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Notes to Accounts of Agro Tech Foods Ltd.

Mar 31, 2022

The projections cover a period of six years, as the Company believes this to be the most appropriate time scale over which to review and consider annual performances before applying a fixed terminal value multiple to the final year cash flows. The growth rates used to estimate future performance are based on the estimates from past performance. Weighted Average Cost of Capital % (WACC) = Risk free return (Market risk premium x Beta for the Company).

The Company has performed sensitivity analysis around the base assumptions and has concluded that no reasonable change in key assumptions would result in the recoverable amount of the IPC CGU to be less than the carrying value.

(i) The consumption of inventories recognised as an expense during the year has been disclosed in Notes 28,29,30 and 33.

(ii) The consumption of inventories recognised as an expense includes '' 0.08 (during 2020-21: '' 0.46) in respect of write-downs of inventory to net realisable value, and has been reduced by '' Nil

(during 2020-21 : '' Nil ) in respect of reversal of such write-downs.

(iii) Refer note 3(e) for method of valuation for inventories.

(i) The average credit period for the customers is in the range of 7 days to 30 days depending on customer groups.

(ii) Of the trade receivables balance '' 521.42 is due from one of the Company''s large customers (as at March 31,2021 : '' 143.48 due from two of the Company''s large customers). There are no other customers who represent more than 10% of the total balance of trade receivables.

(iii) The Company has used a practical expedient by computing the expected credit loss allowance for doubtful trade receivables based on a provisioning matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward-looking estimates. The expected credit loss allowance is based on the ageing of the receivables which are due and the rates used in the provision matrix.

Rights, preferences and restrictions attached to the equity shares:

The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividends and share in the Company''s residual assets. The equity shares are entitled to receive dividend as declared from time to time. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to their share of the paid-up equity capital of the Company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable have not been paid. Failure to pay any amount called up on shares may lead to forfeiture of the shares. On winding up of the Company, the holders of equity shares will be entitled to receive the residual assets of the company, remaining after distribution of all preferential amounts in proportion to the number of equity shares held.

(f) Share based payments

The Company instituted the "Agro Tech Employee Stock Option Plan (''Plan'') " to grant equity based incentives to its eligible employees. The Company has established a trust called the Agro Tech ESOP Trust ("Trust") to implement the Plan. The Company has given advance to the Trust for purchase of the Company''s shares and such advance outstanding as at March 31, 2022 is '' 237.97 ('' 311.14 as at March 31, 2021).

Fair value Measurement :

The fair value of the employee share based payment is determined using the Black Scholes model on the date of grant. No new grants have been issued during the year ended March 31, 2022 and March 31, 2021.

(i) The disclosure in respect of the amounts payable to Micro, Small and Medium Enterprises as at reporting date has been made in the standalone financial statements based on information received and available with the Company and has been relied upon by the auditors.

Further, in the view of the Management, the impact of interest, if any, that may be payable in accordance with the provisions of the Micro, Small and Medium Enterprises Development Act, 2006 ("the MSMED Act") is not expected to be material. The Company has not received any claim for interest from any supplier under the said Act.

The Company is subject to legal proceedings and claims, which have arisen in the ordinary course of business including litigation before various tax authorities. The amounts included above represent the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal positions against such dispute. The Company''s Management does not reasonably expect that these legal actions, when ultimately concluded and determined, will have a material and adverse effect on the Company''s results of operations or financial conditions. The Company has accrued appropriate provision wherever required.

During the current year, the Company has received the settlement in respect of the insurance claim made by it in relation to the fire incident at one of the manufacturing facilities of the Company which had caused damage to the Company''s property, plant and equipment and inventory during the year ended March 31, 2019. The Company had recorded a loss arising from such incident for the year ended March 31,2019 and had also recognised a minimum insurance claim receivable for an equivalent amount. The Company has adjusted the insurance proceeds against the net claims receivable balance and presented '' 20.11 as exceptional income in the financial statements for the year ended March 31, 2022.

The Chief Operating Decision Maker (CODM) evaluates the Company''s performance and allocates resources based on analysis of various performance indicators by industry classes. The operating segment of the Company has been identified as "Foods" as the CODM reviews the business performance at an overall Company level as one segment.

Note: The above information has been determined to the extent of such parties have been identified on the basis of information available with the Company and relied upon by the auditors.

Note 43 - Corporate social responsibility

As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. Accordingly, the gross amount required to be spent during the year is '' 9.45 (March 31, 2021: '' 9.58).The Company has before the year end, contributed the entire amount of its current year obligation of '' 9.45 to the Prime Minister''s National Relief Fund, which is a fund prescribed under Schedule VII of the Act. The unspent amount of the previous year of '' 9.58 was also contributed to the Prime Minister''s National Relief Fund within the prescribed timelines of September 30, 2021.

Note 45 - Capital management

The Company''s policy is to maintain a stable and strong capital structure with focus on total equity so as to maintain investors, creditors and market confidence and to sustain future development and growth of its business. In order to maintain the capital structure, the Company monitors the return on capital, as well as the level of dividends of equity share holders. The Company aims to manage its capital efficiently so as to safeguard its ability to continue as a going concern and to optimise returns to all its shareholders. For the purpose of Company''s capital management, capital includes issued capital and all other equity reserves and debt includes long-term borrowings and short-term working capital demand loan.

a) The employee benefit schemes are as under:i. Provident fund :

All employees of the Company receive benefits under the Provident Fund which is a defined benefit plan wherein the Company provides the guarantee of a specified return on contribution. The contribution is made both by the employee and the Company equal to 12% of the employees'' salary. These contributions are made to the fund administered and managed by the Company''s own Trust. (Refer Note 42).

ii. Superannuation fund:

The Company has a defined contribution scheme to provide pension to its eligible employees. The Company makes monthly contributions equal to a specified percentage of the covered employees'' salary. These contributions are administered by Company''s own Trust which has subscribed to "Group Superannuation Policy" of ICICI Prudential Life Insurance Company Limited. The Company''s monthly contributions are charged to the Statement of Profit and Loss.

iii. Compensated absences :

The accrual for unutilised leave is determined for the entire available leave balance standing to the credit of the employees at the year end. The value of such leave balances that are eligible for carry forward, is determined by an actuarial valuation as at the end of the year and is charged to the Statement of Profit and Loss.

iv. Gratuity :

In accordance with the ''The Payment of Gratuity Act, 1972'' of India, the Company provides for Gratuity, a defined retirement benefit scheme (the Gratuity Plan), covering eligible employees. Liabilities with regard to such gratuity plan are determined by an actuarial valuation as at the end of the year. The gratuity plan is a funded plan administered by Company''s own Trust which has subscribed to "Group Gratuity Scheme" of ICICI Prudential Life Insurance Company Limited.

Risk Management:

Investment risk - The probability or likelihood of occurrence of losses related to the expected return on any particular investment.

Interest rate risk - The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability.

Longevity risk - The present value of defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after employment. An increase in the life expectancy of the plan participants will increase the plan''s liability.

Salary risk - The present value of the defined benefit plan is calculated with reference to the future salaries of participants under the plan. Increase in salary due to adverse inflationary pressures might lead to higher liabilities.

The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions maybe correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as and when calculating the defined benefit liability recognised in the Balance Sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous year.

Note 47 - Financial instruments

The Company''s principal financial liabilities comprise borrowings, trade payables and other liabilities. The Company''s principal financial assets include loans, investments, trade and other receivables, and cash and cash equivalents that are derived directly from its operations. The Company''s activities expose it to a variety of financial risks viz. market risk, credit risk and liquidity risk. The Company''s primary focus is to foresee the unpredictability of financial markets and seek to minimise potential adverse effects on its financial performance. The primary market risk to the Company is foreign exchange risk. The Company uses derivative financial instruments to mitigate foreign exchange related risk exposures. The Company''s exposure to credit risk is influenced mainly by the individual characteristic of each customer and the concentration of risk from the top few customers. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company''s policy that no trading in derivatives for speculative purposes may be undertaken.

Fair value hierarchy

The fair value of financial instruments as referred to above have been classified into three categories depending on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active markets for identified assets or liabilities [Level 1 measurements] and lowest priority to unobservable inputs [Level 3 measurements].

The following levels have been used for classification:

• Level 1: Quoted prices (unadjusted) for identical instruments in active market

• Level 2: Directly or indirectly observable market inputs, other than Level 1 inputs

• Level 3: Inputs which are not based on observable market data.

If one or more of the significant inputs is not based on observable market data, the fair value is determined using generally accepted pricing models based on a discounted cash flow analysis, with the most significant inputs being the discount rate that reflects the credit risk of counterparty.

The fair value of trade receivables, trade payables and other current financial assets and liabilities is considered to be equal to the carrying amounts of these items due to their short-term nature. Where such items are non-current in nature, the same has been classified as Level 3 and fair value determined using discounted cash flow basis. There has been no change in the valuation methodology for Level 3 inputs during the year. There were no transfers between Level 1 and Level 2 during the year.

Financial risk management

"The Company has exposure to the following risks arising from financial instruments:

i. Credit Risk

ii. Liquidity Risk

iii. Market Risk

Risk Management framework:

The Company''s financial risk management is an integral part of how to plan and execute its business strategies. The Company''s risk management policy is set by the Risk Management Committee. The Company''s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk. The Company''s primary focus is to foresee the unpredictability of financial markets and seek to minimise potential adverse effects on its financial performance. A summary of the risks have been given below:

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers and loans given. Credit risk arises from cash held with banks, as well as credit exposure to clients, including outstanding accounts receivables. The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of managing counterparty credit risk is to prevent losses in financial assets. The Company assesses the credit quality of the counterparties, taking into account their financial position, past experience and other factors.

Trade and other receivables

The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are wholesale, retail or institutional customers, their industry, trading history with the Company and existence of previous financial difficulties. The default in collection as a percentage to total receivable is low.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or any other financial asset. The Company''s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risk of damage to the Company''s reputation.

The Company monitors the level of expected cash inflows on trade receivables and loans together with expected cash outflows on trade payables and other financial liabilities.

Market risk

Market risk is the risk that changes in market prices - such as foreign exchange rates and interest rates - will affect the Company''s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Since the Company has insignificant interest bearing borrowings, the exposure to risk of changes in market interest rates is minimal. The Company has not used any interest rate derivatives. Currency risk

The Company is exposed to currency risk to the extent that there is mismatch between the currencies in which sales, purchase are denominated and the respective functional currencies of Company. The functional currency of the Company is INR and maximum sales transactions are denominated in INR itself. Foreign currency transactions are mainly denominated in USD.

Price risk exposure

The Company''s exposure to price risk arises from investments held by the Company in the mutual fund units and classified as fair value through profit or loss. To manage its price risk arising from investments in mutual fund units, the Company diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Company. The exposure of the Company''s mutual fund investments to security price changes at the end of the reporting period are as follows:

Note 48 - During the year ended March 31,2022 and March 31,2021 no material foreseeable loss was incurred for any long-term contract including derivative contracts.

Note 49 - The Management has considered the possible effects that may arise out of the COVID-19 pandemic in concluding on significant accounting judgements and estimates, inter-alia, recoverability of receivables, assessment for impairment of investments, intangible assets, inventory, based on the information available to date, both internal and external, to the extent relevant, while preparing these financial statements as of and for the year ended March 31, 2022. There is no material impact on these financial statements for the year ended March 31, 2022 owing to the pandemic. The eventual outcome of impact of the COVID 19 pandemic may be different from those estimated as on the date of approval of these financial statements.

Note 50 - The Code on Social Security, 2020 (''Code'') relating to employee benefits during employment and postemployment benefits has been enacted. However, the date on which the Code will come into effect has not been notified. The Management will assess the impact of the Code and will give appropriate impact in the financial statements in the period in which, the Code becomes effective.

