| 1. (a) Contingent liabilities not provided for
i) Income Tax - Rs. 220.00 Lacs ( previous year Rs. 344.00 Lacs)
ii) Sales tax - Rs. 70.13 Lacs (previous year Rs. 67.57 Lacs)
iii) Bank Guarantee - Rs. 25,272.79 Lacs (previous year Rs. 25,272.79
Lacs)
iv) Provident Fund - Rs. 12.88 Lacs ( Previous year Rs. Nil)
v) Custom Duty - Rs. 1,154.70 Lacs
vi) Excise Duty - Rs. 3,179.29 Lacs
vii) Penal Interest - Nil (Previous year Rs. 108.39 Lacs)
viii) Claims against the company not acknowledged as debts on account
of cases filed by the dealers - Rs. 390.18 Lacs
1. (b) Estimated value of contracts on capital account (net of
advances) remaining to be executed and not provided for Rs 108.06 lacs
(previous year Rs. 6.71 lacs)
2. Acceptances to the extent of Rs. 3970.03 lacs (previous year Rs.
2,707.44 lacs) are secured against hypothecation of raw material
components.
2001-02 2000-01
(Rs. Lacs) (Rs. Lacs)
3. Remuneration to directors *
Salaries 73.25 123.15
Perquisites and other benefits 13.64 48.48
Sitting Fees 0.16 0.12
Managerial Remuneration includes Rs 26.34 Lacs (Previous year 6.94
Lacs) which is subject to Central Govt.s approval for which
applications/representations are pending before the Central Government
and Rs. 1.47 Lacs (Previous year Rs. 5.86 Lacs) which are subject to
Shareholders approval. In case of non-approval, recovery actions would
be initiated as per directions of Board of Directors. Deputy Managing
Director has been appointed as Managing Director by the Board of
Directors on 30.09.02, subject to the shareholders and other
approvals.
Note: The provision for gratuity and leave encashment has been made on
group basis and separate figures applicable to individual employees are
not available and, therefore, the amount provided for gratuity and
leave encashment has not been taken into account in the above
computation.
4. Auditors remuneration:
Audit fees 10.50 10.50
Tax audit fees 1.05 1.05
Fee for other services 2.13 3.60
5. Expenditure in foreign currency (on cash basis):
Interest 184.85 1161.14
Travelling 17.83 43.28
Others Nil 81.00
6. CIF value of imports
Kits and components 3429.32 19851.30
Capital goods Nil 5.28
Others Nil 29.45
7. Earnings in foreign exchange:
Exports, on FOB basis 540.32 15,198.45
Interest - 0.73
8. (a) The interest incurred on foreign currency loans taken from
financial institutions upto June 30, 1985 for investments in certain
specific plant and machinery had been computed for the entire period of
the loans on the basis that the interest accrues at the time the
facilities were availed of. For the purpose of this computation it was
assumed that the repayment of loans would be made on the dates
stipulated and that adjustments on account of future fluctuations in
the amount of interest owing to changes in interest rate and
fluctuations in foreign currency rates would be accounted for in the
year in which such changes occurred. Accordingly, future interest which
related to the period after putting into use the plant and machinery
was accounted for as part of the acquisition cost of the said plant and
machinery.
(b) Interest and premium payable on redemption of debentures pertaining
to debentures issued against advance of Rs. 500 lacs received upto
June 30, 1985 for investment in buildings, plant and machinery and
preoperative expenses (including on trial production) was computed for
the entire period of debentures on the basis that interest had accrued
at the time of receipt of the money. For the purpose of this
computation it had been assumed that the debentures, after allotment,
would be redeemed on the dates stipulated. Accordingly, future
interest/premium on redemption which related to the period after
putting into use of the buildings and plant and machinery was accounted
for as part of the acquisition cost of fixed assets.
(c) The aforesaid treatment of future interest on foreign currency
loans and debentures as well as future premium on redemption of
debentures which related to the period after putting the assets into
use is not in accordance with Accounting Standard 10 (Accounting for
Fixed Assets) of the Institute of Chartered Accountants of India, which
became mandatory only in respect of accounting years beginning on or
after 1 April 1991. The Company is following the aforesaid accounting
treatment since 1985-86 and has not changed the treatment since the
impact in the context of these accounts is not significant.(d) Had the
future interest on foreign currency loans and on debentures and the
premium payable on redemption of debentures, which related to the
periods after putting into use the buildings and plant and machinery,
not been treated as part of the acquisition cost of fixed assets and
instead treated as expenditure in the year to which they related, the
net book value of fixed assets as at March 31, 2002 would have been
lower by Rs. 239.89 lacs (cost Rs. 874.04 lacs less depreciation Rs.
