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Notes to Accounts of Radico Khaitan Ltd.

Mar 31, 2016

a. The Company has issued only one class of shares, referred to as equity shares having a par value of Rs. 21-. Each holder of equity shares is entitled to one vote per share.

b. 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.

c. During the year ended March 31, 2016, the amount of dividend per share recognized for distribution to equity shareholders is Rs. 0.80 (previous year Rs. 0.80) per share.

f. Shares reserved for issue under options: ESOPs

The Company established Employee Stock Options Plan, duly approved by the shareholders in the meeting held on 25.05.2006 which is effective from 25.07.2006. Accordingly, the Company has granted 41,80,000 equity options up to 31.03.2016 which will get vested over a period of 4 years from the date of the grant. The employees have the options to exercise the right within a period of 3 years from the date of vesting. The compensation cost of stock options granted to employees are accounted by the Company using the intrinsic value method.

# Notes

i). The above loans are secured by a parl-passu first charge on gross block of fixed assets of the Company, both present and future.

II). Non-fund based facilities provided by banks are also secured by a second charge on the fixed assets of the Company

# Loans from banks - secured by hypothecation of inventories and book debts. Further secured by a second charge on fixed assets of the Company.

# The Company has not received information from suppliers or service providers, whether they are covered under Micro, Small and Medium Enterprises (Development) Act, 2006 and hence it has not been possible to ascertain the required information relating to amounts unpaid, if any, as at year end together with interest paid or payable to them.

# This does not include any amount due and outstanding, to be credited to the Investor Education and Protection Fund

For the purpose of considering the limit of the Committee Memberships and Chairmanships of a Director, the Audit Committee and the Stakeholders Relationship Committee of Public Limited Companies have been considered.

The Board has framed the Remuneration and Nomination Committee Charter which ensures effective compliance of Section 178 of the Companies Act, 2013 and Clause 49 of the Listing Agreement and Regulation 19 and part D of ceased to be member on 05.02.2016. Terms of reference


Mar 31, 2015

1.a. The Company has issued only one class of shares, referred to as equity shares having a par value of Rs. 2J-. Each holder of equity shares is entitled to one vote per share.

b. 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,

Rupees in lace 2014-15 2013-14

2. Contingent Liabilities not provided for:

i) Claims against the Company, not acknowledged as debts

(a) Disputed liability relating to ESI Contribution 0 89 0.89

(b) Disputed liability relating to PF conlribulion of conlraclor labour 33.04 33 04

(c) Disputed liability relating to payment of late re-Calibration fees on verification and stamping of manufacturing vats/lanks installed at distillery. 86.00 88.00

(d) Disputed claim relating to refund of export duty On rectified spirit 10.62 10.62

(e) Disputed VAT/Sales/Entry Tax matters under appeal 2,078,08 9.88

(f) Disputed Excise matters- 349,52 392.64

(g) Disputed Stamp duty claim arising out of amalgamation, being contested 80.00 80.00

(h) Disputed demands on account of service tax including interest and penalty thereon for the period July 2003 to March 2012, being contested and under appeal 15,371.50 10,865,61

18, 011.65 11,480,69

In respect of the items above, future cash outflows are determinable only on receipt of judgements / decisions pending at various forums / authorities

ii) Madhya Pradesh State Industrial Development Corporation Ltd, in February 2007 demanded a sum of Rs.166.09 lacs besides unspecified expenses arising out of the alleged non compliance of conditions relating to its holding of shares in Abhishek Cement Ltd prior to the merger of Radico Khailan Ltd, in the year 2002-03. The writ petition filed by Company before Madhya Pradesh high court has been partly allowed by confirming the recovery of Rs 167.32 Sacs against the Company. However, the division bench of Madhya Pradesh high court has stayed the recovery proceedings initiated by local collector office. The court has ordered to maintain Rs 100 lacs in Slate Bank of India till the final adjudication of the matter. The matter is since sub -judioe.

iii) The Company has filed legal suits against recovery of its dues from trade receivable, contract bottlers and other parties aggregating to Rs.1376.39 Lakhs, which are in the opinion of Management recoverable and no material losses are foreseen,

vi)The Commissioner Service Tax New Delhi had issued further show cause notice on 12 05 2014 on the Company demanding Service Tax of Rs 2647.22 Lacs plus interest and penally under business auxiliary service for the period April 2012 toMarch 2013, The Company is in the process of replying to the show cause notice

3. In the opinion of the Management and to the best of their knowledge and belief, the value on realisation of current assets, loans and advances in the ordinary course of business would not be less than the amount at which they are stated in the Balance Sheet.

