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Notes to Accounts of DFM Foods Ltd.

Mar 31, 2016

Note:

a) Defined contribution plans

The Company makes contribution towards employees'' provident fund and employees'' state insurance plan scheme. Under the schemes, the Company is required to contribute a specified percentage of payroll cost, as specified in the rules of the schemes, to these defined contribution schemes. The Company recognized Rs. 108 Lakhs (31st March, 2015 Rs. 92 Lakhs) as provident fund and Rs. 15 Lakhs (31st March, 2015 Rs. 17 Lakhs) as employees'' state insurance plan during the year as expense towards contribution to these plans.

b) Defined benefit plans Gratuity scheme

The amount of gratuity has been computed based on respective employee''s salary and the years of employment with the Company. Gratuity has been accrued based on actuarial valuation as at the balance sheet date, carried out by an independent actuary. The amount is funded through trusts'' group gratuity schemes managed by Life Insurance Corporation of India. The Company is contributing to trusts towards the payment of premium of such group gratuity schemes.

Compensated absences

Compensated absences represent earned leaves. Long term compensated absences have been provided on accrual basis based on year end actuarial valuation and short term compensated absences on actual basis.

(i) During the year, the Excise Department has raised a demand against the Company amounting to Rs. 4,904 Lakhs (Previous Year Rs. 2,214 Lakhs) on account of excise duty payable on the products of the Company. The total demand outstanding as on 31st March, 2016 is Rs. 1 1,273 Lakhs (Previous year Rs. 6,369 Lakhs). As per reclassification of the products filed by the Company, Nil excise duty is leviable on its products from 1st December, 2007. The Excise Department had contested the reclassification filed by the Company. The Commissioner of Excise Duty (Appeals) had upheld the reclassification in favour of the Company. Further, the Excise Department has filed an appeal with Custom, Excise and Service Tax Appellate Tribunal against the order of Commissioner of Excise Duty (Appeals). Based on the favourable judgment by Commissioner (Appeals) and on legal advice with reference to Supreme Court''s judgement on the similar matter, the Company has not created any provision in the books of accounts and has treated these amounts as contingent liability. Accordingly, CENVAT credit for the year amounting to Rs. 864 Lakhs (Previous year Rs. 920 Lakhs) has also not been claimed as a credit by the Company and has been charged as a part of purchase cost/ expense for the year. Had the Company claimed the unavailed CENVAT credit, the balance of cenvat credit would be of Rs. 4,192 Lakhs (Previous year Rs. 3,328 Lakhs) as on 31st March, 2016 and thus the net liability of the Company after availing CENVAT credit would be Rs. 7,081 Lakhs (Previous Year Rs. 3,041 Lakhs).

1. Exceptional Item

During the previous year, the commercial tax department had raised a demand of Rs. 358 lakhs (including interest of Rs. 42 lakhs) on account of difference in VAT rates against the classification of products. The demand pertains to the period September, 2012 till December, 2014. The Company had estimated the tax liability till 31st March, 2015 of Rs. 406 lakhs and charged it as an exceptional item in statement of profit and loss during the previous year.

2. Leases

The Company has operating lease arrangements for office premises and depots. The lease arrangements are cancellable in nature by giving notice in writing. The rent charged to Statement of Profit and Loss relating to operating leases aggregating to Rs. 379 Lakhs (Previous year Rs. 356 Lakhs).

3. Segment reporting

As the Company''s business activity falls within a single business segment, namely Snacks Food, the disclosure requirements in terms of Accounting Standard (AS) 17 on segment reporting are not applicable.

4. Long-term contracts

The Company does not have any long term contracts including derivative contracts for which there is any material foreseeable losses as at 31st March, 2016.

