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Notes to Accounts of Britannia Industries Ltd.

Mar 31, 2015

1. During the financial year 2008-09, the Company introduced Britannia Industries Limited Employee Stock Option Scheme ('the Scheme'). As per the Scheme, the Remuneration / Compensation Committee grants options to the employees and Executive Directors of the Company. The vesting period of the option is one year from the date of grant. Options granted under the Scheme can be exercised within a period of three years from the date of vesting. Exercise of an option is subject to continued employment.

Under the Scheme, the Company granted 15,000 options on 29 October 2008 at an exercise price of Rs. 1,125.30/-; 15,000 options on 27 May 2009 at an exercise price of Rs. 1,698.15/-; 20,000 options on 27 May 2010 at an exercise price of Rs. 1,668.55/-; 125,000 options on 27 May 2011 at an exercise price of Rs. 391.75/- and 100,000 options on 28 May 2012 at an exercise price of Rs. 528.75/- to the Managing Director of the Company. Each option represents one equity share of Rs. 10/- each (for options granted between the years 2008 to 2010) and one equity share of Rs.2/- each (for options granted after the year 2010). The said price was determined in accordance with the pricing formula approved by the shareholders i.e. the latest available closing price, prior to the date of the meeting of the Board of Directors or Remuneration / Compensation Committee in which options were granted, on the stock exchange having higher trading volume.

Exercise prices as stated above are adjusted downwards by Rs. 170/- per share for options granted on 29 October 2008 and 27 May 2009, being the face value of bonus debentures issued pursuant to the Scheme of Arrangement approved by the Honourable Calcutta High Court on 11 February 2010.

The number of options have been appropriately adjusted, consequent upon the sub-division of the equity shares [Refer note (e) below].

The Company had not granted options during the year 2013-14. The Company has further granted 50,000 options on 26 May 2014 at an exercise price of Rs. 870.35/- to the Managing Director of the Company.

2. Contingent liabilities and commitments:

(i) Contingent liabilities:

(a) Claims / demands against the Company not acknowledged as debts including excise duty, income tax, sales tax and trade and other demands of Rs. 44.49 (previous year: Rs. 37.87).

(b) Bank guarantee and letter of credit for Rs. 22.46 (previous year: Rs. 7.15).

(c) Discounted cheques Rs. 0.30 (previous year: Rs. 0.88).

Notes:

(i) Contingent liabilities disclosed above represent possible obligations where possibility of cash outflow to settle the obligations is not remote.

(ii) The above does not include non-quantifiable industrial disputes and other legal disputes pending before various judicial authorities [Also refer note 32 and 33].

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.106.82 (previous year: Rs. 9.51).

(b) The Company has furnished the following corporate guarantees:

Banking facilities Name of the 31 March 31 March given to bank 2015 2014

(i) Britannia and Bank of 103.12 149.70 Associates (Mauritius) America

Private Limited, Mauritius *

* The following are the loan balances outstanding against the corporate guarantees mentioned above: Bank of America: Rs. 96.87 crores (USD 15.5 Million).

Regarding items (i) and (ii) (b) above, it is not practicable to disclose information in respect of the estimate of the financial effect, an indication of the uncertainties relating to outflow and the possibility of any reimbursement as it is determinable only on occurrence of uncertain future events / receipt of judgments pending at various forums.

(c) The Company has furnished the following letters of comfort / letters of awareness:

Banking facilities Name of the bank 31 March 31 March given to 2015 2014

(i) Britannia Dairy HSBC Bank 4.50 4.50 Private Limited

(ii) Strategic Food Royal Bank of 30.62 29.34 International Co. Scotland LLC, Dubai

(iii) Al Sallan Food Royal Bank of 11.91 11.41 Industries Co. SAOC Scotland

These letters are not to be construed as a guarantee issued by the Company.

3. (a) Operating leases

The Company has certain operating leases for office facilities and residential premises (cancellable leases). Such leases are generally with the option of renewal against increased rent and premature termination of agreement. Rental expenses of Rs. 6.56 (previous year: Rs. 5.09) in respect of obligation under operating leases have been recognised in the statement of profit and loss.

4. With respect to the matter related to the refund of excess contribution by Company's Covenanted Staff Pension Fund ("Fund") to the Company, the Honourable Supreme Court at its hearing on 12 May 2008 set aside the order of the Division Bench of the Honourable High Court, Kolkata and remanded the writ pending for disposal. Based on the directions of the courts, the Company was required to deposit Rs. 12.12 with a Nationalised Bank, which the Company has done under protest.

In other Writ Petitions filed by some of the pensioners in the Honourable Madras High Court, challenging the Deeds of Variation submitted in May 2005, the Honourable High Court has passed an interim order restraining the CIT, Kolkata from approving the Deeds of Variation pending disposal of the Writ Petitions.

There have been no significant development in the year under review.

In the suit filed by the Britannia Industries Limited Pensioners Welfare Association ('the Association') in the Honourable City Civil Court, Bangalore, the proceedings are currently in the stage of final arguments. However, in the meanwhile the Association further filed an application stating certain members have joined the Association post retirement from the Company and are eligible for Pension and hence the Court should direct the Company and the Fund to pay pension to these employees. the Company and the Fund filed their objections to this Application on 31 August 2013. Based on the interim order of the Honourable City Civil Court, Bangalore and the direction of the Honourable Supreme Court the, Company presently continues to pay pension as per the interim order passed by the Bangalore City Civil Court on1 January 2009 (i.e. on Defined Contribution basis) till disposal of the suit by the Trial Court.

The Company believes, based on current knowledge and after consultation with eminent legal counsel that the resolution of the matter will not have material adverse effect on the financial statements of the Company.

5. Based on guiding principles in the Accounting Standard 17 - "Segment Reporting", the primary business segment of the Company is foods, comprising bakery and dairy products. As the Company operates in a single primary business segment, disclosure requirements are not applicable. The Company primarily caters to the domestic market and export sales are not significant and accordingly there is no reportable secondary segment.

6. Related party disclosures under Accounting Standard 18

Relationships

1. Ultimate The Bombay Burmah Trading Corporation Limited holding company Holding company Associated Biscuits International Limited (ABIL), UK

2. Subsidiary Al Sallan Food Industries Co. SAOC companies Boribunder Finance and Investments Private Limited

Britannia and Associates (Dubai) Private Company Limited, Dubai

Britannia and Associates (Mauritius) Private Limited, Mauritius

Britannia Dairy Holdings Private Limited, Mauritius

Britannia Dairy Private Limited

Daily Bread Gourmet Foods (India) Private Limited

Flora Investments Company Private Limited

Ganges Vally Foods Private Limited

Gilt Edge Finance and Investments Private Limited

International Bakery Products Limited

J B Mangharam Foods Private Limited

Manna Foods Private Limited

Strategic Brands Holding Company Limited, Dubai Strategic Food International Co. LLC, Dubai Sunrise Biscuit Company Private Limited

3. Fellow Bannatyne Enterprises Pte Limited, Singapore subsidiary companies Dowbiggin Enterprises Pte Limited, Singapore Nacupa Enterprises Pte Limited, Singapore

Spargo Enterprises Pte Limited, Singapore Valletort Enterprises Pte Limited, Singapore

4. Associates Klassik Foods Private Limited Nalanda Biscuits Company Limited

5. Key Management Personnel (KMP) *

Managing Director Mr.Varun Berry

Erstwhile Managing Director Ms. Vinita Bali

* Mr. Varun Berry was appointed as Executive Director (w.e.f. 11 November 2013). Further, effective from 1 April 2014, Mr. Varun Berry has been appointed as Managing Director of the Company Ms. Vinita Bali has ceased to be Managing Director of the Company w.e.f. the close of business on 31 March 2014.

