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Notes to Accounts of Nitta Gelatin India Ltd.

Mar 31, 2015

1. In order to comply with the Minimum Public Shareholding (MPS) to 25% as required under Securities Contracts Regulations (Rules) 1957, during the preceding year, pursuant to a resolution passed at the Extra Ordinary General Meeting (EGM) of the company held on 29th May 2013, the company had allotted 100,000 equity shares at Rs. 50/- per equity share of face value of Rs. 10/- each to the employees under an Employee Stock Puchase Scheme (ESPS) and bonus shares in the ratio of 1:3 (579,160 equity shares) only to the public shareholders excluding the promoters.

On 17th June 2013, one of the promoter shareholders, M/s Kerala State Industrial Development Corporation Limited (KSIDC) informed the company their inability to forego its right to bonus shares and consequently the other promoter shareholder, M/s Nitta Gelatin Inc, Japan also declined to forgo their right to the bonus shares. In view of the said request the company informed BSE of its intention to partially modify the earlier EGM resolution dated 29th May, 2013, to allot bonus shares to the two Promoters as above also, subject to applicable approvals. Subsequently, the Board in their meeting dated 5th July 2013 recommended to the shareholders to issue bonus shares in the ratio of 1:3 to both the Promoter shareholders, in partial modification of EGM resolution dated 29th May 2013 and subject to necessary approvals, and also to allot further shares under the ESPS Scheme to its employees to ensure compliance of MPS even after the issue of bonus shares as above. This recommendation of the Board was approved in the adjourned EGM held on 24th August 2013 adopting a special resolution in partial modification of the resolution in EGM dated 29th May 2013, to allot 2,254,173 Bonus shares to Promoter shareholders and 696,667 shares to employees under ESPS scheme at Rs. 25/- per equity share of face value of Rs.10/- each, subject to the approval of SEBI and other applicable authorities.

On 19th August 2013 the company sought an in-principle approval for listing equity shares to be issued to the promoter shareholders and to employees under ESPS as per resolution proposed at the EGM on 24th August 2013. The BSE advised the company by email dated 27th August to seek condonation of delay from SEBI under Regulation 95(2) regarding Bonus issue, under SEBI (ICDR) Regulations, 2009 and this application was made to SEBI on 31st August 2013 seeking condonation of the delay in allotment of Bonus shares to the promoters and for retaining 20th June 2013 as the record date for the Bonus issue. SEBI in their letter dated 14th February 2014 declined to accede to the request of the company to allot Bonus shares to the promoter shareholders also on the ground that the interest of investors including those who traded in shares of the company based on the resolution passed at the EGM held on 29th May 2013, would be adversely affected.

Under the circumstances the company was unable to act on the resolution passed at the EGM held on 24th August 2013 and to allot 2,254,173 Bonus shares to Promoter shareholders (in the ratio 1:3) and 696,667 shares to employees under ESPS scheme as per resolutions adopted therein and hence no adjustment in this regard was made in the accounts for the preceding year ended 31st March 2014. Based on legal opinion received, the company had filed an appeal against the order of SEBI as above before Securities Appellate Tribunal (SAT).

During the year, the Securities Appellate Tribunal has dismissed the company's appeal on the above matter and based on the leagal openion that any appeal before the Supreme Court against the SAT order is not warranted, the Board of directors has decided not to pursue the matter further.

Terms/ Rights attached to Equity Shares

The company has only one class of shares referred to as equity shares with a face value of Rs. 10/- each. Each holder of equity share is entitled to one vote per share. The company declares and pays dividend in Indian Rupees. The dividend proposed/declared by the Board of Directors is subject to approval/regularisation of the shareholders' in the ensuing 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, in proportion to the number of equity shares held by the shareholders.

2. Final dividend of Re. 1 ( Nil ) per share proposed by the Board of Directors is subject to approval of share holders in the ensuing Annual General Meeting.

3. Secured by way of exclusive charge over the fixed assets created with the term loan assistance and collateral security by way of equitable mortgage of land owned by the Company on pari passu basis with other lenders and first charge over the other fixed assets of Company on pari passu basis. The interest rate is Base Rate 2.40 %.

4. Secured by exclusive charge over the fixed assets created with the term loan assistance. The principal amount is to be paid in 20 quarterly instalments of Rs 2,250,000 starting from December 2014. The interest rate is Base Rate 3.00 %.

5. Secured by the hypothecation of entire current assets of the Company namely inventories, debtors, cash & bank balances, other current assets and loans & advances, present & future and by way of pari passu charge on the fixed assets of the Company. The loans are repayable on demand except in the case of Buyers Credit amounting to Rs. 16,022,915 (Nil) which is repayable within a period of 70 days to 90 days from the date of availment as per terms.

