NOTES FORMING PART OF STAND ALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31st MARCH, 2016 1) Corporate Information The Company is a registered Non-banking finance Company ("NBFC"). However, the Company has ceased to carry on business as NBFC since 1999-2000. During the year, the Company has earned income from fixed deposits and sale of fixed asset. During the year the Company has incurred loss amounting to Rs.15.15 lacs (2014-15: Rs.6.96 lacs). As at March 31, 2016, its negative net worth (excluding borrowing from and investments in subsidiaries) is Rs. 2,253.83 Lacs (March 31, 2015: Rs. 2,236.65 lacs) which is mainly rebrsented by, borrowing from one of the promoter group company of Rs. 1,500 lacs (March 31, 2015: Rs. 1,500 lacs), (which as per the scheme of Compromise and arrangement (refer note 2.20) sanctioned by High Court of Gujarat in 2004 would not be repaid before repayment of all other liabilities). Further, the interest received of Rs. 1,060.94 lacs on Income tax refund of Rs.3,102.74 lacs and short provision of tax of Rs. 277.21 lacs resulting therefrom, is pending adjustment/accounting consequent to appeals filed by the Income tax Authorities against the refund order. In view of the above, these financial statements have been brpared on going concern basis and do not include any adjustment relating to recorded amounts and the classification of asset and liabilities that might be necessary should the company be unable to continue as a going concern. 2) Significant Accounting Policies a) Basis of brparation The financial statements of the Company have been brpared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act").The financial statements have been brpared on accrual basis under the historical cost convention. The accounting policies adopted in the brparation of the financial statements are consistent with those followed in the brvious year. b) use of estimates The brparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in brparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise. c) Other income Interest income is accounted on an accrual basis. Dividend income is accounted for when the right to receive it is established. d) Fixed Assets (Tangible) Fixed assets are carried at cost less accumulated debrciation / amortisation and impairment losses, if any. The cost of fixed assets comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use and other incidental expenses. Subsequent expenditure on fixed assets after its purchase is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its brviously assessed standard of performance. e) Debrciation Debrciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Debrciation on tangible fixed assets has been provided on the straight-line method as per the useful life brscribed in Schedule II to the Companies Act, 2013. f) Investments Long-term investments are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments include acquisition charges such as brokerage, fees and duties. g) Employee benefits Employee benefits include provident fund, gratuity fund and compensated absences. Defined contribution plans The Company's contribution to provident fund are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees. Defined benefit plans The company has taken policy with the Life Insurance Corporation of India which covers the liability of gratuity to employees accruing under the Payment of Gratuity Act 1972. Annual brmium on the basis of said policy is accounted for in the year of payment. Short-term employee benefits The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service. The cost of short-term compensated absences is accounted as under: (a) in case of accumulated compensated absences, when employees render the services that increase their entitlement of future compensated absences; and (b) in case of non-accumulating compensated absences, when the absences occur. h) Earnings per share Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. i) Taxes on income Current tax is determined on the basis of taxable income and tax credits computed for the Company in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961. Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets are recognised for timing differences of items other than unabsorbed debrciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. However, if there are unabsorbed debrciation and carry forward of losses and item relating to capital losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realise the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their realisability. j) Provisions and contingencies A provision is recognised when the Company has a brsent obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their brsent value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognised in the financial statements. 3.1 Contingent Liabilities a) Uncalled liability on partly paid-up shares amounts to Rs.141.08 lacs (As at March 31, 2015 Rs.141.08 lacs). b) Disputed income-tax amounting to Rs. 277.21 lacs (As at March 31, 2015 Rs.277.21 lacs). (Ref. Note No. 2.21 (c)) Future cash outflows in respect of the above matters are determinable only on receipt of judgements / decisions pending at various forums / authorities. 3.2 Hon'ble High Court of Gujarat had sanctioned the scheme of compromise and arrangement between the Company and a consortium of 16 banks on 27th July,2004 under section 391 of the Companies Act,1956 and the Company has made the payment in the accounting year 2004-05 to the banks as per the Court's order. However, the final deed of Assignment of the charged assets in favour of banks is yet to be made. 3.3 Income Tax (a) In view of unabsorbed losses and in the absence of taxable income under the provisions of the Income Tax Act, 1961 in the current year, the company believes that there will be no tax liability. Accordingly, no provision for income tax for the year has been made in the accounts. (b) The Company has unabsorbed debrciation and carry forward losses under the Income Tax Act, 1961. In the absence of virtual certainty of sufficient future taxable income, deferred tax assets are not recognized in the accounts. (c) The Company has already received refund of tax pertaining to earlier assessment year amounting to Rs.3,102.74 lacs (As at March 31, 2015 Rs.3,102.74 lacs) which includes interest on refund amounting to Rs.1,060.94 lacs (As at March 31, 2015 Rs.1,060.94 lacs). In view of opinion received from the Tax Consultants and pendency of appeals, the Company has, as a matter of prudence neither adjusted the short provision for tax of Rs.277.21 lacs (As at March 31, 2015 Rs.277.21 lacs) nor recognised the interest received on tax refund amounting to Rs.1,060.94 lacs (As at March 31, 2015 Rs.1,060.94 lacs). Necessary entries for the same shall be made on settlement of pending matters/disputes with the tax/appellate authorities. 3.4 As at March 31, 2016 the Company has investments in its three wholly owned subsidiaries with an aggregate carrying value of Rs.1,120.91 lacs (net of provision of diminution in value of investments). These subsidiaries have ceased to carry on business. Provision has been made for the diminution in the value of investments in these subsidiaries based on the assessment of the realizable value of their assets. 3.5 As the net-worth of the Company has been fully eroded, the Company had not been able to meet with the requirements that were stipulated under the Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 relating to Capital Adequacy and Concentration of Credit/Investment. As per the Revised Regulatory Framework for NBFC issued by RBI in November 2014, the Company being an NBFC - ND (Non-Deposit Accepting) having asset size of less than Rs. 500 crore is exempted from the requirement of maintaining CRAR and complying with Credit Concentration Norms. 3.6 As the company has ceased operations there are no reportable segments in accordance with the requirement of Accounting Standard (AS-17) " Segment Reporting" specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014. 3.7 . In accordance with the Memorandum of Understanding dated 9th January, 2008 entered into between the company and banks, 179,520 equity shares of Competent Automobiles Ltd of Rs 10/- each, belonging to the banks will be sold / transferred by the Company as per the advice of the banks. Till such time, GLFL will hold the shares on behalf of the bankers in its Demat Account. 3.8 The Company has taken a policy with the Life Insurance Corporation of India to cover the liability of gratuity and fair value of plan assets at the beginning of the year was Rs.13.79 lacs and the same at the end of the year is Rs 14.94 lacs. No benefits have been paid out of the said plan assets during the year. The Company has two employees but none of the employee is brsently eligible for the Gratuity under the rules of the Payment of Gratuity Act. 3.9 On the basis of information available with the Management there are no dues payable to Micro and Small Enterprises. This has been relied upon by the auditors. 3.10 Previous year’s figures have been regrouped / reclassified wherever necessary to correspond with the current year’s classification / disclosure. In terms of our report attached For C. C. Chokshi & Co. Chartered Accountants Gaurav J. Shah Partner For and on behalf of the Board of Directors S.M.Shah Chairperson(DIN:00016578) Harnish Patel Director-in-Charge (DIN:00114198) Janak Mehta CFO Anil Jhaveri CEO Place : Ahmedabad Date : 19.05.2016 |