Mar 31, 2018
1. Background
Tasty Bite Eatables Limited (âthe Companyâ) is a company domiciled in India with its registered office situated at Shivajinagar, Pune and its manufacturing facility near Pune. The Company has been incorporated under the provisions of Indian Companies Act and its equity shares are listed on the Bombay Stock Exchange Limited and the National Stock Exchange Limited. The Company is in the business of manufacturing and selling âPrepared Foodsâ. It includes a range of Ready-to-Serve (âRTSâ) ethnic food products under the brand name âTasty Biteâ and Frozen Formed Products (âFFPâ).
2. Basis of preparation
2.1 Statement of compliance
These financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 notified under Section 133 of Companies Act, 2013, (the âActâ) and other relevant provisions of the Act.
The Companyâs financial statements as at and for the year ended 31 March 2017 were prepared in accordance with the Companyâs (Accounting standards) Rules, 2006, notified under Section 133 of the Act and other relevant provisions of the Act.
As these are the Companyâs first financial statements prepared in accordance with Indian Accounting Standards (Ind AS), Ind AS 101, First-time Adoption of Indian Accounting Standards has been applied. An explanation of how the transition to Ind AS has affected the previously reported financial position, financial performance and cash flows of the Company is provided in Note 48.
Details of the Companyâs accounting policies are included in Note 3.
The financial statements were authorised for issue by the Companyâs Board of Directors on 16th May 2018.
2.2 Functional and presentation currency
These financial statements are presented in Indian Rupees (INR), which is also the Companyâs functional currency. All amounts have been rounded-off to the nearest lakh (except per share data) to two decimal points, unless otherwise indicated.
2.3 Basis of measurement
The financial statements have been prepared on the historical cost basis except for the following items:
2.4 Use of estimates and judgements
In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized prospectively.
Judgements, Assumptions and estimation uncertainties
Information about judgements made in applying accounting policies, assumptions and estimation uncertainties that have the most significant effects on the amounts recognized/significant risk resulting in a material adjustment in the financial statements is included in the following notes:
Note 3.4 - Estimation of useful life used by the management for property, plant and equipment and intangible asset Note 44 - Measurement of defined benefit obligations: key actuarial assumptions
Note 35 - recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources
Note 38 - Lease classification
Note 34 - Estimation of current tax expense and tax payable
Note 34 - Recognition of deferred tax asset
Note 10 - Impairment of Trade Receivables
2.5 Measurement of fair values
A number of accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.
The Company has an established control framework with respect to measurement of fair values. The Companyâs board of directors has overall responsibility for the establishment and oversight of the Companyâs risk management framework.
The established framework is reviewed and monitored by the Controller - Finance, which includes the responsibility for reviewing and monitoring all significant fair value measurements, including level 3 fair values. The Controller -Finance regularly reviews significant unobservable inputs and valuation adjustments.
Significant valuation issues are reported to the Companyâs Board of Directors.
Fair values are categorized into different levels in a Fair value hierarchy based on inputs used in the valuation techniques as follows.
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
When measuring the fair value of an asset or liability, the Company uses observable market data as far as possible. If the inputs used to measure fair value of asset or liability fall into different levels of fair value hierarchy, then the fair value measurement is categorized in its entiretly in the same level of fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
Further information about the assumptions made in measuring fair values is included in following notes:
Note 47 - Financial instruments.
Note 46 - Employee Shared based payment.
2.6 Current-non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. Assets
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realized in, or is intended for sale or consumption in, the Companyâs normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realized within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.
Current assets include current portion of non-current financial assets. All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Companyâs normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be settled within 12 months after the reporting date; or
d) The Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
Current liabilities include current portion of non-current financial liabilities. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Operating cycle
Operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. The operating cycle of the Company is less than 12 months.
3. Standard issued but not effective
The Company is not yet required to adopt the following standards which are issued but not yet effective.
Appendix B to Ind AS 21, Foreign currency transactions and advance consideration:
On March 28, 2018, Ministry of Corporate Affairs (âMCAâ) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency.
The amendment will come into force from April 1, 2018 Ind AS 115 Revenue from contracts with customers:
On March 28, 2018, Ministry of Corporate Affairs (âMCAâ) has notified Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entityâs contracts with customers.
This amendment will come into force from April 1, 2018
The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. According to the new standard, revenue is recognized to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard establishes a five step model that will apply to revenue earned from a contract with a customer, regardless of the type of revenue transaction or the industry. The standard is effective from 01 April 2018.
The Company has preliminary assessed that the profit impact of IND AS 115 will be immaterial to the financial statements. The Company is still in the process of assessing the full impact of the application of IND AS 115 on its financial statements, including any additional disclosures required.
C) Rights, preferences and restrictions attached to equity shares:
The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividend and share in the Companyâs residual assets. The equity shares are entitled to receive dividend as declared from time to time subject to payment of dividend to preference shareholders. The voting rights of equity shareholders are in proportion to their share of paid up equity capital of the Company.
D) Rights, preferences and restrictions attached to preference shares:
1% Non-Cumulative, Non-Convertible, Redeemable Preference Shares are redeemable on or before August 31, 2018 at a premium of INR 1,950 per share. The preference shareholder reserves the right to demand for redemption of preference shares during the period upto 31st August, 2018. These preference shares are classified as financial liability as per the requirements of Ind AS.
The Company has received an application dated 17 January 2018 from Kagome Co. Ltd. for change in promoter and promoter group consequent to stock purchase agreement dated 14 August 2017 between Kagome Co. Ltd. and Effem Holdings Limited for acquisition of common stock in Preferred Brands International Inc., intermediate holding Company of the Company. The Company has made an application to the BSE Limited and National Stock Exchange of India Limited for intimation of the change in ultimate parent from Kagome Co. Ltd. to Effem Holdings Limited and is in the process of obtaining requisite approvals from the members.
âDividend paid during the year ended 31st March 2018 is related to dividend proposed during the year ended 31st March 2017
âDividend paid during the year ended 31st March 2017 is related to dividend proposed during the year ended 31st March 2016
After the reporting dates the following dividends (excluding DDT) were proposed by the directors subject to the approval at the annual general meeting; the dividends have not been recognised as liabilities. Dividends would attract DDT when declared or paid.
A âdividendâ of INR 1 per redeemable non-cumulative preference share (excluding DDT) has been proposed by the directors subject to the approval at the annual general meeting. Since the aforesaid preference share have been classified as âfinancial liabilityâ, the aforesaid amount has been shown as part of finance cost.
Nature and purpose of reserve and surplus and items of other comprehensive income Securities premium reserve
Securities premium is used to record the premium received on issue of shares. It is utilised in accordance with the provisions of the Companies Act, 2013.
Capital reserve
Capital reserve is created for government subsidies and other liabilities.
Employee share based payment reserve
Employee share based payment reserve is created in accordance with Ind AS 102 consequent to the value pool agreement between PBI Inc., the Company and the holders of the outstanding options. Refer Note 46 - Employee shared based payment.
Changes in fair value of hedge instruments, net of tax
Change in fair value of hedge instruments are hedging instruments used by Company as a part of its management of foreign risk associated with its highly probable forecast sale. For hedging foreign currency risk and interest rate risk the Company uses foreign currency forward contract and interest rate swaps respectively, both of which are designated as cash flow hedge.
Remeasurement of defined benefit liability (asset), net of tax
Remeasurements of defined benefit liability (asset) comprises actuarial gains and losses and return on plan assets (excluding interest income)
# The PCFC was secured by first paripassu charge on current assets, first and second pari passu charge on moveable fixed assets and negative lien over immovable properties of factory land and building located at Bhandgaon, Pune.
Information about the Companyâs exposure to interest risk, foreign currency risk and liquidity risks is included in note 47.
Refer note 23 for current maturities of long term debt.
Sub-note:
* During the year, a draft order dated 30 November 2017 was received relevant to the assessment year 2014-2015 from the Deputy Commissioner of Income Tax, Pune (âDCITâ) proposing upward adjustment of income amounting to INR 991 lakhs under transfer pricing regulations, resulting in approximate tax impact of INR 336.84 lakhs (calculated at tax rate of 30.90%) excluding the amount of penalty and interest. The Company has filed an objection with Dispute Resolution Panel for the same and is awaiting the final order.
Income tax demand comprise demand from the Indian tax authorities, upon completion of their tax review for the assessment years 2008-09 to 2013-14. The tax demands are mainly on account of certain transfer pricing adjustments of expenses claimed by the Company under the Income Tax Act. The matters are pending before the Income Tax Appellate Tribunal and the Commissioner of Income tax (Appeals).
Excise duty demand comprise demand from the Central Excise authorities of INR 98.83 lakhs (31 March 2017: INR 96.50 lakhs). The tax demands are mainly related to Excise duty on clearance of goods under certain concessional rate of duty, which as per Departmentâs contention, are not covered under such category. These litigation are pending before various authorities such as Commissioner of Central Excise (Appeals) and Central Excise and Service Tax Appellate Tribunal.
The Company is contesting the demands and the management believes that its position will likely be upheld in the appellate process. The management believes that the ultimate outcome of these proceeding will not have a material adverse effect on the Companyâs financial position and results of operations.
Pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings of the cash flow, if any, in respect of the above as it is determinable only on receipt judgements / decision pending with various forums/authorities.
Custom duty demand comprise demand from the Office of the Commisioner of Custom of INR 264.09 lakhs (31 March 2017: INR Nil lakhs). The tax demands are mainly related to benefit received by the company under Vishesh Krishi and Gram Udyog Yojana (VKGUY), which as per Departmentâs contention, have been availed under incorrect and inadmissible notification. This litigation is pending before Commissioner of Customs .
The Company has reviewed all its pending litigations and proceedings and has adequately provided for where the provision is required and disclosed as contingent liabilities where applicable, in its financial statements.
4. Compliance with Micro, Small and Medium Enterprises Development Act, 2006
The Company has not received any intimation from its suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures, if any relating to amounts unpaid as at year end together with interest paid/payable as required under the said Act have not been given.
5. Earnings per share
A. Basic earnings per share
The calculation of profit attributable to equity shareholders and weighted average number of equity shares outstanding for purpose of basic earnings per share calculation are as follows:
B. Diluted earning per share
The calculation of diluted earning per share is based on profit attributable to equity shareholders and weighted average number of equity shares outstanding, after adjusting for the effects of all dilutive potential equity shares as follows:
6. Operating leases
A. Leases as lessee
The Company has taken on lease a number of offices, warehouse and factory premises under operating leases, The leases typically runs for a period of 3 to 5 years, generally with an option to renew the lease after that period. Lease payments are negotiated after the end of every lease term to reflect market rentals.
7. Details of Specified Bank Notes held
Details of Specified Bank Notes (âSBNâ) held and transacted during the period 08 November 2016 to 30 December 2016 (in accordance with the notification issued by Ministry of Corporate Affiars G.S.R. 308 (E) dated 30th March 2017):
8. Capital management
A business objective of the Company is to sustain the strongest possible equity base in order to foster confidence in all key stakeholders and promote the Companyâs onward development. A sound equity base is also a key factor in ensuring a stable risk rating with lenders, which is important for obtaining acceptable borrowing terms for the Company. The Board of Directors and the shareholders of the Company ensure a responsible dividend policy and an appropriate return on invested capital to promote value growth and safeguard the Companyâs future.
The Board of Directors of the Company are kept informed about the equity position of the Company as part of quarterly reporting. Measures are implemented as necessary, taking the tax and legal frameworks into account, to sustain an appropriate capital base that enables to attain operating targets and to meet the strategic goals.
The Company is required to comply with certain covenants for the borrowing facilities availed by the Company. The Company has complied with these covenants throughout the reporting period.
