| 1. Contingent liabilities not provided for:
a. Liability that may arise towards interest as claimed by ESIC is to
the extent of Rs.3.50 lacs for the period April 2001 to Sept. 2005.
b. The Provident Fund Department has issued a Show Cause Notice cum
Levy Order dated 01.03.2013 to Alacrity Foundations (P) Ltd seeking
payment of interest relating to the Company of Rs.28,65,390/- u/s. 7Q of
the Employees' Provident Funds & Miscellaneous Provisions Act, 1952 for
delayed remittance of monthly contributions and Rs.32,70,851/- for
penalty u/s. 14B of the Act for delayed payment of monthly
contributions. Rs.28,65,390/- has been provided for in the books of
accounts. No provision is made for the penalty as the Com- pany, given
its financial circumstances, has filed an appeal with the Provident
Fund Appellate Tribunal, New Delhi for a waiver of penalty and damages.
c. The Company had preferred an appeal for income tax demand for the
assessment year (AY) 1993-94 amounting to Rs. 27.10 Lacs excluding
interest and penalty thereon with the High Court of Madras. The Hon'ble
Court allowed the appeal in favour of the Company. The Company is
awaiting revised orders from the assessing officer deleting the demand
for tax and interest. As per letter dated 13.10.2006, the Tax
authorities had further demanded payment of Rs.243.57 lacs including
interest of Rs.32.47 lacs and penalty of Rs.184 lacs for the above AY
1993- 94. The Company had received order dated 12.10.2011 from the
Commissioner of Income-Tax, (A)-lll, Chennai deleting the demand for
penalty to the extent of Rs.184 lacs.
No provision has also been made for the tax demand of Rs.289.78 lacs
including interest of Rs. 44.20 lacs for the AY 1994- 95 which arose
due to the disallowance of the brought forward loss and unabsorbed
depreciation of the AY 1993-94. The Company is awaiting the revised
assessment orders in its favour in the light of the above High Court
order.
No provision has also been made for the tax demands for the AY 1995-96
of Rs.39.55 lacs (including interest of Rs.6.03 lacs) which is also
consequent to the disallowance of the brought forward loss for AY
1993-94 and the Company is awaiting revised assessment orders in its
favour.
d. Interest claim of about Rs.27.11 lacs made by creditors/customers
disputed by the Company in courts.
e. Claim against the company of Rs.20 lacs made by a landowner of a
property, disputed by the company.
2. The balance shown as dues from Debtors represents the money due
mostly from customers with whom the Company had entered into agreements
before 2003-04 for many of whom the company would have to execute sale
deeds after getting various clearances and hence considered recoverable
and no provision made there against even though due for a long period
of time.
3. Presently, a total of 37 cases are pending against the company by
customers, creditors and other parties before various courts including
the State & District Consumer Forum, Metropolitan Magistrate Court,
District Munsif Court, Fast Track Court, City Civil Court and High
Court of Madras for non-fulfillment of certain obligations by the
company. Suitable provisions to the extent of Rs.500.92 lacs (Rs. 530.32
lacs) have been made in the accounts wherever judgments have gone
against the company and remain undisputed. Value of claims against the
company for which no provision has been made since they are under
dispute amounted to Rs.91.35 lacs as at 31.03.2014.
4. Unsecured loan includes a loan viz. Chakiat Agencies Pvt Ltd (Rs. 9.56
lacs) who has approached the courts seeking repayment of loan dues. No
provision is made towards interest on the unsecured loan from the year
2003-04.
5. Sundry Creditors include dues to Small Scale Industrial Undertakings
Rs. 9.24 lacs (Rs. 9.24 lacs). The Small Scale Industrial Undertakings to
whom the amount outstanding for more than 30 days, such due exceeding Rs.
1 lac are as follows:
31.03.2014 (in Lacs) 31.03.2013 (in Lacs)
1 Kailash Hi-Tech Timber
India Ltd 1.53 1.53
2 Prosteel Industries 5.63 5.63
3 The Mayuram Timber &
General Trading Co. 2.08 2.08
6. Note on Secured Loans:
a. ICICI Bank Ltd - Rs. 1359.91 lacs: The loan outstanding as per books
of account as at 31.03.2014 is Rs. 1359.91 lacs after payments amounting
to Rs. 531 lacs by Land Marvel Homes (LMH) to whom the Company had
transferred Project Paramount Gardens' (Saligramam) development rights
with related liabilities vide agreement dated 31.03.2005. The bank has
filed an application before the Debt Recovery Tribunal (DRT). The bank
had earlier issued notice under the Securitization and Reconstruction
of Financial Assets & Enforcement of Securities Inter- est Act 2002
(SARFAESI) dated 10.07.2008 to recover an amount of Rs.4070.12 lacs
including interest up to 22nd May 2008. The claim of the Bank towards
interest, penalties and other charges is disputed by the Company and no
provision made there against. The properties held by ICICI Bank as
collateral security are i) Property in Perambur ii) 55.52% undivided
share in the 129 grounds at West Mogappair and 39 flats under
construction (from which the Bank ceded 11.84% undivided share to State
Bank of Indore). (Note: The landowners who hold 23.86% ownership of the
undivided share have not cooperated with the Company for registering
the sale deeds in favour of 175 flat owners, 18 of whom have filed
suits in various courts for registration of sale deeds) iii) The bank
holds a first charge on the property at No 25, Thirumalai Road, Chennai
- 600 017 belonging to Alacrity Foundations Private Limited'
b. State Bank of Hyderabad - Rs. 118.56 lacs: The Bank has obtained an
order dated 03.02.2010 from the Debt Recovery Tribunal (DRT) directing
the Company to pay the Bank Rs. 118.56 lacs including interest @ 15% p.a.