4. Pursuant to the amendment by way of addition of paras 46 and 46A to AS-11 on effect of changes in foreign exchange rates. the Company had excercised the option of deferring the foreign exchange fluctuation gain / loss in respect of the accounting periods commencing from 0104,2007 Further, such foreign exchange differences relating to acquisition of depreciable capital assets have been adjusted to the cost of such assets and depreciated over the balance life of the assets.

As a result, foreign exchange loss (including arising on account of loan repayment) of Rs 479,45 lacs (previous year Rs 1131.59 lacs) long term foreign currency items pertaining to capital assets has been adjusted to fixed assets. Out of the foreign currency monetary items translation difference account of Rs.4229,45 lacs (debit) (previous year Rs,5524.02 lacs), as on 31.03.2015, a sum of Rs 1033.09 lacs (previous year Rs,1469.39 lacs) has been debited to loss on foreign exchange fluctuation account during the year,

5. The Company has taken premises on operating lease. The lease payments charged during the year to the Statement of profit and loss account amounts to Rs 489.57 lacs. (Previous Year; Ra.473.03 lacs), Amount due within one year Rs 366.61 lacs.

6. Income Tax -

Provision for Income Tax for the year has been made as per section 115 JB of the Income Tax Act, 1962 (MAT). The Company can avail the benefit of unutilized MAT credit of Rs 952.50 lacs within the period provided in law.

7. Employee Benefits : AS-15

(I) The Company has taken a policy with Life Insurance Corporation of India (LIC) for meeting the acornting liability on account of gratuity. The premium, ascertained by UC, is charged to the Statement of profit and loss. The amount debited to profit & loss account is Rs. 376-34 lacs

8. Related Party disclosure as per Accounting Standard -18 :

A Related parties arid their relationship:

I Enterprises that directly, or Indirectly through one or more intermediaries control, or are controlled by, or are under common control with, the reporting enterprise : (1)Sapphire Intrex Ltd,

II Associates and Joint Ventures (1) Radico MV Distilleries Limited Maharashtra (2) Radico Global Limited (Associate)

III Key Manangemant personnel: (1) Dr Lai it Khaitan , Chairman 4 Managing Director (2) Mr, Khaitan . Managing Director (3) Mr, K.P. Singh , Whole Time Director (4) Mrs. Shailaja Seraf, Director

Relatives: (1) Mrs, Deepshikha Khaitan (Wife of Mr Abhishek Khaitan)

9.The Company is required to spend a further sum of Rs.71.86 lakhs lowards Corporate Social Responsibility relating to the financial year 2014-15, as required under section 135 of the Companies Act, 2013. This is expected to be spent Jo the succeeding financial year.

10. The Company has entered into arrangements with certain distilleries and bottling units in other states for manufacture and marketing of its own IMFL brands. The manufacture under the said arrangement, wherein each party's obligations are stipulated, is carried out under It's dose supervision. The marketing is entirely the responsibility of the Company and consequently the Company is required to bear bad debts arising on sales The Company is also required to ensure adequate finance to the distilleries, where required. Accordingly, it is considered appropriate to disclose the following Information (unaudited), as applicable to such activities

i) The balance due from distilleries under the arrangement, Rs 17424,63 lacs (Previous year Rs 21031.53 lacs) is included under advances recoverable, This is on account of the financing by the company of inventories. deblora and other current assets net of current liabilities on behalf of the Units. Such advances include Rs.1992,96 lacs (previous year Rs.1927,64 lacs) in respect of units Which are closed and considered good and recoverable. The management is taking steps to recover the amount,

11. Previous year figures have been re-grouped, wherever necessary, to correspond to current year figures.


Mar 31, 2014

Rupees in lacs 2013-14 2012-13

1 Contingent Liabilities not provided for:

i) Claims against the Company , not acknowledged as debts

(a) Disputed liability relating to ESI Contribution 0.89 0.89

(b) Disputed liability relating to PF contribution of contractor labour 33.04 32.44

(c) Disputed liability relating to payment of late re-calibration fees on verification and stamping of manufaturing vats/tanks installed at distillery. 88.00 88.00

(d) Disputed claim relating to refund of export duty on rectified spirit 10.62 10.62

(e) Disputed Sales/Entry/Purchase Tax matters under appeal 9.88 9.88

(f) Disputed Excise matters 392.64 401.23

(g) Disputed Stamp duty claim arising out of amalgamation, being contested 80.00 80.00 (h) Disputed demands on account of service tax including interest and penalty thereon for the period July 2003 to March 2012, being contested and under appeal 10,865.61 10,865.61

11,480.68 11,488.67

2 Related party disclosure as per Accounting Standard -18 :

A Related parties and their relationship :

I Enterprises that directly, or indirectly through one or more intermediaries,control, or are controlled by, or are under common control with, the reporting enterprise :

(1) Sapphire Intrex Ltd.