9. Disclosure in respect of Research and Development activities as per the requirements of Guidelines issued by the Department of Scientific and Research (âDSIRâ):
The Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India has recognized Tasty Bite Research Center (âTBRCâ) as an âIn-house R&D facilityâ with effect from June 21, 2011.
10. Transfer pricing regulations
The Company has established a comprehensive system of maintenance of information and documentation as required by the transfer pricing legislation under section 92- 92F of the Income Tax Act, 1961. The Company is in process of preparing related documentation for the financial year 2017-2018.
The management is of the opinion that its international transactions are at armâs length such that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.
11. Segment Information
A. Business Segments
An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Companyâs other components, and for which discrete financial information is available. The Company recognizes its sale of Prepared Foods activity as its only primary business segment since its operations predominantly consist of manufacture and sale of Prepared Foods to its customers. The âChief Operating Decision Makerâ monitors the operating results of the Companyâs business as single segment. Accordingly in context of âInd AS 108 - Operating Segmentsâ the principle business of the Company constitute a single reportable segment. Accordingly, income from sale of Prepared Foods comprises the primary basis of segmental information set out in these financial statements.
B. Geographical Segments
The geographical information analyses the Companyâs revenues by the Companyâs country of domicile (i.e. India) and other countries. The Company has identified India, United States of America and Rest of the World as geographical location for the presenting the geographical information. In presenting the geographical information, revenue is allocated based on the geographical location of the customers and non current assets (excluding financial instruments ) are allocated based on the location of the assets.
C. Information about major customers
Revenue from one of the customers of the Companyâs single segment i.e. Prepared Foods is INR 17,643.22 lakhs (2017 : INR 15,529.24 lakhs) which is more than 10 percent of the total revenue for the year ended 31 March 2018 and 31 March 2017.
For details about the related employees benefit expenses (including those of Defined Contribution Plan), see Note 30 The Company operates the following post employment benefit plans:
âThe Company has a defined benefit plan, governed by the Payment of Gratuity Act, 1972. Benefit plan entitles an employee, who has rendered at least five years of continuous service, to gratuity at the rate of fifteen days for every completed year of service or part thereof in excess of six months., based on the rates of wages last drawn by the employee concerned. The defined benefit plan for gratuity is administered and funded through a Group Gratuity Scheme with HDFC Life. These defined benefit plans expose the Company to actuarial risk, such as longevity risk, interest rate risk and market (investment) risk.â
A. Funding
Gratuity Plan is funded by the Company. The funding requirements are based on the gratuity fundâs actuarial measurement framework set out in the funding policies of the plan. The funding of Gratuity Plan is based on separate actuarial valuation for funding purposes for which assumption may differ from the assumptions set out in (E). Employees do not contribute to the plan.
The Company expects to pay INR 65 lakhs in contributions to its defined benefit plans in 2018-2019.
B. Reconciliation of the net defined benefit liability
The following table shows a reconciliation from the opening balances to the closing balances for the net defined benefit liability and its components:
Assumptions regarding future mortality are based on published statistics and mortality tables (i.e. India Assured Live Mortality (2006-08).
At 31 March 2018, the weighted average duration of the defined benefit obligation is 6 years
ii. Sensitivity Analysis
Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amount shown below:
a) Background:
Specified employees of the Company were eligible for equity settled stock options under Preferred Brand Inc.âs (âFBI Inc.â or the Holding Companyâs) 2009 Non-Qualified Stock Option and Equity Plan (âthe Equity Planâ). However, during the year 2015 a value pool agreement was entered into, by and between PBI Inc., the Company and the holders of outstanding options (âHoldersâ), wherein PBI Inc. and the Holders agreed to cancel the Options and terminate the Grant Agreements in exchange for a consideration payable by PBI Inc. in lieu of such cancellation of unvested options to the employees of the Company.
b) Conditions:
The consideration is payable only to those Holders who continue their employment with the Company on such dates. Any payments forfeited shall be credited to a segregated account of the Company and on 1 April 2020 shall be allocated and paid pro-rata among the Holders and each other Holder who is employed by the Company.
c) Classification of share based payments:
In accordance with Ind-AS 102, the classification of the share-based payment transaction depends on the nature of the award granted and whether the entity has an obligation to settle the transaction and if the entity has either an obligation to settle in its own equity instruments or no obligation to settle at all, then the transaction is accounted as Equity Settled. Since, the Company does not have any obligation to reimburse corresponding cost of share based payment transaction to PBI Inc., it has classified the settlement as Equity Settled.
e) Measurement of settlement:
Since the amount of cash payment is pre-determined by the Holding Company based on the Value Pool agreement and the Employee covered were specifically mentioned in the said agreement, the Company is of the view that the share based payment shall be measured at such amount agreed since the Company does not have any separate obligation towards the settlement. Accordingly, the details of the fair value and the inputs used in the measurement of the grant-date fair values are not required. Further, since the aggregate amount payable is pre-determined and any payments forfeited shall be allocated and paid pro-rata among the Holders who are in employment with the Company; details such as reconciliation of outstanding share options, weighted average etc. are not applicable.
The liabilities as at 31 March 2016 and 31 March 2017 were settled by PBI Inc. during the year ended 31 March 2017 and 31 March 2018 respectively.
12. Financial instruments - Fair value and risk management
A. Accounting classification and fair values
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy:
* Financial assets and liabilities such as trade receivables, employee dues, cash and cash equivalent, bank balance other than cash and cash equivalents, security deposits, interest accrued on fixed deposits, borrowing, trade payables, deposits from dealers, unclaimed dividend, Other payables etc. are largely short-term in nature. The fair values of these financial assets and liabilities approximate their carrying amount due to the short-term nature of such assets and liabilities.
** Also refer Note 2.5
* Financial assets and liabilities such as trade receivables, employee dues, cash and cash equivalent, bank balance other than cash and cash equivalents, security deposits, interest accrued on fixed deposits, borrowing, trade payables, deposits from dealers, unclaimed dividend, Other payables etc. are largely short-term in nature. The fair values of these financial assets and liabilities approximate their carrying amount due to the short-term nature of such assets and liabilities.
** Also refer Note 2.5
B. Measurement of fair value
Specific valuation technique used to value financial instruments include:
a) The use of quoted market price or dealer quotes of similar instruments
b) the fair value of interest rate swaps is calculated at the present value of the estimated future cash flows based on observable yield curves
c) the fair value of forward foreign exchange contracts and principle swap is determined using forward exchange rates at the balance sheet date
d) the fair value of the remaining financial instruments is determined using discounted cash flow analysis
All of the resulting fair value estimates, where the fair values have been determined based on present values and the discount rates used were adjusted for counterparty or own credit risk
C. Financial risk management
The Company has exposure to the following risk arising from financial instruments:
- credit risk (see (ii) below);
- liquidity risk (see (iii) below); and
- market risk (see (iv) below).
i. Risk management framework
The Companyâs board of directors has overall responsibility for the establishment and oversight of the Com panyâs risk management framework. The board of directors have established a Risk Management Framework, which is reviewed and monitored by the Controller-Finance. The Controller - Finance reports regularly to the board of directors on its activities.
The Companyâs risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Companyâs activities. The Company, through its training and established procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
The Companyâs Audit Committee oversees how management monitors compliance with the Companyâs risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Audit Committe is assisted in its oversight role by internal auditors. Internal auditors undertake regular reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.
ii. Credit risk
Credit risk is the risk of financial loss to the Company if a customer or a counterparty to a financial instrument fails to meet its contractual obligation, and arises principly from the Companies receivable from customer and loans, if any.
The carrying amounts of financial asset represents the maximum credit risk exposure.
Trade receivables are typically unsecured and are derived from revenue earned from customers located in India and outside India. Credit risk has always been managed by the Company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or gain. The Company computes the expected credit loss allowance for trade receivables based on available external and internal credit risk factors such as the ageing of its dues, market information about the customer, industry information and the Companyâs historical experience for customers.
The Companyâs exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk associated with the industry and country in which customers operate.
The risk management framework has a credit policy under which each new customer is analysed individually for creditworthiness before the Companyâ standard payment and delivery terms and condition are offered.
The Company limits its exposure to credit risk from trade receivables by establishing a maximum payment period for customers.
Refer Note 10 for the following information:
- Exposure to the credit risk for trade receivables by geographic region
- Exposure to the credit risk for trade receivables by type of counterparty (concentration of credit risk)
- Movement in the allowance for impairment
- Carrying amount of trade receivables (net of impairment)
Also refer note 3.6 for policy related impairment of financial instruments
Cash and cash equivalent and bank balances other than cash and cash equivalent (âcollectively referred as Bank balanceâ)
The Bank balance is held with Banks. Credit risk on Bank balance is limited as the Company generally invest in deposits with banks with high credit ratings assigned by domestic credit rating agencies. Bank balance pri marily include investment in fixed deposit with banks for a specified time period.
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Companyâs approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Companyâs reputation. The Companyâs treasury department is responsible for liquidity and funding. The Company manages its liquidity risk by continuously monitoring its working capital and by preparing month on month cash flow projections to monitor liquidity requirements.
The Companyâs principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Company believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived. The Company aims to maintain the level of its working capital at an amount in excess of expected cash outflows on account of financial liability over the next six months.
Market risk is the risk that changes in market prices - such as foreign exchange rates and interest rates, will affect the Companyâs income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
The Company is exposed to foreign exchange risk through purchases from overseas suppliers and sales to overseas customers in various foreign currencies. The Company uses derivatives to manage market risk. All such transactions are carried out within the guidelines set by the Company. Generally, the Company seeks to apply hedge accounting to manage volatility in profit or loss.
A) Currency risk
The Company is exposed to currency risk to the extent that there is a mismatch between the currencies in which sales, purchases and borrowings are denominated and the functional currency (INR) of the Company. The exposure is primarily denoted in US Dollars.
The Company uses forward exchange contracts to hedge its currency risk, most with a maturity of less than one year from the reporting date. Such contracts are generally designated as cash flow hedges. At any point of time, the Company hedges 80 to 90% of its estimated foreign currency exposure in respect of forecasted sales. Currency risk related to External Commercial Borrowings have been fully hedged using forward contracts on same dates as the loan are due for repayment.
Sensitivity analysis
A reasonably possible strengthening (weakening) of the US Dollar and other currencies against INR at 31 March would have affected the measurement of financial instruments denominated in foreign currency and affected equity and profit or loss by the amounts shown below. The analysis assume that all other variables as remain constant other than change in foreign currency rate to INR.
1 % increase or decrease in foreign currency rate will have following impact on profit before tax:
The Company adopts the policy of ensuring that between 80 and 90 % of its interest rate risk exposure is at a fixed rate. This is achieved partly by entering into fixed-rate instruments and partly by borrowing at floating rate and using interest rate swaps as hedges of the variabilty in cash flows to interest rate risk.
All the above categories of hedging instruments have been included in derivative assets/derivative liabilities. Management of the Company believes that there are no items to be recognised in profit or loss as hedge ineffective, except for realised portion of foreign exchange against the relevant forward contract. The amount recognised as effective hedge is disclosed under Other comprehensive income.
13 Explanation of Transition to Ind AS:
As stated in Note 2.1, these are the Companyâs first financial statements prepared in accordance with Ind AS. For the year ended 31 March 2017, the Company had prepared its financial statements in accordance with Companies (Accounting Standards) Rules, 2006, notified under Section 133 of the Act and other relevant provisions of the Act (âPrevious GAAPâ).
The accounting policies set out in Note 3 have been applied in preparing these financial statements for the year ended 31 March 2018 including comparative information for the year ended 31 March 2017 and the opening Ind AS Balance Sheet on the date of transition i.e. 1 April 2016.
