for Steel Unit- Machinery on operating lease basis. Disclosure requirement as upto 1991-92, amount unascertained. per AS-19 are as under: 24. As per Press Release dated 18th January, 2016, the State (` in Lac) Government has announced financial assistance on `23.30 Period Year ended Year ended per quintal of cane which would be linked to average selling price of sugar and its by products during 1st October, 2015 to 31.03.2016 30.03.2015 31st May, 2016, which is yet to be announced. The Company Not later than one year 82.07 82.20 has estimated and accounted for the above financial assistance of `1147.70 Lac @ `23.30 per quintal of cane as the Company Later than one year but not is hopeful for issue of notification by the State Government in later than five years 127.63 Nil this regard. Had the above financial assistance not accounted Later than five years Nil Nil for in the books of account, the cost of material consumed and value of closing stock would increase by `1147.70 Lac The above includes: and `183.60 Lac respectively is resulting in net impact of (i) During the financial year 2011-12, Gas Unit of the increase in expenses by `964.10 Lac. Company has entered into lease agreement, as 25. Allahabad Bank had filed a recovery suit for recovery of ` 21.41 amended, with Weld Excel India Ltd. (WEIL), a related Crores against Modi Industries Limited and others before the party, taking Oxygen filling plant under operating lease Debt Recovery Tribunal (DRT), Lucknow in April, 2005. The for 2 years non cancelable lease period at monthly rent Company challenged the recovery suit on the grounds that of ` 1.00 Lac up to 31st December, 2014 which was bank required prior permission under section 22 (1) of the Sick extended by one year in 2014-15. During the current Industrial Companies (Special Provisions) Act, 1985 for filing financial year, the Company has further renewed this recovery suit. Debt Recovery Tribunal, Lucknow, allowed agreement for One year up to 31st December, 2016 at continuation of recovery suit against which Company filed the same rent. appeal with Debt Recovery Appellate Tribunal, (DRAT) (ii) During the financial year 2010-11, Electrodes unit of the Allahabad. The DRAT had stayed further proceedings by DRT Company has taken office premises in Delhi on sublease in the matter. A writ petition was filed by the Company before basis from WEIL, a related party, under operating lease the Lucknow Bench of Allahabad High Court challenging the for an initial period of three years as non-cancelable orders of the DRT, Lucknow and DRAT, Allahabad. The period at monthly rent of `4.15 Lac and the lease was Lucknow Bench of Allahabad High Court noting the contention further renewed for a period of three years w.e.f. 1st April, of the Company has disposed off the Writ Petition by its order th 2013 at an increase of 15% over the current lease rent dated 18 July, 2008. The Company has filed review petition i.e. ` 4.78 Lac pm. Lease agreement has now been against the said order seeking the quashing of the Allahabad further renewed at reduced rent of `4.15 Lac pm for a Bank’s suit before the DRT, which is still pending. period of three year w.e.f. 1st April, 2016. 26. Previous year’s figures have been regrouped wherever (iii) Electrodes unit of the Company has taken premises for necessary. office cum guest house cum residence of Managing 27. No confirmation letters were sent to debtors/creditors. In the Director in Chattarpur, New Delhi on operating lease absence of such confirmations, the balances in respect of basis and having sharing arrangement with WEIL with Sundry Debtors/Creditors, Loans taken/given and Advances effect from 1st November, 2011 (for a period of two years and other accounts are taken as shown by the books of and further extended till 31st December, 2016) at a accounts and are subject to adjustments and reconciliation, if monthly rent of `1.60 Lac with effect from 1st January, any. 2015 (our share net of recovery from Managing Director). 28. In view of non-viability of the Vanaspati Unit, which was a (iv) 1633 cylinders (Previous year 1633 cylinders) taken from separate business segment as per AS-17, Segment Reporting, Weld Excel India Limited on operating lease at a monthly the Company declared closure of the Unit with effect from 3rd rent of Rs.45/- per cylinder since 1st June, 2012 for three February, 2003 and prior information, as required under law, years, has been further renewed for another 5 year w.e.f. was given to the State Government on 4th December, 2002. 1st June, 2015 on same rent. The closure is consistent with the Company’s strategy to focus 21. The Distillery Unit declared cessation and lock-out of the Unit on its other viable manufacturing activities.
(78) MODI INDUSTRIES LIMITED 29. Delhi Excise Authorities issued Show Cause Notices and raised doubtful debts, provisions disallowed and interest on term loans demand for `167.43 Lac towards Risk-Purchase of Country disallowed in Income Tax. Deferred Tax Liabilities is ` 337.56 Liquor in view of non-supply of the same by Distillery Unit of Lac as on 31st March, 2016 (Previous year `353.50 Lac) on the Company. Company has disputed the above demand and account of higher depreciation claimed in Income Tax. On a Writ Petition was filed before the Hon’ble Delhi High Court conservative basis as required by the Accounting Standard who ordered the case to be referred back to Collector of Excise 22, the net Deferred Tax Assets have not been recognized for taking final decision. The Collector of Excise vide its order and position will be re-assessed at next balance sheet date. dated 27th June, 2003 has confirmed the above demand However, the estimated Deferred Tax Assets and Liabilities against which the Company has filed a writ petition before the details are given as under: Hon’ble Delhi High Court. On the basis of orders of Hon’ble ( ` in Lac) Delhi High Court, the Company has deposited `50.00 Lac till Description As at As at date against the above demand. No provision is considered 31st March, 2016 31st March 2015 necessary at this stage since the matter is sub-judice. (a) Deferred Tax Assets : (i) Disallowances under the 30. (a) As on 31st March, 2016, there were 160 Public Deposits amounting to `7.32 Lac which have remained unclaimed Income Tax Act. 1336.96 1434.25 and unpaid for a period of more than seven years and (ii) Provision for Doubtful Debts 255.81 217.09 interest accrued but not paid on these unclaimed deposits (iii) Unabsorbed Depreciation 637.77 549.43 till the date of maturity amounts to `2.40 Lac. Details of (iv) Unabsorbed Loss 3621.51 3574.48 unclaimed and unpaid debentures for a period of more Total 5852.05 5775.25 than seven years are presently not available. (b) Deferred Tax Liabilities: The Company has filed a return dated 14th June, 2002 Related to Fixed Assets 337.56 353.50 with the Registrar of Companies duly certified by (c) Deferred Tax Assets (Net) (a-b) 5514.49 5421.75 practicing Company Secretary stating that the Company is a Sick Industrial Company as per orders of BIFR dated 33. Till 31st March, 2016, certain Quarters of the Company are 14th March, 1991 and rehabilitation proposal for payment occupied unauthorisedly by ex-employees/outsiders. The in respect of debentures and fixed deposits etc. is Company has entered into “Agreement to Sell” for 215 pending before the IDBI (as the Operating Agency)/BIFR/ (Previous year 215), such residential quarters with such parties. AAIFR for consideration. The Company will pay/credit Sale consideration amounting to ` 504.50 Lac (Previous year the amount as per final orders of BIFR/ AAIFR. ` 504.50 Lac) has been received as interest free advance. Accordingly, no amount was credited / paid to Investor’s These “agreements” clearly stipulates that final sale of such Education and Protection Fund till date. quarters are subject to approval of Financial Institutions to (b) With regard to payment of Fixed Deposits, as per Section whom these quarters have been mortgaged and the Company 74 of the Companies Act, 2013, deposits accepted before proposes to seek the same before affecting final sale of such the commencement of the Act (i.e. 1st April, 2014) shall quarters. Accordingly the sale of such quarters will be be repaid within one year from the commencement of accounted for only on receipt of approval of Financial the Act. The Company had filed a petition with the Institutions. Further the Company has been legally advised Company Law Board on 31st March, 2015 which has that it can enter into such “Agreements to Sell”. since been dismissed by Company Law Board vide its order dated 21st April, 2016. Against this order the 34. (a) The Steel Unit of the Company has entered into few Company has filed an appeal before Hon’ble High Court, leases, including perpetual leases, agreements for Allahabad on 23rd July, 2016. certain portions of the factory land and building 27954.86 Sq. Mtrs (Previous year 27954.86 Sq. Mtr.) for which 31. There has been diminution ‘other than temporary’ of ` 148.80 approval of financial institutions, to whom the factory land Lac as on 31st March, 2016 (Previous Year ` 149.60 Lac) in the market value of one of its investments in the Group and buildings are mortgaged, is yet to be obtained. Companies mainly in view of closure of plant for the last three However, the Company has been legally advised that it years and negative net worth of the Group Company as per can enter into such lease agreements. Further, the lease books of account as on 31st March, 2016. Even though the money was mainly utilized for payment of workers and modified rehabilitation scheme of this group Company is still statutory dues. under consideration of the BIFR, provision for diminution of (b) The Company has entered into a perpetual lease `148.80 Lac has been made in the books of account as on agreement for certain portion of closed Soap factory, land 31st March, 2016 as required by Accounting Standard 13 i.e. & building (1584 sq. mtrs.) to a related party. As the said Accounting for Investments and shown as an ‘Exceptional Item’ land and building is mortgaged with the financial in Statement of Profit and Loss. institutions therefore the Company had sought the 32. Deferred Tax Assets are ` 5852.05 Lac as on 31st March, approval of IDBI Limited (the lead financial institution) to 2016 (Previous year ` 5775.25 Lac) constituting mainly of the said transaction vide its letter dated 6th September, unabsorbed depreciation, unabsorbed losses, provision for 2006. Since IDBI Limited did not respond, therefore the
MODI INDUSTRIES LIMITED (79) Company again wrote a letter to IDBI Limited on 5th April, charges in the books of account. Hon’ble Allahabad High 2007 requesting for its approval to the said transaction. Court vide its order dated 16th April, 2014 has stayed the The Company in the letter under reference also recovery charges of ` 278.99 Lac. Further the Company mentioned that if IDBI Limited does not respond to the has paid interest on cane arrears. Company’s request, it will be deemed that the Company’s (f) Recovery Certificate (RC) was issued on 23rd June, 2014 request has been approved by IDBI Limited and the on account of non payment of cane price/interest due to Company will go ahead with the said leasing agreement. Co-operative Societies for the sugar season 2013-14. The IDBI has so far not responded to the Company’s The above RC also includes interest of `803.85 Lac and letter. recovery charges of ` 1704.67 lac. No provision has been 35. (a) Recovery Certificate (RC) was issued on 1st May, 2004 made for recovery charges in the books of account. on account of non payment of cane price/commission/ Further as per Press release dated 22nd May, 2015 issued interest due to Co-operative Societies for the sugar by Chief Secretary, Sugar Industry and Cane season 2003-04. The Hon’ble High Court has stayed the Development Department, U.P. Government, interest on recovery proceedings against the Company subject to cane arrears for the sugar season 2013-14 are being payment of dues upto 31st July, 2004. The Company has waived off. State Government Notification in this regard complied with the conditions regarding payment of cane is awaited. In view of the above pending issue of price and commission on basic SMP upto 31st July, 2004. Notification, the Company has not provided interest of However, the Company has disputed the payment of ` 2138.58 Lac as the Company expects issue of interest of `142.00 Lac and recovery charges of `236.00 Notification ultimately. Lac in the Hon’ble Allahabad High Court which is still (g) Recovery Certificate (RC) was issued on 20th August, pending. On consideration of prudence, the Company 2015 on account of non-payment of cane price/interest has made provision for interest of Rs.142.00 Lac during due to Co-operative Societies for the sugar season 2014- the year 2004-05. 15. No provision has been made for recovery charges of th (b) Recovery Certificate (RC) was issued on 18 March, 2008 ` 1703.95 Lac in the books of account. on account of non payment of cane price/commission/ Further no provision for interest of `2010.87 Lac for the interest due to Co-operative Societies for the sugar period upto 31st March, 2016 for the sugar season 2014- season 2007-08. The above RC also includes recovery 15 has been made as the Company expects waiver off charges of `413.50 Lac which has not been provided for the same. in the books of account. (h) No provision for interest for the period upto 31st March, (c) Recovery Certificate (RC) was issued on 20th April, 2011 2016 of `341.88 Lac for the Sugar Season 2015-16 has on account of non-payment of cane price/commission/ been made as the Company expects waiver off the same. interest due to Co-operative Societies for the sugar season 2010-11. The above RC also includes recovery (i) In view of Government Notification No. 4/2015,620S,chi th charges of `268.25 Lac which has not been provided for U.Anu-I-2015-1607/2004, Lucknow dated 12 June, in the books of account as stay granted by Hon’ble 2015, commission on cane purchase for crushing season Allahabad High Court. 2012-13 is reduced from ` 5.10 per quintal to ` 2.00 per quintal resulting in Refund of ` 249.18 Lac which is (d) Recovery Certificate (RC) was issued on 10th August, shown as ` Exceptional Item’ in the statement of Profit & 2007 on account of non payment of cane price/ Loss. commission/interest due to Co-operative Societies for the sugar season 2006-07. The above RC also includes 36. In the recent past, the Arc Electrode Industry in the country interest of `340.66 Lac upto 7th August, 2007 on cane has been facing stiff competition from international players price/ commission payable to societies and recovery who entered Indian market and started aggressive publicity to charges of `426.95 Lac which has not been provided for capture it. This resulted in adverse impact on domestic in the books of account. As per the Interim Order dated companies. To cope with the treat, the Electrode Unit of the 27th February, 2008 of Hon’ble Supreme Court, there shall Company has also undertaken publicity campaign through not be any recovery charges or interest for delayed advertisement in Newspapers/banners, calendars etc. in payment at this stage. current year also. (e) Recovery Certificate (RC) was issued on 21st February, Further, we give below figures on advertisement during last 2014 on account of non payment of cane price/ four years: commission/interest due to Co-operative Societies for 2012-13 ` 381.34 Lac the sugar season 2012-13. The above RC also includes 2013-14 ` 281.64 Lac interest of `1246.58 Lac and recovery charges of ` 2014-15 ` 154.74 Lac 450.79 Lac. No provision has been made for recovery 2015-16 ` 115.64 Lac
(80) MODI INDUSTRIES LIMITED 37. The following are the particulars of dues on account of sales tax, excise duty, income tax and others as at 31st March, 2016 that have been disputed by the Company in appeals pending before appellate authorities. Name of Nature of the dues Amount of Amount Period to which the Forum where statute dues deposited amount relates disputes is pending (` Lac) under protest (` Lac) U.P.VAT Act VAT Tax, Penalty, 2584.59 5.98 1987-88, 1990-91 & Allahabad High Court. Interest, Exemption 1991-92, May 91 to to New Units. March 96 VAT Tax and Penalty @ 345.78 123.04 1982-83 to 1986-87, Commercial Tax 1988-89, 1992-93, Tribunal, Ghaziabad 2001-01 to 2001-02 2007-08 VAT Tax and Penalty 455.26 254.28 1986-87, Jt.Commr.(A), Ghaziabad. 1994-95 to 1999-2000 VAT Tax 0.12 - 2005-06 Dy. Commr. (Assessment), Modinagar. Penaliy under Vat Tax 4.37 0.45 2008-09 Trade Tax Tribunal, Ghaziabad. Gaziabad. Central Central Sales Tax 162.09 16.10 1985-86, 1988-89, Commercial Tax Tribunal, Sales Tax 1992-93, Ghaziabad. Act 1999-2000 to 2000-01 Central Sales Tax 51.04 20.30 1994-95 to 1996-97 Joint Commissioner Sales Tax, Ghaziabad Central Sales Tax 1.01 - 2005-06 Deputy Commissioner (A), Modinagar State Sales State Tax 10.56 0.20 1992-93 Addl.Commr. Sales Tax, Tax Act Delhi. Sales Tax 5.97 2.00 1985-86, 1997-98, State Tax 2002-03, 2004-05 & 2005-06 Sales Tax 0.82 0.05 2014-15 State Tax Penalty (HGST) 0.30 - 1991-92 Tribunal Sales Tax, Chandigarh. State Tax 15.79 1.79 1989-90 to 1993-94, Dy.Commr. (A), States 1998-99 and 2006-07 Central Sales Central Sales Tax 1.92 0.29 1988-89 to 1992-93. Appellate Authority/DC Tax Act (States) (Appeals) Delhi Central Excise Custom Duty *43.91 - 1.3.2001 to 25.4.2001 Civil Court Ghaziabad & Custom Act Excise Duty 0.70 - 2002-03 and 2003-04 Supreme Court of India Excise Duty 77.67 - 2008-09 to 2013-14 Commissioner (Appeals) Meerut Excise Duty 167.43 50.00 1985-86 Delhi High Court 0.49 0.25 2004-05 Allahabad High Court 0.74 0.20 1996-97 Commissioner of Central Excise, Ghaziabad **169.17 - February 1981 to CESTAT February, 1987, 2002-03 to 2010-11 5.00 - Information not Information not available. available. 6.34 6.34 2009 onwards Supreme Court of India Income Tax Penalty 209.59 - 2007-08 and 2008-09 CIT (appeal) New Delhi @ Provided for ` 82.60 Lac in the Accounts * Provided for in the Accounts ** Provided for ` 32.20 Lac in the Accounts
MODI INDUSTRIES LIMITED (81) 38. RELATED PARTIES DISCLOSURE 01 Entities under the Control of the Company : Subsidiaries : Own Investment (India) Limited Your Investment (India) Limited 02 Key Management Personnel : Shri Mahendra Kumar Modi Managing Director Shri Umesh Kumar Modi Managing Director 03 Other Related Parties with whom the Company had transactions etc : Enterprises over which the Key Management Personnel and their relatives are able to exercise significant influence: Modipon Limited Ashoka Mercantile Limited Weld Excel India Limited Modi Paint Pvt. Ltd. Bihar Sponge Iron Limited SBEC Bio-energy Limited SBEC Sugar Limited Moderate Leasing & Capital Services Limited Modi Hitech India Limited Technicast Engineers Limited SBEC System India Limited Modi Mundipharma Pvt. Limited Win-Medicare Pvt. Limited Modi Motors Private Limited Modi Illva India Pvt. Ltd. Modi Line Travel Services Pvt. Ltd. Modi Revlon Private Limited Modi Senator (I) Pvt. Limited Jayesh Tradex Pvt. Limited A to Z Holding Pvt. Limited H.M. Tubes & Containers Pvt. Ltd. 04 Disclosure of transactions between the Company and related parties and the status of outstanding balances as at 31st March, 2016: (A) Transactions with the enterprises over which the Key Management Personnel and their relatives are able to exercise significant influence: (` in Lac) Year Particulars 2015-16 2014-15 Sale of Goods SBEC Sugar Limited 31.02 5065.37 Weld Excel India Limited 41.30 43.76 Modipon Limited - 0.20 Modi Paint Pvt. Limited 3.97 - Modi Illva India Pvt. Limited 0.22 - 76.51 5109.33 Purchase of Goods/Raw Materials Weld Excel India Limited 574.98 1233.09 SBEC Sugar Limited 473.41 478.49 Jayesh Tradex Pvt. Limited 4.13 4.34 Modi Hitech India Ltd. 6.20 12.22 Modi Revlon Pvt. Ltd. 8.13 10.19 H.M. Tubes & Containers Pvt. Ltd. - 21.99 Win Medicare Pvt. Ltd. 0.25 - 1067.10 1760.32
(82) MODI INDUSTRIES LIMITED (` in Lac) Year Particulars 2015-16 2014-15 Purchase of Assets - 1.77 Rental Income Win Medicare Pvt. Ltd. (Foot Note No. 10) 62.21 67.33 Weld Excel India Limited (Foot Note No. 3) 18.93 17.67 Modi Motors Pvt. Ltd. 12.00 12.00 Modi Mundipharma Pvt. Ltd 9.36 10.93 SBEC Sugar Limited 0.26 2.16 Moderate Leasing & Capital Services Ltd.(Foot Note No. 8) 0.91 - Modi Revlon Pvt. Ltd. 0.36 0.36 Jayesh Tradex Pvt. Ltd. 0.32 0.88 Shri Mahendra Kumar Modi 5.76 4.72 Modi Illva India Pvt. Ltd. 0.58 2.29 Others 0.33 0.33 111.02 118.67 Interest Income Ashoka Mercantile Ltd. (Foot Note No. 7) 71.18 78.89 Payment of Lease Rent Weld Excel India Limited (Foot Note No.2, 5 & 6 ) 86.98 85.85 SBEC Bio-energy Ltd. (Foot Note No. 9) 3.49 - 90.47 85.85 Expenses reimbursed Weld Excel India Limited 26.19 22.52 Others. 0.45 0.48 26.64 23.00 Interest paid on Loan taken Moderate Leasing & Capital Services Pvt. Ltd. 797.74 688.51 Weld Excel India Limited 0.54 - 798.28 688.51 Expenses realized Weld Excel India Limited (Foot Note No.3) 2.95 3.10 SBEC Sugar Limited - 3.41 Shri Mahendra Kumar Modi, 1.26 1.32 4.21 7.83 Loan and Advances taken Moderate Leasing & Capital Services Ltd. 489.32 313.66 Weld Excel India Limited 45.00 - 534.32 313.66 Royalty Fee received Weld Excel India Limited (Foot Note No. 4) 4.45 7.34 Commission paid for sale promotion Ashoka Mercantile Ltd. 1.85 5.75 Receiving of Services Modi Line Travel Services Pvt. Ltd. 12.48 21.08 Refund received against Loans & Advances Recoverable Modipon Ltd. 0.37 4.38 Refund of Security deposits given Ashoka Mercantile Ltd.(Foot Note No.7) 69.50 130.20 Refund of Loan and Advance Moderate Leasing & Capital Services Ltd. 1745.09 1593.02
MODI INDUSTRIES LIMITED (83) (` in Lac) Year Particulars 2015-16 2014-15
(B) Balances outstanding at the year end: Interest recoverable Ashoka Mercantile Ltd.(Foot Note No. 7) 64.07 71.00 Amount recoverable Good 24.54 23.58 Doubtful 3.78 3.78 Security deposit to Weld Excel India Ltd. Against Cylinders (Foot Note No. 5) 32.66 32.66 Against Oxygen Filling Plant (Foot Note No. 7) 4.00 4.00 Security deposit recoverable for quarters Ashoka Mercantile Limited (Foot Note No. 7) 798.30 867.80 Modipon Limited 147.63 147.63 Sundry Debtors SBEC Sugar Limited 220.82 1380.06 Modipon Limited - 0.12 Amount payable Weld Excel India Limited 323.15 248.53 Modi Revlon Pvt. Ltd. 17.58 10.05 H.M. Tubes & Containers Pvt. Ltd. - 16.99 Others 13.72 18.02 Unsecured Loan taken Outstanding A to Z Holding Pvt. Ltd. 24.89 24.89 Moderate Leasing & Capital Services Ltd. 2888.65 3646.04 Weld Excel India Limited 45.00 -
(C) Payment to the Key Management Personnel: (` in Lac) Particulars Year 2015-16 2014-15 i) Managerial Remuneration Shri Mahendra Kumar Modi 18.00 18.00 ii) Amount recoverable from Managing Director Shri Mahendra Kumar Modi (Recovered subsequently) - 0.49 iii) Amount payable to Managing Director Shri Mahendra Kumar Modi 0.01 - iv) Amount payable (for gratuity) 3.35 3.35
Foot Notes : 1. The above excludes amount payable/receivable to/from related parties in the books of Steel Unit in view of non-incorporation of Balance Sheets for these years on account of non-availability of opening audited balances as on 01.04.1993. 2. During the financial year 2010-11, Electrodes Unit of the Company has taken office premises in Delhi on sublease basis from Weld Excel India Limited (WEIL), a related party, under operating lease for an initial period of three years as non-cancelable period at monthly rent of ` 4.15 Lac and the lease was further renewed for a period of three years w.e.f. 1st April, 2013 at an increase 15% over the current lease rent i.e. `4.78 Lac per month . Lease agreement has now been further renewed at reduced rent of `4.15 Lac per month for a period of three years w.e.f. 1st April, 2016. 3. Electrode unit of the Company has taken premises for office cum guest house cum residence of Managing Director in Chatarpur, New Delhi on operating lease basis and having sharing agreement with WEIL with effect from 1st November, 2011 (for a period of two years and further extended till 31st December, 2016) at monthly rent of `1.60 Lac with effect from 1st January, 2015 (our share net of recovery for Managing Director). The Company is legally advised that sharing of lease/rent between related party are not covered under the provisions of related party transactions specified under section 188 of the Companies Act, 2013.