6. Secured by exclusive charge over the fixed assets to be created out of the term loan. The loan is repaid during the current year in quarterly installments of Rs 25,00,000 each commencing from the first quarter of the year. The interest rate is Base Rate 3.00 %.

7. The company has taken steps to identify the suppliers who qualify under the definition of micro and small enterprises, as defined under the Micro, Small and Medium Enterprises Development Act, 2006. Intimations have been received from some of the suppliers regarding their status under the said Act as at 31.03.2015, based on which, principal amount unpaid to such suppliers as at the year end aggregating to Rs. 193,800 (Rs. 69,021) has been included under Trade Payables. In the opinion of the management, the impact of interest, if any, which may be payable in accordance with the provisions of the Act, is not expected to be material.

8. In view of business plans of the subsidiary company, Reva Proteins Limited, which is expected to bring in positive cash flows in the near future the management is of the opinion that no dimunition in value of investments in the subsidiary company is anticipated at this stage and hence no provision is made.

9. Method of Valuation of Inventories - Refer 1(g) of Significant Accounting Policies.

10. Balance with banks in Current Accounts include earmarked balances for unpaid dividend Rs. 16,37,705 (Rs. 17,93,682)

11. Balance with banks in Deposit Accounts include Rs. 4,946,293 (Rs.2,491,776) with a maturity period of less than 12 months, which are held as security against Letter of Credits/ Guarantee and Buyers Credit.

12. Balance with banks in Deposit Accounts include Rs. 520,851 (Rs.Nil ) with a maturity period beyond 12 months, which are held as security against Letter of Credits/ Guarantee

13. Export incentive receivable includes Duty Drawback claims amounting to Rs. 9,090,768 (Rs. 6,858,636) taken credit for in prior years not admitted by the Department. In respect of such claims amounting to Rs. 6,461,789 (Rs. 6,461,789) during an earlier year, a single bench of the Honourable High Court of Kerala had decided the matter in favour of the company, which however has been challenged by the Department before the division bench of the Hon. High Court. In respect of such claims amounting to Rs.2,628,979 (Rs. 396,487), the amounts have been withheld by the Central Excise / Customs officials, against which representations have been made before higher authorities. Though the company is hopeful of favourable decisions, provision has been created in the accounts as a matter of abundant caution.

14. Export incentive receivable includes claims under Duty Entitlement Pass Book (DEPB) Scheme accounted as income for earlier years. The Company had also availed Duty Drawback benefit for the corresponding periods of Rs 4,151,031 ( Rs 4,151,031 ) The Dy. Director General of Foreign Trade vide letter dt 03.10.2011 had informed the company that the dual benefit of DEPB as well as Duty Drawback cannot be allowed and advised that either DEPB benefit or Duty Drawback on the export product may be availed. The company has been legally advised that it is entitled to both benefits as per the relevant regulations, based on which representations have been filed before higher authorities. The management is of the opinion that these claims are fully recoverable, and no provision is considered necessary at this stage.

15. Miscllaneous expenses include Rs. 1,786,059/- incurred as expenditure towards Corporate Social Responsibility activities. The expenditure includes contributions made to trust controlled by the company as shown in Note 2.26.

16. Disclosure of transactions with Related Parties as required by Accounting Standard - 18 on Related Party Disclosures as prescribed by Companies (Accounting Standards) Rules, 2006.

A. Related parties and nature of relationship

i. Nitta Gelatin Inc. - Enterprise having substantial interest in the Company

ii. Nitta Gelatin NA Inc. - Subsidiary of Nitta Gelatin Inc

iii. Nitta Gelatin Canada Inc. - Subsidiary of Nitta Gelatin Inc

iv. Bamni Proteins Limited - Subsidiary Company

v. Reva Proteins Limited - Subsidiary Company

vi. K K Organics Private Limited - Associate Company

vii. K. T. Chandy Seiichi Nitta - Trust controlled by the Foundation Company

viii. Key Managerial Personnel

Mr Sajiv K. Menon - Managing Director ( w.e.f. 01.04.2014 )

Mr Takeo Yamaki - Whole Time Director ( w.e.f. 11.07.2014 )

A) In view of the inadequacy of profits , the remuneration paid / payable to the Whole Time Director during the year - Rs. 1,861,479/- (Nil) is subject to necessary approvals prescribed under the Companies Act, 2013 which is being sought by the Company in the General Meeting.