6. Post retirement benefit - Defined benefit plans

The Company has two funds: Britannia Industries Limited Covenanted Staff Gratuity Fund and Britannia Industries Limited Non Covenanted Staff Gratuity Fund, which are funded defined benefit plans for qualifying employees.

(i) The Scheme in relation to Britannia Industries Limited Non Covenanted Staff Gratuity Fund provides for lumpsum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months subject to the higher of maximum amount payable as per the Payment of Gratuity Act, 1972 and twenty months salary.

(ii) The Scheme in relation to Britannia Industries Limited Covenanted Staff Gratuity Fund provides for lumpsum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months subject to the higher of maximum amount payable as per the Payment of Gratuity Act, 1972 and twenty months salary.

7. Notes:

(i) The discount rate is based on the prevailing market yield on Government Securities as at the balance sheet date for the estimated term of obligations.

(ii) The expected return on plan assets is determined considering several applicable factors mainly the composition of the plan assets held, assessed risks of asset management, historical results of the return on plan assets and the Company's policy for plan asset management.

(iii) The estimate of future salary increases considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

(iv) The disclosure above includes amounts for both Britannia Industries Limited Covenanted Staff Gratuity Fund and Britannia Industries Limited Non Covenanted Staff Gratuity Fund.

8. Derivative contracts

Foreign currency forward contracts

The Company has designated certain foreign exchange forward contracts (relating to foreign currency receivables and payables) outstanding as on 31 March 2015 as hedge of committed transaction. On that date, the Company had forward contracts amounting to USD 2,908,783 and EUR 2,060,830 (previous year: USD 2,686,908 and EUR 58,287). As at the year end the unrealized exchange loss of Rs. 0.49 has been accounted for (previous year: unrealized exchange gain of Rs. 0.55 has not been accounted) (arrived on a mark to market basis) in line with the ICAI notification issued in March 2008.

9. Capital subsidy

During the year ended 31 March 2013, an amount of Rs. 5 was received towards capital subsidy for the Hajipur Factory, Bihar in accordance with the State Industrial Policy of Bihar. Out of this, an amount of Rs. 0.71 (previous year: Rs. 0.54) has been credited to the statement of profit and loss (by reducing the depreciation charge for the year) and the outstanding amount of Rs. 3.57 (previous year: Rs. 4.28) has been classified as capital subsidy in the balance sheet [Refer note 1 (t)].

10. Corporate Social Responsibility

During the year, the amount required to be spent on corporate social responsibility activities amounted to Rs. 7.35 in accordance with Section 135 of the Companies Act, 2013.The following amounts were spent during the year:

11. Figures in rupees have been rounded off to two decimal places to the nearest crore, unless otherwise stated.

12. During the year ended 31 March 2015 no material foreseeable loss was incurred for any long-term contract including derivative contracts.


Mar 31, 2014

Note 1. Contingent liabilities and commitments:

(i) Contingent liabilities:

(a) Claims / demands against the Company not acknowledged as debts including excise duty, income tax, sales tax and trade and other demands of Rs. 37.87 (previous year: Rs. 43.37).

(b) Bank guarantee and letter of credit for Rs. 7.15 (previous year: Rs. 9.60).

(c) Discounted cheques Rs. 0.88 (previous year: Rs. 0.42).

The Honourable Supreme Court against the Order of the Division Bench. The Honourable Supreme Court at its hearing on 12 May 2008 set aside the Order of the Division Bench of the Honourable Calcutta High Court. As a condition of the stay order granted, the Company has, under protest, made the deposit as per the direction of the Honourable Calcutta High Court.

Pursuant to the directions of the Honourable Madras High Court, the CIT, Kolkata passed Orders rejecting the Deeds of Variation submitted in May 2005 by the Company''s Pension Funds on technical grounds. The Company preferred Appeals before the Central Board of Direct Taxes (''CBDT''), New Delhi challenging the Orders of the CIT. CBDT passed Orders in the said Appeals in March 2011 directing the Company inter alia to submit Deeds of Variation incorporating the modifications in line with the directions made in the Orders effective 1 November 2004. The modified Deeds of Variation in line with the directions contained in the CBDT Orders have already been filed with the CIT, Kolkata, for its approval. In Writ Petitions filed by some of the Pensioners in the Honourable Madras High Court and by the Pensioners Welfare Association in the Honourable Calcutta High Court, the Honourable High Courts have passed interim orders restraining the CIT, Kolkata, from approving the Deeds of Variation pending disposal of the Writ Petitions.

A suit was filed by the Britannia Industries Limited Pensioners Welfare Association (''the Association'') in the Honourable City Civil Court, Bangalore, where the Honourable Court passed interim orders on 1 January 2009 and 10 February 2009 directing the Funds to pay pension to the Members in accordance with the computation made and submitted by the Pension Funds to the Court. This computation was on a defined contribution basis, and is consistent with the pension offered by the Pension Funds to eligible employees at the time of their retirement / exit. Since then, the Funds have been complying with the said Order. In April 2010, the Honourable City Civil Court passed another interim order requiring the Funds to pay pension as per Rule 11(a) of the Pension Fund Rules, i.e. on "Defined Benefit Basis", and gave the Funds two months'' time for complying with the Order. This was challenged by Britannia Industries Limited ("BIL" / "Company") in an Appeal before the Honourable Karnataka High Court, the Honourable Karnataka High Court in April 2010 modified the Trial Court''s Order so as to extend the time limit from two months to three months and in July 2010, further modified the Trial Court''s Order directing inter alia that the Pension shall be paid as per Rule 11(a) from the date of filing of the Suit by the Association in the Honourable City Civil Court, Bangalore, i.e. with effect from 17 June 2008. The Company filed Special Leave Petitions (SLPs) in the Honourable Supreme Court against the above Order of the Honourable Karnataka High Court, Bangalore. The Honourable Supreme Court passed an Order in January 2011 disposing of the SLPs, and directing that the Pension Fund should continue to pay pension as per the interim order passed by the Bangalore City Civil Court on 1 January 2009 (i.e. on Defined Contribution basis) till disposal of the suit by the Trial Court. The proceedings in the main suit are currently in progress in the Honourable Bangalore City Civil Court and Sessions Judge. However, in the meanwhile the Association further filed an application stating certain members have joined the Association post retirement from BIL and are eligible for pension and hence the Court should direct BIL and the Fund to pay pension to these employees, BIL and the Fund filed their objections to this Application on 31 August 2013.