634.15 lacs) (previous year Rs. 277.70 lacs) and in the profit and
loss account, the charge for depreciation and consequently the loss for
the year would have been lower by Rs. 37.81 lacs (previous year Rs.
37.81 lacs).
9. (a) In respect of the 15% non-convertible redeemable debenture
issue of Rs. 1858 lacs against which an advance of Rs. 500 lacs was
received upto June 30, 1985 the Company had capitalised the debenture
issue expenses amounting to Rs. 90.38 lacs committed upto that date.
(b) Had the debenture issue expenses not been capitalised and instead
treated as deferred revenue expenditure and written off over a period
of five years in accordance with the current policy of the Company, the
charge for depreciation and consequently the loss for the year would
have been lower by Rs 3.70 lacs (previous year Rs. 3.70 lacs), whereas
the fixed assets would have been lower and accumulated debit balance in
the profit and loss account higher by Rs. 27.17 lacs as at 31 March
2002 (previous year Rs. 30.87 lacs).
10. Pursuant to the issuance of Notification No. CE(NT) - 11/95 dated
March 16, 1995 (the "notification") by the Central Government in terms
of section 37 of the Central Excise and Salt Act, 1944, (the "Act"),
unutilised MODVAT balance amounting to Rs. 1120.39 lacs (Previous Year
Rs 1120.39 Lacs) standing to the credit of the Company on that day was
to lapse. The Company challenged the validity of this notification
through a writ petition filed in the Delhi High Court on the grounds
that it was discriminatory, unreasonable, arbitrary, ultra-vires
Article 14 of the Constitution of India and against the principle of
promissory estoppel. The Delhi High Court, stayed the operation of this
notification by an order dated 19 December, 1997. However, on an appeal
filed by the Government of India in the Supreme Court against the
aforesaid stay order, the Companys writ petition was transferred from
the Delhi High Court to the Supreme Court. In the similar case of
another manufacturer, the Supreme Court vide its judgement dated 28
January, 1999 struck down the notification ruling that the amended Rule
57(F) could not be applied since it affected the vested rights of the
assessee, and that the Government of India did not have the powers
under section 37 of the Act to make a rule in this manner. However, as
a measure of abundant caution, the Company did not utilise any
available MODVAT credit. During the year 1998-99, the Act was amended
with retrospective effect from 16 March 1995, as a result of which the
said notification lapsing the MODVAT credit is deemed to have been made
under the authority of law. The Company along with other affected
manufacturers has represented to the Government of India for
withdrawing the said notification and is also contemplating legal
action based on legal advice that, should it challenge the amendment in
the Supreme Court, the likelihood of a judgement in its favour, is
high. In view of the above, no provision or write-off has been made in
the accounts in respect of MODVAT balance of Rs. 640.44 lacs which has
been carried forward under the head "Balance with excise" under Loans
and Advances in schedule 6.
11. Sundry creditors include Rs. 5.46 lacs (previous year Rs. 33.50
lacs) due to ancillary and/or small scale industrial undertakings to
the extent such parties have been identified from available information
and Rs Nil (previous year Rs 0.07 lacs) being the interest accrued
thereupon computed in accordance with the Interest on Delayed Payments
to Small Scale Industrial and Ancillary Industrial Undertakings Act,
1993.
Amount due to SSI for more than 30 days:-
(Rs in Lacs)
Interface Microsysytems 0.16
G. B. Industries 0.89
A. E. W Industries 0.58
Himech Mfg. Co. 0.14
R. S. Industries 0.22
Technofabs 0.11
Nidhi Enterprises 0.03
Hinudtan Fabrics 0.02
12. Debenture installments together with interest and premium payable
thereon aggregating to Rs. Nil (Previous year Rs. 99.19 lacs) had
matured for payment in the year 1994-95 but have remained unclaimed
since last year. They are shown under "Current Liabilities" in Schedule
7 and are secured by a charge on the specific movable and immovable
properties of the company.
13. Inter-corporate deposits include certain deposits where minimal
recovery of interest and/or principal has been made upto the date of
signing these accounts. The Company has filed legal cases for recovery.
In some cases the Company has received offers and made counter offers
for settlement. These are under consideration of the Company. The
company, out of abundant caution, has made appropriate provision in the
accounts, though the management expects recovery of the same and has
initiated requisite steps in this regard.
14. Interest on External Commercial Borrowings from Daewoo Corporation
and Daewoo Motor Co. Ltd., Korea is accounted for on cash basis.