II Associates and Joint Ventures

(1) Radico NV Distilleries Maharashtra Limited

(2) Radico Global Limited ( Associate)

III Key Manangement personnel :

(1) Dr. Lalit Khaitan , Chairman & Managing Director

(2) Mr. Abhishek Khaitan , Managing Director

(3) Mr. K.P.Singh , Whole Time Director

(1) Mrs. Deepshikha Khaitan (Wife of Mr Abhishek Khaitan)

(2) Mrs. Shailaja Saraf ( Daughter of Dr Lalit Khaitan )

(3) Mr. Padmanabh Mandelia ( Grand son of Dr Lalit Khaitan )


Mar 31, 2013

1. In the opinion of the Management and to the best of their knowledge and belief, the value on realisation of current assets, loans and advances in the ordinary course of business would not be less than the amount at which they are stated in the Balance Sheet.

2. Pursuant to the amendment by way of addition of paras 46 and 46A to AS-11 on effect of changes in foreign exchange rates, the Company had excercised the option of deferring the foreign exchange fluctuation gain / loss in respect of the accounting periods commencing from 01.04.2007. Further, such foreign exchange differences relating to acquisition of depreciable capital assets have been adjusted to the cost of such assets and depreciated over the balance life of the assets.

As a result, foreign exchange loss of Rs 646.64 lacs (previous year Rs 1281.30 lacs) long term foreign currency items pertaining to capital assets has been adjusted to fixed assets. Out of the foreign currency monetary items translation difference account of Rs.4114.11 lacs (debit) (previous year Rs.2981.51 lacs), as on 31.03.2013, a sum of Rs 771.81 lacs (previous year Rs.296.86 lacs) has been debited to loss on foreign exchange fluctuation account during the year.

35. The Company has taken premises on operating lease. The lease payments charged during the year to the Statement of profit and loss account amounts to Rs 454.72 lacs. (Previous Year: Rs.322.69 lacs). Amount due within one year Rs 328.96 lacs.

3. INCOME TAX -

i) Provision for Income Tax for the year has been made as per normal provisions of the Income Tax Act, 1961. The MAT credit to the extent of Rs. 703.28 lacs will be adjusted thereagainst. The Company can avail the benefit of unutilized MAT credit within the period provided in law.

ii) The Company''s factory premises and offices were searched by the Income Tax Department on 1 5th February, 2011. There were no seizure of cash or stocks etc. from the Company''s premises. The Company received notices under section 1 53A of the Income Tax Act, 1961 in respect of A.Y''s 2005-06 to 2010-11 and u/s 143(2) for scrutiny assessment for assessment year 2011 -12. The assessment proceedings are currently in progress. In view of the ongoing assessment proceedings, the Company is not in a position to ascertain the possible liability on account of this action.

4. EMPLOYEE BENEFITS : AS-1 5

(i) The Company has taken a policy with Life Insurance Corporation of India (LIC) for meeting the accruing liability on account of gratuity. The premium, actuarially ascertained by LIC, is charged to the Statement of profit and loss. The amount debited to profit & loss account is Rs. 100.82 lacs.

(ii) In respect of leave encashment, provision is made based on the actuarial valuation by an independent Actuary. The following information as required under AS-1 5 are based on the report of the Actuary / L.I.C.

5. SEGMENT REPORTING :

Based on the guideline in Accounting Standard on segment reporting (AS- 17), the Company''s primary business segment is manufacture and trading in liquor. The liquor business incorporates the product groups, namely, rectified spirit, country liquor and IMFL which mainly have similar risks and returns. Therefore, segment reporting is not applicable.

6. RELATED PARTY DISCLOSURE AS PER ACCOUNTING STANDARD-18 :

A Related parties and their relationship :

I Enterprises that directly, or indirectly through one or more intermediaries,control, or are controlled by, or are under common control with, the reporting enterprise :

(1) Sapphire Intrex Ltd.