The Company believes, based on current knowledge and after consultation with eminent legal counsel that the resolution of the matter will not have material adverse effect on the financial statements of the Company.


Mar 31, 2013

Note 1 Contingent liabilities and commitments:

(i) Contingent liabilities:

(a) Claims / demands against the Company not acknowledged as debts including excise duty, income tax, sales tax and trade and other demands of Rs. 43.37 (previous year: Rs. 28.95).

(b) Bank guarantee and letter of credit for Rs. 9.60 (previous year: Rs. 5.13).

(c) Discounted cheques: Rs. 0.42 (previous year: Rs. 0.32).

Notes:

(i) Contingent liabilities disclosed above represent possible obligations where possibility of cash outflow to settle the obligations is not remote.

(ii) The above does not include non-quantifiable industrial disputes and other legal disputes pending before various judicial authorities [Also refer note 29].

(ii) Commitments:

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 30.32 (previous year: Rs. 42.44).

Note 2 (a) Operating leases

The Company has certain operating leases for office facilities and residential premises (cancellable leases). Such leases are generally with the option of renewal against increased rent and premature termination of agreement. Rental expenses of Rs. 6.30 (previous year: Rs. 4.66) in respect of obligation under operating leases have been recognised in the statement of profit and loss.

(b) Finance leases

The Company has taken motor vehicles on finance lease. The total minimum lease payments and present value of minimum lease payments are as follows:

Note 3 In accordance with Accounting Standard 29 - "Provisions, Contingent Liabilities and Contingent Assets", prescribed by the Companies (Accounting Standard), Rules 2006, certain classes of liabilities have been identified as provisions which have been disclosed as under:

(a) and (b) represents estimates made for probable cash outflow arising out of pending disputes / litigations with various regulatory authorities.

(c) represents provisions made for probable liabilities / claims arising out of commercial transactions with vendors / others. Further disclosures as required in Accounting Standard 29 are not made since it can be prejudicial to the interests of the Company.

* Included under various heads in the statement of profit and loss.

Note 4 In April 2007, the Commissioner of Income Tax (''CIT''), Kolkata issued a notice to the Company''s Covenanted Staff Pension Fund (''BILCSPF'') asking it to show cause why recognition granted to the Fund should not be withdrawn for refunding in the year 2004, the excess contribution of Rs. 12.12 (previous year: Rs. 12.12) received by it in earlier years. The Single Judge of the Hon''ble Calcutta High Court, on a Writ Petition, granted a stay restraining the CIT from proceeding with the show cause notice but with a direction to the Company to deposit Rs. 12.12 (previous year: Rs. 12.12) with a nationalised bank in the name of the Fund. On appeal, the Division Bench of the Hon''ble Calcutta High Court disposed off the Writ Petition pending before the Single Judge. The Fund filed a Special Leave Petition (''SLP'') before the Hon''ble Supreme Court against the Order of the Division Bench. The Hon''ble Supreme Court at its hearing on 12 May 2008 has set aside the Order of the Division Bench of the Hon''ble Calcutta High Court. As a condition of the stay order granted, the Company has, under protest, made the deposit as per the direction of the Hon''ble Calcutta High Court.

Pursuant to the directions of the Hon''ble Madras High Court, the CIT, Kolkata passed Orders rejecting the Deeds of Variation submitted in May 2005 by the Company''s Pension Funds on technical grounds. The Company preferred Appeals before the Central Board of Direct Taxes (''CBDT''), New Delhi challenging the Orders of the CIT. CBDT passed Orders in the said Appeals in March 2011 directing the Company inter alia to submit Deeds of Variation incorporating the modifications in line with the directions made in the Orders effective 1 November 2004. The modified Deeds of Variation in line with the directions contained in the CBDT Orders have already been filed with the CIT, Kolkata, for its approval. In Writ Petitions filed by some of the Pensioners in the Hon''ble Madras High Court and by the Pensioners Welfare Association in the Hon''ble Calcutta High Court, the Hon''ble High Courts have passed interim orders restraining the CIT, Kolkata, from approving the Deeds of Variation pending disposal of the Writ Petitions.

A suit was filed by the Britannia Industries Limited Pensioners Welfare Association (''the Association'') in the Hon''ble City Civil Court and Sessions Judge, Bangalore, where the Hon''ble Court passed interim orders on 1 January 2009 and 10 February 2009 directing the Funds to pay pension to the Members in accordance with the computation made and submitted by the Pension Funds to the Court. This computation was on a defined contribution basis, and is consistent with the pension offered by the Pension Funds to eligible employees at the time of their retirement / exit. The Funds have been complying with the said Order. In April 2010, the Hon''ble Judge passed another interim order requiring the Funds to pay pension as per Rule 11(a) of the Pension Fund Rules, i.e. on "Defined Benefit Basis", and gave the Funds two months'' time for complying with the Order. In an Appeal filed against this Order in the Hon''ble Karnataka High Court, the Hon''ble Karnataka High Court in April 2010 modified the Trial Court''s Order so as to extend the time limit from two months to three months and in July 2010, further modified the Trial Court''s Order directing inter alia that the Pension shall be paid as per Rule 11(a) from the date of filing of the suit by the Association in the Hon''ble Bangalore City Civil Court and Sessions Judge, i.e. with effect from 17 June 2008. The Company filed Special Leave Petitions (SLPs) in the Hon''ble Supreme Court against the above Order of the Hon''ble Karnataka High Court. The Hon''ble Supreme Court passed an Order in January 2011 disposing of the SLPs and directing inter alia that the interim order passed by it in September 2010 directing that the Pension Funds should continue to pay pension as per the interim order passed by the Hon''ble Bangalore City Civil Court and Sessions Judge on 1 January 2009 would continue till disposal of the suit by the Trial Court. The proceedings in the main suit are currently in progress in the Hon''ble Bangalore City Civil Court and Sessions Judge.

The Company believes, based on current knowledge and after consultation with eminent legal counsel that the resolution of the matter will not have material adverse effect on the financial statements of the Company.

Note 5 Based on guiding principles in the Accounting Standard 17 - "Segment Reporting", the primary business segment of the Company is foods, comprising bakery and dairy products. As the Company operates in a single primary business segment, disclosure requirements are not applicable. The Company primarily caters to the domestic market and export sales are not significant and accordingly there is no reportable secondary segment.

