RUNGTA IRRIGATION Share price

The company was incorporated as private limited on 17thApril 1986 in the name of Jindal Irrigation Pvt. Limitedwhich later became deemed public limited on 18th June 1986u/s 43A of the Companies Act 1956. Subsequently name waschanged to Rungta Irrigation Limited with effect from 4thApril 1994 and shareholders of the company passed aSpecial Resolution in Extra Ordinary General Meeting held n09.05.94 for deleting the restriction clause under Section3(1)(iii) of the Companies Act 1956 in the Articles ofAssociation of the Company and as such company becamepublic company within the meaning of Section 3(1)(iv) ofthe Companies Act 1956. The company has its registered andadministrative office at 101 Pragati Tower 26 RajendraPlace New Delhi. The company was originally promoted byShri S.R. Jindal and was under his management till financialyear 1992-93. Thereafter during August 1993 themanagement of the company was taken over by the RungtaGroup headed by Shri R.S. Rungta by acquiring the holdingfor a total consideration of Rs.126.88 lacs. Thevaluation of shares were arrived at the book value andfurther no revaluation of assets was done. At the time oftake-over the following were the pending liabilities :a) Sales Tax liability imposed upon the company by the salestax authorities amounting to Rs.86.00 lacs includingpenalties and interest is under protest. On a writ filedby the company the H''ble High Court of Rajasthan hasstayed the demand and instructed the company to furnish thebank guarantee for Rs.23.00 lacs.b) Demand raised by Income Tax authorities after regularassessment for the assessment year 1989-90 1990-91 &1991-92 amounting to Rs.42685/- Rs.277412 andRs.18118/- respectively for which appears have been preferredwith the concerned authorities.The company is presently engaged in the manufacturingdesigning assembling and marketing ofAluminium/G.I./HDPE/PVC - Pipe based Sprinkler Irrigationsystem and rigid PVC & HDPE Pipes for water conveyancechannels and other uses. The company has played asignificant role so far in acceleration of greenrevolution in the agro-sector of India especially in theStates of Haryana Rajasthan Delhi M.P. and North EasternStates.Presently the company has two manufacturing units - FirstUnit is at Ghaziabad in the state of U.P. for themanufacturing and assembling of Sprinklers and othercomponents of Sprinkler Irrigation System based onAluminium/G.I. Pipe fittings. The second unit is set up atKala Amb Dist. Sirmour in the State of Himachal Pradesh anotified backward area eligible for 100% Income Taxbenefit for the manufacturing of HDPE pipes and othercomponents and the assembling of Sprinkler IrrigationSystem. The Second Unit commenced its production in themonth of November 1994.In addition to the two manufacturing Units the company hasits branches at Calcutta Jaipur Hyderabad and Bangaloreand Depots at Siliguri in West Bengal Jabalpur and Bhopalin Madhya Pradesh Nagpur in Maharashtra Varanasi in UttarPradesh Bhiwani in Haryana Sikar and Sayala in Rajasthan.The company was incorporated in 1986 and in the succeedingyear ended on 30th June 1987 it started the full fledgedmanufacturing operations producing Aluminium IrrigationSystem and registered a turn over of Rs.585 lacs. Thecompany declared maiden dividend of 8% in 1987.For the year ended on 30th June 1988 sale of the companywas Rs.597 lacs and the net profit (after tax) was Rs.20lacs. The dividend for the year remained the same as in theearlier year.The sale net profit (after tax) and dividend for the yearended on 31st March 1989 was Rs.622 lacs and Rs.29.76lacs and 8% respectively.The company has not faced any labour problem since itsincorporation and Labour Management relations are verycordial. The company has engaged in the production of SprinklerIrrigation Systems based on Aluminium only. However itwas felt by management that Sprinkler Irrigation Systemsmade up of HDPE and Drip Irrigation System and also rigidPVC pipes having vast market potential. Further these arerelated area of activities and can be successfullyimplemented by the company. Thus the company shall have thecomplete range of artificial irrigation systems availablein the market. As the company''s brand is alreadyestablished in the market and also it has strong dealershipnetwork it will give the company an edge over itscompetitors. With the implementation of the proposed project thefollowing capacities shall be created additionally.Accounting PoliciesA. Basis of preparation of Financial statement :(a) The financial statements have been prepared under thehistorical cost convention in accordance with the generallyaccepted accounting principle and the provisions of theCompanies Act 1956.(b) Accounting polices not specifically referred tootherwise are consistent with generally accepted accountingprinciples followed by the company.B. Fixed Assets and Depreciation(a) Fixed assets are stated at cost of acquisition lessaccumulated depreciation.(b) Advances paid for acquisition of Fixed Assets areincluded under capital work in progress.(c) The cost of Fixed Assets are inclusive of freightduties and other incidental expenses incurred duringconstruction period.(d) With regard to assets acquired under deferredpayment/instalment credit schemes the cost of the assets arecapitalised while the financial charges at equatedinstalments have been charged to revenue.(e) Depreciation is charged on prorata basis as per therates prescribed under schedule XIV to the Companies Act1956. C. InvestmentsInvestments are stated at cost.D. Inventories- Raw materials are valued at cost and Finished goods arevalued at cost or market value whichever is lower.- Stores and spare parts are valued at cost.- Scrap is valued at estimated realisable value.E. Research & Development ExpensesExpenditure on Research and Development is charged torevenue as and when incurred.F. Recognition of Income & ExpenditureAll revenues costs assets and liabilities are accountedfor on accrual basis. Sales are net of discounts and salestax.G. Deferred revenue expenditurePreliminary expenses are written off in equal installmentsover a period of ten years as allowable under the IncomeTax Act 1961.MATERIAL NOTES ON ACCOUNTSYear 1990-91 1991-92 1992-931. The company is liable to be assessed under Wealth TaxAct and the liability of it is accounted for on cash basis.Year 1993-941. Demand raised by Income Tax authorities after regularassessment for the Assessment Year 1989-90 1990-91 &1991-92 amounting to Rs.42685.00 Rs.277412.00 andRs.18118.00 respectively for which appeals have beenpreferred with the concerned authorities.2. Sales tax liability imposed upon the company by thesales tax authorities amounting to Rs.86.00 lacs includingpenalties and interest is under protest. On a writ fieldby company the Hon''ble High court of Rajasthan has stayedthe demand and instructed the company to furnish the bankguarantee for Rs.23 lakhs.3. The company has changed the method providing depreciationon fixed assets from written down value method to straightline method at the rates and manner provided under scheduleXIV to the Companies Act 1956 on the assets acquired on orafter 1st April 1993. Assets acquired before 1stApril 1993 are continued to be depreciated under writtendown value method. Had the method of providingdepreciation been adopted consistently as provided inprevious years the profit of the company would have beenreduced by Rs.2070358.00 and the decrease in net blockby Rs.2070358.00.