In preparing its Ind AS Balance Sheet as at 1 April 2016 and in presenting the comparative information for the year ended 31 March 2017, the Company has adjusted amounts reported previously in financial statements prepared in accordance with previous GAAP. This note explains the principle adjustments made by the Company in restating its financial statements prepared in accordance with previous GAAP, and how transition from previous GAAP to Ind AS has affected the Companyâs financial position, financial performance and cash flows.
Optional exemptions availed and mandatory exceptions
In preparing these financial statements, the Company has applied the below mentioned optional exemptions and mandatory exceptions.
A Optional exemptions availed
1 Property, plant and equipment and Intangible assets :
As per Ind AS 101, an entity may elect to:
(i) measure an item of property, plant and equipment at the date of transition at its fair value and may use that fair value as its deemed cost at that date
(ii) use a previous GAAP revaluation of an item of property, plant and equipment at or before the date of transition as deemed cost at the date of the revaluation, provided the revaluation value was, at the date of revaluation, broadly comparable to:
- fair value;
- or cost or depreciated cost under IND AS adjusted to reflect, for example, changes in a general or specific price index.
The elections under (i) or (ii) above are also available for intangible assets that meets recognition criteria in Ind AS 38, Intangible Assets, (including reliable measurement of original cost); and criteria in Ind AS 38 for revaluation (including the existence of an active market).
(iii) use carrying values of property, plant and equipment and intangible assets as on the date of transition to Ind
AS (which are measured in accordance with previous GAAP) if there has been no change in its functional currency as on the date of transition.
As permitted by Ind AS 101, the Company has elected to continue with the carrying values under previous GAAP for all the items of property, plant and equipment and intangible assets.
2 Long term foreign currecy monetary items
Under the Previous GAAP, the Company had opted for option available under para 46A of âAS-11 - The effects of changes in foreign exchange ratesâ to capitalize foreign exchange differences arising from translation of long term foreign currency monetary items (external commercial borrowings for the Company). As per para D13AA of Ind AS 101, a first-time adopter may continue the policy adopted for accounting for exchange differences arising from translation of long-term foreign currency monetary items recognised in the financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period as per the previous GAAP The Company has not availed the option and discontinued to capitalize the foreign exchange differences arising from translation of long term foreign currency monetary items recognised in the financial statements on or before the period ended 31 March 2017.
3 Determing whether an arrangement contains a lease
Ind 101 AS 101 includes whether an optional exemption that permits an entity to apply the relevant requirements in Appendix C of I nd AS 17 for determining whether an arrangement existing at the date of transition contains a lease by considering the facts and circumstances existing at the date of transition. The Company has elected to avail of the above exemption.
B Mandatory exceptions
1 Estimates:
As per Ind AS 101, an entityâs estimates in accordance with Ind AS at the date of transition to Ind AS at the end of the comparative period presented in the entityâs first Ind AS financial statements, as the case may be, should be consistent with estimates made for the same date in accordance with the previous GAAP unless there is objective evidence that those estimates were in error. However, the estimates should be adjusted to reflect any differences in accounting policies.
As per Ind AS 101, where application of Ind AS requires an entity to make certain estimates that were not required under previous GAAP, those estimates should be made to reflect conditions that existed at the date of transition (for preparing opening Ind AS balance sheet or at the end of the comparative period (for presenting comparative information as per Ind AS).
The Companyâs estimates under Ind AS are consistent with the above requirement. Key estimates considered in preparation of the financial statements that were not required under the previous GAAP are listed below:
- Fair valuation of financial instruments carried at FVTPL and FVOCI.
- Determination of the discounted value for financial instruments carried at amortised cost.
2 Derecognition of financial assets and liabilities:
As per Ind AS 101, an entity should apply the derecognition requirements in Ind AS 109, Financial Instrument, prospectively for transactions occurring on or after the date of transition to Ind AS. However, an entity may apply the derecognition requirements retrospectively from a date chosen by it if the information needed to apply Ind AS 109 to financial assets and financial liabilities derecognised as a result of past transactions was obtained at the time of initially accounting for those transactions.
The Company has elected to apply the derecognition principles of Ind AS 109 prospectively.
3 Classification and measurement of financial assets and liabilities:
Ind AS 101 requires an entity to assess classification of financial assets on the basis of facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortised cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable.
Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Measurement of the financial assets accounted at amortised cost has been done retrospectively.
Reconciliation of equity
The following reconciliations provide a quantification of the effect of differences arising from the transition from the previous Indian GAAP (âI GAAPâ) to IND AS in accordance with IND AS 101 and the notes explaining the significant differences there to:
a. Balance Sheet Reconciliation as at 1 April 2016 and 31 March 2017
b. Reconciliation of Statement of Profit and Loss for the year ended 31 March 2017
c. Explanatory notes to the Balance Sheet and Statement of Profit and Loss Reconciliation
âRefers to deferred tax liability on changes in fair value of hedge instruments which was earlier not recognised during and for the period ending 31 March 2017 and 1 April 2016. Due to such recognition, there is no impact/ change in retained earnings, since the changes in fair value of hedge instruments are components of Other Comprehensive Income.
(b) Security deposits
Under previous GAAP, interest free lease security deposits (that are refundable in cash on completion of the lease term) are recorded at their transaction value. Under Ind AS, all financial assets are required to be recognised at fair value. Accordingly, the Company has fair valued these security deposit under Ind AS. The difference between the fair value and transaction value of the security deposit has been recognised as deferred rent. Consequent to this the amount of security deposit has decreased and deferred rent has increased. The profit for the year and total equity has decreased due to amortisation of deferred rent which is partly off set by the notional interest income.
(c) Fair value of investments
Under previous GAAP, Investment in mutual funds was classified as current investment based on intended holding period. Current investment were carried at lower of cost and fair value. Under Ind AS, these investments are required to be measured at fair value. The resulting fair value changes of these investment amounting to INR 0.93 lakhs have been recognised in retained earnings as at the date of transition and subsequently in the profit or loss for the year ended 31 March 2017.
(d) Reclassification of Preference share capital from equity to Borrowings:
Under previous GAAP, Non-cumulative Non-convertible Redeemable preference shares were classified as Equity. Under Ind AS, such non-convertible preference shares are classified as Borrowings since the Company has a contractual obligation to deliver cash and the same is accounted using effective interest rate method at 9% per annum.
(e) Proposed dividend
Under previous GAAP, dividends proposed by the board of directors after the reporting date but before the approval of financial statements were considered to be adjusting events and accordingly recognised (along with relevant dividend distribution tax) as liabilities at the reporting date. Under Ind AS, dividends proposed by the board of directors are considered to be a non-adjusting event. Accordingly, provision for proposed dividend including dividend distribution tax recognised under previous GAAP has been reversed.
(f) Excise duty
Under previous GAAP, revenue from sale of goods was presented net of the excise duty on sales. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. Excise duty is presented in the Statement of Profit and Loss as an expense. This has resulted in an increase in the revenue from operations by INR 150.41 lakhs and increase in total expenses by INR 150.41 lakhs for the year ended 31 March 2017. The total comprehensive income for the year ended and equity as at 31 March 2017 has remained unchanged.
(g) Remeasurement of defined benefit liability / asset and accounting for employee share based payments
Under Ind AS, remeasurement of defined benefit liability / asset are recognised in other comprehensive income. Under previous GAAP, the Company recognised Remeasurement of defined benefit liability / asset in profit or loss. However, this has no impact on total comprehensive income and total equity as on 1 April 2016 and as on 31 March 2017. Further, the Company has accounted for Share Based Payments in accordance with Ind AS 102 (refer note 46). The total reduction in Employee benefits expense for the year ended 31 March 2017, is explained below:
14 Previous years financial statements were audited by a firm other than B S R & Associates LLP (Chartered Accountants).
Mar 31, 2017
Note 1 : General Information
Tasty Bite Eatables Limited (âthe Companyâ) is in the business of manufacturing and selling âPrepared Foodsâ. It includes a range of Ready-to-Serve (âRTSâ) ethnic food products under the brand name âTasty Biteâ and Frozen Formed Products (âFFPâ). The Company has manufacturing facility near Pune in India. The Company is a public limited company and is listed on the Bombay Stock Exchange Limited (BSE Ltd.) and the National Stock Exchange Limited.
(a) Terms attached to Equity Shares
The Company has only one class of equity shares having par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the Annual General Meeting.
(b) Rights, Preferences and Restrictions attaching to each class of shares including restrictions on the distribution of dividends and repayment of capital.
1% Non-Cumulative, Non-Convertible, Redeemable Preference Shares are redeemable on or before August 31, 2018 at a premium of Rs.1,950 per share. The preference shareholder reserves the right to demand for redemption of preference shares during the period upto 31st August, 2018.
Note 2 : Long-Term Borrowings
(a) The Company had replaced Foreign Currency Term Loan (FCTL) taken from an Indian Bank by availing External Commercial Borrowing (ECB) from Japanese Bank in the previous year. Replacement of FCTL has been approved by the Reserve Bank of India (RBI) vide its letter No. FED.C0.ECBD/8388/03.02.766/2015-16 dated January 22, 2016. ECB carries interest at 3 months LIBOR plus 0.90 bps per annum. The loan is repayable in 8 years by way of 32 quarterly equal installments commencing from June, 2016. This ECB is fully unsecured.
(b) During the year, the Company had taken ECBs from a Japanese bank for capacity expansion and modernisation of the existing manufacturing infrastructure. ECB of USD 2,500 thousand is approved by the RBI vide its letter reference number DSIM/BPSD/3730/04.61.19/2015-16 dated April 4, 2016. ECB carries interest at 3 months LIBOR plus 0.90 bps per annum. First drawdown date was April 11, 2016. As per the loan agreement terms, moratorium period is two years and the loan is repayable in 6 years by way of 24 quarterly equal installments commencing from July, 2018. Prepayment of the loan shall be permitted, whether in full or partly, without any prepayment penalty or charges. Prepayment is allowed only on an interest payment date.
ECB of USD 900 thousand is approved by the RBI vide its letter reference number DSIM/BPSD/3299/04.61.19/2016-17 dated March 8, 2017. ECB carries interest at 3 months LIBOR plus 0.75 bps per annum. First drawdown date was March 10, 2017. As per the loan agreement terms, moratorium period is for one year and the loan is repayable in 4 years by way of 16 quarterly equal installments commencing from June 10, 2018. Prepayment of the loan shall be permitted, whether in full or partly, without any prepayment penalty or charges. Prepayment is allowed only on an interest payment date. This ECB is fully unsecured.
(c) During the year, the Company had availed Buyers Credit facility from a Japenese bank for import of capital goods and components in USD and JPY currencies only. The Company had drawn down USD 249 thousand from bank. This facility is fully unsecured. The maximum tenor is 3 years from the date of each drawdown. Facility carries interest at 3 months LIBOR plus 0.75 bps per annum. Interest is payable on quarterly basis from the date of drawdown. As per the sanction terms repayment must be made in full in the same currency on the maturity date. Prepayment of the loan shall be permitted, whether in full or partly, without any prepayment penalty or charges. Prepayment is allowed only on an interest payment date.
(d) There is no default as on 31st March, 2017 and as on 31st March, 2016 in repayment of principal and interest.
