Notes to Accounts of Terai Tea Company Ltd.

Mar 31, 2018

Corporate Information

Terai Tea Company Limited (the “Company”) is a Public Limited Company Incorporated and domiciled in India and has its registered office at 10, Government Place (East), 1st Floor, Kolkata - 700 069, India. The Company is listed on the BSE Limited, Calcutta Stock Exchange Limited, Ahmedabad Stock Exchange Limited and Jaipur Stock Exchange Limited. The company is engaged mainly in production and Distribution of tea and trading in Agri merchandise.

The Financial Statements for the year ended March 31, 2018 were approved by the Board of Directors and authorised for issue on 30th May 2018.

a) Rights / Preferences / Restrictions Attached to Equity Shares

The Company has only one class of equity shares having a 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, except interim dividend.In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts, if any. The distribution will be in proportion to the number of equity shares held by the shareholders.

Working capital borrowings from Banks are secured by first charge by way of hypothecation over entire current assets of the respective units/ tea estate of the Company as primary security and equitable mortgage of immovable properties of company’s units/ tea estate. Rate of interest on Working Capital Loans ranges from 8.90% to 9.50& p.a..

NOTE - 1 : EARNINGS PER EQUITY SHARE

The Company’s Earnings Per Share (‘EPS’) is determined based on the net profit / (loss) attributable to the shareholders’ of the . Basic earnings per share is computed using the weighted average number of shares outstanding during the year. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the year including share options, except where the result would be anti-dilutive.

NOTE - 2 : SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Judgements in the process of applying the Company’s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the financial statements:

Depreciation and Amortisation depreciation and amortisation is based on management’s estimate of the future useful lives of the Property, Plant and Equipment and Intangible Assets. Estimates may change due to technological developments, competition, changes in market conditions and other factors and may result in changes in the estimated useful life and in the depreciation and amortisation charges.

Employee BenefitsThe present value of the defined benefit obligations depends on a number of factors that are determined on an actuarial basis using various assumptions. One of the critical assumptions used in determining the net cost (income) for these obligations include the discount rate. Any changes in these assumptions will impact the carrying amount of retirement benefit obligations.

Fair Value Measurement of Financial Instruments When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using other valuation techniques. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial.

Impairment of Non-Financial Assets Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the asset’s performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes.

NOTE - 3 : COMMITMENTS & CONTINGENT LIABILITIES

(A) Capital commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for :

At 31st March 2018 and 31st March 2017, the Company does not have any pending commitments relating to estimated amount of completion of Property, Plant & Equipment-

(B) Contingent Liabilities

(a) The Company had extended corporate guarantees and equitable mortgage on company’s immovable properties created to secure the loans limit sanction in favour of the following Companies.

b) Demand for Agricultural Income Tax aggregating Rs. 6.96 Lakhs payable within April 2019 in terms of scheme of Govt. of West Bengal, excluding the interest portion of Rs. 21.82 lacs which shall be waived if the demand is paid within April, 2019.

c) VAT & Sales Tax Demand on Assessment aggregating Rs. 154.65 Lakhs (''154.65 Lakhs) being disputed.

Gratuity

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service.

The weighted average duration of the defined benefit obligation as at 31 March 2018 is 19.20 years (31 March 2017: 19.93 years). The amounts recognised in the balance sheet and the movements in the net defined benefit obligation over the year are as follows:

These assumptions were developed by management with the assistance of independent actuarial appraisers. Discount factors are determined close to each year-end by reference to government bonds of relevant economic markets and that have terms to maturity approximating to the terms of the related obligation. Other assumptions are based on management’s historical experience.

Level 1 : Hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments, mutual funds that have quoted price. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting period.

Level 2 : The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is inlcuded in Level 2.

Level 3 : If one or more of the significant inputs is not based on observable market data, the instrument is included in level

3. This is the case for unlisted equity securities, contingent consideration and indemnification asset included in level 3.

(b) Fair value of financial assets and liabilities measured at amortised cost and FVTPL

The carrying amounts of trade payables and cash and cash equivalents are considered to be the same as their fair values, due to short term nature.

The fair values for loans and security deposits were calculated based on cash flows discounted using a current lending rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit risk.The fair values of non-current borrowings are based on discounted cash flows using a current borrowings rate.

