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Notes to Accounts of Heritage Foods Ltd.

Mar 31, 2022

Nature and purpose of reserves Securities premium

Rights, preferences and restrictions attached to equity shares

The Company has only one class of issued, subscribed and paid up equity shares having a par value of '' 5 each per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the share holders.

The amount received in excess of face value of the equity shares is recognised in the securities premium. This reserve will be utilised in accordance with the provisions of Section 52 of the Companies Act, 2013 ("the Actâ).

Capital reserve

The excess of net assets taken, over the consideration paid, as part of the business combinations have been recorded under the capital reserve during the earlier years.

Capital redemption reserve

Capital redemption reserve was created on buy back of equity shares in the earlier years. The Company uses capital redemption reserve in accordance with the provisions of the Act.

Warrants money appropriated

Warrants money appropriated represents forfeiture of share application money made during the earlier years.

General reserve

The reserve has arisen on transfer of a portion of the net profit pursuant to the provisions of the erstwhile Companies Act, 1956. Mandatory transfer to general reserve is not required under the Act.

Changes in fair value of equity instruments

This represents the cumulative gains and losses arising on the fair valuation of equity instruments measured at FVTOCI, under an irrevocable option, net of amounts reclassified to retained earnings when such assets are disposed off.

Retained earnings

Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distribution to the shareholders.

(a) Gratuity

The Company provides its employees with benefits under a defined benefit plan, referred to as the "Gratuity Planâ. The Gratuity Plan entitles an employee, who has rendered at least five years of continuous service, to receive 15 days salary for each year of completed service (service of six months and above is rounded off as one year) at the time of retirement/exit in accordance with the Payment of Gratuity Act, 1972.

1. Company has transferred '' 6.87 to Asian Healthcare Foundation (AHF) being the implementing partner of the Company as an ongoing/multi-year CSR project, out of which an unspent amount of '' 4.52 is available with AHF as on 31 March 2022 and the same will be spent in accordance with the CSR Amendment Rules, 2021.

2. As the selected projects for CSR spent are ongoing/muli-year in nature, the unspent amount of '' 7.06 available with the Company will be spent in accordance with the CSR Amendment Rules, 2021. In accordance with the provisions of Section 135(6) of the Act, the Company has transferred the unspent amount to a separate bank account and the unspent amount has been provided in the accompanying financial statements.

36. Disclosure pursuant to requirements of Rule 11(e) (i) & (ii) of the Companies (Audit and Auditors) Rules

i) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediariesâ) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries).

ii) The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company ("Ultimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

37. The Company has not extended any loans or advances in the nature of loans to its promoters, directors, key managerial personnel and its related parties, as defined under the Act, during the years ended 31 March 2022 and 31 March 2021.

There are no transfers between levels during the current and previous year ended 31 March 2022 and 31 March 2021 respectively. The Company''s policy is to recognise transfers into and transfers out of fair value hierarchy levels at the end of the reporting period.

(ii) Valuation technique and inputs used for level 3 instruments:

The fair value of the level 3 instruments has been estimated using the discounted cash flow model. The valuation requires management to make certain assumptions about the model inputs, including forecasting of cash flows, discount rate, credit risk and volatility. The probabilities of the various estimates within the range can be reasonably assessed and are used in the management''s estimate of the fair value for these level 3 instruments.

The significant unobservable inputs used in the fair value measurement categorised within Level 3 of the fair value hierarchy as at 31 March 2022 and 31 March 2021 are as shown below. The impact on account of change in these assumptions are not considered as significant.

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was '' 630.32 and '' 454.07 as of 31 March 2022 and 31 March 2021 respectively, representing carrying amount of all financial assets with the Company.

Financial assets that are neither past due nor impaired

None of the Company''s cash equivalents, including fixed deposits, were either past due or impaired as at 31 March 2022 and 31 March 2021.

40. Financial risk management objectives and policies

Financial Risk Management Framework

The Company''s Board of Directors has an overall responsibility for the establishment and oversight of the Company''s risk management framework. The Board of Directors has established Risk Management Committee, which is responsible for developing and monitoring the Company''s risk management policies. The Committee reports regularly to the Board of Directors on its activities.

The Company''s principal financial liabilities, comprises of borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s principal financial assets include investments in equity shares, loans, trade and other receivables, and cash and cash equivalents that the Company derives directly from its operations.

The Company is exposed primarily to Credit risk, Liquidity risk and Market risk (fluctuations in interest rates, foreign currency rates, and prices of equity instruments), which may adversely impact the fair value of its financial instruments. The Company assesses the unpredictability of the financial environment and seeks to mitigate potential adverse effects on the financial performance of the Company.

A. Credit risk

Credit risk is the risk that the counterparty shall not meet its obligations under a financial instrument or customer contract, leading to a financial loss. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of the creditworthiness as well as concentration of risks. Credit risk arises primarily from financial assets such as trade receivables, investment in equity shares, balances with banks, loans and other receivables.

Credit risk is controlled by analyzing credit limits and creditworthiness of the customers on a continuous basis to whom credits have been granted after obtaining necessary approvals. Financial instruments that are subject to concentration of credit risk principally consist of trade receivables, investments, cash and cash equivalents, bank deposits and other financial assets. None of the financial instruments of the Company result in material concentration of credit risk.

Ind AS requires expected credit losses to be measured through a loss allowance. The Company assesses at each date of Balance Sheet whether a financial asset or a group of financial assets are impaired. Expected credit losses are measured at an amount equal to 12 months expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial assets have increased significantly since the initial recognition. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward-looking information.

B. Liquidity risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations as and when they become due. The objective of liquidity risk management is to maintain sufficient liquidity and to ensure that funds are available for meeting due obligations of the Company. The Company manages liquidity risk by maintaining adequate reserves, banking facilities, continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of the financial assets and financial liabilities.

40. Financial risk management objectives and policies (continued)

C. Market risk

Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in the market rates and prices. Market risk is attributable to all market risk-sensitive financial instruments, all foreign currency receivables and

payables and all short-term and long-term borrowings. Market risk comprises three types of risk: interest rate risk, currency risk and other price risks such as equity price risk.

i. Interest risk:

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument shall fluctuate because of changes in the market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s long-term obligations with floating interest rates. The impact on account of change in interest rate on the Company''s long-term obligations is not considered as significant.

ii. Foreign currency risk:

Foreign currency risk is the risk that the fair value or future cash flows of an exposure shall fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s operating and investing activities (when revenue or expense including capital expenditure is denominated in a foreign currency). The exposure of foreign currency risk to the entity is low as it enters very limited transactions in foreign currencies and accordingly any impact on account of change in the exchange rate is not considered as significant.

In order to achieve this overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the borrowings. Breaches in meeting the financial covenants would permit the lenders to immediately call back the borrowings. There was no breach in the financial covenants of any borrowings during the year ended 31 March 2022 and 31 March 2021.

iii. Equity price risk:

The Company''s listed and non-listed equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company manages the equity price risk through diversification and by placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Company''s senior management on a regular basis. The Company''s Board of Directors reviews and approves all equity investment decisions.

At the reporting date, the exposure to unlisted equity securities at fair value was '' 2.60 (31 March 2021:'' 2.60). Sensitivity analyses of these investments have been provided in Note 38.

41. Capital risk management

For the purpose of the Company''s capital management, capital includes issued equity capital, share premium and all other reserves attributable to the equity holders. The primary objective of the Company''s capital management is to maximise the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payments to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total equity plus net debt. The Company''s policy is to keep the gearing ratio up to 35%. The Company includes within net debt, borrowings from banks less cash and cash equivalents. Borrowings from banks comprise of term loans and loans repayable on demand.

(a) The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31 March 2022, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (31 March 2021: Nil). This assessment is undertaken each financial year through examining the financial position of the related parties and the market in which such parties operates.

(b) Post-employment and other long-term benefits, disclosed above, does not include those benefits which are computed for the Company as a whole.

