3.15. Contingencies and Provisions
A provision is recognised when the Company has a present obligation as a result of past events. It is
probable that an outflow of resources embodying economic benefit will be required to settle the
obligation in respect of which a reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on the best estimate of the expenditure 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 estimate.
A Contingent Liability is disclosed, unless the possibility of an outflow of resources embodying the
economic benefit is remote.
3.16 Financial Instruments
Financial assets and financial liabilities are recognised when a Company becomes a party to the
contractual provisions of the instruments. A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity instrument of another entity.
Equity Investments
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are
held for trading are classified as at Fair Value through Profit & Loss (FVTPL). For all other equity
instruments, the Company decides to classify the same either as at Fair Value through Other
Comprehensive Income (FVTOCI) or FVTPL. The Company makes such election on an instrument by
instrument basis. The classification is made on initial recognition and is irrevocable.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on
the instrument, excluding dividends, are recognised in the Other Comprehensive Income (OCI). There
is no recycling of the amounts from OCI to Statement of Profit & Loss, even on sale of investment.
However, the Company may transfer the cumulative gain or loss within equity. Equity instruments
included within the FVTPL category are measured at fair value with all changes recognised in the
Statement of Profit & Loss.
NOTE 4 : OTHER NOTES TO ACCOUNTS
(Forming part of Accounts)
FOR THE YEAR ENDED 31st MARCH, 2024
4.1 -The Adjudicating Authority (under Prevention of Money Laundering Act, 2002), vide its order
dated 28th May, 2015 confirmed the attachment of Fixed Assets [comprising of Land, Building,
Plant & Machinery (situated at Village - Banondi, PO - Shahzadpur, Tehsil-Naraingarh, District -
Ambala, Haryana)] of Naraingarh Sugar Mills Ltd. (Defendant) to the extent of ' 9,511.40 lakh (against
liability of ' 10,580.72 lakh due towards M/s. Yathuri Associates, a business associate against whom
case had been registered for recovery).
The Company had preferred an appeal with the Hon’ble Appellate Tribunal,
Prevention of Money Laundering Act, 2002 and the matter is subjudiced.
Company's inability to discharge the liability in the time frame determined by Adjudicating Authority
may affect the Company's ability to continue as going concern.
However, the Financial Statements of the Company have been prepared on going concern basis
pending decision of the Appellate Authority (Refer note 4.7).
-The Adjudicating Authority ( comprising of committee Constituted by the Order Dated 04.05.2022 by the
Hon’ble Supreme Court in W.P. (C) No. 995/2019) vide its order dated 24th August, 2024 confirmed the
attachment of Fixed Assets under Maharashtra protection of interest of Depositors Act, 1999 comprising
of Land & Building.
Immoveable properties are attached. The Board of Directors, Directors, employees and authorized
representative of Naraingarh Sugar Mills Limited are restrained from transferring, alienating,
encumbering or parting with possession in any manner.
4.2. Contingent Liabilities & Commitments:
a) Estimated amount of contracts remaining to be executed and not provided for in the
books of account - Nil (previous year - Nil).
b) Contingent Liabilities:
i) The Trading in Shares of Company is suspended on stock exchange since 26.07.1999.
The Company may be liable to pay Revocation Fee, Fine and Penalty of ' 40.00 lakh or if the
Company is compulsorily delisted than all the shareholders will be paid for the number of shares
held by them at the value as decided by the BSE.
ii) Claims against the Company not acknowledged as debt:
a) Income Tax penalty u/s 271(1)(c) for the assessment year 2008-2009, levied by the
Income Tax Department - ' 5.46 lakh (previous year - ' 5.46 lakh).
The Company had preferred an appeal with Income Tax Appellate Tribunal, New Delhi; decision is
still awaited
b) Excise Duty demand (' 37.27 lakh - inclusive of penalty), for the period from
01st March, 2015 to 31st March, 2016, was raised by Excise & Custom Department vide
their order dated 07th September - 2016 against which the Company has deposited
(' 2.49 lakh) under protest and preferred an appeal with CESTAT, New Delhi;
the decision of the concerned Authority is still awaited.
c) Service Tax demand (' 30.85 lakh - inclusive of penalty), for the financial year
2010-2011, was raised by Excise & Custom Department vide their order
dated 05th March, 2014 against which the Company has deposited ('4.72 lakh) under protest
and preferred an appeal with CESTAT, New Delhi; decision is still awaited.
d) The Company may be liable to pay interest on Cane Purchase Tax payable.
e) ICICI Bank claimed ('1,002.21 lakh) for defaults by the Farmers, on account of guarantee given by
the Company.
f) Corporate Guarantee (' 3,000.00 lakh) given by the Company to Bank, for loans given to
Cane Farmers.