5. Employee share based payments

The Compensation Committee of Board of Directors of the Company has granted options to the employees pursuant to DFM Foods Employee Stock Option Plan-2014 (''the plan'') on 31st July, 2014. These options were granted at Rs. 291 per share, being the latest available closing market price prior to the date of grant of options in accordance with SEBI guidelines. The quoted price of share on grant date and the exercise price of option were Rs. 335.30 and Rs. 291 respectively. The Company is following intrinsic value of method to amortise the compensation expense and accordingly recognised an expense of Rs. 9 lakhs for the year ended 31st March, 2016.

6. Previous year''s figures

Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.


Mar 31, 2014

NOTE 1 : CORPORATE INFORMATION

DFM FOODS LIMITED (''the Company'') is a public limited company incorporated under the provisions of the Companies Act, 1956 on March 17, 1993. The shares of the Company are listed on Bombay Stock Exchange (BSE). The Company is engaged in manufacturing and sale of Snack Foods. The Company has manufacturing facilities in India and sells its products under the brand name "CRAX" & "NATKHAT".

As at As at March 31, 2014 March 31, 2013

NOTE 2 : CONTIGENT LIABLITIES

In respect of claims not acknowledged as debts

(i) Sales Tax 2 2

(ii) Excise Duty ** 41,55 17,40

Total 41,57 17,42

** During the year, the Excise Department has raised a demand against the Company amounting to Rs. 2414 lacs (Previous Year Rs. 400.32 lacs) on account of excise duty payable on the products of the Company. The total demand outstanding as on 31.03.2014 is Rs. 4155 lacs (Previous year Rs. 1740 lacs). As per reclassification of the products filed by the Company, nil excise duty is leviable on its products from 01.12.2007. The Excise Department had contested the reclassification filed by the Company. The Commissioner of Excise Duty (Appeals) had upheld the reclassification in favour of the Company. The Excise Department has raised the abovementioned demand and filed an appeal with Custom, Excise and Service Tax Appellate Tribunal. Based on the favourable judgment by Commissioner (Appeals) and on legally advice, the Company has not created any provision in its accounts and has treated these amounts as contingent liability. Accordingly, CENVAT credit for the year amounting to Rs. 842.04 lacs (Previous year Rs. 615.72 lacs) has also not been claimed as a credit by the Company, but has been charged as part of purchase cost/expense for the year. The balance unavailed CENVAT credit as on 31.03.2014 is Rs. 2407.52 lacs (Previous year Rs. 1565.48 lacs). The net liability of the Company after availing CENVAT credit would be Rs.1747.48 lacs (Previous Year Rs. 174.52 lacs).

NOTE 3 : RELATED PARTY DISCLOSURES_

1. Names of related parties and nature of relationship:

a) Enterprise where control exists : Enterprise that controls the Company

The Delhi Flour Mills Co. Ltd.

b) Other related parties where transactions have taken place during the year: (i) Key managerial personnel

(a) Shri R. P. Jain (Chairman - ceased with effect from November 8, 2013)

(b) Shri Mohit Jain (Managing Director)

(c) Shri Rohan Jain (Whole time Director)

NOTE 4: SEGMENT REPORTING_

As the Company''s business activity falls within a single business segment, namely Snacks Food, the disclosure requirements in terms of Accounting Standard (AS) 17 on segment reporting are not applicable.

NOTE 5 : TRANSFER PRICING

The Company is in the process of establishing a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under Sections 92-92F of the Income Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company is in the process of updating the documentation for the domestic transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by the due date as required under law. The management is of the opinion that its domestic transactions with associated enterprises are at arm''s length and the transfer pricing legislation under Section 92-92F of the Income Tax Act, 1961 will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision of taxation, if any.

NOTE 6 : PREVIOUS YEAR''S FIGURES

Previous year''s figures have been regrouped/ reclassified wherever necessary to correspond with the current year''s classification/ disclosure.