NOTE - 4 : FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company’s principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company’s operations and to support its operations. The Company’s financial assets include investments in equity instruments and mutual funds, trade and other receivables, and cash & cash equivalents that derive directly from its operations.

The Company is exposed to market risk, credit risk and liquidity risk. The company’s senior management oversees the management of these risks. The company’s senior management is supported by a financial risk committee that advises on financial risks and the appropriate financial risk governance framework for the Company. This financial risk committee provides assurance to the Company’s senior management that the Company’s financial risk activities are governed by appropriate policies and procedure and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives. The Board of Directors reviews and agrees policies for managing each risk, which are summarised as below:

(A) Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk and other price risks. Financial instruments affected by market risk include loans and borrowings and investments in quoted equity instruments.

i) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s long term debt obligations with floating interest rates. The Company is carryg its borrowings primarily at variable rate. The Company expects the variable rate to decline, accordingly the Company is currently carrying its loans at variable interest rates.

Interest rate sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variable held constant, the Company’s profit/(loss) before tax is affected through the impact on floating rate borrowings, as follows:

(B) Equity Price Risks

Equity Price Risk is related to the change in market reference price of the investments in equity securities. The company is not an active investor in equity markets; it holds certain investments in equity which are accordingly measured at fair value through Profit and loss.The fair value of Company’s investment in quoted equity securities as at March 31, 2018, 2017 and April 1, 2016 was Rs. 20. 72 lacs, Rs. 49.75 lacs and Rs. 56.82 lacs, respectively. A 10% change in equity price as at March 31, 2018, 2017 and April 1,2016 would result in an impact of Rs. 2.07 lacs, Rs. 4.96 lacs and Rs. 5.68 lacs, respectively.( Note : The impact is indicated on equity before consequential tax impact, if any).

(i) Trade Receivables

Customer credit risk is managed by each business location subject to the Company’s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed and individual credit limits are defined in accordance with the assessment both in terms of number of days and amount. Any Credit risk is curtailed with arrangements with third parties .An impairment analysis is performed at each reporting date on an individual basis for each client. In addtion, a large number of minor receivables are grouped into homogenous groups andd assessed for impairment collectively. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note 11. The Company does not hold collateral as security.

(ii) Financial Instruments and Cash Deposits

Credit risk from balances with banks and financial institutions is managed by the Company’s treasury department in accordance with the Company’s policy. Investment of surplus funds are made only with approved counterparties . The Company’s maximum exposure to credit risk for the components of the balance sheet at 31 March 2017 and 1st April 2016 is the carrying amount as illustrated in Note 36.

(C) Liquidity Risk

Liquidity risk refer to the risk that the Company may not able to meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per the requirement. The Company has obtained adequate fund and non fund based working capital limits from its bankers. The Company maintains its surplus funds, if any, in deposits / balances which carry low market risk. The Company believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived.The table below summarises the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments -

Disclosure of Related Party Transactions provides the information about the Company’s structure. The following tables provides the total amount of transactions that have been entered into with related parties for the relevant financial year.

Terms and conditions of transactions with related parties:

The sales and purchase from related parties are made on terms equivalent to those that prevail in arm;s length transactions. Outstanding balance at the year-end are unsecured and interest free and settlement occurs in cash. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

NOTE - 5 : DETAILS OF DUES TO MICRO, SMALL AND MEDIUM ENTERPRISES AS PER MSMED ACT, 2006 :

The Company has not received information from vendors regarding their status under the MSMED Act, 2006 and hence disclosures relating to amounts unpaid as at the year end together with interest paid/ payable under this Act have not been given.

NOTE - 6 : CAPITAL MANAGEMENT

For the purpose of the Company’s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company’s capital management is to maximise the shareholder value.The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt.

In order to achieve this overall objective, the Group’s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period. No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March 2018 and 31 March 2017.

NOTE - 7 : FIRST TIME ADOPTION OF IND AS

These financial statements, for the year ended 31 March 2018, are the first the Company has prepared in accordance with Ind AS. For periods up to and including the year ended 31 March 2016, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP). Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on 31 March 2018, together with the comparative period data as at and for the year ended 31 March 2017, as described in the summary of significant accounting policies. In preparing these financial statements, the Company’s opening balance sheet was prepared as at 1 April 2016, the Company’s date of transition to Ind AS. An explanation of how the transition from previous GAAP to Ind AS has affected the Company’s financial position, financial performance and cash flows is set out in the following tables and notes.