(84) MODI INDUSTRIES LIMITED 4. Electrode Unit of the Company had entered into a trade mark license agreement with WEIL with effect from 1st May, 2009 (for the period five years and further extended on 1st May, 2014 for next six years) wherein the right to use MODI’s trade mark, logo and brand for arc welding filler metals and welding equipments was given to WEIL at a royalty of 1% of the net sale price. 5. 1633 Cylinders (Previous year 1633 cylinders) taken on operating lease at monthly rent of `45.00 per cylinder since 1st June, 2012 for three years has been renewed for five years w.e.f. 1st June, 2015 on same rent. Approval of shareholders would be obtained at the ensuing Annual General Meeting. 6. Oxygen Filling Plant taken on operating lease for 2 years (non-cancelable) on 1st January, 2012 at again monthly rent of `1.00 Lac was renewed for period of one year from 1st January, 2015 to 31st December, 2015. Lease period subsequently extended for one more year w.e.f. 1st January, 2016 at the same rent at monthly rent of `1.00 Lac. 7. Unsecured Security deposits amounting to `798.30 Lac (Previous year `867.80 Lac) given during May, 2011 against temporary possession of 43 (Previous year 47) houses in Modinagar on which interest charged @ 8.50% with effect from 1st April, 2014. 8. Leave and License Agreement entered into with Moderate Leasing and Capital Services Limited for eleven months on 3rd November, 2015 for rent of `16,200/- per month plus Service Tax. 9. DG Set taken on operating lease at monthly rent of `67,000/- for a period of five years with effect from 2nd November, 2015. Approval of Shareholders would be obtained at the ensuing Annual General Meeting. 10. Lease agreement for house w.e.f. 15th March, 2016 for eleven months at monthly rent of `8,000/-. Approval of Shareholders for the agreement would be obtained at the ensuing Annual General Meeting. 39. Undertakings given to Financial Institutions on behalf of Lords Chloro Alkali Limited, Modi Rubber Limited and Bihar Sponge Iron Limited: (a) To procure funds jointly/severally with other promoters to meet any shortfall in the resources of the Company for completing their projects and/or for working capital. The funds made available/to be made available can only be withdrawn with the prior approval of Financial Institutions and shall not involve any charge or lien on the assets of the said Companies. (b) That the Company shall not transfer, assign, pledge, hypothecate or otherwise dispose of in any manner it’s holding in their capital without Institutions’ prior approval in writing. 40. Deferred credit including liability for interest payable for unexpired period have been guaranteed by the Bankers of the Company against hypothecation of Gas Cylinders and Machinery purchased under the Scheme in Steel Unit. 41. Impairment of fixed assets, if any, as per Accounting Standard AS-28 i.e. impairment of assets has not been ascertained in Sugar and Electrode Units. 42. Impact of componentization of fixed assets and ascertaining useful life and original cost/estimated value of such components as on 1st April, 2015 as required by the amended Schedule II of the Companies Act, 2013 is pending. Impact, if any, on the depreciation for the year ended 31st March, 2016 is yet to be ascertained by the Management. 43. Debit advice of ` 2.63 Lac of Sugar Unit toward certain expenses has not been accounted for in the books of accounts of MD Office. Further no provision has been made for electricity expenses of six units ` 7.43 Lac. 44. Additional information as required by Schedule III of Companies Act, 2013:
(i) Prior period items: ( ` in Lac) Sl.No. Particulars For the year For the year ended ended 31st March, 2016 31st March, 2015
(A) Income (i) Revenue from operations (3.81) (0.26) (ii) Other Income 4.11 5.81 (iii) Depreciation (Net) - 2.34 Total 0.30 7.89
(B) Expenditure (i) Finance costs 0.34 0.92 (ii) Employee benefits expenses 0.88 16.78 (iii) Legal & Professional Charges 1.41 - (iv) Discount & Sales Promotion expenses 103.25 - (iii) Other expenses (Net of reversal) 10.43 14.46 Total 116.31 32.16
MODI INDUSTRIES LIMITED (85) (ii) Cost of materials consumed: (` in Lac) Sl.No. Particulars For the year For the year ended ended 31st March, 2016 31st March, 2015
(a) Sugar cane 15,593.92 19,259.95 Satina Uni. Stainer (b) Sugar Purchased (Reprocess) - 467.67 Glowlite putty (c) Molasses 6.83 8.62 Welding Electrodes (d) Extra neutral alcohol (ENA) 341.67 191.66 Oxygen Gas (e) Vatted Malt Scotch Whisky 800.70 412.27 Nitrogen Gas (f) Oils 91.34 82.48 Hydrogen Gas (g) Chemicals 1,358.42 1,588.25 N2H2 Mixure (h) Wire 605.76 1,326.61 Carbon di oxide Gas (i) Carbide 203.22 208.71 Argon Gas (j) Carbon dioxide (CO ) 17.75 34.82 2 Zero Air Gas (k) Argon Gas 12.22 23.49 Freight on above (l) Oxygen Gas 28.93 28.47
(m) Others 58.71 33.34 Total 19,119.47 23,666.34
(iii) Manufactured goods: ( ` in Lac) Sl.No. Particulars Sales @ Opening Inventory Closing Inventory For the year For the year For the year For the year For the year For the year ended ended ended ended ended ended 31.03.2016 31.03.2015 31.03.2016 31.03.2015 31.03.2016 31.03.2015 (a) Sugar 19,264.89 22,500.64 3,350.13 5,386.99 2,811.36 3,350.13 (b) Molasses (By product) 885.78 622.07 545.41 501.58 101.26 545.41 (c) Bagasse (By product) 514.41 883.18 25.29 6.15 25.59 25.29 (d) Spirit 17.66 8.64 56.89 44.79 85.64 56.89 (e) Extra neutral alchohol (ENA) - - 0.63 0.41 0.62 0.63 (f) Indian made foreign liquor (IMFL) 8,690.28 3,190.47 317.10 184.99 325.94 317.10 (g) Country liquor ------(h) Bio-organic manure 22.67 13.01 8.17 2.78 7.50 8.17 (i) Special denatured spirit 967.65 1,595.45 - - 10.08 - (j) Paints & varnish 2,323.02 1,979.20 132.35 115.75 101.86 132.35 (k) Disolved Acetylene 328.29 332.89 3.38 4.31 3.42 3.28 (l) Carbon di oxide 40.12 68.52 0.40 0.46 0.33 0.40 (m) Argon 24.61 47.95 0.59 0.55 0.01 0.59 (n) Oxygen 65.45 52.67 0.14 0.28 0.23 0.14 (o) Welding Electrodes 2,111.70 3,957.60 239.59 401.38 130.13 239.59 (p) Flux 38.21 40.88 - - - - (q) Wires* - - 442.63 442.63 442.63 442.63 (r) Rods,Flats,Sections* - - 398.25 398.25 398.25 398.25 (s) Oxygen Gas* - - 0.05 0.05 0.05 0.05 (t) Scrap & Others* - - 54.81 54.81 54.81 54.81 (u) Others ------TOTAL 35,294.74 35,293.17 5,575.71 7,546.16 4,499.71 5,575.71 * This represents figures of Steel Unit as at 31st March, 1992.{ Refer note 27(4) }. @ Inclusive of Excise-duty but excludes rebates and discounts.
(86) MODI INDUSTRIES LIMITED (iv) Traded goods:- ( ` in Lac) Sl.No. Particulars Sales Purchases Opening Inventory Closing Inventory For the For the For the For the For the For the For the For the year year year year year year year year ended ended ended ended ended ended ended ended 31 .03.2016 31.03.2015 31 .03.2016 31.03.2015 31 .03.2016 31.03.2015 31 .03.2016 31.03.2015 (a) Satina Uni. Stainer - - - - 0.04 0.14 0.01 0.04 (b) Glowlite putty - - - - 0.08 0.28 0.01 0.08 (c) Welding Electrodes 16.32 0.39 11.30 0.37 - - - - (d) Oxygen Gas 18.00 33.87 17.60 20.61 0.02 0.02 0.03 0.02 (e) Nitrogen Gas 14.34 15.17 6.80 5.52 0.32 0.18 0.14 0.32 (f) Hydrogen Gas 23.27 23.97 11.15 10.71 0.60 0.85 0.65 0.60 (g) N2H2 Mixure 12.02 13.49 3.66 4.28 0.04 0.02 0.06 0.04 (h) Carbon di oxide Gas 9.67 16.46 4.91 8.93 0.04 0.06 0.01 0.04 (i) Argon Gas 30.62 19.58 15.84 9.25 0.04 0.09 0.96 0.04 (j) Zero Air Gas 2.04 1.31 0.66 0.45 0.01 0.01 0.02 0.01 (k) Freight on above - - 4.43 5.97 - - - - 126.28 124.24 76.35 66.09 1.19 1.65 1.89 1.19 v) Services rendered:- (` in Lac) Sl.No. Particulars For the year For the year ended ended 31 -03-2016 31-03-2015 (a) Product Development Charges 38.34 22.26 (b) Conditioning charges of cylinders 11.15 12.48 (c) Job work charges 52.68 13.13 TOTAL 102.17 47.87
(vi) Work-in-progress:- ( ` in Lac) Sl.No. Particulars Opening InventoryClosing Inventory For the year For the year For the year For the year ended ended ended ended 31st March 2016 31st March 2015 31st March 2016 31st March 2015
(a) Sugar 170.00 237.87 67.84 170.00 (b) Indian made foreign liquor (IMFL) 11.66 18.14 23.98 11.66 (c) Country liquor 0.60 0.60 0.60 0.60 (d) Paints & Varnish 41.57 39.63 31.42 41.57 (e) Welding Electrodes 61.52 92.83 20.48 61.52 (f) Flux 9.70 10.26 0.78 9.70 (g) Steel 40.32 40.32 40.32 40.32 TOTAL 335.37 439.65 185.42 335.37
MODI INDUSTRIES LIMITED (87) (vii) Other Information:- (` in Lac) Sl.No. Particulars For the year For the year ended % age ended % age 31st March 2016 31st March 2015
(A) Value of imports on CIF basis: (i) Raw materials(cost of material acquired) 257.76 259.24 (ii) Components & spare parts - 1.75 (B) Expenditure in foreign currency: (i) Travelling 0.73 1.22 (ii) Stores purchased 14.25 85.76 (iii) Membership & Subscription 0.12 - (iv) Drawings & designing charges 21.71 - (v) Other matters 0.78 0.04- (C) Earing in foreign exchange Value of Export on FOB basis (including indirect export benefits availed by third parties) - 35.24 (D) Value of imported/indigenous: (a) Raw materials consumed: (i) Imported 807.71 4.22 414.91 1.75 (ii) Indigenous 18,311.76 95.78 23,251.43 98.25 TOTAL 19,119.47 100.00 23,666.34 100.0 (b) Spare parts and components consumed: (i) Imported -- 1.98 0.63 (ii) Indigenous 302.27 100.00 311.54 99.37 TOTAL 302.27 100.00 313.52 100.00
Foot Note :- As segregation between spare parts and components is not possible, the value of consumption of spare parts and components has been aggregated. The figures given in (vii)(D)(b) above are as certified by the Officials of the Company.
As per our report of even date attached. For Modi Industries Limited For P. R. Mehra & Co., Chartered Accountants Mahendra Kumar Modi Rakesh Kumar Modi Manish Kumar Modi Abhishek Modi (Regn.No.000051N) (DIN 00014594) (DIN 00022386) (DIN 00030036) (DIN 00002798) Managing Director Director Director Director Ramesh Chand Goyal Partner N.P. Bansal V P Gupta Membership No. 012628 (PAN AAOPB7869G) (FCS-6380) Place : Delhi Chief Financial Officer Company Secretary Date : 22nd August, 2016.
(88) MODI INDUSTRIES LIMITED INDEPENDENT AUDITOR’S REPORT To the members of Modi Industries Limited Report on the Consolidated Financial Statements (1) We have audited the accompanying consolidated financial statements of Modi Industries Limited (“the holding Company”), and its subsidiaries (collectively referred to as “the Group”) which comprise the consolidated Balance Sheet as at 31st March, 2016, the consolidated Statement of Profit and Loss, consolidated Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information. The attached consolidated Balance Sheet does not include Assets and Liabilities including Contingent Liabilities and other additional information of Steel Unit of the Company as at 31st March, 2016 but includes balances as on 31st March, 1992, except for reduction of: (i) unsecured loan by ` 323.95Lac in view of write-back of ` 278.95Lac during the financial year 2004-05 and payment of ` 45Lac during the financial year 2005-06 on account of one-time settlement of dues of a bank and (ii) net fixed assets by ` 696.19Lac (Previous year ` 689.38Lac) on account of provision for depreciation for the period 1st April, 1993 to 31st March, 2016 on fixed assets as stated in Note 27(4)(c) of the consolidated financial statements. The consolidated Statement of Profit and Loss does not include: (i) certain provisions as stated in Note 27(4)(f) and (ii) loss, amount unascertained, of the Steel Unit of the Company for the year 1992-93 in view of non-incorporation of the financial statements of the Steel Unit for the above year. The consolidated Cash Flow Statement, except for certain adjustments made as stated in foot-note 2 of consolidated cash flow statement, does not include adjustments for Cash Flows from investing / financing activities and changes in assets and liabilities of Steel Unit of the holding Company in view of non-availability of audited Balance Sheets of the Unit as on 31st March, 2015 and 31st March, 2016 {Refer Note 27(4)}. (2) Management’s Responsibility for the Consolidated Financial Statements The Holding Company’s Board of Directors is responsible for the preparation of these consolidated financial statements in terms with the requirement of the Companies Act (“the Act”) that give a true and fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the Group in accordance with the Accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. The respective Board of Directors of the companies included in the Group are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Group and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error which have been used for the purpose of preparation of the consolidated financial statements by the Directors of the Holding Company, as aforesaid. Auditor’s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. While conducting the audit, we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Holding Company’s preparation of the consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Holding Company’s Board of Directors, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence obtained by us and the audit evidence obtained by other auditor in terms of their report referred to in “Other Matters” paragraph below is sufficient and appropriate to provide a basis for our adverse audit opinion on the consolidated financial statements. (3) Basis for Adverse Opinion (A) The books of accounts, vouchers and other documents of the Steel Unit of the holding Company for 1992-93 were not made available to us and consequently audit could not be conducted in respect of the same. {Note 27(4)}. Therefore, as stated in Paragraph 1 above, the attached consolidated Balance Sheet, consolidated Statement of Profit and Loss and consolidated Cash Flow Statement does not include: (a) the financial data / impact of working results and of declaration of closure / post-closure transactions, which includes realization of depot sales / dues from debtors, provision / payment of final dues of employees and payments to various parties and manufacturing / personnel / administration expenses etc., of the Steel Unit of the holding Company for the year 1992-93 during which the Unit had operated for ten months the exclusion of which, in our opinion, substantially impairs the presentation of above consolidated financial statements of the Company especially in view of the fact that (i) the assets and liabilities of Steel Unit of the holding Company constituted 28% and 43% respectively of the total Assets & Liabilities of the Company as at 31st March, 1992 and the Income & Expenditure of the Steel Unit constituted 30% and 32% respectively of the total Income & Expenditure of the holding
MODI INDUSTRIES LIMITED (89) Company for the said year which resulted in a loss of ` 787.22Lac for the Unit and (b) impact on assets, liabilities and cash flows on account of non-incorporation of transactions / balance sheets for the years 1993-94 to 2015-16 as stated in Note 27(4)(c). (B) Further to our comments in paragraphs 1 and 4(A) above and in the Annexure 1 referred to in paragraph 6(i) below, we report that: i. Understatement of accumulated losses on account of non-incorporation of impact of operational / working results / declaration of closure and post closure transactions of Steel Unit of the Company for the year 1992-93, amount / impact unascertained. {Refer Note 27(4) and Paragraph 4(A) above}. ii. Though the holding Company has been incurring huge losses continuously (losses for the five years i.e. 2011-12 to 2015-16 are ` 4,276.10Lac, ` 3,489.48Lac, ` 4,289.92Lac, ` 2,505.50Lac and ` 884.95Lac respectively which aggregates to loss of ` 15,445.95Lac for 5 years), accumulated losses of the holding Company of ` 22,335.47Lac as on 31st March, 2016 are far in excess of paid-up capital & reserves (excluding revaluation reserve) of the holding Company of ` 1,006.98Lac as on that date and the holding Company has been declared a sick Company on 14th March, 1991 and was also issued a show cause notice for winding up by the Board for Industrial & Financial Restructuring on 28th October, 2013 (presently the winding up order has been stayed by the Appellate Authority for Industrial & Financial Restructuring), the accounts have been prepared by the management on a going concern basis for the reason stated in Note 27(15). In our opinion, these events / conditions cast significant doubt on the ability of the holding Company to continue as a going concern and the appropriateness of the said basis is inter-alia mainly dependent on the vacation of the winding-up order, sanction and implementation of the rehabilitation scheme, government support / incentives / subsidy for paying huge amount of farmers dues towards cane purchases for sugar season 2015-16 and waiver off interest liability since sugar season 2013-14 to 2015-16 on dues paid / payable to farmers and also the Company’s ability to infuse requisite funds by sale of unproductive assets or otherwise for meeting substantial financial obligations including dues of farmers towards cane purchases. iii. Understatement of losses on account of non-provision of interest on loans, obsolete inventories, doubtful debtors / loan and advances and impairment loss, and non-physical verification of inventories and fixed assets etc. in Steel Unit of the holding Company as stated in Notes 27(4)(f)(i) to (vii) and 27(5) of the consolidated financial statements. Amount of non-provision not ascertained by the management. iv. Non-provision of impairment loss, amount unascertained by the management, of assets of Sugar and Electrode Units of the holding Company as stated in Note 27(35). v. (1) Non-provision of late payment surcharge / recovery charges ` 302.66Lac (Previous year ` 302.66Lac) {Note 27(9)} and Non- provision of demands of U.P. Power Corporation Ltd ` 1311.49Lac (Previous year ` 1311.49Lac) {Note 27(4)(f) (viii)(c)}; (2) Non-provision of ESI demand ` 64.68Lac (previous year ` 63.51Lac) {Note 27(10)}; (3) Non-provision of House-tax demand ` 188.63Lac (Previous year `188.63Lac) {Note27(11)}; (4) Non-provision of simple, penal and compound interest of ` 38,164.17Lac (for the year ` 5,414.65Lac) on term loans / debentures and public deposits {Note 27(16)(a) and (f)} and interest / bank charges ` 4,124.37Lac (for the year ` 596.33Lac) on cash credit from banks {Note 27(16)(d) & (e)}; (5) Non-provision of Wages ` 27.46Lac (Previous year ` 27.46Lac) for the lock-out period {Note 27(18)}; (6) Non-provision of recovery charges of ` 413.50Lac (Previous Year ` 413.50Lac) for sugar season 2007-08 and ` 1,703.95Lac (Previous Year ` Nil) for sugar season 2014-15{Note 27(30)(b) & (g)}; (7) Non-provision of interest up to 31st March, 2016 on cane dues for sugar season 2014-15 and 2015-16 amounting to ` 2,010.87Lac and ` 341.88Lac respectively. {Notes 27(30)(g) & (h)}; (8) Accounting for amount recoverable of ` 1,147.70Lac as on 31st March, 2016 towards financial assistance for sugar season 2015-16 by way of reimbursement of part of sugar cane price by State Govt. whereas the amount to be reimbursed, if any, is yet to be notified by the State Govt. for this purpose. Had the above financial assistance not accounted for in the books of account, there would be net increase in expenses by ` 964.10Lac (net of increase in closing stock by ` 183.60Lac) as stated in Note 27(21} and (9) Debit advice of ` 2.63 Lac of Sugar Unit of the holding Company toward certain expenses has not been accounted for in the books of accounts of other units of the Company as stated in Note 37 resulting in under-statement of expenses / loss and over-statement of debit balance of inter-unit balances by the same amount. Further, no provision has been made for electricity expenses also by certain units amounting to ` 7.43 Lac. (C) Accounting treatment given to the manufacture and sale of Vodka and whisky by the Distillery unit (“Unit”) of holding Company in its books of account is not proper even though the same has no impact on the net profit of the Unit for the year in view of the reasons stated in Note 27(14). (D) Confirmation of Debit / Credit balances of debtors / creditors and of certain banks were not obtained. Impact on the consolidated financial statements is not ascertainable. {Note 27(23)}. (E) Our audit observations under sections 143(1) & 186 of The Companies Act, 2013 are as under: The holding Company had given unsecured interest free security deposits amounting to: (i) ` 1,100Lac during May 2011 against temporary possession of 59 houses to Ashoka Mercantile Limited (“AML”), a related party, and (ii) ` 147.63Lac during the earlier years against temporary possession of 9 houses to Modipon Limited (“MPL”), also a related party. The outstanding amounts as on 31st March, 2016 in the books of account of the holding Company are ` 798.30Lac (43 houses) (Previous year ` 867.80Lac & 47 houses) and ` 147.63Lac (9 houses) (Previous year ` 147.63Lac for 9 houses) in respect of AML and MPL respectively. These houses are
(90) MODI INDUSTRIES LIMITED not occupied by any of the employees of the Company till date. In our opinion, the above unsecured loans given by the Company {i.e. a sick Company as mentioned in Note 27(15)} to two related parties amounting to ` 945.93Lac (As on 31st March, 2015 ` 1,015.43Lac) have been shown as deposits by the holding Company since date of payments on which interest @ 8.5% has been charged w.e.f. 1st April, 2014 from AML since it expressed its inability to refund the amount and no interest has been charged from MPL since inception. {Refer Note 27(32)(3)(B) and Foot-note 7 of Note 27(32)}. (F) As stated by the management in Note 27(31), the Electrode Unit of the holding Company has incurred expenditure for advertisement of products amounting to ` 115.64Lac (previous year ` 153.12Lac) by way of advertisement in newspapers through agents. In the absence of sufficient appropriate audit evidence regarding prevailing market rates / charges paid to newspaper publishers by agents, we are unable to verify and express our opinion on these rates/charges paid by the Company to agents. Observations & suggestions of Internal Auditors in this regard need to be also looked into & implemented. (G) (i) As per the bottling contract mentioned in Note 27(14), the Distillery Unit (“the Unit”) of the holding Company has agreed for blending, manufacturing and bottling of the products for MI Spirit India Private Limited (MI Spirit) and MI Spirit will, either itself or through “Modi Illva India Private Limited (Modi Illva), a Company in which a director of the Company is also a director, market the products and in case MI Spirit requests the bottler to directly undertake any promotion of the products, then expenses incurred by the bottler in connection with the promotion of the products shall be reimbursed by MI Spirit, against the debit notes raised by the bottler. (ii) We note that the Unit has accounted for sale promotion expenses {cost of gift items ` 805.58Lac and trade scheme amount `183.40Lac which is claimed as reimbursement from the Unit by sale promotion agents (SPAs) on secondary sales i.e. on sale made by the State corporations to their customers} {Previous year: Cost of gifts ` 250.99Lac & trade scheme amount ` Nil}. In view of the facts stated in sub-paragraph (i) above, in our opinion, the accounting for these expenses in the books of account of the Unit is not proper since the same is to be debited to MI Spirit and also in view of the opinion given by the Expert advisory Committee of the Institute of Chartered accountants of India on the similar arrangement as stated in Note 27(14). Further, we could not verify / audit these expenses as the sale promotion policy, records / supporting documents relating to receipt and / or distribution of these gifts and proof / confirmation of customers for having received gifts and trade scheme amounts (from SPAs) are not available with the Unit. (iii) However, the accounting of these sale promotion expenses in the books of account of the Unit had no impact on the net profit of the Unit as the Unit is entitled to only fixed manufacturing margin of ` 281.90Lac for the year ended March 31, 2016 as per the agreement stated above which is actually represented by way of net profit earned from manufacture and sale of Vodka and whisky by the Unit as stated in note 27(14) i.e. instead of sale promotion expenses, the trade mark license & marketing fee expenses would have been accounted for in the books of account of the Unit resulting in no impact on net profit earned by the Unit. (H) We further report that, without considering items mentioned at 4 (A), (B) (i) to (v) and 4(D)to 4(F) above, the possible effects of which could not be determined, had the observations made by us in paragraphs 4(B) (vi), and 4(C & G) above been considered, the loss for the year would have been ` 50,524.20Lac (as against the reported loss of ` 896.40Lac), negative balance of Reserves and Surplus in Note 2 would have been ` 69,299.77Lac (as against the reported negative figure of ` 19,671.95 Lac), current assets would have been ` 13,246.68Lac (as against the reported figure of ` 18,048.95Lac), debit balance of inter-unit balances in Note 17 would have been ` 1,026.73Lac (as against the reported figure of ` 1,029.36Lac), current liabilities would have been ` 83,451.32 Lac (as against the reported figure of ` 35,874.78Lac), long-term borrowings would have been ` 2,971.75Lac (as against the reported figure of ` 5,722.74Lac), gross revenue (including other income) would have been ` 27,835.98Lac (as against the reported figure of ` 36,536.58 Lac), trade mark license and marketing fees expense would have been ` 1,137.35 Lac (as against the reported figure of ` 148.37 Lac), discount and sales promotion expense would have been ` 86.32Lac (as against the reported figure of ` 1,075.30Lac) and total expenses (including excise-duty) for the year would have been ` 78,641.76Lac (as against the reported figure of ` 37,432.64Lac). (I) In view of the significance of our audit observations in paragraphs 1 and 4(A) to (H) above and especially in view of the fact that the state of affairs would change substantially in case the Statement of Profit and Loss for the financial year 1992-93 and Balance Sheet as on 31st March, 2016 of Steel Unit of the holding Company were included, which we are unable to quantify, we are of the opinion, the said consolidated financial statements DO NOT give a true and fair view: (a) In the case of the consolidated Balance Sheet, of the state of affairs of the Group as at 31st March, 2016, (b) in the case of consolidated Statement of Profit and Loss, of the loss for the year ended 31st March, 2016 and (c) in the case of consolidated Cash Flow Statement, of the cash flows for the year ended on that date. (5) Emphasis of Matter (i) The holding Company has not deposited unpaid unclaimed public deposits and interest accrued thereon amounting to ` 9.72Lac with Investor Education & Protection Fund. Further, unpaid amount of such unclaimed debentures, if any, as on 31.03.2016 has not been identified. {Note 27(26)}. (ii) Cars costing ` 82.62Lac (Previous Year `96.26Lac) purchased in the name of employees / others are yet to be transferred to the name of the holding Company. However, these persons have given disclaimer in favor of the Company. {Refer Foot-Note D of Note 10}. (iii) We invite attention to Note 27(28) regarding entering into agreements to sell 215 (previous year 215) residential quarters, Note 27(29)(a) regarding entering into lease, including perpetual lease, agreements for 27,954.86 Sq. Meters of factory land & buildings and Note 27(29)(b) regarding entering into perpetual lease agreement for 1584 Sq. Mtrs. of factory land for which the approvals of financial institutions, to whom these quarters and factory land & buildings are mortgaged, were not obtained.