(a) Secured loans were taken from two banks. Cash credit from one bank is secured by first pari passu hypothecation charge on present and future current assets of the Company. Cash credits are collaterally secured by hypothecation of second pari passu charge on movable fixed assets of the Company both present and future, negative lien over land and buildings of the Company and corporate guarantee of Preferred Brands International Inc., the Holding Company. Cash credit include facilities of working capital demand loan, pre and post shipment credit, export packing credit, Letter of Credit and Buyers Credit. Cash Credit from another bank is secured by way of first priority charge over all present and furture current assets and movable fixed assets of the Company and collaterally secured by present and future immovable properties and corporate guarantee issued by Preferred Brands International Inc., the Holding Company and personal guarantees of directors of Preferred Brands Foods (India) Private Limited, the Immediate Holding Company. Cash credit include facilities of Export packing credit, Packing credit in foreign currency, Foreign bill discounting, Letter of credit, Buyers Credit, Bank Gurantee.
(b) Unsecured loans are taken from two Japenese banks and these facilities are obtained in the form of overdraft, working capital demand loans, export credit facility. Export Packing Credit (EPC), Export Bill Discounting (EBD), PreShipment Credit in Foreign Currency (PCFC), Post-Shipment Credit in Foreign Currency (PSFC) carries interest rate of LIBOR plus 40 bps per annum. Overdraft facility carries interest rate of MCLR 3% p.a. (presently MCLR is 6.50% p.a.).
(c) There is no default as on 31st March, 2017 and as on 31st March, 2016 in repayment of principal and interest.
3.1 Micro and Small enterprises as defined under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) have been identified by the Company on the basis of the information available with the Company and the auditors have relied on the same. Trade payables include total outstanding dues of micro enterprises and small enterprises amounting to Rs. NIL (Previous Year: Rs.NIL). The disclosures pursuant to MSMED Act based on the books of account are as under:
4.1 During the year, the Company had specified bank notes or other denominations note as defined in the Ministry of Corporate Affairs notification G.S.R 308 (E ) dated March 31, 2017 on the details of Specified Bank Notes (SBN) held and transacted during the period from November 08, 2016 to December 30, 2016, the denomination wise SBNs and other notes as per the notification is given below:
* for the purposes of this clause, the term âSpecified Bank Notesâ shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O.3407(E ), dated 8th November, 2016.
5.1 Defined Contribution Plan:
Contribution to defined contribution plans includes contribution to provident fund and are recognized as expense for the year.
5.2 Defined Benefit Plan:
The amounts recognized in the Companyâs financial statements as at the year end as per the certificate issued by actuary in respect of gratuity are as under:
(i) The estimates of future salary increases, considered in actuarial valuation, have been done on the basis of current salary suitably projected for future taking into consideration the general trend in inflation, seniority, promotion and other relevant factors such as supply and demand in employment market.
(ii) The discounting rate is considered based on government securities having the term, which is consistent with the expected future service based on the average age.
(iii) Plan assets are insurer managed fund.
5.3 The liability for leave encashment as at the year end is Rs. 13,572 thousand (Previous Year: Rs.11,525 thousand).
The amounts included above, represent the best possible estimates arrived at on the basis of available information. The uncertainties and possible liabilities are dependent on the outcome of different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately.
Note 6 : Capital Commitments
Estimated amount of contracts remaining to be executed on Capital Account and not provided for Rs. 68,089 thousand (Previous Year: Rs. 29,978 thousand)
Preferred Brands International Inc., holding company of immediate holding company has paid Rs.3,519 thousand (Previous Year: 21,783 thousand) to employees of the Company under the Value Pool Creation Agreement based on the options vested as per Employees Stock Option Equity Plan.
Note 7 :
In the opinion of the Board, all current assets have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated in the balance sheet and provisions for all known liabilities and doubtful assets have been made as at the year end.
Note 8 : Related Party Disclosures
(a) Relationships :
(i) HOLDING COMPANY
Preferred Brands Foods (India) Private Limited
Preferred Brands International, Inc. USA (Holding company of Preferred Brands Foods (India) Private Limited)
(ii) ULTIMATE HOLDING COMPANY
Kagome Co Ltd.
(iii) FELLOW SUBSIDIARY
Preferred Brands Australia Pty. Ltd.
ASG Omni India Private Limited Preferred Brands UK Ltd.
Kagome Australia Pty. Ltd
Kagome Foods India Private Limited (formerly known as Ruchi Kagome Foods India Private Ltd.)
United Gentics India Private Limited
(iv) KEY MANAGEMENT PERSONNEL
Mr. Ravi Nigam - Managing Director
Mr. Sohel Shikari - Chief Financial Officer and Alternate Director Ms. Minal Talwar - Company Secretary
(v) RELATIVES OF KEY MANAGEMENT PERSONNEL
Mrs. Ruby Nigam Mrs. Reshma Shikari
(vi) ENTERPRISE WHICH EXERCISES SIGNIFICANT INFLUENCE
ASG OMNI L.L.C.
Disclosure requirements in respect of âAccounting Standard 17 - Segment Reportingâ are as under:
(a) Information about Primary Segments
The Company has a single business segment âPrepared Foodsâ in accordance with the criteria for identification of reportable segment specified in the said standard.
(b) Information about Secondary Segments
The Company has identified following geographical segments as secondary reportable segments (Rupees in Thousand):
(c) Revenue within India includes sales to customers located within India and earnings in India. Revenue outside India includes sales to customers located outside India and earnings outside India
(d) Carrying amount of segment assets are determined by geographical location of assets in India and outside India.
(e) Capital expenditure includes cost incurred during the year to acquire the tangible and intangible fixed assets by geographical location of assets in India and outside India.
As per Accounting Standard 4 - Contingencies and Events Occurring after the Balance Sheet Date notified under the Companies (Accounting Standards) Amendmend Rules, 2016, dividend payable to shareholders shall be accounted as and when declared by the Company. Consequently, tax on dividend shall be accounted as and when dividend is accounted.
Section 135 of the Companies Act, 2013 and Rules made therunder prescribe that every company having net worth of Rs 500 crore or more, or turnover of Rs.1000 crore or more or a net profit of Rs. 5 crore or more during any financial year shall ensure that the Company spends, in every financial year, at lease 2% of the average net profits made during the three immediately preceeding financial years, in pursuance of its Corporate Social Responsibility Policy. The provisions pertaining to corporate social responsibility as prescribed under the Companies Act, 2013 are applicable to the Company. The financial details as sought by the Companies Act, 2013 are as follows:
Gross amount required to be spent by the Company during the year Rs. 3,037 thousand (Previous Year: Rs.2,004 thousand).
Amount spent during the current year towards corporate social responsibility for the current year and previous year are as under:
Note 9 : Research and Development Expenditure
The Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India has recognized Tasty Bite Research Center (âTBRCâ) as an âIn-house R&D facilityâ with effect from June 21, 2011. The Department had granted approval to TBRC upto March 31, 2016 for the purpose of section 35 (2AB) of the Income Tax Act, 1961. The recognition of TBRC has been renewed with effect from April 1, 2016 till March 31, 2019. The revenue expenditure amounting to Rs.16,282 thousand (Previous Year: Rs.16,458 thousand) on research and development is charged to the Statement of Profit and Loss. Further, the Company has incurred capital expenditure of Rs.608 thousand (Previous Year: Rs.549 thousand) for research and development facility and is included in companyâs assets.
Note 10 : Previous Year Figures
Figures for the previous period have been regrouped / restated wherever necessary.
Mar 31, 2016
(d) Details of shares held by Holding Company
Out of above, 1,904,510 (Previous Year : 1,904,510) Equity shares and 59,530 (Previous Year : 59,530) 1% Non-Cumulative, Non-Convertible, Redeemable Preference Shares are held by Preferred Brands Foods (India) Private Limited, the immediate Holding Company, the subsidiary of Preferred Brands International Inc., USA, the subsidiary of Kagome Co. Ltd., the Ultimate Holding Company.
(f) Terms attached to Equity Shares
The Company has only one class of equity shares having par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
(c) During the previous year, the Company had replaced external commercial borrowing (''ECB'') taken from financial institution by Foreign Currency Term Loan (''FCTL'') taken from Bank. Such replacement of ECB has been approved by the Reserve Bank of India vide its letter No. FED.CO.ECBD/8765/03.02.755/2014-15 dated December 1, 2014. The FCTL was secured by way of first priority charge over all present and future current assets and movable fixed assets of the Company. FCTL was collaterally secured by present and future immovable properties and corporate guarantee issued by Preferred Brands International Inc., the Holding Company (''PBI'') and personal guarantees of directors of Preferred Brands Foods (India) Private Limited, the Immediate Holding Company. FCTL carried interest at 6 months LIBOR plus 425 bps per annum. The loan was repayable in 8 years by way of quarterly installments commencing from June 2015.
(d) Term loan from related party has been taken from Preferred Brands International Inc. USA, (PBI). ECB is secured by way of first priority charge and mortgage over all present and future movable and immovable properties, tangible and intangible properties except for current assets and fixed assets acquired out of the loans taken from banks.
The Company has been sanctioned ECB of USD 1,000 thousand by PBI in the year 2008-2009 for modernization and up-gradation of existing manufacturing facility. The Company has received the RBI approval ref. FED.CO.ECBD/13748/03.02.766/2008-09 dated November 17, 2008. The loan carried interest at LIBOR plus 2%. As per the terms of the loan agreement, the loan is repayable at any time after the third anniversary of the date of first disbursement upon the written demand by the lender. In absence of a written demand, the Company has to repay the principal sum in twenty equal installments of USD 50 thousand each on quarterly basis commencing from March 31, 2012. As on March 31, 2016, balance outstanding is USD 150 Thousand. Since these are payable within a year, the same is classified as Short Term Borrowings.
(e) During the year, the Company has replaced FCTL taken from Bank by ECB taken from another Bank. Replacement of ECB has been approved by the Reserve Bank of India vide its letter No. FED.CO.ECBD/8388/ 03.02.766/2015-16 dated January 22, 2016. ECB carries interest at 3 months LIBOR plus 0.90 bps per annum. The loan is repayable in 8 years by way of quarterly equal installments commencing from June, 2016. This ECB is unsecured.
(f) There is no default as on 31st March, 2016 and as on 31st March, 2015 in repayment of principal and interest.
(a) Secured loans have been taken from two banks.âCash credit from one bank are secured by first pari passu hypothecation charge on present and future current assets of the company. Cash credits are collaterally secured by hypothecation of second pari passu charge on movable fixed assets of the Company both present and future, negative lien over land and buildings of the Company and corporate guarantee of Preferred Brands International Inc., the Holding Company. Cash credit include facilities of working capital demand loan, pre and post shipment credit, export packing credit, Letter of Credit and Buyers credit.ââ Cash credit from another bank is secured by way of first priority charge over all present and future current assets and movable fixed assets of the Company and collaterally secured by present and future immovable properties and corporate guarantee issued by Preferred Brands International Inc., the Holding Company and personal guarantees of directors of Preferred Brands Foods (India) Private Limited, the Holding Company. Cash credit include facilities of Export packing credit, Packing credit in foreign currency, Foreign bill discounting, Letter of credit, Buyers Credit, Bank Guarantee.
(b) Unsecured loan is taken from Bank during the current year. The said facility was obtained in the form of overdraft, working capital demand loans, export credit facility. Packing credit on demand carries interest rate of LIBOR plus 40 bps p.a. Overdraft facility carries interest rate of base rate 3% p.a. (presently base rate is 7.60% p.a.).
Note 1 : Capital Commitments
Estimated amount of contracts remaining to be executed on Capital Account and not provided for Rs.29,978 thousand (Previous Year: Rs. 1409 thousand)
Note 2 : With the issue of the Guidance Note on Accounting for Derivative Contracts by The Institute of Chartered Accountants of India, the Company has refined its accounting policy with regards to Accounting for Derivative Contract from mark to market through the Statement of Profit and Loss to Cash Flow Hedge Accounting during the current year.