Exemptions and exceptions availed

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.

a) Ind AS Optional exemptions

Deemed Cost for Property, Plant and Equipment Ind AS 101 permits a first time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38

Intangible Assets. Accordingly, the Company has elected to measures all of its property, plant and equipment and intangible assets at their previous GAAP carrying values except for the property viz land situtaed in India. Fo the land the Company have considered fair value as deemed cost in accordance with the stipulations of Ind As 101 with the resultant impact being acccounted for in the retained earnings.

Investment in associates

Ind AS 101 permits a first time adopter to measure its investments in associates at deemed cost. The deemed cost of such an investment could be either (a) its fair value at the date of transition; or (b) previous GAAP carrying amount at that date. The option may be excercised individually and seperately for each item of investment.Accordingly, the Company has adopted to measure its investments in associates at deemed cost i.e. previous GAAP carrying amount.

b) Ind AS Mandatory exceptions

Estimates : On assessment of the estimates made under the Previous GAAP financial statements, the Company has concluded that there is no necessity to revise the estimates under Ind AS, as there is no objective evidence of an error in those estimates. However, estimates that were required under Ind AS but not required under Previous GAAP are made by the Company for the relevant reporting dates reflecting conditions existing as at that date.

Classification and measurement of financial Assets : The classification of financial assets to be measured at amortised cost or fair value through profit and loss is made on the basis of the facts and circumstances that existed on the date of transition to Ind AS.

c) Reconciliations between previous GAAP and Ind AS

Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from previous GAAP to Ind AS.

Disclosure required by Ind AS 101 - First time adoption of Ind AS

NOTES TO FIRST-TIME ADOPTION:

(i) Note : Fair Valuation of Investments

Under the previous GAAP, investments in equity instruments and mutual funds were classified as long-term investments or current investments based on the intended holding period and readability. Long-term investments were carried at cost less provision for other than temporary decline in the value of such investments. Current investments were carried at lower of cost and fair value. Under lnd AS, these investments are required to be measured at fair value. The resulting fair value changes of these investments (other than equity instruments designated asat FVOCI) have been recognised in retained earnings as at the date of transition and subsequently in the profit or loss for the year ended 31st March 2017 and 31st March 2018.Fair value changes with respect to investments in quoted equity instruments, unquoted equity instruments and mutual funds designated as at FVTPL have been recognised in retained earning at the date of transition and subsequently in the profit and loss account for the year ended 31st March 2017 and 31st March 2018.

(ii) Note : Property, Plant and Equipment

The Company has elected to considered fair value for property, viz land situated in india, in accordance with stipulatons of Ind AS 101 with the resultant impact being accounted for in the reserves. For rest of the property, plant and equipment company had elected to continue with the carrying value of all of its plant and equipment and intangible assets as recognised as of 1st April, 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.

(iii) Note : Biological Assets

Under previous GAAP, the Company has not recognised Tea bushes and shade trees as bearer plant and accordingly depreciation has not been charged. Under Ind AS, Tea bushes and shade trees has been recognised as bearer plant and depreciated over the their estimated useful life. Consequently, depreciation and the cost of bearer plants has been adjusted and effect of the same has been taken in retained earnings as on 1st April 2016 and in profit and loss as at March 31 2017.

(iv) Note : Borrowings

Under Indian GAAP, transaction costs incurred in connection with borrowings are amortised upfront and charged to profit or loss for the period. Under Ind AS, transaction cost are included in initial recognition amount of financial liability and charged to profit or loss using the effective interest method.

(v) Note : Loans/Other Financial Assets/ Other Current Assets

As per Schedule III, Security Deposits are to be classified under Loans or Other Non-current/Current Assets respectively. Accordingly, Security Deposits which are financial in nature are classified under Loans and other deposits are classified under Non-current/ Current Assets respectively.Under IGAAP, Loans and Advances were shown together under Loans and Advances. However, as per Schedule III, Advances are classified under other Non-current/Current Assets.