44. Contingent liabilities and commitments	31 March 2022	Â» at 31 March 2021
(a) Commitments
(i) Estimated amount of contracts remaining to be executed on capital account and not provided for	60.45	52.06
(b) Contingent liabilities, not provided for
In respect of income tax matters [refer (i) below]	5.21	-
In respect of sales tax / value added tax matters [refer (ii) below]	18.67	18.67
In respect of other matters [refer (iii) below]	59.73	20.65
(i) The Company had received demand order from the income tax authorities for the assessment years 2017-18 and 2018-19 in relation to the inadmissibility of expenditure claimed under Section 80G of the Income Tax Act, 1961. The management, on the basis of its internal assessment of the facts of the case, the underlying nature of transactions, is of the view that the probability of the case being settled against the Company is remote and accordingly do not foresee any adjustment to these standalone financial statements in this regard. The litigation is currently pending with the Commissioner of Income Tax (Appeals) ("CIT(A)â).
(ii) - Disputed purchase tax levied under Andhra Pradesh Value Added Tax Act, 2005 on purchase of milk @	9.51	9.51
- Disputed Input tax credit disallowed under Andhra Pradesh Value Added Tax Act, 2005 @	4.69	4.69
- Disputed Input tax credit disallowed under The Central Sales Tax, 1956 #	4.47	4.47
@ litigation pending with Hon''ble High Court of Telangana; # litigation pending with Joint Commissioner of commerical Taxes (Appeals), Bangalore.
(iii) - Disputed entry tax levied under Andhra Pradesh Tax on Entry of Goods into Local Areas Act, 2001 on interstate purchases &	3.77	-
- Disputed entry tax levied under Telangana Tax on Entry of Goods into Local Areas Act, 2001 on interstate purchases @	10.37	10.34
- Disputed amount levied under Central GST Act, 2017 on classification of flavored milk product &	35.28	-
- Disputed milk cess levied on installed capacity under the Haryana Murrah Buffalo and other Milch Animal Breed Act, 2001 ^A	10.31	10.31
& litigation pending with Hon''ble High Court of Andhra Pradesh; a litigation pending with Supreme Court of India

Based on the internal assessment and / or legal opinion, the Management is confident that, for the aforesaid mentioned contingent liabilities under paragraph (ii) and (iii) above, no further provision is required to be made as at 31 March 2022.

(c) Guarantees excluding financial guarantees	2.38	2.91
45. Leases The movement in lease liabilities is as follows:
Particulars	31 March 2022	ear ended 31 March 2021
Balance at the beginning of the year	44.87	65.49
Additions during the year	65.40	17.01
Finance cost accrued during the year	6.77	5.86
Payment of lease liabilities	(41.68)	(43.49)
Lease liabilities at the end of the year	75.36	44.87
Current lease liabilities	28.23	22.51
Non-current lease liabilities	47.13	22.36

The Company does not face a significant liquidity risk with regard to its lease liabilities as the current assets are sufficient to meet the obligations related to lease liabilities as and when they fall due.

Rental expense recorded for short-term leases for the year ended 31 March 2022 was '' 37.14 (31 March 2021: '' 19.98). Leases not yet commenced to which the Company is committed aggregated to '' Nil as on 31 March 2022.

46. Segment reporting

In accordance with Ind AS 108 - ''Operating segments'', segment information has been given in the consolidated financial statements of the Company and therefore no separate disclosure on segment information is given in these standalone financial statements.

Note: Reasons for change more than 25% is as under

(i) Principal reason for change in the current ratio is attributed to the increase in current assets balances as at 31 March 2022.

(ii) Principal reason for change in the debt equity ratio is attributed to the decrease in borrowings on account of prepayment of long

term borrowings during the year ended 31 March 2022.

(iii) Principal reason for change in the debt service coverage ratio is attributed to the increase in prepayment of loan term borrowings during the year ended 31 March 2021 when compared to prepayments made during the year ended 31 March 2022.

(iv) Principal reason for change in the return on equity ratio / return on investment ratio / net profit margin / return on capital employed is attributed to the increase in raw material prices resulting in decrease in profits reported during the year ended 31 March 2022 compared to the year ended 31 March 2021.

(v) Principal reason for change in net capital turnover ratio is attributed to the increase in current assets balances as at 31 March 2022.

(vi) Principal reason for change in trade payables turnover ratio is attributed to the increase in cost of goods sold during the year ended

31 March 2022, on account of increase in revenue from operations.

Explanation - The terms ''appointed day'', ''buyer'', ''enterprise'', ''micro enterprise'', ''small enterprise'' and ''supplier'' shall have the same meaning as assigned to them under clauses (b), (d), (e), (h), (m) and (n) respectively of section 2 of the Micro, Small and Medium Enterprises Development Act, 2006.

50 . Additional information as required under paragraph 5 of the part II of the Schedule III to the Act to the extent either "Nilâ or "Not Applicableâ has not been furnished.

This is the summary of significant accounting policies and other explanatory information referred to in our report of even date.

Mar 31, 2018

1. CORPORATE INFORMATION

The standalone financial statements of âHeritage Foods Limitedâ (âthe Companyâ or âHFLâ) are for the year ended 31 March 2018.The company is a public company domiciled in India and is incorporated under the provisions of the Companies Act applicable in India. Its shares are listed on two recognised stock exchanges in India. The registered office of the Company is located at #6-3-541/C, Punjagutta, Hyderabad - 500082.

Incorporated in 1992, Heritage Foods Limited is engaged in two key business verticals - Dairy and Renewable Energy.

The standalone financial statements were approved for issue in accordance with a resolution of the directors on 24th May 2018.

2. Significant accounting policies - Basis of preparation

The standalone financial statements of the Company have been prepared and presented in accordance with all the material aspects of the Indian Accounting Standards (âInd ASâ) as notified under section 133 of the Companies Act 2013 read with the Companies (Indian Accounting Standards) Rules 2015 (by Ministry of Corporate Affairs (âMCAâ)). The Company has uniformly applied the accounting policies during the periods presented.

In Accordance with the notification issued by the Ministry of Corporate Affairs, the Company has adopted Indian Accounting Standards (Referred to as âInd ASâ) notified under the Companies (Indian Accounting Standards) Rules, 2015 with effect from 1 April 2017. Previous periods have been restated to Ind AS. In accordance with Ind AS 101 Firsttime Adoption of Indian Accounting Standard, the Company has presented a reconciliation from the presentation of Financial Statements under Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (âPrevious GAAPâ) to Ind AS of Shareholdersâ equity as at 31 March 2017 and 1 April 2016 and of the Comprehensive net income for the year ended 31 March 2017 (refer note 50).

The standalone financial statements have been prepared on a going concern basis under historical cost, except for the following:

- certain financial assets and liabilities are measured either at fair value or at amortised cost depending on the classification; and

- employee defined benefit assets/ (liability) are recognised as the net total of the fair value of plan assets, plus actuarial losses, less actuarial gains and the present value of the defined benefit obligation.

The stand-alone financial statements are presented in â and all values are rounded to the nearest lakhs, except when otherwise indicated.

Accounting policies have been consistently applied except where a newly issued Accounting Standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use or for the purpose of better presentation of financial statements. Management evaluates all recently issued or revised Accounting Standards on an ongoing basis and accordingly changes the Accounting policies as applicable.

3. Key accounting estimates, judgments and assumptions

The preparation of the Companyâs financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below.

a. Impairment of non-financial asset

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at armâs length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the assetâs performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes.

b. Taxes

Significant judgments are involved in estimating budgeted profits for the purpose of paying advance tax and determining the provision for income taxes.

c. Defined benefit plans and other long term benefit plan

The cost and present value of the defined benefit gratuity plan and leave encashment (other long term benefit plan) are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation and other long term benefits are highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

d. Useful lives of various assets

Management reviews the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets to the Company.

e. Business combinations

Business combinations are accounted for using Ind AS 103, Business Combinations. Ind AS 103 requires the identifiable assets to be fair valued. Significant estimates are required to be made in determining the value of identifiable assets acquired. These valuations are conducted by independent valuation experts.

f. Fair value measurement of financial instruments

When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values.

4. Standards issued but not effective

The amendments to standards that are issued, but not yet effective, up to the date of issuance of the Companyâs financial statements are disclosed below. The Company intends to adopt these standards, if applicable, when they become effective.

The Ministry of Corporate Affairs (âMCAâ) has issued the Companies (Indian Accounting Standards) Amendment Rules, 2017 and Companies (Indian Accounting Standards) Amendment Rules, 2018 amending the following standard:

a. Ind AS 115, Revenue from Contracts with Customers

Ind AS 115 was issued on 28 March 2018 and establishes a five-step model to account for revenue arising from contracts with customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further, the new standard requires enhances disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entityâs contracts with customers.

The new revenue standard will supersede all current revenue recognition requirements under Ind AS. Either a full retrospective application or a modified retrospective application is required for annual period beginning on or after 1 April 2018.

