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Notes to Accounts of Agro Tech Foods Ltd.

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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