until 03.02.2010. 7118.56 lacs has been provided for by the Company in
its books of accounts. No provision has been made in the books for
interest after 03.02.2010 since the Company is confident of getting
necessary waiver from the Bank.
c. Union Bank of India - Rs. 1216.70 lacs: The Bank has obtained an order
from the Debt Recovery Tribunal (DRT) directing the Company to pay the
Bank Rs. 1216.70 lacs including interest upto 19.12.2008. Rs. 1216.70 lacs
has been provided for by the Company in its books of accounts. No
provision has been made in the books for interest after 19.12.2008
since the Company is confident of getting necessary waiver from the
Bank.
d. Phoenix ARC Private Limited - the Asset Reconstruction Company had
been assigned the Company's debt and accrued interest thereon along
with underlying security earlier by State Bank of India to the extent
of 11.84% on the Mogappair (Tarangini project), vide Registrar of
Companies, Certificate of Registration for Modification of Mortgage,
u/s 132 read with section 135 of the Companies Act, 1956. State Bank of
India had earlier obtained an order dated 25.10.2010 from the Debt
Recovery Tribunal (DRT) directing the Company to pay the Bank Rs. 585.45
lacs with further interest @ 13.5% p.a from 11.07.2005 until date of
settlement. Rs. 585.45 lacs has been provided for by the Company in its
books of accounts. No provision has been made in the books towards
further interest from 11.07.2005 since the Company is confident of
getting necessary waiver now from Phoenix.
7. Status on other Bank Loans
a. Citibank N.A.: The principal amount of Rs. 560 lacs of unsecured loan
facility (employee home loans converted vide agreement dated
02.08.2006) is remaining outstanding to the Bank. Even though the Bank
has claimed a total due of Rs. 2653.90 lacs as at 31.03.2014 including
interest at a compounded rate of 9%, no interest is provided in the
books of account since the Company is confident of getting necessary
waiver from the 6ank.
b. State Bank of Indlia: The principal loan amount of Rs.97 lacs (balance
after repayment by Jam Housing A Constructions Ltd (JHCL) of Rs. 283 lacs
to the Bank of the employee home loans converted after transferring
project Prasan's development rights with related liabilities to JHCL
vide Agreement dated 06.10.2005) is / remaining outstanding to the
Bank. No interest is provided in the books of account since the Company
is confident of getting necessary waiver from the Bank. The Bank has
obtained an order dated 09.04.2012 from the Debt Recovery Tribunal
(DRT) claiming a total of Rs. 216 lacs with further interest @> 10.25%
from 04.03.2011. The Bank holds a second charge on the property at No
25, Thirumalai Road, Chennai - 600 017 belonging to Alacrity
Foundations Private Limited, (Company in which two of the Directors of
the Company are Directors).
8. The Company is engaged in the business of promoting, developing and
construction of residential flats which is the significant business
segment. There is no other business segment.
9. Due to financial difficulties, the Company had to stop its business
of full fledged construction activities during 2003-04. The accounts
have been prepared now taking the present position into account as a
"going concern" since the Board of Directors are confident that the
Company can be revived in due course of time.
10. The present value of gratuity obligation and superannuation
benefits payable is not recognized as expense by the Company. The
Company shall meet its gratuity and other employee retirement benefits
as and when the concerned employee retires. Accordingly, no provision
has been made in the accounts of the Company towards employee benefits
including gratuity. The company has not deposited the provision created
upto March 2004 for Rs. 28.66 lacs towards superannuation fund.
13. Previous year's figures have been regrouped and rearranged wherever
necessary in order to make them
comparable with the current year's figures. .
14. Balances under sundry debtors, sundry creditors and loans and
advances remain to be confirmed and in
absence of evidence to the contrary, book balances have been taken as
correct subject to the notes given above. .
15. Related party disclosures under Accounting Standard 18:
Key managerial persons (KMP),
their relatives' 1. Ashok R Karnad - Managing Director
names
2. Ajit Hattikudur - Director
3. Dilip Dharmasthal - Director
Relatives of key managerial person
1. Sunil Karnad
2. Nita Hattikudur
16. Since the Company is in losses, there is NIL Liability towards
Deferred Tax. No Deferred Tax Asset has also been created as there is
no reasonable certainty that the Deferred Tax Asset can be set-off
against future income.
17. The nature of business carried on by the Company, viz. construction
activity is such that furnishing quantitative details relating to
consumption / stock of building materials is not feasible.
18. The Company could not fulfill the requirements of Section 383A of
the Companies Act, 1956 relating to appointment of Company Secretary
for the Company due to financial difficulties.
20. Figures in brackets represent previous year's figures.
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