The Company plans to adopt the new standard on the required effective date using modified retrospective application method. In most of the contracts with customers, sale of goods is generally expected to be the only performance obligation. Hence adoption of Ind AS 115 is not expected to have any major impact on the Company revenue and profit or loss.

b. Amendments to Ind AS 12, Recognition of Deferred Tax Assets for Unrealised Losses

The amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable profits against which it may make deductions on the reversal of that deductible temporary difference. Furthermore, the amendments provide guidance on how an entity should determine future taxable profits and explain the circumstances in which taxable profit may include the recovery of some assets for more than their carrying amount.

Entities are required to apply the amendments retrospectively. However, on initial application of the amendments, the change in the opening equity of the earliest comparative period may be recognized in opening retained earnings (or in another component of equity, as appropriate), without allocating the change between opening retained earnings and other components of equity. Entities applying this relief must disclose that fact.

These amendments are effective for annual periods beginning on or after 1 April 2018. These amendments are not expected to have any impact on the Company as the Company has no deductible temporary differences or assets that in the scope of the amendments.

c. Transfers of Investment Property - Amendments to Ind AS 40

The amendments clarify when an entity should transfer property, including property under construction or development into, or out of investment property. The amendments state that a change in use occurs when the property meets, or ceases to meet, the definition of investment property and there is evidence of the change in use. A mere change in managementâs intentions for the use of a property does not provide evidence of a change in use.

Entities should apply the amendments prospectively to changes in use that occur on or after the beginning of the annual reporting period in which the entity first applies the amendments. An entity should reassess the classification of property held at that date and, if applicable, reclassify property to reflect the conditions that exist at that date. Retrospective application in accordance with Ind AS 8 is only permitted if it is possible without the use of hindsight.

The amendments are effective for annual periods beginning on or after 1 April 2018. The Company will apply amendments when they become effective. However, the Company does not foresee any significant impacton its financial statements due to these amendments.

iv. Rights, preferences and restrictions attached to equity shares

The Company has only one class of issued, subscribed and paid up equity shares having a par value of Rs.5 each per share (31 March 2017: Rs.10 each, 1 April 2016: Rs.10 each). Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees.

The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the Annual General Meeting.

vii. The Company has not issued any equity shares pursuant to contract without payment being received in cash nor brought back any equity shares during the last five years.

viii. During the year, the equity shares of the Company having face value of Rs.10 each were subdivided into 2 equity shares having a face value of Rs.5 each. Accordingly 23,199,000 equity shares of face value of Rs.10 each were sub divided into 46,398,000 equity shares of face value of Rs.5 each.

Nature and purpose of reserves Securities premium reserve

Securities premium reserve is used to record the premium on issue of equity shares. The reserve is utilised in accordance with provisions of the Companies Act, 2013 (âthe Actâ).

Capital reserve

The excess of net assets taken, over the consideration paid, if any, as part of business combination is recorded under capital reserve. Capital reserve to the extent of adverse Rs.331.52 was created in accordance with the composite scheme of arrangement (refer note 42) and to the tune of Rs.452.60 on acquisition of dairy business of Reliance Retail Limited (refer note 43).

Capital redemption reserve

Capital redemption reserve was created on buy back of equity shares. The Company uses capital redemption reserve for transactions in accordance with the provisions of the Act.

Warrants money appropriated

Warrants money apportioned reserve represents forfeiture of share application money made during the previous years. General reserve

The reserve arises on transfer portion of the net profit pursuant to the earlier provisions of the Companies Act, 1956. Mandatory transfer to general reserve is not required under the Act.

FVTOCI equity instruments

5. Consequent to the introduction of Goods and Service Tax (GST) with effect from 1 July 2017, Central Excise Tax, Value Added Tax (VAT) etc. have been subsumed into GST. In accordance with Ind AS and Schedule III of the Companies Act, 2013, unlike excise duty, levies such as GST, VAT etc., are not part of revenue from operations. Accordingly, the figures for the year ended 31 March 2018 and 31 March 2017 are not directly comparable.

6. Dividend proposed before approval or issue of financial statements

The amount of dividend proposed or declared to be paid in cash before the financial statements were approved for issue but not recognised as a distribution to owners during the year ended 31 March 2018 amounts to Rs.927.96 (Rs.2 per equity share) (31 March 2017: Rs.927.96 (Rs.2 per equity share)). Dividend distribution tax on such dividend distribution amounts to Rs.188.91 (31 March 2017: Rs.188.91).

There are no transfers between levels during the year. The Companyâs policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.

The Companyâs principal financial liabilities, other than derivatives, comprises of borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Companyâs operations. The Companyâs principal financial assets include investments in equity shares, loans, trade and other receivables, and cash and cash equivalents that the Company derives directly from its operations. The Company also holds FVTOCI/ FVTPL investments and enters into derivative transactions.

The Company is exposed primarily to Credit Risk, Liquidity Risk and Market risk (fluctuations in interest rates and foreign currency rates), which may adversely impact the fair value of its financial instruments. The Company assesses the unpredictability of the financial environment and seeks to mitigate potential adverse effects on the financial performance of the Company.

A. Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Credit risk arises primarily from financial assets such as trade receivables, investment in equity shares, derivative financial instruments, other balances with banks, loans and other receivables.

Credit risk is controlled by analyzing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, investments, derivative financial instruments, cash and cash equivalents, bank deposits and other financial assets. None of the financial instruments of the Company result in material concentration of credit risk.

Exposure to credit risk:

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was Rs.108,152.39, Rs.55,454.48 and Rs.10,161.35 as of 31 March 2018, 31 March 2017 and 1 April 2016 respectively, being the total of the carrying amount of financial assets.

Financial assets that are neither past due nor impaired

None of the Companyâs cash equivalents, including fixed deposits, were either past due or impaired as at 31 March 2018. Financial assets that are past due but not impaired

The Companyâs credit period for customers generally ranges from 0 - 30 days. The aging of trade receivables that are past due but not impaired is given below:

Ind AS requires expected credit losses to be measured through a loss allowance. The Company assesses at each date of Balance Sheet whether a financial asset or a group of financial assets are impaired. Expected credit losses are measured at an amount equal to the 12 month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward-looking information.

B. Liquidity risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

The table below summarises the maturity profile of the Companyâs financial liabilities based on contractual undiscounted payments:

C. Market risk:

Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in market rates and prices. Market risk is attributable to all market risk-sensitive financial instruments, all foreign currency receivables and payables and all short-term and long-term borrowings. Market risk comprises three types of risk: interest rate risk, currency risk and other price risks such as equity price risk.

i. Interest risk:

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Companyâs exposure to the risk of changes in market interest rates relates primarily to the Companyâs long-term obligations with floating interest rates.

For the years ended 31 March 2018 and 31 March 2017, every 50 basis point decrease in the floating interest rate component applicable to the Companyâs borrowings would have decrease the loss by approximately Rs.43.10 and Rs.20.01 respectively. A 50 basis point increase in floating interest rate would have led to an equal but opposite effect.

ii. Foreign currency risk:

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the Companyâs operating activities (when revenue or expense including capital expenditure is denominated in a foreign currency). The exposure of entity to foreign currency risk is very limited on account of limited transactions in foreign currency.

The carrying amount of the Companyâs foreign currency denominated monetary items in â as at 31 March 2018, 31 March 2017 and 1 April 2016 are as follows:

Foreign currency sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in USD and Euro exchange rates, with all other variables held constant.

iii. Equity price risk:

The Companyâs listed and non-listed equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company manages the equity price risk through diversification and by placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Companyâs senior management on a regular basis. The Companyâs Board of Directors reviews and approves all equity investment decisions.

At the reporting date, the exposure to unlisted equity securities at fair value was Rs.26.02. Sensitivity analyses of these investments have been provided in Note 36.

At the reporting date, the exposure to listed equity securities at fair value was Rs.100,088.27 (31 March 2017: Rs.47,718.29, 1 April 2016: Rs.2.73). A decrease of 5% in market price of the securities, which are measured at FVTPL, would have an adverse impact of Rs.984.09 (31 March 2017: Rs.447.3) on the Statement of Profit and loss of the Company, and an increase in prices, a vice versa impact. Further decrease of 5% in market price of the securities, which are measured at FVTOCI, would have an adverse impact of Rs.328.25 (31 March 2017: Rs.149.3) on the OCI of the Company, and an increase in prices, a vice versa impact.

7. Capital risk management

For the purpose of the Companyâs capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders. The primary objective of the Companyâs capital management is to maximise the shareholder value. The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Companyâs policy is to keep the gearing ratio between 10% and 25%. The Company includes within net debt, borrowings from banks and finance lease obligations, less cash and cash equivalents.