II Associates and Joint Ventures (1) Radico NV Distilleries Maharashtra Limited

(2) Radico Global Limited ( Associate)

III Key Management personnel : (1) Dr. Lalit Khaitan , Chairman & Managing Director

(2) Mr. Abhishek Khaitan , Managing Director

(3) Mr. K.P.Singh , Whole Time Director

Relatives: (1) Mrs. Deepshikha Khaitan (Wife of Mr Abhishek Khaitan)

(2) Mrs. Shailaja Saraf ( Daughter of Dr Lalit Khaitan)

(3) Mr. Padmanabh Mandelia ( Grand son of Dr Lalit Khaitan)

7. In the opinion of the management, there is no impairment of assets requiring provision in accordance with AS-28.

8. The Company has entered into arrangements with certain distilleries and bottling units in other states for manufacture and marketing of its own IMFL brands. The manufacture under the said arrangement, wherein each party''s obligations are stipulated, is carried out under it''s close supervision. The marketing is entirely the responsibility of the Company and consequently the Company is required to bear bad debts arising on sales. The Company is also required to ensure adequate finance to the distilleries, where required. Accordingly, it is considered appropriate to disclose the following information (unaudited), as applicable to such activities.

(i) Income from operations through other distilleries / bottling units reflects the net contribution from the sales made by these Units and is detailed as under:

ii) The balance due from distilleries under the arrangement, Rs 19595.94 lacs (Previous year Rs 18954.51 lacs) is included under advances recoverable. This is on account of the financing by the company of inventories,debtors and other current assets net of current liabilities on behalf of the Units. Such advances include Rs. 1 889.38 lacs (net of Rs.75 lacs provided) in respect of units which are closed and considered good and recoverable. The management is taking steps to recover the amount.

9. The Board of Directors in their meeting held on 8th February, 2013 have re-appointed to Dr L.K. Khaitan,Mr Abhishek Khaitan and Mr K. P. Singh as Chairman & Managing Director, Managing Director and Whole Time Director respectively for a period of 5 years w.e.f. 20th February, 2013 subject to the approval of shareholders and any other regulatory approvals that may be necessary. Necessary resolutions will be placed before the shareholders in the ensuing Annual General Meeting.

10. Previous year figures have been re-grouped, wherever necessary, to correspond to current year figures.


Mar 31, 2012

2011-2012 2010-2011

1. Estimated amount of Capital commitments (Net of advances) 2,169.19 1740.70

2. Contingent Liabilities not provided for:

i) Claims against the Company, not acknowledged as debts

(a) Disputed liability relating to ESI Contribution 0,89 0.89

(b) Disputed liability relating to PF contribution of contractor labour 32.44 32.44

(c) Disputed liability relating to payment of late re-calibration fees on verification and stamping of manufacturing vats/tanks installed at distillery. 88.00 88.00

(d) Disputed claim relating to refund of export duty on rectified spirit 10.62 10.62

(e) Disputed Entry Tax demand- matter under appeal 6.86 33.17

(f) Disputed penalty U/s 10 for purchase of HSD (Diesel) matter under appeal 3.02 3.02

(g) Disputed Excise matters 442.68 236.65

(h) Disputed Stamp duty claim arising out of amalgamation, being contested 80.00 80.00

(i) Disputed demands on account of service tax including interest and penalty thereon for the period July 2003 to March 2010, being contested and under appeal 8,259.47 6,359.66

8,923.98 6,844.45 In respect of the items above, future cash outflows are determinable only on receipt of judgements / decisions pending at various forums / authorities.

3.Employee Benefits : AS-15

(I) The Company has taken a policy with Life Insurance Corporation of India (LIC) for meeting the accruing liability on account of gratuity. The premium, actuarially ascertained by LIC, is charged to the Profit and Loss account. The amount debited to profit & loss account is Rs. 89.77 lacs.

(ii) In respect of leave encashment, provision is made based on the actuarial valuation by an independent Actuary. The following information as required under AS-15 are based on the report of the Actuary / L.I.C.

4. Segment reporting :

Based on the guideline in Accounting Standard on segment reporting (AS- 17), the Company's primary business segment is manufacture and trading in liquor. The liquor business incorporates the product groups, namely, rectified spirit, country liquor and IMFL which mainly have similar risks and returns. Therefore, segment reporting is not applicable.

5.Related party disclosure as per Accounting Standard -18 :

A Related parties and their relationship :

I Enterprises that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the reporting enterprise :

6. The Company has entered into arrangements with certain distilleries and bottling units in other states for manufacture and marketing of its own IMFL brands. The manufacture under the said arrangement, wherein each party's obligations are stipulated, is carried out under it's close supervision. The marketing is entirely the responsibility of the Company and consequently the Company is required to bear bad debts arising on sales The Company is also required to ensure adequate finance to the distilleries, where required. Accordingly, it is considered appropriate to disclose the following information (unaudited), as applicable to such activities.