MODI INDUSTRIES LIMITED (91) (iv) We invite attention to Foot-notes 5, 9 & 10 of Note 27(32) regarding post-facto approval of shareholders to be obtained by the holding Company in the ensuing annual general meeting for leasing agreements for premises and plant and machinery entered into with related parties whereas all these agreements requires prior approval of shareholders. (v) We invite attention to Note 27(17)(a) regarding reasons for not making provision for disputed Sales-tax demand of `2,455.78Lac excluding interest (Previous year ` 2,455.78Lac) of closed Vanaspati Unit of the holding Company. (vi) We invite attention to Note 27(30)(a), (c), (e) and (f) regarding demands of recovery charges of ` 2,659.71Lac (Previous Year ` 2,659.71Lac) on account of non-payment of cane price / commission / interest as the same are disputed by the holding Company / obtained stay order as stated therein. We also invite attention to Note 27(30)(f) regarding issue of notification by the State Government for waiver off interest for sugar season 2013-14 amounting to ` 2,138.58Lac which is still awaited. (vii) We invite attention to Note 27(27)(a) regarding provision made for diminution in market value of one of its long-term investment in a group Company of ` 148.80Lac for the year ended March 31, 2016 in view of the reasons stated in the Note and is disclosed in the Consolidated Statement of Profit and Loss as an ‘Exceptional Item’. Our opinion is not qualified in respect of the matters mentioned in paragraph 5 above. (6) Report on Other Legal and Regulatory Requirements As required by section 143(3) of the Act, we report that: a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit except in respect of Steel Unit as mentioned above and the matters referred in paragraphs 4(F) & (G) above. In case of Steel Unit, no details, information and explanations are available for the opening and closing assets and liabilities as on 1st April, 2015 and 31st March, 2016 respectively and for contingent liabilities and additional information etc. as on 1st April, 2015 and 31st March, 2016 in view of non-incorporation of: (i) the financial statements of Steel Unit for 1992-93 and (ii) Balance Sheets for the years 1993-94 to 2015-16 as stated in note 27(4)(c).{(See paragraphs 1 and 4(A) above}; b. In our opinion, proper books of accounts as required by law have been kept by the Company so far as appears from our examination of those books except: (i) in respect of Steel Unit, where audited balances of opening and closing assets, liabilities, contingent liabilities and additional information etc. as on 1st April, 2015 and 31st March, 2016 respectively were not available and consequently not incorporated in the books of account and (ii) for the effects of other matters described in the `Basis for Adverse Opinion’ paragraph 4 above. c. The Balance Sheet referred to in this report is in agreement with the books of accounts of all units, subsidiaries and accounting centres taken together, other than Steel Unit, as on 31st March, 2016 as consolidated with the Balance Sheet of Steel Unit as stated in Note 27(4) (c) & (d) of the standalone financial statements and hence is not in agreement with the books of account of the Company as a whole. Further, the Cash Flow Statement for the year ended on that date, which does not include adjustments for Cash Flows from investing / financing activities and changes in assets and liabilities in view of non-availability of audited Balance Sheet of Steel Unit as on 31st March, 2015 & 31st March, 2016, is also not in agreement with the books of account. (Refer foot-note 2 of consolidated cash flow statement). Except for non-incorporation of Statement of profit and loss of Steel Unit for the year 1992-93, the Consolidated Statement of Profit and Loss is in agreement with the books of accounts. d. Subject to our observations in paragraph 4(B) above, in our opinion, the Statement of Profit and Loss and Balance Sheet, so far as they relate to the remaining units i.e. other than Steel Unit, comply with the requirements of the Accounting Standards referred to in Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. However, in view of non-availability and consequently non-incorporation of audited (i) opening and closing balances as on 1st April, 2015 and 31st March, 2016 respectively of assets, liabilities, contingent liabilities and other additional information etc. and (ii) Statement of Profit and Loss for 1992-93 of Steel Unit {Refer Paragraph 4(A) above}, the aforesaid consolidated financial statements do not comply with the requirements of Accounting Standards referred to in Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 as a whole. e. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid consolidated financial statements, so far as they relate to the remaining Units i.e. other than Steel Unit, give the information required by the Act in the manner so required except for non-disclosure of information relating to micro, small and medium enterprises {Refer note 27(12)}. In the case of Steel Unit, in view of non-incorporation of Balance Sheets of Steel unit as on 31st March, 2016 and 31st March, 2015 on account of non-availability and consequently non-incorporation of audited opening balances as on 1st April, 2015 and 1st April, 2014 respectively of assets, liabilities, contingent liabilities and other additional information etc., the consolidated financial statements do not give the information required by the Companies Act, 2013 in the manner so required as a whole. {Refer Note 27(4)}. f. The matters described in the Basis for Adverse Opinion paragraph above, in our opinion, can have an adverse effect on the functioning of the holding Company. g. On the basis of the written representations received from the directors of the holding Company and its subsidiaries as on 31st March, 2016, taken on record by the Board of Directors, none of the directors is disqualified, as on 31st March, 2016, from being appointed as a director in terms of Section 164(2) of the Act. Further, the holding Company was legally advised earlier that provisions of Section 274(1)(g) of the Companies Act, 1956, which corresponds to section 164(2) of the Companies Act, 2013, are prospective in nature and the defaults made by it prior to 13th December, 2000, for non-payment of deposits/interest on deposits on due dates and non-redemption of debentures on due dates, are not covered by Section 274(1)(g) of the Companies Act, 1956, on which we have relied upon. h. The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the ‘Basis for Adverse Opinion’ paragraph above.
(92) MODI INDUSTRIES LIMITED i. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to Annexure 1. j. With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us: i. The Company has various pending litigations which could impact its financial position and the same has been suitably disclosed under contingent liability / notes to accounts under Note 27. ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses. iii. An amount of ` 9.72Lac being unclaimed deposits and interest accrued till date of maturity of deposit are yet to be transferred to the Investor Education and Protection Fund by the Company. Amount of unclaimed debentures and interest accrued till maturity is not yet quantified by the management. (7) Other Matter We did not audit the financial statements of both the subsidiaries, whose financial statements reflect total assets of ` 51.01Lac (Previous year ` 62.73Lac) as at 31st March, 2016, the total revenue of ` 2.28Lac (Previous year ` 2.19Lac) and cash outflows (net) amounting ` 4.92Lac (Previous year inflows of ` 0.46Lac) for the year then ended. These financial statements and other financial information have been audited by other auditor whose reports have been furnished to us and our opinion is based solely on the report of other auditor.
for P.R. MEHRA & CO., CHARTERED ACCOUNTANTS ( Regn. No. 000051N )
Ramesh Chand Goyal PLACE: DELHI PARTNER DATED: 22nd August, 2016 Membership No.012628
Annexure 1 to the Independent Auditor’s Report Referred to in paragraph 2(g) under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date on the consolidated financial statements of Modi Industries limited. Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”) We have audited the internal financial controls over financial reporting of Mod i Industries Limited (hereinafter referred to as “the Holding Company”) as of March 31, 2016 In conjunction with our audit of the consolidated financial statements of the Group for the year ended on that date. 1. Management’s Responsibility for Internal Financial Controls The respective Board of Directors of the holding Company and its subsidiaries, which are companies incorporated in India, are responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the holding Company and its subsidiary companies incorporated in India considering the essential components of internal controls stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to respective Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act. 2. Auditors’ Responsibility Our responsibility is to express an opinion on the Holding Company’s and its subsidiary companies internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to
MODI INDUSTRIES LIMITED (93) fraud or error. We believe that the audit evidence we have obtained and the audit evidence obtained by the other auditor in terms of their report referred in the ‘Other Matters’ paragraph below is sufficient and appropriate to provide a basis for our audit opinion on the holding Company’s and its subsidiary companies internal financial controls system over financial reporting. 3. Meaning of Internal Financial Controls over Financial Reporting A Company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. 4. Inherent Limitations of Internal Financial Controls over Financial Reporting Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 5. Disclaimer of opinion According to the information and explanations given to us, the holding Company has neither established nor evaluated its internal financial controls over financial reporting on criteria based on or considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. Mainly because of this reason and also our comments in paragraph 4 of statutory audit report of even date on consolidated financial statements of the Group, we are unable to obtain sufficient appropriate audit evidence to provide a basis for our opinion whether the holding Company had adequate internal financial controls over financial reporting and whether such internal financial controls were operating effectively as at March 31, 2016. However, according to the information and explanations given to us and based on our audit of the financial statements of the holding Company, the following material weaknesses have been noticed as at March 31, 2016 for which remedial action by the management is yet to be initiated: a) No physical verification of fixed assets has been conducted by the Management since 1989 in Sugar, Steel and Distillery Units and of Corporate Office and since 2001-02 in respect of other units of the holding Company. Fixed asset register of the holding Company needs to be updated for: (i) locations in case of furniture and fixture and (ii) recording of additions / deletions of certain previous years. b) The inventory of stores and spare-parts of all units of the holding Company during the year and inventory of the closed Steel Unit since the year 1992-93 has not been physically verified by the management. c) The books of accounts, vouchers and other documents of the Steel Unit of the holding Company for 1992-93 were not made available to us and consequently audit could not be conducted in respect of the same. {Note 27(4)}. Therefore, as stated in Paragraph 1 above of audit report of even date, the attached Consolidate Balance Sheet, Consolidated Statement of Profit and Loss and Consolidated Cash Flow Statement does not include: (a) the financial data / impact of working results and of declaration of closure / post-closure transactions, which includes realization of depot sales / dues from debtors, provision / payment of final dues of employees and payments to various parties and manufacturing / personnel / administration expenses etc., of the Steel Unit of the holding Company for the year 1992-93 during which the Unit had operated for ten months the exclusion of which, in our opinion, substantially impairs the presentation of above consolidated financial statements of the Group and (b) impact on assets, liabilities and cash flows on account of non-incorporation of transactions / balance sheets for the years 1993-94 to 2015-16 as stated in Note27(4)(c). d) Accounting treatment given to the manufacture and sale of Vodka and whisky by the Distillery unit (“Unit”) of holding Company in its books of account is not in accordance with the opinion given by the Expert Advisory Committee of the Institute of Chartered Accountants of India even though the same has no impact on the net profit of the Unit for the year in view of the reasons stated in Note 27(16). In our opinion, the accounting treatment suggested by the Expert Advisory Committee of the Institute of Chartered Accountants of India for accounting only manufacturing margin in the books of account of the Unit should be followed and accordingly, all expenses, revenue, assets and liabilities related to the manufacture and sale of Vodka and whisky by the Unit should not be recorded in the books of account of the Unit. e) As stated by the management in Note 27(36), the Electrode Unit of the holding Company has incurred expenditure for advertisement of products amounting to ` 115.64Lac (previous year ` 153.12Lac) by way of advertisement in newspapers through agents. In the
(94) MODI INDUSTRIES LIMITED absence of sufficient appropriate audit evidence regarding prevailing market rates / charges paid to newspaper publishers by agents, we are unable to verify and express our opinion on these rates/charges paid by the Company to agents.Observations & suggestions of Internal Auditors in this regard need to be also looked into & implemented. f) (i) As stated in paragraph 4(G)(i) of our main report, expenses incurred by the holding Company i.e. bottler in connection with the promotion of the products shall be reimbursed by MI Spirit, against the debit notes raised by the bottler. We note that the Unit has accounted for sale promotion expenses {cost of gift items ` 805.58Lac and trade scheme amount `183.40Lac which is claimed as reimbursement from the Unit by sale promotion agents (SPAs) on secondary sales i.e. on sale made by the State corporations to their customers. In our opinion, the accounting for these expenses in the books of account of the Unit is not proper since the same is to be debited to MI Spirit as per the agreement and also in view of the opinion given by the Expert advisory Committee of the Institute of Chartered accountants of India on the similar arrangement as stated in paragraph (d) above, these expenses should not be accounted for in the books of account of the Unit. (ii) Further, we also could not verify / audit these expenses as the sale promotion policy, records / supporting documents relating to receipt and / or distribution of these gifts and proof / confirmation of customers for having received gifts and trade scheme amounts (from SPAs) are not available with the Unit. g) Confirmation of Debit / Credit balances of debtors / creditors are not being obtained by the holding Company since long. Impact on the consolidated financial statements is not ascertainable. We have considered the disclaimer above in determining the nature, timing and extent of audit tests applied in our audit of the consolidated financial statements of the Group and the disclaimer has affected our opinion on the consolidated financial statements of the Group and we have issued an adverse opinion on the consolidated financial statements. Other Matters Our aforesaid report under section 143(3)(i) of the Act on the adequacy and operating effectiveness of the internal financial controls over financial reporting insofar as it relates to both the subsidiary companies, which are incorporated in India, is based on the corresponding reports of the auditor of the subsidiary companies. for P.R. MEHRA & CO., CHARTERED ACCOUNTANTS ( Regn. No. 000051N )
Ramesh Chand Goyal Place : Delhi PARTNER Dated : 22nd August, 2016 Membership No.012628
MODI INDUSTRIES LIMITED (95) Consolidated Balance Sheet as at 31st March, 2016
(` in Lac)
Particulars Note As at As at no. 31.03.2016 31.03.2015
I EQUITY AND LIABILITIES : (1) Shareholders’ funds: (a) Share Capital 1 371.66 371.42 (b) Reserves & Surplus 2 (19,671.95) (18,775.57) (19,300.29) (18,404.15) (2) Minority interests 0.06 0.08 (3) Non-current liabilities : (a) Long term borrowings 3 5,722.74 5,279.61 (b) Other long term liabilities 4 1,627.05 1,574.18 (c) Long term provisions 5 965.37 1,023.91 8,315.16 7,877.70 (4) Current liabilities : (a) Short term borrowings 6 1,828.97 1,880.53 (b) Trade payables 7 21,122.01 23,654.35 (c) Other current liabilities 8 12,282.41 12,878.77 (d) Short term provisions 9 641.39 679.90 35,874.78 39,093.55 TOTAL 24,889.71 28,567.18 II ASSETS (1) Non-current assets (a) Fixed assets : i) Tangible assets 10 5,897.95 6,165.96 ii) Intangible assets 11 1.58 5.20 iii) Capital work-in progress 41.37 38.06 (b) Non-current investments 12 640.84 801.58 (c) Long term loans and advances 13 252.12 225.78 (d) Other non-current assets (Fixed Tangible) 10 (foot note G) 6.90 - 6,840.76 7,236.58 (2) Current assets (a) Inventories 14 6,018.66 7,441.79 (b) Trade receivables 15 5,635.77 6,010.63 (c) Cash and bank balances:- (i) Cash and Cash equivalents 16(i) 605.00 1,350.65 (ii) Other bank balances 16(ii) 1,305.78 1,247.10 (d) Short term loans and advances 17 2,779.14 2,821.93 (e) Other current assets 18 1,704.60 2,458.50
18,048.95 21,330.60 TOTAL 24,889.71 28,567.18 Accounting policies and other notes to financial statements 26 & 27
As per our report of even date attached. For Modi Industries Limited For P. R. Mehra & Co., Chartered Accountants Mahendra Kumar Modi Rakesh Kumar Modi Manish Kumar Modi Abhishek Modi (Regn.No.000051N) (DIN 00014594) (DIN 00022386) (DIN 00030036) (DIN 00002798) Managing Director Director Director Director Ramesh Chand Goyal Partner N.P. Bansal V P Gupta Membership No. 012628 (PAN AAOPB7869G) (FCS-6380) Place : Delhi Chief Financial Officer Company Secretary Date : 22nd August, 2016.
(96) MODI INDUSTRIES LIMITED Consolidated Statement of Profit and Loss for the year ended 31st March, 2016 (` in Lac) Particulars Note For the For the no. year ended year ended 31.03.2016 31.03.2015 I Revenue from operations 19 35,735.22 36,003.85 Less:- Excise duty 4,862.59 2,224.01 30,872.63 33,779.84 II Other income 20 552.13 642.51 III Total Revenue ( I + II ) 31,424.76 34,422.35
IV Expenses:- Cost of materials consumed 19,119.47 23,666.34 Purchases of stock-in-trade 76.35 66.09 Changes in inventories of finished goods, 21 1,225.25 2,075.19 work-in-progress and stock-in-trade Employee benefits expense 22 3,348.52 3,337.36 Finance costs 23 644.04 1,228.39 Depreciation and amortization expense 10, 11 334.51 435.92 Other expenses 24 7,673.12 6,117.51 Total expenses 32,421.26 36,926.80 V Loss before exceptional and 996.50 2,504.45 extra-ordinary items and tax ( IV-III ) VI Exceptional items:- (a) Refund of Commission on (27)(30)(i) (249.18) - Sugar Cane Purchase for 2012-13 (b) Provision for Dimunition in the value of (27)(27) 148.80 - Long Term Investment
VII Loss before extra-ordinary items 896.12 2,504.45 and tax ( V+VI ) VIII Extra-ordinary items -- IX Loss before tax (VII + VIII) 896.12 2,504.45 X Tax expenses:- -- (1) - Current tax 0.24 0.33 (1) - Earlier year tax 0.04 (0.05) XI Loss for the period (IX + X) 896.40 2,504.73 Minority interest (0.02) - 896.38 - XII Loss from continuing operations 692.68 2,373.15 XIII Loss from discontinuing operations 27(4)(e) 203.70 131.58 XIV Tax expense of discontinuing operations -- XV Loss from discontinuing operations (after Tax) (XIII + XIV) 203.70 131.58 XVI Loss for the period (XII+XV) 896.38 2,504.73 XVII Basic /Diluted Earnings per equity share of ` 10 each (in Rupees) 27(42) (27.27) (75.87) Accounting policies and other notes to financial statements 26 & 27
As per our report of even date attached. For Modi Industries Limited For P. R. Mehra & Co., Chartered Accountants Mahendra Kumar Modi Rakesh Kumar Modi Manish Kumar Modi Abhishek Modi (Regn.No.000051N) (DIN 00014594) (DIN 00022386) (DIN 00030036) (DIN 00002798) Managing Director Director Director Director Ramesh Chand Goyal Partner N.P. Bansal V P Gupta Membership No. 012628 (PAN AAOPB7869G) (FCS-6380) Place : Delhi Chief Financial Officer Company Secretary Date : 22nd August, 2016.