Note 52 - The financial statements are approved for issue by the Audit Committee and Board of Directors at their meetings held on April 28, 2022.


Mar 31, 2019

1 Reporting entity

Agro Tech Foods Limited (the ‘Company’) is a company domiciled in India, with its registered office situated at 31, Sarojini Devi Road, Secunderabad, Telangana - 500 003, India. The Company has been incorporated under the provisions of Indian Companies Act and its equity shares are listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) in India. The Company is primarily engaged in the business of manufacturing and trading of food and food products to consumers and institutional customers.

2 Basis of preparation

A. Statement of compliance

The standalone financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 notified under Section 133 of Companies Act, 2013, (the ‘Act’) and other relevant provisions of the Act.

The standalone financial statements were authorised for issue by the Company’s Board of Directors on 24 April 2019.

Details of the Company’s accounting policies are included in Note 3.

B. Functional and presentation currency

These standalone financial statements are presented in Indian Rupees (‘), which is also the Company’s functional currency. All amounts have been rounded-off to two decimal places to the nearest millions, unless otherwise indicated.

C. Basis of measurement

The standalone financial statements have been prepared on the historical cost basis except for the following items:

D. Use of estimates and judgements

In preparing these standalone financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.

Judgements

Information about judgements made in applying accounting policies that have the most significant effects on the amounts recognised in the standalone financial statements is included in the following notes:

- Note 32 - leases: whether an arrangement contains a lease; and

- Note 32 - lease classification;

Assumptions and estimation uncertainties

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the year ending 31 March 2020 is included in the following notes:

- Note 42 - measurement of defined benefit obligations: key actuarial assumptions;

- Note 31 - recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources;

- Note 4 - useful life of property, plant and equipment.

- Note 5 - useful life of intangible assets and impairment of intangible assets having indefinite useful life.

- Notes 6, 7, 10, 11 and 13 - impairment of financial assets.

E. Measurement of fair values

Certain accounting policies and disclosures of the Company require the measurement of fair values, for both financial and non-financial assets and liabilities.

The Company has an established internal control framework with respect to the measurement of fair values.

The valuation team regularly reviews significant unobservable inputs and valuation adjustments.

If third party information such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which these valuations should be classified.

Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

When measuring the fair value of an asset or a liability, Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

Further information about the assumptions made in measuring fair values is included in the following notes:

- Note 15 (e) - share-based payments;

- Note 44 - financial instruments.

Note 3 - Current investments

Investments in mutual funds - quoted (carried at fair value through profit and loss (FVTPL))

Information about the Company’s exposure to price risks and fair value measurement, are included in Note 44.

Rights, preferences and restrictions attached to the equity shares:

The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividends and share in the Company’s residual assets. The equity shares are entitled to receive dividend as declared from time to time. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to their share of the paid-up equity capital of the Company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable have not been paid. Failure to pay any amount called up on shares may lead to forfeiture of the shares. On winding up of the Company, the holders of equity shares will be entitled to receive the residual assets of the company, remaining after distribution of all preferential amounts in proportion to the number of equity shares held.

Notes:

(a) Shares in respect of equity in the Company held by its holding or ultimate holding company, including shares held by subsidiaries or associates of the holding company or the ultimate holding company in aggregate :

(e) Share based payments

The Company instituted the “Agro Tech Foods Limited Employee Stock Option Plan’ (“Plan”) to grant equity based incentives to its eligible employees. The Company has established a trust called the Agro Tech ESOP Trust (“Trust”) to implement the Plan. The Company has given advance to the Trust for purchase of the Company’s shares and advance outstanding as at 31 March 2019 is Rs. 402.28 (Rs. 502.38 as at 31 March 2018). Under the plan a maximum of 23,436,926 options will be granted to the eligible employees. All these options are planned to be settled in equity at the time of exercise at the option of the employee. These options have an exercise price of Rs. 561.00, Rs. 597.55 and Rs. 589.75 per share granted during the years ended 31 March 2014, 31 March 2015 and 31 March 2016 respectively and vests on a graded basis as follows:

Fair value Measurement:

The fair value of the employee share based payment is determined using the Black Scholes model on the date of grant. No new grants have been issued during the year ended 31 March 2019 and 31 March 2018.

Nature and purpose of other reserves

General Reserve

General reserve is used from time to time to transfer profit from reserves, for appropriation purposes.

Securities premium reserve

Securities premium reserve is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions of the Act.

Agro Tech ESOP Trust (ATET) reserve

Profit on sale of treasury shares by Agro Tech ESOP Trust is recognised in ATET reserve.

After the reporting dates dividend of Rs. 2.50 (31 March 2018: Rs. 2.50) per equity share were proposed by the Directors subject to the approval at the annual general meeting; the dividends have not been recognised as liabilities. Dividends would attract dividend distribution tax when declared or paid.

Note:

The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allotted after filing of the Memorandum. Accordingly, the disclosure in respect of the amounts payable to such enterprises as at reporting date has been made in the standalone financial statements based on information received and available with the Company and has been relied upon by the auditors.

Further, in the view of the Management, the impact of interest, if any, that may be payable in accordance with the provisions of the Micro, Small and Medium Enterprises Development Act, 2006 (‘‘the MSMED Act’’) is not expected to be material. The Company has not received any claim for interest from any supplier under the said Act.

Disclosure required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006

(a) Also refer note 43

(b) The Company is subject to legal proceedings and claims, which have arisen in the ordinary course of business including litigation before various tax authorities. The amounts included above represent the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal positions against such dispute. The Company’s Management does not reasonably expect that these legal actions, when ultimately concluded and determined, will have a material and adverse effect on the Company’s results of operations or financial conditions. The Company has accrued appropriate provision wherever required.

Note 4 - Operating leases

(i) The Company leases warehouses and office facilities under cancellable and non-cancellable operating lease agreements. Total rental expense under cancellable operating lease was Rs. 46.12 (31 March 2018 :Rs. 49.99) and under non-cancellable portion was Rs. 26.42 ( 31 March 2018: Rs. 24.54) inclusive of maintenance and other charges, which has been disclosed as rent.

(ii) The Company has certain cancellable arrangements with contract packers (which conveys a right to use an asset in return for a payment or a series of payment) identified to be in the nature of lease and have been classified as operating lease arrangements. Rental expenses of Rs. 162.01 (31 March 2018: Rs. 167.68) in respect of obligation under operating leases have been recognised in the statement of profit and loss. Management has concluded that it is impracticable to separate lease and non-lease payment. The lease payment disclosed in this note also includes non-lease payments.

Future minimum lease payments

The future minimum lease payments to be made under non-cancellable operating lease are as under:

Note 5 - Intangible assets - Trademarks

Trademarks represent the purchase consideration paid for brand viz. “Sundrop”. Sundrop brand has an indefinite useful life is measured at cost and are not subject to amortisation, but tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired. On the balance sheet date, the Management reassesses the value of brand through an independent valuer to ensure that the recoverable amount of the asset is not lower than its carrying amount. Key assumptions used in the estimation of the recoverable amount are set out below :

Note 6 - Exceptional items

On 04 November 2018, a fire broke out at one of the manufacturing facilities of the Company which caused damage to the Company’s property, plant, equipment and inventories. The Company lodged claim with the insurance company for losses suffered which is under survey by the insurance company. The Company has recorded a loss of Rs. 251.76 arising from such incident for the year ended 31 March 2019. Further, the Company has also recognised a minimum insurance claim receivable for equivalent amounts and has been disclosed under note 13 in these standalone financial statements. The aforementioned losses and the corresponding credit arising from insurance claim receivable has been presented on a net basis (‘ Nil) under Exceptional items in these standalone financial statements. There are no disputes made by the insurance company against such claim till the date of these standalone financial statements. The Company has received on account payments of Rs. 100 from the insurance company and Rs. 6.77 from the scrap vendor. The same has been adjusted with the amount recoverable from the insurance company.

Also, the Company is in the process of determining its final claim for loss of property, plant and equipment and losses incurred due to interruption of business and has accordingly not recorded any further claim arising therefrom at this stage.

Note 7 - Segmental information

The Chief Operating Decision Maker (CODM) evaluates the Company’s performance and allocates resources based on analysis of various performance indicators by industry classes. The operating segment of the Company has been identified as “Foods” as the CODM reviews the business performance at an overall Company level as one segment.

Information about major customers

Revenue from specific customers exceeding 10% of total revenue for the years ended 31 March 2019 and 31 March 2018 are as follows:

*Remuneration as given above does not include long-term compensated absences benefit accrued, gratuity benefit accrued and insurance premium since the same are computed for all the employees together and the amounts attributable to the managerial personnel cannot be ascertained separately. Share-based compensation expense allocable to key management personnel is not included in the remuneration disclosed above.

Note: The above information has been determined to the extent such parties have been identified on the basis of information available with the Company and relied upon by the auditors

Note 8 - Corporate social responsibility

During the year, the Company has spent Rs. 4.62 (31 March 2018: Rs. 1.64) for Social welfare program called “Poshan”. The program which is designed to address malnourishment amongst children, works with Government Anganwadi’s and Child Malnourishment Treatment Centers using Peanut Butter which is a rich source of protein and highly effective to fight malnutrition. The amount includes allocable manufacturing overhead and it represents about 1.06% (31 March 2018: 0.39%) of last 3 years average profit. This amount is booked under the head of miscellaneous expenses and charged to the statement of profit and loss.

Gross amount required to be spent by the Company during the year : Rs. 8.69 (31 March 2018: Rs. 8.44)

Note 9 - Research and development expenses

Revenue expenditure on research and development is expensed as incurred. Capital expenditure incurred on research and development (‘R&D’) is capitalised as property, plant and equipment and depreciated in accordance with the depreciation policy of the Company. The details are as below:

Note 10 - Capital management

The Company’s policy is to maintain a stable and strong capital structure with focus on total equity so as to maintain investors, creditors and market confidence and to sustain future development and growth of its business. In order to maintain the capital structure, the Company monitors the return on capital, as well as the level of dividends of equity share holders. The Company aims to manage its capital efficiently so as to safeguard its ability to continue as a going concern and to optimise returns to all its shareholders. For the purpose of Company’s capital management, capital includes issued capital and all other equity reserves and debt includes shortterm working capital demand loan. The Company does not have any borrowings or loans and it believes that the working capital is sufficient to meet its current requirements.

Note 11 - Employee Benefits

a) The employee benefit schemes are as under:

i. Provident fund :

All employees of the Company receive benefits under the Provident Fund which is a defined benefit plan wherein the Company provides the guarantee of a specified return on contribution. The contribution is made both by the employee and the Company equal to 12% of the employees’ salary. These contributions are made to the Fund administered and managed by the Company’s own Trust. (Refer note 43).

ii. Superannuation fund:

The Company has a Defined Contribution Scheme to provide pension to the eligible employees. The Company makes monthly contributions equal to a specified percentage of the covered employees’ salary. These contributions are administered by Company’s own Trust which has subscribed to “Group Superannuation Policy” of ICICI Prudential Life Insurance Company Limited. The Company’s monthly contributions are charged to the statement of profit and loss.

iii. Gratuity :

In accordance with the ‘The Payment of Gratuity Act, 1972’ of India, the Company provides for Gratuity, a Defined Retirement Benefit Scheme (the Gratuity Plan), covering eligible employees. Liabilities with regard to such Gratuity Plan are determined by an actuarial valuation as at the end of the year and are charged to statement of profit and loss. The Gratuity Plan is a funded Plan administered by Company’s own Trust which has subscribed to “Group Gratuity Scheme” of ICICI Prudential Life Insurance Company Limited.

iv. Compensated absences :

The accrual for unutilised leave is determined for the entire available leave balance standing to the credit of the employees at the year end. The value of such leave balances that are eligible for carry forward, is determined by an actuarial valuation as at the end of the year and is charged to the statement of profit and loss.

b) The following table sets out the particulars of the employee benefits as required under the Ind AS ^-.”Employee Benefits”.

i) The amounts recognised in the balance sheet and the movements in the defined benefit obligation over the year for Gratuity are as follows:

Discount rate : The discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of the obligations.