In order to achieve this overall objective, the Companyâs capital management, amongst other things, aims to ensure that it meets financial covenants attached to the borrowings from banks that define capital structure requirements. Breaches in meeting the financial covenants would permit the bankers to immediately call back the borrowings. There have been no breaches in the financial covenants of any borrowings in the current year.

No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March 2018 and 31 March 2017.

8. Discontinued operations

(i) Composite Scheme of Arrangement among the Company, Heritage Nutrivet Limited (formerly known as Heritage Foods Retail Limited), Future Retail Limited and their respective shareholders and creditors:

(a) The National Company Law Tribunal (âNCLTâ) for the state of Telangana and Andhra Pradesh has approved the Composite Scheme of Arrangement (âthe schemeâ) between the Company (âTransferor Companyâ or âHFLâ), Heritage Nutrivet Limited (formerly known as Heritage Foods Retail Limited) (wholly owned subsidiary of HFL) (âTransferee Companyâ or âDemerged Companyâ or âHNLâ), Future Retail Limited (âResulting Companyâ or âFRLâ) and their respective shareholders and creditors vide its order dated 3 May 2017. Based on the internal evaluation, management of the Company determined that the Scheme duly approved by the NCLT is generally considered as an order of law. Therefore, the accounting treatment prescribed under the Scheme overrides the accounting principles prescribed under Ind AS. Accordingly, the accounting treatment provided under the scheme has been considered to effect such arrangement in the books of account. In contrast, in case the Company had recognized the said scheme under Ind AS then the impact would have been as detailed below::

(ii) The composite scheme of arrangement has been implemented by HFL and HNL as below:

(a) The Company transferred its âRetail undertakingâ (comprising Retail, Agri and Bakery business segments) and âVetCa undertakingâ (comprising VetCa business segment) by way of Slump Sale to the HNL with effect from the slump sale appointed date (i.e. Commencement of business on 1 November 2016) for a lump sum consideration. From the slump sale appointed date and to the effective date, the Company was carrying on the business of âRetail Undertakingâ and âVetCa Undertakingâ on the behalf of transferee company.

(b) HNL demerged the âRetail undertakingâ to FRL with effect from the demerger appointed date (i.e. Close of business on 31 March 2017) and reduced its share capital through cancellation of shares held by its existing shareholders by utilising security premium account.

(iii) In accordance with the scheme, the accounting treatment has been given in the financial statements as follows:

(a) The Company has transferred net assets of Rs.13,449.02 (Assets of Rs.20,538.94 and Liabilities of Rs.7,089.92) as at commencement of business on 1 November 2016 of âRetail undertakingâ and âVetCa undertakingâ to the transferee company for a lump sum consideration of Rs.13,500, which is agreed to be discharged by the transferee company by way of allotment of 1,40,00,000 equity shares at Rs.96.43 per share having face value Rs.10 each and at a premium of Rs.86.43 per share to the Company. The Company accounted the consideration of Rs.13,500 as investment in HNL. The difference of Rs.50.98 between the value of consideration and net value of assets and liabilities has been accounted as Capital reserve. The business transactions of âRetail Undertakingâ and âVetCa Undertakingâ from 1 November 2016 to 31 March 2017 have been reported in the financial statements of the transferee company

(b) HNL has transferred the net assets of Rs.13,684.84 (Assets of Rs.19,571.21 and Liabilities of Rs.5,886.37) as at close of business on 31 March 2017 of Retail undertaking to FRL for a consideration of 17,847,420 equity shares of FRL having face value of Rs.2 per share agreed to be allotted by FRL to the shareholders of HNL i.e. HFL. The Company has recorded the equity shares of FRL as investment in FRL at a cost of Rs.13,466.56 lakhs by reducing the cost of investment in HNL.

(iv) In accordance with the scheme, applicable accounting standards, and Generally Accepted Accounting Principles in India (âIGAAPâ or âIndian GAAPâ), directly attributable cost of Rs.382.49 pertaining to slump sale is accounted as capital reserve and â1,338.04 pertaining to demerger is considered as cost of investment in FRL.

(vii) The Company has eliminated the inter-segment transactions against the discontinued operations in the standalone financial statements

9. Business combination

(A) The Company has acquired Dairy business of Reliance Retail Limited through slump sale on 12 April 2017 for cash consideration. The Company has made this acquisition to expand its reach in North and Western Indian markets. Details of net assets acquired and capital reserve are as follows:

(B) Business combination related costs of Rs.80.55 has been debited to statement of profit and loss under the head other expenses.

Notes:

(a) The sales to and purchases from related parties are made on terms equivalent to those that prevail in armâs length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31 March 2018, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (31 March 2017: Nil, 1 April 2016: Nil). This assessment is undertaken each financial year through examining the financial position of the related parties and the market in which such parties operates.

(b) During the year ended 31 March 2018, the Company has given a guarantee to a bank towards a loan of Rs.2,450 taken by its wholly owned subsidiary i.e. Heritage Nutrivet Limited (formerly known as Heritage Foods Retail Limited).

10. Segment reporting

In accordance with Ind AS 108 - âOperating segmentsâ, segment information has been given in the consolidated financial statements of the Company and therefore no separate disclosure on segment information is given in these standalone financial statements.

11. Leases

Finance leases

The Company has obtained server and data processing equipment on Finance lease. The term of lease is for four years. The future minimum lease payments and their present values as on 31 March 2018, 31 March 2017 and 1 April 2016 has been disclosed below:

12. Derivative Contract

The Company has entered into agreement with FRL (the âImplementation Agreementâ) dated 7 November 2016, under which the Company agreed to share an upside with FRL in the following manner upon sale of shares, which the Company has received as a consideration under the scheme:

If the net consideration by the Company, after deducting taxes statutorily required to be paid to any tax authority in respect of such sale of shares, (the âShare Sale Considerationâ),

(i) is less than or equal to Rs.40,000, then the Company shall be entitled to retain the entire share sale consideration

(ii) exceeds Rs.40,000 but is less than or equal to Rs.50,000, then the Company shall subscribe to a total of 1,000 equity shares of FRL by paying an amount equal to the 50% of such excess over Rs.40,000.

(iii) exceeds Rs.50,000, then the Company shall subscribe to a total of 1,000 equity shares of FRL by paying amount equal to the 50% of such excess between Rs.40,000 and Rs.50,000 and 75% of excess over Rs.50,000.

The Company recognized the above contractual provisions of the Implementation Agreement as derivative financial instruments.

13. Disclosure under Micro, Small and Medium Enterprises Development Act, 2006

The creditors covered by Micro, Small and Medium Enterprises Development Act, 2006 (âthe MSMED Act, 2006â) have been identified on the basis of information available with the Company. Disclosures in respect of the amounts payable to such parties are given below:

14. First time adoption of Ind AS

With effect from 1 April 2017, the Company is required to prepare its financial statements under the Indian Accounting Standards (âInd ASâ) prescribed under section 133 of the Companies Act, 2013 read together with rule 3 of the Companies (Indian Accounting Standards) Rules, 2015, as amended.

These financial statements, for the year ended 31 March 2018, are the first the Company has prepared in accordance with Ind AS. For periods up to and including the year ended 31 March 2017, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).

Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on 31 March 2018, together with the comparative period data as at and for the year ended 31 March 2017, as described in the summary of significant accounting policies. In preparing these financial statements, the Companyâs opening balance sheet was prepared as at 1 April 2016, the Companyâs date of transition to Ind AS. This note explains exemptions availed by the Company in restating its Indian GAAP financial statements, including the balance sheet as at 1 April 2016 and the financial statements as at and for the year ended 31 March 2017

Mandatory exceptions and Optional exemptions

Ind AS 101 allows first-time adopters certain mandatory and voluntary exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:

(A) Mandatory exceptions

(a) The estimates at 1 April 2016 and at 31 March 2017 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies) apart from the following items where application of Indian GAAP did not require estimation:

- FVTOCI - Quoted and unquoted equity shares.

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

The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at 1 April 2016, the date of transition to Ind AS and as of 31 March 2017

(b) De-recognition of financial assets

The Company has applied the de-recognition requirements in Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS.

Financial instruments - loan to employees and security deposits

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

Financial assets such as loan to employees and security deposits have been classified and measured at amortised cost on the basis of the facts and circumstances that exist at the date of transition to Ind ASs. Since, it is impracticable for the Company to apply retrospectively the effective interest method in Ind AS 109, the fair value of the financial asset or the financial liability at the date of transition to Ind As by applying amortised cost method, has been considered as the new gross carrying amount of that financial asset or the financial liability at the date of transition to Ind AS.