During the year Interest accrued on External commercial Borrowings
amounting to Rs. 11920.99 Lacs ( Previous year 14631.85 Lacs). As a
result, Loss for the year is lower by Rs. 11920.99 Lacs and the
Accumulated Loss upto 31st March 2002 is lower by the 26552.84 Lacs.
15. The Company is accounting for Running Royalty on cash basis. As a
result, loss for the year is lower by Rs. 301.03 Lacs (Previous Year
Rs 1308 Lacs) and the accumulated loss as on 31st March 2002 is lower
by Rs. 1609.03 lacs.
16. Interest on DA ( Supplier Credit) is accounting for on cash basis.
As a result, Loss for the year is lower by Rs. 1,546.35 Lacs (Previous
Year Rs 2425.29) and the Debit Balance in the Profit & Loss Account as
on 31st March, 2002 is Lower by Rs. 3971.64 lacs.
17. The management evaluates it long term and strategic investments
periodically. Based on such evaluation, the management is of the view
that there is no diminution, other than temporary, in the value of its
trade investments other than those which have been provided for in the
accounts. Accordingly, such investments are valued at cost.
18. The company had imported capital equipment under the "Export
Promotion Capital Goods scheme" (EPCG scheme) without paying any
customs duty against an undertaking of export obligation amounting to
Rs. 1,633,562 lacs within a period of eight years from the date of
import License, failing which the company would have to pay the custom
duty with interest and penalties (if levied). The company has been able
to fulfill its stipulated exports obligation till the year end only to
the extent of Rs. 55397.50 lacs. DGFT has revoked extension earlier
granted for fulfillment of export obligation. The custom authorities
invoked the bank guarantees and Rs. 7,852.87 lacs has been paid by the
bankers. Subsequently the custom authorities also raised demand of Rs.
916 Lacs. Above matters are pending before Supreme Court in the SLP No.
C-14657-58/2002 filed by the company. In view of the amendment in
custom notification no. 111/95 dated 05.06.1995 vide notification no.
49/2002 dated 29.04.2002, extending the moratorium and total fulfilment
period from 2 and 8 years to 5 and 12 years respectively and also in
view of the fact that matter is sub judice, no provision has been made
for custom duty liability (approx.) of Rs. 174,100 Lacs and interest
liability (approx.) of Rs. 228,900 Lacs as on 31.03.2002.
19. The company understand that Daewoo Corporation, Korea, has
assigned all shares held by it to Daewoo Motor Co. Ltd. Korea, by
virtue of which, Daewoo Motor Co. Ltd., Korea has now become the
holding company. In the absence of appropriate documents, this
assignment has not yet been registered. The Company has close linkages
and dependency relating to technology, components and materials,
exports and continued financial commitments with Daewoo Motor Co. Ltd.
The Company itself and the above mentioned parent/group companies at
Korea are experiencing financial difficulties. The Company is closely
monitoring the situation with respect to Daewoo Motor Co. Ltd., Korea
and Daewoo Corporation, Korea. The management expects that they will
continue to have financial and technological support from the above
mentioned companies. Also, the management expects that the Companys
operation will turnaround. In view of the above, these accounts have
been prepared on a going concern basis. Also refer Note 33 below
regarding appointment of receiver under Debt Recovery Tribunal (DRT).
20. The company has not accounted for deferred tax asset aggregating
to Rs 70,293.30 lacs on account of unabsorbed depreciation under the
Income Tax Act, 1961 as on April 1, 2001 as the management does not
anticipate profits under the Indian Income Tax Act, 1961 in the
foreseeable near future. Further, in view of the loss during the
current year, no exercise has been carried out to calculate the
deferred tax on the current years unabsorbed depreciation.
21. The Company has calculated and accounted for interest (including
additional interest) aggregating to Rs 13,986.59 lacs upto March 31,
2002 on loans taken from Financial Institutions/Banks whereas the
Financial Institutions/Banks have recalled the above mentioned loans
along with interest and additional interest aggregating to Rs 14,796.30
lacs upto March 31, 2002. The Company has not accounted for the
differential interest (including additional interest) aggregating to Rs
809.71 lacs as the management is of the opinion that the Financial
Institutions/Banks have erred in calculating interest (including
additional interest).
22. There has been no production activity in Engine & Transaxle Plant
since October, 2000 and the same has been closed in September 2001.
Accordingly depreciation for the year amounting to Rs. 11465.45 Lacs
on Buildings & Plant and machinery has not been provided in the books
of accounts.
23. The balances in debtors and creditors accounts are subject to
confirmation by the respective parties.