Expected rate of return on plan assets : This is based on the expectation of the average long-term rate of return expected on investments of the fund during the estimated term of the obligations.

Salary escalation rate : The estimates of future salary increase considered in the actuarial valuation takes into account factors like inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

Note - 12 On 28th February 2019, the Hon’ble Supreme Court of India has delivered a judgment clarifying the principles that need to be applied in determining the components of salaries and wages on which Provident Fund (PF) contributions need to be made by establishments. Basis this judgment, the Company has re-computed its liability towards PF for the month of March 2019 and has made a provision for it in the books of account. In respect of the earlier periods/years, the Company has been legally advised that there are numerous interpretative challenges on the application of the judgment retrospectively. Based on such legal advice, the management believes that it is impracticable at this stage to reliably measure the provision required, if any, and accordingly, no provision has been made towards the same. Necessary adjustments, if any, will be made to the books as more clarity emerges on this subject.

Note 13 - Financial instruments - fair values and risk management

The Company’s principal financial liabilities comprise trade payables and other liabilities. The Company’s principal financial assets include loans, investments, trade and other receivables, and cash and short-term deposits that derive directly from its operations. The Company’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company’s primary focus is to foresee the unpredictability of financial markets and seek to minimise potential adverse effects on its financial performance. The primary market risk to the Company is foreign exchange risk. The Company uses derivative financial instruments to mitigate foreign exchange related risk exposures. The Company’s exposure to credit risk is influenced mainly by the individual characteristic of each customer and the concentration of risk from the top few customers. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company’s policy that no trading in derivative for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below:

Measurement of fair values

The carrying amount of the current financial assets and current financial liabilities are considered to be same as their fair values, due to their short term nature.

The fair valuation of investments in mutual funds is classified as level 1 in the fair value hierarchy as they are determined based on their quoted prices.

The fair valuation of derivative financial assets are valued based on quoted prices for similar assets and liabilities in active markets or inputs that are directly or indirectly observable in the market place.

The fair value of cash and cash equivalents, bank balances, investments, trade receivables, other financial assets, trade payables and liabilities approximate their carrying amount largely due to short-term nature of these instruments.

Financial risk management

The Company has exposure to the following risks arising from financial instruments:

i. Credit Risk

ii. Liquidity Risk

iii. Market Risk

Risk Management framework:

The Company’s financial risk management is an integral part of how to plan and execute its business strategies. The Company’s risk management policy is set by the Risk Management Committee. The Company’s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk. The Company’s primary focus is to foresee the unpredictability of financial markets and seek to minimise potential adverse effects on its financial performance. A summary of the risks have been given below:

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and loans given. Credit risk arises from cash held with banks, as well as credit exposure to clients, including outstanding accounts receivables. The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of managing counterparty credit risk is to prevent losses in financial assets. The Company assesses the credit quality of the counterparties, taking into account their financial position, past experience and other factors.

Trade and other receivables

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are wholesale, retail or institutional customers, their industry, trading history with the Company and existence of previous financial difficulties. The default in collection as a percentage to total receivable is low.

The Company’ s exposure to credit risk for trade receivables by type of counterparty is as follows:

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or any other financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risk damage to the Company’s reputation.

The Company monitors the level of expected cash inflows on trade receivables and loans together with expected cash outflows on trade payables and other financial liabilities.

The table below provides details regarding the contractual maturities of significant financial liabilities as at 31 March 2019 and 31 March 2018:

Market risk

Market risk is the risk that changes in market prices - such as foreign exchange rates and interest rates - will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Since, the Company does not have any borrowings having floating rate of interest, hence there is no interest rate risk. Currency risk

The Company is exposed to currency risk to the extent that there is mismatch between the currencies in which sales, purchase are denominated and the respective functional currencies of Company. The functional currency of the Company is INR and maximum sales transactions are denominated in INR itself. Foreign currency transactions are mainly denominated in USD.

Exposure to currency risk

The following is the nominal value of outstanding derivative contracts entered into by the Company for hedging currency and interest rate related risks as at:

Price risk exposure

The Company’s exposure to price risk arises from investments held by the Company in the mutual fund units and classified as fair value through profit or loss in the standalone balance sheet. To manage its price risk arising from investments in mutual fund units, the Company diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Company. The exposure of the Company’s mutual fund investments to security price changes at the end of the reporting period are as follows:

Note 14 - During the year ended 31 March 2019 and 31 March 2018 no material foreseeable loss was incurred for any long-term contract including derivative contracts.


Mar 31, 2018

1 Reporting entity

Agro Tech Foods Limited (the ‘Company’) is a company domiciled in India, with its registered office situated at 31, Sarojini Devi Road, Secunderabad, Telangana - 500 003, India. The Company has been incorporated under the provisions of Indian Companies Act and its equity shares are listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) in India. The Company is primarily engaged in the business of manufacturing and trading of food and food products to consumers and institutional customers.

2 Basis of preparation

A. Statement of compliance

The standalone financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 notified under Section 133 of Companies Act, 2013, (the ‘Act’) and other relevant provisions of the Act.

The standalone financial statements up to and for the year ended 31 March 2017 were prepared in accordance with the Companies (Accounting Standards) Rules, 2006, notified under Section 133 of the Act and other relevant provisions of the Act.

As these are the Company’s first standalone financial statements prepared in accordance with Indian Accounting Standards (Ind AS), Ind AS 101, First-time Adoption of Indian Accounting Standards has been applied. An explanation of how the transition to Ind AS has affected the previously reported financial position, financial performance and cash flows of the Company is provided in Note 45.

The standalone financial statements were authorised for issue by the Company’s Board of Directors on 25 April 2018.

Details of the Company’s accounting policies are included in Note 3.

B. Functional and presentation currency

These standalone financial statements are presented in Indian Rupees (‘), which is also the Company’s functional currency. All amounts have been rounded-off to two decimal places to the nearest millions, unless otherwise indicated.

C. Basis of measurement

The standalone financial statements have been prepared on the historical cost basis except for the following items:

D. Use of estimates and judgements

In preparing these standalone financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.

Judgements

Information about judgements made in applying accounting policies that have the most significant effects on the amounts recognised in the standalone financial statements is included in the following notes:

- Note 33 - leases: whether an arrangement contains a lease; and

- Note 33 - lease classification;

Assumptions and estimation uncertainties

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the year ending 31 March 2019 is included in the following notes:

- Note 43 - measurement of defined benefit obligations: key actuarial assumptions;

- Note 32 - recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources;

- Note 4 - useful life of property, plant and equipment.

- Note 5 - useful life of intangible assets and impairment of intangible assets having indefinite useful life.

- Notes 6, 7, 11 and 13 - impairment of financial assets.

E. Measurement of fair values

Certain accounting policies and disclosures of the Company require the measurement of fair values, for both financial and non-financial assets and liabilities.

The Company has an established internal control framework with respect to the measurement of fair values. The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of IndAS, including the level in the fair value hierarchy in which these valuations should be classified.

Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

When measuring the fair value of an asset or a liability, Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

Further information about the assumptions made in measuring fair values is included in the following notes:

- Note 15 (e) - share-based payments;

- Note 44 - financial instruments.

Rights, preferences and restrictions attached to the equity shares:

The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividends and share in the Company’s residual assets. The equity shares are entitled to receive dividend as declared from time to time. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to their share of the paid-up equity capital of the Company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable have not been paid. Failure to pay any amount called up on shares may lead to forfeiture of the shares. On winding up of the Company, the holders of equity shares will be entitled to receive the residual assets of the company, remaining after distribution of all preferential amounts in proportion to the number of equity shares held.

Notes:

(a) Shares in respect of equity in the Company held by its holding or ultimate holding company, including shares held by subsidiaries or associates of the holding company or the ultimate holding company in aggregate:

(e) Share based payments

The Company instituted the “Agro Tech Foods Limited Employee Stock Option Plan’ (“Plan”) to grant equity based incentives to its eligible employees. The Company has established a trust called the Agro Tech ESOP Trust (“Trust”) to implement the Plan. The Company has given advance to the “Trust” for purchase of the Company’s shares and advance outstanding as at 31 March 2018 is Rs.502.38 (Rs.558.00 as at 31 March 2017 and Rs.560.35 as at 1 April 2016).

Under the plan a maximum of 23,436,926 options will be granted to the eligible employees. All these options are planned to be settled in equity at the time of exercise at the option of the employee. These options have an exercise price of Rs.561.00, Rs.597.55 and Rs.589.75 per share granted during the years ended 31 March 2014, 31 March 2015 and 31 March 2016 respectively and vests on a graded basis as follows:

Fair value measurement:

The fair value of the employee share based payment is determined using the Black Scholes model on the date of grant. No new grants have been issued during the year ended 31 March 2018 and 31 March 2017. The Company has availed exemption given under Ind AS 101 and has not applied the fair value to the equity instruments that were vested before the date of transition to Ind AS.

After the reporting dates dividend of Rs.2.50 (31 March 2017: Rs.2) per equity share were proposed by the Directors subject to the approval at the annual general meeting; the dividends have not been recognised as liabilities. Dividends would attract dividend distribution tax when declared or paid.

Note:

The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allotted after filing of the Memorandum. Accordingly, the disclosure in respect of the amounts payable to such enterprises as at reporting date has been made in the standalone financial statements based on information received and available with the Company and has been relied upon by the auditors.

Further, in the view of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the Micro, Small and Medium Enterprises Development Act, 2006 (“the MSMED Act”) is not expected to be material. The Company has not received any claim for interest from any supplier under the said Act.

The Company is subject to legal proceedings and claims, which have arisen in the ordinary course of business including litigation before various tax authorities. The amounts included above represent the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal positions against such dispute. The Company’s Management does not reasonably expect that these legal actions, when ultimately concluded and determined, will have a material and adverse effect on the Company’s results of operations or financial conditions. The Company has accrued appropriate provision wherever required.

Note 3 Operating leases

(i) The Company leases warehouses and office facilities under cancellable and non-cancellable operating lease agreements. Total rental expense under cancellable operating lease was Rs.49.99 (31 March 2017 : Rs.49.94) and under non-cancellable portion was Rs.24.54 ( 31 March 2017: Rs.26.08) inclusive of maintenance and other charges, which has been disclosed as rent.

(ii) The Company has certain cancellable arrangements with contract packers (which conveys a right to use an asset in return for a payment or a series of payment) identified to be in the nature of lease and have been classified as operating lease arrangements. Rental expenses of Rs.167.68 (31 March 2017: Rs.173.78) in respect of obligation under operating leases have been recognised in the statement of profit and loss. Management has concluded that it is impracticable to separate lease and non-lease payment. The lease payment disclosed in this note also includes non-lease payments.

Future minimum lease payments

The future minimum lease payments to be made under non-cancellable operating lease are as under:

Note 4 Intangible assets - Trademark

Trademark represents the purchase consideration paid for brand viz. “Sundrop”.Sundrop brand has an indefinite useful life is measured at cost and are not subject to amortisation, but tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired. On the balance sheet date, the Management reassesses the value of brand through an independent valuer to ensure that the recoverable amount of the asset is not lower than its carrying amount. Key assumptions used in the estimation of the recoverable amount are set out below.

