Modipon Ltd. - Quarterly/Annual Result Disclosures and Notes dated 31 Mar 2020

1. The above financial results have been reviewed by the audit committee and approved by the Board of Directors at its meeting held on 31st July, 2020 and the same have been reviewed by the statutory auditors of the company.

2. The preparation of the above financial results is in accordance with Indian Accounting Standard, as prescribed under Section 133 of the Companies Act. 2013 read with rule 3 of Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time, and other accounting principles generally accepted in India.

3. The Company discontinued its manufacturing operations permanently w.e.f. 19th May 2007 and all movable assets were disposed of during the year 2009-10.

4. Balance confirmation certificates were not obtained by the Company from creditors, loans and advances given/received, house/shop security depositors, in-operative current accounts with banks and loan account with Punjab National Bank (PNB). Consequent adjustments required, if any, has not been carried out in the financial results.

5. During the quarter ended 30th June 2019, the Company has transferred amount of R.s.8.85 Lakhs to Statement of Profit or Loss, which represents administration & consultancy expenses pertaining to the financial year ended as on 31st March 2019. The Company has not re-stated the comparative figures for prior periods items to correct the materiality of prior period errors retrospectively as required as per 1ND AS 8. Accounting Policies, Changes in Accounting Estimates and Errors'. Due to the same. Loss of current financial year is being overstated by Rs 8.85/- Lakhs.

6. (a) The Company has not provided interest of Rs. 1000.54 Lakhs up to March 31, 2008 on overdue amounts payable to a supplier resulting in understatement of liabilities and debit balance of reserve and surplus by Rs. 1000.54 Lakhs each; and

(b) The amount of interest to be provided for in the books of account for the period April 1, 2008 to 31st March, 2020 has not been ascertained.

7. The amount of interest to be provided for in the books of account, if any, for the period April 1. 2007 to 31st March 2020 to Small and Micro Enterprise has not been ascertained.

8. During the year ended March 31, 2009, the Company has sold 65,743 sq.yds of its vacant land at Modinagar for Rs. 1021.15 Lakhs (original cost Rs. 1.95 Lakhs) for which the approval of hank is pending.

9. During the year 201 1-12. the Company has given physical possession of its vacant 59 (46 as on March 31. 2015) houses located at Modinagar, Uttar Pradesh to a lender i.e. Ashoka Mercantile Limited (AML), a related party, (balance outstanding of loan taken from AML as on March 31, 2015 as per books of account: secured loan Rs. 882.29 Lakhs and unsecured loan Rs. 1125.57 Lakhs) for use without any charges/'rent/security deposit and no lease rent agreement has been entered into with AM. The Company contends that the temporary possession of houses for use without charges was given to AML as security only as the Company was unable to repay the loans taken from AML.

10. The Punjab National Bank (PNB) had approved one-time settlement of its outstanding dues of Rs. 1900 lakhs vide its approval letters dated April 02, 2014 and April 12, 2014 respectively. In terms of the settlement, OTS amount of Rs. 1710 lakhs (Net of upfront payment of Rs. 190 lakhs) was to be paid by the company in four quarterly instalments with interest during financial year 2014-15. However, the company was able to manage the payment of Rs. 630 lakhs up to March 31, 2015 and at the request of the Company, PNB condone the delay and revived the OTS vide its letter dated July 02. 2015 requiring the Company to make payment of residual OTS amount of Rs. 1270 lakhs by March 31. 2016 and total interest on OTS payment @ 10.25% (simple) by June 30, 2016. The Company has paid Rs. 1270 lakhs upto December 31st, 2018 along with interest of Rs 259.62 lakhs. The company has already made provision of interest on account of delayed payment of OTS of Rs 94.43 lakhs in their books upto 30th September 2018 and booked balance amount of interest in the quarter ending 31st December 2018.

11. (a) The Punjab National Bank has initiated the proceeding against the company under section 7 of the Insolvency and Bankruptcy Code, 2016 before the NCLT, Allahabad Bench and other Proceeding before DRT-1I and recovery Officer, DRT- II, New Delhi due to non-fulfilment of OTS Terms/conditions vide OTS letter dated July 02, 2015 issued by PNB.

