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Notes to Accounts of Huhtamaki PPL Ltd.

Dec 31, 2014

1. Terms / Rights attached to equity shares.

The company has only one class of Issued, Subscribed & Paid up Equity Capital having a par value of Rs. 2/- per share. Each holder of equity share 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 ensuing Annual General Meeting.

During the year ended 31st December 2014, the amount of per share dividend recognised as distributions to equity shareholders was A 2.80 (31 December 2013 : Rs. 2.80)

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. 31 December 31 December 2014 2013 2. CONTINGENT LIABILITIES

a Excise Duty

Matters in Appeal - Duty 5,016.95 5,202.50

- Penalties 419.52 147.01

Show Cause Notices - Duty 4,014.54 3,703.92

b Service Tax

Show Cause Notices - Service Tax 64.40 49.74

- Penalties 3.26 -

Matters in Appeal - Service Tax 24.10 84.26

- Penalties 14.45 58.12

c Income Tax Demands in Appeal 67.32 -

d Sales Tax Demands in Appeal 178.96 76.91

e Claims against the Company not acknowledged as debts 65.18 65.18

Note for (a) to (e): Future cash outflows / uncertainties, if any, in respect of the above are determinable only on receipt of judgements / decisions pending with various forums / authorities.

3. SEGMENT REPORTING

The Company''s sole business segment is consumer packaging and all activities of the Company are incidental to this sole business segment. Given this fact and that the Company services its domestic and export markets from India only, the financial statements reflect the information required by AS-17 Segment Reporting for the sole business segment of consumer packaging.

Secondary segments for the Company are geographic, namely domestic and exports. Revenue from geographic segments is based on the domicile of customers.

4. Defined Benefit Plans

The Company has classified the various benefit plans provided to employees as under :

I Gratuity Plan

Gratuity is payable to all eligible employees of the Company on superannuation, death and resignation, in terms of the provisions of the Payment of Gratuity Act or as per the Company''s Scheme whichever is more beneficial.

II Leave Plan

Eligible employees can carry forward and encash leave on superannuation, death, and resignation subject to maximum limits as per Company policy.

The following table summarises the components of the net benefit expense recognised in the statement of profit & loss and the funded status and amount recognised in the Balance sheet for the respective plans.

5. EXCEPTIONAL ITEM

Exceptional Income in the previous year comprises of gain realised on sale of office property at Nariman Point,Mumbai of Rs. 704.66 Lacs (Provision for Tax includes Rs. 239.51 lacs towards tax on this gain).

6. EXTRAORDINARY ITEM

Extra-Ordinary Item in the current year, represents Insurance claim for fire at Silvassa Plant during the year 2013. The claim has been settled in January 2015, resulting in surplus of Rs. 627.53 lacs (net of tax of Rs. 323.13 lacs). Out of the total claim an amount of Rs. 228.63 lacs (net of tax of R117.73 lacs) has been received subsequent to the year end.

7. On 8 July 2014, the Company and the Shareholders of Positive Packaging Industries Limited, India (''PPIL''), had entered into a definitive agreement, pursuant to which the Company on 30th January 2015, has acquired 100% of PPIL. This has been completed, after all necessary approvals and for a total enterprise value of Rupees 78,819 lacs inclusive of debt of Rs. 27,917 lacs, subject to closing adjustments.

The Company has funded the above acqusition through the following:-

* Issue of 10,024,744 Equity shares of R.2 each (face value) to Huhtavefa B.V. (''Holding Company'') on Preferential basis in August 2014 at a price of Rupees 134.08 per share. These funds as on 31st December 2014 were temporarily invested in liquid mutual funds.

* Issue of 7% Non-convertible Debentures of Rupees 38,500 lacs on 27th January 2015 on private placement basis to Huhtalux S A R. L. (''Huhtamaki Group entity'')

8. Since the Company Secretary has resigned w.e.f.20 September 2014 and the Company is in the process of appointing a new Company Secretary as required under Section 203 of the Companies Act, 2013, the financial statements have not been signed by a Company Secretary as required by section 215 of the Companies Act, 1956.