B) Remuneration to Managing Director for the year includes gratuity and leave encashment paid out of liability funded /recognised in earlier years - Nil (Rs 8,177,167)

C) Amounts payable to Bamni Proteins Limited is net of amounts receivable from them for claims of Nitta Gelatin Inc., Japan - Rs 17,345,863 ( Nil )

17. The details of Provisions and Contingent Liabilities are as under. (Disclosed in terms of Accounting Standard -29 on Provisions, Contingent Liabilities & Contingent Assets notified by the Companies (Accounting Standards) Rules, 2006 )

A) (i). Central Excise authorities have issued show cause notices proposing to withdraw CENVAT credit availed by the company on Hydrochloric Acid used in the manufacture of Ossein consumed for Gelatin production amounting to Rs. 33,409,583 (Rs 31,065,141), which has been disputed by the company. Though no demand has been raised by the department, based on legal advice received, the company has created a provision of Rs 10,393,020 (Rs. 9,598,921) as a matter of abundant caution and the balance amount of Rs. 23,016,563 ( Rs 21,466,220) has been disclosed as a contingent liability. Further the Central Excise authorities have issued show cause notices relating to CENVAT Credit for Rs 623,430 ( Rs 115,720 ). In the opinion of the management, no provision is considered necessary for the same and has accordingly been disclosed as contingent liability.

B) Contingent Liabilities not provided for:

As at As at 31.03.2015 31.03.2014 Particulars Rupees Rupees

1. Claims against the Company not acknowledged as debts:

a. Income Tax [See Note 2.28.2(i)] 67,049,358 67,049,358

b. Value Added Tax/ CST [See Note 2.28.2(ii)] 36,775,140 1,237,334

c. Excise Duty [See Note 2.28.1(i)] 23,639,993 21,581,940

d. Water Cess [See Note 2.28.2(iii)] 65,301,200 65,301,200

2. Foreign Bills Discounted 231,983,217 239,148,923

3. Domestic Bills Discounted 7,994,250 1,632,000

4. Counter Guarantee issued in favour of bankers 9,048,426 6,352,152

5. Corporate guarantee issued in favour of Subsidiary Company Reva Proteins Limited. - Amount outstanding 131,245,832 156,250,000 [ Amount of Guarantee - Rs 200,000,000 ( Rs 200,000,000) ]

Total 573,037,416 558,552,907

C) (i) The Income Tax department has made certain disallowances on assessments completed for earlier years, which are pending on appeal before the first appellate authority. In the opinion of the management no provision is considered necessary for the same at this stage.

D) (ii) The Value Added Tax / CST authorities had raised demands on assessment for an earlier year amounting to Rs 36,775,140 ( Rs 1,237,334 ) which had been disputed by the Company on appeal. Based on legal advice, no provision is considered necessary towards the said claims and the amount involved is disclosed as contingent liability.

E) (iii) During an earlier year, an amount of Rs 71,484,000 was demanded as water cess for extraction of river water for industrial use during the period from 01.04.1979 to 31.12.2010, in accordance with a Government Order issued on 25.07.2009. The company had been legally advised that the demands may not be fully sustainable in law and had filed a writ petition before the Hon' High Court of Kerala against the proceedings, which is pending.

The company had also made a representation to the Secretary (Water Resources), Government of Kerala which is pending consideration of the Government. Pursuant to discussions with Government authorities, the company had entered into an agreement for payment of such charges for the periods subsequent to 01.01.2011. Further, a provision of Rs 61,83,200 towards disputed charges for the period from 25.07.2009 to 31.12.2010, being periods subsequent to issue of the Government Order, was made in the accounts in the previous year as a matter of abundant caution.

In the opinion of the management, having regard to the legal advice, no provision is considered necessary for charges for periods from 01.04.1979 to 24.07.2009 amounting to Rs 65,301,200, being periods prior to the issue of the G.O. which has been disclosed as contingent liability.

18. Estimated amount of contracts remaining to be executed on capital account - Rs. 30,470,888 (Rs.32,010,596)

19. a. In respect of Capital Goods imported at concessional rate of duty under the Export Promotion Capital Goods Scheme, the Company has an export obligation of approximately Rs. 3,520,000 (Rs. 12,560,000) which is required to be fulfilled at different dates until 2020. In the event of non fulfillment of the export obligation, the Company will be liable for the Customs duties and penalties as applicable.

b. In respect of Raw materials imported at concessional rate of duty under the Advance Authorisation Scheme, the Company has an export obligation of approximately Rs. 336,030,000 (Rs. 162,549,000) which is required to be fulfiled at different dates until 2016. In the event of non fulfilment of the export obligation, the Company will be liable for the Customs duties and penalties as applicable.

20. In the opinion of the Directors, Short Term Loans and Advances and Other Current Assets, have the value at which they are stated in the Balance Sheet, if realised in the ordinary course of business.

21. As a part of company's risk management policy, the exchange risks arising from foreign currency fluctuations are partly hedged by forward contracts, designated as cash flow hedges.

22. Figures have been rounded off to the nearest rupee. Previous year figures, unless otherwise stated are given within brackets and have been re-grouped and recast wherever necessary to be in conformity with current year's layout.