Accordingly, the mark to market gain / loss has been accounted for in Cash Flow Hedge Reserve. Consequent to this change, the impact on profit for the year is Nil.
Note 3 : In the opinion of the Board, all current assets have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the balance sheet and provisions for all known liabilities and doubtful assets have been made as at the year end.
Note 4 : Segment Reporting
Disclosure requirements in respect of âAccounting Standard 17 - Segment Reportingâ are as under :
(a) Information about Primary Segments
The Company has a single business segment âPrepared Foodsâ in accordance with the criteria for identification of reportable segment specified in the said standard.
(b) Information about Secondary Segments
The Company has identified following geographical segments as secondary reportable segments (Rupees in Thousands) :
(c) Revenue within India includes sales to customers located within India and earnings in India. Revenue outside India includes sales to customers located outside India and earnings outside India
(d) Carrying amount of segment assets are determined by geographical location of assets in India and outside India.
(e) Capital expenditure includes cost incurred during the year to acquire the tangible and intangible fixed assets by geographical location of assets in India and outside India
Note 5 : Corporate Social Responsibility
Section 135 of the Companies Act, 2013 and Rules made thereunder prescribe that every company having net worth of Rs 500 crore or more, or turnover of Rs.1000 crore or more or a net profit of Rs. 5 crore or more during any financial year shall ensure that the Company spends, in every financial year, at least 2% of the average net profits made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy. The provisions pertaining to corporate social responsibility as prescribed under the Companies Act, 2013 are applicable to the Company. The financial details as sought by the Companies Act, 2013 are as follows:
Gross amount required to be spent by the Company during the year Rs. 2,004 thousand (Previous Year: Rs.1,032 thousand).
Note 6: Research and Development Expenditure
The Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India has recognized Tasty Bite Research Center (''TBRC'') as an âIn-house R&D facilityâ with effect from June 21, 2011. The Department has granted approval to TBRC up to March 31, 2016 for the purpose of section 35 (2AB) of the Income Tax Act, 1961. The recognition of TBRC has been renewed with effect from April 1, 2016 till March 31, 2019.
The revenue expenditure amounting to Rs.16,458 thousand (Previous Year: Rs.14,796 thousand) on research and development is charged to the Statement of Profit and Loss. Further, the Company has incurred capital expenditure of Rs.549 thousand (Previous Year: Rs.110 thousand) for research and development facility and is included in company''s assets.
Note 7 : Previous Year Figures
''Figures for the previous period have been regrouped / restated wherever necessary.
Mar 31, 2015
Tasty Bite Eatables Limited ('the Company') is in the business of
manufacturing and selling 'Prepared Foods'. It includes a range of
Ready-to-Serve ('RTS') ethnic food products under the brand name 'Tasty
Bite' and Frozen Formed Products ('FFP'). The Company has manufacturing
facility near Pune in India. The Company is a public limited company
and is listed on the Bombay Stock Exchange Limited.
Note : 1 Share Capital
(d) Details of shares held by Holding Company
Out of above 1,904,510 (Previous Year: 1,904,510) Equity shares and
59,530 (Previous Year: 59,530) 1% Non- Cumulative, Non-Convertible,
Redeemable Preference Shares are held by Preferred Brands Foods (India)
Private Limited, the immediate Holding Company, the subsidiary of
Preferred Brands International Inc., USA, the subsidiary of ASG Omni
LLC, the Ultimate Holding Company.
Preferred Brands International Inc. USA, the Holding Company has
pledged its 100% holding in its wholly owned subsidiary, Preferred
Brands Foods (India) Private Limited, which is the immediate holding
company of the Company. These shares have been released subsequent to
the Balance Sheet date.
(ii) Terms attached to Equity Shares
The Company has only one class of equity shares having par value of Rs.
10 per share. Each holder of equity shares is entitled to one vote per
share. The Company declares and pays dividends in Indian rupees. The
dividend proposed by the Board of Directors is subject to the approval
of the shareholders in the ensuing Annual General Meeting.
(g) Rights, Preferences and Restrictions attaching to each class of
shares including restrictions on the distribution of dividends and
repayment of capital.
1% Non-Cumulative, Non-Convertible, Redeemable Preference Shares are
redeemable on or before August 31,2018 at a premium of Rs.1,950 per
share. The preference shareholder reserves the right to demand for
redemption of preference shares during the period upto 31st August,
2018.
(b) The term loan (External Commercial Borrowing /ECB) from financial
institution had been approved by the Reserve Bank of India. ECB was
secured by way of charge over certain immovable properties and movable
fixed assets of the Company that were acquired out of the proceeds of
ECB. The ECB was also secured by all assets of Preferred Brands
International Inc. ('PBI'), ASG OMNI LLC's interest in PBI, PBI's
ownership interest in Preferred Brands Foods (India) Private Limited
(PBFIPL), personal guarantees of the owners of ASG OMNI LLC and their
ownership interest in ASG OMNI LLC. Term loan carried interest at 3
months LIBOR plus 275 bps per annum. The loan was repayable in 32
quarterly equal instalments commencing from the third year.
(c) During the year, the Company has replaced ECB taken from financial
institution by Foreign Currency Term Loan (FCTL) taken from Bank. Such
replacement of ECB has been approved by the Reserve Bank of India vide
its letter No. FED.CO.ECBD/8765/03.02.755/2014-15 dated 1st December,
2014. The FCTL is secured by way of first priority charge over all
present and future current assets and movable fixed assets of the
Company. FCTL is collaterally secured by present and future immovable
properties and corporate guarantee issued by Preferred Brands
International Inc., the Holding Company ('PBI') and personal guarantees
of directors of Preferred Brands Foods (India) Private Limited, the
Holding Company. FCTL carries interest at 6 months LIBOR plus 425 bps
per annum. The loan is repayable in 8 years by way of quarterly
instalments commencing from June 2015.
d) Term loans from related parties (External Commercial Borrowings /
ECB) have been taken from Preferred Brands International Inc. USA,
(PBI). ECBs are secured by way of first priority charge and mortgage
over all present and future movable and immovable properties, tangible
and intangible properties except for current assets and fixed assets
acquired out of the loans taken from banks.
The Company had taken ECB of USD 1,300 thousand from PBI, for capacity
expansion and modernisation of the existing manufacturing
infrastructure. The Company has received the Reserve Bank of India
(RBI) approval ref. FED.CO.ECBD./03.02.766/2005-06 dated 9th November,
2005. The loan carried interest at LIBOR plus 3.5%. First draw down
date was December 30, 2005. As per the terms of the loan agreement, the
loan is repayable at any time after the third anniversary of the date
of first disbursement upon written demand by the lender. In absence of
a written demand, the Company has to repay the principal sum in
approximately eight quarterly installments commencing with the first
payment date occurring eight years after the date of drawdown. The
said ECB has been fully repaid during the year.
The Company has been sanctioned an additional ECB of USD 1,000 thousand
by PBI in the year 2008-2009 for modernization and up-gradation of
existing manufacturing facility. The Company has received the RBI
approval ref. FED.CO.ECBD/13748/03.02.766/2008-09 dated 17th November,
2008. The loan carried interest at LIBOR plus 2%. As per the terms of
the loan agreement, the loan is repayable at any time after the third
anniversary of the date of first disbursement upon the written demand
by the lender. In absence of a written demand, the Company has to repay
the principal sum in twenty equal installments of USD 50 thousand each
on quarterly basis commencing from 31st March, 2012.
Above ECBs are not prepayable.
(e ) There is no default as on 31st March, 2015 and as on 31st March,
2014 in repayment of principal and interest.
Note : 2 Short Term Borrowings
(a) Cash credits have been taken from three banks. Cash credits taken
from two banks are secured by first pari passu hypothecation charge on
present and future current assets of the company. Cash credits are
collaterally secured by hypothecation of second pari passu charge on
movable fixed assets of the Company both present and future, negative
lien over land and buildings of the Company and corporate guarantee of
Preferred Brands International Inc., the Holding Company. Cash credit
of one of the banks is also collaterally secured by recurring deposit
in addition to above.
Cash credit from third bank is secured by way of first priority charge
over all present and future current assets
and movable fixed assets of the Company and collaterally secured by
present and future immovable properties and corporate guarantee issued
by Preferred Brands International Inc., the Holding Company and
personal guarantees of directors of Preferred Brands Foods (India)
Private Limited, the Holding Company.
Cash credits, obtained in the foreign currency in the form of packing
credit are repayable on demand and carry interest rate ranging from
base rate plus 1.5% to 3% per annum. (Previous year: base rate plus
2.5% to 3%). Cash credits include facilities of working capital demand
loan, pre and post shipment credit, letters of credit, buyer's credit
as sub-limits of cash credit limit.
(b) There is no default as on 31st March, 2015 and as on 31st March,
2014 in repayment of principal and interest.
Year ending Year ending
31st March, 2015 31st March, 2014
Rs. '000 Rs.'000
Note 3 : Contingent Liabilities
(a) Sales Tax demands disputed by
the Company and under appeal 930 930
(b) Service tax demand disputed by the
Company and under appeal 2,716 2,716
(c) Income tax liability towards additions
/ disallowances under dispute 88,254 44,025
The amounts included above, represent the best possible estimates
arrived at on the basis of available information. The uncertainties
and possible liabilities are dependent on the outcome of different
legal processes which have been invoked by the Company or the claimants
as the case may be and therefore cannot be predicted accurately.
Note 4 : Capital Commitments
Estimated amount of contracts remaining to be executed on Capital
Account and not provided for Rs.1409 thousand (Previous Year: Rs. 761
thousand)
Note 5 : Derivative Contracts
The derivative contracts outstanding as at March 31,2015 are as under:
Forward contracts USD-INR for the purpose of hedging its exposure to
foreign currency receivables: USD 860 thousand (Previous Year: USD
2,120 thousand).
Note 6 : In the opinion of the Board, all current assets have a value
on realisation in the ordinary course of business at least equal to the
amount at which they are stated in the balance sheet and provisions for
all known liabilities and doubtful assets have been made as at the year
end.
Note 7 : Related Party Disclosures
(a) Relationships :
(i) HOLDING COMPANY
Preferred Brands Foods (India) Private Limited
Preferred Brands International, Inc. USA (Holding company of Preferred
Brands Foods (India) Private Limited)
(ii) ULTIMATE HOLDING COMPANY
ASG OMNI L.L.C.
(iii) FELLOW SUBSIDIARY
Preferred Brands Australia Pty. Ltd.
ASG Omni India Private Limited
(iv) KEY MANAGEMENT PERSONNEL
Mr. Ravi Nigam - Managing Director Mr. Sohel Shikari - Alternate
Director Ms. Minal Talwar - Company Secretary
(v) RELATIVES OF KEY MANAGEMENT PERSONNEL
Mrs. Ruby Nigam Mrs. Reshma Shikari
(vi) ENTERPRISES OVER WHICH KEY MANAGEMENT PERSONNEL EXERCISE
SIGNIFICANT INFLUENCE
M/s. K. S. Shikari & Associates
(b) Following transactions were carried out with the related parties in
the ordinary course of business:
(i) Details Relating to parties referred to in items (a) (i), (ii) and
(iii) above (Rupees in Thousand):
Note : 8 Segment Reporting
Disclosure requirements in respect of 'Accounting Standard 17 - Segment
Reporting' are as under:
(a) Information about Primary Segments
The Company has a single business segment 'Prepared Foods' in
accordance with the criteria for identification of reportable segment
specified in the said standard.
(b) Information about Secondary Segments
The Company has identified following geographical segments as secondary
reportable segments (Rupees in Thousand):
(c) Revenue within India includes sales to customers located within
India and earnings in India. Revenue outside India includes sales to
customers located outside India and earnings outside India
(d) Carrying amount of segment assets are determined by geographical
location of assets in India and outside India.
