History of Rungta Irrigation Ltd.

COMPANY MANAGEMENT AND PROJECT HISTORY and BUSINESS OF THE COMPANY

The Comp. was incorporated as private limited on 17th April, 1986, in the name of Jindal Irrigation Pvt. Limited which later became deemed public limited on 18th June, 1986 u/s 43A of Companies Act, 1956. Subsequently name was changed to Rungta Irrigation Limited with effect from 4th April, 1994 & shareholders of Comp. passed a Special Resolution in Extra Ordinary General Meeting held n 09.05.94 for deleting the restriction clause under Section 3[1s][iiis] of Companies Act, 1956 in the Articles of Association of Comp. & as such Comp. became public Comp. within the meaning of Section 3[1s][ivs] of the Companies Act, 1956. The Comp. has its registered and administrative office at 101, Pragati Tower, 26, Rajendra Place, New Delhi. The Comp. was originally promoted by Shri S.R. Jindal & was under his management till financial year 1992-93. Thereafter during August 1993, the management of Comp. was taken over by Rungta Group headed by Shri R.S. Rungta by acquiring the holding for a total consideration of Rs.126.88 lacs. The valuation of shares were arrived at the book value and further no revaluation of assets was done. At the time of take-over the following were the pending liabilities :

as] Sales Tax liability imposed upon the Comp. by sales tax authorities amounting to Rs.86.00 lacs including penalties & interest, is under protest. On a writ filed by the company, the H'ble High Court of Rajasthan has stayed the demand & instructed the Comp. to furnish the bank guarantee for Rs.23.00 lacs.

bs] Demand raised by Income Tax authorities after regular assessment for assessment year 1989-90, 1990-91 & 1991-92 amounting to Rs.42,685/-, Rs.2,77,412 and Rs.18,118/- respectively for which appears have been preferred with the concerned authorities.

The Comp. is presently engaged in the manufacturing, designing, assembling & marketing of Aluminium/G.I./HDPE/PVC - Pipe based Sprinkler Irrigation system & rigid PVC and HDPE Pipes for water conveyance channels & other uses. The Comp. has played a significant role so far, in acceleration of green revolution in the agro-sector of India especially in the States of Haryana, Rajasthan, Delhi, M.P. & North Eastern States.

Presently the Comp. has two manufacturing units - First Unit is at Ghaziabad in the state of U.P. for the manufacturing & assembling of Sprinklers & other components of Sprinkler Irrigation System based on Aluminium/G.I. Pipe fittings. The second unit is set up at Kala Amb, Dist. Sirmour in the State of Himachal Pradesh, a notified backward area eligible for 100% Income Tax benefit, for manufacturing of HDPE pipes & other components & the assembling of Sprinkler Irrigation System. The Second Unit commenced its production in the month of November, 1994.

In addition to the two manufacturing Units the Comp. has its branches at Calcutta, Jaipur, Hyderabad & Bangalore and Depots at Siliguri in West Bengal, Jabalpur & Bhopal in Madhya Pradesh, Nagpur in Maharashtra, Varanasi in Uttar Pradesh, Bhiwani in Haryana, Sikar & Sayala in Rajasthan.

The Comp. was incorporated in 1986 & in the succeeding year ended on 30th June, 1987 it started the full fledged manufacturing operations producing Aluminium Irrigation System & registered a turn over of Rs.585 lacs. The company declared maiden dividend of 8% in 1987.

For the year ended on 30th June, 1988 sale of company was Rs.597 lacs & the net profit [after taxs] was Rs.20 lacs. The dividend for year remained the same as in the earlier year.

The sale, net profit [after taxs] & dividend for year ended on 31st March, 1989 was Rs.622 lacs & Rs.29.76 lacs & 8% respectively.

The Comp. has not faced any labour problem since its incorporation & Labour Management relations are very cordial.

The Comp. has engaged in the production of Sprinkler Irrigation Systems based on Aluminium only. However, it was felt by management that Sprinkler Irrigation Systems made up of HDPE & Drip Irrigation System & also rigid PVC pipes having vast market potential. Further these are related area of activities & can be successfully implemented by company. Thus the Comp. shall have the complete range of artificial irrigation systems available in the market. As the company brand is already established in the market & also it has strong dealership network, it will give the Comp. an edge over its competitors.

With the implementation of proposed project the following capacities shall be created additionally.

Accounting Policies

A. Basis of preparation of Financial statement :

[as] The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principle & the provisions of the Companies Act, 1956.

[bs] Accounting polices not specifically referred to otherwise are consistent with generally accepted accounting principles followed by company.

B. Fixed Assets & Depreciation

[as] Fixed assets are stated at cost of acquisition less accumulated depreciation.

[bs] Advances paid for acquisition of Fixed Assets are included under capital work in progress.

[cs] The cost of Fixed Assets are inclusive of freight, duties & other incidental expenses incurred during construction period.

[ds] With regard to assets acquired under deferred payment/instalment credit schemes, the cost of assets are capitalised while the financial charges at equated instalments have been charged to revenue.

[es] Depreciation is charged on prorata basis as per the rates prescribed under schedule XIV to the Companies Act, 1956.

C. Investments

Investments are stated at cost.

D. Inventories

- Raw materials are valued at cost & Finished goods are valued at cost or market value whichever is lower.

- Stores & spare parts are valued at cost.

- Scrap is valued at estimated realisable value.

E. Research and Development Expenses

Expenditure on Research & Development is charged to revenue as & when incurred.

F. Recognition of Income and Expenditure

All revenues, costs, assets & liabilities are accounted for on accrual basis. Sales are net of discounts & sales tax.

G. Deferred revenue expenditure

Preliminary expenses are written off in equal installments over a period of ten years, as allowable under the Income Tax Act 1961.

MATERIAL NOTES ON ACCOUNTS

Year 1990-91, 1991-92, 1992-93

1. The Comp. is liable to be assessed under Wealth Tax Act & the liability of it is accounted for on cash basis.

Year 1993-94

1. Demand raised by Income Tax authorities after regular assessment for Assessment Year 1989-90, 1990-91 & 1991-92 amounting to Rs.42,685.00, Rs.2,77,412.00 and Rs.18,118.00 respectively for which appeals have been preferred with the concerned authorities.

2. Sales tax liability imposed upon the Comp. by the sales tax authorities amounting to Rs.86.00 lacs including penalties & interest, is under protest. On a writ field by company, the Hon'ble High court of Rajasthan has stayed the demand & instructed the Comp. to furnish the bank guarantee for Rs.23 lakhs.

3. The Comp. has changed the method providing depreciation on fixed assets from written down value method to straight line method at the rates & manner provided under schedule XIV to the Companies Act, 1956 on the assets acquired on or after 1st April, 1993. Assets acquired before 1st April, 1993 are continued to be depreciated under written down value method. Had the method of providing depreciation been adopted consistently as provided in previous years, the profit of Comp. would have been reduced by Rs.20,70,358.00 & the decrease in net block by Rs.20,70,358.00.

2008

- Rungta Irrigation Ltd has appointed Ms. Priya Rungta, D/o Shri. M P Rungta, as Additional Director of Comp. with effect from October 30, 2008.