Mar 31, 2013

Terms/ Rights attached to Equity Shares

The company has only one class of shares referred to as equity shares with a face value of Rs. 10/- each. Each holder of equity share is entitled to one vote per share. The company declares and pays dividends in Indian Rupees. The dividend proposed/ declared by the Board of Directors is subject to approval/regularisation of the shareholders'' in the ensuing 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, in proportion to the number of equity shares held by the shareholders.

1.1.1 With effect from 1st April 2012, the company has changed the policy for accounting forward contracts intended to hedge the foreign currency risk of future transactions in respect of which firm commitments are made or which are highly probable forecast transactions, in accordance with the principles enunciated in the accounting treatment contained in AS 30 (Financial Instruments: Recognition and Measurement) issued by the Institute of Chartered Accountants of India by recognizing the losses/gains from marking to market such contracts determined to be "effective hedges" in the Hedging Reserve Account (under ''Reserves & Surplus'') in the Balance Sheet, as against the earlier policy of charging losses from such contracts to the Statement of Profit and Loss and not recognizing gain therefrom. Accordingly Marked to Market gain of Rs 4,785,189 as on 31.03.2013 is recognized in Hedging Reserve Account. This has no impact on the profit for the year.

1.1.2 The Board of directors has declared interim dividend of Rs 4 (Nil) per share for the financial year ending 31.03.2013 at their meeting held on 3rd May 2013 , which is subject to regularisation of the shareholders in the ensuing Annual General Meeting.

1.2.1 Secured by the hypothecation of entire current assets of the Company namely inventories, debtors, cash & bank balances, other current assets and loans & advances, present & future and by way of pari passu charge on the fixed assets of the Company.

1.2.2 The above loans are repayable on demand.

1.3.1 The company has taken steps to identify the suppliers who qualify under the definition of micro and small enterprises, as defined under the Micro, Small and Medium Enterprises Development Act, 2006. Intimations have been received from some of the suppliers regarding their status under the said Act as at 31.03.2013, based on which, principal amount unpaid to such suppliers as at the year end aggregating to Rs. 673,186 (Rs. 640,634) has been included under Trade Payables. In the opinion of the management, the impact of interest, if any, which may be payable in accordance with the provisions of the Act, is not expected to be material.

1.4.1 Balance with banks in Current Accounts include earmarked balances for unpaid dividend Rs. 1,441,417 (Rs. 1,166,557)

1.4.2 Balance with banks in Deposit Accounts include Rs. 2,183,674 (Rs.2,183,674) with a maturity period of less than 12 months, which are held as security against Letter of Credits/ Guarantee.

1.5.1 Duty Drawback includes Rs. 6,461,789 (Rs. 6,461,789) being claims taken credit for in prior years not admitted by the Department. During the previous year a single bench of the Honourable High Court of Kerala had decided the matter in favour of the company, which however has been challenged by the Department before the division bench of the Hon High Court. Though the company is hopeful of a favourable decision, provision created in the accounts in the preceding years has been retained as a matter of abundant caution.

1.5.2 Represents claims accounted as income for earlier years. The Company had also availed Duty Drawback benefit for the corresponding periods amounting to Rs. 4,151,031 (Rs. 5,424,105). The Dy. Director General of Foreign Trade vide letter dt 03.10.2011 had informed the company that the dual benefit of DEPB as well as Duty Drawback cannot be allowed and advised that either DEPB benefit or Duty Drawback on the export product may be availed. The company has been legally advised that it is entitled to both benefits as per the relevant regulations and the management is of the opinion that claims are fully recoverable, and no provision is considered necessary at this stage.

1.6 Disclosure of transactions with Related Parties as required by Accounting Standard - 18 on Related Party Disclosures as prescribed by Companies (Accounting Standards) Rules, 2006.

A. Related parties and nature of relationship

i. Nitta Gelatin Inc. - Enterprise having substantial interest in the Company

ii. Nitta Gelatin NA Inc. - Subsidiary of Nitta Gelatin Inc

iii. Nitta Gelatin Canada Inc. - Subsidiary of Nitta Gelatin Inc

iv. Bamni Proteins Limited - Subsidiary Company

v. Reva Proteins Limited - Subsidiary Company

vi. K K Organics Private Limited - Associate Company

vii. Key Managerial Personnel

i. Mr G. Suseelan - Managing Director

Capital employed as also assets and liabilities of the company are not capable of being stated separately segment wise since all the assets and liabilities are held under composite undertaking for both the geographic segments.