MODI INDUSTRIES LIMITED (97) Consolidated Cash Flow Statement for the year ended 31st March, 2016. (` in Lac)
Particulars 2015-16 2014-15
A. CASH FLOW FROM OPERATING ACTIVITES : Profit/(Loss) before Tax (896.10) (2,505.45) Less: Adjustment for : i) Interest Income 175.39 175.26 ii) Profit on Sale of Fixed Assets 5.01 10.12 iii) Profit on assets held for dosposal 4.13 - iv) Excess Provision written back 24.11 16.85 v) Unclaimed credit balances W/back 38.42 22.37 vi) Amount written back 17.89 3.21 vii) Depreciation written back 1.96 4.17 viii) Dividend Income 52.50 42.00 319.41 273.98 Add: Adjustments for : (1,215.51) (2,778.43) i) Depreciation 334.51 435.92 ii) Assets written off/Loss on sale of Assets/Stores 10.13 4.29 iii) Interest Expenses 644.04 1,228.39 iv) Provision for Doubtful Debts & Advances 199.37 119.01 v) Amounts/Claims/Bad Debts written off (Net of provisions) 8.64 9.46 vi) Provision for obsoleteRaw Material, spare-parts & stores 26.15 5.36 vii) Provision for Dimunition in the value of Long Term Investment 160.74 - 1,383.58 1,802.43 Operating Profit/(Loss) before Working Capital Changes 168.07 (976.00) Adjustments for : Trade Receivables 213.34 (1,049.47) Inventories 1,396.76 1,848.34 Trade Payable (2,645.57) 5,294.99 Loans/Advances and other assets 799.23 (1,915.91) Other bank balances (58.68) (98.25) Cash Generated from Operations (126.88) 3,103.70 Interest Paid (Foot-note 1 below) (65.93) (1,338.98) income tax paid/ refund ( Net ) (26.15) (38.29) Net Cash from Operating Activities (A) (218.96) 1,726.43
(B) CASH FLOW FROM INVESTING ACTIVITIES : Purchase of Fixed Assets (124.91) (71.87) Sale of Fixed Assets 26.77 13.16 Interest Received 193.29 103.59 Dividend Received 52.50 42.00 Net Cash Flow from Investing Activities (B) 147.65 86.88
(98) MODI INDUSTRIES LIMITED (` in Lac) Particulars 2015-16 2014-15
(C) CASH FLOW FROM FINANCING ACTIVITIES :
Secured term borrowings from bank (2.17) (3.93)
Secured borrowings from banks 67.81 45.89
Unsecured Fixed Deposits paid (0.17) (0.62)
Unsecured borrowings from others (net) (80.03) (153.90)
Interset paid on borrowings (619.84) (715.85)
Unsecured Debentures Paid (2.11) -
Net Cash from Financing Activities (C) (636.51) (828.41)
*Inter Unit Balances (Net) (D) (Foot-note 2 below) (37.83) (37.99)
Net Increase/(decrease) in cash and Cash Equivalents (A+B+C+D) (745.65) 946.91
Opening Cash and Cash Equivalents 1,350.65 403.74
Closing Cash and Cash Equivalents 605.00 1,350.65
FOOT NOTES :
1. Interest credited to accounts of suppliers, C & F agents and dealers etc. is treated as paid.
2. In view of non availability of audited balance sheet as on 31.03.2016 and 31.03.2015 of Steel Unit, cash flow from investing/financing activities and changes in current assets & liabilities of steel unit are not included in the Cash Flow Statement except for inclusion of net outflow of ` 37.83 Lac on account of net increse in inter unit balances appearing in Note 17 i.e. Short term loans & advances {Refer Note 27(4)}.
3. Figures in brackets represents outflows.
4. Previous Year figures have been rearranged/regrouped wherever considered necessary.
As per our report of even date attached. For Modi Industries Limited For P. R. Mehra & Co., Chartered Accountants Mahendra Kumar Modi Rakesh Kumar Modi Manish Kumar Modi Abhishek Modi (Regn.No.000051N) (DIN 00014594) (DIN 00022386) (DIN 00030036) (DIN 00002798) Managing Director Director Director Director Ramesh Chand Goyal Partner N.P. Bansal V P Gupta Membership No. 012628 (PAN AAOPB7869G) (FCS-6380) Place : Delhi Chief Financial Officer Company Secretary Date : 22nd August, 2016.
MODI INDUSTRIES LIMITED (99) Notes : Forming part of the Consolidated Financial Statements for the year ended 31st March, 2016
Note no.1 : SHARE CAPITAL (` in Lac)
Particulars As at As at 31.03.2016 31.03.2015
Authorised:- 40,00,000 Equity shares of ` 10/- each 400.00 400.00 1,00,000 15% Redeemable cumulative 100.00 100.00 Preference shares of ` 100/- each 500.00 500.00
Issued, subscribed and paid up:- 33,09,214 Equity shares of ` 10/- each fully paid-up 330.92 330.92 Less: Calls unpaid (Directors and Officers) - - Less: Calls unpaid (others)* - 0.24
330.92 330.68 40,741 15% Redeemable cumulative 40.74 40.74 Preference shares of ` 100/- each fully paid-up
TOTAL 371.66 371.42
* Recovered by way of adjustment from interest payable on debentures held by these shareholders
Foot notes: (1) (a) Details of equity shares held by each shareholder holding more than 5 percent shares as at the end of financial year are as under: As at 31.03.2016 As at 31.03.2015 Name of share holder No.of shares Percentage No.of Percentage held shares held
(i) Status Mark Finvest Limited 227844 6.89 227844 6.89 (ii) K K Modi Investment & Financial Services Pvt. Ltd. 231751 7.00 231751 7.00
(b) Details of preference shares held by each shareholder holding more than 5 percent shares as at the end of financial year are as under: As at 31.03.2016 As at 31.03.2015
Name of share holder No.of shares Percentage No.of Percentage held shares held
(i) ICICI Bank 7794 19.13 7794 19.13 (ii) The oriental insurance company limited 6550 16.08 6550 16.08 (iii) The new india assurance company limited 13624 33.44 13624 33.44 (iv) The united india insurance company limited 4093 10.05 4093 10.05 (v) General insurance corporation of india 3560 8.74 3560 8.74 (vi) National insurance company limited 4912 12.06 4912 12.06
(2) (a) Cumulative Preference Shares were due for redemption on 31st December, 2010. The company moved Misc. Application (MA) u/s 22(3) of the SICA before Hon’ble BIFR, whereby it had sought extension and suspension of obligation in relation to the 15% Preference Shares concerning Preference Shareholders for two years. The Hon’ble BIFR vide its order dated 18th January, 2011 dismissed the application of the Company. Consequent to the order, the company had written letters to the Institutional Preference Shareholders for settlement and redemption of Preference Shares. Further, negotiations are pending and preference shares are overdue for redemption as on 31st March, 2016.
(b) Arrears of dividend on Cumulative Preference Shares amounts to ` 154.28 Lac (upto 31st March, 2015 ` 148.17 Lac).
(100) MODI INDUSTRIES LIMITED Note no. 2 : RESERVES & SURPLUS (` in Lac) Sl.No. Particulars Opening Balance Addition Deduction Closing Balance (1) Capital Reserve 459.34 - - 459.34 (2) Capital Redemption Reserve 25.11 - - 25.11 (3) Shares Premium Account 22.57 - - 22.57 (4) Debenture Redemption Reserve 113.00 - - 113.00 (5) Revaluation Reserve 2,012.51 - - 2,012.51 (6) Share options outstanding accounts - - - - (7) General Reserve 22.91 22.91 (8) Other Reserves/Funds:- -Storage fund for Molasses Account 10.01 5.29 - 15.30 -Statutory Reserves 1.09 1.09 (9) Surplus i.e. balance in Statement of Profit & Loss (21,442.11) (896.38) 5.29 (22,343.78) TOTAL (18,775.57) (891.09) 5.29 (19,671.95) Previous year (16,162.74) (2,500.00) 112.83 (18,775.57)
Foot-note:- 1. Storage fund for Molasses (` 5.29 lacs (previous year ` 4.73 lacs) is created @ ` 1.50 per Qtl. of Molasses sold as per the provision of “ The Molasses control (Regulation of fund for erection of storage facilities) order, 1976” and is to be utilised for construction or erection of storage facilities for Molasses. 2. Deductions in previous year includes ` 108.10 Lacs being depreciation on assets whose life expired as on 31.03.2014 as per schedule II of the Companies Act, 2013.
Note no. 3 : LONG TERM BORROWINGS ( ` in Lac) Particulars As at As at 31.03.2016 31.03.2015 Secured:- Bonds/debentures -- Term loans from banks (see-foot note below ) 8.10 10.27 Term loans from others -- Loans and advances from related parties -- Unsecured:- Bonds/debentures - - Term loans from banks - - Term loans from others 2,825.99 2,193.63 Deposits -- Loans and advances from related parties -Moderate Leasing & Capital Finance Service Ltd. 2,888.65 3,075.71 Longs term maturities of finance lease obligations - -
TOTAL 5,722.74 5,279.61
Foot-note:- Secured by hypothecation of vehicles and is repayable in monthly installments. There are no defaults as on 31st March, 2016.
MODI INDUSTRIES LIMITED (101) Note no. 4 : OTHER LONG TERM LIABILITIES Note no. 6 : (Contd.) (` in Lac) (` in Lac)
Particulars As at As at Particulars As at As at 31.03.2016 31.03.2015 31.03.2016 31.03.2015 Trade payable - - Unsecured:- Loans repayable on demand:- Others: -from banks - - Security received against houses 890.28 838.03 -from others - - Security received from others 226.03 229.75 Loans and advances from related parties:- Advance received against houses 504.50 504.50 -Moderte Leasing & Capital Services Ltd. - 170.00 {Note 27 (28)} -Weld Excel India Limited 45.00 - Other liabilities 6.24 1.90 Deposits - - Other loans and advances - - TOTAL 1,627.05 1,574.18 TOTAL 1,828.97 1,880.53 Note no. 5 : LONG-TERM PROVISIONS Foot-notes:- ( ` in Lac) 1 Cash credit of ` 1498.19 Lac ( including interest accrued and due Particulars As at As at of ` 17.61 Lac ) is secured by hypothecation of Raw Materials, 31.03.2016 31.03.2015 Stock in Progress, Finished Goods, Stores and Spares and Book Debts and guaranteed by a Managing Director.{ Refer note 27(5) Provision for employee benefits:- (i) (a)}. Provision for gratuity:- 2 Cash credit of ` 58.16 Lac from Allahabad Bank is in default since 1996 and ` 1440.03 Lac from PNB is in default since 1992. As per last balance sheet 936.61 1,038.91 Interest payable on cash credit has not been paid since then. Add: Provided during the year (11.33) (77.39) {Refer note 27(16) (c to e) and note 27 (5) (i) (a)} Less: Paid during the year 40.77 24.91 Note no. 7: TRADE PAYABLES Sub total (A) 884.51 936.61 ( ` in Lac) Particulars As at As at Provision for leave encashment:- 31.03.2016 31.03.2015 As per last balance sheet 87.30 103.13 Purchase of raw material and store 20,460.13 22,957.20 Add: Provided during the year 6.04 (2.46) {Note 27 (12)} Less: Paid during the year 12.48 13.37 Customers/ Agents for purchase of goods 661.88 697.15
Sub total (B) 80.86 87.30 TOTAL 21,122.01 23,654.35
TOTAL (A+B) 965.37 1,023.91 Note no.8 : OTHER CURRENT LIABILITIES ( ` in Lac) Note no. 6 : SHORT TERM BORROWINGS Particulars As at As at ( ` in Lac) 31.03.2016 31.03.2015 Particulars As at As at Current maturities of long-term 31.03.2016 31.03.2015 debts ( unsecured ) Secured:- -From related parties:- Loans repayable on demand:- - A to Z Holding Pvt. Ltd. 24.89 24.89 - Moderate Leasing & Capital -from banks Services Ltd. - 400.33 -Cash credit (including interest 1,498.19 1,498.19 -From others - - accrued)(see-foot note below) Current maturities of long-term debts -overdraft from bank against 285.78 212.34 ( secured ) -From banks 2.42 8.05 pledge of FDR’s -From other parties (see foot-note 1) 1,506.85 1,506.85 -from others - - Current maturities of finance lease Loans and advances from related parties - - obligations (see foot-note 2) 79.06 120.99 Other loans and advances - - Deferred credits {Note 27 (34)} 35.10 35.11
(102) MODI INDUSTRIES LIMITED Note no.8 : (Contd.) (b) Balance outstanding in Fixed deposits and interest (` in Lac) payable on fixed deposits has not been paid since 1989- 90 {Also refer Note No. 27 (26)(b)}. Particulars As at As at (4) Debentures:- 31.03.2016 31.03.2015 (a) (i) 2,26,105-12.5% Mortgage Debentures (Non- Convertible part of ` 200/- each) redeemable in three Interest accrued but not due on yearly instalments of ` 65.00, ` 65.00 and ` 70.00 borrowings (unsecured) 61.45 61.45 respectively commencing from the expiry of seventh Interest accrued but not due on year from the date of allotment i.e. 29th February, borrowings (secured) 0.09 0.11 1988 and due for payment. Interest not paid since 29th Interest accrued and due on February, 1988. borrowings ( secured ) 1,707.46 1,707.46 (ii) 30,000-15% Mortgage Debentures of ` 100/- each Interest accrued and due on redeemable at 5% premium on the expiry of seventh borrowings (unsecured) year from the date of allotment i.e. 18th December -from banks - - 1987 and due for payment. Interest not paid since 1987- 88. -from others 50.95 72.71 (iii) 5,300-15% Mortgage Debentures of ` 1000/- each Income received in advances 0.07 0.13 redeemable upto 20th August, 1990 and due for Unpaid matured deposits and interest payment. 1,000 Debentures redeemed during the year accrued thereon( unsecured):- 1998-99 for which discharged debenture certificates (see foot-note 3) not yet received. Interest not paid since 1987- 88. -Fixed deposits 64.19 64.36 (b) The above debentures are secured by Joint Mortgage of -Interest accrued thereon 280.85 280.88 all fixed assets present and future by hypothecation of the said assets and by deposit of title deeds relating to Unpaid matured debentures and company’s immovable properties, floating charges on all interest accrued thereon (secured):- movable/current assets, other than assets referred in foot (see foot-note 4) notes1(b,c,d) and foot note 1 of Note 6. -Debentures (Net off calls in arrears) 535.21 537.32 -Interest accrued thereon 3,032.58 3,052.50 Note no. 9 : SHORT-TERM PROVISIONS Other Payable:- (` in Lac) Employees dues 963.02 839.27 Statutory liabilities 2,048.20 2,442.10 Particulars As at As at Security received from others 76.07 75.77 31.03.2016 31.03.2015 Other liabilities 1,813.95 1,648.49 Provision for employee benefits:- Total 12,282.41 12,878.77 Provision for gratuity:- Notes: As per last balance sheet 284.70 277.52 (1) Others:- Add: Provided during the year 115.09 108.49 (a) Loans aggregating to ` 1377.87 Lac (IDBI ` 627.74 Lac, Less: Paid during the year 122.96 101.31 ICICI ` 235.00 Lac, IFCI ` 287.66 Lac, LIC ` 138.97 Lac, GIC and its subsidiaries ` 88.50 Lac) are secured against Sub total (A) 276.83 284.70 securities as mentioned in 3(b) below. {Refer Note Provision for leave encashment:- 27(5)(i)(b) and 27(5)(ii)}. (b) Loan of ` 8.08 Lac from Government of Uttar Pradesh As per last balance sheet 11.09 9.60 under the Industrial Subsidised Housing Scheme is Add: Provided during the year 3.80 8.87 st Mortgage of Land and tenaments secured by 1 Less: Paid during the year 6.15 7.38 constructed under the Scheme.Details of default not available. Sub total (B) 8.74 11.09 c) Loan from IDBI under Technical Development Fund Others:- Scheme amounting to ` 74.70 Lac is secured against Electrolyser and Copper Electrodes Machine.{Refer Note Provision for Incentive: 27(5)(i)(b)(i)}. As per last balance sheet 32.47 26.09 (d) Loan taken under Equipment Finance Scheme Add: Provided during the year 9.23 7.54 amounting to ` 46.20 Lac is secured against Effluent treatment plant.{ Refer Note 27(5)(i)(b)(ii)} and loan Less: Paid during the year 3.28 1.16 repayment is in default prior to year 1996 and interest Sub total 38.42 32.47 payable has not been paid since then. Provision for excise duty 317.16 351.11 (2) Finance lease rent of ` 79.06 Lac 1st October 2013, are over due. Provision for income tax 0.24 0.53 (3) Fixed deposits:- Sub total (C) 355.82 384.11 (a) Fixed deposits guaranted by managing directors ` 22.98 TOTAL (A+B+C) 641.39 679.90 Lac (Previous year ` 22.98 Lac )
MODI INDUSTRIES LIMITED (103) (104) MODI INDUSTRIES LIMITED
5.20 Note no. 12 : NON CURRENT INVESTMENT Note no. 12 (Contd.) (` in Lac) (` in Lac) Particulars As at As at Particulars As at As at 31.03.2016 31.03.2015 31.03.2016 31.03.2015
Trade investments --Less: Provision for diminution in Value - Other investments 4 fully paid-up shares of ` 10/-each in (a) Investment in Equity Instruments:- Mukund Limited. 0.01 0.01 Unquoted:- (b) Investment in preference shares:- 10,50,000 fully paid-up shares of (Quoted ) ` 10/-each in Indofil Industries Limited 437.43 437.43 1 fully-paid preference Share of 1,200 partly paid-up shares of ` 10/- ` 10/-each in Mukund Limited - - each in Vital Chemicals Private Limited. Unquoted:- (Transfer refused by the Board-matter 67 Fully paid-up shares of ` 100/- in dispute before the Court). 0.07 0.07 each in Modi Spg. & Wvg. Mills Co. Ltd. 0.07 0.07 86,750 Fully paid-up shares of ` 10/- (c) Investment in Government or trust securities:- each in Modi Spining & weaving Mills (Quoted ) Co.Ltd.{Note(27)(27)(b)} 8.68 8.68 *75551.226 fully-paid Units in U T I Less: Provision for Diminution in value Infrastructure Fund-Growth Plan 25.84 25.84 of Shares (8.68) - Total 640.84 801.58 95,000 Fully paid-up shares of ` 10/- * Corporate lien marked on these infrastructure fund units each in Xerox india Limited 9.50 9.50 # The relevent Share certificate for above shares not yet received and the 40,000 Fully paid-up shares of 10/- each company has applied for duplicate share script. in Modi Hightech India Limited 4.00 4.00 48,000 Fully paid-up shares of ` 10/- Foot Notes: each in Win Medicare Private Limited 4.80 4.80 (1) Carrying amount of quoted 10,000 Fully paid-up shares of ` 10/- investments 306.29 306.29 each in Modigarh Chemicals Pvt. Ltd. 1.00 1.00 (2) Market value of quoted investments 529.68 392.01 20,000 Fully paid-up shares of ` 10/- (3) Carrying amount of unquoted each in Modi Santa Fe India Pvt. Ltd. investments 495.29 495.29 {Note(27)(27)(b)} 2.00 2.00 (4) Aggregate provision for dimunition Less: Provision for Diminution in in value of investments value of Shares (1.56) - { Note 27(27)} 160.73 - 4,000 Fully paid-up shares of ` 10/- each in Bekaert Engg. (India) Pvt. Ltd. {Note(27)(27)(b)} 0.40 0.40 Less: Provision for Diminution in (` in Lac) value of Shares (0.19) - Particulars As at As at 17,350 Fully paid-up shares of ` 100/- 31.03.2016 31.03.2015 each in Rajputana Fertilizers Ltd. - - Capital advances 30.55 - 17,350 Fully paid-up shares of (Unsecured considered good) ` 100/-each in Haryana Distillery Ltd. # - - Less : Allowance for Doubtful 1.90 1.90 1500 Fully paid-up shares of ` 100/- each in Associated Drilling and Services Security Deposits:- Limited. {Note(27)(27)(b)} 1.50 1.50 - Secured, considered good (1.90) (1.90) Less: Provision for Diminution in - Unsecured, considered good - - value of Shares (1.50) - - Related parties: 36.66 36.66 Quoted:- - Others 164.12 166.79 7,00,000 fully paid-up shares of ` 10/- - Doubtful - 1.00 each in Modipon limited. 20.00 20.00 Less Allowance for Doubtful - (1.00) 19,99,960 fully paid-up shares of ` 10/- Loans and advances to related parties - - each in Bihar Sponge Iron limited. Other Loans and Advances:- {Note (27)(27)(a)} 200.00 200.00 (Unsecured, considered good) Less: Provision for Diminution in (a) Prepaid expenses 1.33 2.87 value of Shares (148.80) - (b) Amount recoverable 11.46 11.46 8,00,000 fully paid-up shares of ` 10/- (c) Loans to employees - - each in Modi Rubber Limited. 80.00 80.00 (d) Loans to othersZA 8.00 8.00 62,755 fully paid-up shares of ` 10/- each in Lord Chloro Alkali Limited 6.28 6.28 TOTAL 252.12 225.78
MODI INDUSTRIES LIMITED (105) Note no. 14 : INVENTORIES Note no. 16 (Contd.) (` in Lac) (` in Lac)
Particulars As at As at Particulars As at As at 31.03.2016 31.03.2015 31.03.2016 31.03.2015 (a) Raw materials 146.46 495.93 (c) Fixed deposits with banks (b) Raw materials (in transit ) 220.87 60.65 (Pledged with tender) 46.42 38.74 (d) Fixed Deposits with Banks (c) Work-in-progress 185.42 335.37 (Pledged against overdraft) 310.33 286.51 (d) Finished goods 4,499.71 5,575.71 (e) Balance with banks held (e) Stock-in-trade 1.89 1.19 as margin money against (f) Stores and spare parts 939.95 948.67 guarantees 330.00 313.26 (f) Bank deposits with upto (g) Loose tools 24.36 24.27 12 months maturity 35.88 54.12 TOTAL 6,018.66 7,441.79 (g) Bank deposits with more than 12 months maturity 99.07 91.00 Note no. 15 : TRADE RECEIVABLES (h) Deposits with Bank in-no lien accounts 395.00 395.00 (` in Lac) TOTAL 1,305.78 1,247.10 Particulars As at As at 31.03.2016 31.03.2015 * These FDR’s are in the joint name of Modi Sugar Mills and Sub Inspector, Molasses Excise. Trade receivables outstanding for a period exceeding 6 months:- -Secured, considered good 4.56 4.54 -Unsecured, considered good 677.21 648.06 (` in Lac) -Doubtful 827.89 702.58 Particulars As at As at Less:- 31.03.2016 31.03.2015 Allowance for bad and doubtful debts (827.89) (702.58) (a) Loans and advances to related parties:- Other Debts:- (i) -Secured considered good - - -Secured, considered good 91.08 93.79 (ii) -Unsecured considered good -Unsecured, considered good 4,862.92 5,264.24 -Bihar Sponge Iron Ltd. 1.47 1.36 -Doubtful 2.54 7.84 -Win Medicare Pvt. Ltd. 1.15 1.37 Less:- -Modipon Limited 8.69 9.06 -Managing Director Allowance for bad and doubtful debts (2.54) (7.84) (Mahendra Kumar Modi)* - 0.49 TOTAL 5,635.77 6,010.63 (iii) -Doubtful -Modi Senator Pvt. Ltd. 0.85 0.85 - Technicast Engineering Ltd. 0.51 0.51 Note no. 16 : CASH AND BANK BALANCES Less:Allowance for doubtful (1.36) (1.36) ( ` in Lac) (b) Others (unsecured, considered good):- (i) Unutilized balances of CENVAT/ VAT 93.93 99.87 Particulars As at As at (ii) Loans & Advances to employees 9.01 12.59 31.03.2016 31.03.2015 (iii) Prepaid expenses 113.05 109.77 (iv) Amount recoverable 212.56 190.86 (i) Cash and cash equivalents:- (v) Deposits with excise / (a) Balances with banks: sales tax authorties 8.08 8.08 -In Current Accounts 550.10 1,263.10 (vi) Others 204.11 189.82 -In FDR’s 2.45 35.01 (vii) Unreconciled Inter-unit balances (b) Cheques, drafts on hand 34.94 37.49 { Note 27 (4) and 37 } 1,029.36 992.24 (c) Others (doubtful):- (c) Cash on hand 17.51 15.04 (i) Loans & Advances to employees 3.00 2.97 (d) Others:- (ii) Amount recoverable 24.55 23.99 -Postage imprest & (iii) Others 95.48 102.16 stamps in hand - 0.01 Less: Allowance for doubtful (123.03) (129.12) (d) Security Deposits:- TOTAL 605.00 1,350.65 -Secured considered good 18.50 - -Unsecured considered good 133.30 190.99 (ii) Other bank balances:- -Related parties (a) Earmarked balance with (Unsecured considered good): banks/post office:- -Ashoka Mercantile Ltd. -Saving account {Foot-Note 7 of Note 27(32)} 798.30 867.80 (molasses storage fund) 0.36 0.35 -Modipon Limited 147.63 147.63 -Fixed deposits (molasses -Doubtful 48.84 8.13 storage fund)* 7.67 47.63 Less: Allowance for doubtful (48.84) (8.13) (b) Fixed deposits with banks TOTAL 2,779.14 2,821.93 (Pledged with Excise/Sale Tax /P.F. Authorties) 81.05 20.49 * Recovered Subsequently.