Note 6 Related party disclosures under Accounting Standard 18 Relationships

1. Ultimate holding company The Bombay Burmah Trading Corporation Limited Holding company Associated Biscuits International Limited (ABIL), UK

2. Subsidiary companies Al Sallan Food Industries Co. SAOC

Boribunder Finance and Investments Private Limited Britannia and Associates (Dubai) Private Company Limited, Dubai Britannia and Associates (Mauritius) Private Limited, Mauritius Britannia Dairy Holdings Private Limited, Mauritius Britannia Dairy Private Limited

Britannia Lanka Private Limited, Sri Lanka [Refer note (iv) below] Daily Bread Gourmet Foods (India) Private Limited

Flora Investments Company Private Limited

Ganges Vally Foods Private Limited

Gilt Edge Finance and Investments Private Limited

International Bakery Products Limited

J B Mangharam Foods Private Limited

Manna Foods Private Limited

Strategic Brands Holding Company Limited, Dubai

Strategic Food International Co. LLC, Dubai

Sunrise Biscuit Company Private Limited

3. Fellow subsidiary companies Bannatyne Enterprises Pte Limited, Singapore

Dowbiggin Enterprises Pte Limited, Singapore Nacupa Enterprises Pte Limited, Singapore Spargo Enterprises Pte Limited, Singapore Valletort Enterprises Pte Limited, Singapore

4. Associates Klassik Foods Private Limited

Nalanda Biscuits Company Limited

5. Others Britannia Sports (partnership firm) [Refer note (iv) below]

6. Key management personnel (KMP)

Managing Director Ms. Vinita Bali

Note 7 Employee benefits

(a) Post retirement benefit - Defined contribution plans

The Company has recognised an amount of Rs. 5.70 (previous year: Rs. 5.03) as expenses under the defined contribution plans in the statement of profit and loss for the year.

(b) Post retirement benefit - Defined benefit plans

The Company makes annual contributions to the Britannia Industries Limited Covenanted Staff Gratuity Fund and Britannia Industries Limited Non Covenanted Staff Gratuity Fund, which are funded defined benefit plans for qualifying employees.

(i) The Scheme in relation to Britannia Industries Limited Non Covenanted Staff Gratuity Fund provides for lumpsum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months subject to the higher of maximum amount payable as per the Payment of Gratuity Act, 1972 and twenty months salary.

(ii) The Scheme in relation to Britannia Industries Limited Covenanted Staff Gratuity Fund provides for lumpsum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months subject to the higher of maximum amount payable as per the Payment of Gratuity Act, 1972 and twenty months salary.

Vesting (for both the funds mentioned above) occurs only upon completion of five years of service, except in case of death or permanent disability. The present value of the defined benefit obligation and the related current service cost are measured using the projected unit credit method with actuarial valuation being carried out at balance sheet date.

Note 8 Derivative contracts

Foreign currency forward contracts

The Company has entered into foreign exchange forward contracts for hedging the foreign exchange fluctuation risks on foreign currency payables / loans, which has been accounted for in line with Accounting Standard 11 - "The Effects of Changes in Foreign Exchange Rates". Accordingly, the amount receivable of Rs. 25.71 (previous year: Rs. 27.57) and loan payable of Rs. 20.08 (previous year: Rs. 20.08), relating to foreign exchange forward contracts for hedging have been netted off and disclosed under ''Short-term loans and advances (previous year: Long-term loans and advances)'' [Refer note 19 (previous year: note 14)].

The Company has designated certain foreign exchange forward contracts (relating to foreign currency receivabes and payables) outstanding as on 31 March 2013 as hedge of committed transaction. On that date, the Company had forward contracts amounting to USD 1,741,026 and EUR 39,150 (previous year: USD 2,158,505 and EUR 66,000). As at the year end the unrealised exchange gain of Rs. 0.05 has not been accounted for (previous year: unrealised exchange loss of Rs. 0.19 was accounted for) (arrived on a mark to market basis) in line with the ICAI notification issued in March 2008.

The foreign currency exposures not hedged towards payables / receivables as at the year end amount to USD 185,294 / Rs. 1.01 (previous year: USD 148,891 / Rs. 0.76).

Note 9 Capital subsidy

During the year ended 31 March 2013, an amount of Rs. 5 has been received towards capital subsidy for the Hajipur Factory, Bihar in accordance with the State Industrial Policy of Bihar. Out of this, an amount of Rs. 0.18 has been credited to the statement of profit and loss (by reducing the depreciation charge for the year) and the outstanding amount of Rs. 4.82 has been classified as capital subsidy in the balance sheet [Refer note 1 (t)].

Note 10 Figures in Rs. have been rounded off to two decimal places to the nearest crore, unless otherwise stated.

Note 11 Previous year''s figures have been regrouped / reclassified as per the current year''s presentation for the purpose of comparability.


Mar 31, 2012

(a) During the financial year 2008-09, the Company introduced Britannia Industries Limited Employee Stock Option Scheme ('the Scheme'). As per the Scheme, the Remuneration / Compensation Committee grants options to the employees and Executive Directors of the Company. The vesting period of the option is one year from the date of grant. Options granted under the Scheme can be exercised within a period of three years from the date of vesting. Exercise of an option is subject to continued employment.

Under the Scheme, the Company granted 15,000 options on 29 October 2008 at an exercise price of Rs. 1,125.30/-; 15,000 options on 27 May 2009 at an exercise price of Rs. 1,698.15/- and 20,000 options on 27 May 2010 at an exercise price of Rs. 1,668.55/- to the Managing Director of the Company. Each option represents one equity share of Rs. 10/- each. The said price was determined in accordance with the pricing formula approved by the shareholders i.e. the latest available closing price, prior to the date of the meeting of the Board of Directors or Remuneration / Compensation Committee in which options were granted, on the stock exchange having higher trading volume.

Exercise prices as stated above are adjusted downwards by Rs. 170/- per share for options granted on 29 October 2008 and 27 May 2009, being the face value of bonus debentures issued pursuant to the Scheme of Arrangement approved by the Honourable Calcutta High Court on 11 February 2010.

The number of options have been appropriately adjusted, consequent upon the sub-division of the equity shares [Refer note (e) below].

The Company has further granted 125,000 options on 27 May 2011 at an exercise price of Rs. 391.75/- to the Managing Director of the Company after the aforesaid adjustments.

Method used for accounting of share based payment plan:

The Company has used intrinsic value method to account for the compensation cost of stock options to employees and Executive Directors of the Company. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price (without considering the impact of Rs. 170/- on account of issue of bonus debentures) of the option. Since the options under the Scheme were granted at the market price, the intrinsic value of the option is Rs. Nil. Consequently the accounting value of the option (compensation cost) is also Rs. Nil.

(e) In the Annual General Meeting held on 9 August 2010, the shareholders of the Company approved the sub- division of equity shares, where in each equity share with a face value of Rs. 10/- has been subdivided into 5 equity shares with a face value of Rs. 2/- each. The effective date for the sub-division was 10 September 2010.