1.7 The details of Provisions and Contingent Liabilities are as under. (Disclosed in terms of Accounting Standard -29 on Provisions, Contingent Liabilities & Contingent Assets notified by the Companies (Accounting Standards) Rules, 2006)

1.7.1(i). Central Excise authorities have issued show cause notices proposing to withdraw CENVAT credit availed by the company on Hydrochloric Acid used in the manufacture of Ossein consumed for Gelatin production amounting to Rs. 28,903,586 (Rs 26,265,559), which has been disputed by the company. Though no demand has been raised by the department, based on legal advice received, the company has created a provision of Rs 8,799,108 (Rs.7,868,898) as a matter of abundant caution and the balance amount of Rs. 20,104,478 (Rs 18,396,661) has been disclosed as a contingent liability.

1.7.2(i) The Income Tax department has made certain disallowances on assessments completed for earlier years, which are pending on appeal before the first appellate authority. In the opinion of the management no provision is considered necessary for the same at this stage.

1.7.2(ii) The Value Added Tax/ CST authorities had raised demands on assessment for an earlier year amounting to Rs. 20,642,815 (Rs. 20,642,815), which had been disputed by the Company on appeal. The appellate authority has remanded the matter back to the assessing officer for fresh consideration. Based on legal advice, no provision is considered necessary towards the said claims and the amount involved is disclosed as contingent liability.

1.7.2(iii) During the preceding year, an amount of Rs 71,484,400 was demanded as water cess for extraction of river water for industrial use during the period from 01.04.1979 to 31.12.2010, in accordance with a Government Order issued on 25.07.2009. The company had been legally advised that the demands may not be fully sustainable in law and had filed a writ petition before the Hon'' High Court of Kerala against the proceedings, which is pending.

The company had also made a representation to the Secretary (Water Resources), Government of Kerala which is pending consideration of the government. During the year, pursuant to discussions with government authorities, the company has entered into an agreement for payment of such charges for the periods subsequent to 01.01.2011. Further, an amount of Rs 6,183,200 (Rs. NIL) has been provided towards disputed charges for the period from 25.07.2009 to 31.12.2010, being periods subsequent to issue of the Government Order and is disclosed under the head ''Other Current Liabilities''.

In the opinion of the management, having regard to the legal advice, no provision is considered necessary for charges for periods from 01.04.1979 to 24.07.2009 amounting to Rs 65,301,200, being periods prior to the issue of the G.O. which has been disclosed as contingent liability.

1.8 Estimated amount of contracts remaining to be executed on capital account - Rs. 99,171,177 (Rs. 15,943,539)

1.9 a. In respect of Capital Goods imported at concessional rate of duty under the Export Promotion Capital Goods Scheme, the Company has an export obligation of approximately Rs. 72,150,000 (Rs. 33,680,000) which is required to be fulfilled at different dates until 2020. In the event of non fulfilment of the export obligation, the Company will be liable for the Customs duties and penalties as applicable.

b. In respect of Raw materials imported at concessional rate of duty under the Advance Authorisation Scheme, the Company has an export obligation of approximately Rs. 19,250,000 (Rs. NIL) which is required to be fulfilled at different dates until 2015. In the event of non fulfilment of the export obligation, the Company will be liable for the Customs duties and penalties as applicable.

1.10 In the income tax assessment of the company, the income tax authorities have made certain disallowances which has resulted in additional demands on assessments completed for certain prior years, which are disputed by the company before appellate authorities. Though the company is hopeful of favourable decisions on such appeals on these matters, as a matter of prudence, a provision of Rs 11,532,974 has been additionally made during the year, towards incremental tax liability of prior years, with necessary adjustments in deferred tax. In the opinion of the management no provision is considered necessary in respect of the balance demands raised by the tax authorities aggregating to Rs 22,415,688, which have been disclosed as contingent liability in the accounts as shown in Note 2.27.2(i) .

1.11 In the opinion of the Directors, Short Term Loans and Advances and Other Current Assets, have the value at which they are stated in the Balance Sheet, if realised in the ordinary course of business.

1.12 As a part of company''s risk management policy, the exchange risks arising from foreign currency fluctuations are partly hedged by forward contracts, designated as cash flow hedges.

1.13 Figures have been rounded off to the nearest rupee. Previous year figures, unless otherwise stated are given within brackets and have been re-grouped and recast wherever necessary to be in conformity with current year''s layout.


Mar 31, 2011

1. Amounts due to Micro and Small Enterprises

The company has taken steps to identify the suppliers who qualify under the definition of micro and small enterprises, as defined under the Micro, Small and Medium Enterprises Development Act 2006. Intimations have been received from some of the suppliers regarding their status under the said Act as at 31.03.2011, based on which principal amount unpaid to such suppliers as at the year end aggregating to Rs. 1.92 Lakhs (Nil) has been disclosed under Current Liabilities in Schedule - 11. In the opinion of the management, the impact of interest, if any, which may be payable in accordance with the provisions of the Act, is not expected to be material.