Note 5 Segmental information

The Chief Operating Decision Maker (CODM) evaluates the Company’s performance and allocates resources based on analysis of various performance indicators by industry classes. The operating segment of the Company has been identified as “Foods” as the CODM reviews the business performance at an overall Company level as one segment.

Information about major customers

Revenue for the year ended 31 March 2018 and 31 March 2017 were from customers located in India. Customers include private distribution entities. Revenue from specific customers exceeding 10% of total revenue for the years ended 31 March 2018 and 31 March 2017 were as follows:

*Remuneration as given above does not include long-term compensated absences benefit accrued and gratuity benefit accrued since the same are computed based on actuarial valuation for all the employees and the amounts attributable to the managerial personnel cannot be ascertained separately. It also excludes gratuity of Rs.3.18 lakh paid to KMP retired/ resigned during the year ended 31 March 2017. Share-based compensation expense allocable to key management personnel is not included in the remuneration disclosed above.

Note (a): The above information has been determined to the extent such parties have been identified on the basis of information available with the Company and relied upon by the auditors.

Note 6 Corporate social responsibility

During the year, the Company has spent Rs.1.64 for Social welfare program called “Poshan”. The program which is designed to address malnourishment amongst children, works with Government Anganwadi’s and Child Malnourishment Treatment Centers using Peanut Butter which is a rich source of protein and highly effective to fight malnutrition. The amount includes allocable manufacturing overhead and it represents about 0.39% (31 March 2017: 0.98%) of last 3 years average profit. This amount is booked under the head of miscellaneous expenses and charged to the statement of profit and loss.

Gross amount required to be spent by the company during the year : Rs.8.44 (31 March 2017: Rs.9.23)

Note 7 Research and development expenses

Revenue expenditure on research and development is expensed as incurred. Capital expenditure incurred on research and development (‘R&D’) is capitalised as fixed assets and depreciated in accordance with the depreciation policy of the Company. The details are as below:

Note 8 Capital management

The Company’s policy is to maintain a stable and strong capital structure with focus on total equity so as to maintain investors, creditors and market confidence and to sustain future development and growth of its business. In order to maintain the capital structure, the Company monitors the return on capital, as well as the level of dividends of equity share holders. The Company aims to manage its capital efficiently so as to safeguard its ability to continue as a going concern and to optimise returns to all its shareholders. For the purpose of Company’s capital management, capital includes issued capital and all other equity reserves and debt includes shortterm working capital demand loan.

The Company monitors capital on the basis of the following gearing ratio

Note 9 Employee Benefits

a) The employee benefit schemes are as under:

i. Provident fund :

All employees of the Company receive benefits under the Provident Fund which is a defined benefit plan wherein the Company provides the guarantee of a specified return on contribution. The contribution is made both by the employee and the Company equal to 12% of the employees’ salary. These contributions are made to the Fund administered and managed by the Company’s own Trust.

ii. Superannuation fund:

The Company has a Defined Contribution Scheme to provide pension to the eligible employees. The Company makes monthly contributions equal to a specified percentage of the covered employees’ salary. These contributions are administered by Company’s own Trust which has subscribed to “Group Superannuation Policy” of ICICI Prudential Life Insurance Company Limited. The Company’s monthly contributions are charged to the statement of profit and loss.

iii. Gratuity :

In accordance with the ‘The Payment of Gratuity Act, 1972’ of India, the Company provides for Gratuity, a Defined Retirement Benefit Scheme (the Gratuity Plan), covering eligible employees. Liabilities with regard to such Gratuity Plan are determined by an actuarial valuation as at the end of the year and are charged to statement of profit and loss. The Gratuity Plan is a funded Plan administered by Company’s own Trust which has subscribed to “Group Gratuity Scheme” of ICICI Prudential Life Insurance Company Limited.

iv. Compensated absences :

The accrual for unutilised leave is determined for the entire available leave balance standing to the credit of the employees at the year end. The value of such leave balances that are eligible for carry forward, is determined by an actuarial valuation as at the end of the year and is charged to the statement of profit and loss.

b) The following table sets out the particulars of the employee benefits as required under the Ind AS 19- Employee Benefits.

i) The amounts recognised in the balance sheet and the movements in the de fined benefit obligation over the year for Gratuity are as follows:

Discount rate : The discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of the obligations.

Expected rate of return on plan assets : This is based on the expectation of the average long-term rate of return expected on investments of the fund during the estimated term of the obligations.

Salary escalation rate : The estimates of future salary increase considered in the actuarial valuation takes into account factors like inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

Note 10 Financial instruments - fair values and risk management

The Company’s principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company’s operations and to provide guarantees to support its operations. The Company’s principal financial assets include loans, trade and other receivables, and cash and short-term deposits that derive directly from its operations. The Company’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company’s primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The primary market risk to the company is foreign exchange risk. The Company uses derivative financial instruments to mitigate foreign exchange related risk exposures. The Company’s exposure to credit risk is influenced mainly by the individual characteristic of each customer and the concentration of risk from the top few customers. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company’s policy that no trading in derivative for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below: Accounting classification and fair values

The following table shows the carrying amounts and fair values of financial assets and financial liabilities as at 31 March 2018, including their levels in the fair value hierarchy.

The fair value of cash and cash equivalents, bank balances, investments, trade receivables, trade payables, borrowings, other financial assets and liabilities approximate their carrying amount largely due to short-term nature of these instruments. The Company’s loans have been contracted at market rates of interest. Accordingly, the carrying value of such loans approximate fair value.

The fair valuation of derivative financial assets are valued based on quoted prices for similar assets and liabilities in active markets or inputs that are directly or indirectly observable in the market place.

Financial risk management

The Company has exposure to the following risks arising from financial instruments:

i. Credit Risk

ii. Liquidity Risk

iii. Market Risk

Risk Management framework:

The Company’s financial risk management is an integral part of how to plan and execute its business strategies. The Company’s risk management policy is set by the Risk Management Committee. The Company’s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk. The Company’s primary focus is to foresee the unpredictability of financial markets and seek to minimise potential adverse effects on its financial performance. A summary of the risks have been given below:

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and loans given. Credit risk arises from cash held with banks, as well as credit exposure to clients, including outstanding accounts receivables. The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of managing counterparty credit risk is to prevent losses in financial assets. The Company assesses the credit quality of the counterparties, taking into account their financial position, past experience and other factors.

Trade and other receivables

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are wholesale, retail or institutional customers, their industry, trading history with the Company and existence of previous financial difficulties. The default in collection as a percentage to total receivable is low.

The Company’ s exposure to credit risk for trade receivables by type of counterparty is as follows:

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or any other financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risk damage to the Company’s reputation.

The Company monitors the level of expected cash inflows on trade receivables and loans together with expected cash outflows on trade payables and other financial liabilities.

The table below provides details regarding the contractual maturities of significant financial liabilities as at 31 March 2018, 31 March 2017 and 1 April 2016:

Market risk

Market risk is the risk that changes in market prices - such as foreign exchange rates and interest rates - will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Since, the Company does not have any borrowings having floating rate of interest, hence there is no Interest rate risk.

Currency risk

The Company is exposed to currency risk to the extent that there is mismatch between the currencies in which sales, purchase are denominated and the respective functional currencies of Company. The functional currency of the Company is INR and maximum sales transactions are denominated in INR itself. Foreign currency transactions are mainly denominated in USD.

Exposure to currency risk

The following is the nominal value of outstanding derivative contracts entered into by the Company for hedging currency and interest rate related risks as at:

Note 11 Explanation of transition to Ind AS

As stated in Note 2A, the Company has prepared its first financial statements in accordance with Ind AS. For the year ended 31 March 2017, the Company had prepared its financial statements in accordance with Companies (Accounting Standards) Rules, 2006, notified under Section 133 of the Act and other relevant provisions of the Act.

The accounting policies set out in Note 3 have been applied in preparing the financial statements for the year ended 31 March 2018 including the comparative information for the year ended 31 March 2017 and the opening Ind AS balance sheet on the date of transition i.e. 1 April 2016.

In preparing its Ind AS balance sheet as at 1 April 2016 and in presenting the comparative information for the year ended 31 March 2017, the Company has adjusted amounts reported previously in financial statements prepared in accordance with previous GAAP. This note explains the principal adjustments made by the Company in restating its financial statements prepared in accordance with previous GAAP, and how the transition from previous GAAP to Ind AS has affected the Company’s financial position, financial performance and cash flows.

Optional exemptions availed and mandatory exceptions

In preparing the financial statements, the Company has applied the below mentioned optional exemptions and mandatory exceptions.

A. Optional exemptions availed

1 Property, plant and equipment and intangible assets

As per Ind AS 101 an entity may elect to:

(i) measure an item of property, plant and equipment at the date of transition at its fair value and use that fair value as its deemed cost at that date.

(ii) use a previous GAAP revaluation of an item of property, plant and equipment at or before the date of transition as deemed cost at the date of revaluation, provided the revaluation was, at the date of revaluation, broadly comparable to:

- fair value

- or cost or depreciated cost under Ind AS adjusted to reflect.

The elections under (i) and (ii) above are also available for intangible assets that meets the recognition criteria in Ind AS 38, Intangible Assets, (including reliable measurement of original cost); and criteria in Ind AS 38 for revaluation (including the existence of an active market).

(iii) use carrying values of property, plant and equipment and intangible assets as on the date of transition to Ind AS (which are measured in accordance with previous GAAP and after making adjustments relating to decommissioning liabilities prescribed under Ind AS 101) if there has been no change in its functional currency on the date of transition.

As permitted by Ind AS 101, the Company has elected to continue with the carrying values under previous GAAP for all the items of property, plant and equipment. The same election has been made in respect of intangible assets also.

2 Determining whether an arrangement contains a lease

Ind AS 101 includes an optional exemption that permits an entity to apply the relevant requirements in Appendix C of Ind AS 17 for determining whether an arrangement existing at the date of transition contains a lease by considering the facts and circumstances existing at the date of transition (rather than at the inception of the arrangement).

The Company has elected to avail of the above exemption.

3 Business combinations

Ind AS 101 provides the option to apply Ind AS 103 prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date.

The Company elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Business combinations occurring prior to the transition date have not been restated.

4 Share-based payment transactions

Ind AS 102 deals with the accounting and disclosure requirements related to share based payment transactions. The standard addresses three type of transactions: equity settled, cash settled and with cash alternatives. A first time adopter is encouraged to apply this standard to:

(i) equity instruments that vested before the date of transition to Ind AS.

(ii) liabilities arising from share based payment transactions that were settled before the date of transition to Ind AS.

The Company has availed this exemption and has not applied the fair value to the equity instruments that were vested before the date of transition to Ind AS.

B. Mandatory exceptions

1 Estimates

As per Ind AS 101, an entity’s estimates in accordance with Ind AS at the date of transition to Ind AS at the end of the comparative period presented in the entity’s first Ind AS financial statements, as the case may be, should be consistent with estimates made for the same date in accordance with the previous GAAP unless there is objective evidence that those estimates were in error. However, the estimates should be adjusted to reflect any differences in accounting policies.

As per Ind AS 101, where application of Ind AS requires an entity to make certain estimates that were not required under previous GAAP, those estimates should be made to reflect conditions that existed at the date of transition (for preparing opening Ind AS balance sheet) or at the end of the comparative period (for presenting comparative information as per Ind AS).

The Company’s estimates under Ind AS are consistent with the above requirement. Key estimates considered in preparation of the standalone financial statements that were not required under the previous GAAP are listed below:

- Fair valuation of financial instruments carried at FVTPL.

- Impairment of financial assets based on the expected credit loss model.

- Determination of the discounted value for financial instruments carried at amortised cost.

- Discounted value of liability for decommissioning cost.

2 Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification of financial assets on the basis of facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortised cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable.

Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Measurement of the financial assets accounted at amortised cost has been done retrospectively except where the same is impracticable.

1 Property, plant and equipment (PPE)

Under the previous GAAP, land was specifically scoped out from the scope of AS 19 Leases, hence leasehold land was grouped under plant, property and equipment and the respective amortisation charge was disclosed as depreciation charge in the statement of profit or loss. There is no such exclusion under Ind AS 17, hence the Company has reclassified leasehold land from plant, property and equipment to prepaid rent, with a corresponding amortisation charge debited to rent expense.

2 Consolidation of Agro Tech ESOP Trust (‘Trust’)

The Company has formed Agro Tech ESOP trust reserve (‘ATET reserve’) for implementation of the schemes that are notified or may be notified from time to time by the Company under the plan, providing share based payment to its employees. “Trust” purchases shares of the Company out of funds borrowed from the Company. The Company treats “Trust” as its extension and shares held by “Trust” are treated as treasury shares.

The Consolidation of the “Trust” financials statements with that of the Company does not in any manner affect the independence of the trustees where the rights and obligations are regulated by the Trust deed. Own equity instruments (treasury shares) are recognised at cost and deducted from equity. Profit/ loss on sale of treasury shares by “Trust” is recognised in ATET reserve.

Items adjusted owing to the “Trust” consolidation include:

(a) Treasury shares

Upon consolidation, the investment in the Company’s equity shares made by “Trust” is debited to the Company’s equity as treasury shares amounting to Rs.571.33 as at 31 March 2017 (Rs.571.33 as at 1 April 2016).

(b) ATET Reserve

The income of the “Trust” till date comprising of profit on sale of treasury shares, forms a part of ATET Reserve amounting to Rs.2.40 as at 31 March 2017 (Rs.2.40 as at 01 April 2016)

(c) Other non-current financial assets

Loans advanced to the “Trust” is eliminated on consolidation amounting to Rs.558.00 as at 31 March 2017 (01 April 2016: Rs.560.35) forming part of non-current assets in previous GAAP.

3 Security deposits

Under the previous GAAP, interest free lease security deposits are recorded at their transaction value. Under Ind AS, all financial assets are required to be recognised at fair value. Accordingly, the Company has fair valued these security deposits under Ind AS. Difference between the fair value and transaction value of the security deposit has been recognised as prepaid rent.

4 Derivative asset

Ind AS 21 requires derivative financial instrument such as forward contract to be marked to market on the reporting date and recognise the resultant gain or loss in the statement of profit and loss.

5 Share based payment

Under the previous GAAP, the cost of equity-settled employee share-based plan were recognised using the intrinsic value method. Under Ind AS, the cost of equity settled share-based plan is recognised based on the fair value of the options as at the grant date.

6 Rent straight lining liability

Under Ind AS, if the payment to the lessor is structured to increase in line with expected general inflation to compensate for the lessor’s expected inflationary cost increases, then the rent expenses are not recognised on a straight-line basis. Accordingly Company has reversed straight lining of rental expense to the extent of structured escalation which is in line with expected general inflation.

7 Intangible assets

As per Ind AS 38, Intangible Assets having an indefinite life are not amortised and tested annually for impairment. Accordingly Company has reversed the amortisation charged on the Trademarks for the year ended 31 March 2017.

8 Excise duty

Under the previous GAAP, revenue from sale of products was presented exclusive of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty paid is presented as part of other expenses in the statement of profit and loss.

9 Other comprehensive income

Under Ind AS, all items of income and expense recognised in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognised in profit or loss but are shown in the Statement of Profit and Loss as ‘other comprehensive income’ includes remeasurements of defined benefit plans. The concept of other comprehensive income did not exist under previous GAAP.

10 Lease arrangement

Under the previous GAAP, arrangements that did not take the legal form of lease were accounted for based on the legal form of such arrangements. Under Ind AS, any arrangement (even if not legally structured as lease) which conveys a right to use an asset in return for a payment or series of payments are identified as leases provided certain conditions are met. In case such arrangements are determined to be in the nature of leases, such arrangements are required to be classified into finance or operating leases as per the requirements of Ind AS 17, Lease.

11 Deferred tax charge/ benefit

The (decreased)/ increased the deferred tax assets and liabilities are on account of the adjustments made on transition to Ind AS.

*For the purposes of this clause, the term ‘Specified Bank Notes’ shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economics Affairs number S.O.3407 (E), dated the 8 November 2016.

Note 12 During the year ended 31 March 2018 no material foreseeable loss (31 March 2017: Nil) was incurred for any long-term contract including derivative contracts.

Note 13 Exceptional income of Rs.42.09 during the year ended 31 March 2017 represents interest on Income-tax related to Assessment Year 1997-1998 which was adjudicated in the favour of the Company.


Mar 31, 2017

1: Operating leases

The Company leases warehouse and office facilities under cancellable and non-cancellable operating lease agreements. Total rental expense under cancellable operating leases was Rs. 49.25 (Previous year: Rs. 46.65) and under non-cancellable portion was Rs. 24.90 (Previous year: Rs. 23.83) inclusive of maintenance and other charges, which has been disclosed as rent.

The total of future minimum lease payments (MLP) under non-cancellable operating leases is as follows:

2. Intangible assets-brand

Brand purchased by the Company is being amortized on straight line method based on its estimated useful life. Consequently, amortization cost for the year includes a sum of Rs. 6.44 (previous year Rs. 6.44) being the amortization relating to this brand. On the balance sheet date, the management has reassessed the value of this brand through an independent value to ensure that the recoverable amount of this asset is not lower than its carrying amount.

3 Employee benefits

a) The employee benefit schemes are as under:

i. Provident fund :

All employees of the Company receive benefits under the Provident Fund which is a defined benefit plan wherein the Company provides the guarantee of a specified return on contribution. The contribution is made both by the employee and the Company equal to 12% of the employees'' salary. These contributions are made to the Fund administered and managed by the Company''s own Trust.

ii. Superannuation fund:

The Company has a Defined Contribution Scheme to provide pension to the eligible employees. The Company makes monthly contributions equal to a specified percentage of the covered employees'' salary. These contributions are administered by Company''s own Trust which has subscribed to "Group Superannuation Policy" of ICICI Prudential Life Insurance Company Limited. The Company''s monthly contributions are charged to the statement of profit and loss.

iii. Gratuity:

In accordance with the ''The Payment of Gratuity Act, 1972'' of India, the Company provides for Gratuity, a Defined Retirement Benefit Scheme (the Gratuity Plan), covering eligible employees. Liabilities with regard to such Gratuity Plan are determined by an actuarial valuation as at the end of the year and are charged to statement of profit and loss. The Gratuity Plan is a funded Plan administered by Company''s own Trust which has subscribed to "Group Gratuity Scheme" of ICICI Prudential Life Insurance Company Limited.

iv. Compensated absences:

The accrual for unutilized leave is determined for the entire available leave balance standing to the credit of the employees at the year end. The value of such leave balances that are eligible for carry forward, is determined by an actuarial valuation as at the end of the year and is charged to the statement of profit and loss.

Discount rate: The discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of the obligations.

Expected rate of return on plan assets: This is based on the expectation of the average long-term rate of return expected on investments of the fund during the estimated term of the obligations.

Salary escalation rate : The estimates of future salary increase considered in the actuarial valuation takes into account factors like inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

- Expense recognized in the statement of profit and loss for Gratuity has been included under employee benefits expense (Refer Note 2.23)

-The Company has not recognized an asset amounting to Rs. 29.38 (previous year Rs. 9.98) as there are no future economic benefits available to the Company in the form of reduction in future contribution or a cash refund.

Note: (a) Remuneration as given above does not include long-term compensated absences benefit accrued and gratuity benefit accrued since the same are computed based on actuarial valuation for all the employees and the amounts attributable to the managerial personnel cannot be ascertained separately. It excludes gratuity of Rs. 3.18 paid to the KMP retired/ resigned during the year.

(b) The Company has applied to Central Government of India for approval for payment of managerial remuneration in excess of limits as mandated by Section 197 read with Schedule V to the Companies Act, 2013 (''the Act''). Pending approval from the Central Government of India, payment made is within the limits prescribed under the Act. Remuneration to KMP and Remuneration payable to KMP includes amount of Rs. 5.13 payable for the period 01 July 2016 to 31 March 2017 to Managing Director which will be paid post receipt of approval from the Central Government of India.

4: Agro Tech Foods Limited Employee Stock Option Plan

The Company instituted the ''Agro Tech Foods Limited Employee Stock Option Plan'' ("Plan") to grant equity-based incentives to its eligible employees. The Company has established a trust called the ''Agro Tech ESOP Trust'' ("Trust") to implement the Plan.

Under the Plan a maximum of 2,436,926 (previous year : 2,436,926) options will be granted to the eligible employees. All these options are planned to be settled in equity/cashless at the time of exercise. These options have an exercise price of Rs.561.00, Rs. 597.55 and Rs. 589.75 per share granted during the years ended 31 March 2014, 31 March 2015 and 31 Mar 2016 respectively and vest on a graded basis as follows:

The Company follows the intrinsic value method to calculate employee compensation cost. There is no material charge to the statement of profit and loss as the exercise price of the shares is greater than or equal to the market value of the shares. Amount recoverable from employee stock option trust disclosed in the balance sheet represents balance recoverable from the trust on account of the shares purchased and held by the trust.

Performa disclosure

In accordance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, had the compensation cost for Stock Option Plan been recognized based on the fair value at the date of grant in accordance with Black Scholes model, the Performa amounts of the Company’s net profit and earnings per share would have been as follows:

5: Segment information

The entire operations relate to only the foods segment and are primarily concentrated in India. Accordingly, there are no reportable segments to be disclosed as required by Accounting Standard 17’Segment reporting.

6 Amounts payable to micro, small and medium enterprises

The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allotted after filing of the Memorandum. Accordingly, the disclosure in respect of the amounts payable to such enterprises as at 31 March 2017 has been made in the financial statements based on information received and available with the Company. Further, in the view of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the Micro, Small and Medium Enterprises Development Act, 2006 ("the MSMED Act") is not expected to be material. The Company has not received any claim for interest from any supplier under the said Act.

7: Disclosure regarding forward contracts

The Company uses forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The use of this foreign exchange forward contracts reduces the risk or cost to the Company and the Company does not use the foreign exchange forward contracts for trading or speculation purposes.

8: Corporate Social Responsibility (CSR) expenditure

During the year, the Company has spent Rs. 4.52 for Social welfare program called "Poshan". The program which is designed to address malnourishment amongst children, works with Government Anganwadi''s and Child Malnourishment Treatment Centers using Peanut Butter which is a rich source of protein and highly effective to fight malnutrition. The amount includes allocable manufacturing overhead and it represents about 1% of last 3 years average profit. This amount is booked under the head of miscellaneous expenses and charged to the statement of profit and loss.

The Fact that the Company has spent 1% lower than prescribed 2% of average of the profit as stipulated under Section 135 of the Act has been taken on record by the Board of Directors. However, spending was lower at 1% due to higher efficiencies in the process and further expansion of the program awaiting necessary approvals from the government. On receipt of approval, the Company will be in a position to further expand this program and work towards the 2% guideline prescribed in the Act.

9 The Company is subject to legal proceedings and claims, which have arisen in the ordinary course of business including litigation before various tax authorities. The Company''s Management does not reasonably expect that these legal actions, when ultimately concluded and determined, will have a material and adverse effect on the Company''s results of operations or financial conditions. The Company has accrued appropriate provision wherever required.

10 Exceptional income of Rs. 42.09 representing interest on income tax related to Assessment Year 1997-98 which has been adjudicated in favor of the Company.