Mar 31, 2013

NOTE 1 : CORPORATE INFORMATION

DFM FOODS LIMITED is engaged in the manufacture and sale of Snack Foods. The Company has manufacturing facilities in India and sells its products under the brand name "CRAX" & "NATKHAT". The Company is a public limited company incorporated under the provisions of the Companies Act, 1956. It is listed on the Bombay Stock Exchange (BSE).

Year ended Year ended March 31, 2013 March 31, 2012

NOTE 2 : CONTINGENT LIABILITIES

Contingent liabilities not provided for in respect of :

a) Counter Guarantees given against Bank Guarantees 21 21

b) In respect of claims not acknowledged as debts

(i) Sales Tax 2 2

(ii)Excise Duty ** 17,40 13,40

Total 17,63 13,63

A) PROVIDENT FUND: Provident Fund for all the employees is deposited with "The Delhi Flour Mills Co. Ltd. Employees Provident Fund Trust" The Provident Fund Trust is managed in line with the Employees'' Provident Funds & Miscellaneous Provisions Act, 1952. The plan guarantees interest at the rate notified by the Provident Fund Authorities. The contribution by the employer and the employee together with the interest accumulated thereon are payable by the Trust to employees at the time of their separation from the Company or retirement, whichever is earlier. The benefits vest immediately on rendering of the services by the employee.

B) GRATUITY: The Company operates a gratuity plan through the " DFM Foods Ltd. Gratuity Trust ". Every employee is entitled to a benefit equivalent to fifteen days of the salary last drawn for each completed year of service in line with the Payment of Gratuity Act, 1972. The same is payable by the trust at the time of separation from the Company or retirement, whichever is earlier. The benefits vest after five years of continuous service.

C) LEAVE ENCASHMENT : The present value of obligation of leave encashment is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation for leave encashment. Short term liability is ascertained in respect of the following year and based on respective emoluments and encashment.

NOTE 3 : PREVIOUS YEAR FIGURES

The previous year figures have been regrouped/ reclassified, wherever necessary to conform to this year''s


Mar 31, 2012

Corporate Information

DFM FOODS LIMITED is engaged in the manufacture and sale of Snack Foods. The Company has manufacturing facilities in India and sells its products under the brand name"CRAX"&"NATKHAT".The Company is a public limited company incorporated under the provisions of the Companies Act, 1956. It is listed on the Bombay Stock Exchange (BSE).

Terms / Rights attached to Equity Shares

The Company has only one class of equity shares having a par value of Rs. 10/- per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation, equity share holders are eligible to receive the remaining assets in proportion to their shareholding.

* Out of above deposits, Rs. 80.34 lacs are guaranteed by a Director (March 31, 2011 Rs. 41.80 lacs) ** Vehicle Loans are secured by hypothecation of vehicles.

There are no amounts due for payment to the Investor Education and Protection Fund as at the year end * In pursuance with Accounting Standard 26 on Intangible Assets the Company is of the view that the Trade Marks held by the Company are not less than the value at which they are stated in the Balance Sheet.The Company on the basis of working and the calculations of future economic benefits, is of the opinion that the value of these trade marks should not be amortised, as the value has appreciated since their purchase by the Company. Therefore, the Company has not charged any depreciation on these assets.