(vi) Note : Provison for Expected Credit Loss

Impairment for trade receivable and interest receiable is measured in Ind AS based on life time expected credit losses. Expected credit loss allowance is measured based on historical credit loss experience, defaults, bankruptcy and forward looking information where relevant adjusted for probability of recovery. Under Previous GAAP, provision for trade receivable is measured based on factors such as age of receivables, defaults etc. adjusted for probability of recovery.

(vii) Note : Defined Benefit Liabilities

Both under Indian GAAP and Ind AS, the Company recognised costs related to its post-employment defined benefit plan on an actuarial basis. The entire cost, including actuarial gains and losses, are charged to profit or loss. Under Ind AS, remeasurements [comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability] are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI.

(viii) Note : Deferred Tax

Under Previous GAAP, deferred taxes were recognised for the tax effect of timing differences between accounting profit and taxable profit for the year using the income statement approach. Under Ind AS, deferred taxes are recognised using the balance sheet for future tax consequences of temporary differences between the carrying value of assets and liabilities and their respective tax bases. The above difference, together with the consequential tax impact of the other Ind AS transitional adjustments lead to temporary differences. Deferred tax adjustments are recognised in correlation to the underlying transaction either in retained earnings or through other comprehensive income.

(ix) Note : Government Grant Amortisation

Under previous GAAP, the Company has not recognised Tea plant subsidy as government grant related to property, plant and equipment but under Ind AS, the subsidy received for tea plant has been recognised as government grants and are presented at fair value and booked as deferred income.

NOTE - 8 : SEGMENT REPORTING

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the company’s chief operating decision maker to make decisions for which discrete financial information is available. Based on the management approach as defined in Ind AS 108, the chief operating decision maker evaluates the Company’s performance and allocates resources based on an analysis of various performance indicators by business segments and geographic segments.

NOTE - 9 : The Company acquired by way of purchase Dharnipur Tea Estate as a “Going Concern” from its owner Sri Dhirendra Nath Bhowmick (since deceased) and Dharnipur Tea Industries (P) Ltd. as confirming party and the Deed of conveyance was duly executed and registered in the name of the Company. The said Deed of Conveyance was cancelled in view of pending dispute between the seller and another party. However the agreement for purchase of the said Tea Estate subsists and is subject matter of a specific performance suit pending before Hon’ble Kolkata High Court. The Company is not in possession of the said Tea estate and has accordingly not accounted for the profit and/or loss on account of the operation or ownership of the said Tea Estate. The value of Dharnipur Tea estate represents the costs paid at the time of purchase and the legal expenses incurred thereafter on behalf of Bhowmicks and/or their legal heirs for contesting their suit which was pending. All Advocate fees at High Court and at Supreme Court were paid by this Company and capitalized on the basis of Hon’ble Supreme Court order dated 1.10.91, if Bhowmick’s title is confirmed in their pending suit then the rights of this company remains intact. The title of Bhowmicks/legal heirs was confirmed by Hon’ble Calcutta High Court during this financial year.

NOTE - 10 : The Company acquired certain interest in a plot of land at Bangalore for which registration in the name of the company has not been done. All expenses of litigation in respect of the said land are considered as deemed cost of land and the same has been accounted as advance given for land.

NOTE - 11 : Previous year figures have been reclassified / regrouped / rearranged wherever necessary.

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Mar 31, 2016

1. Terms/ Rights attached to Equity Shares

The company has only one class of equity shares having a par value of Rs.10/- per share. Each holder of equity share 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. In the event of liquidation of the company, the holders of the equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

As per the records of the company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of shares.

2. The company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures relating to amounts unpaid as at the year-end together with interest paid / payable under this Act have not been given.

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Mar 31, 2015

1. EARNINGS AND EXPENDITURE IN FOREIGN EXCHANGE- (Rs, Lakhs)

i. Earnings : Sales (FOB Value): Rs, Nil (Rs, NIL)

ii. Expenditure (Others) (Rs, Lakhs): Rs, 5.60 (Rs, 9.45)

2. CAPITAL AND OTHER COMMITMENTS

At 31st March 2015, the Company has committed of Rs, Nil (Rs, NIL) relating to purchase of Plant & Machinery.