(a) 23,890,163 - 8.25% Redeemable non-convertible bonus debentures of face value of Rs. 170/- each, fully paid up.

Secured by way of first mortgage created on identified immovable property and first charge on Company's movable assets restricted to inventories and plant and machinery. The book value (net) of plant and equipment and inventories as on 31 March 2012 amounts to Rs. 256.19 (previous year: Rs. 223.89) and Rs. 382.28 (previous year: Rs. 311.20) respectively.

Redeemable in full at the end of 36 months from 22 March 2010 being the date of allotment.

The Committee of the Board of Directors ('the Board'), at its meeting held on 22 March 2010, pursuant to the Scheme of Arrangement ('the Scheme') sanctioned by the Honourable Calcutta High Court on 11 February 2010 under Section 391(2) of the Companies Act, 1956 ('the Act'), allotted 8.25% secured fully paid-up Redeemable non-convertible bonus debentures ('the bonus debentures') from the general reserve, in the ratio of one debenture of the face value of Rs. 170/- for every equity share held by the shareholders of the Company as on 9 March 2010. The date of allotment of bonus debentures is 22 March 2010. The Scheme was earlier approved by the Board at its meeting held on 27 May 2009 and by the shareholders at the general meeting held on 31 August 2009. The bonus debentures have been listed on the Bombay Stock Exchange Limited, National Stock Exchange of India Limited and the Calcutta Stock Exchange Limited. The Scheme involves issuance of bonus debentures out of General Reserve and does not entail any real borrowing, accordingly, the requirement of creating a Debenture Redemption Reserve pursuant to Section 117C of the Act or Clause 10.3 of SEBI (Disclosure and Investor Protection) Guidelines, 2000 issued under the Securities and Exchange Board of India Act, 1992 is not applicable. This has also been noted in the Scheme of Arrangement sanctioned by the Honourable Calcutta High Court.

Note 1 Contingent liabilities and commitments:

(i) Contingent liabilities:

(a) Claims / demands against the Company not acknowledged as debts including excise duty, income tax, sales tax and trade and other demands of Rs. 28.95 (previous year: Rs. 57.88).

(b) Bank guarantee and letter of credit for Rs. 5.13 (previous year: Rs. 6.50).

(c) Discounted cheques Rs. 0.32 (previous year: Rs. 45.70).

Notes:

(i) Contingent liabilities disclosed above represent possible obligations where possibility of cash outflow to settle the obligations is not remote.

(ii) The above does not include non-quantifiable industrial disputes and other legal disputes pending before various judicial authorities [Also refer note 28].

(ii) Commitments:

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 42.44 (previous year: Rs. 34.67).

Regarding items (i) and (ii) (b) above, it is not practicable to disclose information in respect of the estimate of the financial effect, an indication of the uncertainties relating to outflow and the possibility of any reimbursement as it is determinable only on occurrence of uncertain future events / receipt of judgements pending at various forums.

Note 2 (a) Operating leases

The Company has certain operating leases for office facilities and residential premises (cancellable leases). Such leases are generally with the option of renewal against increased rent and premature termination of agreement. Rental expenses of Rs. 4.66 (previous year: Rs. 3.77) in respect of obligation under operating leases have been recognised in the statement of profit and loss.

Note 3 In April 2007, the Commissioner of the Income Tax ('CIT'), Kolkata issued a notice to the Company's Covenanted Staff Pension Fund ('BILCSPF') asking it to show cause why recognition granted to the Fund should not be withdrawn for refunding in the year 2004, the excess contribution of Rs. 12.12 (previous year: Rs. 12.12) received by it in earlier years. The Single Judge of the Honourable Calcutta High Court, on a writ petition, granted a stay restraining the CIT from proceeding with the show cause notice but with a direction to the Company to deposit Rs. 12.12 (previous year: Rs. 12.12) with a nationalised bank in the name of the Fund. On appeal, the Division Bench of the Honourable Calcutta High Court disposed off the writ petition pending before the Single Judge. The Fund filed a Special Leave Petition ('SLP') before the Honourable Supreme Court against the order of the Division Bench. The Honourable Supreme Court at its hearing on 12 May 2008 has set aside the order of the Division Bench of the Honourable Calcutta High Court. As a condition of the stay order granted, the Company has, under protest, made the deposit as per the direction of the Honourable Calcutta High Court.

Pursuant to the directions of the Honourable Madras High Court, the CIT, Kolkata passed orders rejecting the deeds of variation submitted in May 2005 by the Company's Pension Funds on technical grounds. The Company preferred appeals before the Central Board of Direct Taxes ('CBDT'), New Delhi challenging the orders of the CIT. CBDT passed Orders in the said appeals in March 2011 directing the Company inter alia to submit deeds of variation incorporating the modifications in line with the directions made in the Orders effective 1 November 2004. The modified deeds of variation in line with the directions contained in the CBDT Orders have already been filed with the CIT, Kolkata, for its approval. In writ petitions filed by some of the pensioners in the Honourable Madras High Court and by the Pensioners Welfare Association in the Honourable Calcutta High Court, the Honourable High Courts have passed interim orders restraining the CIT, Kolkata, from approving the deeds of variation pending disposal of the writ petitions.

A suit was filed by the Britannia Industries Limited Pensioners Welfare Association ('the Association') in the Honourable City Civil Court and Sessions Judge, Bangalore, where the Honourable Court passed interim orders on 1 January 2009 and 10 February 2009 directing the Funds to pay pension to the Members in accordance with the computation made and submitted by the Pension Funds to the Court. This computation was on a defined contribution basis, and is consistent with the pension offered by the Pension Funds to eligible employees at the time of their retirement / exit. The Funds have been complying with the said order. In April 2010, the Honourable Judge passed another interim order requiring the Funds to pay pension as per Rule 11(a) of the Pension Fund Rules, i.e. on "Defined Benefit Basis", and gave the Funds two months' time for complying with the order. In an appeal filed against this Order in the Honourable Karnataka High Court, the Honourable Karnataka High Court in April 2010 modified the Trial Court's order so as to extend the time limit from two months to three months and in July 2010, further modified the Trial Court's order directing inter alia that the pension shall be paid as per Rule 11(a) from the date of filing of the suit by the Association in the Honourable Bangalore City Civil Court, i.e. with effect from 17 June 2008. The Company filed Special Leave Petitions (SLPs) in the Honourable Supreme Court against the above order of the Honourable Karnataka High Court. The Honourable Supreme Court passed an order in January 2011 disposing of the SLPs and directing inter alia that the interim order passed by it in September 2010 directing that the Pension Funds should continue to pay pension as per the interim order passed by the Honourable Bangalore City Civil Court on 1 January 2009 would continue till disposal of the suit by the Trial Court. The proceedings in the main suit are currently in progress in the Honourable Bangalore City Civil Court.