7. Previous year figures have been re-grouped, wherever necessary, to correspond to current year figures.


Mar 31, 2011

Rs. in '000 Rs. in '000

CURRENT YEAR PREVIOUS YEAR

1. Estimated amount of Capital commitments ( Net of advances ) 174,070 44,506

2 Contingent Liabilities not provided for:

i) Claims against the Company , not acknowledged as debts

(a) Disputed liability relating to ESI Contribution 89 89

(b) Disputed liability relating to PF contribution of contractor labour 3,244 3,244

(c) Disputed liability relating to payment of late re-calibration fees on verification and stamping of manufaturing vats/tanks installed at distillery. 8,800 8,800

(d) Disputed claim relating to molasses purchased on credit ( include interest of Rs.437,868) - 561

(e) Disputed claim by APO for non - supply of rum - 1,292

(f) Disputed claim relating to refund of export duty on rectified spirit 1,062 1,062

g) Disputed Entry Tax demand-matter under appeal 3,317 3,370

(h) Disputed Penalty U/S 10 for purchase of HSD ( Diesel) -matter under appeal 302 302

(i) Disputed Excise matters 23,665 23,665

(j) Disputed Stamp duty claim arising out of amalgamation, being contested 8,000 8,000

(k) A recovery suit and winding up petition filed by a UK company for enforcing an alleged guarantee given on behalf of Radico SPS UK Ltd. (Since liquidated) disputed and being contested at London and Allahabad (Higher of the claim being taken) - 99,513

(l) Disputed demand on account of service tax including an equal penalty thereon for the period July 2003 to March 2008, being contested and under appeal 635,966 635,966

(m) Loan prepayment charges levied by Banks, not accepted - 9,477

684,445 795,341

In respect of the items above, future cash outflows are determinable only on receipt of judgements / decisions pending at various forums / authorities.

ii) Guarantee given to a Bank on behalf of :

(a) Radico NV Distilleries Maharashtra Ltd. 414,000 414,000

iii) The Company has entered into an agreement dated 23rd February' 2007 with Fortune Brand Promotion And Management Trust (the Trust), (of which the Company is the Settler) for carrying out brand management services. In consideration of the same, the Company is required to pay brand management fee to the Trust. Sales promotion expenses for the year include Rs. 1890.73 lacs (Previous year Rs. 1804.96 lacs) paid to the Trust on the basis of their invoices. The agreement is to continue for a period of seven years, unless terminated earlier. As per the Trust Deed and agreement, the Trust fund is held for the benefit of the lenders in respect of their outstanding dues and the brand owners (the Company) in respect of residual interest. On termination of the agreement at any time, the Company will be liable to pay to the Trust of its outstanding borrowing, as reduced by the funds available to the Trust and also the other costs and expenses towards closing of the Trust.

As security, charge by way of hypothecation has been created on the trade marks and copy rights of two self generated brands of the Company in favour of a Bank and registered in the office of Registrar of Companies as per section 125 of the Companies Act 1956. On the basis of information from the Trust, the outstanding loan as on the Balance Sheet date is : 356,363 371,580

iv) Madhya Pradesh State Industrial Development Corporation Ltd. has demanded a sum of Rs.168.09 lacs besides unspecified expenses arising out of the alleged non compliance of conditions relating to its holding of shares in Abhishek Cement Ltd. prior to the merger of Radico Khaitan Ltd. in the year 2002-03. Its action has resulted in a sum of Rs.72.84 lacs held in State Bank of India being attached. The recovery proceedings initiated by local Collector Office are stayed under the Orders of the Madhya Pradesh High Court. The Company is taking suitable steps to contest the recovery proceedings.

v) The Addl. Director General DGCEI (Hqrs), R.K. Puram, New Delhi had issued show cause notice on 21.10.2009 on the Company demanding Service Tax of Rs. 729.86 Lacs plus interest and penalty under business auxiliary service for the period April 2008 to March 2009. The Company has submitted the reply and hearing on the same is awaited.

vi) The Addl. Director General DGCEI (Hqrs), R.K. Puram, New Delhi had issued further show cause notice on 24.09.2010 on the Company demanding Service Tax of Rs. 1169.95 Lacs plus interest and penalty under business auxiliary service for the period April 2009 to March 2010. The Company is in the process of submitting the reply.

3 In the opinion of the Management and to the best of their knowledge and belief, the value on realisation of current assets, loans and advances in the ordinary course of business would not be less than the amount at which they are stated in the Balance Sheet.

4 (i) The Company raised USD 50 million through an issue of FCCBs on 26th July 2006 (USD 40 million) and 25th August 2006 (USD 10 million on exercise of green shoe option by the manager to the issue). The FCCBs will be convertible into equity shares of the Company at any time during the currency of the bonds at the option of the bondholders at a conversion price of Rs. 159.20 per share (orginal conversion price being Rs 172.50 per share reset on 6th August 2008 pursuant clause 6.4 of the subscrption agreement). These are listed on the Singapore Stock Exchange. The FCCBs carry a coupon rate of 3.50% per annum and have a maturity of five years and one day from the date of issue.