3. The Company has capitalized during the year the following expenses of revenue nature to the cost of fixed assets. Consequently expenses disclosed under the respective Notes are net of amounts capitalized by the company-

4. CONTINGENT LIABILITY NOT PROVIDED FOR-

a. In respect of Outstanding Bank Guarantees amounting to Rs, 97.68 lakhs (Rs, 115.807 Lakhs)

b. Demand for Agricultural Income Tax aggregating Rs, 8.70 Lakhs (Rs, 30.52 Lakhs) being disputed demand and appeals pending

c. VAT & Sales Tax Demand on Assessment aggregating Rs, 154.65 Lakhs (Rs, 154.65 Lakhs) amounts being disputed.

5. The Company acquired by way of purchase of Dharnipur Tea Estate as a "Going Concern" from its owner Sri Dhirendra Nath Bhowmick (since deceased) and Dharnipur Tea Industries (P) Ltd. as confirming party and the Deed of Conveyance was duly executed and registered in the name of the Company. The said Deed of Conveyance was cancelled in view of pending dispute between the seller and another party. However, the agreement for purchase of the said Tea Estate subsists and is subject matter of a specific performance suit pending before Hon'ble Calcutta High Court. The Company is not in possession of the said Tea estate and has accordingly not accounted for the profit and/or loss on account of the operation or ownership of the said Tea Estate. The value of Dharnipur Tea estate represents the costs paid at the time of purchase and the legal expenses incurred therefore.

6. The Company acquired certain interest in a plot of land at Bangalore for which registration in the name of the company has not been done. All expenses of litigation in respect of the said land are considered as deemed cost of land.

7. The company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures relating to amounts unpaid as at the year- end together with interest paid / payable under this Act have not been given.

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Mar 31, 2014

1. No provision for contingent liability in respect of the following has been made in the accounts- Outstanding Bank Guarantees amounting to - IIS.80 Lakhs (- 86.61 lakhs)

2. The company has accounted for Agricultural Income Tax on Cash Basis. Total Agricultural Income Tax liability including interest payable thereon not accounted for aggregate - 30.S2 lakhs. However, total demand is disputed and case is pending at West Bengal Tax Tribunal.

3. The Company acquired by way of purchase Dharnipur Tea Estate as a going concern from its owner Sri Dhirendra Nath Bhowmick (since deceased) and Dharnipur Tea Industries (P) Ltd. as confirming party and the Deed of conveyance was duly executed and registered in the name of the Company. The said Deed of Conveyance was cancelled in view of pendin g dispute between the seller and another party. However the agreement for purchase of the said Tea Estate subsists and is subject matter of a specific performance suit pending before Hon''ble Calcutta High Court. The Company is not in possession of the said Tea estate and has accordingly not accounted for the profit and/or loss on account of the operation or ownership of the said Tea Estate. The value of Dharnipur Tea estate represents the costs paid at the time of purchase and the legal expenses incurred therefore.

4. The Company acquired certain interest in a plot of Land at Bangalore for which registration in the name of the Co. has not been done. All expenses of litigation in respect of the said land are considered as deemed cost of land.

5. As per Accounting Standard 18, issued by the Institute of Chartered Accountants of India, the disclosure of transactions with the related parties as defined in the Accounting Standard are given below:

i) List of Related Parties with whom transactions have taken place and relationships :

Name of the Related Party Name of Relationship

1 East Indian Produce Limited

2 Jaldacca Tea Plantations Private Limited

3 Abhijit Tea Company Private Limited

4 Terai Infrastructures Limited

5 Terai Ispat & Trading Limited

6 Terai Dooars Tea Company Private Limited

7 Sayedabad Tea Company Limited Associate Companies

8 Terai Jute Private Limited

9 Terai Financial Services Private Limited

10 The Kharibari Tea Company Limited

11 Terai Overseas Limited

12 Terai Distilleries Ltd.

13 Terai Resorts & Country Club Pvt. Ltd.

14 New Darjeeling Union Tea Co. Ltd.

15 Amit Paridhan (P) Ltd

16 Kanchanview Tea Estate Enterprises of Key Management Persons

17 Ajit Kumar Agarwala & Others (HUF)

18 Sri Ajit Kumar Agarwala Key Management persons

19 Smt. Shashikala Agarwala

6. The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures relating to amounts unpaid as at the years- end together with interest paid / payable under this Act have not been given.

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Mar 31, 2013

Note 1: Corporate information

Terai Tea Co Limited is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange. The company is engaged in the manufacturing and selling of Tea trading in Merchandise.