The Company believes, based on current knowledge and after consultation with eminent legal counsel that the resolution of the matter will not have material adverse effect on the financial statements of the Company.

Note 4 Based on guiding principles in the Accounting Standard 17 - "Segment Reporting", the primary business segment of the Company is foods, comprising bakery and dairy products. As the Company operates in a single primary business segment, disclosure requirements are not applicable. The Company primarily caters to the domestic market and export sales are not significant and accordingly there is no reportable secondary segment.

Note 5 Related party disclosures under Accounting Standard 18 Relationships

1. Ultimate holding company The Bombay Burmah Trading Corporation Limited

Holding company Associated Biscuits International Limited (ABIL), UK

2. Subsidiary companies Al Sallan Food Industries Co. SAOC

Boribunder Finance and Investments Private Limited

Britannia and Associates (Dubai) Private Company Limited, Dubai

Britannia and Associates (Mauritius) Private Limited, Mauritius

Britannia Dairy Holdings Private Limited, Mauritius

Britannia Dairy Private Limited

Britannia Lanka Private Limited, Sri Lanka

Daily Bread Gourmet Foods (India) Private Limited

Flora Investments Company Private Limited

Ganges Vally Foods Private Limited

Gilt Edge Finance and Investments Private Limited

International Bakery Products Limited

J B Mangharam Foods Private Limited

Manna Foods Private Limited

Strategic Brands Holding Company Limited, Dubai

Strategic Food International Co. LLC, Dubai

Sunrise Biscuit Company Private Limited

3. Fellow subsidiary companies Bannatyne Enterprises Pte Limited, Singapore

Dowbiggin Enterprises Pte Limited, Singapore Nacupa Enterprises Pte Limited, Singapore Spargo Enterprises Pte Limited, Singapore Valletort Enterprises Pte Limited, Singapore

4. Associates Klassik Foods Private Limited

Nalanda Biscuits Company Limited

Note 6 Employee benefits

(b) Post retirement benefit - Defined benefit plans

The Company makes annual contributions to the Britannia Industries Limited Covenanted Staff Gratuity Fund and Britannia Industries Limited Non Covenanted Staff Gratuity Fund, which are funded defined benefit plans for qualifying employees.

(i) The Scheme in relation to Britannia Industries Limited Non Covenanted Staff Gratuity Fund provides for lumpsum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months subject to the maximum amount payable as per the Payment of Gratuity Act, 1972.

(ii) The Scheme in relation to Britannia Industries Limited Covenanted Staff Gratuity Fund provides for lumpsum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months subject to the higher of maximum amount payable as per the Payment of Gratuity Act, 1972 and twenty months salary.

Vesting (for both the funds mentioned above) occurs only upon completion of five years of service, except in case of death or permanent disability. The present value of the defined benefit obligation and the related current service cost are measured using the projected unit credit method with actuarial valuation being carried out at balance sheet date.

Note 7 Derivative contracts

Foreign currency forward contracts

The Company has entered into foreign exchange forward contracts for hedging the foreign exchange fluctuation risks on foreign currency payables / loans, which has been accounted for in line with Accounting Standard 11- " The Effects of Changes in Foreign Exchange Rates". Accordingly, the amount receivable of Rs. 27.57 (previous year: Rs. 23.68) and loan payable of Rs. 20.08 (previous year: Rs. 20.08), relating to foreign exchange forward contracts for hedging have been netted off and disclosed under 'Long-term loans and advances' [Refer note 13].

The Company has designated certain foreign exchange forward contracts (relating to foreign currency

receivabes and payables) outstanding as on 31 March 2012 as hedge of committed transaction. On that date, the Company had forward contracts amounting to USD 2,158,505 and EUR 66,000 (previous year: USD 1,448,372). As at the year end the unrealized exchange loss of Rs. 0.19 (previous year: Rs. Nil) (arrived on a mark to market basis) has been accounted for in line with the ICAI notification issued in March 2008.

Note 8 Figures in rupees have been rounded off to two decimal places to the nearest crore, unless otherwise stated.

Note 9 The financial statements for the year ended 31 March 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended 31 March 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.


Mar 31, 2010

1 Capital commitments and contingent liabilities:

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 118,159 (Previous year: Rs. 69,509).

(b) Contingent Liabilities for:

(1) Bank guarantee and letter of credit for Rs. 1,046,138 (Previous year: Rs.43,799).

(2) Discounted cheques Rs. 582,506 (Previous year: Rs. 737,696).

(3) Claims/demand against the Company not acknowledged as debts including Excise, Income tax, Sales tax and Trade and other demands Rs. 1,058,882 (Previous year: Rs. 822,401).

Notes:

(i) Contingent liabilities disclosed above represents possible obligations where possibility of cash outflow to settle the obligation is not remote.

(ii) The above does not include non quantifiable industrial disputes and other legal disputes pending before various judicial authorities. [Also refer note 28]

Regarding items (b) and (c) above, it is not practicable to disclose information in respect of the estimate of the financial effect, an indication of the uncertainties relating to outflow and the possibility of any reimbursement as it is determinable only on occurrence of uncertain future events/receipt of judgements pending at various forums.

2 (a) Operating leases

The Company has certain operating leases for vehicles, office facilities and residential premises (cancellable as well as non-cancellable leases). Such leases are generally with the option of renewal against increased rent and premature termination of agreement. Rental expenses of Rs. 130,230 (Previous year: Rs. 13,019) in respect of obligation under operating leases [including minimum lease payments of Rs.906 (Previous year: Rs. 1,343)] have been recognised in the Profit and Loss Account.

Assets on operating lease which represents motor vehicles (acquired prior to 1 April 2001) aggregate to Rs. Nil (Previous year: Rs. 4,064). The charge on account of lease rental to Profit and Loss Account for the year is Rs. 1,019 (Previous year: Rs. 1,511).

"Accounting for taxes on income" disclosure as per AS 22: Major components of deferred tax assets and liabilities on account of timing differences are as follows:

Depreciation

Voluntary retirement scheme, terminal compensation benefits

Statutory payments

Provisions allowed on payments, write off

Deferred tax asset/(liability), net

The Company has an investment of Rs. 49 (Previous year: Rs. 49) in a partnership firm "Britannia Sports" having a capital of Rs. 100 (Previous year: Rs. 100) in which it holds 49% share of the profit or loss and the balance share is held by two associate companies, Flora Investments Company Private Limited and Gilt Edge Finance and Investments Private Limited who hold 26% and 25% respectively. The Company has booked its proportionate share of partnership losses which is disclosed in the Profit and Loss Account.