9. Previous year figures have been regrouped or reclassified wherever necessary, to conform to this year classifications.


Dec 31, 2013

1 SEGMENT REPORTING

The Company''s sole business segment is consumer packaging and all activities of the Company are incidental to this sole business segment. Given this fact and that the Company services its domestic and export markets from India only, the financial statements reflect the information required by AS-17 Segment Reporting for the sole business segment of consumer packaging.

Secondary segments for the Company are geographic, namely domestic and exports. Revenue from geographic segments is based on the domicile of customers.

2 EXCEPTIONAL INCOME

Exceptional Income comprises of gain realised on sale of office property at Nariman Point, Mumbai during the current year of a 705 Lacs (Provision for Tax includes a 239 lacs towards tax on this gain).

3 Previous year figures have been regrouped or reclassified wherever necessary, to conform to this year classifications.


Dec 31, 2012

A Terms /rights attached to equity shares.

The company has only one class of equity shares having a par value of a2/- per share. Each holder of equity share 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 ensuing Annual General Meeting.

During the year ended 31st December 2012,the amount of per share dividend recognised as distributions to equity shareholders was a 2.60 (31 December 2011 : a 2.40)

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.

31 December 2012 31 December 2011

1 CONTINGENT LIABILITIES

a) Excise Duty

Matters in Appeal - Duty 5,099.57 5,013.67

- Penalties 125.58 125.58

Show cause notices - Duty 3,221.53 2,948.66

- Penalties - 0.09

b) Service Tax

Show cause notices - Service Tax 34.47 108.89

Matters in Appeal - Service Tax 74.81 21.05

- Penalties 55.87 0.70

c) Sales Tax demands in appeal 117.24 208.94

d) Income Tax demands in appeal - 54.94

e) Claims against the company not acknowledged as debts 120.83 120.83 Note for (a) to (e): Future cash outflows / uncertainties, if any, in respect of the above are determinable only on receipt of judgments / decisions pending with various forums / authorities.

f) Bank guarantees issued by bankers on behalf of the Company 228.01 148.62

g) Contracts remaining to be executed on capital account 323.04 961.47 and not provided for (net of advances)

h) Letters of Credit issued by banks on behalf of the company 982.72 816.15 for import of goods

i) The company has obtained EPCG Licenses issued under and subject to conditions in Chapter 5 of the foreign trade Policy 2004-2009.These Licenses entitle the company to import Capital goods at concessional rates of Customs duty and accordingly duty concession obtained is Rs 418.54 Lacs ( Previous year Rs 383.15 Lacs).In accordance with the terms of the EPCG License the company has an export obligation of Rs 3,348.34 Lacs (Previous year Rs 3,288.32 Lacs) to be discharged over a period of 8 years. As at the year end the company has discharged export obligation of approximate value of Rs 1,376.03 Lacs (Previous year Rs 862.24 Lacs)

2 SEGMENT REPORTING

The Company''s sole business segment is consumer packaging and all activities of the Company are incidental to this sole business segment. Given this fact and that the Company services its domestic and export markets from India only, the financial statements reflect the information required by AS-17 Segment Reporting for the sole business segment of consumer packaging.

(iii) Defined Benefit Plans

The Company has classified the various benefit plans provided to employees as under :

I Gratuity Plan

Gratuity is payable to all eligible employees of the group on superannuation, death and resignation, in terms of the provisions of the Payment of Gratuity Act or as per the Company''s Scheme whichever is more beneficial.

II Leave Plan

Eligible employees can carry forward and encase leave on superannuation, death, and resignation subject to maximum limits as per Company policy.

III Long Service Award

Long Service Award benefit is payable to eligible employees who leave after completion of 20 years of service.(31 December 2011 - 25 years)

The following table summarizes the components of the net benefit expense recognised in the profit & loss account and the funded status and amount recognised in the Balance sheet for the respective plans.

3 LEASES

The Company has taken certain Office Premises and residential facilities under Operating Lease arrangements. All the lease agreements are cancellable and there are no restrictions imposed by lease arrangements. There are no sub leases.