(d) Impairment of financial assets (Trade receivables and other financial assets)

At the date of transition to Ind AS, the Company has assessed whether there has been a significant increase in credit risk since the initial recognition of a financial instrument, which would require undue cost or effort. Therefore the Company has recognised a loss allowance at an amount equal to lifetime expected credit losses at each reporting date until that financial instrument is de-recognised (unless that financial instrument is low credit risk at a reporting date).

(e) Government loans

On transition to Ind AS, based on mandatory exception relating to government loans, Company has decided to apply the requirement of Ind AS 109 prospectively to government loans existing at the date of transition i.e. to carry the government loans as at the date of transition at Indian GAAP carrying value. Hence the Company has not recognised the corresponding benefit of government loan at below market rate of interest as government grant.

(B) Optional exemptions

(a) Deemed cost

As there is no change in the functional currency, the Company has elected to continue with the carrying value for all of Property, Plant and Equipment and Other Intangible Assets, as recognised in its Indian GAAP financial statements as deemed cost at the transition date.

(b) Arrangements containing a lease

Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. However, the Company has used Ind AS 101 exemption and assessed all arrangements based for embedded leases based on conditions in place as at the date of transition.

At the date of transition to Ind AS, Ind AS 101 allows an entity to designate investments in equity instruments at FVTOCI on the basis of the facts and circumstances of each case. The Company has elected to apply this exemption for its investment in certain quoted equity shares.

At the date of transition to Ind AS, Ind AS 101 also allows an entity to designate investments in equity instruments at FVTPL on the basis of the facts and circumstances of each case. The Company has elected to apply this exemption for its investment in certain unquoted and certain quoted equity shares.

Notes on reconciliations between Indian GAAP and Ind AS (i) FVTOCI - financial assets (Other than Investment in Future Retail Limited)

Under Indian GAAP, the Company has accounted for long term investments in unquoted and quoted equity shares as investment measured at cost less provision for other than temporary diminution in the value of investments. Under Ind AS, the Company has designated such investments as FVTOCI investments. Ind AS requires FVTOCI investments to be measured at fair value. At the date of transition to Ind AS, difference between the instruments fair value and Indian GAAP carrying amount has been recognised as a separate component of equity, in the FVTOCI reserve, net of related deferred taxes.

(ii) Investment in Future Retail Limited

Pursuant to the Composite Scheme of Arrangement entered between the Company, Heritage Foods Retail Limited (âa wholly owned subsidiary of the Companyâ or âHFRLâ), Shareholders of the Company and Future Retail Limited (âFRLâ), the âRetail undertakingâ i.e. demerged undertaking of Heritage Foods Retail Limited got transferred to Future Retail Limited with effect from the closing hours of 31 March 2017. For this transfer, Future Retail Limited has issued 17,847,420 equity shares of the face value of Rs.2 each fully paid-up to the shareholders of HFRL i.e. HFL. On account of this transaction, the share capital of HFRL and Investment of the Company in HFRL got reduced with the net book value of demerged undertaking on 31 March 2017

Also through supplementary agreement, the Company has agreed to share the consideration on sale of âFRL sharesâ with FRL, if the total consideration on such sale exceeds the agreed limit. Management has concluded the given agreement as derivative to be measured at FVTPL.

As per the scheme, HFL has initially recognised the âInvestment in FRLâ at cost i.e. at Rs.14,804.60. Under IGAAP, the Company has subsequently measured the âInvestment in FRLâ at cost only. Under Ind AS, the Company has elected to designate 13,384,565 shares at FVTPL investment and 4,462,855 shares at FVTOCI investment. Ind AS requires FVTOCI investments to be measured at fair value.

The difference between âcost and fair value of Investment designated at FVTPLâ amounting to Rs.24,681.01 is recognised in âOther Incomeâ in the âStatement of profit or lossâ. The difference between âcost and fair value of Investment designated at FVTOCIâ amounting to Rs.8,229.46 in â Other Comprehensive Incomeâ. The Company has also recognised a âDerivative liabilityâ of Rs.3,854.87 relating to agreement to share the consideration.

(iii) Government grant in the nature of promotersâ contribution

Under Indian GAAP, governments grants in the nature of promotersâ contribution is credit to capital reserve. Under Ind AS, such grants are classified as grants relating to assets and is recognised by setting up the grant as deferred income. The grant set up as deferred income is recognised in profit or loss on a systematic basis over the useful life of the assets.

As on the date of transition, the Company has transferred the amount standing in capital reserve (on account of grants from government towards total investment in an undertaking) to deferred government liability (Current and non current). Subsequently the amount is transferred from the deferred government liability to âStatement of profit and lossâ based on the useful life of the undertaking.

(iv) Deferred tax

Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP

In addition, the various transitional adjustments led to temporary differences. The Company has accounted for such differences as well in deferred tax. Deferred tax adjustments are recognised in correlation to the underlying transaction either in retained earnings or a separate component of equity.

(v) Proposed dividend

Under the Indian GAAP, dividends proposed by the Board of Director after the balance sheet date but before the approval of financial statements were considered as adjusting event. Accordingly, provision for proposed dividend was recognised as a liability. Under Ind AS, such dividends are recognised when the same is approved by the shareholders in the general meeting.

(vi) Trade receivables

Under Indian GAAP, the Group had created provision for doubtful debts based on specific amount for incurred losses. Under Ind AS, the allowance for doubtful debts has been determined based on expected credit loss model.

(vii) Borrowings

Under Ind AS, transaction costs are included in the initial recognition amount of financial liability and charged to profit or loss using the effective interest method. Under Indian GAAP, these transaction costs were charged to profit or loss as and when incurred or capitalised as borrowings cost.

(viii) Defined benefit plan

Under Indian GAAP, actuarial gains and losses were recognised in statement of profit and loss. Under Ind AS, the actuarial gains and losses form part of remeasurement of net defined benefit liability / asset which is recognised in other comprehensive income in the respective periods.

(ix) Effect of transition to Ind AS on Cash Flow Statement for the year ended 31 March 2017

Ind AS adjustments are either non cash adjustments or are regrouping among the cash flows from operating, investing and financing activities and has no impact on the net cash flow for the year ended 31 March 2017 as compared with the Indian GAAP.

(x) Retained earnings

Retained earnings as at 1 April 2016 has been adjusted consequent to the above Ind AS transition adjustments.

This is the summary of significant accounting policies and other explanatory information referred to in our report of even date.

Mar 31, 2017

Note 1: Disclosure as required by AS 24 Discontinuing Operations

As the Composite Scheme of Arrangement referred in Note no. 43, is implemented by the company, ''Retail Undertaking'' i.e., Retail, Agri and Bakery, Vetca undertaking i.e. Vetca business segments are considered as discontinued operations

The carrying amounts of the total assets and liabilities of discontinued operations are as follows. Comparative information of discontinued segments is included in accordance with AS 24 Discontinuing Operations.

Note: 2: Statement Showing "Specified Bank Notes" held and transacted during the period from November 8, 2016 to December 30, 2016 (in accordance with the clause ''X'' to part-1 of Division-1 Schedule - III of Companies Act, 2013 )

Note: 3. The Company has acquired the Dairy business of Reliance Retail Limited through slump sale during the month of April''2017.

Note: 4. Confirmation of balances for Trade Receivables / Payables, Loans and advances and others have been received from many parties. Wherever conformation of balances have not been received, they are subject to adjustment and reconciliation, if any.

Note: 5. Details of Corporate Social Responsibility (CSR) expenditure :

a) Gross amount required to be spent by the company during the year : Rs, 137.93 lakhs (Previous year : Rs, 99.16 lakhs)

* Contribution made to a Registered Trust named NTR Memorial Trust of Rs, 137.93 lakhs during the Financial Year 2016-17 (Previous year : Rs, 99.16 lakhs).

Note: 6. The financial statements for the year ended March 31, 2017 are presented as per Schedule III of the Companies Act, 2013 as near as thereto.

Note: 7. Previous year figures are regrouped / reclassified, wherever necessary. The comparison of the results with previous year is subject to the accounting effect of the Composite Scheme of Arrangement.

Note: 8. The amounts in the financial statements are presented in Indian Rupees in lakhs

Mar 31, 2016

Note: 1. Segment reporting for the year ended March 31, 2016

As per the Accounting Standard (AS- 17), the Company has identified Dairy, Retail, Agri, Bakery and Renewable Energy segments as reportable segments.