11 The Company is in the process of fulfilling vacancy of the position of Company Secretary in accordance with the provision of Section 203 of the Companies Act, 2013.

12 Specified bank notes disclosure*

Details of Specified Bank Notes (SBNs) held and transacted during the period from 8 November 2016 to 30 December 2016 are as below:

Closing cash in hand as on 08 November 2016 - - -

Add: Permitted receipts - - -

Less: Permitted payments - - -

Less: Amount deposited in banks - - -

Closing cash in hand as on 30 December 2016 - - -

*For the purposes of this clause, the term Specified Bank Notes'' shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407 (E), dated the 8 November 2016.

13 Previous year figures

Previous year figures have been regrouped/ reclassified wherever necessary, to conform to current year classification.

As per our report of even date attached

Note :

a) The above cash flow statement has been prepared under the "Indirect Method" as set out in the Accounting Standard - 3 on Cash Flow Statements issued by the Institute of Chartered Accountants of India.

b) Cash and cash equivalents includes restricted cash balance (margin money and unpaid dividend account) of Rs. 6.63 (previous year of Rs. 6.35).


Mar 31, 2016

A. Rights, preferences and restrictions attached to equity shares

The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividends and share in the Company''s residual assets. The equity shares are entitled to receive dividend as declared from time to time. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to its share of the paid-up equity capital of the Company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable have not been paid. Failure to pay any amount called up on shares may lead to forfeiture of the shares. On winding up of the Company, the holders of equity shares will be entitled to receive the residual assets of the company, remaining after distribution of all preferential amounts in proportion to the number of equity shares held.

The amounts included above represent the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal positions against such disputes.

1. Operating leases

The Company leases warehouse and office facilities under cancellable and non-cancellable operating lease agreements. Total rental expense under cancellable operating leases was Rs, 46.65 (Previous year: Rs, 47.43) and under non-cancellable portion was Rs, 23.83 (Previous year: Rs, 24.83 ) inclusive of maintenance and other charges, which has been disclosed as rent.

2. Intangible assets-brand

Brand purchased by the Company is being amortised on straight line method based on its estimated useful life. Consequently, amortisation cost for the year includes a sum of Rs, 6.44 (previous year Rs, 6.44) being the amortisation relating to this brand. On the balance sheet date, the management has reassessed the value of this brand through an independent valuer to ensure that the recoverable amount of this asset is not lower than its carrying amount.

The Company does not have any potential equity shares. Hence, the basic and diluted earnings per share are the same.

3. Employee benefits

a) The employee benefit schemes are as under:

i. Provident fund :

All employees of the Company receive benefits under the Provident Fund which is a defined benefit plan wherein the Company provides the guarantee of a specified return on contribution. The contribution is made both by the employee and the Company equal to 12% of the employees'' salary. These contributions are made to the Fund administered and managed by the Company''s own Trust.

ii. Superannuation fund:

The Company has a Defined Contribution Scheme to provide pension to the eligible employees. The Company makes monthly contributions equal to a specified percentage of the covered employees'' salary. These contributions are administered by Company''s own Trust which has subscribed to "Group Superannuation Policy" of ICICI Prudential Life Insurance Company Limited. The Company''s monthly contributions are charged to the statement of profit and loss.

iii. Gratuity :

In accordance with the ''The Payment of Gratuity Act, 1972'' of India, the Company provides for Gratuity, a Defined Retirement Benefit Scheme (the Gratuity Plan), covering eligible employees. Liabilities with regard to such Gratuity Plan are determined by an actuarial valuation as at the end of the year and are charged to statement of profit and loss. The Gratuity Plan is a funded Plan administered by Company''s own Trust which has subscribed to "Group Gratuity Scheme" of ICICI Prudential Life Insurance Company Limited.

iv. Compensated absences :

The accrual for unutilised leave is determined for the entire available leave balance standing to the credit of the employees at the year end. The value of such leave balances that are eligible for carry forward, is determined by an actuarial valuation as at the end of the year and is charged to the statement of profit and loss.

Discount rate : The discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of the obligations.

Expected rate of return on plan assets : This is based on the expectation of the average long-term rate of return expected on investments of the fund during the estimated term of the obligations.

Salary escalation rate : The estimates of future salary increase considered in the actuarial valuation takes into account factors like inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

*It has been included under employee benefits expense note no. 2.23.

**The Company has not recognised an asset amounting to Rs, 9.98 (previous year Rs, 10.63) as there are no future economic benefits available to the Company in the form of reduction in future contribution or a cash refund.

Note

(a) Remuneration as given above does not include long-term compensated absences benefit accrued and gratuity benefit accrued since the same are computed based on actuarial valuation for all the employees and the amounts attributable to the managerial personnel cannot be ascertained separately.

4. Agro Tech Foods Limited Employee Stock Option Plan

The Company instituted the ''Agro Tech Foods Limited Employee Stock Option Plan'' ("Plan") to grant equity- based incentives to its eligible employees. The Company has established a trust called the ''Agro Tech ESOP Trust'' ("Trust") to implement the Plan.

Under the Plan a maximum of 2,436,926 (previous year : 2,436,926) options will be granted to the eligible employees. All these options are planned to be settled in equity/cashless at the time of exercise. These options have an exercise price of Rs, 561, Rs, 597.55 and Rs, 589.75 per share granted during the years ended 31 March 2014, 31 March 2015 and 31 March 2016 respectively and vest on a graded basis as follows:

The Company follows the intrinsic value method to calculate employee compensation cost. There is no material charge to the statement of profit and loss as the exercise price of the shares is greater than or equal to the market value of the shares. Amount recoverable from employee stock option trust disclosed in the balance sheet represents balance recoverable from the trust on account of the shares purchased and held by the trust.

5. Segment information

The entire operations relate to only the foods segment and are primarily concentrated in India. Accordingly, there are no reportable segments to be disclosed as required by Accounting Standard 17 ''Segment reporting''.

6. Amounts payable to micro, small and medium enterprises

The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect of the amounts payable to such enterprises as at 31 March 2016 has been made in the financial statements based on information received and available with the Company. The Company has not received any claim for interest from any supplier under the said Act.

7. Research and development expenditure

Revenue expenditure on research and development is expensed as incurred. Capital expenditure incurred on research and development (''R&D'') is capitalised as fixed assets and depreciated in accordance with the depreciation policy of the Company.

8. Disclosure regarding forward contracts

The Company uses forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The use of this foreign exchange forward contracts reduces the risk or cost to the Company and the Company does not use the foreign exchange forward contracts for trading or speculation purposes.

9. Corporate Social Responsibility (CSR) expenditure

During the year, the Company has spent Rs, 5.39 for Social welfare program called "Poshan". The program which is designed to address malnourishment amongst children, works with the Government Anganwadi''s and Child Malnourishment Treatment Centers using Peanut Butter which is a rich source of protein and highly effective to fight malnutrition. The amount includes allocable manufacturing overhead and it represents about 1% of last 3 years average profit. This amount is booked under the head of miscellaneous expenses and charged to the statement of profit and loss.

Gross amount required to be spent by the company during the year : Rs, 10.89

The fact that the Company has spend 1% lower than prescribed 2% of average of the profit as stipulated under Section 135 of Companies Act, 2013 has been taken on record by the Board of Directors. However, spending was lower at 1% due to higher efficiencies in the process and further expansion of the program awaiting necessary governmental approvals. On receipt of approvals we will be in a position to further expand this program and work towards the 2% guideline prescribed in the Companies Act, 2013.

10. Pursuant to the Companies Act, 2013 (the ''Act''), being effective from 1 April 2014, the Company has reassessed useful life of its fixed assets which coincide with the useful life specified in Part ''C'' of Schedule II of the Act. As a result of this change, impact on the depreciation charge for the year ended 31 March 2015 (previous year) was higher by Rs, 0.72. There has been no such charge in the statment of profit and loss for the year ended 31 March 2016.

11. The Company is subject to legal proceedings and claims, which have arisen in the ordinary course of business including litigation before various tax authorities. The Company''s Management does not reasonably expect that these legal actions, when ultimately concluded and determined, will have a material and adverse effect on the Company''s results of operations or financial conditions. The Company has accrued appropriate provision wherever required.

12. The Central Government in consultation with National Advisory Committee on Accounting Standards has amended Companies (Accounting Standards) Rules, 2006 (Rs,principal rules''), vide notification issued by Ministry of Corporate Affairs dated March 30, 2016. The Companies (Accounting Standards) Rules, 2016 is effective March 30, 2016. According to the amended rules, proposed dividend of Rs, 48.74 are not recorded as a liability as at March 31, 2016. (Refer Para 8.5 of AS-4 – Contingencies and Events occurring after Balance Sheet date).

13. Previous year figures

Previous year figures have been regrouped/ reclassified wherever necessary, to conform to current year classification.

Note :

a) The above cash flow statement has been prepared under the "Indirect Method" as set out in the Accounting Standard - 3 on Cash Flow Statements issued by the Institute of Chartered Accountants of India.

b) Cash and cash equivalents includes restricted cash balance (margin money and unpaid divided account) of Rs, 6.35 (previous year of Rs,5.19).


Mar 31, 2015

As at As at Particu|ars 31 March 2015 31 March 2014

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) 274.99 158.41

Contingent liabilities:

Guarantees given by bank 8.55 2.56

Letter of credits 1.74 71.52

Claims against the Company not acknowledged as debts in respect of : Indirect tax and direct tax matters, under dispute 281.44 249.03

Other matters, under dispute 33.10 33.10

The amounts included above represent the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal positions against such dispute.

*Represent guarantees given in the normal course of the Company''s operations and are not expected to result in any loss to the Company.

1.1: Operating leases

The Company leases office facilities under cancellable and non-cancellable operating lease agreements. Total rental expense under cancellable operating leases was Rs. 47.43 (previous year Rs. 46.35) and under non- cancellable portion was Rs. 24.83 (previous year Rs. 23.73) inclusive of maintenance and other charges, which has been disclosed as rent.

The total of future minimum lease payments (MLP) under non-cancellable operating leases is as follows:

1.2: Intangible assets-brand

Brand purchased by the Company is being amortised on straight line method based on its estimated useful life. Consequently, amortisation cost for the year includes a sum of Rs. 6.44 (previous year Rs. 6.44) being the amortisation relating to this brand. On the balance sheet date, the management has reassessed the value of this brand through an independent valuer to ensure that the recoverable amount of this asset is not lower than its carrying amount.

1.3 : Employee benefits

a) The employee benefit schemes are as under:

i. Provident fund :

All employees of the Company receive benefits under the Provident Fund which is a defined benefit plan wherein the Company provides the guarantee of a specified return on contribution. The contribution is made both by the employee and the Company equal to 12% of the employees'' salary. These contributions are made to the Fund administered and managed by the Company''s own Trust.

ii. Superannuation fund:

The Company has a Defined Contribution Scheme to provide pension to the eligible employees. The Company makes monthly contributions equal to a specified percentage of the covered employees'' salary. These contributions are administered by Company''s own Trust which has subscribed to "Group Superannuation Policy" of ICICI Prudential Life Insurance Company Limited. The Company''s monthly contributions are charged to the statement of profit and loss.

iii. Gratuity :

In accordance with the ''The Payment of Gratuity Act, 1972'' of India, the Company provides for Gratuity, a Defined Retirement Benefit Scheme (the Gratuity Plan), covering eligible employees. Liabilities with regard to such Gratuity Plan are determined by an actuarial valuation as at the end of the year and are charged to statement of profit and loss. The Gratuity Plan is a funded Plan administered by Company''s own Trust which has subscribed to "Group Gratuity Scheme" of ICICI Prudential Life Insurance Company Limited.

iv. Compensated absences :

The accrual for unutilised leave is determined for the entire available leave balance standing to the credit of the employees at the year end. The value of such leave balances that are eligible for carry forward, is determined by an actuarial valuation as at the end of the year and is charged to the statement of profit and loss.