(106) MODI INDUSTRIES LIMITED Note no. 18 : OTHER CURRENT ASSETS Particulars As at As at 31.03.2016 31.03.2015 (` in Lac) Tax deducted at source 111.36 85.78 Wealth tax receivable 7.37 7.37 Particulars For the For the Interest accrued on fixed year ended year ended deposits with banks 41.10 52.07 31.03.2016 31.03.2015 Amount recoverable {Note 27(24)} 1,457.09 2,218.72 Interestreceivable on Security deposit (A) Finished goods Opening stock 4,996.84 7,035.65 -Ashoka Mercantile Ltd. 64.07 71.00 Less: Closing stock 4,365.36 4,996.84 Rent receivables:- -Unsecured, considered good 1.87 1.82 Sub Total (A) 631.48 2,038.81 -Doubtful 22.78 22.78 Less:- (B) Stock in trade Allowance for bad and doubtful debts (22.78) (22.78) Opening stock 1.19 1.65 Deferred revenue expenditure 11.07 11.07 Less: Closing stock 1.89 1.19 Stores and spare parts * 10.67 10.67 TOTAL 1,704.60 2,458.50 Sub Total (B) (0.70) 0.46
*Net value of Store & spare parts of Vanaspati Unit which is lying (C) Goods in process closed since 2002. Opening stock 335.37 439.650 Note no. 19 : REVENUE FROM OPERATIONS Less: Closing stock 185.42 335.37 (` in Lac) Particulars For the For the Sub Total (C) 149.95 104.28 year ended year ended 31.03.2016 31.03.2015 (D) By Product
Sale of products 35,421.02 35,417.41 Opening stock 578.87 510.51 Sale of services 102.17 47.87 Less: Closing stock 134.35 578.87 Other operating revenue 49.63 64.49 Subsidy on Cane Commission 162.40 474.08 Sub Total (D) 444.52 (68.36) TOTAL 35,735.22 36,003.85 Note no. 20 : OTHER INCOME Net (Increase) / Decrease (` in Lac) in Stock (A+B+C+D) 1,225.25 2,075.19 Particulars For the For the year ended year ended 31.03.2016 31.03.2015 Note no. 22 : EMPLOYEE BENEFITS EXPENSES Interest income 175.39 175.26 Dividend received (gross) 52.50 42.00 (` in Lac) Rental income 207.29 216.92 Particulars For the For the Profit on sale of fixed assets 5.01 10.12 year ended year ended Profit on sale of non current assets held 31.03.2016 31.03.2015 for disposal (Refer foot note (G) of note 10) 4.13 - Excess provision written back 24.11 16.85 Salary, wages, gratuity & Unclaimed Credit Balances W/Back 38.42 22.37 other allowances 2,876.54 2,833.52 Amounts written back 17.89 3.21 Depreciation Written Back 1.96 4.17 Contribution to provident and Foreign Currency fluctuation gain (Net) - 18.86 other funds 202.11 206.48 Other non-operating income 22.92 121.71 Miscellaneous Income 2.51 - Staff welfare expenses 269.87 297.36 Claim received on fire (net) - 11.04 TOTAL 3,348.52 3,337.36 TOTAL 552.13 642.51
MODI INDUSTRIES LIMITED (107) Note no. 23 : FINANCE COSTS Note no. 24 : (Contd.) (` in Lac) (` in Lac) Particulars For the For the Particulars For the For the year ended year ended year ended year ended 31.03.2016 31.03.2015 31.03.2016 31.03.2015 (a) Interest expenses:- {Note 27(4)(f)(i) & (ii), 27 (5) and 27(16)} Rent paid on Cylinders 8.84 - (i) On borrowings 578.13 724.63 Freight/ transport & forwarding 502.64 522.77 (ii) On statutory dues 8.83 22.23 Commission to selling agents 490.64 308.17 (iii) On trade payable 47.62 472.92 Discount & sale promotion 1,075.30 370.25 (iv) On security 5.51 5.38 Advertisement expenses 121.54 162.15 (v) On Finance Lease - - Travelling expenses 266.16 283.09 (vi) On Loan from Corporate 1.06 - Legal & professional charges 291.81 184.81 (vii) On car loans taken by Trade mark licensce & marketing fees 148.37 - employees / corporate adviser 1.98 2.32 Job work charges 46.83 11.64 Retainership Expenses 208.11 237.37 (viii) On others 0.91 0.91 Net gain/loss on foreign currency (b) Other borrowing costs - - transactions & translaion 14.52 - (c) Net gain/loss on foreign currency - - Provision for dimunition in value of transactions and translation long term investments 11.94 - TOTAL 644.04 1,228.39 Other general expenses 532.23 555.40 Note no. 24 : OTHER EXPENSES TOTAL 7,673.12 6,117.51 (` in Lac) Foot-note : Particulars For the For the Auditor’s remuneration:- year ended year ended (a) As auditors 8.21 7.41 31.03.2016 31.03.2015 (b) For taxation matter (Tax Audit fee) 6.58 6.49 Consumption of stores & spare parts 403.73 406.46 (c) For Company Law matters - - Consumption of packing materials 1,600.38 1,284.78 (d) For management services - - Power & fuel 341.34 467.93 (e) For other services including Packing & Filing Expenses 40.04 - certification work 7.09 7.61 Repairs to machinery 670.09 678.20 (f) For reimbursement of expenses 1.66 2.13 Repairs to building 71.05 46.19 Lease rent 130.56 151.30 TOTAL 23.54 23.64 Rates & taxes 339.03 252.67 Excise duty on stock 35.89 (18.94) Note no. Insurance 44.39 50.54 25. BASIS OF PREPARATION Auditor’s remuneration (i) These Consolidated Financial Statements have been (see foot-note below) 23.54 23.64 prepared to comply in all material aspects with applicable Service Tax 9.09 - accounting principles in India, the applicable Accounting Loss on sale of fixed assets 9.15 0.01 Standards prescribed under Section 133 of the Companies Loss on sale of stores - 5.28 Act, 2013 [‘Act’] read with Rule 7 of the Companies Stores Written Off 0.19 - (Accounts) Rules, 2014, the provisions of the Act (to the Less: Adjustment of provision extent notified) and other accounting principles generally for obsolete stores - (1.16) accepted in India, to the extent applicable and in particular Donations 0.77 0.97 Accounting Standard 21(AS 21)-‘Consolidated Financial Bad debts written-off 41.51 22.86 Statements’. Less : Adjustment of provision (ii) The list of Companies which are included in consolidation for doubtful debts (36.74) (13.40) and the Parent Company’s holdings therein are as under: Claims / amounts written-off 11.88 10.58 Name of the Company Percentage holding Less : Adjustment of provision 2016 2015 for doubtful (8.01) (10.58) Own Investment (India) Limited 99.89% 99.89% Fixed assets written-off 0.79 0.16 Provision for obsolete spare-parts & stores 16.15 5.36 Your Investment (India) Limited 99.93% 99.93% Provision for Raw Material 10.00 - Each of the above Companies is incorporated in India and Provision for doubtful debts, advances financial statements are drawn up to the same reporting and Security Deposits 199.37 119.01 date as that of the parent Company i.e. 31st March, 2016.
(108) MODI INDUSTRIES LIMITED (iii) The Consolidated Financial Statements have been transfer of goods, is being treated as finished goods prepared to comply in all material respect with the instead of raw materials/stores and valued Accounting Standards notified by Companies (Accounting accordingly. Standards) Rules, 2006 (as amended) and the relevant (2) FIXED ASSETS provisions of the Companies Act, 2013. ( i) Major improvements to fixed assets that increases the (iv) The Consolidated Financial Statements have been future benefits from the existing assets beyond its prepared under the historical cost convention on an previously assessed standard of performance is accrual basis, except where revaluation/ impairment is included in the gross block and is depreciated over the made. remaining life of the original assets. (v) The Accounting Policies have been consistently applied by (ii) Financing cost (upto the date the assets are ready to the Company and are consistent with those used in the be put to use for commercial production) relating to previous year. borrowed funds attributable to acquisition of (vi) The Consolidated Financial Statements of the Company construction of fixed assets are included in the gross and its Subsidiary Companies have been consolidated on book value of fixed assets to which they relate. a line-by-line basis by adding together the book value of (3) DEPRECIATION like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances and intra-group (a) Depreciation on Plant & Machinery is provided on transactions resulting in unrealized Profits/Losses. Straight Line Method except in Corporate Office. In (vii) The Consolidated Financial Statements have been respect of other assets including Office Equipments, prepared using uniform accounting policies for like depreciation is provided on Written Down Value transactions and other events in similar circumstances and Method in all units except Sugar and Steel Units where are presented, to the extent possible, in the same manner it is provided on Straight Line Method. as the Company’s separate financial statements except as (b) Depreciation on additions/deletions is charged on pro stated in notes on accounts. rata basis and in accordance with Schedule II of the (viii) Minority Interest in the net assets of consolidated Companies Act, 2013. subsidiaries is identified and presented in the consolidated (c) Depreciation on assets costing upto `5,000/- has been Balance Sheet separately from liabilities and equity of the fully depreciated in the year of purchase. Company’s shareholders. (4) INTANGIBLE ASSETS: Minority interest in the net assets of consolidated Intangible assets are stated at cost of acquisition less subsidiaries consists of: accumulated amortization. Computer Software is (a) The amount of equity attributable to minority at the date amortized over a period of five years. on which investment in a subsidiary is made; and (5) REVENUE RECOGNITION: (b) The minority share of movements in equity since the ( i) Export incentives under the duty entitlement pass date parent subsidiary relationship came into book scheme is recognized on accrual basis. existence. (ii) Revenue arising by use of Company’s properties by (ix) Minority Interest’s share of Net Profit/(Loss) for the year of others yielding rent is recognized when no significant consolidated subsidiaries is identified and adjusted against uncertainty as to measurability or collectability exists. the profit/loss after tax of the group. (iii) Sale of goods is recognized at the point of dispatch of 26 ACCOUNTING POLICIES: goods to customers. (1) INVENTORY VALUATION (6) INVESTMENTS: (a) Stocks of raw materials and stores and spares are Long-term investments are valued at cost less provision for valued at weighted/moving average cost. (Net of diminution, other than temporary, in the value of Cenvat benefits/input tax credit of U.P.VAT) or net realizable value whichever is less. investments. (b) Loose tools are valued at depreciated cost. (7) RETIREMENT BENEFITS: (c) Cost of machinery spares, which can be used only in (a) Contribution to Provident Fund is made at a connection with an item of fixed asset and whose use predetermined rate to the Provident Fund Trust and is expected to be irregular, are charged to revenue charged to the Statement of Profit and Loss on accrual over useful life of the principal item. basis. (d) Goods-in-transit are valued at cost. (b) Gratuity Liability is accounted for on accrual basis, st (e) Finished goods/Goods-in-Process are valued at lower computed actuarially, except for Steel Unit upto 31 of cost and net realisable value except by-product i.e. March, 2002 which is accounted for on cash basis. molasses which is valued at net realizable value. Cost (c) Leave encashment is accounted for accrual basis, inter-alia, includes direct cost, depreciation, excise computed actuarially. duty, lease rentals and factory overheads but excludes (8) OPERATING LEASE: general administration and selling expenses, Lease payments under an operating lease are recognized Corporate Office administration expenses and as an expense in Statement of Profit and Loss on a straight interest. The closing stocks out of inter divisional line basis over the lease term.
MODI INDUSTRIES LIMITED (109) 27. CONTINGENT LIABILITIES AND OTHER NOTES: liabilities including inter unit balances arising on account of (` in Lac) transactions for the period 1st April, 1993 to 31st March, As at As at 2016. 31.03.2016 31.03.2015 (b) The financial results for the year 1992-93 would be incorporated as soon as the Company is able to obtain 1. (a) Claims against the Company access to/reconstruct the financial, accounting and not acknowledged as debts : production records. (i) Workmen (excluding (c) In view of above, as per past practice, the audited opening unascertainable amounts) 329.76 290.24 balances of Assets and Liabilities, quantitative details, (ii) Others 244.31 234.42 contingent liabilities {excluding old electricity dues – Refer (b) Partly paid-up Equity Shares of Note 4f(viii)} and notes of the Steel Unit as on 1st April, 1992, Vital Chemicals Private Limited 0.08 0.08 subject to (i) reduction of unsecured loans taken by (c) Disputed Liability for Excise-duty, `278.95 Lac in view of write back on account of one-time Sales-tax, Entry-tax matters and settlement (O.T.S.) of dues with Hong Kong and Shanghai liquidated damages on Provident Banking Corporation Limited (HSBC) during the year 2004- Fund dues {excluding interest 05, and further reduction of ` 45.00 Lac on account of unascertainable and undisputed payment during 2005-06 of O.T.S. to H.S.B.C.; (ii) Sales Tax/ penalty demands reduction of fixed assets (net) by `696.19 Lac being (net of provision made of depreciation provided during 1993-94 to 2015-16 on fixed ` 62.21 Lac) of ` 175.24 Lac} 1537.57 1378.50 assets and (iii) decrease in Inter-Unit balance by `668.08 (d) Income Tax 209.59 209.59 Lac which represents; the sum of net loss of `623.08 Lac (e) Bills discounted 148.59 200.21 for the years 1993-94 to 2015-16 (before inter-unit rental income, write-back of above amount of `278.95 Lac and 2. Estimated amount of contracts remaining to be executed on provision for depreciation of `696.19 Lac) and repayment Capital Account `337.57 Lac (Previous Year `63.12 Lac). of unsecured loan of `45.00 Lac. The above inter-unit 3. Guarantees given to Sales-tax/Excise Departments on behalf balance will actually represent either net increase in assets of Companies in the same group amounts to `139.42 Lac or net decrease in liabilities as on 31st March, 2016 over (Previous year `139.42 Lac). Information regarding outstanding balances as on 31st March, 1993 of the Steel Unit. position is not available. This excludes guarantees of `109.63 (d) Assets and Liabilities of the Steel Unit incorporated in the Lac (Previous year `109.63 Lac) vacated by Sales Tax Balance Sheet of the Company as on 31.03.2015 and Department for which guarantee bonds not yet received back. 31.03.2016 are as under: 4. (a) The Steel Unit is lying closed since 24th January, 1993 due (` in Lac) to strike/lock-out and thereafter closure was declared with effect from 24th November, 1993, as the Unit was found to be unviable. The Company has not been able to obtain access to the accounting, financial and production records of the unit necessary for updating the said books of accounts/compiling the data to prepare the annual accounts as well as for finalizing the audit for the year ended 31st March, 1993. Transactions subsequent to the closure of the unit could not be incorporated in the annual accounts of 1992-93 and onwards in view of pending access to the earlier accounts viz., 1st April, 1992 to 24th January, 1993, the absence of which would leave the books still incomplete. However, the Statement of Profit and Loss for the current financial year 2015-16 and from 1993-94 to 2014-15 have been incorporated in current financial year and in various previous financial years respectively. As an interim measure `1026.73 Lac (Previous year `992.24 Lac) which represents: (i) `1694.81 Lac (Previous year `1,463.43Lac) being net cumulative inter-unit debit balance on account of transactions of other units of the Company with Steel Unit during 1st April, 1992 to 31st March, 2016, (ii) payment of unsecured loan of ` 45.00 Lac {Refer Note (c) below} and (iii) net loss of `623.08 Lac for the years 1993-94 to 2015-16 (before inter unit rental income, write-back of ` 278.95 Lac and provision for depreciation of ` 696.19 Lac) have been clubbed with Current Assets of the Company as on 31st March, 2016 and 31st March, 2015 respectively as “Inter- Unit Balances” pending incorporation of (i) Annual Accounts for the period 1st April, 1992 to 31st March, 1993 and (ii) assets and
(110) MODI INDUSTRIES LIMITED ( e) Statement of Profit and Loss of the Steel Unit for the year Corporation Limited regarding arrears of ended 31st March, 2016 and 31st March, 2015 (excluding electricity dues, the Steel unit paid during the year inter-unit rental income of `46.12 Lac) (Previous year 2009-10 `563.90 Lac against the demand of `46.12 Lac) is as under: `1123.99 Lac included in (viii)(a) above. (` in Lac) Accordingly shortfall in provision of `243.37 Lac has been charged to revenue during the year Particulars 2015-16 2014-15 2009-10. INCOME : (c) The Company filed writ petition in Allahabad High Court Rental Income 185.97 192.25 challenging the said demand notices. The Hon’ble Profit on sale of fixed assets - 3.54 Allahabad High Court dismissed the writ petition filed by the 185.97 195.79 Company. The Company filed Special Leave Petition (SLP) EXPENDITURE : with the Hon’ble Supreme Court of India, who has granted interim stay on 14th March, 2005 for stay of recovery by way Employees Benefit Expenses 109.23 100.07 of sale of property which is still continuing. Finance Cost 232.29 179.67 In view of the above and pending incorporation of annual Depreciation 6.81 6.82 accounts of Steel Unit for 1992-93, no provision is Legal and Professional Expenses 1.46 1.47 considered necessary against the balance demand of Other Expenses 39.88 389.67 39.34 327.37 `1311.49 Lac at this stage. Profit/(Loss) for the year 203.70 131.58 5. With respect to the assignment of debt, the views of both the (f) The Profit and Loss Account/Statement of Profit and Loss Managing Directors are stated herein below:- of Steel Unit for the years 1993-94 to 2015-16 are subject (i) Shri U.K. Modi submits that:- to the following notes on accounts:- “(a) During the year 2006-07, an agreement dated 22nd (i) In view of non-availability of book balance of liabilities January, 2007 for One Time Settlement (OTS) of dues towards PNB, IDBI and IFCI in the books of Steel Unit of Punjab National Bank (PNB) was entered into of the Company on account of non-incorporation of between the Company, PNB, Shri U.K. Modi (as annual accounts and balance sheets of Steel Unit Guarantor) and SBEC Sugar Limited (SSL), on the {Refer Note 27 (4) (a to c) of Annual Accounts}, the terms as contained in the PNB’s Letter dated 28th difference between OTS amounts and book balances September, 2006. Under the said agreement, PNB has could not be ascertained. agreed to assign all its claims against Steel Unit of the (ii) No-provision of interest, amount unascertained, is Company together with all securities and charges required to be made, on loans from other Financial created by the Company to SSL on payment of full Institutions as the existing amounts appearing in the settlement amount of `2810.60 Lac together with books of accounts of the Company will be more than interest. SSL made full payment to PNB of the sufficient in view of in-principle approval/discussions settlement amount together with interest. PNB being held for one time settlement of dues with the thereafter executed a Deed of Assignment on 15th May, Financial Institutions. 2012 in favour of SSL by which PNB assigned all its claims together with all securities and charges created (iii) The impact, if any, on account of non-availability and by the Company in its favour to SSL. The Registrar of consequently non incorporation of audited opening Companies has registered the modification to the balances of assets and liabilities of the Steel Unit as on charges in favour of SSL. The debts of MIL which was 1st April, 2015; assigned to SSL has been further assigned to SBEC (iv) Non-provision of obsolete/damaged stocks and fixed Bioenergy Limited (SBEL) on 31st December, 2012. In assets, if any, in view of non-incorporation of earlier view of the above, the secured debt is now payable by year’s accounts and non-physical verification of the Company to SBEL. The Company proposes to inventories and fixed assets as on 31st March, 2016; enter into revised terms of payment of this secured debt (v) Non-confirmation/reconciliation of balances of with SBEL. debtors, creditors, banks, financial institutions etc. and (b) (i) With reference to the Company’s liabilities to IDBI impact, if any, on the Statement of Profit and Loss; Limited, a settlement agreement was concluded (vi) Non-provision of doubtful debts and loans & advances, between the Company, IDBI Limited and SBEC amount unascertained; Bio Energy Limited (SBEL) on 6th October, 2007. (vii) Non-provision of Impairment, if any, of the fixed assets This settlement agreement was in terms of IDBI’s as per Accounting Standard (AS 28) i.e. Impairment of letter dated 9th February, 2007. Under the said Assets, amount unascertained. agreement IDBI agreed to assign its entire debt due and payable by the Company to SBEL subject (viii) (a) Uttar Pradesh Electricity Board (now U.P. Power to SBEL paying to IDBI its OTS claim amount of Corporation Ltd.) raised various demand notices `1232.20 Lac. Acting on the said agreement, against electricity dues and late payment SBEL made a payment of `1232.20 Lac to IDBI surcharge amounting to `2435.48 Lac on the together with interest. The said payment to IDBI of Steel unit of the Company. `1232.20 Lac along with interest was completed (b) In terms of One Time Settlement with U.P. Power on 6th October 2007. IDBI’s claim against this
MODI INDUSTRIES LIMITED (111) Company stood assigned to SBEL together with IDBI, vide their letter dated 7th May, 2012 has the securities and charges and the said debt is approached BIFR regarding the execution of the now payable by this Company to SBEL. assignment deed in respect of assignment of debt The Hon’ble BIFR vide its orders dated 12th to the applicant (SBEC Bioenergy Ltd.). December, 2011 and 19th April, 2012 recognized (vi) The BIFR by its order dated 22nd June, 2012 SBEL as this Company’s creditor in place of IDBI allowed MA No. 224/BC/2012 and directed that and by an order dated 17th July, 2012 directed the name of Applicant (SBEC Sugar Ltd.) be IDBI (OA) to execute the Deed of Assignment in substituted for PNB and the name of the Applicant favour of SBEL. The Company proposes to enter (SBEC Bioenergy Ltd.) be substituted, in place of into fresh terms of payment of the IDBI’s assigned IFCI, as the deed of assignment has since been debt with SBEL. executed. (ii) With reference to this Company’s liabilities to IFCI (vii) In the proceedings held on 17th July, 2012, the Limited, a settlement agreement dated 30th Hon’ble BIFR directed IDBI to execute the deed of December, 2009 was concluded between this assignment in favour of the Applicant (SBEC Company, IFCI Limited and SBEC Bio-Energy Bioenergy Ltd.), with respect to the assignment of Limited (SBEL). This settlement agreement was its claims against this Company together with in terms of IFCI’s letter dated 30th December, securities and charges in favour of SBEC 2009. Under the said settlement agreement, IFCI Bioenergy Ltd. subject to the various other agreed to assign to SBEL its entire debt as due directions stated therein. and payable by this Company to it subject to SBEL (viii) Pursuant to the order passed by AAIFR, paying to IFCI its OTS claim of `775.00 Lac. Shri U.K. Modi and Shri M.K. Modi have now Acting on the said settlement agreement, SBEL submitted their separate Draft Rehabilitation th made a payment of `775.00 Lac to IFCI on 30 proposals to the IDBI. December, 2009 and in consideration thereof (ix) Shri D K Modi had filed 2 Appeals before the IFCI Limited executed a Deed of Assignment dated 19th April, 2012 and assigned its all claims AAIFR being Appeal No. 206/2012 and 207/2012 challenging the orders dated 22nd June 2012 and against this Company together with the securities th and charges in favour of SBEL. The Registrar of 17 July 2012 passed by the BIFR. By two orders th Companies has registered the modification to the both dated 15 April 2013, the AAIFR has set aside the orders dated 22nd June 2012 and 17th charges in favour of SBEL. The said secured debt is payable by this Company to SBEL. The July 2012 and remanded the matter back to the BIFR with directions to consider the MA No.s 224/ Company proposes to enter into fresh terms of payment of this debt with SBEL. BC/2012 and 226/BC/2012 afresh after hearing Shri D K Modi and proceed further in accordance (iii) At the hearings before the Hon’ble BIFR and with with law. the consent of Advocates for Shri U.K. Modi and (x) Shri U K Modi had also filed an Appeal before the Shri M.K. Modi, the Hon’ble BIFR passed orders and issued directions in M.A. No. 754/BC/2011 AAIFR, being Appeal No. 178/12 challenging the th (filed on behalf of Shri U.K. Modi) and clarified that order dated 17 July 2012 passed by the BIFR. the OA shall consider the representations from (xi) The aforesaid Appeal No. 178/2012 was heard on Shri U.K. Modi, Shri M.K. Modi, Shri D.K. Modi 20th November 2013 and the Hon’ble AAIFR, after and also from SBEC Bioenergy Ltd. and SBEC hearing the submissions of the parties, has been Sugar Ltd. pleased to allow the Appeal, set aside the order and remanded the matter back to BIFR with the (iv) The Bench directed that, SBEC Bioenergy and following directions: SBEC Sugar be heard and consulted by IDBI (OA) in connection with the preparation of the “Since the order has already been set aside as DRS. above, we make it clear that all the matters before BIFR, including MA 224 of 2012 will be (v) In the order dated 22nd June, 2012 the Hon’ble considered by the Board on remand afresh giving BIFR observed and noted that IFCI and PNB have executed deeds of assignments in favour of a reasonable opportunity of hearing to all SBEC Bioenergy Ltd. and SBEC Sugar Ltd. concerned. It is also made clear that all the issues respectively after receiving entire OTS amount raised before us in the appeals by the respective along with interest, whereas the IDBI has parties are kept open and will be considered and adjudicated by the Board afresh. In deciding received the entire OTS amount along with interest and had only entered into an agreement matters afresh, the Board, needless to mention, will not be influenced by its said earlier order to transfer all the rights, title and interest in the Financial Assistance/ Financial Instruments and which, as aforesaid was set aside.” the underlying securities in respect thereof to the The Appeal preferred by SBEC Bioenergy Ltd. Applicant (SBEC Bioenergy) of MA No. 224/BC/ before the AAIFR was challenging the wrongful 2012 but has not executed the deed of and arbitrary imposition of conditions on the assignment. The Bench also observed that the execution of Deed of Assignment by IDBI in favour