4 Pursuant to Labour Commissioners Order under section 25 O (1) of the Industrial Disputes Act, 1947, production at the Company owned facility was closed effective 24 March 2004. As per the Order of the Bombay High Court, the Company as on the date of the Balance Sheet has paid an amount of Rs. 58,317 (Previous year: Rs. 58,317) equivalent to eligible compensation under section 25 O (1) of the Industrial Disputes Act, 1947. Further, based on the appeal filed by the worker union, the Industrial Tribunal has reversed the Order of the Labour Commissioner. The Company has preferred an appeal against the Order of the Industrial Tribunal. As per interim direction of the Bombay High Court, the Company has paid Rs. 14,703 (Previous year: Rs. 12,799) as compensation equivalent to 70% of the last drawn amount for the year (Previous year: 50% of the last drawn amount for the period from 1 April 2008 to 19 November 2008 and 70% of the last drawn amount for the period 20 November 2008 to 31 March 2009). The Company has made the above payments as compensation under the Industrial Disputes Act, 1947. The case is currently pending in the High Court.

5 Voluntary Retirement Scheme (VRS) expenditure includes payment made towards VRS expenditure of Manna Foods Private Limited, Subsidiary of Britannia Industries Limited, amouting to Rs. 49,381 as per arbitration award dated 25 January 2010.

6 Provisions for deferred tax for the current year is after provision in respect of earlier years of Rs. Nil (Previous year: Rs. 11,246).

7 Salaries, wages and bonus and contribution to provident and other funds are net of recoveries of Rs. 41,671 and Rs. 3,622 respectively for seconded staff costs (Previous year: Rs. 27,953 and Rs. 2,789 respectively).

8 (i) In accordance with AS 13 - "Accounting for Investments", notified u/s 211(3C) of the Companies Act, 1956, the Company has, based on an approved business plan, retained provision of Rs. 325,000 (Previous year: Rs. 325,000) for diminution, other than temporary, on long term investment made in equity shares of Britannia Dairy Private Limited.

(ii) During current year, an amount of Rs. 390,000 has been reversed from Provision for doubtful advances as a result of conversion of loan given to Daily Bread Gourmet Foods (India) Private Limited into equivalent investment in equity shares. Further, an amount of Rs. 390,000 has been provided for diminution in value of investments in relation to these equity shares.

(iii) The Company has decided to discontinue the business operations of Britannia Lanka Private Limited, Sri Lanka (Subsidiary of the Company). Pursuant to this, an amount of Rs. 46,475 and Rs. 11,243 has been provided for diminution in value of investments and for doubtful advances respectively. Further, an amount of Rs. 142,282 has been provided in relation to Corporate guarantee and other claims.

9 Directors remuneration of Rs. 58,130 (Previous year: Rs. 60,145 ) includes:

- Fees and estimated cost of benefits Rs. 32,369 (Previous year: Rs. 29,869)

- Contribution to Provident Fund, Pension Fund Rs. 2,700 (Previous year: Rs. 2,700)

- Perquisites or benefits in cash or in kind Rs. 62 (Previous year: Rs. 76)

- Commission to Non-wholetime Directors Rs. 13,000 (Previous year: Rs. 17,500), net of reversal of last years liability of Rs. Nil (Previous year: Rs. Nil)

10 Based on guiding principles in the AS 17 - "Segment Reporting," the primary business segment of the Company is foods, comprising bakery and dairy products. As the Company operates in a single primary business segment, disclosure requirements are not applicable. The Company primarily caters to the domestic market and export sales are not significant and accordingly there is no reportable secondary segment.

11 Related party disclosures under Accounting Standard 18: Relationships

1. Ultimate Holding Company

The Bombay Burmah Trading Corporation Limited

Holding Company

ABI Holdings Limited (ABIH), UK (till 14 April 2009). Associated Biscuits International Limited (ABIL), UK

2. Subsidiary Companies

Strategic Food International Co. LLC, Dubai

Boribunder Finance and Investments Private Limited

International Bakery Products Limited

J B Mangharam Foods Private Limited

Sunrise Biscuit Company Private Limited

Manna Foods Private Limited

Ganges Vally Foods Private Limited

Al Sallan Food Industries Company SAOC, Oman

Flora Investments Company Private Limited

Gilt Edge Finance and Investments Private Limited

Britannia and Associates (Mauritius) Private Limited, Mauritius

Britannia and Associates (Dubai) Private Company Limited, Dubai

Strategic Brands Holding Company Limited, Dubai

Britannia Lanka Private Limited, Sri Lanka

Daily Bread Gourmet Foods (India) Private Limited

Britannia Dairy Private Limited #

Britannia New Zealand Holdings Private Limited, Mauritius #

3. Fellow Subsidiary Companies

Valletort Enterprises Pte Limited, Singapore Spargo Enterprises Pte Limited, Singapore Nacupa Enterprises Pte Limited, Singapore Dowbiggin Enterprises Pte Limited, Singapore Bannatyne Enterprises Pte Limited, Singapore

4 . Associates

Britannia Sports (partnership firm) Klassik Foods Private Limited Nalanda Biscuits Company Limited

5. Key Management Personnel (KMP) Managing Director

Ms. Vinita Bali

6. Relatives of Key Management Personnel None

# Britannia Dairy Private Limited (Formerly known as Britannia New Zealand Foods Private Limited) and Britannia New Zealand Holdings Private Limited have been considered as subsidiaries pursuant to a change in control during the year.

(b) Post Retirement Benefit- Denned Benefit Plans

The Company makes annual contributions to the Britannia Industries Limited Covenanted Staff Gratuity Fund and Britannia Industries Limited Non Covenanted Staff Gratuity Fund, funded defined benefit plans for qualifying employees.

(i) The Scheme in relation to Britannia Industries Limited Non Covenanted Staff Gratuity Fund provides for lumpsum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months subject to the maximum amount payable as per the Payment of Gratuity Act, 1972.

(ii) The Scheme in relation to Britannia Industries Limited Covenanted Staff Gratuity Fund provides for lumpsum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months subject to the higher of maximum amount payable as per the Payment of Gratuity Act, 1972 and twenty months salary.

Vesting (for both the funds mentioned above) occurs only upon completion of five years of service, except in case of death or permanent disability. The present value of the defined benefit obligation and the related current service cost are measured using the projected unit credit method with actuarial valuation being carried out at Balance Sheet date.

The Payment of Gratuity Act (Amendment) Bill, 2010 has proposed to increase the ceiling limit from Rs. 3.5 Lakhs to Rs. 10 Lakhs. This Bill has been passed by both the houses of parliament in May 2010. The effect of this change has been considered in the actuarial valuation carried out at Balance Sheet date as this event is an adjusting event in accordance with AS 4 - "Contingenices and Events Occurring After the Balance Sheet Date".