4 EXTRAORDINARY ITEM IN THE PREVIOUS YEAR COMPRISE OF :

Insurance claim of Fire at Thane Plant was settled, resulting in surplus of a 294.17 Lacs (Net of Income Tax of a 141 Lacs)

5 Till the year ended 31 December 2011, the Company was using pre-revised schedule VI to the Companies Act, 1956 for preparation & presentation of its Financial statements.

During the year ended 31 December 2012 the revised schedule VI notified under the Companies Act, 1956 has become applicable. The Company has reclassified the previous year figures to conform this year''s classification.


Dec 31, 2010

1 Gross sales are inclusive of Excise Duty and Sales Tax .

2 Sales returns are accounted for in the year of return.

3 Dividend income is recognised when the right to receive dividend is unconditional at the balance sheet date.

4 Interest on investments is accounted on a time proportion basis taking into account the amounts invested and the rate of interest.

I. RETIREMENT BENEFITS

1 Defined Contribution Plans

Contributions payable to the recognised provident fund, which is a Defined contribution Plan, are charged to the Profit and loss account as incurred.

2 Defined Benefit Plans

The Companys gratuity Benefit scheme is a Defined Benefit plan. The Companys net obligation in respect of the gratuity Benefit scheme is calculated by estimating the amount of future Benefit that employees have earned in return for their service in the current and prior periods; that Benefit is discounted to determine its present value, and the fair value of any plan assets is deducted.

The present value of the obligation under such Defined Benefit plans is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee Benefit entitlement and measures each unit separately to build up the fnal obligation.

The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under Defined Benefit plans are based on the market yields on Government securities as at the balance sheet date.

When the calculation results in a Benefit to the Company, the recognized asset is limited to the lower of the net total of the present value of the Defined Benefit obligation at the balance sheet date minus any past service cost minus fair value of plan assets as at balance sheet date and the present value of any future refunds from the plan or reductions in future contributions to the plan.

Actuarial gains and losses are recognised immediately in the Profit and Loss Account.

Family Pension and Long Term Service Award plan are Defined Benefit plans and are valued based on actuarial valuation.

3 Other Long term employment benefits

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are determined on the basis of valuations, as at balance sheet date, carried out by an independent actuary using Projected Unit Credit Method. Actuarial gains and losses comprise experience adjustments and the effects of changes in actuarial assumptions and are recognised immediately in the Profit and Loss Account.

4 Other short term employment benefits

Company provides short term Benefit of sick leave to its employees with certain accumulation provisions and same being short term and expected to be utilised within twelve months are provided on undiscounted basis.

VIII. INVESTMENTS

Long term investments are valued at cost and an appropriate provision is made for diminution, which is other than temporary, in their value.

Current investments are valued at cost or market value, whichever is lower.

IX. RESEARCH AND DEVELOPMENT EXPENDITURE

Research and development expenditure of a revenue nature is charged off in the year in which it is incurred and expenditure of a capital nature is capitalised to fixed assets.

X. TAXATION

Income tax expense comprises current income tax (i.e. amount of tax for the period determined in accordance with the income tax law), fringe benefit tax and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the period). The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in future; however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognized only if there is a virtual certainty of realization of such assets. Deferred tax assets are reviewed at each balance sheet date and written down or written up to refect the amount that is reasonably/ virtually certain (as the case may be) to be realized.

Provision for fringe Benefit tax (FBT) is made on the basis of applicable FBT on the taxable value of eligible expenses of the company as prescribed under the Income Tax Act, 1961.

XI. LEASES Operating Leases

Lease payments under operating leases are recognised as an expense in the statement of Profit and loss account on a straight line basis over the lease term.

XII. IMPAIRMENT OF ASSETS

The Company assesses at each balance sheet date whether there is any indication that an asset or a group of assets (cash generating unit) may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset or the cash generating unit to which the asset belongs. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Profit and loss account. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is refected at the recoverable amount subject to reversal of loss being limited to maximum of historical impairment loss booked.

XIII. PROVISIONS AND CONTINGENT LIABILITIES

The Company creates a provision when there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Provisions are reviewed at each balance sheet date and adjusted to refect the current best estimate. If it is no longer probable that an outflow of resources would be required to settle the obligation, the provision is reversed. Contingent assets are not recognized in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognized in the period in which the change occurs.