Further as per Debts Recovery Tribunal-11, Delhi an order dated 30 July, 2018, has been passed in favour of the company and directed PNB to accept Rs. 65 lakhs as outstanding principal of OTS plus Rs 259.62 lakhs as interest @10.25% as per revived OTS vide its letter dated July 02. 2015 on delayed payment upto 15 March, 2018 which was later on accepted and paid by the company in terms of the DRAT order.
During the pendency of the appeal, PNB has encashed the said amount of Rs. 65 Lakhs towards principal OTS and Rs 259.62 lakhs towards interest in term of the order of Debts Recovery Appellate Tribunal (DRAT), New Delhi. Further, the DRAT has reserved the order on 27.12.2018 in the said matter and not pronounced till the date of our reporting, as a result the company has not considered any liability in its books in addition to the dues already settled as per DRT order dated 30th July, 2018.

During the pendency of order before DRAT, the PNB has revived OTS vide letter
dated 25.03.2019 against payment of Rs. 459.62 lakhs on the following terms & conditions:

Terms & conditions:

1. The proceeds of FDRs amounting to Rs. 65 lakhs and Rs. 259.62 lakhs kept with us will be appropriated simultaneously on conveying approval of revival of OTS.

2. Rs. 135 lakhs will be deposited within one week of receipt of this sanction letter.

3. The party to undertake to pay commercial tax liability as demanded by the Commercial Tax Authority.

4. No Dues Certificate will be issued, Bank's charge on the security/tittle deeds will be released only after receipt of OTS amount in full and on clearance of commercial tax liability as stated above. (Satisfactory proof/letter from the competent authority in this regard to be submitted).

The company has already deposited balance of OTS amount of Rs.65 lakhs plus delayed period interest of Rs. 259.62 lakhs with the bank in terms of DRT & DRAT orders and further Rs. 135 lakhs over and above original OTS amount deposited by the company in terms of revived OTS vide letter dated 25.03.2019 within one week of receipt of letter. Further PNB vide letter dated 02.04.2019 acknowledged the payment under revived OTS vide letter dated 25.03.2019 for Rs. 459.62 lakhs.

In respect of commercial tax liability the company has tiled an appeal against the order of Commissioner of Commercial Tax before Hon'ble High Court of Allahabad through Punjab National Bank and the Court has directed vide order dated 26.11.2018 that the operation and effect of the impugned order dated 08.08.2018 passed by the Commercial Tax Tribunal, Ghaziabad in Appeal no 1353 of 2013, shall remain stayed subject to the applicant depositing 50% of the commercial tax liability imposed on it and furnish security for the balance amount other than cash or bank guarantee to the satisfaction of the tribunal within a period of three weeks from the date of direction.

The company deposited Commercial Tax of Rs. 54.94 lakhs out of Commercial Tax liability of Rs 183.90 Lakhs along with interest of Rs. 3.07 lakhs for the period starting from 18.12.2018 to 02.05.2019 in compliance with order dated 26.11.2018 of the Hon'ble High Court of Allahabad and communicated the same to PNB vide letter dated 03.05.19

Further, PNB vide letter dated 04.05.2019 requested the company to submit No Dues Certificate from tax authorities after paying the commercial tax liability to bank for compliance of OTS Sanction within 3 days else OTS will be declared as failed. Since the company failed to reply to the same, PNB vide letter dated 04.07.2019 informed that the tax authorities have declared OTS revival as failed and PNB is resuming all recoveries as usual. Further, DRAT allowed appeal of PNB on 20.08.2019 styed the DRAT and NCLT proceedings filed by the PNB till the next date of hearing which is listed on 19th February, 2020. Interim order dated 24th October, 2019 was made absolute during the pendency of the writ petition. The matter was again listed for 30th March 2020 but the hearing could not take place due to covid-19 and is still pending before the court.

(b) The outstanding liability in the books of the company is higher than the OTS amount by Rs. 183.90 lakhs and in the absence of any documentary evidences from the management as well as PNB, we are unable to quantify the amount of interest on the amount of Rs. 183.90 lakhs the amount of Rs. 183.90 lakhs is over and above the loan amount on account of the sales tax liability on PNB on account of the auction held by the bank for old plant and machinery of the company.

The above matter is subjudice before Hon'ble High Court of Allahabad for further hearing.

