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Notes to Accounts of Tasty Bite Eatables Ltd.

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 – 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 (‘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.

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 ‘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) :

(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

 
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