(112) MODI INDUSTRIES LIMITED of SBEC Bioenergy Ltd., which has since been favour of SBEC Bioenergy Ltd., has been set set aside by the AAIFR. In fact, the AAIFR has aside. clearly stated that all issues raised by SBEC (iii) SBEC Bioenergy Ltd. and SBEC Sugar Ltd., thus, Bioenergy Ltd. in Appeal No. 178/12 are kept have no locus standi in the BIFR proceedings and open and would be agitated before the BIFR. are not recognized as creditors of MIL by BIFR. Therefore, in view of the above, it is clear that (iv) MKM Group has, without prejudice to their legal SBEC Bioenergy Ltd. and SBEC Sugar Ltd. are contentions in the matter, already approached the secured creditors of MIL and continue to be so both IDBI and IFCI for making payment of the as assignees of the respective debts of IDBI, IFCI dues pertaining to the six units under and PNB. management and control of Shri M.K.Modi on Shri M K Modi submits that AAIFR Order dated assignment basis subject to certain conditions. 20th November, 2013 in Appeal No. 178/2012, Shri U.K. Modi disagrees with the above statements and nowhere recognizes SBEC Bio-energy Ltd. and submissions made by Shri M.K. Modi as the same are not SBEC Sugar Ltd. as being Secured Creditors of correct. Shri. U.K Modi has commented as below:- MIL or the assignments in their favour to be valid and/or legal. It is clarified on the submission made by Shri M.K Modi that the Hon’ble BIFR vide its order dated 12.12.2011 had As per Shri U K Modi, the above contention of Shri directed IDBI (OA) to invite the secured creditors including M K Modi is incorrect. It is a matter of record that SBEC Bioenergy Ltd. and SBEC Sugar Ltd. for discussions the Hon’ble BIFR vide its orders dated 12th before finalizing any DRS. By a subsequent order dated December, 2011 and 19th April, 2012 has already 19.04.2012, the Hon’ble BIFR has also directed that SBEC recognized SBEC Bioenergy Ltd. and SBEC Bioenergy Ltd. and SBEC Sugar Ltd. be heard and Sugar Ltd. as MIL’s secured creditor and it is in consulted by IDBI (OA) while preparing the DRS. Therefore this capacity, the applications for substitution it is absolutely clear that SBEC Sugar Ltd. and SBEC were moved before the BIFR. By virtue of the Bioenergy Ltd. are secured creditors of MIL. This order of order dated 20th November 2013, the AAIFR has 12.12.2011 has not been challenged by any party till date remanded the matter back to BIFR for fresh and therefore the issue stands settled by the BIFR . In so far consideration. as the remand of the MAs is concerned, it is clarified that (ii) Shri M.K. Modi disagrees with the above statements and the matter has been remanded by Hon’ble AAIFR only on submissions made by Shri U.K. Modi as the same are not the ground that Shri D K Modi be heard on the application. correct. The setting aside of the orders dated 22.06.2012 and Shri M.K. Modi submits that – 17.07.2012 are on a technical ground and not on merits (a) That the said settlements based on assignment in therefore the allegations that SBEC Sugar Ltd. and SBEC favour of one of the Managing Directors of the Bioenergy Ltd. do not have any locus standi in the BIFR Company are neither legal nor binding and are without proceedings or that they are not secured creditors are approval of the Board. The same are also contrary to absolutely incorrect and baseless. the 1989 Modi Family MOU, the agreement between Thus as per Shri U.K. Modi, these liabilities will now be the two Managing Directors, the Board Resolution and quantified with the assignees of PNB, IDBI and IFCI debts. the “Status Quo” order of Hon’ble Supreme Court of Shri M.K. Modi disagrees with the above statements and India. submissions made by Shri U.K. Modi as the same are not (b) Without prejudice to what is stated in para (i) above, correct. As the matter stands today, orders dated assignments and the terms of payment etc. shall be 22.06.2012 and 17.07.2012 stand set aside by Hon’ble governed by the directions to be passed by Hon’ble AAIFR and fresh order is required to be passed by Hon’ble BIFR. BIFR. Hence, these orders do not give rise to any right/ (c) Hon’ble BIFR has, in the proceedings of the hearing obligation to any party. held on 19th April, 2012, already directed IDBI (OA) to Shri U.K. Modi disagrees with the above statements and assess the liabilities of each unit of the Company submissions made by Shri M.K. Modi as the same are not (Group wise) and while making an assignment to UKM correct. Though it is correct to say that the orders dated Group Companies, to see that the security charged to 22.06.2012 and 17.07.2012 has been set aside by Hon’ble Banks/FIs belonging to his own units are assigned and AAIFR but it is incorrect to say that SBEC Sugar and SBEC the security belonging to MKM Group is to be freed. It Bioenergy are not the secured creditors of MIL as the order is thus abundantly clear that the security pertaining to dated 12.12.2011 clearly recognizes SBEC Sugar and his own units only is to be charged to SBEC Bioenergy SBEC Bioenergy as a Secured Creditor. Hon’ble AAIFR Ltd and SBEC Sugar Ltd. has directed BIFR to conduct a rehearing on the M.A’s 224 (d) By virtue of AAIFR’s orders dated 15.04.2013 : and 226 of 2012 allowing the substitution of SBEC Sugar and SBEC Bioenergy in place of PNB and IFCI. (i) BIFR’s order dated 22.06.2012, whereby SBEC Bioenergy Ltd. and SBEC Sugar Ltd. were As per Shri M.K.Modi the above contention of Shri U.K. substituted in place of IFCI and PNB respectively, Modi is incorrect. has been set aside; and Shri U.K. Modi submits that IDBI vide its letter dated (ii) BIFR’s order dated 17.07.2012, whereby IDBI 16.01.2015 again reiterated in unequivocal and was permitted to execute assignment deed in unambiguous terms that their debt due from MIL has been
MODI INDUSTRIES LIMITED (113) assigned in favour of SBEC Bioenergy Ltd on 06.10.2007. it had directed IDBI to circulate the DRS to all stakeholders and th Shri M.K. Modi stated that there is no agreement between conduct joint meeting of stakeholders vide their letter dated 16 Shri M.K.Modi and Shri U.K.Modi on this issue. July, 2013. Pursuant to this direction, a meeting of the Managing Directors and Shri D K Modi was called by IDBI on 12th August 6. With respect to the rehabilitation scheme of the Company, the 2013 at IDBI Towers, Mumbai. views of both the Managing Directors are as below:- In the joint meeting held at IDBI Towers in Mumbai on 12th August Shri M.K.Modi stated that:- 2013, Shri U K Modi submitted another letter of even date and As reported last year, Shri M.K. Modi had filed a Special Leave reiterated his proposal that the distribution of proceeds without th Petition before the Supreme Court of India on 27 July, 2010 payment of liabilities would be unethical and can be construed th challenging the order dated 19 May, 2010 of Hon’ble Delhi High as siphoning of funds out of the Company and the issue th Court. The Hon’ble Supreme Court vide its order dated 27 regarding division of assets of the Company should be left to August, 2010 held that “the parties are directed to maintain Civil Courts. status quo with regard to the management of the Company, but Shri. M.K Modi submits that:- we make it clear that this will not in any way affect the proceedings pending before the Board for Industrial and The contents of Shri U.K. Modi’s letters dated 25.06.2013 and Financial Reconstruction and also the Appellate Authority 12.08.2013 travel beyond BIFR’s orders and as being against (AAIFR).” the 1989 Modi Family MoU, 2006 Agreement of Shri U.K. Modi with Shri M.K. Modi, Shri U.K. Modi’s own earlier stand before Pursuant to the order dated 22nd June, 2011 passed by Hon’ble various Forums including his own case filed before Hon’ble AAIFR, Shri M.K.Modi and Shri U.K.Modi had submitted their Delhi High Court in 1998 which is still pending and the orders of separate Draft Rehabilitation proposals to IDBI (OA). Hon’ble Supreme Court of India in the matter. Subsequently, BIFR has heard the matter on various dates and Shri M.K. Modi agrees that basic objective of Operating Agency passed directions from time to time. The Operating Agency is to formulate a Scheme for rehabilitation of the Company. The (IDBI) had submitted a DRS to BIFR in July, 2013, which is under OA has in fact prepared such a scheme and submitted the same consideration of BIFR. to BIFR. Shri M.K. Modi disagrees with Shri U.K. Modi’s As p er Sh ri M .K . M o di the said DRS had been gone through by proposal to formulate a rehabilitation scheme without split as BIFR Consultant, who wanted some technical corrections to be being a self serving and mala-fide suggestion of Shri U.K. Modi. carried out therein, which were duly carried out by IDBI (OA) and Shri U.K. Modi disagrees with the above statements and the revised DRS was submitted to BIFR by the O.A. submissions made by Shri M.K. Modi as the same are not Shri U.K. Modi disagrees with the above statement made by correct. Shri M.K Modi. It is hereby clarified that the DRS received in Shri M.K Modi disagrees with the above statements and June, 2013 was returned by Hon’ble BIFR with a direction to the submission made by Shri U.K. Modi as IDBI (OA) has already IDBI (OA) to revise the said DRS after updating the financials submitted the minutes of meeting to BIFR as well as to the three from MIL. Subsequently a revised DRS was circulated by OA Modi’s and final DRS has also been submitted by IDBI (OA) to which was not acceptable. Thereafter the OA had filed two BIFR. reports on 06.09.2013 and 04.10.2013 pursuant to the meeting held with all the promoters of MIL on 12.08.2013. In the said Shri U.K Modi further submits: report OA informed the BIFR that only workable solution for Subsequent to the said meeting held in Mumbai on 12.08.2013, revival of MIL is through sale of all unproductive assets Shri U K Modi submitted an email to IDBI on 23.08.2013 (including Modi Bhawan) and the Company’s net worth would acknowledging receipt of DRS which has been filed by IDBI on become positive thereafter. 09.07.2013 as was mentioned during the meeting of the Shri U.K. Modi further submits that:- stakeholders in order to enable him to share comments on the same. By this email, it was further reiterated that Shri U K Modi Shri U K Modi vide letter dated 25th June 2013, had informed the will be supporting a scheme as a whole without any split with the Operating Agency – IDBI (OA), that the continued disputes condition that the proceeds from sale of surplus assets would be among family members has not only led to the delay in utilised for payment all liabilities of the Company and no amount rehabilitation of the Company, but have also adversely affected is distributed to any member of any group. the growth of the Company. By a letter dated 06.09.2013, IDBI informed the BIFR about the The basic objective of the OA is to formulate a scheme for the outcome of the joint meeting held on 12.08.2013 in Mumbai. rehabilitation of the Company and not to settle family disputes, IDBI (OA) informed the BIFR that due to extreme polarized and as such it is humbly requested that the OA should rather situation between the 2 fractions, there was no consensus on concentrate on the rehabilitation of the Company, leaving the the DRS. However, IDBI in its letter took note of the fact that an family settlement to courts. acceptable DRS would be possible if the disputes and Shri U. K Modi reiterated that rehabilitation scheme be differences between the various promoter groups are resolved. formulated for the Company as a whole without any split, and Therefore, IDBI was well aware of the fact that a DRS is possible with the conditions that the proceeds from sale of surplus to revive MIL by sale of assets which did not involve any corporate assets are utilized for paying all the liabilities of the adjudication of disputes inter-se the promoter groups. Company i.e. Secured and Unsecured Loans, pressing and By another letter dated 04.10.2013, IDBI (OA) had categorically Statutory Liabilities of the Company be fully discharged and no informed the BIFR that the only workable solution for revival of amount shall be distributed among any Units. MIL is sale of all unproductive assets (including Modi Bhawan) Shri U K Modi further clarifies that in the hearing held before the and the Company’s net worth would become positive. Upon the th BIFR on 18 July 2013, the Board informed all the parties that net worth becoming positive, the Company would be de-
(114) MODI INDUSTRIES LIMITED registered from BIFR and the civil disputes can be settled Shri U.K. Modi submits: outside the purview of BIFR. The appeals filed by Shri U.K. Modi, Shri M.K. Modi and Shri In the hearing held before the Hon’ble BIFR on 22.10.2013, D.K. Modi were last listed on 27.03.2015 before the Hon’ble representative of IDBI (OA) reiterated its recommendation on AAIFR. On the said date of hearing, the counsel for Bhartiya DRS vide their letter dated 04.10.2013 and submitted that the Kisan Union, Mazdoor Congress Modi Steels and Karamchari only viable solution to revive the Company would be by sale of Sangh Modi Steels entered appearance. The Hon’ble AAIFR all unproductive assets including Modi Bhawan. Since the letter agreed to hear the counsel for the abovementioned unions of 04.10.2013 was not circulated by IDBI (OA) to all the parties before finally deciding all the appeals. including Shri U K Modi, the counsel for Shri U K Modi as well as However, Shri M.K.Modi states that no such order / direction MKM and DKM requested the Bench to direct IDBI to circulate was passed by the Hon’ble AAIFR. the report / letter dated 06.09.2013 and 04.10.2013 so as to Shri U K Modi submits that even though the same is not reflected enable them to comment on the same and requested for a short in the said order, but he was informed by his counsels who were date to file their respective reply. The Bench agreed to issue the present during the course of hearing that during the course of necessary directions in that regard and expressed its views that hearing on 06.02.2015, 13.03.2015, 16.03.2015, 27.03.2015, a final opportunity would be given to comment on the 01.05.2015 and 20.05.2015, the bench had agreed to hear the recommendations of IDBI (OA) and finally argue the matter. all the parties including the counsel representing Bhartiya Kisan The order of BIFR dated 22.10.2013 did not correctly reflect the Union, Mazdoor Congress Modi Steels and Karamchari Sangh minutes of proceedings that actually transpired during the Modi Steels whose presence is recorded in all the above hearing held on 22.10.2013. During the said hearing, on the mentioned orders. basis of submissions of all parties, the BIFR had agreed to give Shri M.K. Modi stated that there is no agreement between Shri time to the counsels for all the promoter groups to finally argue M.K.Modi and Shri U.K.Modi on this issue. the matter on the next date of hearing. The Board had also Hon’ble AAIFR had, in its hearing held on 09.10.2015 directed agreed to give time to the parties to file their respective replies “all the concerned Respondents to file replies to the Appeals to the report / letter dated 04.10.2013. However, the same did which will include comments on the OA’s reports as well as not find any mention in the order dated 22.10.2013, rather the the views/comments on the viability or otherwise of the DRS order records that the Bench decided to reserve the order. prepared by OA in the year 2013 along with the alternative On 28.10.2013, the BIFR passed an order, inter-alia, holding suggestions for revival or otherwise of the sick company, if that the Company is not likely to make its net worth exceed its any, within 2 months.” accumulated losses within a reasonable time while meeting all Pursuant to the above, all the Respondents filed their its financial obligations as a result whereof it is not likely to comments and alternative suggestions in compliance of the become viable on a long term basis. Hence, it would be just, above directions. The matter was last heard by AAIFR on equitable and in public interest that the Company be wound up 05.08.2016 and the next date of hearing is yet to be notified. u/s 20(1) of SICA. The Board therefore issued a show cause 7. With respect to the Contempt Application (M.A No. 412/2013) notice to the Company in this regard and also gave final filed before Hon’ble BIFR by Shri M.K.Modi , the views of both opportunity to the Company, the present promoters or a the Managing Directors are stated as below:- registered Workers Industrial Co-operative Society (WICS) or an outsider to submit a fully tied up proposal with or without OTS Shri M.K.Modi stated that:- and with or without co- promoters, to the OA, within 30 days from Shri U.K. Modi has violated BIFR’s injunction order dated the date of this order. 11.04.2013 for which Shri M.K. Modi has filed M.A.No.402/2013 Pursuant to the order dated 28.10.2013, the Bench Officer of before the BIFR. The BIFR has issued notice on the application BIFR has published an advertisement on 09.11.2013 in Times on 12.08.2013 and also directed status quo with regard to the of India in relation to the notice under Section 20 (1) of the SICA property in question, viz. Land belonging to MIL(Steel Division) and BIFR Regulations for proposed winding up of MIL, thereby leased out to G.S. Pharmbutor Pvt. Ltd. vide lease deed dated inviting shareholders, creditors and others to file their respective 31.05.2013. objections or suggestions with the Registrar. Shri U.K. Modi disagrees with the above allegations and Shri U K Modi has preferred an Appeal before the AAIFR statements made by Shri M.K. Modi as the same are not correct. Shri U.K Modi has commented as below:- challenging the order dated 28.10.2013 passed by the BIFR. The said Appeal has been registered as Appeal No. 142 of 2013. There has been no violation of any order of BIFR as there has By an order dated 27.11.2013, the AAIFR has been pleased to been no transfer of any asset. It is relevant to state that the same pass an unconditional stay of operation of order dated portions of the land have been leased out since 1995 to various 28.10.2013. By subsequent orders dated 18.12.2013, group companies of Shri U.K Modi. This was much prior to the 09.01.2014, 10.02.2014, 05.03.2014, 20.05.2014, 05.11.2014, BIFR order dated 11.04.2013 when direction were issued by the 09.01.2015, 06.02.2015, 16.03.2015, 27.03.2015, 01.05.2015 BIFR under Section 22A directing parties not dispose of, and on 20.05.2015 the interim order has been directed to alienate or part with possession of the property. The lease rental continue. It may be pertinent to note that Shri M K Modi has also recovered has been utilised to pay the statutory liabilities of the filed two separate Appeals being Appeal No. 11/2014 and 22/ Steel Division of MIL and also to repay loans taken for payment 2014 challenging the orders dated 22.10.2013 and 28.10.2014 of the statutory liabilities and various other dues including respectively, which are also listed for hearing on the same date. electricity charges, water charges, maintenance of roads, etc. On the Appeals filed by Shri M.K. Modi also, AAIFR has granted that arose owing to workers and labourers of the Steel Division an unconditional stay upto the next date of hearing. residing in the quarters of the Steel Division. The lease deed was
MODI INDUSTRIES LIMITED (115) initially executed pursuant to an understanding between the with the agreement, matter regarding waiver of late payment Steel Division and the various labour Unions relating to the surcharge and recovery charges after 1st July, 1998 will be settlement of their dues in order to avoid a law and order referred to the Government. situation and to maintain peace in the area. In this context, Shri 10. ESI authorities had raised a demand on the Company for ` U.K Modi refers to the various agreements entered into with the 64.68 Lac (upto previous year ` 63.51 Lac) (inclusive of interest) labour unions of the Steel Division where under the Company towards Company’s liability for ESI for the years 1968 to 1986 has agreed to employ the children of the workers/ labourers of and no provision has been made against this liability. the closed Steel Division in any new venture that is set up, 11. Modinagar Municipal Committee had determined the basis/ depending on their skill, ability and talent. The labour unions liability of house tax payable by the Company for the years 1982- have entered into these agreements to secure the future 83 to 2006-07 at ` 213.98 Lac. The said liability/demand/basis interest of their children who would be offered employment. Shri is disputed by the Company at various levels and has deposited M.K Modi has filed M.A.No.402/2013 before the Hon’ble BIFR `16.51 Lac on account upto 31st March, 2016. Pending final making these allegations only to pressurize the management in decision of the Court/settlement and after taking into account particular, Shri. U.K Modi to accept his terms relating to the draft the provision/ payment already made by the Company, there is scheme to be submitted to BIFR. The matter is still pending a net liability of `188.63 Lac (upto the previous year `188.63 before the Hon’ble BIFR. Shri U.K Modi has sought time to file Lac), which has not been provided for in the accounts. a reply to the application filed by Shri M.K Modi. Shri U K Modi will file a detailed response to the said MA. In any event, the 12. The Company has not received information from vendors statements and contentions made in these Notes on Accounts regarding their status under the Micro, Small and Medium are not exhaustive and detailed objection will be read in the reply Enterprises Development Act, 2006 and hence disclosure to the MA. It is important to note that Shri M.K Modi had himself relating to amounts unpaid as at the year end together with entered into a perpetual lease agreement for certain portion of interest paid/payable under this act has not been given. closed Soap Factory (1584 sq. mtrs.) with his group Company 13. Government of India has issued guidelines dated 15th January, M/s Weld Excel India Limited. 1987 which requires companies raising resources through Shri M.K. Modi disagrees with the above statements and issue of Debentures to create a Debenture Redemption submissions made by Shri U.K. Modi as the same are not Reserve. The Company has not created such a reserve in view correct as various parts (not the same portions) of the land have of the accumulated losses. been leased out by Shri U.K. Modi to his private companies. 14. (a) During the year 2010-11, the Distillery Unit of the Company Area leased to TC Healthcare Pvt. Ltd. was 8,231.56 Sq. Mtrs. (Bottler) has entered into an agreement i.e. a “Bottling and the area leased to G.S. Pharmbutor Pvt. Ltd. is 12,531 Sq. Agreement (including addendum to bottling agreement Mtrs. The space of closed soap factory had been leased out to dated 26th April, 2012”) with MI Spirit India Private Ltd Weld Excel India Limited much after the perpetual lease (MISIP) whereby the parties i.e. bottler and MISIP have agreements executed by Shri U.K. Modi with his group agreed to the blending, manufacturing and bottling of the companies namely; TC Healthcare Pvt. Ltd. on 05.12.2002 and products by the bottler. Bottling agreement inter-alia Modi Revlon Pvt. Ltd. on 01.10.2005 and there was no restraint includes: (i) the bottler shall manufacture the products in order operative at that time. accordance with the quality standards, standard Shri U.K. Modi disagrees with the above statements and manufacturing procedures, the process and other submissions made by Shri M.K. Modi as the same are not specifications laid down by MISIP from time to time and in correct. such quantities as may be specified by MISIP from time to time (ii) the bottler shall procure the materials i.e. As per Shri M.K. Modi, the above contentions of Shri U.K. Modi concentrates, spirit, flavouring agents, de-mineralised are factually incorrect. water, packages and levels from MISIP or from the 8. In view of clear cut delineation of responsibilities of the two suppliers suggested or recommended by MISIP (iii) Managing Directors of the Company, the accounts of two products manufacturing by the bottler shall be supplied, divisions of six units and three units of the Company are being dispatched or sold by the bottler as per the purchase orders prepared and finalized independently and accordingly Shri procured by MISIP and bad-debts from direct indenters M.K.Modi and Shri U.K.Modi are certifying the accounts as supplied on credit upon request by MISIP are to MISIP’s relate to the two divisions of the Company i.e six units and three Account (iv) MISIP will be responsible for working capital units respectively, the management whereof is looked after by financing. Bottler shall open a bank account (“ Account” ) them. which is to be operated jointly by the bottler and MISIP and 9. The Company has entered into an agreement with U.P. Power all funds in the account shall belong to MISIP Corporation Limited for its Residential Feeder SC No. 2005 on notwithstanding that the account may be in the name of the 29th March, 2000. In pursuance of that agreement, the bottler (v) MISIP will reimburse the manufacturing Company has paid for the existing authorised occupants only expenses and pay manufacturing margin (i.e. 10% of the after 1st July, 1998 computed prorata based on covered area of aggregate of the manufacturing expenses as reduced by quarters occupied by the employees. In view of the above, no statutory charges, taxes and duties and selling and provision has been made for electricity charges of ` 131.46 Lac distribution expenses) from the above account (vi) all upto the period of permanent disconnection of residential payments received by the bottler for sale of products shall feeder SC No. 2005 i.e. 31st May, 2001 (Previous year ` 131.46 be credited to the account and manufacturing expenses Lac) for the unauthorized occupants and late payment incurred by the bottler, manufacturing margin shall be surcharge/recovery charges amounting to ` 302.66 Lac upto reimbursed by MISIP to bottler. Any surplus remaining in the 31st May, 2001 (Previous year ` 302.66 Lac). In accordance account shall therefore be paid to the MISIP as fee.