Dairy segment mainly deals with procuring milk, processing and selling of milk, value added products, fat products, Skimmed milk powder ,Tradable goods and job work. Retail segment mainly deals with buying and selling of FMCG-Food, FMCG-Non-Food and Fruits and vegetables. Agri segment mainly deals with procuring , processing and selling of Fruits and Vegetables, Tradable goods and job works. Bakery segment mainly deals with procurement, production and selling of bakery products. Renewable Energy segment mainly deals with generating and supply of solar power and wind power to the Dairy segment for its captive consumption.

Note: 2.

Confirmation of balances for Trade Receivables / Payables, Loans and advances and others have been received from many parties. Wherever conformation of balances have not been received, they are subject to adjustment and reconciliation, if any.

Note: 3. Details of Corporate Social Responsibility (CSR) expenditure :

a) Gross amount required to be spent by the company during the year : Rs, 99.16 lakhs (Previous year : Rs, 69.63 lakhs)

- Contribution made to a Registered Trust named NTR Memorial Trust of Rs, 99.16 lakhs during the Financial Year 2015-16 (Previous year : Rs, 69.63 lakhs).

Note: 4.

The financial statements for the year ended March 31, 2016 are presented as per Schedule III of the Companies Act, 2013 as near as thereto.

Note: 5.

Previous year figures are regrouped / reclassified, wherever necessary.

Note: 6.

The amounts in the financial statements are presented in Indian Rupees in lakhs.

Mar 31, 2015

1. Contingent Liabilities

Contingent liabilities are identified and disclosed as per the requirements of "Accounting Standard AS-29"

Note: 2 Contingent liabilities and commitments (to the extent not provided for) (Rs. in lakhs)

As at March 31,2015 As at March 31, 2014

A. Contingent Liabilities

i. Claims against the company not acknowledged as debt :

a) Tax matters in appeal :

Income Tax 475.68 475.68

Sales Tax 166.38 141.29

The Andhra Pradesh VAT Act 201.89 201.89

b) Others 16.20 17.45

ii. Guarantees 373.99 372.86

iii. Other money for which the company is contingently liable forms under collection 379.30 82.50

(Against all the above Rs. 171.21 lakhs (Previous year : 151.21 lakhs )was paid under protest) It is not practicable for the Company to estimate the timing of cash outflows, if any, in respect of A(i) pending resolution of the respective proceedings.

B. Commitments

i. Estimated amount of contracts remaining to be executed on capital account and not 780.82 664.02

provided for (net of advances)

ii. Other commitments :

- Export obligation upto the year 2022-23 against import of capital goods under 4280.49 3247.83

EPCG scheme

Note: 2 Confirmation of balances for Trade Receivables / Payables, Loans and advances and others have been received from many parties. Wherever conformation of balances have not been received, they are subject to adjustment and reconciliation, if any.

Note.3 In the opinion of Board of Directors the assets other than fi xed assets and non-current investments have value on realization in the ordinary course of business atleast equal to the amount at which they are stated.

Note: 4 The financial statements for the year ended March 31, 2015 are prepared as per Schedule III of the Companies Act, 2013 and in or form as near as thereto.

Note: 5 Previous year figures are regrouped / reclassified, wherever necessary.

Note: 6 The amounts in the financial statements are presented in Indian Rupees in lakh

Mar 31, 2014

1. Rights, preferences and restrictions attached to equity shares

The Company has only one class of Issued, subscribed and paid up equity shares having a par value of Rs. 10/- each per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the Annual General Meeting.

70,000 Equity Shares allotted as fully paid up Sweat Equity Shares for consideration other than cash to an employee of the Company during the financial year ended March 31, 2013 and 70,000 Equity Shares issued as bonus Shares during the year against these Sweat Equity Shares shall be locked in for a period of 3 years from the date of allotment.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the share holders.

Deferred Payment Liabilities

Deferred Payment Liabilities represent sales tax collected under deferrment scheme of State Government of Andhra Pradesh and is being repaid as per the sales tax deferrment scheme. The Company availed scheme for Gokul, Narketpalle and Bayyavaram Dairy plants. Sales Tax deferred in a year should be repaid at the end of 14th year for Gokul and Bayyavaram plants and 10th year for Narketpalle plant without interest and is secured by fixed assets of the respective dairy plants.

Short Term Loans from Banks

1 The short term loan outstanding as on March 31, 2014 is 999.58 lakhs (sanction limit : Rs. 1000 lakhs) (Previous year : Rs. Nil) from Kotak Mahindra Bank carries interest rate @ base rate plus 1.5% repayable in three installments on 25th day of 4th,5th and 6th month from the date of disbursement and is secured by second charge by way of extension of equitable mortgage on the property belonging to Executive Director of the Company and extension of mortgage of industrial property belonging to Vice Chairperson & Managing Director of the Company and personal guarantees of Vice Chairperson & Managing Director, Executive Director and Non-Executive Director.

2. The short term loan outstanding as on March 31, 2014 is 1185.79 lakhs (Sanction limit: Rs. 3000 lakhs) (Previous year : Rs. Nil) from Andhra Bank carries interest rate @ base rate plus 2.75% repayable in three equal monthly installments commencing from the end of fourth month from the date of disburse- ment and is secured by first pari passu charge on the current assets of the Company and extension of first pari passu charge on net fixed assets of the Company as a collateral security alongwith consortium banks.

3. The Company has overdraft facility outstanding as on March 31, 2014 of Rs. 40.77 lakhs (Previous year: Rs. 94.50 lakhs) (Sanction limit: Rs. 100 lakhs) from Kotak Mahindra Bank carrying interest @ 12.50% and secured by exclusive mortgage of property belonging to Executive Director of the Company and personal guarantees of Vice Chairperson & Managing Director, Executive Director and one of the Non-Executive Director.

Contingent liabilities and commitments (to the extent not provided for)

(Rs. in lakhs) As at As at March 31, 2014 March 31, 2013

A. Contingent Liabilities

i. Claims against the company not aknowledged as debt :

a) Tax matters in appeal :

Income Tax 475.68 423.24 Sales Tax 141.29 150.06 The Andhra Pradesh VAT Act 201.89 127.07 Excise duty - 0.85

b) Others 17.45 29.88

ii. Guarantees 372.86 276.56

iii. Other money for which the company is contingently liable ''C'' forms under collection 82.50 59.27

B. Commitments

i. Estimated amount of contracts remaining 664.02 609.11 to be executed on capital account and not provided for (net of advances)

ii. Other commitments :

- Export obligation upto the year 2022-23 against import of capital goods 3247.83 3913.69 under EPCG scheme

* Managerial remuneration of 180.44 lakhs provided during the year 2012-13 to the Executive Director has exceeded the limits specified by the Central Government by Rs. 112.33 lakhs. The same has been paid during the year 2013-14 with the approval .

* Confirmation of balances for Trade Receivables / Payables, Loans and advances and others have been received from many parties. Wherever conformation of balances have not been received, they are subject to adjustment and reconciliation, if any.

* The financial statements for the year ended March 31, 2014 are prepared as per revised Schedule VI of the Companies Act, 1956 and in or form as near as thereto. The items which are not applicable as per revised Schedule VI are not disclosed.

* Previous year figures are regrouped / reclassified, wherever necessary.

* The amounts in the financial statements are presented in Indian Rupees in lakhs.

Mar 31, 2013

Note: 1

Managerial remuneration provided during the year 2012-13 is Rs.180.44 lakhs to the Executive Director has exceeded the limits specified by the Central Government by Rs.112.33 lakhs. The Company has filed the application to the Central Government seeking its clarification for the remuneration provided over the limits earlier specified. However the said excesss remuneration is payable subject to the approval of the Central Government.

Note: 2

M/s SKIL Raigaim Power (India) Limited is an associate of the Company as on March 31, 2013 (It ceased to be subsidiary of the Company on March 27, 2012 and became an associate).

Note: 3 Confirmation of balances for Trade Receivables/Payables, Loans and advances and others have been received from many parties. Wherever conformation of balances have not been received, they are subject to adjustment and reconciliation, if any.

Note: 4 The financial statements for the year ended March 31, 2013 are prepared as per revised Schedule VI of the Companies Act, 1956 and in or form as near as thereto. The items which are not applicable as per revised Schedule VI are not disclosed.

Note: 5 Previous year figures are regrouped/reclassified, wherever necessary.

Note: 46 The amounts in the financial statements are presented in Indian Rupees in lakhs.

Mar 31, 2012

A) Rights, preferences and restrictions attached to equity shares

The Company has only one class of Issued, subscribed and paid up equity shares having a par value of Rs.10/- each per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the share holders.