Note 2: Basis of preparation

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on accrual basis and under the historical cost convention except for land & plantations, building and plant & machinery acquired before 1st April, 1994 that are carried at revalued amounts. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year except for change in the accounting policy explained below.

3. Earnings and expenditure in Foreign Exchange- (Rs. Lakhs)

i. Earnings: Sales (FOB Value) : Rs. Nil (Rs. NIL) ii. Expenditure (Others) : Rs. 15.47 (Rs.6.43)

4. Capital and Other Commitments

At 31 st March 2013, the company has commitment of Rs. 1.84 lakh relating to purchase of Plant & Machinery.

5. The Company has capitalized during the year the following expenses of revenue nature to the cost of fixed assets. Consequently expenses disclosed under the respective Notes are net of amounts capitalized by the company-

6. No provision for contingent liability in respect of the following has been made in the accounts- i. Outstanding Bank Guarantees amounting to Rs. 86.61 Lakhs (Rs. 70.61 Lakhs)

7. The company has accounted for Agricultural Income Tax on cash basis. Total Agricultural Income Tax liability including interest payable thereon not accounted for aggregate Rs. 30.52 lakhs. However, total demand is disputed and case is pending at West Bengal Tax Tribunal.

8. The Company acquired by way of purchase Dharnipur Tea Estate as a going concern from its owner Sri Dhirendra Nath Bhowmick (since deceased) and Dharnipur Tea Industries (P) Ltd. as confirming party and the Deed of conveyance was duly executed and registered in the name of the Company. The said Deed of Conveyance was cancelled in view of pending dispute between the seller and another party. However the agreement for purchase of the said Tea Estate subsists and is subject matter of a specific performance suit pending before Hon''ble Kolkata High Court. The Company is not in possession of the said Tea estate and has accordingly not accounted for the profit and/or loss on account of the operation or ownership of the said Tea Estate. The value of Dharnipur Tea estate represents the costs paid at the time of purchase and the legal expenses incurred therefore.

9. The Company acquired certain interest in a plot of land at Bangalore for which registration in the name of the company has not been done. All expenses of litigation in respect of the said land are considered as deemed cost of land.

10. As per Accounting Standard 18, issued by the Institute of Chartered Accountants of India, the disclosure of transactions with the related partie as defined in the Accounting Standard are given below:

11. Directors Remuneration

The increase in the remuneration of the Managing Director from Rs. 15 lacs to 25 lacs w.e.f 1st April, 2012. The said increased in the Managing Director remuneration is authorized by the Board of Directors in their meeting held on 2nd day of November, 2012 and appropriate form with MCA-21 have been filed. However the increase in remuneration is subject to approval of the shareholder in the ensuring Annual General Meeting.

12. The company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures relating to amounts unpaid as at the year end together with interest paid / payable under this Act have not been given.

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Mar 31, 2012

Note 1: Corporate Information

Terai Tea Co Limited is a public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange. The company is engaged in the manufacturing and selling of Tea.

Note 2: Basis of Preparation

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on accrual basis and under the historical cost convention except for land & plantations, building and plant & machinery acquired before 1st April, 1994 that are carried at revalued amounts. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year except for change in the accounting policy explained below.

a. Terms/ Rights attached to Equity Shares

The Company has only one class of Equity Shares having a par value of R 10 per Share. Each holder of Equity Share 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. In the event of liquidation of the Company, the holders of the Equity Shares will be entitled to receive remaining assets of the Company, after distribution of all Preferential amounts. The distribution will be in proportion to the number of Equity Shares held by the Shareholders

As per the Records of the Company, including its Register of Shareholders/Members and other declarations received from Shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of shares.