(116) MODI INDUSTRIES LIMITED (b) In the opinion of the management, since the products are (d) The Expert Advisory Committee of Institute of Chartered being manufactured and sold in the name of the bottler, the Accountants of India in an almost similar case do not agree purchase invoices in respect of raw material, packing with the above mentioned accounting treatment. The material and consumables and sales invoices for the opinion is governed by the substance of the finished goods are being issued in the name of the bottler, transaction and not by the legal form i.e. sales, purchases, necessary compliances under various tax laws are also assets and liabilities relating to such business controlled by being done by the bottler and special bank account is also the brand owners should not be recorded in the books of in the name of the bottler, the transactions of the above account of the Company even though supporting vouchers business of manufacture and sale of “Vodka and Whisky” are in the name of the Company and the correct accounting have been treated as part of books of account of the bottler treatment of the transactions in the books of account of the and these have been included in sales, expenses, assets Company would be to recognize only the fixed margin/ and liabilities of the bottler as stated in paragraph (c) below. charge received by it rather than to recognize sales and (c) Balance Sheet and Statement of Profit and Loss of the purchases of the business of manufacturing IMFL and also bottler for the financial year ended 31st March, 2016 and should not recognize any current asset or liabilities of the 31st March, 2015 includes the following items relating to the said business in its books of account. Further, the brand above activities of manufacture and sale of “Vodka and owners entitlement paid by the Company should be booked Whisky”: as a mere cash outflow. Further the Expert Advisory Committee had clarified that the opinion expressed by the Balance Sheet (` in Lac) committee is purely from the accounting point of view Particulars As at As at without consideration of any implication thereof, from the 31st March, 2016 31st March, 2015 point of view of the provisions of TDS/TCS in the Income Tax Act 1961 or any other legal/ statutory requirement. Sundry Debtors 2,796.50 1,871.91 15. Consequent to the losses, the Company had been declared a Bank Balances 147.13 132.03 Sick Industrial Company on 14th March, 1991 in terms of Section Security Deposits 222.53 107.03 3(1)(o) of the Sick Industrial Companies (Special Provisions) Closing Stock 826.80 892.39 Act, 1985. Show Cause Notice issued by BIFR for winding up pursuant to its order dated 28th October, 2013 has been stayed Advance Recoverable 124.48 81.37 by AAIFR. Pending final orders of BIFR/AAIFR, the accounts of Total Current Assets 4,117.44 3,084.73 the Company have been prepared on a going concern basis. 16. (a) No provision has been made for penal/delayed/simple/ Less: Current Liabilities 1,084.55 845.33 compound interest amounting to ` 37839.07 Lac upto 31st March, 2016 (for the year ` 5400.68 Lac) on term Credit Balance of MISIP 2, 750.99 3,835.54 2,093.63 2,938.96 borrowings of Financial Institutions and debentures Net Current Assets 281.90 145.77 pending final order of BIFR. Recognized as net profit for the year (b) Interest payable by Vanaspati Unit of the Company to Instead of manufacturing margin 281.90 145.77 Financial Institutions since the date of disbursement of the IMPACT OF NET PROFIT NIL NIL loan on simple rate of interest basis amounts to ` 1450.65 Lac upto 31st March, 2016 and the unit holds total interest Statement of Profit & Loss (` in Lac) provision of ` 732.41 Lac as on 31st March, 2016 resulting in the short provision of ` 718.24 Lac on simple interest Particulars 2015-2016 2014-2015 basis. Turnover (Net of discount) 8,690.28 3,190.47 (c) The Sugar & Distillery Units of the Company have given a Other Income 10.32 8,700.60 27.90 3,218.37 proposal for settlement of their dues with Allahabad Bank Excise duty paid 3,226.11 440.12 of ` 227.00 Lac against which an upfront payment of ` 50.00 Lac has already been made under `No Lien Account’ and Cost of materials consumed 1,192.75 629.37 included under “Other Bank Balances” and to pay the Change in Inventories (18.89) (125.63) balance amount of ` 177.00 Lac in two equal monthly Employees Benefits Expenses 397.27 336.75 instalments after the receipt of sanction from the Bank. The Finance Costs 8.68 4.16 shortfall in interest provision amounting to ` 168.84 Lac will be provided in the books of account in the year of approval Rates & Taxes 300.95 212.16 of OTS proposal by the Bank which is pending. Sales Promotional Expenses 999.49 296.28 (d) The Sugar Unit of the Company has not made provision for Other Expenses 2,312.34 1,279.39 interest/bank charges amounting to ` 3711.21 Lac (for the Total Expenses 8,418.70 3,072.60 year `531.20 Lac) on cash credit loan taken from Allahabad Bank in view of para (c) above. Net Profit for the year 281.90 145.77 (e) No provision has been made for interest on Cash Credit Recognized as net profit for the year amounting to `413.16 Lac (for the year ` 65.13 Lac). Instead of manufacturing margin 281.90 145.77 Further, response to the proposal submitted to the Bank for IMPACT OF NET PROFIT NIL NIL One Time Settlement (OTS) dues is awaited in Distillery
MODI INDUSTRIES LIMITED (117) Unit in view of para (c) above. the total interest as per the scheme. No Dues Certificate of (f) Till 31st March, 2000, simple interest on matured fixed Sales Tax authorities is awaited. deposits and interest upto date of maturity was provided in 18. The Distillery Unit declared cessation and lock-out of the Unit the books of account. With effect from 1st April, 2000, no with effect from 19th December, 1991 and 5th January, 1992 provision has been made for interest of ` 325.10 Lac upto respectively. The lockout has since been lifted. The U.P. 31st March, 2016 (for the year ` 13.97 Lac), computed as Government, suo moto, has referred the matter to the Industrial per past practice, on these fixed deposits in view of a legal Tribunal to decide the legality of the lockout. Pending final opinion received by the Company to the effect that as per decision, no provision has been made for wages ` 27.46 Lac for terms and conditions of Fixed Deposit Scheme, deposits do the lockout period. not carry any interest beyond due dates unless these are 19. Provision/payments (including value of perquisites) has been renewed. Since these deposits were never renewed after made to Managing Directors for the remuneration of `80.68 Lac their due dates as such, the question of payment of interest in terms of shareholders resolution, which is subject to approval after due dates does not arise at all. However, as a prudent of the Financial Institutions. measure, the provision made of ` 280.85 Lac in the past 20. No provision has been made for Earned Leave for Steel Unit- (net of payments) has been retained in the books of account upto 1991-92, amount unascertained. as on 31st March, 2016. 21. As per Press Release dated 18th January, 2016, the State 17. (a) The Vanaspati Unit had applied for Sales Tax Relief Government has announced financial assistance on `23.30 per Exemption to U.P. Government in terms of Section 4A of quintal of cane which would be linked to average selling price of U.P. Sales Tax Act. Consequent to rejection, the Company sugar and its by products during 1st October, 2015 to 31st May, has filed a writ petition in Lucknow Bench of Allahabad High 2016, which is yet to be announced. The Company has Court and Court had passed an order dated 21st February, estimated and accounted for the above financial assistance of 2013 that “the writ petition is allowed and impugned order `1147.70 Lac @ `23.30 per quintal of cane as the Company is dated 22nd April, 1992 is quashed. The opposite parties are hopeful for issue of notification by the State Government in this directed to reconsider the case of the petitioner afresh, after regard. Had the above financial assistance not accounted for in giving personal opportunity of hearing and pass the books of account, the cost of material consumed and value appropriate orders, in accordance with law.” In compliance of closing stock would increase by `1147.70 Lac and `183.60 of High Court order, we had filed an application before the Lac respectively is resulting in net impact of increase in Secretary Level Committee (Constituted under Section 4A expenses by `964.10 Lac. of the U.P. Trade Tax Act). As the matter is still pending before the authority, no provision has been made for sales 22. Previous year’s figures have been regrouped wherever tax liability of Rs.2,455.78 Lac relating to the period May, necessary. 1991 to July, 1994 (previous year Rs.2,455.78 Lac). 23. No confirmation letters were sent to debtors/creditors. In the (b) The Vanaspati Unit had preferred an application for absence of such confirmations, the balances in respect of deferment of Sales-tax with effect from July, 1994 under Sundry Debtors/Creditors, Loans taken/given and Advances Section 38 of the U.P. Sales Tax Act and the same has been and other accounts are taken as shown by the books of rejected by the State Government. The Company has also accounts and are subject to adjustments and reconciliation, if filed Writ Petition against the rejection and consequent to any. the orders of the Court, the recovery of Sales-tax has been 24. In view of non-viability of the Vanaspati Unit, which was a kept in abeyance. Accordingly, Sales-tax amounting to ` separate business segment as per AS-17, Segment Reporting, 440.46 Lac (previous year ` 440.46 Lac) relating to the the Company declared closure of the Unit with effect from 3rd period August, 1994 to March, 1996 has not been deposited February, 2003 and prior information, as required under law, with the authorities. was given to the State Government on 4th December, 2002. The The above writ petition filed by the Company was listed for closure is consistent with the Company’s strategy to focus on its hearing on 2nd May, 2008 at High Court, Lucknow Bench. other viable manufacturing activities. The Company had filed an affidavit with the Court that BIFR 25. Delhi Excise Authorities issued Show Cause Notices and raised had passed an order dated 26th March, 2008 by virtue of demand for `167.43 Lac towards Risk-Purchase of Country which the Bench permitted the Commercial Tax Liquor in view of non-supply of the same by Distillery Unit of the Department, Government of U.P. to recover its outstanding Company. Company has disputed the above demand and a Writ dues, due after 30th June, 2007. The Company had also Petition was filed before the Hon’ble Delhi High Court who stated in the said affidavit that the Hon’ble Supreme Court ordered the case to be referred back to Collector of Excise for of India had affirmed the order of the BIFR and therefore in taking final decision. The Collector of Excise vide its order dated view of the said orders of BIFR as affirmed by the Hon’ble 27th June, 2003 has confirmed the above demand against Supreme Court, the said Writ Petition may be dismissed as which the Company has filed a writ petition before the Hon’ble infructuous. Accordingly the High Court, Lucknow Bench Delhi High Court. On the basis of orders of Hon’ble Delhi High has dismissed the said writ petition as infructuous. Court, the Company has deposited `50.00 Lac till date against (c) In accordance with the scheme announced by U.P. the above demand. No provision is considered necessary at this Government regarding Waiver of Interest & Penalty on stage since the matter is sub-judice. Sales Tax, the Distillery Unit of the Company has paid and 26. (a) As on 31st March, 2016, there were 160 Public Deposits provided interest during 2005-06 of ` 54.77 Lac i.e. 10% of amounting to `7.32 Lac which have remained unclaimed
(118) MODI INDUSTRIES LIMITED and unpaid for a period of more than seven years and seek the same before affecting final sale of such quarters. interest accrued but not paid on these unclaimed deposits Accordingly the sale of such quarters will be accounted for only till the date of maturity amounts to `2.40 Lac. Details of on receipt of approval of Financial Institutions. Further the unclaimed and unpaid debentures for a period of more than Company has been legally advised that it can enter into such seven years are presently not available. “Agreements to Sell”. The Company has filed a return dated 14th June, 2002 with 29. (a) The Steel Unit of the Company has entered into few leases, the Registrar of Companies duly certified by practicing including perpetual leases, agreements for certain portions Company Secretary stating that the Company is a Sick of the factory land and building 27954.86 Sq. Mtrs (Previous Industrial Company as per orders of BIFR dated 14th year 27954.86 Sq. Mtr.) for which approval of financial March, 1991 and rehabilitation proposal for payment in institutions, to whom the factory land and buildings are respect of debentures and fixed deposits etc. is pending mortgaged, is yet to be obtained. However, the Company before the IDBI (as the Operating Agency)/BIFR/AAIFR for has been legally advised that it can enter into such lease consideration. The Company will pay/credit the amount as agreements. Further, the lease money was mainly utilized per final orders of BIFR/ AAIFR. Accordingly, no amount for payment of workers and statutory dues. was credited / paid to Investor’s Education and Protection (b) The Company has entered into a perpetual lease Fund till date. agreement for certain portion of closed Soap factory, land (b) With regard to payment of Fixed Deposits, as per Section & building (1584 sq. mtrs.) to a related party. As the said 74 of the Companies Act, 2013, deposits accepted before land and building is mortgaged with the financial institutions the commencement of the Act (i.e. 1st April, 2014) shall be therefore the Company had sought the approval of IDBI repaid within one year from the commencement of the Act. Limited (the lead financial institution) to the said transaction The Company had filed a petition with the Company Law vide its letter dated 6th September, 2006. Since IDBI Limited Board on 31st March, 2015 which has since been did not respond, therefore the Company again wrote a letter dismissed by Company Law Board vide its order dated 21st to IDBI Limited on 5th April, 2007 requesting for its approval April, 2016. Against this order the Company has filed an to the said transaction. The Company in the letter under appeal before Hon’ble High Court, Allahabad on 23rd July, reference also mentioned that if IDBI Limited does not 2016. respond to the Company’s request, it will be deemed that 27. (a) There has been diminution `other than temporary’ of the Company’s request has been approved by IDBI Limited `148.80 Lac as on 31st March, 2016 (Previous Year `149.60 and the Company will go ahead with the said leasing Lac) in the market value of one of its investments in the agreement. The IDBI has so far not responded to the Group Companies mainly in view of closure of plant for the Company’s letter. last three years and negative net worth of the Group 30. (a) Recovery Certificate (RC) was issued on 1st May, 2004 on Company as per books of account as on 31st March, 2016. account of non payment of cane price/commission/interest Even though the modified rehabilitation scheme of this due to Co-operative Societies for the sugar season 2003- group Company is still under consideration of the BIFR, 04. The Hon’ble High Court has stayed the recovery provision for diminution of `148.80 Lac has been made in proceedings against the Company subject to payment of the books of account as on 31st March, 2016 as required by dues upto 31st July, 2004. The Company has complied with Accounting Standard 13 i.e. Accounting for Investments the conditions regarding payment of cane price and and shown as an `Exceptional Item’ in Statement of Profit commission on basic SMP upto 31st July, 2004. However, and Loss. the Company has disputed the payment of interest of (b) In accordance with the Accounting Standard AS-13 i.e. `142.00 Lac and recovery charges of `236.00 Lac in the `Accounting for Investments’ issued by the Institute of Hon’ble Allahabad High Court which is still pending. On Chartered Accountants of India, a sum of ` 11.93 Lac has consideration of prudence, the Company has made been provided in the books of both the subsidiaries of the provision for interest of Rs.142.00 Lac during the year Company during the year ended 31st March, 2016 2004-05. (Previous Year ` Nil) for diminution, other than temporary, in (b) Recovery Certificate (RC) was issued on 18th March, 2008 the value of certain investments even though the Aggregate on account of non payment of cane price/commission/ Market / Intrinsic/Fair value of all investments are interest due to Co-operative Societies for the sugar season substantially higher than their `Aggregate Cost’. 2007-08. The above RC also includes recovery charges of 28. Till 31st March, 2016, certain Quarters of the Company are `413.50 Lac which has not been provided for in the books occupied unauthorisedly by ex-employees/outsiders. The of account. Company has entered into “Agreement to Sell” for 215 (c) Recovery Certificate (RC) was issued on 20th April, 2011 on (Previous year 215), such residential quarters with such parties. account of non-payment of cane price/commission/interest Sale consideration amounting to `504.50 Lac (Previous year due to Co-operative Societies for the sugar season 2010- `504.50 Lac) has been received as interest free advance. These 11. The above RC also includes recovery charges of “agreements” clearly stipulates that final sale of such quarters `268.25 Lac which has not been provided for in the books are subject to approval of Financial Institutions to whom these of account as stay granted by Hon’ble Allahabad High quarters have been mortgaged and the Company proposes to Court.
MODI INDUSTRIES LIMITED (119) (d) Recovery Certificate (RC) was issued on 10th August, 2007 (g) Recovery Certificate (RC) was issued on 20th August, 2015 on account of non payment of cane price/commission/ on account of non-payment of cane price/interest due to interest due to Co-operative Societies for the sugar season Co-operative Societies for the sugar season 2014-15. No 2006-07. The above RC also includes interest of `340.66 provision has been made for recovery charges of `1703.95 Lac upto 7th August, 2007 on cane price/ commission Lac in the books of account. payable to societies and recovery charges of `426.95 Lac Further no provision for interest of `2010.87 Lac for the which has not been provided for in the books of account. As period upto 31st March, 2016 for the sugar season 2014-15 per the Interim Order dated 27th February, 2008 of Hon’ble has been made as the Company expects waiver off the Supreme Court, there shall not be any recovery charges or same. interest for delayed payment at this stage. (h) No provision for interest for the period upto 31st March, (e) Recovery Certificate (RC) was issued on 21st February, 2016 of `341.88 Lac for the Sugar Season 2015-16 has 2014 on account of non payment of cane price/commission/ been made as the Company expects waiver off the same. interest due to Co-operative Societies for the sugar season 2012-13. The above RC also includes interest of `1246.58 (i) In view of Government Notification No. 4/2015,620S,chi th Lac and recovery charges of ` 450.79 Lac. No provision has U.Anu-I-2015-1607/2004, Lucknow dated 12 June, 2015, been made for recovery charges in the books of account. commission on cane purchase for crushing season 2012- Hon’ble Allahabad High Court vide its order dated 16th April, 13 is reduced from `5.10 per quintal to `2.00 per quintal 2014 has stayed the recovery charges of ` 278.99 Lac. resulting in Refund of `249.18 Lac which is shown as Further the Company has paid interest on cane arrears. `Exceptional Item’ in the statement of Profit & Loss. (f) Recovery Certificate (RC) was issued on 23rd June, 2014 31. In the recent past, the Arc Electrode Industry in the country has on account of non payment of cane price/interest due to Co- been facing stiff competition from international players who operative Societies for the sugar season 2013-14. The entered Indian market and started aggressive publicity to above RC also includes interest of `803.85 Lac and capture it. This resulted in adverse impact on domestic recovery charges of `1704.67 lac. No provision has been companies. To cope with the treat, the electrode unit of the made for recovery charges in the books of account. Company has also undertaken publicity campaign through advertisement in Newspapers/banners, calendars etc. in Further as per Press release dated 22nd May, 2015 issued current year also. by Chief Secretary, Sugar Industry and Cane Development Department, U.P. Government, interest on cane arrears for Further, we give below figures on advertisement during last four the sugar season 2013-14 are being waived off. State years: Government Notification in this regard is awaited. In view of 2012-13 ` 381.34 Lac the above pending issue of Notification, the Company has 2013-14 ` 281.64 Lac not provided interest of `2138.58 Lac as the Company 2014-15 ` 154.74 Lac expects issue of Notification ultimately. 2015-16 ` 115.64 Lac
32. RELATED PARTIES DISCLOSURE 01 Key Management Personnel : Shri Mahendra Kumar Modi Managing Director Shri Umesh Kumar Modi Managing Director 02 Other Related Parties with whom the Company had transactions etc : Enterprises over which the Key Management Personnel and their relatives are able to exercise significant influence: Modipon Limited Modi Mundipharma Pvt. Limited
Ashoka Mercantile Limited Win-Medicare Pvt. Limited
Weld Excel India Limited Modi Motors Private Limited
Modi Paint Pvt. Ltd. Modi Illva India Pvt. Ltd.