Term Loan from Banks (Secured) inlcudes :

a) Bank of Baroda :

i) Foreign Currency Term Loan(FCTL) of Rs.6285.99 lakhs (outstanding as on March 31,2012 :Rs.1542 lakhs (Previous year: Rs.2570 lakhs)) from the Bank carries the interest @ 200 bps over 6 months US$ LIBOR (Previous year: 200 bps over 6 months US$ LIBOR). The loan is repayable in 24 quarterly installments commencing from December 2007. The loan is secured by first Pari Pasu charge on all present and future fixed assets of the Company, second pari pasu charge on current assets of the Company.

ii) Foreign Currency Non-Resident (B) Loan (FCNRB) of Rs.3206 lakhs (outstanding as on March 31,2012 :Rs.798.84 lakhs (Previous Year (rupee loan): Rs.1334 lakhs))from the Bank carries the interest @ 625 bps over 6 months US$ LIBOR (Previous year: 625 bps over 6 months US$ LIBOR). The loan is repayable in 24 quarterly installments commencing from December 2007. The loan is secured by first Pari Pasu charge on all present and future fixed assets of the Company, second pari pasu charge on current assets of the Company.

iii) Rupee Term Loan of Rs.1435 lakhs (outstanding as on March 31,2012 :Rs.704.03 lakhs (Previous year: Rs.991.03 lakhs) from the Bank carries the interest @ base rate plus 4% (Previous year: base rate plus 4%). The loan is repayable in 20 quarterly installments commencing from May 2009 . The loan is secured by first Pari Pasu charge on all present and future fixed assets of the Company, second pari pasu charge on current assets of the Company.

b) Andhra Bank :

i) Rupee term loan of Rs.2500 lakhs (outstanding as on March 31,2012 :Rs.850.15 lakhs (Previous year: Rs.1271.52 lakhs)) carries the interest @ BMPLR minus 1 plus 0.25 for Dairy and Agri divisions (Previous year :interest @ BMPLR minus 1 plus 0.25 ) @ BMPLR for Retail division (Previous year : @BMPLR ). Loan is repayabe in 24 quarterly installments commencing from April, 2008. The loan is secured by first Pari Pasu charge on entire fixed assets (present and future) of the Company along with consortium bankers.

c) ICICI Bank

i) Rupee term loan of Rs.3000 lakhs (outstanding as on March 31,2012 :Rs.1439.96 lakhs (Previous year:Rs.2080 lakhs))carries the interest @ 1.75% per annum below the sum of I-BAR and term premia prevailing on the date plus applicable interest tax or other statutory levy, if any (Previous year :interest @ 1.75% per annum below the sum of I-BAR and term premia prevailing on the date plus applicable interest tax or other statutory levy, if any). Loan is repayabe in 21 quarterly installments commencing from April,2009. The loan is secured by first Pari Pasu charge on fixed assets of the Company and Second charge on current assets of the Company.

ii) Rupee term loan of Rs.500 lakhs (outstanding as on March 31,2012 :Rs.325 lakhs (Previous year:Rs.425 lakhs)) carries the interest @ 8 % per annum (Previous year: 8% per annum). Loan is repayabe in 20 quarterly installments commencing from August 2010. The loan is secured by first charge on fixed assets both immovable and movable excluding entire stocks of raw materials, work-in-progress, semi finished and finished goods, consumable stores and spares and such other movables including book debts, bills whether documentary or clean both present and future of the Company.

iii) Rupee term loan of Rs.1300 lakhs (outstanding as on March 31,2012 :Rs.1 137.50 lakhs (Previous year:Rs.1300 lakhs))carries the fixed rate interest @ 9.5% per annum for five years and after five years the interest rate shall be 3.20% per annum above the IBASE (Previous year: interest @ 9.5% per annum for five years and after five years the interest rate shall be 3.20% per annum above the IBASE). Loan is repayabe in 24 quarterly installments commencing from August, 2010. The loan is secured by first paripasu charge on both movable and immovable fixed assets of the Company, second charge on current assets, present and future of of the Company, along with other term lenders.

iv) Rupee term loan of Rs.2500 lakhs ( sanctioned with FCNR(B) sub-limit of Rs.2500 lakhs) (outstanding as on March 31,2012 :Rs.2500 lakhs (Previous year:Rs.Nil)) carries the rate of interest a) IBASE and spread per annum plus applicable interest tax or other statutory levy if any (Previous year: Nil ) b) For sub-limit of FCNR(B) the rate of interest 8.80% plus six months USD LIBOR (Previous year: Nil ) . Loan is repayabe in 16 quarterly installments commencing from December, 2012. The loan is secured by first paripasu charge on both movable and immovable fixed assets of the Company, second charge on current assets, present and future of other Company, along with other term lenders.

Deferred Payment Liabilities

Deferred Payment Liabilities represents sales tax collected under defferment scheme of State Government of Andhra Pradesh and is being repaid as per the sales tax defferment scheme. The Company availed scheme for Gokul, Narketpalle and Bayyavaram Dairy plants. Sales Tax deffered in a year should be repaid at the end of 14 /10th year without interest and is secured by fixed assets of the respective dairy plants.

Loans and advances from related parties

The loan carries interest @ 9% and is repayable in September, 2016 (with a role over for every 360 days).

Working Capital Loans from Banks :

The working capital loan disbursements are based on the terms of consortium lead banker i.e., Bank of Baroda. The working capital loans are secured by first pari pasu charge on current assets of the Company by way of hypothetication of raw materials, work-in-progress, finished goods, packing materials,spares, stores, with Andhra Bank and ICICI Bank Ltd., Extention of first pari pasu charge on the fixed assets of the Company to secure the working capital limits of Bank of Baroda, Andhra Bank and on second charge basis to secure the working capital limits of ICICI Bank Ltd., The total working capital limits of Rs.7500 lakhs (inlcudes FCNR(B) sub-limit from ICICI Bank Ltd., of Rs.3000 lakhs) are shared between Bank of Baroda 40%, Andhra Bank 20%, and ICICI Bank 40%. The rate of interest on working capital loan is base rate plus 2.50% for Bank of Baroda, for Andhra Bank : Base rate plus 2.75% and for ICICI Bank: IBASE plus plus spread plus applicable interest tax or other statutory levy, if any. Outstanding as on March 31, 2012 Rs.6058.44 lakhs (Previous year: Rs.6181.81 lakhs)

Short Term Loans from Banks

1. The short term working capital loan of Rs.1000 lakhs from Axis Bank Limited carries interest rate @ base rate plus 1.5% repayable after 180 days from the date of disbursement and is secured by second charge by way of extention of equitable mortgage on the commercial land of Vice Chairperson & Managing Director of the Company and personal guarantee given by Vice Chairperson & Managing Director of the Company.

2. The Company has overdraft facility of Rs. 100 lakhs from Kotak Mahindra Bank carries interest @ 12.50% which is secured by exclusive mortgage of property belonging to spouse of Executive Director of the Company and by personal guarantees of Vice Chairperson & Managing Director, Executive Director and spouse of Executive Director.

Note: 1 Contingent liabilities and commitments (to the extent not provided for)

(Rs.in lakhs)

As at As at March 31,2012 March 31,2011

A. Contingent Liabilities

i. Claims against the company not aknowledged as debt :

a) Tax matters in appeal :

Income Tax 367.68 342.28

Sales Tax 141.29 165.46

The Andhra Pradesh VAT Act * 127.07 114.00

Excise duty 3.99 Nil

b) Others 16.50 24.43

ii. Other money for which the company is contingently liable Nil

'C' forms under collection 64.22 79.18

B. Commitments

i. Estimated amount of contracts remaining to be executed on capital 489.11 825.42 account and not provided for (net of advances)

ii. Other commitments :

- Export obligation upto the year 2021-22 against import of capital goods 3956.58 4315.58 under EPCG scheme

Counter guarantees given by the Company in respect of Bank guarantees of Rs. 433.32 lakhs(Previous year: Rs.363.13 lakhs) are not treated as contingent liability.

Note: 2

M/s SKIL Raigaim Power (India) Limited, a subsidiary of the Company ceased to be subsidiary on March 27, 2012 and it continues to be an associate as on March 31, 2012.

Note: 3 Disclosure under Micro, Small and Medium Enterprises Development Act, 2006

The particulars of outstanding (for more than 45 days) to Micro, Small and Medium Scale business enterprises are given below

Note: 4 Confirmation of balances for Trade Receivables / Payables, Loans and advances and others have been received from many parties. Wherever conformation of balances have not been received, they are subject to adjustment and reconciliation, if any.