2. Managerial Remuneration under Section 198 of the Companies Act 1956:

Enhancement in remuneration to Managing Director for the period 01.04.2010 to 31.03.2011 is as approved by the Remuneration Committee / Board of Directors. Necessary approval of shareholders in accordance with the requirements of Schedule XIII of the Companies Act, 1956, is being sought at the ensuing Annual General Meeting.

3. In the opinion of the Directors, the Current Assets, Loans and Advances have the value at which they are stated in the Balance Sheet, if realized in the ordinary course of business.

4. Other current assets in the Balance Sheet include Rs. 64.62 lakhs (Rs. 64.62 lakhs) being Duty Drawback claims taken credit for in prior years not admitted by the Department. During the previous year a single bench of the Honourable

High Court of Kerala had decided the matter in favour of the company, which however has been challenged by the department before the division bench of the Honourable High Court. Though the company is hopeful of a favourable decision, provision created in the accounts in the preceding years has been retained as a matter of abundant caution.

5. During the year, the companys appeals against disallowance of certain duty drawback claims have been allowed by the appellate authority. Though the department has filed a further revision application against this order, the company has been legally adviced that there is no significant uncertainty in realisability of these claims. Accordingly, the provision of Rs 43.21 lakhs created in prior years as a matter of abundant caution, is no longer considered necessary and has been written back to the Profit & Loss Account.

6. Disclosure of transactions with related parties as required by Accounting Standard - 18 on related party disclosures as prescribed by Companies (Accounting Standards) Rules, 2006.

(A) Related parties and nature of relationship

i. Nitta Gelatin Inc. - Enterprise having substantial interest in the Company

ii. Nitta Gelatin NA Inc. - Subsidiary of Nitta Gelatin Inc

iii. Bamni Proteins Limited - Subsidiary Company

iv. Reva Proteins Limited - Subsidiary Company

v. K K Organics Private Limited - Associate Company vi.

vi. Key Management Personnel:

i) Mr. G. Suseelan - Managing Director



7. As a part of companys risk management policy, the exchange risks arising from foreign currency fluctuations are partly hedged by forward contracts.

d) The outstanding forward contracts as at Balance Sheet date have been marked to market as at 31st March, 2011 and the Exchange Gain arising on the same amounting to Rs.36.84 lakhs (Rs.49.80 Lakhs) has not been recognized in the accounts.

8. The details of Provisions and Contingent Liabilities are as under. (Disclosed in terms of Accounting Standard -29 on Provisions, Contingent Liabilities & Contingent Assets notified by the Companies (Accounting Standards) Rules, 2006.

Note:

i) Central Excise authorities have issued show cause notices proposing to withdraw CENVAT credit availed by the company on Hydrochloric Acid used in the manufacture of Ossein consumed for Gelatin production amounting to Rs 219.86 lakhs. (Rs 189.54 lakhs), which has been disputed by the company. Though no demand has been raised by the department, based on legal advice received, the company has created a provision of Rs 67.92 lakhs (Rs. 51.92 lakhs) as a matter of abundant caution and the balance amount of Rs. 151.94 lakhs ( Rs 137.62 lakhs) has been disclosed as a contingent liability.

ii) The company has made representations before the Government of Kerala for waiver of water cess payable to the Government and has also obtained a stay from the Honble High Court of Kerala in respect of demands raised from 20.11.1998 towards the same. Pending final decision in the matter, provision of Rs 77.35 Lakhs (Rs.70.78 Lakhs) has been made in the accounts, as estimated by the management, as a matter of prudence.

b) Contingent Liabilities not provided for: (Rs. In lakhs)

Particulars For the Year For the Year Ended Ended 31.03.2011 31.03.2010

1. Claims against the Company not acknowledged as debts:

a) Income Tax 112.03 Nil (See Note (i) below)

b) Sales Tax 135.81 Nil (See Note (ii) below)

c) Excise duty 151.94 295.75 (See Note 13 (a)(i) above)

2. Foreign Bills Discounted 1,513.09 1,931.15

3. Counter Guarantee issued in favour 43.52 13.56 of bankers

4. Letter of Credit 10.93 Nil

5. Corporate guarantee issued 2,000.00 Nil in favour of Subsidiary company, M/s Reva Proteins Limited

TOTAL 3,967.32 2,240.46

Note:

i) The Hon. High Court of Kerala has during the year, passed an order which has the effect of enhancing the income tax liability of the company relating to certain prior years; but the revised assessment order/demands are yet to be received from tax authorities. The company has filed an appeal against the said order before the Honble Supreme Court of India which is pending and according to the expert legal opinion received by the company, there is no likelihood of any additional liability and hence no provision is made for the same, estimated at Rs 112.03 lakhs.

ii) During the year, Sales Tax authorities have issued show cause notices proposing to withdraw sales tax exemption allowed to the company in earlier years amounting to Rs 135.81 lakhs, which has been disputed by the company. Based on legal advice received, no provision is considered necessary towards the said claims and the amounts involved are disclosed as contingent liability.