Bihar Sponge Iron Limited Modi Line Travel Services Pvt. Ltd.
SBEC Bio-energy Limited Modi Revlon Private Limited
SBEC Sugar Limited Modi Senator (I) Pvt. Limited
Moderate Leasing & Capital Services Limited Jayesh Tradex Pvt. Limited
Modi Hitech India Limited A to Z Holding Pvt. Limited
Technicast Engineers Limited H.M. Tubes & Containers Pvt. Ltd.
SBEC System India Limited
(120) MODI INDUSTRIES LIMITED 03 Disclosure of transactions between the Company & its subsidiaris and related parties and the status of outstanding balances as at 3lst March, 2016: (A) Transactions with the enterprises over which the Key Management Personnel and their relatives are able to exercise significant influence: (` in Lac) Year 2015-16 2014-15 Sale of Goods SBEC Sugar Limited 31.02 5065.37 Weld Excel India Limited 41.30 43.76 Modipon Limited -0.20 Modi Paint Pvt. Limited 3.97 - Modi Illva India Pvt. Limited 0.22 - 76.51 5109.33 Purchase of Goods/Raw Materials Weld Excel India Limited 574.98 1233.09 SBEC Sugar Limited 473.41 478.49 Jayesh Tradex Pvt. Limited 4.13 4.34 Modi Hitech India Ltd. 6.20 12.22 Modi Revlon Pvt. Ltd. 8.13 10.19 H.M. Tubes & Containers Pvt. Ltd. - 21.99 Win Medicare Pvt. Ltd. 0.25 - 1067.10 1760.32 Purchase of Assets - 1.77 Rental Income Win Medicare Pvt. Ltd. (Foot Note No. 10) 62.21 67.33 Weld Excel India Limited (Foot Note No. 3) 18.93 17.67 Modi Motors Pvt. Ltd. 12.00 12.00 Modi Mundipharma Pvt. Ltd 9.36 10.93 SBEC Sugar Limited 0.26 2.16 Moderate Leasing & Capital Services Ltd.(Foot Note No. 8) 0.91 - Modi Revlon Pvt. Ltd. 0.36 0.36 Jayesh Tradex Pvt. Ltd. 0.32 0.88 Shri Mahendra Kumar Modi 5.76 4.72 Modi Illva India Pvt. Ltd. 0.58 2.29 Others 0.33 0.33 111.02 118.67 Interest Income Ashoka Mercantile Ltd. (Foot Note No. 7) 71.18 78.89 Payment of Lease Rent Weld Excel India Limited (Foot Note No.2, 5 & 6 ) 86.98 85.85 SBEC Bio-energy Ltd. (Foot Note No. 9) 3.49 - 90.47 85.85 Expenses reimbursed Weld Excel India Limited 26.19 22.52 Others. 0.45 0.48 26.64 23.00 Interest paid on Loan taken Moderate Leasing & Capital Services Pvt. Ltd. 797.74 688.51 Weld Excel India Limited 0.54 - 798.28 688.51 Expenses realized Weld Excel India Limited (Foot Note No.3) 2.95 3.10 SBEC Sugar Limited - 3.41 Shri Mahendra Kumar Modi, 1.26 1.32 4.21 7.83
MODI INDUSTRIES LIMITED (121) (` in Lac) Year 2015-16 2014-15 Loan and Advances taken Moderate Leasing & Capital Services Ltd. 489.32 313.66 Weld Excel India Limited 45.00 - 534.32 313.66 Royalty Fee received Weld Excel India Limited (Foot Note No. 4) 4.45 7.34 Commission paid for sale promotion Ashoka Mercantile Ltd. 1.85 5.75 Receiving of Services Modi Line Travel Services Pvt. Ltd. 12.48 21.08 Refund received against Loans & Advances Recoverable Modipon Ltd. 0.37 4.38 Refund of Security deposits given Ashoka Mercantile Ltd.(Foot Note No.7) 69.50 130.20 Refund of Loan and Advance Moderate Leasing & Capital Services Ltd. 1745.09 1593.02 (B) Balances outstanding at the year end: Interest recoverable Ashoka Mercantile Ltd.(Foot Note No. 7) 64.07 71.00 Amount recoverable Good 24.54 23.58 Doubtful 3.78 3.78 Security deposit to Weld Excel India Ltd Against Cylinders (Foot Note No. 5) 32.66 32.66 Against Oxygen Filling Plant (Foot Note No. 6) 4.00 4.00 Security deposit recoverable for quarters Ashoka Mercantile Limited (Foot Note No. 7) 798.30 867.80 Modipon Limited 147.63 147.63 Sundry Debtors SBEC Sugar Limited 220.82 1380.06 Modipon Limited - 0.12 Amount payable Weld Excel India Limited 323.15 248.53 Modi Revlon Pvt. Ltd. 17.58 10.05 H.M. Tubes & Containers Pvt. Ltd. - 16.99 Others 13.72 18.02 Unsecured Loan taken Outstanding A to Z Holding Pvt. Ltd.24.8924.89 Moderate Leasing & Capital Services Ltd. 2888.65 3646.04 Weld Excel India Limited 45.00 - (C) Payment to the Key Management Personnel: (` in Lac) Yea r 2015-16 2014-15 i) Managerial Remuneration Shri Mahendra Kumar Modi 18.00 18.00 ii) Amount recoverable from Managing Director Shri Mahendra Kumar Modi (Recovered subsequently) - 0.49 iii) Amount payable to Managing Director Shri Mahendra Kumar Modi 0.01 - iv) Amount payable (for gratuity) 3.35 3.35
(122) MODI INDUSTRIES LIMITED Foot Notes: 1. The above excludes amount payable/receivable to/from related parties in the books of Steel Unit in view of non-incorporation of Balance Sheets for these years on account of non-availability of opening audited balances as on 01.04.1993. 2. During the financial year 2010-11, Electrodes unit of the Company has taken office premises in Delhi on sublease basis from Weld Excel India Limited (WEIL), a related party, under operating lease for an initial period of three years as non-cancelable period at monthly rent of ` 4.15 Lac and the lease was further renewed for a period of three years w.e.f. 1st April, 2013 at an increase 15% over the current lease rent i.e. `4.78 Lac per month . Lease agreement has now been further renewed at reduced rent of `4.15 Lac per month for a period of three years w.e.f. 1st April, 2016. 3. Electrode unit of the Company has taken premises for office cum guest house cum residence of Managing Director in Chatarpur, New Delhi on operating lease basis and having sharing agreement with WEIL with effect from 1st November, 2011 (for a period of two years and further extended till 31st December, 2016) at monthly rent of `1.60 Lac with effect from 1st January, 2015 (our share net of recovery for Managing Director). The Company is legally advised that sharing of lease/rent between related party are not covered under the provisions of related party transactions specified under section 188 of the Companies Act, 2013. 4. Electrode Unit of the Company had entered into a trade mark license agreement with WEIL with effect from 1st May, 2009 (for the period five years and further extended on 1st May, 2014 for next six years) wherein the right to use MODI’s trade mark, logo and brand for arc welding filler metals and welding equipments was given to WEIL at a royalty of 1% of the net sale price. 5. 1633 Cylinders (Previous year 1633 cylinders) taken on operating lease at monthly rent of `45.00 per cylinder since 1st June, 2012 for three years has been renewed for five years w.e.f. 1st June, 2015 on same rent. Approval of shareholders would be obtained at the ensuing Annual General Meeting. 6. Oxygen Filling Plant taken on operating lease for 2 years (non-cancelable) on 1st January, 2012 at again monthly rent of `1.00 Lac was renewed for period of one year from 1st January, 2015 to 31st December, 2015. Lease period subsequently extended for one more year w.e.f. 1st January, 2016 at the same rent at monthly rent of `1.00 Lac. 7. Unsecured Security deposits amounting to `798.30 Lac (Previous year `867.80 Lac) given during May, 2011 against temporary possession of 43 (Previous year 47) houses in Modinagar on which interest charged @ 8.50% with effect from 1st April, 2014. 8. Leave and License Agreement entered into with Moderate Leasing and Capital Services Limited for eleven months on 3rd November, 2015 for rent of `16,200/- per month plus Service Tax. 9. DG Set taken on operating lease at monthly rent of `67,000/- for a period of five years with effect from 2nd November, 2015. Approval of Shareholders would be obtained at the ensuing Annual General Meeting. 10. Lease agreement for house w.e.f. 15th March, 2016 for eleven months at monthly rent of `8,000/-. Approval of Shareholders for the agreement would be obtained at the ensuing Annual General Meeting. 33. Undertakings given to Financial Institutions on behalf of Lords Chloro Alkali Limited, Modi Rubber Limited and Bihar Sponge Iron Limited: (a) To procure funds jointly/severally with other promoters to meet any shortfall in the resources of the Company for completing their projects and/or for working capital. The funds made available/to be made available can only be withdrawn with the prior approval of Financial Institutions and shall not involve any charge or lien on the assets of the said Companies. (b) That the Company shall not transfer, assign, pledge, hypothecate or otherwise dispose of in any manner it’s holding in their capital without Institutions’ prior approval in writing. 34. Deferred credit including liability for interest payable for unexpired period have been guaranteed by the Bankers of the Company against hypothecation of Gas Cylinders and Machinery purchased under the Scheme in Steel Unit. 35. Impairment of fixed assets, if any, as per Accounting Standard AS-28 i.e. impairment of assets has not been ascertained in Sugar and Electrode Units. 36. Impact of componentization of fixed assets and ascertaining useful life and original cost/estimated value of such components as on 1st April, 2015 as required by the amended Schedule II of the Companies Act, 2013 is pending. Impact, if any, on the depreciation for the year ended 31st March, 2016 is yet to be ascertained by the Management. 37. Debit advice of ` 2.63 Lac of Sugar Unit toward certain expenses has not been accounted for in the books of accounts of MD Office. Further no provision has been made for electricity expenses of six units ` 7.43 Lac. 38. Pursuant to directions received from Reserve Bank of India, Main object clauses of both the subsidiary companies were amended as on 16th September, 2000 that the Company would not carry on the business of Non-Banking Financial Institution within the meaning of Section 45 I A of the Reserve Bank of India Act, 1934. Accordingly the Company has not acquired any fresh investments.
MODI INDUSTRIES LIMITED (123) 39. Modi Spinning & Weaving Mills Company Limited, one of investee companies, in compliance of BIFR sanctioned scheme has allotted following shares during the year 2011-12 free of cost (one share against 5 (five) Equity Shares held by the Shareholders of MSWM as on record date i.e. 12th November, 2009) to both the subsidiaries as under :
Subsidiaries of the Company Shares received of Haryana Distillery Ltd. Rajputana Fertilizers Ltd. Own Investment (India) Ltd. 8233 8233 Your Investment (India) Ltd. 9117 9117
40. Investments in two associates i.e. Bekaert Engineering (India) Pvt. Ltd. and Modi Santa Fe India Pvt. Ltd. have not been accounted for in Consolidated Financial Statements under the Equity method as prescribed in Accounting Standard -23 i.e. Accounting for investment in associates as these associates are operating under severe long term restrictions that significantly impair its ability to transfer funds to the investor. Accordingly these investments are accounted for at cost. 41. SEGMENT REPORTING : ( i) The Management has identified six reportable Business Segments for the current year namely : Sugar comprising of Cane Sugar. Gas comprising of gases. Distillery comprising of liquors and spirit. Paint comprising of Paints & Varnish. Electrodes comprising of Welding Electrodes Investment Operations (ii) The Vanaspati Unit of the Company, which is lying closed since 2003, has not been treated as business segment. (iii) The Steel Unit is lying closed since 24th January, 1993 due to strike/lock-out. In the meanwhile, opening balances (Assets and Liabilities) of the unit as on 1st April, 1992 subject to certain modifications as per Note 27 {4(c)} have been incorporated as Assets & Liabilities of Steel Unit. (Refer Note 27(4)). (iv) Segmentwise information (Primary Segments) for the current year: ( ` in Lac) Particulars Sugar Gas Distillery Paint Electrode Investment Total operations SEGMENT REVENUE Total Sales/Income 20614.77 564.51 6427.10 2053.92 1984.16 - 31644.46 Less: Inter Segment Sales 512.66 2.97 - 6.70 0.32 - 522.65 Total Sales/Income 20102.11 561.54 6427.10 2047.22 1983.84 - 31121.81 from Operation* SEGMENT RESULT : Segment Result 434.05 53.59 205.13 (23.88) (645.80) (11.15) 11.94 Add: . i) Profit of Steel Unit# ------28.59 ii) Interest Income/Profit on ------54.81 sale of Fixed Assets 95.34 Less: Interest Expenses ------578.13 Provision fo rDiminution in value of long term investment {27 (27)(a)} ------148.80 Unallocable Expenses (Net)** ------264.51 Profit/(Loss) before Tax ------(896.10) Less: Provision for Tax ------0.28 Profit/(Loss) after Tax (896.38)
# Excludes inter-unit rental income of ` 46.12 Lac. * Sugar Units includes refun dof commission on sugar cane purchased for 2012-13 of ` 249.18 Lac shown as “Exceptional Item” in Statement of Profit & Loss. ** Includes Administrative Offices i.e. MD Office and Corporate Office of the Company.
(124) MODI INDUSTRIES LIMITED OTHER INFORMATION ( ` in Lac) Particulars Sugar Gas Distillery Paint Electrode Investment Total operations
Segment Assets 8765.92 214.71 4846.37 734.27 786.94 4.55 15352.76 Steel Unit* ------3384.09 Investments ------640.84 FD with Banks & Interest Accrued 20.48 6.23 184.06 6.78 389.71 26.39 633.65 Other unallocable assets** ------2819.51 Total Assets #22830.85 Segment Liabilities 19362.17 180.51 4815.93 605.94 1389.97 0.59 26355.11 Steel Unit* ------2778.13 Other unallocable liabilities** ------2953.90 Total Liabilities ------32087.14 Secured/Unsecured Loan/DPG ------12102.76 (Including interest accrued) Capital Expenditure : (Including Under Erection and acquired under finance lease) on Segment Assets 37.36 - 45.86 3.67 0.14 - 87.03 Depreciation 172.32 2.34 41.52 8.30 64.84 - 289.32
NOTES : * Refer Note 27(41)(iii) above. ** Includes Administrative Offices i.e. MD Office and Corporate Office of the Company. 01 The Business operations are concentrated in India only. 02 External Revenue is exclusive of Excise Duty realized. 03 Inter segment revenues between operating segments are accounted for at market price. @ Includes revaluation of Fixed Assets also. #This includes `1023.76 Lac being unreconciled debit balance of Steel Unit included in Short Term Loan and Advances i.e. Note 17. (v) Segmentwise information (Primary Segments) for the previous year: ( ` in Lac) Particulars Sugar Gas Distillery Paint Electrode Investment Total operations SEGMENT REVENUE : Total Sales/Income 24453.79 615.31 4177.91 1737.10 3598.12 - 34582.23 Less: Inter Segment Sales 795.96 2.78 - 3.41 0.24 - 802.39 Total Sales 23657.83 612.53 4177.91 1733.69 3597.88 - 33779.84 SEGMENT RESULT : Segment Result (1203.22) 59.61 199.64 (12.79) (606.16) 1.05 (1561.87) Add: . i) Profit of Steel Unit# 48.09 ii) Interest Income/ Profit on 50.04 sale of Fixed Assets (1463.74) Less: Interest Expenses 724.63 Unallocable Expenses (Net)* 316.08 Profit/(Loss) before Tax (2504.45) Less: Provision for Tax 0.28 Profit/(Loss) after Tax (2504.73)
# Excludes inter-unit rental income of `46.12 Lac. * Includes Administrative Offices i.e. MD Office and Corporate Office of the Company.
MODI INDUSTRIES LIMITED (125) OTHER INFORMATION ( ` in Lac) Particulars Sugar Gas Distillery Paint Electrode Investment Total operations Segment Assets 12370.68 240.94 3870.25 792.78 1456.26 5.57 18736.48 Steel Unit* 3390.19 Investments 801.58 FD with Banks & Interest Accrued 13.33 4.39 169.73 6.24 396.22 25.17 615.08 Other unallocable assets** 5023.85 Total Assets #28567.18 Segment Liabilities 22474.30 198.51 3658.26 646.72 1515.52 0.88 28494.19 Steel Unit* 2778.13 Other unallocable liabilities** 2880.40 Total Liabilities 34152.72 Secured/Unsecured Loan/DPG 12808.53 (Including interest accrued) Capital Expenditure : (Including Under Erection and acquired under finance lease) on Segment Assets 38.27 1.15 13.45 0.63 0.05 - 53.55 Depreciation 188.25 2.33 51.00 14.48 112.29 - 368.25 NOTES : * Refer Note 27(41)(iii) above. ** Includes Administrative Offices i.e. MD Office and Corporate Office of the Company. 01 The Business operations are concentrated in India only. 02 External Revenue is exclusive of Excise Duty realized. 03 Inter segment revenues between operating segments are accounted for at market price. @ Includes revaluation of Fixed Assets also. # This includes `992.24 Lac being unreconciled debit balance of Steel Unit included in Short Term Loan and Advances i.e. Note 17. 42. Earnings per Share (EPS) basic and diluted, computed in accordance with Accounting Standard-20: ( ` in Lac) Particulars 2015-16 2014-15 Loss for the year as per annual accounts 896.38 2504.73 Add: Dividend on Preference Shares 6.11 6.11 Total (A) 902.49 2510.84 Number of Equity Shares issued (B) 33,09,214 33,09,214 Earning per share (in ` ) (A)/(B) (27.27) (75.87) Face Value of Equity Share in Rupees 10 10 43. Additional information as required by Paragraph 2 of the General Instructions for preparation of Consolidated Financial statements to Schedule III of the Companies Act, 2013: Name of the Enterprise Net Assets i.e. total assets minus total liabilities Share in profit or loss As % of consolidated Amount As % of consolidated Amount net assets ( `in Lac) profit or loss ( `in Lac) Parent Modi Industries Ltd. (100.26) (19350.63) 98.72 (884.95) Subsidiaries Indian Own Investment (India) Ltd. 0.09 17.83 0.70 (6.30) Your Investment (India) Ltd. 0.174 32.53 0.70 (5.13) Minority interest in all subsidiaries - 0.06 - (0.02)
As per our report of even date attached. For Modi Industries Limited For P. R. Mehra & Co., Chartered Accountants Mahendra Kumar Modi Rakesh Kumar Modi Manish Kumar Modi Abhishek Modi (Regn.No.000051N) (DIN 00014594) (DIN 00022386) (DIN 00030036) (DIN 00002798) Managing Director Director Director Director Ramesh Chand Goyal Partner N.P. Bansal V P Gupta Membership No. 012628 (PAN AAOPB7869G) (FCS-6380) Place : Delhi Chief Financial Officer Company Secretary Date : 22nd August, 2016. (126) MODI INDUSTRIES LIMITED PROXY FORM (FORM NO. MGT-11) [Pursuant to section 105(6) of the Companies Act, 2013 and rule 19(3) of the Companies (Management and Administration) Rules, 2014] Name of the company : MODI INDUSTRIES LIMITED Tel: 01232-231755, 243115 CIN : L15429UP1932PLC000469 Email : [email protected] Registered Office : MODINAGAR-201204. (U.P.) Website : www.modiindustries.net
Name of the member(s) Registered address E-mail ID Folio No. I/We being the member(s) of ...... equity shares of the above named Company, hereby appoint:
(1) (2) (3) Name Address E-mail ID
or failing him or failing him as my/our proxy to attend and vote (on a poll) for me/us and on my/our behalf at the 82st Annual General Meeting of the Company, to be held on Thursday, the 29th September, 2016 at 12.30 P.M. at Modi Industries Transit House (Modi Industries Complex), Modinagar-201204, Distt. Ghaziabad (U.P.) and at any adjournment thereof in respect of such resolutions as are indicated below:
I wish my above proxy to vote in the name as indicated in the box below :
Resolutions For Against 1. Consider and adopt: (a) Audited Standalone Financial Statements, Report of the Board of Directors and Auditors. (b) Audited Consolidated Financial Statements and Auditor Report. 2. Re-appointment of the following Directors, retiring by rotation: (a) Shri Vinay Kumar Modi (b) Shri Rakesh Kumar Modi 3. Appointment of Statutory Auditors and fixing their remuneration. 4. Ratification of remuneration payable to Cost Auditors. 5. Ratification of the Rent/Lease/Hire Agreements & Transactions for Cylinders/Flat/DG Set with related parties.
Signed this ………...... …day of …...... 2016.
Signature of First Proxy Holder : …...... ………….. Affix Signature of Second Proxy holder : ……………...... revenue stamp Signature of Third Proxy holder : ……………...... of ` 1.00
NOTE : This form of proxy in order to be effective should be duly completed and deposited at the Registered Office of the Company, not less than 48 hours before the commencement of the Meeting...... Signature of Shareholder
MODI INDUSTRIES LIMITED (127) NOTES
(128) MODI INDUSTRIES LIMITED MODI INDUSTRIES LIMITED CIN: L15429UP1932PLC000469 Tel: 01232-231755, 243115 Email : [email protected] Regd. Office: Modinagar 201204 (U.P.) Website : www.modiindustries.net
ATTENDANCE SLIP
I hereby record my presnce at the 82st Annual General Meeting held at Modi Industries Transit House (Modi Industries Complex), Modinagar 201204, Distt. Ghaziabad (U.P.) on Thursday, the 29th, September, 2016, at 12.30 P.M.
1. Full name of the Shareholder ...... (in Block Letters)
2. L.F. No......
3. No. of Equity shares held ......
4. Signature of the Shareholder or proxy attending......
To be used only when First named shareholder is not attending.
Please give full name of the 1st Joint Holder.
Mr./Mrs./Miss......
NOTE: Please fill-in this attendance slip and hand it over at the ENTRANCE OF THE TRANSIT HOUSE.
MODI INDUSTRIES LIMITED (129) Route Map of the Venue of the 82nd Annual General Meeting.
Modi Industries Ltd., Transit House (Modi Industries Complex) opposite Modi Mandir, Modi Nagar.
(130) MODI INDUSTRIES LIMITED NOTES
MODI INDUSTRIES LIMITED (131) BY COURIER
ANNUAL REPORT 2015-16
To,
If undelivered please return to : MODI INDUSTRIES LIMITED CIN - L15429UP1932PLC000469 Regd. Office : Modinagar - 201204. (U.P.) Tel: 01232-231755, 243115 Email : [email protected] Website : www.modiindustries.net
(132) MODI INDUSTRIES LIMITED