NOTE 1

CONTINGENT LIABILITIES

Claims against the Company not acknowledged as debts

Year ended

March 31,2012 March 31,2011

Sales Tax (Entry Tax) 2 2

Excise Duty ** 13,40 8,76

Total 13,42 8,78

** During the year, the Excise Department has raised a demand against the Company amounting to Rs. 463.53 lacs (Previous Year Rs. 347.59 lacs), on account of excise duty payable on the products of the Company. The total demand outstanding as on 31.03.2012 is Rs. 1340 lacs (Previous year Rs. 876.46 lacs). As per reclassification of the products filed by the Company, nil excise duty is leviable on its products from 01.12.2007. The Excise Department had contested the reclassification filed by the Company. Commissioner of Excise Duty (Appeals) had upheld the reclassification in favour of the Company. The Excise Department has raised the abovementioned demand and filed an appeal with Custom, Excise and Service Tax Appellate Tribunal. The Company has not created any provision in its accounts and has treated these amounts as contingent liability. Accordingly, CENVAT credit for the year amounting to Rs. 321.50 lacs (Previous year Rs. 278.55 lacs) has also not been claimed as a credit by the Company, but has been charged as part of purchase cost for the year. The balance unavailed CENVAT credit as on 31.03.2012 is Rs. 843.49 lacs (Previous year Rs. 521.99 lacs). The net liability of the Company after availing CENVAT credit would be Rs. 496.51 lacs (Previous Year Rs. 354.47 lacs)

As per Accounting Standard 15 "Employee Benefits", the disclosures as defined in the Accounting Standard are given below:

A) PROVIDENT FUND: Provident Fund for all the employees is deposited with "The Delhi Flour Mills Co. Ltd. Employees Provident Fund Trust". The Provident Fund Trust is managed in line with the Employees'Provident Funds & Miscellaneous Provisions Act, 1952. The plan guarantees interest at the rate notified by the Provident Fund Authorities. The contribution by the employer and the employee together with the interest accumulated thereon are payable by the Trust to employees at the time of their separation from the Company or retirement, whichever is earlier. The benefits vest immediately on rendering of the services by the employee.

B) GRATUITY: The Company operates a gratuity plan through the" DFM Foods Ltd. Gratuity Trust". Every employee is entitled to a benefit equivalent to fifteen days of the salary last drawn for each completed year of service in line with the Payment of Gratuity Act, 1972.The same is payable by the trust at the time of separation from the Company or retirement, whichever is earlier. The benefits vest after five years of continuous service.

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market.The above information is certified by the actuary.

* Amount is below the rounding off norm adopted by the Company

Note: Previous year's figures have been given in brackets. *Amount is below the rounding off norm adopted by the Company.

PREVIOUS YEAR FIGURES

The Financial Statements for the year ended March 31, 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 March 31, 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, 2011

1. Contingent Liabilities

Current Year Previous Year (Rs.OO0's) (Rs. OO0's)

i) Claims against the Company not acknowledged as debts

a) Sales Tax (Entry Tax) 2,41 2,41

b) Excise Duty 8,76,46 5,28,87

ii) Counter Guarantees given for Bank Guarantees issued by bank 17,45 17,45

iii) Estimated amount of contracts remaining to be executed on capital account (net of advances) are 28,47,15 62,24

iv) Liability for export obligation under Export Promotion Credit Guarantee 7,55,02 7,55,02

2. During the year Company has invested Rs. 50.00 lacs (Previous Year Nil) in HSBC Mutual fund under Regular income plan. Income from such investment has been accounted for in the Profit & Loss account.The difference between the purchase price and the market price as on 31.03.2011 is Rs. 2.66 lacs (Previous Year Nil) has been debited to the Profit & Loss Account.

3. During the year Company has issued 30,000 equity shares of Rs. 10/- each at a premium of Rs. 86.20 per share to a non promoter on a preferential basis.

4. In pursuance with Accounting Standard 26 on Intangible Assets, the company is of the view that the Trade Marks held by the Company are not less than the value at which they are stated in the Balance Sheet. The Company on the basis of working and the calculations of future economic benefits, is of the opinion that the value of these trade marks should not be amortised, as the value has appreciated since their purchase by the Company. Therefore, Company has not charged any depreciation on these assets.

