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Notes to Accounts of Tasty Bite Eatables Ltd.

Mar 31, 2018

1. Background

Tasty Bite Eatables Limited (‘the Company’) 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 ‘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’).

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 ‘Act’) and other relevant provisions of the Act.

The Company’s financial statements as at and for the year ended 31 March 2017 were prepared in accordance with the Company’s (Accounting standards) Rules, 2006, notified under Section 133 of the Act and other relevant provisions of the Act.

As these are the Company’s 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 Company’s accounting policies are included in Note 3.

The financial statements were authorised for issue by the Company’s 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 Company’s 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 Company’s board of directors has overall responsibility for the establishment and oversight of the Company’s 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 Company’s 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 Company’s 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 Company’s 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 (“MCA”) 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 (“MCA”) 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 entity’s 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 Company’s 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.

‘Dividend paid during the year ended 31st March 2018 is related to dividend proposed during the year ended 31st March 2017

“Dividend 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 ‘dividend’ 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 ‘financial liability’, 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 Company’s 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 (‘DCIT’) 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 Department’s 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 Company’s 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 Department’s 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 (‘SBN’) 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 Company’s 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 Company’s 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 (‘DSIR’):

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.

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 arm’s 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 Company’s 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 ‘Chief Operating Decision Maker’ monitors the operating results of the Company’s business as single segment. Accordingly in context of ‘Ind AS 108 - Operating Segments’ 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 Company’s revenues by the Company’s 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 Company’s 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:

“The 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.”

A. Funding

Gratuity Plan is funded by the Company. The funding requirements are based on the gratuity fund’s 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.’s (‘FBI Inc.’ or the Holding Company’s) 2009 Non-Qualified Stock Option and Equity Plan (‘the Equity Plan’). 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 (‘Holders’), 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 Company’s board of directors has overall responsibility for the establishment and oversight of the Com pany’s 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 Company’s 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 Company’s 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 Company’s Audit Committee oversees how management monitors compliance with the Company’s 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 Company’s historical experience for customers.

The Company’s 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 Company’ 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 (‘collectively referred as Bank balance’)

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 Company’s 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 Company’s reputation. The Company’s 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 Company’s 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 Company’s 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 Company’s 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 (‘Previous GAAP’).

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 Company’s 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 ‘AS-11 - The effects of changes in foreign exchange rates’ 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 entity’s estimates in accordance with Ind AS at the date of transition to Ind AS at the end of the comparative period presented in the entity’s 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 Company’s 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 (“I GAAP”) 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

‘Refers 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 (‘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 (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 “Specified Bank Notes” 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 Company’s 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 ‘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.

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 (‘TBRC’) as an “In-house R&D facility” 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 company’s 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.“Cash 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.’’ 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 ‘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 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 “In-house R&D facility” 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 – 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


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 ‘Term Loan (non- interest bearing) under the scheme ‘Technology 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 ‘grant 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 – 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 ‘Accounting Standard 17 – Segment Reporting is as under:

a. Information about Primary Segment

The Company has a single business segment ‘Prepared 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

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