XIV. EARNINGS PER SHARE (EPS)

Basic EPS is computed by dividing the net Profit for the period attributable to the equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted EPS is computed using the weighted average number of equity and dilutive equity equivalent shares outstanding during the period, except where the results would be anti dilutive.

1 SECURED LOANS

Working Capital Facility taken from Banks are secured by hypothecation of inventories & book–debts.

4 SEGMENT REPORTING

The Companys sole business segment is consumer packaging and all activities of the Company are incidental to this sole business segment. Given this fact and that the Company services its domestic and export markets from India only, the financial statements refect the information required by AS-17 Segment Reporting for the sole business segment of consumer packaging.

5 RELATED PARTY TRANSACTIONS

a) Related party where control exists : Ultimate Parent Company Holding Company

Huhtamaki Oyj., Finland Huhtavefa B.V., Netherlands

b) Other Related Parties with whom transactions have taken place during the year : Fellow Subsidiaries

Huhtamaki New Zealand Ltd., New Zealand.

Huhtamaki Vietnam Ltd, Vietnam

Huhtamaki Australia Ltd., Australia

Huhtamaki Deutschland Gmbh and Co.KG., Germany

Huhtamki South Africa Ltd., South Africa

Huhtamaki (Thailand) Ltd., Thailand

c) Key Managerial Personnel

Mr. Suresh Gupta

Chairman and Managing Director

Mr. M. K. Srinivasan

Chief Executrive Officer and Executive Director

(w.e.f. 25th March 2010)

Mr. C. N. Murthy

Executive Director and Chief Operating Officer

(Till 8th December 2010)

d) Relatives of Key Managerial Personnel

Mr. Suresh Gupta Mrs. Kumkum Gupta–Wife, Ms. Ratna Gupta–Daughter,

Ms. Shivani Gupta–Daughter, Mr. C.N. Murthy Mrs. Jayanthi Murthy–Wife

21 During the year, revenue expenses incurred for the projects that have been capitalised are Rs Nil (Previous Year Rs. 24,533/-). Out of the same, amount lying in capital work in progress is Rs Nil (Previous year Rs Nil).

23 DISCLOSURE PURSUANT TO ACCOUNTING STANDARD - 15 (REVISED) EMPLOYEE BENEFITS

(i) Effective 1 January,2007 the Company has adopted accounting standard 15 (revised 2005) "Employee benefits"

The Company has classifed the various benefits provided to employees as under.

(ii) Defined Contribution Plans

Amount recognised as an expense and included in "Personnel costs" for Provident Fund & ESIC contributions in the Profit and Loss account. 25,942 22,655

(iii) Defined Benefit Plans

The Company has classifed the various Benefit plans provided to employees as under :

I Gratuity Plan Gratuity is payable to all eligible employees of the Company on superannuation, death and resignation, in terms of the provisions of the Payment of Gratuity Act or as per the Companys Scheme whichever is more benefcial.

II Leave Plan Eligible employees can carry forward and encash leave on superannuation, death, and resignation subject to maximum limits as per Company policy.

III Long Service Award Long Service Award Benefit is payable to eligible employees on completion of 25 years of service. The following table summarises the components of the net Benefit expense recognised in the Profit & loss account and the funded status and amount recognised in the Balance sheet for the respective plans

24 EXCEPTIONAL ITEMS COMPRISE OF :

a. Income of Rs.139,813/- Thousand being net gain realised on sale of Nagpur Factory Assets (Current Tax includes Rs. 28,600/- Thousand related to the said gain).

b. Expenses of Rs. 17,004/- Thousand incurred during the year on Voluntary Retirement Scheme (VRS) at Hyderabad Plant.

25 EXTRAORDINARY ITEMS COMPRISE OF :

a. The Company has reversed balance provision amounting to Rs.27,949/- Thousand (Net of Rs.Nil Tax) created in earlier year towards repairs of certain machineries damaged by food in 2005, as the same is no longer required.

b. Against an insurance claim for fire at Thane plant during the year an advance payment of Rs. 10,000/- Thousand has been received pending final settlement.