Term Loan referred above to the extent of :

a. Term Loan from Central Bank of India of R 490 lakh carries interest @ Base Rate plus 1.75% p.a. The Loan is repayable in 20 equal quarterly installments after 24 months moratorium period. The Loan is secured by bank's charge on replantation on areas having tea bushes of age group 50 years and above in the Company's Bagdogra Tea Estate and also guaranteed by its Directors Mr. Ajit Kumar Agarwala and Mrs. Shashikala Agarwala.

b. Term Loan from Axis Bank of R 33.57 lakh is secured against hypothecation of Car and carries interest @ 10.43 p.a.on a monthly reducing basis and is repayable in 60 equal monthly installments including interest.

c. Unsecured Corporate Loan from UCO Bank of R 900 lakh carries interest @ BPLR minus 1.5% p.a. The loan is repayable at the end of two years moratorium period. The Loan is guaranteed by its Directors Mr. Ajit Kumar Agarwala and Mrs. Shashikaka Agarwala.

d. Unsecured Term Loan of R1418.83 lakhs from related parties and other are due for repayment after 3 years of deposit and carries no interest.

a. Working Capital loans are against Bank's exclusive 1st charge by Hypothecation of Stocks of Finished Goods, Raw Materials and Stores and Book Debts and Equitable Mortage of Land and Building in Tea Garden and Tea Factory and guaranteed by its Directors Mr. Ajit Kumar Agarwala and Mrs. Shashikala Agarwala. CC limit from Bank of India carries interest @ BR plus 1.75% and from Central Bank of India carries interest @ BR plus 1.75%. b Unsecured Term Loan of R 59.99 lakh from related parties and other are due for repayment within one year and carries no interest.

3. Capital and other commitments

As at 31st March 2012, the Company has committed of R 7.9 lakh relating to purchase of Plant & Machinery.

4. The Company has Capitalized during the year the following expenses of revenue nature to the cost of fixed assets. Consequently expenses disclosed under the respective Notes are net of amounts capital- ized by the Company-

5. No provision for contingent liability in respect of the following has been made in the accounts-

i. Outstanding Bank Guarantees amounting to r 70.61 Lacs (r 70.61 lacs)

6. The Company has accounted for Agricultural Income Tax on cash basis. Total Agricultural Income Tax liability including interest payable thereon not accounted for aggregate r 38.97 lakhs. However, total demand is disputed and cases are pending at West Bengal Tax Tribunal.

7. The Company acquired by way of purchase Dharnipur Tea Estate as a going concern from its owner Sri Dhirendra Nath Bhowmick (since deceased) and Dharnipur Tea Industries (P) Ltd. as confirming party and the Deed of conveyance was duly executed and registered in the name of the Company. The said Deed of Conveyance was cancelled in view of pending dispute between the seller and another party. However the agreement for purchase of the said Tea Estate subsists and is subject matter of a specific performance suit pending before Hon'ble Calcutta High Court. The Company is not in possession of the said Tea Estate and has accordingly not accounted for the profit and/or loss on account of the operation or ownership of the said Tea Estate. The value of Dharnipur Tea estate represents the costs paid at the time of purchase and the legal expenses incurred therefore.

8. The Company acquired certain interest in a plot of land at Bangalore for which registration in the name of the Company has not been done. All expenses of litigation in respect of the said land are considered as deemed cost of land.

9. As per Accounting Standard 18, issued by the Institute of Chartered Accountants of India, the disclo- sure of transactions with the related parties as defined in the Accounting Standard are given below :

10. The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures relating to amounts unpaid as at the year end together with interest paid / payable under this Act have not been given.

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Mar 31, 2011

1. Gratuity:

The Company has provided for gratuity on the basis of actuarial valuation .

2. Quantitative information

Manufactured Item Tea Licensed Capacity Not Applicable Installed Capacity (In kg): 1,00,00,000 (1,00,00,000)

2. No provision for contingent liability in respect of the following has been made in the accounts-

i. Outstanding Bank Guarantees amounting to 70.61 Lakhs ( 74.76 lakhs) ii. Guarantees to Banks/ other institutions for limits in favour of associate companies 634.76 lakhs ( 581.51 lakhs).

iii. In respect of Capital Contracts Net of Advances NIL ( 49.90 Lakhs).

4. The company has accounted for Agricultural Income Tax on cash basis. Total Agricultural Income Tax liability including interest payable thereon not accounted for aggregate 54.39 lakhs. However, total demand is disputed and case is pending at West Bengal Tax Tribunal.

5. The Company acquired by way of purchase Dharnipur Tea Estate as a going concern from its owner Sri Dhirendra Nath Bhowmick (since deceased) and Dharnipur Tea Industries (P) Ltd. as confirming party and the Deed of conveyance was duly executed and registered in the name of the Company. The said Deed of Conveyance was cancelled in view of pending dispute between the seller and another party. However the agreement for purchase of the said Tea Estate subsists and is subject matter of a specific performance suit pending before Hon'ble Calcutta High Court. The Company is not in possession of the said Tea estate and has accordingly not accounted for the profit and/or loss on account of the operation or own- ership of the said Tea Estate. The value of Dharnipur Tea estate represents the costs paid at the time of purchase and the legal expenses incurred therefore.