(ii) The FCCBs unless previously converted, redeemed, or cancelled, are liable to be redeemed on the maturity date at a premium of 30.3961% of the principal amount. The premium payable on redemption has been provided proportionately (over the life of bonds) and accordingly, Rs.883.50 lacs for the year (out of the total redemption premium of Rs.4602.22 lacs) on this account has been debited to Share Premium account.

5 Pursuant to the amendment by way of addition of para 46 to AS-11 on effect of changes in foreign exchange rates, the Company has excercised the option of deferring the foreign exchange fluctuation gain / loss in respect of the accounting periods commencing from 01.04.2007. Further, such foreign exchange differences relating to acquisition of depreciable capital assets have been adjusted to the cost of such assets and depreciated over the balance life of the assets.

As a result, Rs 113.49 lacs foreign exchange gain on long term foreign currency items pertaining to capital assets (previous year: gain Rs 1292.41 lacs) has been adjusted to fixed assets. Out of the foreign currency monetary items translation difference account of Rs.177.88 lacs (credit), as on 31.03.2011 (previous year: credit Rs 250.43 lacs) a sum of Rs 177.88 lacs - credit (previous year: credit Rs 125.22 lacs) has been credited during the year.

6 The Company has taken premises on opearitng lease. The lease payments charged during the year to the profit and loss account amounts to Rs.210.85 Lacs. (Previous Year: Rs.167.37 Lacs). Amount due within one year Rs.179.06.lacs.

7 Income Tax -

a ) Provision for Income Tax for the year has been made on book profits (MAT) under section 115 JB of the Income Tax Act, 1961. MAT credit available for set off aggregating to Rs.1447.50 lacs has been shown separately under Loans and Advances . The Company can avail the benefit of MAT within the period provided in law.

b ) The Company's factory premises and offices were searched by the Income Tax Department on 15th February, 2011. There were no seizures of cash or stocks etc. from the Company's premises. The Income Tax department would be preparing an appraisal report in due course of time and would be submitting the same to the assessing authorities under the rules governing such searches. The Company has not yet been informed of the substance of the allegations against it nor evidence upon which they are based and is therefore not in a position to ascertain the possible liability on account of this action and the Company is not aware of any wrong doing.

8 The Company has not received information from suppliers or service providers, whether they are covered under Micro, Small and Medium Enterprises (Development) Act, 2006 and hence it has not been possible to ascertain the required information relating to amounts unpaid,if any, as at year end together with interest paid or payable to them.

9 The Company established Employee Stock Options Plan, duly approved by the shareholders in the meeting held on 25th May, 2006, which has become effective from 25th July, 2006. Accordingly, the Company has granted 3,327,500 equity options upto 31st March 2010 and also 62,500 equity options during 2010-11, to the eligible employees as per the recommendations of the Compensation Committee, which will get vested over a period of 4 years from the date of the grant. The employees have the options to exercise the right within a period of 3 years from the date of vesting.

In respect of Options granted under the Employee Stock Options plan, in accordance with the guidelines issued by SEBI, the accounting value of the options is accounted as deferred employee compensation, which is amortized on a straight line basis over the period between the date of grant of options and eligible dates for conversion into equity shares. Consequently the schedule of salaries & benefits includes Rs.43.19 lakhs (Previous year Rs.81.38 lakhs) being the amortisation of deferred employee compensation.

10 Employees Benefits : AS-15

(I) The Company has taken a policy with Life Insurance Corporation of India (LIC) for meeting the accruing liability on account of gratuity. The premium, actuarialy ascertained by LIC, is charged to the Profit and Loss account. The amount debited to profit & loss account is Rs.63.69 lacs

11 Segment reporting :

Based on the guideline in Accounting Standard on segment reporting ( AS- 17), the Company's primary business segment is manufacture and trading in liquor. The liquor business incorporates the product groups, namely, rectified spirit, country liquor and IMFL which mainly have similar risks and returns. Therefore, segment reporting is not applicable.