Provisions of Section 186 of the Companies Act, 2013, have not been complied with.
-The amounts mentioned hereinbelow. in earlier years, were deposited (under-protest):
With Hon’ble. Delhi High Court (' 103.13 lakh):
Sales Tax (' 98.13 lakh) on demand raised by the Department;
Whereas, as per the policies of the Central Government, Sales Tax on sale of molasses was
exempt for Five years.
Amit Electricals (' 5.00 lakh), pending settlement of accounts.
With Haryana State Government (' 14.92 lakh):
on account of Local Area Development Tax.
With Excise & Custom Department (' 7.20 lakh):
The Company had preferred appeals with CESTAT, New Delhi; decision is still awaited.
- The ultimate outcome of these matters cannot be determined & provision for liability, if any, cannot
be estimated at this stage.
-Liabilities in respect of Income Tax, Excise Duty, Sales Tax, Goods & Services Tax and other
material statutory dues have been accounted for on the basis of respective returns filed with
the concerned authorities.
-Additional demand, if any, on account of statutory dues, arising at the time of assessments will be
accounted for in the year in which assessments are completed.
c) Figures have been rounded off to nearest lakh, except Earnings per Equity share.
4.3. Issued. Subscribed & Paid up Capital:
i) Calls in arrears (' 129.41 lakh i.e. 25.88 Equity Shares @ '5.00 per share), since the
financial year 1996-1997, are due from public at large including associates; effective steps have
been initiated to regularise and appropriately adjust the account in the ensuing year.
ii) Redeemable (Non-cumulative) Preference Shares (' 217.73 lakh - issued to a Bank); due for
redemption in the financial year 2010-2011, have not yet been redeemed.
4.4. Non Current Financial Liabilities:
-Long-term Borrowings:
-Secured:
Term Loans
From: Indian Renewable Energy Development Agency Ltd. (IREDA)
-Account no.- I (sanctioned amount - ' 10,035.00 lakh), as detailed hereinbelow, is repayable in 32
quarterly instalments:
4 quarterly instalments of '225.78 lakh each w.e.f June-2023 to March-2024.
4 quarterly instalments of '250.87 lakh each w.e.f June-2024 to March-2025.
4 quarterly instalments of '282.22 lakh each w.e.f June-2025 to March-2026.
20 quarterly instalments of '349.96 lakh each w.e.f. June-2026 to March-2031.
The Company could not pay interest accrued & due to Indian Renewable Energy Development
Agency Ltd. (' 2,000.00 lakh for the period, from March, 2016 to June, 2017).
CONTD. P/6.....
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However, the Company’s proposal to Indian Renewable Energy Development Agency Ltd (IREDA)
for Re-schedulement of interest accrued & due, for the period from March, 2016 to June, 2017,
has been accepted by IREDA - vide their letter no. 221/2697/COG/2012/IREDA/3474
dated 30th September, 2016 and accordingly the repayment of interest accrued & due was
resch e du led & converted in to Term Loan as mentioned hereinbelow: -
-Account no.- II
(Restructured amount - ' 2,000.00 lakh), is repayable in 20 quarterly instalments as detailed
hereinbelow:
8 quarterly instalments of ' 50.00 lakh each w.e.f June-2018 to March-2020.
4 quarterly instalments of ' 60.00 lakh each w.e.f June-2020 to March-2021.
8 quarterly instalments of '170.00 lakh each w.e.f June-2021 to March-2023.
The Company had defaulted in repayment of dues ie Principal amount - '2,283.06 lakh for the periodfrom
March, 2020 to March, 2024 & Interest - '5,572.28 lakh for the period from March, 2020 to March, 2024 to
Financial Institution (IREDA).
Interest on loans, mentioned hereinabove, is payable on quarterly basis.
Balance of Term Loans from Indian Renewable Energy Development Agency Ltd (IREDA), as per Loan
Statement exceeds by '50.50 lakh as on 31st March, 2024, due to non-consideration of said amount by IREDA
in their Loan Statement.
SOFT LOANS:
From: The Ambala Central Cooperative Bank Ltd.
-Account no. - I
(Sanctioned amount - ' 6,000.00 lakh), was repayable in 12 monthly instalments of
' 500.00 lakh each w.e.f. October-2019 to September-2020.
- Account no. - II
(Disbursed amount - ' 3,410.00 lakh), as detailed hereinbelow, was repayable in 6 quarterly
instalments:
5 quarterly instalments of ' 568.00 lakh each w.e.f June-2019 to June-2020.
1 quarterly instalment of '570.00 lakh due & payable in September-2020.
Interest on loans, mentioned hereinabove, is payable on quarterly basis.