6. The Company acquired certain interest in a plot of land at Bangalore for which registration in the name of the company has not been done. All expenses of litigation in respect of the said land are considered as deemed cost of land.

7. As per Accounting Standard 18, issued by the Institute of Chartered Accountants of India, the disclosure of transactions with the related parties as defined in the Accounting Standard are given below :

i) List of Related Parties with whom transactions have taken place and relationships :

Sl Name of Related Party Nature of Relationship No. 1 East Indian Produce Limited Associate Companies

2 Jaldacca Tea Plantations Private Limited

3 Abhijit Tea Company Private Limited

4 Terai Infrastructures Limited

5 Terai Ispat & Trading Limited

6 Terai Dooars Tea Company Private Limited

7 Sayedabad Tea Company Limited

8 Terai Jute Pvt. Limited

9 Terai Financial Services (P) Limited

10 The Kharibari Tea Company Limited

11 Terai Overseas Limited

12 Terai Distilleries Limited

13 Terai Resorts & Country Club (P) Limited

14 Amit Paridhan Private Limited

15 Kanchaanview Tea Estate Enterprises of Key Management Persons

16 Ajit Kumar Agarwala & Others (HUF)

17 Sri Ajit Kumar Agarwala Key Management Persons

18 Smt. Shashikala Agarwala

8. As the Company's business activity falls within a single primary business segment viz. Tea plantation and production, disclosure requirement of Accounting Standards (AS-17) "Segment Reporting" issued by the Institute of Chartered Accountants of India are not applicable.

9. The company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures relating to amounts unpaid as at the year end together with interest paid / payable under this Act have not been given.

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Mar 31, 2010

1. Gratuity:

The Company has provided for gratuity on the basis of actuarial valuation .

2. Earnings and Expenditure in Foreign Exchange- (Rs. Lakhs)

i. Earnings: Sales (FOB Value): Rs. NIL (Rs. NIL) ii. Expenditure (Others): Rs. 9.74 (Rs. 12.18)

3. No provision for contingent liability in respect of the following has been made in the accounts- i. Outstanding Bank Guarantees amounting to Rs.74.76 Lakhs (Rs. 82.11 lakhs).

ii. Guarantees to Banks/ other institutions for limits in favour of associate companies Rs.581.51 lakhs (Rs. 653.91 lakhs).

iii. In respect of Capital Contracts net of advances Rs. 49.90 Lakhs (Rs.18.88 Lakhs).

4. The company has accounted for Agricultural Income Tax on cash basis. Total Agricultural In- come Tax liability including interest payable thereon not accounted for aggregate Rs. 54.39 lakhs. However, total demand is disputed and case is pending at West Bengal Tax Tribunal.

5. The Company acquired by way of purchase of Dharnipur Tea Estate as a going concern from its owner Sri Dhirendra Nath Bhowmick (since deceased) and Dharnipur Tea Industries (P) Ltd. as confirming party. The Deed of conveyance was duly executed and registered in the name of the Company. The said Deed of Conveyance was cancelled in view of pending dispute between the seller and another party. However the agreement for purchase of the said Tea Estate subsists and is subject matter of a specific performance suit pending before Hon’ble Calcutta High Court. The Company is not in possession of the said Tea estate and has accordingly not accounted for the profit and/or loss on account of the operation or ownership of the said Tea Estate. The value of Dharnipur Tea estate represents the costs paid at the time of purchase and the legal expenses incurred therefore.

6. The Company acquired certain interest in a plot of land at Bangalore for which registration in the name of the company has not been done. All expenses of litigation in respect of the said land are considered as deemed cost of land.

7. As the Companys business activity falls within a single primary business segment viz. Te a plantation and production, disclosure requirement of Accounting Standards (AS-17) "Segment Reporting" issued by the Institute of Chartered Accountants of India are not applicable.

8. The company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures relating to amounts unpaid as at the year end together with interest paid / payable under this Act have not been given.