12 Related party disclosure as per Accounting Standard -18 :

A Related parties and their relationship :

I Enterprises that directly, or indirectly through one or more intermediaries, control, or

(1) Saphire Intrex Ltd.

are controlled by, or are under common control with, the reporting enterprise:

II Associates and joint ventures

(1) Diageo Radico Distilleries Private Limited

(2) Radico NV Distilleries Maharashtra Limited

(3) Radico Global Limited (an associate)

III Key Manangement personnel :

(1) Dr. Lalit Khaitan, Chairman & Managing Director

(2) Mr. Abhishek Khaitan, Managing Director

(3) Mr. K.P. Singh, Whole Time Director

Relatives :

(1) Mrs. Deepshikha Khaitan (wife of Mr Abhishek Khaitan)

(2) Mrs. Shailja Saraf (Daughter of Dr. Lalit Khaitan)

(3) Mr. Padmanabh Mandelia (Grand son of Dr Lalit Khaitan)

13 The Company has entered into arrangements with certain distilleries and bottling units in other states for manufacture and marketing of its own IMFL brands. The manufacture under the said arrangement, wherein each party's obligations are stipulated, is carried out under it's close supervision. The marketing is entirely the responsiblity of the Company and consequently the Company is required to bear bad debts arising on sales The Company is also required to ensure adequate finance to the distilleries, where required. Accordingly, it is considered appropriate to dislcose the following information (unaudited), as applicable to such activities.

14 Previous year figures have been re-grouped, wherever necessary, to correspond to current year figures.


Mar 31, 2010

1. In the opinion of the Management and to the best of their knowledge and belief, the value on realisation of current assets, loans and advances in the ordinary course of business would not be less than the amount at which they are stated in the Balance Sheet.

2. The shareholders in the Extra Ordinary General Meeting held on 23.10.2009 approved the raising of long term funds by way of Qualified Institutional Placements (QIPs)in terms of Chapter VIII of the SEBI (Issue of Capital & Disclosre Requirements) Regulations 2009. In pursuant thereof, the Company has raised USD 75 millions equivalent to Rs.341.79 crores from QIBs and 2,89,19,000 equity shares having face value of Rs.2/- each at a premium of Rs.116.90 per equity share, were issued and allotted to the investors on 22.03.2010. The funds thus raised have been used for repayment of loans as per the terms of the issue and the amount remaining unutilised are held in mutual funds - Rs. 22.00 crores and in an escrow bank a/c - Rs. 12.79 crore.

3. (i) The Company has raised USD 50 million through an issue of FCCBs on 26th July 2006 (USD 40 million) and 25th August 2006 ( USD 10 million on exercise of green shoe option by the manager to the issue). The FCCBs will be convertible into equity shares of the Company at any time during the currency of the bonds at the option of the bondholders at a conversion price of Rs. 159.20 per share (orginal conversion price being Rs 172.50 per share reset on 6th August 2008 pursuant clause 6.4 of the subscrption agreement). These are listed on the Singapore Stock Exchange. They carry a coupon rate of 3.50% per annum and have a maturity of five years and one day from the date of issue.

(ii) The FCCBs unless previously converted, redeemed, or cancelled, are liable to be redeemed on the maturity date at a premium of 30.3961% of the principal amount. The premium payable on redemption has been provided proportionately (over the life of bonds) and accordingly, Rs 451.95 lacs for the year (out of the total redemption premium of Rs 4652.72 lacs) on this account has been debited to Share Premium account.

(iii) Pursuant to RBI circular dated 8th December 2008, the Company has repurchased / bought back the FCCBs to the extent of face value of USD 16.09 million till 31st March 2010 and cancelled in the record of the Trustee to the issue, leaving a balance outstanding of USD 33.91 million. The gain on re-purchase of bond has been credited to profit & loss account. The Company has been advised that this gain is not exigible to income tax liability under normal computation.

4. Pursuant to the amendment by way of addition of para 46 to AS-11 on effect of changes in foreign exchange rates, the Company has excercised the option of deferring the foreign exchange fluctuation gain / loss in respect of the accounting periods commencing from 01.04.2007. Further, such foreign exchange differences relating to acquisition of depreciable capital assets have been adjusted to the cost of such assets and to be depreciated over the balance life of the assets.

As a result, Rs 1292.41 lacs foreign exchange gain on long term foreign currency items pertaining to capital assets (previous year: loss Rs 1940.91 lacs) has been adjusted to fixed assets. Out of the foreign currency monetary items translation difference account of Rs 250.43 lacs(credit), as on 31.03.2010 (previous year: debit Rs 724.17 lacs) a sum of Rs 125.22 lacs - credit (previous year: debit Rs 270.76 lacs) has been credited during the year leaving a balance of Rs 125.21 lacs(credit) to be adjusted in the next financial year.