The Ambala Central Cooperative Bank Ltd. had sanctioned Soft Loan of (' 4,500.00 lakh), out of
which (' 3,410.00 lakh) was disbursed upto 31.03.2017 and the remaining amount (' 1,090.00 lakh)
will be disbursed after the release of funds by the State Government.
- Unsecured:
soft loan (' 1,111.14 lakh):
The Ambala Central Cooperative Bank Ltd. had sanctioned Soft Loan (interest free) to be paid in six
instalments, as detailed hereinbelow:
1 instalment of ' 335.00 lakh due & payable in December-2018.
1 instalment of ' 160.00 lakh due & payable in June-2019.
2 instalment of ' 160.00 lakh each due & payable in December-2019 & March-2020.
1 instalment of ' 150.00 lakh due & payable in June-2020.
4.5. a) In the opinion of the Directors, “Current Assets” are approximately of the value stated in the
Balance Sheet, if realised in the ordinary course of business and to the best of their knowledge
provisions for all the known liabilities have been made and, as certified, all the contractual and
statutory obligations have been duly complied with.
b) Party balances are good for payment and hopeful of recovery, therefore, provision for doubtful
amount/unclaimed balances is not required; however, the representative of majority shareholders
“Mr. Rahul Anand” who effected the transactions with old parties is behind the bars in Fraud Case and
also the legal cases are pending against him and the parties related to him as per FIR and
Police Department; Copy of FIR against Mr. Rahul Anand and Others is attached.
c) Party balances, brought forward from earlier years, are due for payment/recovery pending settlement
of accounts with the respective parties; effective steps have been initiated by the Chairman,
CEO cum ED and Director Finance appointed by the Government of Haryana this year.
4.6. Taxes
-MAT Credit Entitlement (' 382.72 lakh i.e. balance brought forward ' 207.22 lakh add adjustment,
during the year ' 175.50 lakh) has been shown under the head ‘Other Equity’ with corresponding effect
under the head ‘Other Non-Curcent Assets’ in accordance with the accepted accounting principles.
According to amendment in the Finance Act 2018; MAT credit Entitlement can be carried forward upto
fifteen assessment year.
In wake of the said amendment, ' 175.50 lakh relating to previous years has been adjusted during the year.
-There are no dues of Income Tax, Sales Tax, Service Tax, Custom Duty, Excise Duty,
Goods & Services Tax and Cess which have not been deposited with appropriate authorities on
account of any dispute, except as mentioned below:
4.7 Other Non-Current/Current Liabilities:
Advance from customer (Yathuri Associates - aggregating to ' 10,580.72 lakh) was received, in terms
of the agreement/supplement agreement executed, in earlier years, for supply of Sugar. As per mutual
agreed, terms & conditions, supply had to be effected in installments; however supply could not be
effected as the party did not lift Sugar within the stipulated period due to pricing issue.
The Company subsequently filed a suit in a Local Court (Naraingarh); the Hon’ble Court directed the
Company to maintain status quo (Refer note 4.1).
Note : This may by noted that Yathuri Associates was one of the party involved in NSEL Financial Fraud,
consequently ED and EOW, Mumbai enquiries are going on against the Company regarding
Yathuri Associates money receipt.
4.8. Non-Current Liabilities
Other Financial Liabilities (' 138.17 lakh) represent:
-Security Deposits (' 50.30 lakh) received from farmers, suppliers/contractors & dealers.
The Company has not entered into any contractual agreement(s) with the above referred parties with
regard to repayment/refund or payment of interest etc.
Government of Haryana is also involved in the recovery and FIR is also lodged against
Mr. Rahul Anand and also the Police Recovery Proceedings has been initiated against various parties
involved.
During the year, ' 155.00 lakh balance of ALBELI LEASING & FINANCE PVT LTD -NAGPUR
(unsettled other liability now recovered) has been adjusted with ESOTERIC TRADING PRIVATE
LIMITED- CHD.
4.13. Other Current Assets (' 7,553.33 lakh):
Advance for Supplies & Services ('1,492.34 lakh) include:
- Farmers:
'1,383.14 lakh (previousyear - '1,373.43 lakh), are subject to confirmation Amount shown as advances to
Farmers is not actually any amount advanced to any Farmer. This is the Financial Fraud done by
Mr. Rahul Anand and other officer in-charge of the Company at the time of advance shown in the
books.
Others:
Amount Recoverable (' 6,027.38) include amount due & recoverable from Government Department &
Other Agencies:
From: Income Tax Department (' 45.39 lakh):
on account of refund of Income Tax for earlier years.
From: Haryana State Government ('253.00 lakh):
on account of subsidy.
From: Suppliers (' 5,289.48 lakh inclusive of ' 3,645.08 lakh* due from Rahul Sales Ltd and
' 1,644.40 lakh due from other suppliers):
On account of advance given in earlier years.