5. During the year, the Excise Department has raised demand against the company amounting to Rs. 347.59 lacs (Previous Year Rs.118.61 lacs), on account of excise duty payable on the products of the company. The total demand outstanding as on 31.03.2011 is Rs. 876.46 lacs (Previous Year Rs. 528.87 lacs). As per reclassification of the products filed by the company, nil excise duty is leviable on its products from 01.12.2007. The excise department had contested the reclassification filed by the company. Commissioner of Excise Duty (Appeals) had upheld the reclassification in favour of the company. The excise department has raised the above mentioned demand and filed an appeal with Custom, Excise and Service Tax Appellate Tribunal. The company has not created any provision in its accounts and has treated these amounts as contingent liability. Accordingly CENVAT credit for the period/year amounting to Rs. 278.55 lacs (Previous Year Rs. 98.72 lacs) has also not been claimed as a credit by the Company but has been charged as part of purchase cost for the year. The balance unavailed CENVAT credit as on 31.03.2011 is Rs. 521.99 lacs (Previous year Rs. 243.43 lacs).

6. RELATED PARTY DISCLOSURE

(1) Relationships

(a) Where Control Exists : The Delhi Flour Mills Co. Ltd.

(b) Key Management Personnel : (i) Shri R.P.Jain, Chairman

(ii) Shri Mohit Jain (Whole-time Director) (iii) Shri Rohan Jain (Executive Director)

(c) Fully Owned Subsidiary Company : Achilles Retail Ventures Pvt. Ltd. (For part of the year)

7. On the basis of confirmation obtained from suppliers who have registered themselves under the Micro Small Medium Enterprises Development Act, 2006 (MSMED Act, 2006) and based on the information available with the Company, the balance due to Micro & Small Enterprises as defined under the MSMED Act, 2006 is Rs. 204.05 lacs (Previous Year Rs. 141.07 lacs). Further, no interest during the year has been paid or is payable under the terms of the MSMED Act, 2006.

8. SECURED LOANS

a) Term Loans and Working Capital facility granted by Punjab & Sind Bank are secured by an equitable mortgage of Company's property at C-40, Meerut Road Industrial Area, Ghaziabad and hypothecation of all the Immovable / Movable fixed assets, present and future, of the Company. The above are also guaranteed by the Managing Director.

b) Term Loan of HDFC bank is secured by first and exclusive charge on the Land and building acquired by the Company. This is also guaranteed by the Managing Director.

c) No guarantee commission or any other benefits have been paid to the Managing Director for personal guarantee given by him.

9. The Company has hedged its foreign exchange liability payable with respect to the acquisition of the Capital goods.The exchange rate variation as on 31.03.2011 has been adjusted to the Profit & Loss Account. Exchange loss for the year worked out to Rs. 39.83 lacs (Previous year Rs. 25.55 lacs) which has been debited to Profit & Loss Account.

10. The disclosures required under Accounting Standard 15 "Employee Benefits" notified in the Companies (Accounting Standards) Rules, 2006 are given below:

Provident Fund

The Company as per the provisions of Employee's Provident Fund and Miscellaneous Provisions Act, 1952 as an employer makes good the deficiency, if any, in its Provident Fund Trust on a year to year basis.

Gratuity

The employees'gratuity fund scheme is managed by a trust through Metlife Company Limited. The valuation is undertaken by the insurance company and the shortfall of liability is paid as premium for the year and is written off as an expense in the profit and loss account for the year.

Leave encashment

The present value of obligation of leave encashment is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation for leave encashment Short term liability is ascertained in respect of the following year and based on respective emoluments and encashment.


Mar 31, 2010

1. Contingent Liabilities Current Year Previous Year

Contingent liabilities not provided for in respect of:- (Rs. 000s) (Rs. 000s) i) Claims against the Company not acknowledged as debts

a) Sales Tax (Entry Tax) 2,41 2,41

b) Excise Duty 5,28,87 4,10,25

c) Income Tax 70 --

ii) Counter Guarantees given for Bank Guarantees issued by bank 17,45 --

iii) Estimated amount of contracts remaining to be executed on capital account (net of advances) are 62,24 4,33,69

2. In pursuance with Accounting Standard 26 on Intangible Assets, the company is of the view that the Trade Marks held by the Company are not less than the value at which they are stated in the Balance Sheet. The Company on the basis of working and the calculations of future economic benefits, is of the opinion that the value of these trade marks should not be amortised, as the value has appreciated since their purchase by the Company. Therefore Company has not charged any depreciation on these assets.