Note: 5 There are no extra ordinary items during the year 2011 - 12.

Note: 6 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 notificaiton under the Companies Act, 1956, the financial statements for the year ended March 31, 2012 are prepared as per revised Schedule VI and in or form as near as thereto. Accordingly, the previous year figures have also been reclassified to conform to the current year's classification.

Note: 7 The amounts in the financial statements are presented in Indian Rupees in lakhs

Mar 31, 2011

1.Particulars As at As at 31.03.2011 31.03.2010 Rs. Rs.

A. Contingent Liabilities not provided for

(a) Tax matters in appeal :

i) Income Tax 342.28 342.28

ii) Sales Tax 165.45 126.69

iii) The Andhra Pradesh VAT Act 114.00 114.00

(b) Bank Guarantees 363.13 290.99

(c) ' C' Forms under collection 79.18 104.19

(d) Others (GHMC Tax) 8.88 -

2. SECURED LOANS

Term Loan: The term loan includes Rs. 3 12.72 crores from Andhra Bank and Rs. 23.32 crores from Bank of Baroda and Rs. 38.05 crores from ICICI Bank Ltd., under Rupee Term Loan and Rs. 25.70 Crores from Bank of Baroda under FCTL and fully secured by first Pari Pasu charge on the present and future fixed assets of the Company and second Pari Pasu charge on currrent assets of the Company.

Working Capital Loan: The Company has availed working capital facilities from Bank of Baroda, Andhra Bank and ICICI Bank Ltd., of Rs. 61.82 Crores (Previous year : Rs. 58.95 Crores) secured by hypothecation of stocks and book debts on pari pasu basis .Extension of 1st pari-passu charge on the fixed assets of the Company, to secure the working capital limits of Bank of Baroda, Andhra Bank and on second charge basis to secure the working capital limits of ICICI Bank Ltd.

Short Term Loan : The Company has availed short term loan of Rs. 15 Crores from Axis Bank Ltd., for funding current assets. The loan is secured by fixed deposit of Rs. 2 crores and personal guarantee of Smt N.Bhuvaneswari, Vice Chairperson & Managing Director of the Company.

3. UNSECURED LOANS :

Amount shown under the head Unsecured Loans represents sales tax collected under deferment scheme of State Government of Andhra Pradesh Rs. 9.45 crores (Previous year Rs. 8.92 crores) and is being repaid as per the Sales Tax Deferrment Scheme.

4. Borrowing Cost as per AS-16 : During the year an amount of Rs. 62.53 lacs of borrowing cost on loans obtained from Banks has been capitalised.

5. IMPAIRMENT OF ASSETS: In accordance with AS-28 the Company has identified and accounted for loss on assets impaired to the extent of Rs. 41655/-

6. Disclosure under Micro, Small and Medium Enterprises Development Act, 2006

The names of the Micro, Small and Medium scale business enterprises to whom the Company owes money which is outstanding for more than 45 days and the particulars of the outstanding are given below

A V Thomas & Co Ltd Deccan Crowns & Cans Pvt Ltd

Abhiruchi Foods Deejay Multi Packs Pvt Ltd

Amit Industries Delicious Cashew Company Anant Products Eesha Packaging

Arasan Sweets & Snacks Finecab Wires & Cables Pvt Ltd

Ari Amman Foods Godrej Tyson Foods Ltd

Ashish Engineers Hi-Tech Printers

Ashmit Packaging India Sweet Company Pvt Ltd

Asura Food Products Infragro Industries Ltd

Atlanta Print Systems (P) Ltd J M Plastic Industries

Avis Press Pvt Ltd Jaishree Distributors

Balaji Foods Janiya Dairy Products

Balaji Namkeens Lotus Chocolate Company Ltd

Balaji Poly Plast Pvt Ltd Makers Polyfi lms Pvt Ltd

Barrier Films Pvt Ltd Mars Tech Engineering Services Beardsell Limited Micro Packaging works

Best Food Enterprises Om Sri Sai Foods

Bliss Foods Paragan Paper Packaging(Pvt) Ltd Brite International

Paran Polymers Pvt Ltd., Sree Designs

Poly Korp Pvt Ltd Sree Venkatasai Packaging Industries Pragathi Plastoform Pvt Ltd

Prakruthi Health Care Sree Venkateswara Cashew Chikky

Precission Foils Pvt Ltd Sree Venkateswara Swamy Saw Mill Prince Multiplast Pvt Ltd Sri Pumps Manufacturing Co.,

Print Ãn' Pack

R.N. Enterprises Sri Saibaba Chemical Industries

Rachana Marketing Srivatsa Enterprises

Raghavendra Offset Printers Stick Lables India Pvt Ltd

Raj Packaging Industries Ltd Sudhir Pandya

Rajaram And Company Sudhir Pandya (Gokul Gruh Udyog) Relish Snacks Pvt Ltd

S L Polypack Pvt Ltd Sumit Packaging

S S Laminates SVS Polymers

Sai Hari Teja Multi Tasty World Poly Films

Sai Krupa Packaging Thai Food Products

Sathavahana Packaging PVt Ltd Universal Enterprises

Shalimar Foods Venkateshwara Bitumen

7. Confirmation of balances from Sundry Debtors/ Creditors, Loans and advances and others have been received from many parties. Wherever conformation of balanceses have not been received, they are subject to adjustment and reconciliation if any.

8. There are no extra ordinary items incurred by the Company during the year 2010 - 11.

9. Paise is rounded off to the nearest Rupee.

10. The company has presented the financial results as per schedule VI of Companies Act,1956 and in or form as near as thereto. The items which are not applicable as per schedule VI are not disclosed.

11. Previous Year figures are regrouped wherever necessary.

Mar 31, 2010

As at As at 1. Particulars 31.03.2010 31.03.2009 Rs. Rs. A. Contingent Liabilities not provided for (a) Tax matters in appeal : i) Income Tax 34227781 26649931 ii) Sales Tax 12669000 12669000 iii) The Andhra Pradesh VAT Act 11399898 11399898 (b) Bank Guarantees 29098547 15731047 (c) C Forms under collection 10419000 8773812

B. Estimated amount of Contracts remaining to be executed on 26630336 37404493 capital account and not provided for (Net of Advances) C. Claims not acknowledged as debts Nil 71015

2. SECURED LOANS

Term Loan: The term loan includes Rs.16.88 crores from Andhra Bank and Rs.18.73 crores from Bank of Baroda under FCNR(B) Loan and Rs.35.98 Crores from Bank of Baroda under FCTL and Rs.32.20 crores from ICICI Bank and Rs.12.78 Crores from Bank of Baroda under Rupee Term Loan fully secured by first Pari Pasu charge on the present and future fixed assets of the Company and second Pari Pasu charge on currrent assets of the Company. The loan availed from ICICI Bank of Rs.30 Crores is further secured by pledging part of the shares of promoters.

Working Capital Loan: The Company has availed working capital facilities from Bank of Baroda, Andhra Bank and ICICI Bank of Rs.58.95 Crores (Previous year : Rs.50.79 Crores) secured by hypothecation of stocks and book debts on pari pasu basis and for Bank of Baroda and Andhra Bank also secured by equitable mortgage of fixed assets.

3. UNSECURED LOANS :

Amount shown under the head Unsecured Loans represents sales tax collected under deferment scheme of State Government of Andhra Pradesh Rs.8.92 crores (Previous year Rs.7.59 crores) and is being repaid as per the Sales Tax Deferment Scheme.

4. Warrants money forfeited: Out of 16,00,000 warrants alloted to promoters, 539500 warrants were converted into equity shares during the financial year 2007-08. The remaining warrants of 10,60,500 were not converted within the specified time and hence the money collected of Rs.3,18,68,800 towards 10% of value of warrants alloted was forfeited during the current financial year.

5. As per the Accounting Standards AS-15 -"Employee Benefits" the disclosures of the Employee benefits as defined in the Accounting Standard are given below

6. IMPAIRMENT OF ASSETS :In accordance with AS-28 the Company has identified and accounted for loss on assets impaired to the extent of Rs.69734/-

7. Confirmation of balances from Sundry Debtors/ Creditors, Loans and advances and others have been received from many parties. Wherever confirmation of balances have not been received, they are subject to adjustment and reconciliation if any.

8. There are no extraordinary items incurred by the company during the year 2009-10.

9. Paise is rounded off to the nearest Rupee.

10. The company has presented the financial results as per schedule VI of Companies Act,1956 and in or form as near as thereto. The items which are not applicable as per schedule VI are not disclosed.

11. Previous Year figures are regrouped wherever necessary.

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