9. Estimated amount of contracts remaining to be executed on capital account - Company - Rs.303.79 lakhs (Rs. 57.92 lakhs).

10. Loans and advances include interest free loan to subsidiary company Reva Proteins Limited, Rs 1,009.58 lakhs (Rs.389.77 lakhs) in respect of which no fixed repayment schedule has been prescribed at this stage.

11. (a) During the year, the Company has acquired certain assets including investments held by a company in its industrial unit, for setting up an industrial undertaking of the company, for an aggregate consideration of Rs. 777.31 lakhs. This includes "Patta land" admeasuring 126.88 cents acquired for a value of Rs 4.70 lakhs, which is included under Land & Development under Fixed Assets, in respect of which the assignment order by Government of Kerala is pending to be received.

The cost of buildings Rs. 237.36 lakhs and Plant, Machinery and Equipments costing Rs 207.62 lakhs acquired as part of the above, which are required for the companys use as per technical assessment have been included under Capital Work in Progress, to be capitalized on commissioning the unit, after completion of necessary modifications.

Certain items of machinery acquired as part of the above for an estimated cost of Rs 50 lakhs and identified on the basis of technical assessment as not usable for the business of the company, are shown under Other Current Assets.

An amount of Rs 30 lakhs being cost of investments in equity shares of another company, acquired as part of the above, has been included under "Loans and Advances", pending transfer of shares of the relative shares in the name of the company.

(b) The company has contracted to purchase land admeasuring 73.775 cents adjacent to the above industrial unit, for a total consideration of Rs 225 lakhs, against which an advance of Rs 60 lakhs was paid during the year and included under Capital Advances.

12. Advertisement and Publicity under Schedule 16 - Other Manufacturing, Selling and administrative expenses include expenditure incurred during the year towards sales promotion and brand building on new consumer products Rs 393.11 lakhs (Rs 33.86 lakhs).

13. (a) Licensed and Installed Capacities, Production, Turnover and Opening and Closing stock.

NOTE:

1. Licensed Capacity - Not applicable

2. Installed Capacity is as technically reassessed by the management

3. Production includes quantity manufactured outside on jobwork basis, as under: Ossein - 2406.850 MT (2,365.800 MT)

DCP - 5295.000 MT (5284.10 MT)

4. Turnover - Others - Rs 41,48,398 ( Rs 2,63,950 )

14. Figures have been rounded off to the nearest rupee. Previous year figures, unless otherwise stated are given within brackets and have been re-grouped and recast wherever necessary to be in conformity with current years layout.


Mar 31, 2010

1. Amounts due to Micro and Small Enterprises

The company has taken steps to identify the suppliers who qualify under the definition of micro and small enterprises, as defined under the Micro, Small and Medium Enterprises Development Act 2006. Based on available information, there are no balances outstanding as payable to such suppliers at the year end. In the opinion of the management there are no amounts paid / payable towards interest under the said statute.

2 In the opinion of the Directors, the Current Assets, Loans and Advances have the value at which they are stated in the Balance Sheet, if realized in the ordinary course of business.

3 On the basis of an independent professional valuation carried out in an earlier year and taking into consideration the improved performance of the subsidiary company, Bamni Proteins Limited, no loss in respect of the investments in and advances to the said company, aggregating to Rs 455.62 Lakhs (Rs. 455.65 Lakhs) is anticipated at this stage.

4. Deferred Tax Asset/ (Liability) consists of:

(Amount in Rs.) As at As at Particulars 31.03.2010 31.03.2009 Deferred Tax Liability: On excess of net book value over income tax written down value of fixed assets 77,140,000 74,135,366 Deferred Tax Asset: On Unabsorbed Depreciation Loss - 4,090,280 On Provisions 9,512,000 3,588,384 On other disallowances 3,995,000 806,702 Net Deferred Tax Asset/ (Liability) (63,633,000) (65,650,000)

5. Other current assets in the Balance Sheet include Rs. 64.62 lakhs (Rs. 64.62 lakhs) being Duty Drawback claims taken credit for in prior years not admitted by the Department. During the year a single bench of the Honourable High Court of Kerala had decided the matter in favour of the company, which however has been challenged by the department before the division bench of the Honourable High Court of Kerala. Though the company is hopeful of a favourable decision, provision created in the accounts in the preceding year has been retained as a matter of abundant caution.

6. Disclosure of transactions with related parties as required by Accounting Standard - 18 on related party disclosures as prescribed by Companies (Accounting Standards) Rules, 2006.