(e) Capital expenditure includes cost incurred during the year to
acquire the tangible and intangible fixed assets by geographical
location of assets in India and outside India
Note : 9 Research and Development Expenditure
The Department of Scientific and Industrial Research, Ministry of
Science and Technology, Government of India ('the Department') has
recognized Tasty Bite Research Center ('TBRC') as an "In-house R&D
facility" with effect from June 21,2011. The Department has granted
approval to TBRC upto March 31,2014 for the purpose of section 35 (2AB)
of the Income Tax Act, 1961. The recognition of TBRC has been renewed
with effect from April 1,2014. The renewal of approval from the
Department is awaited.
The revenue expenditure amounting to Rs.14,796 thousand (Previous Year:
Rs.13,689 thousand) on research and development is charged to the
Statement of Profit and Loss. Further, the Company has incurred capital
expenditure of Rs.110 thousand (Previous Year: Rs.370 thousand) for
research and development facility and is included in company's assets.
Note : 10 Managerial Remuneration
The Company had made application with the Central Government for
approval of excess remuneration paid to the Managing Director for the
year ended March 31, 2014 in excess of the remuneration approved by the
Central Government earlier vide letter dated May 1,2012 as prescribed
under section 198 read with Schedule XIII to the Companies Act, 1956.
The approval of the Central Government for the same is awaited.
Note : 11 Previous Year Figures
Figures for the previous period have been regrouped / restated wherever
necessary.
Mar 31, 2014
Note : 1 General Information
Tasty Bite Eatables Limited (''the Company'') is in the business of
manufacturing and selling ''Prepared Foods''. It includes a range of
Ready-to-Serve (''RTS'') ethnic food products under the brand name ''Tasty
Bite'' and Frozen Formed Products (''FFP''). The Company has manufacturing
facility near Pune in India. The Company is a public limited company
and is listed on the Bombay Stock Exchange Limited, Delhi Stock
Exchange and Calcutta Stock Exchange.
Year ending Year ending
31st March, 2014 31st March, 2013
Rs. 000 Rs. 000
Note 2 : Contingent Liabilities
(a) Sales Tax demands disputed by
the Company and under appeal 930 930
(b) Service tax demand disputed by
the Company and under appeal 2,716 2,716
(c) Income tax liability towards
additions / disallowances under dispute 44,025 40,177
The amounts included above, represent the best possible estimates
arrived at on the basis of available information. The uncertainties and
possible liabilities are dependent on the outcome of the different
legal processes which have been invoked by the Company or the claimants
as the case may be and therefore cannot be predicted accurately.
Note 3 : Capital Commitments
Estimated amount of contracts remaining to be executed on Capital
Account and not provided for Rs.761 thousand (Previous Year: Rs. 64,123
thousand)
Note 4 : Derivative Contracts
The derivative contracts outstanding as at March 31, 2014 are as under:
a) Forward contracts USD-INR for the purpose of hedging its exposure to
foreign currency receivables: USD 2,120 thousand (Previous Year: USD
1,550 thousand).
Note 5 :
In the opinion of the Board, all current assets have a value on
realisation in the ordinary course of business at least equal to the
amount at which they are stated in the balance sheet and provisions for
all known liabilities and doubtful assets have been made as at the year
end.
Note 6 : Related Party Disclosures
(a) Relationships :
(i) HOLDING COMPANY
Preferred Brands Foods (India) Private Limited
Preferred Brands International, Inc. USA (Holding company of Preferred
Brands Foods (India) Private Limited)
(ii) ULTIMATE HOLDING COMPANY
ASG OMNI L.L.C.
(iii) FELLOW SUBSIDIARY
Preferred Brands Australia Pty. Ltd. ASG Omni India Private Limited
(iv) KEY MANAGEMENT PERSONNEL
Mr. Ravi Nigam - Managing Director Mr. Sohel Shikari - Alternate
Director
(v) RELATIVES OF KEY MANAGEMENT PERSONNEL
Mrs. Ruby Nigam Mrs. Reshma Shikari
Note : 7 Segment Reporting
Disclosure requirements in respect of ''Accounting Standard 17 Â Segment
Reporting'' is as under:
(a) Information about Primary Segments
The Company has a single business segment ''Prepared Foods'' in
accordance with the criteria for identification of reportable segment
specified in the said standard.
(b) Information about Secondary Segments
The Company has identified following geographical segments as secondary
reportable segments
(c) Revenue within India includes sales to customers located within
India and earnings in India. Revenue outside India includes sales to
customers located outside India and earnings outside India.
(d) Carrying amount of segment assets are determined by geographical
location of assets in India and outside India.
(e) Capital expenditure includes cost incurred during the year to
acquire the tangible and intangible fixed assets by geographical
location of assets in India and outside India.
Note : 8 Research and Development Expenditure
The Department of Scientific and Industrial Research, Ministry of
Science and Technology, Government of India has recognized Tasty Bite
Research Center (''TBRC'') as an "In-house R&D facility" with effect from
June 21, 2011. The Department has granted approval to TBRC upto March
31, 2014 for the purpose of section 35 (2AB) of the Income Tax Act,
1961.
The revenue expenditure amounting to Rs.13,689 thousand (Previous Year:
Rs.13,389 thousand) on research and development is charged to the
Statement of Profit and Loss. Further, the Company has incurred capital
expenditure of Rs.282 thousand (Previous Year: Rs.46 thousand) for
research and development facility and is included in company''s assets.
Note : 9 Managerial Remuneration
The remuneration paid to the Managing Director for the year ended March
31, 2014 is in excess of the remuneration approved by the Central
Government vide letter dated May 1, 2012 as prescribed under section
198 read with Schedule XIII to the Companies Act, 1956 by Rs.869,600.
The Company is in the process of making further application for the
necessary approval from the Central Government for the excess
remuneration.
Note : 10 Previous Year Figures
Figures for the previous period have been regrouped / restated wherever
necessary.
Mar 31, 2013
Note : 1 General Information
Tasty Bite Eatables Limited (Âthe Company'') is in the business of
manufacturing and selling ÂPrepared Foods''. It includes a range of
Ready-to-Serve (ÂRTS'') ethnic food products under the brand name ÂTasty
Bite'' and Frozen Formed Products (ÂFFP''). The Company has manufacturing
facility near Pune in India. The Company is a public limited company
and is listed on the Bombay Stock Exchange.
Note 2 : Capital Commitments
Estimated amount of contracts remaining to be executed on Capital
Account and not provided for Rs.64,123 thousand (Previous Year: Rs.
32,102 thousand)
Note 3 : Derivative Contracts
The derivative contracts outstanding as at March 31, 2013 are as under:
a) Forward contracts USD-INR for the purpose of hedging its exposure to
foreign currency receivables:
USD 1,550 thousand (Previous Year: USD 4,467 thousand). (b) Forward
contracts AUD-INR for the purpose of hedging its exposure to foreign
currency receivables: Nil
(Previous Year: AUD 240 thousand)
Note 4 :
In the opinion of the Board, all assets other than fixed assets have a
value on realisation in the ordinary course of business at least equal
to the amount at which they are stated in the balance sheet and
provisions for all known liabilities and doubtful assets have been made
as at the year end.
Note 5 :
During the year, the Company has returned an equipment to the supplier
since the equipment was not meeting the required technical
specifications. The incidental expenditure related to the equipment
amounting to Rs. 837 thousand has been treated as extraordinary
expenses and has been charged to the Statement of Profit and Loss.
Note 6 : Related Party Disclosures
(a) Relationships :
(i) HOLDING COMPANY
Preferred Brands Foods (India) Private Limited
Preferred Brands International, Inc. USA (Holding company of Preferred
Brands Foods (India) Private Limited)
(ii) ULTIMATE HOLDING COMPANY
ASG OMNI L.L.C.
(iii) FELLOW SUBSIDIARY
Preferred Brands Australia Pty. Ltd. ASG Omni India Private Limited
(iv) KEY MANAGEMENT PERSONNEL
Mr. Ravi Nigam - Managing Director Mr. Sohel Shikari - Alternate
Director
(v) RELATIVES OF KEY MANAGEMENT PERSONNEL
Mrs. Ruby Nigam Mrs. Reshma Shikari
(vi) ENTERPRISES OVER WHICH KEY MANAGEMENT PERSONNEL EXERCISE
SIGNIFICANT INFLUENCE
M/s. K. S. Shikari & Associates
Note : 7 Segment Reporting
Disclosure requirements in respect of ÂAccounting Standard 17 Â Segment
Reporting'' is as under:
(a) Information about Primary Segments
The Company has a single business segment ÂPrepared Foods'' in
accordance with the criteria for identification of reportable segment
specified in the said standard.
(b) Information about Secondary Segments
The Company has identified following geographical segments as secondary
reportable segments (Rupees in Thousand) :
(c) Revenue within India includes sales to customers located within
India and earnings in India. Revenue outside India includes sales to
customers located outside India and earnings outside India.
(d) Carrying amount of segment assets are determined by geographical
location of assets in India and outside India.
(e) Capital expenditure includes cost incurred during the year to
acquire the tangible and intangible fixed assets by geographical
location of assets in India and outside India.
Note : 8 Research and Development Expenditure
The Department of Scientific and Industrial Research, Ministry of
Science and Technology, Government of India has recognized Tasty Bite
Research Center as an "In-house R&D facility" with effect from June 21,
2011.
The revenue expenditure amounting to Rs.13,389 thousand (Previous Year
: Rs. 8,483 Thousand) on research and development is charged to the
Statement of Profit and Loss. Further, the Company has incurred capital
expenditure of Rs. 46 thousand (Previous Year : Rs.1,133 thousand) for
research and development facility and is included in company''s assets.
Note : 9 Previous Year Figures
Figures for the previous period have been regrouped / restated wherever
necessary.
Mar 31, 2012
Note : 1 General Information
Tasty Bite Eatables Limited ('the Company') is in the business of
manufacturing and selling 'Prepared Foods'. It includes a range of
Ready-to-Serve ('RTS') ethnic food products under the brand name 'Tasty
Bite' and Frozen Formed Products ('FFP'). The Company has manufacturing
facility near Pune in India. The Company is a public limited company
and is listed on the Bombay Stock Exchange.
(a) Details of shares held by Holding Company
Out of above, 1,904,510 (Previous Year : 1,904,510) Equity shares and
59,530 (Previous Year : 59,530) 1% Non-Cumulative, Non-Convertible,
Redeemable Preference Shares are held by Preferred Brands Foods (India)
Private Limited, the Holding Company, the subsidiary of Preferred
Brands International Inc., USA, the Ultimate Holding Company.
(b) Terms attached to Equity Shares
The Company has only one class of equity shares having par value of Rs.
10 per share. Each holder of equity shares is entitled to one vote per
share. The company declares and pays dividends in Indian rupees. The
dividend proposed by the Board of Directors is subject to the approval
of the shareholders in the ensuing Annual General Meeting.
(c) Rights, Preferences and Restrictions attaching to each class of
shares including restrictions on the distribution of dividends and
repayment of capital.
1% Non-Cumulative, Non-Convertible, Redeemable Preference Shares are
redeemable on or before August 31, 2018 at a premium of Rs.1,950 per
share. The preference shareholder reserves the right to demand for
redemption of preference shares during the period upto 31st August,
2018.
(b) Term loans from banks are secured by charge over movable fixed
assets of the company and collaterally secured by deposits with bank,
hypothecation charge over current assets of the Company, negative lien
over land and building and corporate guarantee from the ultimate
holding company. Term loan from bank carries interest at base rate plus
4.75% per annum. Loan is repayable in 56 monthly installments of
Rs.1,035 thousand each plus interest.