Discount rate : The discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of the obligations.

Expected rate of return on plan assets : This is based on the expectation of the average long-term rate of return expected on investments of the fund during the estimated term of the obligations.

Salary escalation rate : The estimates of future salary increase considered in the actuarial valuation takes into account factors like inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

*It has been included under employee benefits expense note no. 2.23.

**The Company has not recognised an asset amounting to Rs. 10.63 (previous year Rs. 1.75) as there are no future economic benefits available to the Company in the form of reduction in future contribution or a cash refund.

1.4: Related parties transactions

A) Related parties

Parties where control exists

S.No. Name of the Company Relationship

1. CAG-Tech (Mauritius) Limited Holding company

2. ConAgra Foods Inc. Ultimate holding company

3. Sundrop Foods India Private Limited Subsidiary company

4. Agro Tech Foods (Bangladesh) Pvt. Ltd. Subsidiary company

5. Sundrop Foods Lanka (Private) Limited Subsidiary company

Other related parties where transactions exists

S.No. Name of the Company Relationship

1. ConAgra Foods Export Company,Inc. Fellow subsidiary

2. ConAgra Foods S.R.L Fellow subsidiary

Key management personnel (KMP)

S.No. Name of the Person Designation

1. Dr. Pradip Ghosh Chaudhuri Whole-time Director

2. Mr. Sachin Gopal President & CEO

3. Mr. Hemant Kumar Ruia Vice-President & CFO- Finance, IS & Legal

4. Mr. N. Narasimha Rao Sr.Vice-President-Human Resources & Corporate Communication

5. Mr. Phani K Mangipudi Company Secretary

Directors

S.No. Name of the person Relationship

1. Mr. Lt.Gen.D.B.Singh Independent director

2. Mr. Sanjaya Kulkarni Independent director

3. Mr. Arun Bewoor Independent director

4. Mr. Narendra Ambwani Independent director

5. Mrs. Veena Vishindas Gidwani Independent director

Note

(a) Remuneration as given above does not include long-term compensated absences benefit accrued and gratuity benefit accrued since the same are computed based on actuarial valuation for all the employees and the amounts attributable to the managerial personnel cannot be ascertained separately.

(All amounts in Indian rupees millions, except share data and otherwise stated)

F) For investment in subsidiaries refer note 2.10

G) Corporate guarantee given to Agro Tech Foods (Bangladesh) Pvt. Ltd. of BDT 10 crores.

2.35: Agro Tech Foods Limited Employee Stock Option Plan

The Company instituted the ''Agro Tech Foods Limited Employee Stock Option Plan'' ("Plan") to grant equity- based incentives to its eligible employees. The Company has established a trust called the ''Agro Tech ESOP Trust'' ("Trust") to implement the Plan.

Under the Plan a maximum of 2,436,926 (previous year : 2,436,926) options will be granted to the eligible employees. All these options are planned to be settled in equity at the time of exercise. These options have an exercise price of Rs. 75.10, Rs. 170.10, Rs. 131.70, Rs. 147.40, Rs. 287.20, Rs. 422.10, Rs. 472.50 , Rs. 561 and Rs. 597.55 per share granted during the years ended 31 March 2007, 31 March 2008, 31 March 2009, 31 March 2010, 31 March 2011,31 March 2012, 31 March 2013, 31 March 2014 and 31 March 2015 respectively and vest on a graded basis as follows:

The Company follows the intrinsic value method to calculate employee compensation cost. There is no charge to the statement of profit and loss as the exercise price of the shares is greater than or equal to the market value of the shares. Amount recoverable from employee stock option trust disclosed in the balance sheet represents balance recoverable from the trust on account of the shares purchased and held by the trust.

Proforma disclosure

In accordance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, had the compensation cost for Stock Option Plan been recognised based on the fair value at the date of grant in accordance with Black Scholes model, the proforma amounts of the Company''s net profit and earnings per share would have been as follows:

1.5: Segment information

The entire operations relate to only the foods segment and are primarily concentrated in India. Accordingly, there are no reportable segments to be disclosed as required by Accounting Standard 17 ''Segment reporting''.

1.6: Amounts payable to micro, small and medium enterprises

The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect of the amounts payable to such enterprises as at 31 March 2015 has been made in the financial statements based on information received and available with the Company. The Company has not received any claim for interest from any supplier under the said Act.

1.7: Disclosure regarding forward contracts

The Company uses forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The use of this foreign exchange forward contracts reduces the risk or cost to the Company and the Company does not use the foreign exchange forward contracts for trading or speculation purposes.

The information on such forward contracts are as follows: a) Forward exchange contracts outstanding as at the year end:

1.8: Research and development expenditure

Revenue expenditure on research and development is expensed as incurred. Capital expenditure incurred on research and development (''R&D'') is capitalised as fixed assets and depreciated in accordance with the depreciation policy of the Company.

The details are as below:

1.9: Corporate Social Responsibility (CSR) expenditure

The Company has spent Rs. 7.37 for Social welfare program called "Poshan". The amount includes allocable manufacturing overhead and it represents about 1.31% of last 3 years average profit. This amount is booked under the head of miscellaneous expenses and charged to the statement of profit and loss.

The Company has placed on record the above fact to the Board of Directors, who has agreed that it is too early to spend 2% of average of the profit as stipulated under section 135 of Companies Act, 2013. However, the Company would continue to spend on increasing number of children to address the issue of malnutrition amongst children through its CSR program "Poshan".

1.10: Pursuant to the Companies Act, 2013 (the ''Act''), being effective from 1 April 2014, the Company has reassessed useful life of its fixed assets which coincide with the useful life specified in Part ''C'' of Schedule II of the Act. As a result of this change, impact on the depreciation charge for the year ended 31 March 2015 is higher by Rs. 0.72.

1.11: The Company is subject to legal proceedings and claims, which have arisen in the ordinary course of business including litigation before various tax authorities. The Company''s Management does not reasonably expect that these legal actions, when ultimately concluded and determined, will have a material and adverse effect on the Company''s results of operations or financial conditions. The Company has accrued appropriate provision wherever required.

1.12: Previous year figures

Previous year figures have been regrouped/ reclassified wherever necessary, to conform to current year classification.

Note :

a) The above cash flow statement has been prepared under the "Indirect Method" as set out in the Accounting Standard - 3 on Cash Flow Statements issued by the Institute of Chartered Accountants of India.

b) Cash and cash equivalents includes restricted cash balance (margin money and unpaid divided account) of Rs. 5.19 (previous year of Rs. 4.58)


Mar 31, 2014

1.1 : Commitments and contingent liabilities

As at As at Particulars 31 March 2014 31 March 2013

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) 158.41 117.25

Contingent liabilities:

Guarantees given by bank * 2.56 92.80

Letter of credits 71.52 -

Claims against the Company not acknowledged as debts in respect of:

Indirect tax matters, under dispute 249.03 508.33

Other matters, under dispute 33.10 41.30

The amounts included above, represent the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal positions against such dispute.

* Represent guarantees given in the normal course of the Company''s operations and are not expected to result in any loss to the Company.

1.2 : Operating leases

The Company leases offce facilities under cancellable and non-cancellable operating lease agreements. Total rental expense under cancellable operating leases was Rs. 46.35 (previous year Rs. 44.41) and under non-cancellable portion was Rs. 23.73 (previous year Rs. 25.94) inclusive of maintenance and other charges, which has been disclosed as rent.

1.3 : Intangible assets-brand

Brand purchased by the Company is being amortised on straight line method based on its estimated useful life. Consequently, amortisation cost for the year includes a sum of Rs. 6.44 (previous year Rs. 6.44) being the amortisation relating to this brand. On the balance sheet date, the management has reassessed the value of this brand through an independent valuer to ensure that the recoverable amount of this asset is not lower than its carrying amount.

1.4 : Employee benefits

a) The employee benefit schemes are as under:

i) Provident fund:

All employees of the Company receive benefits under the Provident Fund which is a defined benefit plan wherein the Company provides the guarantee of a specifed return on contribution. The contribution is made both by the employee and the Company equal to 12% of the employees'' salary. These contributions are made to the Fund administered and managed by the Company''s own Trust.

ii) Superannuation fund:

The Company has a Defined Contribution Scheme to provide pension to the eligible employees. The Company makes monthly contributions equal to a specifed percentage of the covered employees'' salary. These contributions are administered by Company''s own Trust which has subscribed to "Group Superannuation Policy" of ICICI Prudential Life Insurance Company Limited. The Company''s monthly contributions are charged to the statement of Profit and loss.

iii) Gratuity:

In accordance with the ''The Payment of Gratuity Act, 1972'' of India, the Company provides for Gratuity, a Defined Retirement Benefit Scheme (the Gratuity Plan), covering eligible employees. Liabilities with regard to such Gratuity Plan are determined by an actuarial valuation as at the end of the year and are charged to the statement of Profit and loss. The Gratuity Plan is a funded Plan administered by Company''s own Trust which has subscribed to "Group Gratuity Scheme" of ICICI Prudential Life Insurance Company Limited.

iv) Compensated absences:

The accrual for unutilised leave is determined for the entire available leave balance standing to the credit of the employees at the year end. The value of such leave balances that are eligible for carry forward, is determined by an actuarial valuation as at the end of the year and is charged to the statement of Profit and loss.

Discount rate: The discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of the obligations.

Expected rate of return on plan assets: This is based on the expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

Salary escalation rate: The estimates of future salary increase considered in the actuarial valuation takes into account factors like infation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

*It has been included under employee benefits expense in note no. 2.23.

**The Company has not recognised an asset amounting to Rs. 1.75 (previous year Rs. 1.02) as there are no future economic benefits available to the Company in the form of reduction in future contribution or a cash refund.

2.35 : Agro Tech Foods Limited Employee Stock Option Plan

The Company instituted the ''Agro Tech Foods Limited Employee Stock Option Plan'' ("Plan") to grant equity- based incentives to its eligible employees. The Company has established a trust called the ''Agro Tech ESOP Trust'' ("Trust") to implement the Plan.

The Company follows the intrinsic value method to calculate employee compensation cost. There is no charge to the statement of Profit and loss as the exercise price of the shares is greater than or equal to the market value of the shares. Amount recoverable from employee stock option trust disclosed in the balance sheet represents balance recoverable from the trust on account of the shares purchased and held by the trust.

2.40 : Segment information

The entire operations relate to only the foods segment and are primarily concentrated in India. Accordingly, there are no reportable segments to be disclosed as required by Accounting Standard 17 ''Segment reporting''.

2.41 : Amounts payable to micro, small and medium enterprises

The Ministry of Micro, Small and Medium Enterprises has issued an Offce Memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after fling of the Memorandum. Accordingly, the disclosure in respect of the amounts payable to such enterprises as at 31 March 2014 has been made in the financial statements based on information received and available with the Company. The Company has not received any claim for interest from any supplier under the said Act.

2.42 : Disclosure regarding forward contracts

The Company uses forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and frm commitments. The use of this foreign exchange forward contracts reduces the risk or cost to the Company and the Company does not use the foreign exchange forward contracts for trading or speculation purposes.

2.44 : Research and development expenditure

Revenue expenditure on research and development is expensed as incurred. Capital expenditure incurred on research and development (''R&D'') is capitalised as fxed assets and depreciated in accordance with the depreciation policy of the Company.

2.45 : Previous year fgures

Previous year fgures have been regrouped / reclassifed wherever necessary, to conform to current year classifcation.