24. In working capital loan obtained from various banks interest
liability has been provided on the basis of contracted rates. No
provision has been made for penal interest in respect of default in
compliance with the terms of the said contract as no penal interest has
been levied so far and the amount thereof cannot be ascertained.
25. Segment information has been prepared in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the company.
The following tables present the revenue, profit, assets & liabilities
information relating to the business segment for the year ending on
31st March, 2002.
Information about business segment - primary
Rs. Lacs
Reportable Segments Automobile Total
Revenue
Sales and other Income 29,430.59 29,572.59
Inter Segment Sales - -
Total Revenue 29,430.59 29,572.59
Result
Segment Result (19,439.86) (19,297.85)
Operating Profit (19,297.85)
Interest (Net) (13,220.70)
Profit Before Tax (32,518.56)
Less: Provision for Taxation -
Profit after Tax (32,518.56)
Other Information
Segment Assets 3,78,133.39 3,78,133.39
Unallocated Assets 1,586.00
Total Assets 3,79,719.39
Segment Liabilities 7,550.13 7,550.13
Unallocated Liabilities 364,462.85
Total liabilities 372,012.98
Capital Expenditure 72.40 72.40
Depreciation
On plant & machinery 8,342.95 8,342.95
On other fixed assets 830.10 830.10
Non-cash expenditure other than depreciation (Amortisation)
NOTES
The automobile segment includes sale of vehicles, spare parts and
components.
Unallocated assets include interest bearing loans, advances, deposits
and non trade investment.
Unallocated liabilities include interest bearing liabilities and tax
provisions.
Capital expenditure pertains to additions made to fixed assets during
the year.
26. Related Party Disclosure
a) List of Related Parties Directors:
Parent: Daewoo Corporation, Korea Mr. Young TaeCho
Associates: Daewoo Motor Co. Ltd., Korea Mr. Dong Woong Kim
Fiem Sungsan (India) Ltd. Mr. In Kyu Lee
Korin India Ltd. (merged with Sharda Motors
Industries Ltd.) Mr. Vivek Khanna
Spack Automotive Ltd. Mr. V. K. Saxena
Panalfa Dongwon India Ltd. Mr. Young Chang Kim*
Mr. Chong Soon Park*
* Resigned during the year Mr. In Su Kim*
Mr. K. Vishwanathan*
Mr. H. D. Talwani*
b) Transactions with related parties
Rs. in Lacs
Nature of Transactions/Balances Parent Associates
Purchase of Raw Material and Components - 4,153.14
Purchase of Spares Parts - 656.90
Sale of Spare Parts - 101.67
Loans Payable 116,742.98 117,555.00
Sundry Creditors 0.16 210.41
Advances Received 3,054.25
Note: (a) The Payment made to Directors have been disclosed in note 8
above. (b) Figures for previous years are not available
27. Earnings per Shares (EPS) - The numerators and denominators used
to calculate basic and diluted earnings per share:
(Rs. In lacs)
31.03.02 Basic 31.03.01 Basic
Profit after Tax (32,518.56) (19,641.63)
Profit attributable to the Equity
Shareholders (32,518.56) (19,641.63)
Basic/Weighted average Equity Shares
(Nos.) 511,176,601 511,176,601
Nominal value of Equity Shares (Rs.) 10.00 10.00
Basic/Diluted Earnings per Shares (Rs.) (6.36) (3.84)
28. As per the order date 9th May, 2002 of DRT III, Mumbai M/s Khade
Bapat Kabe Sinha & Associates, who has been appointed as a receiver to
take the possession of all fixed, current and other assets of the
company in the matter ICICI Ltd. V/s Daewoo Motors India Ltd and
others, has appointed DMIL as its agent after taking the possession of
the properties. In another matter of IDBI v/s DMIL and others, DRT I
Mumbai, has also appointed the aforesaid receiver as receiver of the
properties of the companies. In the matter of EXIM Bank v/s DMIL and
others, DRT, Delhi, has appointed local Commissioner to take the
inventory of the properties of the company, which they have taken from
the receiver. DRT receiver has also initiated the process of sale of
assets of the company pursuant to the order of DRAT Mumbai dated
08.08.2002 under which public auction is to take place on 19.12.2002.
29. As on 31.03.2002 the company was in operation and despite the
uncertainties the company was maintaining the basic operations.
Accordingly the accounts for the year have been prepared on going
concern basis. However, the long term sustenance of the companys
operations cannot be ascertained at this point of time.
30. Previous years figures have been regrouped/re-classified where
ever necessary to conform to the current years classification.
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