(c) Term loans from related parties (External Commercial Borrowings /
ECB) have been taken from Preferred Brands International Inc. USA,
(PBI) the Ultimate Holding Company. ECBs are secured by way of first
priority charge and mortgage over all present and future movable and
immovable properties, tangible and intangible properties except for
current assets and fixed assets acquired out of the loans taken from
banks.
The Company has taken External Commercial Borrowing (ECB) of USD 1,300
thousand from PBI, for capacity expansion and modernisation of the
existing manufacturing infrastructure. The Company has received the
Reserve Bank of India (RBI) approval ref.
FED.CO.ECBD./03.02.766/2005-06 dated November 9, 2005. The loan carried interest at LIBOR plus 3.5%. First draw down date was December 30, 2005.
As per the terms of the loan agreement, the loan is repayable at any
time after the third anniversary of the date of first disbursement upon written demand by the lender. In absence of a written demand, the
Company has to repay the principal sum in approximately eight quarterly installments commencing with the first payment date occurring eight
years after the date of drawdown.
The Company has been sanctioned an additional ECB of USD 1,000 thousand
by PBI in the year 2008-2009 for modernization and up-gradation of
existing manufacturing facility. The Company has received the RBI
approval ref. FED.CO.ECBD/13748/03.02.766/2008-09 dated November 17,
2008. The loan carried interest at LIBOR plus 2%. As per the terms of
the loan agreement, the loan is repayable at any time after the third
anniversary of the date of first disbursement upon the written demand
by the lender. In absence of a written demand, the Company has to repay
the principal sum in twenty equal installments of USD 50 thousand each
on quarterly basis commencing from March 31, 2012.
Above ECBs are not pre-payable.
(d) There is no default as on March 31, 2012 and as on March 31, 2011
in repayment of principal and interest.
(a) Cash credits have been taken from two banks. Cash credits taken
from both banks are secured by first pari passu hypothecation charge on
present and future current assets of the company. Cash credit taken
from one bank is collaterally secured by hypothecation of second pari
passu charge on existing movable fixed assets of the Company alongwith
other bank, extension of hypothecation first charge over specific
movable fixed assets to be purchased out of term loans, negative lien
over land and buildings and deposits with bank. Cash credit of other
bank is collaterally secured by second pari passu charge on existing
plant and machinery, second charge on plant and machineries purchased
out of the term loan of other bank. Cash credits of both banks are also
secured by corporate guarantee of the Ultimate Holding Company. Cash
credits are repayable on demand and carry interest rate of base rate
plus 3.5% in case of one bank whereas in case of other bank the rate is
mutually agreed.
(b) There is no default as on March 31, 2012 and as on March 31, 2011
in repayment of principal and interest.
(b) Micro, Small and Medium enterprises as defined under the Micro,
Small and Medium Enterprises Development Act, 2006 (MSMED Act) have
been identified by the Company on the basis of the information
available and the auditors have relied on the same. Sundry creditors
include total outstanding dues of micro enterprises and small
enterprises amounting to Rs. NIL (Previous Year: Rs.NIL). The
disclosures pursuant to MSMED Act based on the books of account are as
under:
(a) Adjustments for the current year include exchange differences
arising on reporting of long-term foreign currency monetary liability
on account of option exercised by the Company as per Accounting
Standard 11 The Effects of Changes in Foreign Exchange Rates. (Previous
Year: Adjustments include government grant recognised.)
(b) During the year, the Company has exercised the option available to
it under Para 46A of Accounting Standard 11 The Effects of Changes in
Foreign Exchange Rates as per the Companies (Accounting Standards)
(Second Amendment) Rules, 2011 in respect of accounting for
fluctuations in foreign exchange relating to "Long Term Foreign
Currency Monetary Items". Accordingly, it has adjusted Rs.14,768
thousand for the year ended March 31, 2012 to the cost of its fixed
assets on account of such difference arising during the year and has
provided for depreciation thereon amounting to Rs.1,278 thousand over
the balance useful life of the respective assets. Consequently, the
charge to the Profit and Loss Account is lower to that extent.
(c) Depreciation charged to the profit and loss statement for the year
ended 31 st March, 2012 on availment of above option is Rs.1,278
thousand.
(d) Amount of foreign exchange remaining to be amortised as on March
31, 2012 is Rs.13,490 thousand.
(d) Defined Contribution Plan:
Contribution to defined contribution plans includes contribution to
provident fund and are recognized as expense for the year.
Note :
(i) The estimates of future salary increases, considered in actuarial
valuation, have been done on the basis of current salary suitably
projected for future taking into consideration the general trend in
salary rise and inflation rates.
(ii) The discounting rate is considered based on government securities
having the term, which is consistent with the expected future service
based on the average age.
(iii) Plan assets are insurer managed fund.
(f) The liability for leave encashment as at the year end is Rs. 5,225
thousand (Previous Year: Rs.6,015 thousand).
Year ending Year ending
31st March,
2012 31st March,
2011
Rs. '000 Rs. '000
Note : 1 Contingent Liabilities
(a) Sales Tax demands disputed by the
Company and under appeal 930 930
(b) Custom duty demand disputed by the
Company and under appeal 950 950
(c) Service tax demand disputed by the
Company and under appeal 2,716 -
(d) Income tax liability towards
additions / disallowances under dispute 24,983 22,351
(e) Guarantees given by banks counter
guaranteed by the Company in respect
of item (b) above. 950 950
The amounts included above, represent the best possible estimates
arrived at on the basis of available information. The uncertainties and
possible reimbursements are dependent on the outcome of the different
legal processes which have been invoked by the Company or the claimants
as the case may be and therefore cannot be predicted accurately.
Note : 2 Capital Commitments
Estimated amount of contracts remaining to be executed on Capital
Account and not provided for Rs.32,102 thousand (Previous Year : Rs.
18,865 thousand)
Note : 3 Derivative Instruments
The derivative instruments outstanding as at March 31, 2012 are as
under :
(a) Forward contracts USD-INR for the purpose of hedging its exposure
to foreign currency receivables: USD 4,467 thousand (Previous Year: USD
7,493 thousand).
(b) Forward contracts AUD-INR for the purpose of hedging its exposure
to foreign currency receivables: AUD 240 thousand (Previous Year: AUD
700 thousand)
The Company has provided for the losses on derivative instruments by
marking them to market.
Note : 4
In the opinion of the Board, all assets other than fixed assets have a
value on realisation in the ordinary course of business at least equal
to the amount at which they are stated in the balance sheet and
provisions for all known liabilities and doubtful assets have been made
as at the year end
Note : 5 Related Party Disclosures
(a) Relationships :
(i) HOLDING COMPANY
Preferred Brands Foods (India) Private Limited
(ii) ULTIMATE HOLDING COMPANY
Preferred Brands International, Inc. USA
(iii) FELLOW SUBSIDIARY
Preferred Brands Australia Pty. Ltd.
ASG Omni India Private Limited
(iv) KEY MANAGEMENT PERSONNEL
Mr. Ravi Nigam - Managing Director
Mr. Sohel Shikari - Alternate Director
(v) RELATIVES OF KEY MANAGEMENT PERSONNEL
Mrs. Ruby Nigam
Mrs. Reshma Shikari
(vi) ENTERPRISES OVER WHICH KEY MANAGEMENT PERSONNEL EXERCISE
SIGNIFICANT INFLUENCE
M/s. K. S. Shikari & Associates
Note : 6 Segment Reporting
Disclosure requirements in respect of 'Accounting Standard 17 - Segment
Reporting' is as under:
(a) Information about Primary Segments
The Company has a single business segment 'Prepared Foods' in
accordance with the criteria for identification of reportable segment
specified in the said standard.
(b) Information about Secondary Segments
The Company has identified following geographical segments as secondary
reportable segments (Rupees in Thousand) :
* net of government grant.
(c) Revenue within India includes sales to customers located within
India and earnings in India. Revenue outside India includes sales to
customers located outside India and earnings outside India.
(d) Carrying amount of segment assets are determined by geographical
location of assets in India and outside India.
(e) Capital expenditure includes cost incurred during the year to
acquire the tangible and intangible fixed assets by geographical
location of assets in India and outside India.
Note : 7 Research and Development Expenditure
The Department of Scientific and Industrial Research, Ministry of
Science and Technology, Government of India has recognized Tasty Bite
Research Center as an "In-house R&D facility" with effect from June 21,
2011.
Revenue expenditure amounting to Rs.8,483 thousand on research and
development is charged to the Profit and Loss Account. Further, capital
expenditure amounting to Rs.1,133 thousand is mainly on extension of
building and other miscellaneous equipments and is included in
company's assets.
Note : 8 Managerial remuneration
The Company has made an application to the Central Government for
approval of payment of remuneration to the whole time directors in
excess of the limits laid down in section 198 of the Companies Act,
1956 read with Schedule XIII to the said Act. The Central Government
has approved the remuneration of Mr. Ravi Nigam for the period April 1,
2011 to July 19, 2011 vide letter dated May 17, 2012 and for the period
of three years commencing from July 20, 2011 vide letter dated May 1,
2012. Further, approval of the Central Government for payment of
remuneration to Mr. Sohel Shikari for the year is awaited.
Note : 9 Previous Year Figures
Figures for the previous period have been regrouped / restated wherever
necessary.
Mar 31, 2011
1. TERM LOANS FROM BANKS
The Ministry of Food Processing Industries under the scheme 'Technology
Up-gradation / Establishment / Modernization of Food Processing Plant'
had released the grant of Rupees 4,384 thousand for expansion of
existing unit for manufacture of ready to eat foods etc.
The grant had been disbursed by the Ministry to the bank. As per the
scheme, the bank had released the grant to the Company in the form of
term loan keeping fixed deposit of equal amount in the name of the
Company.
During the year, the Company has complied with the terms and conditions
of the grant and the bankers have adjusted the term loan against the
deposit. Accordingly, the Company recognized the grant in the books and
has deducted the same from the gross value of eligible assets.
2. TERM LOANS FROM OTHERS
The Company has taken External Commercial Borrowing (ECB) of USD 1,300
thousand from Preferred Brands International Inc., U.S.A. (PBI), its
ultimate holding company, for capacity expansion and modernisation of
the existing manufacturing infrastructure. The Company has received the
Reserve Bank of India (RBI) approval ref.
FED.CO.ECBD./03.02.766/2005-06 dated November 9, 2005. As per the terms
of the loan agreement, the loan is repayable at any time after the
third anniversary of the date of first disbursement upon written demand
by the lender. In absence of a written demand, the Company has to repay
the principal sum in approximately eight quarterly installments
commencing with the first payment date occurring eight years after the
date of drawdown.
The Company has availed an additional ECB of USD 1,000 thousand by PBI
in the year 2008-2009 for modernization and up-gradation of existing
manufacturing facility. The Company has received the RBI approval ref.
FED.CO.ECBD/13748/03.02.766/2008-09 dated November 17, 2008. The
Company has drawn down entire amount of USD 1,000 thousand (Previous
Year: USD 500 thousand) as at the balance sheet date. As per the terms
of the loan agreement, the loan is repayable at any time after the
third anniversary of the date of first disbursement upon the written
demand by the lender. In absence of a written demand, the Company has
to repay the principal sum in twenty equal installments of USD 50
thousand each on quarterly basis commencing from March 31, 2012.
The above ECBs are not pre-payable.