(A) Related parties and nature of relationship

i. Nitta Gelatin Inc. - Enterprise having substantial interest in the Company ii. Nitta Gelatin NA Inc. - Subsidiary of Nitta Gelatin Inc iii. Bamni Proteins Limited - Subsidiary Company iv. Reva Proteins Limited - Subsidiary Company v. K K Organics Private Limited - Associate Company vi. Key Management Personnel: i) Mr. G. Suseelan - Managing Director

7. Segment Information

The company is engaged in the business of manufacture and sale of Gelatin, Ossein, DCP and Bovine Collagen Peptide, which form broadly part of one product group and hence constitute a single business segment. However, based on geographical factors, reportable geographic segments have been identified as export sales and domestic sales. The segment wise information pertaining to the reportable geographical segments as above, is as follows:

Capital employed as also assets and liabilities of the company are not capable of being stated separately segment wise since all the assets and liabilities are held under composite undertaking for both the geographic segments.

8. Employee benefits

Disclosures required under Accounting Standard 15 - "Employee Benefits" (Revised 2005)

a) Defined Contribution Plans

During the year the following amounts have been recognised in the Profit and Loss Account on account of defined contribution plans:

9. As a part of companys risk management policy, the exchange risks arising from foreign currency fluctuations are partly hedged by forward contracts.

a) The outstanding forward contracts as at Balance Sheet date have been marked to market as at 31st March, 2010 and the Exchange Gain arising on the same amounting to Rs.49.80 lakhs (Rs.1.85 Lakhs) has not been recognized in the accounts.

10. The details of Provisions and Contingent Liabilities are as under. (Disclosed in terms of Accounting Standard -29 on Provisions, Contingent Liabilities & Contingent Assets notified by the Companies (Accounting Standards) Rules, 2006.)

* The company has made representations before the Government of Kerala for waiver of water cess payable to the Government and has also obtained a stay from the Hon High Court of Kerala in respect of demands raised from 20.11.1998 towards the same. Pending final decision in the matter, provision of Rs 70.78 lakhs (Nil) has been made in the accounts, as estimated by the management, as a matter of prudence.

b) Contingent Liabilities not provided for: (Rs. In lakhs)

For the Year Ended For the Year Ended 31.03.2010 31.03.2009 Claims against the Company not acknowledged as debts:

Disputed sales tax demands Nil 138.23

Disputed excise duty demands (See Note 12 (c) and (d) below) 294.07 135.94

Foreign Bills Discounted 1931.15 2001.96

Counter Guarantee issued in favour 13.56 21.11 of bankers

Letter of Credit Nil 48.77

TOTAL 2238.78 2346.01

c) During the preceding year Central Excise authorities had issued a show cause notice proposing to withdraw CENVAT credit availed by the company in prior years on Hydrochloric Acid used in the manufacture of Ossein consumed for Gelatin production amounting to Rs 176.89 lakhs. (Rs 176.89 lakhs). The company has disputed the matter. Though no demand has been raised by the department, based on legal advice received, the company had created a provision of Rs 40.95 lakhs as a matter of abundant caution and the balance amount of Rs. 135.94 lakhs has been disclosed as a contingent liability.

d) Central excise authorities had issued a show cause notice in an earlier year demanding excise duty of Rs 158.13 Lakhs (Rs 158.13 Lakhs) along with interest and penalty for manufacture and clearance of Di-Calcium Phosphate (DCP) during the period from 1.03.2005 to 30.11.2005. Based on representation by the company that manufacture of DCP attracts Nil Rate of Duty and hence falls under an exempt tariff classification, the above show cause notice had been dropped by the Commissioner. During the year the company has received an intimation regarding department appeal before CESTAT against the action of the Commissioner in dropping the show cause notice as above, in view of which the demand of Rs 158.13 lakhs (Rs 158.13 lakhs) has now been disclosed as a contingent liability.

e) Estimated amount of contracts remaining to be executed on capital account - Rs. 57.92 Lakhs (Rs. 234.16 lakhs).

11. Loans and advances include interest free loan to subsidiary company Reva Proteins Limited, Rs 389.77 lakhs (Nil) [Maximum amount outstanding during the year Rs 389.77 lakhs] in respect of which no fixed repayment schedule has been prescribed at this stage.

NOTE : 1. Licensed capacity - Not applicable

2. Installed Capacity is as technically reassessed by the management

3. Production includes quantity manufactured outside on job work basis as under: Ossein - 2365.800 MT (2415.250 MT)

DCP - 5284.100 MT (5533.350 MT)

12. Figures have been rounded off to the nearest rupee. Previous year figures, unless otherwise stated are given within brackets and have been re-grouped and recast wherever necessary to be in conformity with current years layout.

 
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