12 In April 2007, the Commissioner of Income Tax (CIT), Kolkata issued a notice to the Companys Covenanted Staff Pension Fund (BILCSPF) asking it to show cause why recognition granted to the Fund should not be withdrawn for refunding in the year 2004, the excess contribution of Rs. 121,199 (Previous year: Rs. 121,199) received by it in earlier years. The Single Judge of the Calcutta High Court, on a writ petition, granted a stay restraining the CIT from proceeding with the show cause notice but with a direction to the Company to deposit Rs. 121,199 (Previous year: Rs. 121,199) (included in Deposits under Schedule I) with a nationalised bank in the name of the Fund. On appeal, the Division Bench of the Calcutta High Court disposed off the writ petition pending before the Single Judge. The Fund filed a Special Leave Petition before the Supreme Court against the order of the Division Bench. The Supreme Court at its hearing on 12 May 2008 has set aside the order of the Division Bench of the Calcutta High Court. As a condition of the stay order granted, the Company has, under protest, made the deposit as per the direction of Honble Calcutta High Court.

Pursuant to the directions of the Madras High Court, the CIT, Kolkata passed orders rejecting the deeds of variation submitted in May 2005 by the Pension Fund on technical grounds. The Company has preferred appeals before the Central Board of Direct Taxes (CBDT), New Delhi challenging the orders. The appeals came up for hearing in August 2009 and the matter is in progress. A suit has been filed in the City Civil Court, Bangalore, where the Honble Judge has passed interim orders on 1 January 2009 and 10 February 2009 directing the Fund to pay pension to the members in accordance with the Funds calculations. The Fund has since complied with the said order. On 8 April 2010, the Honble Judge passed another interim order requiring the Funds to pay pension as per Rule 11(a) of the Pension Fund Rules, i.e. on "Defined Benefit Basis", and gave the Funds two months time for complying with the order. An appeal was filed against this order in the Karnataka High Court, which was heard on 22 April 2010. The Honble Court has modified the Trial Courts order so as to extend the time limit for compliance from two months to three months and has fixed 15 June 2010 for further hearing.

The Company believes, based on current knowledge and after consultation with eminent legal counsel that the resolution of the matter will not have material adverse effect on the financial statements of the Company.

13 There are no material dues owed by the Company to Micro, Small and Medium Enterprises, which are outstanding for more than 45 days as at 31 March 2010. This information as required under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company and hasbeen relied upon by the auditors.

14 Derivative contracts

(i) Foreign currency forward contracts

The Company has entered into foreign exchange forward contracts for hedging the foreign exchange fluctuation risks on foreign currency payables/loans, which has been accounted for in line with AS 11 - "The effects of changes in foreign exchange rates". Accordingly, the amount receivable of Rs. 215,149 (Previous year: Rs. 229,651) and loan payable of Rs. 200,772 (Previous year: 200,772), relating to foreign exchange forward contracts for hedging have been netted off and disclosed under Loans and advances (Refer Schedule J).

The Company has designated certain foreign exchange forward contracts (relating to foreign currency receivabes) outstanding as on 31 March 2010 as Hedge of highly probable forecasted transaction. On that date, the Company had forward contracts to sell USD 974 (in thousands), (Previous year: USD 2,092 (in thousands)). As at the year end the unrealised exchange loss of Rs. Nil (Previous year: 1,102) arrived on a mark to market basis has been accounted for.

(ii) Other derivative contracts .

For all other derivative contracts, a mark to market valuation has been obtained and any loss thereon has been accounted for in line with the ICAI notification issued in March 2008 in relation to such transactions. Any gain on such valuation is not accounted for based on the principle of prudence.

As at the year end, the unrealised loss of Rs. 1,655 (Previous year: Rs. Nil) arrived on a mark to market basis for such contracts has been duly accounted for.

15 The Committee of the Board of Directors (the Board), at its meeting held on 22 March 2010, pursuant to the scheme of arrangement (the Scheme) sanctioned by the Honourable High Court of Calcutta on 11 February 2010 under Section 391(2) of the Companies Act, 1956 (the Act), allotted 8.25% secured fully paid-up redeemable non-convertible bonus debentures (the bonus debentures) from the general reserve, in the ratio of one debenture of the face value of Rs. 170 for every equity share held by the shareholders of the Company as on 9 March 2010. The date of allotment of bonus debentures is 22 March 2010. The Scheme was earlier approved by the Board at its meeting held on 27 May 2009 and by the shareholders at the general meetings held on 31 August 2009. The bonus debentures have been listed on the Bombay Stock Exchange Limited, National Stock Exchange of India Limited and the Calcutta Stock Exchange Limited. The Issue of bonus debentures has been treated as deemed dividend under the provisions of the Income Tax Act, 1961. Accordingly the Company has remitted Rs. 690,222 (in thousands) as dividend distribution tax and has utilised general reserve for the payment of the same, pursuant to the Scheme. The scheme involves issuance of bonus debentures out of General Reserve and does not entail any real borrowing, accordingly the requirement of creating a Debenture Redemption Reserve pursuant to Section 117C of the Act or Clause 10.3 of SEBI (Disclosure and Investor Protection) Guidelines, 2000 issued under the Securities and Exchange Board of India Act, 1992 is not applicable. This has also been noted in the scheme of arrangement sanctioned by the Honourable Calcutta High Court.

16 The Company had offered a VRS scheme to workers at its manufacturing unit at M.T.H. Road, Padi, Chennai during the month of April 2008. The same was accepted by all workers. Consequently, manufacturing operations have been suspended effective 7 April 2008.

17 During the financial year 2008-09, the Company introduced Britannia Industries Limited Employee Stock Option Scheme (Scheme). As per the Scheme, the Remuneration/Compensation Committee grants options to the employees and Executive Directors of the Company. The vesting period of the option is one year from the date of grant. Options granted under the Scheme can be exercised within a period of three years from the date of vesting. Exercise of an option is subject to continued employment.

Under the Scheme, the Company granted 15,000 options on 29 October 2008 at an exercise prices of Rs. 1,125.30 and 15,000 options on 27 May 2009 at an exercise of Rs. 1,698.15 to the Managing Director of the Company. Each Option represents one equity share of Rs. 10 each. The said price was determined in accordance with the pricing formula approved by the shareholders i.e. the latest available closing price, prior to the date of the meeting of the Board of Directors or Remuneration/Compensation Committee in which options were granted, on the stock exchange having higher trading volume.

Exercise prices as stated above are adjusted downwards by Rs. 170 per share, being the face value of bonus debentures issued pursuant to the Scheme of Arrangement approved by the Honourable High Court of Calcutta on 11 February 2010.

Method used for accounting for share based payment plan:

The Company has used intrinsic value method to account for the compensation cost of stock options to employees and Executive Directors of the Company. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price (without considering the impact of Rs. 170 on account of issue of bonus debentures) of the option. Since the options under the Scheme were granted at the market price, the intrinsic value of the option is Nil. Consequently the accounting value of the option (compensation cost) is also Nil.

18 During the year, there were no significant purchase of machinery spares that are of irregular usage.

19 Figures in rupees have been rounded off to the nearest thousand, unless otherwise stated.

20 Previous years figures have been regrouped/rearranged, wherever necessary.

 
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