CONTD. P/9.....
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*Rahul Sales Ltd (Company in which Ex-Directors/relatives of Ex-Directors are interested):
' 3,645.08 lakh (previous year - ' 3,645.08 lakh) for supply of imported Sugar;
“Mr. Rahul Anand” who effected the transactions is behind the bars in Fraud Case and also the legal cases
are pending against him and the parties related to him as per FIR and Police Department
' 1,644.40 lakh due from other parties includes major parties related to previous years and Legal cases are
also pending against many of them as per FIR and Police Department has also initiated the recovery
proceedings against them; List of Parties against which the Police Proceedings has been initiated is attached.
As advised by an expert, the provisions of Section 185 of the Companies Act, 2013 are not attracted, if at the
time of giving advance, directors do not hold, jointly or severally, more than 25% of the voting power of the
Company to whom advance has been given.
From: Naraingarh Distillery Ltd. ('1.58 lakh):
on account of expenses incurred on their behalf
The amounts, mentioned hereinbelow, were deposited (under-protest), in earlier years:
With Hon’ble. Delhi High Court (' 103.13 lakh):
Sales Tax (' 98.13 lakh) on demand raised by the Department;
Whereas, as per the policies of the Central Government, Sales Tax on sale of molasses was exempt for Five
years.
Amit Electricals (' 5.00 lakh), pending settlement of accounts.
With Haryana State Government (' 14.91 lakh):
on account of Local Area Development Tax.
With Excise & Custom Department (' 7.20 lakh):
The Company had preferred appeals with CESTAT, New Delhi; decision is still awaited.
4.14. Operating Segments (Ind AS-108)
The Company is operating in Sugar Industry and Power Sector. However, the Chief Operating
Decision Maker (CODM) of the Company is of the opinion that there are no reportable segments as
required under Indian Accounting Standard - 108 "Operating Segments".
4.15. Related Party Disclosures (Ind AS-24)
Related parties & their relationship and related parties transactions - As per Annexure - (A).
4.16. The Company has made provision for liability of Gratuity & Leave Encashment on the basis of
Actuarial Valuation Report, as required under Indian Accounting Standard (Ind AS - 19). Every
employee who has completed five years or more of service gets a gratuity on departure at 15 days
salary (last drawn salary) for each completed year of service. However, the Company has not made
investment in Plan Assets.
Method : Projected Unit Credit (PUC)
The following table summarizes the components of net employee benefit expenses recognised in the
Statement of Profit & Loss, Other Comprehensive Income and amounts recognised in the
Balance Sheet:
4.21 Current Financial Liabilities:
- Trade Payables (' 4,906.16 lakh) include:
Amount due to Farmers (' 4,286.11 lakh) on account of Cane Price.
Farmers have been contesting, from time to time, for release of their payment; effective steps have been
taken to settle their accounts.
And Other Balances related to suppliers & contractors are bifurcated as per the Schedule III
requirements.
Other Current Financial Liabilities (' 24,435.50 lakh):
Workmen’s Compensation:
The Company had made provision of ' 240.00 lakh, in earlier years, on account of
Workmen’s Compensation awarded to 24 workers under the directions of Labour Commissioner,
Haryana; however the case is pending before Hon’ble Supreme Court of India; the matter is
subjudiced.
We have entered for settlement agreement with workers and settlement amount will be paid in
3 installment out of which 1 installment of ' 72.00 Lakh is paid during the year.
Other Liabilities (' 308.24 lakh) include:
Amount recovered from Unisiddha Trading Private Limited - Nagpur (' 62.71 lakh) by Police.
Police is recovering the payment in trail of payments gone from mill.
Police recovered Amount has been recovered from Albeli Leasing & Finance Pvt. Ltd by Police.
e) There was no transaction in Foreign Currency (previous year - Nil).
f) The woman Director (Ms. Grupsi) is not attending any of the meeting. Due to non-payment of
Farmers (Cane Growers) within time, the mill is being supervised by the State Government.
CONTD. P/14.....
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4.25. Figures for previous year have been regrouped/rearranged where necessary to conform to the
crnmt year’s presentation.
In terms of our attached report of even date. For and on behalf of the Board of Directors
For P.K. VASUDEVA & CO. SANDEEP SINGH GHUMAN
CHARTERED ACCOUNTANTS (Whole-time Director)
Firm Registration No. - 000724N DIN : 07275838
(PRATEEK PURI) MANOJ KUMAR DAS
PARTNER (Director)
Membership No. - 524431 DIN : 07693956
VIJAY BHATIA
(Chief Financial Officer)
Dated: 20th June, 2024 PRABHJOT KAUR
Place : Banondi (Company Secretary)
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