Mar 31, 2012

1.1 : Commitments and contingent liabilities As at As at Particulars 31 March 2012 31 March 2011

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) 206.01 120.24

Contingent liabilities:

Guarantees given by bank * 95.37 95.24

Claims against the Company not acknowledged as debts in respect of:

- Sales tax matters, under dispute 615.21 615.21

- Other matters, under dispute 42.84 43.61

The amounts included above, represent the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal positions against such dispute.

* Represent guarantees given in the normal course of the Company's operations and are not expected to result in any loss to the Company.

1.2 : During the last year the Company has sold its vanaspati brand 'Rath' to Cargill India Private Limited vide

an agreement dated 12 November 2010 for a consideration of Rs 258. The profit on sale of the brand amounted to Rs174.46 had been credited to the Statement of Profit and Loss and disclosed under the head "Exceptional items".

1.3 : Operating leases

The Company leases office facilities under cancellable and non-cancellable operating lease agreements. Total rental expense under cancellable operating leases was Rs 54.42 (previous year Rs 49.36) and under non-cancellable portion was Rs 26.49 (previous year Rs15.85), which has been disclosed as rent.

The total of future minimum lease payments (MLP) under non-cancellable operating lease is as follows:

1.4 : Intangible assets

Brands purchased by the Company are being amortised on straight line method based on their estimated useful lives. Consequently, amortisation cost for the year includes a sum of Rs 6.44 (previous year Rs 8.45) being the amortisation relating to these brands. On the Balance Sheet date, the management has reassessed the value of these brands through an independent valuer to ensure that the recoverable amounts of these assets are not lower than their carrying amounts.

Since, the Company does not have any potential equity shares hence, the basic and diluted earnings per share are the same.

1.5 : Purchases shown under note no.2.19 are net of rebates, discounts, claims and settlements etc., amounting to Rs 0.65 (previous year Rs 0.92).

1.6 : Employee benefits

a) The employee benefit schemes are as under:

i) Provident fund:

All employees of the Company receive benefits under the provident fund which is a defined benefit plan wherein the Company provides the guarantee of a specified return on contribution. The contribution is made both by the employee and the Company equal to 12% of the employees' salary. These contributions are made to the fund administered and managed by the Company's own Trust.

ii) Superannuation fund:

The Company has a defined contribution scheme to provide pension to the eligible employees. The Company makes monthly contributions equal to a specified percentage of the covered employees' salary. These contributions are administered by Company's own Trust which has subscribed to "Group superannuation policy" of ICICI Prudential Life Insurance Company Limited. The Company's monthly contributions are charged to the Statement of Profit and Loss.

iii) Gratuity:

In accordance with the payment of 'Gratuity Act, 1972' of India, the Company provides for gratuity, a defined retirement benefit scheme (the Gratuity Plan), covering eligible employees. Liabilities with regard to such gratuity plan are determined by an actuarial valuation as at the end of the year and are charged to Statement of Profit and Loss. The gratuity plan is a funded plan administered by Company's own Trust which has subscribed to "Group Gratuity Scheme" of ICICI Prudential Life Insurance Company Limited.

iv) Compensated absences:

The accrual for unutilised leave is determined for the entire available leave balance standing to the credit of the employees at the year end. The value of such leave balances that are eligible for carry forward, is determined by an actuarial valuation as at the end of the year and is charged to the Statement of Profit and Loss.

Discount rate: The discount rate is based on the prevailing market yields of Indian Government securities as at the Balance Sheet date for the estimated term of the obligations.

Expected rate of return on plan assets: This is based on the expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

Salary escalation rate: The estimates of future salary increase considered in the actuarial valuation takes into account factors like inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

*It represents the employee benefit expense which has been included under salaries and wages in note no. 2.22.

**The Company has not recognised an asset amounting to Rs 0.46 (previous year Rs Nil) as there are no future economic benefits available to the Company in the form of reduction in future contribution or a cash refund.

1.7 : Agro Tech Foods Limited Employee Stock Option Plan

The Company instituted the 'Agro Tech Foods Limited Employee Stock Option Plan' ("Plan") to grant equity-based incentives to its eligible employees. The Company has established a trust called the 'Agro Tech ESOP Trust' ("Trust") to implement the Plan.

Under the Plan a maximum of 1,218,463 (previous year: 1,218,463) options will be granted to the eligible employees. All these options are planned to be settled in equity at the time of exercise. These options have an exercise price of Rs 75.10, Rs 170.10, Rs 131.70, Rs 147.40 Rs 287.20 and Rs 422.10 per share granted during the years ended 31 March 2007, 31 March 2008, 31 March 2009, 31 March 2010, 31 March 2011and 31 March 2012 respectively and vest on a graded basis as follows:

The Company follows the intrinsic value method to calculate employee compensation cost. There is no charge to the Statement of Profit and Loss as the exercise price of the shares is greater than or equal to the market value of the shares. Amount recoverable from employee stock option trust disclosed in the Balance Sheet represents balance recoverable from the trust on account of the shares purchased and held by the trust.

Proforma disclosure

In accordance with Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 had the compensation cost for Stock Option plans been recognised based on the fair value at the date of grant in accordance with Black-Scholes model, the proforma amounts of the Company's net profit and earnings per share would have been as follows:

1.8 : Segment information

The entire operations relate to only the foods segment. Accordingly there are no reportable segments to be disclosed as required by Accounting Standard 17 'Segment reporting'.

1.9 : Amounts payable to micro, small and medium enterprises

The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect of the amounts payable to such enterprises as at 31 March 2012 has been made in the financial statements based on information received and available with the Company. The Company has not received any claim for interest from any supplier under the said Act.

1.10 : Disclosure regarding derivative instruments

The Company uses forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The use of this foreign exchange forward contracts reduces the risk or cost to the Company and the Company does not use the foreign exchange forward contracts for trading or speculation purposes.

The information on such derivative instruments is as follows:

1.11 : Leasehold land

On 23 February 2011, the Company, has been allotted 24.71 acres of land by Gujarat Industrial Development Corporation (GIDC) on 99 years lease for construction of food manufacturing facility and generation of employment within the stipulated time periods, on contravention of which GIDC would be entitled to terminate the agreement and take back such portion of land which has not been developed by the Company.

1.12 : Previous year figures

Till the year end 31 March 2011, the Company was using old Schedule VI to the Companies Act, 1956, for preparation and presentation of its financial statements. During the year ended 31 March 2012, the revised Schedule VI notified under the Companies Act, 1956, has become applicable to the Company. The Company has reclassified the previous year figures to confirm to this year's classification. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it significantly impacts presentation and disclosure made in the financial statements, particularly presentation of Balance Sheet.


Mar 31, 2011

I) Commitments and contingent liabilities

As at As at

Particulars 31 March 2011 31 March 2010

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) 120.24 110.48

Contingent liabilities:

Guarantees given by bank * 95.81 6.95

Claims against the Company not a cknowledged as debts in respect of:

Sales tax matters, under dispute 615.21 615.21

Other matters, under dispute 43.61 43.61

The amounts included above, represent the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal positions against such disputes.

* Represent guarantees given in the normal course of the Companys operations and are not expected to result in any loss to the Company on the basis of the benefciaries fulflling their ordinary commercial obligations.

ii) During the year, the Company has sold its vanaspati brand Rath to Cargill India Private Limited vide an agreement dated 12 November 2010 for a consideration of Rs. 258. The transaction was consummated on 15 December 2010. The profit on sale of the brand amounted to Rs. 174.46 has been credited to the profit and loss account and disclosed under the head "Exceptional item". This divestiture is consistent with Companys long term strategy of focusing on value added products.

iii) Operating leases

The Company leases offce facilities under cancellable and non-cancellable operating lease agreements. Total rental expense under cancellable operating leases was Rs. 53.41 (Previous year: Rs. 48.30) and under non-cancellable portion was Rs. 11.80 (Previous year: Rs. 3.82), which has been disclosed as rent.

iv) Intangible assets

Brands purchased by the Company are being amortised on straight line method based on their estimated useful lives. Consequently, amortisation cost for the year includes a sum of Rs. 8.45 (Previous year - Rs. 9.28) being the amortisation relating to these brands. On the Balance Sheet date, the management has reassessed the value of these brands through an independent valuer to ensure that the recoverable amounts of these assets are not lower than their carrying amounts.

Since, the Company does not have any potential equity shares hence, the basic and diluted earnings per share are the same.

v) Employee benefits

a) The employee beneft schemes are as under:

i). Provident fund:

All employees of the Company receive benefits under the provident fund which is a defned beneft plan wherein the Company provides the guarantee of a specifed return on contribution. The contribution is made both by the employee and the Company equal to 12% of the employees salary. These contributions are made to the fund administered and managed by the Companys own Trust.

ii). Superannuation fund:

The Company has a defned contribution scheme to provide pension to the eligible employees. The Company makes monthly contributions equal to a specifed percentage of the covered employees salary. These contributions are administered by Companys own Trust which has subscribed to "Group superannuation policy" of ICICI Prudential Life Insurance Company Limited. The Companys monthly contributions are charged to the profit and Loss Account.

iii). Gratuity:

In accordance with the payment of Gratuity Act, 1972 of India, the Company provides for gratuity, a defned retirement beneft scheme (the Gratuity Plan), covering eligible employees. Liabilities with regard to such gratuity plan are determined by an actuarial valuation as at the end of the year and are charged to profit and Loss Account. The gratuity plan is a funded plan administered by Companys own Trust which has subscribed to "Group gratuity scheme" of ICICI Prudential Life Insurance Company Limited.

vi). Compensated absences:

The accrual for unutilised leave is determined for the entire available leave balance standing to the credit of the employees at the year end. The value of such leave balances that are eligible for carry forward, is determined by an actuarial valuation as at the end of the year and is charged to the profit and Loss Account.

Discount rate: The discount rate is based on the prevailing market yields of Indian Government securities as at the Balance Sheet date for the estimated term of the obligations.

Expected rate of return on plan assets: This is based on the expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

Salary escalation rate: The estimates of future salary increase considered in the actuarial valuation takes into account factors like infation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

*It represents the employee beneft expense which has been included under salaries,wages and bonus in Schedule 14.

**The Company has not recognised an asset amounting to Rs. Nil (Previous year Rs. 2.01) as there are no future economic benefits available to the Company in the form of reduction in future contribution or a cash refund.

vii) Agro Tech Foods Limited Employee Stock Option Plan

The Company instituted the Agro Tech Foods Limited Employee Stock Option Plan ("Plan") to grant equity-based incentives to its eligible employees. The company has established a trust called the Agro Tech ESOP Trust ("Trust") to implement the Plan.

viii) Segment information

The entire operations relate to only one segment "Branded Foods". Accordingly there are no reportable segments to be disclosed as required by Accounting Standard 17 Segment reporting.

ix) Amounts payable to micro, small and medium enterprises

The Ministry of Micro, Small and Medium Enterprises has issued an Offce Memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after fling of the Memorandum. Accordingly, the disclosure in respect of the amounts payable to such enterprises as at 31 March 2011 has been made in the fnancial statements based on information received and available with the Company. The Company has not received any claim for interest from any supplier under the said Act.

x) Disclosure regarding derivative instruments

The Company uses forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and frm commitments. The use of this foreign exchange forward contracts reduces the risk or cost to the Company and the Company does not use the foreign exchange forward contracts for trading or speculation purposes.

xi) Leasehold land

On 23 February 2011, the Company, has been allotted 24.71 acres of land by Gujarat Industrial Development Corporation (GIDC) on 99 years lease for construction of food manufacturing facility and generation of employment within the stipulated time periods, on contravention of which GIDC would be entitled to terminate the agreement and take back such portion of land which has not been developed by the Company.

xi) Previous year figures

Previous year figures have been regrouped/reclassified wherever necessary, to conform to current year classification.

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