3. CONTINGENT LIABILITIES
Rupees in thousands
Current Previous
Year Year
a. Sales Tax demands disputed by the Company
and under appeal. 930 930
b. Custom duty demand disputed by the Company
and under appeal. 950 950
c. Provident Fund demand disputed by the Com
-pany and under appeal. - 10,034
During the year, the Employees' Provident
Fund Appellate Tribunal had confirmed the
demand raised by the Assistant Provident
Fund Commissioner (APFC), Pune. Consequen
-tly, the provident fund authorities had
recovered the dues from the Company. The
Company had filed Writ Petition against
the order of the Employees' Provident Fund
Appellate Tribunal with Hon. High Court at
Bombay. The Hon. High Court had quashed
and set aside the orders passed by the
Employees' Provident Fund Appellate Tribu
-nal and APFC, Pune and remitted back the
proceeding to the APFC, Pune with specific
directive to refund Rupees 7,303 thousand
out of the recovered amount.
In opinion of the management, there is no
contingent liability.
d. Income tax liability towards additions /
disallowances under dispute. 22,351 11,767
e. Guarantees given by banks counter guaran
-teed by the Company. It includes bank
guarantees amounting to Rupees 950
thousand (Previous Year: 950 thousand)
in respect of item (b) above. 3,200 3,200
The amounts included above, represent the best possible estimates
arrived at on the basis of available information. The uncertainties and
possible reimbursements are dependent on the outcome of the different
legal processes which have been invoked by the Company or the claimants
as the case may be and therefore cannot be predicted accurately.
4. DERIVATIVE INSTRUMENTS
The derivative instruments outstanding as at March 31, 2011 are as
under:
i) Forward contracts USD-INR for the purpose of hedging its exposure to
foreign currency receivables: USD 7,493 thousand (Previous Year: USD
5,100 thousand).
ii) Forward contracts AUD-INR for the purpose of hedging its exposure
to foreign currency receivables: AUD 700 thousand (Previous Year: AUD
300 thousand).
The Company has provided for the losses on derivative instruments by
marking them to market.
5. Estimated amount of contracts remaining to be executed on Capital
Account and not provided for Rupees 18,865 thousand (Previous Year:
Rupees 69,312 thousand).
6. LIABILITIES
Micro, Small and Medium enterprises as defined under the Micro, Small
and Medium Enterprises Development Act, 2006 (MSMED Act) have been
identified by the Company on the basis of the information available and
the auditors have relied on the same. Sundry creditors include total
outstanding dues of micro enterprises and small enterprises amounting
to Rs. NIL (Previous Year: Rs.NIL). The disclosures pursuant to the
Schedule VI to the Companies Act, 1956 and MSMED Act based on the books
of account are as under:
7. The Company was hitherto recognizing the revenue from sale of goods
on the basis of dispatch of goods to customers from the factory. During
the year, the Company has refined its revenue recognition policy for
export sales to recognize the revenue on the basis of dispatch of goods
from the port of shipment which is the date of bill of lading.
Consequent thereto, the sales for the year are lower to the extent of
Rupees 3,359 thousand.
Consequent to the above change, income from export incentives
recognized during the year is lower to the extent of Rupees 242
thousand.
8. In the opinion of the management, the current assets, loans and
advances have a value on realisation in the ordinary course of business
at least equal to amounts at which they are stated in the balance sheet
and provisions for all known liabilities have been made as at the year
end.
9. DEFERRED TAXATION
In accordance with the Accounting Standard 22 on Accounting for Taxes
on Income, the Company has made adjustments in its accounts for
deferred tax liabilities / assets.
10. EMPLOYEE BENEFITS
Defined Contribution Plan:
Contribution to defined contribution plans are recognized as expense
for the year. The contributions to provident fund under defined
contribution plan are reported in Schedule 10 - Manufacturing and other
expenses.
Note:
a) The estimates of future salary increases, considered in actuarial
valuation, have been done on the basis of current salary suitably
projected for future taking into consideration the general trend in
salary rise and inflation rates.
b) The discounting rate is considered based on government securities
having the term, which is consistent with the expected future service
based on the average age.
c) The liability for leave encashment as at the year end is Rs. 6,015
thousand (Previous Year: Rs.2,404 thousand).
d) The above information is certified by the actuary.
11. SEGMENT REPORTING
The disclosure requirements in respect of 'Accounting Standard 17 -
SegmentReporting' is as under:
a. Information about Primary Segments
The Company has a single business segment 'Prepared Foods' in
accordance with the criteria for identification of reportable segment
specified in the said standard.
b. Information about Secondary Segments
The Company has identified following geographical segments as secondary
reportable segments (Rupees in Thousand):
c. Notes:
i. Revenue within India includes sales to customers located within
India and earnings in India. Revenue outside India includes sales to
customers located outside India and earnings outside India.
ii. Carrying amount of segment assets are determined by geographical
location of assets in India and outside India.
iii. Capital expenditure includes cost incurred during the year to
acquire the tangible and intangible fixed assets by geographical
location of assets in India and outside India.
12. RELATED PARTY DISCLOSURE
1. Relationships :
(i) HOLDING COMPANY
Preferred Brands Foods (India) Private Limited (formerly known as
Preferred Brands Foods (India) Limited).
(ii) ULTIMATE HOLDING COMPANY
Preferred Brands International, Inc. USA
(iii) FELLOW SUBSIDIARY
Preferred Brands Australlia Pty. Ltd.
ASG Omni India Private Limited
(iv) KEY MANAGEMENT PERSONNEL
Mr. Ravi Nigam - Managing Director
Mr. Sohel Shikari - Alternate Director
(v) RELATIVES OF KEY MANAGEMENT PERSONNEL
Mrs. Ruby Nigam
Mrs. Reshma Shikari
M/s. K. S. Shikari & Associates
Mar 31, 2010
1. TERM LOANS FROM BANKS
Term loans include Rs.2,192 thousand (Previous Year: Rs.2,192 thousand)
being disbursement of the grant released by the Ministry of Food
Processing Industries to the Company in the form of ÃTerm Loan (non-
interest bearing) under the scheme ÃTechnology Up-gradation /
Establishment / Modernization of Food Processing Plant of the Ministry
of Food Processing Industries for expansion of existing unit for
manufacture of ready to eat foods etc.
The Ministry has sanctioned the grant of Rs.4,384 thousand, which will
be released in two equal installments. As per the scheme, the first
installment of Rs.2,192 thousand has been released by the bankers on
behalf of the Ministry in the form of the term loan. As per the
Government scheme guidelines, the term loan will become Ãgrant on
compliance with the terms and conditions of the scheme.
2. TERM LOANS FROM OTHERS
The Company has taken External Commercial Borrowing (ECB) of USD 1,300
thousand from Preferred Brands International Inc., U.S.A. (PBI), its
ultimate holding company, for capacity expansion and modernisation of
the existing manufacturing infrastructure. The Company has received the
Reserve Bank of India (RBI) approval ref.
FED.CO.ECBD./03.02.766/2005-06 dated November 9, 2005. The Company has
drawn down entire amount of the loan in the year ended March 31, 2007.
As per the terms of the loan agreement, the loan is repayable at any
time after the third anniversary of the date of first disbursement upon
the written demand by the lender. In the absence of a written demand,
the Company has to repay the principal sum in approximately eight
quarterly installments commencing with the first payment date occurring
eight years after the date of drawdown.
The Company has been sanctioned an additional ECB of USD 1,000 thousand
by PBI in the year 2008- 2009 for modernization and up-gradation of
existing manufacturing facility. The Company has received the RBI
approval ref. FED.CO.ECBD/13748/03.02.766/2008-09 dated November 17,
2008. The Company has drawn down USD 500 thousand (Previous Year: USD
250 thousand) as at the balance sheet date. The loan is repayable at
any time after the third anniversary of the date of first disbursement
upon the written demand by the lender. In absence of a written demand,
the Company has to repay the principal sum in twenty equal installments
on quarterly basis commencing from September 30, 2012.
The above ECBs are not pre-payable.
3. CONTINGENT LIABILITIES
a) Claims against the Company not acknowledged as debts and not
provided for:
i) Sales Tax demands disputed by the Company and under appeal Rs.930
thousand (Previous Year: Rs.930 thousand).
ii) Income tax claims disputed by the Company and under appeal
Rs.11,767 thousand (Previous Year: Rs.10,407 thousand).
iii) Custom duty demand disputed by the Company and under appeal Rs.950
thousand (Previous Year: Rs.950 thousand).
iv) Provident Fund demand disputed by the Company and under appeal
Rs.10,034 thousand (Previous Year: Rs.10,034 thousand).
b) Guarantees given by the Companys bankers against counter guarantees
given by the Company of Rs.3,200 thousand (Previous Year: Rs.3,200
thousand). It includes bank guarantees amounting to Rs.950 thousand
(Previous Year: Rs.950 thousand) in respect of item (a) (iii) above.
The amounts included above, represent the best possible estimates
arrived at on the basis of available information. The uncertainties and
possible reimbursements are dependent on the outcome of the different
legal processes which have been invoked by the Company or the claimants
as the case may be and therefore cannot be predicted accurately.
4. DERIVATIVE INSTRUMENTS
The derivative instruments outstanding as at March 31, 2010 are as
under:
i) Forward contracts USD-INR for the purpose of hedging its exposure to
foreign currency receivables: USD 5,100 thousand (Previous Year: USD
4,350 thousand).
ii) Forward contracts AUD-INR for the purpose of hedging its exposure
to foreign currency receivables: AUD 300 thousand (Previous Year: Nil).
The Company has provided for the losses on derivative instruments by
marking them to market.
5. Estimated amount of contracts remaining to be executed on Capital
Account and not provided for Rs.69,312 thousand (Previous Year:
Rs.9,567 thousand).
6. EMPLOYEE BENEFITS
Defined Contribution Plan:
Contribution to defined contribution plans are recognized as expense
for the year. The contributions to provident fund under defined
contribution plan are reported in Schedule 11 Ã Manufacturing and other
expenses.
Note:
a) The estimates of future salary increases, considered in actuarial
valuation, has been done on the basis of current salary suitably
projected for future taking into consideration the general trend in
salary rise and inflation rates.
b) The liability for leave encashment as at the year end is Rs.2,404
thousand (Previous Year: Rs.1,955 thousand).
7. SEGMENT REPORTING
The disclosure requirements in respect of ÃAccounting Standard 17 Ã
Segment Reporting is as under:
a. Information about Primary Segment
The Company has a single business segment ÃPrepared Foods in
accordance with the criteria for identification of reportable segment
specified in the said standard. The Company has reduced the activity of
providing cold storage on rental basis and vegetable processing
activities substantially and now these activities have remained
incidental. Hence, the management does not consider the above
incidental activities as reportable segment.
c. Notes:
i. Revenue within India includes sales to customers located within
India and earnings in India. Revenue outside India includes sales to
customers located outside India and earnings outside India.
ii. Carrying amount of segment assets are determined by geographical
location of assets in India and outside India.
iii. Capital expenditure includes cost incurred during the year to
acquire the tangible and intangible fixed assets by geographical
location of assets in India and outside India.
8. RELATED PARTY DISCLOSURE
1. Relationships :
(i) HOLDING COMPANY
Preferred Brands Foods India Limited.
(ii) ULTIMATE HOLDING COMPANY
Preferred Brands International, Inc. USA
(iii) FELLOW SUBSIDIARY
Preferred Brands Australia Pty. Ltd. ASG Omni India Private Limited
(iv) KEY MANAGEMENT PERSONNEL
Mr. Ravi Nigam - Managing Director Mr. Sohel Shikari - Alternate
Director
(v) RELATIVES OF KEY MANAGEMENT PERSONNEL
Mrs. Ruby Nigam
Mrs. Reshma Shikari
M/s. K. S. Shikari & Associates