12. The Commissioner Central Excise & Service Tax Kamla Neheru, Nagar CGO, Complex 2 Ghaziabad vide its memorandum order No.31/COMM/CX/GZB/2017-18 dated 31.01.2018 had ordered for payment of

a. Amount of central excise duty of Rs. 44.93 lakhs

b. Amount of interest of Rs. 6.56 lakhs

c. Amount of penalty of Rs. 6.56 lakhs
for the period from 1994 to 1997.

The company has not made provision of the said amount & further interest thereon in
its books till 31st December, 2019 due to which profit is understated by Rs. 58.05 lakhs plus interest.

Further the company has filed appeal against the order of Commissioner Central Excise & Service Tax. Kamla Neheru Nagar CGO, Complex 2, Ghaziabad before custom excise & service tax appellate tribunal, Allahabad.

13. (a) The amounts paid by the Ashoka Mercantile Limited (AML), a related party, to abu Dhabi Commercial Bank (ADCB) on account of One Time Settlement (OTS) of dues of the bank was accounted for in the books of the Company to the extent of OTS amount paid to the ADCB by AML and the balance amount of Rs. 153.92 Lakhs is still lying unallocated under unsecured loans in view of pending successful implementation of OTS of the dues of PNB as the settlement of assigned dues with AML is linked to the OTS of dues with PNB

(b) The amount paid to Karnataka Bank by Ashoka Mercantile Limited (AML), a related party, during the year ended March 31, 2012, on account of OTS of dues of the bank was accounted for in the books of the Company to the extent of OTS amount paid to the Karnataka Bank by AML and the balance amount of Rs. 339.20 lakhs is still lying unallocated under unsecured loans in view of pending successful implementation of OTS of the dues of PNB as the settlement of dues with AML is linked to the OTS of dues with PNB.

(c) The part payment made to Bank of Baroda by the Ashoka Mercantile Limited (AML), a related party, during the year ended March 31, 2013 on account of OTS of dues of the bank was accounted for in the company to the extent of OTS amount paid to the Bank of Baroda by AML and the Company and the balance amount of Rs. 232.04 lakhs is still lying unallocated under unsecured loans in view of ending successful implementation of OTS of the dues of PNB as the settlement of dues with AML is linked to the OTS of dues with PNB.
The effect if any, on the income \ expenditure of the company on final OTS with PNB cannot be ascertained.

14. The company has elected to exercise the options permitted under section 115BAA of the Income Tax Act 1961 as introduced by the Taxation Laws (Amendment) Ordinance 2019. No Provision for Income Tax under the Income Tax Act, 1961 is considered necessary for current financial year on account of unabsorbed depreciation, unabsorbed business losses and capital loss. The recognition of Deferred Tax Assets (Net) has been postponed on consideration of prudence.

15. On 11th Mar 2020. the world health organisation (WHO) officially declared COVID- 19, disease caused by novel coronavirus, a pandemic. Management is confirming that no case of COV1D19 infection among its staff/officers and the outbreak has not had a significant impact to the company. Management will continue to monitor and assess the ongoing development and respond accordingly.

16. The Company has adopted IND AS 116 W.e.f. 1st April 2019. IND AS 116 requires lessees to determine lease term as Non-cancellable period of lease adjusted with an option to extend or terminate the lease, if the use of such option is reasonably certain. The company makes an assessment on the expected lease term on lease-by-lease basis and there by assess whether it is reasonably certain that any option to extend or terminate the contract will be exercised. In evaluating the lease term, company consider factors such as any significant leasehold improvement undertaken over the lease term, costs relating to termination of the lease and importance of the underlying assets to company operations. The company do not have any applicable lease and has on impact on financial statement.

17. The company has 15% redeemable cumulative preference shares of Rs 100 each, reference share due for redemption since 31st March 1996.

18. The Company has been charging Interest on Loans taken from related parties i.e. Ashoka Meicantile Limited and Status Mark Finvest Limited upto 31st December 2019, Dining the Current quarter the lender has waived interest on loans for full FY 2019-20 including Rs. 230.71 Lakhs charged in Profit and Loss Account Upto Quarter 3 FY 2019-20.

19. Figures for the previous period have been regrouped, wherever necessary to confirm to the current period's classification.

20. The above financial results do not contain any false or misleading statement or figures and do not omit any material fact which may make financial statement of figures
contain therein misleading.