5. Income Tax -

a ) Provision for Income Tax for the year has been made on book profits (MAT) under section 115 JB of the Income Tax Act, 1961. Income tax payments (net of provision) shown under Loans and Advances include Rs 1447.50 lacs on account of MAT credit available for set off, which the Company can avail within the period provided in law.

b ) In respect of assessment years 1993-94 and 1996-97 - the demands aggregate to Rs 96.90 lacs. In view of the expected relief in appeals, no provision is considered necessary for the demand. However, these have been adjusted in full by the department against TDS / Advance tax refunds due to the Company.

c ) The Deputy Commissioner of Income Tax, while giving effect to the order of Income Tax Settlement Commission for the assesment years 2000-01 to 2006-07 has vide order dated 29th April,2008 charged penal interest under relevant provisions of the Income Tax Act 1961 aggregating to Rs 335.23 lacs. This has been recovered out of the refunds due to the company. The Company has not accepted the levy of interest and no provision has been made therefore. The Company has filed a special leave petition before the Hon’ble Supreme Court of India, which is pending.

In line with the Accounting Standard AS-22, deferred tax in respect of timing differences, which orginate and likely to be reversed during the tax holiday period under chapter VI A of the Act have not been recognised.

6. The Company has not received information from suppliers or service providers, whether they are covered under Micro, Small and Medium Enterprises (Development) Act, 2006 and hence it has not been possible to ascertain the required information relating to amounts unpaid, if any, as at year end together with interest paid or payable to them.

7. The Company established Employee Stock Options Plan, duly approved by the shareholders in the meeting held on 25th May, 2006, which has become effective from 25th July, 2006. Accordingly, the Company has granted 2,590,000 equity options upto 31st March 2009 and also 737,500 equity options during 2009-10, to the eligible employees as per the recommendations of the Compensation Committee, which will get vested over a period of 4 years from the date of the grant. The employees have the options to exercise the right within a period of 3 years from the date of vesting.

The compensation cost of stock options granted to employees are accounted by the Company using the intrinsic value method.

In respect of Options granted under the Employee Stock Options plan, in accordance with the guidelines issued by SEBI, the accounting value of the options is accounted as deferred employee compensation, which is amortized on a straight line basis over the period between the date of grant of options and eligible dates for conversion into equity shares. Consequently the schedule of salaries & benefits includes Rs. 81.38 lakhs (Previous year Rs 56.25 lakhs) being the amortisation of deferred employee compensation.

8. Employees Benefits : AS-15

(i) The Company has taken a policy with Life Insurance Corporation of India (LIC) for meeting the accruing liability on account of gratuity. The premium, actuarialy ascertained by LIC, is charged to the Profit and Loss account. The amount debited to profit & loss account is Rs.58.00 lacs (includes Rs.3.51 lakhs excess charged during previous year).

Based on the guideline in Accounting Standard on segment reporting ( AS- 17), the Company’s primary business segment is manufacture and trading in liquor. The liquor business incorporates the product groups , namely , rectified spirit , country liquor and IMFL which mainly have similar risks and returns.Therefore, segment reporting is not applicable.

9. Related party disclosure as per Accounting Standard -18 : A Related parties and their relationship :

I Enterprises that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the reporting enterprise:

(1) Saphire Intrex Ltd.

II Associates and joint ventures (1) Diageo Radico Distilleries Private Limited

(2) Radico NV Distilleries Maharashtra Limited

(3) Radico Global Limited (an associate)

III Key Manangement personnel : (1) Dr. Lalit Khaitan, Chairman & Managing Director

(2) Mr. Abhishek Khaitan, Managing Director

(3) Mr. K.P.Singh, Whole Time Director

Relatives : (1) Mrs. Deepshikha Khaitan (wife of Mr Abhishek Khaitan)

(2) Mrs. Shailja Saraf (Daughter of Dr. Lalit Khaitan)

(3) Mrs. Sheela Singh (wife of Mr. K.P. Singh)

ii) The balance due from distilleries under the arrangement, Rs 1577715 thousands (Previous year Rs 1335047 thousands) is included under advances recoverable. This is on account of the financing by the company of inventories,debtors and other current assets net of current liabilities on behalf of the Units. Out of this balances aggregating to Rs. 606623 thousands are pending confirmation / reconciliation. 22. Previous year figures have been re-grouped, wherever necessary, to correspond to current year figures.

c There are no derivative contracts outstanding as on the balance sheet date.

10. The Company has entered into arrangements with certain distilleries and bottling units in other states for manufacture and marketing of its own IMFL brands. The manufacture under the said arrangement, wherein each party’s obligations are stipulated, is carried out under it’s close supervision. The marketing is entirely the responsiblity of the Company and consequently the Company is required to bear bad debts arising on sales The Company is also required to ensure adequate finance to the distilleries, where required. Accordingly, it is considered appropriate to dislcose the following information, as applicable to such activities.

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