A surplus of Rs. 2,578/- Thousand net of Income Tax of Rs. 2,912/- Thousand, cost of repairs & book value of damaged assets has been recognised in Year 2010.

26 Since the Company Secretary has resigned with effect from 30th November 2010 and the Company is still in the process of appointing a new Company Secretary as required under section 383A of the Companies Act 1956, the financial statements have not been signed by a Company Secretary as required by section 215 of the Companies Act, 1956.

27 The figures of the previous year were audited by a firm of Chartered Accountants other than S.V.Ghatalia & Associates.

28 Previous years figures are appropriately reclassified to conform with current years classification.


Dec 31, 2009

1 SECURED LOANS

Working Capital Loans from Banks are secured by hypothecation of inventories, book-debts and bills.

2 SEGMENT REPORTING

The Companys sole business segment is consumer packaging and all activities of the Company are incidental to this sole business segment. Given this fact and that the Company services its domestic and export markets from India only, the financial statements reflect the information required by AS-17 Segment Reporting for the sole business segment of consumer packaging. The entire business assets of the Company are situated in India.

3 RELATED PARTY TRANSACTIONS

a) Related party where control exists :

Ultimate Parent Company Huhtamaki Oyj., Finland

Holding Company Huhtavefa B.V., Netherlands

b) Other Related Parties with whom transactions have taken place during the year:

Fellow Subsidiaries Huhtamaki New Zealand Ltd., New Zealand.

Huhtamaki Vietnam Ltd,

Vietnam Huhtamaki Australia Ltd.,

Australia Huhtamaki Deutschland Gmbh and Co.KG.,

Germany Huhtamaki Finance B.V.,

Netherlands Huhtamki South Africa Ltd.,

South Africa Huhtamaki Singapore Pte.Ltd.,

Singapore Huhtamaki (Thailand) Ltd., Thailand

c) Key Managerial Personnel

Mr. Suresh Gupta

Managing Director and Chief Executive Officer

Mr. C.N.Murthy

Executive Director and Chief Operating Officer

d) Relatives of Key Managerial Personnel

Mr. Suresh Gupta

Brig.V.P.Gupta-Father,

Mrs.Manmohini Gupta-Mother,

Mrs.Kumkum Gupta-Wife,

Ms.Ratna Gupta-Daughter,

Ms.Shivani Gupta-Daughter

Mr.Suresh Gupta as Excecutor of Jyoti Trust and Geeta Trust.

Mrs.Jayanthi Murthy-Wife

Mr. C.N.Murthy

4 CONTINGENT LIABILITIES

31 December 2009 31 December 2008

i) Excise Duty

a Matters in Appeal - Duty 497,382 497,382

- Penalties 7,148 7,148

b Show cause notices- Duty 225,242 189,392

- Penalties 1,179 776

ii) Customs Duty demands in appeal - 133 iii) Service Tax show cause notices 4,065 1,700

- Penalties 88 --

iv) Service Tax appeal - Service Tax 4,143 2,528

- Penalties 136 70

v) Sales Tax demands in appeal 22,998 19,546

vi) Claims against the company not acknowledged as debts 6,288 6,288

5 The Company has availed of unsecured interest free Sales tax deferred loan from the Government of Andhra Pradesh for its Hyderabad (Bollaram) factory, in accordance with their sales tax deferral scheme. 225,309 225,309

The above amount is repayable after 14 years from the date of availment of the loan. The first due date for repayment is 1 April 2011.

(iv) General Descriptions of significant defined benefit plans

I Gratuity Plan

Gratuity is payable to all eligible employees of the Company on superannuation, death and resignation, in terms of the provisions of the Payment of Gratuity Act or as per the Companys Scheme whichever is more beneficial.

II Leave Plan

Eligible employees can carry forward and encash leave on superannuation, death, and resignation subject to maximum accumulation of 90 days.

III Long Service Award

Long Service Award benefit is payable to eligible employees on completion of 25 years of service.

6 Previous year figures are appropriately reclassified to conform with current years classification.