3. During the year, the Excise Department has raised demand against the company amounting to Rs. 118.61 lacs (Pr. Year Rs. 286.33 lacs), on account of excise duty payable on the products of the company. The total demand outstanding as on 31.03.2010 is Rs. 528.87 Lacs (Pr. year Rs. 410.25 Lacs). As per reclassification of the products filed by the company, nil excise duty is leviable on its products from 01.12.2007. The excise department had contested the reclassification filed by the company. Commissioner of Excise Duty (Appeals) had upheld the reclassification in favour of the company. The excise department has raised the abovementioned demand and filed an appeal with Custom, Excise and Service Tax Appellate Tribunal. The company has not created any provision in its accounts and has treated these amounts as contingent liability. Accordingly CENVAT credit for the period/year amounting to Rs. 98.72 lacs (Pr. year Rs. 109.82 lacs) has also not been claimed as a credit by the Company but have been charged as part of purchase cost for the year. The balance unavailed CENVAT credit as on 31.03.2010 is Rs. 243.43 lacs (Pr. year Rs. 144.71 lacs).

4. RELATED PARTY DISCLOSURE

(1) Relationships

(a) Where Control Exists : The Delhi Flour Mills Co. Ltd.

(b) Key Management Personnel : (i) Shri R.P. Jain, Chairman

(ii) Shri Mohit Jain (Whole-time Director) (iii) Shri Rohan Jain (Executive Director)

(c) Fully Owned Subsidiary Company : Achilles Retail Ventures Pvt. Ltd. (For part of the year)

5. On the basis of confirmation obtained from suppliers who have registered themselves under the Micro Small Medium Enterprises Deelopment Act, 2006 (MSMED Act, 2006) and based on the information available with the Company, the balance due to Micro & Small Enterprises as defined under the MSMED Act, 2006 is Rs. 1,41,06,816/- (Previous Year Rs. 71,65,135). Further, no interest during the year has been paid or is payable under the terms of the MSMED Act, 2006.

6. SECURED LOANS

a) During the year , a term loan was sanctioned by HDFC Bank for purchase of Land & Building at Roshanara

Road , Delhi and it is secured by first and exclusive charge on the land and building acquired by the company. The above was also guaranteed by the Managing Director of the company.

b) Term loan of Punjab & Sind Bank, are secured by first and exclusive charge on the fixed assets acquired through the said term loan and it is also guaranteed by Managing Director of the company.

c) No guarantee commission or any other benefits have been paid to the Managing Director for personal guar- antee given by him.

d) Out of the total amount of term loan sanctioned by Punjab & Sind Bank, the Bank has issued Letter of Comfort amounting to Rs. 5.77 Crores ( Previous year - Nil) to Standard Chartered Bank-Singapore for the foreign exchange paid/payable by it in respect of Letter of Credits opened for purchase of Plant & Machinery under buyer credit scheme.

7. During the year Company sold 10,000 equity shares of Rs.10/- each of Achilles Retail Ventures Pvt. Ltd. at par. These were purchased by the Company on 31st August, 2009. Achilles Retail Ventures Pvt. Ltd. was a sub- sidiary company for a part of year. There was no profit / loss on purchase / sale of this investment.

8. The Company has hedged its foreign exchange liability payable with respect to the acquisition of the Capital goods. The exchange rate variation as on 31.03.2010 (Previous year Rs. Nil) has been adjusted to the Profit & Loss Account . Lxchange loss for the year worked out to Rs. 25.55 lacs ( Previous year Nil) which has been debited to Profit & Loss Account.

9. Previous year figures have been regrouped & reclassified, wherever necessary.

 
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